<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. 27 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 29 /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)
One Financial Way
Cincinnati, Ohio 45242
(Depositor's Telephone Number)
(513) 794-6100
(Name and Address of Agent for Service)
Ronald L. Benedict, Corporate Vice President, Counsel and Secretary
The Ohio National Life Insurance Company
P.O. Box 237
Cincinnati, Ohio 45201
Notice to:
W. Randolph Thompson, Esq.
Of Counsel
Jones & Blouch L.L.P.
Suite 405 West
1025 Thomas Jefferson Street, N.W.
Washington, D.C. 20007
Approximate Date of Proposed Public Offering: As soon after the effective date
of this amendment as is practicable.
It is proposed that this filing will become effective (check appropriate space):
immediately upon filing pursuant to paragraph (b)
---
X on May 1, 2000 pursuant to paragraph (b)
---
60 days after filing pursuant to paragraph (a)(i)
---
on (date) pursuant to paragraph (a)(i) 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 undeterminable. Pursuant to Rule 456(m) under the 1933 Act, no
separate fee is being paid for the Guarantee.
OHIO NATIONAL VARIABLE ACCOUNT B
N-4 Item Caption in Prospectus
- -------- ---------------------
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
19 See Prospectus (Distribution of Variable Annuity
Contracts)
20 Underwriter
21 Calculation of Money Market Subaccount Yield
<PAGE> 3
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 Undertakings and Representations
<PAGE> 4
PART A
PROSPECTUS
<PAGE> 5
PROSPECTUS
FLEXIBLE PURCHASE PAYMENT
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
OHIO NATIONAL VARIABLE ACCOUNTS A AND B
THE OHIO NATIONAL LIFE INSURANCE COMPANY
One Financial Way
Montgomery, Ohio 45242
Telephone (800) 366-6654
This prospectus offers variable annuity contracts allowing you to accumulate
values and paying you benefits on a variable and/or fixed basis.
Variable annuities provide contract values and lifetime annuity payments that
vary with the investment results of the Funds you choose. You cannot be sure
that the contract value or annuity payments will equal or exceed your purchase
payments.
The variable annuity contracts are designed for:
- - annuity purchase plans adopted by public school systems and certain tax-exempt
organizations described in Section 501(c)(3) of the Internal Revenue Code (the
"Code"), qualifying for tax-deferred treatment pursuant to Section 403(b) of
the Code,
- - other employee pension or profit-sharing trusts or plans qualifying for
tax-deferred treatment under Section 401(a), 401(k) or 403(a) of the Code,
- - individual retirement annuities qualifying for tax-deferred treatment under
Section 408 or 408A of the Code,
- - state and municipal deferred compensation plans and
- - non-tax-qualified plans.
The minimum purchase payment is $25. You may make additional payments at any
time. We may limit your total purchase payments to $1,500,000.
You may direct the allocation of your purchase payments to one or more (but not
more than 10 variable) subaccounts of Ohio National Variable Account A ("VAA")
for tax-qualified contracts or Ohio National Variable Account B ("VAB") for
non-tax-qualified contracts. VAA and VAB are separate accounts of The Ohio
National Life Insurance Company. The assets of VAA and VAB are invested in
shares of the Funds. The Funds are portfolios of Ohio National Fund, Inc., The
Dow Target Variable Fund LLC, Goldman Sachs Variable Insurance Trust, Janus
Aspen Series, Lazard Retirement Series, Inc., PBHG Insurance Series Fund, Inc.,
Strong Variable Insurance Funds, Inc. and Variable Insurance Products Fund
(Fidelity). See page 3 for the list of available Funds. See also the
accompanying prospectuses of the Funds. The Fund prospectuses might also contain
information about other funds that are not available for these contracts.
You may withdraw all or part of the contract's value before annuity payments
begin. You might incur federal income tax penalties for those early withdrawals.
We may charge you a surrender charge equal to 7 3/4% of your 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, you may withdraw
up to 10% of the contract value each year without this charge. Your exercise of
contract rights may be subject to the terms of your qualified employee trust or
annuity plan. This prospectus contains no information concerning your trust or
plan.
You may revoke the contract without penalty, within 20 days of receiving it (or
a longer period if required by state law).
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE. IT SETS FORTH THE INFORMATION ABOUT
VAA, VAB AND THE VARIABLE ANNUITY CONTRACTS THAT YOU SHOULD KNOW BEFORE
INVESTING. ADDITIONAL INFORMATION ABOUT VAA AND VAB HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IN A STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 2000. WE HAVE INCORPORATED THE STATEMENT OF ADDITIONAL INFORMATION
BY REFERENCE. IT IS AVAILABLE UPON REQUEST AND WITHOUT CHARGE BY WRITING OR
CALLING US AT THE ABOVE ADDRESS. THE TABLE OF CONTENTS FOR THE STATEMENT OF
ADDITIONAL INFORMATION IS ON THE BACK PAGE OF THIS PROSPECTUS.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Form V-4820 MAY 1, 2000
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Funds.......................... 3
Fee Table................................ 4
Accumulation Unit Values................. 8
Financial Statements................... 13
Ohio National............................ 14
Ohio National Life..................... 14
Ohio National Variable Accounts A and
B................................... 14
The Funds.............................. 14
Mixed and Shared Funding............... 14
Voting Rights.......................... 15
Distribution of Variable Annuity
Contracts.............................. 15
Deductions and Expenses.................. 15
Surrender Charge....................... 15
Contract Administration Charge......... 16
Deduction for Administrative
Expenses............................ 16
Deduction for Risk Undertakings........ 16
Transfer Fee........................... 17
Deduction for State Premium Tax........ 17
Fund Expenses.......................... 17
Description of Variable Annuity
Contracts.............................. 17
Free Look.............................. 17
Accumulation Period...................... 17
Purchase Payments...................... 17
When We May Terminate Your Contract.... 17
Accumulation Units..................... 17
Crediting Accumulation Units........... 17
Allocation of Purchase Payments........ 18
Accumulation Unit Value and Contract
Value............................... 18
Net Investment Factor.................. 18
Surrender and Partial Withdrawal....... 18
Transfers among Subaccounts............ 19
Scheduled Transfers (Dollar Cost
Averaging).......................... 19
TeleAccess............................. 20
Death Benefit.......................... 20
Guaranteed Account..................... 20
Ohio National Life Employee Discount... 21
Texas State Optional Retirement
Program............................. 21
Annuity Period........................... 21
Annuity Payout Date.................... 21
Annuity Options........................ 21
Determination of Amount of the First
Variable Annuity Payment............ 22
Annuity Units and Variable Payments.... 22
Transfers during Annuity Payout........ 23
Other Contract Provisions................ 23
Assignment............................. 23
Periodic Reports....................... 23
Substitution for Fund Shares........... 24
Contract Owner Inquiries................. 24
Performance Data....................... 24
Federal Tax Status....................... 24
Tax-Deferred Annuities................. 26
Qualified Pension or Profit-Sharing
Plans............................... 26
Individual Retirement Annuities
(IRA)............................... 27
Simplified Employee Pension Plans
(SEPPs)............................. 27
Withholding on Distribution............ 28
Prior Contracts.......................... 28
Annual Payment Variable Annuity........ 28
Variable Interest Annuity.............. 28
Flexible Payment Combination Annuity... 29
Multiple Funded Combination Annuity.... 29
Investar Vision/Top Spectrum Flexible
Payment Variable Annuity............ 29
Accumulation Unit Values for Prior
Contracts.............................. 30
IRA Disclosure Statement................. 39
Free Look Period....................... 39
Eligibility Requirements............... 39
Contributions and Deductions........... 39
IRA for Non-working Spouse............. 40
Rollover Contribution.................. 40
Premature Distributions................ 41
Distribution at Retirement............. 41
Inadequate Distributions -- 50% Tax.... 41
Death Benefits......................... 41
Roth IRAs.............................. 41
Prototype Status....................... 42
Reporting to the IRS................... 42
Illustration of IRA Fixed
Accumulations.......................... 43
Statement of Additional Information
Contents............................... 44
</TABLE>
Form V-4820
2
<PAGE> 7
AVAILABLE FUNDS
<TABLE>
<S> <C>
ADVISER (SUBADVISER)
OHIO NATIONAL FUND, INC. (Legg Mason Fund Adviser, Inc.)
Equity Portfolio Ohio National Investments, Inc.
Money Market Portfolio Ohio National Investments, Inc.
Bond Portfolio Ohio National Investments, Inc.
Omni Portfolio (a flexible portfolio (Federated Global Investment Management
fund) Corp.)
International Portfolio (Federated Global Investment Management
International Small Company Portfolio Corp.)
Capital Appreciation Portfolio (Jennison Associates LLC)
Small Cap Portfolio (Founders Asset Management LLC)
Aggressive Growth Portfolio (Janus Capital Corporation)
Core Growth Portfolio (Pilgrim Baxter & Associates, Ltd.)
Growth & Income Portfolio (RS Investment Management Co. LLC)
Capital Growth Portfolio (RS Investment Management Co. LLC)
S&P 500 Index Portfolio Ohio National Investments, Inc.
Social Awareness Portfolio Ohio National Investments, Inc.
High Income Bond Portfolio (Federated Investment Counseling)
Equity Income Portfolio (Federated Investment Counseling)
Blue Chip Portfolio (Federated Investment Counseling)
Nasdaq 100 Index Portfolio Ohio National Investments, Inc.
</TABLE>
<TABLE>
<S> <C>
THE DOW(SM) TARGET VARIABLE FUND LLC
The Dow(SM) Target 10 Portfolios (First Trust Advisors L.P.)
The Dow(SM) Target 5 Portfolios (First Trust Advisors L.P.)
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Goldman Sachs Growth and Income Fund Goldman Sachs Asset Management
Goldman Sachs CORE U.S. Equity Fund Goldman Sachs Asset Management
Goldman Sachs Capital Growth Fund Goldman Sachs Asset Management
JANUS ASPEN SERIES (SERVICE SHARES)
Growth Portfolio Janus Capital Corporation
Worldwide Growth Portfolio Janus Capital Corporation
Balanced Portfolio Janus Capital Corporation
LAZARD RETIREMENT SERIES, INC.
Small Cap Portfolio Lazard Asset Management
Emerging Markets Portfolio Lazard Asset Management
PBHG INSURANCE SERIES FUND, INC.
PBHG Technology & Communications
Portfolio Pilgrim Baxter & Associates, Ltd.
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Mid Cap Growth Fund II Strong Capital Management, Inc.
Strong Opportunity Fund II
(a mid cap/small cap fund) Strong Capital Management, Inc.
Strong Schafer Value Fund II Strong Capital Management, Inc.
VARIABLE INSURANCE PRODUCTS FUND SERVICE
CLASS 2 (FIDELITY)
VIP Contrafund(R) Portfolio Fidelity Management & Research Company
VIP Mid Cap Portfolio Fidelity Management & Research Company
VIP Growth Portfolio Fidelity Management & Research Company
</TABLE>
Form V-4820
3
<PAGE> 8
FEE TABLE
<TABLE>
<CAPTION>
CONTRACTOWNER TRANSACTION EXPENSES
----------------------------------
<S> <C>
Deferred Sales Load (this "surrender charge"
is 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>
<S> <C>
VAA AND VAB ANNUAL EXPENSES (as a percentage of
average account value)
Mortality and Expense Risk Fees*** 0.85%
Account Fees and Expenses 0.25%
----
Total VAA and VAB Annual Expenses 1.10%
</TABLE>
***The Mortality and Expense risk fees may be changed at any time, but may not
be increased to more than 1.55%. We agree that the fees will not be increased on
any contract issued pursuant to this prospectus. See Deduction for Risk
Undertakings.
Neither the table nor the examples reflect any premium taxes that may apply to a
contract. These currently range from 0% to 3.5%. For further details, see
Deduction for State Premium Tax.
FUND ANNUAL EXPENSES (as a percentage of the Fund's average net assets)
<TABLE>
<CAPTION>
TOTAL FUND
EXPENSES TOTAL TOTAL FUND
WITHOUT WAIVERS EXPENSES
MANAGEMENT OTHER WAIVERS OR AND WITH WAIVERS
FEES EXPENSES REDUCTIONS REDUCTIONS* OR REDUCTIONS
---------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
OHIO NATIONAL FUND, INC.:
Money Market* 0.30% 0.11% 0.41% 0.05% 0.36%
Equity 0.80% 0.12% 0.92% 0.00% 0.92%
Bond 0.60% 0.17% 0.77% 0.00% 0.77%
Omni 0.54% 0.13% 0.67% 0.00% 0.67%
S&P 500 Index 0.38% 0.11% 0.49% 0.00% 0.49%
International* 0.90% 0.36% 1.26% 0.05% 1.21%
International Small Company 1.00% 1.06% 2.06% 0.00% 2.06%
Capital Appreciation 0.80% 0.15% 0.95% 0.00% 0.95%
Small Cap 0.80% 0.09% 0.89% 0.00% 0.89%
Aggressive Growth 0.80% 0.15% 0.95% 0.00% 0.95%
Core Growth 0.95% 0.11% 1.06% 0.00% 1.06%
Growth & Income 0.85% 0.10% 0.95% 0.00% 0.95%
Capital Growth 0.90% 0.19% 1.09% 0.00% 1.09%
Social Awareness 0.60% 0.33% 0.93% 0.00% 0.93%
High Income Bond 0.75% 0.38% 1.13% 0.00% 1.13%
Equity Income 0.75% 0.53% 1.28% 0.00% 1.28%
Blue Chip 0.90% 0.45% 1.35% 0.00% 1.35%
Nasdaq 100 Index** 0.75% 0.20% 0.95% 0.00% 0.95%
DOW TARGET VARIABLE FUND LLC:
Dow Target 10* 0.60% 0.64% 1.24% 0.21% 1.03%
Dow Target 5* 0.60% 2.54% 3.14% 2.27% 0.87%
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Growth and Income* 0.75% 0.47% 1.22% 0.22% 1.00%
Goldman Sachs CORE U.S. Equity 0.70% 0.20% 0.90% 0.00% 0.90%
Goldman Sachs Capital Growth* 0.75% 0.94% 1.69% 0.69% 1.00%
</TABLE>
Form V-4820
4
<PAGE> 9
<TABLE>
<CAPTION>
TOTAL FUND
EXPENSES TOTAL TOTAL FUND
WITHOUT WAIVERS EXPENSES
MANAGEMENT OTHER WAIVERS OR AND WITH WAIVERS
FEES EXPENSES REDUCTIONS REDUCTIONS* OR REDUCTIONS
---------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
JANUS ASPEN SERIES (SERVICE SHARES):
Growth** 0.65% 0.27% 0.92% 0.00% 0.92%
Worldwide Growth** 0.65% 0.30% 0.95% 0.00% 0.95%
Balanced** 0.65% 0.27% 0.92% 0.00% 0.92%
LAZARD RETIREMENT SERIES, INC.:
Small Cap* 0.75% 6.56% 7.31% 6.06% 1.25%
Emerging Markets* 1.00% 8.59% 9.59% 7.99% 1.60%
PBHG INSURANCE SERIES FUND, INC.:
PBHG Technology & Communications 0.85% 0.24% 1.09% 0.00% 1.09%
STRONG VARIABLE INSURANCE FUNDS, INC.:
Strong Mid Cap Growth II* 1.00% 0.17% 1.17% 0.02% 1.15%
Strong Opportunity II 1.00% 0.14% 1.14% 0.00% 1.14%
Strong Schafer Value II* 1.00% 0.57% 1.57% 0.37% 1.20%
VARIABLE INSURANCE PRODUCTS FUND
(FIDELITY):
VIP Contrafund 0.58% 0.37% 0.95% 0.00% 0.95%
VIP Mid Cap 0.57% 0.68% 1.25% 0.00% 1.25%
VIP Growth 0.58% 0.35% 0.93% 0.00% 0.93%
</TABLE>
EXAMPLE -- If you surrendered your contract at the end of the applicable time
period, you would pay the following aggregate expenses on a $1,000 investment in
each Fund, assuming 5% annual return:
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
OHIO NATIONAL FUND, INC.:
Money Market* $ 93 $124 $162 $186
Equity 99 140 191 245
Bond 98 136 184 230
Omni 96 133 179 219
S&P 500 Index 95 128 169 200
International* 102 149 206 275
International Small Company 110 173 245 356
Capital Appreciation 99 141 193 248
Small Cap 99 139 190 242
Aggressive Growth 99 141 193 248
Core Growth 100 144 199 260
Social Awareness 99 141 192 246
Growth & Income 99 141 193 248
Capital Growth 101 145 200 263
High Income Bond 101 146 202 267
Equity Income 103 151 209 282
Blue Chip 103 153 212 289
Nasdaq 100 Index** 99 141 193 248
DOW TARGET VARIABLE FUND LLC:
Dow Target 10* 100 143 197 256
Dow Target 5* 99 139 189 240
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Growth and Income* 100 143 195 253
Goldman Sachs CORE U.S. Equity 99 140 190 243
Goldman Sachs Capital Growth* 100 143 195 253
</TABLE>
Form V-4820
5
<PAGE> 10
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
JANUS ASPEN SERIES (SERVICE SHARES):
Growth** $ 99 $140 $191 $245
Worldwide Growth** 99 141 193 248
Balanced** 99 140 191 245
LAZARD RETIREMENT SERIES, INC.:
Small Cap* 102 150 208 279
Emerging Markets* 106 160 224 313
PBHG INSURANCE SERIES FUND, INC.:
PBHG Technology & Communications 101 145 200 263
STRONG VARIABLE INSURANCE FUNDS, INC.:
Strong Mid Cap Growth II* 101 147 203 269
Strong Opportunity II 101 147 203 268
Strong Schafer Value II* 102 148 205 274
VARIABLE INSURANCE PRODUCTS FUND (FIDELITY):
VIP Contrafund 99 141 193 248
VIP Mid Cap 102 150 208 279
VIP Growth 99 141 192 246
</TABLE>
EXAMPLE -- If you do not surrender your contract or if you annuitize at the end
of the applicable time period, you would pay the following aggregate expenses on
the same investment:
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
OHIO NATIONAL FUND, INC.:
Money Market* $ 16 $ 49 $ 85 $186
Equity 22 66 114 245
Bond 20 62 106 230
Omni 19 59 101 219
S&P 500 Index 17 53 92 200
International* 24 75 129 275
International Small Company 33 100 170 356
Capital Appreciation 22 67 115 248
Small Cap 21 65 112 242
Aggressive Growth 22 67 115 248
Core Growth 23 71 121 260
Social Awareness 22 67 114 246
Growth & Income 22 67 115 248
Capital Growth 23 72 123 263
High Income Bond 24 73 125 267
Equity Income 25 77 132 282
Blue Chip 26 79 136 289
Nasdaq 100 Index** 22 67 115 248
DOW TARGET VARIABLE FUND LLC:
Dow Target 10* 23 70 119 256
Dow Target 5* 21 65 111 240
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Growth and Income* 22 69 118 253
Goldman Sachs CORE U.S. Equity 21 66 113 243
Goldman Sachs Capital Growth* 22 69 118 253
</TABLE>
Form V-4820
6
<PAGE> 11
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
JANUS ASPEN SERIES (SERVICE SHARES):
Growth** $ 22 $ 66 $114 $245
Worldwide Growth** 22 67 115 248
Balanced** 22 66 114 245
LAZARD RETIREMENT SERIES, INC.:
Small Cap* 25 76 131 279
Emerging Markets* 28 87 148 313
PBHG INSURANCE SERIES FUND, INC.:
PBHG Technology & Communications 23 72 123 263
STRONG VARIABLE INSURANCE FUNDS, INC.:
Strong Mid Cap Growth II* 24 73 126 269
Strong Opportunity II 24 73 125 268
Strong Schafer Value II* 24 75 128 274
VARIABLE INSURANCE PRODUCTS FUND (FIDELITY):
VIP Contrafund 22 67 115 248
VIP Mid Cap 25 76 131 279
VIP Growth 22 67 114 246
</TABLE>
*The investment advisers of certain Funds are voluntarily waiving part or all of
their management fees and/or reimbursing certain Funds in order to reduce total
Fund expenses.
EXAMPLE -- Without the voluntary fee waivers or reimbursements by investment
advisers, if you surrendered your contract at the end of the applicable time
period, you would pay the following aggregate expenses on a $1,000 investment in
each of the following Funds, assuming 5% annual return:
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
OHIO NATIONAL FUND, INC.:
Money Market $ 94 $125 $165 $191
International 102 150 208 280
DOW TARGET VARIABLE FUND LLC:
Dow Target 10 102 149 207 278
Dow Target 5 121 202 292 449
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Growth and Income 102 149 206 276
Goldman Sachs Capital Growth 107 162 228 321
LAZARD RETIREMENT SERIES, INC.:
Small Cap 161 307 450 716
Emerging Markets 182 358 522 813
STRONG VARIABLE INSURANCE FUNDS, INC.:
Strong Mid Cap Growth II 24 74 127 271
Strong Schafer Value II 28 86 146 310
</TABLE>
EXAMPLE -- Without the voluntary fee waivers or reimbursements by investment
advisers, if you do not surrender your contract or if you annuitize at the end
of the applicable time period, you would pay the following aggregate expenses on
the same investment:
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
OHIO NATIONAL FUND, INC.:
Money Market $ 16 $ 51 $ 88 $191
International 25 77 131 280
DOW TARGET VARIABLE FUND LLC:
Dow Target 10 25 76 130 278
Dow Target 5 44 131 221 449
</TABLE>
Form V-4820
7
<PAGE> 12
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Growth and Income $ 25 $ 75 $129 $276
Goldman Sachs Capital Growth 29 89 152 321
LAZARD RETIREMENT SERIES, INC.:
Small Cap 84 242 390 716
Emerging Markets 105 296 467 813
STRONG VARIABLE INSURANCE FUNDS, INC.:
Strong Mid Cap Growth II 102 147 204 271
Strong Schafer Value II 106 159 223 310
</TABLE>
**The "Other Expenses" (and accordingly, the Total Fund Expenses) for these
Funds are based on estimates.
The purpose of the above table is to help you to understand the costs and
expenses that you will bear directly or indirectly. THESE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSE. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN. For some funds, the "Other Expenses" include a
12b-1 fee. These fees do not exceed 0.25%. Note that the expense amounts shown
in the examples are aggregate amounts for the total number of years indicated.
In the examples, 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 Guaranteed Account. The above table and examples reflect only
the charges for contracts currently offered by this prospectus and not other
contracts that we may offer.
ACCUMULATION UNIT VALUES
The International fund began on April 30, 1993. The Capital Appreciation and
Small Cap funds began on March 31, 1995. The International Small Company and
Aggressive Growth funds began on October 2, 1995. The Core Growth, Growth &
Income, S&P 500 Index and Social Awareness funds began on January 3, 1997. The
Ohio National Fund Capital Growth, High Income Bond, Equity Income and Blue Chip
funds, the Dow Target Variable funds, the Goldman Sachs funds, the Janus Aspen
(Institutional Shares) funds, the Lazard Retirement funds and the Strong funds
were made available in these contracts on November 1, 1999. The Nasdaq 100
Index, Janus Aspen (Service Shares), PBHG Technology & Communications and
Variable Insurance Products funds were added on May 1, 2000. The Janus Aspen
(Institutional Shares) funds are not available in contracts issued after April
30, 2000. Values for series of contracts that we no longer issue are listed on
pages 30 to 38.
The net annualized yield for the Money Market fund in these contracts for the
seven days ended December 31, 1999 and was 4.62%.
VAA EQUITY
<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>
1990 $22.218759 $21.128705 589,220
1991 21.128705 25.116964 802,548
1992 25.116964 26.717609 1,048,285
1993 26.717609 30.151694 1,181,609
1994 30.151694 29.897240 1,288,052
1995 29.897240 37.616119 1,394,001
1996 37.616119 44.033562 1,505,499
1997 44.033562 51.466766 1,554,930
1998 51.466766 53.820037 1,469,467
1999 53.820037 63.810576 1,219,724
</TABLE>
Form V-4820
8
<PAGE> 13
VAB EQUITY
<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>
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
1995 30.616106 38.520577 622,321
1996 38.520577 45.092323 680,118
1997 45.092323 52.704246 695,574
1998 52.704246 55.144099 670,584
1999 55.144099 65.344855 566,619
</TABLE>
VAA MONEY MARKET
<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>
1990 $ 13.616583 $ 14.530988 92,671
1991 14.530988 15.168901 58,620
1992 15.168901 15.479601 42,940
1993 15.479601 15.731262 50,340
1994 15.731262 16.181828 69,638
1995 16.181828 16.904534 130,218
1996 16.904534 17.584720 175,232
1997 17.584720 18.327573 122,725
1998 18.327573 19.104543 133,824
1999 19.104543 19.846031 241,774
</TABLE>
VAB MONEY MARKET
<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>
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
1995 16.319825 17.048698 43,415
1996 17.048698 17.734674 83,494
1997 17.734674 18.483863 80,528
1998 18.483863 19.267463 54,060
1999 19.267463 20.015273 129,935
</TABLE>
VAA BOND
<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>
1990 $15.771471 $16.819063 34,836
1991 16.819063 18.791755 53,151
1992 18.791755 19.989232 83,991
1993 19.989232 21.885503 118,872
1994 21.885503 20.817057 118,724
1995 20.817057 24.481177 130,720
1996 24.481177 25.112262 139,016
1997 25.112262 27.144385 128,523
1998 27.144385 28.249407 136,752
1999 28.249407 28.103600 115,712
</TABLE>
Form V-4820
9
<PAGE> 14
VAB BOND
<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>
1990 $14.594592 $15.564009 20,973
1991 15.564009 17.389500 27,244
1992 17.389500 18.497622 39,037
1993 18.497622 20.252393 79,658
1994 20.252393 19.263675 84,726
1995 19.263675 22.654830 94,683
1996 22.654830 23.238374 100,642
1997 23.238374 25.118862 103,698
1998 25.118862 26.141439 122,870
1999 26.141439 26.006519 96,317
</TABLE>
VAA OMNI
<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>
1990 $17.385702 $17.525899 690,864
1991 17.524899 20.479652 689,306
1992 20.479652 21.999497 853,840
1993 21.999497 24.557054 1,156,731
1994 24.557054 24.162172 1,248,250
1995 24.162172 29.337035 1,272,672
1996 29.337035 33.527373 1,384,658
1997 33.527373 39.180721 1,431,184
1998 39.180721 40.510184 1,380,277
1999 40.510184 44.619627 1,081,115
</TABLE>
VAB OMNI
<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>
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
1995 24.030898 29.177631 646,847
1996 29.177631 33.345205 703,470
1997 33.345205 38.967842 744,774
1998 38.967842 40.290085 724,292
1999 40.290085 44.377211 576,927
</TABLE>
S&P 500 INDEX
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1997 $10.000000 $13.031676 152,864 103,761
1998 13.031676 16.757375 684,474 342,016
1999 16.757375 20.822980 1,516,466 626,757
</TABLE>
Form V-4820
10
<PAGE> 15
INTERNATIONAL
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1993 $10.000000 $12.404596 387,372 269,335
1994 12.404596 13.259582 1,626,139 909,768
1995 13.259582 14.702847 1,803,630 909,290
1996 14.702847 16.648702 2,157,623 1,186,643
1997 16.648702 16.815722 2,305,256 1,230,232
1998 16.815722 17.278635 1,878,181 1,021,072
1999 17.278635 28.609795 1,299,713 755,373
</TABLE>
INTERNATIONAL SMALL COMPANY
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1995 $10.000000 $10.125502 3,870 10,852
1996 10.125502 11.226306 68,964 60,596
1997 11.226306 12.399654 115,590 106,262
1998 12.399654 12.697451 113,662 111,352
1999 12.697451 26.188124 157,347 119,756
</TABLE>
CAPITAL APPRECIATION
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1995 $10.000000 $11.370573 126,633 130,970
1996 11.370573 13.018249 379,717 312,799
1997 13.018249 14.832378 550,059 372,993
1998 14.832378 15.538473 606,078 366,130
1999 15.538473 16.361968 536,419 332,204
</TABLE>
SMALL CAP
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1995... $10.000000 $12.201273 154,063 15,532
1996... 12.201273 14.205207 454,045 147,557
1997... 14.205207 15.240569 649,957 212,467
1998... 15.240569 16.668731 665,332 236,231
1999... 16.668731 34.040041 776,055 286,164
</TABLE>
AGGRESSIVE GROWTH
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1995... $10.000000 $10.499375 9,491 9,448
1996... 10.499375 10.463801 107,442 68,715
1997... 10.463801 11.646359 178,651 109,334
1998... 11.646359 12.422862 200,721 104,679
1999... 12.422862 12.995269 191,692 87,207
</TABLE>
CORE GROWTH
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1997... $10.000000 $ 9.586403 146,611 89,830
1998... 9.586403 10.318290 138,652 97,692
1999... 10.318290 20.917283 202,849 139,073
</TABLE>
Form V-4820
11
<PAGE> 16
GROWTH & INCOME
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1997... $10.000000 $13.509406 146,772 144,903
1998... 13.509406 14.309421 467,063 270,510
1999... 14.309421 22.964177 756,197 376,028
</TABLE>
SOCIAL AWARENESS
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1997... $10.000000 $12.426744 22,600 25,632
1998... 12.426744 9.537309 49,169 35,228
1999... 9.537309 11.102565 25,584 15,892
</TABLE>
CAPITAL GROWTH
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999... $10.000000 $14.195676 14,665 10,147
</TABLE>
HIGH INCOME BOND
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999... $10.000000 $10.285653 1,173 1,233
</TABLE>
EQUITY INCOME
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $10.913281 1,550 287
</TABLE>
DOW TARGET 10, NOVEMBER
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $10.093952 2,102 1
</TABLE>
DOW TARGET 10, DECEMBER
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $10.007412 7 0
</TABLE>
DOW TARGET 5, NOVEMBER
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $9.960325 60 70
</TABLE>
DOW TARGET 5, DECEMBER
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $10.006724 532 0
</TABLE>
GOLDMAN SACHS GROWTH AND INCOME
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $10.502077 2,420 1,685
</TABLE>
Form V-4820
12
<PAGE> 17
GOLDMAN SACHS CORE U.S. EQUITY
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $10.924941 6,751 6,222
</TABLE>
GOLDMAN SACHS CAPITAL GROWTH
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $11.178377 7,407 0
</TABLE>
JANUS GROWTH (INSTITUTIONAL SHARES)
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $11.657335 140,899 70,201
</TABLE>
JANUS WORLDWIDE GROWTH (INSTITUTIONAL SHARES)
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $13.225533 84,104 30,873
</TABLE>
JANUS BALANCED (INSTITUTIONAL SHARES)
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $11.025619 60,253 47,022
</TABLE>
LAZARD SMALL CAP
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $10.538021 875 698
</TABLE>
LAZARD EMERGING MARKETS
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $12.512192 7,037 186
</TABLE>
STRONG MID CAP GROWTH II
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $12.916791 15,604 6,551
</TABLE>
STRONG OPPORTUNITY II
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $11.158443 1,268 493
</TABLE>
STRONG SCHAFER VALUE II
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $10.000000 $10.284400 372 559
</TABLE>
FINANCIAL STATEMENTS
The complete financial statements of VAA or VAB, and of Ohio National Life,
including the Independent Auditors' Reports for them, are included in the
Statements of Additional Information for VAA and VAB.
Form V-4820
13
<PAGE> 18
OHIO NATIONAL
OHIO NATIONAL LIFE
Ohio National Life was organized under the laws of Ohio on September 9, 1909 as
a stock life insurance company. We are now ultimately owned by a mutual holding
company (Ohio National Mutual Holdings, Inc.) with the majority ownership being
by our policyholders. We write life, accident and health insurance and annuities
in 47 states, the District of Columbia and Puerto Rico. Currently we have assets
in excess of $7.6 billion and equity in excess of $725 million. Our home office
is located at One Financial Way, Montgomery, Ohio 45242.
OHIO NATIONAL VARIABLE ACCOUNTS A AND B
We established VAA and VAB on August 1, 1969 as separate accounts 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 VAA or
VAB. However, contract values may not be allocated to more than 10 variable
subaccounts at any one time. Income, gains and losses, whether or not realized,
from assets allocated to VAA and VAB are credited to or charged against VAA or
VAB without regard to our other income, gains or losses. The assets maintained
in VAA and VAB will not be charged with any liabilities arising out of our other
business. Nevertheless, all obligations arising under the contracts, including
the commitment to make annuity payments, are our general corporate obligations.
Accordingly, all of our assets are available to meet our obligations under the
contracts. VAA and VAB are registered as unit investment trusts under the
Investment Company Act of 1940.
The assets of each subaccount of VAA and VAB are invested at net asset value in
Fund shares.
THE FUNDS
The Funds are mutual funds registered under the Investment Company Act of 1940.
Fund shares are sold only to insurance company separate accounts to fund
variable annuity contracts and variable life insurance policies and, in some
cases, to qualified plans. The value of each Fund's investments fluctuates daily
and is subject to the risk that Fund management may not anticipate or make
changes necessary in the investments to meet changes in economic conditions.
The Funds receive investment advice from their investment advisers. The Funds
pay each of the investment advisers a fee as shown in the fee table beginning on
page 4. In some cases, the investment adviser pays part of its fee to a
subadviser.
Affiliates of certain Funds may compensate us based upon a percentage of the
Fund's average daily net assets that are allocated to VAA or VAB. These
percentages vary by Fund. This is intended to compensate us for administrative
and other services we provide to the Funds and their affiliates.
For additional information concerning the Funds, including their investment
objectives, see the Fund prospectuses. Read them carefully before investing.
They may contain information about other funds that are not available as
investment options for these contracts. You cannot be sure that any Fund will
achieve its stated objectives and policies.
The investment policies, objectives and/or names of some of the Funds may be
similar to those of other investment companies managed by the same investment
adviser or subadviser. However, similar funds often do not have comparable
investment performance. The investment results of the Funds may be higher or
lower than those of the other funds.
MIXED AND SHARED FUNDING
In addition to being offered to VAA and VAB, certain Fund shares are offered to
our other separate accounts for variable annuity contracts and a separate
account of Ohio National Life Assurance Corporation for variable life insurance
contracts. Fund shares may also be offered to other insurance company separate
accounts and qualified
Form V-4820
14
<PAGE> 19
plans. It is conceivable that in the future it may become disadvantageous for
one or more of variable life and variable annuity separate accounts, or separate
accounts of other life insurance companies, and qualified plans, to invest in
Fund shares. Although neither we nor any of the Funds currently foresee any such
disadvantage, the Board of Directors or Trustees of each Fund will monitor
events to identify any material conflict among different types of owners and to
determine if any action should be taken. That could possibly include the
withdrawal of VAA's and/or VAB's participation in a Fund. Material conflicts
could result from such things as:
- - changes in state insurance law;
- - changes in federal income tax law;
- - changes in the investment management of any Fund; or
- - differences in voting instructions given by different types of owners.
VOTING RIGHTS
We will vote Fund shares held in VAA and VAB at Fund shareholders meetings in
accordance with voting instructions received from contract owners. We will
determine the number of Fund shares for which you are entitled to give
instructions as described below. This determination will be within 90 days
before the shareholders meeting. Fund proxy material and forms for giving voting
instructions will be distributed to each owner. We will vote Fund shares held in
VAA and VAB, for which no timely instructions are received, in proportion to the
instructions that we do receive for each of VAA and VAB.
Until annuity payments begin, the number of Fund shares for which you may
instruct us is determined by dividing your contract value in each Fund by the
net asset value of a share of that Fund as of the same date. After annuity
payments begin, the number of Fund shares for which you may instruct us is
determined by dividing the actuarial liability for your variable annuity by the
net asset value of a Fund 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 are sold by our insurance agents who are also
registered representatives (a) of The O.N. Equity Sales Company ("ONESCO"), a
wholly-owned subsidiary of ours, or (b) of other broker-dealers that have
entered into distribution agreements with Ohio National Equities, Inc. ("ONEQ"),
another wholly-owned subsidiary of ours. ONEQ is the principal underwriter of
the contracts. ONESCO, ONEQ and the other broker dealers are registered under
the Securities Exchange Act of 1934, and are members of the National Association
of Securities Dealers, Inc. We pay ONEQ 6.75% of purchase payments during the
first contract year and 5.5% of purchase payments made after the contract has
been in effect for more than a year. ONEQ then pays part of that amount to
ONESCO and the other broker dealers. ONESCO and the other broker-dealers pay
their registered representatives from their own funds. Purchase payments on
which nothing is paid to registered representatives may not be included in
amounts on which we pay sales compensation to ONEQ. If our surrender charge is
not sufficient to recover the fee paid to ONEQ, any deficiency will be made up
from our general assets. These include, among other things, any profit from the
mortality and expense risk charges. The address of ONESCO and ONEQ is One
Financial Way, Montgomery, Ohio 45242.
DEDUCTIONS AND EXPENSES
SURRENDER CHARGE
There is no deduction from purchase payments to pay sales expense. We may assess
a surrender charge if you surrender the contract or withdraw part of its value.
The purpose of this charge is to defray expenses relating to
Form V-4820
15
<PAGE> 20
the sale of the contract, including compensation to sales personnel, cost of
sales literature and prospectuses, and other expenses related to sales activity.
This surrender charge equals the lesser of:
- - 7 3/4% of the total purchase payments made during the 96 months immediately
preceding the surrender or partial withdrawal, or
- - 7 3/4% of the amount being surrendered or withdrawn.
On or after the first contract anniversary, you may make a partial withdrawal of
not more than 10% of the contract value (as of the date the partial withdrawal
is requested) once each contract year without the surrender charge. You may take
this 10% annual free withdrawal in up to 12 installments. The surrender charge
does not apply to surrenders or withdrawals from contracts issued in connection
with our executive officers' and directors' voluntary deferred compensation
plan. The surrender charge will not be imposed when the values of one or more
contracts owned by the trustee of a retirement plan qualifying under Section
401, 403(b) or 457 of the Code are transferred to one of our group annuity
contracts. If you use values of at least $250,000 from an Ohio National Life
fixed annuity to provide the initial purchase payment for a contract offered by
this prospectus, this contract will be treated (for purposes of determining the
surrender charge) as if it were issued at the same time as the fixed annuity and
as if the purchase payments made for the fixed annuity had been made for this
contract.
CONTRACT ADMINISTRATION CHARGE
Each year on the contract anniversary (or when you surrender the contract), we
will deduct a contract administration charge of $30 from the contract value.
This helps to repay us for maintaining the contract. We guarantee not to
increase the contract administration charge. The charge is not made after
annuity payments begin.
DEDUCTION FOR ADMINISTRATIVE EXPENSES
At the end of each valuation period we deduct an amount equal to 0.25% on an
annual basis of the contract value. This deduction reimburses us for expenses
not covered by the contract administration charge. Examples of these expenses
are accounting, auditing, legal, contract owner services, reports to regulatory
authorities and contract owners, contract issue, etc.
DEDUCTION FOR RISK UNDERTAKINGS
We guarantee that until annuity payments begin, the contract's value will not be
affected by any excess of sales and administrative expenses over the deductions
for them. We also guarantee to pay a death benefit in the event of the
annuitant's death before annuity payments begin. After annuity payments begin,
we guarantee that variable annuity payments will not be affected by adverse
mortality experience or expenses.
For assuming these risks, when we determine the accumulation unit values and the
annuity unit values for each subaccount, we make a deduction from the applicable
investment results equal to 0.85% of the contract value on an annual basis. We
may decrease that deduction at any time and we may increase it not more often
than annually to not more than 1.55% on an annual basis. However, we agree that
the deduction for these risk undertakings for contracts purchased on and after
November 1, 1997 shall not be increased to more than the rate in effect at the
time the contract is issued. We may discontinue this limitation on our right to
increase the deduction, but only as to any contracts purchased after notice of
the discontinuance. The risk charge is an indivisible whole of the amount
currently being deducted. However, we believe that a reasonable allocation would
be 0.35% for mortality risk, and 0.50% for expense risk. We hope to realize a
profit from this charge. However, there will be a loss if the deduction fails to
cover the actual risks involved.
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TRANSFER FEE
We may charge a transfer fee of $3 (which may be increased to $15) for each
transfer from one subaccount to another. The fee is charged against the
subaccount from which the transfer is made. Currently, we do not charge for your
first four transfers each year.
DEDUCTION FOR STATE PREMIUM TAX
Most states do not presently charge a premium tax for these contracts. Where a
tax applies, the rates for tax-qualified contracts are presently 0.5% in
California, 1.0% in Puerto Rico and West Virginia, 2.0% in Kentucky and 2.25% in
the District of Columbia. For non-tax-qualified contracts, the rates are 1.0% in
Puerto Rico, West Virginia and Wyoming, 1.25% in South Dakota, 2.0% in Kansas,
Kentucky and Maine, 2.25% the District of Columbia, 2.35% in California and 3.0%
in Nevada. The deduction for premium taxes will be made when incurred. Normally,
that is not until annuity payments begin. However, in Kansas, South Dakota and
Wyoming, they are presently being deducted from purchase payments.
FUND EXPENSES
There are deductions from, and expenses paid out of, the assets of the Funds.
These are described in the Fund prospectus.
DESCRIPTION OF VARIABLE ANNUITY CONTRACTS
FREE LOOK
You may revoke the contract at any time until the end of 20 days after you
receive the contract (or such longer period as may be required by your state
law) and get a refund of the entire purchase price. To revoke you must return
the contract to us within the free look period. In those states where required
by state 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
free look period.
ACCUMULATION PERIOD
PURCHASE PAYMENTS
Your purchase payments must be at least $25. You may make payments at any time.
We may limit your total purchase payments to $1,500,000.
WHEN WE MAY TERMINATE YOUR CONTRACT
We may terminate a contract on any anniversary when its value is less than the
lesser of (a) $1,000 or (b) $250 times the number of years the contract has been
in force. This could have adverse tax consequences to you. (See Federal Tax
Status.) We will not terminate an individual retirement annuity (IRA) if you
made a purchase payment during the preceding two years. We will not terminate an
annuity funding a Section 403(b) salary reduction agreement.
ACCUMULATION UNITS
Until the annuity payout date, the contract value is measured by accumulation
units. These units are credited to your contract when you make each purchase
payment. (See Crediting Accumulation Units, below). The number of units remains
constant between purchase payments, but their dollar value varies depending upon
the investment results of each Fund to which payments are allocated.
CREDITING ACCUMULATION UNITS
Your representative will send application forms or orders, together with the
first purchase payment, to our home office for acceptance. Upon acceptance, we
issue a contract and we credit the first purchase payment to the
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contract in the form of accumulation units. If all information necessary for
issuing a contract and processing the purchase payment is complete, your first
purchase payment will be credited within two business days after receipt. If we
do not receive everything within five business days, we will return the purchase
payment to you immediately unless you specifically consent to having us retain
the purchase payment until the necessary information is completed. After that,
we will credit the purchase payment within two business days.
You must send any additional purchase payments directly to our home office. They
will then be applied to provide that number of accumulation units (for each
subaccount) determined by dividing the amount of the purchase payment by the
unit value next computed after we receive the payment at our home office.
ALLOCATION OF PURCHASE PAYMENTS
You may allocate your purchase payments among up to 10 variable subaccounts of
VAA or VAB and the Guaranteed Account. The amount allocated to any Fund or the
Guaranteed Account must equal a whole percent. You may change your allocation of
future purchase payments at any time by sending written notice to our home
office.
ACCUMULATION UNIT VALUE AND CONTRACT VALUE
We set the accumulation unit value of each subaccount of VAA and VAB at $10 when
we allocated the first payments for these contracts. We determine the unit value
for any later valuation period by multiplying the unit value for the immediately
preceding valuation period by the net investment factor (described below) for
such later valuation period. We determine a contract's value by multiplying the
total number of units (for each subaccount) credited to the contract by the unit
value (for such subaccount) for the current valuation period.
NET INVESTMENT FACTOR
The net investment factor measures the investment results of each subaccount.
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 the corresponding Fund share at the end of a
valuation period, plus
(2) the per share amount of any dividends or other distributions declared
for that 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 the
maintenance or operation of that subaccount, (no federal income taxes
apply under present law.)
(b) is the net asset value of the corresponding Fund share at the end of the
preceding valuation period; and
(c) is the deduction for administrative and sales expenses and risk
undertakings.
SURRENDER AND PARTIAL WITHDRAWAL
Before annuity payments begin (and also after that in the case of annuity Option
1(e) described below), you may surrender (totally withdraw the value of) your
contract or you may elect a partial (at least $100) withdrawal. The surrender
charge may apply to these transactions. That charge is a percent of the total
amount withdrawn. For example, if a partial withdrawal of $1,000 is requested,
we would pay you $1,000, but the total amount deducted from the accumulation
value would be $1,084 (i.e., $1,084 x 7 3/4% = $84). Unless, you specify
otherwise, the withdrawal will be made pro-rata from your values in each Fund.
The amount you may withdraw is the contract value less any charge. In the case
of a complete surrender, we subtract the contract administration charge. We will
pay you within seven days after we receive your request. However, we may defer
payment as described below. Surrenders and partial withdrawals are limited or
not permitted in connection with certain tax-qualified retirement plans. For tax
consequences of a surrender or withdrawal, see Federal Tax Status.
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If you request a surrender or partial withdrawal which includes contract values
derived from purchase payments that have not yet cleared the banking system, we
may delay mailing that portion which relates to such payments until the check
for the purchase payment has cleared. We require 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:
- - for any period during which the New York Stock Exchange is closed (other than
customary weekend and holiday closings) or during which the Securities and
Exchange Commission has restricted trading on the Exchange;
- - for any period during which an emergency, as determined by the Commission,
exists as a result of which disposal of securities held in a Fund is not
reasonably practical, or it is not reasonably practical to determine the value
of a Fund's net assets; or
- - such other periods as the Commission may order to protect security holders.
TRANSFERS AMONG SUBACCOUNTS
You may transfer contract values from one Fund to another. You may make
transfers at any time before annuity payments begin. The amount of any transfer
must be at least $300 (or the entire contract value in a Fund, if less).
We may limit the number, frequency, method or amount of transfers. We may limit
transfers from any Fund on any one day to 1% of the previous day's total net
assets of that Fund if we or the Fund, in our discretion, believe that the Fund
might otherwise be damaged. In this case, some requested transfers will not
occur. In determining which requests to honor, scheduled transfers (under a DCA
program) will be made first, followed by mailed written requests in the order
postmarked and, lastly, telephone and facsimile requests in the order received.
We will notify you if your requested transfer is not made. Current SEC rules
preclude us from processing at a later date those requests that were not made.
Accordingly, you would need to submit a new transfer request in order to make a
transfer that was not made because of these limitations.
Certain third parties may offer you asset allocation or timing services for your
contract. We may choose to honor transfer requests from these third parties if
you give us a written power of attorney to do so. Fees you pay for such asset
allocation or timing services are in addition to any contract charges. WE DO NOT
ENDORSE, APPROVE OR RECOMMEND THESE SERVICES.
After annuity payments begin, you may make transfers among Funds only once each
calendar quarter. The transfer fee no longer applies then. Not more than 20% of
a contract's Guaranteed Account value (or $1,000, if greater) as of the
beginning of a contract year may be transferred to variable Funds during that
contract year.
SCHEDULED TRANSFERS (DOLLAR COST AVERAGING)
We administer a scheduled transfer ("DCA") program enabling you to preauthorize
automatic monthly or quarterly transfers of a specified dollar amount of at
least $300 each time. At least 12 DCA transfers must be scheduled. The transfers
may be from any variable Funds to any other Funds or to the Guaranteed Account.
Transfers may be made from the Guaranteed Account to any other Funds if the DCA
program is established at the time the contract is issued, the DCA program is
scheduled to begin within 6 months of contract issue and the term of the DCA
program does not exceed 2 years. For transfers from variable Funds, the DCA
program may not exceed 5 years. There is no transfer fee for DCA transfers. DCA
transfers do not count against your four free transfers per year. We may
discontinue the DCA program at any time. You may also discontinue further DCA
transfers by giving us 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 the Guaranteed
Account or from a Fund with a stabilized net asset value, such as the Money
Market Fund, will generally reduce the average total cost of indirectly
purchasing Fund shares because
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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
variable Fund, DCA has the effect of reducing the average price of the shares
being redeemed. DCA might also be used to systematically transfer contract
values from variable Funds to the Guaranteed Account in anticipation of
retirement, reducing the risk of making a single transfer during a low market.
TELEACCESS
If you give us a pre-authorization form, your contract and unit values and
interest rates can be checked and transfers may be made by telephoning us
between 7:00 a.m. and 7:00 p.m. (Eastern time) on days we are open for business,
at 1-800-366-6654, #8. You may only make one telephone transfer per day. We will
honor pre-authorized telephone transfer instructions from anyone who provides
the personal identifying information requested via TeleAccess. We will not honor
telephone transfer requests after we receive notice of your death. For added
security, we send the contract owner a written confirmation of all telephone
transfers on the next business day. However, if we cannot complete a transfer as
requested, our customer service representative will contact the contract owner
in writing sent within 48 hours of the TeleAccess request. YOU MAY THINK THAT
YOU HAVE LIMITED THIS ACCESS TO YOURSELF, OR TO YOURSELF AND YOUR
REPRESENTATIVE. HOWEVER, ANYONE GIVING US THE NECESSARY IDENTIFYING INFORMATION
CAN USE TELEACCESS ONCE YOU AUTHORIZE ITS USE.
DEATH BENEFIT
If the annuitant (and any contingent annuitant) dies before annuity payments
begin, the contract pays a death benefit to a designated beneficiary. (This
death benefit is not available on any contract purchased through a bank in
Puerto Rico.) The amount of the death benefit will be determined as of the end
of the valuation period in which we receive written notice of death. The amount
of death benefit is the contract value or, if greater, the total purchase
payments made less any partial withdrawals.
GUARANTEED ACCOUNT
The Guaranteed Account guarantees a fixed return for a specified period of time
and guarantees the principal against loss. The Guaranteed Account is not
registered as an investment company. Interests in it are not subject to the
provisions or restrictions of federal securities laws. The staff of the
Securities and Exchange Commission has not reviewed disclosures regarding it.
The Guaranteed Account consists of all of our general assets other than those
allocated to a separate account. You may allocate purchase payments and contract
values between the Guaranteed Account and the Funds.
We will invest our general assets in our discretion as allowed by Ohio law. We
allocate the investment income from our general assets to those contracts having
guaranteed values.
The amount of investment income allocated to the contracts varies from year to
year in our sole discretion. However, we guarantee that we will credit interest
at a rate of not less than 3.25% per year, compounded annually, to contract
values allocated to the Guaranteed Account. We may credit interest at a rate in
excess of 3.25%, but any such excess interest credit will be in our sole
discretion.
We guarantee that, before annuity payments begin, the guaranteed value of a
contract will never be less than:
- - the amount of purchase payments allocated to, and transfers into, the
Guaranteed Account, plus
- - interest credited at the rate of 3% per year compounded annually, plus
- - any additional excess interest we may credit to guaranteed values, minus
- - any partial withdrawals, loans and transfers from the guaranteed values, minus
- - any surrender charge on partial withdrawals, loan interest, state premium
taxes, transfer fees, and the portion of the $30 annual contract
administration charge allocable to the Guaranteed Account.
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No deductions are made from the Guaranteed Account for administrative expenses
or risk undertakings.
Other than pursuant to a DCA (scheduled transfer) program, we may restrict
transfers of your Guaranteed Account value during a contract year to not more
than 20% of that value as of the beginning of a contract year (or $1,000, if
greater). As provided by state law, we may defer the payment of amounts to be
withdrawn from the Guaranteed Account for up to six months from the date we
receive written request for withdrawal.
OHIO NATIONAL LIFE EMPLOYEE DISCOUNT
We and our affiliated companies offer a credit on the purchase of contracts by
any of our employees, directors or retirees, or their spouse or the surviving
spouse of a deceased retiree, 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 counts 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. We credit the
Guaranteed Account in these amounts at the time the eligible person makes each
payment.
TEXAS STATE OPTIONAL RETIREMENT PROGRAM
Under the Texas State Optional Retirement Program (the "Program"), purchase
payments may be excluded from the gross income of state employees for federal
tax purposes to the extent that such purchase payments do not exceed the
exclusion allowance provided by the Code. The Attorney General of Texas has
interpreted the Program as prohibiting any participating state employee from
receiving the surrender value of a contract funding benefits under the Program
prior to termination of employment or the state employee's retirement, death or
total disability. Therefore, a participant in the Program may not make a
surrender or partial withdrawal until the first of these events occurs.
ANNUITY PERIOD
ANNUITY PAYOUT DATE
Annuity payments begin on the annuity payout date. You may select this date when
the contract is issued. It must be at least 30 days after the contract date. You
may change it from time to time so long as it 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
90th birthday. This restriction may be modified by applicable state law or we
may agree to waive it.
The contracts include our guarantee that (except for option 1(e), below) we will
pay annuity payments for the lifetime of the annuitant (and any joint annuitant)
in accordance with the contract annuity rates, no matter how long you live.
Other than in connection with annuity Option 1(e) described below, once annuity
payments begin, you may not surrender the contract for cash except that, upon
the death of the annuitant, the beneficiary may surrender the contract for the
commuted value of any remaining period-certain payments. You may make surrenders
and partial withdrawals from Option 1(e) at any time.
ANNUITY OPTIONS
You may elect one or more of the following annuity options. You may change the
election anytime before the annuity payout date.
Option 1(a): Life Annuity with installment payments for the lifetime of the
annuitant (the contract has no more value after annuitant's
death).
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Option 1(b): Life Annuity with installment payments guaranteed for five years
and then continuing during the remaining lifetime of the
annuitant.
Option 1(c): Life Annuity with installment payments guaranteed for ten years
and then continuing during the remaining lifetime of the
annuitant.
Option 1(d): Installment Refund Life Annuity with payments guaranteed for a
period certain and then continuing 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 1(e): Installment Refund Annuity with payments guaranteed for a fixed
number (up to thirty) of years. This option is available for
variable annuity payments only. (Although the deduction for risk
undertakings is taken from annuity unit values, we have no
mortality risk during the annuity payout period under this
option.)
Option 2(a): Joint & Survivor Life Annuity with installment payments during
the lifetime of the annuitant and then continuing during the
lifetime of a contingent annuitant (the contract has no more
value after the second annuitant's death).
Option 2(b): Joint & Survivor Life Annuity with installment payments guaranteed
for ten years and then continuing during the remaining lifetime of
the annuitant or a contingent annuitant.
We may agree to other settlement options.
Unless you direct otherwise, we will apply the contract value as of the annuity
payout date to provide annuity payments pro-rata from each Fund in the same
proportion as the contract values immediately before the annuity payout date.
If no election is in effect on the annuity payout date, we will apply the
contract value under Option 1(c) with the beneficiary as payee for any remaining
period-certain installments payable after the death of the annuitant. The
Pension Reform Act of 1974 might require certain contracts to provide a Joint
and Survivor Annuity. If the contingent annuitant is not related to the
annuitant, Options 2(a) and 2(b) are available only if we agree.
The Internal Revenue Service has not ruled on the tax treatment of a commutable
variable annuity. If you select Option 1(e), it is possible that the IRS could
determine that the entire value of the annuity is fully taxable at the time you
elect Option 1(e) or that variable annuity payments under this option should not
be taxed under the annuity rules (see Federal Tax Status). This could result in
your payments being fully taxable to you. Should the IRS so rule, we may have to
tax report up to the full value of the annuity as your taxable income.
DETERMINATION OF AMOUNT OF THE FIRST VARIABLE ANNUITY PAYMENT
To determine the first variable annuity payment, we apply the contract value for
each Fund in accordance with the contract's settlement option tables. The rates
in those tables depend upon the annuitant's (and any contingent annuitant's) age
and sex and the option selected. The annuitant's sex is not a factor in
contracts issued to plans sponsored by employers subject to Title VII of the
Civil Rights Act of 1964 or similar state statutes. We determine the value to be
applied at the end of a valuation period (selected by us and uniformly applied)
not more than 10 valuation periods before the annuity payout date.
If the amount that would be applied under an option is less than $5,000, we will
pay the contract value to the annuitant in a single sum. If the first periodic
payment under any option would be less than $25, we may change the frequency of
payments so that the first payment is at least $25.
ANNUITY UNITS AND VARIABLE PAYMENTS
After your first annuity payment, later variable annuity payments will vary to
reflect the investment performance of your Funds. The amount of each payment
depends on the number your annuity units. To determine the
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number of annuity units for each Fund, divide the dollar amount of the first
annuity payment from each Fund by the value of that Fund's annuity unit. This
number of annuity units remains constant during the annuity payment period
unless you transfer among Funds.
The annuity unit value for each Fund was set at $10 for the valuation period
when the first variable annuity was calculated for these contracts. The annuity
unit value for each later valuation period equals the annuity unit value for the
immediately preceding valuation period multiplied by the net investment factor
(described on page 14) for such later valuation period and by a factor
(0.9998925 for a one-day valuation period) to neutralize the 4% assumed interest
rate discussed below.
The dollar amount of each later variable annuity payment equals your constant
number of annuity units for each Fund 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 stay level.
TRANSFERS DURING ANNUITY PAYOUT
After annuity payments have been made for at least 12 months, the annuitant can,
once each calendar quarter, change the Funds on which variable annuity payments
are based. On at least 30 days written notice to our home office, we will change
that portion of the periodic variable annuity payment as you direct to reflect
the investment results of different Funds. The annuity payment immediately after
a change will be the amount that would have been paid without the change. Later
payments will reflect the new mix of Funds.
OTHER CONTRACT PROVISIONS
ASSIGNMENT
Amounts payable in settlement of a contract may not be commuted, anticipated,
assigned or otherwise encumbered, or pledged as loan collateral to anyone other
than us. To the extent permitted by law, such amounts are not subject to any
legal process to pay any claims against an annuitant before annuity payments
begin. The owner of a tax-qualified contract may not, but the owner of a
non-tax-qualified contract may, collaterally assign the contract before the
annuity payout date. Ownership of a tax-qualified contract may not be
transferred
except to:
- - the annuitant,
- - a trustee or successor trustee of a pension or profit-sharing trust which is
qualified under Section 401 of the Code,
- - the employer of the annuitant provided that the contract after transfer is
maintained under the terms of a retirement plan qualified under Section 403(a)
of the Code for the benefit of the annuitant, or
- - as otherwise permitted by laws and regulations governing plans for which the
contract may be issued.
PERIODIC REPORTS
Before the annuity payout date, we will send you semi-annual statements showing
(a) the number of units credited to the contract by Fund and (b) the value of
each unit as of the end of the last half year. In addition, as long as the
contract remains in effect, we will forward any periodic Fund reports.
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SUBSTITUTION FOR FUND SHARES
If investment in a Fund is no longer possible or we believe it is inappropriate
to the purposes of the contract, we may substitute one or more other funds.
Substitution may be made as to both existing investments and the investment of
future purchase payments. However, no substitution will be made until we receive
any necessary approval of the Securities and Exchange Commission. We may also
add other Funds as eligible investments of VAA or VAB.
CONTRACT OWNER INQUIRIES
Direct any questions to Ohio National Life, Variable Annuity Administration,
P.O. Box 2669, Cincinnati, Ohio 45201; telephone 1-800-366-6654 (8:30 a.m. to
4:30 p.m., Eastern time).
PERFORMANCE DATA
We may advertise performance data for the various Funds showing the percentage
change in unit values based on the performance of the applicable Fund over a
period of time (usually a calendar year). We determine the percentage change by
dividing the increase (or decrease) in value for the unit by the unit value at
the beginning of the period. This percent reflects the deduction of any
asset-based contract charges but does not reflect the deduction of any
applicable contract administration charge or surrender charge. The deduction a
contract administration charge or surrender charge would reduce any percentage
increase or make greater any percentage decrease.
Advertising may also include average annual total return figures calculated as
shown in the Statement of Additional Information. The average annual total
return figures reflect the deduction of applicable contract administration
charges and surrender charges as well as applicable asset-based charges.
We 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, IBC's Money
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 or mutual funds with investment objectives
similar to those of the Funds.
FEDERAL TAX STATUS
The following discussion of federal income tax treatment of amounts received
under a variable annuity contract does not cover all situations or issues. It is
not intended as tax advice. Consult a qualified tax adviser to apply the law to
your circumstances. Tax laws can change, even for contracts that have already
been issued. Tax law revisions, with unfavorable consequences, could have
retroactive effect on previously issued contracts or on later voluntary
transactions in previously issued contracts.
We are taxed as a life insurance company under Subchapter L of the Internal
Revenue Code (the "Code"). Since the operations of VAA and VAB are a part of,
and are taxed with, our operations, VAA and VAB are not separately taxed as
"regulated investment companies" under Subchapter M of the Code.
As to tax-qualified contracts, the law does not now provide for payment of
federal income tax on dividend income or capital gains distributions from Fund
shares held in VAA or upon capital gains realized by VAA on redemption of Fund
shares. When a non-tax-qualified 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, in
that case, 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 years you receive the
payments.
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The income and gains within an annuity contract are generally tax deferred.
Within a tax-qualified plan, the plan itself provides tax deferral. Therefore,
the tax-deferred treatment otherwise available to an annuity contract is not a
factor to consider when purchasing an annuity within a tax-qualified plan or
arrangement.
The contracts are considered annuity contracts under Section 72 of the Code,
which generally provides for taxation of annuities. Under existing provisions of
the Code, any increase in the contract value 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. The owner
of a non-tax qualified contract must be a natural person for this purpose. With
certain exceptions, where the owner of a non-tax qualified 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
contract owner during the current tax year.
When annuity payments begin each payment is taxable under Section 72 of the Code
as ordinary income in the year of receipt if you have neither paid any portion
of the purchase payments nor 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 you recover your
"investment in the contract," all further annuity payments will be included in
your taxable income.
If you elect to receive the accumulated value in a single sum in lieu of annuity
payments, any amount you receive or withdraw in excess of the "investment in the
contract" will normally be taxed as ordinary income in the year received. 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." Any part of the value of the contract that you assign or pledge to
secure a loan will be taxed as if it had been a partial withdrawal and may be
subject to a 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:
- - received on or after the taxpayer reaches age 59 1/2;
- - made to a beneficiary on or after the death of the annuitant;
- - attributable to the taxpayer's becoming disabled;
- - made as a series of substantially equal periodic payments for the life of the
annuitant (or joint lives of the annuitant and beneficiary);
- - from a contract that is a qualified funding asset for purposes of a structured
settlement;
- - 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;
- - incident to divorce, or
- - taken from an IRA for a qualified first-time home purchase (up to $10,000) or
qualified education expenses.
If you elect not to have withholding apply to an early withdrawal or if an
insufficient amount is withheld, you 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. If you fail to
provide your taxpayer identification number, any payments under the contract
will automatically be subject to withholding.
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<PAGE> 30
TAX-DEFERRED ANNUITIES
Under the provisions of Section 403(b) of the Code, employees may exclude from
their gross income purchase payments made for annuity contracts purchased for
them by public educational institutions and certain tax-exempt organizations
which are described in Section 501(c)(3) of the Code. You may make this
exclusion to the extent that the aggregate purchase payments plus any other
amounts contributed to purchase the contract and toward benefits under qualified
retirement plans do not exceed your exclusion allowance as determined in
Sections 403(b) and 415 of the Code. Employee contributions are, however,
subject to social security (FICA) tax withholding. All amounts you receive under
a contract, either in the form of annuity payments or cash withdrawal, will be
taxed under Section 72 of the Code as ordinary income for the year received,
except for exclusion of any amounts representing "investment in the contract."
Under certain circumstances, amounts you receive may be used to make a "tax-free
rollover" into one of the types of individual retirement arrangements permitted
under the Code. Amounts you receive that are eligible for "tax-free rollover"
will be subject to an automatic 20% withholding unless you directly roll over
such amounts from the tax-deferred annuity to the individual retirement
arrangement.
With respect to earnings accrued and purchase payments made after December 31,
1988, for a salary reduction agreement under Section 403(b) of the Code,
distributions may be paid only when the employee:
- - attains age 59 1/2,
- - separates from the employer's service,
- - dies,
- - becomes disabled as defined in the Code, or
- - incurs a financial hardship as defined in the Code.
In the case of hardship, cash distributions may not exceed the amount of your
purchase payments. These restrictions do not affect your right to transfer
investments among the Funds and do not limit the availability of transfers
between tax-deferred annuities.
QUALIFIED PENSION OR PROFIT-SHARING PLANS
Under present law, purchase payments made by an employer or trustee, for a plan
or trust qualified under Section 401(a) or 403(a) of the Code, are generally
excludable from the employees gross income. Any purchase payments made by the
employee, or which are considered taxable income to the employee in the year
such payments are made, constitute an "investment in the contract" under Section
72 of the Code for the employee's annuity benefits. Salary reduction payments to
a profit sharing plan qualifying under Section 401(k) of the Code are generally
excludable from the employee's gross income.
The Code requires plans to prohibit any distribution to a plan participant prior
to age 59 1/2, except in the event of death, total disability or separation from
service (special rules apply for plan terminations). Distributions must begin no
later than April 1 of the calendar year following the year in which the
participant reaches age 70 1/2. Premature distribution of benefits or
contributions in excess of those permitted by the Code may result in certain
penalties under the Code.
If an employee, or one or more of the beneficiaries, receives the total amounts
payable with respect to an employee within one taxable year after age 59 1/2 on
account of the employee's death or separation from service of the employer, any
amount received in excess of the employee's "investment in the contract" may be
taxed under special 5-year forward averaging rules. Five-year averaging will no
longer be available after 1999 except for certain grandfathered individuals. You
can elect to have that portion of a lump-sum distribution attributable to years
of participation prior to January 1, 1974 given capital gains treatment. The
percentage of pre-74 distribution subject to capital gains treatment decreases
as follows: 100%, 1987; 95%, 1988; 75%, 1989; 50%, 1990; and 25%, 1991. For tax
years 1992 and later no capital gains treatment is available (except that
taxpayers who were age 50
Form V-4820
26
<PAGE> 31
before 1986 may still elect capital gains treatment). If you receive such a
distribution you may be able to make a "tax-free rollover" of the distribution
less your "investment in the contract" into another qualified plan in which you
are a participant or into one of the types of individual retirement arrangements
permitted under the Code. Your surviving spouse receiving such a distribution
may be able to make a tax-free rollover to one of the types of individual
retirement arrangements permitted under the Code. Amounts received that are
eligible for "tax-free rollover" will be subject to an automatic 20% withholding
unless such amounts are directly rolled over to another qualified plan or
individual retirement arrangement.
INDIVIDUAL RETIREMENT ANNUITIES (IRA)
Section 408(b) of the Code provides that you may invest an amount up to $2,000
per year of earned income in an IRA and claim it as a personal tax deduction if
you are not an "active participant" in an employer maintained qualified
retirement plan or you have adjusted gross income which does not exceed the
"applicable dollar limit." For a single taxpayer, the applicable dollar
limitation is $30,000, with the amount of IRA contribution which may be deducted
reduced proportionately for Adjusted Gross Income between $30,000-$40,000. For
married couples filing jointly, the applicable dollar limitation is $50,000,
with the amount of IRA contribution which may be deducted reduced
proportionately for Adjusted Gross Income between $50,000-$60,000. There is no
deduction allowed for IRA contributions when Adjusted Gross Income reaches
$40,000 for individuals and $60,000 for married couples filing jointly. In the
alternative, if you are otherwise qualified for an IRA you may elect to
contribute to an IRA for yourself and for your non-working spouse, with the
total deduction limited to $4,000.
You may make non-deductible IRA contributions to the extent you are ineligible
to make deductible IRA contributions. Any amount received from another qualified
plan (including another individual retirement arrangement) which is eligible as
a "tax-free rollover" may be invested in an IRA. This is not counted toward the
overall contribution limit. Earnings on nondeductible IRA contributions are not
subject to tax until they are withdrawn. The combined limit on designated
nondeductible and deductible contributions for a tax year is the lesser of 100%
of compensation or $2,000 ($4,000 in the case of an additional contribution to a
spousal IRA).
Generally, distributions (all or part) made prior to age 59 1/2 (except in the
case of death or disability) will result in a penalty tax of 10% plus ordinary
income tax treatment of the amount received. Additionally, there is an excise
tax of 6% of the amount you contributed in excess of either the deductible limit
or nondeductible limit, as indicated above, if you do not withdraw that amount
before filing your income tax return for the year of contribution or apply that
amount as an allowable contribution for a later year. The excise tax continues
to apply each year until the excess contribution is corrected. Distributions
after age 59 1/2 are treated as ordinary income at the time received.
Distributions must begin before April 1 following the year in which you reach
age 70 1/2. A 50% nondeductible excise tax is imposed on the excess in any tax
year of the amount that should have been distributed over the amount actually
distributed.
Section 408A of the Code provides for a special type of IRA called a Roth IRA.
No tax deduction is allowed for contributions to a Roth IRA, but assets grow on
a tax deferred basis. Under certain circumstances, withdrawals from a Roth IRA
can be excludable from income. Eligibility for a Roth IRA is based on adjusted
gross income and filing status. Special rules apply which allow traditional IRAs
to be rolled over or converted to a Roth IRA.
SIMPLIFIED EMPLOYEE PENSION PLANS (SEPPS)
Under Section 408 of the Code, employers may establish SEPPs for their
employees. Under these plans the employer may contribute on behalf of an
employee to an individual retirement account or annuity. The amount of the
contribution is excludable from the employee's income.
Certain employees who participate in a SEPP may elect to have the employer make
contributions to a SEPP on their behalf or to receive the contributions in cash.
If the employee elects to have contributions made on the employee's behalf to a
SEPP, it is not treated as current taxable income to the employee. Elective
deferrals under a SEPP are subject to an inflation-indexed limit which is
$10,000 for 1998. Salary-reduction SEPPs are available
Form V-4820
27
<PAGE> 32
only if at least 50% of the employees elect to have amounts contributed to the
SEPP and if the employer has 25 or fewer employees at all times during the
preceding year. New salary reduction SEPPs may not be established after 1996.
An employee may also take a deduction for individual contributions to the IRA,
subject to the limits applicable to IRAs in general. Withdrawals from the IRAs
to which the employer contributes must be permitted. These withdrawals, however,
are subject to the general rules with respect to withdrawals from IRAs.
WITHHOLDING ON DISTRIBUTION
Distributions from tax-deferred annuities or qualified pension or profit sharing
plans that are eligible for "tax-free rollover" will be subject to an automatic
20% withholding unless such amounts are directly rolled over to an individual
retirement arrangement or another qualified plan. Federal income tax withholding
is required on annuity payments. However, recipients of annuity payments may
elect not to have the tax withheld. This election may be revoked at any time and
withholding would begin after that. If you do not give us your taxpayer
identification number any payments under the contract will automatically be
subject to withholding.
PRIOR CONTRACTS
ANNUAL PAYMENT VARIABLE ANNUITY
Before December 15, 1981, we issued Annual Payment Variable Annuity contracts.
Some of these remain active and purchase payments may still be made until
annuity payments begin. These contracts called for deductions from purchase
payments in the following amounts:
<TABLE>
<CAPTION>
DEDUCTION FOR DEDUCTION FOR DEATH TOTAL*
PORTION OF TOTAL SALES ADMINISTRATIVE BENEFIT COMBINED
PURCHASE PAYMENTS 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%
</TABLE>
*Plus 50(cent) per payment
These deductions are in lieu of any surrender charge, contract administration
charge and deduction for administrative expense as provided for in the contracts
offered in this prospectus. The deduction for mortality and expense risk
undertakings is 1% of the contract value on an annual basis. We may reduce this
deduction at any time and we may increase it not more often than annually to not
more than 1.5%.
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 Fund of VAA and VAB and/or Guaranteed Account with
limited transfer privileges between the Guaranteed Account and the Equity Fund.
VARIABLE INTEREST ANNUITY
From July 15, 1981 to November 2, 1982, we issued Variable Interest Annuity
contracts. Purchase payments for these contracts can be continued until annuity
payments begin. These contracts are substantially the same as the contracts
offered in this prospectus except that all contract values are allocated to the
Money Market Fund. There is no right to transfer the contract values to any
other Funds. These contracts also included a guarantee of the investment
performance. Such investment guarantee is regarded as a separate security. The
deduction for mortality, expense and investment risk undertaking is 1.3% of the
contract value on an annual basis. We may reduce this deduction at any time and
we may increase it not more often than annually to not more than 2%.
Form V-4820
28
<PAGE> 33
These contracts do not provide for a deduction from contract value for
administrative expense. They do provide for a contract administration charge and
a surrender charge.
FLEXIBLE PAYMENT COMBINATION ANNUITY
From December 1, 1981 to November 2, 1982, we issued Flexible Payment
Combination Annuity contracts. Purchase payments for these contracts can be
continued until annuity payments begin. These contracts are substantially the
same as the contracts offered in this prospectus except that values can be
accumulated only in what now constitute the Equity Fund of VAA or VAB and/or the
Guaranteed Account. A deduction is made each valuation period for the
administrative expense and mortality and expense risk undertakings equal to 1.1%
on an annual basis. We may reduce this deduction at any time and we may increase
it not more frequently than annually to not more than 1.75%. Although these
contracts provide for limited transfer of values between the Equity Fund and the
Guaranteed Account, transfers are not allowed after annuity payments begin.
MULTIPLE FUNDED COMBINATION ANNUITY
From November 2, 1982 to September 10, 1984, we issued Multiple Funded
Combination Annuity contracts substantially the same as the contracts offered in
this prospectus. However, such prior contracts include a guarantee of the
investment performance of the Money Market Fund and a deduction therefor each
valuation period equal to 0.2% of Money Market assets on an annual basis. Such
investment guarantee is regarded as a separate security. In addition, the rate
for the surrender charge is 5% and the deduction for risk undertakings
is 1.3%.
INVESTAR VISION/TOP SPECTRUM FLEXIBLE PAYMENT VARIABLE ANNUITY
From January 3, 1997 to April 30, 1999 we issued Investar Vision and Top
Spectrum flexible payment variable annuities. These contracts were substantially
the same as the contracts offered in this prospectus. A deduction is made each
valuation period for mortality and expense risk undertakings and for
administrative expenses equal to 1.4% on an annual basis. The annual contract
administration charge is $35. The surrender charge is a percentage of the amount
withdrawn. The percentage varies with the number of years from the date of
purchase payments as follows:
<TABLE>
<CAPTION>
YEAR PERCENT
---- -------
<S> <C>
1st and 2nd 7%
3rd 6%
4th 5%
5th 4%
6th 2%
7th 1%
8th and later 0%
</TABLE>
Form V-4820
29
<PAGE> 34
ACCUMULATION UNIT VALUES FOR PRIOR CONTRACTS
ANNUAL PAYMENT VARIABLE ANNUITY
VAA EQUITY
<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>
1990 $ 56.953326 $ 54.213096 54,987
1991 54.213096 64.510143 51,310
1992 64.510143 68.689335 45,754
1993 68.689335 77.594885 43,892
1994 77.594885 77.016062 40,537
1995 77.016062 96.995665 36,620
1996 96.995665 113.656777 35,244
1997 113.656777 132.974317 29,341
1998 132.974317 139.192132 26,151
1999 139.192132 165.193487 22,199
</TABLE>
VAB EQUITY
<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>
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
1995 81.637986 102.816617 24,630
1996 102.816617 120.477605 22,849
1997 120.477605 140.954452 22,582
1998 140.954452 147.545413 17,171
1999 147.545413 175.107175 13,635
</TABLE>
VARIABLE INTEREST ANNUITY
VAA MONEY MARKET
<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>
1990 $ 20.571199 $ 21.909036 94,135
1991 21.909036 22.825685 76,406
1992 22.825685 23.247080 49,465
1993 23.247080 23.578345 36,485
1994 23.578345 24.205890 30,702
1995 24.205890 25.237165 23,519
1996 25.237165 26.200345 19,866
1997 26.200345 27.253241 17,074
1998 27.253241 28.352494 15,961
1999 28.352494 29.394756 13,701
</TABLE>
Form V-4820
30
<PAGE> 35
VAB MONEY MARKET
<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>
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
1995 24.205890 25.237165 29,059
1996 25.237165 26.200345 28,910
1997 26.200345 27.253241 27,553
1998 27.253241 28.352494 8,368
1999 28.352494 29.394756 6,924
</TABLE>
FLEXIBLE PAYMENT COMBINATION ANNUITY
VAA EQUITY
<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>
1990 $ 32.260450 $ 30.677737 24,226
1991 30.677737 36.468472 23,107
1992 36.468472 38.792521 22,601
1993 38.792521 43.778639 22,887
1994 43.778639 43.409203 20,039
1995 43.409203 54.616584 20,564
1996 54.616584 63.934367 20,212
1997 63.934367 74.726955 20,567
1998 74.7326955 78.143774 18,686
1999 78.143774 92.649498 12,092
</TABLE>
VAB EQUITY
<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>
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
1995 41.809023 52.603280 1,095
1996 52.603280 61.577580 1,109
1997 61.577580 71.972334 1,121
1998 71.972334 75.263201 1,141
1999 75.263201 89.234207 768
</TABLE>
Form V-4820
31
<PAGE> 36
MULTIPLE FUNDED COMBINATION ANNUITY ("TOP I")
VAA EQUITY
<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>
1990 $ 25.819181 $ 24.552478 227,378
1991 24.552478 29.187005 209,706
1992 29.187005 31.047017 195,926
1993 31.047017 35.037574 189,725
1994 35.037574 34.741902 183,889
1995 34.741902 43.711561 185,550
1996 43.711561 51.168913 183,969
1997 51.168913 59.806603 172,235
1998 59.806603 62.541201 150,434
1999 62.541201 74.150642 131,063
</TABLE>
VAB EQUITY
<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>
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
1995 36.283811 45.651565 22,160
1996 45.651565 53.439888 22,720
1997 53.439888 62.460938 23,678
1998 62.460938 65.316911 23,801
1999 65.316911 77.441596 15,771
</TABLE>
VAA MONEY MARKET
<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>
1990 $ 15.587258 $ 16.600960 66,701
1991 16.600960 17.295517 53,715
1992 17.295517 17.614815 40,163
1993 17.614815 17.865828 32,193
1994 17.865828 18.341334 33,908
1995 18.341334 19.122749 26,823
1996 19.122749 19.852565 19,326
1997 19.852565 20.650358 17,640
1998 20.650358 21.483279 24,712
1999 21.483279 22.273016 19,340
</TABLE>
VAB MONEY MARKET
<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>
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
1995 18.355539 19.137562 5,896
1996 19.137562 19.867953 6,004
1997 19.867953 20.666372 6,102
1998 20.666372 21.499933 4,311
1999 21.499933 22.290284 4,423
</TABLE>
Form V-4820
32
<PAGE> 37
VAA BOND
<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>
1990 $ 17.438080 $ 18.596379 43,782
1991 18.596379 20.777538 38,147
1992 20.777538 22.101548 40,781
1993 22.101548 24.198199 33,461
1994 24.198199 23.016849 32,609
1995 23.016849 27.068171 30,431
1996 27.068171 27.765946 26,417
1997 27.765946 30.128230 19,546
1998 30.128230 31.234606 18,756
1999 31.234606 31.073387 18,331
</TABLE>
VAB BOND
<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>
1990 $ 17.427516 $ 18.585115 5,481
1991 18.585115 20.764956 4,532
1992 20.764956 22.088165 4,261
1993 22.088165 24.183549 3,921
1994 24.183549 23.002903 3,679
1995 23.002903 27.051775 3,601
1996 27.051775 27.749128 3,122
1997 27.749128 29.994642 723
1998 29.994642 31.215693 2,869
1999 31.215693 31.054566 2,902
</TABLE>
VAA OMNI
<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>
1990 $ 17.425546 $ 17.565065 143,084
1991 17.565065 20.526604 136,984
1992 20.526604 22.049934 138,165
1993 22.049934 24.613344 151,630
1994 24.613344 24.217555 140,851
1995 24.217555 29.404272 134,309
1996 29.404272 33.604216 133,427
1997 33.604216 39.270518 127,406
1998 39.270518 40.603031 124,948
1999 40.603031 44.721902 105,792
</TABLE>
VAB OMNI
<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>
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
1995 24.183329 29.362718 53,357
1996 29.362718 33.556721 53,263
1997 33.556721 39.215015 52,426
1998 39.215015 40.545640 24,611
1999 40.545640 44.658692 20,370
</TABLE>
Form V-4820
33
<PAGE> 38
INTERNATIONAL
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1993* $ 10.000000 $ 12.404596 36,879 1,427
1994 12.404596 13.259582 103,976 13,999
1995 13.259582 14.702847 112,362 17,006
1996 14.702847 16.648702 116,301 18,085
1997 16.648702 16.815772 100,572 15,613
1998 16.815772 17.278635 78,452 12,488
1999 17.278635 28.609795 63,487 8,563
</TABLE>
CAPITAL APPRECIATION
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1995* $ 10.000000 $ 11.370573 8,261 456
1996 11.370573 13.018249 11,321 786
1997 13.018249 14.832378 21,166 1,426
1998 14.832378 15.538473 23,962 5,710
1999 15.538473 16.361968 28,664 5,710
</TABLE>
SMALL CAP
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1995* $ 10.000000 $ 12.201273 16,139 0
1996 12.201273 14.205207 21,891 0
1997 14.205207 15.240569 21,377 0
1998 15.240569 16.668731 27,574 0
1999 16.668731 34.040041 47,967 0
</TABLE>
INTERNATIONAL SMALL COMPANY
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999* $ 10.000000 $ 26.188124 231 0
</TABLE>
CORE GROWTH
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999* $ 10.000000 $ 14.122842 783 0
</TABLE>
GROWTH & INCOME
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999* $ 10.000000 $ 13.191296 1,630 1,878
</TABLE>
CAPITAL GROWTH
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999* $ 10.000000 $ 14.195676 247 0
</TABLE>
S&P 500 INDEX
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999* $ 10.000000 $ 11.093933 4,722 0
</TABLE>
Form V-4820
34
<PAGE> 39
BLUE CHIP
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999* $ 10.000000 $ 10.358691 699 0
</TABLE>
GOLDMAN SACHS GROWTH AND INCOME
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999* $ 10.000000 $ 10.502077 81 0
</TABLE>
GOLDMAN SACHS CORE U.S. EQUITY
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999* $ 10.000000 $ 10.924941 0 2,216
</TABLE>
JANUS GROWTH
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999* $ 10.000000 $ 11.657335 7,707 0
</TABLE>
JANUS WORLDWIDE GROWTH
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999* $ 10.000000 $ 13.225533 3,185 0
</TABLE>
JANUS BALANCED
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999* $ 10.000000 $ 11.025619 9,739 0
</TABLE>
STRONG MID CAP GROWTH II
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT VAA UNITS VAB UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR END OF YEAR END OF YEAR
- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1999* $ 10.000000 $ 12.916791 1,510 0
</TABLE>
* International fund was added April 30, 1993. Capital Appreciation and Small
Cap funds were added March 31, 1995. International Small Company, Aggressive
Growth, Core Growth, Growth & Income, Capital Growth, S&P 500 Index, Social
Awareness, High Income Bond, Equity Income, Blue Chip, Dow Target 10, Dow Target
5, Goldman Sachs Growth and Income, Goldman Sachs CORE U.S. Equity, Goldman
Sachs Capital Growth, Janus Growth, Janus Worldwide Growth, Janus Balanced,
Lazard Small Cap, Lazard Emerging Markets, Morgan Stanley U.S. Real Estate,
Strong Mid Cap Growth II, Strong Opportunity II and Strong Schafer Value II
funds were made available under these contracts on November 1, 1999.
INVESTAR VISION AND TOP SPECTRUM FLEXIBLE PAYMENT VARIABLE ANNUITY
EQUITY
<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>
1997 $ 10.000000 $ 11.599062 82,440
1998 11.599062 12.093494 277,925
1999 12.093494 14.295961 239,130
</TABLE>
Form V-4820
35
<PAGE> 40
MONEY MARKET
<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>
1997 $ 10.000000 $ 10.388381 65,172
1998 10.388381 10.796720 122,681
1999 110.796720 11.182556 103,091
</TABLE>
BOND
<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>
1997 $ 10.000000 $ 10.791393 12,183
1998 10.791393 11.197447 126,324
1999 11.197447 11.106666 85,725
</TABLE>
OMNI
<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>
1997 $ 10.000000 $ 11.608584 102,587
1998 11.608584 11.966933 300,484
1999 11.966933 13.141868 258,876
</TABLE>
INTERNATIONAL
<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>
1997 $ 10.000000 $ 10.114943 86,113
1998 10.114943 10.362585 120,242
1999 10.362585 17.107592 90,063
</TABLE>
CAPITAL APPRECIATION
<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>
1997 $ 10.000000 $ 11.366198 93,956
1998 11.366198 11.872017 210,773
1999 11.872017 12.464184 168,262
</TABLE>
SMALL CAP
<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>
1997 $ 10.000000 $ 10.854875 54,898
1998 10.854875 11.836906 146,789
1999 11.836906 24.101318 148,302
</TABLE>
INTERNATIONAL SMALL COMPANY (GLOBAL CONTRARIAN)
<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>
1997 $ 10.000000 $ 11.036950 16,423
1998 11.036950 11.268548 27,971
1999 11.268548 23.172470 29,582
</TABLE>
AGGRESSIVE GROWTH
<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>
1997 $ 10.000000 $ 11.150420 26,996
1998 11.150420 11.858619 92,803
1999 11.858619 12.368283 91,754
</TABLE>
Form V-4820
36
<PAGE> 41
S&P 500 INDEX
<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>
1998* $ 10.000000 $ 11.452642 118,264
1999 11.452642 14.189120 324,817
</TABLE>
CORE GROWTH
<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>
1999* $ 10.000000 $ 14.116011 1,003
</TABLE>
GROWTH & INCOME
<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>
1999* $ 10.000000 $ 14.870514 240
</TABLE>
CAPITAL GROWTH
<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>
1999* $ 10.000000 $ 30.942431 1,323
</TABLE>
STRATEGIC INCOME
<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>
1997 $ 10.000000 $ 10.724151 100,248
1998 10.724151 10.425769 179,803
1999 10.425769 9.787698 109,609
</TABLE>
FIRSTAR GROWTH & INCOME (STELLAR)
<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>
1997 $ 10.000000 $ 10.818421 56,527
1998 10.818421 10.980827 122,557
1999 10.980827 11.020029 99,834
</TABLE>
RELATIVE VALUE
<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>
1997 $ 10.000000 $ 12.651115 250,298
1998 12.651115 15.061199 663,668
1999 15.061199 15.956711 630,191
</TABLE>
EMERGING MARKETS
<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>
1997 $ 10.000000 $ 9.788417 32,560
1998 9.788417 6.030274 51,176
1999 6.030274 11.482079 43,692
</TABLE>
GOLDMAN SACHS CAPITAL GROWTH
<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>
1998* $ 10.000000 $ 11.582489 36,645
1999 11.582489 14.522089 55,854
</TABLE>
Form V-4820
37
<PAGE> 42
WORLDWIDE GROWTH
<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>
1998* $ 10.000000 $ 10.308701 63,482
1999 10.308701 16.718939 141,812
</TABLE>
BALANCED 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>
1998* $ 10.000000 $ 11.955678 142,767
1999 11.955678 14.945572 401,500
</TABLE>
GOLDMAN SACHS CORE U.S. EQUITY
<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>
1999* $ 10.000000 $ 12.485861 9,482
</TABLE>
JANUS GROWTH
<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>
1999* $ 10.000000 $ 16.412037 14,331
</TABLE>
MORGAN STANLEY U.S. REAL ESTATE
<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>
1999* $ 10.000000 $ 8.687826 3,270
</TABLE>
STRONG MID CAP GROWTH II
<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>
1999* $ 10.000000 $ 21.584486 1,645
</TABLE>
STRONG OPPORTUNITY II
<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>
1999* $ 10.000000 $ 12.694022 118
</TABLE>
* S&P 500 Index, Goldman Sachs Capital Growth, Janus Worldwide Growth and Janus
Balanced funds were made available under these contracts May 1, 1998. Core
Growth, Growth & Income, Capital Growth, Social Awareness, High Income Bond,
Equity Income, Blue Chip, Dow Target 10, Dow Target 5, Goldman Sachs, CORE U.S.
Equity, Goldman Sachs Growth and Income, Janus Growth, Lazard Small Cap, Morgan
Stanley U.S. Real Estate, Strong Mid Cap Growth II, Strong Opportunity II and
Strong Schafer Value II funds were made available under these contracts on
November 1, 1999.
Form V-4820
38
<PAGE> 43
APPENDIX A
IRA DISCLOSURE STATEMENT
This statement is designed to help you understand the requirements of federal
tax law which apply to your individual retirement annuity (IRA), your Roth IRA,
your simplified employee pension IRA (SEPP-IRA) for employer contributions, your
Savings Incentive Match Plan for Employees (SIMPLE) IRA, or to one you purchase
for your spouse. You can obtain more information regarding your IRA either from
your sales representative or from any district office of the Internal Revenue
Service.
FREE LOOK PERIOD
The annuity contract offered by this prospectus gives you the opportunity to
return the contract for a full refund within 20 days after it is delivered. To
exercise this "free-look" provision write or call the address shown below:
The Ohio National Life Insurance Company
Variable Annuity Administration
P. O. Box 2669
Cincinnati, Ohio 45201
Telephone: 1-800-366-6654 -- 8:30 a.m. - 4:30 p.m. (Eastern time zone)
ELIGIBILITY REQUIREMENTS
IRAs are intended for all persons with earned compensation whether or not they
are covered under other retirement programs. Additionally if you have a
non-working spouse (and you file a joint tax return), you may establish an IRA
on behalf of your non-working spouse. A working spouse may establish his or her
own IRA. A divorced spouse receiving taxable alimony (and no other income) may
also establish an IRA.
CONTRIBUTIONS AND DEDUCTIONS
Contributions to your IRA will be deductible if you are not an "active
participant" in an employer maintained qualified retirement plan or you have
Adjusted Gross Income which does not exceed the "applicable dollar limit." IRA
(or SEPP-IRA) contributions must be made by no later than the time you file your
income tax return for that year. For a single taxpayer, the applicable dollar
limitation is $30,000, with the amount of IRA contribution which may be deducted
reduced proportionately for Adjusted Gross Income between $30,000-$40,000. For
married couples filing jointly, the applicable dollar limitation is $50,000,
with the amount of IRA contribution which may be deducted reduced
proportionately for Adjusted Gross Income between $50,000-$60,000. There is no
deduction allowed for IRA contributions when Adjusted Gross Income reaches
$40,000 for individuals and $60,000 for married couples filing jointly.
Contributions made by your employer to your SEPP-IRA are excludable from your
gross income for tax purposes in the calendar year for which the amount is
contributed. Certain employees who participate in a SEPP-IRA will be entitled to
elect to have their employer make contributions to their SEPP-IRA on their
behalf or to receive the contributions in cash. If the employee elects to have
contributions made on the employee's behalf to the SEPP, those funds are not
treated as current taxable income to the employee. Elective deferrals under a
SEPP-IRA are subject to an inflation-adjusted limit which is $10,000 for 1998.
Salary-reduction SEPP-IRAs (also called "SARSEPs") are available only if at
least 50% of the employees elect to have amounts contributed to the SEPP-IRA and
if the employer has 25 or fewer employees at all times during the preceding
year. New salary reduction SEPPs may not be established after 1996.
The IRA maximum annual contribution and your tax deduction is limited to the
lesser of: (1) $2,000 or (2) 100% of your earned compensation. Contributions in
excess of the deduction limits may be subject to penalty. See below.
Form V-4820
39
<PAGE> 44
Under a SEPP-IRA agreement, the maximum annual contribution which your employer
may make on your behalf to a SEPP-IRA contract which is excludable from your
income is the lesser of 15% of your salary or $24,000. An employee who is a
participant in a SEPP-IRA agreement may make after-tax contributions to the
SEPP-IRA contract, subject to the contribution limits applicable to IRAs in
general. Those employee contributions will be deductible subject to the
deductibility rules described above.
The maximum tax deductible annual contribution that a divorced spouse with no
other income may make to an IRA is the lesser of (1) $2,000 or (2) 100% of
taxable alimony.
If you or your employer should contribute more than the maximum contribution
amount to your IRA or SEPP-IRA, the excess amount will be considered an "excess
contribution." You are permitted to withdraw an excess contribution from your
IRA or SEPP-IRA before your tax filing date without adverse tax consequences.
If, however, you fail to withdraw any such excess contribution before your tax
filing date, a 6% excise tax will be imposed on the excess for the tax year of
contribution.
Once the 6% excise tax has been imposed, an additional 6% penalty for the
following tax year can be avoided if the excess is (1) withdrawn before the end
of the following year, or (2) treated as a current contribution for the
following year. (See Premature Distributions for penalties imposed on withdrawal
when the contribution exceeds $2,200).
IRA FOR NON-WORKING SPOUSE
If you establish an IRA for yourself, you may also be eligible to establish an
IRA for your "non-working" spouse. In order to be eligible to establish such a
spousal IRA, you must file a joint tax return with your spouse and if your
non-working spouse has compensation, his/her compensation must be less than your
compensation for the year. Contributions of up to $2,000 each may be made to
your IRA and the spousal IRA if the combined compensation of you and your spouse
is at least equal to the amount contributed. If requirements for deductibility
(including income levels) are met, you will be able to deduct an amount equal to
the least of (i) the amount contributed to the IRA's; (ii) $4,000; or (iii) 100%
of your combined gross income.
Contributions in excess of the contribution limits may be subject to penalty.
See above under "Contributions and Deductions". If you contribute more than the
allowable amount, the excess portion will be considered an excess contribution.
The rules for correcting it are the same as discussed above for regular IRAs.
Other than the items mentioned in this section, all of the requirements
generally applicable to IRAs are also applicable to IRAs established for
non-working spouses.
ROLLOVER CONTRIBUTION
Once every year, you are permitted to withdraw any portion of the value of your
IRA or SEPP-IRA and reinvest it in another IRA or bond. Withdrawals may also be
made from other IRAs and contributed to this contract. This transfer of funds
from one IRA to another is called a "rollover" IRA. To qualify as a rollover
contribution, the entire portion of the withdrawal must be reinvested in another
IRA within 60 days after the date it is received. You will not be allowed a
tax-deduction for the amount of any rollover contribution.
A similar type of rollover to an IRA can be made with the proceeds of a
qualified distribution from a qualified retirement plan or tax-sheltered
annuity. Properly made, such a distribution will not be taxable until you
receive payments from the IRA created with it. Unless you were a self-employed
participant in the distributing plan, you may later rollover such a contribution
to another qualified retirement plan as long as you have not mixed it with IRA
(or SEPP-IRA) contributions you have deducted from your income. (You may roll
less than all of a qualified distribution into an IRA, but any part of it not
rolled over will be currently includable in your income without any capital
gains treatment.)
Form V-4820
40
<PAGE> 45
PREMATURE DISTRIBUTIONS
At no time can your interest in your IRA or SEPP-IRA be forfeited. To insure
that your contributions will be used for your retirement, the federal tax law
does not permit you to use your IRA or SEPP-IRA as security for a loan.
Furthermore, as a general rule, you may not sell or assign your interest in your
IRA or SEPP-IRA to anyone. Use of an IRA (or SEPP-IRA) as security or assignment
of it to another will invalidate the entire annuity. It then will be includable
in your income in the year it is invalidated and will be subject to a 10%
penalty tax if you are not at least age 59 1/2 or totally disabled unless you
comply with special rules requiring distributions to be made at least annually
over your life expectancy.
The 10% penalty tax does not apply to the withdrawal of an excess contribution
as long as the excess is withdrawn before the due date of your tax return.
Withdrawals of excess contributions after the due date of your tax return will
generally be subject to the 10% penalty unless the excess contribution results
from erroneous information from a plan trustee making an excess rollover
contribution or unless you are over age 59 1/2 or are disabled.
DISTRIBUTION AT RETIREMENT
Once you have attained age 59 1/2 (or have become totally disabled), you may
elect to receive a distribution of your IRA (or SEPP-IRA) regardless of when you
actually retire. You may elect to receive the distribution in either one sum or
under any one of the periodic payment options available under the contract. The
distributions from your IRA under any one of the periodic payment options or in
one sum will be treated as ordinary income as you receive them.
INADEQUATE DISTRIBUTIONS -- 50% TAX
Your IRA or SEPP-IRA is intended to provide retirement benefits over your
lifetime. Thus, federal law requires that you either (1) receive a lump-sum
distribution of your IRA by April 1 of the year following the year in which you
attain age 70 1/2 or (2) start to receive periodic payments by that date. If you
elect to receive periodic payments, those payments must be sufficient to pay out
the entire value of your IRA during your life expectancy (or over the joint life
expectancies of you and your spouse). If the payments are not sufficient to meet
these requirements, an excise tax of 50% will be imposed on the amount of any
underpayment.
DEATH BENEFITS
If you, (or your surviving spouse) die before receiving the entire value of your
IRA (or SEPP-IRA), the remaining interest must be distributed to your
beneficiary (or your surviving spouse's beneficiary) in one lump-sum within 5
years of death, or applied to purchase an immediate annuity for the beneficiary.
This annuity must be payable over the life expectancy of the beneficiary
beginning within one year after your or your spouse's death. If your spouse is
the designated beneficiary, he or she is treated as the owner of the IRA. If
minimum required distributions have begun, the entire amount must be distributed
at least as rapidly as if the owner had survived. A distribution of the balance
of your IRA upon your death will not be considered a gift for federal tax
purposes, but will be included in your gross estate for purposes of federal
estate taxes.
ROTH IRAS
Section 408A of the Code permits eligible individuals to contribute to a type of
IRA known as a "Roth IRA." Contributions may be made to a Roth IRA by taxpayers
with adjusted gross incomes of less than $160,000 for married individuals filing
jointly and less than $100,000 for single individuals. Married individuals
filing separately are not eligible to contribute to a Roth IRA. The maximum
amount of contributions allowable for any taxable year to all Roth IRAs
maintained by an individual is generally the lesser of $2,000 and 100% of
compensation for that year (the $2,000 limit is phased out for incomes between
$150,000 and $160,000 for married and between $95,000 and $110,000 for singles).
The contribution limit is reduced by the amount of any contributions made to a
non-Roth IRA. Contributions to a Roth IRA are not deductible.
Form V-4820
41
<PAGE> 46
For taxpayers with adjusted gross income of $100,000 or less, all or part of
amounts in a non-Roth IRA may be converted, transferred or rolled over to a Roth
IRA. Some or all of the IRA value will typically be includable in the taxpayer's
gross income. If such a rollover, transfer or conversion occurred before 1/1/99,
the portion of the amount includable in gross income must be included in income
ratably over the next four years beginning with the year in which the
transaction occurred. Provided a rollover contribution meets the requirements
for IRAs under Section 408(d)(3) of the Code, a rollover may be made from a Roth
IRA to another Roth IRA.
UNDER SOME CIRCUMSTANCES, IT MAY NOT BE ADVISABLE TO ROLL OVER, TRANSFER OR
CONVERT ALL OR PART OF A NON-ROTH IRA TO A ROTH IRA. PERSONS CONSIDERING A
ROLLOVER, TRANSFER OR CONVERSION SHOULD CONSULT THEIR OWN TAX ADVISOR.
"Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified distribution" is a distribution that satisfies two requirements: (1)
the distribution must be made (a) after the owner of the IRA attains age 59 1/2;
(b) after the owner's death; (c) due to the owner's disability; or (d) for a
qualified first time homebuyer distribution within the meaning of Section
72(t)(2)(F) of the Code; and (2) the distribution must be made in the year that
is at least five years after the first year for which a contribution was made to
any Roth IRA established for the owner or five years after a rollover, transfer
or conversion was made from a non-Roth IRA to a Roth IRA. Distributions from a
Roth IRA that are not qualified distributions will be treated as made first from
contributions and then from earnings, and taxed generally in the same manner as
distributions from a non-Roth IRA.
Distributions from a Roth IRA need not commence at age 70 1/2. However, if the
owner dies before the entire interest in a Roth IRA is distributed, any
remaining interest in the contract must be distributed by December 31 of the
calendar year containing the fifth anniversary of the owner's death subject to
certain exceptions.
PROTOTYPE STATUS
The Internal Revenue Service has been requested to review the format of your
SEPP, and to issue an opinion letter to Ohio National Life stating that your IRA
qualifies as a prototype SEPP.
REPORTING TO THE IRS
Whenever you are liable for one of the penalty taxes discussed above (6% for
excess contributions, 10% for premature distributions or 50% for under
payments), you must file Form 5329 with the Internal Revenue Service. The form
is to be attached to your federal income tax return for the tax year in which
the penalty applies. Normal contributions and distributions must be shown on
your income tax return for the year to which they relate.
Form V-4820
42
<PAGE> 47
ILLUSTRATION OF IRA FIXED ACCUMULATIONS
<TABLE>
<CAPTION>
AGE 60 AGE 65 AGE 70
GUARANTEED GUARANTEED GUARANTEED
SURRENDER VALUE SURRENDER VALUE SURRENDER VALUE
----------------------------- ----------------------------- -----------------------------
$2,000 $2,000 $2,000
$1,000 ONE TIME $1,000 ONE TIME $1,000 ONE TIME
CONTRACT ANNUAL LUMP SUM ANNUAL LUMP SUM ANNUAL LUMP SUM
ANNIVERSARY CONTRIBUTIONS CONTRIBUTION CONTRIBUTIONS CONTRIBUTION CONTRIBUTIONS CONTRIBUTION
- ----------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 933 $ 1,895 $ 933 $ 1,895 $ 933 $ 1,895
2 1,917 1,955 1,917 1,955 1,917 1,955
3 2,933 2,006 2,933 2,006 2,933 2,006
4 3,990 2,058 3,990 2,058 3,990 2,058
5 5,089 2,116 5,089 2,116 5,089 2,116
6 6,234 2,177 6,234 2,177 6,234 2,177
7 7,435 2,240 7,435 2,240 7,435 2,240
8 8,686 2,306 8,686 2,306 8,868 2,306
9 10,069 2,529 10,069 2,529 10,069 2,529
10 11,506 2,600 11,506 2,600 11,506 2,600
15 19,604 3,001 19,604 3,001 19,604 3,001
20 29,456 3,489 29,456 3,489 29,456 3,489
25 41,442 4,082 41,442 4,082 41,442 4,082
30 56,026 4,804 56,026 4,804 56,026 4,804
35 73,769 5,683 73,769 5,683 73,769 5,683
40 95,356 6,751 95,356 6,751 95,356 6,751
45 121,620 8,051 121,620 8,051 121,620 8,051
50 153,574 9,633 153,574 9,633 153,574 9,633
55 192,451 11,558 192,451 11,558 192,451 11,558
60 239,751 13,900 239,751 13,900 239,751 13,900
65 297,298 16,748 297,298 16,748
70 367,313 20,215 367,313 20,215
</TABLE>
- - Guaranteed Interest Rate: 3.25% is applicable to each contract anniversary.
- - The Surrender Value is the Accumulation Values less the Contingent Deferred
Sales Charge.
Form V-4820
43
<PAGE> 48
<TABLE>
<S> <C>
STATEMENT OF ADDITIONAL INFORMATION CONTENTS
Custodian
Independent Certified Public Accountants
Underwriter
Calculation of Money Market Yield
Total Return
Loans under Tax-Sheltered Annuities (VAA only)
Financial Statements for Ohio National Life and VAA or VAB
</TABLE>
Form V-4820
44
<PAGE> 49
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 50
OHIO NATIONAL VARIABLE ACCOUNT A
AND
OHIO NATIONAL VARIABLE ACCOUNT B
OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY
One Financial Way
Montgomery, Ohio 45242
Telephone (513) 794-6514
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2000
This Statement of Additional Information is not a prospectus. Read it along
with the prospectus for Ohio National Variable Accounts A and B ("VAA" and
"VAB") flexible purchase payment individual variable annuity contracts dated
May 1, 2000. To get a free copy of the prospectus for VAA and VAB, write or
call us at the above address.
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
Custodian ......................................................................... 2
Independent Certified Public Accountants .......................................... 2
Underwriter ....................................................................... 2
Calculation of Money Market Yield ................................................. 3
Total Return ...................................................................... 3
Loans Under Tax-sheltered Annuities ............................................... 4
Financial Statements .............................................................. 6
</TABLE>
"TOP TRADITION"
<PAGE> 51
CUSTODIAN
We have a custody agreement with Firstar Bank, N.A., Cincinnati, Ohio, under
which Firstar holds custody of VAA's and VAB's assets. The agreement provides
for Firstar to purchase Fund shares at their net asset value determined as of
the end of the valuation period during which we receive the deposit. At our
instruction, Firstar redeems the Fund shares held by VAA and VAB at their net
asset value determined as of the end of the valuation period during which we
receive or make a redemption request. In addition, Firstar keeps appropriate
records of all of VAA's and VAB's transactions in Fund shares.
The custody agreement requires Firstar to always have aggregate capital, surplus
and undivided profit of not less than $2 million. It does not allow Firstar to
resign until (a) a successor custodian bank having the above qualifications has
agreed to serve as custodian, or (b) VAA and VAB have been completely liquidated
and the liquidation proceeds properly distributed. Subject to these conditions,
the custody agreement may be terminated by either us or Firstar upon sixty days
written notice. We pay Firstar a fee for its services as custodian.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The financial statements of VAA and VAB as of December 31, 1999 and for the
periods indicated and our consolidated financial statements as of December 31,
1999 and 1998 and for the periods indicated have been included or incorporated
by reference in reliance upon the reports of KPMG LLP, independent certified
public accountants, also appearing herein, and upon that firm's authority as
experts in accounting and auditing.
UNDERWRITER
We offer the contracts continuously. Before May 1, 1997, The O. N. Equity Sales
Company ("ONESCO"), a wholly-owned subsidiary of ours, was the principal
underwriter of the contracts. Since May 1, 1997, the principal underwriter has
been Ohio National Equities, Inc. ("ONEQ"), another wholly-owned subsidiary of
ours. The aggregate amount of commissions paid to ONESCO and ONEQ for contracts
issued by VAA, and the amounts retained by ONESCO and ONEQ, for each of the last
three years have been:
<TABLE>
<CAPTION>
ONESCO ONEQ ONESCO ONEQ
Aggregate Aggregate Retained Retained
Year Commissions Commissions Commissions Commissions
- ---- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1999 None $14,608,378 None $2,619,496
1998 None 6,658,441 None 827,720
1997 $ 903,146 2,997,646 $ 89,572 297,299
</TABLE>
For contracts issued by VAB, those amounts have been:
2
<PAGE> 52
<TABLE>
<CAPTION>
ONESCO ONEQ ONESCO ONEQ
Aggregate Aggregate Retained Retained
Year Commissions Commissions Commissions Commissions
- ---- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1999 None $ 554,994 None $ 99,518
1998 None 934,575 None 116,178
1997 $ 330,599 1,097,297 $ 32,788 108,827
</TABLE>
CALCULATION OF MONEY MARKET YIELD
The annualized current yield of the Money Market subaccount for the seven days
ended on December 31, 1999, was 4.62%. 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 Money Market accumulation unit at
the beginning of the seven-day period, dividing the net change in value by the
beginning value to obtain the seven-day return, and multiplying the difference
by 365/7. The result is rounded to the nearest hundredth of one percent.
TOTAL RETURN
The average annual compounded rate of return for a contract for each subaccount
over a given period is found by equating the initial amount invested to the
ending redeemable value using the following formula:
n
P(1 + T) = 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).
We will up-date standardized total return data based upon Fund performance in
the subaccounts within 30 days after each calendar quarter.
In addition, we may present non-standardized total return data, using the above
formula but based upon Fund performance before the date we first offered this
series of contracts (September 10, 1984). This will be presented as if the same
charges and deductions applying to these contracts had been in effect from the
inception of each Fund. Note that, for purposes of these calculations, we
convert the $30 annual contract administration charge to an annual percentage
charge of 0.10%. This is based upon an average contract value of $30,000. The
actual effect that the contract administration charge would have on total
returns would be less than that percentage for contracts having a higher value
and greater than that for contracts having a lower value.
3
<PAGE> 53
The average annual total returns for the contracts from the inception of each
Fund and for the one-, five- and ten-year periods ending on December 31, 1999
(assuming surrender of the contract then) are as follows:
<TABLE>
<CAPTION>
Returns Fund
One Five Ten From Fund in VAA* Inception
Year Years Years Inception and VAB* Date
---- ----- ----- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ohio National Fund:
Money Market 3.88% 4.17% 3.84% 5.92% 5.92% 3-20-80
Equity 18.56% 16.37% 11.13% 9.96% 9.96% 1-14-71
Bond (0.52%) 6.19% 5.95% 6.83% 6.83% 11-2-82
Omni 10.14% 13.05% 9.88% 10.28% 10.28% 9-10-84
S&P 500 Index 24.26% N/A N/A 27.76% 27.76% 1-3-97
International 65.58% 16.63% N/A 17.08% 17.08% 4-30-93
International Small Company 106.25% N/A N/A 24.14% 24.14% 3-31-95
Capital Appreciation 5.30% 11.78% N/A 11.03% 11.03% 5-1-94
Small Cap 104.21% 29.70% N/A 29.95% 29.95% 5-1-94
Aggressive Growth 4.61% N/A N/A 9.77% 9.77% 3-31-95
Core Growth 102.72% N/A N/A 27.95% 27.95% 1-3-97
Growth & Income 60.48% N/A N/A 32.01% 32.01% 1-3-97
Capital Growth 199.09% N/A N/A 104.69% 104.69% 5-1-98
Social Awareness 16.41% N/A N/A 3.55% 3.55% 1-3-97
High Income Bond 0.84% N/A N/A (0.06%) (0.06%) 5-1-98
Equity Income 17.29% N/A N/A 14.17% 14.17% 5-1-98
Blue Chip 4.71% N/A N/A 3.99% 3.99% 5-1-98
Goldman Sachs Variable:
G.S. Growth & Income 4.26% N/A N/A 4.38% (3.56%) 1-2-98
G.S. CORE U.S. Equity 22.95% N/A N/A 19.50% 15.85% 1-2-98
G.S. Capital Growth 25.75% N/A N/A 23.18% 24.61% 1-2-98
Janus Aspen Series:
Growth 42.43% 28.47% N/A 22.94% 36.51% 9-13-93
Worldwide Growth 62.66% 32.15% N/A 28.31% 39.60% 9-13-93
Balanced 25.38% 23.33% N/A 19.32% 26.91% 9-13-93
Lazard Retirement Series:
Small Cap 3.69% N/A N/A (1.09%) 3.72% 11-4-97
Emerging Markets 47.61% N/A N/A 3.14% 41.46% 11-4-97
Strong Variable Insurance:
Mid Cap Growth II 87.82% N/A N/A 44.66% 60.89% 12-31-96
Opportunity II 33.44% 21.77% N/A 19.02% 17.01% 5-8-92
Schafer Value II (3.92%) N/A N/A (1.78%) (4.82%) 10-10-97
</TABLE>
*The "Returns in VAA and VAB" are the standardized total returns from the time
these Funds were added to VAA or VAB through December 31, 1999. The Goldman
Sachs Variable, Janus Aspen Series, and Strong Variable Insurance Funds were
added May 1, 1998. The Lazard Retirement Series Funds were added May 1, 1999.
LOANS UNDER TAX-SHELTERED ANNUITIES
Contracts issued as tax-sheltered annuities under plans qualifying under Section
403(b) of the Code, and allowing for voluntary contributions only, are eligible
for loans secured by a security interest in the contract. A loan must be for at
least $1,000 and may only be made from the Guaranteed Account. The loan amount
is limited by the maximum loan formula described in your contract.
We charge an annual effective rate of interest up to 7%. You must generally
repay your loans within 5 years (or 20 years if you use the loan to purchase
your primary home).
The amount of the death benefit, the amount payable on a full surrender and the
amount that will be applied to provide an annuity will all be reduced by your
loan balance, including accrued interest.
4
<PAGE> 54
<PAGE> 1
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of
Ohio National Financial Services, Inc.)
Consolidated Financial Statements
December 31, 1999 and 1998
With Independent Auditors' Report Thereon
<PAGE> 2
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 (a wholly owned subsidiary of Ohio National
Financial Services, Inc.) and subsidiaries (the Company) as of December 31,
1999 and 1998, and the related consolidated statements of income, equity
and cash flows for each of the years in the three-year period ended
December 31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
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 subsidiaries as of December 31,
1999 and 1998, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1999, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
Cincinnati, Ohio
January 28, 2000
<PAGE> 3
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Consolidated Balance Sheets
December 31, 1999 and 1998
(in thousands, except share amounts)
<TABLE>
<CAPTION>
ASSETS 1999 1998
---------- ---------
<S> <C> <C>
Investments (notes 5, 9 and 10):
Securities available-for-sale, at fair value:
Fixed maturities $2,644,846 2,834,274
Equity securities 71,640 90,207
Fixed maturities held-to-maturity, at amortized cost 829,214 749,528
Mortgage loans on real estate, net 1,274,156 1,245,180
Real estate, net 9,472 8,724
Policy loans 162,078 157,555
Other long-term investments 56,832 41,697
Short-term investments 139,341 106,627
---------- ---------
Total investments 5,187,579 5,233,792
Cash 9,411 11,300
Accrued investment income 66,323 64,396
Deferred policy acquisition costs 374,359 275,119
Reinsurance recoverable 95,291 78,265
Other assets 43,802 44,074
Assets held in Separate Accounts 1,741,620 1,154,576
---------- ---------
Total assets $7,518,385 6,861,522
========== =========
LIABILITIES AND EQUITY
Future policy benefits and claims (note 6) $4,806,594 4,643,507
Policyholders' dividend accumulations 60,827 73,782
Other policyholder funds 18,030 17,260
Note payable (net of unamortized discount of $679 in 1999
and $722 in 1998) (note 7) 84,321 84,278
Federal income taxes (note 8):
Current 12,834 21,383
Deferred 12,105 67,828
Other liabilities 148,245 137,827
Liabilities related to Separate Accounts 1,718,864 1,107,049
---------- ---------
Total liabilities $6,861,820 6,152,914
---------- ---------
Equity (notes 3 and 12):
Class A Common stock, $1 par value. 10,000,000 authorized,
issued and outstanding 10,000 10,000
Accumulated other comprehensive income 6,245 107,444
Retained earnings 640,320 591,164
---------- ---------
Total equity 656,565 708,608
Commitments and contingencies (notes 10 and 14)
---------- ---------
Total liabilities and equity $7,518,385 6,861,522
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Consolidated Statements of Income
Years ended December 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Traditional life insurance premiums $131,279 121,900 117,960
Accident and health insurance premiums 25,530 25,183 23,921
Annuity premiums and charges 36,931 32,280 34,187
Universal life policy charges 66,189 59,743 50,991
Net investment income (note 5) 414,147 394,825 386,693
Net realized gains on investments (note 5) 26,484 1,903 12,500
Other income 14,527 13,160 12,804
-------- -------- --------
715,087 648,994 639,056
-------- -------- --------
Benefits and expenses:
Benefits and claims 415,907 400,662 391,906
Provision for policyholders' dividends on
participating policies (note 12) 27,582 27,659 25,332
Amortization of deferred policy acquisition costs 29,124 23,240 22,122
Other operating costs and expenses 92,096 91,522 94,870
-------- -------- --------
564,709 543,083 534,230
-------- -------- --------
Income before Federal income taxes 150,378 105,911 104,826
-------- -------- --------
Federal income taxes (note 8):
Current expense 43,334 40,337 41,564
Deferred expense (benefit) 7,888 (2,301) (3,825)
-------- -------- --------
51,222 38,036 37,739
-------- -------- --------
Net income $ 99,156 67,875 67,087
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Consolidated Statements of Equity
Years ended December 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON COMPREHENSIVE RETAINED TOTAL
STOCK INCOME EARNINGS EQUITY
-------- ---------- -------- ---------
<S> <C> <C> <C> <C>
1997:
Balance, beginning of year $ -- 46,807 468,202 515,009
Comprehensive income:
Net income -- -- 67,087 67,087
Other comprehensive income (note 4) -- 56,149 -- 56,149
--------
Total comprehensive income 123,236
-------- -------- -------- --------
Balance, end of year $ -- 102,956 535,289 638,245
======== ======== ======== ========
1998:
Balance, beginning of year $ -- 102,956 535,289 638,245
Stock issuance 10,000 -- (10,000) --
Dividends paid -- -- (2,000) (2,000)
Comprehensive income:
Net income -- -- 67,875 67,875
Other comprehensive income (note 4) -- 4,488 -- 4,488
--------
Total comprehensive income 72,363
-------- -------- --------- --------
Balance, end of year $ 10,000 107,444 591,164 708,608
======== ======== ========= ========
1999:
Balance, beginning of year $ 10,000 107,444 591,164 698,608
Dividends paid -- -- (50,000) (50,000)
Comprehensive income:
Net income -- -- 99,156 99,156
Other comprehensive loss (note 4) -- (101,199) -- (101,199)
---------
Total comprehensive loss (2,043)
-------- -------- --------- --------
Balance, end of year $ 10,000 6,245 640,320 656,565
======== ======== ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 6
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Consolidated Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
1999 1998 1997
----------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 99,156 67,875 67,087
Adjustments to reconcile net income to net cash
provided by operating activities:
Capitalization of deferred policy acquisition costs (63,521) (55,200) (48,507)
Amortization of deferred policy acquisition costs 29,124 23,240 22,122
Amortization and depreciation (75) (289) 4,342
Realized gains on invested assets, net (26,484) (1,903) (12,500)
Deferred Federal income tax expense (benefit) 7,888 (2,301) (3,825)
Increase in accrued investment income (1,927) (317) (1,740)
Increase in other assets (22,392) (19,113) (15,401)
Net (decrease) increase in separate accounts 24,770 (18,279) (16,011)
Increase in policyholder account balances 56,409 50,834 40,843
(Decrease) increase in policyholders' dividend
accumulations and other funds (12,185) 11,550 (243)
(Decrease) increase in current Federal income tax payable (8,549) 8,662 (2,149)
Increase in other liabilities 14,965 18,855 6,484
Other, net (3,875) (14,355) 4,656
----------- ---------- ----------
Net cash provided by operating activities 93,304 69,259 45,158
----------- ---------- ----------
Cash flows from investing activities:
Proceeds from maturity of fixed maturities available-for-sale 18,206 11,167 298,686
Proceeds from sale of fixed maturities available-for-sale 295,806 202,694 51,770
Proceeds from sale of equity securities 30,312 9,603 4,996
Proceeds from maturity of fixed maturities held-to-maturity 86,335 115,577 75,530
Proceeds from repayment of mortgage loans on real estate 183,514 198,464 180,745
Proceeds from sale of real estate 962 15,906 19,078
Cost of fixed maturities available-for-sale acquired (354,722) (345,266) (367,027)
Cost of equity securities acquired (5,001) (8,197) (7,205)
Cost of fixed maturities held-to-maturity acquired (162,049) (134,965) (110,982)
Cost of mortgage loans on real estate acquired (207,587) (212,924) (321,914)
Cost of real estate acquired (550) (846) (1,310)
Change in policy loans, net (4,523) (4,207) (620)
Change in other assets, net 140 5,253 312
----------- ---------- ----------
Net cash used in investing activities (119,157) (147,741) (177,941)
----------- ---------- ----------
Cash flows from financing activities:
Universal life and investment product account deposits 1,221,353 1,076,011 1,000,919
Universal life and investment product account withdrawals (1,114,675) (928,812) (884,395)
Dividends to shareholder (50,000) (2,000) --
Other, net -- (3,361) 80
----------- ---------- ----------
Net cash provided by financing activities 56,678 141,838 116,604
----------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 30,825 63,356 (16,179)
Cash and cash equivalents, beginning of year 117,927 54,571 70,750
----------- ---------- ----------
Cash and cash equivalents, end of year $ 148,752 117,927 54,571
=========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 7
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(1) ORGANIZATION, CONSOLIDATION POLICY AND BUSINESS DESCRIPTION
The Ohio National Life Insurance Company (ONLIC) is a stock life
insurance company. Ohio National Life Assurance Corporation (ONLAC) is a
wholly owned stock life insurance subsidiary included in the
consolidated financial statements. ONLIC and its subsidiaries are
collectively referred to as the "Company". All significant intercompany
accounts and transactions have been eliminated in consolidation.
On February 12, 1998, ONLIC's Board of Directors approved a plan of
reorganization for the Company under the provision of Sections 3913.25
to 3913.38 of the Ohio Revised Code relating to mutual insurance holding
companies. The plan of reorganization was approved by the Company's
policyholders and by the Ohio Department of Insurance and became
effective on August 1, 1998 (Effective Date). As part of the
reorganization (see footnote (1)(k)), ONLIC became a stock company 100%
owned by Ohio National Financial Services, Inc. (ONFS). ONFS is 100%
owned by Ohio National Mutual Holdings, Inc. (ONMH), an Ohio mutual
holding company.
ONLIC and ONLAC are life and health insurers licensed in 47 states, the
District of Columbia and Puerto Rico. The Company offers a full range of
life, health and annuity products through exclusive agents and other
distribution channels and is subject to competition from other insurers
throughout the United States. The Company is subject to regulation by
the Insurance Departments of states in which it is licensed and
undergoes periodic examinations by those departments.
The following is a description of the most significant risks facing life
and health insurers and how the Company mitigates those risks:
LEGAL/REGULATORY RISK is the risk that changes in the legal or
regulatory environment in which an insurer operates will create
additional expenses not anticipated by the insurer in pricing its
products. That is, regulatory initiatives designed to reduce
insurer profits, new legal theories or insurance company
insolvencies through guaranty fund assessments may create costs
for the insurer beyond those recorded in the consolidated
financial statements. The Company mitigates this risk by offering
a wide range of products and by operating throughout the United
States, thus reducing its exposure to any single product or
jurisdiction, and also by employing underwriting practices which
identify and minimize the adverse impact of this risk.
CREDIT RISK is the risk that issuers of securities owned by the
Company or mortgagors on mortgage loans on real estate owned by
the Company will default or that other parties, including
reinsurers, which owe the Company money, will not pay. The Company
minimizes this risk by adhering to a conservative investment
strategy, by maintaining sound reinsurance and credit and
collection policies and by providing for any amounts deemed
uncollectible.
6
<PAGE> 8
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
INTEREST RATE RISK is the risk that interest rates will change and
cause a decrease in the value of an insurer's investments. This
change in rates may cause certain interest-sensitive products to
become uncompetitive or may cause disintermediation. The Company
mitigates this risk by charging fees for non-conformance with
certain policy provisions, by offering products that transfer this
risk to the purchaser, and/or by attempting to match the maturity
schedule of its assets with the expected payouts of its
liabilities. To the extent that liabilities come due more quickly
than assets mature, an insurer would have to borrow funds or sell
assets prior to maturity and potentially recognize a gain or loss.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) which
differ from statutory accounting practices prescribed or permitted by
regulatory authorities (see Note 3).
(a) VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES
Fixed maturity securities are classified as held-to-maturity when
the Company has the positive intent and ability to hold the
securities to maturity and are stated at amortized cost. Fixed
maturity securities not classified as held-to-maturity and all
equity securities are classified as available-for-sale and are
stated at fair value, with the unrealized gains and losses, net of
adjustments to deferred policy acquisition costs and deferred
Federal income tax, reported as a separate component of equity
that would have been required as a charge or credit to operations
had such unrealized amounts been realized. The Company has no
securities classified as trading.
Mortgage loans on real estate are carried at the unpaid principal
balance less valuation allowances. The Company provides valuation
allowances for impairments of mortgage loans on real estate based
on a review by portfolio managers. The measurement of impaired
loans is based on the present value of expected future cash flows
discounted at the loan's effective interest rate or, at the fair
value of the collateral, if the loan is collateral dependent.
Loans in foreclosure and loans considered to be impaired as of the
balance sheet date are placed on non-accrual status and written
down to the fair value of the existing property to derive a new
cost basis. Cash receipts on non-accrual status mortgage loans on
real estate are included in interest income in the period
received.
Real estate is carried at cost less accumulated depreciation and
valuation allowances. Other long-term investments are carried on
the equity basis, adjusted for valuation allowances.
Realized gains and losses on the sale of investments are
determined on the basis of specific security identification, net
of associated deferred acquisition costs and capital gains
expenses. Any capital gains occurring in the Closed Block
portfolio are offset by increases in the deferred policyholder
obligation for that group of policies. Estimates for valuation
allowances and other than temporary declines are included in
realized gains and losses on investments.
7
<PAGE> 9
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(c) REVENUES AND BENEFITS
Traditional life insurance products include those products with
fixed and guaranteed premiums and benefits and consist primarily
of whole life, limited-payment life, term life and certain
annuities with life contingencies. Premiums for traditional life
insurance products are recognized as revenue when due and
collected. Benefits and expenses are associated with earned
premiums so as to result in recognition of profits over the life
of the contract. This association is accomplished by the provision
for future policy benefits and the deferral and amortization of
policy acquisition costs.
Universal life products include universal life, variable universal
life and other interest-sensitive life insurance policies.
Investment products consist primarily of individual and group
deferred annuities, annuities without life contingencies and
guaranteed investment contracts. Revenues for universal life and
investment products consist of net investment income and cost of
insurance, policy administration and surrender charges that have
been earned and assessed against policy account balances during
the period. Policy benefits and claims that are charged to expense
include benefits and claims incurred in the period in excess of
related policy account balances, maintenance costs and interest
credited to policy account balances.
Accident and health insurance premiums are recognized as revenue
in accordance with the terms of the policies. Policy claims are
charged to expense in the period that the claims are incurred.
(c) DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally commissions,
certain expenses of the policy issue and underwriting department
and certain variable agency expenses have been deferred. For
traditional non-participating life insurance products, these
deferred acquisition costs are predominantly being amortized with
interest over the premium paying period of the related policies in
proportion to premium revenue. Such anticipated premium revenue
was estimated using the same assumptions as were used for
computing liabilities for future policy benefits. For
participating life insurance products, deferred policy acquisition
costs are being amortized in proportion to gross margins of the
related policies. Gross margins are determined for each issue year
and are equal to premiums plus investment income less death
claims, surrender benefits, administrative costs, expected
policyholder dividends, and the increase in reserve for future
policy benefits. For universal life and investment products,
deferred policy acquisition costs are being amortized with
interest over the lives of the policies in relation to the present
value of the estimated future gross profits from projected
interest margins, cost of insurance, policy administration and
surrender charges. Deferred policy acquisition costs for
participating life and universal life business are adjusted to
reflect the impact of unrealized gains and losses on fixed
maturity securities available-for-sale (see note 2(a)).
8
<PAGE> 10
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(d) SEPARATE ACCOUNTS
Separate Account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific
investment objectives. The investment income and gains or losses
of these accounts accrue directly to the contractholders. The
activity of the Separate Accounts is not reflected in the
consolidated statements of income and cash flows except for the
fees the Company receives for administrative services and risks
assumed. Amounts provided by the Company to establish Separate
Account investment portfolios, seed money, are not included in
Separate Account liabilities.
(e) FUTURE POLICY BENEFITS
Future policy benefits for traditional life have been calculated
using a net level premium method based on estimates of mortality,
morbidity, investment yields and withdrawals which were used or
which were being experienced at the time the policies were issued,
rather than the assumptions prescribed by state regulatory
authorities (see note 6).
Future policy benefits for annuity policies in the accumulation
phase, universal life and variable universal life policies have
been calculated based on participants' aggregate account values.
(f) PARTICIPATING BUSINESS
Participating business represents approximately 39% of the
Company's ordinary life insurance in force in 1999. In 1998 and
1997, participating business represented approximately 41% and
42%, respectively, of the Company's ordinary life insurance in
force. The provision for policyholder dividends is based on
current dividend scales. Future dividends are provided for in
future policy benefits based on dividend scales in effect as of
December 31, 1999.
(g) REINSURANCE CEDED
Reinsurance premiums ceded and reinsurance recoveries on benefits
and claims incurred are deducted from the respective income and
expense accounts. Assets and liabilities related to reinsurance
ceded are reported on a gross basis.
(h) FEDERAL INCOME TAX
The Company is included as part of the consolidated Federal income
tax return of its ultimate parent, OHMH. The Company uses the
asset and liability method of accounting for income tax. Under the
asset and liability method, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under this
method, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date. Valuation allowances are established
when necessary to reduce the deferred tax assets to the amounts
expected to be realized.
9
<PAGE> 11
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(i) CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the
Company considers all short-term investments with original
maturities of three months or less to be cash equivalents.
(j) USE OF ESTIMATES
In preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities as of the date of the
consolidated financial statements and revenues and expenses for
the reporting period. Actual results could differ significantly
from those estimates.
The estimates susceptible to significant change are those used in
determining deferred policy acquisition costs, the liability for
future policy benefits and claims, contingencies, and those used
in determining valuation allowances for mortgage loans on real
estate and real estate. Although some variability is inherent in
these estimates, management believes the amounts provided are
adequate.
(k) CLOSED BLOCK
The Reorganization contained an arrangement, known as a closed
block (the Closed Block), to provide for dividends on policies
that were in force on the Effective Date and were within classes
of individual policies for which the Company had a dividend scale
in effect at the time of the Reorganization. The Closed Block was
designed to give reasonable assurance to owners of affected
policies that assets will be available to support such policies,
including maintaining dividend scales in effect at the time of the
Reorganization, if the experience underlying such scales
continues. The assets, including revenue therefrom, allocated to
the Closed Block will accrue solely to the benefit of the owners
of policies included in the Closed Block until the Closed Block is
no longer in effect. The Company will not be required to support
the payment of dividends on Closed Block policies from its general
funds.
The financial information of the Closed Block, while prepared on a
GAAP basis, reflects its contractual provisions and not its actual
results of operations and financial position. Many expenses
related to the Closed Block operations are charges to operations
outside of the Closed Block; accordingly, the contribution from
the Closed Block does not represent the actual profitability of
the Closed Block operations. Operating costs and expenses outside
of the Closed Block are, therefore, disproportionate to the
business outside of the Closed Block.
10
<PAGE> 12
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
Summarized financial information of the Closed Block as of and for the year
ended December 31, 1999 is as follow:
<TABLE>
<S> <C>
Closed Block assets:
Fixed maturity securities available-for-sale,
at fair value (amortized cost of $238,405) $234,150
Fixed maturity securities held-to-maturity,
at amortized cost 72,826
Short-term investments, at fair value 10,583
Mortgage loans on real estate, net 93,698
Policy loans 115,932
Accrued investment income 6,101
Other assets 3,054
Reinsurance recoverable 1,979
Deferred policy acquisition costs 90,455
--------
$628,778
========
Closed Block liabilities:
Future policy benefits and claims $695,540
Other policyowner funds 3,768
Policyholders' dividend accumulations 16,345
--------
$715,653
========
Closed Block revenues and expenses:
Traditional life insurance premiums $ 74,269
Net investment income 44,230
Net realized gains on investments 33
Other expense (74)
Benefits and claims (71,806)
Amortization of deferred acquisition costs (4,433)
Other operating costs and expenses (5,100)
Provision for policyholders' dividends on participating policies (26,608)
--------
Income before Federal income taxes(1) $ 10,511
========
(1) Represents contribution from the Closed Block.
</TABLE>
11
<PAGE> 13
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(l) COMPREHENSIVE INCOME
Comprehensive income is the total of net income and all non-owner
changes in equity.
(m) EMERGING ACCOUNTING ISSUES
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" (SFAS 133).
SFAS 133 establishes accounting and reporting standards for
derivative instruments and for hedging activities. Contracts that
contain embedded derivatives, such as certain insurance contracts,
are also addressed by the Statement. SFAS 133 requires that an
entity recognize all derivatives as either assets or liabilities
in the statement of financial position and that those assets or
liabilities be measured at fair value. SFAS 133 is effective for
all fiscal quarters of fiscal years beginning after January 1,
2001, with earlier application permitted. The Company is currently
reviewing the requirements of this Statement and evaluating what,
if any, impact it will have on consolidated results of operations
and financial condition.
(n) RECLASSIFICATIONS
Certain amounts in the 1998 and 1997 consolidated financial
statements have been reclassified to conform with 1999
presentation.
(3) BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with GAAP which differs from statutory accounting practices
prescribed or permitted by regulatory authorities. Annual Statements for
ONLIC and ONLAC, insurance subsidiaries, filed with the Department of
Insurance of the State of Ohio, are prepared on a basis of accounting
practices prescribed or permitted by such regulatory authority.
Prescribed statutory accounting practices include a variety of
publications of the National Association of Insurance Commissioners
(NAIC), as well as state laws, regulations and general administrative
rules. Permitted statutory accounting practices encompass all accounting
practices not so prescribed. ONLIC and ONLAC have no material permitted
statutory accounting practices.
The statutory basis net income and capital and surplus of ONLIC and
ONLAC after intercompany eliminations included in the accompanying
consolidated financial statements was $91,163, $51,900 and $53,696 for
the years ended December 31, 1999, 1998 and 1997, respectively and
$430,869 and $408,928 as of December 31, 1999 and 1998, respectively.
12
<PAGE> 14
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(4) COMPREHENSIVE INCOME
The components of other comprehensive income, including the related
Federal tax amounts, were as follows for the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
--------- ------- -------
<S> <C> <C> <C>
Unrealized gains (losses) on securities
available-for-sale arising during the period:
Net of adjustment to deferred policy acquisition costs $(127,982) 11,418 86,670
Related Federal tax benefit (expense) 46,151 (4,003) (30,335)
--------- ------- -------
Net (81,831) 7,415 56,335
--------- ------- -------
Less:
Reclassification adjustment for net (gains) losses on securities
available-for-sale realized during the period:
Gross 29,798 4,504 287
Related Federal tax benefit (10,430) (1,577) (101)
--------- ------- -------
Net 19,368 2,927 186
--------- ------- -------
Total other comprehensive (loss) income $(101,199) 4,488 56,149
========= ======= =======
</TABLE>
13
<PAGE> 15
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(5) INVESTMENTS
An analysis of investment income and realized gains/(losses) by
investment type follows for the years ended December 31:
<TABLE>
<CAPTION>
REALIZED GAINS (LOSSES)
INVESTMENT INCOME ON INVESTMENTS
------------------------------------ -------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- ------------ ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 215,996 211,002 207,377 (1,184) (1,624) 3,041
Equity securities 3,495 3,530 2,441 16,830 178 38
Fixed maturities held-to-maturity 66,735 62,516 62,348 2,760 5,325 2,539
Mortgage loans on real estate 109,256 109,850 103,566 314 371 1,863
Real estate 1,371 2,334 6,123 (252) 2,416 4,418
Policy loans 10,988 10,298 9,834 -- -- --
Short-term 4,133 4,610 5,087 -- -- --
Other 17,782 6,553 6,612 9,481 (4,558) (387)
---------- ---------- ---------- ---------- -------- ---------
Total 429,756 410,693 403,388 27,949 2,108 11,512
Investment expenses (15,609) (15,868) (16,695)
Gains attributable to Closed Block (1,191) -- --
DAC amortization due to realized gains (218) (298) (985)
Change in valuation allowances:
Mortgage loans on real estate (56) 93 (63)
Real estate and other -- -- 2,036
---------- ---------- ---------- ---------- -------- ---------
(1,465) (205) 988
---------- -------- ---------
Net investment income 414,147 394,825 386,693
========== ========== ==========
Net realized gains on
investments $ 26,484 1,903 12,500
========== ======== =========
</TABLE>
14
<PAGE> 16
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
The amortized cost and estimated fair value of securities available-for-sale and
fixed maturities held-to-maturity were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Securities available-for-sale:
Fixed maturities:
U.S. Treasury securities and
obligations of U.S. government
operations and agencies $ 108,292 1,267 (1,908) 107,651
Obligations of states and political
subdivisions 79,236 571 (920) 78,887
Debt securities issued by foreign
governments 8,078 1,004 (850) 8,232
Corporate securities 1,666,057 29,519 (63,430) 1,632,146
Mortgage-backed securities 823,882 7,412 (13,364) 817,930
---------- ------- -------- ---------
Total fixed maturities $2,685,545 39,773 (80,472) 2,644,846
========== ======= ======== =========
Equity securities $ 35,635 39,212 (3,207) 71,640
========== ======= ======== =========
Fixed maturity securities held-to-maturity:
Obligations of states and political
subdivisions $ 13,596 355 (418) 13,533
Corporate securities 783,378 23,237 (16,426) 790,189
Mortgage-backed securities 32,240 746 (3,209) 29,777
---------- ------- -------- ---------
$ 829,214 24,338 (20,053) 833,499
========== ======= ======== =========
</TABLE>
15
<PAGE> 17
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-----------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Securities available-for-sale:
Fixed maturities:
U.S. Treasury securities and
obligations of U.S. government
operations and agencies $ 132,932 15,672 -- 148,604
Obligations of states and political
subdivisions 89,399 9,953 (47) 99,305
Debt securities issued by foreign
governments 8,078 2,057 -- 10,135
Corporate securities 1,720,789 137,373 (16,033) 1,842,129
Mortgage-backed securities 695,365 39,682 (946) 734,101
---------- -------- -------- ---------
Total fixed maturities $2,646,563 204,737 (17,026) 2,834,274
========== ======== ======== =========
Equity securities $ 41,795 51,454 (3,042) 90,207
========== ======== ======== =========
Fixed maturity securities held-to-maturity:
Obligations of states and political
subdivisions $ 10,265 825 (179) 10,911
Corporate securities 724,447 78,581 (529) 802,499
Mortgage-backed securities 14,816 1,233 -- 16,049
---------- -------- -------- ---------
$ 749,528 80,639 (708) 829,459
========== ======== ======== =========
</TABLE>
The components of unrealized gains on securities available-for-sale, net, were
as follows for the years ended December 31:
1999 1998
-------- --------
Gross unrealized (loss) gain $ (4,694) 236,123
Adjustment to deferred dividend liability -- (18,578)
Adjustment to deferred policy acquisition costs 16,226 (48,834)
Deferred Federal income tax (5,287) (61,267)
-------- --------
$ 6,245 107,444
======== ========
16
<PAGE> 18
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
The net unrealized gain on securities available-for-sale include a net
unrealized gain on equity securities of $23,403 in 1999 ($31,468 in 1998) and a
net unrealized loss on fixed maturities of $16,215 in 1999 ($76,621 in 1998).
An analysis of the change in gross unrealized gains (losses) on securities
available-for-sale and fixed maturities held-to-maturity follows for the years
ended December 31:
1999 1998 1997
--------- ------ ------
Securities available-for-sale:
Fixed maturities $(228,410) 25,125 91,601
Equity securities (12,407) 10,632 15,972
Fixed maturities held-to-maturity (75,646) 11,840 14,217
The amortized cost and estimated fair value of fixed maturity securities
available-for-sale and fixed maturity securities held-to-maturity as of December
31, 1999, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
FIXED MATURITY SECURITIES
----------------------------------------------------------------
AVAILABLE-FOR-SALE HELD-TO-MATURITY
----------------------------- ---------------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
---------- --------- --------- ----------
<S> <C> <C> <C> <C>
Due in one year or less $ 67,057 68,013 22,817 23,011
Due after one year through five years 436,560 438,455 139,022 139,781
Due after five years through ten years 804,945 787,425 250,797 252,947
Due after ten years 1,376,983 1,350,953 416,578 417,760
---------- --------- ------- -------
$2,685,545 2,644,846 829,214 833,499
========== ========= ======= =======
</TABLE>
Proceeds from the sale of securities available-for-sale (excludes calls) during
1999, 1998 and 1997 were $158,661, $3,186, and $51,770, respectively. Gross
gains of $293 ($0 in 1998 and $203 in 1997) and gross losses of $4,131 ($38 in
1998 and $283 in 1997) were realized on those sales.
Investments with an amortized cost of $12,807 and $11,750 as of December 31,
1999 and 1998, respectively, were on deposit with various regulatory agencies as
required by law.
Real estate is presented at cost less accumulated depreciation of $1,855 in 1999
($1,730 in 1998) and valuation allowances of $0 in 1999 and 1998.
The Company generally initiates foreclosure proceedings on all mortgage loans on
real estate delinquent sixty days. There was one foreclosure of a mortgage loan
on real estate in 1999 and no mortgage loan, on real estate in process of
foreclosure as of December 31, 1999.
17
<PAGE> 19
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(6) FUTURE POLICY BENEFITS AND CLAIMS
The liability for future policy benefits for universal life insurance
policies and investment contracts (approximately 79% of the total
liability for future policy benefits as of December 31, 1999 and 1998)
has been established based on accumulated contract values without
reduction for surrender penalty provisions. The average interest rate
credited on investment product policies was 6.4%, 6.8% and 6.8% for the
years ended December 31, 1999, 1998 and 1997, respectively.
The liability for future policy benefits for traditional life policies
has been established based upon the net level premium method using the
following assumptions:
Interest rates: Interest rates vary as follows:
YEAR OF ISSUE INTEREST RATE
------------- -------------
1999, 1998 and 1997 4 - 5.5%
1996 and prior 2.25 - 6.0%
Withdrawals: Rates, which vary by issue age, type of coverage and
policy duration, are based on Company experience
Mortality: Mortality and morbidity rates are based on published tables,
guaranteed in insurance contracts.
(7) NOTES PAYABLE
On July 11, 1994, the Company issued $50,000, 8.875% surplus notes, due
July 15, 2004. On May 21, 1996, the Company issued $50,000, 8.5% surplus
notes, due May 15, 2026. Concurrent with the issue of the new notes,
$15,000 of the notes issued on July 11, 1994 were retired. Total
interest paid was $7,356 for each year during the years ended December
31, 1999, 1998 and 1997, respectively.
The notes have been issued in accordance with Section 3941.13 of the
Ohio Revised Code. Interest payments, scheduled semi-annually, must be
approved for payment by the Director of the Department of Insurance of
the State of Ohio. All issuance costs have been capitalized and are
being amortized over the terms of the notes.
18
<PAGE> 20
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(8) FEDERAL INCOME TAX
Prior to 1984, the Life Insurance Company Income Tax Act of 1959, as
amended by the Deficit Reduction Act of 1984 (DRA), permitted the
deferral from taxation of a portion of statutory income under certain
circumstances. In these situations, the deferred income was accumulated
in the Policyholders' Surplus Account (PSA). Management considers the
likelihood of distributions from the PSA to be remote; therefore, no
Federal income tax has been provided for such distributions in the
financial statements. The DRA eliminated any additional deferrals to the
PSA. Any distributions from the PSA, however, will continue to be
taxable at the then current tax rate. The pre-tax balance of the PSA is
approximately $5,257 as of December 31, 1999.
Total income taxes for the years ended December 31, 1999, 1998 and 1997
were allocated as follows:
1999 1998 1997
-------- ------ ------
Operations $ 51,222 38,036 37,739
Unrealized gains (loss) on securities
available for sale (56,581) 2,426 30,234
-------- ------ ------
$ (5,359) 40,462 67,973
======== ====== ======
Total Federal income tax expense for the years ended December 31, 1999,
1998 and 1997 differs from the amount computed by applying the U.S.
Federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------ ---------------------- ------------------
AMOUNT % AMOUNT % AMOUNT %
--------- ------ ---------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Computed (expected)
tax expense $ 52,632 35.0 37,069 35.0 36,689 35.0
Differential earnings (3,896) (2.6) 1,232 1.1 3,720 3.5
Dividends received
deduction and tax
exempt interest (1,492) (1.0) (1,279) (1.1) (1,406) (1.3)
Other, net $ 3,978 2.6 1,014 1.0 (1,264) (1.2)
========= ====== ========= ======= ========= ======
Total expense and
effective rate $ 51,222 34.0 38,036 37.1 37,739 37.3
========= ====== ========= ======= ========= ======
</TABLE>
Included in other, net in 1999 are non-deductible expenses related to
the reorganization to a mutual holding company structure.
Total Federal income tax paid was $51,773, $32,251 and $43,522 (net of
refunds of $66, $6,661 and $0) during the years ended December 31, 1999,
1998 and 1997, respectively.
19
<PAGE> 21
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
The tax effects of temporary differences between the financial statement
carrying amounts and tax basis of assets and liabilities that give rise
to significant components of the net deferred tax liability as of
December 31, 1999 and 1998 relate to the following:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <S> <C>
Deferred tax assets:
Fixed maturity securities available-for-sale $ 14,262 --
Future policy benefits 59,251 59,651
Mortgage loans on real estate 2,529 2,529
Other assets and liabilities 34,830 24,161
---------- ----------
Total gross deferred tax assets 110,872 86,341
---------- ----------
Deferred tax liabilities:
Fixed maturity securities available-for-sale -- 65,618
Deferred policy acquisition costs 76,781 70,312
Other fixed maturities, equity securities and other
long-term investments 7,951 15,062
Other 38,245 3,177
---------- ----------
Total gross deferred tax liabilities 122,977 154,169
---------- ----------
Net deferred tax liability $ (12,105) (67,828)
========== ==========
</TABLE>
The Company has determined that a deferred tax asset valuation allowance
was not needed as of December 31, 1999 and 1998. In assessing the
realization of deferred tax assets, management considers whether it is
more likely than not that the deferred tax assets will be realized. The
ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers primarily
the scheduled reversal of deferred tax liabilities and tax planning
strategies in making this assessment and believes it is more likely than
not the Company will realize the benefits of the deductible differences
remaining as of December 31, 1999.
20
<PAGE> 22
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(9) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, Disclosures about
Fair Value of Financial Instruments (SFAS 107) requires disclosure of
fair value information about existing on and off-balance sheet financial
instruments. SFAS 107 excludes certain assets and liabilities, including
insurance contracts, other than policies such as annuities that are
classified as investment contracts, from its disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent
the underlying value of the Company. The tax ramifications of the
related unrealized gains and losses can have a significant effect on
fair value estimates and have not been considered in the estimates.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures:
CASH, SHORT-TERM INVESTMENTS AND POLICY LOANS - The carrying
amount reported in the balance sheets for these instruments
approximate their fair value.
INVESTMENT SECURITIES - Fair value for equity securities and
fixed maturity securities are the same as market value. Market
value generally represents quoted market prices traded in the
public market place. For fixed maturity securities not actively
traded, or in the case of private placements, fair value is
estimated by discounting expected future cash flows using a
current market rate applicable to the yield, credit quality and
duration of investments.
SEPARATE ACCOUNT ASSETS AND LIABILITIES - The fair value of
assets held in Separate Accounts is based on quoted market
prices. The fair value of liabilities related to Separate
Accounts is the accumulated contract values in the Separate
Account portfolios.
MORTGAGE LOANS ON REAL ESTATE - The fair value for mortgage loans
on real estate is estimated using discounted cash flow analyses,
using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations.
DEFERRED AND IMMEDIATE ANNUITY AND INVESTMENT CONTRACTS - Fair
value for the Company's liabilities under investment type
contracts is disclosed using two methods. For investment
contracts without defined maturities, fair value is the amount
payable on demand. For investment contracts with known or
determined maturities, fair value is estimated using discounted
cash flow analysis. Interest rates used are similar to currently
offered contracts with maturities consistent with those remaining
for the contracts being valued.
NOTE PAYABLE - The fair value for the note payable was determined
by discounting the scheduled cash flows of the note using a
market rate applicable to the yield, credit quality and maturity
of a similar debt instrument.
POLICYHOLDERS' DIVIDEND ACCUMULATION AND OTHER POLICYHOLDER FUNDS
- The carrying amount reported in the consolidated balance sheets
for these instruments approximates their fair value.
21
<PAGE> 23
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
The carrying amount and estimated fair value of financial instruments
subject to SFAS 107 were as follows as of December 31:
<TABLE>
<CAPTION>
1999 1998
-------------------------------------------------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Securities available-for-sale:
Fixed maturities $2,644,846 2,644,846 2,834,274 2,834,274
Equity securities 71,640 71,640 90,107 90,107
Fixed maturities held-to-maturity 829,214 833,499 749,528 829,459
Mortgage loans on real estate 1,274,156 1,243,246 1,245,180 1,245,180
Policy loans 162,078 162,078 157,555 157,555
Short-term investments 139,341 139,341 106,627 106,627
Cash 9,411 9,411 11,300 11,300
Assets held in Separate Accounts 1,741,620 1,741,620 1,154,576 1,154,576
LIABILITIES
Guaranteed investment contracts $1,197,382 1,164,411 1,094,242 1,096,184
Individual contracts 1,061,053 1,040,355 1,076,504 1,063,799
Other annuity contracts 859,536 848,976 898,781 945,694
Note payable 84,321 80,142 84,278 92,732
Dividend accumulations and
other policyholder funds 78,857 78,857 91,042 91,042
Liability accounts 1,718,864 1,718,864 1,107,049 1,107,049
</TABLE>
(10) ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE
(a) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company is a party to financial instruments with
off-balance-sheet risk in a normal course of business through
management of its investment portfolio. The Company had
outstanding commitments to fund mortgage loans, bonds and venture
capital partnerships of approximately $74,000 and $229,000 as of
December 31, 1999 and 1998, respectively. These commitments
involve 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.
22
<PAGE> 24
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
(b) SIGNIFICANT 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, and total loans in any state do not
exceed 10% of the total loan portfolio as of December 31, 1999.
The summary below depicts loan exposure of remaining principal
balances by type as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---------- -----------
<S> <C> <C>
Mortgage assets by type:
Retail $ 393,543 381,044
Office 320,988 312,092
Apartment 304,106 285,643
Industrial 157,854 162,278
Other 107,372 113,725
----------- -----------
1,283,863 1,254,782
Less valuation allowances 9,707 9,602
----------- -----------
Total mortgage loans on real estate, net $1,274,156 1,245,180
=========== ===========
</TABLE>
(11) PENSIONS AND OTHER POSTRETIREMENT BENEFITS
The Company sponsors a funded pension plan covering all home office
employees. Retirement benefits are based on years of service and the
highest average earnings in five of the last ten years. The Company also
sponsors unfunded pension plans covering home office employees where
benefits exceed Code 401(a)(17) and Code 415 limits and covering general
agents. The general agents plan provides benefits based on years of
service and average compensation during the final five and ten years of
service
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. Only home office
employees hired prior to January 1, 1996, 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: age 55 with 20 years of credited service at
retirement, age 56 with 18 years of service, age 57 with 16 years of
service grading to age 64 with 2 years of service. The health plan is
contributory with retirees contributing approximately 15% of premium
for coverage.
23
<PAGE> 25
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
CAREER AGENTS HEALTH PLAN
Only career agents with contracts effective prior to January 1, 1996,
may become eligible for these benefits provided that the agent is at
least age 55 and has 15 years of credited service at retirement. The
health plan is contributory, with retirees contributing approximately
47% of medical costs.
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
----------------------- -----------------------
1999 1998 1999 1998
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ 46,777 45,583 14,238 14,572
Service cost 2,634 2,520 300 258
Interest cost 3,282 3,131 399 333
Actuarial (loss) gain (4,341) 738 (619) (643)
Benefits paid (2,810) (5,195) (234) (282)
------------ ---------- ---------- ----------
Benefit obligation at end of year $ 45,542 46,777 14,084 14,238
============ ========== ========== ==========
CHANGE IN PLAN ASSETS
Fair value of assets at beginning of year $ 23,797 24,854
Actual return on plan assets 12,142 1,335
Employer contribution 1,410 701
Benefits paid (1,820) (3,093)
------------ ---------- ---------- ----------
Fair value of assets at end of year 35,529 23,797 -- --
============ ========== ========== ==========
CALCULATION OF FUNDED STATUS
Funded status $ (9,923) (22,980) (14,084) (14,238)
Unrecognized actuarial (gain) loss (6,222) 9,625 -- --
Unrecognized prior service cost (678) (745) -- --
------------ ---------- ---------- ----------
Net amount recognized $ (16,823) (14,100) (14,084) (14,238)
============ ========== ========== ==========
</TABLE>
24
<PAGE> 26
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
The following table shows the portions of the above values, in
aggregate, attributable to the pension plans whose Accumulated Benefit
Obligation exceeds Plan Assets.
PENSION BENEFITS
--------------------------------
1999 1998 1997
--------- -------- --------
Projected Benefit Obligation $ 19,941 18,708 18,299
Accumulated Benefit Obligation 15,981 13,864 14,307
Assets -- -- 257
Minimum Liability 15,981 13,864 14,050
Accrued Pension Cost (15,584) (10,829) (9,620)
Unrecognized Transition Obligation 2,329 2,620 2,911
WEIGHTED AVERAGE ASSUMPTIONS AS OF DECEMBER 31
PENSION BENEFITS OTHER BENEFITS
------------------ -----------------
1999 1998 1999 1998
--------- ------- ------- -------
Discount rate $ 6.90% 5.80% 7.65% 6.94%
Expected return on plan assets 10.50% 9.00% -- --
Rate of compensation increase 5.70% 5.70% -- --
For measurement purposes, a nine percent annual rate of increase in the
per capita cost of covered health care benefits was assumed for 2000. The
rate was assumed to decrease gradually to five percent for 2001 and
remain at that level thereafter.
COMPONENTS OF NET PERIODIC BENEFIT COST
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
-------------------------------------- -----------------------------------
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 2,634 2,520 2,221 300 258 301
Interest cost 3,411 3,131 3,072 399 333 468
Expected return on plan assets (2,404) (2,087) (2,037) -- -- --
Amortization of prior service cost (67) (67) (67) (504) (504) (367)
Recognized actuarial loss 549 564 300 (115) (139) (107)
------- ------ ------ ---- ---- ----
Net periodic benefit cost $ 4,123 4,061 3,489 80 (52) 295
======= ====== ====== ==== ==== ====
</TABLE>
25
<PAGE> 27
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
The health care cost trend rate assumption has a significant effect on
the amounts reported for the health care plan. A one percentage point
increase in the assumed health care cost trend rate would increase the
accumulated postretirement benefit obligation as of December 31, 1999 and
1998 by $274 and $236, respectively, and the net periodic postretirement
benefit cost for the years ended December 31, 1999 and 1998 by $17.
The Company also maintains a qualified contributory defined contribution
profit sharing plan covering substantially all employees. Company
contributions to the Profit Sharing Plan are 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 1999, 1998, and 1997
were $1,917, $1,829 and $1,825, respectively.
The Company has other deferred compensation and supplemental pension
plans. The expenses for these plans in 1999, 1998 and 1997 were $8,962,
$6,277 and $5,245, respectively.
(12) REGULATORY RISK-BASED CAPITAL, RETAINED EARNINGS AND DIVIDEND
RESTRICTIONS
ONLIC and ONLAC exceed the minimum risk-based capital requirements as
established by the NAIC as of December 31, 1999.
The Company has designated a portion of retained earnings for separate
account contingencies and investment guarantees totaling $1,648 as of
December 31, 1999 and 1998.
The payment of dividends by the Company to its parent, ONFS, is limited
by Ohio law. As of December 31, 1999, $25,791 of retained earnings, as
presented in the accompanying financial statements, is restricted as to
dividend payments in 2000.
(13) BANK LINES OF CREDIT
As of December 31, 1999 and 1998, ONLIC had a $10,000 unsecured line of
credit which was not utilized during 1999 and 1998.
(14) 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.
26
<PAGE> 28
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
(15) REINSURANCE
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 reinsurer should be unable to
meet its obligations, the Company would be liable to policyholders. The
Company has reinsurance recoverables of $95,291 and $78,265 at December
31, 1999 and 1998, respectively. Ceded premiums approximated 12% and 9%
of gross earned life and accident and health premiums during 1999 and
1998, respectively.
(16) SEGMENT INFORMATION
The Company conducts its business in three operating segments:
individual life insurance, pension and annuities, and other insurance.
Individual life insurance includes whole life, universal life, variable
universal life and term life. All products within this segment share
similar distribution systems and some degree of mortality (loss of life)
risk. Pension and annuities include fixed and variable deferred and
immediate annuities issued to individuals as well as guaranteed
investment and accumulated deposit contracts issued to groups. The
products in this segment are primarily designed for asset accumulation
and generation of investment returns. Other insurance includes
individual disability insurance along with group life and disability
insurance. These lines are viewed as "complementary" lines that allow us
to provide a broad portfolio of products to enhance sales in our two
primary operating segments. In addition to our operating segments,
certain assets not specifically allocated to support any product line,
along with various corporate expenses and liabilities, are assigned to
the corporate segment. All revenue, expense, asset and liability amounts
are allocated to one of the four segments. As such, the sum of the
financial information from these segments equals the information for the
Company as a whole.
27
<PAGE> 29
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OR
AS OF DECEMBER 31, 1999
----------------------------------------------------------------------------
INDIVIDUAL PENSION
LIFE AND OTHER
INSURANCE ANNUITIES INSURANCE CORPORATE TOTAL
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Traditional life insurance premiums $ 101,019 $ -- $ 30,260 $ -- $ 131,279
Accident and health insurance premiums -- -- 25,530 -- 25,530
Annuity premiums and charges -- 36,931 -- -- 36,931
Universal life policy charges 66,189 -- -- -- 66,189
Net investment income 118,147 265,808 8,756 21,436 414,147
Net realized gains on investments -- -- -- 26,484 26,484
Other income 172 14,355 -- -- 14,527
----------------------------------------------------------------------------
285,527 317,094 64,546 47,920 715,087
Benefits and expenses:
Benefits and claims 160,284 206,575 49,048 -- 415,907
Provision for policyholder dividends 27,563 19 -- -- 27,582
Operating expenses 46,148 46,743 14,102 14,227 121,220
----------------------------------------------------------------------------
233,995 253,337 63,150 14,227 564,709
Income before federal income taxes $ 51,532 $ 63,757 $ 1,396 $ 33,693 $ 150,378
============================================================================
Total assets as of December 31, 1999 $2,145,787 $4,913,534 $159,131 $299,933 $7,518,385
============================================================================
</TABLE>
(1) Premiums, policy charges and investment income for life and other
insurance includes the net contribution from Closed Block for the
year ended December 31, 1999.
28
<PAGE> 30
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OR
AS OF DECEMBER 31, 1998
----------------------------------------------------------------------------------
INDIVIDUAL PENSION
LIFE AND OTHER
INSURANCE ANNUITIES INSURANCE CORPORATE TOTAL
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Traditional life insurance premiums $ 91,565 $ -- $ 30,335 $ -- $ 121,900
Accident and health insurance premiums -- -- 25,183 -- 25,183
Annuity premiums and charges -- 32,280 -- -- 32,280
Universal life policy charges 59,743 -- -- -- 59,743
Net investment income 111,723 267,560 7,721 7,821 394,825
Net realized gains on investments -- -- -- 1,903 1,903
Other income (29) 13,189 -- -- 13,160
------------------------------------------------------------------------------
263,002 313,029 63,239 9,724 648,994
Benefits and expenses:
Benefits and claims 146,503 212,512 41,647 -- 400,662
Provision for policyholder dividends 27,635 24 -- -- 27,659
Operating expenses 41,814 39,963 16,440 16,545 114,762
------------------------------------------------------------------------------
215,952 252,499 58,087 16,545 543,083
Income before federal income taxes $ 47,050 $ 60,530 $ 5,152 $ (6,821) $ 105,911
==============================================================================
Total assets as of December 31, 1998 $1,994,834 $4,263,703 $161,577 $441,408 $6,861,522
==============================================================================
</TABLE>
(1) Premiums, policy charges and investment income for life and other
insurance includes the net contribution from Closed Block for the
year ended December 31, 1998.
29
<PAGE> 31
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OR
AS OF DECEMBER 31, 1998
--------------------------------------------------------------------------------
INDIVIDUAL PENSION
LIFE AND OTHER
INSURANCE ANNUITIES INSURANCE CORPORATE TOTAL
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Traditional life insurance premiums $ 91,758 $ -- $ 26,202 $ -- $ 117,960
Accident and health insurance premiums -- -- 23,921 -- 23,921
Annuity premiums and charges -- 34,187 -- -- 34,187
Universal life policy charges 50,991 -- -- -- 50,991
Net investment income 102,107 272,153 8,084 4,349 386,693
Net realized gains on investments -- -- -- 12,500 12,500
Other income (26) 12,830 -- -- 12,804
--------------------------------------------------------------------------------
244,830 319,170 58,207 16,849 639,056
Benefits and expenses:
Benefits and claims 133,850 222,283 35,773 -- 391,906
Provision for policyholder dividends 25,309 23 -- -- 25,332
Operating expenses 39,001 37,930 17,204 22,857 116,992
--------------------------------------------------------------------------------
198,160 260,236 52,977 22,857 534,230
Income before federal income taxes $ 46,670 $ 58,934 $ 5,230 $ (6,008) $ 104,826
================================================================================
Total assets as of December 31, 1997 $1,722,594 $4,033,860 $156,600 $417,508 $6,330,562
================================================================================
</TABLE>
30
<PAGE> 55
OHIO NATIONAL VARIABLE ACCOUNT B
STATEMENTS OF ASSETS AND CONTRACT OWNERS' EQUITY
December 31, 1999
<TABLE>
<CAPTION>
MONEY
EQUITY MARKET BOND OMNI INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Assets -- Investments at market value (note
2)............................................ $52,359,628 $5,195,427 $4,056,141 $35,778,591 $33,560,519
=========== ========== ========== =========== ===========
Contract owners' equity
Contracts in accumulation period (note 3)... 51,245,715 4,306,774 4,015,613 35,237,550 33,545,985
Annuity reserves for contract in payment
period...................................... 1,113,913 888,653 40,528 541,041 14,534
----------- ---------- ---------- ----------- -----------
Total contract owners' equity................. $52,359,628 $5,195,427 $4,056,141 $35,778,591 $33,560,519
=========== ========== ========== =========== ===========
<CAPTION>
CAPITAL
APPRECIATION SMALL CAP
SUBACCOUNT SUBACCOUNT
------------ -----------
<S> <C> <C>
Assets -- Investments at market value (note
2)............................................ $11,116,842 $19,591,957
=========== ===========
Contract owners' equity
Contracts in accumulation period (note 3)... 11,108,182 19,591,957
Annuity reserves for contract in payment
period...................................... 8,660 0
----------- -----------
Total contract owners' equity................. $11,116,842 $19,591,957
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL AGGRESSIVE CORE GROWTH &
COMPANY GROWTH GROWTH INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Assets -- Investments at market value (note 2).......... $7,091,706 $2,845,349 $4,586,920 $15,238,449
========== ========== ========== ===========
Contract owners' equity
Contracts in accumulation period (note 3)............. 7,091,706 2,845,349 4,586,920 15,212,722
Annuity reserves for contract in payment period....... 0 0 0 25,727
---------- ---------- ---------- -----------
Total contract owners' equity........................... $7,091,706 $2,845,349 $4,586,920 $15,238,449
========== ========== ========== ===========
<CAPTION>
S&P 500 SOCIAL EQUITY
INDEX AWARENESS INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ----------
<S> <C> <C> <C>
Assets -- Investments at market value (note 2).......... $23,937,966 $ 350,697 $ 3,137
=========== =========== =========
Contract owners' equity
Contracts in accumulation period (note 3)............. 23,703,999 350,697 0
Annuity reserves for contract in payment period....... 233,967 0 0
----------- ----------- ---------
Total contract owners' equity........................... $23,937,966 $ 350,697 $ 3,137
=========== =========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
121
<PAGE> 56
OHIO NATIONAL VARIABLE ACCOUNT B
STATEMENTS OF ASSETS AND CONTRACT OWNERS' EQUITY
December 31, 1999
<TABLE>
<CAPTION>
HIGH INCOME CAPITAL DOW TARGET 10 DOW TARGET 5
BOND GROWTH NOVEMBER NOVEMBER
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Assets -- Investments at market value (note
2)......................................... $ 12,685 $ 198,091 $ 7,285 $ 7,943
========== ========== ========== ==========
Contract owners' equity
Contracts in accumulation period (note
3)...................................... $ 12,685 $ 198,091 $ 7,285 $ 7,943
========== ========== ========== ==========
<CAPTION>
JANUS ASPEN SERIES
-----------------------------------------
WORLDWIDE
GROWTH GROWTH BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ----------
<S> <C> <C> <C>
Assets -- Investments at market value (note
2)......................................... $ 1,138,374 $779,519 $566,872
=========== ======== ========
Contract owners' equity
Contracts in accumulation period (note
3)...................................... $ 1,138,374 $779,519 $566,872
=========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
MORGAN
STRONG VARIABLE FUNDS STANLEY GOLDMAN SACHS
--------------------------------------- ---------- ------------------------
OPPORTUNITY SCHAFER MID-CAP US REAL VIT GROWTH VIT CORE
II VALUE II GROWTH II ESTATE & INCOME US EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Assets -- Investments at market value (note
2).......................................... $ 5,502 $ 5,744 $ 112,271 $58,379 $22,280 $92,184
======= ======= ========= ======= ======= =======
Contract owners' equity
Contracts in accumulation period (note 3)... $ 5,502 $ 5,744 $ 112,271 $58,379 $22,280 $92,184
======= ======= ========= ======= ======= =======
<CAPTION>
LAZARD RETIREMENT
------------------------
EMERGING SMALL
MARKET CAP
SUBACCOUNT SUBACCOUNT
---------- ----------
<S> <C> <C>
Assets -- Investments at market value (note
2).......................................... $ 4,299 $ 7,358
======== ========
Contract owners' equity
Contracts in accumulation period (note 3)... $ 4,299 $ 7,358
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
122
<PAGE> 57
OHIO NATIONAL VARIABLE ACCOUNT B
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
EQUITY MONEY MARKET BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT
--------------------------- ------------------------- -----------------------
1999 1998 1999 1998 1999 1998
------------ ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends............. $ 158,742 $ 643,736 $ 225,724 $ 201,970 $ 298,236 $ 289,292
Risk & administrative expense
(note 4)...................... (478,211) (546,470) (42,741) (42,082) (40,556) (46,515)
------------ ---------- ---------- ---------- --------- ---------
Net investment activity..... (319,469) 97,266 182,983 159,888 257,680 242,777
------------ ---------- ---------- ---------- --------- ---------
Realized & Unrealized gain (loss)
on investments:
Reinvested capital gains...... 20,150,862 967,611 0 0 0 0
Realized gain (loss).......... 3,064,788 1,549,381 (3,325) 0 (44,458) 17,889
Unrealized gain (loss)........ (14,467,643) (381,417) 0 0 (230,000) (89,689)
------------ ---------- ---------- ---------- --------- ---------
Net gain (loss) on
investments............ 8,748,007 2,135,575 (3,325) 0 (274,458) (71,800)
------------ ---------- ---------- ---------- --------- ---------
Net increase (decrease)
in contract owners'
equity from
operations.......... $ 8,428,538 $2,232,841 $ 179,658 $ 159,888 $ (16,778) $ 170,977
============ ========== ========== ========== ========= =========
<CAPTION>
OMNI
SUBACCOUNT
-------------------------
1999 1998
---------- ----------
<S> <C> <C>
Investment activity:
Reinvested dividends............. $ 796,221 $1,083,391
Risk & administrative expense
(note 4)...................... (364,706) (427,281)
---------- ----------
Net investment activity..... 431,515 656,110
---------- ----------
Realized & Unrealized gain (loss)
on investments:
Reinvested capital gains...... 1,224,231 6,749
Realized gain (loss).......... 2,008,442 1,039,662
Unrealized gain (loss)........ (148,783) (397,565)
---------- ----------
Net gain (loss) on
investments............ 3,083,890 648,846
---------- ----------
Net increase (decrease)
in contract owners'
equity from
operations.......... $3,515,405 $1,304,956
========== ==========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL CAPITAL APPRECIATION SMALL CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------------------- ------------------------- --------------------------
1999 1998 1999 1998 1999 1998
----------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends............ $ 0 $1,156,082 $ 337,943 $ 290,823 $ 0 $ 0
Risk & administrative expense
(note 4)..................... (247,052) (309,250) (114,400) (117,381) (117,155) (76,080)
----------- ---------- ---------- ---------- ----------- ----------
Net investment activity.... (247,052) 846,832 223,543 173,442 (117,155) (76,080)
----------- ---------- ---------- ---------- ----------- ----------
Realized & Unrealized gain
(loss) on investments:
Reinvested capital gains..... 0 1,161,180 1,027,347 911,853 5,016,049 125
Realized gain (loss)......... (461,499) (77,521) 107,420 111,752 803,917 47,477
Unrealized gain (loss)....... 14,166,256 (927,238) (766,935) (664,732) 4,000,217 827,495
----------- ---------- ---------- ---------- ----------- ----------
Net gain on
investments........... 13,704,757 156,421 367,832 358,873 9,820,183 875,097
----------- ---------- ---------- ---------- ----------- ----------
Net increase in
contract owners'
equity from
operations......... $13,457,705 $1,003,253 $ 591,375 $ 532,315 $ 9,703,028 $ 799,017
=========== ========== ========== ========== =========== ==========
<CAPTION>
INTERNATIONAL SMALL CO.
SUBACCOUNT
-----------------------
1999 1998
---------- --------
<S> <C> <C>
Investment activity:
Reinvested dividends............ $ 0 $123,763
Risk & administrative expense
(note 4)..................... (44,594) (41,755)
---------- --------
Net investment activity.... (44,594) 82,008
---------- --------
Realized & Unrealized gain
(loss) on investments:
Reinvested capital gains..... 671,300 380,757
Realized gain (loss)......... 93,100 7,587
Unrealized gain (loss)....... 2,962,132 (376,963)
---------- --------
Net gain on
investments........... 3,726,532 11,381
---------- --------
Net increase in
contract owners'
equity from
operations......... $3,681,938 $ 93,389
========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
123
<PAGE> 58
OHIO NATIONAL VARIABLE ACCOUNT B
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH CORE GROWTH GROWTH & INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------- ------------------------- -------------------------
1999 1998 1999 1998 1999 1998
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends............. $ 0 $ 0 $ 0 $ 0 $ 21,336 $ 60,145
Risk & administrative expense
(note 4)...................... (26,005) (27,354) (24,373) (16,008) (98,158) (58,966)
---------- ---------- ---------- ---------- ---------- ----------
Net investment activity..... (26,005) (27,354) (24,373) (16,008) (76,822) 1,179
---------- ---------- ---------- ---------- ---------- ----------
Realized & Unrealized gain (loss)
on investments:
Reinvested capital gains...... 0 200,891 949,341 0 2,196,234 0
Realized gain (loss).......... (47,192) 23,950 144,682 4,074 225,476 (31,303)
Unrealized gain (loss)........ 176,397 (14,822) 1,030,245 147,453 3,034,105 286,998
---------- ---------- ---------- ---------- ---------- ----------
Net gain on
investments............ 129,205 210,019 2,124,268 151,527 5,455,815 255,695
---------- ---------- ---------- ---------- ---------- ----------
Net increase in
contract owners'
equity from
operations.......... $ 103,200 $ 182,665 $2,099,895 $ 135,519 $5,378,993 $ 256,874
========== ========== ========== ========== ========== ==========
<CAPTION>
S&P 500 INDEX
SUBACCOUNT
-------------------------
1999 1998
---------- ----------
<S> <C> <C>
Investment activity:
Reinvested dividends............. $ 495,882 $ 187,262
Risk & administrative expense
(note 4)...................... (195,698) (65,983)
---------- ----------
Net investment activity..... 300,184 121,279
---------- ----------
Realized & Unrealized gain (loss)
on investments:
Reinvested capital gains...... 1,783,851 457,759
Realized gain (loss).......... 476,383 94,319
Unrealized gain (loss)........ 1,973,695 1,128,994
---------- ----------
Net gain on
investments............ 4,233,929 1,681,072
---------- ----------
Net increase in
contract owners'
equity from
operations.......... $4,534,113 $1,802,351
========== ==========
</TABLE>
<TABLE>
<CAPTION>
HIGH
EQUITY INCOME CAPITAL
SOCIAL AWARENESS INCOME BOND GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------- ---------- ---------- -----------
1999 1998 1999(a) 1999(a) 1999(a)
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends.......................... $ 1,714 $ 3,337 $ 6 $ 121 $ 0
Risk & administrative expense (note 4)........ (3,925) (6,311) 0 (6) (122)
---------- ---------- ---------- ---------- -----------
Net investment activity.................. (2,211) (2,974) 6 115 (122)
---------- ---------- ---------- ---------- -----------
Realized & Unrealized gain (loss) on
investments:
Reinvested capital gains................... 0 0 0 0 19,904
Realized gain (loss)....................... (115,903) (36,029) 0 0 1,964
Unrealized gain (loss)..................... 155,885 (166,905) 34 (52) (340)
---------- ---------- ---------- ---------- -----------
Net gain (loss) on investments........ 39,982 (202,934) 34 (52) 21,528
---------- ---------- ---------- ---------- -----------
Net increase (decrease) in contract
owners' equity from operations... $ 37,771 $ (205,908) $ 40 $ 63 $ 21,406
========== ========== ========== ========== ===========
<CAPTION>
DOW DOW
TARGET 10 TARGET 5
NOVEMBER NOVEMBER
SUBACCOUNT SUBACCOUNT
---------- ----------
1999(a) 1999(a)
---------- ----------
<S> <C> <C>
Investment activity:
Reinvested dividends.......................... $ 24 $ 34
Risk & administrative expense (note 4)........ (9) (10)
---------- --------
Net investment activity.................. 15 24
---------- --------
Realized & Unrealized gain (loss) on
investments:
Reinvested capital gains................... 0 0
Realized gain (loss)....................... 0 (75)
Unrealized gain (loss)..................... 101 (32)
---------- --------
Net gain (loss) on investments........ 101 (107)
---------- --------
Net increase (decrease) in contract
owners' equity from operations... $ 116 $ (83)
========== ========
</TABLE>
- ---------------
(a) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
124
<PAGE> 59
OHIO NATIONAL VARIABLE ACCOUNT B
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES RETIREMENT SHARES
-------------------------------------------
WORLDWIDE
GROWTH GROWTH BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ----------
1999(a) 1999(a) 1999(a)
----------- ----------- ----------
<S> <C> <C> <C>
Investment activity:
Reinvested dividends........................ $ 962 $ 0 $ 5,962
Risk & administrative expense (note 4)...... (681) (467) (397)
----------- ----------- ----------
Net investment activity................ 281 (467) 5,565
----------- ----------- ----------
Realized & Unrealized gain (loss) on
investments:
Reinvested capital gains................. 0 0 0
Realized gain (loss)..................... 5,243 2,566 356
Unrealized gain (loss)................... 65,747 83,099 21,636
----------- ----------- ----------
Net gain (loss) on investments......... 70,990 85,665 21,992
----------- ----------- ----------
Net increase (decrease) in contract
owners' equity from operations.... $ 71,271 $ 85,198 $ 27,557
=========== =========== ==========
<CAPTION>
MORGAN
STRONG VARIABLE ANNUITY FUNDS STANLEY
------------------------------------------- ----------
OPPORTUNITY SCHAFER MID-CAP US REAL
II VALUE II GROWTH ESTATE
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ---------- ----------
1999(a) 1999(a) 1999(a) 1999(a)
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends........................ $ 0 $ 0 $ 0 $ 1,107
Risk & administrative expense (note 4)...... 0 0 (35) (23)
---------- ---------- ---------- ----------
Net investment activity................ 0 0 (35) 1,084
---------- ---------- ---------- ----------
Realized & Unrealized gain (loss) on
investments:
Reinvested capital gains................. 0 0 0 0
Realized gain (loss)..................... (1,646) 1,758 217 0
Unrealized gain (loss)................... 49 53 7,312 1,118
---------- ---------- ---------- ----------
Net gain (loss) on investments......... (1,597) 1,811 7,529 1,118
---------- ---------- ---------- ----------
Net increase (decrease) in contract
owners' equity from operations.... $ (1,597) $ 1,811 $ 7,494 $ 2,202
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
GOLDMAN SACHS LAZARD RETIREMENT
--------------------------- -------------------------
VIT GROWTH VIT CORE EMERGING SMALL
& INCOME US EQUITY MARKET CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ---------- ----------
1999(a) 1999(a) 1999(a) 1999(a)
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends........................ $ 197 $ 0 $ 8 $ 0
Risk & administrative expense (note 4)...... (27) (29) (3) 0
----------- ----------- ---------- ----------
Net investment activity................ 170 (29) 5 0
----------- ----------- ---------- ----------
Realized & Unrealized gain (loss) on
investments:
Reinvested capital gains................. 0 0 0 0
Realized gain............................ 0 225 0 0
Unrealized gain.......................... 494 3,467 471 1
----------- ----------- ---------- ----------
Net gain on investments................ 494 3,692 471 1
----------- ----------- ---------- ----------
Net increase in contract owners'
equity from operations............ $ 664 $ 3,663 $ 476 $ 1
=========== =========== ========== ==========
</TABLE>
- ---------------
(a) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
125
<PAGE> 60
OHIO NATIONAL VARIABLE ACCOUNT B
STATEMENT OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
EQUITY SUBACCOUNT MONEY MARKET SUBACCOUNT BOND SUBACCOUNT
--------------------------- ------------------------ ------------------------
1999 1998 1999 1998 1999 1998
------------ ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in contract owners'
equity from operations:
Net investment activity............... $ (319,469) $ 97,266 $ 182,983 $ 159,888 $ 257,680 $ 242,777
Reinvested capital gains.............. 20,150,862 967,611 0 0 0 0
Realized gain (loss).................. 3,064,788 1,549,381 (3,325) 0 (44,458) 17,889
Unrealized gain (loss)................ (14,467,643) (381,417) 0 0 (230,000) (89,689)
------------ ----------- ---------- ---------- ---------- ----------
Net increase (decrease) in contract
owners' equity from operations... 8,428,538 2,232,841 179,658 159,888 (16,778) 170,977
------------ ----------- ---------- ---------- ---------- ----------
Equity transactions:
Sales:
Contract purchase payments......... 949,792 2,100,044 621,151 2,147,915 362,884 935,872
Transfers from fixed & other
subaccounts...................... 2,858,015 2,435,432 5,065,523 2,619,746 239,788 1,709,892
------------ ----------- ---------- ---------- ---------- ----------
3,807,807 4,535,476 5,686,674 4,767,661 602,672 2,645,764
------------ ----------- ---------- ---------- ---------- ----------
Redemptions:
Withdrawals & surrenders........... 5,123,319 3,364,861 1,372,115 954,565 564,887 290,032
Annuity & death benefit payments... 759,507 1,078,632 128,071 83,578 269,265 48,171
Transfers to fixed & other
subaccounts...................... 5,577,253 1,941,051 3,480,999 2,875,688 764,132 1,298,182
------------ ----------- ---------- ---------- ---------- ----------
11,460,079 6,384,544 4,981,185 3,913,831 1,598,284 1,636,385
------------ ----------- ---------- ---------- ---------- ----------
Net equity transactions.......... (7,652,272) (1,849,068) 705,489 853,830 (995,612) 1,009,379
------------ ----------- ---------- ---------- ---------- ----------
Net change in contract owners'
equity...................... 776,266 383,773 885,147 1,013,718 (1,012,390) 1,180,356
Contract owners' equity:
Beginning of period................... 51,583,362 51,199,589 4,310,280 3,296,562 5,068,531 3,888,175
------------ ----------- ---------- ---------- ---------- ----------
End of period......................... $ 52,359,628 $51,583,362 $5,195,427 $4,310,280 $4,056,141 $5,068,531
============ =========== ========== ========== ========== ==========
<CAPTION>
OMNI SUBACCOUNT
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
Increase (decrease) in contract owners'
equity from operations:
Net investment activity............... $ 431,515 $ 656,110
Reinvested capital gains.............. 1,224,231 6,749
Realized gain (loss).................. 2,008,442 1,039,662
Unrealized gain (loss)................ (148,783) (397,565)
----------- -----------
Net increase (decrease) in contract
owners' equity from operations... 3,515,405 1,304,956
----------- -----------
Equity transactions:
Sales:
Contract purchase payments......... 666,992 2,747,209
Transfers from fixed & other
subaccounts...................... 1,106,315 2,178,355
----------- -----------
1,773,307 4,925,564
----------- -----------
Redemptions:
Withdrawals & surrenders........... 3,564,970 3,192,559
Annuity & death benefit payments... 932,987 780,199
Transfers to fixed & other
subaccounts...................... 5,144,919 1,931,656
----------- -----------
9,642,876 5,904,414
----------- -----------
Net equity transactions.......... (7,869,569) (978,850)
----------- -----------
Net change in contract owners'
equity...................... (4,354,164) 326,106
Contract owners' equity:
Beginning of period................... 40,132,755 39,806,649
----------- -----------
End of period......................... $35,778,591 $40,132,755
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
126
<PAGE> 61
OHIO NATIONAL VARIABLE ACCOUNT B
STATEMENT OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
CAPITAL APPRECIATION
INTERNATIONAL SUBACCOUNT SUBACCOUNT SMALL CAP SUBACCOUNT
-------------------------- -------------------------- -------------------------
1999 1998 1999 1998 1999 1998
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase in contract owners' equity
from operations:
Net investment activity.............. $ (247,052) $ 846,832 $ 223,543 $ 173,442 $ (117,155) $ (76,080)
Reinvested capital gains............. 0 1,161,180 1,027,347 911,853 5,016,049 125
Realized gain (loss)................. (461,499) (77,521) 107,420 111,752 803,917 47,477
Unrealized gain (loss)............... 14,166,256 (927,238) (766,935) (664,732) 4,000,217 827,495
----------- ----------- ----------- ----------- ----------- ----------
Net increase in contract owners'
equity from operations.......... 13,457,705 1,003,253 591,375 532,315 9,703,028 799,017
----------- ----------- ----------- ----------- ----------- ----------
Equity transactions:
Sales:
Contract purchase payments........ 405,805 1,100,574 644,262 1,163,240 643,462 702,881
Transfers from fixed & other
subaccounts..................... 506,762 564,994 931,594 665,066 3,272,715 700,063
----------- ----------- ----------- ----------- ----------- ----------
912,567 1,665,568 1,575,856 1,828,306 3,916,177 1,402,944
----------- ----------- ----------- ----------- ----------- ----------
Redemptions:
Withdrawals & surrenders.......... 2,409,535 1,562,756 835,021 231,140 1,327,858 193,335
Annuity & death benefit
payments........................ 491,647 255,710 276,869 129,216 181,117 70,497
Transfers to fixed & other
subaccounts..................... 6,030,672 5,087,977 1,880,606 1,128,899 1,558,667 878,703
----------- ----------- ----------- ----------- ----------- ----------
8,931,854 6,906,443 2,992,496 1,489,255 3,067,642 1,142,535
----------- ----------- ----------- ----------- ----------- ----------
Net equity transactions......... (8,019,287) (5,240,875) (1,416,640) 339,051 848,535 260,409
----------- ----------- ----------- ----------- ----------- ----------
Net change in contract
owners' equity............. 5,438,418 (4,237,622) (825,265) 871,366 10,551,563 1,059,426
Contract owners' equity:
Beginning of period.................. 28,122,101 32,359,723 11,942,107 11,070,741 9,040,394 7,980,968
----------- ----------- ----------- ----------- ----------- ----------
End of period........................ $33,560,519 $28,122,101 $11,116,842 $11,942,107 $19,591,957 $9,040,394
=========== =========== =========== =========== =========== ==========
<CAPTION>
INTERNATIONAL SMALL CO.
SUBACCOUNT
------------------------
1999 1998
---------- ----------
<S> <C> <C>
Increase in contract owners' equity
from operations:
Net investment activity.............. $ (44,594) $ 82,008
Reinvested capital gains............. 671,300 380,757
Realized gain (loss)................. 93,100 7,587
Unrealized gain (loss)............... 2,962,132 (376,963)
---------- ----------
Net increase in contract owners'
equity from operations.......... 3,681,938 93,389
---------- ----------
Equity transactions:
Sales:
Contract purchase payments........ 108,466 233,524
Transfers from fixed & other
subaccounts..................... 678,360 344,948
---------- ----------
786,826 578,472
---------- ----------
Redemptions:
Withdrawals & surrenders.......... 151,314 77,787
Annuity & death benefit
payments........................ 39,040 7,840
Transfers to fixed & other
subaccounts..................... 1,496,514 478,743
---------- ----------
1,686,868 564,370
---------- ----------
Net equity transactions......... (900,042) 14,102
---------- ----------
Net change in contract
owners' equity............. 2,781,896 107,491
Contract owners' equity:
Beginning of period.................. 4,309,810 4,202,319
---------- ----------
End of period........................ $7,091,706 $4,309,810
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
127
<PAGE> 62
OHIO NATIONAL VARIABLE ACCOUNT B
STATEMENT OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH
SUBACCOUNT CORE GROWTH SUBACCOUNT GROWTH & INCOME SUBACCOUNT
------------------------ ------------------------ ---------------------------
1999 1998 1999 1998 1999 1998
---------- ---------- ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Increase in contract owners' equity from
operations:
Net investment activity................ $ (26,005) $ (27,354) $ (24,373) $ (16,008) $ (76,822) $ 1,179
Reinvested capital gains............... 0 200,891 949,341 0 2,196,234 0
Realized gain (loss)................... (47,192) 23,950 144,682 4,074 225,476 (31,303)
Unrealized gain (loss)................. 176,397 (14,822) 1,030,245 147,453 3,034,105 286,998
---------- ---------- ---------- ---------- ----------- ----------
Net increase in contract owners'
equity from operations............ 103,200 182,665 2,099,895 135,519 5,378,993 256,874
---------- ---------- ---------- ---------- ----------- ----------
Equity transactions:
Sales:
Contract purchase payments.......... 110,532 365,436 287,789 315,440 843,108 1,767,790
Transfers from fixed & other
subaccounts....................... 493,901 146,582 1,298,977 320,848 4,200,569 2,890,406
---------- ---------- ---------- ---------- ----------- ----------
604,433 512,018 1,586,766 636,288 5,043,677 4,658,196
---------- ---------- ---------- ---------- ----------- ----------
Redemptions:
Withdrawals & surrenders............ 261,509 101,645 147,101 70,806 504,250 463,117
Annuity & death benefit payments.... 76,685 18,453 2,610 3,721 90,264 68,077
Transfers to fixed & other
subaccounts....................... 490,832 434,257 672,679 581,882 1,693,204 1,167,686
---------- ---------- ---------- ---------- ----------- ----------
829,026 554,355 822,390 656,409 2,287,718 1,698,880
---------- ---------- ---------- ---------- ----------- ----------
Net equity transactions........... (224,593) (42,337) 764,376 (20,121) 2,755,959 2,959,316
---------- ---------- ---------- ---------- ----------- ----------
Net change in contract owners'
equity....................... (121,393) 140,328 2,864,271 115,398 8,134,952 3,216,190
Contract owners' equity:
Beginning of period.................... 2,966,742 2,826,414 1,722,649 1,607,251 7,103,497 3,887,307
---------- ---------- ---------- ---------- ----------- ----------
End of period.......................... $2,845,349 $2,966,742 $4,586,920 $1,722,649 $15,238,449 $7,103,497
========== ========== ========== ========== =========== ==========
<CAPTION>
S&P 500 INDEX SUBACCOUNT
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
Increase in contract owners' equity from
operations:
Net investment activity................ $ 300,184 $ 121,279
Reinvested capital gains............... 1,783,851 457,759
Realized gain (loss)................... 476,383 94,319
Unrealized gain (loss)................. 1,973,695 1,128,994
----------- -----------
Net increase in contract owners'
equity from operations............ 4,534,113 1,802,351
----------- -----------
Equity transactions:
Sales:
Contract purchase payments.......... 1,479,192 3,550,150
Transfers from fixed & other
subaccounts....................... 12,478,613 4,851,282
----------- -----------
13,957,805 8,401,432
----------- -----------
Redemptions:
Withdrawals & surrenders............ 1,086,225 616,453
Annuity & death benefit payments.... 158,447 60,889
Transfers to fixed & other
subaccounts....................... 4,253,342 1,458,064
----------- -----------
5,498,014 2,135,406
----------- -----------
Net equity transactions........... 8,459,791 6,266,026
----------- -----------
Net change in contract owners'
equity....................... 12,993,904 8,068,377
Contract owners' equity:
Beginning of period.................... 10,944,062 2,875,685
----------- -----------
End of period.......................... $23,937,966 $10,944,062
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
128
<PAGE> 63
OHIO NATIONAL VARIABLE ACCOUNT B
STATEMENT OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
HIGH
EQUITY INCOME CAPITAL DOW TARGET 10 DOW TARGET 5
SOCIAL AWARENESS INCOME BOND GROWTH NOVEMBER NOVEMBER
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------------------- ---------- ---------- ---------- ------------- -------------
1999 1998 1999(a) 1999(a) 1999(a) 1999(a) 1999(a)
--------- ---------- ---------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
contract owners' equity from
operations:
Net investment activity..... $ (2,211) $ (2,974) $ 6 $ 115 $ (122) $ 15 $ 24
Reinvested capital gains.... 0 0 0 0 19,904 0 0
Realized gain (loss)........ (115,903) (36,029) 0 0 1,964 0 (75)
Unrealized gain (loss)...... 155,885 (166,905) 34 (52) (340) 101 (32)
--------- --------- ------ ------- -------- ------ ------
Net increase (decrease)
in contract owners'
equity from
operations............. 37,771 (205,908) 40 63 21,406 116 (83)
--------- --------- ------ ------- -------- ------ ------
Equity transactions:
Sales:
Contract purchase
payments............... 6,009 236,842 0 0 38,558 10 700
Transfers from fixed &
other subaccounts...... 19,537 241,588 3,097 12,622 145,271 11,710 7,326
--------- --------- ------ ------- -------- ------ ------
25,546 478,430 3,097 12,622 183,829 11,720 8,026
--------- --------- ------ ------- -------- ------ ------
Redemptions:
Withdrawals &
surrenders............. 27,677 13,191 0 0 0 0 0
Annuity & death benefit
payments............... 5,358 4,845 0 0 0 0 0
Transfers to fixed &
other subaccounts...... 248,500 196,683 0 0 7,144 4,551 0
--------- --------- ------ ------- -------- ------ ------
281,535 214,719 0 0 7,144 4,551 0
--------- --------- ------ ------- -------- ------ ------
Net equity
transactions........ (255,989) 263,711 3,097 12,622 176,685 7,169 8,026
--------- --------- ------ ------- -------- ------ ------
Net change in
contract owners'
equity............ (218,218) 57,803 3,137 12,685 198,091 7,285 7,943
Contract owners' equity:
Beginning of period......... 568,915 511,112 0 0 0 0 0
--------- --------- ------ ------- -------- ------ ------
End of period............... $ 350,697 $ 568,915 $3,137 $12,685 $198,091 $7,285 $7,943
========= ========= ====== ======= ======== ====== ======
</TABLE>
- ---------------
(a) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
129
<PAGE> 64
OHIO NATIONAL VARIABLE ACCOUNT B
STATEMENT OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
MORGAN
JANUS ASPEN SERIES RETIREMENT SHARES STRONG VARIABLE ANNUITY FUNDS STANLEY
-------------------------------------- --------------------------------------- ----------
WORLDWIDE OPPORTUNITY SCHAFER MID-CAP US REAL
GROWTH GROWTH BALANCED II VALUE II GROWTH ESTATE
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ----------- ---------- ---------- ----------
1999(a) 1999(a) 1999(a) 1999(a) 1999(a) 1999(a) 1999(a)
---------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in contract
owners' equity from
operations:
Net investment activity....... $ 281 $ (467) $ 5,565 $ 0 $ 0 $ (35) $ 1,084
Reinvested capital gains...... 0 0 0 0 0 0 0
Realized gain (loss).......... 5,243 2,566 356 (1,646) 1,758 217 0
Unrealized gain (loss)........ 65,747 83,099 21,636 49 53 7,312 1,118
---------- -------- -------- ------- ------ -------- -------
Net increase (decrease)
in contract owners'
equity from
operations............ 71,271 85,198 27,557 (1,597) 1,811 7,494 2,202
---------- -------- -------- ------- ------ -------- -------
Equity transactions:
Sales:
Contract purchase
payments.............. 53,702 114,377 70,260 0 0 26,413 0
Transfers from fixed &
other subaccounts..... 1,075,866 627,548 591,947 11,033 3,933 83,377 56,177
---------- -------- -------- ------- ------ -------- -------
1,129,568 741,925 662,207 11,033 3,933 109,790 56,177
---------- -------- -------- ------- ------ -------- -------
Redemptions:
Withdrawals & surrenders... 0 0 0 0 0 0 0
Annuity & death benefit
payments................. 155 0 703 0 0 0 0
Transfers to fixed & other
subaccounts.............. 62,310 47,605 122,189 3,934 0 5,013 0
---------- -------- -------- ------- ------ -------- -------
62,465 47,605 122,892 3,934 0 5,013 0
---------- -------- -------- ------- ------ -------- -------
Net equity
transactions.......... 1,067,103 694,320 539,315 7,099 3,933 104,777 56,177
---------- -------- -------- ------- ------ -------- -------
Net change in contract
owners' equity...... 1,138,374 779,518 566,872 5,502 5,744 112,271 58,379
Contract owners' equity:
Beginning of period........... 0 0 0 0 0 0 0
---------- -------- -------- ------- ------ -------- -------
End of period................. $1,138,374 $779,518 $566,872 $ 5,502 $5,744 $112,271 $58,379
========== ======== ======== ======= ====== ======== =======
</TABLE>
- ---------------
(a) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
130
<PAGE> 65
OHIO NATIONAL VARIABLE ACCOUNT B
STATEMENT OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
GOLDMAN SACHS LAZARD RETIREMENT
------------------------ ------------------------
VIT GROWTH VIT CORE EMERGING SMALL
& INCOME US EQUITY MARKET CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ----------
1999(a) 1999(a) 1999(a) 1999(a)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Increase (decrease) in contract owners' equity from
operations:
Net investment activity............................... $ 170 $ (29) $ 5 $ 0
Reinvested capital gains.............................. 0 0 0 0
Realized gain......................................... 0 225 0 0
Unrealized gain....................................... 494 3,467 471 1
------- ------- ------ ------
Net increase in contract owners' equity from
operations....................................... 664 3,663 476 1
------- ------- ------ ------
Equity transactions:
Sales:
Contract purchase payments......................... 4,500 10 0 10
Transfers from fixed & other subaccounts........... 17,116 88,511 3,823 7,347
------- ------- ------ ------
21,616 88,521 3,823 7,357
------- ------- ------ ------
Redemptions:
Withdrawals & surrenders........................... 0 0 0 0
Annuity & death benefit payments................... 0 0 0 0
Transfers to fixed & other subaccounts............. 0 0 0 0
------- ------- ------ ------
0 0 0 0
------- ------- ------ ------
Net equity transactions.......................... 21,616 88,521 3,823 7,357
------- ------- ------ ------
Net change in contract owners' equity......... 22,280 92,184 4,299 7,358
Contract owners' equity:
Beginning of period................................... 0 0 0 0
------- ------- ------ ------
End of period......................................... $22,280 $92,184 $4,299 $7,358
======= ======= ====== ======
</TABLE>
- ---------------
(a) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
131
<PAGE> 66
OHIO NATIONAL VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS
(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 variable 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 portfolio shares of Ohio National Fund,
Inc., Janus Aspen Series, Strong Variable Insurance Funds, Inc., Morgan
Stanley Universal Funds, Inc., Goldman Sachs Variable Insurance Trust and
Lazard Retirement Funds (collectively the Funds). The Funds are diversified
open-end management investment companies. 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 or
4.0 percent depending on the contract selected by the annuitant. Charges to
annuity reserves for adverse mortality and express risk experience are
reimbursed to the Account by ONLIC. Such amounts are included in risk and
administrative expenses.
Investments are valued at the net asset value of fund shares held at December
31, 1999. Share transactions are recorded on the trade date. Income and
capital gain distributions are recorded on the ex-dividend date. Net realized
capital gains and losses are determined on the basis of average cost.
ONLIC performs investment advisory services on behalf of the Ohio National
Fund, Inc. in which the Account invests. For these services, the Company
receives fees from the mutual funds. These fees are paid to an affiliate of
the Company.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(2) INVESTMENTS
At December 31, 1999 the aggregate cost and number of shares of Ohio National
Fund, Inc. owned by the respective subaccounts were:
<TABLE>
<CAPTION>
MONEY CAPITAL
EQUITY MARKET BOND OMNI INTERNATIONAL APPRECIATION SMALL CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ----------- ----------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Cost............... $51,929,734 $5,195,427 $4,301,092 $27,286,671 $21,880,129 $11,510,283 $13,942,374
Number of Shares............. 1,977,551 519,543 408,186 1,586,915 1,559,721 918,216 619,685
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL AGGRESSIVE CORE GROWTH & S&P 500 SOCIAL EQUITY
COMPANY GROWTH GROWTH INCOME INDEX AWARENESS INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Cost................ $ 4,444,242 $2,560,330 $3,419,446 $11,664,797 $20,836,721 $ 410,367 $ 3,103
Number of Shares.............. 350,277 241,315 270,153 811,549 1,480,760 34,022 253
</TABLE>
<TABLE>
<CAPTION>
DOW DOW JANUS ASPEN
HIGH INCOME CAPITAL TARGET 10 TARGET 5 JANUS ASPEN WORLDWIDE JANUS ASPEN
BOND GROWTH NOVEMBER NOVEMBER GROWTH GROWTH BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Cost.................. $ 12,737 $ 198,432 $ 7,184 $ 7,975 $1,072,627 $ 696,419 $ 545,236
Number of Shares................ 1,376 7,071 723 799 33,830 16,325 20,303
</TABLE>
(continued)
132
<PAGE> 67
OHIO NATIONAL VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
GOLDMAN
STRONG STRONG STRONG MORGAN SACHS VIT GOLDMAN
OPPORTUNITY SCHAFER MID-CAP STANLEY US GROWTH & SACHS CORE
II VALUE II GROWTH REAL ESTATE INCOME US EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Cost.................. $ 5,453 $ 5,692 $ 104,958 $ 57,261 $ 21,786 $ 88,716
Number of Shares................ 212 630 3,697 6,408 2,046 6,594
</TABLE>
<TABLE>
<CAPTION>
LAZARD LAZARD
EMERGING SMALL
MARKET CAP
SUBACCOUNT SUBACCOUNT
----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Cost.................. $ 3,828 $ 7,357
Number of Shares................ 390 749
</TABLE>
(3) CONTRACTS IN ACCUMULATION PERIOD
At December 31, 1999 the accumulation units and value per unit of the
respective subaccounts and products were:
<TABLE>
<CAPTION>
ACCUMULATION UNITS VALUE PER UNIT VALUE
------------------ -------------- -----------
<S> <C> <C> <C>
EQUITY SUBACCOUNT
Combination............................................... 13,634.6276 175.107175 $ 2,387,521
Back Load................................................. 768.1846 89.234207 $ 68,548
Top I..................................................... 15,716.6293 77.441596 $ 1,217,121
Top Tradition............................................. 566,619.3079 65.344855 $37,025,657
Top Plus.................................................. 480,964.6145 21.928573 $10,546,868
MONEY MARKET SUBACCOUNT
VIA....................................................... 6,923.9317 29.394756 $ 203,527
Top I..................................................... 4,422.7873 22.290284 $ 98,585
Top Tradition............................................. 129,934.9525 20.015273 $ 2,600,684
Top Plus.................................................. 109,471.3175 12.825076 $ 1,403,978
BOND SUBACCOUNT
Top I..................................................... 2,902.2098 31.054566 $ 90,127
Top Tradition............................................. 96,317.0701 26.006519 $ 2,504,872
Top Plus.................................................. 110,306.7924 12.878760 $ 1,420,615
OMNI SUBACCOUNT
Top I..................................................... 20,370.2498 44.658692 $ 909,709
Top Tradition............................................. 576,927.3991 44.377211 $25,602,429
Top Plus.................................................. 467,854.7137 18.649833 $ 8,725,412
INTERNATIONAL SUBACCOUNT
Top I..................................................... 8,563.2404 28.609795 $ 244,993
Top Tradition............................................. 755,373.1787 28.609795 $21,611,072
Top Plus.................................................. 462,283.4427 25.287344 $11,689,920
CAPITAL APPRECIATION SUBACCOUNT
Top I..................................................... 5,709.5218 16.361968 $ 93,419
Top Tradition............................................. 332,203.6341 16.361968 $ 5,435,505
Top Plus.................................................. 304,647.3049 18.313827 $ 5,579,258
SMALL CAP SUBACCOUNT
Top Tradition............................................. 286,164.0841 34.040041 $ 9,741,037
Top Plus.................................................. 220,470.5719 44.681338 $ 9,850,920
INTERNATIONAL SMALL COMPANY SUBACCOUNT
Top Tradition............................................. 119,756.2522 26.188124 $ 3,136,191
Top Plus.................................................. 140,283.3439 28.196610 $ 3,955,515
</TABLE>
(continued)
133
<PAGE> 68
OHIO NATIONAL VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION UNITS VALUE PER UNIT VALUE
------------------ -------------- -----------
<S> <C> <C> <C>
AGGRESSIVE GROWTH SUBACCOUNT
Top Tradition............................................. 87,207.3016 12.995269 $ 1,133,282
Top Plus.................................................. 108,827.5610 15.731920 $ 1,712,067
CORE GROWTH SUBACCOUNT
Top Tradition............................................. 139,073.4318 20.917283 $ 2,909,038
Top Plus.................................................. 79,741.7703 21.041443 $ 1,677,882
GROWTH & INCOME SUBACCOUNT
Top I..................................................... 1,877.8764 13.191296 $ 24,772
Top Tradition............................................. 376,028.4979 22.964177 $ 8,635,185
Top Plus.................................................. 283,664.4539 23.100411 $ 6,552,765
S&P 500 INDEX SUBACCOUNT
Top Tradition............................................. 626,757.1052 20.822980 $13,050,951
Top Plus.................................................. 508,584.1867 20.946479 $10,653,048
SOCIAL AWARENESS SUBACCOUNT
Top Tradition............................................. 15,891.9103 11.102565 $ 176,441
Top Plus.................................................. 15,602.4619 11.168486 $ 174,256
EQUITY INCOME SUBACCOUNT
Top Tradition............................................. 287.4153 10.913281 $ 3,137
HIGH INCOME SUBACCOUNT
Top Tradition............................................. 1,233.2853 10.285653 $ 12,685
CAPITAL GROWTH SUBACCOUNT
Top Tradition............................................. 10,147.1425 14.195676 $ 144,045
Top Plus.................................................. 3,805.9585 14.200260 $ 54,046
DOW TARGET 10 NOVEMBER SUBACCOUNT
Top Tradition............................................. .9922 10.093952 $ 10
Top Plus.................................................. 720.4663 10.097239 $ 7,275
DOW TARGET 5 NOVEMBER SUBACCOUNT
Top Tradition............................................. 70.4465 9.960325 $ 702
Top Plus.................................................. 726.7960 9.963566 $ 7,241
JANUS ASPEN GROWTH SUBACCOUNT
Top Tradition............................................. 70,201.4009 11.657335 $ 818,361
Top Plus.................................................. 27,442.7290 11.661117 $ 320,013
JANUS ASPEN WORLDWIDE GROWTH SUBACCOUNT
Top Tradition............................................. 30,873.4477 13.225533 $ 408,318
Top Plus.................................................. 28,057.9204 13.229802 $ 371,201
JANUS ASPEN BALANCED SUBACCOUNT
Top Tradition............................................. 47,021.9463 11.025619 $ 518,446
Top Plus.................................................. 4,390.6980 11.029199 $ 48,426
STRONG OPPORTUNITY II SUBACCOUNT
Top Tradition............................................. 493.0675 11.158443 $ 5,502
STRONG SCHAFER VALUE II SUBACCOUNT
Top Tradition............................................. 558.5544 10.284400 $ 5,744
STRONG MID-CAP GROWTH II SUBACCOUNT
Top Tradition............................................. 6,551.0086 12.916791 $ 84,618
Top Plus.................................................. 2,140.1299 12.920972 $ 27,653
MORGAN STANLEY US REAL ESTATE SUBACCOUNT
Top Tradition............................................. 5,753.5496 10.146637 $ 58,379
</TABLE>
(continued)
134
<PAGE> 69
OHIO NATIONAL VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION UNITS VALUE PER UNIT VALUE
------------------ -------------- -----------
<S> <C> <C> <C>
GOLDMAN SACHS VIT GROWTH & INCOME SUBACCOUNT
Top Tradition............................................. 1,684.5650 10.502077 $ 17,691
Top Plus.................................................. 436.7750 10.505494 $ 4,589
GOLDMAN SACHS VIT CORE US EQUITY SUBACCOUNT
Top I..................................................... 2,215.6947 10.924941 $ 24,206
Top Tradition............................................. 6,222.2191 10.924941 $ 67,978
LAZARD EMERGING MARKET SUBACCOUNT
Top Tradition............................................. 186.1856 12.512192 $ 2,329
Top Plus.................................................. 157.3593 12.516246 $ 1,970
LAZARD SMALL CAP SUBACCOUNT
Top Tradition............................................. 698.1966 10.538021 $ 7,358
</TABLE>
(4) RISK AND ADMINISTRATIVE EXPENSE
ONLIC charges the Account's assets at the end of each day, equal to 0.25% on
an annual basis, of 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 the contract value at a rate presently ranging from 0.65% to
1.25% for mortality and expense risk on an annual basis.
The expense risk assumed by ONLIC is the risk that the deductions for sales
and administrative expenses provided for in the variable annuity contracts
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 ranging from 0% to 6% may be assessed by ONLIC when a
contract is surrendered or a partial withdrawal of accumulation value is made
before the annuity payout date.
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 1/2% for these contracts. In
those jurisdictions permitting, such taxes will be deducted when annuity
payments begin. Elsewhere, they will be deducted from purchase payments.
Each year on the contract anniversary (or at the time of surrender of the
contract), ONLIC will deduct a contract administration charge of $35 from the
accumulation value to reimburse it for the expenses relating to the
maintenance of the contract. Total contract charges for the Account amounted
to approximately $88,000 during 1999.
(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 the 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.
135
<PAGE> 70
OHIO NATIONAL VARIABLE ACCOUNT B
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
The Ohio National Life Insurance Company
and Contract Owners of Ohio National
Variable Account B:
We have audited the accompanying statements of assets and contract owners'
equity of Ohio National Variable Account B (comprised of the Equity, Money
Market, Bond, Omni, International, Capital Appreciation (formerly Small Cap
Growth), Small Cap, International Small Company (formerly Global Contrarian),
Aggressive Growth, Core Growth, Growth & Income, S&P 500 Index, Social
Awareness, Equity Income, High Income Bond, Capital Growth (formerly Small Cap
Growth), Dow Target 10 November, Dow Target 5 November, Janus Aspen
Series -- Growth, Janus Aspen Series -- Worldwide Growth, Janus Aspen
Series -- Balanced, Strong Variable Funds -- Opportunity II, Strong Variable
Funds -- Schafer Value II, Strong Variable Funds -- Mid-Cap Growth II, Morgan
Stanley -- US Real Estate, Goldman Sachs VIT Growth & Income, Goldman Sachs VIT
Core US Equity, Lazard Retirement Emerging Market, and Lazard Retirement Small
Cap subaccounts) (collectively, the Account) as of December 31, 1999 and the
related statements of operations and changes in contract owners' equity for each
of the periods indicated herein. These financial statements are the
responsibility of the Account'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, 1999, by correspondence with
the transfer agents of the underlying mutual funds. 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 as of December 31, 1999, and the results of its operations and its changes in
contract owners' equity for each of the periods indicated herein in conformity
with generally accepted accounting principles.
KPMG LLP
Cincinnati, Ohio
February 18, 2000
136
<PAGE> 71
OHIO NATIONAL VARIABLE ACCOUNT B
FORM N-4
PART C
OTHER INFORMATION
<PAGE> 72
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements of the Registrant are to be included in Part
B of this Registration Statement:
Independent Auditors' Report of KPMG LLP dated February 18, 2000
Statements of Assets and Contract Owners' Equity dated December 31, 1999
Statement of Operations and Changes in Contract Owners' Equity for the
Years Ended December 31, 1999 and 1998
Notes to Financial Statements dated December 31, 1999
Schedules of Changes in Unit Values for the Years Ended December 31, 1999
and 1998
The following consolidated financial statements of the Depositor and its
subsidiaries are also to be included in Part B of this Registration Statement:
Independent Auditors' Report of KPMG LLP dated January 29, 2000
Consolidated Balance Sheets dated December 31, 1999 and 1998
Consolidated Statements of Income for the Years Ended December 31, 1999,
1998 and 1997
Consolidated Statements of Equity for the Years Ended December 31, 1999,
1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997
Notes to Consolidated Financial Statements dated December 31, 1999, 1998
and 1997
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 LLP
Exhibits:
All relevant exhibits, which have previously been filed with the Commission
and are incorporated herein by reference, are as follows:
(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).
-1-
<PAGE> 73
(3)(a) Principal Underwriting Agreement for Variable Annuities
between the Depositor and Ohio National Equities, Inc. was
filed as Exhibit (3)(a) of Form N-4, Post-effective Amendment
no. 21 of Ohio National Variable Account A (File no. 2-91213).
(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).
(3)(d) Variable Contract Distribution Agreements (with compensation
schedules) between the Depositor and Ohio National Equities, Inc.
were filed as Exhibit (3)(d) of Post-effective Amendment no. 23 of
Ohio National Variable Account A registration statement on Form
N-4 on April 27, 1998 (File no. 2-91213).
(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)(a) Variable Annuity Application, Form V-4890B, was filed as Exhibit
(5)(a) of the Registrant's Form N-4, Post-effective Amendment no.
18 on April 25, 1996 (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 A
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 Post-effective Amendment no. 22 of Ohio National
Variable Account A registration statement on Form N-4 on March 2,
1998 (File no. 2-91213) and Exhibit (8)(a) of Ohio National
Variable Account A registration statement on Form N-4,
Post-effective Amendment no. 2 on March 2, 1999 (File no.
333-43511).
(13) Computation of Performance Data was filed as Exhibit (13) of the
Form N-4 for Ohio National Variable Account A Pre-effective
Amendment no. 1 on April 10, 1998 (File no. 333-43511).
-2-
<PAGE> 74
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
Thomas A. Barefield* Senior Vice President, Institutional Sales
Howard C. Becker* Senior Vice President, Individual Insurance
& Corporate Services
Ronald L. Benedict* Corporate Vice President, Counsel and
Secretary
Michael A. Boedeker* Vice President, Senior Investment Officer
Robert A. Bowen* Senior Vice President, Information Systems
Roylene M. Broadwell* Vice President & Treasurer
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. Director
Buyniski Gluckman
2343 Auburn Avenue
Cincinnati, Ohio 45219
Christopher A. Carlson* Vice President, Senior Investment Officer
Raymond R. Clark Director
201 East Fourth Street
Cincinnati, Ohio 45202
David W. Cook* Senior Vice President and Actuary
Ronald J. Dolan* Director and Senior Vice President and Chief
Financial Officer
Michael J. Ferry* Vice President, Information Systems
Michael F. Haverkamp* Vice President and Counsel
John W. Hayden Director
7000 Midland Boulevard
Batavia, Ohio 45103
John A. Houser III* Vice President, Claims
</TABLE>
-3-
<PAGE> 75
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
- ---------------- --------------
<S> <C>
Charles S. Mechem, Jr. Director
One East Fourth Street
Cincinnati, Ohio 45202
James I. Miller, II* Vice President, Marketing Support
Thomas O. Olson* Vice President, Underwriting
David B. O'Maley* Director, Chairman, President and Chief
Executive Officer
James F. Orr Director
201 East Fourth Street
Cincinnati, Ohio 45202
John J. Palmer* Director and Senior Vice President, Strategic
Initiatives
George B. Pearson, Jr.* Vice President, PGA Marketing
J. Donald Richardson* Senior Regional Vice President
D. Gates Smith* Director and Senior Vice President, Sales
Michael D. Stohler* Vice President, Mortgages and Real Estate
Stuart G. Summers* Director and Senior Vice President and General
Counsel
Dennis C. Twarogowski* Vice President, Career Marketing
Oliver W. Waddell Director
425 Walnut Street
Cincinnati, Ohio 45202
Dr. David S. Williams* Vice President and Medical Director
</TABLE>
*The principal business address for these individuals is One Financial Way,
Montgomery, Ohio 45242.
-4-
<PAGE> 76
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
THE OHIO NATIONAL LIFE INSURANCE COMPANY/CINCINNATI
A MUTUAL LIFE INSURANCE COMPANY INCORPORATED UNDER THE LAWS OF OHIO
- --------------------------------------------------------------------------------
<S> <C>
- ------------------------------- -----------------------------
ENTERPRISE PARK, INC. OHIO NATIONAL EQUITIES INC.
A GEORGIA CORPORATION A BROKER/DEALER
REAL ESTATE DEVELOPMENT COMPANY CAPITALIZED BY ONLI @ $30,000
CAPITALIZED BY ONLI $50,000
- ------------------------------- --------------------------------
Pres. & Dir. M. Stohler Chm. & Dir. D. O'Maley
V.P. & Dir. R. Dolan Pres. & Dir. J. Palmer
Secy. & Dir. J. Fischer VP & Dir. T. Backus
Treas. & Dir. J. Sander VP & Dir. J. Miller
Vice Pres. C. Carlson Sr. VP T. Barefield
Secretary & Dir. R. Benedict
Treasurer & B. Turner
Compliance Officer
Asst. Secy. M. Haverkamp
Asst. Treas. L. Weiler
- ------------------------------- --------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
THE OHIO NATIONAL LIFE 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
--------------------------------
<S> <C> <C>
- ------------------------------- ------------------------------ -------------------------------------
OHIO NATIONAL INVESTMENTS, INC. THE O.N. EQUITY SALES COMPANY OHIO NATIONAL LIFE
ASSURANCE CORPORATION
AN INVESTMENT ADVISER AN OHIO CORPORATION AN OHIO CORPORATION
CAPITALIZED BY ONLI @ $10,000 A BROKER/DEALER A STOCK LIFE INSURANCE COMPANY
CAPITALIZED BY ONLI @ $790,000 CAPITALIZED BY ONLI @ $32,000,000
INCORPORATED UNDER THE LAWS OF OHIO
- ------------------------------- ------------------------------ ------------------------------------
Chm. & Dir. D. O'Maley Chm./Pres/.CEO & Dir. D. O'Maley
Pres. & Dir. C. Carlson Sr. VP & Dir. R. Dolan
Pres. & Dir. J. Palmer Sr. VP & Dir. J. Palmer
VP & Dir. M. Boedeker Sr. VP & Dir. S. Summers
V.P. & Dir. D. Twarogowski
VP & Dir. M. Stohler Sr. VP T. Barefield
Secy. & Dir. M. Haverkamp Sr. Vice Pres. A. Bowen
Dir. D. O'Maley Sr. Vice Pres. D. Cook
Dir. J. Palmer Treasurer & B. Turner Sr. Vice Pres. G. Smith
Compliance Director Vice Pres. & Treas. R. Broadwell
Vice President M. Boedeker
Treasurer D. Taney Vice President T. Backus
Vice President G. Pearson
Secretary R. Benedict Vice President M. Stohler
Vice Pres. J. Houser
VP S. Komrska Vice President D. Twarogowski
VP J. Martin VP & Secy. R. Benedict
Asst. Secy. J. Fischer
Asst. Actuary K. Flischel
- ------------------------------- ------------------------------ -----------------------------------
SEPARATE ACCOUNT
-----------------------------------
R
---
<CAPTION>
= Advisor to Advisor to =
--------------------------------------------------------
<S> <C> <C>
- ------------------ -------------------------------- --------------------------------
ONE FUND, INC. O.N. INVESTMENT MANAGEMENT CO. OHIO NATIONAL FUND
A MARYLAND CORPORATION AN OHIO CORPORATION A MARYLAND CORPORATION
AN OPEN END DIVERSIFIED A FINANCIAL ADVISORY SERVICE AN OPEN END DIVERSIFIED
MANAGEMENT INVESTMENT COMPANY CAPITALIZED BY ONESCO @ $145,000 MANAGEMENT INVESTMENT COMPANY
- ----------------------------- -------------------------------- --------------------------------
Pres. & Dir. J. Palmer Pres. & Dir. J. Palmer Pres. & Dir. J. Palmer
Vice. Pres. M. Boedeker ----- Vice President M. Boedeker
VP & Dir. G. Smith Vice President T. Barefield
Vice Pres. T. Barefield VP & Dir. D. Twarogowski
Vice Pres. S. Williams Treasurer B. Turner Treasurer D. Taney
Treasurer D. Taney --------Secy. & Dir. R. Benedict
Secy. & Dir. R. Benedict Secretary & Dir. M. Haverkamp Director R. Love
Director R. Love Director J. Bushman
Director J. Bushman Director G. Vredeveld
Director G. Vredeveld Sr. VP T. Barefield
- --------------------------------- -------------------------------- ---------------------------------
</TABLE>
<PAGE> 77
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 March 20, 2000 the Registrant's contracts were owned by 7,580 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> 78
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 Ohio National
Equities, Inc. ("ONEQ"). ONEQ is a wholly-owned subsidiary of the
Depositor. ONEQ 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> 79
The directors and officers of ONEQ are:
Name Position with ONEQ
---- -----------------------
David B. O'Maley Chairman and Director
John J. Palmer President & Chief Executive Officer and
Director
Thomas A. Barefield Senior Vice President
Trudy K. Backus Vice President and Director
Ronald L. Benedict Secretary and Director
Barbara A. Turner Operations Vice President, Treasurer
and Compliance Officer
James I. Miller II Vice President and Director
The principal business address of each of the foregoing is One Financial Way,
Cincinnati, Ohio 45242.
During the last fiscal year, ONEQ 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>
$934,575 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")
One Financial Way
Montgomery, Ohio 45242
Firstar Bank, N.A. ("Custodian")
425 Walnut Street
Cincinnati, Ohio 45202
-7-
<PAGE> 80
(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.
(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 3L. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS AND REPRESENTATIONS
Representation pursuant to Section 26(e)(2)(A) of the Investment Company Act of
1940, as amended, was furnished in the Registrant's Form N-4, Post-effective
Amendment no. 21, on April 25, 1997.
-8-
<PAGE> 81
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the registrant, Ohio National Variable Account B certifies that it meets
the requirements of Securities Act Rule 485(b) for effectiveness of this
registration statement and has caused this post-effective amendment to the
registration statement to be signed on its behalf in the City of Montgomery and
the State of Ohio on this 25th day of April, 2000.
OHIO NATIONAL VARIABLE ACCOUNT B
(Registrant)
By THE OHIO NATIONAL LIFE INSURANCE COMPANY
(Depositor)
By /s/ John J. Palmer
_____________________________________________
John J. Palmer, Senior Vice President,
Strategic Initiatives
Attest:
/s/Ronald L. Benedict
____________________________________
Ronald L. Benedict
Corporate Vice President, Counsel
and 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 amendment to the registration statement to be signed on its
behalf in the City of Montgomery and the State of Ohio on the 25th day of
April, 2000.
THE OHIO NATIONAL LIFE INSURANCE COMPANY
(Depositor)
By /s/John J. Palmer
_______________________________________________
John J. Palmer, Senior Vice President,
Strategic Initiatives
Attest:
/s/Ronald L. Benedict
_________________________________
Ronald L. Benedict
Corporate Vice President, Counsel
and Secretary
<PAGE> 82
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, April 25, 2000
- -------------------------------- Chief Executive Officer
David B. O'Maley and Director
*s/Dale P. Brown Director April 25, 2000
- --------------------------------
Dale P. Brown
*s/Jack E. Brown Director April 25, 2000
- --------------------------------
Jack E. Brown
*s/William R. Burleigh Director April 25, 2000
- --------------------------------
William R. Burleigh
*s/Victoria B. Buyniski Gluckman Director April 25, 2000
- --------------------------------
Victoria B. Buyniski Gluckman
*s/Raymond R. Clark Director April 25, 2000
- --------------------------------
Raymond R. Clark
s/Ronald J. Dolan Director April 25, 2000
- --------------------------------
Ronald J. Dolan
Director
- --------------------------------
John W. Hayden
*s/Charles S. Mechem, Jr. Director April 25, 2000
- --------------------------------
Charles S. Mechem, Jr.
*s/James F. Orr Director April 25, 2000
- --------------------------------
James F. Orr
s/John J. Palmer Director April 25, 2000
- --------------------------------
John J. Palmer
s/D. Gates Smith Director April 25, 2000
- --------------------------------
D. Gates Smith
s/Stuart G. Summers Director April 25, 2000
- --------------------------------
Stuart G. Summers
</TABLE>
<PAGE> 83
<TABLE>
<S> <C> <C>
*s/Oliver W. Waddell Director April 25, 2000
- -------------------------------
Oliver W. Waddell
</TABLE>
By s/ John J. Palmer
- -------------------------------
John J. Palmer, Attorney in Fact pursuant to Powers of Attorney, copies
of which have previously been filed as exhibits to the Registrant's
registration statement.
<PAGE> 84
INDEX OF CONSENTS AND EXHIBITS
Page Number in
Exhibit Sequential
Number Description Numbering System
Consent of KPMG LLP
<PAGE> 85
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of
The Ohio National Life Insurance Company and
Contract Owners of
Ohio National Variable Account A and
Ohio National Variable Account B:
We consent to use of our reports dated February 18, 2000 for the Ohio National
Variable Account A and Ohio National Variable Account B and January 28, 2000 for
The Ohio National Life Insurance Company and subsidiaries as included herein for
Ohio National Variable Account B and The Ohio National Life Insurance Company
and as incorporated by reference herein for Ohio National Variable Account A and
to the reference to our firm under the heading "Independent Certified Public
Accountants" in the Statement of Additional Information included herein.
KPMG LLP
Cincinnati, Ohio
April 25, 2000
