Registration No. 2-92146
- --------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 15 X
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 14 X
CARILLON ACCOUNT
(Exact Name of Registrant)
The Union Central Life Insurance Company
(Name of Depositor)
1876 Waycross Road, Cincinnati, Ohio 45240
(Address of Depositor's Principal Executive Offices)
(513) 595-2600
(Depositor's Telephone Number)
John F. Labmeier, Esq.
The Union Central Life Insurance Company
P.O. Box 40888
Cincinnati, Ohio 45240
(Name and Address of Agent for Service)
Copy to:
Jones & Blouch L.L.P.
Suite 405 West
1025 Thomas Jefferson St., N.W.
Washington, D.C. 20007
Pursuant to Rule 24f-2 under the Investment Company Act of
1940, the Registrant has registered an indefinite amount of
securities under the Securities Act of 1933. A Rule 24f-2 Notice
for Registrant's 1995 fiscal year was filed on February 26, 1997.
It is proposed that this filing will become effective (check
appropriate box)
( ) immediately upon filing pursuant to paragraph (b)of Rule 485
(X) on May 1, 1997 pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a) of Rule 485
( ) on May 1, 1997 pursuant to paragraph (a) of Rule 485
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
PROSPECTUS
Flexible Premium Deferred Variable Annuity
CARILLON ACCOUNT
of
THE UNION CENTRAL LIFE INSURANCE COMPANY
Home Office:
1876 Waycross Road
P.O. Box 40888
Cincinnati, Ohio 45240-40888
Telephone: 1-800-999-1840
This Prospectus describes a Flexible Premium Deferred Variable
Annuity Contract ("Contract") offered by The Union
Central Life Insurance Company ("Union Central"). The Contract is
designed to aid employers, employees, and other groups
and individuals in long-term financial planning, and it provides
for the accumulation of capital on a tax-deferred basis for
retirement or other long-term purposes. The Contract is designed
for use in connection with retirement plans regardless of
whether the plan qualifies for favored federal income tax
treatment.
Funds may be accumulated and annuity payments made on a variable
basis, a fixed basis, or a combination variable
and fixed basis. The Contract allows for significant flexibility
with respect to premium payments, annuity payments,
withdrawals, and transfers. Within the limits, if any, applicable
to particular retirement plans, the Contract provides the
flexibility necessary to permit a Contract Owner to devise a
financial plan that best fits the particular needs.
Premiums may be allocated in whole or in part to the Carillon
Account ("CA"), a separate account of Union Central. CA invests
its assets in shares of the Carillon Fund, Inc. (the "Carillon
Fund"), a mutual fund consisting of four separate portfolios:
Equity Portfolio, Bond Portfolio, Capital Portfolio and S&P 500
Index Portfolio; in shares of the Capital Growth Portfolio Class
A, International Portfolio Class A, and Money Market Portfolio of
Scudder Variable Life Investment Fund (the "Scudder Fund"); in
shares of the American Century VP Capital Appreciation Portfolio
(formerly known as the TCI Growth Portfolio) of American Century
Variable Portfolios, Inc. (the "American Century Fund"), formerly
known as TCI Portfolios, Inc.; in shares of the MFS Growth With
Income Series, MFS High Income Series and MFS Emerging Growth
Series of MFS Variable Insurance Trust (the "MFS Fund"); and in
shares of the Templeton International Fund Class 2 of Templeton
Variable Products Series Fund (the "Templeton Fund," and with
Carillon Fund, Scudder Fund, American Century Fund and MFS Fund,
collectively referred to as the "Funds"). To the extent that
premiums are allocated to CA, the Accumulation Value will vary in
accordance with the investment performance of the Portfolio or
Portfolios selected by the Contract Owner. Similarly, if a
variable annuity settlement is selected, the amount of the
annuity payments will vary with the investment performance of the
Portfolio(s). The Contract Owner bears the investment risk for
any amounts allocated to CA. This Prospectus generally describes
only the variable portion of the Contract. For a brief
description of the fixed portion, see "The Guaranteed Account" on
page 22.
This Prospectus sets forth the information about CA that
prospective purchasers of Contracts ought to know.
Additional information about CA has been filed with the
Securities and Exchange Commission in the form of a Statement
of Additional Information ("SAI") which is incorporated herein by
reference. The SAI is dated May 1, 1997, and may be
obtained without charge by writing Union Central at the address
given above or calling the listed telephone number. A Table
of Contents for the SAI is given on page 3.
This Prospectus Must be Accompanied or Preceded by a Current
Prospectus for the Carillon Fund, Inc.; for the Capital Growth
Portfolio Class A, International Portfolio Class A and Money
Market Portfolio of Scudder Variable Life Investment Fund; for
the American Century VP Capital Appreciation Portfolio of
American Century Variable Portfolios, Inc.; for the MFS Growth
with Income Series, MFS High Income Series, and MFS Emerging
Growth Series of MFS Variable Insurance Trust; and for the
Templeton International Fund Class 2 of Templeton Variable
Products Series Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Please Read This Prospectus Carefully and Retain It for Future
Reference
The Date of This Prospectus is May 1, 1997.
<PAGE>
TABLE OF CONTENTS
Page
Definitions . . . . . . . . .. . . . . . . . . 3
Summary . . . . . . . . .. . . . . . . . . 4
Summary of Separate Account Expenses . . . . . . . . . 6
Performance Data . . . . . . . . .. . . . . . . . . 9
Accumulation Unit Values . . . . . . . . .. . . . . . . 10
The Union Central Life Insurance Company and Carillon Account. 11
Union Central . . . . . . . . .. . . . . . . . . 11
Carillon Account . . . . . . . . .. . . . . . . . . 11
The Funds. . . . . . . . . .. . . . . . . . . 11
Additions, Deletions, or Substitutions of Investments. .12
The Contract . . . . . . . . .. . . . . . . . . 13
Purchasing a Contract . . . . . . . . .. . . . . . . . . 13
Premiums . . . . . . . . .. . . . . . . . . 13
Crediting of Accumulation Units . . . . . . . . . 13
Value of Accumulation Units . . . . . . . . . 14
Transfers . . . . . . . . . . . . . . . . . . . . . . . 14
Special Transfers - Dollar Cost Averaging . . . . . . . 15
Portfolio Rebalancing Plan. . . . . . . . . . . . . . . 16
Surrenders. . . . . . . . . . .. . . . . . . . . . . . . 16
Interest Sweep. . . . . . . . . . . . . . . . . . . . . 16
Personal Income Plan. . . . . .. . . . . . . . . . . . . 17
Charges and Other Deductions . . . . . . . . . . . . . . . 17
Administration Fee. . . . . . . . . . . . . . . . . . . 17
Mortality and Expense Risk Charge . .. . . . . . . . . . 17
Surrender Charge (Contingent Deferred Sales Charge) .. . 18
Terminal Illness/Confinement. . . . .. . . . . . . . 18
Premium Taxes . . . . . . . . . . . . . . . . .. . . . . 19
Fund Expenses . . . . . . . . . . . . . . . . . . . . . 20
Benefits Under the Contract. . . . . . . . . . . . . . . . 20
Death Benefits. . . . . . . . . . . . . . . . . .. . . . 20
Annuity Payments. . . . . . . . . . . . . . . . . . . . 20
The Guaranteed Account . . . . . . . . . . . . . . . . . . 22
General Matters. . . . . . . . . . . . . . . .. . . . . . . 23
Federal Tax Matters. . . . . . . . . . . . . . .. . . . . . 23
Restrictions Under the Texas Optional Retirement Program .. 25
Distribution of the Contracts. . . . . . . . . . . . . . . 25
Voting Rights. . . . . . . . . . . . . . . . . . . . . . . 26
Financial Statements . . . . . . . . . . . . . . . . . . . 26
Appendix A . . . . . . . . . . . . . . . . . . . . . .. . . 27
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Distribution of Contracts. . . . . . . . . . . . . . . . .B-2
Determination of Annuity Payments. . . . . . . . .. . . . .B-2
Performance Data Advertising . . . . . . . . . . . . . . .B-3
Federal Tax Matters. . . . . . . . . . . . . . . . . . . .B-5
Miscellaneous Contract Provisions. . . . . . . . . .. . . .B-7
Custody of CA's Assets . . . . . . . . . . . . . . . . . .B-8
Experts. . . . . . . . . . . . . . . . . . . .. . . . . . .B-8
Financial Statements of CA and of Union Central
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO
DEALER, SALESMAN, OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON.<PAGE>
DEFINITIONS
Accumulation Period - The period before the Maturity Date and
during the lifetime of the Annuitant.
Accumulation Unit - An accounting unit of measure used to
calculate the value of the Variable Account prior to the
Maturity Date.
Accumulation Value - The sum of the Guaranteed Account and the
Variable Account credited to a Contract.
Annuitant - The person or persons whose life determines the
duration of annuity payments involving life contingencies.
Annuity Period - The period after the Maturity Date during which
Union Central makes annuity payments.
Annuity Unit - An accounting unit of measure used to calculate
Variable Annuity payments.
CA - A separate account of The Union Central Life Insurance
Company called the Carillon Account. CA currently is
divided into twelve Subaccounts, and each Subaccount invests
exclusively in a different Portfolio of the Funds.
Contract Owner ("Owner") - During the Annuitant's lifetime and
prior to the Maturity Date, the person designated
as the Owner in the Contract or as subsequently changed. After
the Maturity Date, the Annuitant is the Contract Owner.
After the Annuitant's death, the beneficiary is the Contract
Owner.
If a Contract has been absolutely assigned, the assignee is the
Contract Owner. A collateral assignee is not a Contract
Owner.
Contract Year - A period of 12 consecutive months beginning on
the Contract Date or any anniversary thereof.
Due Proof of Death - One of the following:
(a) A certified copy of a death certificate.
(b) A certified copy of a decree of a court of competent
jurisdiction as to the finding of death.
(c) A written statement by a medical doctor who attended the
deceased.
(d) Any other proof satisfactory to Union Central.
Fixed Annuity - An annuity with payments fixed in amount
throughout the annuity period.
Guaranteed Account - The Contract's value that is part of the
general assets of Union Central other than assets in any
of its separate accounts.
Investment Option - The Guaranteed Account and the twelve
subdivisions of the Variable Account constitute the thirteen
Investment Options.
Maturity Date - The date on which annuity payments will begin.
Nonqualified Contracts - Contracts that do not qualify for
special federal income tax treatment.
Portfolio or Fund Portfolio - A separate Portfolio of the Funds,
the mutual funds in which CA invests, its successor
or assigns.
Qualified Contracts - Contracts issued in connection with plans
that qualify for special federal income tax treatment.
Subaccount - A part of CA. Each Subaccount invests exclusively in
shares of a different Fund Portfolio.
Variable Account - That part of the value of a Contract that is
invested in one or more Subaccounts of CA. Each Contract's
Variable Account is divided into one or more subdivisions, one
for each Subaccount of CA in which the Contract is invested.
Variable Annuity - An annuity with payments that (1) are not
predetermined or guaranteed as to dollar amount, and (2) vary in
amount in relation to the investment experience of one or more
specified Subaccounts.<PAGE>
SUMMARY
The Contract and the Investment Options
The individual variable annuity contracts described in this
Prospectus are designed and offered to aid in the
accumulation of funds on a tax-deferred basis for retirement in
connection with the following types of plans: (a) plans
established by persons entitled to the benefits of the
Self-Employed Individuals Tax Retirement Act of 1962, as amended
(H.R. 10); (b) certain qualified employee pension and
profit-sharing trusts or plans (described in Section 401(a) and
tax-exempt under Section 501(a) of the Internal Revenue Code of
1986, as amended ("the Code") and qualified annuity plans
(described in Section 403(a) of the Code); (c) annuity purchase
plans adopted by public school systems and certain tax-exempt
organizations under Section 403(b) of the Code; (d) Individual
Retirement Annuities purchased by or on behalf of individuals
pursuant to Section 408 of the Code; (e) government deferred
compensation plans pursuant to Section 457 of the Code; (f)
other qualified plans; and (g) nontax-favored plans. Qualified
plans provide special tax treatment to participating employees
and self-employed individuals and their beneficiaries.
Contract Owners may allocate their premiums in whole or in part
to one or more subdivisions of the Contract's Variable Account,
to the Guaranteed Account, or to a combination of the Variable
Account subdivisions and the Guaranteed Account. Each subdivision
of a Contract's Variable Account corresponds to a different
Subaccount of CA, and each Subaccount invests solely in a
specified Portfolio of the Funds.
The Carillon Fund Equity Portfolio seeks primarily long-term
appreciation of capital by investing primarily in common
stocks and other equity securities.
The Carillon Fund Bond Portfolio seeks as high a level of current
income as is consistent with reasonable investment risk by
investing primarily in investment-grade corporate bonds.
The Carillon Fund Capital Portfolio seeks the highest total
return through a combination of income and capital appreciation
consistent with the reasonable risks associated with an
investment portfolio of above-average quality by investing
in equity securities, debt instruments and money market
instruments.
The Carillon Fund S&P 500 Index Portfolio seeks investment
results that correspond to the total return performance
of U.S. common stocks, as represented by the Standard & Poor's
500 Composite Stock Index (the "S&P 500"**). The S&P 500 is a
well-known stock market index that includes common stocks of
companies representing approximately 70% of the market value of
all common stocks publicly traded in the United States. The
investment adviser of the Portfolio believes that
the performance of the S&P 500 is representative of the
performance of publicly traded common stocks in general.
**The S&P 500 is an unmanaged index of common stocks comprised of
500 industrial, financial, utility and transportation companies.
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard &
Poor's 500(R)", and "500" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by Carillon Fund.
The Portfolio is not sponsored, endorsed, sold or promoted by
Standard & Poor's ("S&P"). S&P makes no representation or
warranty, express or implied, to the beneficial owners of the
Portfolio or any member of the public regarding the advisability
of investing in securities generally or in the Portfolio
particularly or the ability of the S&P 500 Index to track general
stock market performance. S&P's only relationship to Carillon
Fund is the licensing of certain trademarks and trade names of
S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to Carillon Fund or the
Portfolio. S&P has no obligation to take the needs of Carillon
Fund or the beneficial owners of the Portfolio into consideration
in determining, composing or calculating the S&P 500 Index. S&P
is not responsible for and has not participated in the
determination of the prices and amount of the Portfolio or the
timing of the issuance or sale of the Portfolio or in the
determination or calculation of the equation by which the
Portfolio is to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or
trading of the Portfolio.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF
THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE
NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.
S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE
OBTAINED BY CARILLON FUND, BENEFICIAL OWNERS OF THE PORTFOLIO, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR
ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE
ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED
OF THE POSSIBILITY OF SUCH DAMAGES.**
The Scudder Fund Capital Growth Portfolio Class A seeks to
maximize long-term capital growth through a broad and
flexible investment program. The Portfolio invests in marketable
securities, principally common stocks and, consistent with
its objective of long-term capital growth, preferred stocks.
The Scudder Fund International Portfolio Class A seeks long-term
growth of capital principally from a diversified portfolio of
foreign equity securities.
The Scudder Fund Money Market Portfolio seeks stability and
current income from a portfolio of money market instruments.
Money market funds are neither insured nor guaranteed by the U.S.
Government, and there can be no assurance that this Portfolio
will maintain a stable net asset value per share.
The American Century VP Capital Appreciation Portfolio seeks
capital growth by investing primarily in common stocks that are
considered by its management to have better-than-average
prospects for appreciation.
The MFS Growth With Income Series seeks to provide reasonable
current income and long-term growth of capital and income.
The MFS High Income Series seeks high current income by investing
primarily in a professionally managed diversified portfolio of
fixed income securities, some of which may involve equity
features. The MFS High Income Series may invest up to 100% of
its assets in lower-rated bonds commonly known as junk bonds.
Before allocating any portion of premiums to the subdivision
corresponding to this Portfolio, Contract Owners should read the
risk disclosure in the accompanying Prospectus for the MFS High
Income Series.
The MFS Emerging Growth Series seeks to provide long-term growth
of capital. Dividend and interest income from portfolio
securities, if any, is incidental to the Series' investment
objective of long-term growth of capital.
The Templeton International Fund Class 2 seeks long-term capital
growth through a flexible policy of investing in stocks and debt
obligations of companies and governments outside the United
States.
There can be no assurance that any Portfolio will achieve its
objective. See "The Funds," page 11, and the accompanying Fund
Prospectuses.
The Accumulation Value of the Contract will vary according to the
investment experience of the Portfolio or Portfolios selected by
the Contract Owner. Similarly, the dollar amount of variable
annuity payments will vary according to the investment experience
of the Portfolio(s) selected. The Contract Owner bears the entire
investment risk for all amounts allocated to the Contract's
Variable Account. Premiums may also be allocated to the
Guaranteed Account. See "The Guaranteed Account," page 22.
Premiums
Each premium payment must be at least $25 for Qualified Contracts
and $50 for Nonqualified Contracts, but Contract Owners may pay
premiums at any time and in any amount, subject to the $25/$50
minimum and a maximum (which may be waived by Union Central) of
$10,000 per Contract Year. However, if no premiums are paid for
two consecutive Contract Years (three in New York), then under
certain circumstances Union Central may pay the Owner the
Accumulation Value (less the administration fee and surrender
charge, if applicable) and cancel the Contract. See "Premiums,"
page 13.
Surrenders
Total or partial surrenders, which are cash withdrawals of all or
part of the Accumulation Value, are permitted at any time prior
to the Maturity Date, except in the case of certain surrenders
under contracts issued in connection with annuity purchase plans
adopted pursuant to Section 403(b) of the Code (see page 25).
Certain surrenders may be subject to a surrender charge (see page
18) and a penalty tax may be imposed (see "Federal Tax Matters"
in the Statement of Additional Information). In addition,
Contract Owners may return the Contract for a refund within 20
days after receiving it (see page 23).
Transfers
Before the Maturity Date, amounts may be transferred among
subdivisions of the Contract's Variable Account or between those
subdivisions and the Guaranteed Account, as frequently as
desired. Transfers generally must be at least $300. Prior to the
Maturity Date, up to six transfers may be made each Contract Year
without charge. However, a transaction charge (currently $10) is
imposed for each transfer in excess of that number. See
"Transfers," page 14. There is no limit on the amount that may be
transferred out of a subdivision of the Variable Account. For
transfers out of the Guaranteed Account, see page 22.
Similarly, after the Maturity Date, the Contract Owner may, once
each year, change the investment base upon which the amount of
the variable annuity payments are calculated by requesting that
Union Central transfer annuity reserves among
the Fund Portfolios.
Benefits
Contract Owners can choose among various types of annuity
benefits, including life annuities with a period certain
and joint and survivor life annuities. See "Annuity Payments,"
page 20.
If the Annuitant dies before the Maturity Date and the Annuitant
was the Owner or the Owner is still living, then Union Central
will pay the beneficiary a death benefit equal to the greater of
(a) the Accumulation Value, or (b) the sum of all premiums paid
less any amounts deducted in connection with partial surrenders.
See "Death Benefits," page 20.
Charges
No sales charge is deducted from premiums. However, a surrender
charge is imposed on certain early surrenders. This
surrender charge depends on how long the Contract has been in
force. During the first two Contract Years the surrender
charge is 7% of the amount surrendered. This charge is reduced by
1% on each subsequent Contract anniversary until the
eighth anniversary when it becomes zero. Notwithstanding the
charges described above, partial surrenders totaling not more
than 10% of the Accumulation Value (as of the date of the first
partial surrender in the Contract Year) may be made each Contract
Year without the imposition of the surrender charge. Also, the
surrender charge will be waived in the event of the Owner's
hospital confinement or terminal illness as defined in the
Contract. The total surrender charge assessed over the life of
the Contract will not exceed 9% of premiums paid. See "Surrender
Charge," page 18.
As partial compensation for administrative expenses, an
administration fee of $30 per year is deducted prior to the
Maturity Date. The annual administration fee will be waived for
any year in which the Accumulation Value of the Contract
is $25,000 or more on the last day of that Contract Year. This
annual fee is not imposed after the Maturity Date. A daily
charge at the rate of 0.25% of net assets per year is also
deducted (both before and after the Maturity Date) to defray the
expenses of administering the Contract. See "Administration Fee,"
page 17.
As compensation for Union Central's assumption of the mortality
and expense risks, a charge that is currently 1.2% of net assets
per year (and that will never exceed 1.7% per year) is deducted
from CA. See "Mortality and Expense Risk Charge," page 17. In
accordance with state laws, premium taxes will be deducted from
some policies. See "Premium Taxes," page 19.
Finally, the Funds in which CA invests will pay an investment
advisory fee and other expenses which are described in the Fund
Prospectuses. See "The Funds," page 11.
SUMMARY OF SEPARATE ACCOUNT EXPENSES
Contract Owner Transaction Expenses
Sales Load Imposed on Purchases (as a percentage of purchase
payments). . . . . None
Surrender Charge (Contingent Deferred Sales Charge) (as a
percentage of amount surrendered)
<TABLE>
<CAPTION>
Contract Year Surrender Charge Percentage*
<S> <C>
1 7%
2 7%
3 6%
4 5%
5 4%
6 3%
7 2%
8 1%
After 8 0%
</TABLE>
Exchange Fee . . . . . . . . . . . . . . . . . $10 **
Annual Administration Fee . . . . . . . . . . $30***
Separate Account Annual Expenses (as a percentage of average
account value)
<TABLE>
<CAPTION>
Equity Bond Capital
Subaccount Subaccount Subaccount
<S> <C> <C> <C>
Mortality and Expense Risk Charge 1.20% 1.20% 1.20%
Administration Fee .25% .25% .25%
Total Separate Account Annual Expenses 1.45% 1.45% 1.45%
</TABLE>
<TABLE>
<CAPTION>
S&P 500 Capital Scudder Money
Index Growth International Market
Subaccount Subaccount Subaccount Subaccount
<S> <C> <C> <C>
Mortality and
Expense Risk Charge 1.20% 1.20% 1.20% 1.20%
Administration Fee .25% .25% .25% .25%
Total Separate Account
Annual Expenses 1.45% 1.45% 1.45% 1.45%
</TABLE>
<TABLE>
<CAPTION>
Capital Growth With High
Appreciation Income Income
Subaccount Subaccount Subaccount
<S> <C> <C> <C>
Mortality and Expense Risk Charge 1.20% 1.20% 1.20%
Administration Fee .25% .25% .25%
Total Separate Account Annual Expenses 1.45% 1.45% 1.45%
</TABLE>
<TABLE>
<CAPTION>
Emerging Templeton
Growth International
Subaccount Subaccount
<S> <C> <C>
Mortality and Expense Risk Charge 1.20% 1.20%
Administration Fee .25 .25
Total Separate Account Annual Expenses 1.45% 1.45%
</TABLE>
<TABLE>
<CAPTION>
Carillon Fund, Inc. Annual Expenses+
S&P 500
Equity Bond Capital Index
Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C>
Management Fees .57% .48% .68% .29%
Other Expenses .07% .14% .09% .30%
Total Carillon Fund, Inc.
Annual Expenses .64% .62% .77% .59%
</TABLE>
<TABLE>
<CAPTION>
Scudder Variable Life Investment Fund Annual Expenses+
Capital
Growth International Money
Portfolio Portfolio Market
Class A Class A Portfolio
<S> <C> <C> <C>
Management Fees .48% .88% .37%
Other Expenses .05% .17% .09%
Total Scudder Variable Life
Investment Fund Annual Expenses .53% 1.05% .46%
</TABLE>
<TABLE>
<CAPTION>
American Century Variable Portfolios, Inc. Annual Expenses+
VP Capital Appreciation
Portfolio
<S> <C>
Management Fees 1.00%
Other Expenses++ --
Total TCI Portfolios, Inc. Annual Expenses 1.00%
</TABLE>
<TABLE>
<CAPTION>
MFS Variable Insurance Trust Annual Expenses+(1)(2)
Emerging
Growth With High Income Growth
Income Series Series Series
<S> <C> <C> <C>
Management Fees .75% .75% .75%
Other Expenses
(after fee reductions) .25% .25% .25%
Total MFS Variable Insurance
Trust Annual Expenses 1.00% 1.00% 1.00%
</TABLE>
<TABLE>
<CAPTION>
Templeton Variable Products Series Fund Annual Expenses+
Templeton
International
Fund Class 2
<S> <C>
Management Fees .70%
Rule 12b-1 Fees .25%
Other Expenses .18%
Total Templeton Variable Products
Series Fund Annual Expenses 1.13%
</TABLE>
* Partial surrenders totaling up to 10% of the Accumulation
Value may be made each Contract Year without the surrender
charge being assessed.
** Prior to the Maturity Date, up to six transfers may be made
each Contract Year without charge.
*** Waived for any year in which the Accumulation Value of the
Contract is $25,000 or more on the last day of the Contract
Year.
+ Because the Templeton International Fund Class 2 shares were
not offered until May 1, 1997, the figures for "Management Fees"
and "Other Expenses" are based on the historical expenses of the
Templeton International Class 1 shares for the year ended
December 31, 1996. Class 1 Management Fees and total operating
expenses have been restated to reflect the management fee
schedule approved by shareholders and effective May 1, 1997,
Class 1 actual management fees and total fund operating expenses
before May 1, 1997 were lower. For each other Portfolio they are
based on the actual expenses incurred by the Portfolio for the
year ended December 31, 1996. Total Annual Expenses in excess of
.60% for the S&P 500 Index Portfolio are paid by the investment
adviser.
++ All expenses except brokerage, taxes, interest and fees and
expenses of non-interested person directors are paid by the
investment adviser.
(1) Each Series has an expense offset arrangement which reduces
the Series' custodian fee based upon the amount of cash
maintained by the Series with its custodian and dividend
disbursing agent, and may enter into other such arrangements and
directed brokerage arrangements (which would also have the
effect of reducing the Series' expenses). Any such fee
reductions are not reflected under "Other Expenses."
(2) The Adviser has agreed to bear expenses for each Series,
subject to reimbursement by each Series, such that each Series'
"Other Expenses" shall not exceed 0.25% of the average daily net
assets of the Series during the current fiscal year. See
"Information Concerning Shares of Each Series - Expenses" (in
the Series' Prospectus). Otherwise, "Other Expenses" for the
Emerging Growth Series, the Growth With Income Series and the
High Income Series would be 0.41%, 1.32% and 0.87%,
respectively, and "Total Operating Expenses" would be 1.16%,
2.07% and 1.62%, respectively, for these Series.
Example* If you surrender your Contract at the end of the applicable time
period, you would pay the following expenses
on a $1,000 investment, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Equity Subaccount $94 $134 $165 $255
Bond Subaccount $94 $134 $164 $253
Capital Subaccount $96 $138 $171 $268
S&P 500 Index Subaccount $94 $133 $162 $250
Capital Growth Subaccount $93 $131 $159 $243
Scudder International Subaccount $98 $146 $185 $297
Money Market Subaccount $93 $129 $156 $236
Capital Appreciation Subaccount $98 $145 $182 $292
Growth With Income Subaccount $98 $145 $182 $292
High Income Subaccount $98 $145 $182 $292
Emerging Growth Subaccount $98 $145 $182 $292
Templeton International Subaccount $99 $146 $183 $293
</TABLE>
If you annuitize at the end of the applicable time period
or if you do not surrender your Contract, you would pay
the following expenses on a $1,000 investment, assuming
5% annual return on assets:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Equity Subaccount $22 $69 $119 $255
Bond Subaccount $22 $69 $118 $253
Capital Subaccount $24 $73 $126 $268
S&P 500 Index Subaccount $22 $68 $116 $250
Capital Growth Subaccount $21 $66 $113 $243
Scudder International Subaccount $27 $82 $140 $297
Money Market Subaccount $21 $64 $110 $236
Capital Appreciation Subaccount $26 $80 $137 $292
Growth With Income Subaccount $26 $80 $137 $292
High Income Subaccount $26 $80 $137 $292
Emerging Growth Subaccoung $26 $80 $137 $292
Templeton International Subaccount $28 $82 $137 $293
</TABLE>
The purpose of this table is to assist the Contract Owner in
understanding the various costs and expenses that a Contract
Owner will bear directly or indirectly. The table reflects
expenses of CA as well as the Funds. See "Charges and Other
Deductions," page 17, and the accompanying Prospectuses. The
table does not reflect any deduction made for premium taxes
that may be applicable (see page 19).
THIS TABLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES AND THE ACTUAL EXPENSES THAT WILL BE PAID
MAY BE GREATER OR LESSER THAN THOSE SHOWN.
+ In the example above, the $30 annual administration fee has
been reflected in the calculation of annual expenses by
converting the fee to a percent of average net assets
attributable to the Contracts, adding it to the Total
Separate Account Annual Expenses and the Fund Annual Expenses
shown above and multiplying the resulting percentage figure
by the average annual assets of the hypothetical account.
The fee has been converted to a percent by dividing the total
amount of the fee collected during 1996 by the total average
net assets attributable to the Contracts. Net assets
attributable to the Contracts includes amounts allocated to
both CA and the Guaranteed Account except for such amounts as
are held as reserves for annuity payments.
PERFORMANCE DATA
From time to time CA may publish advertisements containing
total return performance data relating to its Subaccounts
(including graphs, charts, tables and examples depicting that
data). More detailed information on computation of
performance data is included in the Statement of Additional
Information. All performance data quoted represents only
historical performance and is not intended to indicate future
performance of the Subaccounts.
Total return for a Subaccount is the sum of all the
Subaccount's earnings plus any changes in the value of its
assets, reduced by all expenses accrued during a measuring
period, expressed as a percentage of the amount invested for
a one-year period. The total return figures advertised are
average annual total returns for periods of one year and,
when applicable, five years and ten years, and since
inception of the Subaccounts. Total return omitting the
effect of surrender charges may also be advertised for the
same and other periods, to illustrate change in the value of
the Variable Account during times when there is no surrender.
Total return omitting the effect of charges not reflected in
Accumulation Unit Values (surrender charges and the portion
of the annual administration fee attributable to the
Subaccount whose return is shown) may also be advertised for
the same and other periods, usually in comparison with
certain unmanaged market indices. Total return (whether
including or excluding the effects of the charges described
above) also may be shown in some advertisements on a
cumulative basis.
<TABLE>
<CAPTION>
ACCUMULATION UNIT VALUES
(for a unit outstanding throughout the period)
Year ended December 31,
-----------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
EQUITY SUBACCOUNT
Accumulation unit value
at beginning of period $33.969 $27.147 $26.628 $23.676 $21.491
Accumulation unit value
at end of period $41.682 $33.969 $27.147 $26.628 $23.676
Number of accumulation
units outstanding,
end of period 2,723,705 2,337,986 1,981,958 1,723,790 1,312,947
Payout unit value $41.682 $33.969 $27.147
Number of payout units
outstanding, end
of period 9,142 9,796 10,476
BOND SUBACCOUNT
Accumulation unit value
at beginning of period $23.865 $20.341 $20.977 $19.014 $17.921
Accumulation unit value
at end of period $25.210 $23.865 $20.341 $20.977 $19.014
Number of accumulation
units outstanding,
end of period 672,511 574,421 508,398 513,613 348,420
CAPITAL SUBACCOUNT
Accumulation unit value
at beginning of period $16.214 $14.394 $14.467 $13.022 $12.241
Accumulation unit value
at end of period $18.367 $16.214 $14.394 $14.467 $13.022
Number of accumulation
units outstanding,
end of period 2,732,591 2,521,521 2,271,375 1,790,938 1,181,036
S&P 500 INDEX
SUBACCOUNT
Accumulation unit
value at beginning
of period $10.000<F2>
Accumulation unit value
at end of period $11.375
Number of accumulation
units outstanding,
end of period 869,681
CAPITAL GROWTH
SUBACCOUNT
Accumulation unit value
at beginning of period $14.394 $11.351 $12.749 $10.700 $10.000<F3>
Accumulation unit value
at end of period $17.041 $14.394 $11.351 $12.749 $10.700
Number of accumulation
units outstanding,
end of period 1,593,634 1,162,999 906,428 439,914 70,218
SCUDDER INTERNATIONAL
SUBACCOUNT
Accumulation unit value
at beginning of period $14.192 $12.958 $13.259 $9.760 $10.000<F3>
Accumulation unit value
at end of period $16.054 $14.192 $12.958 $13.259 $ 9.760
Number of accumulation
units outstanding,
end of period 1,564,591 1,220,160 1,095,214 362,172 43,624
MONEY MARKET SUBACCOUNT
Accumulation unit value
at beginning of period $15.468 $14.850 $14.526 $14.369 $14.122
Accumulation unit value
at end of period $16.028 $15.468 $14.850 $14.526 $14.369
Number of accumulation
units outstanding,
end of period 477,679 368,444 280,575 119,598 120,547
CAPITAL APPRECIATION
SUBACCOUNT
Accumulation unit
value at beginning
of period $10.000<F2>
Accumulation unit value
at end of period $9,062
Number of accumulation
units outstanding,
end of period 424,022
GROWTH WITH INCOME
SUBACCOUNT
Accumulation unit
value at beginning
of period $10.000<F2>
Accumulation unit value
at end of period $11.352
Number of accumulation
units outstanding,
end of period 425,068
HIGH INCOME SUBACCOUNT
Accumulation unit
value at beginning
of period $10.000<F2>
Accumulation unit value
at end of period $10.841
Number of accumulation
units outstanding,
end of period 108,723
</TABLE>
<TABLE>
<CAPTION>
1991 1990 1989 1988 1987
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
EQUITY SUBACCOUNT
Accumulation unit value
at beginning of period $14.979 $17.977 $16.316 $12.565 $12.624
Accumulation unit value
at end of period $21.491 $14.979 $17.977 $16.316 $12.565
Number of accumulation
units outstanding,
end of period 1,057,669 936,036 799,268 561,682 521,067
Payout unit value
Number of payout
units outstanding,
end of period
BOND SUBACCOUNT
Accumulation unit
value at beginning
of period $15.424 $14.403 $13.199 $12.475 $12.272
Accumulation unit
value at end
of period $17.921 $15.424 $14.403 $13.199 $12.475
Number of accumulation
units outstanding,
end of period 283,493 285,370 250,631 225,777 224,900
CAPITAL SUBACCOUNT
Accumulation unit value
at beginning of period $9.850 $10.000<F1>
Accumulation unit
value at end
of period $12.241 $ 9.850
Number of accumulation
units outstanding,
end of period 627,636 279,289
MONEY MARKET SUBACCOUNT
Accumulation unit value
at beginning of period $13.576 $12,709 $11,846 $11,226 $10,708
Accumulation unit value
at end of period $14.122 $13.576 $12.709 $11.846 $11.226
Number of accumulation
units outstanding,
end of period 83,623 103,405 75,006 52,666 50,467
<FN>
<F1> Commencement of operations was May 1, 1990.
<F2> Commencement of operations was May 1, 1996.
<F3> Commencement of operations was May 4, 1992.
</TABLE>
The Emerging Growth Subaccount and Templeton International
Subaccount did not exist on December 31, 1996.
THE UNION CENTRAL LIFE INSURANCE COMPANY
AND CARILLON ACCOUNT
Union Central
The Union Central Life Insurance Company ("Union Central"), a
mutual insurance company, was organized in 1867 under the laws of
Ohio. Union Central is primarily engaged in the sale of life and
disability insurance and annuities and is currently licensed to
operate in all states and the District of Columbia. The Contract
is available in all states.
Carillon Account
CA is a separate account of Union Central that is registered with
the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940. Such
Registration does not signify that the Commission supervises the
management or investment practices or policies of CA. Union
Central's Board of Directors established CA by resolution on
February 6, 1984.
Although the assets of CA belong to Union Central, these assets
are held separately from the other assets of Union Central, and
are not chargeable with liabilities incurred in any other
business operations of Union Central (except to the extent that
assets in CA exceed the liabilities under the variable portion of
the Contracts). Accordingly, the income, capital gains, and
capital losses incurred on the assets of CA are credited to or
charged against the assets of CA, without regard to the income,
capital gains or capital losses arising out of any other business
Union Central may conduct. Therefore, the investment performance
of CA is entirely independent of both the investment performance
of Union Central's general assets and the performance of any
other separate account.
CA has been divided into twelve subaccounts, each of which
invests in a different Portfolio of the Funds. Additional
Subaccounts may be added at Union Central's discretion.
The Funds
The Funds are mutual funds of the series type which are
registered with the Securities and Exchange Commission as
open-end, diversified, management investment companies. Such
registration does not signify that the Commission supervises
the management or investment practices or policies of Funds. The
investment adviser to Carillon Fund is Carillon Advisers,
Inc. (a wholly-owned subsidiary of Union Central). Scudder,
Stevens & Clark, Inc. is the investment adviser to the Scudder
Fund.
The investment adviser to the American Century is American
Century Investment Management, Inc., the adviser to the American
Century Investments group. The investment adviser to the MFS
Fund is Massachusetts Financial Services Company. The investment
adviser to the Templeton Fund is Templeton Investment Counsel,
Inc.
CA invests in four Portfolios of Carillon Fund: the Equity
Portfolio, the Bond Portfolio, the Capital Portfolio and the
S&P 500 Index Portfolio. CA invests in three Portfolios of the
Scudder Fund: the Capital Growth Portfolio Class A, the
International Portfolio Class A and the Money Market Portfolio.
(The Scudder Fund has four additional Portfolios that are not
available through the Contract.) CA invests in one Portfolio of
the American Century Fund: American Century VP Capital
Appreciation Portfolio. (The American Century Fund has four
additional Portfolios that are not available through the
Contract.) CA invests in three Portfolios of the MFS
Fund: MFS Growth With Income Series, MFS High Income Series and
MFS Emerging Growth Series. (The MFS Fund has nine additional
Portfolios that are not available through the Contract.) CA
invests in one Portfolio of the Templeton Fund: Templeton
International Fund Class 2. (The Templeton Fund has nine
additional Portfolios that are not available through the
Contract.) The assets of each Portfolio are separate from the
others and each Portfolio has different investment objectives and
policies. As a result, each Portfolio operates as a separate
investment fund and the investment performance of one Portfolio
has no effect on the investment performance of any other
Portfolio.
The Carillon Fund Equity Portfolio seeks primarily long-term
appreciation of capital by investing primarily in common stocks
and other equity securities.
The Carillon Fund Bond Portfolio seeks as high a level of
current income as is consistent with reasonable investment
risk by investing primarily in investment-grade corporate bonds.
The Carillon Fund Capital Portfolio seeks the highest total
return through a combination of income and capital appreciation
consistent with the reasonable risk associated with an investment
portfolio of above-average quality by investing in equity
securities, debt instruments and money market instruments.
The Carillon Fund S&P 500 Index Portfolio seeks investment
results that correspond to the total return performance
of U.S. common stocks, as represented by the Standard & Poor's
500 Composite Stock Index (the "S&P 500"). The S&P 500 is a
well-known stock market index that includes common stocks of
companies representing approximately 71% of the market value of
all common stocks publicly traded in the United States. The
investment adviser of the Portfolio believes that
the performance of the S&P 500 is representative of the
performance of publicly traded common stocks in general.
The Scudder Fund Capital Growth Portfolio Class A seeks to
maximize long-term capital growth through a broad and
flexible investment program. The Portfolio invests in marketable
securities, principally common stocks and, consistent with
its objective of long-term capital growth, preferred stocks.
The Scudder Fund International Portfolio Class A seeks
long-term growth of capital principally from a diversified
portfolio of foreign equity securities.
The Scudder Fund Money Market Portfolio seeks stability and
current income from a portfolio of money market instruments.
Money market funds are neither insured nor guaranteed by the U.S.
Government, and there can be no assurance that this Portfolio
will maintain a stable net asset value per share.
The American Century VP Capital Appreciation Portfolio seeks
capital growth by investing primarily in common stocks that are
considered by management to have better-than-average prospects
for appreciation.
The MFS Growth With Income Series seeks to provide reasonable
current income and long-term growth of capital and income.
The MFS High Income Series seeks high current income by investing
primarily in a professionally managed diversified portfolio of
fixed income securities, some of which may involve equity
features. The MFS High Income Portfolio may invest up to 100% of
its assets in lower-rated bonds commonly known as junk bonds.
Before allocating any portion of premiums to the subdivision
corresponding to this Portfolio, the Contract Owners should read
the risk disclosure in the accompanying Prospectus for the MFS
High Income Series.
The MFS Emerging Growth Series seeks to provide long-term growth
of capital. Dividend and interest income from portfolio
securities, if any, is incidental to the Series' investment
objective of long-term growth of capital.
The Templeton International Fund seeks long-term capital growth
through a flexible policy of investing in stocks and debt
obligations of companies and governments outside the United
States.
THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE
THEIR RESPECTIVE STATED OBJECTIVES. Additional information
concerning the investment objectives and policies of the Funds
can be found in the current Fund Prospectuses which are attached
and accompany this Prospectus. The Fund Prospectuses should be
read carefully before any decision is made concerning the
allocation of premiums to a particular Subaccount of CA.
Additions, Deletions or Substitutions of Investments
Union Central retains the right, subject to any applicable law,
to make additions to, deletions from or substitutions for the
Portfolio shares held by any Subaccount of CA or that CA may
purchase. Union Central reserves the right to eliminate the
shares of any of the Portfolios and to substitute shares of
another Fund Portfolio, or of another open-end, registered
investment company, if the shares of the Portfolio are no longer
available for investment, or if in Union Central's judgment
investment in any Portfolio would become inappropriate in view of
the purposes of CA. To the extent required by the Investment
Company Act of 1940, substitutions of shares attributable to a
Contract Owner's interest in a Subaccount will not be made until
the Owner has been notified of the change, and until the
Securities and Exchange Commission has approved the change. In
the case of such substitution, affected Contract Owners will have
the right, within 30 days after notification, to surrender the
Contract without the imposition of any withdrawal charge. Nothing
contained in this Prospectus shall prevent CA from purchasing
other securities for other series or classes of contracts, or
from effecting a conversion between series or classes of
contracts on the basis of requests made by Contract Owners.
The Company may also establish additional Subaccounts of CA. Each
additional Subaccount would purchase shares in a new Fund
Portfolio, in another mutual fund, or in a combination of these.
New Subaccounts may be established when, in the sole discretion
of Union Central, marketing needs or investment conditions
warrant, and any new Subaccounts will be made available to
existing Contract Owners only on a basis to be determined by
Union Central, if at all. Union Central may also eliminate one or
more Subaccounts if, in its sole discretion, marketing, tax or
investment conditions so warrant.
In the event of any such substitution or change, Union Central
may, by appropriate endorsement, make such changes in Contracts
offered by this Prospectus as may be necessary or appropriate to
reflect such substitution or change. If deemed by Union Central
to be in the best interests of persons having voting rights under
the Contracts, CA may be operated as a management company under
the Investment Company Act of 1940 or it may be deregistered
under such Act in the event such registration is no longer
required, or it may be combined with one or more other separate
accounts.
THE CONTRACT
Purchasing a Contract
A Contract can be purchased by completing an application and
having it and a premium of at least $25 for Qualified Contracts
or $50 for Nonqualified Contracts sent to Union Central by a
representative of Union Central who is also a qualified
securities representative under federal law. Acceptance of an
application is subject to Union Central's underwriting rules and
Union Central reserves the right to reject any application. If an
initial premium cannot be credited to the Contract within five
business days of receipt by Union Central, then Union Central
will return the premium to the payor immediately unless the
applicant consents to Union Central holding the premium for a
longer period. Initial premiums accompanied by completed
applications will be credited to the Contract not later than two
business days following receipt.
Premiums
After the first premium has been paid and accepted, the Owner
has flexibility, within the limits of any applicable retirement
plan, in determining the size and frequency of subsequent
premiums. Premiums may be paid at any time and in any amount,
subject only to the $25/$50 minimum and to a maximum of $10,000
per Contract Year. (Union Central may waive the maximum but a
waiver in one instance does not constitute a waiver for any
additional premiums.)
If no premiums are paid for two consecutive Contract Years
(three in New York), Union Central may cancel the Contract and
return the Accumulation Value (less the administration fee and
surrender charge, if applicable) but only if (1) the
Accumulation Value is less than $2,000 at the end of the
two-year period (three-year period in New York); and (2) the
total premium paid, less any partial surrenders, is less than
$2,000. Union Central will not cancel a Contract unless it first
gives the Contract Owner at least 30 days' notice to pay an
additional premium to prevent cancellation.
Premiums will be allocated among the thirteen Investment Options
(the twelve subdivisions of the Variable Account and the
Guaranteed Account) in accordance with the instructions of the
Contract Owner, as specified in the application for the Contract
or as subsequently changed by the Owner. Any portion of the
premium, subject to a $10 minimum, may be allocated to these
Investment Options. The allocation may be changed at any time,
without charge, by notifying Union Central in writing.
Crediting of Accumulation Units
Premiums that are allocated to the Contract's Variable Account
are credited to the Contract in the form of Accumulation Units.
The number of Accumulation Units credited to a Contract is
determined by dividing the amount allocated to each subdivision
of the Variable Account by the Accumulation Unit value for the
corresponding Subaccount of CA for the Valuation Period during
which the premium is received. (In the case of the initial
premium, units are credited when the application is accepted.)
The value of the Accumulation Units will vary in accordance with
investment experience and expenses of the Portfolio in which the
Subaccount invests.
Prior to the Maturity Date, the Accumulation Value equals the
sum of the Variable Account and the Guaranteed Account credited
to the Contract. The Variable Account is the sum of the value of
all subdivisions of the Variable Account. The value in a
subdivision equals the number of Accumulation Units credited to
that subdivision times the value of the Accumulation Units for
the corresponding Subaccount. For the value of the Guaranteed
Account, see page 22.
Value of Accumulation Units
The value of Accumulation Units is expected to change every
valuation period, and will depend upon the investment
performance and expenses of the Portfolio in which each
Subaccount invests. The Accumulation Units in each Subaccount
of CA are valued separately.
A valuation period is the period between successive valuation
dates, commencing at the close of business of each valuation
date and ending at the close of business of the next succeeding
valuation date. A valuation date is each day, Monday through
Friday, when there are purchases or redemptions of Fund shares,
except (i) when the New York Stock Exchange is closed (currently
New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas
Day); and (ii) any day on which changes in the value of the
Portfolio securities of the Funds will not materially affect the
current net asset value of the shares of a Portfolio.
The value of each Accumulation Unit was initially set at $10.
Thereafter, the value of an Accumulation Unit for any valuation
period equals the value of such a unit as of the immediately
preceding valuation period, multiplied by the "Net Investment
Factor" for the current valuation period.
The Net Investment Factor for each Subaccount for any Valuation
Period is determined by dividing (A) by (B) and subtracting (C)
from the result, where:
(A) is:
(1) the net asset value per share of a Portfolio share
held in the Subaccount determined as of the end of the current
valuation period; plus
(2) the per share amount of any dividend or capital
gains distributions made by the Portfolio on shares held in
the Subaccount if the "ex-dividend" date occurs during the
current valuation period; plus or minus
(3) a per share charge or credit for any taxes incurred
by or provided for in the Subaccount, which Union Central
determines to have resulted from the maintenance of the
Subaccount (Union Central does not believe that currently any
taxes are incurred by CA); and
(B) is:
(1) the net asset value per share of a Portfolio share
held in the Subaccount determined as of the end of the
immediately preceding valuation period (adjusted for an
"ex-dividend"); plus or minus
(2) the per share charge or credit for any taxes
provided for during the immediately preceding valuation period;
and
(C) is a factor representing the daily charges deducted from CA
by Union Central for administrative expenses and assumption of
the mortality and expense risks under the Contract. The factor
is equal to 0.00004% for a one-day valuation period.
Transfers
Amounts may be transferred among subdivisions of a Contract's
Variable Account, or between the Guaranteed Account and
subdivisions of the Variable Account, at any time prior to the
Maturity Date. Prior to the Maturity Date, Contract Owners may
transfer up to the greater of (1) 20% of the value of the
Guaranteed Account (as of the first day of the Contract Year),
or (2) $1,000 to one or more subdivisions of the Variable
Account each Contract Year. There is no maximum on amounts that
may be transferred out of a subdivision of the Variable Account.
The minimum amount that may be transferred is $300, or if less,
the entire amount in the Investment Option.
Prior to the Maturity Date, up to six transfers may be made each
Contract Year without charge. However, a transaction charge is
imposed for each transfer in excess of that number, and is
deducted from the Investment Option from which the transfer is
made (or from the amount transferred, if the entire amount in
any Investment Option is transferred). The transfer charge is
currently $10 and may be increased, but it will never be more
than $15.
If after a transfer the amount remaining in any Investment
Option is less than $25, then the entire amount will be
transferred instead of the requested amount.
Transfer requests must be made pursuant to proper written or
telephone instructions which specify in detail the requested
changes. Transfers from subdivisions of the Variable Account
will be made based on the Accumulation Unit values at the end of
the valuation period during which Union Central receives the
transfer request.
After the Maturity Date, the Annuitant can change the reserve
basis (contract reserves for the specific variable annuity
contract involved) for the variable annuity payments he or she
is receiving once in each 12 months after the first 12 months.
Such a change in reserve basis for variable annuity payments
will result in subsequent annuity payments being based on the
investment performance of the Subaccount to which annuity
reserves have been transferred.
Telephone Transfers: To effect a telephone transfer,
authorization must have been properly provided to Union Central
in a telephone transfer authorization form. Such authorization
must be on file at Union Central's Home Office before telephone
transfer instructions will be honored by Union Central.
Telephone transfer instructions may be made by calling
1-800-456-9319 between 9:00 a.m. and 3:30 p.m. (Eastern Time
Zone) on days when Union Central is open for business. Each
telephone exchange request must include a precise
identification of the Contract and the Contract Owner's Personal
Security Code. Union Central may accept telephone exchange
requests from any person representing himself or herself to be
the Contract Owner or any other person who properly identifies
the correct Contract Number and Personal Security Code. Thus,
Contract Owners risk possible loss of interest, capital
appreciation and principal in the event of an unauthorized
telephone exchange. Neither Union Central nor the Funds nor
Carillon Investments, Inc., the principal underwriter of the
Contracts, will be liable for complying with telephone
instructions it reasonably believes to be authentic, nor for any
loss, damage, cost or expense in acting on such telephone
instructions, and Contract Owners will bear the risk of any such
loss. Union Central will employ reasonable procedures to
confirm that telephone instructions are genuine. If Union
Central does not employ such procedures, it may be liable for
losses due to unauthorized or fraudulent instructions. Such
procedures may include, among others, requiring forms of
personal identification prior to acting upon telephone
instructions, providing written confirmation of such
transactions to Contract Owners, and/or tape recording of
telephone transfer request instructions received from Contract
Owners. All or part of any telephone conversation relating to
transfer instructions may be recorded by Union Central without
prior disclosure.
Telephone instructions apply only to previously invested amounts
and do not change the investment of any future premiums paid
under the Contract. Allocations of future premium payments can
only be changed by proper written request. (See "Premiums" on
page 13.)
NOTE: During periods of drastic economic or market changes,
telephone transfers may be difficult to implement. At such
times, requests may be made by regular or express mail and will
be processed pursuant to the terms and restrictions described in
this "Transfers" section.
Additional information concerning this transfer privilege may be
obtained from Union Central. Union Central reserves the right to
modify, suspend or discontinue the telephone transfer privilege
at any time and without prior notice.
Special Transfers - Dollar Cost Averaging Union Central
administers a Dollar Cost Averaging ("DCA") program that enables
the Contract Owner to pre-authorize a periodic exercise of the
right to transfer amounts among subdivisions of the Variable
Account. Contract Owners entering into a DCA agreement instruct
Union Central to transfer monthly (as of the first business day
of the month) a predetermined dollar amount (a minimum of $100)
from the Money Market subdivision to other subdivisions of the
Variable Account until the amount in the Money Market
subdivision is exhausted. A DCA agreement may be terminated at
any time upon the Contract Owner notifying Union Central in
writing at least five business days prior to the next transfer
date so that the transfer scheduled to take effect on such date
can be cancelled.
Transfers made pursuant to the DCA program are not subject to a
transfer charge and do not affect a Contract Owner's right to
make up to six transfers each Contract Year without charge,
prior to the Maturity Date.
By allocating specific amounts on a regularly scheduled basis,
as opposed to allocating the total amount at one particular
time, a Contract Owner may be less susceptible to the impact of
market fluctuations. There is no guarantee, however, that such
an investment method will result in profits or prevent losses.
Contract Owners interested in the DCA program may elect to
participate in this program by separate application.
Portfolio Rebalancing Plan
Union Central administers a Portfolio Rebalancing Plan that
enables Contract Owners with a minimum balance of $5,000 in the
Variable Account to indicate to Union Central the percentage
levels he or she would like to maintain among the subdivisions
of the Variable Account. On a calendar-year quarterly,
semi-annual or annual basis as selected by the Contract Owner,
Union Central will automatically rebalance the subdivisions of
the Contract Owner's Variable Account to maintain the indicated
percentages by transfers among the subdivisions. (The Portfolio
Rebalancing Plan is not available for amounts in the Guaranteed
Account.) The entire value of the subdivisions of the Variable
Account must be included in the Portfolio Rebalancing Plan.
Other investment programs, such as the DCA program, Interest
Sweep Plan (see below), or other transfers or withdrawals may
not work in concert with the Portfolio Rebalancing Plan.
Therefore, Contract Owners should monitor their use of these
other programs and any other transfers or withdrawals while the
Portfolio Rebalancing Plan is being used.
The Portfolio Rebalancing Plan may be terminated at any time
upon the Contract Owner notifying Union Central in writing at
least five business days prior to the date of the next
rebalancing.
Transfers made pursuant to the Portfolio Rebalancing Plan are
not subject to a transfer charge and do not affect a Contract
Owner's right to make up to six transfers each Contract Year
without charge, prior to the Maturity Date.
Union Central reserves the right to alter the terms or suspend
or eliminate the availability of the Portfolio Rebalancing Plan
at any time.
Contract Owners may elect to participate in this program by
separate application.
Interest Sweep
Contract Owners with a minimum balance of $5,000 in the
Guaranteed Account may elect to have the interest credited to
the Guaranteed Account periodically transferred (or "swept")
into specified subdivisions of the Variable Account. The sweep
may be done on a quarterly, semi-annual or annual basis.
The Interest Sweep Plan may be terminated at any time upon the
Contract Owner notifying Union Central in writing at least five
business days prior to the date of the next periodic sweep.
Transfers made pursuant to the Interest Sweep Plan are not
subject to a transfer charge and do not affect a Contract
Owner's right to make up to six transfers each Contract Year
without charge, prior to the Maturity Date.
Union Central reserves the right to alter the terms or suspend
or eliminate the availability of the Interest Sweep Plan at any
time.
Contract Owners may elect to participate in this program by
separate application.
Surrenders
The Contract Owner may make cash withdrawals (surrenders) of all
or part of the Accumulation Value at any time prior to the
earlier of the death of the Annuitant or the Maturity Date
(subject to any restrictions imposed in connection with a
particular retirement plan). Surrender requests must be made
pursuant to proper written instructions. Surrenders cannot be
made by telephone. The amount available is the Accumulation
Value at the end of the valuation period during which Union
Central receives the written request, less any surrender
charges, administration fee and premium taxes not previously
deducted. Surrenders from the Variable Account generally will be
paid within seven days of receipt of the written request (see
"Miscellaneous Contract Provisions" in the Statement of
Additional Information). For surrenders from the Guaranteed
Account, see page 23. For restrictions applicable to certain
surrenders under Contracts issued in connection with annuity
purchase plans adopted pursuant to Section 403(b) of the Code,
see "Qualified Plans," page 25.
The minimum partial surrender is $100 or the entire amount in
the Investment Option, whichever is less. If after the
surrender (and deduction of the surrender charge, if any) the
amount remaining in the Investment Option would be less than
$25, then the request will be considered to be a request for
surrender of the entire amount held in the Investment Option.
If a partial surrender plus any surrender charge would reduce
the Accumulation Value to less than $100, then a request for
a partial surrender will be treated as a total surrender of the
Contract and the entire Accumulation Value, less any charges,
will be paid out.
Under certain circumstances, surrenders will be subject to the
surrender charge set forth below under "Surrender
Charge" at page 18. Surrenders of Contracts may be subject to a
10% tax penalty (see "Federal Tax Matters" in the Statement of
Additional Information).
The full administration fee will also be deducted at the time of
total surrender regardless of the date of surrender. For total
surrenders, any surrender charge and administration fee will be
deducted from the amount paid.
Partial surrenders will be implemented by canceling Accumulation
Units in an amount equal to the withdrawal and any applicable
surrender charge. The Contract Owner should designate the
Investment Option from which the surrender should be made. If no
designation is made, the requested amount will be withdrawn from
each Investment Option in the same proportion that the interest
therein bears to the Accumulation Value. The surrender charge,
if any, will be deducted from
the value remaining after payment of the requested amount, or
from the amount paid if the entire amount in an Investment
Option is surrendered.
Since the Contract Owner assumes the investment risk with
respect to amounts allocated to the Variable Account (and
because there are certain charges), the total amount paid upon
total surrender of the Contract (including any prior surrenders)
may be more or less than the total premiums paid.
Personal Income Plan
Union Central administers a Personal Income Plan ("PIP") that
enables a Contract Owner to pre-authorize a periodic exercise of
the contractual surrender rights described above. Contract
Owners entering into a PIP agreement instruct Union Central to
withdraw a level dollar amount or percentage of the Accumulation
Value on a monthly, quarterly, semi-annual or annual basis. To
the extent that the total of PIP surrenders in a Contract Year
exceeds 10% of the Contract Owner's Accumulation Value (in the
initial year, as of the date the PIP agreement is approved by
Union Central; in subsequent years, as of the first day of that
Contract Year), a surrender charge may be applicable (see
"Surrender Charge" at page 18.) PIP surrenders may also be
subject to the 10% federal tax on early withdrawals (see
"Federal Tax Matters" in the Statement of Additional
Information).
CHARGES AND OTHER DEDUCTIONS
Administration Fee
Prior to the Maturity Date, an annual administration fee of $30
will be deducted from the Accumulation Value as partial
reimbursement for actual expenses related to the administration
of each Contract and the Variable Account. The annual
administration fee will be waived for any year in which the
Accumulation Value of the Contract is $25,000 or more on the
last day of that Contract Year. Union Central guarantees that
the amount of this fee will not increase over the life of the
Contract. This annual administration fee is not deducted after
the Maturity Date.
The annual administration fee will be deducted on the last day
of each Contract Year. The fee will be deducted pro rata from
all Investment Options in the same proportion that the Contract
Owner's interest in each bears to the total Accumulation Value.
The full administration fee will also be deducted at the time of
total surrender, regardless of the date of surrender. However,
in the case of a total surrender, the annual administration fee
will also be waived if the Accumulation Value of the Contract is
$25,000 or more on the date of surrender.
There will also be a deduction, on a daily basis, at an annual
rate of 0.25% of the assets of the Variable Account to help
defray the expenses of administering CA and the Contract. This
deduction also is guaranteed not to increase over the life of
the Contract. Because this fee is a percentage of assets, rather
than a flat amount, larger contracts will, in effect, pay a
higher proportion of the total administrative expenses of CA
than smaller contracts. The deduction for 1996 was $538,608.
Administrative expenses include expenses incurred in connection
with premium billing and collection, record keeping, processing
death benefit claims, cash surrenders and Contract changes,
calculating Accumulation Unit and Annuity Unit values, reporting
and other communications to Owners and other similar expense and
overhead costs.
Mortality and Expense Risk Charge
A Mortality and Expense Risk Charge will be deducted daily at a
rate equal, on an annual basis, to 1.2% of each
Contract's Variable Account. THIS CHARGE MAY INCREASE BUT UNION
CENTRAL GUARANTEES THAT IT WILL NEVER BE MORE THAN 1.7%.
Although Union Central does not believe it is possible to
allocate this charge to different risks, Union Central feels
that a reasonable estimate is .8% for mortality risk and .4% for
expense risk.
The mortality risk arises from Union Central's guarantees to
make annuity payments in accordance with the annuity tables,
regardless of how long the Annuitant lives and regardless of any
improvement in life expectancy generally. This relieves
annuitants of the risk that they might outlive the funds that
have been accumulated for retirement. The mortality risk
also arises from Union Central's guarantee to pay death benefits
equal to the total of all premiums paid under the Contract, with
adjustments for any partial surrenders (including surrender
charges), should an Annuitant die before the Maturity Date.
Union Central's expense risk arises from the possibility that
the amounts realized from the administration fee and surrender
charge (which are guaranteed not to increase) will be
insufficient to cover actual administrative and distribution
expenses. If these charges are insufficient to cover the
expenses, the deficiency will be met from Union Central's
general corporate funds, including amounts derived from the
Mortality and Expense Risk Charge.
If amounts derived from the Mortality and Expense Risk Charge
are insufficient to cover mortality costs and excess expenses,
Union Central will bear the loss. If the charge is more than
sufficient, Union Central will retain the balance as profit.
Union Central currently expects a profit from this charge. The
Mortality and Expense Risk Charge for 1996 was $2,629,642.
Surrender Charge (Contingent Deferred Sales Charge)
The Accumulation Value may, as explained above, be withdrawn in
whole or in part by totally or partially surrendering the
Contract, at any time before the earlier of the Maturity Date or
the Annuitant's death. However, if a surrender takes place in
the first eight Contract Years, then a surrender charge will be
imposed on the amount withdrawn as shown below:
<TABLE>
<CAPTION>
Contract Year 1 2 3 4 5 6 7 8 Thereafter
---------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
7% 7% 6% 5% 4% 3% 2% 1% 0%
</TABLE>
Notwithstanding the charges described above, partial surrenders
totaling not more than 10% of the Accumulation Value (as of the
date of the first partial surrender in the Contract Year) may be
made each Contract Year without the imposition of the surrender
charge. Also, PIP surrenders (see "Personal Income Plan" at page
17) in a Contract Year totaling not more than 10% of the
Accumulation Value (in the initial year, as of the date the PIP
agreement is approved by Union Central; in subsequent years, as
of the first day of that Contract Year) may be made without the
imposition of the surrender charge.
Terminal Illness/Confinement
Also, where permitted by state law, the surrender charge will be
waived upon a full surrender or one or more partial surrenders
in the event of (1) or (2) below:
(1) The Contract Owner becomes confined in a qualified
institution for a period of at least 30 consecutive days after
the later of the issue date of the Contract ("Contract Date") or
May 1, 1993, subject to the following:
(a) The Owner must be a natural person (not a Trust,
Corporation, or other legal entity).
(b) The Owner must have been an Owner of the Contract
continuously since the Contract Date.
(c) The Owner was not confined in a qualified institution
at any time during the 60 day period just prior to the later of
the Contract Date or May 1, 1993.
(d) Union Central receives a written request for full or
partial surrender along with due proof of confinement within 12
months following such confinement.
(e) A "qualified institution" means any licensed hospital
or licensed skilled or intermediate care nursing facility at
which:
(i) medical treatment is available on a daily basis;
and
(ii) daily medical records are kept for each patient.
(2) The Contract Owner acquires a terminal illness after the
later of the Contract Date or May 1, 1993, subject to the
following:
(a) The Owner must be a natural person (not a Trust,
Corporation, or other legal entity).
(b) The Owner must have been an Owner of the Contract
continuously since the Contract Date.
(c) The Owner has less than 12 months to live.
(d) Union Central must receive a written request for full
or partial surrender together with a certificate from the
Owner's attending physician stating the Owner's life expectancy
and any other proof Union Central may require.
(e) "Physician" means a medical doctor licensed in the
United States who:
(i) is operating within the scope of that license; and
(ii) is not the Owner and is not related to the Owner.
The cumulative total of all surrender charges is guaranteed
never to exceed 9% of premiums.
The surrender charge may be reduced in certain instances where a
large number of Contracts are issued in connection with a single
sale. For example, the charge may be reduced where a Corporate
Pension Plan funded by the Contracts results
in the issuance of a number of Contracts to the same owner, or
where an employer-sponsored salary-deduction plan results
in Contracts being issued to a number of employees of one
employer. Any reduction in the surrender charge will be
nondiscriminating by class of purchaser, and will be based on
reduced selling and other expenses.
The surrender charge may be modified for Contracts where the
initial premium is a result of a transfer to or from(i) another
Contract owned by the employer or another person for the benefit
of the Contract Owner in connection with an employee benefit
plan, (ii) a Certificate (account) under certain Union Central
Group Retirement Annuity Contracts, or (iii) certain Union
Central Life Insurance Policies or Annuity Contracts. In
addition, the surrender charge will be eliminated with respect
to any amount payable in connection with the surrender of a
Contract where such amount is forfeited by an employee under the
terms of an employee benefit plan and credited to another
Contract issued in connection with the plan. The reduction or
elimination of the surrender charge in the foregoing
circumstances recognizes the reduction of selling expense in
such circumstances.
Surrender charges on partial surrenders will be deducted pro
rata from the value remaining in the Investment Option
or Options from which the amount paid was withdrawn. However, if
insufficient value remains to pay the surrender charges
or if the entire amount in an Investment Option is withdrawn,
then to the extent necessary, any surrender charge will be
deducted from the amount to be paid. Any surrender charges on a
total surrender of a Contract will be deducted from the
amount paid.
The amounts obtained from the surrender charge will be used to
offset the distribution fee paid Carillon Investments.
See page 25.
The surrender charge is not expected to recover all of the
distribution costs associated with the Contracts. Any shortfall
will be paid by Union Central out of its general surplus, which
may include profits derived from the mortality and expense
risk charge.
Certain surrenders of Contracts may also be subject to federal
tax penalties. See Federal Tax Matters, page 23.
Premium Taxes
Union Central will, where such taxes are imposed by state law,
deduct premium taxes or other taxes relative to the
Contract (collectively referred to as "premium taxes") when
incurred, which could be (1) at the Maturity Date, (2) when a
total surrender occurs, or (3) when premiums are paid. If the
charge for premium taxes is deducted at the Maturity Date,
it will be taken from each Investment Option in the proportion
that the Contract Owner's interest in the Investment Option
bears to the total Accumulation Value. If the charge for premium
taxes is deducted when premiums are paid, it will be
deducted from the premium before the premium has been allocated
to the Investment Option(s). Applicable premium tax rates
depend upon such factors as the Contract Owner's state of
residency and the insurance laws and status of Union Central in
that state when the premium taxes are incurred. Current premium
tax rates range from 0 to 3.5%. Applicable premium tax
rates are subject to change by legislation, administrative
interpretations or judicial acts.
<PAGE>
Fund Expenses
There are deductions from and expenses paid out of the assets
of the Funds that are fully described in the Fund
Prospectuses.
BENEFITS UNDER THE CONTRACT
Death Benefits
If the Annuitant is the Owner and dies prior to the Maturity
Date, or if the Annuitant dies prior to the Maturity Date
while the Owner is living, then a death benefit will be paid to
the designated Beneficiary. The death benefit will be the
greater
of: (a) the sum of all premiums paid less any amounts deducted
in connection with partial surrenders, including any surrender
charges associated with those partial withdrawals; or (b) the
Accumulation Value on the date Union Central receives Due
Proof of Death. This formula guarantees that the death benefit
will at least equal the sum of all premiums paid (less any
partial surrenders and surrender charges on such partial
withdrawals), independent of the investment experience of CA.
If the Owner is not the Annuitant and the Owner dies before
the Maturity Date and while the Annuitant is living, Union
Central will pay the Accumulation Value (measured as of the date
Union Central receives Due Proof of Death) to the Owner's
estate or to a successor owner. Notwithstanding the foregoing
sentence to the contrary, if the Owner's spouse is the
designated beneficiary under the Contract, such spouse will
become the Owner of the Contract and no distribution will be
required as a result of the death of the original Owner.
If the Annuitant dies after the Maturity Date, Union Central
will provide the death benefit, if any, contained in the
particular Annuity Option elected. See page 20.
Annuity Payments
Maturity Date The Contract Owner specifies a Maturity Date in
the application, which is the day that annuity payments will
commence under the Contract. The Contract Owner may change the
Maturity Date at any time, provided written notice of the change
is received by Union Central at least 30 days before the
previously specified Maturity Date. The Maturity Date must be:
(a) at least a month after the Contract Date; (b) the first day
of a calendar month; and (c) no later than the Annuitant's 95th
(85th in New York and Pennsylvania) birthday (particular
retirement plans may impose additional limitations).
Type of Income Payments A Contract Owner may specify any
proportion of the Accumulation Value (less premium taxes, if
any) to be applied to a Variable Annuity or a Fixed Annuity.
Variable Annuity payments will vary in accordance with the
investment experience of the Subaccount selected by the Contract
Owner.
At least 30 days before the Maturity Date, the Contract Owner
must select how the Accumulation Value will be used to provide
the monthly annuity payments. If no selection is made, Union
Central will provide a Fixed Annuity with the proceeds of the
Guaranteed Account and a Variable Annuity with the proceeds of
the Variable Account. The first Variable Annuity payment will be
based on the allocation of the Variable Account among the
subdivisions.
If a Variable Annuity is selected, the amount of the first
monthly income payment will be obtained from the appropriate
Option Table in the Contract. Subsequent monthly income payments
will vary based on the investment experience of the
Subaccount(s) used to reserve for the annuity.
Amount of Variable Annuity Payments The amount of Variable
Annuity payments will depend not only upon the investment
experience of the Subaccount selected by the Contract Owner, but
also upon the amount of any premium tax, the age (and possibly
sex) of the Annuitant, and the Annuity Option chosen. Union
Central guarantees that the annuity payments (1) will not be
affected by any variation in the actual mortality experience of
the Annuitants from what was assumed in determining the amount
of the first monthly payment, and (2) will not be affected by
the actual amount of expenses incurred by Union Central in
administering the Contract.
Since Variable Annuity payments will vary in accordance with
the investment results of the Subaccounts, the amount of the
Variable Annuity payments cannot be predetermined.
If the total Accumulation Value to be applied to an Annuity
Option is less than $5,000 ($2,000 in Massachusetts and
New York), Union Central will have the option of paying the
Accumulation Value in a lump sum. If the total first monthly
payment (combined Fixed and Variable) determined under the
Annuity Option selected is less than $50 ($20 in New York),
Union Central may change the payment frequency of annuity
payments to quarterly, semiannually or annually.
Annuity Options The Contract Owner may elect a Fixed Annuity,
a Variable Annuity, or a combination Fixed and Variable Annuity.
All of the Annuity Options listed below (except the Alternate
Annuity Option) are available as either Fixed or Variable
Annuities.
Up to 30 days before the Maturity Date, the Contract Owner may
change the Annuity Option. If an Annuity Option is chosen which
depends on the continuation of the life of the Annuitant or of a
contingent Annuitant, proof of age will be required before
annuity payments begin. The Annuity Options include:
Option 1: Life Annuity (a) Nonrefund. Union Central will make
payments during the lifetime of the Annuitant. No payments are
due after the death of the Annuitant. It is possible under this
Option that only one payment will be made if the Annuitant dies
before a second payment is due, or that only two payments will
be made if the Annuitant dies before the third payment, and so
forth.
(b) 5-Years Certain. Union Central will make payments for at
least five years, and after that during the lifetime of the
Annuitant. No payments are due after the death of the Annuitant
or, if later, the end of the five-year period certain.
(c) 10-Years Certain. Union Central will make payments for at
least 10 years, and after that during the lifetime of the
Annuitant. No payments are due after the death of the Annuitant
or, if later, the end of the 10-year period certain. (This
option will apply unless the Contract Owner selects a different
option.)
(d) Installment Refund. Union Central will make payments for a
period certain and after that during the lifetime of the
Annuitant. No payments are due after the death of the Annuitant
or, if later, the end of the period certain. The number of
period certain payments is equal to the amount applied under
this Installment Refund Option divided by the amount of the
first annuity payment; provided, however, that the amount of the
final period certain payment shall be multiplied by that part
of the answer which is not a whole number.
Option 2: Joint and Survivor Life Annuity (a) Joint and
Survivor Nonrefund. Union Central will make payments during
the joint lifetime of the Annuitant and contingent Annuitant.
Payments will then continue during the remaining lifetime of
the survivor of them. No payments are due after the death of the
last survivor of the Annuitant and contingent Annuitant.
It is possible under this option that only one monthly annuity
payment will be made if the Annuitant and contingent Annuitant
both die before the second payment is made, or that only two
payments will be made if they both die before the third
payment, and so forth.
(b) Joint and Survivor with 10-Year Certain. Union Central
will make payments for 10 years and after that during the joint
lifetime of the Annuitant and contingent Annuitant. Payments
will then continue during the remaining lifetime of the survivor
of them. No payments are due after the death of the survivor of
the Annuitant and contingent Annuitant or, if later, the end of
the 10-year period certain.
Instead of the settlement in accordance with the Annuity
Options described above, Contract Owners may choose an
alternate type of Fixed Annuity payment. Such alternate annuity
option shall be based on rates at least as favorable as those
for fixed-dollar single-premium immediate annuities being issued
by Union Central on the Maturity Date. This alternate
annuity option may only be elected within 30 days before the
Maturity Date.
If the Annuitant dies on or after the Maturity Date, but
before annuity payments have been made for a guaranteed period,
if any, Union Central will continue payments to the beneficiary
until the rest of the guaranteed payments have been made. If no
beneficiary is living, Union Central will commute any unpaid
guaranteed payments to a single sum (on the basis of the
interest rate used in the Annuity Option Table from which the
payments were determined) and pay that sum to the estate of the
last to die of the Annuitant and the Beneficiary.
<PAGE>
THE GUARANTEED ACCOUNT
Premiums allocated to the Guaranteed Account and transfers to
the Guaranteed Account become part of the general assets of
Union Central, which support insurance and annuity obligations.
Because of exemptive and exclusionary provisions, interests in
the Guaranteed Account have not been registered under the
Securities Act of 1933 ("1933 Act") nor is Union Central
registered as an investment company under the Investment Company
Act of 1940 ("1940 Act "). Accordingly, neither Union Central
nor any interests in its general assets generally are subject to
the provisions of the 1933 or 1940 Acts and it is understood
that the staff of the Securities and Exchange Commission has not
reviewed the disclosures in this Prospectus which relate to the
fixed portion of the Contract. Disclosures regarding the fixed
portion of the Contract and Union Central, however, may be
subject to certain generally applicable provisions of the
federal securities laws relating to the accuracy and
completeness of statements made in prospectuses. For complete
details regarding the fixed portion, see the Contract itself.
General Description
The Guaranteed Account is the value of the Contract that is
part of the general assets of Union Central, other than
those allocated to separate investment accounts such as CA.
Contract Owners may elect to allocate all or part of their
premiums to the Guaranteed Account, and they may also transfer
values from the Variable Account to the Guaranteed
Account. Union Central bears the full investment risk for all
amounts allocated or transferred to the Guaranteed Account,
whereas the Contract Owners bear the investment risk for amounts
allocated or transferred to the Variable Account. Union
Central has sole discretion to invest its general assets,
including assets funding the Guaranteed Account, subject to
applicable law.
Guaranteed Account Accumulations
Union Central guarantees that it will credit interest to the
Guaranteed Account at an effective rate of at least 4.0% per
year (compounded annually). Interest in excess of the guaranteed
rate may be used in the calculation of the Guaranteed
Account at such increased rates and in such a manner as Union
Central may determine. ANY INTEREST CREDITED TO THE GUARANTEED
ACCOUNT IN EXCESS OF THE MINIMUM GUARANTEED RATE OF 4.0% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF UNION CENTRAL.
Union Central guarantees that, at any time prior to the
Maturity Date, the Guaranteed Account of the Contract will
be at least equal to:
(1) the total of all net premiums allocated to the Guaranteed
Account; plus
(2) the total of all amounts transferred to the Guaranteed
Account from the Variable Account; minus
(3) the total of all amounts transferred from the Guaranteed
Account to the Variable Account (including the transfer fee);
minus
(4) the total of all administration fees attributable to the
Guaranteed Account; minus
(5) the total of all partial surrenders from the Guaranteed
Account (including any surrender charges); plus
(6) interest at the guaranteed annual effective interest rate
of 4.0%.
Fixed Annuity Payments
A fixed annuity is an annuity with payments that have a dollar
amount that is fixed and guaranteed by the insurance company
issuing the Contract. The amount of the annuity payments will be
determined by applying the Guaranteed Account to rates at least
as favorable as those in the applicable annuity option table in
accordance with the Annuity Option elected. This will be done at
the Maturity Date. The annuity option tables contained in the
Contract are based on a 4.0% interest rate.
Union Central guarantees the amount of fixed annuity payments.
The payment depends only on the annuity option elected, the age
(and possibly sex) of the Annuitant, and the amount applied to
purchase the fixed annuity.
<PAGE>
Surrenders
The Contract Owner may surrender all or part of the Guaranteed
Account value at any time prior to the Maturity Date or the
death of the Annuitant. Union Central intends to pay surrender
requests upon receipt but reserves the right to delay payment of
all surrenders from the Guaranteed Account for up to six months.
Surrenders from the Guaranteed Account generally are subject to
the same provisions that apply to surrenders from the Variable
Account, discussed under "Surrenders" on page 16.
Transfers
Amounts may be transferred among subdivisions of a Contract's
Variable Account, or between the Guaranteed Account and
subdivisions of the Variable Account, at any time prior to the
Maturity Date. Prior to the Maturity Date, Contract Owners may
transfer up to the greater of (1) 20% of the value of the
Guaranteed Account (as of the first day of the Contract Year),
or (2) $1,000 to one or more subdivisions of the Variable
Account each Contract Year. There is no maximum on amounts that
may be transferred out of a subdivision of the Variable Account.
The minimum amount that may be transferred is $300, or if less,
the entire amount in the investment option. No transfers may be
made with respect to fixed annuity payments.
GENERAL MATTERS
Designation of Beneficiary
The Beneficiary is the person designated as such in the
application and is the person or persons to whom benefits will
be paid upon the death of the Annuitant. Subject to the terms of
any existing assignment or the rights of any irrevocable
Beneficiary, the Contract Owner may change the Beneficiary while
the Annuitant is living by providing Union Central with
written notice. Any change will be effective at the time it is
signed by the Contract Owner, whether or not the Annuitant is
living when the change is received by Union Central. Union
Central will not, however, be liable as to any payment or
settlement made prior to receiving the written notice.
20-Day Right to Examine Contract
If a Contract Owner is not satisfied with the Contract, it may
be voided by returning it to Union Central or the agent of Union
Central from which it was purchased within 20 days of receipt.
The Contract Owner will then receive a full refund of any
premium paid or in certain states the Accumulation Value.
Contract Owner's Inquiry
Contract Owners may make inquiries concerning their contracts by
calling Union Central at (513) 595-2728, or writing
c/o Annuity Administration, P.O. Box 40888, Cincinnati, Ohio
45240.
FEDERAL TAX MATTERS
Introduction
The following discussion is general and is not intended as tax
advice. This discussion is based upon Union Central's
understanding of the present federal income tax laws as they are
currently interpreted by the Internal Revenue Service
("Service"). No representation is made as to the likelihood of
continuation of these present federal income tax laws or of the
current interpretations by the Service. Moreover, no attempt has
been made to consider any applicable state or other tax laws.
The Contract may be used in connection with retirement plans
that are qualified for special tax treatment under Sections 401,
403, 408, or 457 of the Internal Revenue Code of 1986, as
amended ("Code"). The ultimate effect of federal income taxes on
the Accumulation Value, on annuity payments, and on the economic
benefit to the Contract Owner, the Annuitant or the Beneficiary
depends on the type of retirement plan for which the Contract is
purchased, on the tax and employment status of the individual
concerned, on Union Central's tax status, and on other factors.
Any person concerned about these tax implications should consult
a competent tax adviser.
<PAGE>
Tax Status of Contracts
The following discussion assumes that the Contracts will be
treated as annuities under Section 72 of the Internal
Revenue Code.
Union Central believes that an annuity owner generally is not
taxed on increases in the value of a Contract until
distribution occurs either in the form of a lump sum received by
withdrawing all or part of the cash value (i.e., "surrenders")
or as annuity payments under the annuity option elected. The
exception to this rule is the treatment afforded to owners that
are not natural persons. Generally, an owner of any deferred
annuity contract who is not a natural person must include in
income any increase in the excess of the Owner's cash value over
the Owner's investment in the contract during the taxable
year. However, there are some exceptions to this exception and
you may wish to discuss these with your tax counsel. The
taxable portion of a distribution (in the form of an annuity or
lump-sum payment) is taxed as ordinary income. For this
purpose, the assignment, pledge, or agreement to assign or
pledge any portion of the cash value (and in the case of a
Qualified Contract, any portion of an interest in the qualified
employer plan) generally will be treated as a distribution.
The following discussion applies generally to Contracts owned by
natural persons.
In the case of a surrender under Qualified Contracts, amounts
received are treated as taxable income to the extent that
they exceed the "investment in the contract." Any additional
amount withdrawn is not taxable. The "investment in a contract"
generally equals the portion, if any, of any premium paid by or
on behalf of an individual under a contract which is not
excluded from the individual's gross income. For contracts
issued in connection with tax-qualified plans, the "investment
in the contract" can be zero. A special rule may apply to
surrenders under Qualified Contracts with respect to the
"investment in the contract" as of December 31, 1986. In the
case of a surrender under Nonqualified Contracts, amounts
received are first treated as taxable income to the extent that
the cash value of the contract immediately before the surrender
exceeds the "investment in the contract" at that time. Any
additional amount withdrawn is not taxable. For purposes of
determining amounts treated as taxable income, all annuity
contracts issued by the same company to the same person during
any calendar year are treated as a single contract.
The recipient of an annuity payment under the Contract is
generally taxed on the portion of such payment that exceeds
the "investment in the contract." For variable annuity payments,
the taxable portion is determined by a formula which establishes
a specific dollar amount of each payment that is not taxed until
the investment in the Contract is recovered. The dollar amount
is determined by dividing the "investment in the contract" by
the total number of expected periodic payments. For fixed
annuity payments, in general, there is no tax on the portion of
each payment which represents the same ratio that the
"investment in the contract" bears to the total expected value
of the annuity payments for the term of the Contract until the
investment in the Contract is recovered; the remainder of each
payment is taxable. Once the investment in the Contract is
recovered, the entire amount of each payment is taxable.
For Nonqualified Contracts, there may be imposed a penalty tax
on surrenders equal to 10% of the amount treated as taxable
income. In general, there is no penalty tax on surrenders (1)
made on or after age 59-1/2, (2) made as a result of death or
disability, or (3) received in substantially equal installments
as a life annuity. For some Qualified Contracts, there
may be imposed a penalty tax on certain surrenders.
A transfer of ownership of a Contract, or designation of an
annuitant or other beneficiary who is not also the owner,
may result in certain tax consequences to the owner that are not
discussed herein. An owner contemplating any such transfer
or assignment of a Contract should contact a competent tax
adviser with respect to the potential tax effects of such a
transaction.
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% federal income tax
withholding unless such amounts are directly rolled over to
another qualified plan or individual retirement arrangement
permitted under the Code. Withholding for federal income taxes
on annuity payments is required unless the recipient elects not
to have any such amounts withheld and properly notifies Union
Central of that election. Failure to provide your taxpayer
identification number will automatically subject any payments
under the Contract to withholding.
Qualified Plans
The Contract may be used with several types of qualified plans.
The tax rules applicable to participants in such qualified plans
vary according to the type of plan and the terms and conditions
of the plan itself. Purchasers of Contracts for use with any
qualified plan should seek competent legal and tax advice
regarding the suitability of the Contract.
(a) Section 403(b) Plans. Under Section 403(b) of the Code,
payments made by public school systems and certain tax-exempt
organizations to purchase annuity contracts for their employees,
directly or through voluntary salary reductions, are excludable
from the gross income of the employee, subject to certain
limitations. However, such payments may be subject to FICA
(Social Security) taxes. In addition, effective January 1, 1989,
cash distributions from a Section 403(b) annuity may not begin
before the employee attains age 59-1/2, separates from his or her
employer's service, dies or becomes disabled, except that cash
distributions limited to the amount of premiums may be paid in
the event of the employee's hardship. These restrictions apply
to distributions attributable to contributions made after
December 31, 1988 pursuant to a salary reduction agreement,
earnings on those contributions, and earnings on amounts
attributable to contributions held as of December 31, 1988 and
made pursuant to a salary reduction agreement.
(b) Individual Retirement Annuities. Sections 219 and 408 of
the Code permit individuals or their employers to contribute to
an individual retirement program known as an "Individual
Retirement Annuity" or "IRA." Individual Retirement Annuities
are subject to limitations on the amount which may be
contributed and deducted and the time when distributions may
commence. In addition, distributions from certain other types of
qualified plans may be placed into an Individual Retirement
Annuity on a tax-deferred basis.
(c) Corporate Pension and Profit-Sharing Plans. Sections
401(a) and 403(a) of the Code permit corporate employers to
establish various types of retirement plans for employees. Such
retirement plans may permit the purchase of the Contracts to
provide benefits under the plans.
(d) H.R. 10 Plans. The Self-Employed Individuals Tax
Retirement Act of 1962, as amended, commonly referred to as
"H.R. 10," permits self-employed individuals to establish
tax-qualified plans for themselves and their employees. These
plans are limited by law to maximum permissible contributions,
distribution dates, and nonforfeitability of interests. In order
to establish such a plan, a plan document, usually in a form
approved in advance by the Internal Revenue Service, is adopted
and implemented by the employer.
(e) State and Local Government Deferred Compensation Plans.
Section 457 of the Code, while not actually providing for a
qualified plan as that term is normally used, provides for
certain deferred compensation plans with respect to service for
state governments, local governments, certain tax-exempt
organizations, political subdivisions, agencies,
instrumentalities and certain affiliates of such entities which
enjoy special treatment. The Contracts can be used with such
plans.
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM
Section 36.105 of the Texas Education Code permits participants
in the Texas Optional Retirement Program ("ORP") to redeem their
interest in a variable annuity contract issued under the ORP
only upon (1) termination of employment in the Texas public
institutions of higher education, (2) retirement, or (3) death.
Accordingly, a participant in the ORP, or the participant's
estate if the participant has died, will be required to obtain a
certificate of termination from the employer before the Contract
can be surrendered.
DISTRIBUTION OF THE CONTRACTS
Carillon Investments, Inc. (a wholly-owned subsidiary of Union
Central whose principal business address is 1876 Waycross Road,
Cincinnati, Ohio 45240), the principal underwriter of the
Contracts, is registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 as a
broker-dealer and is a member of the National Association of
Securities Dealers, Inc. Union Central will pay Carillon
Investments, Inc., an amount not in excess of 5% of premiums
received over the duration of the Contract, from which Carillon
Investments will pay commissions to its own registered
representatives or pay a reallowance to other broker-dealers who
distribute the Contracts. In those cases where the surrender
charges are reduced (see page 19), the amount paid to Carillon
Investments will be less than 5% of premiums.
VOTING RIGHTS
To the extent required by law, the Portfolio shares held by CA
will be voted by Union Central at shareholder meetings of the
Funds in accordance with instructions received from persons
having voting interests in the corresponding Subaccounts of CA.
However, if the Investment Company Act of 1940 or any regulation
thereunder should be amended or if the present interpretation
thereof should change, and as a result, Union Central determines
that it is allowed to vote the Portfolio shares in its own
right, Union Central may elect to do so.
The number of votes which a person has the right to instruct
will be calculated separately for each Subaccount. Prior to the
Maturity Date, the number of votes for which a Contract Owner
has a right to give instructions will be determined by dividing
the Accumulation Value attributable to a subdivision by the net
asset value per share of the corresponding Portfolio. After the
Maturity Date, the Annuitant has the voting interest. The number
of votes after the Maturity Date will be determined by dividing
the reserve for such Contract held in a Subaccount by the net
asset value per share of the corresponding Portfolio. After the
Maturity Date, the votes attributable to a Contract decrease as
the reserves underlying the Contract decrease. In determining
the number of votes, fractional shares will be recognized.
Voting instructions will be solicited prior to such meeting in
accordance with procedures established by Union Central. Fund
shares held in CA as to which no timely instructions are
received will be voted or not voted by Union Central in
proportion to the voting instructions received. Each person
having a voting interest in a Subaccount will receive proxy
material, reports and other materials relating to the
appropriate Portfolio.
In accordance with an amendment to the Maryland General
Corporation Law, the Board of Directors of Carillon Fund has
adopted an amendment to its By-laws providing that unless
otherwise required by the Investment Company Act of 1940,
Carillon Fund shall not be required to hold an annual meeting of
shareholders unless the Board of Directors determines to hold an
annual meeting. Carillon Fund intends to hold shareholder
meetings only when required by law and such other times as may
be deemed appropriate by its Board of Directors.
Scudder Fund, which was organized in the Commonwealth of
Massachusetts as a "Massachusetts business trust," does not
intend to hold annual meetings. However, shareholders of
Scudder Fund have certain rights, as set forth in the
Declaration of Trust of Scudder Fund, including the right to
call a meeting of shareholders for the purpose of voting on the
removal of one or more Trustees.
American Century Fund was organized as a Maryland corporation.
An insurance company issuing a variable contract invested in
shares issued by the American Century Fund will request voting
instructions from Contract Owners and will vote shares in
proportion to the voting instructions received.
MFS Fund was organized in the Commonwealth of Massachusetts as a
"Massachusetts business trust." It does not intend to hold
annual shareholder meetings.
Templeton Fund was organized in the Commonwealth of
Massachusetts as a "Massachusetts business trust." Massachusetts
business trust law does not require the Trust to hold annual
shareholder meetings.
FINANCIAL STATEMENTS
Financial statements of CA and Union Central are included in the
SAI which may be obtained without charge by writing Union
Central at: address - P.O. Box 40409, Cincinnati, Ohio
45240-0409; telephone - 1-800-999-1840.
<PAGE>
APPENDIX A
IRA DISCLOSURE STATEMENT
This statement is designed to help you understand the
requirements, as they exist for tax years beginning on and after
1-1-97, of federal tax law which apply to your Individual
Retirement Annuity (IRA), your Simplified Employee Pension IRA
(SEP-IRA for employer contributions), or to one purchased by
your spouse (see Spousal IRAs below). You can obtain more
information regarding your IRA either from your sales
representative or from any district office of the Internal
Revenue Service.
Seven-day Review Period
You have seven days after you sign your application to review
this statement and the Prospectus without obligation. If you
notify Union Central or your sales representative either orally
or in writing within the seven-day period that you want to
revoke your application, your entire purchase payment will be
refunded to you. The address and telephone number of Union
Central are as follows:
The Union Central Life Insurance Company
P.O. Box 40888
Cincinnati, Ohio 45240
Telephone: (513) 595-2728 8:15 a.m.-4:30 p.m.
(Eastern Time Zone)
Eligibility Requirements
If neither you, nor your spouse, is an active participant (see
A. below) you may make a contribution of up to the lesser of
$2,000 or 100% of compensation and take a deduction for the
entire amount contributed. If you or your spouse is an active
participant but have a combined adjusted gross income (AGI)
below a certain level (see B. below), you may make a fully
deductible contribution. If, however, you or your spouse is an
active participant and your combined AGI is above the specified
level, the amount of the deductible contribution you may make to
an IRA is scaled down and eventually eliminated.
A. Active Participant
You are an "active participant" for a year if you are covered by
a retirement plan. You are covered by a "retirement plan" for a
year if your employer or union has a retirement plan under which
money is added to your account or you are eligible to earn
retirement credits. For example, if you are covered under a
profit-sharing plan, certain government plans, a salary-
reduction arrangement (such as a tax-sheltered annuity
arrangement or a 401(k) plan), a simplified employee pension
plan (SEP), a SIMPLE plan, or a plan which promises you a
retirement benefit which is based upon the number of years of
service you have with the employer, you are likely to be an
active participant. Your Form W-2 for the year should indicate
your participation status.
You are an active participant for a year even if you are not yet
vested in your retirement benefit. Also, if you make required
contributions or voluntary employee contributions to a
retirement plan, you are an active participant. In certain
plans you may be an active participant even if you were only
with the employer for part of the year.
You are not considered an active participant if you are covered
in a plan only because of your service as (1) an Armed Forces
Reservist, for less than 90 days of active service; or (2) a
volunteer firefighter covered for firefighting service by a
government plan, which will not provide more than $1,800 per
year at age 65. Of course, if you are covered in any other
plan, these exceptions do not apply.
If your spouse is an active participant, by employing similar
rules as above to this or her situation, you will also be
treated as an active participant, unless you file separately and
do not live together at any time during the tax year.
B. Adjusted Gross Income (AGI)
If you are an active participant, you must look at your Adjusted
Gross Income for the year (if you and your spouse file a joint
tax return you use your combined AGI) to determine whether you
can make a deductible IRA contribution. Your tax return will
show you how to calculate your AGI for this purpose. If you are
at or below a certain AGI level, called the Threshold Level, you
are treated as if you were not an active participant and can
make a deductible contribution under the same rules as a person
who is not an active participant.
If you are single, your Threshold Level is $25,000. The
Threshold Level if you are married and file a joint tax return
is $40,000, and if you are married but file a separate tax
return, the Threshold Level is $0. If you are married but file
separately and you live apart from your spouse for the entire
year, the IRS will treat you as not being married for purposes
of active participant status and the Threshold Level. Thus,
your Threshold Level is $25,000.
If your AGI is less than $10,000 above your Threshold Level, you
will still be able to make a deductible contribution but it will
be limited in amount. The amount by which your AGI exceeds your
Threshold Level (AGI--Threshold Level) is called your Excess
AGI. The Maximum Allowable Deduction is $2,000. You can
estimate your Deduction Limit or calculate it as follows:
$10,000 - Excess AGI X Maximum Allowable Deduction = Deduction
- -------------------- Limit
$10,000
You must round up the result to the next highest $10 level (the
next highest number which ends in zero). For example, if the
result is $1,524, you must round it up to $1,530. If the final
result is below $200 but above zero, your Deduction Limit is
$200. Your Deduction Limit cannot, in any event, exceed 100% of
your compensation.
Deductible Contributions
If you satisfy the eligibility requirements described above,
contributions to your IRA will be deductible up to the deduction
limit whether or not you itemize deductions on your federal
income tax return. IRA or SEP-IRA contributions must be made by
no later than the time you file your income tax return for that
year (i.e., April 15 if you are a calendar-year taxpayer) with
no extensions.
Under certain circumstances an employee may elect to have the
employer make up to $7,000 ($9,500 in 1997 as adjusted for
inflation) in salary-reduction contributions to a SEP. Under a
SEP-IRA agreement, the maximum annual contribution which your
employer may make to a SEP-IRA contract is 15% of your
compensation. For plan years after 1993, compensation is
limited to $150,000. ($160,000 in 1997 as adjusted for
inflation.) Employer contributions to a SEP-IRA are excludable
from the employee's gross income rather than deductible.
If you or your employer should contribute more than the maximum
contribution amount of your IRA or SEP-IRA, the excess amount
will be considered an "excess contribution." You are permitted
to withdraw an excess contribution from your IRA or SEP-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.
No contribution may be made to your IRA during or after the tax
year in which you attain age70-1/2.
Nondeductible Contributions
Even if you are above the threshold level and thus may not make
a deductible contribution of $2,000, you may still contribute up
to the lesser of 100% of compensation or $2,000 to an IRA. The
amount of your contribution which is not deductible will be a
nondeductible contribution to the IRA. You may also choose to
make a contribution nondeductible even if you could have
deducted part or all of the contribution. Interest or other
earnings on your IRA contribution, whether from deductible or
nondeductible contributions, will not be taxed until taken out
of your IRA and distributed to you.
If you make a nondeductible contribution to an IRA you must
report the amount of the nondeductible contribution to the IRS
by including form 8606 as a part of your tax return for the
year. There is a $50 penalty for failure to file Form 8606,
entitled Nondeductible IRA Contributions, IRA Basis, and
Nontaxable IRA Distributions.
You may make a $2,000 contribution at any time during the year,
if your compensation for the year will be at least $2,000,
without having to know how much will be deductible. When you
fill out your tax return you may then figure out how much is
deductible.
You may withdraw an IRA contribution made for a year any time
before April 15 of the following year. If you do so, you must
also withdraw the earnings attributable to that portion and
report the earnings as income for the year for which the
contribution was made. If some portion of your contribution is
not deductible, you may decide either to withdraw the
nondeductible amount, or to leave it in the IRA and designate
that portion as a nondeductible contribution on your tax return.
Spousal IRAs
Your spouse may make a deductible contribution to a spousal IRA
if he or she files a joint tax return with you and his or her
gross income (if any) for the taxable year is less than yours.
The maximum amount allowable as a deduction to the spousal IRA
is limited to the lesser of (a) $2,000, and (b) the total of
both spouses' gross income reduced by the amount allowed as
deduction for your own IRA. This means that the total
contributions that can be made to both IRAs can be as much as
$4,000 for the taxable year.
You may not make a contribution to your IRA for any tax year
during which and after you attain age 70-1/2. Your spouse,
however, may make contributions to his or her spousal IRA until
the tax year in which he or she reaches age 70-1/2 if the other
conditions mentioned in the previous paragraph are met.
The amount which your spouse may deduct for a spousal IRA is
limited by application of the same rules for active
participation as described in "Eligibility Requirements," above.
Rollover Contributions
Once every year, you are permitted to withdraw any portion of
the value of your IRA or SEP-IRA and reinvest it in another IRA.
Withdrawals may also be made from other IRAs and contributed to
this IRA. 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 direct transfer of funds from one IRA
to another IRA is permitted. Such direct transfers are not
limited to one per year.
A similar type of rollover can be made with the proceeds of a
qualified distribution from a qualified retirement plan
(including TDA and HR-10 plans). 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% federal income tax withholding unless such amounts
are directly rolled over to another qualified plan or individual
retirement arrangement permitted under the Code. 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 SEP-IRA
contributions.
Premature Distributions
At no time can interest in your IRA or SEP-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 SEP-
IRA as a security for a loan. Furthermore, as a general rule,
you may not sell or assign your interest in your IRA or SEP-IRA
to anyone. Use of an IRA or SEP-IRA as security or assignment
of it to another will invalidate the entire annuity. The
portion attributable to your deductible contributions and all
earnings will be includable in your income in the year it is
invalidated and will be subject to a 10% penalty if you are not
at least age 59-1/2 or totally disabled, or if you do not meet
certain other limited exceptions. (You may, however, assign
your IRA or SEP-IRA without penalty to your former spouse in
accordance with the terms of a divorce decree.)
You may surrender any portion of the value of your IRA or SEP-
IRA. In the case of a partial surrender which does not qualify
as a rollover, the amount withdrawn which is attributable to
your deductible contributions and all earnings will be
includable in your income and subject to the 10% penalty if you
are not at least age 59-1/2 or totally disabled, or if you do
not meet certain other limited exceptions. In addition, the 10%
penalty does not apply to an amount equal to medical expenses in
excess of 7.5% of your Adjusted Gross Income (AGI), nor does it
apply to amounts withdrawn to pay for medical expenses for you
and your spouse and dependents if you have separated from
employment and received unemployment compensation for at least
12 consecutive weeks, and the withdrawal is made in the year
unemployment compensation is received or in the following year.
The 10% penalty tax does not apply to the distribution of excess
contributions if you receive such distribution on or before the
due date (including extensions of time) for filing your tax
return, you did not deduct such excess contribution, and you
also received the net income attributable to such excess
contribution. However, the net income must be reported and may
be subject to the 10% penalty tax. Unless you are 59-1/2,
totally disabled, or meet the limited exceptions mentioned in
the previous paragraph, a 10% penalty tax will be imposed on the
part of an excess contribution greater than $2,000 which is
withdrawn after your tax filing date.
There is no 10% penalty if the IRA distributions are in
substantially equal amounts (at least annually) over your life
or life expectancy, or the joint lives or life expectancies of
you and your beneficiary.
Because nondeductible IRA contributions are made using income
which has already been taxed (that is, they are not deductible
contributions), the portion of the IRA distributions consisting
of nondeductible contributions will not be taxed again when
received by you. If you make any nondeductible IRA
contributions, each distribution from your IRAs will consist of
a nontaxable portion (return of nondeductible contributions) and
a taxable portion (return of deductible contributions, if any,
and account earnings).
The following formula is used to determine the nontaxable
portion of your distributions for a taxable year:
Remaining Nondeductible Total Distributions = Nontaxable
Contribution X (for the year) Distribution
- ----------------------- (for the year)
Year-end total IRA
account balances
To compute the year-end total IRA account balance you treat all
of your IRAs as a single IRA. This includes all regular IRAs,
as well as SEP-IRAs, and Rollover IRAs. You also add back the
distributions taken during the year.
Distributions
A. Inadequate or Underdistributions 50% Tax
Your IRA or SEP-IRA is intended to provide retirement benefits
over your lifetime. Thus, federal law requires that you either
receive a lump-sum distribution of your IRA or start to receive
distribution payments by the April 1 following the end of the
calendar year in which you attain age 70-1/2. If you elect
other than a lump-sum distribution, the distribution must begin
not later than the commencement date previously stated, and for
each succeeding year a distribution must be made on or before
December 31. If the payments are not sufficient to meet the
requirements, an excise tax of 50% will be imposed on the amount
of any underpayment.
B. Distribution Forms
By the required beginning date, you may elect to have the
balance in the account disbursed in one of the following forms:
(1) a single sum payment;
(2) equal or substantially equal payments over your life;
(3) equal or substantially equal payments over the lives
of you and your designated beneficiary;
(4) equal or substantially equal payments over a specified
period that may not be longer than your life
expectancy; or
(5) equal or substantially equal payments over a specified
period that may not be longer than the joint life and
last survivor expectancy of you and your designated
beneficiary.
C. Death Benefits
If you die before your entire interest is distributed, the
entire remaining interest will be disbursed as follows:
(1) If you die on or after disbursements have begun
under B., the entire remaining interest must be
disbursed at least as rapidly as provided under B.
(2) If you die before disbursements have begun under B.,
the entire remaining interest must be disbursed as
elected by you or, if you have nor no elected, as
elected by the beneficiary or beneficiaries, as
follows:
(i) by December 31st of the year containing the fifth
anniversary of your death; or
(ii) in equal or substantially equal payments over the
life of life expectancy of the designated
beneficiary or beneficiaries starting by December
31st of the year following the year of your
death. If, however, the beneficiary is your
surviving spouse, then this disbursement is not
required to begin before December 31st of the
year in which you would have turned 70-1/2.
Unless otherwise elected by you prior to the commencement of
disbursements under B. or, if applicable, by the surviving
spouse where you die before disbursements have commenced, life
expectancies of you or spouse beneficiary shall be recalculated
annually for purposes of disbursements under B. and C. An
election not to recalculate shall be irrevocable and shall apply
to all subsequent years. The life expectancy of a non-spouse
beneficiary shall not be recalculated.
Prototype Status
The Internal Revenue Service reviewed the format of your IRA,
and issued an opinion letter on May 19, 1986, to The Union
Central Life Insurance Company stating that your IRA qualifies
as a prototype IRA.
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 distribution underpayments), 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.
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
CARILLON ACCOUNT
- -----------------------------------------------------------
of
THE UNION CENTRAL LIFE INSURANCE COMPANY
1876 Waycross Road Cincinnati, Ohio 45240 513-595-2600
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1997
This Statement of Additional Information is not a prospectus.
Much of the information contained in this Statement of
Additional Information expands upon subjects discussed in the
Prospectus. Accordingly, this Statement should be read in
conjunction with Carillon Account's ("CA") current Prospectus,
dated May 1, 1997, which may be obtained by calling The Union
Central Life Insurance Company ("Union Central") at (513)
595-2600, or writing to P.O. Box 40409, Cincinnati, Ohio
45240-0409.
TABLE OF CONTENTS
Page
Distribution of Contracts........................ B-2
Determination of Annuity Payments................ B-2
Performance Data Advertising..................... B-3
Federal Tax Matters.............................. B-4
Miscellaneous Contract Provisions................ B-6
Custody of CA's Assets........................... B-7
Experts.......................................... B-9
Financial Statements of CA and of Union Central
- ---------------------------------------------------------
<PAGE>
DISTRIBUTION OF CONTRACTS
Contracts are offered on a continuous basis through life
insurance agents of Union Central who are also registered
representatives of Carillon Investments, Inc., or another
broker-dealer member of the National Association of Securities
Dealers, Inc.
As underwriter of the Contracts, the following distribution
fees were paid to Carillon Investments, Inc., by Union Central:
<TABLE>
<CAPTION>
Year Amount
<S> <C>
1996 $2,723,411
1995 $1,636,172
1994 $1,975,636
</TABLE>
DETERMINATION OF ANNUITY PAYMENTS
The amount of the first Variable Annuity payment is
calculated by applying the Accumulation Value (less any premium
tax charge deducted at this time), measured as of a date not
more than 10 business days prior to the Maturity Date, to the
Annuity Tables in the Contract. This is done separately for
each amount to be used to provide an annuity reserved for in a
different Subaccount.
The first Variable Annuity payment is divided by the
appropriate Annuity Unit value (as of the same date that the
amount of the first payment was determined) to determine the
number of Annuity Units upon which later annuity payments will
be based. This number of Annuity Units will not change.
Variable Annuity payments after the first will be equal to the
number of Annuity Units determined in this manner times the
Annuity Unit value for each respective Subaccount calculated on
a uniform basis not more than 10 business days before each
annuity payment is due.
Annuity Unit Value - The value of an Annuity Unit in each
Subaccount of CA was initially set at $10. Annuity Units of
each Subaccount are valued separately and will vary with the
investment experience of the particular Subaccount.
The value of the Annuity Unit for each Subaccount at the end
of any valuation period is calculated by: (a) multiplying the
prior Annuity Unit value by the Subaccount's Net Investment
Factor for the period; and then (b) adjusting the result to
compensate for the interest rate assumed in the annuity tables
used to determine the dollar amount of the first Variable
Annuity payment. In this manner, the Annuity Unit values will
most likely change (except when the investment performance
exactly equals the assumed interest rate) for each annuity
payment (although the number of Annuity Units will remain fixed)
and therefore the amount of the Variable Annuity payments will
most likely vary.
<PAGE>
Performance Data Advertising
As noted in the Prospectus, CA occasionally may publish
advertisements that contain total return performance data
relating to its Subaccounts. Tables of historical Accumulation
Unit Values for each Subaccount may be included in advertising
or sales literature that contains total return calculations as
described below. The following table sets forth the performance
data for each of the Subaccounts of the type that will be used
in advertising, in each case for the period ended December 31,
1996.
<TABLE>
<CAPTION>
Average Annual Total Return
(Based on Accumulation Unit Values)
------------------------------------
Inception One Five Ten Since
Subaccounts Date Year Years Years Inception
- ----------- ---- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C>
Equity 6/7/85 22.70% 14.17% 12.69% 13.12%
Bond 8/26/85 5.64% 7.06% 7.47% 8.48%
Capital 5/2/90 13.27% 8.45% - 9.54%
S&P 500 Index 5/1/96 - - - 13.75%
Scudder International 5/1/92 13.12% - - 10.66%
Capital Growth 5/1/92 18.39% - - 12.09%
Money Market * 7/15/85 3.61% 2.57% 4.05% 4.14%
Capital Appreciation 5/1/96 - - - -9.38%
Growth with Income 5/1/96 - - - 13.51%
High Income 5/1/96 - - - 8.41%
Emerging Growth 5/1/97 - - - -
Templeton International 5/1/97 - - - -
<CAPTION>
Average Annual Total Return
(Standardized Total Return)
------------------------------------
Inception One Five Ten Since
Subaccounts Date Year Years Years Inception
- ----------- ---- ---- ----- ----- ---------
<S> <C> <C> <C> <C> <C>
Equity 6/7/85 14.01% 13.10% 12.48% 12.82%
Bond 8/26/85 -1.86% 6.06% 7.27% 8.21%
Capital 5/2/90 5.24% 7.44% - 9.06%
S&P 500 Index 5/1/96 - - - 5.72%
Scudder International 5/1/92 5.10% - - 9.57%
Capital Growth 5/1/92 9.99% - - 10.98%
Money Market * 7/15/85 -3.74% 1.60% 3.86% 3.86%
Capital Appreciation 5/1/96 - - - -15.78%
Growth with Income 5/1/96 - - - 5.50%
High Income 5/1/96 - - - 0.75%
Emerging Growth 5/1/97 - - - -
Templeton International 5/1/97 - - - -
</TABLE>
* Although the Money Market Subaccount began investing in the
Scudder Variable Life Investment Fund Money Market Portfolio on
November 12, 1993, the performance data quoted reflects the
performance of the Scudder Fund Money Market Portfolio since the
inception of the Money Market Subaccount.
<PAGE>
Average annual total return is the average annual compounded
rate of return that equates a purchase payment on the first day
to the market value of that purchase payment on the last day of
the period for which total return is calculated. For purposes
of the calculation, it is assumed that an initial payment of
$1,000 is made on the first day of the period for which the
return is calculated. Expenses and charges incurred by the Fund
and charges measured as a percentage of Subaccount assets are
reflected in changes in unit values. The typical effect of the
annual administration fee is included in the total return
calculations, other than those measured by changes in
Accumulation Unit Value, by multiplying $30 by the total number
of contracts in CA and then dividing that total by the average
net assets of CA (including contract assets allocated to the
Guaranteed Account) for the year measured. The resulting
percentage is then multiplied by the average value of the $1,000
investment during the year measured. For less than one year
periods, 1/365 of the fee is assumed to be deducted for each day
of the period. Total return figures that include the impact of
surrender charges assume that the investment is withdrawn from
the Subaccount at the end of the period for which return is
calculated.
From time to time, advertisements for CA may include
comparisons of performance of the Subaccounts to that of various
market indices, including, but not limited to: the Salomon
Brothers Investment Grade Bond Index, the Salomon Brothers U.S.
Treasury Bill Index, the Shearson Lehman Government/Corporate
Bond Index, the S&P 500 Index, the Dow Jones Industrial Average,
the Donoghue Money Fund 30-Day Average Yield, and the Lipper
Variable Insurance Products Performance Analysis Service.
CA advertisements may also include performance rankings (or
information based on those rankings) compiled by various
independent organizations, including but not limited to: LIPPER
ANALYTICAL SERVICES MUTUAL FUNDS SURVEY, LIPPER VARIABLE
INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE, THE VARDS
REPORT, SYLVIA PORTER PERSONAL FINANCE, FINANCIAL SERVICES WEEK,
CONSUMER REPORTS, MONEY MAGAZINE, FORBES MAGAZINE, AND FORTUNE
MAGAZINE.
FEDERAL TAX MATTERS
Taxation of Union Central
Union Central is taxed as a life insurance company under Part
I of Subchapter L of the Internal Revenue Code ("Code"). Since
CA is not an entity separate from Union Central, and its
operations form a part of Union Central, it will not be taxed
separately as a "regulated investment company" under Subchapter
M of the Code. Investment income and realized capital gains on
the assets of CA are reinvested and taken into account in
determining the Accumulation and Annuity Unit values. As a
result, such investment income and realized capital gains are
automatically applied to increase reserves under the Contract.
Under existing federal income tax law, separate account
investment income and capital gains are not taxed to the extent
they are applied to increase reserves under a Contract issued in
connection with CA. Accordingly, Union Central does not
anticipate that it will incur any federal income tax liability
attributable to CA, and therefore Union Central does not intend
to make provisions for any such taxes. However, if changes in
the federal tax laws or interpretations thereof result in Union
Central being taxed on income or gains attributable to CA or
certain types of Contracts, then Union Central may impose a
charge against CA (with respect to some or all Contracts) in
order to set aside provisions to pay such taxes.
<PAGE>
Tax Status of the Contracts
Section 817(h) of the Code provides that separate account
investments (or the investments of a mutual fund the shares of
which are owned by separate accounts of insurance companies)
underlying the Contract must be "adequately diversified" in
accordance with Treasury regulations in order for the Contract
to qualify as an annuity contract under Section 72 of the Code.
The Separate Account, through each Portfolio of the Funds,
intends to comply with the diversification requirements
prescribed in regulations, which affect how the assets in each
Portfolio of the Funds in which the Separate Account invests may
be invested. Union Central does not have control over the Funds
or their investments. However, Union Central believes that each
Portfolio in which the Separate Account owns shares will meet
the diversification requirements and that therefore the
Contracts will be treated as annuities under the Code.
The Treasury has stated that regulations on diversification
requirements do not provide guidance concerning the extent to
which contract holders may direct their investments to the
Portfolios of the Funds. Regulations in this regard may be
issued in the future. It is possible that when regulations are
issued the Funds may not be in compliance with such regulations.
Although Union Central can provide no assurances that any such
regulations will not adversely affect the tax treatment of
existing Contracts in all events, based upon a private letter
ruling Union Central has received on the Contracts, Union
Central believes that any such regulations would be applied only
on a prospective basis. For these reasons, Union Central
reserves the right to modify the Contract as necessary to
prevent the contract holder from being considered the owner of
the assets of the Funds or otherwise to qualify the contract for
favorable tax treatment.
In addition, Nonqualified Contracts will not be treated as
annuity contracts for purposes of Section 72 unless such
contracts provide: (a) that if the contract holder dies on or
after the annuity starting date but prior to the time before the
entire interest in the contract has been distributed, the
remaining portion of such interest must be distributed at least
as rapidly as under the method of distribution in effect at the
time of the contract holder's death; and (b) if the contract
holder dies prior to the annuity starting date, the entire
interest must be distributed within five years after the death
of the contract holder. These requirements should be considered
satisfied if any portion of the contract holder's interest which
is payable to or for the benefit of a "designated beneficiary"
is distributed over the life of such designated beneficiary (or
over a period that does not extend beyond the life expectancy of
the designated beneficiary) and such distributions begin within
one year of the contract holder's death. (A contract holder's
designated beneficiary is the person to whom ownership of the
Contract passes by reason of death and must be a natural
person.) However, if the contract holder's designated
beneficiary is the surviving spouse of the contract holder, the
contract may be continued in the name of the spouse as the
contract holder. Union Central believes that the Contracts
described in this Prospectus meet these requirements. However,
no assurance can be given that the provisions contained in the
Contracts satisfy all such Code requirements. The provisions
contained in the Contracts will be reviewed and modified if
necessary to assure that they comply with the Code requirements.
Other rules may apply to Qualified Contracts.
For a discussion of the tax treatment of the contracts as
annuities under Section 72, see "Tax Status of the Contracts" in
the Prospectus.
<PAGE>
MISCELLANEOUS CONTRACT PROVISIONS
Delay of Payments
Union Central will pay all amounts due from the Variable
Account under the Contract within seven days, unless:
(1) The New York Stock Exchange is closed for other than
usual weekends or holidays, or trading on the Exchange is
otherwise restricted;
(2) An emergency exists as defined by the Securities and
Exchange Commission; or
(3) The Securities and Exchange Commission permits delay
for the protection of the security holders.
Participating
The Contract is issued on a participating basis, and as such
is eligible to share in Union Central's profits and surplus to
the extent determined by Union Central's Board of Directors in
its sole discretion. Union Central anticipates that such
participation, if at all, will be small in amount and will occur
only in later years of the Contract.
Misstatement and Proof of Age, Sex or Survival
Proof of age, sex, or survival of the Annuitant and any
contingent Annuitant may be required prior to making annuity
payments under any Annuity Option which depends on the
continuation of life. If any age or sex has been misstated,
Union Central will pay the amounts which would have been
provided at the correct age and sex. After the annuity payments
begin, Union Central will make up any underpayments in a lump
sum with the next annuity payment. Any overpayments will be
deducted from future annuity payments until the overpayment is
made up.
Settlements
Union Central may require the return of the Contract prior to
any settlement. Due proof of the Annuitant's death must be
received prior to settlement of a death claim.
Assignments
The Contract Owner may assign the Contract prior to the
Maturity Date and during the Annuitant's lifetime, subject to
the rights of any irrevocable Beneficiary, although the ability
to assign certain Qualified Contracts may be restricted. An
assignment will not be binding until received in writing by
Union Central, and Union Central will not be responsible for the
validity of an assignment. An assignment or pledge of the
Contract may result in income tax liability to the owner.
<PAGE>
No Beneficiary may assign benefits under the Contract until
they are due, and to the extent permitted by law, payments are
not subject to the debts of any Beneficiary or to any judicial
process for payment of the Beneficiary's debts.
Modification
Union Central may not modify the Contract without the consent
of the Contract Owner except to make the Contract meet the
requirements of the Investment Company Act of 1940, or to make
the Contract comply with any changes in the Internal Revenue
Code or as required by the Code or by any other applicable law
in order to continue treatment of the Contract as an annuity.
CUSTODY OF CA'S ASSETS
Title to the assets of CA is held by Union Central. Records
are maintained of all purchases and redemptions of Portfolio
shares held by each of the Subaccounts.
EXPERTS
The financial statements of CA at December 31, 1996 and the
statements of financial condition of Union Central at December
31, 1996 and 1995 appearing in this Statement of Additional
Information have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon also appearing
elsewhere herein. Such financial statements have been included
herein in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.
CARILLON ACCOUNT
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
<PAGE>
(letterhead)
ERNST & YOUNG LLP
1300 Chiquita Center
250 East Fifth Street
Cincinnati, Ohio 45202
Phone: 513 621 6454
Report of Independent Auditors
=========================================================
To the Contractholders of Carillon
Account and the Board of Directors of
The Union Central Life Insurance Company
We have audited the accompanying statement of assets and
liabilities of the Carillon Account (comprised of the Carillon
Fund, Inc. Equity, Capital, Bond, and S&P 500 Index Subaccounts,
the Scudder Variable Life Investment Fund Money Market, Capital
Growth, and International Subaccounts, the MFS Variable
Insurance Trust, Growth with Income and High Income subaccounts,
and TCI Portfolios, Inc. Growth Subaccount) as of December 31,
1996, the related statement of operations for the year then
ended and the statements of changes in net assets for each of
the two years in the period then ended. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the applicable
transfer agent. 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 each of the respective subaccounts constituting the Carillon
Account at December 31, 1996, the results of their operations
for the year then ended and changes in their net assets for each
of the two years in the period then ended in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
Cincinnati, Ohio
March 5, 1997
<PAGE>
Carillon Account
Statement of Assets and Liabilities
=======================================
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Carillon Fund, Inc.
(affiliated issuers)
-----------------------------------------
S&P 500
Equity Capital Bond Index
Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities of
unaffiliated issuers, at
value (cost $ 7,672,708;
$4,517,366, $ 1,190,238,
$ 4,039,705) Investments in
shares of Carillon Fund, Inc.
at value (cost $ 84,762,580;
$43,418,068; $16,988,199,
$9,170,224) 114,189,384 48,469,001 16,994,952 9,914,625
----------- ---------- ---------- ---------
Total Assets 114,189,384 48,469,001 16,994,952 9,914,625
=========== ========== ========== =========
LIABILITIES
Payable to The Union
Central Life Insurance
Company for mortality
and expense risk charges,
and administration fee 279,552 117,413 40,766 22,059
Net Assets Attriibutable
to Contract Owners'
Equity Subacount:
2,723,705.33 Accumulation
Units @ $41.68174 113,528,777
9,142.02 Payout
Units @ $41.68174 381,055
Capital Subaccount:
2,632,591.00 Accumulation
Units @ $18.36654 48,351,588
Bond Subaccount:
672,511.33 Accumulation
Units @ $25.21026 16,954,186
S & P Subaccount:
869,681.47 Accumulation
Units @ $11.37493 9,892,566
Total Liabilities 114,189,384 48,469,001 16,994,952 9,914,625
=========== ========== ========== =========
</TABLE>
<PAGE>
Carillon Account
Statement of Assets and Liabilities (continued)
=========================================================
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Scudder Variable Life
Investment Fund
(unaffiliated issuers)
Money Capital
Market Growth International
Subaccount Subaccount Subaccount
<S> <C> <C> <C>
ASSETS
Investments in securities of
unaffiliated issuers, at value
(cost $7,672,708; $23,264,447;
$21,491,361; 7,672,708 27,224,859 25,177,192
Investments in shares of
Carillon Fund, Inc.,
at value (cost $ 84,762,580;
$43,418,068; $16,988,199,
$9,170,224) ---------- ---------- ----------
Total Assets 7,672,708 27,224,859 25,177,192
========== ========== ==========
LIABILITIES
Payable to The Union Central
Life Insurance Company for
mortality and expense risk
charges, and administration fee 16,606 67,658 59,907
Net Assets Attriibutable to
Contract Owners' Money Market
Subaccount: 477,679.12 Accumulation
Units @ $16.02771 7,656,102
Capital Growth Subaccount:
1,593,634.26 Accumulation
Units @ $17.04105 27,157,201
International Subaccount:
1,564,590.89 Accumulation
Units @ $16.05358 25,117,285
Total Liabilities 7,672,708 27,224,859 25,177,192
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
Carillon Account
Statement of Assets and Liabilities (continued)
=========================================================
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MFS Variable
Insurance Trust TCI Portfolios, Inc.
(unaffiliated issuers) (unaffiliated issuers)
---------------------- ----------------------
Growth High
with Income Income Growth
Subaccount Subaccount Subaccount
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Investments in securities
of unaffiliated issuers,
at value (cost $ 7,672,708;
$23,264,447; $21,491,361; 4,835,556 1,180,931 3,851,036
Investments in shares of
Carillon Fund, Inc., at
value (cost $ 84,762,580;
$43,418,068; $16,988,199,
$9,170,224)
Total Assets 4,835,556 1,180,931 3,851,036
========= ========= =========
LIABILITIES
Payable to The Union
Central Life Insurance
Company for mortality
and expense risk
charges, and
administration fee 10,394 2,308 8,427
Growth with Income Subaccount
425,068.19 Accumulation
Units @ $11.35150 4,825,162
High Income Subaccount
108,722.82 Accumulation
Units @ $10.84062 1,178,623
Growth Subaccount
424.022.29 Accumulation
Units @ $9.06228 3,842,609
--------- --------- ---------
Total Liabilities 4,835,556 1,180,931 3,851,036
========= ========= =========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Carillon Fund, Inc.
(affiliated issuers)
-----------------------------------------
S&P 500
Equity Capital Bond Index
Subaccount Subaccount Subaccount Subaccount
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income $ 5,124,916 $2,377,817 $1,268,449 $ 77,967
EXPENSES
Mortality and expense
risk charge 1,183,376 555,802 187,639 43,633
Administration fee 242,379 113,839 38,433 8,938
----------- ---------- ---------- --------
Total expenses 1,425,755 669,641 226,072 52,571
----------- ---------- ---------- --------
NET INVESTMENT
INCOME (EXPENSE) 3,699,161 1,708,176 ,042,377 25,396
----------- ---------- ---------- --------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss)
on investments 1,812,837 438,750 (13,540) 11,131
Net unrealized appreciation
(depreciation) of investments 14,393,952 3,452,457 (163,522) 744,401
----------- ---------- ---------- --------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS 16,206,789 3,891,207 (177,062) 755,532
----------- ---------- ---------- --------
NET INCREASE (DECREASE)
IN NET ASSETS FROM OPERATIONS $19,905,950 $5,599,383 $ 865,315 $780,928
=========== ========== ========== ========
<CAPTION>
Scudder Variable Life
Investment Fund
(unaffiliated issuers)
-----------------------------------
Money Capital
Market Growth International
Subaccount Subaccount Subaccount
---------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend income $ 321,204 $1,772,539 $ 431,383
EXPENSES
Mortality and expense
risk charge 76,088 278,842 259,541
Administration fee 15,585 57,113 53,160
--------- ---------- ----------
Total expenses 91,673 335,955 312,701
--------- ---------- ----------
NET INVESTMENT
INCOME (EXPENSE) 229,531 1,436,584 118,682
--------- ---------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on
investments -- 165,975 171,655
--------- ---------- ----------
Net unrealized appreciation
(depreciation) of investments -- 2,198,938 2,292,031
--------- ---------- ----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS -- 2,364,913 2,463,686
--------- ---------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 229,531 $3,801,497 $2,582,368
========= ========== ==========
<CAPTION>
MFS Variable
Insurance Trust TCI Portfolios, Inc.
(unaffiliated issuers) (unaffiliated issuers)
---------------------- ----------------------
Growth High
with Income Income Growth
Subaccount Subaccount Subaccount
---------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend income $ 80,004 $ 61,019 $ --
-------- -------- ---------
EXPENSES
Mortality and expense
risk charge 21,309 4,090 19,322
Administration fee 4,365 838 3,958
-------- -------- ---------
Total expenses 25,674 4,928 23,280
-------- -------- ---------
NET INVESTMENT
INCOME (EXPENSE) 54,330 56,091 (23,280)
-------- -------- ---------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss)
on investments 3,524 755 (3,651)
Net unrealized appreciation
(depreciation) of
investments 318,190 (9,308) (188,669)
-------- -------- ---------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS 321,714 (8,553) (192,320)
-------- -------- ---------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS $376,044 $ 47,538 $(215,600)
======== ======== =========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
================================================
<TABLE>
<CAPTION>
Carillon Fund, Inc.
Equity Subaccount
-----------------------
Year ended December 31,
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 3,699,161 $ 4,357,599
Net realized gain on investments 1,812,837 694,386
Net unrealized appreciation
of investments 14,393,952 9,553,916
------------ -----------
Net increase in net assets
resulting from operations 19,905,950 14,605,901
------------ -----------
EQUITY TRANSACTIONS
Contract purchase payments 17,670,408 13,375,897
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 6,004,201 2,803,916
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (3,610,691) (1,514,951)
Surrenders (5,812,606) (3,607,918)
------------ -----------
Net proceeds from equity transactions 14,251,312 11,056,944
------------ -----------
NET INCREASE IN NET ASSETS 34,157,262 25,662,845
NET ASSETS (Beginning of year) 79,752,570 54,089,725
------------ -----------
NET ASSETS (End of year) $113,909,832 $79,752,570
============ ===========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
========================================
<TABLE>
<CAPTION>
Carillon Fund, Inc.
Capital Subaccount
-----------------------
Year ended December 31,
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 1,708,176 $ 2,793,454
Net realized gain on investments 438,750 228,784
Net unrealized appreciation
of investments 3,452,457 1,298,776
----------- -----------
Net increase in net assets
resulting from operations 5,599,383 4,321,014
----------- -----------
EQUITY TRANSACTIONS
Contract purchase payments 5,734,653 6,490,922
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 1,976,596 970,203
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (3,029,990) (1,912,855)
Surrenders (2,813,935) (1,677,734)
----------- -----------
Net proceeds from equity transactions 1,867,324 3,870,536
----------- -----------
NET INCREASE IN NET ASSETS 7,466,707 8,191,550
NET ASSETS (Beginning of year) 40,884,881 32,693,331
----------- -----------
NET ASSETS (End of year) $48,351,588 $40,884,881
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
=====================================
<TABLE>
<CAPTION>
Carillon Fund, Inc.
Bond Subaccount
-----------------------
Year ended December 31,
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 1,042,377 $ 737,629
Net realized gain (loss) on investments (13,540) 61
Net unrealized appreciation
(depreciation) of investments (163,522) 1,088,507
----------- -----------
Net increase in net assets resulting
from operations 865,315 1,826,197
----------- -----------
EQUITY TRANSACTIONS
Contract purchase payments 3,598,278 2,396,149
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 1,232,814 471,042
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (1,607,281) (537,207)
Surrenders (843,649) (788,960)
----------- -----------
Net proceeds from equity transactions 2,380,162 1,541,024
----------- -----------
NET INCREASE IN NET ASSETS 3,245,477 3,367,221
NET ASSETS (Beginning of year) 13,708,709 10,341,488
----------- -----------
NET ASSETS (End of year) $16,954,186 $13,708,709
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
=======================================
<TABLE>
<CAPTION>
Scudder Variable Life Investment Fund
Money Market Subaccount
-----------------------
Year ended December 31,
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 229,531 $ 175,915
----------- -----------
Net increase in net assets resulting
from operations 229,531 175,915
EQUITY TRANSACTIONS
Contract purchase payments 6,319,738 3,269,680
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 2,438,282 1,868,283
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (6,169,979) (3,591,075)
Surrenders (860,396) (190,316)
----------- -----------
Net proceeds from equity transactions 1,727,645 1,356,572
----------- -----------
NET INCREASE IN NET ASSETS 1,957,176 1,532,487
NET ASSETS (Beginning of year) 5,698,926 4,166,439
----------- -----------
NET ASSETS (End of year) $ 7,656,102 $ 5,698,926
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
=====================================
<TABLE>
<CAPTION>
Scudder Variable Life Investment Fund
Capital Growth Subaccount
-----------------------
Year ended December 31,
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 1,436,584 $ 268,652
Net realized gain on investments 165,975 26,006
Net unrealized appreciation of investments 2,198,938 2,607,035
----------- -----------
Net increase in net assets resulting
from operations 3,801,497 2,901,693
----------- -----------
EQUITY TRANSACTIONS
Contract purchase payments 6,225,412 3,831,260
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 2,457,281 947,249
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (1,294,901) (779,187)
Surrenders (772,653) (449,607)
----------- -----------
Net proceeds from equity transactions 6,615,139 3,549,715
----------- -----------
NET INCREASE IN NET ASSETS 10,416,636 6,451,408
NET ASSETS (Beginning of year) 16,740,565 10,289,157
----------- -----------
NET ASSETS (End of year) $27,157,201 $16,740,565
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
=====================================
<TABLE>
<CAPTION>
Scudder Variable Life Investment Fund
International Subaccount
-----------------------
Year ended December 31,
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment (expense) $ 118,682 $ (158,671)
Net realized gain on investments 171,655 240,636
Net unrealized appreciation of investments 2,292,031 1,354,983
----------- -----------
Net increase in net assets resulting
from operations 2,582,368 1,436,948
----------- -----------
EQUITY TRANSACTIONS
Contract purchase payments 4,746,264 3,361,698
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 2,157,750 598,178
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (824,341) (1,523,833)
Surrenders (861,194) (748,667)
----------- -----------
Net proceeds from equity transactions 5,218,479 1,687,376
----------- -----------
NET INCREASE IN NET ASSETS 7,800,847 3,124,324
NET ASSETS (Beginning of year) 17,316,438 14,192,114
----------- -----------
NET ASSETS (End of year) $25,117,285 $17,316,438
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
=====================================
<TABLE>
<CAPTION>
MFS Variable Insurance Trust
Growth with Income Subaccount
-----------------------------
Year ended December 31, 1996
<S> <C>
OPERATIONS
Net investment income $ 54,330
Net realized gain on investments 3,524
Net unrealized appreciation of investments 318,190
Net increase in net assets resulting
from operations 376,044
----------
EQUITY TRANSACTIONS
Contract purchase payments 2,163,387
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 2,336,016
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (36,171)
Surrenders (14,114)
----------
Net proceeds from equity transactions 4,449,118
----------
NET INCREASE IN NET ASSETS 4,825,162
NET ASSETS (Beginning of year) 0
NET ASSETS (End of year) $4,825,162
==========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
=====================================
<TABLE>
<CAPTION>
MFS Variable Insurance Trust
High Income Subaccount
-----------------------------
Year ended December 31, 1996
<S> <C>
OPERATIONS
Net investment income $ 56,091
Net realized gain on investments 755
Net increase in net assets resulting
from operations 47,538
----------
EQUITY TRANSACTIONS
Contract purchase payments 740,317
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 403,782
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (11,050)
Surrenders (1,964)
----------
Net proceeds from equity transactions 1,131,085
----------
NET INCREASE IN NET ASSETS 1,178,623
NET ASSETS (Beginning of year) 0
----------
NET ASSETS (End of year) $1,178,623
==========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
=====================================
<TABLE>
<CAPTION>
Carillon Fund, Inc.
S&P 500 Index Subaccount
-----------------------------
Year ended December 31, 1996
<S> <C>
OPERATIONS
Net investment income $ 25,396
Net realized gain on investments 11,131
Net unrealized appreciation of investments 744,401
----------
Net increase in net assets resulting
from operations 780,928
----------
EQUITY TRANSACTIONS
Contract purchase payments 5,067,645
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 4,416,451
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (325,162)
Surrenders (47,296)
----------
Net proceeds from equity transactions 9,111,638
----------
NET INCREASE IN NET ASSETS 9,892,566
NET ASSETS (Beginning of year) 0
----------
NET ASSETS (End of year) $9,892,566
==========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
=====================================
<TABLE>
<CAPTION>
TCI Portfolios, Inc.
Growth Subaccount
-----------------------------
Year ended December 31, 1996
<S> <C>
OPERATIONS
Net investment expense $ (23,280)
Net realized loss on investments (3,651)
Net unrealized depreciation of investments (188,669)
----------
Net decrease in net assets resulting
from operations (215,600)
----------
EQUITY TRANSACTIONS
Contract purchase payments 2,210,548
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 1,995,290
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (107,926)
Surrenders (39,703)
----------
Net proceeds from equity transactions 4,058,209
----------
NET INCREASE IN NET ASSETS 3,842,609
NET ASSETS (Beginning of year) 0
----------
NET ASSETS (End of year) $3,842,609
==========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON ACCOUNT
NOTES TO FINANCIAL STATEMENTS
================================
DECEMBER 31, 1996
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Carillon Account of The Union Central Life Insurance Company
(the Account) is a separate account registered under the
Investment Company Act of 1940, as amended, as a unit
investment trust. The Account was established on February 6,
1984 by resolution of the Board of Directors of The Union
Central life Insurance Company (Union Central) and commenced
operations on June 7, 1985. Carillon Account is comprised of
ten subaccounts, each of which invests in a corresponding
Portfolio of Carillon Fund, Inc., Scudder Variable Life
Investment Fund, MFS Variable Insurance Trust, or TCI
Portfolios, Inc. (the "Funds"). The Funds are no-load,
diversified, open-end management investment companies
registered under the Investment Company Act of 1940, as
amended. The shares of Carillon Fund, Inc. are sold only to
Union Central and its separate accounts to fund the benefits
under certain variable annuity contracts. Carillon
Investments, Inc., a broker-dealer registered under the
Securities Exchange Act of 1934 and a wholly-owned subsidiary
of Union Central , serves as the distributor of variable
annuity contracts issued by Carillon Fund, Inc. The shares of
Scudder Variable Life Investment Fund are available and are
being marketed exclusively as a pooled funding vehicle for life
insurance companies writing all types of variable life
insurance policies and variable annuity contracts. Scudder
Investor Services, Inc., a wholly-owned subsidiary of Scudder
Stevens & Clark Inc. serves as distributor of variable life
insurance policies and variable annuity contracts issued by
Scudder Variable Life Investment Fund. MFS Fund Distributors,
Inc., a wholly-owned subsidiary of MFS, is the distributor of
the shares issued by the MFS Variable Insurance Trust.
Twentieth Century Securities, Inc. a wholly-owned subsidiary of
Twentieth Century Companies, Inc. serves as the distributor of
variable annuity and variable life insurance contracts issued
by TCI Portfolios, Inc.
The assets of the Account are segregated from the other assets
of Union Central and the investment performance of the Account
is independent of the investment performance of both Union
Central's general assets and other separate accounts.
Investment valuation - Assets of the Account are invested in
shares of the Funds at the net asset value of the Fund shares.
Investments in Fund shares are subsequently valued at the net
asset value of the Fund shares held.
Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and
disclosure of contingent assets and labilities at the date of
the financial statements. Estimates also effect the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ for those estimates.
Securities transactions and investment income - Securities
transactions are recorded on the trade date (the date the order
to buy or sell is executed), and dividend income is recorded on
the ex-dividend date. Gains and losses on sales of Fund shares
are calculated on the first-in, first-out basis for financial
reporting and tax purposes. All dividends and distributions
from the Subaccount are reinvested in additional shares of the
respective Subaccount at the net asset value per share.
Federal income taxes - The operations of the Account form a
part of and are taxed with the operations of Union Central.
Union Central is taxed as a life insurance company under
Subchapter L of the Internal Revenue Code. Under existing
federal income tax law, separate account investment income and
capital gains are not taxed to the extent they are applied to
increase reserves under a contract issued in connection with
the Account. Investment income and realized capital gains and
losses on assets of the Account are automatically applied to
increase or decrease reserves under the contract. Accordingly,
no provision for federal income taxes has been made in these
financial statements.
NOTE 2 - INVESTMENT IN AFFILIATED AND NON-AFFILIATED FUND
The subaccounts of the Account held the following investment in
the corresponding Portfolios of Carillon Fund, Inc., Scudder
Variable Life Investment Fund, MFS Variable Insurance Trust,
and TCI Portfolio, Inc. as of December 31, 1996:
<TABLE>
<CAPTION>
Carillon Fund, Inc.
----------------------------------------------
Equity Capital Bond S&P 500
Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value per share $ 19.45 $ 14.95 $ 10.91 $ 12.13
Number of shares 5,870,920 3,242,074 1,557,741 817,364
<CAPTION>
Scudder Variable Life Investment Fund
-------------------------------------
Money Capital
Market Growth International
Subaccount Subaccount Subaccount
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value per share $ 1.00 $ 16.50 $ 13.25
Number of shares 7,672,708 1,649,991 1,900,165
<CAPTION>
MFS Variable Insurance Trust
--------------------------------
Growth with Income High Income
Subaccount Subaccount
---------- ----------
<S> <C> <C>
Net asset value per share $ 12.98 $ 10.87
Number of shares 372,539 108,641
<CAPTION>
TCI Portfolios, Inc
-------------------
Growth
Subaccount
----------
<S> <C>
Net asset value per share $ 10.24
Number of shares 376,078
</TABLE>
NOTE 3 - ACCOUNT CHARGE
Mortality and expense risk charge - A mortality and expense
risk charge for Union Central at an annual rate of 1.2% of the
net assets of the Account is determined daily. The charge may
be increased or decreased by Union Central's Board of Directors
but cannot exceed a 1.7% annual rate. The mortality risk
results from a provision in the contract in which Union Central
agrees to make annuity payments in accordance with the annuity
tables, regardless of how long a particular annuitant or other
payee lives. The expense risk assumed by Union Central is the
risk that deductions for administration fees and surrender
charges will be insufficient to cover actual administrative and
distribution expenses.
Administrative fee - An administrative fee for Union Central,
at an annual rate of 0.25% of the net assets of the Account, is
determined daily. This fee is intended to defray expenses
incurred by Union Central in connection with premium billing
and collection, record keeping, processing death benefit
claims, cash surrenders and contract changes, calculating
accumulation unit values, reporting and other communications to
contract owners, and other similar expenses and overhead costs.
NOTE 4 - SELECTED PER UNIT DATA
The following selected per unit data is computed on the basis
of an accumulation unit outstanding at December 31, of each
year except as noted.
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CARILLON FUND, INC.
EQUITY SUBACCOUNT
Accumulation unit value $41.68 $33.97 $27.15
Number of accumulation units
outstanding, end of period 2,723,705.33 2,337,986.47 1,981,958.18
Payout unit value $41.68 $33.97
Number of payout units
outstanding, end of period 9,142.02 9,795.88
CAPITAL SUBACCOUNT
Accumulation unit value $18.37 $16.21 $14.39
Number of accumulation units
outstanding, end of period 2,632,591.00 2,521,521.39 2,271,374.95
BOND SUBACCOUNT
Accumulation unit value $25.21 $23.87 $20.34
Number of accumulation units
outstanding, end of period 672,511.33 574,420.86 508,398.32
S&P 500 SUBACCOUNT
Accumulation unit value $11.37<F4>
Number of accumulation units
outstanding, end of period 869,681.47
SCUDDER VARIABLE LIFE
INVESTMENT FUND
MONEY MARKET SUBACCOUNT<F3>
Accumulation unit value $16.03 $15.47 $14.85
Number of accumulation units
outstanding, end of period 477,679.12 368,443.98 280,575.27
CAPITAL GROWTH
SUBACCOUNT
Accumulation unit value $17.04 $14.39 $11.35
Number of accumulation units
outstanding, end of period 1,593,634.26 1,162,998.78 906,428.22
INTERNATIONAL
SUBACCOUNT
Accumulation unit value $16.05 $14.19 $12.96
Number of accumulation units
outstanding, end of period 1,564,590.89 1,220,160.02 1,095,214.21
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
CARILLON FUND, INC.
EQUITY SUBACCOUNT
Accumulation unit value $26.63 $23.68 $21.49
Number of accumulation units
outstanding, end of period 1,723,790.37 1,312,947.47 1,057,669.36
Payout unit value
Number of payout units
outstanding, end of period
CAPITAL SUBACCOUNT
Accumulation unit value $14.47 $13.02 $12.24
Number of accumulation units
outstanding, end of period 1,790,938.05 1,181,036.39 627,636.09
BOND SUBACCOUNT
Accumulation unit value $20.98 $19.01 $17.92
Number of accumulation units
outstanding, end of period 513,613.17 348,420.48 283,492.73
S&P 500 SUBACCOUNT
Accumulation unit value
Number of accumulation units
outstanding, end of period
SCUDDER VARIABLE LIFE
INVESTMENT FUND
MONEY MARKET SUBACCOUNT<F3>
Accumulation unit value $14.53 $14.37 $14.12
Number of accumulation units
outstanding, end of period 119,598.28 120,546.54 83,622.68
CAPITAL GROWTH
SUBACCOUNT
Accumulation unit value $12.75 $10.70<F2>
Number of accumulation units
outstanding, end of period 439,913.95 70,218.22
INTERNATIONAL
SUBACCOUNT
Accumulation unit value $13.26 $9.76<F2>
Number of accumulation units
outstanding, end of period 362,171.94 43,624.42
<CAPTION>
1990 1989 1988 1987
---- ---- ---- ----
<S> <C> <C> <C> <C>
CARILLON FUND, INC.
EQUITY SUBACCOUNT
Accumulation unit value $14.98 $17.98 $16.32 $12.57
Number of accumulation units
outstanding, end of period 936,036.25 799,268.16 561,681.97 521,066.65
Payout unit value
Number of payout units
outstanding, end of period
CAPITAL SUBACCOUNT
Accumulation unit value $9.85<F1>
Number of accumulation units
outstanding, end of period 279,289.41
BOND SUBACCOUNT
Accumulation unit value $15.42 $14.40 $13.20 $12.48
Number of accumulation units
outstanding, end of period 285,369.81 250,631.38 225,777.14 224,899.83
S&P 500 SUBACCOUNT
Accumulation unit value
Number of accumulation units
outstanding, end of period
SCUDDER VARIABLE LIFE
INVESTMENT FUND
MONEY MARKET SUBACCOUNT<F3>
Accumulation unit value $13.58 $12.71 $11.85 $11.23
Number of accumulation units
outstanding, end of period 103,404.70 75,006.15 52,665.63 50,466.90
CAPITAL GROWTH
SUBACCOUNT
Accumulation unit value
Number of accumulation units
outstanding, end of period
INTERNATIONAL
SUBACCOUNT
Accumulation unit value
Number of accumulation units
outstanding, end of period
CAPTION
<PAGE>
1996
<S> <C>
MFS VARIABLE
INSURANCE TRUST
GROWTH WITH INCOME
SUBACCOUNT
Accumulation unit value $11.35<F4>
Number of accumulation units
outstanding, end of period 425,068.19
HIGH INCOME
SUBACCOUNT
Accumulation unit value $10.84<F4>
Number of accumulation units
outstanding, end of period 108,772.82
TCI PORTFOLIOS, INC.
GROWTH
SUBACCOUNT
Accumulation unit value $9.06<F4>
Number of accumulation units
outstanding, end of period 424,022.29
<FN>
<F1> Commencement of operations was May 1, 1990, with a beginning
accumulation unit value of $10.00.
<F2> Commencement of operations was May 1, 1992, with a beginning
accumulation unit value of $10.00.
<F3> Assets of Carillon Money Market Subaccount were transferred to the
Scudder Money Market Subaccount on November 12, 1993.
<F4> Commencement of operations was May 1, 1996, with a beginning
accumulation value of $10.00.
</TABLE>
<PAGE>
Consolidated Financial Statements
The Union Central Life
Insurance Company and Subsidiaries
Years ended December 31, 1996 and 1995
with Report of Independent Auditors
<PAGE>
THE UNION CENTRAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996 and 1995
CONTENTS
Page
Report of Independent Auditors.......................... 1
Consolidated Balance Sheets as of
December 31, 1996 and 1995.............................. 2
Consolidated Statements of Income for the years ended
December 31, 1996 and 1995.............................. 3
Consolidated Statements of Equity for the years ended
December 31, 1996 and 1995.............................. 4
Consolidated Statements of Cash Flows for the years
ended December 31, 1996 and 1995........................ 5
Notes to Consolidated Financial Statements.............. 6
<PAGE>
(letterhead)
ERNST & YOUNG LLP
1300 Chiquita Center
250 East Fifth Street
Cincinnati, Ohio 45202
Phone: 513 621 6454
Report of Independent Auditors
To the Board of Directors
The Union Central Life Insurance Company
We have audited the accompanying consolidated balance sheets of The Union
Central Life Insurance Company and subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of income, equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
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 consolidated financial position of The Union
Central Life Insurance Company and subsidiaries at December 31, 1996, and
1995, and the consolidated results of their operations and their cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ ERNST & Young LLP
March 24, 1997
<PAGE>
The Union Central Life Insurance Company and Subsidiaries
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
December 31,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities available-for-sale
at fair value (amortized cost: $2,749,772 $2,817,219
1996 - $2,727,178; and 1995 - $2,744,458)
Equity securities available-for-sale
at fair value
(cost: 1996 - $54,504 and 1995 - $45,998) 61,458 51,824
Cash and short-term investments 1,040 11,438
Other invested assets 42,490 34,058
Mortgage loans 663,351 591,978
Real estate 58,601 61,196
Policy loans 206,889 207,855
---------- ----------
Total investments 3,783,601 3,775,568
Accrued investment income 47,491 46,868
Deferred policy acquisition costs 414,458 383,563
Property, plant and equipment, at cost,
less accumulated depreciation
(1996 - $55,798 and 1995 - $53,726) 22,561 21,679
Federal income tax recoverable 6,394 --
Other assets 89,251 79,141
Separate account assets 1,000,469 729,792
---------- ----------
Total assets $5,364,225 $5,036,611
========== ==========
LIABILITIES AND EQUITY
Policy liabilities:
Future policy benefits $1,892,875 $1,861,520
Deposit funds 1,568,566 1,595,829
Policy and contract claims 28,413 28,587
Policyholders' dividends 37,492 35,957
---------- ----------
Total policy liabilities 3,527,346 3,521,893
Deferred revenue 130,176 134,464
Accrued commissions, expenses and taxes 16,373 24,461
Other liabilities 49,604 41,768
Deferred federal income taxes 35,149 42,892
Federal income tax payable -- 890
Surplus notes payable 49,740 --
Separate account liabilities 1,014,960 735,334
---------- ----------
Total liabilities 4,823,348 4,501,702
MINORITY INTEREST IN SUBSIDIARY'S EQUITY 46,076 49,165
EQUITY
Policyholders' equity 481,799 456,203
Unrealized gain on
available-for-sale securities 13,002 29,541
---------- ----------
Total equity 494,801 485,744
---------- ----------
Total liabilities and equity $5,364,225 $5,036,611
========== ==========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
THE UNION CENTRAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
<TABLE>
<CAPTION>
Year ended December 31
----------------------
1996 1995
---- ----
<S> <C> <C>
REVENUE
Insurance revenue:
Traditional insurance premiums $136,448 $133,068
Universal life policy charges 77,149 69,088
Annuities 34,740 35,128
Net investment income 296,912 290,548
Net realized losses on investments (19,113) (7,147)
Other 6,162 7,074
-------- --------
Total revenue 532,298 527,759
BENEFITS AND EXPENSES
Benefits 184,368 170,208
Increase in reserves for
future policy benefits 2,985 12,132
Interest expense:
Universal life 50,461 47,683
Investment products 95,654 100,081
Underwriting, acquisition
and insurance expenses 130,582 135,273
Policyholders' dividends 17,306 20,247
-------- --------
Total benefits and expenses 481,356 485,624
Income before federal income taxes
and minority interest in
subsidiary (income) loss 50,942 42,135
Federal income tax expense 22,642 14,347
-------- --------
Income before minority interest in
subsidiary (income) loss 28,300 27,788
Minority interest in
subsidiary (income) loss (2,704) 1,458
-------- --------
Net Income $ 25,596 $ 29,246
======== ========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
THE UNION CENTRAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF EQUITY
(in thousands)
<TABLE>
<CAPTION>
Unrealized
Gain (Loss)
on Available-
Policyholders' for-Sale Total
Equity Securities Equity
------------- ------------- ---------
<S> <C> <C> <C>
Balance at
December 31, 1994 $ 426,957 $(100,401) $ 326,556
Net income 29,246 -- 29,246
Net unrealized
appreciation -- 129,942 129,942
--------- --------- ---------
Balance at
December 31, 1995 456,203 29,541 485,744
--------- --------- ---------
Net income 25,596 -- 25,596
Net unrealized
depreciation -- (16,539) (16,539)
--------- --------- ---------
Balance at
December 31, 1996 $ 481,799 $ 13,002 $ 494,801
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
THE UNION CENTRAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year ended December 31
----------------------
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 25,596 $ 29,246
Adjustments to net income not affecting cash:
Interest credited to interest
sensitive products 95,654 100,081
Interest credited to universal life policies 50,461 47,683
Accrual of discounts on investments, net (1,487) (4,443)
Net realized losses on investments 19,113 7,147
Depreciation 6,472 4,019
Amortization of deferred policy
acquisition costs 33,523 35,744
Amortization of deferred revenue (6,476) (8,974)
Deferred federal income taxes (benefit) 4,134 (2,429)
Change in operating assets and liabilities:
Accrued investment income (623) (2,885)
Policy cost deferred (40,471) (41,246)
Revenue deferred 2,188 4,656
Policy liabilities (72,417) (41,922)
Federal income tax recoverable (payable) (54) 845
Change in other liabilities (17,127) (12,634)
Other items, net 11,557 5,048
---------- ----------
Cash Provided by Operating Activities 110,043 119,936
---------- ----------
INVESTING ACTIVITIES
Costs of investments acquired (3,393,082) 2,879,846)
Proceeds from sale, maturity or repayment of
investments 3,297,247 2,779,000
(Increase) decrease in policy loans 966 (1,037)
Purchases of property and equipment, net (6,986) (4,249)
---------- ----------
Cash Used in Investing Activities (101,855) (106,132)
---------- ----------
FINANCING ACTIVITIES
Receipts from universal life and
investment contracts 534,974 514,772
Withdrawals from universal life and
investment contracts (603,300) (529,487)
Cash provided by issuance of surplus notes 49,740 --
---------- ----------
Cash Used by Financing Activities (18,586) (14,715)
---------- ----------
Decrease in cash and short term investments (10,398) (911)
---------- ----------
Cash and short term investments
at beginning of year 11,438 12,349
---------- ----------
Cash and short term investments
at end of year $ 1,040 $ 11,438
========== ==========
Supplemental disclosure of
cash flow information:
Cash paid during the year
for federal income taxes $27,905 $20,785
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
THE UNION CENTRAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Organization
The accompanying consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles (GAAP) and include the accounts of The Union Central
Life Insurance Company (Union Central) and its subsidiaries: The
Manhattan Life Insurance Company (Manhattan Life), a mixed
charter life insurance company of which Union Central owns 73% of
the outstanding guarantee capital shares, Carillon Advisers, Inc.
(CAI), a registered investment advisor company, wholly owned,
Carillon Investments, Inc. (CII) a broker dealer, wholly owned,
and Carillon Marketing Agency, Inc. (CMAI) an insurance agency,
wholly owned. The consolidated entity will be referred to as
"the Company". All significant intercompany accounts and
transactions have been eliminated in the accompanying
consolidated financial statements. Union Central also has the
following unconsolidated investment affiliates: Carillon Fund,
Inc., a variable products mutual fund consisting of four
investment portfolios (equity, bond, asset allocation, and S&P
500 indexed); Carillon Investment Trust, a mutual fund; and
Summit Investment Trust, a high-yield mutual fund. In addition,
Carillon Advisors, Inc., owns 51% of First Summit Capital
Management, a registered investment advisor.
The Company provides a wide spectrum of financial products and
related services for the benefit of individual, group and pension
policyholders. Such products and services include insurance to
provide for financial needs resulting from loss of life or income
and management of funds accumulated for preretirement and
retirement needs.
The Company is licensed to do business in all 50 states in the
United States.
The preparation of financial statements requires management to
make estimates and assumptions that affect amounts reported in
the financial statements and accompanying notes. Such estimates
and assumptions could change in the future as more information
becomes known, which could impact the amounts reported and
disclosed herein.
Accounting Changes
On November 15, 1995, the Financial Accounting Standards Board
(FASB) issued a Special Report "A Guide to Implemention of
Statement 115 on Accounting for Certain Investments in Debt and
Equity Securities"(SFAS 115 Special Report). In accordance with
provisions in the SFAS 115 Special Report, the Company
reclassified all "Held-to-Maturity" securities to "Available-for-
Sale." The adoption had an immaterial effect on the Company's
equity.
In 1995, the Company adopted FASB Statement No. 114," Accounting
by Creditors for Impairment of a Loan" as amended by FASB
Statement No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures." The effect of adoption
was immaterial.
Investments
Fixed maturity and equity securities classified as available-for-
sale are carried at fair value with net unrealized gains and
losses reported as a separate component of equity.
Other investments are reported on the following bases:
* Mortgage loans on real estate are carried at their
aggregate unpaid balance less unamortized discount and
less an allowance for possible losses.
* Real estate acquired through foreclosure is carried at
the lower of cost or its net realizable value.
* Policy loans are reported at unpaid balances.
* Cash and short-term investments presented on the Balance
Sheets consist of cash-in-bank, cash-in-transit and
commercial paper that has a maturity date of 90 days or
less from the date acquired.
The fair values of fixed maturity and equity securities represent
quoted market values from published sources or calculated market
values using the "yield method" if no quoted market values are
obtainable.
Realized gains and losses, net of related deferred policy
acquisition cost amortization, on sales of investments, and
declines in the value of investments judged to be other-than-
temporary, are recognized on a specific identification basis.
Interest is not accrued on mortgage loans or bonds for which
principal or interest payments are determined to be
uncollectible.
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.
Deferred policy acquisition costs are amortized consistent with
the methods described in "Policy Liabilities, Revenues, Benefits
and Expenses," and the effect of realized gains and losses on
deferred policy acquisition cost amortization is restored or
amortized and is netted against "Net realized losses on
investments". Amortization of deferred policy acquisition costs
totalled $33,523,000 and $35,774,000, net of the effect of
realized losses on amortization of ($9,176,000) and ($5,180,000)
for the years ended December 31, 1996 and 1995, respectively.
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. These adjustments totalled $7,143,000, and
$21,914,000 at 1996 and 1995, respectively.
Property, Plant and Equipment
Property, plant and equipment is valued at historical cost less
accumulated depreciation in the Balance Sheets. It consists
primarily of Union Central's home office, capital leases for
furniture and equipment, furniture and fixtures and electronic
data processing equipment.
Depreciation is computed with the straight-line method over the
estimated useful lives of the respective assets, not to exceed 10
years for office furniture and 5 years for electronic data
processing equipment. Depreciation is computed for leasehold
improvements with the straight-line method over the shorter of
the remaining lease term or useful life of the improvements.
Deposit Funds
The liability for deposit funds is generally established at the
policyholders' accumulated cash values plus amounts provided for
guaranteed interest.
Policy Claims
Policy claim reserves represent the estimated ultimate net cost
of all reported and unreported claims incurred. In addition, a
claim adjustment expense reserve is held to account for the
expenses associated with administering these claims. The
reserves for unpaid claims are estimated using individual case
basis valuations and statistical analyses. The claim adjustment
expense reserve is estimated using statistical analyses. These
estimates are subject to the effects of trends in claim severity
and frequency. Although some variability is inherent in such
estimates, management believes that the reserves for claims and
claim related expenses are adequate. The estimates are
continually reviewed and adjusted as necessary as experience
develops or new information becomes known; and such adjustments
are included in current operations.
Dividends to Policyholders
Union Central's dividend liability is the amount estimated to
have accrued to policyholders' as of each year end. Manhattan
Life's dividend liability is based on the dividend scale in
effect at the time the policy was issued.
Separate Accounts
Separate Account assets and liabilities reported in the
accompanying financial statements pertain to segregated funds
which are administered for pension and other clients, including
purchasers of Union Central's variable insurance and annuity
contracts. Other than amounts derived from, or otherwise
attributable to, the General Account (which amounts are included
in surplus), assets of Separate Accounts are not available to
fund the liabilities of the General Account. Separate Account
assets include common stocks, long-term bonds, mortgages and
short-term investments. Separate Account liabilities represent
reserves established to meet withdrawal and future benefits
payment contractual provisions. Union Central derives certain
fees for maintaining and managing the Separate Accounts, but
bears no investment risk on these assets, except to the extent
that it participates in a particular Separate Account.
Investment risk associated with market value changes are borne by
the owner of the contract and not by Union Central.
Recognition of Premium Revenues and Related Costs
POLICY LIABILITIES, REVENUES, BENEFITS AND EXPENSES
Traditional Insurance Products
Traditional insurance products include those products with fixed
and guaranteed premiums and benefits and consist primarily of
whole life insurance policies, term insurance policies and
disability income policies. Premiums for traditional products
are recognized as revenue when due.
The liability for future policy benefits for participating
traditional life is computed using a net level premium method and
the guaranteed mortality and dividend fund interest. The
mortality and interest assumptions are equivalent to statutory
assumptions. The liabilities for future policy benefits and
expenses for nonparticipating traditional life policies and
disability income policies are generally computed using a net
level premium method and assumptions for investment yields,
morbidity, and withdrawals based principally on company
experience projected at the time of policy issue, with provision
for possible and adverse deviations. Interest assumptions for
participating traditional life reserves for all policies ranged
from 2.25% to 5.50% for the years ended 1996 and 1995.
The costs of acquiring new traditional business, principally
commissions, certain policy issue and underwriting expenses (such
as medical examination and inspection report fees) and certain
agency expenses, all of which vary with and are primarily related
to the production of new and renewal business, are deferred to
the extent that such costs are deemed recoverable through future
gross premiums. Such non-participating deferred acquisition
costs are amortized over the anticipated premium paying period of
the related policies, generally not to exceed 30 years, using
assumptions consistent with those used to develop policy benefit
reserves. For participating life insurance products, deferred
policy acquisition costs are being amortized in proportion to
estimated 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, policyholder dividends, and the increase in
reserve for future policy benefits. The future investment yields
are assumed to range from 7.36% to 8.62% for the years ended 1996
and 1995. Changes in dividend payouts are assumed with changes
in yields.
Universal Life and Other Interest Sensitive Products
Interest sensitive products include universal life and single
premium whole life products. They are distinguished by the
existence of a separately definable fund that is credited with
interest and from which any policy charges are taken. Revenues
for these products consist of policy charges for the cost of
insurance, policy administration charges, and surrender charges
that have been assessed against policyholder account balances
during the period.
Benefit reserves for universal life and other interest sensitive
products are computed in accordance with the retrospective
deposit method and represent policy account balances before
applicable surrender charges. Policy benefits that are charged
to expense include benefit claims incurred in the period in
excess of related policy account balances and interest credited
to account balances. Interest crediting rates ranged from 4.75%
to 7.60% for the years ended 1996 and 1995.
The cost of acquiring universal life and other interest sensitive
products, principally commissions, certain policy issue and
underwriting expenses (such as medical examination and inspection
report fees) and certain agency expenses, all of which vary with
and are primarily related to the production of new and renewal
business, are deferred to the extent that such costs are deemed
recoverable through future estimated gross profits. Acquisition
costs for universal life and other interest sensitive products
are amortized over the life of the policies in proportion to the
present value of expected gross profits from surrender charges
and investment, mortality and expense margins. The amortization
is adjusted retrospectively when estimates of current or future
gross profits (including the impact of investment gains and
losses) to be realized from a group of products are revised.
Amounts assessed policyholders that represent revenue for
services to be provided in future periods are reported as
unearned revenue and recognized in income over the life of the
policies, using the same assumptions and factors as are used to
amortize deferred acquisition costs. These charges consist of
policy fees and premium loads that are larger in the initial
policy years than they are in the later policy years.
Group Products
Group products consist primarily of group life insurance, and
group long and short term disability income products. Premiums
for group insurance products are recognized as revenue when due.
The liabilities for future policy benefits and expenses for group
life and disability income products are computed using statutory
methods and assumptions, which approximate net level premium
reserves using assumptions for investment yields, mortality, and
withdrawals based principally on company experience projected at
the time of policy issue, with provisions for possible adverse
deviations. Interest assumptions are based on assumed investment
yields that range from 2.00% to 6.00% for the years ended 1996
and 1995.
The costs of acquiring new group life and disability income
business, principally commissions, certain policy issue and
underwriting expenses (such as medical examination and inspection
report fees) and certain agency expenses, all of which vary with
and are primarily related to the production of new and renewal
business, are deferred to the extent that such costs are deemed
recoverable through future gross premiums. Such deferred
acquisition costs are amortized over the anticipated premium
paying period of the related policies, generally not to exceed
ten years.
Pension Products
Pension products include deferred annuities, guaranteed
investment contracts and payout annuities. Revenues for the
deferred annuity products and guaranteed investment contracts
consist of investment income on policy funds, asset charges,
contract administration fees, and surrender charges that have
been assessed against policyholder account balances. Expenses
for deferred annuity and guaranteed investment contracts products
include the interest credited on policy funds and expenses
incurred in the administration and maintenance of the contracts.
For payout annuities, premiums are recognized as revenue when due
and expenses exclude the interest credited on policy funds.
Benefit reserves for the deferred annuity contracts and
guaranteed investment contracts represent the policy account
balances before applicable surrender charges. Interest
assumptions on payout annuities are based on assumed investment
yields that ranged from 2.00% to 6.00% for the years ended 1996
and 1995.
Commissions and other related costs of acquiring annuity
contracts that vary with and are primarily related to the
production of new and renewal business are deferred to the extent
that such costs are deemed recoverable through future estimated
gross profits. Acquisition costs are amortized over the life of
the contracts in direct proportion to the present value of
expected gross profits from surrender charges and investment and
expense margins. The amortization is adjusted retrospectively
when estimates of current or future gross profits (including the
impact of investment gains or losses) to be realized on a group
of contracts are revised.
Reinsurance
Reinsurance premiums and claims are accounted for on bases
consistent with those used in accounting for the original
policies issued and the terms of the reinsurance contracts.
Premiums and benefits are reported net of reinsured amounts.
Allocation of Manhattan Life's Income and Equity
Manhattan Life's charter provides for the allocation of its
profits between its shareholders and its policyholders on a one-
eighth/seven-eighths basis. The profits allocated are equal to
income after taxes and interest on the Guaranteed Capital Reserve
((GCR) see Note 5 for further discussion) but before policyholder
dividends. Manhattan Life's policyholders' and minority
shareholders' share of profits/losses are included in minority
interest in subsidiary's (income) loss in the Statements of
Income. Manhattan Life's policyholders' and minority
shareholders' equity is included in minority interest in
subsidiary's equity in the Balance Sheets, and includes
policyholders' and minority shareholders' share of Manhattan
Life's change in unrealized gains or (losses) on available for
sale securities. (See Note 5 for more in-depth discussion of
Manhattan Life's corporate charter.)
Federal Income Taxes
The Company accounts for income taxes using the liability method
for financial accounting and reporting of income taxes. Under
this method, deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying the
applicable tax rate to differences between the financial
statement carrying amounts and the tax bases of existing assets
and liabilities.
NOTE 2 - INVESTMENTS
Available-for-sale securities are summarized as follows:
<TABLE>
<CAPTION>
Cost or Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
---- ----- -------- -----
(in thousands)
<S> <C> <C> <C> <C>
December 31, 1996:
- -----------------
U.S. treasury securities
and obligations of U.S.
government corporations
and agencies $ 49,325 $ 325 $ (189) $ 49,461
Corporate securities and other 1,484,274 4,617 (9,385) 1,509,506
Mortgage-backed securities
and collateralized mortgage
obligations 1,185,669 17,289 (20,409) 1,182,549
Debt securities issued by
foreign governments 7,910 346 -- 8,256
---------- ------- -------- ----------
Subtotal 2,727,178 52,577 (29,983) 2,749,772
Equity securities 54,504 6,997 (43) 61,458
---------- ------- -------- ----------
Total $2,781,682 $59,574 $(30,026) $2,811,230
========== ======= ======== ==========
</TABLE>
<TABLE>
<CAPTION>
Cost or Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
---- ----- -------- -----
(in thousands)
<S> <C> <C> <C> <C>
December 31, 1995:
- -----------------
U.S. treasury securities
and obligations of U.S.
government corporations
and agencies $ 84,278 $ 1,689 $ -- $ 85,967
Corporate securities and other 1,290,356 77,993 (5,548) 1,362,801
Mortgage-backed securities
and collateralized mortgage
obligations 1,364,415 30,116 (30,880) 1,363,651
Debt securities issued by
foreign governments 5,409 42 (651) 4,800
---------- -------- -------- ----------
Subtotal 2,744,458 109,840 (37,079) 2,817,219
Equity securities 45,998 5,826 -- 51,824
---------- -------- -------- ----------
Total $2,790,456 $115,666 $(37,079) $2,869,043
========== ======== ======== ==========
</TABLE>
Fixed maturity available-for-sale securities, at
December 31, 1996, are summarized by stated maturity
as follows:
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
(in thousands)
<S> <C> <C>
Due in one year or less $ 4,859 $ 4,923
Due after one year through five years 193,625 197,055
Due after five years through ten years 622,628 632,021
Due after ten years 227,356 228,858
---------- ----------
Subtotal 1,048,468 1,062,857
Mortgage-backed securities 1,185,669 1,182,549
Other securities with multiple
repayment dates 493,041 504,366
---------- ----------
Total $2,727,178 $2,749,772
========== ==========
</TABLE>
Significant components of the unrealized gain on available-
for-sale securities included in equity on the accompanying
Balance Sheets are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Gross unrealized gain on available-
for-sale securities $ 29,548 $ 78,587
Amortization of deferred policy
acquisition costs (7,143) (21,914)
Minority interests (1,573) (7,426)
Deferred taxes (7,830) (19,706)
---------- ----------
Net unrealized gain on available-
for-sale securities $ 13,002 $ 29,541
========== ==========
</TABLE>
See Note 10 for discussion of the methods and assumptions used by
the Company in estimating the fair values of fixed maturity
available-for-sale securities.
At December 31, 1996 and 1995, the Company held unrated or less-
than-investment grade (investment grade is defined as "Baa3" and
higher on Moody's ratings and "BBB-" and higher on Standard and
Poor's bond ratings) corporate bonds of $177,364,000 and
$127,215,000. Those holdings amounted to 6.5% and 4.5%,
respectively, of the Company's investments in bonds and 3.3% and
2.5%, respectively, of the Company's total assets. The holdings
of less-than-investment grade bonds are widely diversified and of
satisfactory quality based on the Company's investment policies
and credit standards.
Proceeds, gross realized gains, and gross realized losses from
the sales and maturities of available-for-sale securities
follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Proceeds $3,170,351 $2,679,377
Gross realized gains 28,154 33,705
Gross realized losses 55,069 44,778
</TABLE>
At December 31, 1996 and 1995, investments in bonds of
$6,452,000 and $4,683,000, respectively, were on deposit
with state insurance departments to satisfy regulatory
requirements.
The Company has no material off-balance sheet risk.
Mortgage loans are stated at their aggregate unpaid balances
on the Balance Sheets, less unamortized discounts.
Activity in the allowance for mortgage loss is summarized
as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Balances at the beginning of the year $ 2,711 $ 2,836
Provisions (release of provisions)
for potential mortgage loan loss 263 1,875
Losses charged against the mortgage
loan loss reserve (750) (2,000)
--------- ---------
Balance at the end of the year $ 2,224 $ 2,711
========= =========
</TABLE>
The provision for mortgage losses has fluctuated between periods.
The Company establishes the mortgage reserve based upon its
continuing review of the mortgage portfolio and individual
problem mortgages. The allowance for potential loan losses is
affected to a significant degree by general economic conditions.
While the Company believes it has provided adequate mortgage
reserves, subsequent economic and market conditions may require
establishing additional reserves.
The Company's mortgage portfolio is monitored closely through the
review of loan and property information such as debt service
coverage, annual operating statements and property inspection
reports. This information is evaluated in light of current
economic conditions and other factors such as geographic and
property-type loan concentrations. This evaluation is part of
the regular review to determine whether adjustments to the
allowance for potential loan losses are warranted. Management
believes the mortgage loss reserve is sufficient to provide for
potential loan losses. However, management cannot predict with
assurance where the economy is headed or how the mortgage and
real estate portfolios would be affected by various economic
circumstances.
A summary of the characteristics of the Company's mortgage
portfolio (before deducting valuation reserves of $2,224,000 and
$2,711,000 at December 31, 1996 and 1995, respectively) follows:
<TABLE>
<CAPTION>
December 31, 1996
-----------------------
Principal Percent of
Region Balance Principal
- ------ --------- ----------
(in thousands)
<S> <C> <C>
New England and Mid-Atlantic $ 75,893 11.4%
South Atlantic 109,859 16.5
North Central 150,586 22.6
South Central 70,968 10.7
Mountain 93,394 14.0
Pacific 164,875 24.8
--------- ------
Total $ 665,575 100.0%
========= ======
Property Type
Apartment and residential $ 106,099 15.9%
Warehouses and industrial 111,363 16.7
Retail and shopping center 225,105 33.8
Offices 199,011 30.0
Other 23,997 3.6
--------- ------
Total $ 665,575 100.0%
========= ======
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
-----------------------
Principal Percent of
Region Balance Principal
- ------ --------- ----------
(in thousands)
<S> <C> <C>
New England and Mid-Atlantic $ 89,760 15.1%
South Atlantic 80,576 13.5
North Central 141,540 23.8
South Central 62,353 10.5
Mountain 73,483 12.4
Pacific 146,977 24.7
--------- ------
Total $ 594,689 100.0%
========= ======
Property Type
Apartment and residential $ 137,949 23.2%
Warehouses and industrial 94,864 16.0
Retail and shopping center 184,416 31.0
Offices 172,314 29.0
Other 5,146 .8
--------- ------
Total $ 594,689 100.0%
========= ======
</TABLE>
Real estate consists of investment real estate under lease and
foreclosed real estate. The investment real estate under lease
is depreciated over 40 years. The cost of the property totalled
$17,383,000 at December 31, 1996 and 1995, and accumulated
depreciation totalled $4,212,000 and $3,839,000 at December 31,
1996 and 1995, respectively. The net book value of foreclosed
real estate was $45,430,000 and $47,652,000 at December 31, 1996
and 1995, respectively.
NOTE 3 - REINSURANCE
In the ordinary course of business, the Company assumes and cedes
reinsurance with other insurers and reinsurers. These
arrangements provide greater diversification of business and
limit the maximum net loss potential on large or hazardous risks.
Reinsurance ceded contracts do not relieve the Company from its
obligations to policyholders. Reinsurance ceded is recorded as
an asset and is recorded in "Other assets" in the Balance Sheets.
The Company remains liable to its policyholders for the portion
reinsured to the extent that any reinsurer does not meet its
obligations for reinsurance ceded to it under the reinsurance
agreements. Failure of reinsurers to honor their obligations
could result in losses to the Company; consequently, allowances
will be established for amounts deemed or estimated to be
uncollectible. To minimize its exposure to significant losses
from reinsurance insolvencies, the Company evaluates the
financial condition of its reinsurers and monitors concentrations
of credit risk arising from similar geographic regions,
activities, or economic characteristics of the reinsurers. No
losses are anticipated, and, based on management's evaluation,
there are no concentrations of credit risk at December 31, 1996
and 1995. The Company retains the risk for varying amounts of
individual or group insurance written up to a maximum of
$1,000,000 on any one life or $4,000 per month disability risk
and reinsures the balance.
Reinsurance transactions with other insurance companies for the
years ended December 31, 1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1996
------------------------------------------
Direct Assumed Ceded Net
------ ------- ----- ---
(in thousands)
<S> <C> <C> <C> <C>
Life insurance in force $29,748,174 $595,713 $4,177,415 $26,166,472
Premiums and other
considerations:
Traditional insurance
premiums and universal life $ 231,158 $ 10,693 $ 28,254 $ 213,597
Annuity 34,740 -- -- 34,740
----------- -------- ---------- -----------
Total $ 265,898 $ 10,693 $ 28,254 $ 248,337
=========== ======== ========== ===========
<CAPTION>
December 31, 1995
------------------------------------------
Direct Assumed Ceded Net
------ ------- ----- ---
(in thousands)
<S> <C> <C> <C> <C>
Life insurance in force $29,548,758 $667,125 $4,037,446 $26,178,437
=========== ======== ========== ===========
Premiums and other
considerations:
Traditional insurance
premiums and universal life $ 216,126 $ 11,122 $ 25,092 $ 202,156
Annuity 35,128 -- -- 35,128
----------- -------- ---------- -----------
Total $ 251,254 $ 11,122 $ 25,092 $ 237,284
=========== ======== ========== ===========
</TABLE>
Benefits paid or provided were reduced by $18,747,000 and
$27,155,000 at December 31, 1996 and 1995, respectively, for
estimated recoveries under reinsurance treaties.
Union Central had ceded 22.5% of a block of ordinary life
insurance under a coinsurance/modified coinsurance agreement in
1988. The amount of life insurance in-force ceded under the
agreement was $160,127,000 at December 31, 1995. This
reinsurance agreement was terminated January 1, 1996. There was
no effect on net income in 1996.
The Company, nor any of its related parties control, either
directly or indirectly, any reinsurers in which the Company
conducts business. No policies issued by the Company have been
reinsured with a foreign company which is controlled, either
directly or indirectly, by a party not primarily engaged in the
business of insurance.
The Company has not entered into any reinsurance agreements in
which the reinsurer may unilaterally cancel any reinsurance for
reasons other than nonpayment of premiums or other similar
credits.
NOTE 4 - FEDERAL INCOME TAX
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Company's
deferred tax liabilities and assets are as follows :
<TABLE>
<CAPTION>
December 31,
------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Deferred tax liabilities:
Deferred policy acquisition costs $ 146,947 $ 141,329
Basis differences on bonds 1,740 784
Unrealized gains - SFAS 115 7,830 19,706
Other 2,647 2,745
--------- ---------
Total deferred tax liabilities 159,164 164,564
--------- ---------
Deferred tax assets:
Policyholder dividends 11,100 11,994
Future policy benefits 76,471 74,240
Premium - based DAC adjustment 23,643 21,253
Investment valuation reserves 1,147 1,610
Retirement plan accruals 9,494 9,976
Investment income differences 273 479
Basis differences on bonds and mortgages 266 266
Other 1,621 1,854
--------- ---------
Total deferred tax assets 124,015 121,672
--------- ---------
Net deferred tax liabilities $ 35,149 $ 42,892
========= =========
</TABLE>
Significant components of the provision for income
taxes attributable to continuing operations are as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Current $ 18,509 $ 16,776
Deferred 4,133 (2,429)
--------- ---------
Total $ 22,642 $ 14,347
========= =========
</TABLE>
Federal income tax expense is calculated based on applying the
statutory corporate tax rate to taxable income, and adjusting
this amount for permanent differences between deductions allowed
for financial statement purposes versus federal income tax
purposes. Significant differences would include the surplus tax
adjustment applicable to Union Central and the small company
deduction for life insurance companies that was available to
Manhattan Life prior to completing the reverse stock split
transaction described in Note 14.
Prior to 1984, a portion of Manhattan Life's income was not
subject to income tax, but was accumulated for income tax
purposes in a special memorandum tax account designated
"policyholders' surplus account" (PSA). Under provisions of the
Tax Reform Act of 1984, the PSA was frozen at its December 31,
1983 balance. The PSA will become subject to tax at current
rates if these amounts are distributed or if the balance of the
account exceeds certain limitations under the Internal Revenue
Code. The balance in the PSA at December 31, 1996 was $1,348,000
and the maximum tax at current rates would be $472,000.
NOTE 5 - SHAREHOLDER DIVIDENDS AND RESTRICTION ON TRANSFER OF
FUNDS FROM SUBSIDIARY
As stated in Note 1, Manhattan Life's charter provides for the
allocation of its profits between its shareholders and its
policyholders on a one-eight/seven-eighths basis. The profits
allocated are equal to income after taxes and interest on the
Guaranteed Capital Reserve (GCR) but before policyholder
dividends.
In administering Manhattan Life's charter's profit-sharing
provision, Manhattan Life and the New York Insurance Department
(the Department) have deemed the shareholders' portion of
Manhattan Life's profits to be equal to $1 for every $7 of
policyholder dividends paid on traditional, participating
contracts. Manhattan Life's charter provides for three types of
shareholder distributions, including distribution based on
profits:
a) Interest at a specified rate on the par value of the
guarantee capital shares issued and outstanding
($195,000 annually), which may be paid in any year
dividends are distributed to policyholders and is
not subject to prior regulatory approval,
b) A distribution of the shareholders' portion of Manhattan
Life's profits. Such amounts may, at the discretion of
the Company's Board of Directors, be distributed as a
stock dividend of additional guarantee capital shares,
paid in cash subject to certain limits and prior
regulatory approval, or reserved for the benefit of the
shareholders in the GCR, and
c) Interest, at the Company's portfolio earnings rate on
invested assets, on the accumulated balance in the GCR.
Manhattan Life's cash distributions to shareholders are subject
to prior approval by the Department. Further, Manhattan Life and
the Department have agreed to the following guidelines under
which shareholder distributions from the GCR would be permitted,
subject to prior approval by the Department:
If Manhattan Life's statutory-basis surplus is less than or
equal to 9% of its statutory policy reserves, then principal
and interest distributions are limited to the lesser of the
prior year statutory gain from operations (after
policyholders' dividends and federal income taxes and before
realized gains and losses), or the prior year's increase in
statutory surplus or,
If its statutory-basis surplus exceeds 9% of statutory policy
reserves, the principal and interest distributions are limited
to the greater of the prior year statutory gain from
operations (after policyholders' dividends and federal income
taxes and before realized gains and losses), or the prior year
increase in statutory surplus.
The foregoing limits are subject to adjustment, by the
Department, for unusually large realized gains or the effects of
surplus relief reinsurance transactions. Since Union Central
plans to eliminate minority interests in the Manhattan Life's
guarantee capital shares by using a reverse stock split to reduce
all outstanding minority shares to fractional shares payable in
cash, Manhattan Life made no cash dividend payments to its
shareholders from principal or interest accumulated in the GCR
for the year ended December 31, 1996. See Note 14 of Notes to
the Consolidated Financial Statements for detailed discussion
about the reverse stock split. Based on the formula described
above, no shareholder dividends were made for the year ended
December 31, 1995, as Manhattan Life recorded both a statutory
loss before net realized gains and losses and a decrease in
statutory surplus.
The GCR represents a restricted segment of statutory unassigned
surplus, and as such, does not represent a commitment or
liability to pay shareholder dividends. For financial statements
prepared in accordance with generally accepted accounting
principles, the GCR is included in shareholders' equity. The
balance in the GCR of $16,127,000 and $14,910,000 and the
Company's share of $11,740,000 and $10,854,000 is included in
"Policyholders' equity" on the Balance Sheets at December 31,
1996 and 1995, respectively. The minority shareholders' share of
the GCR is included in minority interest in the Balance Sheets.
The ratio of Manhattan Life's surplus to its policy reserves was
7.59% and 7.70%, respectively. Interest added to the GCR
amounted to $1,230,000 and $995,000, for the years ended December
31, 1996 and 1995, respectively.
The following table summarizes the allocation of the Manhattan
Life's net income between the shareholders and the policyholders:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Distributable income:
Net income $ 1,832 $ 1,446
Policyholders' dividends and
participation in operations 4,222 3,157
Less interest credited to GCR (1,230) (995)
--------- ---------
Distributable income $ 4,824 $ 3,608
========= =========
Shareholders' share of net income:
1/8 of distributable income $ 602 451
Interest credited to GCR 1,230 995
--------- ---------
Net income $ 1,832 $ 1,446
========= =========
Union Central's share $ 1,334 $ 1,052
========= =========
Other shareholders' share of distributable
income (included in minority interest in
subsidiary (income) loss in the Statements
of Income)
$ 498 $ 394
========= =========
Policyholders' 7/8th share of distributable
income (included in minority interest in
subsidiary (income) loss in the Statements
of Income) $ 4,222 $ 3,157
========= =========
</TABLE>
Manhattan Life is the only existing life insurance company
domiciled in New York which has authorized and outstanding
guarantee capital shares. Neither applicable New York state law
nor Manhattan Life's charter contain express provisions
establishing the extent of the interest of the holders of the
guarantee capital shares in the statutory unassigned surplus
(total surplus less guarantee capital shares and GCR) of
Manhattan Life and there has never been a judicial determination
of the extent of such interest. Further, the laws applicable to
Manhattan Life do not provide for its voluntary liquidation or
dissolution; the Company may only be liquidated under the
supervision of the New York Superintendent of Insurance in the
event of insolvency. In such a liquidation or dissolution, the
entire assets of Manhattan Life would be used to satisfy claims
of creditors and policyholders and there would be no statutory
unassigned surplus for distribution to the holders of the
guarantee capital shares. Accordingly, in the opinion of counsel
to Manhattan Life, no unqualified legal opinion can be rendered
as to the degree, if any, to which the holders of the guarantee
capital shares would be entitled to participate in any current or
liquidating distribution of unassigned surplus. However, in the
view of such counsel, if there should occur a liquidation or
other winding-up of Manhattan Life's business in which assets
exceeded liabilities on policies and the claims of other
creditors, or if there should occur a partial distribution of
surplus in the absence of such a liquidation or winding-up,
although there are reasonable arguments which could be made to
the effect that the entire unassigned surplus would be
distributable solely to the policyholders or solely to the
shareholders, the more likely outcome if the question should be
litigated is that it would be held that one-eighth of the
unassigned surplus would be distributable to the shareholders and
seven-eighths to the policyholders.
NOTE 6 - COMMITMENTS AND CONTINGENT LIABILITIES
Leases
The leases for office space for Manhattan Life and various field
agency offices vary in duration from 1 to 15 years. Some of
these leases include escalation clauses which vary with levels of
operating expense. Rental expense under these operating leases
totalled $3,907,000 and $3,413,000 in 1996 and 1995,
respectively. The Company also leases furniture and equipment
under operating leases which expire in 2001. Rental expense
under these leases totalled $182,000 and $206,000 in 1996 and
1995, respectively.
At December 31, 1996, the future minimum lease payments for all
noncancelable operating leases are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
(in thousands)
<C> <C>
1997 $ 3,847
1998 3,047
1999 2,362
2000 2,057
2001 1,923
After 2001 2,621
-------
Total $15,857
=======
</TABLE>
The Company also has capital leases for office furniture.
Lease expense under these leases was $466,000 and $493,000
in 1996 and 1995, respectively.
At December 31, 1996 the future minimum lease payments for
all noncancelable capital leases are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
(in thousands)
<C> <C>
1997 $ 470
1998 470
1999 470
2000 470
2001 39
-------
Total $ 1,919
=======
</TABLE>
Other Commitments
At December 31, 1996, the Company has outstanding agreements to
fund 41 mortgages totalling $37,280,000 in early 1997. In
addition, the Company has committed to invest $20,800,000 in
limited partnerships during the years 1997 to 2000. These
transactions are in the normal course of business for the
Company.
Litigation
In the normal course of business, the Company is party to various
claims and litigation primarily arising from claims made under
insurance policies and contracts. Those actions are considered
by the Company in estimating the policy and contract liabilities.
The Company's management believes that the resolution of those
actions will not have a material adverse effect on the Company's
financial position or results of operations.
Guaranty Fund Assessments
The economy and other factors have caused an increase in the
number of insurance companies that are under regulatory
supervision. This circumstance is expected to result in an
increase in assessments by state guaranty funds, or voluntary
payments by solvent insurance companies, to fund policyholder
losses or liabilities of insurance companies that become
insolvent. These assessments may be deferred or forgiven under
most guaranty laws if they would threaten an insurers financial
strength and, in certain instances, may be offset against future
premium taxes. There were no charges to income in 1996 or 1995.
The estimated liability of $1,399,000 at December 31, 1996 was
based on data provided by the National Organization of Life and
Health Insurance Guaranty Associations and is included in "Other
liabilities" on the Balance Sheets.
NOTE 7 - STATUTORY SURPLUS AS REPORTED TO REGULATORY AUTHORITIES
Union Central and Manhattan Life file statutory-basis financial
statements with regulatory authorities. Union Central's
statutory-basis financial statements are prepared in conformity
with accounting practices prescribed or permitted by the
Department of Insurance of Ohio, Union Central's state of
domicile. Manhattan Life's statutory - basis financial
statements are prepared in conformity with accounting practices
prescribed or permitted by the Department of Insurance of New
York, Manhattan Life's state of domicile. Surplus as reflected
in the statutory-basis financial statements are as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Capital and surplus
Union Central $ 277,202 $ 201,493
=========== ===========
Manhattan Life $ 28,211 $ 28,770
=========== ===========
</TABLE>
The National Association of Insurance Commissioners is currently
in the process of recodifying statutory accounting practices, the
result of which is expected to constitute the only source of
"prescribed" statutory accounting practices. The project,
expected to be completed in 1999 will likely change certain
prescribed accounting practices, and may result in changes to the
accounting practices the Company uses to prepare its statutory
financial statements.
NOTE 8 - EMPLOYEE BENEFITS
The Company has pension plans covering substantially all of its
employees (The Plans). Benefits are based on years of service
and the employee's highest five consecutive years of compensation
out of the last ten years. The contributions totalled $2,750,000
and $2,393,000 in 1996 and 1995, respectively. The Company's
funding policy is to contribute an amount between the minimum
required to meet ERISA funding standards and the maximum amount
that can be deducted for federal income tax purposes.
Pension expense includes the following components:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Service cost-benefits earned during the year $ 1,982 $ 1,913
Interest cost on projected benefit obligation 5,330 4,453
Actual return on plan assets (4,786) (4,286)
Net amortization and deferral 625 639
------- -------
Net pension expense included in "Underwriting,
acquisition, and insurance expenses"
at end of year $ 3,151 $ 2,719
======= =======
</TABLE>
The following table setting forth the Plans' funded status and
the pension liability included in "Other liabilities" in the
Company's Balance Sheets is based on the latest actuarial report
available, which is as of October 1, 1996 and 1995.
<TABLE>
<CAPTION>
Union Central
December 31,
------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Actuarial present value
of benefit obligations:
Accumulated benefit obligation,
including vested benefits of
$43,920 and $34,444 for 1996
and 1995 respectively $ 50,954 $ 39,714
======== ========
Projected benefit obligation $ 60,216 $ 47,122
Plan assets at fair value 41,912 38,062
-------- --------
Projected benefit obligation
higher than plan assets 18,304 9,060
Unrecognized net gain (16,184) (7,718)
Unrecognized net obligation being
recognized over 15 years 409 450
Adjustment required to recognize
minimum liability 6,514 348
-------- --------
Pension liability included in
"Other liabilities" at end of year $ 9,043 $ 2,140
======== ========
<CAPTION>
Manhattan Life
December 31,
------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Actuarial present value
of benefit obligations:
Accumulated benefit obligation,
including vested benefits of
$17,674 and $16,084 for 1996
and 1995 respectively $ 17,886 $ 16,173
======== ========
Projected benefit obligation $ 19,840 $ 18,239
Plan assets at fair value 16,865 16,616
-------- --------
Projected benefit obligation
higher than plan assets 2,975 1,623
Unrecognized net (gain) loss (1,344) 249
Prior service cost not yet recognized
in net periodic pension cost (11) (14)
Unrecognized net obligation being
recognized over 15 years (325) (371)
Adjustment required to recognize
minimum liability 135 60
-------- --------
Pension liability included in
"Other liabilities" at end of year $ 1,430 $ 1,547
======== ========
</TABLE>
The unfunded accumulated benefit obligation (ABO) will vary from year to
year as changes in the market value of the plans' assets differs from
changes in the ABO. The ABO varies from year to year as the rate used
to discount future pension benefits related to the past service of plan
participants changes. The discount rate at each valuation date reflects
available rates on high quality fixed income investments. The
investment strategy for the plans' assets is designed to achieve
somewhat higher yields over the long term than would be achieved by
investing entirely in high quality fixed income investments. Therefore,
the market value of the plans' assets and the ABO do not change in the
same amount from year to year. The Company believes that its current
funding policy will be adequate to meet all
future plan obligations over the long term.
<TABLE>
<CAPTION>
Union Central
December 31,
------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Assumptions used to determine
the status of the plans were:
Discount rate 7.25% 8.50%
Rate of increase in future compensation levels 4.25% 5.00%
Expected long-term rate of return on assets 8.50% 8.50%
<CAPTION>
Manhattan Life
December 31,
------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Assumptions used to determine
the status of the plans were:
Discount rate 7.25% 8.00%
Rate of increase in future compensation levels 4.25% 5.00%
Expected long-term rate of return on assets 8.50% 8.00%
</TABLE>
Plan assets are primarily composed of mutual funds, unallocated
insurance funds, and guaranteed interest contracts. At December 31,
1996 and 1995, Union Central's and Manhattan Life's pension plans
invested $37,261,000 and $32,460,000, respectively, in affiliated mutual
funds.
The Company has contributory savings plans for employees meeting certain
service requirements which qualifies under Section 401(k) of the
Internal Revenue Code. These plans allows eligible employees to
contribute up to certain prescribed limits of their pre-tax
compensation, with the Company matching 50% of the first 6% of
participants' contributions. The Company's matching contributions to
these Plans were $1,199,000 and $1,206,000 for 1996 and 1995,
respectively. The value of the Plans' assets were $43,905,000 and
$37,401,000 at December 31, 1996 and 1995, respectively. The assets are
held in the Company's deposit fund, in guaranteed interest contracts, or
under the variable accounts of a group annuity policy sponsored by the
Company. At December 31, 1996 and 1995, $17,436,000 and $14,718,000,
respectively, was invested in affiliated mutual funds.
NOTE 9 - POSTRETIREMENT BENEFITS
The Company provides certain health care and life insurance benefits for
its eligible retired employees. The plans provide postretirement
medical and life benefits to full time employees who have worked 15
years and attained age 55 while in service with the Company. The plans
are contributory and contains other cost-sharing features such as
deductibles and coinsurance. The accounting of the plans anticipates
future cost-sharing changes which are consistent with the Company's
expressed intent to require current and future retirees to pay the cost
of medical, prescription drug and dental benefits in excess of 175
percent of the costs incurred by the Company to provide such benefits in
1993.
The accumulated postretirement benefit obligation ("APBO") at December
31, 1996, and 1995 totalled $19,294,000 and $19,027,000, respectively.
The following table presents the plan's funded status reconciled with
amounts recognized in the Company's Balance Sheets:
<TABLE>
<CAPTION>
December 31,
------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Plan Assets: $ 6,934 $ 6,052
Accumulated postretirement benefit obligation:
Retirees 12,610 12,298
Fully eligible active plan participants 2,541 3,353
Other active plan participants 4,143 3,376
------- -------
Accumulated postretirement benefit
obligation in excess of plan assets 12,360 12,975
Unrecognized net gain from past experience (4,172) (3,213)
------- -------
Accrued postretirement benefit cost included
in "Other liabilities" at end of year $16,532 $16,188
======= =======
</TABLE>
Net periodic postretirement benefit cost included
the following components:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Service cost $ 393 $ 321
Interest cost 1,375 1,393
Expected return on assets (1,279) (331)
Net amortization and deferral 738 (232)
------- -------
Net periodic postretirement benefit cost
included in "Underwriting, acquisition,
and insurance expenses" at end of year $ 1,227 $ 1,151
======= =======
</TABLE>
The plan assets are invested in Carillon Capital Fund, an affiliated
mutual fund.
The health care cost trend rate assumption has an insignificant effect
on the amounts reported. To illustrate, increasing the assumed health
care cost trend rates by one percentage point in each year would
increase the postretirement benefit obligation as of December 31, 1996
by $124,000 and the interest cost and estimated eligibility cost
components of the net periodic postretirement benefit cost by $6,000
and less than $1,000, respectively.
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25% and 7.50% at December 31,
1996 and 1995, respectively.
NOTE 10 - FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and short-term investments: The carrying amounts reported
in the balance sheets for these instruments approximate their fair
values.
Investment securities: Fair values for bonds and preferred stock
are based on quoted market prices, where available. If quoted
market prices are not available, fair values are estimated using
values obtained from independent securities broker dealers or
quoted market prices of comparable instruments. The fair values
of common stock in Company sponsored mutual funds are based on
quoted market prices and are recognized in "Equity securities"
on the Balance Sheets.
Mortgage loans: The fair values for commercial and residential
mortgages in good standing are estimated using discounted cash
flow analysis using interest rates currently being offered for
similar loans to borrowers with similar credit ratings in
comparison with actual interest rates and maturity dates.
Fair values for mortgages with potential loan losses are based
on discounted cash flow analysis of the underlying properties.
Policy loans: Management is unable to ascertain the estimated
life of the policy loan portfolio. Due to the excessive costs
which would be incurred to determine this information,
management considers the estimation of its fair value to be
impracticable. The nature of a policy loan insures that the
outstanding loan balance will be fully recoverable because the
balance owed to the Company is always equal to or lower than
the cash value of the insurance policy owed to the policyholder.
Policy loans are stated at their aggregate unpaid balance in the
balance sheets.
Investment contracts: Fair values for the Company's liabilities
under investment-type insurance contracts are estimated using
discounted cash flow calculations, based on interest rates
currently being offered for similar contracts with maturities
consistent with those remaining for the contracts being valued.
The carrying amounts and fair values of the Company's mortgage loans
and liabilities for instrument type contracts are summarized as
follows:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
----------------- -----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
(in thousands)
<S> <C> <C> <C> <C>
Mortgage loans $ 663,351 $ 702,843 $ 591,978 $ 625,492
</TABLE>
The carrying amounts and fair values of the Company's
liabilities for investment-type insurance contracts are
as follows:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
----------------- -----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
(in thousands)
<S> <C> <C> <C> <C>
Group annuities $ 871,481 $ 867,562 $ 923,583 $ 927,544
S.P.D.A.* 359,469 355,074 346,230 340,848
S.P.I.A.** 28,910 31,557 32,222 36,169
Variable annuities 167,336 165,103 166,485 164,267
Supplementary contracts 58,989 59,330 61,062 60,942
Traditional annuities 20,414 20,636 14,970 15,002
Guaranteed interest contracts 17,138 17,120 18,154 18,201
Other 5,989 5,989 6,039 6,039
---------- ---------- ---------- ----------
Total $1,529,726 $1,522,371 $1,568,745 $1,569,012
========== ========== ========== ==========
</TABLE>
* Single premium deferred annuities
** Single premium immediate annuities
The Company's other insurance contracts are excluded from Statement of
Financial Accounting Standard (SFAS-107), "Disclosures about Fair Value
of Financial Instruments", disclosure requirements. However, the fair
values of liabilities under all insurance contracts are taken into
consideration in the Company's overall management of interest rate
risk, which minimizes exposure to changing interest rates through the
matching of investment maturities with amounts due under insurance
contracts. Additional data with respect to the carrying value and fair
value of the Company's investments is disclosed in Note 2.
NOTE 12 - LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES
Activity in the liability for unpaid claims and claim adjustment
expense is summarized as follows:
<TABLE>
<CAPTION>
December 31,
------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Balance as of January 1 $132,670 $122,343
Incurred related to:
Current year 143,216 140,333
Prior years 7,237 5,878
-------- --------
Total incurred 150,453 146,211
Paid related to :
Current year 103,245 98,019
Prior years 38,370 37,865
-------- --------
Total paid 141,615 135,884
-------- --------
Balance as of December 31 $141,508 $132,670
======== ========
</TABLE>
As a result of changes in estimates of insured events in prior years,
the provision of claims and claim adjustment expenses, increased by
$7,237,000 and $5,989,000 in 1996 and 1995 due to lower than expected
rates of claim terminations. Included in the above balances are
reinsurance recoverables of $1,287,000 and $2,713,000 at 1996 and
1995, respectively.
NOTE 13 - SURPLUS NOTES
On November 1, 1996, Union Central issued $50,000,000 of 8.20% Surplus
Notes (Notes). These Notes mature on November 1, 2026 and may not be
redeemed prior to maturity. The Notes are unsecured and subordinated
to all present and future policy claims, prior claims and senior
indebtedness. Subject to prior written approval of the Superintendent
of the Ohio Insurance Department, these Notes will pay interest semi-
annually on May 1 and November 1. Interest expense of $637,000 was
accrued as of December 31, 1996, and is recorded in "Other
liabilities" in the Balance Sheets. In connection with issuing the
Notes, Union Central incurred and capitalized $765,000 of issuance
cost. This cost is recorded in "Other assets" in the Balance Sheets,
and will be amortized to expense over the life of the Notes.
NOTE 14 - SUBSEQUENT EVENTS
At December 31, 1996 and 1995, Union Central owned approximately 73%
of Manhattan Life's guarantee capital shares. On January 28, 1997,
the guarantee capital shareholders constituting at least two-thirds of
the outstanding guarantee capital shares of Manhattan Life (including
the shares owned by Union Central) approved Union Central's plan to
eliminate the minority interests in Manhattan Life's guarantee capital
shares by effecting a reverse stock split (the "Plan") that had
previously been approved by the New York Insurance Department. Under
the Plan, each holder of guarantee capital shares received a cash
payment in lieu of the issuance of any resulting fractional guarantee
capital shares, with the Company becoming sole remaining holder of
Manhattan Life's guarantee capital shares. The cost of redeeming the
fractional shares, approximately $6,800,000, was funded by Manhattan
Life; however, as part of the Plan, Union Central made a cash
contribution of approximately $1,800,000 to Manhattan Life's guarantee
capital share account.
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
CARILLON ACCOUNT
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) The Financial Statements of the Registrant, Carillon
Account, are included in Part B.
(2) The Financial Statements of the Depositor, The Union
Central Life Insurance Company, are included in Part B.
(3) The Schedule of Investments in securities of
unaffiliated issuers is included in the Carillon
Account Financials and Notes.
(b) Exhibits
(1) Resolution of the Board of Directors of The Union
Central Life Insurance Company authorizing
establishment of CA - previously filed (initial
filing on July 11, 1984)
(2) Proposed form of Custodianship Agreement - previously
filed (initial filing on July 11, 1984)
(3) Proposed form of Principal Underwriting Agreement -
previously filed (initial filing on July 11, 1984)
(4) Specimen Contract - previously filed (initial filing
on July 11, 1984)
(5) Specimen Application - previously filed (Post-Effective
Amendment No. 14 - May 1, 1996)
(6) (a) Certificate of Incorporation of The Union Central
Life Insurance Company - previously filed (initial
filing on July 11, 1984)
(b) Code of Regulations of The Union Central Life
Insurance Company - previously filed (initial
filing on July 11, 1984)
(7) Not Applicable
(8) None
(9) Opinion of John F. Labmeier, Esq., The Union Central
Life Insurance Company - previously filed (initial
filing on July 11, 1984)
(10) Consent of Ernst & Young - filed herewith
(11) None
(12) Not applicable
(13) Performance Calculations - previously filed (Post-
Effective Amendment No. 5 - May 1, 1989)
Item 25. Directors and Officers of the Depositor
Set forth below is a list of the directors and executive officers of
The Union Central Life Insurance Company and the position held with
the Company by each person.
<TABLE>
<CAPTION>
Name and Principal Positions and
Business Address Offices with Depositor
<S> <C>
Philip G. Barach Director
9403 Kenwood Road
Suite D100
Cincinnati, Ohio 45242
V. Anderson Coombe Director
2503 Spring Grove Avenue
Cincinnati, Ohio 45214
William A. Friedlander Director
36 East Fourth Street
Cincinnati, Ohio 45202
William G. Kagler Director
18 Hampton Court
Cincinnati, Ohio 45208
Lawrence A. Leser Director
312 Walnut Street
Cincinnati, Ohio 45202
Francis V. Mastrianna, Ph.D. Director
Slippery Rock University
of Pennsylvania
Slippery Rock, Pennsylvania 16057
Mary D. Nelson, FSA Director
105 West Fourth Street
Cincinnati, Ohio 45202
Paul G. Pearson, Ph.D. Director
5110 Bonham Road
Oxford, Ohio 45056
Thomas E. Petry Director
580 Walnut Street
Cincinnati, Ohio 45202
Larry R. Pike* Chairman, President and
Chief Executive Officer
Myrtis H. Powell, Ph.D. Director
Miami University
113 Warfield Hall
Oxford, Ohio 45056
Dudley S. Taft Director
312 Walnut Street
Suite 3550
Cincinnati, Ohio 45202
John M. Tew, Jr., M.D. Director
506 Oak Street
Cincinnati, Ohio 45219
George L. Clucas* Senior Vice President
Charles W. Grover* Executive Vice President
Stephen R. Hatcher* Executive Vice President
and Chief Financial Officer
John H. Jacobs* Executive Vice President
Dale D. Johnson* Senior Vice President
Gerald A. Lockwood* Senior Vice President
and Corporate Actuary
David F. Westerbeck* Senior Vice President,
General Counsel and Secretary
* P.O. Box 40888
Cincinnati, Ohio 45240
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
Set forth below is a chart showing the entities controlled by The
Union Central Life Insurance Company, the jurisdictions in which such
entities are organized, and the percentage of voting securities owned
by the person immediately controlling each such entity.
THE UNION CENTRAL LIFE INSURANCE COMPANY,
its Subsidiaries and Affiliates
I. The Union Central Life Insurance Company (Ohio)
A. Carillon Investments, Inc. (Ohio) - 100% owned
B. Carillon Marketing Agency, Inc. (Delaware) - 100% owned
a. Carillon Marketing Agency of Alabama, Inc. (Alabama)
- 100% owned
b. Carillon Marketing Agency of Idaho, Inc. (Idaho) -
100% owned
c. Carillon Marketing Agency of Kentucky, Inc. (Kentucky)
- 100% owned
d. Carillon Marketing Agency of Maine, Inc. (Maine)
- 100% owned
e. Carillon Insurance Agency of Massachusetts, Inc.
(Massachusetts) - 100% owned
f. Carillon Marketing Agency of New Mexico, Inc. (New
Mexico) - 100% owned
g. Carillon Marketing Agency of Ohio, Inc. (Ohio)
- 100% owned
h. Carillon Marketing Agency of Pennsylvania, Inc.
(Pennsylvania) - 100% owned
i. Carillon Marketing Agency of Texas, Inc. (Texas)
- 100% owned
C. Carillon Advisers, Inc. (Ohio) - 100% owned
a. First Summit Capital Management (Ohio) - 51% owned
D. The Manhattan Life Insurance Company (New York)
- 100% owned
E. Family Enterprise Institute, Inc. (Delaware) - 100% owned
II. Mutual Funds of the Carillon Group
A. Carillon Fund, Inc.* (Maryland)
B. Carillon Investment Trust** (Massachusetts)
* At January 31, 1997, The Union Central Life Insurance Company owned
100% of the outstanding shares of Carillon Fund, Inc.
** At January 31, 1997, The Union Central Life Insurance Company
owned 78% of the outstanding shares of Carillon Investment Trust.
III. Summit Investment Trust (Massachusetts) - a mutual fund whose
investment adviser is First Summit Capital Management
Item 27. Number of Contractowners
As of January 31, 1997, the total number of contractowners of
qualified and non-qualified contracts offered by the Registrant was
13,547.
***
Item 29. Principal Underwriters
(a) The principal underwriter of contracts for the Registrant is
Carillon Investments, Inc. Carillon Investments, Inc. also acts as a
principal underwriter for Carillon Investment Trust and Carillon Life
Account.
(b) Set forth below is a list of each officer and director of
Carillon Investments, Inc. and the position held with the company by
each person.
</TABLE>
<TABLE>
<CAPTION>
Name and Principal Positions and
Business Address* Offices with Underwriter <S>
<C>
Larry R. Pike Director
George L. Clucas Director
Charles W. Grover Director
John H. Jacobs Director
Elizabeth G. Monsell Director and President
Lothar A. Vasholz Director
Kevin W. O'Toole Vice President
Connie Grosser Treasurer
Patricia M. Heim Compliance Officer
John F. Labmeier Vice President and Secretary
John M. Lucas Assistant Secretary
(c) Other than distribution fees in the amount of $2,723,411,
Carillon Investments, Inc. received no commissions or other
compensation from the Registrant during 1996.
* The principal business address of each person is
1876 Waycross Road, Cincinnati, Ohio 45240
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules thereunder are maintained
by the Depositor at its principal office, 1876 Waycross Road,
Cincinnati, Ohio 45240.
Item 31. Management Services
None.
Item 32. Undertakings and Representations
The Registrant is relying on a no-action letter issued to the
American Council of Life Insurance published November 28, 1988. The
no-action letter provides certain assurances relying on compliance
with Internal Revenue Code Section 403(b)(11) and certain provisions
of the Investment Company Act of 1940. The Registrant represents it
will comply with paragraph 1 - 4 of the no-action letter.
The Union Central Life Insurance Company hereby represents that the
fees and charges deducted under the Contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected
to be incurred, and the risks assumed by The Union Central Life
Insurance Company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant, Carillon Account, certifies that it meets
the requirements of Securities Act Rule 485(b) for effectiveness of
this Registration Statement and has duly caused this Post-effective
Amendment to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, and its seal to be hereunto
affixed and attested, all in Cincinnati, State of Ohio on the 28th day
of April, 1997.
CARILLON ACCOUNT
(Registrant)
THE UNION CENTRAL LIFE INSURANCE COMPANY
(SEAL) (Depositor)
Attest: /s/ John F. Labmeier By: /s/ Larry R. Pike
Larry R. Pike
Chairman, President and
Chief Executive Officer
The Union Central Life Insurance Company
As required by the Securities Act of 1933, this Registration Statement
has been signed below by the following Directors and Officers of The
Union Central Life Insurance Company in the capacities and on the dates
indicated.
</TABLE>
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Larry R. Pike Chairman, President and
Larry R. Pike Chief Executive Officer
(Principal Executive Officer) 4-28-97
/s/ Stephen R. Hatcher Executive Vice President
Stephen R. Hatcher and Chief Financial Officer
(Principal Financial and
Accounting Officer) 4-28-97
*/s/ Phillip G. Barach Director 4-28-97
Philip G. Barach
*/s/ V. Anderson Coombe Director 4-28-97
V. Anderson Coombe
*/s/ William A. Friedlander Director 4-28-97
William A. Friedlander
*/s/ William G. Kagler Director 4-28-97
William G. Kagler
*/s/ Lawrence A. Leser Director 4-28-97
Lawrence A. Leser
*/s/ Francis V. Mastrianna, Ph.D. Director 4-28-97
Francis V. Mastrianna, Ph.D.
*/s/ Mary D. Nelson Director 4-28-97
Mary D. Nelson, FSA
*/s/ Paul G. Pearson, Ph.D. Director 4-28-97
Paul G. Pearson, Ph.D.
*/s/ Thomas E. Petry Director 4-28-97
Thomas E. Petry
*/Myrtis H. Powell, Ph.D. Director 4-28-97
Myrtis H. Powell, Ph.D.
*/s/ Dudley S. Taft Director 4-28-97
Dudley S. Taft
*/s/ John M. Tew, Jr., M.D. Director 4-28-97
John M. Tew, Jr., M.D.
</TABLE>
* By /s/ David F. Westerbeck, pursuant to Power of Attorney previously
filed, except for Myrtis H. Powell, Ph.D., which is filed herewith.
<PAGE>
TABLE OF EXHIBITS
(10) Consent of Ernst & Young
Power of Attorney for Myrtis H. Powell, Ph.D.
(letterhead)
ERNST & YOUNG LLP
1300 Chiquita Center
250 East Fifth Street
Cincinnati, Ohio 45202
Phone: 513 621 6454
Consent of Independent Auditors
We consent to the reference to our firm under the caption
"Experts" and to the use of our report pertaining to The Union
Central Life Insurance Company and Carillon Account dated March
24, 1997 and March 5, 1997, respectively, in Post-Effective
Amendment No. 15 to the Registration Statement (Form N-4 No. 2-
92146) and related Prospectus and Statement of Additional
Information of Carillon Account of The Union Central Life
Insurance Company.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Cincinnati, Ohio
April 23, 1997
POWER OF ATTORNEY
WITH RESPECT TO
THE UNION CENTRAL LIFE INSURANCE COMPANY
Know all men by these presents that Myrtis H. Powell, Ph.D., whose
signature appears below, hereby constitutes and appoints David F.
Westerbeck, John F. Labmeier and John M. Lucas, and each of them,
her attorneys-in-fact, each with the power of substitution, for her
in any and all capacities, to sign any registration statements and
amendments thereto for The Union Central Life Insurance Company as
Depositor for Carillon Account, Carillon Life Account and any other
separate accounts of the Company, and to file the same, with
exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorney-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
DATE: August 16, 1996
/s/ Myrtis H. Powell, Ph.D.
Myrtis H. Powell, Ph.D.
Director
The Union Central Life Insurance Company
