As filed with the Securities and Exchange Commission on April 21, 1999
FILE No. 33-7734
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 17
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------
A. Exact name of trust:
JPF SEPARATE ACCOUNT A
B. Name of depositor:
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
C. Complete address of depositor's principal executive offices:
One Granite Place
Concord, NH 03301
D. Name and complete address of agent for service:
Ronald R. Angarella
President
Jefferson Pilot Securities Corporation
One Granite Place
Concord, NH 03301
Copies to:
<TABLE>
<S> <C>
Charlene Grant, Esq. Joan E. Boros, Esq.
Jorden, Burt, Boros, Ciochetti,
Jefferson Pilot Financial Insurance Company Berenson & Johnson LLP
One Granite Place 1025 Thomas Jefferson Street, N.W.
Concord, NH 03301 Suite 400 East
Washington, D.C. 20007-0805
</TABLE>
------------------
It is proposed that this filing will become effective (check appropriate
box)
[X] immediately upon filing pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i) of rule (485)
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
E. Title and amount of Securities being registered:
Units of Interest in the Separate Account Under Individual Flexible Premium
Variable Life Insurance Policies.
F. Proposed maximum aggregate offering prices to the public of the securities
being registered:
Registration of Indefinite Amount of Securities under the Securities Act of
1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
G. Amount of filing Fee:
An indefinite amount of the Registrant's securities has been registered
pursuant to a declaration, under Rule 24f-2 under the Investment Company
Act of 1940, set out in the Form S-6 Registration Statement contained in
File No. 2-94478. Registrant filed a Rule 24f-2 Notice for the fiscal year
ending December 31, 1998 on February 26, 1999.
H. Approximate date of proposed public offering:
As soon as practicable after the effective date.
Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the
Investment Company Act of 1940, with respect to the policy described in the
Prospectus.
================================================================================
<PAGE>
Prospectus: May 1, 1999
Ensemble II
JPF Separate Account A
Flexible Premium Variable Life Insurance Policy
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
One Granite Place, Concord, New Hampshire 03301 800-258-3648
- --------------------------------------------------------------------------------
This Prospectus describes the Ensemble II variable life insurance policy
("Ensemble II" or "the Policy"), a flexible premium variable life insurance
policy issued and underwritten by Jefferson Pilot Financial Insurance Company
("We" or "JP" "Financial" or "the Company"). The Policy is intended to provide
life insurance and pay a benefit, as described in this Prospectus, upon
surrender or death. The Policy allows flexible premium payments, Policy Loans,
Partial Surrenders, and a choice of two Death Benefit Options. Your account
values may be invested on either a fixed or variable or combination of fixed
and variable basis. You may allocate Your Net Premiums to JPF Separate Account
A ("Separate Account A" or "the Separate Account"), and/or the General Account,
or both Accounts. The Divisions of the Separate Account support the benefits
provided by the variable portion of the Policy. The Accumulation Value
allocated to each Division is not guaranteed and will vary with the investment
performance of the associated Fund. Net Premiums allocated to the General
Account will accumulate at rates of interest We determine; such rates will not
be less than 4.5% per year. Your Policy may lapse if the Cash Value is
insufficient to pay a Monthly Deduction. We will send premium reminder notices
for Planned Premiums and for premiums required to continue the Policy in force.
If the Policy lapses, You may reinstate it.
The Policy has a free look period during which You may return the Policy. We
will refund Your Premium (See "Right of Policy Examination").
This Prospectus also describes the Divisions used to fund the Policy through
Separate Account A. Each Division invests exclusively in one of the following
Portfolios:
JPVF International Equity Portfolio
JPVF World Growth Stock Portfolio
JPVF Global Hard Assets Portfolio
JPVF Emerging Growth Portfolio
JPVF Capital Growth Portfolio
JPVF Small Company Portfolio
JPVF Growth Portfolio
JPVF Growth and Income Portfolio
JPVF Balanced Portfolio
JPVF High Yield Bond Portfolio
JPVF Money Market Portfolio
Fidelity VIP Growth Portfolio
Fidelity VIP Equity Income Portfolio
Fidelity VIP II Contrafund Portfolio
Fidelity VIP II Index 500 Portfolio
MFS Research Series
MFS Utilities Series
Oppenheimer Strategic Bond Fund/VA Oppenheimer Bond Fund/VA
Templeton International Fund
Not all Divisions may be available under all Policies or in all jurisdictions.
The current Prospectus and Statement of Additional Information ("SAI") for any
of the Portfolios may be obtained by calling (800) 258-3648 x7719.
Replacing existing insurance or supplementing an existing flexible premium
variable life insurance policy with the Policy may not be to your advantage.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR
THE FUNDS. BOTH THIS PROSPECTUS AND THE UNDERLYING FUND PROSPECTUSES SHOULD BE
READ AND RETAINED FOR FUTURE REFERENCE.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Ensemble II insurance policies and shares of the funds are not deposits or
obligations of or guaranteed by any bank. They are not federally insured by the
FDIC or any other government agency. Investing in the contracts involves
certain investment risks, including possible loss of principal invested.
THIS PROSPECTUS AND OTHER INFORMATION ABOUT JPF SEPARATE ACCOUNT A REQUIRED TO
BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION CAN BE FOUND IN THE SEC'S
WEB SITE AT http://www.sec.gov.
<PAGE>
table of contents
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
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<S> <C>
DEFINITIONS ....................................... 3
POLICY SUMMARY .................................... 4
THE SEPARATE ACCOUNT .............................. 5
CHARGES & FEES .................................... 6
Charges & Fees Assessed Against
Premium ......................................... 6
Charges & Fees Assessed Against
Accumulation Value .............................. 6
Charges & Fees Assessed Against the
Separate Account ................................ 7
Charges Assessed Against the Underlying
Funds ........................................... 7
Charges Deducted Upon Surrender .................. 8
ALLOCATION OF PREMIUMS ............................ 9
The Portfolios ................................... 9
Investment Advisers for the Funds ................ 11
Mixed and Shared Funding; Conflicts of
Interest ........................................ 11
Fund Additions, Deletions or
Substitutions ................................... 11
General Account .................................. 12
POLICY CHOICES .................................... 13
General .......................................... 13
Premium Payments ................................. 13
Death Benefit Options ............................ 14
Transfers and Allocations to Funding
Options ......................................... 15
Telephone Transfers, Loans and
Reallocations ................................... 15
Automated Transfers (Dollar Cost
Averaging and Portfolio Rebalancing) ............ 15
POLICY VALUES ..................................... 16
Accumulation Value ............................... 16
Unit Value ....................................... 17
Net Investment Factor ............................ 17
Surrender Value .................................. 17
POLICY RIGHTS ..................................... 18
Surrenders ....................................... 18
Withdrawals ...................................... 18
Grace Period ..................................... 18
Reinstatement of a Lapsed Policy ................. 18
Right to Defer Payment ........................... 19
Policy Loans ..................................... 19
Page
-----
Policy Changes ................................... 20
Right of Policy Examination ...................... 21
Supplemental Benefits ............................ 21
DEATH BENEFIT ..................................... 22
POLICY SETTLEMENT ................................. 22
Settlement Options ............................... 22
THE COMPANY ....................................... 23
DIRECTORS & OFFICERS .............................. 24
ADDITIONAL INFORMATION ............................ 25
Reports to Policyowners .......................... 25
Right to Instruct Voting of Fund Shares .......... 25
Disregard of Voting Instructions ................. 26
State Regulation ................................. 26
Legal Matters .................................... 26
The Registration Statement ....................... 26
Financial Statements ............................. 26
Employee Benefit Plans ........................... 26
Distribution of the Policy ....................... 27
Independent Auditors ............................. 27
Year 2000 ........................................ 27
Group or Sponsored Arrangements .................. 28
TAX MATTERS ....................................... 28
General .......................................... 28
Federal Tax Status of the Company ................ 28
Life Insurance Qualification ..................... 28
Charges for JP Financial Income Taxes ............ 31
MISCELLANEOUS POLICY PROVISIONS ................... 31
The Policy ....................................... 31
Payment of Benefits .............................. 32
Suicide and Incontestability ..................... 32
Protection of Proceeds ........................... 32
Nonparticipation ................................. 32
Changes in Owner and Beneficiary;
Assignment ...................................... 32
Misstatements .................................... 33
ILLUSTRATIONS OF ACCUMULATION
VALUES, CASH VALUES AND DEATH
BENEFITS ......................................... A-1
FINANCIAL STATEMENTS OF THE
COMPANY .......................................... F-1
FINANCIAL STATEMENTS OF THE
SEPARATE ACCOUNT ................................. F-19
</TABLE>
- --------------------------------------------------------------------------------
This prospectus does not constitute an offer in any jurisdiction in which such
offering may not be lawfully made. No dealer, salesman or other person is
authorized to give any information or make any representations in connection
with this offering other than those contained in this prospectus, and, if
given or made, such other information or representations must not be relied
upon. The purpose of this variable life insurance policy is to provide
insurance protection. Life insurance is a long-term investment. Policyowners
should consider their need for insurance coverage and the policy's long-term
investment potential. No claim is made that the policy is any way similar or
comparable to an investment in a mutual fund.
- --------------------------------------------------------------------------------
2
<PAGE>
definitions
- --------------------------------------------------------------------
Accumulation Value: The total amount that a Policy provides for investment plus
the amount held as collateral for Policy Debt.
Age: The Insured's age at his/her nearest birthdays.
Allocation Date: The date when the initial Net Premium is placed in the
Divisions and the General Account as instructed by the Policyowner in the
application. The Allocation Date is 25 days from the date the Company mails the
Policy to the agent for delivery to the Policyowner. However, if the insured is
in a substandard risk class, the Allocation Date will be the date the Company
receives from You all administrative items needed to activate the Policy.
Attained Age: The age of the Insured at the last Policy Anniversary.
Beneficiary: The person you designate in the application to receive the Death
Benefit proceeds. If changed, the Beneficiary is as shown in the latest change
filed with the Company. If no Beneficiary survives the Insured, You or Your
estate will be the Beneficiary. The Beneficiary's interest may be subject to
that of any assignee.
Cash Value: The Accumulation Value less any Surrender Charge. This amount less
any Policy Debt is payable to the Policyowner on surrender of the Policy.
Code: The Internal Revenue Code of 1986, as amended.
Company: Jefferson Pilot Financial Insurance Company.
Cost of Insurance: A charge related to the Company's expected mortality cost
for Your basic insurance coverage under the Policy, not including any
supplemental benefit provision that You may elect through a Policy rider.
Date of Receipt: Any Company business day, prior to 4:00 p.m. Eastern time, on
which a notice or premium payment is received at the Company's home office.
Death Benefit: The amount which is payable to the Beneficiary on the death of
the Insured, adjusted as provided in the Policy.
Death Benefit Options: Either of the two methods for determining the Death
Benefit.
Division: A separate division of Separate Account A which invests only in the
shares of a specified Portfolio of a Fund.
Fund: An open-end management investment company whose shares are purchased by
the Separate Account to fund the benefits provided by the Policy.
General Account: A non-variable funding option available in the Policy that
guarantees a minimum interest rate of 4.5% per year.
Grace Period: The 61-day period beginning on the Monthly Anniversary Day on
which the Policy's Cash Value less any Policy Debt is insufficient to cover the
current Monthly Deduction, unless the cumulative minimum premium requirement
has been met. The Policy will lapse without value at the end of the 61-day
period unless a sufficient payment is received by the Company.
Home Office: The Company's principal executive offices at One Granite Place,
Concord, New Hampshire 03301.
Insured: The person on whose life the Policy is issued.
Issue Age: The Age of the Insured on the Policy's Issue Date.
Issue Date: The effective date on which coverage begins under the Policy.
Loan Value: Generally, 90% of the Policy's Cash Value on the date of a loan.
Minimum Initial Premium: The amount of premium due on the Policy Date, which is
an amount sufficient to cover Monthly Deductions and keep the Policy in force
for at least three months.
Monthly Anniversary Date: The same day in each month as the Policy Date.
Net Premium: The gross premium less a 2.5% State Premium Tax Charge.
Policy: The life insurance contract described in this Prospectus.
3
<PAGE>
Policy Date: The date set forth in the Policy and from which policy years,
policy months and policy anniversaries will be determined. If the Policy Date
should fall on the 29th, 30th or 31st of a month, the Policy Date will be the
28th of such month. You may request the Policy Date. If You do not request a
date, it is the date the Policy is issued.
Policy Debt: The sum of all unpaid policy loans and accrued interest thereon.
Portfolio: A separate investment series of one of the Funds.
Proof of Death: One or more of: a) a copy of a certified death certificate; b)
a copy of a certified decree of a court of competent jurisdiction as to the
finding of death; c) a written statement by a medical doctor who attended the
Insured; or d) any other proof satisfactory to the Company.
SEC: Securities and Exchange Commission.
Separate Account A: JPF Separate Account A, a separate investment account
established by the Company for the purpose of funding the Policy.
Specified Amount: The amount chosen by the Policyowner at application, which
may subsequently be increased or decreased, and used in determining the Death
Benefit.
State: Any State of the United States, the District of Columbia, Puerto Rico,
Guam, the Virgin Islands or any other possession of the United States.
Surrender Charge: An amount retained by the Company upon the Surrender of the
Policy, or a Withdrawal.
Surrender Value: Cash Value less any Policy Debt.
Target Premium: The premium from which first year commissions will be
determined and which varies by sex, Issue Age, rating class of the Insured and
Specified Amount.
Valuation Date: The date and time at which the Accumulation Value of a variable
investment option is calculated. Currently, this calculation occurs after the
close of business of the New York Stock Exchange on any normal business day,
Monday through Friday, that the New York Stock Exchange and the Company are
open. In addition to being closed on all federal holidays, the Company will
also be closed on Good Friday, the Friday following Thanksgiving and the day
before or following Christmas.
Valuation Period: The period of time from between two successive Valuation
Dates, beginning at the close of regular trading on the New York Stock Exchange
on each Valuation Date, and ending at the close of regular trading on the New
York Stock Exchange on the next succeeding Valuation Date.
We, Our, Us, Company: Jefferson Pilot Financial Insurance Company, its
successors or assigns.
You, Your: Policyowner.
policy summary
- --------------------------------------------------------------------------------
The Policy described in this Prospectus is a flexible premium variable life
insurance policy. The Policy is intended to provide life insurance and pay a
benefit (subject to adjustment under the Policy's Age and/or Sex, Suicide and
Incontestability, and Grace Period provisions) upon surrender of the Policy or
death of the Insured. The Policy allows flexible premium payments, Policy
Loans, Withdrawals and a choice of two Death Benefit Options. Account values
may be either fixed or variable or a combination of fixed and variable.
As described within, charges and fees will be assessed against premium
payments, Accumulation Value, the Separate Account, the underlying Funds and
upon surrender.
You must purchase Your variable life insurance policy from a registered
representative. The Policy, the initial application on the Insured, any
subsequent applications and any riders constitute the entire contract.
At the time of application, You must choose a Death Benefit Option, decide on
the amount of premium and determine how to allocate Net Premiums. You may elect
to supplement the benefits afforded by the Policy through the addition of
riders We make available.
The proceeds payable upon the death of the Insured depend on the Death Benefit
Option chosen. Under Option 1 the Death Benefit equals the current Specified
Amount. Under Option 2, the
4
<PAGE>
Death Benefit equals the current Specified Amount plus the Accumulation Value
on the date of death. The Death Benefit proceeds will be reduced by repayment
of any outstanding Policy Debt.
Although the Policy is designed to allow flexible premiums, You must pay
sufficient premiums to continue the Policy in force. An initial premium, based
on Issue Age, underwriting class and Specified Amount must be paid at issue. No
premium payment may be less than $25. Premium reminder notices will be sent for
Planned Premiums and for premiums required to continue the Policy in force.
Should Your Policy lapse, it may be reinstated.
You may allocate Your Net Premiums to the Separate Account, the General Account
or both Accounts. Net Premiums allocated to the Separate Account must be
allocated to one or more of the Divisions of the Separate Account and
allocations must be in whole percentages. The variable portion of the Policy is
supported by the Divisions you choose and will vary with the investment
performance of the associated Portfolios. Net Premiums allocated to the General
Account will accumulate at rates of interest We determine. The effective rate
of interest will not be less than 4.5% per year.
the separate account
- --------------------------------------------------------------------------------
The Separate Account underlying the Policy is JPF Separate Account A. Amounts
allocated to the Separate Account are invested in the Portfolios. Each
Portfolio is a series of an open-end management investment company (mutual
fund) whose shares are purchased by the Separate Account to fund the benefits
provided by the Policy. The Portfolios, including their investment objectives
and their investment advisers, are described in this Prospectus. Complete
descriptions of the Portfolios' investment objectives and restrictions and
other material information relating to the Portfolios are contained in the
prospectuses for each of the Portfolios which are delivered with this
Prospectus.
Separate Account A was established under New Hampshire law on August 20, 1984.
Under New Hampshire Insurance Law, the income, gains or losses of the Separate
Account are credited without regard to the other income, gains or losses of the
Company. These assets are held for the Company's variable life insurance
policies. Any and all distributions made by the Portfolios with respect to
shares held by the Separate Account will be reinvested in additional shares at
net asset value. The assets maintained in the Separate Account will not be
charged with any liabilities arising out of any other business conducted by the
Company. The Company is, however, responsible for meeting the obligations of
the Policy to the Policyowner.
No stock certificates are issued to the Separate Account for shares of the
Portfolios held in the Separate Account. Ownership of Portfolio shares is
documented on the books and records of the Portfolios and of the Company for
the Separate Account.
The Separate Account is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940 and meets the definition of separate
account under the federal securities laws. Such registration does not involve
any approval or disapproval by the Commission of the Separate Account or Our
management or investment practices or policies. We do not guarantee the
Separate Account's investment performance.
Divisions. The Policy presently offers twenty-one Divisions but may add or
delete Divisions. You may invest in a total of 17 Divisions over the life of
the Policy. Each Division will invest exclusively in shares of a single
Portfolio.
5
<PAGE>
charges & fees
- --------------------------------------------------------------------------------
[arrow right] CHARGES & FEES ASSESSED AGAINST PREMIUM
Premium Charges
Before a premium is allocated to any of the Divisions of Separate Account A and
the General Account, We will deduct a state premium tax charge of 2.5% (which
represents an average of actual premium taxes imposed) unless otherwise
required by state law (2.35% in California). We may impose the premium tax
charge in states which do not themselves impose a premium tax. The state
premium tax charge reimburses the Company for taxes it pays to states and
municipalities in which the Policy is sold. The amount of tax assessed by a
state or municipality may be more or less than the charge. We have determined
that the state tax charges are reasonable in relation to Our tax liability, but
subject to state law, We reserve the right to increase these tax charges due to
changes in the state or federal tax laws that increase Our tax liability.
[arrow right] CHARGES & FEES ASSESSED AGAINST ACCUMULATION VALUE
Charges and fees assessed against the Policy's Accumulation Value will be
deducted pro rata from each of the Divisions and the General Account.
Monthly Deduction
On each Monthly Anniversary Date and on the Policy Date, We will deduct from
the Policy's Accumulation Value an amount to cover certain expenses associated
with start-up and maintenance of the Policy, administrative expenses, the cost
of insurance for the Policy and any optional benefits added by rider.
The Monthly Deduction equals:
i) the Cost of Insurance for the Policy (as described below), and the cost of
additional benefits provided by rider, plus
ii) a Monthly Administrative Fee of $6, which may not be increased.
Cost of Insurance. The Cost of Insurance charge is related to Our expected
mortality cost for Your basic insurance coverage under the Policy, not
including any supplemental benefit provisions You may elect through a Policy
rider.
The Cost of Insurance charge equals (i)multiplied by the result of (ii) minus
(iii) where
(i) is the current Cost of Insurance Rate as described in the Policy;
(ii) is the death benefit at the beginning of the policy month divided by
1.0036748 (to arrive at the proper values for the beginning of the month
assuming the guaranteed interest rate of 4.5%); and
(iii) is the Accumulation Value at the beginning of the policy month.
If the corridor percent applies, it will be reflected in the Death Benefit used
in the calculation.
The current Cost of Insurance Rate is variable and is based on the Insured's
issue age, sex (where permitted by law), Policy Year, rating class and
Specified Amount. Because the Accumulation Value and the Death Benefit of the
Policy may vary from month to month, the Cost of Insurance charge may also vary
on each day a Monthly Deduction is taken. In addition, You should note that the
Cost of Insurance charge is related to the difference between the Death Benefit
payable under the Policy and the Accumulation Value of the Policy. An increase
in the Accumulation Value or a decrease in the Death Benefit may result in a
smaller Cost of Insurance charge while a decrease in the Accumulation Value or
an increase in the Death Benefit may result in a larger cost of insurance
charge.
The Cost of Insurance rate for standard risks will not exceed those based on
the 1980 Commissioners Standard Ordinary Mortality Tables Male or Female (1980
Tables). Substandard risks will have monthly deductions based on Cost of
Insurance rates which may be higher than those set forth in the 1980 Tables. A
table of guaranteed maximum Cost of Insurance rates per $1,000 of the Amount at
Risk will be included in each Policy. We may adjust the Monthly Cost of
Insurance rates from time to time. Adjustments will be on a class basis and
will be based on Our estimates for future factors such as mortality, investment
income, expenses, reinsurance costs and the length of time Policies stay in
force. Any adjustments will be made on a nondiscriminatory basis.
We will calculate a guaranteed monthly deduction adjustment at the beginning of
the second Policy
6
<PAGE>
Year and every Policy Year thereafter and add it to the Accumulation Value for
each month of the Policy Year during which the adjustment is in effect. The
adjustment will be allocated among the Divisions and the General Account in the
same proportion as premium payments. The adjustment is calculated as (i)
multiplied by the total of (ii) plus (iii) minus (iv), but not less than zero,
where:
(i) is .000375;
(ii) is the sum of the Policy's Accumulation Value in each Division of the
Separate Account at the beginning of the Policy Year;
(iii) is the Type B loan balance at the beginning of the Policy Year; and
(iv) is the Guideline Single Premium at issue under Section 7702 of the Code,
increased on a pro rata basis for any increase in Specified Amount.
See "Policy Loans" for a description of Type B loans.
Monthly Administrative Expense Charge. The Monthly Deduction amount also
includes a monthly administration fee of $6.00. This fee may not be increased.
Charges for Optional Benefits. If You elect any optional benefits by adding
riders to the Policy, an optional benefits charge will be included in the
Monthly Deduction amount. The amount of the charge will vary depending upon the
actual optional benefits selected and is described on each applicable Policy
rider.
[arrow right] CHARGES & FEES ASSESSED AGAINST THE SEPARATE ACCOUNT
Risk Charge
We will assess a charge, not to exceed .0024657% on a daily basis, against each
Division at a current annual rate of .90% of the value of the Division to
compensate Us for mortality and expense risks We assume in connection with the
Policy. The mortality risk assumed by the Company is that the Insured may live
for a shorter period of time than estimated and that the Company will,
therefore, pay a Death Benefit before collecting a sufficient Cost of Insurance
charge. The expense risk assumed is that expenses incurred in issuing and
administering the Policies and operating the Separate Account will be greater
than the administrative charges assessed for such expenses.
The Separate Account is not subject to any taxes. However, if taxes are
assessed against the Separate Account, We reserve the right to assess taxes
against the Separate Account Value.
Administrative Charge for Transfers or Withdrawal
We will impose an Administrative Fee of $25 for each transfer among the
Divisions of the Separate Account or the General Account, after the first 12
transfers in a Policy Year and except for the transfer of the initial net
premium plus interest, and any other premiums received, from the General
Account on the Allocation Date and loan repayments. An Administrative Fee of
$25 will also be charged for withdrawals.
[arrow right] CHARGES ASSESSED AGAINST THE UNDERLYING FUNDS
Following are the investment advisory and sub-investment management fees, paid
by each of the Funds as a percentage of average net assets.
Jefferson Pilot Variable Fund
<TABLE>
<CAPTION>
World Growth Stock,
Global Hard Assets,
Small Company,
Average Daily Money Growth and Income, Capital
Net Assets Market and Balanced Growth
- -------------------- -------- -------------------- ----------
<S> <C> <C> <C>
First $200 million .50% .75% 1.00%
Next $1.1 billion .45% .70% .95%
Over $1.3 billion .40% .65% .90%
</TABLE>
<TABLE>
<CAPTION>
Average Daily Emerging High Yield International
Net Assets Growth Bond and Growth Equity
- -------------------- ---------- ----------------- --------------
<S> <C> <C> <C>
First $200 million .80% .75% 1.00%
Next $1.1 billion .75% .75% 1.00%
Over $1.3 billion .70% .75% 1.00%
</TABLE>
The compensation of the Sub-Investment Managers is paid directly from the
investment management fees of JP Investment Advisory and is set forth in the
table below as an annual percentage of the average daily net assets of the
Portfolio managed:
<TABLE>
<CAPTION>
Sub-Investment Manager Fees
----------------------------------------------
Templeton Van Eck Lord
Janus World Global Abbett
Average Daily Capital Growth Hard Small
Net Assets Growth Stock Assets Company
- -------------------- --------- ----------- --------- --------
<S> <C> <C> <C> <C>
First $200 million .70% .50% .50% .50%
Next $1.1 billion .65% .45% .45% .45%
Over $1.3 billion .60% .40% .40% .40%
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Warburg MFS MFS MFS
Growth Emerging Money High Janus
Net Assets & Income Growth Market Yield Balanced
- -------------------- ---------- ---------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
First $100 million .50% .40% .30% .40% .55%
Next $100 million .50% .40% .30% .40% .50%
Next $200 million .50% .40% .25% .40% .50%
Over $400 million .50% .40% .25% .40% .50%
</TABLE>
<TABLE>
<CAPTION>
Lombard Odier
Strong International
Net Assets Growth Equity
- ------------------- -------- --------------
<S> <C> <C>
First $25 million .60% .50%
Next $75 million .50% .50%
Next $50 million .40% .50%
Over $150 million .30% .50%
</TABLE>
Templeton International Fund: Class 1.
<TABLE>
<CAPTION>
Total
Management Other Annual
Fee Expenses Expenses
- ---------- -------- --------
<S> <C> <C>
.69% .17% .86%
</TABLE>
Fidelity VIP and VIP II
<TABLE>
<CAPTION>
Total
Management Other Annual
Fidelity VIP Fee Expenses Expenses
- ---------------- ------------ ---------- ---------
<S> <C> <C> <C>
Equity Income .49% .08% .57%
Growth .59% .07% .66%
Fidelity VIP II
- ----------------
Contrafund .59% .07% .66%
Index 500 .24% .04% .28%
</TABLE>
MFS Research Series and MFS Utilities Series:
0.75% of average daily net assets.
Oppenheimer Bond Fund/VA
0.74% of average daily net assets.
Oppenheimer Strategic Bond Fund/VA
0.80% of average daily net assets.
Certain of the unaffiliated Portfolio advisers reimburse the Company for
administrative costs incurred in connection with administering the Funds as
variable funding options under the Policy (MFS--0.15%, Oppenheimer--0.10% for
the Bond Fund and 0.15% for the Strategic Bond Fund). These reimbursements are
paid out of the investment advisory fees and are not charged to the Portfolios.
For further details on each Portfolio's expenses please refer to that
Portfolio's prospectus. Additional copies of each Portfolio's prospectus and
the Statement of Additional Information for each Portfolio may be obtained free
of charge by calling (800)-258-3648 x 7719.
[arrow right] CHARGES DEDUCTED UPON SURRENDER
If You surrender the Policy, make a withdrawal, or the Policy lapses during the
first ten Policy Years, We will assess a surrender charge, which will be
deducted from the Policy's Accumulation Value. This charge is imposed in part
to recover distribution expenses and in part to recover certain first year
administrative costs. The initial Surrender Charges will be specified in Your
Policy and will be in compliance with each state's nonforfeiture law.
The initial Surrender Charge, as specified in the Policy, is based on the
Specified Amount. It also depends on the Issue Age, risk classification and, in
most states, sex of the Insured. It is determined by multiplying a surrender
factor by the lesser of (1) the premiums actually received in policy year one;
or (2) the "Guideline Annual Premiums" as defined in the rules and regulations
under the 1940 Act. The surrender factor depends on the length of time the
Policy has been in force, as follows:
<TABLE>
<CAPTION>
Policy Year Surrender Factor
- -------------- -----------------
<S> <C>
1-5 .30
6 .25
7 .20
8 .15
9 .10
10 .05
11 and after 0
</TABLE>
We will assess an additional Surrender Charge for any increase in the Specified
Amount, other than an increase caused by a change from Death Benefit Option II
to Death Benefit Option I. The additional Surrender Charge is determined by
multiplying a surrender factor by the lesser of (1) or (2), where:
(1) is A times B divided by C, where:
A is the amount of the increase in the Specified Amount;
B is the sum of the cash value just prior to the increase in the
Specified Amount and the total premiums received in the 12 months just
following the increase in the Specified Amount; and
C is the Specified Amount in effect after the increase in the
Specified Amount.
(2) is the "Guideline Annual Premium" for the increase at the attained age of
the Insured on the effective date of the increase in the Specified
Amount.
8
<PAGE>
The surrender factor depends on the length of time the increase has been in
force, as follows:
<TABLE>
<CAPTION>
Increase Year Surrender Factor
- --------------- -----------------
<S> <C>
1-5 .15
6 .125
7 .10
8 .075
9 .05
10 .025
11 and after 0
</TABLE>
The Surrender Charge in effect at any time is the sum of the Surrender Charge
for the initial Specified Amount plus the Surrender Charge for any increase in
the Specified Amount. If the Specified Amount is decreased, the Surrender
Charge will not decrease. We will not assess a Surrender Charge after the tenth
Policy Year.
Surrender Charges on Surrenders and Withdrawals
All applicable Surrender Charges are imposed on Surrenders.
We will impose a pro rata Surrender Charge on Withdrawals. The pro rata
Surrender Charge is calculated by dividing the amount of the net Withdrawal by
the Cash Value and multiplying the result by the amount of the Surrender Charge
on a surrender. We will reduce any applicable remaining Surrender Charges by
the same proportion. We will deduct a transaction charge equal to the lesser of
$25 or 2% of the amount withdrawn, unless the Withdrawal is combined with a
request to maintain or increase the Specified Amount. (See "Withdrawals")
Other Charges
We reserve the right to charge the assets of each Division to provide for any
income taxes or other taxes payable by Us on the assets attributable to that
Division. Although We currently make no charge, we reserve the right to charge
You an administrative fee, not to exceed $25, to cover the cost of preparing
any additional illustrations of current Cash Values and current mortality
assumptions which you may request after the Policy Date.
allocation of premiums
- --------------------------------------------------------------------------------
You may allocate all or a part of Your Net Premiums to the Divisions currently
available under Your Policy or You may allocate all or a part of Your Net
Premiums to the General Account.
[arrow right] THE PORTFOLIOS
The Separate Account currently invests in shares of the Portfolios listed
below. Net Premiums applied to the Separate Account will be invested in the
Portfolios in accordance with Your selection. Portfolios may be added or
withdrawn as permitted by applicable law. We reserve the right to limit the
total number of Portfolios You may elect to 17 over the lifetime of the Policy
or to increase the total number of Portfolios You may elect. Shares of the
Portfolios are not sold directly to the general public. Each of the Portfolios
is available only through the purchase of variable annuities or variable life
insurance policies. (See Mixed and Shared Funding)
The investment results of the Portfolios, whose investment objectives are
described below, are likely to differ significantly. There is no assurance that
any of the Portfolios will achieve their respective investment objectives.
Investment in some of the Portfolios involves special risks, which are
described in their respective prospectuses. You should read the prospectuses
for the Portfolios and consider carefully, and on a continuing basis, which
Portfolio or combination of Portfolios is best suited to Your long-term
investment objectives. Except where otherwise noted, all of the Portfolios are
diversified, as defined in the Investment Company Act of 1940.
[diamond] JPVF International Equity Portfolio seeks long-term capital
appreciation through investments in securities whose primary trading
markets are outside the United States.
[diamond] JPVF World Growth Stock Portfolio seeks to achieve long-term capital
growth through a policy of investing primarily in stocks of companies
organized in the United States or in any foreign nation. A portion of
the Portfolio may also be invested in debt obligations of companies
and governments of any nation. Any income realized will be incidental.
[diamond] JPVF Global Hard Assets Portfolio seeks long-term capital appreciation
by investing globally, primarily in "Hard Asset Securities". Income is
a secondary consideration.
9
<PAGE>
[diamond] JPVF Emerging Growth Portfolio seeks to provide long-term growth of
capital. Dividend and interest income from portfolio securities, if
any, is incidental to the Portfolio's investment objective of
long-term growth.
[diamond] JPVF Capital Growth Portfolio seeks capital growth. Realization of
income is not a significant investment consideration and any income
realized will be incidental.
[diamond] JPVF Small Company Portfolio seeks to achieve growth of capital. The
Portfolio pursues its objective by investing primarily in a
diversified portfolio of equity securities issued by small companies.
[diamond] JPVF Growth Portfolio seeks capital growth by investing primarily in
equity securities that the Sub-Investment Manager believes have
above-average growth prospects.
[diamond] JPVF Growth and Income Portfolio seeks long-term growth of capital by
investing primarily in a wide range of equity issues that may offer
capital appreciation and, secondarily, seeks a reasonable level of
current income.
[diamond] JPVF Balanced Portfolio seeks reasonable current income and long-term
capital growth, consistent with conservation of capital, by investing
primarily in common stocks and fixed income securities.
[diamond] JPVF High Yield Bond Portfolio seeks a high level of current income by
investing primarily in corporate obligations with emphasis on higher
yielding, higher risk, lower-rated or unrated securities. These
securities may be considered speculative and involve greater risks,
including risk of default, than higher rated securities.
[diamond] JPVF Money Market Portfolio seeks to achieve as high a level of
current income as is consistent with preservation of capital and
liquidity. An investment in the Money Market Portfolio is neither
insured nor guaranteed by the U.S. Government.
[diamond] Fidelity Variable Insurance Products Fund--Growth Portfolio seeks
capital appreciation by investing primarily in common stocks.
[diamond] Fidelity Variable Insurance Products Fund--Equity-Income Portfolio
seeks reasonable income by investing primarily in income-producing
equity securities. In choosing these securities, the Fund will also
consider the potential for capital appreciation.
[diamond] Fidelity Investments' Variable Insurance Products Fund II--Contrafund
Portfolio seeks maximum total return over the long term by investing
its assets mainly in equity securities of companies that are
undervalued or out-of-favor.
[diamond] Fidelity Variable Insurance Products Fund II--Index 500 Portfolio
seeks investment results that correspond to the total return of common
stocks publicly traded in the United States, as represented by the S&P
500.
[diamond] MFS Variable Insurance Trust--Research Series seeks to provide
long-term growth of capital and future income by investing a
substantial proportion of its assets in equity securities of companies
believed to possess better-than-average prospects for long-term
growth.
[diamond] MFS Variable Insurance Trust--Utilities Series seeks capital growth
and current income (incomes above that available from a portfolio
invested entirely in equity securities) by investing, under normal
circumstances, at least 65% (but up to 100% at the discretion of the
Adviser) of its assets in equity and debt securities of both domestic
and foreign companies in the utilities industry.
[diamond] Oppenheimer Variable Account Funds--Strategic Bond Fund/VA seeks a
high level of current income principally derived from interest on debt
securities and seeks to enhance such income by writing covered call
options on debt securities. The Portfolio intends to invest
principally in: (i) foreign government and corporate debt securities,
(ii) U.S. Government securities, and (iii) lower-rated high yield
domestic debt securities, commonly known as "junk bonds", which are
subject to a greater risk of loss of principal and nonpayment of
interest than higher-rated securities. These securities may be
considered to be speculative.
[diamond] Oppenheimer Variable Account Funds--Bond Fund/VA primarily seeks a
high level of current income from investment in high yield,
fixed-income securities rated "Baa" or better by Moody's or "BBB" or
better by Standard & Poor's. Secondarily, this Portfolio seeks capital
growth when consistent with its primary objective.
[diamond] Templeton Variable Product Series Fund--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. Any income realized will be incidental.
10
<PAGE>
Although the Templeton International Fund generally invests in common
stock, it may also invest in preferred stocks and certain debt
securities such as convertible bonds which are rated in any category
by Standard & Poor's Corporation or Moody's Investors Service, Inc. or
which are unrated by any rating agency.
Some of the above Portfolios may use instruments known as derivatives as part
of their investment strategies, as described in their respective prospectuses.
The use of certain derivatives such as inverse floaters and principal on debt
instruments may involve higher risk of volatility to a Portfolio. The use of
leverage in connection with derivatives can also increase risk of losses. See
the prospectus for the Portfolio for a discussion of the risks associated with
an investment in those Portfolios. You should refer to the accompanying
prospectuses of the Portfolios for more complete information about their
investment policies and restrictions.
[arrow right] INVESTMENT ADVISERS FOR EACH OF THE FUNDS:
Jefferson Pilot Variable Fund, Inc. ("JPVF") The investment manager to JPVF is
Jefferson Pilot Investment Advisory Corporation ("JP Investment Advisory"), an
affiliate of the Company. JP Investment Advisory and JPVF have contracted with
nine unaffiliated companies to act as sub-investment managers to the Funds.
They are:
[diamond] JPVF International Equity Portfolio: Lombard Odier International
Portfolio Management Limited ("Lombard Odier")
[diamond] JPVF World Growth Stock Portfolio: Templeton Global Advisors Limited
("Templeton")
[diamond] JPVF Global Hard Assets Portfolio: Van Eck Associates Corporation
("Van Eck")
[diamond] JPVF Emerging Growth Portfolio: Massachusetts Financial Services
Company ("MFS")
[diamond] JPVF Capital Growth Portfolio: Janus Capital Corporation ("Janus")
[diamond] JPVF Small Company Portfolio: Lord, Abbett & Co. ("Lord Abbett")
[diamond] JPVF Growth Portfolio: Strong Capital Management, Inc. ("Strong")
[diamond] JPVF Growth and Income Portfolio: Warburg Pincus Asset Management,
Inc. ("Warburg")
[diamond] JPVF Balanced Portfolio: Janus
[diamond] JPVF High Yield Bond: MFS
[diamond] JPVF Money Market Portfolio: MFS
Fidelity Variable Insurance Products Fund - Fidelity Management and Research
Company ("FMR")
Fidelity Variable Insurance Products Fund II - FMR
MFS Variable Insurance Trust - Massachusetts Financial Services Company ("MFS")
Oppenheimer Variable Account Funds - OppenheimerFunds, Inc. ("Oppenheimer")
Templeton Variable Products Series Fund - Templeton Investment Counsel, Inc.
("TICI")
[arrow right] MIXED AND SHARED FUNDING; CONFLICTS OF INTEREST
Shares of the Funds are available to insurance company separate accounts which
fund variable annuity contracts and variable life insurance policies, including
the Policy described in this Prospectus. Because Fund shares are offered to
separate accounts of both affiliated and unaffiliated insurance companies, it
is conceivable that, in the future, it may not be advantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in these Funds simultaneously, since the interests of such Policyowners
or contractholders may differ. Although neither the Company nor the Funds
currently foresees any such disadvantages either to variable life insurance or
to variable annuity Policyowners, each Fund's Board of Trustees/
Directors has agreed to monitor events in order to identify any material
irreconcilable conflicts which may possibly arise and to determine what action,
if any, should be taken in response thereto. If such a conflict were to occur,
one of the separate accounts might withdraw its investment in a Fund. This
might force that Fund to sell portfolio securities at disadvantageous prices.
[arrow right] FUND ADDITIONS, DELETIONS OR SUBSTITUTIONS
The Company reserves the right, subject to compliance with appropriate state
and federal laws, to add, delete or substitute shares of another Portfolio or
Fund for Portfolio share already purchased or to be purchased in the future for
the Division in connection with the Policy. The Company may substitute shares
of one Portfolio for shares of another Portfolio if, among other things, (a) it
is determined that a Portfolio no longer suits the purpose of the Policy due to
a change in its
11
<PAGE>
investment objectives or restrictions; (b) the shares of a Portfolio are no
longer available for investment; or (c) in the Company's view, it has become
inappropriate to continue investing in the shares of the Portfolio.
Substitution may be made with respect to both existing investments and the
investment of any future premium payments. However, no substitution of
securities will be made without prior notice to Policyowners, and without prior
approval of the SEC or such other regulatory authorities as may be necessary,
all to the extent required and permitted by the Investment Company Act of 1940
or other applicable law.
We also reserve the right to make the following changes in the operation of the
Separate Account and the Divisions;
(a) to operate the Separate Account in any form permitted by law;
(b) to take any action necessary to comply with applicable law or obtain and
continue any exemption from applicable laws;
(c) to transfer assets from one Division to another, or from any Division to
our general account;
(d) to add, combine, or remove Divisions in the Separate Account;
(e) to assess a charge for taxes attributable to the operation of the Separate
Account or for other taxes, described in "Charges and Fees--Other Charges"; and
(f) to change the way We assess other charges, as long as the total other
charges do not exceed the amount currently charged the Separate Account and the
Portfolios in connection with the Policies.
Portfolio shares are subject to certain investment restrictions which may not
be changed without the approval of the majority of the Portfolios'
shareholders. See accompanying Prospectus for the Portfolios.
[arrow right] GENERAL ACCOUNT
Interests in the General Account have not been registered with the SEC in
reliance upon exemptions under the Securities Act of 1933, as amended and the
General Account has not been registered as an investment company under the 1940
Act. However, disclosure in this Prospectus regarding the General Account may
be subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of the statements. Disclosure in
this Prospectus relating to the Fixed Account has not been reviewed by the SEC.
The General Account is a fixed funding option available under the Policy. The
Company guarantees a minimum interest rate of 4.5% on amounts in the General
Account and assumes the risk of investment gain or loss. The investment gain or
loss of the Separate Account or any of the Funds does not affect the General
Account Value.
The General Account is secured by the general assets of the Company. The
general assets of the Company include all assets of the Company other than
those held in separate accounts sponsored by the Company or its affiliates. The
Company will invest the assets of the General Account in those assets chosen by
the Company, as allowed by applicable law. Investment income of such General
Account assets will be allocated by the Company between itself and those
policies participating in the General Account.
The Company guarantees that, at any time, the General Account Value of Your
Policy will not be less than the amount of the Net Premiums allocated to the
General Account, plus any monthly deduction adjustment, plus interest at an
annual rate of not less than 4.5%, less the amount of any Withdrawals, Policy
Loans or Monthly Deductions.
If You do not accept the Policy issued as applied for or you exercise Your
"free look" option, no interest will be credited and We will retain any
interest earned on the Initial Net Premium.
12
<PAGE>
policy choices
- --------------------------------------------------------------------
[arrow right] GENERAL
The Policy is designed to provide the Insured with lifetime insurance
protection and to provide the Policyowner with flexibility in amount and
frequency of premium payments and level of life insurance proceeds payable
under the Policy. It provides life insurance coverage with a Death Benefit
payable to a named beneficiary or contingent beneficiary. You are not required
to pay scheduled premiums to keep the Policy in force and You may, subject to
certain limitations, vary the frequency and amount of premium payments. You may
also adjust the level of life insurance payable under the Policy without having
to purchase a new Policy by increasing or decreasing the Specified Amount.
To purchase a Policy, You must complete an application and submit it to Us
through the agent selling the Policy. You must furnish satisfactory evidence of
insurability. We will generally not issue Policies to insure persons older than
age 80. For ages 15 and over, the Insured's smoking status is reflected in the
current cost of insurance rates. Policies issued in certain States will not
directly reflect the Insured's sex in either the premium rates or the charges
or values under the Policy. We may reject an application or premium or contest
a Policy for any good reason.
The minimum Specified Amount at issue is $25,000. We reserve the right to
revise Our rules to specify different minimum Specified Amounts at issue. We
may reinsure all or a portion of the Policy.
[arrow right] PREMIUM PAYMENTS
The Policy is a flexible premium life insurance policy. This means that You may
decide when to make premium payments and in what amounts. You must pay your
premiums to Us at our home office or through one of Our authorized agents for
forwarding to Us. There is no fixed schedule of premium payment on the Policy
either as to amount or frequency. You may determine, within certain limits,
Your own premium payment schedule. We will set forth the limits, which will
include a minimum initial premium payment sufficient to keep the Policy in
force for three months; they may also include limits on the total amount and
frequency of payments in each policy year. No payment may be less than $25. In
order to help You get the insurance benefits You desire, We will state a
Planned Periodic Premium and Premium Frequency in the Policy. This premium will
generally be based on Your insurance needs and financial abilities, the current
financial climate, the Specified Amount of the Policy and the Insured's age,
sex and risk class. You are not required to pay such premiums and failure to
make any premium payment will not necessarily result in lapse of the Policy, so
long as the Policy's Surrender Value is sufficient to pay the Monthly
Deduction. Payment of the Planned Periodic Premiums will not guarantee that
Your Policy will remain in force. (See "Policy Lapse")
Premiums paid in excess of the Planned Periodic Premium or an increase in Your
Planned Periodic Premium may cause the Policy to be classified as a "Modified
Endowment Contract" for federal income tax purposes. If at any time We receive
a premium payment which would result in Your Policy being deemed a modified
endowment contract, We will refund the premium to You with interest within 60
days after the end of the Policy Year in which the premium was received. If,
for any reason, We do not refund the excess premium within 60 days after the
end of such year, We will hold the excess premium in a separate deposit fund
and credit it with interest until We refund it to You. We may also notify You
of other options available to You to keep Your Policy in compliance. (See--"Tax
Matters").
Section 7702 of the Code includes a definition of life insurance for tax
purposes. These rules place limits on premiums and on the relationship between
the Death Benefit and the Accumulation Value. If You pay a premium which would
result in total premiums exceeding the current maximum premium limitations, We
will refund to You any premium in excess of that amount and We will accept no
further premium payments until allowed by the current maximum premium
limitations required by the Code.
Under limited circumstances, we may backdate a Policy, upon request, by
assigning an Issue Date earlier than the date the application is signed but no
earlier than six months prior to state approval of the Policy. Backdating may
be desirable, for example, so that You can purchase a particular Policy
Specified Amount for lower Cost of Insurance Rate based on a younger insurance
age. For a backdated Policy, You must pay the premium for the period between
the
13
<PAGE>
Issue Date and the date the application is received at the Home Office.
Backdating of Your Policy will not affect the date on which Your premium
payments are credited to the Separate Account.
We will allocate premium payments, net of the premium tax charge and Federal
DAC tax, plus interest earned prior to the Allocation Date, among the General
Account and the divisions of the Separate Account in accordance with Your
directions to Us. The minimum percentage of any net premium payment allocated
to any division or the General Account is 5% and allocation percentages must be
in whole numbers only. Your initial premium (including any interest) will be
allocated, as You instructed, on the Allocation Date. Your subsequent premiums
will be allocated as of the date they are received in Our Home Office. Prior to
the Allocation Date, the initial net premium, and any other premiums received,
will be allocated to the General Account. (See "Right of Policy Examination")
You may change Your premium allocation instructions at any time. Your request
may be written or by telephone, so long as the proper telephone authorization
is on file with Us. Allocations must be changed in whole percentages. The
change will be effective as of the date of the next premium payment after You
notify Us. We will send You confirmation of the change. (See "Transfers and
Allocations to Funding Options")
[arrow right] DEATH BENEFIT OPTIONS
At the time of purchase, You must choose between the two available Death
Benefit Options. The amount payable under the Policy will depend upon which
Death Benefit Option You choose.
Under Option 1 the Death Benefit will be the greater of the current Specified
Amount or the Accumulation Value on the date of death multiplied by the
corridor percentage, as described below.
Under Option 2 the Death Benefit will be the current Specified Amount plus the
Accumulation Value on the date of death.
The corridor percentage depends upon the Insured's attained age on the date of
death and is used to determine a minimum ratio of Death Benefit to Accumulation
Value. This is required to qualify the Policy as life insurance under the
federal tax laws. Following is a complete list of corridor percentages.
<TABLE>
<CAPTION>
Attained Corridor Attained Corridor Attained Corridor Attained Corridor
Age Percentage Age Percentage Age Percentage Age Percentage
- ------------ ------------ ---------- ------------ ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
40 & below 250% 52 171% 64 122% 91 104%
41 243 53 164 65 120 92 103
42 236 54 157 66 119 93 102
43 229 55 150 67 118 94 101
44 222 56 146 68 117 95 100
45 215 57 142 69 116
46 209 58 138 70 115
47 203 59 134 71 113
48 197 60 130 72 111
49 191 61 128 73 109
50 185 62 126 74 107
51 178 63 124 75-90 105
</TABLE>
Under both Option 1 and Option 2, the Death Benefit will be reduced by a
Withdrawal. (See "Withdrawals") The Death Benefit payable under either Option
will also be reduced by the amount necessary to repay the Policy Debt in full
and, if the Policy is within the Grace Period, any payment required to keep the
Policy in force.
After We issue the Policy, You may, subject to certain restrictions, change the
Death Benefit selection by sending Us a request in writing. If you change rom
Option 1 to Option 2, or vice versa, by sending Us a request in writing. If you
change the Death Benefit option from Option 2 to Option 1, the Specified Amount
will be increased by the Policy's Accumulation Value on the effective date of
the change. If you change the Death Benefit option from Option 1 to Option 2,
the Specified Amount will be decreased by the Policy's Accumulation Value on
the effective date of the change. We will require evidence of insurability on a
request for a change from Option 1 to Option 2. We will not permit a change in
the Death Benefit Option if the change would result in a Specified Amount which
is less than the minimum Specified Amount of $25,000.
14
<PAGE>
[arrow right] TRANSFERS AND ALLOCATIONS TO FUNDING OPTIONS
You may transfer all or part of the Accumulation Value to any other Portfolio
or to the General Account at any time. You must transfer a minimum of $250 each
time. We currently permit 12 transfers per year without imposing any transfer
charge. For transfers over 12 in any Policy Year, We will impose a transfer
charge of the lesser of $25 or 10% of the amount transferred, which We will
deduct on a pro rata basis from the Division or Divisions or the General
Account into which the amount is transferred, unless You specify otherwise. We
will not impose a Transfer Charge on the transfer of the initial Net Premium
payments, plus interest earned, from the General Account to the Divisions on
the Allocation Date, or on loan repayments. We will not impose a Transfer
Charge for transfers under the Dollar Cost Averaging or Portfolio Rebalancing
features. You may currently make up to 20 transfers per Policy Year. We reserve
the right to modify transfer privileges and charges.
You may at any time transfer 100% of the Policy's Accumulation Value to the
General Account and choose to have all future premium payments allocated to the
General Account. While You are doing this, the minimum period the Policy will
be in force will be fixed and guaranteed. The minimum period will depend on the
amount of Accumulation Value, the Specified Amount, the sex, Attained Age and
rating classes of the Insureds at the time of transfer. The minimum period will
decrease if You choose to increase the Specified Amount, surrender the Policy
or make a withdrawal. The minimum period will increase if You choose to
decrease the Specified Amount, make additional premium payments, or We credit a
higher interest rate than that guaranteed for the General Account or charge a
lower cost of insurance rate than those guaranteed in the Policy.
We will not impose a transfer charge for a transfer of all Accumulation Value
in the Separate Account to the General Account. A transfer from the General
Account to the Divisions of the Separate Account will be subject to the
transfer charge unless it is one of the first 12 transfers in a Policy Year and
except for the transfer of initial net premium payments, plus interest earned,
from the General Account and loan repayments.
We reserve the right to refuse or restrict transfers made by third-party agents
on behalf of Policyowners or pursuant to market timing services when We
determine that such transfers will be detrimental to the Portfolios,
Policyowners or You.
[arrow right] TELEPHONE TRANSFERS, LOANS AND REALLOCATIONS
You, Your authorized representative, or a member of his/her administrative
staff may request a transfer of Accumulation Value or reallocation of premiums
(including allocation changes relating to existing Dollar Cost Averaging and
Automatic Portfolio Rebalancing programs) either in writing or by telephone. In
order to make telephone transfers, You must complete a written telephone
transfer authorization form and return it to Us at our Home Office. All
transfers must be in accordance with the terms of the Policy. If the transfer
instructions are not in good order, the Company will not execute the transfer
and You will be notified.
We may also permit loans to be made by telephone, provided that Your
authorization form is on file with Us. Only You may request loans by telephone.
We will use reasonable procedures, such as requiring identifying information
from callers, recording telephone instructions, and providing written
confirmation of transactions, in order to confirm that telephone instructions
are genuine. Any telephone instructions which We reasonably believe to be
genuine will be Your responsibility, including losses arising from any errors
in the communication of instructions. As a result of this procedure, You will
bear the risk of loss. If the Company does not use reasonable procedures, as
described above, it may be liable for losses due to unauthorized instructions.
[arrow right] AUTOMATED TRANSFERS (DOLLAR COST AVERAGING AND PORTFOLIO
REBALANCING)
Dollar Cost Averaging describes a system of investing a uniform sum of money at
regular intervals over an extended period of time. Dollar Cost Averaging is
based on the economic fact that buying a security with a constant sum of money
at fixed intervals results in acquiring more of the item when prices are low
and less of it when prices are high.
You may establish automated transfers of a specific dollar amount (the
"Periodic Transfer Amount") on a monthly, quarterly or semi-annual basis from
the Money Market Division or the General Account to any
15
<PAGE>
other Portfolio or to the General Account. You must have a minimum of $3,000
allocated to either the Money Market Division or the General Account in order
to enroll in the Dollar Cost Averaging program. The minimum Periodic Transfer
Amount is $250. A minimum of 5% of the Periodic Transfer Amount must be
transferred to any specified Division. There is no additional charge for the
program. You may start or stop participation in the Dollar Cost Averaging
program at any time, but You must give the Company at least 30 days' notice to
change any automated transfer instructions that are currently in place. The
Company reserves the right to suspend or modify automated transfer privileges
at any time.
You may elect an Automatic Portfolio Rebalancing feature which provides a
method for reestablishing fixed proportions between various types of
investments on a systematic basis. Under this feature, We will automatically
readjust the allocation between the Divisions and the General Account to the
desired allocation, subject to a minimum of 5% per Division or General Account,
on a quarterly, semi-annual or annual basis.
You may not elect Dollar Cost Averaging and Automatic Portfolio Rebalancing at
the same time. We will make transfers and adjustments pursuant to these
features on the Policy's Monthly Anniversary Date in the month when the
transaction is to take place, or the next succeeding business day if the
Monthly Anniversary Date falls on a holiday or weekend. We must have an
authorization form on file before either feature may begin. Transfers under
these features and not subject to the transfer fee and do not count toward the
12 free transfers or the 20 transfer maximum currently allowed per year.
Before participating in the Dollar Cost Averaging or Automatic Portfolio
Rebalancing programs, You should consider the risks involved in switching
between investments available under the Policy. Dollar Cost Averaging requires
regular investments regardless of fluctuating price levels, and does not
guarantee profits or prevent losses. Automatic Portfolio Rebalancing is
consistent with maintaining your allocation of investments among market
segments, although it is accomplished by reducing your Accumulation Value
allocated to the better performing segments. Therefore, You should carefully
consider market conditions and each Fund's investment policies and related
risks before electing to participate in the Dollar Cost Averaging Program.
policy values
- --------------------------------------------------------------------------------
[arrow right] ACCUMULATION VALUE
The Accumulation Value of Your Policy is determined on a daily basis.
Accumulation Value is the sum of the values in the Divisions plus the value in
the General Account. We calculate Your Policy's Accumulation Value in the
Divisions by units and unit values under the Policies. Your Policy's
Accumulation Value will reflect the investment experience of the Divisions
investing in the Portfolios, any additional net premiums paid, any withdrawals,
any policy loans, and any charges assessed in connection with the Policy. We do
not guarantee Accumulation Values in the Separate Account as to dollar amount.
On the Allocation Date, the Accumulation Value in the Separate Account (the
"Separate Account Value") equals the initial premium payments, less the State
Premium Tax Charge, plus interest earned prior to the Allocation Date, and less
the Monthly Deduction for the first policy month. We will establish the initial
number of units credited to the Separate Account for Your Policy on the
Allocation Date. At the end of each Valuation Period thereafter, the
Accumulation Value in a Division is:
(i) the Accumulation Value in the Division on the preceding Valuation Date
multiplied by the net investment factor, described below, for the current
Valuation Period, plus
(ii) any Net Premium We receive during the current Valuation Period which is
allocated to the Division, plus
(iii) all Accumulation Value transferred to the Division from another Division
or the General Account during the current Valuation Period, minus
(iv) the Accumulation Value transferred from the Division to another Division
or the General Account and Accumulation Value transferred to secure a Policy
Debt during the current Valuation Period, minus
(v) all withdrawals from the Division during the current Valuation Period.
16
<PAGE>
Whenever a Valuation Period includes the Monthly Anniversary Date, the Separate
Account Value at the end of such period is reduced by the portion of the
monthly deduction allocated to the Divisions.
[arrow right] UNIT VALUES
We credit Units to You upon allocation of Net Premiums to a Division. Each Net
Premium payment you allocate to a Division will increase the number of units in
that Division. We credit both full and fractional units. We determine the
number of units and fractional units by dividing the Net Premium payment by the
unit value of the Division to which You have allocated the payment. We
determine each Division's unit value on each Valuation Date. The number of
units credited to Your Policy will not change because of subsequent changes in
unit value. The number is increased by subsequent contributions or transfers
allocated to a Division, and decreased by charges and withdrawals from that
Division. The dollar value of each Division's units will vary depending on the
investment performance of the corresponding Portfolio, as well as any expenses
charged directly to the Separate Account.
The initial Unit Value of each Division's units was $10.00. Thereafter, the
Unit Value of a Division on any Valuation Date is calculated by multiplying the
Division's Unit Value on the previous Valuation Date by the Net Investment
Factor for the Valuation Period then ended.
[arrow right] NET INVESTMENT FACTOR
The Net Investment Factor measures each Division's investment experience and is
used to determine changes in Unit Value from one Valuation Period to the next.
We calculate the Net Investment Factor by dividing (1) by (2) and subtracting
(3) from the result, where:
(1) is the sum of:
(a) the Net Asset Value of a Fund share held in the Separate Account for
that Division determined at the end of the current Valuation Period; plus
(b) the per share amount of any dividend or capital gain distributions made
for shares held in the Separate Account for that Division if the ex-dividend
date occurs during the Valuation Period;
(2) is the Net Asset Value of a Fund share held in the Separate Account for
that Division determined as of the end of the preceding Valuation Period; and
(3) is the daily charge no greater than .0024657% representing the Mortality &
Expense Risk Charge. This charge is equal, on an annual basis, to .90% of the
daily Net Asset Value of Fund shares held in the Separate Account for that
Division.
Because the Net Investment Factor may be greater than, less than or equal to 1,
values in a Division may increase or decrease from Valuation Period to
Valuation Period.
The General Account Value reflects amounts allocated to the General Account
through payment of premiums or transfers from the Separate Account, plus
interest credited to those amounts. Amounts allocated to the General Account,
and interest thereon, are guaranteed; however there is no assurance that the
Separate Account Value of the Policy will equal or exceed the Net Premiums paid
and allocated to the Separate Account.
You will be advised at least annually as to the number of Units which remain
credited to the Policy, the current Unit Values, the Separate Account Value,
the General Account Value, and the Accumulation Value.
[arrow right] SURRENDER VALUE
The Surrender Value of the Policy is the amount You can receive in cash by
surrendering the Policy. The Surrender Value will equal (a) the Accumulation
Value on the date of surrender; less (b) the Surrender Charge; less (c) the
Policy Debt. (See Charges Deducted Upon Surrender)
17
<PAGE>
policy rights
- --------------------------------------------------------------------------------
[arrow right] SURRENDERS
By Written Request, You may surrender the Policy for its Surrender Value at any
time while the Insured is alive. All insurance coverage under the Policy will
end on the date of the Surrender. All or part of the Surrender Value may be
applied to one or more of the Settlement Options described in this Prospectus
or in any manner to which We agree and that We make available. (See Right to
Defer Payment, Policy Settlement and Payment of Benefits)
[arrow right] WITHDRAWALS
By Written Request, You may, at any time after the expiration of the Free Look
Period, make withdrawals from the Policy. We will deduct a charge equal to the
lesser or $25 or 2% of the amount of the withdrawal from the amount of the Cash
Value which You withdraw. The minimum amount of any withdrawal after the charge
is applied is $500. The amount You withdraw cannot exceed the Cash Value less
any Policy Debt. We will also deduct a pro rata Surrender Charge unless the
withdrawal is combined with a request to maintain or increase the Specified
Amount.
Withdrawals will generally affect the Policy's Accumulation Value, Cash Value
and the life insurance proceeds payable under the Policy as follows.
[diamond] The Policy's Cash Value will be reduced by the amount of the
withdrawal;
[diamond] The Policy's Accumulation Value will be reduced by the amount of the
withdrawal plus any applicable pro rata Surrender Charge;
[diamond] Life insurance proceeds payable under the Policy will generally be
reduced by the amount of the withdrawal plus any applicable pro rata
Surrender Charge, unless the withdrawal is combined with a request to
maintain the Specified Amount.
The withdrawal will reduce the Policy's values as described in the "Charges
Deducted Upon Surrender" section.
If the Death Benefit Option for the Policy is Option 1, a withdrawal will
reduce the Specified Amount. However, We will not allow a withdrawal if the
Specified Amount will be reduced below the $10,000.
If the Death Benefit Option for the Policy is Option 2, a withdrawal will
reduce the Accumulation Value, usually resulting in a dollar-for-dollar
reduction in the life insurance proceeds payable under the Policy.
You may allocate a withdrawal among the Divisions and the General Account. If
you do not make such an allocation, We will allocate the withdrawal among the
Divisions and the General Account in the same proportion that the Accumulation
Value in each Division and the General Account Value, less any Policy Debt,
bears to the total Accumulation Value of the Policy, less any Policy Debt. (See
Right to Defer Payment, Policy Changes and Payment of Benefits)
[arrow right] GRACE PERIOD
If Your Policy's Surrender Value is insufficient to satisfy the Monthly
Deduction, Your Policy will go into lapse pending. We will allow you 61 days of
grace for payment of an amount sufficient to continue coverage. This amount
must be sufficient in amount, after the deduction of the premium tax charge, to
cover the monthly deductions for at least three policy months.
Written notice will be mailed to Your last known address, according to Our
records, not less than 61 days before termination of the Policy. This notice
will also be mailed to the last known address of any assignee of record.
The Policy will stay in force during the Grace Period. If the Insured dies
during the Grace Period, we will reduce the Death Benefit by the amount of any
Monthly Deduction due and the amount of any outstanding Policy Debt.
If payment is not made within 61 days after the Monthly Anniversary Day, the
Policy will terminate without value at the end of the Grace Period.
[arrow right] REINSTATEMENT OF A LAPSED POLICY
If the Policy terminates as provided in its Grace Period, it may be reinstated.
To reinstate the Policy, the following conditions must be met:
[diamond] The Policy has not been fully surrendered.
[diamond] You must apply for reinstatement within 5 years after the date of
termination.
[diamond] We must receive evidence of insurability, satisfactory to Us, that the
Insured is insurable at the original rating class.
[diamond] The premium payment You make must be sufficient, after deduction of
the premium tax
18
<PAGE>
charge, to cover the monthly deductions for three policy months after
the einstatement date.
[diamond] If a loan was outstanding at the time of lapse, We will require that
either You repay or reinstate the loan before We reinstate the Policy.
[diamond] Supplemental Benefits will be reinstated only with Our consent. (See
Grace Period and Premium Payments)
[arrow right] RIGHT TO DEFER PAYMENT
Payments of any Separate Account Value will be made within 7 days after Our
receipt of Your Written Request. However, the Company reserves the right to
suspend or postpone the date of any payment of any benefit or values for any
Valuation Period (1) when the New York Stock Exchange is closed (except
holidays or weekends); (2) when trading on the Exchange is restricted; (3) when
an emergency exists as determined by the SEC so that disposal of the securities
held in the Funds is not reasonably practicable or it is not reasonably
practicable to determine the value of the Funds' net assets; or (4) during any
other period when the SEC, by order, so permits for the protection of security
holders. For payment from the Separate Account in such instances, We may defer
payment of Full Surrender and Withdrawal Values, any Death Benefit in excess of
the current Specified Amount, transfers and any portion of the Loan Value.
Payment of any General Account Value may be deferred for up to six months,
except when used to pay amounts due Us.
[arrow right] POLICY LOANS
We will grant loans at any time after the first policy anniversary using the
Policy as security for the loan. The amount of the loan will not be more than
the Loan Value. Unless otherwise required by state law, the Loan Value for this
Policy is 90% of Cash Value at the end of the Valuation Period during which the
loan request is received. The maximum amount You can borrow at any time is the
Loan Value reduced by any outstanding Policy Debt. Loans have priority over the
claims of any assignee or any other person.
We will usually disburse loan proceeds within seven days from the Date of
Receipt of a loan request, although we reserve the right to postpone payments
under certain circumstances. See "Right to Defer Payment". We may, in our sole
discretion, allow You to make loans by telephone if You have filed a proper
telephone authorization form with Us. So long as Your Policy is in force and an
Insured is living, You may repay your loan in whole or in part at any time
without penalty.
Accumulation Value equal to the loan amount will be maintained in the General
Account to secure the loan. You may allocate a policy loan among the Divisions
of the Separate Account and the existing General Account value that is not
already allocated to secure a Policy Loan, and We will transfer Separate
Account Value as You have indicated. If you do not make this allocation, the
loan will be allocated among the Divisions and the General Account in the same
proportion that the Accumulation Value in each Division and the Accumulation
Value in the General Account less Policy Debt bears to the total Accumulation
Value of the Policy, less Policy Debt, on the date of the loan. We will make a
similar allocation for unpaid loan interest due. A policy loan removes
Accumulation Value from the investment experience of the Separate Account,
which will have a permanent effect on the Accumulation Value and Death Benefit
even if the loan is repaid. General Account Value equal to Policy Debt will
accrue interest daily at the lesser of an annual rate of 6% or the interest
rate currently credited to the General Account.
We will charge interest on any outstanding Policy Debt. The maximum interest
rate is 8% compounded annually. There are two types of loans available. A Type
A loan is charged the same interest rate as the interest credited to the amount
of the Accumulation Value held in the General Account to secure loans. The
amount available at any time for a Type A loan is the maximum loan amount, less
the Guideline Single Premium at issue, as set forth in the Code, less any
outstanding Type A loans. Any other loans are Type B loans. A Type B loan is
charged the prevailing interest rate, but not more than the maximum. One loan
request can result in both a Type A and a Type B loan. A loan request will
first be granted as a Type A loan, to the extent available, and then as a Type
B loan. Once a loan is granted, it remains a Type A or Type B loan until it is
repaid. Interest is due and payable at the end of each Policy Year and any
unpaid interest due becomes loan principal. Increases in the Specified Amount
will affect the amount available for a Type A loan; however, decreases in the
Specified Amount will have no effect on the amount available.
In the future, We may charge lower interest rates on policy loans. If the loan
interest rate is ever less than
19
<PAGE>
8%, We can increase the rate once each policy year by a maximum of 1%. We will
notify You and any assignee of record of any change in the interest rate at
least 30 days before the effective date of the increase. Changes in the
interest rates will not affect the spread.
If Policy Debt exceeds Cash Value, We will notify You and any assignee of
record. You must make a payment within 61 days from the date Policy Debt
exceeds Cash Value or the Policy will lapse and terminate without value (See
"Grace Period"). If this happens, You may be taxed on the total appreciation
under the Policy. However, You may reinstate the Policy, subject to proof of
insurability and payment of a reinstatement premium. See "Reinstatement of a
Lapsed Policy".
You may repay the Policy Debt, in whole or in part, at any time during the
Insured's life, so long as the Policy is in force. The amount necessary to
repay all Policy Debt in full will include any accrued interest. If there is
any Policy Debt, We will apply payments received from you as follows: We will
apply premium payments in the amount of the Planned Periodic Premium, received
at the Premium Frequency, as premium unless You specifically designate the
payment as a loan repayment. We will apply premium payments in excess of the
Planned Periodic Premium or premium payments received other than at the Premium
Frequency, first as policy loan repayments, then as premium when you have
repaid the Policy Debt. If You have both a Type A and a Type B loan, we will
apply repayments first to the Type B loan and then to the Type A loan. Upon
repayment of all or part of the Policy Debt, We will transfer the Policy's
Accumulation Value securing the repaid portion of the debt in the General
Account to the Divisions and the General Account in the same proportion in
which the loan was taken.
An outstanding loan amount will decrease the Surrender Value available under
the Policy. For example, if a Policy has a Surrender Value of $10,000, You may
take a loan of 90% or $9,000, leaving a new Surrender Value of $1,000. If a
loan is not repaid, the decrease in the Surrender Value could cause the Policy
to lapse. In addition, the Death Benefit will be decreased because of an
outstanding Policy Loan. Furthermore, even if You repay the loan, the amount of
the Death Benefit and the Policy's Surrender Value may be permanently affected
since the Loan Value is not credited with the investment experience of the
Funds.
[arrow right] POLICY CHANGES
You may make changes to Your Policy, as described below, by submitting a
Written Request to Our Home Office. Supplemental Policy Specification pages
and/or a notice confirming the change will be sent to You once the change is
completed.
Increase or Decrease in Specified Amount
You may increase the Specified Amount at any time after the Policy has been
issued or You may decrease the Specified Amount after the first Policy Year, so
long as You are under attained age 80, and You send Us a written request along
with the Policy. However:
[diamond] Any increase or decrease must be at least $25,000
[diamond] Any increase or decrease will affect Your cost of insurance charge
[diamond] Any increase or decrease may affect the monthly deduction adjustment
[diamond] Any increase will affect the amount available for a Type A loan, but a
decrease will not have any such effect
[diamond] Any increase will require a supplemental application and satisfactory
evidence of insurability
[diamond] Any increase will be effective on the Monthly Anniversary Date after
the Date of Receipt of the request
[diamond] Any decrease will first apply to coverage provided by the most recent
increase, then to the next most recent, and so on, and finally to the
coverage under the original application
[diamond] Any decrease may result in federal tax implications under DEFRA/TAMRA
(See "Federal Tax Matters")
Change in Death Benefit Option
Any change in the Death Benefit Option is subject to the following conditions:
[diamond] The change will take effect on the Monthly Deduction Day on or next
following the date on which Your Written Request is received.
[diamond] There will be no change in the Surrender Charge.
[diamond] Evidence of insurability may be required.
[diamond] Changes from Option 1 to 2 will be allowed at any time while this
Policy is in force subject to evidence of insurability satisfactory to
Us. The Specified Amount will be reduced to equal the Specified Amount
less the Accumulation Value at the time of the change.
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<PAGE>
[diamond] Changes from Option 2 to 1 will be allowed at any time while this
Policy is in force. The new Specified Amount will be increased to
equal the Specified Amount plus the Accumulation Value as of the date
of the change.
(See Surrender Charge and Right of Policy Examination)
[arrow right] RIGHT OF POLICY EXAMINATION ("FREE LOOK PERIOD")
The Policy has a free look period during which You may examine the Policy. If
for any reason You are dissatisfied, You may return the Policy to Us at Our
Home Office or to Our representative within 10 days of delivery of the Policy
to You (or within a different period if required by State law), within 45 days
of the date You signed the application for insurance, or with 10 days after
mailing or personal delivery of the Right of Withdrawal, whichever is later.
Return the Policy to Jefferson Pilot Financial Insurance Company at One Granite
Place, Concord, New Hampshire 03301. Upon its return, the Policy will be deemed
void from its beginning. We will return to You within seven days all payments
We received on the Policy. Prior to the Allocation Date, We will hold the
initial Net Premium in Our General Account. We will retain any interest earned
if the Free Look right is exercised, unless otherwise required by State law.
[arrow right] SUPPLEMENTAL BENEFITS
The supplemental benefits currently available as riders to the Policy include
the following:
[diamond] Children's Term Insurance Rider - provides increments of level term
insurance on the Insured's children, subject to the terms in the
rider.
[diamond] Guaranteed Insurability Rider - provides that the Insured can purchase
additional insurance at certain future dates, or increase the
Specified Amount, without evidence of insurability, subject to the
terms of the rider.
[diamond] Accidental Death Benefit Rider - provides additional insurance if the
Insured's death results from an accident, as defined in the rider.
[diamond] Guaranteed Death Benefit Rider - guarantees that the Policy will stay
in force during the guarantee period specified in the rider with a
Death Benefit equal to the Specified Amount, subject to the terms of
the rider.
[diamond] Waiver of Specified Premium Rider - provides for payment by Us of a
specified monthly premium into the Policy while You are disabled, as
defined in the rider.
[diamond] Waiver of Premium Disability Rider - provides for waiver of monthly
deductions while You are totally disabled, as defined in the rider.
[diamond] Exchange of Insured Rider - allows You to exchange the Policy for a
reissued policy on the life of a substitute insured, subject to the
terms of the rider.
[diamond] Terminal Illness Accelerated Benefit Rider - provides for an advance
of up to 50% of a policy's eligible death benefit subject to a maximum
of $250,000 per insured with a medical determination of terminal
illness, subject to the terms of the rider.
[diamond] Extension of Maturity Date Rider - allows You to extend the original
Maturity Date of the Policy subject to the terms of the rider.
[diamond] Other Insured Term Rider - provides increments of level terms
insurance on the life of an insured other than the Insured under the
Policy, subject to the terms of the rider.
[diamond] Primary Insured Term Rider - provides increments of level term
insurance on the Insured's life, subject to the terms of the rider.
[diamond] Automatic Increase Rider - allows for scheduled annual increases in
Specified Amount subject to the terms of the rider.
These riders may not be available in all states.
Other riders for supplemental benefits may become available under the Policy
from time to time. The charges for each of these riders are illustrated in Your
Policy.
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<PAGE>
death benefit
- --------------------------------------------------------------------------------
The Death Benefit under the Policy will be paid in a lump sum unless You or the
beneficiary have elected that they be paid under one or more of the available
Settlement Options.
Payment of the Death Benefit may be delayed if the Policy is being contested.
You may elect a Settlement Option for the beneficiary and deem it irrevocable.
You may revoke or change a prior election. The beneficiary may make or change
an election within 90 days of the Insured's death, unless You have made an
irrevocable election.
All or part of the Death Benefit may be applied under one of the Settlement
Options, or such options as We may choose to make available in the future.
If the Policy is assigned as collateral security, We will pay any amount due
the assignee in a lump sum. Any excess Death Benefit due will be paid as
elected.
(See "Right to Defer Payment" and "Policy Settlement")
policy settlement
- --------------------------------------------------------------------------------
We will pay proceeds in whole or in part in the form of a lump sum of the
Settlement Options available under the Policy upon the death of the Insured or
upon Surrender or upon maturity.
A Written Request may be made to elect, change or revoke a Settlement Option
before payments begin under any Settlement Option. This request will take
effect upon its filing at our Home Office. If no Settlement Option has been
elected by You when the Death Benefit becomes payable to the beneficiary, that
beneficiary may make the election.
[arrow right] SETTLEMENT OPTIONS
The following Settlement Options are available under the Policy:
Option A--Installments of a specified amount. Payments of an agreed amount to
be made monthly until the proceeds and interest are exhausted.
Option B--Installments for a specified period. Payments to be made monthly for
an agreed number of years.
Option C--Life Income. Payments to be made each month for the lifetime of the
payee. We guarantee that payments will be made for a minimum of 10, 15 or 20
years, as agreed upon.
Option D--Interest. We will pay interest on the proceeds We hold, calculated at
the compound rate of 3% per year. We will make interest payments at 12, 6, 3 or
1 month intervals.
Option E--Interest: Retained Asset Account (Performance Plus Account). We will
pay interest on the proceeds We hold, based on the floating 13-week U.S.
Treasury Bill rate fixed quarterly. The payee can write checks against such
account at any time and in any amount up to the total in the account. The
checks must be for a minimum of $250.
The interest rate for Options A, B and D will not be less than 3% per year. The
interest rate for Option C will not be less than 2.5% per year. The interest
rate for Option E will not be less than 2% per year.
Unless otherwise stated in the election of any option, the payee of the policy
benefits shall have the right to receive the withdrawal value under that
option. For Options A, D and E, the withdrawal value shall be any unpaid
balance of proceeds plus accrued interest. For Option B, the withdrawal value
shall be the commuted value of the remaining payments. We will calculate this
withdrawal value on the same basis as the original payments. For Option C, the
withdrawal value will be the commuted value of any remaining guaranteed
payments. If the payee is alive at the end of the guarantee period, We will
resume the payment on that date. The payment will then continue for the
lifetime of the payee.
If the payee of policy benefits dies before the proceeds are exhausted or the
prescribed payments made, a final payment will be made in one sum to the estate
of the last surviving payee. The amount to be paid will be calculated as
described for the applicable option in the Withdrawal Value provision of the
Policy.
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<PAGE>
An option may be made only if proceeds are $25,000 or more. We reserve the
right to change payment intervals to increase payments to $250 each.
Calculation of Settlement Option Values
The value of the Settlement Options will be calculated as set forth in the
Policy.
the company
- --------------------------------------------------------------------------------
Jefferson Pilot Financial Insurance Company ("JP Financial" or "the Company")
is a stock life insurance company chartered in 1903 in Tennessee. Prior to May
1, 1998, JP Financial was known as Chubb Life Insurance Company of America. In
1991 Chubb Life redomesticated from the State of Tennessee to the State of New
Hampshire and is now a New Hampshire life insurance company. Effective April
30, 1997, Chubb Life, formerly a wholly-owned subsidiary of The Chubb
Corporation, became a wholly-owned subsidiary of Jefferson-Pilot Corporation, a
North Carolina corporation. The principal offices of Jefferson-Pilot
Corporation are located at 100 North Greene Street, Greensboro, North Carolina
27401; its telephone number is 336-691-3000. Chubb Life changed its name to
Jefferson Pilot Financial Insurance Company effective May 1, 1998. JP
Financial's home office and service center are located at One Granite Place,
Concord, New Hampshire 03301; its telephone number is 800-258-3648.
The Company is licensed to do life insurance business in forty-nine states of
the United States, Puerto Rico, the U.S. Virgin Islands, Guam and in the
District of Columbia.
At December 31, 1998, the Company and its subsidiaries had total assets of
$5,335,079,000 and had over $68 billion of insurance in force, while total
assets of Jefferson-Pilot Corporation and its subsidiaries (including the
Company) were approximately $24 billion.
The Company writes individual life insurance and annuities. It is subject to
New Hampshire laws governing insurance.
The Company is currently rated AAA (Superior) by Duff & Phelps, AAA (Superior)
by Standard & Poor's Corporation and A+ (Superior) by A.M. Best and Company.
These ratings do not apply to JPF Separate Account A, but reflect the opinion
of the rating companies as to the Company's relative financial strength and
ability to meet its contractual obligations to its policyowners.
23
<PAGE>
directors and officers
- --------------------------------------------------------------------
MANAGEMENT OF JP FINANCIAL
Executive Officers and Directors of JP Financial
Directors
<TABLE>
<CAPTION>
Principal Occupation and
Name Business Address
- ------------------------------ -------------------------------------------------------------
<S> <C>
Dennis R. Glass .............. Executive Vice President
(also serves as Executive Vice President, Chief Financial
Officer and Treasurer of Jefferson-Pilot Corporation and
Executive Vice President, Chief Financial Officer and
Treasurer of Jefferson-Pilot Life Insurance Company)
100 North Greene Street
Greensboro, North Carolina 27401
Kenneth C. Mlekush ........... President
(also serves as Executive Vice President of Jefferson Pilot-
Life Insurance Company)
100 North Greene Street
Greensboro, North Carolina 27401
David A. Stonecipher ......... Chairman and Chief Executive Officer
(also serves as President and Chief Executive Officer of
Jefferson-Pilot Life Insurance Company)
100 North Greene Street
Greensboro, North Carolina 27401
E. Jay Yelton ................ Executive Vice President
(also serves as Executive Vice President of Jefferson-Pilot
Life Insurance Company)
100 North Greene Street
Greensboro, North Carolina 27401
</TABLE>
Executive Officers (Other Than Directors)
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Charles C. Cornelio .............. Executive Vice President
Leslie L. Durland ................ Executive Vice President
John D. Hopkins .................. Executive Vice President, General Counsel
Reggie D. Adamson ................ Senior Vice President
Ronald R. Angarella .............. Senior Vice President
John C. Ingram ................... Senior Vice President
Hal B. Phillips, Jr. ............. Senior Vice President, Chief Life Actuary
Richard T. Stange ................ Senior Vice President, Deputy General Counsel
Paul J. Strong ................... Senior Vice President
John W. Wells .................... Senior Vice President
James R. Abernathy ............... Vice President
Margaret O. Cain ................. Vice President
Rebecca M. Clark ................. Vice President
Richard C. Dielensnyder .......... Vice President
Kenneth S. Dwyer ................. Vice President
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Ronald H. Emery .................... Vice President
Donald M. Kane ..................... Vice President
Patrick A. Lang .................... Vice President
Shari J. Lease ..................... Vice President
Donna L. Metcalf ................... Vice President
Thomas E. Murphy, Jr. M.D. ......... Vice President and Medical Director
Robert A. Reed ..................... Vice President, Secretary
James M. Sandelli .................. Vice President
Russell C. Simpson ................. Vice President and Treasurer
William A. Spencer ................. Vice President
Francis A. Sutherland, Jr. ......... Vice President
John A. Thomas ..................... Vice President
John A. Weston ..................... Vice President
</TABLE>
The officers and employees of JP Financial who have access to the assets of
Separate Account A are covered by a fidelity bond issued by American
International Group in the amount of $20,000,000.
additional information
- --------------------------------------------------------------------------------
[arrow right] REPORTS TO POLICYOWNERS
We will maintain all records relating to the Separate Account. At least once in
each Policy Year, We will send You an Annual Summary containing the following
information:
1. A statement of the current Accumulation Value and Cash Value since the prior
report or since the Issue Date, if there has been no prior report;
2. A statement of all premiums paid and all charges incurred;
3. The balance of outstanding Policy Loans for the previous calendar year;
4. Any reports required by the 1940 Act.
We will promptly mail confirmation notices at the time of the following
transactions:
1. policy issue;
2. receipt of premium payments;
3. initial allocation among Divisions on the Allocation Date;
4. transfers among Divisions;
5. change of premium allocation;
6. change between Death Benefit Option 1 and Option 2;
7. increases or decreases in Specified Amount;
8. withdrawals, surrenders or loans;
9. receipt of loan repayments;
10. reinstatements; and
11. redemptions due to insufficient funds.
[arrow right] RIGHT TO INSTRUCT VOTING OF FUND SHARES
In accordance with our view of present applicable law, We will vote the shares
of the Funds held in the Separate Account in accordance with instructions
received from Policyowners having a voting interest in the Funds. Policyowners
having such an interest will receive periodic reports relating to the Fund,
proxy material and a form for giving voting instructions. The number of shares
You have a right to vote will be determined as of a record date established by
the Fund. The number of votes that You are entitled to direct with respect to a
Fund will be determined by dividing Your Policy's Accumulation Value in a
Division by the net asset value per share of the corresponding Portfolio in
which the Division invests. We will solicit Your voting instructions by mail at
least 14 days before any shareholders meeting.
We will cast the votes at meetings of the shareholders of the Fund and will be
based on instructions received from Policyowners. However, if the Investment
Company Act of 1940 or any regulations thereunder should be amended or if the
present interpretation should change, and as a result We determine that We are
permitted to vote the shares of the Fund in our right, We may elect to do so.
We will vote Fund shares for which We do not receive timely instructions and
Fund shares which
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are not otherwise attributable to Policyowners in the same proportion as the
voting instruction which We receive for all Policies participating in each Fund
through the Separate Account. We reserve the right to vote any or all such
shares at Our discretion to the extent consistent with then current
interpretations of the 1940 Act and rules thereunder.
[arrow right] DISREGARD OF VOTING INSTRUCTIONS
When required by state insurance regulatory authorities, We may disregard
voting instructions if the instructions require that the shares be voted so as
to cause a change in the sub-classification or investment objectives of a Fund
or to approve or disapprove an investment advisory contract for a Fund. We may
also disregard voting instructions initiated by a Policyowner in favor of
changes in the investment policy or the investment adviser of the Fund if We
reasonably disapprove of such changes.
We only disapprove a change if the proposed change is contrary to state law or
prohibited by state regulatory authorities or if We determine that the change
would have an adverse effect on the Separate Account if the proposed investment
policy for a fund would result in overly speculative or unsound investments. In
the event that We do disregard voting instructions, a summary of that action
and the reasons for such action will be included in the next annual report to
Policyowners.
[arrow right] STATE REGULATION
Jefferson Pilot Financial Insurance Company is governed under the laws of the
state of New Hampshire. An annual statement is filed with the New Hampshire
Insurance Commissioner on or before March 1 of each year covering the
operations and reporting on the financial condition of JP Financial as of
December 31 of the preceding year. Periodically, the Commissioner examines the
assets and liabilities of JP Financial and Separate Account A and verifies
their adequacy and a full examination of JP Financial's operations is conducted
by the Commissioner at least every five years.
In addition, JP Financial is subject to the insurance laws and regulations of
other states within which it is licensed to operate. Generally, the insurance
department of any other state applies the laws of the state of domicile in
determining permissible investments.
We will offer the Policy for sale in all jurisdictions where We are authorized
to do business and where the Policy has been approved by the appropriate
Insurance Department or regulatory authorities. Any significant variations from
the information appearing in this Prospectus which are required due to
individual state requirements are contained in endorsements to the Policy.
[arrow right] LEGAL MATTERS
We know or no material legal proceedings pending to which either the Separate
Account or the Company is a party or which would materially affect the Separate
Account. The legal validity of the securities described in the prospectus has
been passed on by Our Counsel. The law firm of Jorden Burt Boros Cicchetti
Berenson & Johnson, 1025 Thomas Jefferson Street, Suite 400, East Lobby,
Washington, DC 20007-5201, serve as Our Special Counsel with regard to the
federal securities laws.
[arrow right] THE REGISTRATION STATEMENT
We have filed a Registration Statement under the Securities Act of 1933
relating to the offering described in this Prospectus. This Prospectus does not
include all of the information set forth in the Registration Statement, certain
portions of which have been omitted pursuant to SEC rules and regulations. You
should refer to the instrument as filed to obtain any omitted information.
[arrow right] FINANCIAL STATEMENTS
Our financial statements which are included in the Prospectus should be
considered only as bearing on Our ability to meet Our obligations under the
Policy. They should not be considered as bearing on the investment experience
of the assets held in the Separate Account.
Our most current audited financial statements are those as of December 31,
1998.
There has been no material adverse change in Our financial position since the
dates of the audited financial statements.
[arrow right] EMPLOYMENT BENEFIT PLANS
Employers and employee organizations should consider, in connection with
counsel, the impact of Title VII of the Civil Rights Act of 1964 on the
purchase of policy in connection with an employment-related insurance or
benefit plan. The U.S. Supreme Court held, in a 1983 decision, that, under
Title VII, optional annuity benefits under a deferred compensation plan could
not vary on the basis of sex.
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[arrow right] DISTRIBUTION OF THE POLICY
Jefferson Pilot Variable Corporation (JPVC) a North Carolina corporation on
January 13, 1970 will serve as principal underwriter of the securities offered
under the Policy as defined by the federal securities laws. The Policy will be
sold by individuals who, in addition to being licensed as life insurance agents
for Us, are also registered representatives of broker-dealers who have entered
into written sales agreements with JPVC. Any such broker-dealers will be
registered with the SEC and will be members of the National Association of
Securities Dealers, Inc. We may also offer and sell policies directly.
We will pay commissions under various schedules and accordingly commissions
will vary with the form of schedule selected. In any event, commissions to
registered representatives are not expected to exceed 90% of first year target
premium and 5% of first year excess premium, and 5% of target premium for the
second through fifteenth policy years for both renewals and excess premium.
Compensation arrangements vary among broker-dealers. Override payments, expense
allowances and bonuses based on specific production levels may be paid.
Alternative Commission Schedules will reflect differences in up-front
commissions versus ongoing asset-based compensation. Except as previously
described in this prospectus, no separate deductions from premiums are made to
pay sales commissions or sales expenses.
[arrow right] INDEPENDENT AUDITORS
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts, are the
independent auditors for the Separate Account and Ernst & Young LLP, 100 North
Greene Street, Greensboro, North Carolina, are the independent auditors for the
Company. The services provided to the Separate Account include primarily the
examinations of the Separate Account's financial statements and the review of
the filing made with the SEC.
[arrow right] YEAR 2000
The year 2000 issue relates to the way computer systems and programs define
calendar dates. By using only two digit dates, they could fail or make
miscalculations due to the inability to distinguish between dates in the 1900's
and in the 2000's. The potential problem also exists in some systems and
equipment not typically thought of as "computer-related" (referred to as
"non-IT") which contain hardware or software that must handle dates.
In 1995, Our parent, Jefferson-Pilot Corporation (the "Company"), began work on
a project to ensure the Year 2000 compliance of all systems, non-IT embedded
software equipment, and all Company key vendors and service providers. The
target completion date for the project is September 30, 1999.
The Company has completed the assessment and strategy phases for mainframe
applications, operating systems and hardware. The Company's new business and
policyholder administration systems and the general ledger are on the
mainframe. Currently, the majority of all mainframe systems have been tested to
confirm that their performance will not be affected by dates extending after
1999 and are compliant. With respect to significant policyholder systems, the
majority of the testing has been completed. For other mainframe systems the
project is on schedule.
For the majority of its non-IT related systems and equipment, the Company has
been advised by vendors that systems and equipment are currently Year 2000
compliant. The Company is obtaining written documentation regarding compliance.
Completion for non-IT systems and equipment is scheduled for September 1999.
The most significant category of key business partners is financial
institutions. Their critical functions include safeguarding and managing
investment portfolios, processing of the Company's operating bank accounts, and
sales/distribution. Other partner categories include insurance agents and
marketing organizations, suppliers of communication services, utilities,
materials and supplies. The Company has conducted surveys of all its software
and hardware vendors and testing is underway. Critical business partners have
been identified and surveys initiated. Results of these surveys are being
analyzed and appropriate testing or other due diligence conducted in the second
and third quarters of 1999.
The Company expects its critical policyholder systems to be compliant by the
end of the second quarter of 1999.
From Year 2000 problems, the Company could experience an interruption in its
ability to collect and process premiums, process claim payments, safeguard and
manage its invested assets and operating cash accounts, accurately maintain
policyholder information, accurately maintain accounting records, issue new
policies and/or perform adequate customer service. While the Company believes
the occurrence of such a situation is unlikely, a possible worst case
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scenario might include one or more of the Company's significant policyholder
systems being non-compliant, resulting in a material disruption to the
Company's operations.
Although the Company plans completion of certification of all internal systems
and non-IT equipment well in advance of 2000, the Company recognizes the need
to plan for unanticipated problems resulting from failure of internal systems
or equipment or from failures of the Company's business partners, providers,
suppliers or other critical third parties. The Company began work on
contingency plans for all mission critical functions in the first quarter of
1999.
[arrow right] GROUP OR SPONSORED ARRANGEMENTS
Policies may be purchased under group or sponsored arrangements. A group
arrangement includes a program under which a trustee, employer or similar
entity purchases individual Policies covering a group of individuals on a group
basis. A sponsored arrangement includes a program under which an employer
permits group solicitation of its employees or an association permits group
solicitation of its members for the purchase of Policies on an individual
basis.
We may reduce the following types of charges for Policies issued in connection
with group or sponsored arrangement: the cost of insurance charge, surrender or
withdrawal charges, administrative charges, charges for withdrawal or transfer,
the guaranteed death benefit charge and charges for optional rider benefits. We
may also issue Policies in connection with group or sponsored arrangements on a
"non-medical" or guaranteed issue basis; actual monthly cost of insurance
charges may be higher than the current cost of insurance charges under
otherwise identical Policies that are medically underwritten. We may also
specify different minimum Specified Amounts at issue for Policies issued in
connection with group or sponsored arrangements.
We may also reduce or eliminate certain charges or underwriting requirements
for Policies issued in connection with an exchange of another JP Financial
policy or a policy of any JP Financial affiliate.
The amounts of any reduction, the charges to be reduced, the elimination or
modification of underwriting requirements and the criteria for applying a
reduction or modification will generally reflect the reduced sales and
administrative effort, costs and differing mortality experience appropriate to
the circumstances giving rise to the reduction or modification. Reductions and
modifications will not be made where prohibited by law and will not be unfairly
discriminatory.
tax matters
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[arrow right] GENERAL
Following is a discussion of the federal income tax considerations relating to
the Policy. This discussion is based on Our understanding of federal income tax
laws as they not exist and are currently interpreted by the Internal Revenue
Service. These laws are complex and tax results may vary among individuals.
Anyone contemplating the purchase of or the exercise of elections under the
Policy should seek competent tax advice.
[arrow right] FEDERAL TAX STATUS OF THE COMPANY
We are taxed as a life insurance company in accordance with the Internal
Revenue Code of 1986 as amended ("Code"). For federal income tax purposes, the
operations of each Separate Account form a part of the Company's total
operations and are not taxed separately, although operations of each Separate
Account are treated separately for accounting and financial statement purposes.
Both investment income and realized capital gains of the Separate Account are
reinvested without tax since the Code does not impose a tax on the Separate
Account for these amounts. However, we reserve the right to make a deduction
for such tax should they be imposed in the future.
[arrow right] LIFE INSURANCE QUALIFICATION
The Policy contains provisions not found in traditional life insurance
policies. However, we believe that it should qualify under the Code as a life
insurance contract for federal income tax purposes, with the result that all
Death Benefits paid under the Policy will generally be excludable from the
gross income of the Policy's Beneficiary.
Section 7702 of the Code includes a definition of life insurance for tax
purposes. The definition provides
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limitations on the relationship between the death benefit and the account
value. If necessary, we will increase your death benefit to maintain compliance
with Section 7702.
The federal income tax treatment of a distribution from the Policy will depend
on whether a Policy is a life insurance policy and also if it is determined to
be a "modified endowment contract", as defined by the Code. If the amount of
premiums paid would cause Your Policy to be a modified endowment contract, We
will refund the excess premium to You within 60 days after the end of the
Policy Year in which the premium was received. If, for any reason, We do not
refund the excess premium within such 60-day period, the excess premium will be
held in a separate deposit fund and credited with interest until We refund it
to You. You may be notified of other options available to You to keep Your
Policy in compliance. You may choose to have the Policy treated as a modified
endowment contract.
A modified endowment contract is a life insurance policy which fails to meet a
"seven-pay" test. In general, a policy will fail the seven-pay test if the
cumulative amount of premiums paid under the policy at any time during the
first seven policy years exceeds a calculated premium level. The calculated
seven-pay premium level is based on a hypothetical policy issued on the same
insured persons and for the same initial death benefit which, under specified
conditions (which include the absence of expense and administrative charges),
would be fully paid for after seven years. Your policy will be treated as a
modified endowment unless the cumulative premiums paid under Your policy, at
all times during the first seven policy years, are less than or equal to the
cumulative seven-pay premiums which would have been paid under the hypothetical
policy on or before such times.
In the first seven policy years, whenever there is a "material change" under a
policy, it will generally be treated as a new contract for purposes of
determining whether the policy is a modified endowment, and subject to a new
seven-pay premium period and a new seven-pay limit. The new seven-pay limit
would be determined taking into account, under a prospective adjustment
formula, the Policy Account Value of the policy at the time of such change. A
materially changed policy would be considered a modified endowment if it failed
to satisfy the new seven-pay limit. A material change could occur as a result
of a change in death benefit option, the selection of additional benefits, the
restoration of a terminated policy and certain other changes.
If the benefits under your policy are reduced, for example, by requesting a
decrease in Face Amount, or in some cases by making partial withdrawals,
terminating additional benefits under a rider, changing the death benefit
option, or as a result of policy termination, the calculated seven-pay premium
level will be redetermined based on the reduced level of benefits and applied
retroactively for purposes of the seven-pay test. If the premiums previously
paid are greater than the recalculated seven-pay premium level limit, the
policy will become a modified endowment unless You request a refund of the
excess premium, as outlined above. Generally, a life insurance policy which is
received in exchange for a modified endowment or a modified endowment which
terminates and is restored, will also be considered a modified endowment.
If a Policy is deemed to be a modified endowment contract, any distribution
from the Policy will be taxed in a manner comparable to distributions from
annuities (i.e., on an "income first") basis; distributions for this purpose
include a loan, pledge, assignment or partial withdrawal. Any such
distributions will be considered taxable income to the extent Accumulation
Value under the Policy exceeds investment in the Policy.
A 10% penalty tax will apply to the taxable portion of such a distribution. No
penalty will apply to distributions (i) to taxpayers 59 1/2 years of age or
older, (ii) in the case of a disability which can be expected to result in
death or to be of indefinite duration or (iii) received as part of a series of
substantially equal periodic annuity payment for the life (or life expectancy)
of the taxpayer or the joint lives (or joint life expectancies) of the taxpayer
and his beneficiary.
To the extent a Policy becomes a modified endowment contract, any distribution,
as defined above, which occurs in the policy year it becomes a modified
endowment contract and in any year thereafter, will be taxable income to You.
Also, any distributions within two years before a Policy becomes a modified
endowment contract will also be income taxable to You to the extent that
accumulation value exceeds investment in the Policy, as described above. The
Secretary of the Treasury has been authorized to prescribe rules
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which would similarly treat other distributions made in anticipation of a
policy becoming a modified endowment contract. For purposes of determining the
amount of any distribution includable in income, all modified endowment
contract policies that fail the above-described tests which are issued by the
same insurer, or its affiliates, to the same policyowner during any calendar
year are treated as one contract. The Secretary of the Treasury is also
authorized to issue regulations in this connection.
In addition to the distribution rules for modified endowment contracts, the
Code and proposed regulations thereunder require that reasonable mortality and
other charges be used in satisfying the definition of life insurance. The death
benefit under a policy which meets this definition will continue to be excluded
from the beneficiary's gross income. We believe that the Policy meets this
definition. As long as a policy does not violate the tests described above, it
will not fail to meet the tests of the Code and the general tax provisions
described herein still apply.
The foregoing summary does not purport to be complete or to cover all
situations, and, as always, there is some degree of uncertainty with respect to
the application of the current tax laws. In addition to the provisions
discussed above, the United States Congress may consider other legislation
which, if enacted, could adversely affect the tax treatment of life insurance
policies. Also, the Treasury Department may amend current regulations or adopt
new regulations with respect to this and other Code provisions. Therefore, You
are advised to consult a tax adviser or attorney for more complete tax
information, specifically regarding the applicability of the Code provisions to
You.
Under normal circumstances, if the Policy is not a modified endowment contract,
loans received under the Policy will be construed as Your indebtedness. You are
advised to consult a tax adviser or attorney regarding the deduction of
interest paid on loans.
Even if the Policy is not a modified endowment contract, a partial withdrawal
together with a reduction in death benefits during the first 15 Policy Years
may create taxable income for You. The amount of that taxable income is
determined under a complex formula and it may be equal to part or all of, but
not greater than, the income on the contract. A partial withdrawal made after
the first 15 Policy Years will be taxed on a recovery of premium-first basis,
and will only be subject to federal income tax to the extent such proceeds
exceed the total amount of premiums You have paid that have not been previously
withdrawn.
If You make a partial withdrawal, surrender, loan or exchange of the Policy, We
may be required to withhold federal income tax from the portion of the money
You receive that is includable in Your federal gross income. A Policyowner who
is not a corporation may elect not to have such tax withheld; however, such
election must be made before We make the payment. In addition, if You fail to
provide us with a correct taxpayer identification number (usually a social
security number) or if the Treasury notifies Us that the taxpayer
identification number which has been provided is not correct, the election not
to have such taxes withheld will not be effective. In any case, You are liable
for payment of the federal income tax on the taxable portion of money received,
whether or not an election to have federal income tax withheld is made. If You
elect not to have federal income tax withheld, or if the amount withheld is
insufficient, then You may be responsible for payment of estimated tax. You may
also incur penalties under the estimated tax rules if the withholding and
estimated tax payments are insufficient. We suggest that You consult with a tax
adviser or attorney as to the tax implications of these matters.
In the event that a Policy owned by the trustee under a pension or profit
sharing plan, or similar deferred compensation arrangement, tax consequences of
ownership or receipt of proceeds under the Policy could differ from those
stated herein. However, if ownership of such a Policy is transferred from the
plan to a plan participant (upon termination of employment, for example), the
Policy will be subject to all of the federal tax rules described above. A
Policy owned by a trustee under such a plan may be subject to restrictions
under ERISA and tax adviser should be consulted regarding any applicable ERISA
requirements.
The Policy may also be used in various arrangements, including nonqualified
deferred compensation or salary continuation plans, split dollar insurance
plans, executive bonus plans and others, where the tax consequences may vary
depending on the particular facts and circumstances of each individual
arrangement. A tax adviser should be consulted regarding the tax attributes of
any particular arrangement where the value of it depends in part on its tax
consequences,.
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Federal estate and local estate, inheritance and other tax consequences of
ownership or receipt of policy proceeds depend upon the circumstances of each
Policyowner and Beneficiary. If the Policyowner is the Insured, the Death
Benefit proceeds will generally be includable in the Policyowner's estate on
his or her death for purposes of the federal estate tax. If the Policyowner
dies and was not the Insured, the fair market value of the Policy may be
included in the Policyowner's estate. In general, Death Benefit proceeds are
not included in the Insured's estate if he or she neither retained incidents of
ownership at death nor had given up ownership within three years before death.
Current Treasury regulation set standards for diversification of the
investments underlying variable life insurance policies in order for such
policies to be treated as life insurance. We believe We presently are and
intend to remain in compliance with the diversification requirements as set
forth in the regulations. If the diversification requirements are not
satisfied, the Policy would not be treated as a life insurance contract. As a
consequence to You, income earned on a Policy would be taxable to You in the
calendar quarter in which the diversification requirements were not satisfied,
and for all subsequent calendar quarters.
The Secretary of the Treasury may issue a regulation or a ruling which will
prescribe the circumstances in which a Policyowner's control of the investments
of a segregated account may cause the Policyowner, rather than the insurance
company, to be treated as the owner of the assets of the account. The
regulation or ruling could impose requirements that are not reflected in the
Policy, relating, for example, to such elements of Policyowner control as
premium allocation, investment selection, transfer privileges and investment in
a division focusing on a particular investment sector. Failure to comply with
any such regulation or ruling presumably would cause earnings on a
Policyowner's interest in Separate Account A to be includable in the
Policyowner's gross income in the year earned. However, We have reserved
certain rights to alter the Policy and investment alternatives so as to comply
with such regulation or ruling. We believe that any such regulation or ruling
would apply prospectively. Since the regulation or ruling has not been issued,
there can be no assurance as to the content of such regulation or ruling or
even whether application of the regulation or ruling will be prospective. For
these reasons, Policyowners are urged to consult with their own tax advisers.
Exercise of the Exchange of Insured rider will give rise to tax consequences.
You should consult a tax adviser prior to exercising such rider.
The foregoing summary does not purport to be complete or to cover all
situations, including the possible tax consequences of changes in ownership.
Counsel and other competent advisers should be consulted for more complete
information.
[arrow right] CHARGES FOR JP FINANCIAL INCOME TAXES
We are presently taxed as a life insurance company under the provisions of the
Code. The Code specifically provides for adjustments in reserves for variable
policies, and We will include flexible premium life insurance and annuity
operations in Our tax return in accordance with these rules.
Currently no charge is made against the Separate Account for Our federal income
taxes, or provisions for such taxes, that may be attributable to the Separate
Account. We may charge each Division for its portion of any income tax charged
to Us on the Division or its assets. Under present laws, We may incur state and
local taxes (in addition to premium taxes) in several states. At present these
taxes are not significant. However, if they increase, We may decide to make
charges for such taxes or provisions for such taxes against the Separate
Account. We would retain any investment earnings on any tax charges accumulated
in a Division. Any such charges against the Separate Account or its Divisions
could have an adverse effect on the investment experience of such Division.
miscellaneous policy provisions
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[arrow right] THE POLICY
The Policy which You receive, the application You make when You purchase the
Policy, any applications for any changes approved by Us and any riders
constitute the whole contract. Copies of all applications are attached to and
made a part of the Policy.
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Application forms are completed by the applicants and forwarded to Us for
acceptance. Upon acceptance, the Policy is prepared, executed by duly
authorized officers of the Company and forward to You.
We reserve the right to make a change in the Policy; however, we will not
change any terms of the Policy beneficial to You.
[arrow right] PAYMENT OF BENEFITS
All benefits are payable at Our Home Office. We may require submissions of the
Policy before We grant Policy Loans, make changes or pay benefits.
[arrow right] SUICIDE AND INCONTESTABILITY
Suicide Exclusion--In most states, if the Insured dies by suicide, while sane
or insane, within 2 years from the Issue Date of this Policy, this Policy will
end and We will refund premiums paid, without interest, less any Policy Debt
and less any withdrawal.
Incontestability--We will not contest or revoke the insurance coverage provided
under the Policy, except for any subsequent increase in Specified Amounts,
after the Policy has been in force during the lifetime of the Insured for two
years from the date of issue or reinstatement. We will not contest or revoke
any increase in the Specified Amount after such increase has been in force
during the lifetime of the Insured for two years following the effective date
of the increase. Any increase will be contestable within the two year period
only with regard to statements concerning this increase.
[arrow right] PROTECTION OF PROCEEDS
To the extent provided by law, the proceeds of the Policy are not subject to
claims by a Beneficiary's creditors or to any legal process against any
Beneficiary.
[arrow right] NONPARTICIPATION
The Policy is not entitled to share in the divisible surplus of the Company. No
dividends are payable.
Additions, Deletions of Substitutions of Investments
We reserve the right, subject to compliance with applicable law, to make
additions to, deletions from, or substitutions for the shares held by any
Division or which any Division may purchase. If shares of a Portfolio should no
longer be available for investment or if, in the judgment of Our management,
further investment in shares of a Portfolio should become inappropriate in view
of the purposes of the Policy, We may substitute shares of any other investment
company for shares already purchased, or to be purchased in the future under
the Policies. No substitution of securities will take place without notice to
and consent of Policyowners and without prior approval of the SEC, all to the
extent required by the 1940 Act. Any surrender by a Policyowner due to a change
in a Portfolio's investment policy will incur any applicable Surrender Charges.
Portfolio shares are subject to certain investment restrictions which may not
be changed without the approval of the majority of the holders of such shares.
See the accompanying Prospectuses for the Funds.
Premium Deposit Fund
As a convenience to You, We will allow You to deposit funds in a premium
deposit fund ("PDF"), subject to the terms and conditions of the appropriate
agreement. Funds deposited in the PDF earn interest at a minimum annual rate of
4%, with interest credited on each monthly anniversary date. Interest on these
funds is not tax deferred and will be reported annually on Form 1099. An amount
equal to the Planned Periodic Premium will be transferred on the Policy Date to
pay premiums on the Policy. You may withdraw all or part of the funds from the
PDF at any time. Commissions are not earned or paid until premium payments are
made pursuant to transfer from the PDF.
[arrow right] CHANGES IN OWNER AND BENEFICIARY; ASSIGNMENT
Unless otherwise stated in the Policy, You may change the Policyowner and the
Beneficiary, or both, at any time while the Policy is in force. A request for
such change must be made in writing and sent to Us at Our Home Office. After We
have agreed, in writing, to the change, it will take effect as of the date on
which Your Written Request was signed.
The Policy may also be assigned. We must be notified in writing if the Policy
has been assigned. Each assignment will be subject to any payments made or
action taken by Us prior to Our notification of such assignment. We are not
responsible for the validity of any assignment. Your rights and the
Beneficiary's interest will be subject to the rights of any assignee of record.
Illustration of Benefits and Values
You may request illustrations of Death Benefits, Accumulation Values and Cash
Values at any time after the Policy Date. Illustrations will be based on
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the existing Accumulation Value and Cash Value at the time of the request and
both the maximum and the then-current costs of insurance rates. Although We do
not currently charge a fee for such illustrations, We reserve the right to
charge an administrative fee, not to exceed $25, to cover the cost of preparing
the illustrations.
[arrow right] MISSTATEMENTS
If the age or sex of the Insured has been misstated in an application,
including a reinstatement application, We will adjust the benefits payable to
reflect the correct age or sex.
Determination of Charges
The portion of the monthly deduction attributable to the General Account will
be determined as of the actual Monthly Anniversary Date, even if the Monthly
Anniversary Date does not fall on a Valuation Date.
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appendix a
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[arrow right] ILLUSTRATIONS OF ACCUMULATION VALUES, CASH VALUES AND DEATH
BENEFITS
Following are a series of tables that illustrate how the Accumulation Values,
Cash Values and death benefits of a policy change with the investment
performance of the Portfolios. The tables show how the Accumulation Values,
Cash Values and Death Benefits of a Policy issued to an Insured of a given age
and given premium would vary over time if the return on the assets held in each
Portfolio were a constant gross annual rate of 0%, 6%, and 12%. The tables on
pages A-2 through A-7 illustrate a Policy issued to a male, age 40, under a
standard rate non-smoker underwriting risk classification. The Accumulation
Values, Cash Values and death benefits would be different from those shown if
the returns averaged 0%, 6%, and 12% over a period of years, but fluctuated
above and below those averages for individual policy years.
The amount of the Accumulation Value exceeds the Cash Value during the first
ten policy years due to the surrender charge. For policy years eleven and
after, the Accumulation Value and Cash Value are equal, since the surrender
charge has been reduced to zero.
The second column shows the Accumulation Value of the premiums paid at the
stated interest rate. The third and sixth columns illustrate the Accumulation
Values and the fourth and seventh columns illustrate the Cash Values of the
Policy over the designated period. The Accumulation Values shown in the third
column and the Cash Values shown in the fourth column assume the monthly charge
for cost of insurance is based upon the current cost of insurance rates as
discounted. The current cost of insurance rates are based on the sex, issue
age, policy year, and rating class of the Insured, and the Specified Amount of
the Policy. The Accumulation Values shown in the sixth column and the Cash
Values shown in the seventh column assume the monthly charge for cost of
insurance is based upon the maximum cost of insurance rates allowable, which
are based on the Commissioner's 1980 Standard Ordinary Mortality Table. The
current cost of insurance rates are different for Specified Amounts below
$100,000, below $249,999 below $1 Million and above $1 Million; therefore, the
values shown would change for Specified Amounts below $100,000 and above
$249,999. The fifth and eighth columns illustrate the death benefit of a Policy
over the designated period. The illustrations of death benefits reflect the
same assumptions as the Accumulation Values and Cash Values. The death benefit
values also vary between tables, depending upon whether Option I or Option II
death benefits are illustrated.
The amounts shown for the death benefit, Accumulation Values, and Cash Values
reflect the fact that the net investment return of the dividends of Separate
Account A is lower than the gross return on the assets in the Portfolios, as a
result of expenses paid by the Portfolios and charges levied against the
divisions of Separate Account A.
The policy values shown take into account a daily investment advisory fee
equivalent to the maximum annual rate of .71% of the aggregate average daily
net assets of the Portfolios, plus a charge of .12% of the aggregate average
daily net assets to cover expenses incurred by the Portfolios for the twelve
months ended December 31, 1998. The .71% investment advisory fee is an average
of the individual investment advisory fees of the twenty Portfolios. The .12%
expense figure is based on a weighted average utilizing average net assets for
the Jefferson Pilot Variable Fund Portfolios, the Templeton International Fund,
the Fidelity VIP and VIP II Portfolios, the Oppenheimer Portfolios and the MFS
Portfolios. Expenses for the Templeton International Fund: Class 1, the
Fidelity Equity Income, Growth, Contrafund and Index 500 Portfolios, the MFS
Research and Utilities Series, and the Oppenheimer Bond and Strategic Bond
Portfolios were provided by the investment managers for these portfolios and JP
Financial has not independently verified such information. The policy values
also take into account a daily charge to each division of Separate Account A
for assuming mortality and expense risks which is equivalent to a charge at an
annual rate of .90% of the average net assets of the divisions of Separate
Account A. After deduction of these amounts, the illustrated gross investment
rates of 0%, 6%, and 12% correspond to approximate net annual rates of -1.73%,
4.27% and 10.27%, respectively.
The hypothetical values shown in the tables do not reflect any charges for
federal income taxes or other taxes against Separate Account A since JP
Financial
A-1
<PAGE>
is not currently making such charges. However, if, in the future, such charges
are made, the gross annual investment rate of return would have to exceed the
stated investment rates by a sufficient amount to cover the tax charges in
order to produce the Accumulation Values, Cash Values and death benefits
illustrated.
The tables illustrate the policy values that would result based on hypothetical
investment rates of return if premiums are paid in full at the beginning of
each year, if all net premiums are allocated to Separate Account A, and if no
policy loans have been made. The values would vary from those shown if the
assumed annual premium payments were paid in installments during a year. The
values would also vary if the policyowner varied the amount or frequency of
premium payments. The tables also assume that the policyowner has not requested
an increase or decrease in Specified Amount, that no withdrawals have been made
and no surrender charges imposed, and that no transfers have been made and no
transfer charges imposed.
Upon request, JP Financial will provide, without charge, a comparable
illustration based upon the proposed insured's age, sex and rating class, the
face amount requested, the proposed frequency and amount of premium payments
and any available riders requested. Existing policyowners may request
illustrations based on existing Cash Value at the time of request. JP Financial
has reserved the right to charge an administrative fee of up to $25 for such
illustrations.
A-2
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN: 12% (10.27% net)
$100,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM(1): $1,425
<TABLE>
<CAPTION>
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ------------------------------------------------ -------------------------------------------------
OF AT 4% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ------ ---------------- -------------- ---------- ---------------------- -------------- ---------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,482 1,220 843 100,000 1,219 842 100,000
2 3,023 2,549 2,173 100,000 2,547 2,170 100,000
3 4,626 4,001 3,624 100,000 3,997 3,621 100,000
4 6,293 5,594 5,217 100,000 5,580 5,203 100,000
5 8,027 7,355 6,978 100,000 7,309 6,933 100,000
6 9,830 9,302 8,989 100,000 9,198 8,884 100,000
7 11,705 11,456 11,205 100,000 11,263 11,012 100,000
8 13,655 13,826 13,638 100,000 13,521 13,333 100,000
9 15,684 16,447 16,322 100,000 15,993 15,868 100,000
10 17,793 19,346 19,284 100,000 18,700 18,638 100,000
11 19,987 22,579 22,579 100,000 21,674 21,674 100,000
12 22,268 26,143 26,143 100,000 24,948 24,948 100,000
13 24,641 30,076 30,076 100,000 28,555 28,555 100,000
14 27,109 34,419 34,419 100,000 32,530 32,530 100,000
15 29,675 39,218 39,218 100,000 36,917 36,917 100,000
16 32,344 44,526 44,526 100,000 41,763 41,763 100,000
17 35,120 50,401 50,401 100,000 47,125 47,125 100,000
18 38,007 56,911 56,911 100,000 53,069 53,069 100,000
19 41,009 64,134 64,134 100,000 59,672 59,672 100,000
20 44,131 72,158 72,158 100,000 67,021 67,021 100,000
21 47,378 81,076 81,076 105,399(2)(3) 75,219 75,219 100,000
22 50,755 90,929 90,929 116,389(2)(3) 84,345 84,345 107,962(2)(3)
23 54,268 101,802 101,802 128,270(2)(3) 94,408 94,408 118,954(2)(3)
24 57,920 113,800 113,800 141,112(2)(3) 105,499 105,499 130,819(2)(3)
25 61,719 127,043 127,043 154,993(2)(3) 117,724 117,724 143,623(2)(3)
30 83,118 216,691 216,691 251,362(2)(3) 200,092 200,092 232,107(2)(3)
35 109,153 363,657 363,657 389,113(2)(3) 334,425 334,425 357,835(2)(3)
40 140,828 606,979 606,979 637,328(2)(3) 556,278 556,278 584,092(2)(3)
</TABLE>
- -------
(1) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase due to adjustment by the corridor percentage. See "Death Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION VALUE, CASH VALUE AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY JP FINANCIAL, THE SEPARATE ACCOUNT, OR THE FUNDS THAT THIS
ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-3
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN: 6% (4.27% net)
$100,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM(1): $1,425
<TABLE>
<CAPTION>
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ------------------------------------------------ --------------------------------------
OF AT 4% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ------ ---------------- -------------- ---------- ---------------------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,482 1,146 769 100,000 1,145 768 100,000
2 3,023 2,325 1,948 100,000 2,323 1,946 100,000
3 4,626 3,540 3,164 100,000 3,537 3,160 100,000
4 6,293 4,799 4,422 100,000 4,785 4,409 100,000
5 8,027 6,115 5,738 100,000 6,071 5,695 100,000
6 9,830 7,491 7,177 100,000 7,392 7,078 100,000
7 11,705 8,929 8,678 100,000 8,749 8,498 100,000
8 13,655 10,423 10,234 100,000 10,142 9,954 100,000
9 15,684 11,984 11,859 100,000 11,573 11,447 100,000
10 17,793 13,617 13,554 100,000 13,039 12,977 100,000
11 19,987 15,343 15,343 100,000 14,543 14,543 100,000
12 22,268 17,122 17,122 100,000 16,081 16,081 100,000
13 24,641 18,953 18,953 100,000 17,651 17,651 100,000
14 27,109 20,844 20,844 100,000 19,250 19,250 100,000
15 29,675 22,797 22,797 100,000 20,883 20,883 100,000
16 32,344 24,815 24,815 100,000 22,547 22,547 100,000
17 35,120 26,896 26,896 100,000 24,240 24,240 100,000
18 38,007 29,043 29,043 100,000 25,963 25,963 100,000
19 41,009 31,255 31,255 100,000 27,717 27,717 100,000
20 44,131 33,531 33,531 100,000 29,496 29,496 100,000
21 47,378 35,870 35,870 100,000 31,298 31,298 100,000
22 50,755 38,275 38,275 100,000 33,120 33,120 100,000
23 54,268 40,748 40,748 100,000 34,955 34,955 100,000
24 57,920 43,290 43,290 100,000 36,797 36,797 100,000
25 61,719 45,905 45,905 100,000 38,639 38,639 100,000
30 83,118 60,260 60,260 100,000 47,713 47,713 100,000
35 109,153 77,787 77,787 100,000 55,903 55,903 100,000
40 140,828 102,080 102,080 107,184(2)(3) 61,476 61,476 100,000
</TABLE>
- -------
(1) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase due to adjustment by the corridor percentage. See "Death Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION VALUE, CASH VALUE AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 6% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY JP FINANCIAL, THE SEPARATE ACCOUNT, OR THE FUNDS THAT THIS
ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-4
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN: 0% (-1.73% net)
$100,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM(1): $1,425
<TABLE>
<CAPTION>
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------------- --------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ------ ---------------- -------------- ---------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,496 1,072 695 100,000 1,071 694 100,000
2 3,067 2,110 1,734 100,000 2,108 1,732 100,000
3 4,717 3,116 2,739 100,000 3,113 2,736 100,000
4 6,449 4,095 3,719 100,000 4,083 3,706 100,000
5 8,268 5,060 4,684 100,000 5,019 4,642 100,000
6 10,177 6,011 5,698 100,000 5,919 5,605 100,000
7 12,182 6,949 6,698 100,000 6,781 6,530 100,000
8 14,288 7,861 7,673 100,000 7,605 7,417 100,000
9 16,498 8,761 8,635 100,000 8,390 8,264 100,000
10 18,820 9,647 9,585 100,000 9,133 9,070 100,000
11 21,257 10,540 10,540 100,000 9,834 9,834 100,000
12 23,816 11,392 11,392 100,000 10,487 10,487 100,000
13 26,503 12,203 12,203 100,000 11,088 11,088 100,000
14 29,324 12,968 12,968 100,000 11,632 11,632 100,000
15 32,287 13,687 13,687 100,000 12,113 12,113 100,000
16 35,398 14,356 14,356 100,000 12,527 12,527 100,000
17 38,664 14,970 14,970 100,000 12,867 12,867 100,000
18 42,093 15,525 15,525 100,000 13,130 13,130 100,000
19 45,694 16,017 16,017 100,000 13,311 13,311 100,000
20 49,475 16,436 16,436 100,000 13,402 13,402 100,000
21 53,445 16,775 16,775 100,000 13,393 13,393 100,000
22 57,613 17,027 17,027 100,000 13,273 13,273 100,000
23 61,990 17,185 17,185 100,000 13,026 13,026 100,000
24 66,586 17,238 17,238 100,000 12,634 12,634 100,000
25 71,412 17,177 17,177 100,000 12,077 12,077 100,000
30 99,409 14,667 14,667 100,000 6,091 6,091 100,000
35 135,142 6,390 6,390 100,000 0 0 0
40 0 0 0 0 0 0 0
</TABLE>
- -------
(1) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION VALUE, CASH VALUE AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY JP FINANCIAL, THE SEPARATE ACCOUNT, OR THE FUNDS THAT THIS
ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-5
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN: 12% (10.27% net)
$100,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM(1): $1,425
<TABLE>
<CAPTION>
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------------- --------------------------------------
OF AT 4% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ------ ---------------- -------------- ---------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,482 1,217 840 101,217 1,215 839 101,215
2 3,023 2,539 2,163 102,539 2,537 2,160 102,537
3 4,626 3,979 3,602 103,979 3,975 3,598 103,975
4 6,293 5,553 5,177 105,553 5,539 5,162 105,539
5 8,027 7,290 6,913 107,290 7,241 6,864 107,241
6 9,830 9,205 8,891 109,205 9,092 8,778 109,092
7 11,705 11,316 11,065 111,316 11,104 10,853 111,104
8 13,655 13,632 13,443 113,632 13,293 13,105 113,293
9 15,684 16,185 16,060 116,185 15,674 15,549 115,674
10 17,793 19,001 18,938 119,001 18,263 18,200 118,263
11 19,987 22,136 22,136 122,136 21,083 21,083 121,083
12 22,268 25,575 25,575 125,575 24,159 24,159 124,159
13 24,641 29,347 29,347 129,347 27,512 27,512 127,512
14 27,109 33,484 33,484 133,484 31,166 31,166 131,166
15 29,675 38,020 38,020 138,020 35,143 35,143 135,143
16 32,344 42,994 42,994 142,994 39,471 39,471 139,471
17 35,120 48,444 48,444 148,444 44,178 44,178 144,178
18 38,007 54,415 54,415 154,415 49,302 49,302 149,302
19 41,009 60,955 60,955 160,955 54,878 54,878 154,878
20 44,131 68,113 68,113 168,113 60,944 60,944 160,944
21 47,378 75,941 75,941 175,941 67,538 67,538 167,538
22 50,755 84,504 84,504 184,504 74,705 74,705 174,705
23 54,268 93,868 93,868 193,868 82,487 82,487 182,487
24 57,920 104,106 104,106 204,106 90,928 90,928 190,928
25 61,719 115,298 115,298 215,298 100,076 100,076 200,076
30 83,118 188,896 188,896 288,896 158,624 158,624 258,624
35 109,153 303,283 303,283 403,283 245,244 245,244 345,244
40 140,828 480,932 480,932 580,932 371,318 371,318 471,318
</TABLE>
- -------
(1) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION VALUE, CASH VALUE AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY JP FINANCIAL, THE SEPARATE ACCOUNT, OR THE FUNDS THAT THIS
ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-6
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN: 6% (4.27% net)
$100,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM(1): $1,425
<TABLE>
<CAPTION>
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------------- --------------------------------------
OF AT 4% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ------ ---------------- -------------- ---------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,482 1,143 766 101,143 1,142 765 101,142
2 3,023 2,316 1,939 102,316 2,314 1,937 102,314
3 4,626 3,521 3,144 103,521 3,517 3,141 103,517
4 6,293 4,765 4,388 104,765 4,751 4,375 104,751
5 8,027 6,062 5,686 106,062 6,016 5,640 106,016
6 9,830 7,415 7,101 107,415 7,310 6,996 107,310
7 11,705 8,825 8,574 108,825 8,631 8,380 108,631
8 13,655 10,284 10,095 110,284 9,979 9,791 109,979
9 15,684 11,804 11,679 111,804 11,353 11,228 111,353
10 17,793 13,390 13,327 113,390 12,750 12,687 112,750
11 19,987 15,065 15,065 115,065 14,169 14,169 114,169
12 22,268 16,781 16,781 116,781 15,604 15,604 115,604
13 24,641 18,534 18,534 118,534 17,048 17,048 117,048
14 27,109 20,327 20,327 120,327 18,496 18,496 118,496
15 29,675 22,162 22,162 122,162 19,943 19,943 119,943
16 32,344 24,034 24,034 124,034 21,384 21,384 121,384
17 35,120 25,938 25,938 125,938 22,810 22,810 122,810
18 38,007 27,871 27,871 127,871 24,217 24,217 124,217
19 41,009 29,824 29,824 129,824 25,595 25,595 125,595
20 44,131 31,786 31,786 131,786 26,931 26,931 126,931
21 47,378 33,747 33,747 133,747 28,211 28,211 128,211
22 50,755 35,696 35,696 135,696 29,419 29,419 129,419
23 54,268 37,621 37,621 137,621 30,533 30,533 130,533
24 57,920 39,508 39,508 139,508 31,527 31,527 131,527
25 61,719 41,342 41,342 141,342 32,374 32,374 132,374
30 83,118 49,001 49,001 149,001 33,428 33,428 133,428
35 109,153 51,434 51,434 151,434 25,154 25,154 125,154
40 140,828 43,053 43,053 143,053 0 0 0
</TABLE>
- -------
(1) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase due to adjustment by the corridor percentage. See "Death Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION VALUE, CASH VALUE AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 6% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY JP FINANCIAL, THE SEPARATE ACCOUNT, OR THE FUNDS THAT THIS
ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-7
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN: 0% (-1.73% net)
$100,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM(1): $1,425
<TABLE>
<CAPTION>
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------------- --------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ------ ---------------- -------------- ---------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,496 1,069 692 101,069 1,068 691 101,068
2 3,067 2,102 1,725 102,102 2,100 1,723 102,100
3 4,717 3,099 2,722 103,099 3,096 2,719 103,096
4 6,449 4,067 3,690 104,067 4,054 3,677 104,054
5 8,268 5,018 4,642 105,018 4,975 4,598 104,975
6 10,177 5,953 5,639 105,953 5,855 5,541 105,855
7 12,182 6,872 6,621 106,872 6,693 6,442 106,693
8 14,288 7,763 7,574 107,763 7,489 7,300 107,489
9 16,498 8,638 8,513 108,638 8,240 8,114 108,240
10 18,820 9,499 9,436 109,499 8,943 8,880 108,943
11 21,257 10,366 10,366 110,366 9,598 9,598 109,598
12 23,816 11,187 11,187 111,187 10,198 10,198 110,198
13 26,503 11,959 11,959 111,959 10,737 10,737 110,737
14 29,324 12,681 12,681 112,681 11,210 11,210 111,210
15 32,287 13,347 13,347 113,347 11,611 11,611 111,611
16 35,398 13,954 13,954 113,954 11,932 11,932 111,932
17 38,664 14,497 14,497 114,497 12,167 12,167 112,167
18 42,093 14,969 14,969 114,969 12,314 12,314 112,314
19 45,694 15,365 15,365 115,365 12,366 12,366 112,366
20 49,475 15,674 15,674 115,674 12,314 12,314 112,314
21 53,445 15,885 15,885 115,885 12,146 12,146 112,146
22 57,613 15,991 15,991 115,991 11,853 11,853 111,853
23 61,990 15,983 15,983 115,983 11,419 11,419 111,419
24 66,586 15,850 15,850 115,850 10,825 10,825 110,825
25 71,412 15,582 15,582 115,582 10,053 10,053 110,053
30 99,409 11,715 11,715 111,715 2,976 2,976 102,976
35 135,142 1,942 1,942 101,942 0 0 0
40 0 0 0 0 0 0 0
</TABLE>
- -------
(1) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION VALUE, CASH VALUE AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY JP FINANCIAL, THE SEPARATE ACCOUNT, OR THE FUNDS THAT THIS
ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-8
<PAGE>
Jefferson Pilot Financial Insurance Company and Subsidiaries
Audited Consolidated Financial Statements
As of December 31, 1998 and for the year then ended
Contents
<TABLE>
<S> <C>
Report of Independent Auditors .......................... F-1
Consolidated Balance Sheet .............................. F-2
Consolidated Statement of Income ........................ F-3
Consolidated Statement of Stockholder's Equity .......... F-4
Consolidated Statement of Cash Flows .................... F-5
Notes to Consolidated Financial Statements .............. F-6
</TABLE>
A-9
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Jefferson Pilot Financial Insurance Company and Subsidiaries
We have audited the accompanying consolidated balance sheet of Jefferson Pilot
Financial Insurance Company (a wholly-owned subsidiary of Jefferson Pilot
Corporation and formerly known as Chubb Life Insurance Company of America) and
subsidiaries as of December 31, 1998, and the related consolidated statements
of income, stockholder's equity, and cash flows for the year 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 audit.
We conducted our audit 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 audit provides 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 Jefferson Pilot
Financial Insurance Company and subsidiaries at December 31, 1998, and the
consolidated results of their operations and their cash flows for the year then
ended, in conformity with generally accepted accounting principles.
Greensboro, North Carolina
February 8, 1999
/s/ Ernst & Young LLP
F-1
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1998
(In Thousands, except for Share Amounts)
<TABLE>
<S> <C>
Assets
Invested assets
Debt securities available-for-sale, at fair value (amortized cost--$2,962,335) .......... $3,099,405
Equity securities available-for-sale, at fair value (cost--$8,350) ...................... 10,668
Policy loans ............................................................................ 246,290
Mortgage loans on real estate ........................................................... 282,355
----------
Total investments ........................................................................ 3,638,718
Cash and cash equivalents ................................................................ 6,514
Accrued investment income ................................................................ 53,626
Due from reinsurers ...................................................................... 245,759
Deferred policy acquisition costs ........................................................ 112,959
Value of business acquired ............................................................... 402,176
Cost in excess of net assets acquired, net of accumulated amortization of $7,490 ......... 155,293
Property and equipment, net of accumulated depreciation of $11,629 ....................... 15,560
Assets held in separate accounts ......................................................... 833,239
Deferred income taxes .................................................................... 2,814
Other assets ............................................................................. 17,128
----------
$5,483,786
==========
Liabilities
Policy liabilities
Policyholder contract deposits .......................................................... $2,721,645
Future policy benefits .................................................................. 632,672
Policy and contract claims .............................................................. 51,089
Premiums paid in advance ................................................................ 2,851
Other policyholders' funds .............................................................. 96,711
----------
Total policy liabilities ................................................................. 3,504,968
Payable to affiliates .................................................................... 57,585
Liabilities related to separate accounts ................................................. 833,239
Securities sold under repurchase agreements .............................................. 102,130
Accrued expenses and other liabilities ................................................... 50,688
----------
4,548,610
Commitments and contingent liabilities ................................................... --
Stockholder's equity
Common stock, par value $5 per share, 600,000 shares authorized, issued and outstanding . 3,000
Paid in capital ......................................................................... 756,066
Retained earnings ....................................................................... 134,007
Accumulated other comprehensive income--net unrealized gains on securities .............. 42,103
----------
935,176
----------
$5,483,786
==========
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Statement of Income
Year Ended December 31, 1998
(In Thousands)
<TABLE>
<S> <C>
Revenues
Premiums and policy charges .................................. $315,937
Net investment income ........................................ 246,306
Realized investment gains .................................... 1,276
Other income ................................................. 508
--------
Total revenues ............................................... 564,027
--------
Benefits and expenses
Policy benefits and claims ................................... 293,709
Commissions and operating expenses, net of deferrals ......... 63,172
Amortization of intangibles .................................. 61,971
Taxes, licenses, and fees .................................... 19,799
--------
Total benefits and expenses .................................. 438,651
--------
Income before federal income tax ............................. 125,376
--------
Federal income tax
Current ..................................................... 35,260
Deferred .................................................... 9,826
--------
45,086
--------
Net income ................................................... $ 80,290
========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Statement of Stockholder's Equity
(In Thousands)
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive Income-- Total
Common Paid in Retained Net Unrealized Gains Stockholder's
Stock Capital Earnings on Securities Equity
-------- ----------- ---------- ------------------------ --------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 ......... $3,000 $782,500 $ 53,717 $33,932 $873,149
Net income ......................... -- -- 80,290 -- 80,290
Other comprehensive income ......... -- -- -- 8,171 8,171
--------
Comprehensive income .............. 88,461
Purchase price adjustment .......... -- (26,434) -- -- (26,434)
--------------------------------------------------------------------------
Balance, December 31, 1998 ......... $3,000 $756,066 $134,007 $42,103 $935,176
==========================================================================
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Year Ended December 31, 1998
(In Thousands)
<TABLE>
<S> <C>
Operating activities
Net income ............................................................................... $ 80,290
Adjustments to reconcile net income to net cash used in operating activities:
Decrease in future policy benefits, policy and contract claims and premiums paid in (109,284)
advance, net
Credits to policyholder accounts, net ................................................... (111,916)
Policy acquisition costs deferred, net of amortization .................................. (74,759)
Net amortization of value of business acquired .......................................... 18,335
Increase in accrued investment income ................................................... (2,902)
Realized investment gains ............................................................... (1,276)
Amortization of investment premiums ..................................................... 6,131
Provision for depreciation .............................................................. 10,737
Provision for deferred income tax ....................................................... 9,826
Change in receivables and asset accruals ................................................ (47,170)
Change in payables and expense accruals ................................................. 62,357
Other operating activities, net ......................................................... (7,817)
----------
Net cash used in operating activities .................................................... (167,448)
Investing activities
Proceeds from sales of debt securities ................................................... 91,131
Proceeds from maturities of debt securities .............................................. 313,234
Proceeds from sales of equity securities ................................................. 11,294
Purchases of debt securities ............................................................. (491,995)
Purchases of equity securities ........................................................... (2,738)
Repayment of mortgage loans .............................................................. 6,101
Mortgage loans originated ................................................................ (166,989)
Policy loans issued, net of repayments ................................................... (9,561)
Other investing activities, net .......................................................... 179
----------
Net cash used in investing activities .................................................... (249,344)
Financing activities
Deposits credited to policyholders' funds ................................................ 523,980
Withdrawals from policyholders' funds .................................................... (230,256)
Short term borrowings, net of repayments ................................................. 221
Proceeds from securities sold under repurchase agreements ................................ 102,130
Decrease in loans payable ................................................................ (1,057)
----------
Net cash provided by financing activities ................................................ 395,018
----------
Net decrease in cash and cash equivalents ................................................ (21,774)
Cash and cash equivalents, beginning of period ........................................... 28,288
----------
Cash and cash equivalents, end of period ................................................. $ 6,514
==========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
1. Basis of Presentation
Nature of Operations
Jefferson Pilot Financial Insurance Company (formerly known as Chubb Life
Insurance Company of America) is a wholly-owned subsidiary of Jefferson-Pilot
Corporation (Jefferson-Pilot) and is principally engaged in the sale of
individual life insurance and investment products. These products are marketed
primarily through personal producing general agents throughout the United
States.
Acquisition
Jefferson-Pilot acquired the Company from The Chubb Corporation on May 13,
1997, with an effective date of April 30, 1997. The acquisition was accounted
for as a purchase, utilizing "pushdown" accounting, and the assets and
liabilities were recorded at fair value as of April 30, 1997. The initial cost
of the acquisition by Jefferson-Pilot in 1997 was $785.5 million. This initial
purchase price was adjusted by $26.4 million in the first quarter of 1998 by
mutual agreement between Jefferson-Pilot and the seller, primarily to reflect
tax strategies not anticipated at the original acquisition date. Accordingly,
adjustments to certain assets and liabilities assigned values at the original
acquisition date were made in 1998 to reflect the difference in the final
purchase price. The cost in excess of net assets acquired was increased by
$13.0 million in 1998 as a result of this adjustment. Amortization expense
relating to the cost in excess of net assets acquired amounted to $4.6 million
in 1998.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) and include the
accounts of Jefferson Pilot Financial Insurance Company (the Company) and its
subsidiaries. Principal subsidiaries include Jefferson Pilot LifeAmerica
Insurance Company and Jefferson Pilot Service Corporation. Significant
intercompany transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements requires management to make estimates
and assumptions affecting the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities as of the date of the
financial statements, and the reported amounts of revenues and expenses for the
reporting period. Those estimates are inherently subject to change and actual
results could differ from those estimates. Included among the material (or
potentially material) reported amounts and disclosures that require extensive
use of estimates are asset valuation allowances, policy liabilities, deferred
policy acquisition costs, value of business acquired and the potential effects
of resolving litigated matters.
Cash and Cash Equivalents
The Company includes with cash and cash equivalents its holdings of short-term
investments which are highly liquid investments that mature within three months
of the date of acquisition.
Invested Assets
Debt and equity securities are classified as securities available-for-sale,
stated at fair value with net unrealized gains and losses included in
accumulated other comprehensive income, net of deferred income taxes and
adjustments to deferred policy acquisition costs and value of business
acquired.
Policy loans are carried at the unpaid balances.
Mortgage loans on real estate are stated at the unpaid balances, net of
allowances for unrecoverable amounts. The Company's mortgage loan portfolio is
comprised primarily of conventional real estate mortgages collateralized by
retail (28%), apartment (21%), industrial (12%), hotel (26%) and office (13%)
properties.
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
2. Summary of Significant Accounting Policies--Continued
Mortgage loan underwriting standards emphasize the credit status of a
prospective borrower, quality of the underlying collateral and conservative
loan-to-value relationships. Of stated mortgage loan balances as of December
31, 1998, 25% are due from borrowers in West South Central states, 24% are due
from borrowers in South Atlantic states, 14% are due from borrowers in West
North Central states, 12% are due from borrowers in Mountain states and 11% are
due from borrowers in Pacific states. No other geographic region represents as
much as 10% of December 31, 1998 mortgage loans.
Amortization of premiums and accrual of discounts on investments in debt
securities are reflected in earnings over the contractual terms of the
investments in a manner that produces a constant effective yield. Realized
gains and losses on dispositions of securities are determined by the specific
identification method.
Recognition of Revenues, Benefits, Claims and Expenses:
Universal Life Products
Universal life products include universal life insurance, variable universal
life insurance and other interest-sensitive life insurance policies. Revenues
for universal life products consist of policy charges for the cost of
insurance, policy administration and surrenders that have been assessed against
policy account balances during the period.
Policy fund liabilities for universal life and other interest-sensitive life
insurance policies are computed in accordance with the retrospective deposit
method and represent policy account balances before surrender charges. Policy
fund assets and liabilities for variable universal life insurance are
segregated and recorded as separate account assets and liabilities. Separate
account assets are carried at market values as of the balance sheet date and
are invested by the Company at the direction of the policyholder. Investments
are made in different portfolios in a series fund. Each of the portfolios has
specific investment objectives and the investment income and investment gains
and losses accrue directly to, and investment risk is borne by, the
policyholders. Accordingly, operating results of the separate account are not
included in the consolidated statement of income.
Policy claims that are charged to expense include claims incurred in the period
in excess of related policy account balances. Other policy benefits include
interest credited to universal life and other interest-sensitive life insurance
policies. Interest crediting rates ranged from 4.2% to 6.85% in 1998.
Investment Products
Investment products include flexible premium annuities, structured settlement
annuities and other supplementary contracts without life contingencies.
Revenues for investment products consist of policy charges for the cost of
insurance, policy administration and surrenders that have been assessed against
policy account balances during the period. Deposits for these products are
recorded as policy fund liabilities, which are increased by interest credited
to the liabilities and decreased by withdrawals and policy charges assessed
against the contract holders. Interest crediting rates ranged from 4% to 8.15%
in 1998.
Traditional Life Insurance Products
Traditional life insurance products include those products with fixed and
guaranteed premiums and benefits. Premium revenues for traditional life
insurance are recognized as revenues when due. The liabilities for future
policy benefits are computed by the net level premium method based on estimated
future investment yield, mortality and withdrawal experience. Interest rate
assumptions ranged from 2% to 6% at December 31, 1998. Mortality is calculated
principally on an experience multiple applied to select and ultimate tables in
common usage in the industry. Estimated withdrawals are determined principally
based on industry tables. Policy benefits and claims are charged to expense as
incurred.
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
2. Summary of Significant Accounting Policies--Continued
Policy and Contract Claims
The liability for policy and contract claims consists of the estimated amount
payable for claims reported but not yet settled, and an estimate of claims
incurred but not reported, which is based on historical experience, adjusted
for trends and circumstances. Management believes that the recorded liability
is sufficient to provide for the associated claims adjustment expenses.
Reinsurance
Reinsurance receivables include amounts recoverable from reinsurers related to
paid benefits and estimated amounts related to unpaid policy and contract
claims, future policy benefits and policyholder contract deposits. The cost of
reinsurance is accounted for over the terms of the underlying reinsured
policies using assumptions consistent with those used to account for the
policies.
Deferred Policy Acquisition Costs
Costs related to obtaining new business, including commissions, certain costs
of underwriting and issuing policies and certain agency office expenses, all of
which vary with and are primarily related to the production of new business,
have been deferred.
Deferred policy acquisition costs for traditional life insurance polices are
amortized over the premium paying periods of the related contracts using the
same assumptions for anticipated premium revenue that are used to compute
liabilities for future policy benefits. For universal life and investment
products, these costs are amortized at a constant rate based on the present
value of the estimated future gross profits to be realized over the terms of
the contracts, not to exceed 25 years.
The carrying amount of deferred policy acquisition costs is adjusted for the
effect of realized gains and losses and the effects of unrealized gains or
losses on debt securities classified as available-for-sale. Deferred policy
acquisition costs are reviewed periodically to determine that the unamortized
portion does not exceed expected recoverable amounts. No impairment adjustments
have been reflected in earnings for any period presented.
Value of Business Acquired
Value of business acquired represents the actuarially determined present value
of anticipated profits to be realized from life insurance and annuity business
purchased, using the same assumptions used to value the related liabilities.
Amortization of the value of business acquired occurs over the related contract
periods, using current crediting rates to accrete interest and a constant
amortization rate based on the present value of expected future profits.
Value of business acquired related to universal life and investment contracts
also is adjusted to reflect the effects that the unrealized gains or losses on
investments classified as available-for-sale would have had on the present
value of estimated gross profits had such gains or losses actually been
realized. This adjustment is excluded from income and charged or credited
directly to accumulated other comprehensive income, net of applicable deferred
income tax.
Cost in Excess of Assets Acquired
The excess of Jefferson-Pilot's purchase price over the fair value of assets
acquired, which has been "pushed down" to the Company level for financial
reporting purposes, is being amortized on a straight-line basis over 35 years.
Property and Equipment
Property and equipment used in operations are carried at cost, less accumulated
depreciation. Depreciation is calculated using the straight-line method over
the estimated remaining useful lives of the assets.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
2. Summary of Significant Accounting Policies--Continued
Federal Income Taxes
The Company is not included in Jefferson-Pilot's consolidated tax return, but
instead files its own return with its wholly-owned subsidiaries.
Deferred income tax assets and liabilities are recorded on the differences
between the tax bases of assets and liabilities and the amounts at which they
are reported in the financial statements. Recorded amounts are adjusted to
reflect changes in income tax rates and other tax law provisions as they become
enacted.
New Accounting Pronouncement
As of January 1, 1998, the Company adopted SFAS 130, "Reporting Comprehensive
Income", which sets standards for the reporting and display of comprehensive
income and its components in financial statements. Adoption had no impact on
the Company's net income or stockholder's equity. Comprehensive income consists
of net income plus other comprehensive income.
During 1998, the Company adopted SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use", which requires
capitalization of certain costs incurred in connection with developing or
obtaining internal use software. The impact of adoption was not material.
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments
and for Hedging Activities". This pronouncement is effective for annual periods
beginning after June 15, 1999. SFAS 133 requires all derivatives to be recorded
on the balance sheet and establishes accounting rules for hedging activities.
The effect of the hedge accounting rules is to offset changes in value or cash
flows of both the hedge and hedged item in earnings in the same period. Changes
in the fair value of derivatives that do not qualify for hedge accounting are
reported in earnings in the period of the change. Based on the limited nature
of the Company's use of derivatives and hedging activities, adoption of this
pronouncement is not expected to have a material impact on the Company's
financial position or results of operations.
3. Derivatives
Use of Derivatives
The Company's investment policy permits the use of derivative financial
instruments such as interest rate swaps in certain circumstances. At December
31, 1998, such interest rate swaps are held to modify specific floating-rate
direct investments. The notional amount is $60 million, with the Company
receiving an average fixed rate of 7.45% and paying an average floating rate of
5.32% based primarily on the 3 month and 6 month LIBOR rates.
The interest rate swaps are used to reduce the impact of interest rate
fluctuations on specific floating-rate direct investments. Interest is
exchanged periodically on the notional value, with the Company receiving a
fixed rate and paying a short-term LIBOR rate on a net exchange basis. The net
amount received or paid under swaps is reflected as an adjustment to investment
income. All of the hedges are of investments classified as available-for-sale,
and net unrealized gains and losses, net of the effects of income taxes and the
impact on deferred policy acquisition costs and the value of business acquired,
are not significant and are included in accumulated other comprehensive income
in stockholder's equity as of December 31, 1998.
Credit and Market Risk
The Company is exposed to credit risk in the event of non-performance by
counterparties to swap agreements. The Company limits this exposure by entering
into swap agreements with counterparties having high credit ratings and by
regularly monitoring the ratings.
The Company's credit exposure on swaps is limited to the fair value of swap
agreements that are favorable to the Company. The Company does not expect any
counterparty to fail to meet its obligation; however, non-performance would not
have a material adverse effect on the Company's financial position or results
of operations.
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
3. Derivatives--Continued
The Company's exposure to market risk is mitigated by the offsetting effects of
changes in the value of swap agreements and the related direct investments. The
Company routinely monitors correlation between hedged items and hedging
instruments. In the event a hedge relationship is terminated or loses
correlation, any related hedging instrument that remained would be
marked-to-market through income. If the hedging instrument is terminated, any
gain or loss is deferred and amortized over the remaining life of the hedged
asset.
4. Invested Assets
Aggregate amortized cost, aggregate fair value and gross unrealized gains and
losses of debt securities available-for-sale at December 31, 1998 were as
follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
U.S. Treasury obligations and direct obligations
of U.S. government agencies ............................. $ 107,222 $ 5,675 $ -- $ 112,897
Corporate bonds .......................................... 1,885,666 116,685 13,787 1,988,564
Obligations of states and political subdivisions ......... 9,451 43 62 9,432
Mortgage-backed securities ............................... 958,472 33,684 5,226 986,930
Redeemable preferred stocks .............................. 1,524 58 -- 1,582
---------- -------- ------- ----------
Total debt securities .................................... $2,962,335 $156,145 $19,075 $3,099,405
========== ======== ======= ==========
</TABLE>
Aggregate amortized cost and aggregate fair value of debt securities at
December 31, 1998 by contractual maturity were as follows (in thousands):
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
------------- ------------
<S> <C> <C>
Due in one year or less ........................... $ 65,922 $ 66,107
Due after one year through five years ............. 248,065 257,652
Due after five years through ten years ............ 660,347 701,474
Due after ten years ............................... 517,531 559,019
Amounts not due at a single maturity date ......... 1,470,470 1,515,153
---------- ----------
$2,962,335 $3,099,405
========== ==========
</TABLE>
Actual future maturities will differ from the contractual maturities shown
because the issuers of certain debt securities have the right to call or prepay
the amounts due to the Company, with or without penalty.
The sources of net investment income for the year ended December 31, 1998 were
as follows (in thousands):
<TABLE>
<S> <C>
Debt securities ................. $220,435
Equity securities ............... 863
Policy loans .................... 17,369
Mortgage loans .................. 14,354
Other ........................... 3,544
--------
Gross investment income ......... 256,565
Investment expenses ............. 10,259
--------
Net investment income ........... $246,306
========
</TABLE>
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
4. Invested Assets--Continued
Realized investment gains and (losses) for the year ended December 31, 1998
were as follows
(in thousands):
<TABLE>
<S> <C>
Debt securities ....................................... $ 1,897
Equity securities ..................................... 2,893
Real estate ........................................... 984
Increase in mortgage loan valuation allowance ......... (3,600)
Amortization of value of business acquired ............ (898)
--------
$ 1,276
========
</TABLE>
Gross realized gains and losses on available-for-sale securities were $5.9
million and $1.1 million, respectively, for the year ended December 31, 1998.
The changes in amounts affecting net unrealized gains included in other
comprehensive income, reduced by deferred income taxes, for the year ended
December 31, 1998 are as follows (in thousands):
<TABLE>
<S> <C>
Decrease in unrealized appreciation of equity securities ......... $ (1,593)
Increase in unrealized appreciation of debt securities ........... 22,682
Decrease in value of business acquired ........................... (8,519)
--------
12,570
Decrease in deferred income taxes ................................ (4,399)
--------
Increase in net unrealized gains on securities ................... $ 8,171
========
</TABLE>
The allowance for credit losses on mortgage loans increased from $0 at December
31, 1997 to $3.6 million at December 31, 1998.
Securities Lending
The Company participates in a securities lending program. The Company generally
receives cash collateral in an amount that is in excess of the market value of
the securities loaned. Market values of securities loaned and collateral are
monitored daily, and additional collateral is obtained as necessary. At
December 31, 1998, the market value of securities loaned and collateral
received amounted to $56.9 million and $58.8 million, respectively.
5. Deferred Policy Acquisition Costs and Value of Business Acquired
Policy acquisition costs deferred and the related amortization charged to
income for the year ended
December 31, 1998 were as follows (in thousands):
<TABLE>
<S> <C>
Beginning balance ......... $ 38,200
Deferral:
Commissions .............. 58,374
Other .................... 21,766
--------
80,140
Amortization .............. (5,381)
--------
Ending balance ............ $112,959
========
</TABLE>
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
5. Deferred Policy Acquisition Costs and Value of Business Acquired--Continued
Changes in the value of business acquired for the year ended December 31, 1998
were as follows (in thousands):
<TABLE>
<S> <C>
Beginning balance ........................................................... $ 418,665
Deferral of commissions and accretion of interest ........................... 33,617
Amortization ................................................................ (51,952)
---------
Net amortization reflected in expenses ...................................... (18,335)
---------
Adjustment related to purchase accounting ................................... 11,263
Adjustment related to realized gains on debt securities ..................... (898)
Adjustment related to unrealized gains on debt securities available-for-sale (8,519)
---------
Ending balance .............................................................. $ 402,176
=========
</TABLE>
Expected approximate amortization percentages of the value of business acquired
as of December 31, 1998 over the next five years were as follows:
<TABLE>
<S> <C>
Year Ending December 31:
1999 ...................... 9.7%
2000 ...................... 8.5%
2001 ...................... 7.4%
2002 ...................... 6.7%
2003 ...................... 6.2%
</TABLE>
6. Federal Income Taxes
The tax effects of temporary differences that gave rise to deferred income tax
liabilities and assets at December 31, 1998 were as follows (in thousands):
<TABLE>
<S> <C>
Deferred income tax liabilities:
Value of business acquired .............................. $141,847
Net unrealized gains on securities ...................... 22,671
Other ................................................... 24,205
--------
Total .................................................... 188,723
Deferred income tax assets:
Future policy benefits and policy fund balances ......... 138,869
Deferred policy acquisition costs ....................... 26,771
Other ................................................... 25,897
--------
Total .................................................... 191,537
--------
Net deferred income tax asset ............................ $ 2,814
========
</TABLE>
Under prior federal income tax law, one-half of the excess of a life insurance
company's income from operations over its taxable investment income was not
taxed, but was set aside in a special tax account designated as "Policyholders'
Surplus". The Company has approximately $13.5 million of untaxed
"Policyholders' Surplus" on which no payment of federal income taxes will be
required unless it is distributed as a dividend, or under other specified
conditions. The current administration has proposed to tax, as part of its 1999
budget initiative, the "Policyholders' Surplus" over a ten year period. No
related deferred tax liability has been recognized for the potential tax which
would approximate $4.7 million under current proposed rates.
Federal income taxes paid in 1998 were $29 million.
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
7. Pensions
The Company's employees participate in the Jefferson-Pilot defined benefit
pension plans covering substantially all employees. The plans are
noncontributory and are funded through group annuity contracts issued by
Jefferson-Pilot Life Insurance Company, an affiliate. The assets of the plan
are those of the related contracts, primarily held in the separate accounts of
Jefferson-Pilot Life Insurance Company. The plans provide benefits based on
annual compensation and years of service. The funding policy is to contribute
annually no more than the maximum amount deductible for federal income tax
purposes. The plans are administered by Jefferson-Pilot.
Pension costs allocated to the Company for the year ended December 31, 1998,
were $2,152,000.
8. Other Postretirement Benefits
The Company provides certain other postretirement benefits, principally health
care and life insurance, to retired employees and their beneficiaries and
covered dependents. Postretirement costs of the Company that were allocated
from Jefferson-Pilot amounted to approximately $200,000 for the year ended
December 31, 1998.
9. Commitments and Contingent Liabilities
The Company leases electronic data processing equipment and field office space
under noncancelable operating lease agreements. The lease terms generally range
from three to five years. Neither annual rent nor future rental commitments are
significant.
The Company routinely enters into commitments to extend credit in the form of
mortgage loans and to purchase certain debt securities for its investment
portfolio in private placement transactions. The fair value of outstanding
commitments to fund mortgage loans and to acquire debt securities in private
placement transactions, which are not reflected in the consolidated balance
sheet, approximates $52.8 million as of December 31, 1998.
In the normal course of business, the Company and its subsidiaries are parties
to various lawsuits. Because of the considerable uncertainties that exist, the
Company cannot predict the outcome of pending or future litigation. However,
management believes that the resolution of pending legal proceedings will not
have a material adverse effect on the Company's financial position or results
of operations.
10. Reinsurance
The Company attempts to reduce its exposure to significant individual claims by
reinsuring portions of certain life insurance contracts written. The maximum
amount of individual life insurance retained on any one life, including
accidental death benefits, is $1.5 million.
The effect of reinsurance on the premiums and policy charges in the
consolidated statement of income for the year ended December 31, 1998 was as
follows (in thousands):
<TABLE>
<CAPTION>
Ceded to Assumed
Direct Other from Other Net
Amount Companies Companies Amount
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total premiums and policy charges ......... $372,244 $86,575 $30,268 $315,937
======== ======= ======= ========
</TABLE>
Reinsurance recoveries which have been deducted from benefits, claims and
expenses in the consolidated statement of income for the Company were $105.6
million.
Reinsurance contracts do not relieve the Company from its primary obligation to
policyholders. Therefore, the failure of a reinsurer to discharge its
reinsurance obligations could result in a loss to the Company. The Company
regularly evaluates the financial condition of its reinsurers and monitors
concentrations of credit risk related to reinsurance activities. No significant
credit losses resulted from the Company's reinsurance activities during the
year ended December 31, 1998.
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
10. Reinsurance--Continued
As of December 31, 1998, the Company had a reinsurance recoverable of $95
million from a single reinsurer, pursuant to a 50% coinsurance agreement. The
Company and the reinsurer are joint and equal owners in $191 million of
securities and short-term investments as of December 31, 1998, 50% of which is
included in investments in the accompanying consolidated balance sheet.
11. Statutory Financial Information
The Company prepares financial statements on the basis of statutory accounting
practices (SAP) prescribed or permitted by the New Hampshire Department of
Insurance. Prescribed SAP include a variety of publications of the National
Association of Insurance Commissioners (NAIC) as well as state laws,
regulations and administrative rules. Permitted SAP encompass all accounting
practices not so prescribed. The impact of permitted accounting practices on
statutory capital and surplus is not significant for the Company.
The principal differences between SAP and generally accepted accounting
principles (GAAP) as they relate to the financial statements of the Company are
(1) policy acquisition costs are expensed as incurred under SAP, whereas they
are deferred and amortized under GAAP, (2) amounts collected from holders of
universal life-type and investment products are recognized as premiums when
collected under SAP, but are initially recorded as contract deposits under
GAAP, with cost of insurance recognized as revenue when assessed and other
contract charges recognized over the periods for which services are provided,
(3) the classification and carrying amounts of investments in certain
securities are different under SAP than under GAAP, (4) the criteria for
providing asset valuation allowances, and the methodologies used to determine
the amounts thereof, are different under SAP than under GAAP, (5) the timing of
establishing certain reserves, and the methodologies used to determine the
amounts thereof, are different under SAP than under GAAP, (6) no provision is
made for deferred income taxes under SAP, and (7) certain assets are not
admitted for purposes of determining surplus under SAP.
Reported capital and surplus on a statutory basis at December 31, 1998 was
$350.9 million. Reported statutory net income for the year ended December 31,
1998 was $90.7 million. Purchase accounting adjustments are not made for
statutory accounting purposes.
The amount of GAAP equity in excess of statutory surplus is unavailable for
distribution. In addition, various state insurance laws restrict the Company
and its insurance subsidiaries as to the amount of dividends from statutory
surplus they may pay without the prior approval of regulatory authorities. The
restrictions generally are based on net gains from operations and on certain
levels of surplus as determined in accordance with statutory accounting
practices. Dividends in excess of such thresholds are considered
"extraordinary" and require prior regulatory approval.
Risk-Based Capital ("RBC") requirements promulgated by the NAIC require life
insurers to maintain minimum capitalization levels that are determined based on
formulas incorporating credit risk pertaining to its investments, insurance
risk, interest rate risk and general business risk. As of December 31, 1998,
the Company's adjusted capital and surplus exceeded its authorized control
level RBC.
The NAIC Codification of Statutory Accounting Principles (Codification) has
been completed. The purpose of Codification is to create uniformity in
statutory financial reporting across states. Codification must be adopted by
individual states before it will have any bearing on the statutory reporting
requirements of companies domiciled in a particular state. The NAIC is
encouraging the states to adopt Codification as soon as possible, with an
implementation date of January 1, 2001. The Company does not expect
implementation to have a material impact on its statutory surplus; however,
implementation is expected to result in a net reduction of statutory surplus
and RBC throughout the insurance industry.
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
12. Transactions with Affiliated Companies
During 1998, the Company entered into service agreements with Jefferson-Pilot
and other subsidiaries of Jefferson-Pilot for personnel and facilities usage,
general management services and investment management services. The Company
expensed $69.9 million for general management and investment services provided
by Jefferson-Pilot Life Insurance Company, another wholly-owned subsidiary of
Jefferson-Pilot. At December 31, 1998, $55.6 million remained payable to
Jefferson-Pilot Life Insurance Company related to these service contracts. The
remainder of the payable at year end was to other affiliates.
13. Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted market prices where
available. Fair values of financial instruments for which quoted market prices
are not available are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rates and the estimates of future cash flows.
Certain financial instruments, particularly insurance contracts, are excluded
from fair value disclosure requirements.
The methods and assumptions used to estimate the fair value of financial
instruments are as follows:
[diamond] Fair values of debt securities with active markets are based on quoted
market prices. For debt securities that trade in less active markets,
fair values are obtained from independent pricing services. Fair
values of debt securities are principally a function of current
interest rates.
[diamond] Fair values of equity securities are based on quoted market prices.
[diamond] The carrying value of cash and cash equivalents approximates fair
value due to the short maturities of these assets.
[diamond] Fair values of policy loans and mortgage loans are estimated using
discounted cash flow analyses and approximate carrying values.
[diamond] Fair values of separate account assets and liabilities are reflected
in the consolidated balance sheet.
[diamond] Fair values of securities sold under repurchase agreements approximate
carrying values, which include accrued interest.
The carrying value and fair value of financial instruments at December 31, 1998
were as follows (in thousands):
<TABLE>
<CAPTION>
Carrying Fair
Value Value
------------- -------------
<S> <C> <C>
Financial Assets
Debt securities available-for-sale .................. $3,099,405 $3,099,405
Equity securities available-for-sale ................ 10,668 10,668
Cash and cash equivalents ........................... 6,514 6,514
Policy loans ........................................ 246,290 290,024
Mortgage loans on real estate ....................... 282,355 293,597
Financial Liabilities
Securities sold under repurchase agreements ......... 102,130 102,130
</TABLE>
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
14. Other Comprehensive Income
Comprehensive income and its components are displayed in the accompanying
statement of stockholder's equity. Currently, the only element of other
comprehensive income applicable to the Company is changes in unrealized gains
and losses on securities classified as available-for-sale, which are displayed
in the following table, along with related tax effects. See Note 4 for further
detail of changes in unrealized gains on securities available-for-sale for the
year ended December 31, 1998 (in thousands):
<TABLE>
<S> <C>
Unrealized holding gains arising during period, before taxes ......... $16,463
Income taxes ......................................................... (5,762)
-------
Unrealized holding gains arising during period, net of taxes ......... 10,701
-------
Less reclassification adjustment:
Gains realized in net income, before taxes .......................... 3,892
Income taxes ........................................................ (1,362)
-------
Reclassification adjustment for gains realized in net income ......... 2,530
-------
Other comprehensive income--net unrealized gains ..................... $ 8,171
=======
</TABLE>
15. Year 2000 Conversion Costs (Unaudited)
The Company's administrative and financial reporting systems are shared among
numerous insurance affiliates within the consolidated Jefferson-Pilot
Corporation group (JP).
Like most if not all companies, JP faces certain risks associated with the
coming of the year 2000. The Year 2000 issue relates to the way computer
systems and programs define calendar dates. By using only two digit dates, they
could fail or make miscalculations due to the inability to distinguish between
dates in the 1900's and in the 2000's. Also, many systems and equipment that
are not typically thought of as "computer-related" (referred to as "non-IT")
contain embedded hardware or software that must handle dates and may not
properly perform with dates after 1999.
JP began work on the Year 2000 compliance issue in 1995. The scope of the
project includes: ensuring the compliance of all applications, operating
systems and hardware on mainframe, PC and LAN platforms; addressing issues
related to non-IT embedded software and equipment; and addressing the
compliance of key vendors and service providers to JP (business partners).
The project has four phases: assessment of systems and equipment affected by
the Year 2000 issue; definition of strategies to address affected systems and
equipment; remediation of affected systems and equipment; and certification
that each is Year 2000 compliant. To certify that all IT systems (internally
developed or purchased) are Year 2000 compliant, each system is tested using a
standard testing methodology which includes regression testing, millennium
testing, millennium leap year testing and cross over year testing.
Certification testing is performed on each system as soon as remediation is
completed.
The target for completion of all phases and categories is September 30, 1999.
JP has completed the assessment and strategy phases for mainframe applications,
operating systems and hardware and is executing the remediation and
certification phases. JP's new business and policyholder administration systems
and the general ledger are on the mainframe. JP has determined that
approximately 62% of all mainframe systems are compliant. JP does not deem a
system to be compliant until the completion of remediation and certification to
confirm that its performance will not be affected by dates extending after
1999. With respect to significant policyholder systems, all required
remediation has been completed on all systems. The majority of these systems,
including all systems which support products JP is currently marketing, have
been certified as Year 2000 compliant. Completion of certification of remaining
systems for some closed blocks of business is expected by April 1999. Other
non-policyholder mainframe systems have either been certified or are on
schedule. For PC
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
15. Year 2000 Conversion Costs (Unaudited)--Continued
and LAN systems, JP has completed the strategy phases and is executing the
assessment, remediation and certification phases concurrently and intends to
complete these phases during the third quarter of 1999.
For the majority of JP's non-IT related systems and equipment, JP has been
advised by vendors that the systems and equipment are currently Year 2000
compliant. Written documentation regarding compliance is being obtained. Where
feasible, certification testing will be conducted for systems and equipment
that are material to operations. Some systems and equipment, such as electrical
power supply, are not feasible for JP to certify. Completion for non-IT systems
and equipment is scheduled for September 1999.
The most significant category of key business partners is financial
institutions. Their critical functions include safeguarding and managing
investment portfolios, processing of JP's operating bank accounts, and sales/
distribution. All of JP's business partner financial institutions that have
responded to JP's inquiries have indicated they are on schedule for Year 2000
compliance. JP continues to follow up with business partner financial
institutions that have not yet responded. Other partner categories include
insurance agents and marketing organizations, and suppliers of communication
services, utilities, materials and supplies. JP has conducted surveys of all
its software and hardware vendors, and certification is underway. In addition
to financial institutions, other critical business partners have been
identified and surveys initiated. Results of these surveys are being analyzed
in the first quarter of 1999 and appropriate testing or other due diligence
will be conducted in the second and third quarters of 1999.
JP has not had an independent review of its Year 2000 risks or estimates.
However, experts have been engaged to assist in developing estimates and to
complete remediation work on specific portions of the project.
Since inception of the project, JP has incurred external costs of $7 million
and internal costs of $7 million. The current estimate, based on actual
experience to date, of total project expense is $24 million, with remaining
external costs of $5 million and internal costs of $5 million. Costs are
included in various budgets and expensed as incurred. Expected total costs are
less than earlier estimates due in part to refinements in estimates as more
projects near completion. In addition, remediation/certification costs on
projects completed to date have been lower than originally estimated. Total
1998 costs were $8 million. There has not been a material adverse impact on
JP's operations as a result of IT projects being deferred due to resource
constraints caused by the Year 2000 project.
JP has investments in publicly and privately placed securities and loans. JP
may be exposed to credit risk to the extent that related borrowers are
materially adversely impacted by the Year 2000 issue. Portfolio diversification
reduces the overall risk. JP is in compliance with the NAIC Securities
Valuation Office's Due Diligence Guidelines for analyzing these risks.
Although JP expects to certify that its critical policyholder systems are
compliant by the end of April 1999, there is no guarantee that these results
will be achieved. Specific factors that give rise to this uncertainty include a
possible loss of technical resources to perform the work (not yet encountered),
failure to identify all susceptible systems, non-compliance by third parties
whose systems and operations impact JP, and other similar uncertainties.
Specifically, from Year 2000 problems, JP could experience an interruption in
its ability to collect and process premiums, process claim payments, safeguard
and manage its invested assets and operating cash accounts, accurately maintain
policyholder information, accurately maintain accounting records, issue new
policies and/or perform adequate customer service.
F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
15. Year 2000 Conversion Costs (Unaudited)--Continued
While JP believes the occurrence of such a situation is unlikely, a possible
worst case scenario might include one or more of JP's significant policyholder
systems being non-compliant. Such an event could result in a material
disruption to JP's operations. Should the worst case scenario occur, it could,
depending on its duration, have a material impact on JP's results of operations
and liquidity and ultimately on its financial position. Although JP is on
schedule to complete certification of all internal systems and non-IT equipment
well in advance of January 1, 2000, JP recognizes the need to plan for
unanticipated problems resulting from failure of internal systems or equipment
or from failures by JP's business partners, providers, suppliers or other
critical third parties. JP has begun work on contingency plans for all mission
critical functions.
16. Subsequent Event
On January 1, 1999, Jefferson-Pilot Service Corporation was sold to
Jefferson-Pilot Life Insurance Company for $9.4 million. No gain was recognized
on the sale.
F-18
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Contractholders of JPF Separate Account A
JPF Separate Account A
The Board of Directors, JPF Separate Account A
We have audited the accompanying statement of assets and liabilities of JPF
Separate Account A as of December 31, 1998, and the related statements of
operations and the statements of changes in net assets for the year then ended
and for the years ended December 31, 1997 and 1996. 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, 1998, by correspondence with
the fund managers. 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 JPF Separate Account A at
December 31, 1998, and the results of its operations and the changes in its net
assets for the year then ended and for the year ended December 31, 1997 and
1996, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
April 9, 1999
F-19
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JPF SEPARATE ACCOUNT A
December 31, 1998
<TABLE>
<CAPTION>
JPVF JPVF JPVF
International World Global
Equity Growth Stock Hard Assets
Division Division Division
--------------- ---------------- --------------
<S> <C> <C> <C>
ASSETS
Investments at cost ....................... $ 7,530,811 $102,160,756 $6,868,626
=========== ============ ==========
Investments at market value ............... $ 8,081,174 $108,135,584 $4,333,663
Accrued investment income ................. 27,704 9,160,769 72,099
Net premiums receivable (payable) ......... 28,513 (97,806) (2,153)
----------- ------------ ----------
TOTAL NET ASSETS ...................... $ 8,137,391 $117,198,547 $4,403,609
=========== ============ ==========
NET ASSET DISTRIBUTION
Ensemble ................................ $ $ 1,813,403 $ 69,521
Ensemble II ............................. 8,137,391 115,385,144 4,334,088
----------- ------------ ----------
TOTAL NET ASSETS ...................... $ 8,137,391 $117,198,547 $4,403,609
=========== ============ ==========
UNITS OUTSTANDING
Ensemble ................................ 42,439 8,776
Ensemble II ............................. 660,898 2,795,598 566,564
NET ASSET VALUE PER UNIT
Ensemble ................................ $ 42.732 $ 7.922
Ensemble II ............................. $ 12.314 41.278 7.651
<CAPTION>
JPVF JPVF JPVF
Emerging Capital JPVF Small
Growth Growth Growth Company
Division Division Division Division
---------------- ----------------- --------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Investments at cost ....................... $ 56,744,008 $ 116,357,008 $ 1,409,618 $83,162,228
============ ============= =========== ===========
Investments at market value ............... $ 78,447,061 $ 180,673,286 $ 1,640,905 $76,964,253
Accrued investment income ................. 383,736 9,296,622 -- 7,594,721
Net premiums receivable (payable) ......... 71,316 174,917 15,132 (30,142)
------------ ------------- ----------- -----------
TOTAL NET ASSETS ...................... $ 78,902,113 $ 190,144,825 $ 1,656,037 $84,528,832
============ ============= =========== ===========
NET ASSET DISTRIBUTION
Ensemble ................................ $ 629,362
Ensemble II ............................. $ 78,902,113 $ 190,144,825 $ 1,656,037 83,899,470
------------ ------------- ----------- -----------
TOTAL NET ASSETS ...................... $ 78,902,113 $ 190,144,825 $ 1,656,037 $84,528,832
============ ============= =========== ===========
UNITS OUTSTANDING
Ensemble ................................ 15,343
Ensemble II ............................. 3,238,955 4,372,463 127,148 2,118,856
NET ASSET VALUE PER UNIT
Ensemble ................................ $ 41.023
Ensemble II ............................. $ 24.363 $ 43.491 $ 13.026 39.601
</TABLE>
See notes to consolidated financial statements.
F-20
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES--(Continued)
JPF SEPARATE ACCOUNT A
December 31, 1998
<TABLE>
<CAPTION>
JPVF
Growth & JPVF JPVF
Income Balanced High Yield
Division Division Division
---------------- ---------------- ---------------
<S> <C> <C> <C>
ASSETS
Investments at cost ................. $ 45,818,930 $ 27,945,947 $ 4,967,335
============ ============ ===========
Investments at market value ......... $ 51,974,104 $ 29,873,598 $ 4,679,469
Accrued investment income ........... 404,228 2,628,984 296,661
Net premiums receivable ............. 87,301 19,789 7,376
------------ ------------ -----------
TOTAL NET ASSETS ................ $ 52,465,633 $ 32,522,371 $ 4,983,506
============ ============ ===========
NET ASSET DISTRIBUTION
Ensemble .......................... --
Ensemble II ....................... $ 52,465,633 $ 32,522,371 $ 4,983,506
------------ ------------ -----------
TOTAL NET ASSETS ................ $ 52,465,633 $ 32,522,371 $ 4,983,506
============ ============ ===========
UNITS OUTSTANDING
Ensemble ..........................
Ensemble II ....................... 1,907,918 1,578,464 500,265
NET ASSET VALUE PER UNIT
Ensemble ..........................
Ensemble II ....................... $ 27.499 $ 20.606 $ 9.963
<CAPTION>
JPVF Fidelity
Money Fidelity Fidelity VIP Equity
Market Contrafund VIP Growth Income
Division Division Division Division
---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Investments at cost ................. $ 15,278,072 $ 32,972,700 $ 6,284,719 $ 3,801,137
============ ============ =========== ===========
Investments at market value ......... $ 15,029,297 $ 41,555,769 $ 7,420,782 $ 3,993,891
Accrued investment income ........... 507,941 -- -- --
Net premiums receivable ............. 7,215 185,269 46,256 51,620
------------ ------------ ----------- -----------
TOTAL NET ASSETS ................ $ 15,544,453 $ 41,741,038 $ 7,467,038 $ 4,045,511
============ ============ =========== ===========
NET ASSET DISTRIBUTION
Ensemble .......................... $ 35,802
Ensemble II ....................... 15,508,651 $ 41,741,038 $ 7,467,038 $ 4,045,511
------------ ------------ ----------- -----------
TOTAL NET ASSETS ................ $ 15,544,453 $ 41,741,038 $ 7,467,038 $ 4,045,511
============ ============ =========== ===========
UNITS OUTSTANDING
Ensemble .......................... 1,997
Ensemble II ....................... 896,228 2,360,916 533,388 359,025
NET ASSET VALUE PER UNIT
Ensemble .......................... $ 17.926
Ensemble II ....................... 17.306 $ 17.682 $ 14.001 $ 11.269
</TABLE>
See notes to consolidated financial statements.
F-21
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES--(Continued)
JPF SEPARATE ACCOUNT A
December 31, 1998
<TABLE>
<CAPTION>
Fidelity Fidelity MFS
Index 500 High Income Research
Division Division Division
---------------- ------------- ---------------
<S> <C> <C> <C>
ASSETS
Investments at cost ....................... $ 58,343,815 $2,769,692 $ 3,878,048
============ ========== ===========
Investments at market value ............... $ 73,205,857 $2,543,237 $ 4,213,664
Net premiums receivable (payable) ......... 232,043 (259) 28,899
------------ ---------- -----------
TOTAL NET ASSETS ...................... $ 73,437,900 $2,542,978 $ 4,242,563
============ ========== ===========
NET ASSET DISTRIBUTION
Ensemble ................................
Ensemble II ............................. $ 73,437,900 $2,542,978 $ 4,242,563
------------ ---------- -----------
TOTAL NET ASSETS ...................... $ 73,437,900 $2,542,978 $ 4,242,563
============ ========== ===========
UNITS OUTSTANDING
Ensemble ................................
Ensemble II ............................. 3,850,464 213,799 342,958
NET ASSET VALUE PER UNIT
Ensemble ................................
Ensemble II ............................. $ 19.074 $ 11.895 $ 12.371
<CAPTION>
MFS Oppenheimer Oppenheimer Templeton
Utilities Strategic Bond Bond International
Division Division Division Division
--------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
ASSETS
Investments at cost ....................... $ 3,868,901 $ 1,617,969 $ 17,100,158 $ 49,143,199
=========== =========== ============ ============
Investments at market value ............... $ 4,141,644 $ 1,642,722 $ 17,377,755 $ 54,701,814
Net premiums receivable (payable) ......... 8,953 61,146 678,452 54,892
----------- ----------- ------------ ------------
TOTAL NET ASSETS ...................... $ 4,150,597 $ 1,703,868 $ 18,056,207 $ 54,756,706
=========== =========== ============ ============
NET ASSET DISTRIBUTION
Ensemble ................................ $ 27,114
Ensemble II ............................. $ 4,150,597 $ 1,703,868 18,029,093 $ 54,756,706
----------- ----------- ------------ ------------
TOTAL NET ASSETS ...................... $ 4,150,597 $ 1,703,868 $ 18,056,207 $ 54,756,706
=========== =========== ============ ============
UNITS OUTSTANDING
Ensemble ................................ 1,191
Ensemble II ............................. 343,234 169,337 825,351 3,270,700
NET ASSET VALUE PER UNIT
Ensemble ................................ $ 22.766
Ensemble II ............................. $ 12.093 $ 10.063 21.846 $ 16.743
</TABLE>
See notes to consolidated financial statements.
F-22
<PAGE>
STATEMENT OF OPERATIONS
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF
International
Equity
Division
--------------------
Period from JPVF World Growth Stock Division
January 15, 1998(a) ---------------------------------------------
to Year Ended December 31,
December 31, ---------------------------------------------
1998 1998 1997 1996
-------------------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
Investment Income:
Dividend income ................................ $ -- $ 2,325,200 $ 2,476,350 $ 1,896,674
Distributions of realized gains ................ 27,704 7,901,423 13,293,185 5,766,822
-------- ------------- ------------ -----------
27,704 10,226,623 15,769,535 7,663,496
Expenses:
Mortality and expense risk charge .............. 29,866 1,080,424 1,001,394 786,314
-------- ------------- ------------ -----------
Net Investment Income (Loss) ................. (2,162) 9,146,199 14,768,141 6,877,182
-------- ------------- ------------ -----------
Gain (loss) on investments:
Net realized gain (loss) on investments ........ (1,410) 1,498,732 1,393,920 607,700
Change in net unrealized gain (loss)
on investments ................................ 550,363 (8,293,399) (2,140,961) 7,289,718
-------- ------------- ------------ -----------
Net gain (loss) on investments ................. 548,953 (6,794,667) (747,041) 7,897,418
-------- ------------- ------------ -----------
Increase (Decrease) in
Net Assets from Operations .................. $546,791 $ 2,351,532 $ 14,021,100 $14,774,600
======== ============= ============ ===========
<CAPTION>
JPVF Global Hard Assets Division
--------------------------------------------
Year Ended December 31,
--------------------------------------------
1998 1997 1996
------------- --------------- -------------
<S> <C> <C> <C>
Investment Income:
Dividend income ................................ $ 72,099 $ 52,180 $ --
Distributions of realized gains ................ -- 154,999 196,148
---------- ------------ -----------
72,099 207,179 196,148
Expenses:
Mortality and expense risk charge .............. 43,859 60,762 75,213
---------- ------------ -----------
Net Investment Income (Loss) ................. 28,240 146,417 120,935
---------- ------------ -----------
Gain (loss) on investments:
Net realized gain (loss) on investments ........ (826,362) (1,020,911) 236,329
Change in net unrealized gain (loss)
on investments ................................ 121,013 (2,862,423) (329,690)
---------- ------------ -----------
Net gain (loss) on investments ................. (705,349) (3,883,334) (93,361)
---------- ------------ -----------
Increase (Decrease) in
Net Assets from Operations .................. $ (677,109) $ (3,736,917) $ 27,574
========== ============ ===========
</TABLE>
(a) Commencement of operations
See notes to consolidated financial statements.
F-23
<PAGE>
STATEMENT OF OPERATIONS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF Emerging Growth Division
----------------------------------------
Year Ended December 31,
----------------------------------------
1998 1997 1996
-------------- ------------ ------------
<S> <C> <C> <C>
Investment Income:
Dividend income ................................. $ -- $ -- $ --
Distributions of realized gains ................. 562,053 2,355,925 816,743
----------- ---------- ----------
562,053 2,355,925 816,743
Expenses:
Mortality and expense risk charge ............... 549,991 341,819 156,489
----------- ---------- ----------
Net Investment Income (loss) .................. 12,062 2,014,106 660,254
----------- ---------- ----------
Gain (loss) on investments:
Net realized gain (loss) on investments ......... 1,477,889 528,900 349,647
Change in net unrealized gain (loss)
on investments ................................. 16,294,927 3,845,746 1,103,470
----------- ---------- ----------
Net gain (loss) on investments .................. 17,772,816 4,374,646 1,453,117
----------- ---------- ----------
Increase in
Net Assets from Operations ................... $17,784,878 $6,388,752 $2,113,371
=========== ========== ==========
<CAPTION>
JPVF
Growth
Division
--------------------
JPVF Capital Growth Division Period from
--------------------------------------------- January 20, 1998(a)
Year Ended December 31, to
--------------------------------------------- December 31,
1998 1997 1996 1998
-------------- -------------- --------------- --------------------
<S> <C> <C> <C> <C>
Investment Income:
Dividend income ................................. $ -- $ 21,278 $ 205,917 $ --
Distributions of realized gains ................. 9,631,854 5,556,589 13,379,557 --
----------- ----------- ------------ ---------
9,631,854 5,577,867 13,585,474 --
Expenses:
Mortality and expense risk charge ............... 1,396,476 962,680 634,806 6,809
----------- ----------- ------------ ---------
Net Investment Income (loss) .................. 8,235,378 4,615,187 12,950,668 (6,809)
----------- ----------- ------------ ---------
Gain (loss) on investments:
Net realized gain (loss) on investments ......... 2,650,023 827,249 704,194 (46,655)
Change in net unrealized gain (loss)
on investments ................................. 38,211,343 19,770,192 (3,210,806) 231,287
----------- ----------- ------------ ---------
Net gain (loss) on investments .................. 40,861,366 20,597,441 (2,506,612) 184,632
----------- ----------- ------------ ---------
Increase in
Net Assets from Operations ................... $49,096,744 $25,212,628 $ 10,444,056 $ 177,823
=========== =========== ============ =========
</TABLE>
(a) Commencement of operations
See notes to consolidated financial statements.
F-24
<PAGE>
STATEMENT OF OPERATIONS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF Small Company Division
----------------------------------------------
Year Ended December 31,
----------------------------------------------
1998 1997 1996
---------------- -------------- --------------
<S> <C> <C> <C>
Investment Income:
Dividend income .......................... $ 888,637 377,561 201,993
Distributions of realized gains .......... 7,682,840 7,681,445 8,608,137
------------- --------- ---------
8,571,477 8,059,006 8,810,130
Expenses:
Mortality and expense risk charge ........ 791,529 717,430 578,387
------------- --------- ---------
Net Investment Income (loss) ........... 7,779,948 7,341,576 8,231,743
------------- --------- ---------
Gain (loss) on investments:
Net realized gain on investments ......... 939,643 1,112,075 821,643
Change in net unrealized gain (loss)
on investments .......................... (20,294,880) 7,517,633 (390,637)
------------- --------- ---------
Net gain (loss) on investments ........... (19,355,237) 8,629,708 431,006
------------- --------- ---------
Increase (Decrease) in
Net Assets from Operations ............ $ (11,575,289) $15,971,284 $8,662,749
============= =========== ==========
<CAPTION>
JPVF Growth & Income Division JPVF Balanced Division
------------------------------------------- -----------------------------------------
Year Ended December 31, Year Ended December 31,
------------------------------------------- -----------------------------------------
1998 1997 1996 1998 1997 1996
------------- --------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividend income .......................... $ 404,228 $ 294,059 $ 245,874 $ 554,007 $ 547,519 $ 390,626
Distributions of realized gains .......... -- 8,675,134 858,016 2,074,977 3,433,962 1,233,056
---------- ------------- ---------- ---------- ---------- ----------
404,228 8,969,193 1,103,890 2,628,984 3,981,481 1,623,682
Expenses:
Mortality and expense risk charge ........ 435,459 298,852 160,389 256,295 199,545 160,537
---------- ------------- ---------- ---------- ---------- ----------
Net Investment Income (loss) ........... (31,231) 8,670,341 943,501 2,372,689 3,781,936 1,463,145
---------- ------------- ---------- ---------- ---------- ----------
Gain (loss) on investments:
Net realized gain on investments ......... 781,929 763,718 317,839 111,626 125,127 151,391
Change in net unrealized gain (loss)
on investments .......................... 4,120,409 (1,791,862) 2,500,125 1,976,202 (829,904) (17,988)
---------- ------------- ---------- ---------- ---------- ----------
Net gain (loss) on investments ........... 4,902,338 (1,028,144) 2,817,964 2,087,828 (704,777) 133,403
---------- ------------- ---------- ---------- ---------- ----------
Increase (Decrease) in
Net Assets from Operations ............ $4,871,107 $ 7,642,197 $3,761,465 $4,460,517 $3,077,159 $1,596,548
========== ============= ========== ========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
F-25
<PAGE>
STATEMENT OF OPERATIONS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF High Yield
Division
--------------------
Period from JPVF Money Market Division
January 8, 1998(a) -----------------------------------
to Year Ended December 31,
December 31, -----------------------------------
1998 1998 1997 1996
-------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividend income ........................ $ 296,661 $507,941 $ 425,055 $ 387,924
Distributions of realized gains ........ -- -- -- --
---------- -------- --------- ---------
296,661 507,941 425,055 387,924
Expenses:
Mortality and expense risk charge ...... 32,443 111,692 90,263 76,879
---------- -------- --------- ---------
Net Investment Income (loss) ......... 264,218 396,249 334,792 311,045
---------- -------- --------- ---------
Gain (loss) on investments:
Net realized gain (loss) on investments (77,480) 53,452 61,042 16,652
Change in net unrealized gain (loss)
on investments ........................ (287,866) 20,157 (11,529) (19,364)
---------- -------- --------- ---------
Net gain (loss) on investments ......... (365,346) 73,609 49,513 (2,712)
---------- -------- --------- ---------
Increase (decrease) in Net Assets
from Operations ..................... $ (101,128) $469,858 $ 384,305 $ 308,333
========== ======== ========= =========
<CAPTION>
Fidelity Contrafund Division
------------------------------------------
Period from
Year Ended May 2, 1996(a)
December 31, to
-------------------------- December 31,
1998 1997 1996
------------- ------------ ---------------
<S> <C> <C> <C>
Investment Income:
Dividend income ........................ $ 141,812 $ 53,570 $ --
Distributions of realized gains ........ 1,043,329 141,577 --
---------- ---------- ---------
1,185,141 195,147 --
Expenses:
Mortality and expense risk charge ...... 246,378 112,772 13,294
---------- ---------- ---------
Net Investment Income (loss) ......... 938,763 82,375 (13,294)
---------- ---------- ---------
Gain (loss) on investments:
Net realized gain (loss) on investments 381,646 143,362 3,889
Change in net unrealized gain (loss)
on investments ........................ 6,265,813 1,928,296 388,960
---------- ---------- ---------
Net gain (loss) on investments ......... 6,647,459 2,071,658 392,849
---------- ---------- ---------
Increase (decrease) in Net Assets
from Operations ..................... $7,586,222 $2,154,033 $ 379,555
========== ========== =========
</TABLE>
(a) Commencement of operations.
See notes to consolidated financial statements.
F-26
<PAGE>
STATEMENT OF OPERATIONS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
Fidelity Fidelity VIP
VIP Growth Equity Income
Division Division Fidelity Index 500 Division
-------------------- -------------------- ---------------------------
Period from Period
January 8, 1998(a) January 8, 1998(a) Year Ended
to to December 31,
December 31, December 31, ---------------------------
1998 1998 1998 1997
-------------------- -------------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment Income:
Dividend income ................................. $ 141 $ 8,570 $ 371,052 $ 101,288
Distributions of realized gains ................. 3,709 30,500 859,422 205,527
---------- ----------- ----------- ----------
3,850 39,070 1,230,474 306,815
Expenses:
Mortality and expense risk charge ............... 18,771 38,308 431,588 164,470
---------- ----------- ----------- ----------
Net Investment Income (loss) .................. (14,921) 762 798,886 142,345
---------- ----------- ----------- ----------
Gain (loss) on investments:
Net realized gain (loss) on investments ......... (10,197) (114,816) 551,714 435,364
Change in net unrealized gain (loss)
on investments ................................. 1,136,063 192,755 10,456,961 3,844,079
---------- ----------- ----------- ----------
Net gain (loss) on investments .................. 1,125,866 77,939 11,008,675 4,279,443
---------- ----------- ----------- ----------
Increase (decrease) in Net Assets
from Operations .............................. $1,110,945 $ 78,701 $11,807,561 $4,421,788
========== =========== =========== ==========
<CAPTION>
Fidelity Index
500 Division Fidelity High Income Division
---------------- ----------------------------------------
Period from Period from
May 2, 1996(a) Year Ended May 2,1996(a)
to December 31, to
December 31, ------------------------- December 31,
1996 1998 1997 1996
---------------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Investment Income:
Dividend income ................................. $ -- $398,490 $248,474 $ --
Distributions of realized gains ................. -- 253,207 30,711 --
--------- -------- -------- --------
-- 651,697 279,185 --
Expenses:
Mortality and expense risk charge ............... 18,598 35,359 45,794 9,027
--------- -------- -------- --------
Net Investment Income (loss) .................. (18,598) 616,338 233,391 (9,027)
--------- -------- -------- --------
Gain (loss) on investments:
Net realized gain (loss) on investments ......... 24,088 97,475 71,464 25,826
Change in net unrealized gain (loss)
on investments ................................. 561,002 (784,352) 451,237 106,660
--------- -------- -------- --------
Net gain (loss) on investments .................. 585,090 (686,907) 522,701 132,486
--------- -------- -------- --------
Increase (decrease) in Net Assets
from Operations .............................. $ 566,492 $(70,569) $756,092 $123,459
========= ======== ======== ========
</TABLE>
(a) Commencement of operations
See notes to consolidated financial statements.
F-27
<PAGE>
STATEMENT OF OPERATIONS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
MFS Research MFS Utilities
Division Division
-------------------- ---------------------
Period from Period from
January 8, 1998(a) January 12, 1998(a)
to to
December 31, December 31,
1998 1998
-------------------- ---------------------
<S> <C> <C>
Investment Income:
Dividend income ................................. $ 3,768 $ 13,390
Distributions of realized gains ................. 49,416 60,878
----------- --------
53,184 74,268
Expenses: .........................................
Mortality and expense risk charge ............... 22,916 17,630
----------- --------
Net Investment Income ......................... 30,268 56,638
----------- --------
Gain (loss) on investments:
Net realized gain (loss) on investments ......... (192,250) 38,000
Change in net unrealized gain (loss)
on investments ................................. 335,616 272,742
----------- --------
Net gain (loss) on investments .................. 143,366 310,742
----------- --------
Increase in Net Assets
from Operations .............................. $ 173,634 $367,380
=========== ========
<CAPTION>
Oppenheimer
Strategic Bond
Division
--------------------
Period from Oppenheimer Bond Division
January 12, 1998(a) --------------------------------------
to Year Ended December 31,
December 31, --------------------------------------
1998 1998 1997 1996
-------------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Investment Income:
Dividend income ................................. $ 5,696 $229,399 $754,014 $ 635,318
Distributions of realized gains ................. 3,670 207,606 12,303 34,269
-------- -------- -------- -----------
9,366 437,005 766,317 669,587
Expenses: .........................................
Mortality and expense risk charge ............... 8,104 145,903 114,725 97,066
-------- -------- -------- -----------
Net Investment Income ......................... 1,262 291,102 651,592 572,521
-------- -------- -------- -----------
Gain (loss) on investments:
Net realized gain (loss) on investments ......... (2,048) 296,390 31,843 37,510
Change in net unrealized gain (loss)
on investments ................................. 24,753 247,987 235,133 (364,875)
-------- -------- -------- -----------
Net gain (loss) on investments .................. 22,705 544,377 266,976 (327,365)
-------- -------- -------- -----------
Increase in Net Assets
from Operations .............................. $ 23,967 $835,479 $918,568 $ 245,156
======== ======== ======== ===========
</TABLE>
(a) Commencement of operations
See notes to consolidated financial statements.
F-28
<PAGE>
STATEMENT OF OPERATIONS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
Templeton International Division
---------------------------------------------
Year Ended December 31,
---------------------------------------------
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Investment Income:
Dividend income ........................... $1,024,661 $ 678,464 $ 159,471
Distributions of realized gains ........... 1,831,974 272,716 46,512
---------- ---------- ----------
2,856,635 951,180 205,983
Expenses:
Mortality and expense risk charge ......... 429,430 301,799 143,239
---------- ---------- ----------
Net Investment Income ................... 2,427,205 649,381 62,744
---------- ---------- ----------
Gain on investments:
Net realized gain on investments .......... 776,195 828,887 267,958
Change in net unrealized gain
on investments ........................... 295,855 2,126,633 2,779,085
---------- ---------- ----------
Net gain on investments ................... 1,072,050 2,955,520 3,047,043
---------- ---------- ----------
Increase in Net Assets
from Operations ........................ $3,499,255 $3,604,901 $3,109,787
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
F-29
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF
International
Equity
Division JPVF World Growth Stock Division
-------------------- ------------------------------------------------
Period from
January 15, 1998(a) Year Ended December 31,
to ------------------------------------------------
December 31, 1998 1998 1997 1996
-------------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ................. $ (2,162) $ 9,146,199 $ 14,768,141 $ 6,877,182
Net realized gain (loss) on investments ...... (1,410) 1,498,732 1,393,920 607,700
Change in net unrealized gain (loss)
on investments .............................. 550,363 (8,293,399) (2,140,961) 7,289,718
---------- ------------- ------------ ------------
Increase (decrease) in net assets from
operations .................................. 546,791 2,351,532 14,021,100 14,774,600
Contractholder transactions--Note D:
Transfers of net premiums .................... 1,201,519 19,624,937 20,387,148 21,940,124
Transfers from/to General Account
and within Separate Account, net ............ 6,623,800 (12,458,969) (4,647,630) (3,897,681)
Transfers of cost of insurance ............... (238,990) (7,802,232) (7,901,778) (7,361,182)
Transfers on account of death ................ (12,068) (329,223) (143,565) (317,872)
Transfers on account of other
terminations ................................ 16,339 (2,164,208) (2,830,872) (2,897,126)
---------- ------------- ------------ ------------
Net increase (decrease) in net assets
derived from contractholder transactions ..... 7,590,600 (3,129,695) 4,863,303 7,466,263
Net increase (decrease) in net assets ......... 8,137,391 (778,163) 18,884,403 22,240,863
---------- ------------- ------------ ------------
Balance at beginning of year .................. -- 117,976,710 99,092,307 76,851,444
---------- ------------- ------------ ------------
Balance at end of year ........................ $8,137,391 $ 117,198,547 $117,976,710 $ 99,092,307
========== ============= ============ ============
<CAPTION>
JPVF Global Hard Assets Division
--------------------------------------------
Year Ended December 31,
--------------------------------------------
1998 1997 1996
------------- --------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ................. $ 28,240 $ 146,417 $ 120,935
Net realized gain (loss) on investments ...... (826,362) (1,020,911) 236,329
Change in net unrealized gain (loss)
on investments .............................. 121,013 (2,862,423) (329,690)
---------- ------------- ----------
Increase (decrease) in net assets from
operations .................................. (677,109) (3,736,917) 27,574
Contractholder transactions--Note D:
Transfers of net premiums .................... 1,192,112 1,487,487 1,687,557
Transfers from/to General Account
and within Separate Account, net ............ (854,463) 594,080 202,817
Transfers of cost of insurance ............... (412,766) (522,160) (689,400)
Transfers on account of death ................ (4,158) (5,118) (27,123)
Transfers on account of other
terminations ................................ (113,411) (297,357) (363,544)
---------- ------------- ----------
Net increase (decrease) in net assets
derived from contractholder transactions ..... (192,686) 1,256,932 810,307
Net increase (decrease) in net assets ......... (869,795) (2,479,985) 837,881
---------- ------------- ----------
Balance at beginning of year .................. 5,273,404 7,753,389 6,915,508
---------- ------------- ----------
Balance at end of year ........................ $4,403,609 $ 5,273,404 $7,753,389
========== ============= ==========
</TABLE>
(a) Commencement of operations
See notes to consolidated financial statements.
F-30
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF Emerging Growth Division
-----------------------------------------------
Year Ended December 31,
-----------------------------------------------
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) ................. $ 12,062 $ 2,014,106 $ 660,254
Net realized gain (loss) on
investments ................................. 1,477,889 528,900 349,647
Change in net unrealized gain (loss)
on investments .............................. 16,294,927 3,845,746 1,103,470
------------ ------------ ------------
Increase in net assets from operations ........ 17,784,878 6,388,752 2,113,371
Contractholder transactions--Note D:
Transfers of net premiums .................... 15,940,085 12,081,437 7,560,238
Transfers from/to General Account
and within Separate Account, net ............ 893,513 7,761,806 11,847,439
Transfers of cost of insurance ............... (4,518,851) (3,150,610) (1,670,564)
Transfers on account of death ................ (55,398) (29,914) (14,856)
Transfers on account of other
terminations ................................ (634,670) (617,379) (364,506)
------------ ------------ ------------
Net increase in net assets
derived from contractholder transactions ..... 11,624,679 16,045,340 17,357,751
Net increase in net assets .................... 29,409,557 22,434,092 19,471,122
------------ ------------ ------------
Balance at beginning of year .................. 49,492,556 27,058,464 7,587,342
------------ ------------ ------------
Balance at end of year ........................ $ 78,902,113 $ 49,492,556 $ 27,058,464
============ ============ ============
<CAPTION>
JPVF
Growth
JPVF Capital Growth Division Division
----------------------------------------------- --------------------
Period from
Year Ended December 31, January 20, 1999(a)
----------------------------------------------- to
1998 1997 1996 December 31, 1998
---------------- --------------- -------------- --------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) ................. $ 8,235,378 $ 4,615,187 $ 12,950,668 $ (6,809)
Net realized gain (loss) on
investments ................................. 2,650,023 827,249 704,194 (46,655)
Change in net unrealized gain (loss)
on investments .............................. 38,211,343 19,770,192 (3,210,806) 231,287
------------- ------------ ------------ ----------
Increase in net assets from operations ........ 49,096,744 25,212,628 10,444,056 177,823
Contractholder transactions--Note D:
Transfers of net premiums .................... 29,467,989 23,605,444 20,766,738 509,810
Transfers from/to General Account
and within Separate Account, net ............ 358,425 2,703,509 5,662,187 1,036,375
Transfers of cost of insurance ............... (10,254,190) (7,961,359) (6,261,918) (70,647)
Transfers on account of death ................ (314,463) (104,089) (191,870) --
Transfers on account of other
terminations ................................ (2,015,250) (2,348,433) (1,886,962) 2,676
------------- ------------ ------------ ----------
Net increase in net assets
derived from contractholder transactions ..... 17,242,511 15,895,072 18,088,175 1,478,214
Net increase in net assets .................... 66,339,255 41,107,700 28,532,231 1,656,037
------------- ------------ ------------ ----------
Balance at beginning of year .................. 123,775,570 82,667,870 54,135,639 --
------------- ------------ ------------ ----------
Balance at end of year ........................ $ 190,114,825 $123,775,570 $ 82,667,870 $1,656,037
============= ============ ============ ==========
</TABLE>
(a) Commencement of operations.
See notes to consolidated financial statements.
F-31
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF Small Company Division
-------------------------------------------
Year Ended December 31,
-------------------------------------------
1998 1997 1996
---------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ................. $ 7,779,948 $ 7,341,576 $ 8,231,743
Net realized gain on investments ............. 939,643 1,112,075 821,643
Change in net unrealized gain (loss)
on investments .............................. (20,294,880) 7,517,633 (390,637)
------------ ----------- -----------
Increase (decrease) in net assets
from operations .............................. (11,575,289) 15,971,284 8,662,749
Contractholder transactions--Note D:
Transfers of net premiums .................... 15,832,378 15,002,595 15,512,647
Transfers from/to General Account
and within Separate Account, net (1,321,696) (3,643,068) (999,798)
Transfers of cost of insurance ............... (6,129,383) (5,977,445) (5,382,924)
Transfers on account of death ................ (182,629) (138,279) (363,028)
Transfers on account of other
terminations ................................ (1,303,312) (2,043,613) (1,916,226)
------------ ----------- -----------
Net increase in net assets derived
from contractholder transactions ............. 6,895,358 3,200,190 6,850,671
Net increase (decrease) in net assets ......... (4,679,931) 19,171,474 15,513,420
------------ ----------- -----------
Balance at beginning of year .................. 89,208,763 70,037,289 54,523,869
------------ ----------- -----------
Balance at end of year ........................ $ 84,528,832 $89,208,763 $70,037,289
============ =========== ===========
<CAPTION>
JPVF Growth & Income Division JPVF Balanced Division
----------------------------------------------- -------------------------------
Year Ended December 31, Year Ended December 31,
----------------------------------------------- -------------------------------
1998 1997 1996 1998 1997
-------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ................. $ (31,231) $ 8,670,341 $ 943,501 $ 2,372,689 $ 3,781,936
Net realized gain on investments ............. 781,929 763,718 317,839 111,626 125,127
Change in net unrealized gain (loss)
on investments .............................. 4,120,409 (1,791,862) 2,500,125 1,976,202 (829,904)
----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets
from operations .............................. 4,871,107 7,642,197 3,761,465 4,460,517 3,077,159
Contractholder transactions--Note D:
Transfers of net premiums .................... 10,756,077 8,132,090 6,240,133 5,092,290 4,506,381
Transfers from/to General Account
and within Separate Account, net (1,037,359) 5,643,742 3,324,466 631,049 (154,536)
Transfers of cost of insurance ............... (3,696,570) (2,745,042) (1,850,081) (1,897,240) (1,580,912)
Transfers on account of death ................ (92,605) (45,431) (46,114) (107,286) (32,682)
Transfers on account of other
terminations ................................ (591,078) (658,736) (368,235) (477,084) (480,806)
----------- ----------- ----------- ----------- -----------
Net increase in net assets derived
from contractholder transactions ............. 5,338,465 10,326,623 7,300,169 3,241,729 2,257,445
Net increase (decrease) in net assets ......... 10,209,572 17,868,820 11,061,634 7,702,246 5,334,604
----------- ----------- ----------- ----------- -----------
Balance at beginning of year .................. 42,256,061 24,387,241 13,325,607 24,820,125 19,485,521
----------- ----------- ----------- ----------- -----------
Balance at end of year ........................ $52,465,633 $42,256,061 $24,387,241 $32,522,371 $24,820,125
=========== =========== =========== =========== ===========
<CAPTION>
JPVF Balanced Division
-----------------------
Year Ended December 31,
-----------------------
1996
-----------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ................. $ 1,463,145
Net realized gain on investments ............. 151,391
Change in net unrealized gain (loss)
on investments .............................. (17,988)
-----------
Increase (decrease) in net assets
from operations .............................. 1,596,548
Contractholder transactions--Note D:
Transfers of net premiums .................... 4,608,156
Transfers from/to General Account
and within Separate Account, net (283,623)
Transfers of cost of insurance ............... (1,498,155)
Transfers on account of death ................ (37,978)
Transfers on account of other
terminations ................................ (460,839)
-----------
Net increase in net assets derived
from contractholder transactions ............. 2,327,561
Net increase (decrease) in net assets ......... 3,924,109
-----------
Balance at beginning of year .................. 15,561,412
-----------
Balance at end of year ........................ $19,485,521
===========
</TABLE>
See notes to consolidated financial statements.
F-32
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF High Yield
Bond Division
--------------------
Period from Money Market Division
January 8, 1998(a) -----------------------------------------------
to Year Ended December 31,
December 31, -----------------------------------------------
1998 1998 1997 1996
-------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ................... $ 264,218 $ 396,249 $ 334,792 $ 311,045
Net realized gain (loss) on investments ........ (77,480) 53,452 61,042 16,652
Change in net unrealized gain on
investments ................................... (287,866) 20,157 (11,529) (19,364)
---------- ----------- ------------- -------------
Increase (decrease) in net assets from
operations ..................................... (101,128) 469,858 384,305 308,333
Contractholder transactions--Note D:
Transfers of net premiums ...................... 599,541 4,544,085 4,688,133 4,466,621
Transfers from/to General Account and
within Separate Account, net .................. 4,764,419 2,798,249 (2,751,900) (4,354,762)
Transfers of cost of insurance ................. (255,751) (915,629) (782,134) (741,454)
Transfers on account of death .................. -- (578) (6,947) (1,802)
Transfers on account of other terminations ..... (23,575) (302,128) (592,016) (464,487)
---------- ----------- ------------- -------------
Net increase (decrease) in net assets derived
from contractholder transactions ............... 5,084,634 6,123,999 555,136 (1,095,884)
Net increase (decrease) in net assets ........... 4,983,506 6,593,857 939,441 (787,551)
---------- ----------- ------------- -------------
Balance at beginning of year .................... -- 8,950,596 8,011,155 8,798,706
---------- ----------- ------------- -------------
Balance at end of year .......................... $4,983,506 $15,544,453 $ 8,950,596 $ 8,011,155
========== =========== ============= =============
<CAPTION>
Fidelity Contrafund Division
-----------------------------------------------
Period from
Year Ended May 2, 1996(a)
December 31, to
------------------------------- December 31,
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ................... $ 938,763 $ 82,375 $ (13,294)
Net realized gain (loss) on investments ........ 381,646 143,362 3,889
Change in net unrealized gain on
investments ................................... 6,265,813 1,928,296 388,960
------------ ------------ ----------
Increase (decrease) in net assets from
operations ..................................... 7,586,222 2,154,033 379,555
Contractholder transactions--Note D:
Transfers of net premiums ...................... 9,182,744 4,532,969 930,093
Transfers from/to General Account and
within Separate Account, net .................. 8,458,498 8,789,832 3,824,157
Transfers of cost of insurance ................. (2,365,397) (1,101,248) (151,699)
Transfers on account of death .................. (42,331) (1,382) --
Transfers on account of other terminations ..... (262,093) (153,334) (19,581)
------------ ------------ ----------
Net increase (decrease) in net assets derived
from contractholder transactions ............... 14,971,421 12,066,837 4,582,970
Net increase (decrease) in net assets ........... 22,557,643 14,220,870 4,962,525
------------ ------------ ----------
Balance at beginning of year .................... 19,183,395 4,962,525 --
------------ ------------ ----------
Balance at end of year .......................... $ 41,741,038 $ 19,183,395 $4,962,525
============ ============ ==========
</TABLE>
(a) Commencement of operations.
See notes to consolidated financial statements.
F-33
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
Fidelity Fidelity VIP
VIP Growth Equity Income
Division Division Fidelity Index 500 Division
-------------------- -------------------- -------------------------------
Period from Period
January 8, 1998(a) January 8, 1998(a) Year Ended
to to December 31,
December 31, December 31, -------------------------------
1998 1998 1998 1997
-------------------- -------------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) .................... $ (14,921) $ 762 $ 798,886 $ 142,345
Net realized gain (loss) on investments ......... (10,197) (114,816) 551,714 435,364
Change in net unrealized gain on
investments .................................... 1,136,063 192,755 10,456,961 3,844,079
---------- ---------- ----------- -----------
Increase (decrease) in net assets from
operations ...................................... 1,110,945 78,701 11,807,561 4,421,788
Contractholder transactions--Note D:
Transfers of net premiums ....................... 925,584 1,459,008 14,424,002 5,355,400
Transfers from/to General Account and
within Separate Account, net ................... 5,643,806 2,814,317 22,523,380 13,090,735
Transfers of cost of insurance .................. (177,953) (305,514) (3,847,370) (1,230,424)
Transfers on account of death ................... -- -- (63,585) (41,017)
Transfers on account of other
terminations ................................... (35,344) (1,001) (380,850) (149,305)
---------- ---------- ----------- -----------
Net increase (decrease) in net assets
derived from contractholder
transactions .................................... 6,356,093 3,966,810 32,655,577 17,025,389
Net increase (decrease) in net assets ............ 7,467,038 4,045,511 44,463,138 21,447,177
---------- ---------- ----------- -----------
Balance at beginning of year ..................... -- -- 28,974,762 7,527,585
---------- ---------- ----------- -----------
Balance at end of year ........................... $7,467,038 $4,045,511 $73,437,900 $28,974,762
========== ========== =========== ===========
<CAPTION>
Fidelity Index
500 Division Fidelity High Income Division
---------------- -------------------------------------------
Period from Period from
May 2, 1996(a) Year Ended May 2,1996(a)
to December 31, to
December 31, ----------------------------- December 31,
1996 1998 1997 1996
---------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) .................... $ (18,598) $ 616,338 $ 233,391 $ (9,027)
Net realized gain (loss) on investments ......... 24,088 97,475 71,464 25,826
Change in net unrealized gain on
investments .................................... 561,002 (784,382) 451,237 106,660
---------- ---------- ---------- ----------
Increase (decrease) in net assets from
operations ...................................... 566,492 (70,569) 756,092 123,459
Contractholder transactions--Note D:
Transfers of net premiums ....................... 887,336 82,028 1,344,308 312,854
Transfers from/to General Account and
within Separate Account, net ................... 6,216,629 (4,577,188) 3,119,835 2,471,242
Transfers of cost of insurance .................. (145,983) (264,842) (362,364) (72,880)
Transfers on account of death ................... (219)
Transfers on account of other (3,474)
terminations ................................... 3,111 (126,841) (173,019) (15,474)
---------- ---------- ---------- ----------
Net increase (decrease) in net assets
derived from contractholder
transactions .................................... 6,961,093 (4,887,062) 3,925,286 2,695,742
Net increase (decrease) in net assets ............ 7,527,585 (4,957,631) 4,681,378 2,819,201
---------- ---------- ---------- ----------
Balance at beginning of year ..................... -- 7,500,579 2,819,201 --
---------- ---------- ---------- ----------
Balance at end of year ........................... $7,527,585 $2,542,948 $7,500,579 $2,819,201
========== ========== ========== ==========
</TABLE>
(a) Commencement of operations.
See notes to consolidated financial statements.
F-34
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
MFS Research MFS Utilities
Division Division
-------------------- ---------------------
Period from Period from
January 8, 1998(a) January 12, 1998(a)
to to
December 31, December 31,
1998 1998
-------------------- ---------------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income ................................. $ 30,268 $ 56,638
Net realized gain (loss) on investments ............... (192,250) 38,000
Change in net unrealized gain on investments .......... 335,616 272,742
---------- ----------
Increase in net assets from operations ................. 173,634 367,380
Contractholder transactions--Note D:
Transfers of net premiums ............................. 1,035,071 730,856
Transfers from/to General Account and within
Separate Account, net ................................ 3,239,091 3,166,986
Transfers of cost of insurance ........................ (193,228) (145,371)
Transfers on account of death ......................... (12,135) --
Transfers on account of other terminations ............ 130 30,746
---------- ----------
Net increase in net assets derived from contractholder
transactions .......................................... 4,068,929 3,783,217
Net increase in net assets ............................. 4,242,563 4,150,597
---------- ----------
Balance at beginning of year ........................... -- --
---------- ----------
Balance at end of year ................................. $4,242,563 $4,150,597
========== ==========
<CAPTION>
Oppenheimer
Strategic Bond
Division
--------------------
Period from Oppenheimer Bond Division
January 12, 1998(a) ------------------------------------------------
to Year Ended December 31,
December 31, ------------------------------------------------
1998 1998 1997 1996
-------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income ................................. $ 1,262 $ 291,102 $ 651,592 $ 572,521
Net realized gain (loss) on investments ............... (2,048) 296,390 31,843 37,510
Change in net unrealized gain on investments .......... 24,753 247,987 235,133 (364,875)
---------- ------------ ----------- -----------
Increase in net assets from operations ................. 23,967 835,479 918,568 245,156
Contractholder transactions--Note D:
Transfers of net premiums ............................. 452,931 3,736,503 2,691,506 2,634,301
Transfers from/to General Account and within
Separate Account, net ................................ 1,307,674 595,445 (394,592) 999,421
Transfers of cost of insurance ........................ (74,702) (1,076,884) (918,928) (909,361)
Transfers on account of death ......................... -- (43,142) (65,768) (16,880)
Transfers on account of other terminations ............ (6,002) (227,487) (384,107) (438,849)
---------- ------------ ----------- -----------
Net increase in net assets derived from contractholder
transactions .......................................... 1,679,901 2,984,435 928,111 2,268,632
Net increase in net assets ............................. 1,703,868 3,819,914 1,846,679 2,513,788
---------- ------------ ----------- -----------
Balance at beginning of year ........................... -- 14,236,293 12,389,614 9,875,826
---------- ------------ ----------- -----------
Balance at end of year ................................. $1,703,868 $ 18,056,207 $14,236,293 $12,389,614
========== ============ =========== ===========
</TABLE>
(a) Commencement of operations.
See notes to consolidated financial statements.
F-35
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
Templeton International Division
---------------------------------------------------
Year Ended December 31,
---------------------------------------------------
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS ...................................................
Operations:
Net investment income ................................................... $ 2,427,205 $ 649,381 $ 62,744
Net realized gain on investments ........................................ 776,195 828,887 267,958
Change in net unrealized gain on investments ............................. 295,855 2,126,633 2,779,085
------------ ------------ ------------
Increase in net assets from operations ................................... 3,499,255 3,604,901 3,109,787
Contractholder transactions--Note D:
Transfers of net premiums ............................................... 11,772,271 9,182,098 5,361,868
Transfers from/to General Account and within Separate Account, net ...... 2,942,895 7,333,435 8,214,110
Transfers of cost of insurance .......................................... (3,185,143) (2,324,520) (1,135,804)
Transfers on account of death ........................................... (31,916) (64,977) (9,512)
Transfers on account of other terminations .............................. (356,684) (437,273) (414,887)
------------ ------------ ------------
Net increase in net assets derived from contractholder transactions ...... 11,141,423 13,688,763 12,015,775
Net increase in net assets ............................................... 14,640,678 17,293,664 15,125,562
------------ ------------ ------------
Balance at beginning of year ............................................. 40,116,028 22,822,364 7,696,802
------------ ------------ ------------
Balance at end of year ................................................... $ 54,756,706 $ 40,116,028 $ 22,822,364
============ ============ ============
</TABLE>
(a) Commencement of operations.
See notes to consolidated financial statements.
F-36
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1998
NOTE A--ORGANIZATION OF ACCOUNT
JPF Separate Account A (the "Separate Account") is a separate account of
Jefferson Pilot Financial Life Insurance Company ("JP Financial") effective
April 30, 1997. JP Financial Separate Account is organized as a unit investment
trust registered under the Investment Act of 1940 as amended. It was
established for the purpose of funding flexible premium variable life insurance
policies issued by JP Financial and its predecessor. As of December 31, 1998,
the Separate Account is comprised of twenty-one investment divisions, eleven of
which invest exclusively in the corresponding portfolios of the Jefferson Pilot
Variable Fund, Inc. one of which invests in the Templeton International Fund,
five of which invest in certain Fidelity Portfolios, two of which invest in
certain Oppenheimer Funds, and two of which invest in certain MFS Funds, all
diversified Series Investment Companies.
NOTE B--SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments: Investments in shares of the Fund are valued at the
net asset value per share which is calculated each day the New York Stock
Exchange is open for trading.
Investment Income: Dividend income and distributions of realized gains are
recorded on the ex-dividend date.
Investment Transactions: Purchases and sales of shares of the Fund are
recorded as of the trade date, the date the transaction is executed.
Federal Income Taxes: The operations of the Separate Account are included in
the federal income tax return of JP Financial which is taxed as a life
insurance company under the Internal Revenue Code. Under current law, no
federal income taxes are payable with respect to the Separate Account.
Expenses: Currently, the Separate Account contains the net assets of two
variable insurance policies, Ensemble and Ensemble II. A mortality and expense
risk charge payable to JP Financial is accrued daily which will not exceed .6%
and .9% of the average net asset value of each division of the Separate Account
on an annual basis for Ensemble and Ensemble II, respectively.
Use of Estimates: The accompanying financial statements of the Account have been
prepared in accordance with generally accepted accounting principles. The
preparation of financial statements requires management to make estimates that
affect amounts reported in the financial statements and accompanying notes. Such
estimates could change in the future as more information becomes known, which
could impact the amounts reported and disclosed herein.
NOTE C--AFFILIATED COMPANY TRANSACTIONS
Administrative services necessary for the operation of the Separate Account are
provided by Jefferson Pilot Service Corporation, an affiliate of JP Financial.
JP Financial is the principal underwriter of the variable insurance contracts
that utilize the Separate Account. Jefferson Pilot Securities Corporation, an
affiliate of the Company, is the distributor.
NOTE D--DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code, a variable
life insurance contract will be subject to federal income taxes on the income
earned for any period for which the investments of the segregated assets
account, on which the contract is based, are not adequately diversified. The
Code provides that the "adequately diversified" requirement may be met if the
underlying investments satisfy either a statutory safe harbor test or
diversification requirements set forth in regulations issued by the Secretary
of Treasury.
The Internal Revenue Service has issued regulations under Section 817(h) of the
Code. The Company believes that the segregated asset account satisfies the
current requirements of the regulations, and it intends that the segregated
asset account will continue to meet such requirements.
F-37
<PAGE>
NOTES TO FINANCIAL STATEMENTS--Continued
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1998
NOTE E--INVESTMENTS
In determining the net realized gain or loss on sales of shares of the Fund,
the cost of shares sold has been determined on an average cost basis. For
federal income tax purposes, the cost of shares owned at December 31, 1998 is
the same as for financial reporting purposes.
Following is a summary of shares of each portfolio of the Fund owned by the
respective divisions of the Separate Account and the related net asset values
at December 31, 1998.
<TABLE>
<CAPTION>
Net Asset
Value
Shares Per Share
----------- ---------------
<S> <C> <C>
JPVF World Growth Stock Division 4,937,330 $ 21.901634
JPVF Money Market Division 1,448,905 10.372865
JPVF Global Hard Assets Division 573,626 7.554854
JPVF Emerging Growth Division 3,404,180 23.044337
Templeton International Division 2,643,877 20.690000
JPVF International Equity Division 666,509 12.124627
JPVF Growth Division 125,128 13.113809
JPVF High Yield Bond Division 493,205 9.487880
JPVF Small Company Division 4,747,654 16.210090
Oppenheimer Bond Division 1,410,532 12.320000
MFS Research Division 221,190 19.050000
MFS Utilities Division 208,963 19.820000
JPVF Growth & Income Division 2,718,548 19.118335
Oppenheimer Strategic Bond Division 320,844 5.120000
JPVF Capital Growth Division 6,476,885 27.895088
Fidelity VIP Growth Division 165,384 44.870000
Fidelity VIP Equity Income Division 157,116 25.420000
JPVF Balanced Division 2,349,571 12.714488
Fidelity Contrafund Division 1,700,318 24.440000
Fidelity High Income Division 220,576 11.530000
Fidelity Index 500 Division 518,272 141.250000
</TABLE>
F-38
<PAGE>
NOTES TO FINANCIAL STATEMENTS--Continued
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1998
NOTE F--CONTRACTHOLDER TRANSACTIONS
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------------------------------
1998 1997 1996
----------------------------- -------------------------- ------------------------------
Units Amount Units Amount Units Amount
------------ ---------------- ----------- -------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
JPVF World Growth Stock Division
Issuance of units 943,836 $ 39,051,743 1,011,924 $39,798,520 1,228,496 $ 39,291,612
Redemptions of units 1,018,017 42,181,438 895,063 34,935,217 994,317 31,825,349
--------- ------------ --------- ----------- --------- ------------
Net Increase (decrease) (74,181) $ (3,129,695) 116,861 $ 4,863,303 234,179 $ 7,466,263
========= ============ ========= =========== ========= ============
JPVF Global Hard Assets Division
Issuance of units 437,515 $ 3,764,642 589,273 $ 6,878,213 278,948 $ 5,141,128
Redemptions of units 450,418 3,957,328 475,559 5,621,281 234,636 4,330,821
--------- ------------ --------- ----------- --------- ------------
Net Increase (decrease) (12,903) $ (192,686) 113,714 $ 1,256,932 44,312 $ 810,307
========= ============ ========= =========== ========= ============
JPVF Emerging Growth Division
Issuance of units 2,202,083 $ 45,173,868 2,187,207 $37,160,174 1,835,746 $ 27,213,432
Redemptions of units 1,639,619 33,549,189 1,257,679 21,114,834 663,900 9,855,681
--------- ------------ --------- ----------- --------- ------------
Net Increase 562,464 $ 11,624,679 929,528 $16,045,340 1,171,846 $ 17,357,751
========= ============ ========= =========== ========= ============
JPVF Capital Growth Division
Issuance of units 1,791,255 $ 66,165,409 1,727,504 $49,693,896 1,982,313 $ 47,005,977
Redemptions of units 1,324,641 48,892,898 1,166,517 33,798,824 1,225,848 28,917,802
--------- ------------ --------- ----------- --------- ------------
Net Increase 466,614 $ 17,272,511 560,987 $15,895,072 756,465 $ 18,088,175
========= ============ ========= =========== ========= ============
JPVF Small Company Division
Issuance of units 916,453 $ 39,034,264 783,149 $32,220,885 938,273 $ 32,523,842
Redemptions of units 747,736 32,138,906 707,768 29,020,695 746,233 25,673,171
--------- ------------ --------- ----------- --------- ------------
Net Increase 168,717 $ 6,895,358 75,381 $ 3,200,190 192,040 $ 6,850,671
========= ============ ========= =========== ========= ============
JPVF Growth & Income Division
Issuance of units 1,240,410 $ 32,593,480 1,110,245 $24,846,023 1,036,744 $ 17,720,412
Redemptions of units 1,047,665 27,255,015 659,777 14,619,400 613,562 10,420,243
--------- ------------ --------- ----------- --------- ------------
Net Increase 192,745 $ 5,338,465 450,468 $10,226,623 423,182 $ 7,300,169
========= ============ ========= =========== ========= ============
JPVF Balanced Division
Issuance of units 622,617 $ 11,686,604 557,010 $ 9,238,539 804,427 $ 11,577,640
Redemptions of units 449,737 8,444,875 423,594 6,981,094 645,411 9,250,079
--------- ------------ --------- ----------- --------- ------------
Net Increase 172,880 $ 3,241,729 133,416 $ 2,257,445 159,016 $ 2,327,561
========= ============ ========= =========== ========= ============
JPVF Money Market Division
Issuance of units 3,082,919 $ 52,304,400 2,230,904 $36,446,460 1,936,504 $ 30,547,227
Redemptions of units 2,722,078 46,180,401 2,193,315 35,891,324 2,006,047 31,643,111
--------- ------------ --------- ----------- --------- ------------
Net Increase (decrease) 360,841 $ 6,123,999 37,589 $ 555,136 (69,543) $ (1,095,884)
========= ============ ========= =========== ========= ============
</TABLE>
F-39
<PAGE>
NOTES TO FINANCIAL STATEMENTS--Continued
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1998
NOTE F--CONTRACTHOLDER TRANSACTIONS (Continued)
<TABLE>
<CAPTION>
For the period
January 15, 1998(a)
through
December 31, 1998
------------------------------
Units Amount
-------------- -------------
<S> <C> <C>
JPVF International Equity Division
Issuance of units 806,326 $ 9,244,760
Redemptions of units 145,428 1,654,160
------- -----------
Net Increase 660,898 $ 7,590,600
======= ===========
</TABLE>
<TABLE>
<CAPTION>
For the period
January 20, 1998(a)
through
December 31, 1998
---------------------------------
Units Amount
----------- -----------
<S> <C> <C>
JPVF Growth Division
Issuance of units 289,470 $ 3,260,004
Redemptions of units 162,322 1,781,790
------- -----------
Net Increase 127,148 $ 1,478,214
======= ===========
</TABLE>
<TABLE>
<CAPTION>
For the period
January 8, 1998(a)
through
December 31, 1998
---------------------------------
Units Amount
----------- -----------
<S> <C> <C>
JPVF High Yield Bond Division
Issuance of units 1,187,107 $11,940,568
Redemptions of units 686,842 6,855,934
--------- -----------
Net Increase 500,265 $ 5,084,634
========= ===========
</TABLE>
(a) Commencement of operations
F-40
<PAGE>
NOTES TO FINANCIAL STATEMENTS--Continued
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1998
NOTE F--CONTRACTHOLDER TRANSACTIONS (Continued)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------
For the period May 2,
1996(a)
1998 1997 through December 31, 1996
-------------------------------- ---------------------------- -------------------------
Units Amount Units Amount Units Amount
------------- ---------------- ----------- -------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Fidelity Contrafund Division
Issuance of units 2,028,731 $ 31,008,560 1,533,238 $19,271,804 533,610 $5,507,181
Redemptions of units 1,065,432 16,037,139 580,340 7,204,967 88,891 924,211
--------- ------------ --------- ----------- ------- ----------
Net Increase 963,299 $ 14,971,421 952,898 $12,066,837 444,719 $4,582,970
========= ============ ========= =========== ======= ==========
Fidelity Index 500 Division
Issuance of units 3,405,171 $ 57,232,632 2,094,648 $28,323,380 796,936 $8,418,545
Redemptions of units 1,486,670 24,577,055 822,768 11,297,991 136,853 1,457,452
--------- ------------ --------- ----------- ------- ----------
Net Increase 1,918,501 $ 32,655,577 1,271,880 $17,025,389 660,083 $6,961,093
========= ============ ========= =========== ======= ==========
Fidelity High Income Division
Issuance of units 71,621 $ 908,088 797,876 $ 9,316,213 460,340 $4,748,206
Redemptions of units 455,698 5,795,150 462,054 5,390,927 198,287 2,052,464
--------- ------------ --------- ----------- ------- ----------
Net Increase (decrease) (384,077) $ (4,887,062) 335,822 $ 3,925,286 262,053 $2,695,742
========= ============ ========= =========== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
For the period
January 8, 1998(a)
through
December 31, 1998
-------------------------
Units Amount
--------- -------------
<S> <C> <C>
Fidelity VIP Growth Division
Issuance of units 655,774 $ 7,806,648
Redemptions of units 122,386 1,450,555
------- -----------
Net Increase 533,388 $ 6,356,093
======= ===========
Fidelity VIP Equity Income Division
Issuance of units 982,482 $10,549,873
Redemptions of units 623,457 6,583,063
------- -----------
Net Increase 359,025 $ 3,966,810
======= ===========
</TABLE>
(a) Commencement of operations
F-41
<PAGE>
NOTES TO FINANCIAL STATEMENTS--Continued
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1998
NOTE F--CONTRACTHOLDER TRANSACTIONS (Continued)
<TABLE>
<CAPTION>
For the period
January 8, 1998(a)
through
December 31, 1998
-------------------------
Units Amount
--------- -------------
<S> <C> <C>
MFS Research Division
Issuance of units 631,245 $7,154,159
Redemptions of units 288,287 3,085,230
------- ----------
Net Increase 342,958 $4,068,929
======= ==========
</TABLE>
<TABLE>
<CAPTION>
For the period
January 12, 1998(a)
through
December 31, 1998
-------------------------
Units Amount
--------- -------------
<S> <C> <C>
MFS Utilities Division
Issuance of units 667,553 $7,474,706
Redemptions of units 324,319 3,691,489
------- ----------
Net Increase 343,234 $3,783,217
======= ==========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, Year Ended December 31,
---------------------------- ------------------------- For the period May 2, 1996(a)
1998 1997 through December 31, 1996
---------------------------- ------------------------- -------------------------
Units Amount Units Amount Units Amount
----------- -------------- --------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Oppenheimer Bond Division
Issuance of units 1,052,232 $22,601,035 396,342 $7,858,820 551,744 10,326,450
Redemptions of units 913,765 19,616,600 350,970 6,930,709 429,283 8,057,818
--------- ----------- ------- ---------- ------- ----------
Net Increase 138,467 $ 2,984,435 45,372 $ 928,111 122,461 $ 2,268,632
========= =========== ======= ========== ======= ===========
</TABLE>
<TABLE>
<CAPTION>
For the period
January 12, 1998(a)
through
December 31, 1998
-------------------------
Units Amount
--------- -------------
<S> <C> <C>
Oppenheimer Strategic Bond Division
Issuance of units 374,307 $3,726,685
Redemptions of units 204,970 2,046,784
------- ----------
Net Increase 169,337 $1,679,901
======= ==========
</TABLE>
(a) Commencement of operations
F-42
<PAGE>
NOTES TO FINANCIAL STATEMENTS--Continued
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1998
NOTE G--YEAR 2000 ASSESSMENT (UNAUDITED)
The Company recognizes the need to ensure that its operations will not be
adversely impacted by the Year 2000 systems failures. Year 2000 issues arise
because some computer software and hardware (systems) were designed to handle
only a two digit year, not a four digit year. By using two digits, they could
fail or make miscalculations due to the inability to distinguish between dates
in the 1900's and in the 2000's.
In order to minimize the impact of the year 2000 on the Company,
Jefferson-Pilot Corporation developed a centralized oversight and project
management process to facilitate the planning and conversion of all information
systems on behalf of the Company and its affiliates. The scope of the project
includes an assessment of the Company's material systems currently in place,
modification, testing and implementation of such systems as required, inquiry
to third-party providers with whom the Company has material business
relationships as to the state of their readiness, and the development of a
contingency plan in the event that material Year 2000 issues arise.
The target for completing all phases is September 30, 1999. The Company has
completed its assessment and modification phases of its plan and is actively
testing its systems and communicating with its business partners to assess
these companies' readiness. Although management does not anticipate a material
effect on its business operation as a result of the Year 2000 computer systems
issues, the Company is in the process of developing a contingency plan in the
event that material Year 2000 issues arise in the Company or third-party
computer systems.
F-43
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore, or hereafter duly adopted pursuant to
authority conferred in that section.
UNDERTAKINGS REGARDING INDEMNIFICATION
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer of controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
REPRESENTATIONS REGARDING FEES AND CHARGES
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 Chubb Life Insurance Company of America.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The cover sheet.
The Prospectus consisting of 78 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484(b) (1) under the Securities
Act of 1933.
The Representations Regarding Fees and Charges.
The signatures.
Written consents of the following persons:
Ernst & Young LLP, contained in Exhibit 7 below.
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of the
instructions as to exhibits in Form N-8B-2:
(a) Certified copy of Resolution of Board of Directors of The Volunteer
State Life Insurance Company, adopted at a meeting held on August 20, 1984 (in
lieu of indenture or trust creating unit investment trust) (Incorporated by
reference to Exhibit 1(a) of Post-Effective Amendment No. 12 to the Registration
Statement on Form S-6 dated April 17, 1996).
(b) Not applicable.
(c) (i) Underwriting Agreement between The Volunteer State Life Insurance
Company and Chubb Securities Corporation. (Incorporated by reference to
Exhibit 1(c)(i) of Post-Effective Amendment No. 12 to the Registration
Statement on Form S-6 dated April 17, 1996).
(ii) Amendment to Underwriting Agreement between The Volunteer State
Life Insurance Company and Chubb Securities Corporation. (Incorporated by
reference to Exhibit 1(c)(ii) of Post-Effective Amendment No. 12 to the
Registration Statement on Form S-6 dated April 17, 1996).
(iii) Specimen District Manager's Agreement of Chubb Securities
Corporation. (Incorporated by reference to Exhibit 1(c)(iii) of Post-
Effective Amendment No. 12 to the Registration Statement on Form S-6 dated
April 17, 1996).
(iv) Specimen Sales Representative's Agreement of Chubb Securities
Corporation. (Incorporated by reference to Exhibit 1(c) (iv) of Post-
Effective Amendment No. 12 to the Registration Statement on Form 2-6 dated
April 17, 1996).
(v) Schedule of Commissions. (Incorporated by reference to Exhibit
1(c)(v) of Post-Effective Amendment No. 12 to the Registration Statement on
Form S-6 dated April 17, 1996).
(d) Not applicable
(e) Specimen Policy with form of riders. 1,2,3,6,7. (Incorporated by
reference to Exhibit 1(e) of Post-Effective Amendment No. 12 to the
Registration Statement on Form S-6 dated April 17, 1996).
(f) (i) Amended and Restated Charter (with all amendments) of Chubb Life
Insurance Company of America. (Incorporated by Reference to Exhibit 1(f)
(i) of Post-Effective Amendment No. 2 on
<PAGE>
Form S-6 of Chubb Separate Account C, to the Registration Statement filed
December 10, 1993, File No. 33-72830).
(ii) By-Laws of Chubb Life Insurance Company of America. (Incorporated
by Reference to Exibit 1(f) (ii) of Post-Effective Amendment No. 2 on Form
S-6 of Chubb Separate Account C, to the Registration Statement filed
December 10, 1993, File No. 33- 72830).
(g) Not applicable.
(h)(i) Fund Distribution Agreement between Chubb America Fund, Inc., and
Chubb Securities Corporation (incorporated by reference to Exhibit 6(b) of
Post-Effective Amendment No. 7 to Form N-1A of Chubb America Fund Inc.,
filed on April 11, 1990, Registration No. 2-94479).
(ii) Amendment to Fund Distribution Agreement between Chubb America
Fund, Inc. and Chubb Securities Corporation (incorporated by reference to
Exhibit 6(a) of Post-Effective Amendment No. 7 to Form N-1A of Chubb
America Fund, Inc., filed on April 11, 1990, Registration No. 2-94479).
(iii) Amended and Restated Investment Management Agreement between
Chubb America Fund, Inc., and Chubb Investment Advisory Corporation
(incorporated by reference to Exhibit 5(a) of Post-Effective Amendment No.
7 to Form N-1A of Chubb America fund, Inc., filed on April 11, 1990,
Registration No. 2-94479).
(iv) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Templeton,
Galbraith & Hansberger Ltd. (incorporated by reference to Exhibit 5(e) of
Post-Effective Amendment No. 11 to Form N-1A of Chubb America Fund, Inc.,
filed April 14, 1993, Registration No. 2-94479).
(vii) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Van Eck
Associates Corporation (incorporated by reference to Exhibit 5(f) of
Post-Effective Amendment No. 7 to Form N-1A of Chubb America Fund, Inc.,
filed on April 11, 1990, Registration No. 2-94479).
(viii) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Chubb Asset
Managers, Inc. (incorporated by reference to Exhibit 5(e) of Post-Effective
Amendment No. 7 to Form N-1A of Chubb America Fund, Inc., filed on April
11, 1990, Registration No. 2-94479).
(ix) Sub-Investment Management Agreement among Chubb America Fund,
Inc., Chubb Investment Advisory Corporation and Pioneering Management
Corporation (incorporated by reference to Exhibit 5(g) of Post-Effective
Amendment No. 7 of Form N-1A of Chubb America
<PAGE>
Fund, Inc., filed on April 11, 1990, Registration No. 2-94479).
(x) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Chubb Asset
Managers, Inc. (incorporated by reference to Exhibit 5(h) of Post-Effective
Amendment No. 9 of Form N-1A of Chubb America Fund, Inc., filed on February
28, 1992, Registration No. 2-94479).
(xi) Custodian Agreement between Chubb America Fund, Inc., and
Citibank, N.A. (incorporated by reference to Exhibit 8 of Post-Effective
Amendment No. 8 to Form N-1A of Chubb America Fund, Inc., filed on February
21, 1991, Registration No. 2-94479).
(xii) Amendment to the Custodial Services Agreement between Chubb
America Fund, Inc., and Citibank, N.A. (incorporated by reference to
Exhibit 8(b) of Post-Effective Amendment No. 11 to Form N-1A of Chubb
America Fund, Inc. filed on April 14, 1993, Registration No. 2-94479).
(xiii) Amendment No. 2 to Custodial Services Agreement between Chubb
America Fund, Inc. and Citibank, N.A. (incorporated by reference to Exhibit
8(c) of Post-Effective Amendment No. 11 of Form N-1A of Chubb America Fund,
Inc. filed on April 14, 1993, Registration No. 2-94479).
(xiv) Investment Management Agreement between Chubb America Fund, Inc.
and Chubb Investment Advisory Corporation for the Growth and Income
Portfolio (incorporated by reference to Exhibit 5(i) of Post-Effective
Amendment No. 9 of Form N-1A of Chubb America Fund, Inc. filed on February
28, 1992, Registration No. 2-94479).
(xv) Investment Management Agreement between Chubb America Fund, Inc.
and Chubb Investment Advisory Corporation for the Capital Growth Portfolio
(incorporated by reference to Exhibit 5(j) of Post-Effective Amendment No.
9 to Form N-1A of Chubb America Fund, Inc. filed on February 28, 1992,
Registration No. 2-94479).
(xvii) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Chubb Asset
Managers, Inc. (incorporated by reference to Exhibit 5(l) of Post-Effective
Amendment No. 11 to Form N-1A of Chubb America Fund, Inc. filed on April
14, 1993, Registration No. 2-94479).
(xviii) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Janus Capital
Corporation (incorporated by reference to Exhibit 5(m) of Post-Effective
Amendment No. 11 to Form N-1A of Chubb America Fund, Inc. filed on April
14, 1993, Registration No. 2-94479).
<PAGE>
(xix) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Phoenix
Investment Counsel, Inc. (incorporated by reference to Exhibit 5(n) of
Post-Amendment No. 11 to Form N-1A of Chubb America Fund, Inc. filed on
April 14, 1993, Registration No. 2-94479).
(xx) Form of Investment Management Agreement between Chubb America
Fund, Inc. and Chubb Investment Advisory Corporation with respect to the
Emerging Growth Portfolio (incorporated by reference to Exhibit 5(p) of
Post-Effective Amendment No. 12 to Form of Chubb America Fund, Inc. filed
on February 14, 1995 Registration No. 2-94479).
(xx) Form of Investment Management Agreement between Chubb America
Fund, Inc. and Chubb Investment Advisory Corporation with respect to the
Emerging Growth Portfolio (incorporated by reference to Exhibit 5(p) of
Post-Effective Amendment No. 12 to Form 12 to Form N-1A of Chubb America
Fund, Inc. filed on February 14, 1995 Registration No. 2-94479).
(xxi) Form of Sub-Investment Management Agreement between Chubb America
Fund, Inc., Chubb Investment Advisory Corporation and Massachusetts
Financial Services Company with respect to the Emerging Growth Portfolio
(incorporated by reference to Exhibit 5(q) of Post-Effective Amendment No.
12 to Form N-1A of Chubb America Fund, Inc., filed on February 14, 1995,
Registration No. 2-94479).
(i) Not Applicable.
(j) Application.
2. Specimen Policy. (Same as 1(e)).
3. Opinion of counsel. (Incorporated by reference to Exhibit 3 of
Post-Effective Amendment No. 13 to the Registration Statement on Form S-6
dated April 28, 1997.)
4. Not Applicable.
5. Not Applicable.
6. Actuarial opinion and consent of Richard Dielensnyder, FSA, MAAA.
(Incorporated by reference to Exhibit 6 of Post-Effective Amendment No. 15
to the Registration Statement on Form S-6 dated December 18, 1997.)
7. Consent of Ernst & Young LLP.
8. Procedures Memorandum, as amended, pursuant to Rule 6e-3(T) (b) (12) (iii)
under the 1940 Act. (Incorporated by reference to Exhibit 8 of
Post-Effective Amendment No. 13 to the Registration Statement on Form S-6
dated April 28, 1997).
9. Specimen Notice of Right of Withdrawal, pursuant to Rule 6e3 (T) (b) (13)
(viii). (Incorporated by reference to Exhibit 9 of Post-Effective Amendment
No. 13 to the Registration Statement on Form S-6 dated April 17, 1996).
<PAGE>
10. Representations, description and undertakings regarding mortality and
expense risk charge, pursuant to Rule 6e-3 (T) (b) (13) (iii) (F).
(Incorporated by reference to Exhibit 10 of Post-Effective Amendment No. 13
to the Registration Statement on Form S-6 dated April 28, 1997.)
11. (a) Not Applicable.
(b) Not Applicable.
12. (Incorporated by reference to Exhibit 12 of Post-Effective Amendment No. 2
to the Registration Statement on Form S-6 of Chubb Separate Account C,
filed December 10, 1993, File No. 33-72830).
13. (Incorporated by reference to Exhibit 13 of Post-Effective Amendment No. 2
to the Registration Statement on Form S-6 of Chubb Separate Account C,
filed December 10, 1993, File No. 33-72830).
14. Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
JPF Separate Account A, certifies that it meets the requirements of Securities
Act Rule 485(b) for effectiveness of this Post-Effective Amendment No. 17 to the
Registration Statement and, has duly caused this Post-Effective Amendment No. 17
to the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to the hereunto affixed and attested,
all in Concord, New Hampshire on the 20th day of April, 1999.
(SEAL) JPF SEPARATE ACCOUNT A
(Registrant)
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
AMERICA (Depositor)
By: /s/ Charles C. Cornelio
-------------------------------------------
Charles C. Cornelio
Title: Executive Vice President,
-------------------------------------------
ATTEST:
/s/ Ronald Angarella
- -------------------------------
Ronald Angarella
Senior Vice President
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Jefferson Pilot
Financial Insurance Company certifies that it meets the requirements of the
Securities Act Rule 485(b) for effectiveness of this Post-Effective Amendment
No. 17 to the Registration Statement and has duly caused this Post-Effective
Amendment No. 17 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 Concord, New Hampshire on the 20th day of April, 1999.
[SEAL APPEARS HERE] JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
By: /s/ Charles C. Cornelio
--------------------------------------
Charles C. Cornelio
Title: Executive Vice President
------------------------------------
ATTEST:
/s/ Ronald R. Angarella
- --------------------------------
Ronald R. Angarella
Senior Vice President
Pursuant to the requirements of the Securities act of 1933, this amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Dennis R. Glass
- ----------------------------------- Director April 20, 1999
Dennis R. Glass
/s/ Kenneth C. Mlekush
- ----------------------------------- Director April 20, 1999
Kenneth C. Mlekush
/s/ David A. Stonecipher
- ----------------------------------- Director April 20, 1999
David A. Stonecipher
/s/ E. Jay Yelton
- ----------------------------------- Director April 20, 1999
E. Jay Yelton
</TABLE>
<PAGE>
EXHBIT INDEX
7. Consent of Ernst & Young LLP
Independent Auditors ..........................................
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent
Auditors" and to the use of our reports dated February 8, 1999 with respect to
the financial statements of Jefferson Pilot Financial Insurance Company and
subsidiaries and April 9, 1999 with respect to the financial statements of JPF
Separate Account A in Post-Effective Amendment No. 17 to the Registration
Statement (Form S-6 No. 33-7734) and related Prospectus for the registration of
units of interest in the JPF Separate Account A under individual flexible
premium variable life insurance policies offered by Jefferson Pilot Financial
Insurance Company.
/s/ ERNST & YOUNG LLP
Greensboro, North Carolina
April 21, 1999
