<PAGE>
PAGE 1
1995 ANNUAL REPORT
IDS Life Single Premium Variable Life Insurance Policy
Offers an opportunity for growth with life insurance protection.
Issued by IDS Life Insurance Company
AMERICAN
EXPRESS
FINANCIAL
ADVISORS
<PAGE>
PAGE 2
IDS Life Variable Life Separate Account
Single Premium Variable Life Subaccounts
Message from the President
(Photo of) Richard Kling, President, IDS Life Insurance Company
Lessening one's tax burden is always important, especially if
you're among the highest income earners. But no matter what
bracket you're in, you can help meet both your life insurance and
investment needs on a tax-favored basis with just one product --
Single Premium Variable Life.
Taxes may change, but one thing hasn't changed at all. That's the
need for insurance protection and sound investment choices. At IDS
Life Insurance Company (IDS Life), we've been providing that for
more than three decades. American Express Financial Corporation
has been helping people reach their financial goals for more than
100 years, and the strength and stability of IDS Life has been
enhanced by being part of the American Express Financial
Corporation family of companies.
Diversification and balance continue to be critical elements in a
financial strategy. IDS Life's Single Premium Variable Life
Insurance Policy provides those elements by combining a variety of
investment options with life insurance protection.
You can allocate your policy value among the five investment
portfolios of IDS Life Series Fund, or you may choose to invest in
units of the Zero Coupon U.S. Treasury Securities Trust. Investing
in any of these options allows you to accumulate money on a tax-
deferred basis while also meeting your protection objectives.
IDS Life is among the largest life insurance companies in the
country and provides a wide range of insurance and annuity products
that help meet the needs of a changing society. We do not view our
products as separate investments but as integral parts of the total
financial planning service offered by your financial advisor. All
of us have a mutual goal - to turn your financial objectives into
reality through a prudent, sound investment program.
Sincerely,
Richard W. Kling
President
IDS Life Insurance Company
<PAGE>
PAGE 3
Annual Financial Information
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying individual and combined statements
of net assets of the segregated asset subaccounts of IDS Life
Variable Life Separate Account for Single Premium Variable Life
Insurance as of December 31, 1994, and the related statements of
operations and changes in net assets for each of the three years in
the period then ended. These financial statements are the
responsibility of the management of IDS Life Insurance Company.
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 by the underlying affiliated
mutual fund and unit investment trusts of securities owned at
December 31, 1994. 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 individual and combined
financial position of the segregated asset subaccounts of IDS Life
Variable Life Separate Account for Single Premium Variable Life
Insurance at December 31, 1994 and the individual and combined
results of their operations and the changes in their net assets for
each of the three years in the period then ended, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Minneapolis, Minnesota
March 17, 1995
<PAGE>
PAGE 4
<TABLE>
<CAPTION>
Statements of Net Assets Dec. 31, 1994
Combined
Segregated Asset Subaccounts Retirement
Assets P Q R S T 1995 2004 Annuity
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments in shares of mutual fund portfolios
and units of the trusts, at market value:
IDS Life Series Fund
Equity Portfolio -- 315,710
shares at net asset value
of $19.06 per share
(cost $4,415,127)..... $6,018,316 $ -- $ -- $ -- $ -- $ -- $ -- $ 6,018,316
IDS Life Series Fund
Income Portfolio -- 384,394
shares at net asset value
of $9.28 per share
(cost $3,650,583)..... -- 3,567,854 -- -- -- -- -- 3,567,854
IDS Life Series Fund
Money Market Portfolio --
2,242,849 shares at net
asset value of $1.00 per share
(cost $2,242,791)..... -- -- 2,242,666 -- -- -- -- 2,242,666
IDS Life Series Fund
Managed Portfolio -- 1,629,562
shares at net asset value of
$14.21 per share
(cost $20,015,645).... -- -- -- 23,155,580 -- -- -- 23,155,580
IDS Life Series Fund
Government Securities Portfolio
- -- 262,811 shares at net asset
value of $9.53 per share
(cost $2,508,758)..... -- -- -- -- 2,503,670 -- -- 2,503,670
Smith Barney Inc. Stripped
("Zero Coupon") U.S. Treasury
Securities Fund, Series A
1995 Trust -- 1,657,487 units at
net asset value of $0.94 per unit
(cost $956,463)....... -- -- -- -- -- 1,564,083 -- 1,564,083
Smith Barney Inc. Stripped
("Zero Coupon") U.S. Treasury
Securities Fund, Series A
2004 Trust -- 2,836,352 units at
net asset value of $0.47 per unit
(cost $734,136)....... -- -- -- -- -- -- 1,329,354 1,329,354
6,018,316 3,567,854 2,242,666 23,155,580 2,503,670 1,564,083 1,329,354 40,381,523
Dividends receivable.. -- 23,478 9,456 3,611 13,483 -- -- 50,028
Receivable from mutual
fund portfolios and
trusts for share
redemptions.......... 6,674 5,799 2 33,860 11,316 10,187 34,530 102,368
Total assets......... 6,024,990 3,597,131 2,252,124 23,193,051 2,528,469 1,574,270 1,363,884 40,533,919
</TABLE>
<PAGE>
PAGE 5
<TABLE>
<CAPTION>
Combined
Segregated Asset Subaccounts Variable
Liabilities P Q R S T 1995 2004 Account
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Payable to IDS Life for:
Mortality and expense
risk fee............. 4,959 1,470 936 19,117 1,035 645 556 28,718
Minimum death benefit
guarantee risk
charge............... 1,488 441 281 5,735 310 194 167 8,616
Transaction charge... -- -- -- -- -- 322 278 600
Contract
terminations......... 6,674 5,799 2 33,860 11,316 10,187 34,530 102,368
Payable to mutual fund
portfolios for investments
purchased............ -- 21,567 8,239 -- 12,138 -- -- 41,944
Total liabilities.... 13,121 29,277 9,458 58,712 24,799 11,348 35,531 182,246
Net assets applicable to
Variable Life contracts in
accumulation period.. $6,011,869 $3,567,854 $2,242,666 $23,134,339 $2,503,670 $1,562,922 $1,328,353 $40,351,673
Accumulation units
outstanding.......... 2,238,766 2,027,601 1,470,233 8,103,458 1,479,207 877,482 673,287
Net asset value per
accumulation unit.... $ 2.69 $ 1.76 $ 1.53 $ 2.85 $ 1.69 $ 1.78 $ 1.97
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 6
<TABLE>
<CAPTION>
Statements of Operations Year ended Dec. 31, 1994
Combined
Segregated Asset Subaccounts Variable
P Q R S T 1995 2004 Account
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income from mutual
fund portfolios..... $627,103 $ 267,549 $ 81,645 $2,742,805 $ 177,864 $ -- $ -- $ 3,896,966
Expenses:
Mortality and expense risk
fee (Note 3)........ 29,690 18,748 11,316 119,238 13,189 8,052 7,077 207,310
Minimum death benefit
guarantee risk charge
(Note 4)............ 8,907 5,624 3,395 35,771 3,957 2,416 2,123 62,193
Transaction charge
(Note 7)............ -- -- -- -- -- 4,026 3,538 7,564
Total expenses...... 38,597 24,372 14,711 155,009 17,146 14,494 12,738 277,067
Investment income
(loss) -- net....... 588,506 243,177 66,934 2,587,796 160,718 (14,494) (12,738) 3,619,899
Realized and Unrealized Gain (Loss) on Investments -- net _
Net realized gain (loss) on sales of investments in mutual fund
portfolios and in the trusts:
Proceeds from sales.. 670,491 471,513 603,907 2,128,160 249,067 236,726 135,297 4,495,161
Cost of investments
sold................. 488,958 458,189 603,927 1,765,687 239,439 147,144 73,744 3,777,088
Net realized gain (loss)
on investments....... 181,533 13,324 (20) 362,473 9,628 89,582 61,553 718,073
Net change in unrealized
appreciation or depreciation
of investments....... (657,895) (457,742) (103) (2,968,938) (324,515) (62,637) (208,561) (4,680,391)
Net gain (loss) on
investments......... (476,362) (444,418) (123) (2,606,465) (314,887) 26,945 (147,008) (3,962,318)
Net increase (decrease) in
net assets resulting
from operations..... $112,144 $(201,241) $ 66,811 $ (18,669) $(154,169) $ 12,451 $(159,746) $ (342,419)
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 7
<TABLE>
<CAPTION>
Statements of Operations Year ended Dec. 31, 1993
Combined
Segregated Asset Subaccounts Variable
P Q R S T 1995 2004 Account
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Dividend income from mutual
fund portfolios....... $ 184,109 $ 287,644 $ 65,316 $2,357,742 $ 187,739 $ -- $ -- $ 3,082,550
Expenses:
Mortality and expense
risk fee (Note 3)..... 29,316 20,311 12,451 116,717 14,405 8,994 8,033 210,227
Minimum death benefit
guarantee risk charge
(Note 4)............. 8,795 6,093 3,735 35,015 4,322 2,698 2,410 63,068
Transaction charge
(Note 7)............. -- -- -- -- -- 4,497 4,016 8,513
Total expenses....... 38,111 26,404 16,186 151,732 18,727 16,189 14,459 281,808
Investment income
(loss) -- net........ 145,998 261,240 49,130 2,206,010 169,012 (16,189) (14,459) 2,800,742
Realized and Unrealized Gain (Loss) on Investments -- net
Realized gain (loss) on sales of investments in mutual fund portfolios
and in the trusts:
Proceeds from sales... 658,531 619,248 954,333 1,619,205 230,463 160,637 134,228 4,376,645
Cost of investments
sold.................. 460,929 564,410 954,340 1,297,453 203,328 103,233 70,427 3,654,120
Net realized gain (loss)
on investments........ 197,602 54,838 (7) 321,752 27,135 57,404 63,801 722,525
Net change in unrealized
appreciation or depreciation
of investments........ 350,924 215,515 (2) 1,525,183 111,623 64,947 244,202 2,512,392
Net gain (loss) on
investments........... 548,526 270,353 (9) 1,846,935 138,758 122,351 308,003 3,234,917
Net increase in net assets
resulting from
operations............ $ 694,524 $ 531,593 $ 49,121 $4,052,945 $ 307,770 $ 106,162 $ 293,544 $ 6,035,659
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 8
<TABLE>
<CAPTION>
Statements of Operations Year ended Dec. 31, 1992
Combined
Segregated Asset Subaccounts Variable
P Q R S T 1995 2004 Account
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Dividend income from mutual
fund portfolios....... $ 250,518 $ 306,473 $ 111,801 $2,818,545 $ 179,033 $ -- $ -- $ 3,666,370
Expenses:
Mortality and expense
risk fee (Note 3)..... 26,269 19,463 16,766 105,006 13,440 8,870 6,945 196,759
Minimum death benefit
guarantee risk charge
(Note 4).............. 7,885 5,841 5,032 31,517 4,033 2,662 2,085 59,055
Transaction charge
(Note 7).............. -- -- -- -- -- 4,435 3,473 7,908
Total expenses........ 34,154 25,304 21,798 136,523 17,473 15,967 12,503 263,722
Investment income
(loss) -- net......... 216,364 281,169 90,003 2,682,022 161,560 (15,967) (12,503) 3,402,648
Realized and Unrealized Gain (Loss) on Investments -- net
Net realized gain (loss) on sales of investments in mutual fund
portfolios and in the trusts:
Proceeds from sales... 736,186 566,225 1,172,364 1,763,665 443,708 64,221 114,662 4,861,031
Cost of investments
sold.................. 529,706 545,598 1,172,394 1,418,713 416,532 44,698 73,856 4,201,497
Net realized gain (loss)
on investments........ 206,480 20,627 (30) 344,952 27,176 19,523 40,806 659,534
Net change in unrealized
appreciation or depreciation
of investments........ (210,702) 32,468 33 (1,097,021) (33,542) 111,473 91,222 (1,106,069)
Net gain (loss) on
investments........... (4,222) 53,095 3 (752,069) (6,366) 130,996 132,028 (446,535)
Net increase in net assets
resulting from
operations............ $ 212,142 $ 334,264 $ 90,006 $1,929,953 $ 155,194 $ 115,029 $ 119,525 $ 2,956,113
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 9
<TABLE>
<CAPTION>
Statements of Changes in Net Assets Year ended Dec. 31, 1994
Combined
Segregated Asset Subaccounts Variable
Operations P Q R S T 1995 2004 Account
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income
(loss) -- net....... $ 588,506 $ 243,177 $ 66,934 $ 2,587,796 $ 160,718 $ (14,494)$ (12,738) $ 3,619,899
Net realized gain (loss)
on investments...... 181,533 13,324 (20) 362,473 9,628 89,582 61,553 718,073
Net change in unrealized
appreciation or depreciation
of investments...... (657,895) (457,742) (103) (2,968,938) (324,515) (62,637) (208,561) (4,680,391)
Net increase (decrease)
in net assets resulting
from operations..... 112,144 (201,241) 66,811 (18,669) (154,169) 12,451 (159,746) (342,419)
Contract Transactions
Net transfers*...... 41,778 (6,373) 290,520 (210,317) (36,694) (634) (78,690) (410)
Transfers for policy
loans............... 55,175) 19,560 (84,405) (182,794) (21,026) (27,577) 7,219 (233,848)
Policy charges
(Note 3)............ (102,540) (83,309) (43,938) (388,306) (52,296) (31,198) (28,675) (730,262)
Contract terminations:
Surrender benefits
(Note 8)............ (264,497) (153,588) (131,093) (564,474) (89,368) (166,473) (13,309) (1,382,802)
Death benefits...... (75,282) (41,772) (84,484) (346,458) (13,381) -- (5,134) (566,511)
Decrease from contract
transactions........ (345,366) (265,482) (53,400) (1,692,349) (212,765) (225,882) (118,589) (2,913,833)
Net assets at beginning
of year............. 6,245,091 4,034,577 2,229,255 24,845,357 2,870,604 1,776,353 1,606,688 43,607,925
Net assets at end
of year............. $6,011,869 $3,567,854 $2,242,666 $23,134,339 $2,503,670 $1,562,922 $1,328,353 $40,351,673
Accumulation Unit Activity
Units outstanding at
beginning of year... 2,374,388 2,178,301 1,504,967 8,702,667 1,603,034 1,004,034 732,324
Net transfers*...... 15,483 (5,937) 195,169 (73,680) (21,594) (273) (39,201)
Transfers for
policy loans........ 20,905 10,750 (57,505) (65,370) (12,633) (15,584) 3,770
Deductions for policy
charges............. (39,977) (46,735) (29,296) (137,088) (30,482) (17,623) (14,207)
Contract terminations:
Surrender benefits.. (101,940) (85,179) (87,051) (198,970) (51,238) (94,024) (6,705)
Death benefits...... (30,093) (23,599) (56,051) (124,101 (7,880) -- (2,694)
Units outstanding at
end of year......... 2,238,766 2,027,601 1,470,233 8,103,458 1,479,207 877,482 673,287
* Includes transfer activity from (to) other subaccounts.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 10
<TABLE>
<CAPTION>
Statements of Changes in Net Assets Year ended Dec. 31, 1993
Combined
Segregated Asset Subaccounts Variable
Operations P Q R S T 1995 2004 Account
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income
(loss) -- net......... $ 145,998 $ 261,240 $ 49,130 $ 2,206,010 $ 169,012 $ (16,189) $ (14,459) $ 2,800,742
Net realized gain (loss)
on investments........ 197,602 54,838 (7) 321,752 27,135 57,404 63,801 722,525
Net change in unrealized
appreciation or depreciation
of investments........ 350,924 215,515 (2) 1,525,183 111,623 64,947 244,202 2,512,392
Net increase in net assets
resulting from
operations............ 694,524 531,593 49,121 4,052,945 307,770 106,162 293,544 6,035,659
Contract Transactions
Variable life contract
purchase payments..... 3 1,902 11,800 10 1,352 -- -- 15,067
Net transfers*........ 99,561 1,196 (469,568) 361,404 (4,975) 12,824 (863) (421)
Transfers for policy
loans................. (54,614) (64,694) 6,040 (260,955) (4,139) (31,593) (24,019) (433,974)
Policy charges
(Note 3).............. (95,900) (82,218) (46,544) (371,233) (54,356) (36,149) (31,257) (717,657)
Contract terminations:
Surrender benefits
(Note 8).............. (170,049) (184,117) (292,594) (525,999) (56,884) (69,621) (71,208) (1,370,472)
Death benefits........ (50,317) (27,502) -- (279,131) (2,502) (21,562) -- (381,014)
Increase (decrease) from
contract transactions. (271,316) (355,433) (790,866) (1,075,904) (121,504) (146,101) (127,347) (2,888,471)
Net assets at beginning
of year............... 5,821,883 3,858,417 2,971,000 21,868,316 2,684,338 1,816,292 1,440,491 40,460,737
Net assets at end of
year.................. $6,245,091 $4,034,577 $2,229,255 $24,845,357 $2,870,604 $1,776,353 $1,606,688 $43,607,925
Accumulation Unit Activity
Units outstanding at beginning
of year............... 2,493,139 2,378,468 2,045,594 9,122,529 1,670,434 1,089,681 792,476
Purchase payments..... 2 1,056 8,046 5 772 -- --
Net transfers*........ 38,828 1,997 (321,072) 143,791 (1,081) 7,258 (396)
Transfers for policy
loans................. (23,342) (39,523) 4,246 (101,017) (1,922) (18,196) (11,511)
Deductions for policy
charges............... (40,866) (46,400) (31,745) (144,619) (31,216) (20,754) (14,976)
Contract terminations:
Surrender benefits.... (71,481) (101,638) (200,102) (205,542) (32,820) (40,585) (33,269)
Death benefits........ (21,892) (15,659) -- (112,480) (1,433) (12,418) --
Units outstanding at
end of year........... 2,374,388 2,178,301 1,504,967 8,702,667 1,603,034 1,004,986 732,324
* Includes transfer activity from (to) other subaccounts.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 11
<TABLE>
<CAPTION>
Statements of Changes in Net Assets Year ended Dec. 31, 1992
Combined
Segregated Asset Subaccounts Variable
Operations P Q R S T 1995 2004 Account
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income
(loss) -- net........ $ 216,364 $ 281,169 $ 90,003 $ 2,682,022 $ 161,560 $ (15,967) $ (12,503) $ 3,402,648
Net realized gain (loss)
on investments....... 206,480 20,627 (30) 344,952 27,176 19,523 40,806 659,534
Net change in unrealized
appreciation or depreciation
of investments....... (210,702) 32,468 33 (1,097,021) (33,542) 111,473 91,222 (1,106,069)
Net increase in net assets
resulting from
operations........... 212,142 334,264 90,006 1,929,953 155,194 115,029 119,525 2,956,113
Contract Transactions
Net transfers*....... 417,287 (103,183) (598,039) 127,645 (64,337) 146,721 73,565 (341)
Transfers for policy
loans................ (176,400) (119,068) (86,143) (270,930) (102,668) (15,887) (27,297) (798,393)
Policy charges
(Note 3)............. (86,571) (76,855) (58,562) (328,954) (47,578) (33,812) (26,538) (658,870)
Contract terminations:
Surrender benefits
(Note 8)............. (251,531) (107,256) (262,648) (792,653) (23,854) (12,303) (39,048) (1,489,293)
Death benefits....... (46,457) (11,897) (3,811) (84,013) -- -- -- (146,178)
Increase (decrease)
from contract
transactions......... (143,672) (418,259) (1,009,203) (1,348,905) (238,437) 84,719 (19,318) (3,093,075)
Net assets at beginning
of year.............. 5,753,413 3,942,412 3,890,197 21,287,268 2,767,581 1,616,544 1,340,284 40,597,699
Net assets at end
of year.............. $5,821,883 $3,858,417 $2,971,000 $21,868,316 $2,684,338 $1,816,292 $1,440,491 $40,460,737
Accumulation Unit Activity
Units outstanding at
beginning of year.... 2,574,820 2,646,974 2,750,951 9,735,040 1,825,795 1,033,212 799,918
Net transfers*....... 182,879 (66,157) (418,012) 56,220 (39,648) 95,034 47,140
Transfers for policy
loans................ (79,895) (77,437) (60,245) (123,830) (68,951) (9,742) (16,430)
Deductions for policy
charges.............. (41,940) (49,701) (40,797) (148,990) (30,977) (21,026) (15,677)
Contract terminations:
Surrender benefits... (121,636) (67,330) (183,679) (358,227) (15,485) (7,797) (22,475)
Death benefits....... (21,089) (7,881) (2,624) (37,684) -- -- --
Units outstanding at
end of year.......... 2,493,139 2,378,468 2,045,594 9,122,529 1,670,734 1,089,681 792,476
* Includes transfer activity from (to) other subaccounts.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 12
Notes to Financial Statements
1. Organization
IDS Life Variable Life Separate Account (the Variable Account) was
established on Oct. 16, 1985 as a segregated asset account of IDS
Life Insurance Company (IDS Life) under Minnesota law and is
registered as a single unit investment trust under the Investment
Company Act of 1940. Operations of the Variable Account commenced
on Jan. 20, 1986.
The Variable Account is comprised of various subaccounts. The
assets of each subaccount of the Variable Account are not
chargeable with liabilities arising out of the business conducted
by any other Subaccount, Account or by IDS Life. The assets of the
Variable Account shall be available, however, to cover the
liabilities of IDS Life to the extent the assets of the Variable
Account exceed its liabilities arising under the policies supported
by it. Single Premium Variable Life policy owners allocate their
premium payment to one or more of the seven subaccounts which are
currently used in connection with these policies. Such funds are
then invested in shares of five portfolios of IDS Life Series Fund,
Inc. (the mutual fund) or in units of two Trusts of Smith Barney
Inc., formerly Smith Barney Shearson Stripped ("Zero Coupon") U.S.
Treasury Securities Fund, Series A (individually, a Trust or
collectively, the Trusts).
The mutual fund, which commenced operations Jan. 20, 1986, is
registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. Funds are
allocated to the subaccounts which are used in connection with the
Single Premium Variable Life policies: Subaccount P invests in the
shares of the Equity Portfolio; Subaccount Q invests in the shares
of the Income Portfolio; Subaccount R invests in the shares of the
Money Market Portfolio; Subaccount S invests in the shares of the
Managed Portfolio; and Subaccount T invests in the shares of the
Government Securities Portfolio. The Trusts, which commenced
operations Aug. 4, 1986, are registered under the Investment
Company Act of 1940 as a unit investment trust. Subaccount 1995
invests in units of the 1995 Trust and Subaccount 2004 invests in
units of the 2004 Trust.
IDS Life serves as manager, investment adviser and distributor for
the Variable Account and the underlying series mutual fund. Smith
Barney Inc. (formerly Smith barney Shearson Inc.) serves as sponsor
for the Trusts.
2. Summary of Significant Accounting Policies
Investments in Mutual Fund
Investments in shares of the mutual fund portfolios are stated at
market value which is the net asset value per share as determined
by the respective portfolios. Investment transactions are
accounted for on the date the shares are purchased and sold. The
cost of investments sold and redeemed is determined on the average
cost method. Dividend distributions received from the portfolios
are reinvested, net of any expenses payable to IDS Life, in
additional shares of the portfolios and are recorded as
income by the subaccounts on the ex-dividend date.<PAGE>
PAGE 13
Unrealized appreciation or depreciation of investments in the
accompanying financial statements represents the subaccounts' share
of the portfolios' undistributed net investment income,
undistributed realized gain or loss and the unrealized appreciation
or depreciation on their investment securities.
Investments in Trusts
Investments in units of the Trusts are stated at market value which
is the net asset value per unit as determined by the respective
trust. Investment transactions are accounted for on the date the
units are purchased and sold. The cost of investments sold and
redeemed is determined on the average cost method.
Unrealized appreciation or depreciation of investments in the
accompanying financial statements represents the subaccounts' share
of the Trusts' undistributed net investment income, undistributed
realized gain or loss and the unrealized appreciation or
depreciation on their investment securities.
Federal Income Taxes
IDS Life is taxed as a life insurance company. The Variable
Account is treated as part of IDS Life for federal income tax
purposes.
Under existing federal income tax law, no income taxes are payable
with respect to any investment income of the Variable Account.
3. Mortality and Expense Risk Fee and Policy Charges
IDS Life makes contractual assurances to the Variable Account that
possible future adverse changes in administrative expenses and
mortality experience of the policy owners and beneficiaries will
not affect the Variable Account. The mortality and expense risk
fee paid to IDS Life is computed daily and is equal, on an annual
basis, to 0.5 percent of the daily net asset value of the Variable
Account.
A monthly deduction is made for the cost of insurance for the
Policy month. The cost of insurance for the Policy month is
determined on the monthly date by determining the net amount at
risk, as of that day, and by then applying the cost of insurance
rates to the net amount at risk which IDS Life is assuming for the
succeeding month. The monthly deduction will be taken from the
subaccounts as specified in the application for the policy.
4. Minimum Death Benefit Guarantee Risk Charge
IDS Life deducts a minimum death benefit guarantee risk charge
equal, on an annual basis, to 0.15 percent of the daily net asset
value of the Variable Account. This deduction is made to
compensate IDS Life for the risk it assumes by providing a
guaranteed minimum death benefit. The deduction will be made from
the Variable Account and computed on a daily basis. This charge is
guaranteed for the life of the contract and may not be increased.
<PAGE>
PAGE 14
5. Issue and Administrative Expense Charge
The Policy provides for a one-time $150 issue and administrative
expense charge which will be deducted directly from the premium
paid by the owner. This charge is to reimburse IDS Life for
expenses incurred in processing the premium payment and
establishing and maintaining the records relating to the owner and
participation in the subaccounts for the duration of the Policy.
6. State Premium Tax Charge
The Policy provides that a charge of 2.5 percent of the single
premium will be deducted from the single premium to cover the
premium taxes assessed by the various states. Premium taxes vary
from state to state. This charge is the average rate which IDS
Life expects to pay on premiums from all states.
7. Transaction Charge
IDS Life makes a daily charge against the assets of each subaccount
investing in the Trusts. This charge is intended to reimburse IDS
Life for the transaction charge paid directly by IDS Life to Smith
Barney Inc. on the sale of the Trust units to the Variable Account.
IDS Life pays these amounts from its general account assets. The
amount of the asset charge is equivalent to an effective annual
rate of 0.25 percent of the account value invested in the Trusts.
This amount may be increased in the future but in no event will it
exceed an effective annual rate of 0.5 percent of the account
value. The charge will be cost-based (taking into account a loss
of interest) with no anticipated element of profit for IDS Life.
8. Surrender Charges
IDS Life will use a surrender charge to help it recover certain
expenses relating to the sale of the Policy. The surrender charge
will be deducted during the first eight policy years. IDS Life
will never deduct more than 9 percent of the single premium as a
surrender charge. Charges by IDS Life for surrenders are not
available on an individual segregated asset account basis. Charges
for all segregated asset accounts amounted to $6,969,493 in 1994,
$4,408,562 in 1993 and $3,649,836 in 1992. Such charges are not an
expense of the subaccounts or Variable Account. They are deducted
from contract surrender benefits paid by IDS Life.
9. Investment Transactions
The subaccounts' purchases of portfolio shares or trust units (net
of charges), including reinvestment of dividend distributions, were
as follows:
<TABLE><CAPTION>
Year ended Dec. 31,
Subaccount Investment 1994 1993 1992
<S> <C> <C> <C> <C>
P Equity Portfolio................. $ 913,119 $ 533,814 $ 808,899
Q Income Portfolio................. 449,208 525,055 429,135
R Money Market Portfolio........... 617,441 212,597 253,164
S Managed Portfolio................ 3,016,860 2,753,024 3,097,683
T Government Securities Portfolio.. 197,020 277,971 366,831
1995 1995 Trust....................... (3,865) (1,681) 133,082
2004 2004 Trust....................... 3,684 (7,456) 82,891
$5,193,467 $4,293,324 $5,171,685
/TABLE
<PAGE>
PAGE 15
<TABLE>
<CAPTION>
Condensed Financial Information (unaudited) Period from
Jan. 20, to
Year Ended Dec. 31, Dec. 31,
1994 1993 1992 1991 1990 1989 1988 1987 1986*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Subaccount P (invests in Equity Portfolio)
Accumulation unit value at beginning of
period.................................... $2.63 $2.34 $2.23 $1.35 $1.43 $1.17 $1.07 $0.99 $1.00
Accumulation unit value at end of period.. $2.69 $2.63 $2.34 $2.23 $1.35 $1.43 $1.17 $1.07 $0.99
Number of accumulation units outstanding
at end of period (000 omitted)............ 2,239 2,374 2,493 2,575 2,893 3,286 3,887 3,887 968
Subaccount Q (invests in Income Portfolio)
Accumulation unit value at beginning of
period.................................... $1.85 $1.62 $1.49 $1.30 $1.23 $1.11 $1.04 $1.10 $1.00
Accumulation unit value at end of period.. $1.76 $1.85 $1.62 $1.49 $1.30 $1.23 $1.11 $1.04 $1.10
Number of accumulation units outstanding
at end of period (000 omitted)............ 2,028 2,178 2,378 2,647 3,289 3,778 3,478 3,252 1,292
Subaccount R (invests in Money Market Portfolio)
Accumulation unit value at beginning of
period.................................... $1.48 $1.45 $1.41 $1.35 $1.26 $1.16 $1.10 $1.05 $1.00
Accumulation unit value at end of period.. $1.53 $1.48 $1.45 $1.41 $1.35 $1.26 $1.16 $1.10 $1.05
Number of accumulation units outstanding
at end of period (000 omitted)............ 1,470 1,505 2,046 2,751 3,172 3,146 3,210 1,629 903
Subaccount S (invests in Managed Portfolio)
Accumulation unit value at beginning of
period.................................... $2.85 $2.40 $2.19 $1.67 $1.56 $1.20 $1.11 $1.07 $1.00
Accumulation unit value at end of period.. $2.85 $2.85 $2.40 $2.19 $1.67 $1.56 $1.20 $1.11 $1.07
Number of accumulation units outstanding
at end of period (000 omitted)............ 8,103 8,703 9,123 9,735 10,289 11,099 12,793 14,419 5,573
Subaccount T (invests in Government Securities Portfolio)
Accumulation unit value at beginning of
period.................................... $1.79 $1.61 $1.52 $1.31 $1.24 $1.09 $1.03 $1.08 $1.00
Accumulation unit value at end of period.. $1.69 $1.79 $1.61 $1.52 $1.31 $1.24 $1.09 $1.03 $1.08
Number of accumulation units outstanding
at end of period (000 omitted)............ 1,479 1,603 1,671 1,826 1,937 2,168 2,234 1,666 876
Subaccount 1995 (invests in 1995 Trust)
Accumulation unit value at beginning of
period.................................... $1.77 $1.67 $1.56 $1.36 $1.24 $1.08 $1.02 $1.06 $1.00
Accumulation unit value at end of period.. $1.78 $1.77 $1.67 $1.56 $1.36 $1.24 $1.08 $1.02 $1.06
Number of accumulation units outstanding
at end of period (000 omitted)............ 877 1,005 1,090 1,033 1,012 1,075 979 219 140
Subaccount 2004 (invests in 2004 Trust)
Accumulation unit value at beginning of
period.................................... $2.19 $1.82 $1.68 $1.40 $1.36 $1.11 $0.98 $1.09 $1.00
Accumulation unit value at end of period.. $1.97 $2.19 $1.82 $1.68 $1.40 $1.36 $1.11 $0.98 $1.09
Number of accumulation units outstanding
at end of period (000 omitted)............ 673 732 792 800 731 930 901 654 200
*Operations commenced on Jan. 20, 1986.
</TABLE>
<PAGE>
PAGE 16
IDS Life Financial Information
The financial statements shown below are those of the insurance
company and not those of the Fund or the Account or the Trust.
They are included in the prospectus for the purpose of informing
investors as to the financial condition of the insurance company
and its ability to carry out its obligations under the variable
contracts.
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
ASSETS 1994 1993
(thousands)
<S> <C> <C>
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1994, $10,694,800) $11,269,861 $ -
Available for sale, at fair value (Amortized cost:
1994, $8,459,128) 8,017,555 -
Investment securities, at amortized cost (Fair value:
1993, $20,425,979) - 19,392,424
Mortgage loans on real estate
(Fair value: 1994, $2,342,520; 1993, $2,125,686) 2,400,514 2,055,450
Policy loans 381,912 350,501
Other investments 51,795 56,307
Total investments 22,121,637 21,854,682
Cash and cash equivalents 267,774 146,281
Receivables:
Reinsurance 80,304 55,298
Amounts due from brokers 7,933 5,719
Other accounts receivable 49,745 21,459
Premiums due 1,594 1,329
Total receivables 139,576 83,805
Accrued investment income 317,510 307,177
Deferred policy acquisition costs 1,865,324 1,652,384
Deferred income taxes 124,061 -
Other assets 30,426 21,730
Assets held in segregated asset
accounts, primarily common stocks
at market 10,881,235 8,991,694
Total assets $35,747,543 $33,057,753
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
PAGE 17
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS (continued)
December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 1994 1993
(thousands)
Liabilities:
Future policy benefits:
Fixed annuities $19,361,979 $18,492,135
Universal life-type insurance 2,896,100 2,753,455
Traditional life insurance 206,754 210,205
Disability income, health and
long-term care insurance 244,077 185,272
Policy claims and other
policyholders' funds 50,068 44,516
Deferred income taxes - 43,620
Amounts due to brokers 226,737 351,486
Other liabilities 291,902 292,024
Liabilities related to segregated
asset accounts 10,881,235 8,991,694
Total liabilities 34,158,852 31,364,407
Stockholder's equity:
Capital stock, $30 par value per share;
100,000 shares authorized, issued and outstanding 3,000 3,000
Additional paid-in capital 222,000 222,000
Net unrealized gain (loss) on investments (275,708) 114
Retained earnings 1,639,399 1,468,232
Total stockholder's equity 1,588,691 1,693,346
Total liabilities and stockholder's equity $35,747,543 $33,057,753
======== ========
Commitments and contingencies (Note 6)
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
PAGE 18
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31,
1994 1993 1992
(thousands)
<S> <C> <C> <C>
Revenues:
Premiums:
Traditional life insurance $ 48,184 $ 48,137 $ 49,719
Disability income and
long-term care insurance 96,456 79,108 64,660
Total premiums 144,640 127,245 114,379
Policyholder and contractholder
charges 219,936 184,205 156,368
Management and other fees 164,169 120,139 84,591
Net investment income 1,781,873 1,783,219 1,616,821
Net loss on investments (4,282) (6,737) (3,710)
Total revenues 2,306,336 2,208,071 1,968,449
Benefits and expenses:
Death and other benefits:
Traditional life insurance 28,263 32,136 34,139
Universal life-type insurance
and investment contracts 52,027 49,692 42,174
Disability income, health and
long-term care insurance 13,393 13,148 10,701
Increase (decrease) in liabilities for
future policy benefits:
Traditional life insurance (3,229) (4,513) (5,788)
Disability income, health and
long-term care insurance 37,912 32,528 27,172
Interest credited on universal life-type
insurance and investment contracts 1,174,985 1,218,647 1,188,379
Amortization of deferred policy
acquisition costs 280,372 211,733 140,159
Other insurance and operating expenses 210,101 241,974 215,692
Total benefits and expenses 1,793,824 1,795,345 1,652,628
Income before income taxes 512,512 412,726 315,821
Income taxes 176,343 142,647 104,651
Net income $ 336,169 $ 270,079 $ 211,170
======= ======= =======
See accompanying notes to consolidated financial statements.
<PAGE>
PAGE 19
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,
1994 1993 1992
(thousands)
Cash flows from operating activities:
Net income $ 336,169 $ 270,079 $ 211,170
Adjustments to reconcile net income to
net cash provided by operating activities:
Policy loans, excluding universal
life-type insurance:
Issuance (37,110) (35,886) (32,881)
Repayment 33,384 29,557 26,750
Change in reinsurance receivable (25,006) (55,298) -
Change in other accounts receivable (28,286) (1,364) (4,772)
Change in accrued investment income (10,333) (22,057) (15,853)
Change in deferred policy acquisition
costs, net (192,768) (211,509) (229,252)
Change in liabilities for future policy
benefits for traditional life,
disability income, health and
long-term care insurance 55,354 79,695 21,384
Change in policy claims and other
policyholders' funds 5,552 (5,383) (1,347)
Change in deferred income taxes (19,176) (44,237) (30,385)
Change in other liabilities (122) 56,515 88,997
Amortization of premium
(accretion of discount), net 30,921 (27,438) (4,289)
Net loss on investments 4,282 6,737 3,710
Activity related to universal
life-type insurance:
Premiums 409,035 397,883 312,621
Surrenders and death benefits (290,427) (255,133) (166,162)
Interest credited to account
balances 150,955 156,885 161,873
Policyholder and contractholder
charges, non-cash (126,918) (115,140) (100,975)
Other, net (8,974) (1,907) (10,647)
Net cash provided by operating
activities $ 286,532 $ 221,999 $ 229,942
See accompanying notes to consolidated financial statements.
<PAGE>
PAGE 20
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Years ended December 31,
1994 1993 1992
(thousands)
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases $ (879,740) $ - $ -
Maturities, sinking fund payments and calls 1,651,762 - -
Sales 58,001 - -
Fixed maturities available for sale:
Purchases (2,763,278) - -
Maturities, sinking fund payments and calls 1,234,401 - -
Sales 374,564 - -
Fixed maturities:
Purchases - (6,548,852) (6,590,279)
Maturities, sinking fund payments and calls - 3,934,055 2,696,239
Sales - 487,983 1,011,093
Other investments, excluding policy loans:
Purchases (634,807) (553,694) (411,069)
Sales 243,862 123,352 67,097
Change in amounts due from brokers (2,214) 14,483 289,335
Change in amounts due to brokers (124,749) 92,832 42,182
Net cash used in investing activities (842,198) (2,449,841) (2,895,402)
Cash flows from financing activities:
Activity related to investment contracts:
Considerations received 3,157,778 2,843,668 2,821,069
Surrenders and death benefits (3,311,965) (1,765,869) (1,168,633)
Interest credited to account balances 1,024,031 1,071,917 1,026,506
Universal life-type insurance policy loans:
Issuance (78,239) (70,304) (72,007)
Repayment 50,554 46,148 40,351
Capital contribution from parent - 200,000 -
Cash dividend to parent (165,000) (25,000) (20,000)
Net cash provided by financing activities 677,159 2,300,560 2,627,286
Net increase (decrease) in cash and
cash equivalents 121,493 72,718 (38,174)
Cash and cash equivalents at
beginning of year 146,281 73,563 111,737
Cash and cash equivalents at
end of year $ 267,774 $ 146,281 $ 73,563
======== ======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
PAGE 21
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dec. 31, 1994, 1993 and 1992
($ thousands)
1. Summary of significant accounting policies
Nature of business
IDS Life Insurance Company (the Company) is engaged in the
insurance and annuity business. The Company sells various forms of
fixed and variable individual life insurance, group life insurance,
individual and group disability income insurance, long-term care
insurance, and single and installment premium fixed and variable
annuities.
Basis of presentation
The Company is a wholly owned subsidiary of American Express
Financial Corporation (formerly IDS Financial Corporation), which
is a wholly owned subsidiary of American Express Company. The
accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries, IDS Life
Insurance Company of New York, American Enterprise Life Insurance
Company and American Partners Life Insurance Company. All material
intercompany accounts and transactions have been eliminated in
consolidation.
The accompanying consolidated financial statements have been
prepared in conformity with generally accepted accounting
principles which vary in certain respects from reporting practices
prescribed or permitted by state insurance regulatory authorities.
Investments
As of January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Under SFAS No. 115,
fixed maturities that the Company has both the positive intent and
the ability to hold to maturity are classified as held to maturity
and carried at amortized cost. All other fixed maturities and all
marketable equity securities are classified as available for sale
and carried at fair value. Unrealized gains and losses on
securities classified as available for sale are carried as a
separate component of stockholder's equity. The effect of adopting
SFAS No. 115 was to increase stockholder's equity by approximately
$181 million, net of tax, as of January 1, 1994, but the adoption
had no impact on the Company's net income.
Management determines the appropriate classification of fixed
maturities at the time of purchase and reevaluates the
classification at each balance sheet date.
<PAGE>
PAGE 22
1. Summary of significant accounting policies (continued)
Mortgage loans on real estate are carried principally at the unpaid
principal balances of the related loans. Policy loans are carried
at the aggregate of the unpaid loan balances which do not exceed
the cash surrender values of the related policies. Other
investments include interest rate caps and equity securities. When
evidence indicates a decline, which is other than temporary, in the
underlying value or earning power of individual investments, such
investments are written down to the fair value by a charge to
income. Equity securities are carried at market value and the
related net unrealized appreciation or depreciation is reported as
a credit or charge to stockholder's equity.
Realized investment gain or loss is determined on an identified
cost basis.
Prepayments are anticipated on certain investments in
mortgage-backed securities in determining the constant effective
yield used to recognize interest income. Prepayment estimates are
based on information received from brokers who deal in
mortgage-backed securities.
Statement of cash flows
The Company considers investments with a maturity at the date of
their acquisition of three months or less to be cash equivalents.
These securities are carried principally at amortized cost which
approximates fair value.
Supplementary information to the consolidated statement of cash
flows for the years ended Dec. 31 is summarized as follows:
1994 1993 1992
Cash paid during the year for:
Income taxes $226,365 $188,204 $140,445
Interest on borrowings 1,553 2,661 1,265
Recognition of profits on annuity contracts and insurance policies
The Company issues single premium deferred annuity contracts that
provide for a service fee (surrender charge) at annually decreasing
rates upon withdrawal of the annuity accumulation value by the
contract owner. No sales fee is deducted from the contract
considerations received on these contracts ("no load" annuities).
All of the Company's single premium deferred annuity contracts
provide for crediting the contract owners' accumulations at
specified rates of interest. Such rates are revised by the Company
from time to time based on changes in the market investment yield
rates for fixed-income securities.
Profits on single premium deferred annuities and installment
annuities are recognized by the Company over the lives of the
contracts and represent the excess of investment income earned from
investment of contract considerations over interest credited to
contract owners and other expenses.
<PAGE>
PAGE 23
1. Summary of significant accounting policies (continued)
The retrospective deposit method is used in accounting for
universal life-type insurance. This method recognizes profits over
the lives of the policies in proportion to the estimated gross
profits expected to be realized.
Premiums on traditional life, disability income, health and
long-term care insurance policies are recognized as revenue when
collected or due, and related benefits and expenses are associated
with premium revenue in a manner that results in recognition of
profits over the lives of the insurance policies. This association
is accomplished by means of the provision for future policy
benefits and the deferral and subsequent amortization of policy
acquisition costs.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales
compensation, policy issue costs, underwriting and certain sales
expenses, have been deferred on insurance and annuity contracts.
The deferred acquisition costs for single premium deferred
annuities and installment annuities are amortized based upon
surrender charge revenue and a portion of the excess of investment
income earned from investment of the contract considerations over
the interest credited to contract owners. The costs for universal
life-type insurance are amortized over the lives of the policies as
a percentage of the estimated gross profits expected to be realized
on the policies. For traditional life, disability income, health
and long-term care insurance policies, the costs are amortized over
an appropriate period in proportion to premium revenue.
Liabilities for future policy benefits
Liabilities for universal life-type insurance, single premium
deferred annuities and installment annuities are accumulation
values.
Liabilities for fixed annuities in a benefit status are based on
the Progressive Annuity Table with interest at 5 percent, the 1971
Individual Annuity Table with interest at 7 percent or 8.25
percent, or the 1983a Table with various interest rates ranging
from 5.5 percent to 9.5 percent, depending on year of issue.
Liabilities for future benefits on traditional life insurance have
been computed principally by the net level premium method, based on
anticipated rates of mortality (approximating the 1965-1970 Select
and Ultimate Basic Table for policies issued after 1980 and the
1955-1960 Select and Ultimate Basic Table for policies issued prior
to 1981) and the 1975-1980 Select and Ultimate Basic Table for term
insurance policies issued after 1984, policy persistency derived
from Company experience data (first year rates ranging from
approximately 70 percent to 90 percent and increasing rates
thereafter), and estimated future investment yields of 4 percent
for policies issued before 1974 and 5.25 percent for policies
issued from 1974 to 1980. Cash value plans issued in 1980 and
later assume future investment rates that grade from 9.5 percent to
<PAGE>
PAGE 24
1. Summary of significant accounting policies (continued)
5 percent over 20 years. Term insurance issued from 1981 to 1984
assumes an 8 percent level investment rate, term insurance issued
from 1985-1993 assumes investment rates that grade from 10 percent
to 6 percent over 20 years and term insurance issued after 1993
assumes investment rates that grade from 8.7 percent to 6.57
percent over 7 years.
Liabilities for future disability income policy benefits have been
computed principally by the net level premium method, based on the
1964 Commissioners Disability Table with the 1958 Commissioners
Standard Ordinary Mortality Table at 3 percent interest for 1980
and prior, 8 percent interest for persons disabled from 1981 to
1991, 7.7 percent interest for persons disabled in 1992 and 6
percent interest for persons disabled after 1992.
Liabilities for future benefits on long-term care insurance have
been computed principally by the net level premium method, using
morbidity rates based on the 1985 National Nursing Home Survey and
mortality rates based on the 1983a Table. The interest rate basis
is 9.5 percent grading to 7 percent over ten years for policies
issued from 1989 to 1992, 7.75 percent grading to 7 percent over
four years for policies issued after 1992, 8 percent for claims
incurred in 1989 to 1991, 7.7 percent for claims incurred in 1992
and 6.7 percent for claims incurred after 1992.
Reinsurance
The maximum amount of life insurance risk retained by the Company
on any one life is $750 of life and waiver of premium benefits plus
$50 of accidental death benefits. The maximum amount of disability
income risk retained by the Company on any one life is $6 of
monthly benefit for benefit periods longer than three years. The
excesses are reinsured with other life insurance companies on a
yearly renewable term basis. Graded premium whole life policies
and long term care are primarily reinsured on a coinsurance basis.
Federal income taxes
The Company's taxable income is included in the consolidated
federal income tax return of American Express Company. The Company
provides for income taxes on a separate return basis, except that,
under an agreement between American Express Financial Corporation
and American Express Company, tax benefit is recognized for losses
to the extent they can be used on the consolidated tax return. It
is the policy of American Express Financial Corporation and its
subsidiaries that American Express Financial Corporation will
reimburse a subsidiary for any tax benefit.
Included in other receivables at Dec. 31, 1994 is $22,034
receivable from American Express Financial Corporation for federal
income taxes. Included in other liabilities at December 31, 1993
is $14,709 payable to American Express Financial Corporation for
federal income taxes.
<PAGE>
PAGE 25
1. Summary of significant accounting policies (continued)
Segregated asset account business
The segregated asset account assets and liabilities represent funds
held for the exclusive benefit of the variable annuity and variable
life insurance contract owners. The Company receives investment
management and mortality and expense assurance fees from the
variable annuity and variable life insurance mutual funds and
segregated asset accounts. The Company also deducts a monthly cost
of insurance charge and receives a minimum death benefit guarantee
fee and issue and administrative fee from the variable life
insurance segregated asset accounts.
The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the segregated asset
accounts will not be affected by future variations in the actual
life expectancy experience of the annuitants and the beneficiaries
from the mortality assumptions implicit in the annuity contracts.
The Company makes periodic fund transfers to, or withdrawals from,
the segregated asset accounts for such actuarial adjustments for
variable annuities that are in the benefit payment period. The
Company guarantees, for the variable life insurance policyholders,
the contractual insurance rate and that the death benefit will
never be less than the death benefit at the date of issuance.
Reclassification
Certain 1993 and 1992 amounts have been reclassified to conform to
the 1994 presentation.
2. Investments
Fair values of investments in fixed maturities represent quoted
market prices and estimated values when quoted prices are not
available. Estimated values are determined by established
procedures involving, among other things, review of market indices,
price levels of current offerings of comparable issues, price
estimates and market data from independent brokers and financial
files.
Net gain (loss) on investments for the years ended Dec. 31 is
summarized as follows:
1994 1993 1992
Fixed maturities $(1,575) $ 20,583 $ 22,075
Mortgage loans (3,013) (25,056) (13,444)
Other investments 306 (2,264) (12,341)
$(4,282) $ (6,737) $ (3,710)
===== ===== =====
Changes in net unrealized appreciation (depreciation) of
investments for the years ended Dec. 31 are summarized as follows:
<PAGE>
PAGE 26
2. Investments (continued)
1994 1993 1992
Fixed maturities:
Held to maturity $(1,329,740) $ -- $ --
Available for sale (720,449) -- --
Investment securities -- 323,060 (128,683)
Equity securities (2,917) (156) 300
The amortized cost, gross unrealized gains and losses and fair
values of investments in fixed maturities and equity securities at
Dec. 31, 1994 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government
agency obligations $ 21,500 $ 43 $ 4,372 $ 17,171
State and municipal
obligations 9,687 132 -- 9,819
Corporate bonds
and obligations 8,806,707 100,468 459,568 8,447,607
Mortgage-backed
securities 2,431,967 10,630 222,394 2,220,203
$11,269,861 $111,273 $686,334 $10,694,800
======== ======= ======= ========
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
U.S. Government
agency obligations $ 128,093 $ 756 $ 1,517 $ 127,332
State and municipal
obligations 11,008 702 -- 11,710
Corporate bonds
and obligations 1,142,321 24,166 7,478 1,159,009
Mortgage-backed
securities 7,177,706 9,514 467,716 6,719,504
Total fixed maturities 8,459,128 35,138 476,711 8,017,555
Equity securities 4,663 -- 2,757 1,906
$8,463,791 $35,138 $479,468 $8,019,461
======= ======= ======= =======
</TABLE>
The change in net unrealized gain (loss) on available for sale
securities included as a separate component of stockholder's equity
was $(275,822) in 1994.
The amortized cost, gross unrealized gains and losses and fair
values of investments in fixed maturities carried at amortized cost
at Dec. 31, 1993 are as follows:
<TABLE><CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government
agency obligations $ 63,532 $ 3,546 $ 1,377 $ 65,701
State and municipal
obligations 11,072 2,380 -- 13,452
Corporate bonds
and obligations 9,339,297 768,747 22,929 10,085,115
Mortgage-backed
securities 9,978,523 341,067 57,879 10,261,711
$19,392,424 $1,115,740 $ 82,185 $20,425,979
======== ======== ======== ========
</TABLE>
<PAGE>
PAGE 27
2. Investments (continued)
At Dec. 31, 1993, net unrealized appreciation on equity securities
included $160 of gross unrealized appreciation, $nil of gross
unrealized depreciation and deferred tax credits of $46. The fair
value of equity securities was $1,900 at December 31, 1993.
The amortized cost and fair value of investments in fixed
maturities at Dec. 31, 1994 by contractual maturity are shown
below. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.
Amortized Fair
Held to maturity Cost Value
Due in one year or less $ 108,056 $ 109,228
Due from one to five years 1,412,335 1,423,394
Due from five to ten years 5,467,826 5,245,742
Due in more than ten years 1,849,677 1,696,233
Mortgage-backed securities 2,431,967 2,220,203
$11,269,861 $10,694,800
======== ========
Amortized Fair
Available for sale Cost Value
Due from one to five years $ 757,160 $ 756,842
Due from five to ten years 433,717 449,057
Due in more than ten years 90,545 92,152
Mortgage-backed securities 7,177,706 6,719,504
$8,459,128 $8,017,555
======= =======
During the year ended Dec. 31, 1994, fixed maturities classified as
held to maturity were sold with proceeds of $58,001 and gross
realized gains and losses on such sales were $226 and $3,515,
respectively. The sale of these fixed maturities was due to credit
deterioration.
In addition, fixed maturities available for sale were sold during
1994 with proceeds of $374,564 and gross realized gains and losses
on such sales were $1,861 and $7,602, respectively.
Proceeds from sales of investments in fixed maturities during 1993
were $487,983. During 1993, gross gains of $48,499 and gross
losses of $43,039, respectively, were realized on those sales.
At Dec. 31, 1994, bonds carried at $6,536 were on deposit with
various states as required by law.
Net investment income for the years ended Dec. 31 is summarized as
follows:
<PAGE>
PAGE 28
2. Investments (continued)
1994 1993 1992
Interest on fixed maturities $1,556,756 $1,589,802 $1,449,234
Interest on mortgage loans 196,521 175,063 148,693
Other investment income 38,366 29,345 24,281
Interest on cash equivalents 6,872 2,137 5,363
1,798,515 1,796,347 1,627,571
Less investment expenses 16,642 13,128 10,750
$1,781,873 $1,783,219 $1,616,821
======= ======= =======
At Dec. 31, 1994, investments in fixed maturities comprised 87
percent of the Company's total invested assets. These securities
are rated by Moody's and Standard & Poor's (S&P), except for
securities carried at cost approximately $1.7 billion which are
rated by American Express Financial Corporation internal analysts
using criteria similar to Moody's and S&P. A summary of
investments in fixed maturities, at amortized cost, by rating on
Dec. 31 is as follows:
Rating 1994 1993
Aaa/AAA $ 9,708,047 $ 9,959,884
Aa/AA 242,914 258,659
Aa/A 119,952 160,638
A/A 2,567,947 2,021,177
A/BBB 725,755 654,949
Baa/BBB 3,849,188 3,936,366
Baa/BB 796,063 717,606
Below investment grade 1,719,123 1,683,145
$19,728,989 $19,392,424
======== ========
At Dec. 31, 1994, 97 percent of the securities rated Aaa/AAA are
GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of
any other issuer are greater than 1 percent of the Company's total
investments in fixed maturities.
At Dec. 31, 1994, approximately 10.9 percent of the Company's
invested assets were mortgage loans on real estate. Summaries of
mortgage loans by region of the United States and by type of real
estate at Dec. 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
Dec. 31, 1994 Dec. 31, 1993
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
<S> <C> <C> <C> <C>
East North Central $ 581,142 $ 62,291 $ 552,150 $ 20,933
West North Central 257,996 7,590 361,704 16,746
South Atlantic 597,896 63,010 452,679 52,440
Middle Atlantic 408,940 34,478 260,239 41,090
New England 209,867 23,087 155,214 17,620
Pacific 138,900 -- 120,378 15,492
West South Central 50,854 -- 43,948 525
East South Central 67,503 -- 73,748 --
Mountain 122,668 18,750 70,410 14,594
2,435,766 209,206 2,090,470 179,440
Less allowance for losses 35,252 -- 35,020 --
$2,400,514 $209,206 $2,055,450 $179,440
======= ======= ======= =======
<PAGE>
PAGE 29
2. Investments (continued)
Dec. 31, 1994 Dec. 31, 1993
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
Apartments $ 904,012 $ 56,964 $ 744,788 $ 79,153
Department/retail stores 802,522 88,325 624,651 65,402
Office buildings 321,761 21,691 234,042 15,583
Industrial buildings 232,962 18,827 217,648 9,279
Nursing/retirement homes 89,304 4,649 83,768 917
Hotels/motels 32,666 -- 33,138 --
Medical buildings 36,490 15,651 30,429 5,954
Residential 20 -- 78 --
Other 16,029 3,099 121,928 3,152
2,435,766 209,206 2,090,470 179,440
Less allowance for losses 35,252 -- 35,020 --
$2,400,514 $209,206 $2,055,450 $179,440
======= ======= ======= =======
</TABLE>
Mortgage loan fundings are restricted by state insurance regulatory
authorities to 80 percent or less of the market value of the real
estate at the time of origination of the loan. The Company holds
the mortgage document, which gives the right to take possession of
the property if the borrower fails to perform according to the
terms of the agreement. The fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage
interest rates currently offered for mortgages of similar
maturities. Commitments to purchase mortgages are made in the
ordinary course of business. The fair value of the mortgage
commitments is $nil.
3. Income taxes
The Company qualifies as a life insurance company for federal
income tax purposes. As such, the Company is subject to the
Internal Revenue Code provisions applicable to life insurance
companies.
Income tax expense consists of the following:
1994 1993 1992
Federal income taxes:
Current $186,508 $180,558 $130,998
Deferred (19,175) (44,237) (30,385)
167,333 136,321 100,613
State income taxes-current 9,010 6,326 4,038
Income tax expense $176,343 $142,647 $104,651
====== ====== ======
Increases (decreases) to the federal tax provision applicable to
pretax income based on the statutory rate are attributable to:
<PAGE>
PAGE 30
3. Income taxes (continued)
<TABLE>
<CAPTION>
1994 1993 1992
Provision Rate Provision Rate Provision Rate
<S> <C> <C> <C> <C> <C> <C>
Federal income
taxes based on
the statutory rate $179,379 35.0% $144,454 35.0% $107,379 34.0%
Increases (decreases)
are attributable to:
Tax-excluded interest
and dividend income (9,939) (2.0) (11,002) (2.7) (8,209) (2.6)
Other, net (2,107) (0.4) 2,869 0.7 1,443 0.4
Federal income taxes $167,333 32.6% $136,321 33.0% $100,613 31.8%
====== === ====== === ====== ===
</TABLE>
A portion of life insurance company income earned prior to 1984 was
not subject to current taxation but was accumulated, for tax
purposes, in a "policyholders' surplus account." At December 31,
1994, the Company had a policyholders' surplus account balance of
$19,032. The policyholders' surplus account is only taxable if
dividends to the stockholder exceed the stockholder's surplus
account or if the Company is liquidated. Deferred income taxes of
$6,661 have not been established because no distributions of such
amounts are contemplated.
Significant components of the Company's deferred tax assets and
liabilities as of Dec. 31 are as follows:
1994 1993
Deferred tax assets:
Policy reserves $533,433 $453,436
Investments 116,736 --
Life insurance guarantee
fund assessment reserve 32,235 35,000
Total deferred tax assets 682,404 488,436
Deferred tax liabilities:
Deferred policy acquisition costs 553,722 509,868
Investments -- 10,151
Other 4,621 12,037
Total deferred tax
liabilities 558,343 532,056
Net deferred tax assets (liabilities) $124,061 $(43,620)
====== ======
The Company is required to establish a "valuation allowance" for
any portion of the deferred tax assets that management believes
will not be realized. In the opinion of management, it is more
likely than not that the Company will realize the benefit of the
deferred tax assets, and, therefore, no such valuation allowance
has been established.
<PAGE>
PAGE 31
4. Stockholder's equity
Retained earnings available for distribution as dividends to the
parent are limited to the Company's surplus as determined in
accordance with accounting practices prescribed by state insurance
regulatory authorities. Statutory unassigned surplus aggregated
$1,020,981 as of December 31, 1994 and $922,246 as of December 31,
1993 (see Note 3 with respect to the income tax effect of certain
distributions). In addition, any dividend distributions in 1995 in
excess of approximately $288,601 would require approval of the
Department of Commerce of the State of Minnesota.
Statutory net income for 1994, 1993 and 1992 and capital and
surplus as of Dec. 31, 1994, 1993 and 1992 are summarized as
follows:
1994 1993 1992
Statutory net income $ 294,699 $ 275,015 $180,296
Statutory capital and surplus 1,261,958 1,157,022 714,942
Dividends paid to American Express Financial Corporation were
$165,000 in 1994, $25,000 in 1993 and $20,000 in 1992.
5. Related party transactions
The Company has loaned funds to American Express Financial
Corporation under three loan agreements. The balance of the first
loan was $40,000 and $75,000 at December 31, 1994 and 1993,
respectively. This loan can be increased to a maximum of $75,000
and pays interest at a rate equal to the preceding month's
effective new money rate for the Company's permanent investments.
It is collateralized by equities valued at $110,034 at December 31,
1994. The second loan was used to fund the construction of the IDS
Operations Center. This loan was paid off during 1994 and had an
outstanding balance of $84,588 at December 31, 1993. The loan was
secured by a first lien on the IDS Operations Center property and
had an interest rate of 9.89 percent. The Company also had a loan
to an affiliate which was used to fund construction of the IDS
Learning Center. This loan was sold to the parent during 1994 and
the balance outstanding was $22,573 at December 31, 1993. The loan
was secured by a first lien on the IDS Learning Center property and
had an interest rate of 9.82 percent. Interest income on the above
loans totaled $2,894, $11,116 and $10,711 in 1994, 1993 and 1992,
respectively.
The Company purchased a five year secured note from an affiliated
company which had an outstanding balance of $23,333 and $27,222 at
December 31, 1994 and 1993, respectively. The note bears a fixed
rate of 8.42 percent. Interest income on the above note totaled
$2,278, $2,605 and $2,278 in 1994, 1993 and 1992, respectively.
The Company has a reinsurance agreement whereby it assumed 100
percent of a block of single premium life insurance business from
an affiliated company. The accompanying consolidated balance sheet
at Dec. 31, 1994 and 1993 includes $765,366 and $759,714,
respectively, of future policy benefits related to this agreement.
<PAGE>
PAGE 32
5. Related party transactions (continued)
The accompanying consolidated statement of income includes revenue
from policyholder charges of $8, $21 and $109, and expenses of
$6,912, $4,931 and $5,897 related to this agreement for 1994, 1993
and 1992, respectively.
The Company has a reinsurance agreement to cede 50 percent of its
long-term care insurance business to an affiliated company. The
accompanying consolidated balance sheet at December 31, 1994 and
1993 includes $65,123 and $44,086, respectively, of reinsurance
receivables related to this agreement. Premiums ceded amounted to
$20,360, $16,230 and $12,499 and reinsurance recovered from
reinsurers amounted to $62, $404 and $250 for the years ended Dec.
31, 1994, 1993 and 1992, respectively.
The Company participates in the retirement plan of American Express
Financial Corporation which covers all permanent employees age 21
and over who have met certain employment requirements. The
benefits are based on years of service and the employee's monthly
average of basic annual salary rates in effect on January 1, or
such other date as determined by American Express Financial
Corporation of the highest five consecutive annual salaries of the
last 10 years. American Express Financial Corporation's policy is
to fund retirement plan costs accrued subject to ERISA and federal
income tax considerations. The Company's share of the total net
periodic pension cost was $nil in 1994, 1993 and 1992.
The Company also participates in defined contribution pension plans
of American Express Financial Corporation which cover all employees
who have met certain employment requirements. Company
contributions to the plans are a percent of either each employee's
eligible compensation or basic contributions. Costs of these plans
charged to operations in 1994, 1993 and 1992 were $957, $2,008 and
$1,826, respectively.
The Company participates in defined benefit health care plans of
American Express Financial Corporation that provide health care and
life insurance benefits to retired employees and retired financial
advisors. The plans include participant contributions and service
related eligibility requirements. Upon retirement, such employees
are considered to have been employees of American Express Financial
Corporation. American Express Financial Corporation expenses these
benefits and allocates the expenses to its subsidiaries.
Accordingly, costs of such benefits to the Company are included in
employee compensation and benefits and cannot be identified on a
separate company basis. At Dec. 31, 1994, the total accumulated
post retirement benefit obligation, determined in accordance with
SFAS 106 and based on an assumed interest rate of 8.75 percent and
a health care cost trend rate of 7 percent, has been recorded as a
liability by American Express Financial Corporation.
Charges by American Express Financial Corporation for use of joint
facilities, marketing services and other services aggregated
$335,183, $243,346 and $204,675 for 1994, 1993 and 1992,
respectively. Certain of these costs are included in deferred
<PAGE>
PAGE 33
5. Related party transactions (continued)
policy acquisition costs. In addition, the Company rents its home
office space from American Express Financial Corporation on an
annual renewable basis. Such rentals aggregated $965, $4,513 and
$4,074 for 1994, 1993 and 1992, respectively.
6. Commitments and contingencies
At December 31, 1994 and 1993, traditional life insurance and
universal life-type insurance in force aggregated $52,666,567 and
$46,125,515, respectively, of which $3,246,608 and $3,038,426 were
reinsured at the respective year ends. The Company also reinsures
a portion of the risks assumed under disability income policies.
Under the agreements, premiums ceded to reinsurers amounted to
$29,489, $28,276 and $24,222 and reinsurance recovered from
reinsurers amounted to $5,505, $3,345 and $6,766 for the years
ended Dec. 31, 1994, 1993 and 1992.
Reinsurance contracts do not relieve the Company from its primary
obligation to policyholders.
The Company is a defendant in various lawsuits, none of which, in
the opinion of the Company counsel, will result in a material
liability.
The Company settled all remaining IRS audit issues for the tax
years 1984 through 1986 in September of 1994. There was no
material impact as a result of this audit. Also, the IRS is
currently auditing the Company's 1987 through 1989 tax years.
Management does not believe there will be a material impact as a
result of this audit.
7. Lines of credit
The Company has available lines of credit with three banks
aggregating $100,000 at 40 to 80 basis points over the banks' cost
of funds or equal to the prime rate, depending on which line of
credit agreement is used. Borrowings outstanding under these
agreements were $nil and $1,519 at December 31, 1994 and 1993,
respectively.
8. Derivative financial instruments
The Company enters into transactions involving derivative
financial instruments to manage its exposure to interest rate risk,
including hedging specific transactions. The Company manages risks
associated with these instruments as described below. The Company
does not hold derivative instruments for trading purposes.
Market risk is the possibility that the value of the derivative
financial instruments will change due to fluctuations in a factor
from which the instrument derives its value, primarily an interest
rate. The Company is not impacted by market risk related to
derivatives held for non-trading purposes beyond that inherent in
cash market transactions. Derivatives held for purposes other than<PAGE>
PAGE 34
8. Derivative financial instruments (continued)
trading are largely used to manage risk and, therefore, the cash
flow and income effects of the derivatives are inverse to the
effects of the underlying transactions.
Credit risk is the possibility that the counterparty will not
fulfill the terms of the contract. The Company monitors credit
exposure related to derivative financial instruments through
established approval procedures, including setting concentration
limits by counterparty and industry, and requiring collateral,
where appropriate. A vast majority of the Company's counterparties
are rated A or better by Moody's and Standard & Poor's.
The notional or contract amount of a derivative financial
instrument is generally used to calculate the cash flows that are
received or paid over the life of the agreement. Notional amounts
are not recorded on the balance sheet. Notional amounts far exceed
the related credit exposure.
Credit exposure related to interest rate caps is measured by the
replacement cost of the contracts. The replacement cost
represents the fair value of the instruments. Financial futures
contracts are settled in cash daily.
<TABLE>
<CAPTION>
Notional Carrying Total Credit
Assets Amount Value Fair Value Exposure
<S> <C> <C> <C> <C>
Financial futures contracts $ 159,800 $ 2,072 $ 2,072 $ -
Interest rate caps 4,400,000 29,054 42,365 42,365
$4,559,800 $31,126 $44,437 $42,365
======= ===== ===== =====
</TABLE>
The fair values of derivative financial instruments are based on
market values, dealer quotes or pricing models. The financial
futures contracts expire in 1995. The interest rate caps expire on
various dates from 1995 to 1999.
Financial futures contracts and interest rate caps are used
principally to manage the Company's exposure to rising interest
rates. These instruments are used primarily to protect the margin
between interest rate earned on investments and the interest rate
credited to related annuity contract holders.
Changes in the fair value of financial futures contracts are
accounted for as adjustments to the carrying amount of the hedged
investments and amortized over the remaining lives of such
investments. The cost of interest rate caps is amortized to
interest expense over the life of the contracts and payments
received as a result of these agreements are recorded as a
reduction of interest expense when realized. The amortized cost of
interest rate cap contracts is included in other investments.
9. Fair values of financial instruments
The Company is required to disclose fair value information for most
on- and off-balance sheet financial instruments for which it is<PAGE>
PAGE 35
9. Fair values of financial instruments (continued)
practical to estimate that value. Certain financial instruments
such as life insurance obligations, receivables and all
non-financial instruments, such as deferred acquisition costs are
excluded from required disclosure. Off-balance sheet intangible
assets, such as the value of the field force, are also excluded.
Management believes the value of excluded assets is significant.
The fair value of the Company, therefore, cannot be estimated by
aggregating the amounts presented.
<TABLE>
<CAPTION>
1994 1993
Carrying Fair Carrying Fair
Financial Assets Value Value Value Value
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $11,269,861 $10,694,800 $ -- $ --
Available for sale 8,017,555 8,017,555 -- --
Investment securities -- -- 19,392,424 20,425,979
Mortgage loans on
real estate (Note 2) 2,400,514 2,342,520 2,055,450 2,125,686
Other:
Equity securities (Note 2) 1,906 1,906 1,900 1,900
Derivative financial
instruments (Note 8) 31,126 44,437 26,923 14,201
Cash and
cash equivalents (Note 1) 267,774 267,774 146,281 146,281
Assets held in segregated
asset accounts (Note 1) 10,881,235 10,881,235 8,991,694 8,991,694
Financial Liabilities
Future policy benefits
for fixed annuities 18,325,870 17,651,897 17,519,876 16,881,747
Liabilities related to
segregated asset accounts 10,398,861 9,943,672 8,645,418 8,305,209
</TABLE>
At December 31, 1994 and 1993, the carrying amount and fair value
of future policy benefits for fixed annuities exclude life
insurance-related contracts carried at $971,897 and $913,127,
respectively, and policy loans of $64,212 and $59,132,
respectively. The fair value of these benefits is based on the
status of the annuities at December 31, 1994 and 1993. The fair
value of deferred annuities is estimated as the carrying amount
less any applicable surrender charges and related loans. The fair
value for annuities in non-life contingent payout status is
estimated as the present value of projected benefit payments at the
rate appropriate for contracts issued in 1994 and 1993.
At December 31, 1994 and 1993 the fair value of liabilities related
to segregated asset accounts is estimated as the carrying amount
less variable insurance contracts carried at $482,374 and $346,276,
respectively, and surrender charges, if applicable.
10. Segment information
The Company's operations consist of two business segments; first,
individual and group life insurance, disability income, health and
long-term care insurance, and second, annuity products designed for<PAGE>
PAGE 36
individuals, pension plans, small businesses and employer-sponsored
groups. The consolidated statement of income for the years ended
Dec. 31, 1994, 1993 and 1992 and total assets at Dec. 31, 1994,
1993 and 1992 by segment are summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Net investment income:
Life, disability income,
health and long-term
care insurance $ 247,047 $ 250,224 $ 246,676
Annuities 1,534,826 1,532,995 1,370,145
$1,781,873 $1,783,219 $1,616,821
======= ======= =======
Premiums, charges
and fees:
Life, disability income,
health and long-term
care insurance $335,375 $281,284 $250,386
Annuities 193,370 143,876 104,952
$528,745 $425,160 $355,338
====== ====== ======
Income before income taxes:
Life, disability income,
health and long-term
care insurance $122,677 $104,127 $ 96,215
Annuities 394,117 315,336 223,316
Net loss
on investments (4,282) (6,737) (3,710)
$512,512 $412,726 $315,821
====== ====== ======
Total assets:
Life, disability income,
health and long-term
care insurance $ 5,269,188 $ 4,810,145 $ 4,093,778
Annuities 30,478,355 28,247,608 23,201,995
$35,747,543 $33,057,753 $27,295,773
========= ======== ========
</TABLE>
Allocations of net investment income and certain general expenses
are based on various assumptions and estimates.
Assets are not individually identifiable by segment and have been
allocated principally based on the amount of future policy benefits
by segment.
Capital expenditures and depreciation expense are not material, and
consequently, are not reported.
<PAGE>
PAGE 37
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying consolidated balance sheets of IDS
Life Insurance Company (a wholly owned subsidiary of American
Express Financial Corporation) as of December 31, 1994 and 1993,
and the related consolidated statements of income and cash flows
for each of the three years in the period ended December 31, 1994.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of IDS Life Insurance Company at December 31, 1994 and
1993, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended December 31,
1994, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial
statements, the Company changed its method of accounting for
certain investments in debt and equity securities in 1994.
Ernst & Young LLP
Minneapolis, Minnesota
February 3, 1995
<PAGE>
PAGE 38
[ARTICLE] 6
[NAME] IDS Life Variable Life Separate Account for Single Premium
Variable Life Insurance
[FISCAL-YEAR-END] DEC-31-1994
[PERIOD-START] JAN-01-1994
[PERIOD-END] DEC-31-1994
[PERIOD-TYPE] YEAR
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 34523503
[INVESTMENTS-AT-VALUE] 40381523
[RECEIVABLES] 152396
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 40533919
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] (182246)
[TOTAL-LIABILITIES] (182246)
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 0
[SHARES-COMMON-STOCK] 16870034
[SHARES-COMMON-PRIOR] 18100667
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 40351673
[DIVIDEND-INCOME] 3896966
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] (277067)
[NET-INVESTMENT-INCOME] 3619899
[REALIZED-GAINS-CURRENT] 718073
[APPREC-INCREASE-CURRENT] (4680391)
[NET-CHANGE-FROM-OPS] (342419)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 246077
[NUMBER-OF-SHARES-REDEEMED] (1476710)
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] (3256252)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 0
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (277067)
[AVERAGE-NET-ASSETS] 41979799
[PER-SHARE-NAV-BEGIN] 0
[PER-SHARE-NII] 0
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
<PAGE>
PAGE 39
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 0
[EXPENSE-RATIO] 0
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<PAGE>
PAGE 40
[ARTICLE] 7
[LEGEND]
[CIK]
[NAME] IDS Life Insurance Company
[MULTIPLIER] 1000
[CURRENCY] U.S. DOLLAR
[FISCAL-YEAR-END] DEC-31-1993 DEC-31-1994
[PERIOD-START] JAN-01-1993 JAN-01-1994
[PERIOD-END] DEC-31-1993 DEC-31-1994
[PERIOD-TYPE] YEAR YEAR
[EXCHANGE-RATE] 1 1
[DEBT-HELD-FOR-SALE] 0 8017555
[DEBT-CARRYING-VALUE] 19392424 11269861
[DEBT-MARKET-VALUE] 20425979 10694800
[EQUITIES] 1900 1906
[MORTGAGE] 2055450 2400514
[REAL-ESTATE] 27484 20835
[TOTAL-INVEST] 21854682 22121637
[CASH] 146281 267774
[RECOVER-REINSURE] 1293 1110
[DEFERRED-ACQUISITION] 1652384 1865324
[TOTAL-ASSETS] 33057753 35747543
[POLICY-LOSSES] 21641067 22708910
[UNEARNED-PREMIUMS] 0 0
[POLICY-OTHER] 0 0
[POLICY-HOLDER-FUNDS] 44516 50068
[NOTES-PAYABLE] 0 0
[COMMON] 3000 3000
[PREFERRED-MANDATORY] 0 0
[PREFERRED] 0 0
[OTHER-SE] 1690346 1585691
[TOTAL-LIABILITY-AND-EQUITY]33057753 35747543
[PREMIUMS] 127245 144640
[INVESTMENT-INCOME] 1783219 1781873
[INVESTMENT-GAINS] (6737) (4282)
[OTHER-INCOME] 304344 384105
[BENEFITS] 1341638 1303351
[UNDERWRITING-AMORTIZATION] 211733 280372
[UNDERWRITING-OTHER] 241974 210101
[INCOME-PRETAX] 412726 512512
[INCOME-TAX] 142647 176343
[INCOME-CONTINUING] 270079 336169
[NET-INCOME] 270079 336169
[DISCONTINUED] 0 0
[EXTRAORDINARY] 0 0
[CHANGES] 0 0
[NET-INCOME] 270079 336169
[EPS-PRIMARY] 0 0
[EPS-DILUTED] 0 0
[RESERVE-OPEN] 18004 20636
[PROVISION-CURRENT] 94976 93683
[PROVISION-PRIOR] 0 0
[PAYMENTS-CURRENT] 92344 91091
[PAYMENTS-PRIOR] 0 0
[RESERVE-CLOSE] 20636 23228
[CUMULATIVE-DEFICIENCY] 0 0
<PAGE>
