SUPPLEMENT DATED MAY 1, 2000
TO PROSPECTUS DATED MAY 1, 1994
WRL FREEDOM SP PLUS (R)
The following information supplements information provided on page 7, fifth
paragraph of the Prospectus under the heading "11. What Charges are Assessed in
Connection with the Policy?"
<TABLE>
<CAPTION>
Portfolio Rate
--------- ----
<S> <C>
WRL Great Companies-AmericaSM 0.80%
WRL Great Companies-TechnologySM 0.80%
WRL Value Line Aggressive Growth 0.80%
Fidelity VIP Equity-Incom Portfolio - Service Class 2 0.48%
Fidelity VIP II Contrafund(R)Portfolio - Service Class 2 0.58%
Fidelity VIP III Growth Opportunities Portfolio - Service Class 2 0.58%
</TABLE>
The following information is added to page 9, under the section entitled "Death
Benefit, Cash Value and Net Surrender Value Illustrations" in the Prospectus:
The information contained in both the explanation and "Hypothetical
Illustrations" is out-of-date and should not be relied upon. In addition,
current hypothetical illustrations for the new Portfolios are not included in
Appendix A.
The following information is added to page 8 of the Prospectus before the
section entitled "Investment Experience Information" and represents both the
actual annual expenses of the existing Portfolios incurred during 1999 (except
as noted in the footnotes), and the estimated annual expenses, as a percentage
of average net assets, of the new Portfolios:
<TABLE>
<CAPTION>
WRL
WRL J.P. WRL LKCM
Morgan WRL WRL WRL VKAM Strategic
Money Janus Janus AEGON Emerging Total
Market Growth 2/ Global 3/ Bond Growth Return
------ --------- --------- ------ -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.40% 0.80% 0.80% 0.45% 0.80% 0.80%
Other Expenses 0.04% 0.05% 0.12% 0.08% 0.07% 0.06%
12b-1 Fee N/A N/A N/A N/A N/A N/A
Total Annual Expenses 0.44% 0.85% 0.92% 0.53% 0.87% 0.86%
WRL WRL WRL WRL
Alger WRL Federated Dean WRL NWQ
Aggressive AEGON Growth & Asset C.A.S.E. Value
Growth Balanced Income Allocation Growth Equity
---------- -------- --------- ---------- --------- ------
Management Fees 0.80% 0.80% 0.75% 0.80% 0.80% 0.80%
Other Expenses 0.09% 0.09% 0.14% 0.07% 0.20% 0.10%
12b-1 Fee N/A N/A N/A N/A N/A N/A
Total Annual Expenses 0.89% 0.89% 0.89% 0.87% 1.00% 0.90%
WRL J.P.
WRL GE WRL GE WRL Third Morgan
International U.S. Avenue Real Estate
Equity 4/ Equity Value Securities
------------- ------ ---------- -----------
Management Fees 1.00% 0.80% 0.80% 0.80%
Other Expenses 0.20% 0.13% 0.20% 0.20%
12b-1 Fee N/A N/A N/A N/A
Total Annual Expenses 1.20% 0.93% 1.00% 1.00%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WRL WRL
WRL WRL T. Rowe WRL Pilgrim
Goldman Goldman Price T. Rowe WRL Baxter WRL
Sachs Sachs Dividend Price Salomon Mid Cap Dreyfus
Growth 5/ Small Cap 5/ Growth 5/ Small Cap 5/ All Cap 5/ Growth 5/ Mid Cap 5/
--------- ------------ --------- ----------- ---------- --------- ------- --
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.90% 0.90% 0.90% 0.75% 0.90% 0.90% 0.85%
Other Expenses 0.10% 0.10% 0.10% 0.25% 0.10% 0.10% 0.15%
12b-1 Fee N/A N/A N/A N/A N/A N/A
N/A
Total Annual Expenses 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
WRL Value WRL Great WRL Great
Line Aggressive Companies - Companies -
Growth 6/ America SM 6/ Technology SM 6/
--------- ------------- ----------------
Management Fees 0.80% 0.80% 0.80%
Other Expenses 0.20% 0.20% 0.20%
12b-1 Fee N/A N/A N/A
Total Annual Expenses 1.00% 1.00% 1.00%
Fidelity VIP Fidelity VIP II Fidelity VIP III
Equity-Income Contrafund(R) Growth Opportunities
Portfolio - Portfolio - Portfolio -
Service Class 2 8/ Service Class 2 8/ Service Class 2 8/
--------------- -- --------------- -- --------------- --
Management Fees 0.48% 0.58% 0.58%
Other Expenses 0.10% 0.12% 0.13%
12b-1 Fee 7/ 0.25% 0.25% 0.25%
Total Annual Expenses 0.83% 0.95% 0.96%
</TABLE>
- -----------------
1/ Effective January 1, 1997, the WRL Series Fund, Inc. ("WRL Fund") Board
authorized the WRL Fund to charge each Portfolio of the WRL Fund an annual
12b-1 fee of up to 0.15% of each Portfolio's average daily net assets.
However, the WRL Fund will not deduct the fee from any Portfolio before
April 30, 2001. You will receive advance written notice if a Rule 12b-1
fee is to be deducted. See the WRL Fund prospectus for more detail.
2/ WRL Investment Management, Inc. ("WRL Management"), the WRL Fund's
investment adviser, currently waives 0.025% of its advisory fee for the
first $3 billion of the portfolio's average daily net assets (net fee -
0.775%); and 0.05% for the portfolio's average daily net assets above $3
billion (net fee - 0.75%). The fee table reflects estimated 2000 expenses
because of the termination of the fee waiver. This waiver is voluntary and
will be terminated June 25, 2000.
3/ WRL Management currently waives 0.025% of its advisory fee on portfolio
average daily net assets over $2 billion (net fee - 0.775%). This waiver
is voluntary and will be terminated on June 25, 2000.
4/ The fee table reflects estimated 2000 expenses because the expense limit
for this portfolio will be reduced from 1.50% to 1.20% effective May 1,
2000.
5/ Because these portfolios did not commence operations until May 3, 1999,
the percentages set forth as "Other Expenses" and "Total Annual Expenses"
are annualized.
6/ Because these Portfolios did not commence operations until May 1, 2000,
the percentages set forth as "Other Expenses" and "Total Annual Expenses"
reflect estimates of "Other Expenses" for the first year of operations.
7/ The 12b-1 deducted for the Fidelity VIP Funds recovers certain shareholder
support services provided by companies selling variable contracts
investing in the Fidelity VIP Funds. The 12b-1 fees assessed against the
Fidelity VIP Funds shares held for the Policies will be remitted to AFSG,
the principal underwriter for the Policies.
8/ Service Class 2 expenses are based on estimated expenses for the year
2000.
2
<PAGE>
9/ WRL Management has undertaken, until at least April 30, 2001, to pay
expenses on behalf of the Portfolios of the WRL Fund to the extent normal
operating expenses of a Portfolio exceed a stated percentage of each
Portfolio's average daily net assets. The expense limit, the amount
reimbursed by WRL Management during 1999 and the expense ratio without the
reimbursement are listed below for each portfolio:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
EXPENSE RATIO
- -------------------------------------------------------------------------------------------------------------------
PORTFOLIO EXPENSE REIMBURSEMENT WITHOUT
LIMIT AMOUNT REIMBURSEMENT
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
WRL VKAM Emerging Growth 1.00% $ N/A N/A
WRL T. Rowe Price Small Cap 1.00% 63,542 2.46%
WRL Goldman Sachs Small Cap 1.00% 60,555 5.57%
WRL Pilgrim Baxter Mid Cap Growth 1.00% 34,986 1.40%
WRL Alger Aggressive Growth 1.00% N/A N/A
WRL Third Avenue Value 1.00% 10,734 1.06%
WRL Value Line Aggressive Growth 1.00% N/A N/A
WRL GE International Equity 1.20% 112,088 1.84%
WRL Janus Global 1.00% N/A N/A
WRL Great Companies - TechnologySM 1.00% N/A N/A
WRL Janus Growth 1.00% N/A N/A
WRL Goldman Sachs Growth 1.00% 49,677 2.68%
WRL GE U.S. Equity 1.00% N/A N/A
WRL Great Companies - AmericaSM 1.00% N/A N/A
WRL Salomon All Cap 1.00% 53,174 2.87%
WRL C.A.S.E. Growth 1.00% N/A N/A
WRL Dreyfus Mid Cap 1.00% 34,541 4.89%
WRL NWQ Value Equity 1.00% N/A N/A
WRL T. Rowe Price Dividend Growth 1.00% 46,989 2.35%
WRL Dean Asset Allocation 1.00% N/A N/A
WRL LKCM Strategic Total Return 1.00% N/A N/A
WRL J.P. Morgan Real Estate Securities 1.00% 51,924 2.69%
WRL Federated Growth & Income 1.00% N/A N/A
WRL AEGON Balanced 1.00% N/A N/A
WRL AEGON Bond 0.70% N/A N/A
WRL J.P. Morgan Money Market 0.70% N/A N/A
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The purpose of the preceding table is to help you understand the
various costs and expenses that you will bear directly and indirectly. The table
reflects charges and expenses of the Portfolios of the Funds for the fiscal year
ended December 31, 1999 (except as noted in the footnotes). For more information
on the charges described in this table, see the Fund prospectuses, which
accompany this prospectus.
The following is revised after the third paragraph on page 15 of the Prospectus
under the heading "Other Performance Data":
We are a member of the Insurance Marketplace Standards Association
("IMSA"). IMSA is an independent, voluntary organization of life insurance
companies. It promotes high ethical standards in the sales and advertising of
individual life insurance and annuity products. Companies must undergo a
rigorous self and independent assessment of their practices to become a member
of IMSA. The IMSA logo in our sales literature shows our ongoing commitment to
these standards.
The following information supplements information provided on pages 22-23 of the
Prospectus under the heading "Investments of the Series Account - WRL Series
Fund, Inc.":
Beginning May 1, 2000, you may direct the money in your Policy into six
new Sub-Accounts of the WRL Series Life Account. Each Sub-Account invests
exclusively in a new Portfolio of the WRL Series Fund, Inc. ("WRL Fund") or the
Variable Insurance Products Fund (VIP), Variable Insurance Products Fund II (VIP
II) or Variable Insurance Products Fund III (VIP III) (the "Fidelity VIP
Funds"). There is no assurance that any of the Portfolios will achieve its
stated objective. More detailed information, including a description of risks,
can be found in the Fund Prospectuses, which accompany this Supplement, and
should be read carefully.
3
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE
<S> <C> <C>
WRL GREAT COMPANIES - Great Companies, L.L.C. Seeks long-term growth of capital.
AMERICASM
WRL GREAT COMPANIES - Great Companies, L.L.C. Seeks long-term growth of capital.
TECHNOLOGYSM
WRL VALUE LINE Value Line, Inc. Seeks long-term growth of capital.
AGGRESSIVE
GROWTH
FIDELITY VIP EQUITY - Fidelity Management & Seeks reasonable income by investing
INCOME PORTFOLIO - Research Company primarily in income-producing
SERVICE CLASS 2 equity securities.
FIDELITY VIP II - Fidelity Management & Seeks long-term capital appreciation
CONTRAFUND(R)PORTFOLIO - Research Company by investing primarily in a broad
SERVICE CLASS 2 variety of common stocks, using both
growth-oriented and contrarian
disciplines.
FIDELITY VIP III Fidelity Management & Seeks capital growth by investing in a wide
GROWTH OPPORTUNITIES Research Company range of common domestic and foreign
PORTFOLIO - SERVICE CLASS 2 stocks, and securities convertible into
common stocks.
------------------------------------------------------------------------------------------------------------
</TABLE>
In addition, effective May 1, 2000, the WRL GE/Scottish Equitable International
Equity Portfolio of the WRL Fund in which you may currently invest through the
Policy has changed its name. The new name is: WRL GE International Equity. The
reason for the name change is because also effective May 1, 2000, GE Asset
Management Incorporated will be the sole sub-adviser for this portfolio. See the
WRL Fund prospectus for more details.
Fidelity Management & Research Company ("FMR"), located at 82
Devonshire Street, Boston, Massachusetts 02109, serves as investment adviser to
the Fidelity VIP Funds and manages the Fidelity VIP Funds in accordance with
policies and guidelines established by the Fidelity VIP Funds' Board of
Trustees. For certain portfolios, FMR has engaged investment sub-advisers to
provide portfolio management services with regards to foreign investments. FMR
and each sub-adviser are registered investment advisers under the Investment
Advisers Act of 1940, as amended. See the Fidelity VIP Funds prospectuses for
more information regarding FMR and the investment sub-advisers.
The following paragraph is added after the carryover paragraph on page 29 of the
Prospectus under the heading "Allocation of Premiums and Cash Value -
Transfers."
You may make an unlimited number of "non-substantive" transfers in a
Policy year among the subaccounts although we do limit "substantive" transfers,
as discussed in the following paragraph. WE WILL NOT BE RESPONSIBLE FOR SAME-DAY
PROCESSING OF TRANSFERS IF FAXED TO A NUMBER OTHER THAN 727-299-1648.
The Policy's transfer privilege is not intended to afford policyowners
a way to speculate on short-term movements in the market. Excessive use of the
transfer privilege can disrupt the management of the Portfolios and increase
transaction costs. Accordingly, we have established a policy of limiting
excessive transfer activity. We will limit transfer activity to two substantive
transfers (at least 30 days apart) from each Portfolio, except from WRL J.P.
Morgan Money Market during any 12-month period. We interpret "substantive" to
mean either a dollar amount large enough to have a negative impact on a
Portfolio's operations or a service of movements between Portfolios. We will not
limit non-substantive transfers.
4
<PAGE>
The following information replaces the paragraph on page 33 of the Prospectus
under the heading "Charges against the Series Account - Investment Advisory
Fee."
The portfolios deduct management fees and expenses from the amounts you
have invested in the portfolios. Some portfolios also deduct 12b-1 fees from
portfolio assets. These fees and expenses currently range from 0.44% to 1.20%.
See the Portfolio Annual Expense Table in this Supplement, and the Fund
prospectuses.
Our affiliate, AFSG Securities Corporation ("AFSG"), the principal
underwriter for the Policies, will receive the 12-b fees deducted from portfolio
assets for providing shareholder support services to the portfolios. We and our
affiliates, including the principal underwriter for the Policies, may receive
compensation from the investment advisers, administrators, and/or distributors
(and an affiliate thereof) of the portfolios in connection with administrative
or other services and cost savings experience by the investment advisers,
administrators or distributors. It is anticipated that such compensation will be
based on assets of the particular portfolios attributable to the Policy and may
be significant. Some advisers, administrators, distributors or portfolios may
pay us (and our affiliates) more than others.
The following sentence is added to the following pages of the Prospectus and
under the headings as indicated.
"The signature of the owner's spouse is required if the owner is a resident
of: Arizona, California, Idaho, Nevada, New Mexico, Washington or Wisconsin."
Page 34 of the Prospectus under the heading "Policy Rights - Loan
Privileges" after the first sentence.
Page 36 of the Prospectus under the heading "Policy Rights - Surrender
Privileges" after the first sentence.
Page 39 of the Prospectus under the heading "General Provisions -
Change of Owner or Beneficiary" and "General Provisions - Assignment."
The following is a new paragraph added to page 43 of the Prospectus under the
heading "Distribution of the Policies":
AFSG will receive the 12b-1 fees assessed against the Fidelity VIP
Funds shares held for the Policies as compensation for providing certain
shareholder support services. AFSG will also receive an additional fee based on
the value of shares of the Fidelity VIP Funds held for the Policies as
compensation for providing certain recordkeeping services.
The following paragraphs are added to page 45 under the heading "Tax Treatment
of Policy Benefits - 3. Distributions from Policies Classified as Modified
Endowment Contracts":
If a Policy becomes a modified endowment contract ("MEC"),
distributions that occur during the Policy year will be taxed as distributions
from a MEC. In addition, distributions from a Policy within two years before it
becomes a MEC will be taxed in this manner. This means that a distribution from
a Policy that is not a MEC at the time when the distribution is made could later
become taxable as a distribution from a MEC.
Policy Loans. If a loan from a Policy is outstanding when the Policy is
canceled or lapses, then the amount of the outstanding indebtedness will be
taxed as if it were a distribution.
The following is a new section to be added to page 46 of the Prospectus under
the heading "Federal Tax Matters":
SPECIAL RULES FOR 403(B) ARRANGEMENTS
If this Policy is purchased by public school systems and certain
tax-exempt organizations for their employees, then the federal, state and estate
tax consequences could differ from those stated in the prospectus. A competent
tax advisor should be consulted in connection with such purchase.
Certain restrictions apply. The Policy must be purchased in connection
with a tax-sheltered annuity described in section 403(b) of the Code. Premiums,
distributions, and other transactions in connection with the Policy must be
administered in coordination with the section 403(b) annuity.
5
<PAGE>
The amount of life insurance that may be purchased on behalf of a
participant in a 403(b) plan is limited. The current cost of insurance for the
net amount at risk is treated under the Code as a "current fringe benefit" and
must be included annually in the plan participant's gross income. This cost
(generally referred to as the "P.S. 58" cost) is reported to the participant
annually.
If the plan participant dies while covered by the 403(b) plan and the
Policy proceeds are paid to the participant's beneficiary, then the excess of
the death benefit over the cash value will not be taxable. However, the cash
value will generally be taxable to the extent it exceeds the participant's cost
basis in the Policy.
Policies owned under these types of plans may be subject to the
Employee Retirement Income Security Act of 1974 ("ERISA"), which may impose
additional requirements of Policy loans and other Policy provisions. Plan loans
must also satisfy tax requirements in order to be treated as non-taxable. Plan
loan requirements and provisions may differ from the Policy loan provisions
stated in the prospectus. You should consult a qualified advisor regarding
ERISA.
The fifth paragraph on page 52 of the Prospectus under the heading "APPENDIX A -
ILLUSTRATION OF BENEFITS" is changed as follows:
The amounts we show for the death benefits, Cash Values and Net
Surrender Values take into account (1) the daily charge for assuming mortality
and expense risks assessed against each Sub-Account. This charge is equivalent
to an annual charge of 0.90% of the average net assets of the Sub-Accounts; (2)
estimated daily expenses equivalent to an effective average annual expense level
of 0.92% of the Portfolios' average daily net assets; and (3) all applicable
premium expense charges and Cash Value charges using the current monthly Policy
charge. The 0.92% average Portfolio expense level assumes an equal allocation of
amounts among the 29 Sub-Accounts. We used annual audited expenses incurred
during 1999 as shown in the tables on pages 1 and 2 of this Supplement to
calculate the average annual expense level.
Because WRL Great Companies - AmericaSM, WRL Great Companies -
TechnologySM and WRL Value Line Aggressive Growth portfolios, Fidelity VIP
Equity-Income Portfolio - Service Class 2, Fidelity VIP II Contrafund(R)
Portfolio - Service Class 2 and Fidelity VIP III Growth Opportunities Portfolio
- - Service Class 2 had not commenced operations as of December 31, 1999, the
estimated average annual Portfolio expense level reflects estimated expenses for
each of these Portfolios for 2000.
During 1999, WRL Management undertook to pay normal operating expenses
of certain Portfolios that exceeded a certain stated percentage of those
Portfolios' average daily net assets. WRL Management has undertaken until April
30, 2001 to pay expenses to the extent normal operating expenses of certain
portfolios of the WRL Fund exceed a stated percentage of the Portfolio's average
daily net assets. For details on these expense limits, the amounts reimbursed by
WRL Management during 1999, and the expense ratios without reimbursements, see
the Portfolio Annual Expense Table at the beginning of this Supplement.
Without these waivers and reimbursements, total annual expenses for the
Portfolios would have been greater, and the illustrations would have assumed
that the assets in the Portfolios were subject to an average annual expense
level of 1.53%. Taking into account the assumed charges of 1.82%, the gross
annual investment return rates of 0%, 6% and 12% are equivalent to net annual
investment return rates of -1.82%, 4.18%, and 10.18%.
WRL00192-5/2000
6
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Western Reserve Life Assurance Co. of Ohio
and Policy Owners of the WRL Series Life Account
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
each of the Subaccounts constituting the WRL Series Life Account (a separate
account of Western Reserve Life Assurance Co. of Ohio ("WRL")) at December 31,
1999, the results of each of their operations, the changes in each of their net
assets and financial highlights for each of the periods indicated, in
conformity with accounting principles generally accepted in the United States.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of WRL's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
[GRAPHIC OMITTED]
PricewaterhouseCoopers LLP
Tampa, Florida
February 16, 2000
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1999
ALL AMOUNTS (EXCEPT PER UNIT AMOUNTS) IN THOUSANDS
<TABLE>
<CAPTION>
WRL WRL WRL WRL
J.P. MORGAN AEGON JANUS JANUS
MONEY MARKET BOND GROWTH GLOBAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares ............................................. 58,182 2,559 17,348 12,035
====== ===== ====== ======
Cost ............................................... $ 58,182 $ 29,390 $ 743,669 $ 257,249
========= ========= ============ ==========
Investment, at net asset value ...................... $ 58,182 $ 27,148 $ 1,353,104 $ 450,848
Transfers receivable from depositor ................. 0 0 853 650
--------- --------- ------------ ----------
Total assets ....................................... 58,182 27,148 1,353,957 451,498
--------- --------- ------------ ----------
LIABILITIES:
Accrued expenses .................................... 0 0 0 0
Transfers payable to depositor ...................... 2,112 19 0 0
--------- --------- ------------ ----------
Total liabilities .................................. 2,112 19 0 0
--------- --------- ------------ ----------
Net assets ......................................... $ 56,070 $ 27,129 $ 1,353,957 $ 451,498
========= ========= ============ ==========
NET ASSETS CONSISTS OF:
Policy Owners' equity ............................... $ 56,070 $ 27,129 $ 1,353,957 $ 451,498
Depositor's equity .................................. 0 0 0 0
--------- --------- ------------ ----------
Net assets applicable to units outstanding ......... $ 56,070 $ 27,129 $ 1,353,957 $ 451,498
========= ========= ============ ==========
Policy Owners' units ................................ 3,206 1,232 9,293 11,605
Depositor's units ................................... 0 0 0 0
--------- --------- ------------ ----------
Units outstanding .................................. 3,206 1,232 9,293 11,605
========= ========= ============ ==========
Accumulation unit value ............................ $ 17.49 $ 22.01 $ 145.70 $ 38.91
========= ========= ============ ==========
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1999
ALL AMOUNTS (EXCEPT PER UNIT AMOUNTS) IN THOUSANDS
<TABLE>
<CAPTION>
WRL WRL WRL
LKCM VKAM ALGER WRL
STRATEGIC EMERGING AGGRESSIVE AEGON
TOTAL RETURN GROWTH GROWTH BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares ............................................. 6,332 13,205 10,626 1,436
===== ====== ====== =====
Cost ............................................... $ 90,108 $ 343,339 $ 206,459 $ 17,378
========== ========== ========== =========
Investment, at net asset value ...................... $ 106,667 $ 607,493 $ 353,584 $ 18,182
Transfers receivable from depositor ................. 0 637 594 1
---------- ---------- ---------- ---------
Total assets ....................................... 106,667 608,130 354,178 18,183
---------- ---------- ---------- ---------
LIABILITIES:
Accrued expenses .................................... 0 0 0 0
Transfers payable to depositor ...................... 2 0 0 0
---------- ---------- ---------- ---------
Total liabilities .................................. 2 0 0 0
---------- ---------- ---------- ---------
Net assets ......................................... $ 106,665 $ 608,130 $ 354,178 $ 18,183
========== ========== ========== =========
NET ASSETS CONSISTS OF:
Policy Owners' equity ............................... $ 106,665 $ 608,130 $ 354,178 $ 18,183
Depositor's equity .................................. 0 0 0 0
---------- ---------- ---------- ---------
Net assets applicable to units outstanding ......... $ 106,665 $ 608,130 $ 354,178 $ 18,183
========== ========== ========== =========
Policy Owners' units ................................ 4,674 9,357 7,928 1,186
Depositor's units ................................... 0 0 0 0
---------- ---------- ---------- ---------
Units outstanding .................................. 4,674 9,357 7,928 1,186
========== ========== ========== =========
Accumulation unit value ............................ $ 22.82 $ 64.99 $ 44.67 $ 15.33
========== ========== ========== =========
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1999
ALL AMOUNTS (EXCEPT PER UNIT AMOUNTS) IN THOUSANDS
<TABLE>
<CAPTION>
WRL
FEDERATED WRL WRL WRL
GROWTH & DEAN ASSET C.A.S.E. NWQ
INCOME ALLOCATION GROWTH VALUE EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares ............................................. 1,594 2,746 1,751 2,087
===== ===== ===== =====
Cost ............................................... $ 19,647 $ 36,698 $ 25,553 $ 28,559
========= ========= ========= =========
Investment, at net asset value ...................... $ 17,383 $ 33,309 $ 27,504 $ 26,650
Transfers receivable from depositor ................. 6 8 5 28
--------- --------- --------- ---------
Total assets ....................................... 17,389 33,317 27,509 26,678
--------- --------- --------- ---------
LIABILITIES:
Accrued expenses .................................... 0 0 0 0
Transfers payable to depositor ...................... 0 0 0 0
--------- --------- --------- ---------
Total liabilities .................................. 0 0 0 0
--------- --------- --------- ---------
Net assets ......................................... $ 17,389 $ 33,317 $ 27,509 $ 26,678
========= ========= ========= =========
NET ASSETS CONSISTS OF:
Policy Owners' equity ............................... $ 17,389 $ 33,317 $ 27,509 $ 26,678
Depositor's equity .................................. 0 0 0 0
--------- --------- --------- ---------
Net assets applicable to units outstanding ......... $ 17,389 $ 33,317 $ 27,509 $ 26,678
========= ========= ========= =========
Policy Owners' units ................................ 1,117 2,128 1,657 1,895
Depositor's units ................................... 0 0 0 0
--------- --------- --------- ---------
Units outstanding .................................. 1,117 2,128 1,657 1,895
========= ========= ========= =========
Accumulation unit value ............................ $ 15.57 $ 15.66 $ 16.60 $ 14.08
========= ========= ========= =========
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1999
ALL AMOUNTS (EXCEPT PER UNIT AMOUNTS) IN THOUSANDS
<TABLE>
<CAPTION>
WRL
GE/SCOTTISH WRL
EQUITABLE WRL WRL J.P. MORGAN
INTERNATIONAL GE THIRD AVENUE REAL ESTATE
EQUITY U.S. EQUITY VALUE SECURITIES
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares ............................................. 489 1,669 329 78
=== ===== === ==
Cost ............................................... $ 6,058 $ 24,322 $ 3,045 $ 674
======== ========= ======== =======
Investment, at net asset value ...................... $ 6,985 $ 26,359 $ 3,435 $ 632
Transfers receivable from depositor ................. 28 57 0 0
-------- --------- -------- -------
Total assets ....................................... 7,013 26,416 3,435 632
-------- --------- -------- -------
LIABILITIES:
Accrued expenses .................................... 0 0 0 0
Transfers payable to depositor ...................... 0 0 24 5
-------- --------- -------- -------
Total liabilities .................................. 0 0 24 5
-------- --------- -------- -------
Net assets ......................................... $ 7,013 $ 26,416 $ 3,411 $ 627
======== ========= ======== =======
NET ASSETS CONSISTS OF:
Policy Owners' equity ............................... $ 7,013 $ 26,416 $ 3,411 $ 304
Depositor's equity .................................. 0 0 0 323
-------- --------- -------- -------
Net assets applicable to units outstanding ......... $ 7,013 $ 26,416 $ 3,411 $ 627
======== ========= ======== =======
Policy Owners' units ................................ 475 1,468 322 38
Depositor's units ................................... 0 0 0 40
-------- --------- -------- -------
Units outstanding .................................. 475 1,468 322 78
======== ========= ======== =======
Accumulation unit value ............................ $ 14.76 $ 17.99 $ 10.59 $ 8.06
======== ========= ======== =======
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1999
ALL AMOUNTS (EXCEPT PER UNIT AMOUNTS) IN THOUSANDS
<TABLE>
<CAPTION>
WRL WRL WRL WRL
GOLDMAN SACHS GOLDMAN SACHS T. ROWE PRICE T. ROWE PRICE
GROWTH SMALL CAP DIVIDEND GROWTH SMALL CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares ............................................. 83 31 53 69
== == == ==
Cost ............................................... $ 858 $ 325 $ 505 $ 784
======== ======== ======= ========
Investment, at net asset value ...................... $ 972 $ 346 $ 491 $ 924
Transfers receivable from depositor ................. 5 0 10 1
-------- -------- ------- --------
Total assets ....................................... 977 346 501 925
-------- -------- ------- --------
LIABILITIES:
Accrued expenses .................................... 0 0 0 0
Transfers payable to depositor ...................... 0 2 0 0
-------- -------- ------- --------
Total liabilities .................................. 0 2 0 0
-------- -------- ------- --------
Net assets ......................................... $ 977 $ 344 $ 501 $ 925
======== ======== ======= ========
NET ASSETS CONSISTS OF:
Policy Owners' equity ............................... $ 949 $ 317 $ 478 $ 894
Depositor's equity .................................. 28 27 23 31
-------- -------- ------- --------
Net assets applicable to units outstanding ......... $ 977 $ 344 $ 501 $ 925
======== ======== ======= ========
Policy Owners' units ................................ 84 28 52 72
Depositor's units ................................... 3 3 3 3
-------- -------- ------- --------
Units outstanding .................................. 87 31 55 75
======== ======== ======= ========
Accumulation unit value ............................ $ 11.29 $ 10.92 $ 9.16 $ 12.31
======== ======== ======= ========
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1999
ALL AMOUNTS (EXCEPT PER UNIT AMOUNTS) IN THOUSANDS
<TABLE>
<CAPTION>
WRL WRL WRL
SALOMON PILGRIM BAXTER DREYFUS
ALL CAP MID CAP GROWTH MID CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares ......................................... 34 285 30
== === ==
Cost ........................................... $ 365 $ 3,873 $ 298
======== ======== ========
Investment, at net asset value .................. $ 383 $ 5,051 $ 322
Transfers receivable from depositor ............. 0 14 15
-------- -------- --------
Total assets ................................... 383 5,065 337
-------- -------- --------
LIABILITIES:
Accrued expenses ................................ 0 0 0
Transfers payable to depositor .................. 0 0 0
-------- -------- --------
Total liabilities .............................. 0 0 0
-------- -------- --------
Net assets ..................................... $ 383 $ 5,065 $ 337
======== ======== ========
NET ASSETS CONSISTS OF:
Policy Owners' equity ........................... $ 356 $ 5,065 $ 312
Depositor's equity .............................. 27 0 25
-------- -------- --------
Net assets applicable to units outstanding ..... $ 383 $ 5,065 $ 337
======== ======== ========
Policy Owners' units ............................ 33 317 30
Depositor's units ............................... 3 0 3
-------- -------- --------
Units outstanding .............................. 36 317 33
======== ======== ========
Accumulation unit value ........................ $ 10.70 $ 15.98 $ 10.14
======== ======== ========
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
WRL WRL WRL WRL
J.P. MORGAN AEGON JANUS JANUS
MONEY MARKET BOND GROWTH GLOBAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ........................................... $ 1,813 $ 1,562 $ 19,913 $ 0
Capital gain distributions ................................ 0 0 215,100 29,152
------- -------- --------- ---------
Total investment income .................................. 1,813 1,562 235,013 29,152
EXPENSES:
Mortality and expense risk ................................ 339 233 8,918 2,614
------- -------- --------- ---------
Net investment income (loss) ............................. 1,474 1,329 226,095 26,538
------- -------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investment securities ......... 0 317 26,760 3,824
Change in unrealized appreciation (depreciation) .......... 0 (2,644) 235,401 149,719
------- -------- --------- ---------
Net gain (loss) on investment securities ................. 0 (2,327) 262,161 153,543
------- -------- --------- ---------
Net increase (decrease) in net assets resulting
from operations ....................................... $ 1,474 $ (998) $ 488,256 $ 180,081
======= ======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
WRL WRL WRL
LKCM VKAM ALGER WRL
STRATEGIC EMERGING AGGRESSIVE AEGON
TOTAL RETURN GROWTH GROWTH BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ........................................... $ 2,159 $ 2,813 $ 15,251 $ 363
Capital gain distributions ................................ 6,826 82,040 22,784 0
-------- --------- --------- ------
Total investment income .................................. 8,985 84,853 38,035 363
EXPENSES:
Mortality and expense risk ................................ 913 3,146 2,069 150
-------- --------- --------- ------
Net investment income (loss) ............................. 8,072 81,707 35,966 213
-------- --------- --------- ------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investment securities ......... 3,286 39,266 5,348 292
Change in unrealized appreciation (depreciation) .......... (461) 178,458 96,140 (187)
-------- --------- --------- ------
Net gain (loss) on investment securities ................. 2,825 217,724 101,488 105
-------- --------- --------- ------
Net increase (decrease) in net assets resulting
from operations ....................................... $ 10,897 $ 299,431 $ 137,454 $ 318
======== ========= ========= ======
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
WRL
FEDERATED WRL WRL WRL
GROWTH & DEAN ASSET C.A.S.E. NWQ
INCOME ALLOCATION GROWTH VALUE EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ........................................... $ 1,109 $ 1,118 $ 2,613 $ 219
Capital gain distributions ................................ 132 178 0 400
-------- --------- ------- -------
Total investment income .................................. 1,241 1,296 2,613 619
EXPENSES:
Mortality and expense risk ................................ 150 342 211 240
-------- --------- ------- -------
Net investment income (loss) ............................. 1,091 954 2,402 379
-------- --------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investment securities ......... 9 948 427 307
Change in unrealized appreciation (depreciation) .......... (2,087) (4,362) 3,473 850
-------- --------- ------- -------
Net gain (loss) on investment securities ................. (2,078) (3,414) 3,900 1,157
-------- --------- ------- -------
Net increase (decrease) in net assets resulting
from operations ....................................... $ (987) $ (2,460) $ 6,302 $ 1,536
======== ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
WRL
GE/SCOTTISH WRL WRL
EQUITABLE WRL THIRD J.P. MORGAN
INTERNATIONAL GE AVENUE REAL ESTATE
EQUITY U.S. EQUITY VALUE SECURITIES
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ........................................... $ 24 $ 786 $ 89 $ 11
Capital gain distributions ................................ 358 1,131 0 0
------- ------- ------ ------
Total investment income .................................. 382 1,917 89 11
EXPENSES:
Mortality and expense risk ................................ 57 187 28 5
------- ------- ------ ------
Net investment income (loss) ............................. 325 1,730 61 6
------- ------- ------ ------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investment securities ......... 296 575 (126) (75)
Change in unrealized appreciation (depreciation) .......... 808 969 491 34
------- ------- ------ ------
Net gain (loss) on investment securities ................. 1,104 1,544 365 (41)
------- ------- ------ ------
Net increase (decrease) in net assets resulting
from operations ....................................... $ 1,429 $ 3,274 $ 426 $ (35)
======= ======= ====== ======
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
WRL WRL WRL WRL
GOLDMAN SACHS GOLDMAN SACHS T. ROWE PRICE T. ROWE PRICE
GROWTH SMALL CAP DIVIDEND GROWTH SMALL CAP
SUBACCOUNT(1) SUBACCOUNT(1) SUBACCOUNT(1) SUBACCOUNT(1)
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ........................................... $ 0 $ 15 $ 0 $ 29
Capital gain distributions ................................ 0 0 0 0
----- ----- ----- -----
Total investment income .................................. 0 15 0 29
EXPENSES:
Mortality and expense risk ................................ 2 1 1 3
----- ----- ----- -----
Net investment income (loss) ............................. (2) 14 (1) 26
------- ----- -------- -----
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investment securities ......... (4) (2) (3) 22
Change in unrealized appreciation (depreciation) .......... 114 22 (14) 140
------ ------ ------- -----
Net gain (loss) on investment securities ................. 110 20 (17) 162
------ ------ ------- -----
Net increase (decrease) in net assets resulting
from operations ....................................... $ 108 $ 34 $ (18) $ 188
====== ====== ======= =====
</TABLE>
<TABLE>
<CAPTION>
WRL WRL WRL
SALOMON PILGRIM BAXTER DREYFUS
ALL CAP MID CAP GROWTH MID CAP
SUBACCOUNT(1) SUBACCOUNT(1) SUBACCOUNT(1)
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ..................................... $ 12 $ 13 $ 0
Capital gain distributions .......................... 0 0 0
------ ------ -----
Total investment income ............................ 12 13 0
EXPENSES:
Mortality and expense risk .......................... 1 8 1
------ ------ -----
Net investment income (loss) ....................... 11 5 (1)
------ ------ -------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investment securities ... (3) 91 (8)
Change in unrealized appreciation (depreciation) .... 18 1,177 24
------- ------ ------
Net gain (loss) on investment securities ........... 15 1,268 16
------- ------ ------
Net increase (decrease) in net assets resulting
from operations ................................. $ 26 $1,273 $ 15
======= ====== ======
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
WRL WRL
J.P. MORGAN AEGON
MONEY MARKET BOND
SUBACCOUNT SUBACCOUNT
------------------------- ------------------------
DECEMBER 31, DECEMBER 31,
------------------------- ------------------------
1999 1998 1999 1998
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ..................... $ 1,474 $ 919 $ 1,329 $ 1,002
Net gain (loss) on investment securities ......... 0 0 (2,327) 713
---------- ---------- -------- --------
Net increase (decrease) in net assets
resulting from operations ....................... 1,474 919 (998) 1,715
---------- ---------- -------- --------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) ........... 38,977 12,763 7,560 9,472
---------- ---------- -------- --------
Less cost of units redeemed:
Administrative charges .......................... 3,050 3,123 2,538 2,292
Policy loans .................................... 1,775 1,163 954 594
Surrender benefits .............................. 4,017 1,250 846 865
Death benefits .................................. 115 10 29 159
---------- ---------- -------- --------
8,957 5,546 4,367 3,910
---------- ---------- -------- --------
Increase (decrease) in net assets from
capital unit transactions ...................... 30,020 7,217 3,193 5,562
---------- ---------- -------- --------
Net increase (decrease) in net assets ........... 31,494 8,136 2,195 7,277
Depositor's equity contribution
(net redemption) ................................ 0 0 0 0
NET ASSETS:
Beginning of year ................................ 24,576 16,440 24,934 17,657
---------- ---------- -------- --------
End of year ...................................... $ 56,070 $ 24,576 $ 27,129 $ 24,934
========== ========== ======== ========
UNIT ACTIVITY:
Units outstanding - beginning of year ............ 1,460 1,020 1,090 836
Units issued ..................................... 18,474 11,339 883 1,030
Units redeemed ................................... (16,728) (10,899) (741) (776)
---------- ---------- -------- --------
Units outstanding - end of year .................. 3,206 1,460 1,232 1,090
========== ========== ======== ========
<CAPTION>
WRL
JANUS
GROWTH
SUBACCOUNT
---------------------------
DECEMBER 31,
---------------------------
1999 1998
-------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ..................... $ 226,095 $ 1,103
Net gain (loss) on investment securities ......... 262,161 295,459
----------- ---------
Net increase (decrease) in net assets
resulting from operations ....................... 488,256 296,562
----------- ---------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) ........... 192,993 140,684
----------- ---------
Less cost of units redeemed:
Administrative charges .......................... 57,685 44,910
Policy loans .................................... 33,172 18,083
Surrender benefits .............................. 32,554 22,312
Death benefits .................................. 1,908 4,185
----------- ---------
125,319 89,490
----------- ---------
Increase (decrease) in net assets from
capital unit transactions ...................... 67,674 51,194
----------- ---------
Net increase (decrease) in net assets ........... 555,930 347,756
Depositor's equity contribution
(net redemption) ................................ 0 0
NET ASSETS:
Beginning of year ................................ 798,027 450,271
----------- ---------
End of year ...................................... $ 1,353,957 $ 798,027
=========== =========
UNIT ACTIVITY:
Units outstanding - beginning of year ............ 8,668 7,972
Units issued ..................................... 2,854 2,967
Units redeemed ................................... (2,229) (2,271)
----------- ---------
Units outstanding - end of year .................. 9,293 8,668
=========== =========
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
WRL
WRL LKCM WRL
JANUS STRATEGIC VKAM
GLOBAL TOTAL RETURN EMERGING GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------- ------------------------- -------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------------- ------------------------- -------------------------
1999 1998 1999 1998 1999 1998
------------ ------------ ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ..................... $ 26,538 $ 7,425 $ 8,072 $ 3,284 $ 81,707 $ 6,894
Net gain (loss) on investment securities ......... 153,543 38,427 2,825 4,347 217,724 59,514
--------- --------- --------- -------- --------- ---------
Net increase (decrease) in net assets
resulting from operations ....................... 180,081 45,852 10,897 7,631 299,431 66,408
--------- --------- --------- -------- --------- ---------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) ........... 81,308 72,962 11,792 24,191 94,168 64,824
--------- --------- --------- -------- --------- ---------
Less cost of units redeemed:
Administrative charges .......................... 25,132 19,369 8,436 7,696 25,202 19,612
Policy loans .................................... 9,284 4,953 3,000 2,319 11,395 5,601
Surrender benefits .............................. 8,537 5,662 3,136 2,587 11,025 7,688
Death benefits .................................. 194 591 378 1,047 512 368
--------- --------- --------- -------- --------- ---------
43,147 30,575 14,950 13,649 48,134 33,269
--------- --------- --------- -------- --------- ---------
Increase (decrease) in net assets from
capital unit transactions ...................... 38,161 42,387 (3,158) 10,542 46,034 31,555
--------- --------- --------- -------- --------- ---------
Net increase (decrease) in net assets ........... 218,242 88,239 7,739 18,173 345,465 97,963
Depositor's equity contribution
(net redemption) ................................ 0 0 0 0 0 0
NET ASSETS:
Beginning of year ................................ 233,256 145,017 98,926 80,753 262,665 164,702
--------- --------- --------- -------- --------- ---------
End of year ...................................... $ 451,498 $ 233,256 $ 106,665 $ 98,926 $ 608,130 $ 262,665
========= ========= ========= ======== ========= =========
UNIT ACTIVITY:
Units outstanding - beginning of year ............ 10,167 8,145 4,814 4,270 8,218 7,013
Units issued ..................................... 4,823 5,610 1,538 1,946 4,977 4,099
Units redeemed ................................... (3,385) (3,588) (1,678) (1,402) (3,838) (2,894)
--------- --------- --------- -------- --------- ---------
Units outstanding - end of year .................. 11,605 10,167 4,674 4,814 9,357 8,218
========= ========= ========= ======== ========= =========
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
WRL WRL WRL
ALGER AEGON FEDERATED
AGGRESSIVE GROWTH BALANCED GROWTH & INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------- ----------------------- -------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------------- ----------------------- -------------------------
1999 1998 1999 1998 1999 1998
------------ ------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ..................... $ 35,966 $ 7,851 $ 213 $ 227 $ 1,091 $ 644
Net gain (loss) on investment securities ......... 101,488 44,348 105 576 (2,078) (269)
--------- --------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations ....................... 137,454 52,199 318 803 (987) 375
--------- --------- -------- -------- -------- --------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) ........... 74,699 53,159 5,997 5,658 5,627 8,963
--------- --------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges .......................... 19,544 13,960 1,931 1,423 2,355 1,633
Policy loans .................................... 8,193 3,522 429 279 346 218
Surrender benefits .............................. 7,977 4,423 626 596 542 431
Death benefits .................................. 118 248 10 15 55 72
--------- --------- -------- -------- -------- --------
35,832 22,153 2,996 2,313 3,298 2,354
--------- --------- -------- -------- -------- --------
Increase (decrease) in net assets from
capital unit transactions ...................... 38,867 31,006 3,001 3,345 2,329 6,609
--------- --------- -------- -------- -------- --------
Net increase (decrease) in net assets ........... 176,321 83,205 3,319 4,148 1,342 6,984
Depositor's equity contribution
(net redemption) ................................ 0 0 0 0 0 0
NET ASSETS:
Beginning of year ................................ 177,857 94,652 14,864 10,716 16,047 9,063
--------- --------- -------- -------- -------- --------
End of year ...................................... $ 354,178 $ 177,857 $ 18,183 $ 14,864 $ 17,389 $ 16,047
========= ========= ======== ======== ======== ========
UNIT ACTIVITY:
Units outstanding - beginning of year ............ 6,669 5,230 990 756 976 563
Units issued ..................................... 3,640 3,797 637 578 714 966
Units redeemed ................................... (2,381) (2,358) (441) (344) (573) (553)
--------- --------- -------- -------- -------- --------
Units outstanding - end of year .................. 7,928 6,669 1,186 990 1,117 976
========= ========= ======== ======== ======== ========
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
WRL WRL WRL
DEAN C.A.S.E. NWQ
ASSET ALLOCATION GROWTH VALUE EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------- ------------------------ ------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------------- ------------------------ ------------------------
1999 1998 1999 1998 1999 1998
------------ ------------ ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ..................... $ 954 $ 3,419 $ 2,402 $ 1,475 $ 379 $ 2,021
Net gain (loss) on investment securities ......... (3,414) (1,087) 3,900 (1,114) 1,157 (4,683)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations ....................... (2,460) 2,332 6,302 361 1,536 (2,662)
-------- -------- -------- -------- -------- --------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) ........... 1,729 13,703 7,781 8,731 3,283 6,086
-------- -------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges .......................... 3,875 3,421 2,946 2,433 2,874 2,846
Policy loans .................................... 991 748 668 520 713 643
Surrender benefits .............................. 901 925 678 295 605 401
Death benefits .................................. 89 160 12 60 32 165
-------- -------- -------- -------- -------- --------
5,856 5,254 4,304 3,308 4,224 4,055
-------- -------- -------- -------- -------- --------
Increase (decrease) in net assets from
capital unit transactions ...................... (4,127) 8,449 3,477 5,423 (941) 2,031
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets ........... (6,587) 10,781 9,779 5,784 595 (631)
Depositor's equity contribution
(net redemption) ................................ 0 0 0 0 0 0
NET ASSETS:
Beginning of year ................................ 39,904 29,123 17,730 11,946 26,083 26,714
-------- -------- -------- -------- -------- --------
End of year ...................................... $ 33,317 $ 39,904 $ 27,509 $ 17,730 $ 26,678 $ 26,083
======== ======== ======== ======== ======== ========
UNIT ACTIVITY:
Units outstanding - beginning of year ............ 2,383 1,867 1,417 969 1,982 1,916
Units issued ..................................... 937 1,377 1,347 1,317 1,296 1,748
Units redeemed ................................... (1,192) (861) (1,107) (869) (1,383) (1,682)
-------- -------- -------- -------- -------- --------
Units outstanding - end of year .................. 2,128 2,383 1,657 1,417 1,895 1,982
======== ======== ======== ======== ======== ========
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
WRL WRL WRL
GE/SCOTTISH EQUITABLE GE THIRD AVENUE
INTERNATIONAL EQUITY U.S. EQUITY VALUE
SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------------------- ----------------------- -----------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
----------------------- ----------------------- -----------------------
1999 1998 1999 1998 1999 1998(1)
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ..................... $ 325 $ (32) $ 1,730 $ 434 $ 61 $ (11)
Net gain (loss) on investment securities ......... 1,104 369 1,544 1,411 365 (142)
------- ------- -------- -------- ------- -------
Net increase (decrease) in net assets
resulting from operations ....................... 1,429 337 3,274 1,845 426 (153)
------- ------- -------- -------- ------- -------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) ........... 761 3,972 12,169 10,178 730 2,932
------- ------- -------- -------- ------- -------
Less cost of units redeemed:
Administrative charges .......................... 644 433 2,237 862 218 138
Policy loans .................................... 101 196 422 159 52 8
Surrender benefits .............................. 258 35 444 113 80 26
Death benefits .................................. 1 107 8 63 3 0
------- ------- -------- -------- ------- -------
1,004 771 3,111 1,197 353 172
------- ------- -------- -------- ------- -------
Increase (decrease) in net assets from
capital unit transactions ...................... (243) 3,201 9,058 8,981 377 2,760
------- ------- -------- -------- ------- -------
Net increase (decrease) in net assets ........... 1,186 3,538 12,332 10,826 803 2,607
Depositor's equity contribution
(net redemption) ................................ 0 0 0 0 (199) 200
NET ASSETS:
Beginning of year ................................ 5,827 2,289 14,084 3,258 2,807 0
------- ------- -------- -------- ------- -------
End of year ...................................... $ 7,013 $ 5,827 $ 26,416 $ 14,084 $ 3,411 $ 2,807
======= ======= ======== ======== ======= =======
UNIT ACTIVITY:
Units outstanding - beginning of year ............ 489 215 919 259 304 0
Units issued ..................................... 672 767 1,292 1,266 258 495
Units redeemed ................................... (686) (493) (743) (606) (240) (191)
------- ------- -------- -------- ------- -------
Units outstanding - end of year .................. 475 489 1,468 919 322 304
======= ======= ======== ======== ======= =======
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
WRL WRL WRL WRL
J.P. MORGAN GOLDMAN SACHS GOLDMAN SACHS T. ROWE PRICE
REAL ESTATE SECURITIES GROWTH SMALL CAP DIVIDEND GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------------------- --------------- --------------- ----------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
---------------------- --------------- --------------- ----------------
1999 1998(1) 1999(1) 1999(1) 1999(1)
-------- ------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ..................... $ 6 $ (4) $ (2) $ 14 $ (1)
Net gain (loss) on investment securities ......... (41) (112) 110 20 (17)
----- ------ ------ ------ ----
Net increase (decrease) in net assets
resulting from operations ....................... (35) (116) 108 34 (18)
----- ------ ------ ------ ----
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) ........... (26) 472 871 295 499
----- ------ ------ ------ ----
Less cost of units redeemed:
Administrative charges .......................... 19 4 18 5 2
Policy loans .................................... 0 43 2 5 0
Surrender benefits .............................. 1 0 7 0 3
Death benefits .................................. 1 0 0 0 0
----- ------ ------ ------ ----
21 47 27 10 5
----- ------ ------ ------ ----
Increase (decrease) in net assets from
capital unit transactions ...................... (47) 425 844 285 494
----- ------ ------ ------ ----
Net increase (decrease) in net assets ........... (82) 309 952 319 476
Depositor's equity contribution
(net redemption) ................................ 0 400 25 25 25
NET ASSETS:
Beginning of year ................................ 709 0 0 0 0
----- ------ ------ ------ ----
End of year ...................................... $ 627 $ 709 $ 977 $ 344 $ 501
===== ====== ====== ====== =====
UNIT ACTIVITY:
Units outstanding - beginning of year ............ 84 0 0 0 0
Units issued ..................................... 67 113 106 41 65
Units redeemed ................................... (73) (29) (19) (10) (10)
----- ------ ------ ------ -----
Units outstanding - end of year .................. 78 84 87 31 55
===== ====== ====== ====== =====
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
WRL WRL WRL WRL
T. ROWE PRICE SALOMON PILGRIM BAXTER DREYFUS
SMALL CAP ALL CAP MID CAP GROWTH MID CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
--------------- -------------- ---------------- -------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
--------------- -------------- ---------------- -------------
1999(1) 1999(1) 1999(1) 1999(1)
--------------- -------------- ---------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ..................... $ 26 $ 11 $ 5 $ (1)
Net gain (loss) on investment securities ......... 162 15 1,268 16
------ ------ ------ ----
Net increase (decrease) in net assets
resulting from operations ....................... 188 26 1,273 15
------ ------ ------ ----
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) ........... 727 344 3,885 297
------ ------ ------ ----
Less cost of units redeemed:
Administrative charges .......................... 15 9 37 0
Policy loans .................................... 0 3 18 0
Surrender benefits .............................. 0 0 30 0
Death benefits .................................. 0 0 0 0
------ ------ ------ ----
15 12 85 0
------ ------ ------ ----
Increase (decrease) in net assets from
capital unit transactions ...................... 712 332 3,800 297
------ ------ ------ ----
Net increase (decrease) in net assets ........... 900 358 5,073 312
Depositor's equity contribution
(net redemption) ................................ 25 25 (8) 25
NET ASSETS:
Beginning of year ................................ 0 0 0 0
------ ------ -------- ----
End of year ...................................... $ 925 $ 383 $ 5,065 $ 337
====== ====== ======== =====
UNIT ACTIVITY:
Units outstanding - beginning of year ............ 0 0 0 0
Units issued ..................................... 161 58 412 52
Units redeemed ................................... (86) (22) (95) (19)
------ ------ -------- -----
Units outstanding - end of year .................. 75 36 317 33
====== ====== ======== =====
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
WRL J.P. MORGAN MONEY MARKET SUBACCOUNT
---------------------------------------------------------------------
DECEMBER 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 16.83 $ 16.13 $ 15.45 $ 14.83 $ 14.19
Income from operations:
Net investment income (loss) ..................... 0.66 0.70 0.68 0.62 0.64
Net realized and unrealized gain (loss) on
investment ...................................... 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- -------- --------
Net income (loss) from operations ............... 0.66 0.70 0.68 0.62 0.64
-------- -------- -------- -------- --------
Accumulation unit value, end of year ............... $ 17.49 $ 16.83 $ 16.13 $ 15.45 $ 14.83
======== ======== ======== ======== ========
Total return ....................................... 3.92 % 4.36 % 4.37 % 4.17 % 4.49 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 56,070 $ 24,576 $ 16,440 $ 12,740 $ 10,759
Ratio of net investment income (loss) to average
net assets ....................................... 3.87 % 4.24 % 4.28 % 4.07 % 4.37 %
</TABLE>
<TABLE>
<CAPTION>
WRL AEGON BOND SUBACCOUNT
-------------------------------------------------------------------------
DECEMBER 31,
-------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 22.89 $ 21.12 $ 19.53 $ 19.67 $ 16.14
Income from operations:
Net investment income (loss) ..................... 1.13 1.01 1.01 0.99 1.05
Net realized and unrealized gain (loss) on
investment ...................................... ( 2.01) 0.76 0.58 ( 1.13) 2.48
--------- -------- -------- -------- --------
Net income (loss) from operations ............... ( 0.88) 1.77 1.59 ( 0.14) 3.53
--------- -------- -------- -------- --------
Accumulation unit value, end of year ............... $ 22.01 $ 22.89 $ 21.12 $ 19.53 $ 19.67
========= ======== ======== ======== ========
Total return ....................................... ( 3.81)% 8.34 % 8.18 % ( 0.75)% 21.81 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 27,129 $ 24,934 $ 17,657 $ 11,585 $ 10,066
Ratio of net investment income (loss) to average
net assets ....................................... 5.10 % 4.58 % 5.06 % 5.34 % 5.80 %
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
WRL JANUS GROWTH SUBACCOUNT
----------------------------------------------------------------------------
DECEMBER 31,
----------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 92.07 $ 56.48 $ 48.48 $ 41.47 $ 28.44
Income from operations:
Net investment income (loss) ..................... 25.03 0.13 5.83 2.88 3.89
Net realized and unrealized gain (loss) on
investment ...................................... 28.60 35.46 2.17 4.13 9.14
---------- -------- -------- -------- --------
Net income (loss) from operations ............... 53.63 35.59 8.00 7.01 13.03
---------- -------- -------- -------- --------
Accumulation unit value, end of year ............... $ 145.70 $ 92.07 $ 56.48 $ 48.48 $ 41.47
========== ======== ======== ======== ========
Total return ....................................... 58.25 % 63.01 % 16.50 % 16.91 % 45.81 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 1,353,957 $ 798,027 $ 450,271 $ 349,491 $ 262,467
Ratio of net investment income (loss) to average
net assets ....................................... 22.67 % 0.19 % 10.84 % 6.41 % 11.05 %
</TABLE>
<TABLE>
<CAPTION>
WRL JANUS GLOBAL SUBACCOUNT
---------------------------------------------------------------------------
DECEMBER 31,
---------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 22.94 $ 17.80 $ 15.13 $ 11.95 $ 9.80
Income from operations:
Net investment income (loss) ..................... 2.44 0.82 2.30 1.50 0.45
Net realized and unrealized gain (loss) on
investment ...................................... 13.53 4.32 0.37 1.68 1.70
---------- -------- -------- -------- --------
Net income (loss) from operations ............... 15.97 5.14 2.67 3.18 2.15
---------- -------- -------- -------- --------
Accumulation unit value, end of year ............... $ 38.91 $ 22.94 $ 17.80 $ 15.13 $ 11.95
========== ======== ======== ======== ========
Total return ....................................... 69.58 % 28.86 % 17.69 % 26.60 % 21.96 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 451,498 $ 233,256 $ 145,017 $ 83,159 $ 37,049
Ratio of net investment income (loss) to average
net assets ....................................... 9.07 % 3.92 % 13.39 % 11.09 % 4.25 %
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
WRL LKCM STRATEGIC TOTAL RETURN SUBACCOUNT
------------------------------------------------------------------------
DECEMBER 31,
------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 20.55 $ 18.91 $ 15.66 $ 13.74 $ 11.12
Income from operations:
Net investment income (loss) ..................... 1.68 0.71 1.56 0.82 0.68
Net realized and unrealized gain (loss) on
investment ...................................... 0.59 0.93 1.69 1.10 1.94
-------- -------- -------- -------- --------
Net income (loss) from operations ............... 2.27 1.64 3.25 1.92 2.62
-------- -------- -------- -------- --------
Accumulation unit value, end of year ............... $ 22.82 $ 20.55 $ 18.91 $ 15.66 $ 13.74
======== ======== ======== ======== ========
Total return ....................................... 11.07 % 8.66 % 20.77 % 13.97 % 23.55 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 106,665 $ 98,926 $ 80,753 $ 55,900 $ 39,648
Ratio of net investment income (loss) to average
net assets ....................................... 7.93 % 3.67 % 8.89 % 5.76 % 5.47 %
</TABLE>
<TABLE>
<CAPTION>
WRL VKAM EMERGING GROWTH SUBACCOUNT
------------------------------------------------------------------------
DECEMBER 31,
------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 31.96 $ 23.48 $ 19.51 $ 16.56 $ 11.38
Income from operations:
Net investment income (loss) ..................... 9.32 0.91 2.20 0.82 0.65
Net realized and unrealized gain (loss) on
investment ...................................... 23.71 7.57 1.77 2.13 4.53
-------- -------- -------- -------- --------
Net income (loss) from operations ............... 33.03 8.48 3.97 2.95 5.18
-------- -------- -------- -------- --------
Accumulation unit value, end of year ............... $ 64.99 $ 31.96 $ 23.48 $ 19.51 $ 16.56
======== ======== ======== ======== ========
Total return ....................................... 103.33 % 36.11 % 20.37 % 17.82 % 45.49 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 608,130 $ 262,665 $ 164,702 $ 107,925 $ 67,905
Ratio of net investment income (loss) to average
net assets ....................................... 23.19 % 3.44 % 10.18 % 4.51 % 4.66 %
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
WRL ALGER AGGRESSIVE GROWTH SUBACCOUNT
-----------------------------------------------------------------------
DECEMBER 31,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 26.67 $ 18.10 $ 14.70 $ 13.43 $ 9.82
Income from operations:
Net investment income (loss) ..................... 4.90 1.33 1.75 0.36 0.37
Net realized and unrealized gain (loss) on
investment ...................................... 13.10 7.24 1.65 0.91 3.24
-------- -------- -------- -------- --------
Net income (loss) from operations ............... 18.00 8.57 3.40 1.27 3.61
-------- -------- -------- -------- --------
Accumulation unit value, end of year ............... $ 44.67 $ 26.67 $ 18.10 $ 14.70 $ 13.43
======== ======== ======== ======== ========
Total return ....................................... 67.52 % 47.36 % 23.14 % 9.46 % 36.79 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 354,178 $ 177,857 $ 94,652 $ 54,408 $ 32,904
Ratio of net investment income (loss) to average
net assets ....................................... 15.54 % 6.20 % 10.26 % 2.65 % 2.93 %
</TABLE>
<TABLE>
<CAPTION>
WRL AEGON BALANCED SUBACCOUNT
-----------------------------------------------------------------------
DECEMBER 31,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 15.02 $ 14.17 $ 12.21 $ 11.13 $ 9.37
Income from operations:
Net investment income (loss) ..................... 0.19 0.25 1.55 0.36 0.37
Net realized and unrealized gain (loss) on
investment ...................................... 0.12 0.60 0.41 0.72 1.39
-------- -------- -------- -------- --------
Net income (loss) from operations ............... 0.31 0.85 1.96 1.08 1.76
-------- -------- -------- -------- --------
Accumulation unit value, end of year ............... $ 15.33 $ 15.02 $ 14.17 $ 12.21 $ 11.13
======== ======== ======== ======== ========
Total return ....................................... 2.11 % 5.98 % 16.06 % 9.73 % 18.73 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 18,183 $ 14,864 $ 10,716 $ 6,418 $ 3,795
Ratio of net investment income (loss) to average
net assets ....................................... 1.26 % 1.76 % 11.62 % 3.18 % 3.59 %
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
WRL FEDERATED GROWTH & INCOME SUBACCOUNT
---------------------------------------------------------------------
DECEMBER 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 16.44 $ 16.09 $ 13.03 $ 11.77 $ 9.49
Income from operations:
Net investment income (loss) ..................... 1.05 0.77 2.61 0.76 0.49
Net realized and unrealized gain (loss) on
investment ...................................... ( 1.92) ( 0.42) 0.45 0.50 1.79
-------- -------- -------- -------- --------
Net income (loss) from operations ............... ( 0.87) 0.35 3.06 1.26 2.28
-------- -------- -------- -------- --------
Accumulation unit value, end of year ............... $ 15.57 $ 16.44 $ 16.09 $ 13.03 $ 11.77
======== ======== ======== ======== ========
Total return ....................................... ( 5.31)% 2.13 % 23.54 % 10.64 % 24.14 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 17,389 $ 16,047 $ 9,063 $ 5,501 $ 2,631
Ratio of net investment income (loss) to average
net assets ....................................... 6.51 % 4.83 % 18.50 % 6.38 % 4.57 %
</TABLE>
<TABLE>
<CAPTION>
WRL DEAN ASSET ALLOCATION SUBACCOUNT
--------------------------------------------------------------------
DECEMBER 31,
--------------------------------------------------------------------
1999 1998 1997 1996 1995(1)
------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 16.74 $ 15.60 $ 13.50 $ 11.90 $ 10.00
Income from operations:
Net investment income (loss) ..................... 0.41 1.58 1.20 0.53 0.61
Net realized and unrealized gain (loss) on
investment ...................................... ( 1.49) ( 0.44) 0.90 1.07 1.29
-------- -------- -------- -------- --------
Net income (loss) from operations ............... ( 1.08) 1.14 2.10 1.60 1.90
-------- -------- -------- -------- --------
Accumulation unit value, end of year ............... $ 15.66 $ 16.74 $ 15.60 $ 13.50 $ 11.90
======== ======== ======== ======== ========
Total return ....................................... ( 6.48)% 7.36 % 15.55 % 13.40 % 19.03 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 33,317 $ 39,904 $ 29,123 $ 17,946 $ 9,446
Ratio of net investment income (loss) to average
net assets ....................................... 2.50 % 9.69 % 8.14 % 4.35 % 5.47 %
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
WRL C.A.S.E. GROWTH SUBACCOUNT
------------------------------------------------------------
DECEMBER 31,
------------------------------------------------------------
1999 1998 1997 1996(1)
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 12.51 $ 12.32 $ 10.81 $ 10.00
Income from operations:
Net investment income (loss) ..................... 1.52 1.24 1.51 0.37
Net realized and unrealized gain (loss) on
investment ...................................... 2.57 ( 1.05) 0.00 0.44
-------- -------- -------- --------
Net income (loss) from operations ............... 4.09 0.19 1.51 0.81
-------- -------- -------- --------
Accumulation unit value, end of year ............... $ 16.60 $ 12.51 $ 12.32 $ 10.81
======== ======== ======== ========
Total return ....................................... 32.65 % 1.56 % 14.00 % 8.09 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 27,509 $ 17,730 $ 11,946 $ 4,466
Ratio of net investment income (loss) to average
net assets ....................................... 10.16 % 10.21 % 12.65 % 6.11 %
</TABLE>
<TABLE>
<CAPTION>
WRL NWQ VALUE EQUITY SUBACCOUNT
------------------------------------------------------------
DECEMBER 31,
------------------------------------------------------------
1999 1998 1997 1996(1)
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 13.16 $ 13.94 $ 11.25 $ 10.00
Income from operations:
Net investment income (loss) ..................... 0.20 0.95 0.14 0.05
Net realized and unrealized gain (loss) on
investment ...................................... 0.72 ( 1.73) 2.55 1.20
-------- -------- -------- --------
Net income (loss) from operations ............... 0.92 ( 0.78) 2.69 1.25
-------- -------- -------- --------
Accumulation unit value, end of year ............... $ 14.08 $ 13.16 $ 13.94 $ 11.25
======== ======== ======== ========
Total return ....................................... 6.98 % ( 5.63)% 23.93 % 12.51 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 26,678 $ 26,083 $ 26,714 $ 8,887
Ratio of net investment income (loss) to average
net assets ....................................... 1.42 % 6.84 % 1.05 % 0.77 %
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
WRL GE/SCOTTISH EQUITABLE
INTERNATIONAL EQUITY SUBACCOUNT WRL GE U.S. EQUITY SUBACCOUNT
-------------------------------------- ----------------------------------------
DECEMBER 31, DECEMBER 31,
-------------------------------------- ----------------------------------------
1999 1998 1997(1) 1999 1998 1997(1)
------------ ------------ ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year ...... $ 11.92 $ 10.65 $ 10.00 $ 15.33 $ 12.59 $ 10.00
Income from operations:
Net investment income (loss) .................. 0.62 ( 0.09) ( 0.03) 1.38 0.73 0.99
Net realized and unrealized gain (loss) on
investment ................................... 2.22 1.36 0.68 1.28 2.01 1.60
-------- -------- -------- -------- -------- --------
Net income (loss) from operations ............ 2.84 1.27 0.65 2.66 2.74 2.59
-------- -------- -------- -------- -------- --------
Accumulation unit value, end of year ............ $ 14.76 $ 11.92 $ 10.65 $ 17.99 $ 15.33 $ 12.59
======== ======== ======== ======== ======== ========
Total return .................................... 23.84 % 11.84 % 6.54 % 17.35 % 21.78 % 25.89 %
Ratios and supplemental data:
Net assets at end of year (in thousands) ....... $ 7,013 $ 5,827 $ 2,289 $ 26,416 $ 14,084 $ 3,258
Ratio of net investment income (loss) to average
net assets .................................... 5.09 % ( 0.81)% ( 0.28)% 8.27 % 5.30 % 8.28 %
</TABLE>
<TABLE>
<CAPTION>
WRL WRL
THIRD AVENUE J.P. MORGAN
VALUE REAL ESTATE SECURITIES
SUBACCOUNT SUBACCOUNT
---------------------------- --------------------------
DECEMBER 31, DECEMBER 31,
---------------------------- --------------------------
1999 1998(1) 1999 1998(1)
------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 9.23 $ 10.00 $ 8.46 $ 10.00
Income from operations:
Net investment income (loss) ..................... 0.19 ( 0.05) 0.07 ( 0.05)
Net realized and unrealized gain (loss) on
investment ...................................... 1.17 ( 0.72) ( 0.47) ( 1.49)
-------- -------- ------- --------
Net income (loss) from operations ............... 1.36 ( 0.77) ( 0.40) ( 1.54)
-------- -------- ------- --------
Accumulation unit value, end of year ............... $ 10.59 $ 9.23 $ 8.06 $ 8.46
======== ======== ======= ========
Total return ....................................... 14.68 % ( 7.67)% ( 4.63)% ( 15.44)%
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 3,411 $ 2,807 $ 627 $ 709
Ratio of net investment income (loss) to average
net assets ....................................... 1.98 % ( 0.52)% 0.95% ( 0.90)%
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
WRL
WRL WRL T. ROWE PRICE WRL
GOLDMAN SACHS GOLDMAN SACHS DIVIDEND T. ROWE PRICE
GROWTH SMALL CAP GROWTH SMALL CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
--------------- --------------- --------------- --------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
--------------- --------------- --------------- --------------
1999(1) 1999(1) 1999(1) 1999(1)
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 10.00 $ 10.00 $ 10.00 $ 10.00
Income from operations:
Net investment income (loss) ..................... ( 0.05) 0.76 ( 0.04) 0.41
Net realized and unrealized gain (loss) on
investment ...................................... 1.34 0.16 ( 0.80) 1.90
-------- -------- -------- --------
Net income (loss) from operations ............... 1.29 0.92 ( 0.84) 2.31
-------- -------- -------- --------
Accumulation unit value, end of period ............. $ 11.29 $ 10.92 $ 9.16 $ 12.31
======== ======== ======== ========
Total return ....................................... 12.91 % 9.23 % ( 8.37)% 23.09 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 944 $ 344 $ 501 $ 925
Ratio of net investment income (loss) to average
net assets ....................................... ( 0.90)% 15.66 % ( 0.90)% 8.13 %
</TABLE>
<TABLE>
<CAPTION>
WRL
WRL PILGRIM WRL
SALOMON BAXTER DREYFUS
ALL CAP MID CAP GROWTH MID CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- ---------------- -------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
-------------- ---------------- -------------
1999(1) 1999(1) 1999(1)
-------------- ---------------- -------------
<S> <C> <C> <C>
Accumulation unit value, beginning of year ......... $ 10.00 $ 10.00 $ 10.00
Income from operations:
Net investment income (loss) ..................... 0.40 0.04 ( 0.04)
Net realized and unrealized gain (loss) on
investment ...................................... 0.30 5.94 0.18
-------- -------- --------
Net income (loss) from operations ............... 0.70 5.98 0.14
-------- -------- --------
Accumulation unit value, end of period ............. $ 10.70 $ 15.98 $ 10.14
======== ======== ========
Total return ....................................... 7.02 % 59.78 % 1.44 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......... $ 383 $ 5,065 $ 337
Ratio of net investment income (loss) to average
net assets ....................................... 8.07 % 0.62 % ( 0.90)%
</TABLE>
See Notes to the Financial Statements, which is an integral part of this
report.
<PAGE>
WRL SERIES LIFE ACCOUNT
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 1999
NOTE 1 -- ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
The WRL Series Life Account (the "Life Account"), was established as a variable
life insurance separate account of Western Reserve Life Assurance Co. of Ohio
("WRL", or the "depositor") and is registered as a unit investment trust under
the Investment Company Act of 1940, as amended. The Life Account contains
twenty-three investment options referred to as subaccounts. Each subaccount
invests in the corresponding Portfolio of the WRL Series Fund, Inc.
(collectively referred to as the "Fund" and individually as a "Portfolio"), a
registered management investment company under the Investment Company Act of
1940, as amended.
The Fund has entered into annually renewable investment advisory agreements for
each Portfolio with WRL Investment Management, Inc. ("WRL Management") as
investment adviser. Costs incurred in connection with the advisory services
rendered by WRL Management are paid by each Portfolio. WRL Management has
entered into sub-advisory agreements with various management companies
("Sub-Advisers"), some of which are affiliates of WRL. Each Sub-Adviser is
compensated directly by WRL Management.
Effective May 1, 1999 the names on the following subaccounts were changed:
<TABLE>
<CAPTION>
SUBACCOUNT FORMERLY
- --------------------------------- ---------------------------
<S> <C>
WRL J.P. Morgan Money Market Money Market Subaccount
WRL AEGON Bond Bond Subaccount
WRL Janus Growth Growth Subaccount
WRL Janus Global Global Subaccount
WRL LKCM Strategic Total Return Strategic Total Return
Subaccount
WRL VKAM Emerging Growth Emerging Growth Subaccount
WRL Alger Aggressive Growth Aggressive Growth
Subaccount
WRL AEGON Balanced Balanced Subaccount
WRL Federated Growth & Income Growth & Income Subaccount
WRL Dean Asset Allocation Tactical Asset Allocation
Subaccount
WRL C.A.S.E. Growth C.A.S.E. Growth Subaccount
WRL NWQ Value Equity Value Equity Subaccount
WRL GE/Scottish Equitable International Equity
International Equity Subaccount
WRL GE U.S. Equity U.S. Equity Subaccount
WRL Third Avenue Value Third Avenue Value
Subaccount
WRL J.P. Morgan Real Estate Real Estate Securities
Securities Subaccount
</TABLE>
The Financial Statements reflect a full twelve month period for each year
reported on, except as follows:
<TABLE>
<CAPTION>
SUBACCOUNT INCEPTION DATE
- ------------------------------------------------ ---------------
<S> <C>
WRL Dean Asset Allocation 01/03/1995
WRL C.A.S.E. Growth 05/01/1996
WRL NWQ Value Equity 05/01/1996
WRL GE/Scottish Equitable International Equity 01/02/1997
WRL GE U.S. Equity 01/02/1997
WRL Third Avenue Value 01/02/1998
WRL J.P. Morgan Real Estate Securities 05/01/1998
WRL Goldman Sachs Growth 07/01/1999
WRL Goldman Sachs Small Cap 07/01/1999
WRL T. Rowe Price Dividend Growth 07/01/1999
WRL T. Rowe Price Small Cap 07/01/1999
WRL Salomon All Cap 07/01/1999
WRL Pilgrim Baxter Mid Cap Growth 07/01/1999
WRL Dreyfus Mid Cap 07/01/1999
</TABLE>
On July 1, 1999, WRL made initial contributions totaling $175,000 to the Life
Account. The respective amounts of the contributions and units received are as
follows:
<TABLE>
<CAPTION>
SUBACCOUNT CONTRIBUTION UNITS
- ----------------------------------- -------------- --------
<S> <C> <C>
WRL Goldman Sachs Growth $ 25,000 2,500
WRL Goldman Sachs Small Cap 25,000 2,500
WRL T. Rowe Price Dividend Growth 25,000 2,500
WRL T. Rowe Price Small Cap 25,000 2,500
WRL Salomon All Cap 25,000 2,500
WRL Pilgrim Baxter Mid Cap Growth 25,000 2,500
WRL Dreyfus Mid Cap 25,000 2,500
</TABLE>
The Life Account holds assets to support the benefits under certain flexible
premium variable universal life insurance policies (the "Policies") issued by
WRL. The Life Account's equity transactions are accounted for using the
appropriate effective date at the corresponding accumulation unit value.
The following significant accounting policies, which are in conformity with
accounting principles generally accepted in the United States, have been
consistently applied in the preparation of the Life Account Financial
Statements. The preparation of the Financial Statements required management to
make estimates and assumptions that affect the reported amounts and
disclosures. Actual results could differ from those estimates.
<PAGE>
WRL SERIES LIFE ACCOUNT
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AT DECEMBER 31, 1999
NOTE 1 -- (CONTINUED)
A. VALUATION OF INVESTMENTS AND SECURITIES TRANSACTIONS
Investments in the Fund's shares are valued at the closing net asset value
("NAV") per share of the underlying Portfolio, as determined by the Fund.
Investment transactions are accounted for on the trade date at the Portfolio
NAV next determined after receipt of sale or redemption orders without sales
charges. Dividend income and capital gains distributions are recorded on the
ex-dividend date. The cost of investments sold is determined on a first-in,
first-out basis.
B. FEDERAL INCOME TAXES
The operations of the Life Account are a part of and are taxed with the total
operations of WRL, which is taxed as a life insurance company under the
Internal Revenue Code. Under the Internal Revenue Code law, the investment
income of the Life Account, including realized and unrealized capital gains, is
not taxable to WRL. Accordingly, no provision for Federal income taxes has been
made.
NOTE 2 -- CHARGES AND DEDUCTIONS
Charges are assessed by WRL in connection with the issuance and administration
of the Policies.
A. POLICY CHARGES
Under some forms of the Policies, a sales charge and premium taxes are deducted
by WRL prior to allocation of policy owner payments to the subaccounts.
Contingent surrender charges may also apply.
Under all forms of the Policy, monthly charges against policy cash values are
made to compensate WRL for costs of insurance provided.
B. LIFE ACCOUNT CHARGES
A daily charge equal to an annual rate of .90 % of average daily net assets is
assessed to compensate WRL for assumption of mortality and expense risks for
administrative services in connection with issuance and administration of the
Policies. This charge (not assessed at the individual contract level)
effectively reduces the value of a unit outstanding during the year.
NOTE 3 -- DIVIDEND DISTRIBUTIONS
Dividends are not declared by the Life Account, since the increase in the value
of the underlying investment in the Fund is reflected daily in the accumulation
unit value used to calculate the equity value within the Life Account.
Consequently, a dividend distribution by the underlying Fund does not change
either the accumulation unit value or equity values within the Life Account.
NOTE 4 -- SECURITIES TRANSACTIONS
Securities transactions for the year ended December 31, 1999 are as follows (in
thousands):
<TABLE>
<CAPTION>
PURCHASES PROCEEDS
OF FROM SALES
SUBACCOUNT SECURITIES OF SECURITIES
- ---------------------------------------- ------------ --------------
<S> <C> <C>
WRL J.P. Morgan Money Market $ 133,389 $ 99,679
WRL AEGON Bond 11,936 7,386
WRL Janus Growth 329,222 36,072
WRL Janus Global 71,976 7,800
WRL LKCM Strategic Total Return 14,849 9,892
WRL VKAM Emerging Growth 188,708 61,487
WRL Alger Aggressive Growth 83,923 9,614
WRL AEGON Balanced 4,525 1,311
WRL Federated Growth & Income 5,634 2,209
WRL Dean Asset Allocation 4,351 7,517
WRL C.A.S.E. Growth 10,787 4,903
WRL NWQ Value Equity 6,846 7,419
WRL GE/Scottish Equitable
International Equity 5,739 5,682
WRL GE U.S. Equity 13,901 3,164
WRL Third Avenue Value 1,611 1,344
WRL J.P. Morgan Real Estate Securities 519 554
WRL Goldman Sachs Growth 977 115
WRL Goldman Sachs Small Cap 374 47
WRL T. Rowe Price Dividend Growth 543 35
WRL T. Rowe Price Small Cap 1,428 666
WRL Salomon All Cap 551 183
WRL Pilgrim Baxter Mid Cap Growth 4,402 620
WRL Dreyfus Mid Cap 470 164
</TABLE>
NOTE 5 -- FINANCIAL HIGHLIGHTS
Per unit information has been computed using average units outstanding
throughout each period. Total return is not annualized for periods of less than
one year. The ratio of net investment income (loss) to average net assets is
annualized for periods of less than one year.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Western Reserve Life Assurance Co. of Ohio
We have audited the accompanying statutory-basis balance sheets of Western
Reserve Life Assurance Co. of Ohio (wholly owned indirectly by AEGON N.V.) as
of December 31, 1999 and 1998, and the related statutory-basis statements of
operations, changes in capital and surplus, and cash flows for each of the
three years in the period ended December 31, 1999. Our audits also included the
statutory-basis financial statement schedules required by Regulation S-X,
Article 7. These financial statements and schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits. We did not audit the
"Separate Account Assets" and "Separate Account Liabilities" in the
statutory-basis balance sheets of the Company. The Separate Account financial
statements were audited by other auditors whose reports have been furnished to
us, and our opinion, insofar as it relates to the data included for the
Separate Accounts, is based solely upon the reports of the other auditors.
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 and the reports of other
auditors provide a reasonable basis for our opinion.
As described in Note 1 to the financial statements, the Company presents
its financial statements in conformity with accounting practices prescribed or
permitted by the Insurance Department of the State of Ohio, which practices
differ from generally accepted accounting principles. The variances between
such practices and generally accepted accounting principles are also described
in Note 1. The effects on the financial statements of these variances are not
reasonably determinable but are presumed to be material.
In our opinion, because of the effects of the matter described in the
preceding paragraph, the financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of Western Reserve Life Assurance Co. of Ohio at December
31, 1999 and 1998, or the results of its operations or its cash flows for each
of the three years in the period ended December 31, 1999.
However, in our opinion, based on our audits and the reports of other
auditors, the financial statements referred to above present fairly, in all
material respects, the financial position of Western Reserve Life Assurance Co.
of Ohio at December 31, 1999 and 1998, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1999, in conformity with accounting practices prescribed or permitted by the
Insurance Department of the State of Ohio. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
statutory-basis financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
ERNST & YOUNG LLP
Des Moines, Iowa
February 18, 2000
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
BALANCE SHEETS -- STATUTORY BASIS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------
1999 1998
------------- -------------
<S> <C> <C>
ADMITTED ASSETS
Cash and invested assets:
Cash and short-term investments .......................... $ 23,932 $ 73,808
Bonds .................................................... 119,731 184,697
Common stocks:
Affiliated entities (cost: 1999 and 1998 - $243)......... 2,156 704
Other (cost: 1999 and 1998 - $302)....................... 358 384
Mortgage loans on real estate ............................ 9,698 9,916
Home office properties .................................. 34,066 34,583
Investment properties ................................... 11,078 11,594
Policy loans ............................................ 182,975 112,982
Other invested assets ................................... -- 396
----------- ----------
Total cash and invested assets ............................ 383,994 429,064
Premiums deferred and uncollected ......................... 785 900
Accrued investment income ................................. 1,638 2,867
Transfers from separate accounts due or accrued ........... 463,721 350,633
Cash surrender value of life insurance policies ........... 47,518 45,445
Other assets .............................................. 6,614 9,239
Separate account assets ................................... 11,587,982 6,999,290
----------- ----------
Total admitted assets ..................................... $12,492,252 $7,837,438
=========== ==========
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
BALANCE SHEETS -- STATUTORY BASIS
(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------
1999 1998
-------------- ------------
<S> <C> <C>
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Aggregate reserves for policies and contracts:
Life .................................................................... $ 302,138 $ 231,596
Annuity ................................................................. 268,864 265,418
Policy and contract claim reserves ....................................... 9,269 9,233
Other policyholders' funds ............................................... 38,633 38,080
Remittances and items not allocated ...................................... 20,686 20,569
Federal income taxes payable ............................................. 5,873 5,716
Asset valuation reserve .................................................. 3,809 2,848
Interest maintenance reserve ............................................. 7,866 9,684
Short-term note payable to affiliate ..................................... 17,100 44,200
Payable to affiliate ..................................................... 964 37,907
Other liabilities ........................................................ 49,478 31,151
Separate account liabilities ............................................. 11,582,656 6,997,456
----------- ----------
Total liabilities ......................................................... 12,307,336 7,693,858
Commitments and contingencies (NOTE 11) ...................................
Capital and surplus:
Common stock, $1.00 par value, 3,000,000 shares authorized and
2,500,000 shares issued and outstanding at December 31, 1999 and
1,500,000 shares authorized, issued and outstanding at December 31, 1998 2,500 1,500
Paid-in surplus .......................................................... 120,107 120,107
Unassigned surplus ....................................................... 62,309 21,973
----------- ----------
Total capital and surplus ................................................. 184,916 143,580
----------- ----------
Total liabilities and capital and surplus ................................. $12,492,252 $7,837,438
=========== ==========
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
STATEMENTS OF OPERATIONS -- STATUTORY BASIS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------
1999 1998 1997
------------- ------------- ------------
<S> <C> <C> <C>
Revenues:
Premiums and other considerations, net of reinsurance:
Life .................................................................. $ 584,729 $ 476,053 $ 394,370
Annuity ............................................................... 1,104,525 794,841 822,149
Net investment income .................................................. 39,589 36,315 40,013
Amortization of interest maintenance reserve ........................... 1,751 744 1,576
Commissions and expense allowances on reinsurance ceded ................ 4,178 15,333 11
Income from fees associated with investment management,
administration and contract guarantees for separate accounts ......... 19,620 72,817 --
Other income ........................................................... 44,366 67,751 3,016
---------- ---------- ----------
1,798,758 1,463,854 1,261,135
Benefits and expenses:
Benefits paid or provided for:
Life .................................................................. 35,591 42,982 28,060
Surrender benefits .................................................... 689,535 551,528 431,939
Other benefits ........................................................ 32,201 31,280 28,112
Increase (decrease) in aggregate reserves for policies and
contracts:
Life ................................................................. 70,542 42,940 29,485
Annuity .............................................................. 3,446 (30,872) (35,940)
Other ................................................................ (121) 32,178 794
---------- ---------- ----------
831,194 670,036 482,450
Insurance expenses:
Commissions ............................................................ 246,334 205,939 179,106
General insurance expenses ............................................. 112,536 102,611 70,546
Taxes, licenses and fees ............................................... 19,019 15,545 13,101
Net transfers to separate accounts ..................................... 540,443 475,435 519,214
Other expenses ......................................................... -- 59 21
---------- ---------- ----------
918,332 799,589 781,988
---------- ---------- ----------
1,749,526 1,469,625 1,264,438
---------- ---------- ----------
Gain (loss) from operations before federal income tax expense
(benefit) and net realized capital gains
(losses) on investments ............................................... 49,232 (5,771) (3,303)
Federal income tax expense (benefit) .................................... 11,816 (347) 469
---------- ---------- ----------
Gain (loss) from operations before net realized capital gains (losses)
on investments ........................................................ 37,416 (5,424) (3,772)
Net realized capital gains (losses) on investments
(net of related federal income taxes and amounts transferred to
interest maintenance reserve) ......................................... (716) 1,494 747
---------- ---------- ----------
Net income (loss) ....................................................... $ 36,700 $ (3,930) $ (3,025)
========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS -- STATUTORY BASIS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL
COMMON PAID-IN UNASSIGNED CAPITAL AND
STOCK SURPLUS SURPLUS SURPLUS
-------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Balance at January 1, 1997 .......................... $1,500 $ 68,015 $ 26,041 $ 95,556
Net loss ........................................... -- -- (3,025) (3,025)
Change in non-admitted assets ...................... -- -- (702) (702)
Change in asset valuation reserve .................. -- -- 3,274 3,274
Change in surplus in separate accounts ............. -- -- (2,115) (2,115)
Change in reserve valuation ........................ -- -- (1,872) (1,872)
Capital contribution ............................... -- 20,000 -- 20,000
Tax effect of capital loss carry-forward utilized by
affiliates ....................................... -- -- 3,747 3,747
------ -------- -------- --------
Balance at December 31, 1997 ........................ 1,500 88,015 25,348 114,863
Net loss ........................................... -- -- (3,930) (3,930)
Change in net unrealized capital gains ............. -- -- 248 248
Change in non-admitted assets ...................... -- -- (1,815) (1,815)
Change in asset valuation reserve .................. -- -- (412) (412)
Change in surplus in separate accounts ............. -- -- (341) (341)
Change in reserve valuation ........................ -- -- (2,132) (2,132)
Capital contribution ............................... -- 32,092 -- 32,092
Settlement of prior period tax returns ............. -- -- 353 353
Tax benefits on stock options exercised ............ -- -- 4,654 4,654
------ -------- -------- --------
Balance at December 31, 1998 ........................ 1,500 120,107 21,973 143,580
Net income .......................................... -- -- 36,700 36,700
Change in net unrealized capital gains ............. -- -- 1,421 1,421
Change in non-admitted assets ...................... -- -- 703 703
Change in asset valuation reserve .................. -- -- (961) (961)
Change in surplus in separate accounts ............. -- -- 451 451
Transfer from unassigned surplus to common
stock (stock dividend) ........................... 1,000 -- (1,000) --
Settlement of prior period tax returns ............. -- -- 1,000 1,000
Tax benefits on stock options exercised ............ -- -- 2,022 2,022
------ -------- -------- --------
Balance at December 31, 1999 ........................ $2,500 $120,107 $ 62,309 $184,916
====== ======== ======== ========
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO STATEMENTS OF CASH FLOWS --
STATUTORY BASIS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Premiums and other considerations, net of reinsurance .......... $1,738,870 $1,356,732 $1,223,898
Net investment income .......................................... 44,235 38,294 43,802
Life and accident and health claims ............................ (35,872) (44,426) (26,005)
Surrender benefits and other fund withdrawals .................. (689,535) (551,528) (431,939)
Other benefits to policyholders ................................ (32,642) (31,231) (28,147)
Commissions, other expenses and other taxes .................... (382,372) (326,080) (262,901)
Net transfers to separate accounts ............................. (628,762) (461,982) (596,347)
Federal income taxes received (paid) ........................... (9,637) 11,956 5,006
Interest paid .................................................. -- -- (731)
Other, net ..................................................... (21,054) (7,109) (14,901)
---------- ---------- ----------
Net cash used in operating activities .......................... (16,769) (15,374) (88,265)
INVESTING ACTIVITIES
Proceeds from investments sold, matured or repaid:
Bonds and preferred stocks .................................... 114,177 143,449 146,963
Mortgage loans on real estate ................................. 212 221 2,116
Other ......................................................... 18 -- --
114,407 143,670 149,079
Cost of investments acquired
Bonds and preferred stocks .................................... (49,279) (68,202) (40,418)
Common stocks ................................................. -- (93) (150)
Mortgage loans on real estate ................................. (1) (5,313) (891)
Real estate ................................................... (286) (26,213) (12,002)
Policy loans .................................................. (69,993) (36,241) (24,137)
Other ......................................................... (855) (414) --
---------- ---------- ----------
(120,414) (136,476) (77,598)
Net cash provided by (used in) investing activities ............ (6,007) 7,194 71,481
FINANCING ACTIVITIES
Issuance (payment) of short-term note payable to
affiliate, net ............................................... (27,100) 36,000 8,200
Capital contribution ........................................... -- 32,092 20,000
---------- ---------- ----------
Net cash provided by (used in) financing activities ............ (27,100) 68,092 28,200
---------- ---------- ----------
Increase (decrease) in cash and short-term investments ......... (49,876) 59,912 11,416
Cash and short-term investments at beginning of year ........... 73,808 13,896 2,480
---------- ---------- ----------
Cash and short-term investments at end of year ................. $ 23,932 $ 73,808 $ 13,896
========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Western Reserve Life Assurance Co. of Ohio ("the Company") is a stock life
insurance company and is a wholly-owned subsidiary of First AUSA Life Insurance
Company which, in turn, is a wholly-owned subsidiary of AEGON USA, Inc.
("AEGON"). AEGON is an indirect wholly-owned subsidiary of AEGON N.V., a
holding company organized under the laws of The Netherlands.
NATURE OF BUSINESS
The Company operates predominantly in the variable universal life and
variable annuity areas of the life insurance business. The Company is licensed
in 49 states, District of Columbia, Puerto Rico and Guam. Sales of the
Company's products are through financial planners, independent representatives,
financial institutions and stockbrokers. The majority of the Company's new life
insurance written and a substantial portion of new annuities written is done
through one marketing organization; the Company expects to maintain this
relationship for the foreseeable future.
BASIS OF PRESENTATION
The preparation of financial statements of insurance companies requires
management to make estimates and assumptions that affect amounts reported in
the financial statements and accompanying notes. Such estimates and assumptions
could change in the future as more information becomes known, which could
impact the amounts reported and disclosed herein.
The accompanying financial statements have been prepared in conformity
with accounting practices prescribed or permitted by the Insurance Department
of the State of Ohio ("Insurance Department"), which practices differ from
generally accepted accounting principles. The more significant of these
differences are as follows: (a) bonds are generally reported at amortized cost
rather than segregating the portfolio into held-to-maturity (reported at
amortized cost), available-for-sale (reported at fair value), and trading
(reported at fair value) classifications; (b) acquisition costs of acquiring
new business are expensed as incurred rather than deferred and amortized over
the life of the policies; (c) policy reserves on traditional life products are
based on statutory mortality rates and interest which may differ from reserves
based on reasonable assumptions of expected mortality, interest, and
withdrawals which include a provision for possible unfavorable deviation from
such assumptions; (d) policy reserves on certain investment products use
discounting methodologies utilizing statutory interest rates rather than full
account values; (e) reinsurance amounts are netted against the corresponding
asset or
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
liability rather than shown as gross amounts on the balance sheet; (f) deferred
income taxes are not provided for the difference between the financial
statement amounts and income tax bases of assets and liabilities; (g) net
realized gains or losses attributed to changes in the level of interest rates
in the market are deferred and amortized over the remaining life of the bond or
mortgage loan, rather than recognized as gains or losses in the statement of
operations when the sale is completed; (h) potential declines in the estimated
realizable value of investments are provided for through the establishment of a
formula-determined statutory investment reserve (reported as a liability),
changes to which are charged directly to surplus, rather than through
recognition in the statement of operations for declines in value, when such
declines are judged to be other than temporary; (i) certain assets designated
as "non-admitted assets" have been charged to unassigned surplus rather than
being reported as assets; (j) revenues for universal life and investment
products consist of the entire premiums received rather than policy charges for
the cost of insurance, policy administration charges, amortization of policy
initiation fees and surrender charges assessed; (k) pension expense is recorded
as amounts are paid rather than accrued and expensed during the periods in
which the employers provide service; (l) stock options settled in cash are
recorded as an expense of the Company's indirect parent rather than charged to
current operations; (m) adjustments to federal income taxes of prior years are
charged or credited directly to unassigned surplus, rather than reported as a
component of income tax expense in the statement of operations; and (n) the
financial statements of wholly-owned affiliates are not consolidated with those
of the Company. The effects of these variances have not been determined by the
Company, but are presumed to be material.
In 1998, the National Association of Insurance Commissioners (NAIC)
adopted codified statutory accounting principles ("Codification") effective
January 1, 2001. Codification will likely change, to some extent, prescribed
statutory accounting practices and may result in changes to the accounting
practices that the Company uses to prepare its statutory-basis financial
statements. Codification will require adoption by the various states before it
becomes the prescribed statutory basis of accounting for insurance companies
domesticated within those states. Accordingly, before Codification becomes
effective for the Company, the State of Ohio must adopt Codification as the
prescribed basis of accounting on which domestic insurers must report their
statutory-basis results to the Insurance Department. At this time it is unclear
whether the State of Ohio will adopt Codification. However, based on current
guidance, management believes that the impact of Codification will not be
material to the Company's statutory-basis financial statements.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Other significant statutory accounting practices are as follows:
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, the Company considers all
highly liquid investments with remaining maturities of one year or less when
purchased to be cash equivalents.
INVESTMENTS
Investments in bonds (except those to which the Securities Valuation
Office of the NAIC has ascribed a value), mortgage loans on real estate and
short-term investments are reported at cost adjusted for amortization of
premiums and accrual of discounts. Amortization is computed using methods which
result in a level yield over the expected life of the investment. The Company
reviews its prepayment assumptions on mortgage and other asset backed
securities at regular intervals and adjusts amortization rates retrospectively
when such assumptions are changed due to experience and/or expected future
patterns. Common stocks of unaffiliated companies are carried at market, and
the related unrealized capital gains/(losses) are reported in unassigned
surplus without any adjustment for federal income taxes. Common stocks of the
Company's wholly-owned affiliates are recorded at the equity in net assets.
Home office and investment properties are reported at cost less allowances for
depreciation. Depreciation is computed principally by the straight-line method.
Policy loans are reported at unpaid principal. Other "admitted assets" are
valued, principally at cost, as required or permitted by Ohio Insurance Laws.
Realized capital gains and losses are determined on the basis of specific
identification and are recorded net of related federal income taxes. The Asset
Valuation Reserve (AVR) is established by the Company to provide for potential
losses in the event of default by issuers of certain invested assets. These
amounts are determined using a formula prescribed by the NAIC and are reported
as a liability. The formula for the AVR provides for a corresponding adjustment
for realized gains and losses. Under a formula prescribed by the NAIC, the
Company defers, in the Interest Maintenance Reserve (IMR), the portion of
realized gains and losses on sales of fixed income investments, principally
bonds and mortgage loans, attributable to changes in the general level of
interest rates and amortizes those deferrals over the remaining period to
maturity of the security.
During 1999, 1998 and 1997, net realized capital gains (losses) of $(67),
$1,294 and $3,259, respectively, were credited to the IMR rather than being
immediately
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
recognized in the statements of operations. Amortization of these net gains
aggregated $1,751, $744 and $1,576 for the years ended December 31, 1999, 1998
and 1997, respectively.
Interest income is recognized on an accrual basis. The Company does not
accrue income on bonds in default, mortgage loans on real estate in default
and/or foreclosure or which are delinquent more than twelve months, or real
estate where rent is in arrears for more than three months. Further, income is
not accrued when collection is uncertain. No investment income due and accrued
has been excluded for the years ended December 31, 1999, 1998 and 1997, with
respect to such practices.
AGGREGATE RESERVES FOR POLICIES
Life and annuity reserves are developed by actuarial methods and are
determined based on published tables using statutorily specified interest rates
and valuation methods that will provide, in the aggregate, reserves that are
greater than or equal to the minimum required by law.
The aggregate policy reserves for life insurance policies are based
principally upon the 1941, 1958 and 1980 Commissioners' Standard Ordinary
Mortality Tables. The reserves are calculated using interest rates ranging from
2.25 to 5.50 percent and are computed principally on the Net Level Premium
Valuation and the Commissioners' Reserve Valuation Methods. Reserves for
universal life policies are based on account balances adjusted for the
Commissioners' Reserve Valuation Method.
Deferred annuity reserves are calculated according to the Commissioners'
Annuity Reserve Valuation Method including excess interest reserves to cover
situations where the future interest guarantees plus the decrease in surrender
charges are in excess of the maximum valuation rates of interest. Reserves for
immediate annuities and supplementary contracts with life contingencies are
equal to the present value of future payments assuming interest rates ranging
from 5.75 to 8.75 percent and mortality rates, where appropriate, from a
variety of tables.
POLICY AND CONTRACT CLAIM RESERVES
Claim reserves represent the estimated accrued liability for claims
reported to the Company and claims incurred but not yet reported through the
statement date. These reserves are estimated using either individual case-basis
valuations or statistical analysis techniques. These estimates are subject to
the effects of trends in claim severity and frequency. The estimates are
continually reviewed and adjusted as necessary as experience develops or new
information becomes available.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
SEPARATE ACCOUNTS
Assets held in trust for purchases of variable universal life and variable
annuity contracts and the Company's corresponding obligation to the contract
owners are shown separately in the balance sheets. The assets in the separate
accounts are valued at market. Income and gains and losses with respect to the
assets in the separate accounts accrue to the benefit of the policyholders and,
accordingly, the operations of the separate accounts are not included in the
accompanying financial statements. The separate accounts do not have any
minimum guarantees and the investment risks associated with market value
changes are borne entirely by the policyholders. The Company received variable
contract premiums of $1,675,642, $1,240,858 and $1,164,013 in 1999, 1998 and
1997, respectively. All variable account contracts are subject to discretionary
withdrawal by the policyholder at the market value of the underlying assets
less the current surrender charge. Separate account contractholders have no
claim against the assets of the general account.
STOCK OPTION PLAN
AEGON N.V. sponsors a stock option plan for eligible employees of the
Company. Under this plan, certain employees have indicated a preference to
immediately sell shares received as a result of their exercise of the stock
options; in these situations, AEGON N.V. has settled such options in cash
rather than issuing stock to these employees. These cash settlements are paid
by the Company, and AEGON N.V. subsequently reimburses the Company for such
payments. Under statutory accounting principles, the Company does not record
any expense related to this plan, as the expense is recognized by AEGON N.V.
However, the Company is allowed to record a deduction in the consolidated tax
return filed by the Company and certain affiliates. The tax benefit of this
deduction has been credited directly to unassigned surplus.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1998 and 1997 financial
statements to conform to the 1999 presentation.
2. FAIR VALUES OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, DISCLOSURES ABOUT
FAIR VALUE OF FINANCIAL INSTRUMENTS, requires disclosure of fair value
information about financial instruments, whether or not recognized in the
statutory-basis balance sheet, for which it is practicable to estimate that
value. In cases where quoted market prices are not available, fair values are
based on estimates using present value or other valuation
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
2. FAIR VALUES OF FINANCIAL INSTRUMENTS--(CONTINUED)
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash flows. In that
regard, the derived fair value estimates cannot be substantiated by comparisons
to independent markets and, in many cases, could not be realized in immediate
settlement of the instrument. Statement of Financial Accounting Standards No.
107 excludes certain financial instruments and all nonfinancial instruments
from its disclosure requirements and allows companies to forego the disclosures
when those estimates can only be made at excessive cost. Accordingly, the
aggregate fair value amounts presented do not represent the underlying value of
the Company.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
CASH AND SHORT-TERM INVESTMENTS: The carrying amounts reported in the
statutory-basis balance sheet for these instruments approximate their fair
values.
INVESTMENT SECURITIES: Fair values for fixed maturity securities
(including redeemable preferred stocks) are based on quoted market prices,
where available. For fixed maturity securities not actively traded, fair
values are estimated using values obtained from independent pricing
services or (in the case of private placements) are estimated by
discounting expected future cash flows using a current market rate
applicable to the yield, credit quality, and maturity of the investments.
The fair values for equity securities are based on quoted market prices.
MORTGAGE LOANS AND POLICY LOANS: The fair values for mortgage loans are
estimated utilizing discounted cash flow analyses, using interest rates
reflective of current market conditions and the risk characteristics of
the loans. The fair value of policy loans are assumed to equal their
carrying value.
INVESTMENT CONTRACTS: Fair values for the Company's liabilities under
investment-type insurance contracts are estimated using discounted cash
flow calculations, based on interest rates currently being offered for
similar contracts with maturities consistent with those remaining for the
contracts being valued.
Fair values for the Company's insurance contracts other than investment
contracts are not required to be disclosed. However, the fair values of
liabilities under all insurance contracts are taken into consideration in the
Company's overall management of interest rate risk, which minimizes exposure to
changing interest rates through the matching of investment maturities with
amounts due under insurance contracts.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
2. FAIR VALUES OF FINANCIAL INSTRUMENTS--(CONTINUED)
The following sets forth a comparison of the fair values and carrying
amounts of the Company's financial instruments subject to the provisions of
Statement of Financial Accounting Standards No. 107:
<TABLE>
<CAPTION>
December 31
-----------------------------------------------------
1999 1998
--------------------------- -------------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
ADMITTED ASSETS
Cash and short-term investments ..... $ 23,932 $ 23,932 $ 73,808 $ 73,808
Bonds ............................... 119,731 119,076 184,697 192,556
Common stocks, other than affiliates 358 358 384 384
Mortgage loans on real estate ....... 9,698 9,250 9,916 10,390
Policy loans ........................ 182,975 182,975 112,982 112,982
Separate account assets ............. 11,587,982 11,587,982 6,999,290 6,999,290
LIABILITIES
Investment contract liabilities ..... 301,403 294,342 297,349 294,105
Separate account annuities .......... 8,271,548 8,079,141 5,096,680 5,038,296
</TABLE>
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
3. INVESTMENTS
The carrying amount and estimated fair value of investments in debt
securities are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Amount Gains Losses Value
---------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1999
Bonds:
United States Government and agencies .......... $ 4,755 $ 4 $ 66 $ 4,693
State, municipal and other government .......... 2,185 12 -- 2,197
Public utilities ............................... 13,134 129 368 12,895
Industrial and miscellaneous ................... 52,997 1,213 1,208 53,002
Mortgage and other asset-backed securities ..... 46,660 480 851 46,289
-------- ------ ------ --------
Total bonds ..................................... $119,731 $1,838 $2,493 $119,076
======== ====== ====== ========
DECEMBER 31, 1998
Bonds: ..........................................
United States Government and agencies .......... $ 4,749 $ 83 $ -- $ 4,832
State, municipal and other government .......... 3,234 117 -- 3,351
Public utilities ............................... 18,792 818 251 19,359
Industrial and miscellaneous ................... 96,332 6,685 577 102,440
Mortgage and other asset-backed securities ..... 61,590 1,235 251 62,574
-------- ------ ------ --------
Total bonds ..................................... $184,697 $8,938 $1,079 $192,556
======== ====== ====== ========
</TABLE>
The carrying amount and fair value of bonds at December 31, 1999 by
contractual maturity are shown below. Expected maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without penalties.
<TABLE>
<CAPTION>
Estimated
Carrying Fair
Amount Value
---------- ----------
<S> <C> <C>
Due in one year or less ............................ $ 10,521 $ 10,560
Due one through five years ......................... 32,248 31,993
Due five through ten years ......................... 17,342 17,104
Due after ten years ................................ 12,960 13,130
-------- --------
73,071 72,787
Mortgage and other asset-backed securities ......... 46,660 46,289
-------- --------
$119,731 $119,076
======== ========
</TABLE>
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
3. INVESTMENTS--(CONTINUED)
A detail of net investment income is presented below:
<TABLE>
<CAPTION>
Year ended December 31
------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Interest on bonds .................... $ 12,094 $ 17,150 $ 25,723
Dividends on equity investments from
subsidiaries ........................ 18,555 13,233 10,855
Interest on mortgage loans ........... 746 499 478
Rental income on real estate ......... 5,794 2,839 1,371
Interest on policy loans ............. 9,303 6,241 4,656
Other investment income .............. 414 540 26
-------- -------- --------
Gross investment income .............. 46,906 40,502 43,109
Investment expenses .................. (7,317) (4,187) (3,096)
-------- -------- --------
Net investment income ................ $ 39,589 $ 36,315 $ 40,013
======== ======== ========
</TABLE>
Proceeds from sales and maturities of debt securities and related gross
realized gains and losses were as follows:
<TABLE>
<CAPTION>
Year ended December 31
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Proceeds ...................... $114,177 $143,449 $146,963
======== ======== ========
Gross realized gains .......... $ 1,762 $ 4,641 $ 3,921
Gross realized losses ......... 1,709 899 626
-------- -------- --------
Net realized gains ............ $ 53 $ 3,742 $ 3,295
======== ======== ========
</TABLE>
At December 31, 1999, bonds with an aggregate carrying value of $4,152
were on deposit with certain state regulatory authorities or were restrictively
held in bank custodial accounts for benefit of such state regulatory
authorities, as required by statute.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
3. INVESTMENTS--(CONTINUED)
Realized investment gains (losses) and changes in unrealized gains
(losses) for investments are summarized below:
<TABLE>
<CAPTION>
Realized
-------------------------------------
Year ended December 31
-------------------------------------
1999 1998 1997
--------- ----------- -----------
<S> <C> <C> <C>
Debt securities .................................. $ 53 $ 3,742 $ 3,295
Other invested assets ............................ 18 (18) --
------ -------- --------
71 3,724 3,295
Tax expense ...................................... (854) (936) (711)
Transfer to interest maintenance reserve ......... 67 (1,294) (3,259)
------ -------- --------
Net realized gains (losses) ...................... $ (716) $ 1,494 $ 747
====== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Changes in Unrealized
----------------------------------------
Year ended December 31
----------------------------------------
1999 1998 1997
------------ ------------ ----------
<S> <C> <C> <C>
Debt securities .......................................... $ (8,514) $ (3,985) $ (896)
Common stocks ............................................ 1,426 248 --
-------- -------- ------
Change in unrealized appreciation (depreciation) ......... $ (7,088) $ (3737) $ (896)
======== ======== ======
</TABLE>
Gross unrealized gains (losses) on common stocks were as follows:
<TABLE>
<CAPTION>
Unrealized
-------------------
December 31
-------------------
1999 1998
--------- -------
<S> <C> <C>
Unrealized gains ............. $1,995 $ 579
Unrealized losses ............ (26) (36)
------ -----
Net unrealized gains ......... $1,969 $ 543
====== =====
</TABLE>
During 1999, the Company did not issue any mortgage loans. The Company
requires all mortgagees to carry fire insurance equal to the value of the
underlying property.
During 1999, 1998 and 1997, no mortgage loans were foreclosed and
transferred to real estate. During 1999 and 1998, the Company held a mortgage
loan loss reserve in the asset valuation reserve of $110 and $112,
respectively.
At December 31, 1999, the Company had no investments (excluding U. S.
Government guaranteed or insured issues) which individually represented more
than ten percent of capital and surplus and the asset valuation reserve,
collectively.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
4. REINSURANCE
The Company reinsures portions of certain insurance policies which exceed
its established limits, thereby providing a greater diversification of risk and
minimizing exposure on larger risks. The Company remains contingently liable
with respect to any insurance ceded, and this would become an actual liability
in the event that the assuming insurance company became unable to meet its
obligations under the reinsurance treaty.
<TABLE>
<CAPTION>
Year ended December 31
---------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Direct premiums ............. $1,748,265 $1,345,752 $1,219,271
Reinsurance assumed ......... -- 461 2,389
Reinsurance ceded ........... (59,011) (75,319) (5,141)
---------- ---------- ----------
Net premiums earned ......... $1,689,254 $1,270,894 $1,216,519
========== ========== ==========
</TABLE>
The Company received reinsurance recoveries in the amount of $4,916,
$5,260 and $2,288 during 1999, 1998 and 1997, respectively. At December 31,
1999 and 1998, estimated amounts recoverable from reinsurers that have been
deducted from policy and contract claim reserves totaled $1,557 and $1,003,
respectively. The aggregate reserves for policies and contracts were reduced
for reserve credits for reinsurance ceded at December 31, 1999 and 1998 of
$3,487 and $2,849, respectively.
5. INCOME TAXES
For federal income tax purposes, the Company joins in a consolidated tax
return filing with certain affiliated companies. Under the terms of a
tax-sharing agreement between the Company and its affiliates, the Company
computes federal income tax expense as if it were filing a separate income tax
return, except that tax credits and net operating loss carryforwards are
determined on the basis of the consolidated group. Additionally, the
alternative minimum tax is computed for the consolidated group and the
resulting tax, if any, is allocated back to the separate companies on the basis
of the separate companies' alternative minimum taxable income.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
5. INCOME TAXES--(CONTINUED)
Federal income tax expense (benefit) differs from the amount computed by
applying the statutory federal income tax rate to gain (loss) from operations
before federal income tax expense (benefit) and realized capital gains (losses)
on investments for the following reasons:
<TABLE>
<CAPTION>
Year ended December 31
------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Computed tax (benefit) at federal statutory rate (35%) ......... $ 17,231 $ (2,019) $ (1,156)
Deferred acquisition costs -- tax basis ........................ 11,344 9,672 9,164
Tax reserve valuation .......................................... (2,272) 1,513 (194)
Excess tax depreciation ........................................ (727) (442) (127)
Amortization of IMR ............................................ (613) (260) (552)
Dividend received deduction .................................... (10,784) (6,657) (5,326)
Prior year over-accrual ........................................ (3,167) (2,322) (1,541)
Other, net ..................................................... 804 168 201
--------- -------- --------
Federal income tax expense (benefit) ........................... $ 11,816 $ (347) $ 469
========= ======== ========
</TABLE>
Federal income tax expense (benefit) differs from the amount computed by
applying the statutory federal income tax rate to realized gains (losses) due
to the differences in book and tax asset bases at the time certain investments
are sold.
Prior to 1984, as provided for under the Life Insurance Company Tax Act of
1959, a portion of statutory income was not subject to current taxation, but
was accumulated for income tax purposes in a memorandum account referred to as
the policyholders' surplus account. No federal income taxes have been provided
for in the financial statements on income deferred in the policyholders'
surplus account ($293 at December 31, 1999). To the extent dividends are paid
from the amount accumulated in the policyholders' surplus account, net earnings
would be reduced by the amount of tax required to be paid. Should the entire
amount in the policyholders' surplus account become taxable, the tax thereon
computed at current rates would amount to approximately $103.
At December 31, 1996, the Company had capital loss carryforwards of
approximately $10,705, which were utilized by the Company's affiliates in the
consolidated tax return filing in 1997. This transaction resulted in a receipt
from the Company's affiliate of $3,747, which was credited directly to
unassigned surplus.
In 1999, the Company received $1,000 from its former parent, an
unaffiliated company, for reimbursement of prior period tax payments made by
the Company but owed by the former parent. In 1998, the Company reached a final
settlement with the
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
Internal Revenue Service for 1994 and 1995 resulting in a tax refund of $300
and interest received of $53. Tax settlements for 1999 and 1998 were credited
directly to unassigned surplus.
6. POLICY AND CONTRACT ATTRIBUTES
A portion of the Company's policy reserves and other policyholders' funds
relate to liabilities established on a variety of the Company's products,
primarily separate accounts, that are not subject to significant mortality or
morbidity risk; however, there may be certain restrictions placed upon the
amount of funds that can be withdrawn without penalty. The amount of reserves
on these products, by withdrawal characteristics are summarized as follows:
<TABLE>
<CAPTION>
December 31
------------------------------------------------------
1999 1998
-------------------------- -------------------------
Percent Percent
Amount of Total Amount of Total
------------- ---------- ------------- ---------
<S> <C> <C> <C> <C>
Subject to discretionary withdrawal with
market value adjustment ..................... $ 12,534 0% $ 12,810 0%
Subject to discretionary withdrawal at book
value less surrender charge ................. 73,903 1 76,289 1
Subject to discretionary withdrawal at market
value ....................................... 8,271,441 96 5,096,680 94
Subject to discretionary withdrawal at book
value (minimal or no charges or
adjustments) ................................ 217,372 3 210,270 4
Not subject to discretionary withdrawal
provision ................................... 15,433 0 15,681 1
---------- -- ---------- --
8,590,683 100% 5,411,730 100%
=== ===
Less reinsurance ceded ....................... 1,581 1,131
---------- ----------
Total policy reserves on annuities and deposit
fund liabilities ............................ $8,589,102 $5,410,599
========== ==========
</TABLE>
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
6. POLICY AND CONTRACT ATTRIBUTES--(CONTINUED)
A reconciliation of the amounts transferred to and from the separate
accounts is presented below:
<TABLE>
<CAPTION>
Year ended December 31
---------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Transfers as reported in the summary of
operations of the separate accounts statement:
Transfers to separate accounts ................. $1,675,642 $1,240,858 $1,164,013
Transfers from separate accounts ............... 1,056,207 774,690 646,477
---------- ---------- ----------
Net transfers to separate accounts ............. 619,435 466,168 517,536
Reconciling adjustments -- change in accruals
for investment management, administration
fees and contract guarantees, reinsurance and
separate account surplus ..................... (78,992) 9,267 1,678
---------- ---------- ----------
Transfers as reported in the summary of
operations of the life, accident and health
annual statement ............................. $ 540,443 $ 475,435 $ 519,214
========== ========== ==========
</TABLE>
Reserves on the Company's traditional life insurance products are computed
using mean reserving methodologies. These methodologies result in the
establishment of assets for the amount of the net valuation premiums that are
anticipated to be received between the policy's paid-through date to the
policy's next anniversary date. At December 31, 1999 and 1998, these assets
(which are reported as premiums deferred and uncollected) and the amounts of
the related gross premiums and loadings, are as follows:
<TABLE>
<CAPTION>
Gross Loading Net
--------- --------- -------
<S> <C> <C> <C>
DECEMBER 31, 1999
Ordinary direct renewal business ......... $1,017 $232 $785
------ ---- ----
$1,017 $232 $785
====== ==== ====
DECEMBER 31, 1998
Ordinary direct renewal business ......... $1,101 $201 $900
------ ---- ----
$1,101 $201 $900
====== ==== ====
</TABLE>
In 1994, the NAIC enacted a guideline to clarify reserving methodologies
for contracts that require immediate payment of claims upon proof of death of
the insured. Companies were allowed to grade the effects of the change in
reserving methodologies over five years. A direct charge to surplus of $2,132
and $1,872 was made for the years ended December 31, 1998 and 1997,
respectively, related to the change in reserve methodology.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
7. DIVIDEND RESTRICTIONS
The Company is subject to limitations, imposed by the State of Ohio, on
the payment of dividends to its parent company. Generally, dividends during any
twelve month period may not be paid; without prior regulatory approval, in
excess of the greater of (a) 10 percent of statutory capital and surplus as of
the preceding December 31, or (b) statutory gain from operations for the
preceding year. Subject to the availability of unassigned surplus at the time
of such dividend, the maximum payment which may be made in 2000, without the
prior approval of insurance regulatory authorities, is $36,700.
8. CAPITAL STRUCTURE
During 1999, the Company's Board of Director's approved an amendment to
the Company's Articles of Incorporation which increased the number of
authorized capital shares to 3,000,000. The Board of Directors also authorized
a stock dividend in the amount of $1,000, which was transferred from unassigned
surplus. This amendment and stock dividend were in response to a change in
California law which requires all life insurance companies which do business in
the state to have capital stock of at least $2,500.
9. RETIREMENT AND COMPENSATION PLANS
The Company's employees participate in a qualified benefit plan sponsored
by AEGON. The Company has no legal obligation for the plan. The Company
recognizes pension expense equal to its allocation from AEGON. The pension
expense is allocated among the participating companies based on the Statement
of Financial Accounting Standards No. 87 expense as a percent of salaries. The
benefits are based on years of service and the employee's compensation during
the highest five consecutive years of employment. Pension expense aggregated
$1,105, $917 and $659 for the years ended December 31, 1999, 1998 and 1997,
respectively. The plan is subject to the reporting and disclosure requirements
of the Employee Retirement and Income Security Act of 1974.
The Company's employees also participate in a contributory defined
contribution plan sponsored by AEGON which is qualified under Section 401(k) of
the Internal Revenue Service Code. Employees of the Company who customarily
work at least 1,000 hours during each calendar year and meet the other
eligibility requirements are participants of the plan. Participants may elect
to contribute up to fifteen percent of their salary to the plan. The Company
will match an amount up to three percent of the participant's salary.
Participants may direct all of their contributions and plan balances to be
invested in a variety of investment options. The plan is subject to the
reporting and disclosure requirements of the Employee Retirement and Income
Security Act of 1974.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
9. RETIREMENT AND COMPENSATION PLANS--(CONTINUED)
Pension expense related to this plan was $816, $632 and $448 for the years
ended December 31, 1999, 1998 and 1997, respectively.
AEGON sponsors supplemental retirement plans to provide the Company's
senior management with benefits in excess of normal pension benefits. The plans
are noncontributory and benefits are based on years of service and the
employee's compensation level. The plans are unfunded and nonqualified under
the Internal Revenue Code. In addition, AEGON has established incentive
deferred compensation plans for certain key employees of the Company. AEGON
also sponsors an employee stock option plan for individuals employed at least
three years and a stock purchase plan for its producers, with the participating
affiliated companies establishing their own eligibility criteria, producer
contribution limits and company matching formula. These plans have been accrued
for or funded as deemed appropriate by management of AEGON and the Company.
In addition to pension benefits, the Company participates in plans
sponsored by AEGON that provide postretirement medical, dental and life
insurance benefits to employees meeting certain eligibility requirements.
Portions of the medical and dental plans are contributory. The expenses of the
postretirement plans calculated on the pay-as-you-go basis are charged to
affiliates in accordance with an intercompany cost sharing arrangement. The
Company expensed $81, $157 and $99 for the years ended December 31, 1999, 1998
and 1997, respectively.
10. RELATED PARTY TRANSACTIONS
The Company shares certain officers, employees and general expenses with
affiliated companies.
The Company receives data processing, investment advisory and management,
marketing and administration services from certain affiliates. During 1999,
1998 and 1997, the Company paid $16,905 $12,763 and $10,040, respectively, for
such services, which approximates their costs to the affiliates. The Company
provides office space, marketing and administrative services to certain
affiliates. During 1999, 1998 and 1997, the Company received $3,755, $5,125 and
$4,395, respectively, for such services, which approximates their cost.
Payable to affiliates and intercompany borrowings bear interest at the
thirty-day commercial paper rate of 5.06% at December 31, 1999. During 1999,
1998 and 1997, the Company paid net interest of $1,997, $1,090 and $364,
respectively, to affiliates.
The Company received capital contributions of $32,092 and $20,000 from its
parent in 1998 and 1997, respectively.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
10. RELATED PARTY TRANSACTIONS--(CONTINUED)
At December 31, 1999 and 1998, the Company had short-term note payables to
an affiliate of $17,100 and $44,200, respectively. Interest on these notes
ranged from 5.15% to 5.9% at December 31, 1999 and 5.13% to 5.54% at December
31, 1998.
During 1998, the Company purchased life insurance policies covering the
lives of certain employees of the Company. Premiums of $43,500 were paid to an
affiliate for these policies. At December 31, 1999 and 1998, the cash surrender
value of these policies was $47,518 and $45,445, respectively.
11. COMMITMENTS AND CONTINGENCIES
The Company is a party to legal proceedings incidental to its business.
Although such litigation sometimes includes substantial demands for
compensatory and punitive damages in addition to contract liability, it is
management's opinion, after consultation with counsel and a review of available
facts, that damages arising from such demands will not be material to the
Company's financial position.
The Company is subject to insurance guaranty laws in the states in which
it writes business. These laws provide for assessments against insurance
companies for the benefit of policyholders and claimants in the event of
insolvency of other insurance companies. Assessments are charged to operations
when received by the Company except where right of offset against other taxes
paid is allowed by law; amounts available for future offsets are recorded as an
asset on the Company's balance sheet. The future obligation has been based on
the most recent information available from the National Organization of Life
and Health Insurance Guaranty Association. Potential future obligations for
unknown insolvencies are not determinable by the Company. The Company has
established a reserve of $3,498 and $3,489 and an offsetting premium tax
benefit of $837 and $828 at December 31, 1999 and 1998, respectively, for its
estimated share of future guaranty fund assessments related to several major
insurer insolvencies. The guaranty fund expense (credit) was $(20), $(74) and
$0 at December 31, 1999, 1998 and 1997, respectively.
12. RECONCILIATION OF CAPITAL AND SURPLUS AND NET INCOME
The following table reconciles capital and surplus and net income as
reported in the 1998 Annual Statement filed with the Insurance Department of
the State of Ohio, to the amounts reported in the accompanying financial
statements:
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
12. RECONCILIATION OF CAPITAL AND SURPLUS AND NET INCOME--(CONTINUED)
<TABLE>
<CAPTION>
Year ended
December 31, 1998 December 31, 1998
------------------- ------------------
Total Capital
and Surplus Net Income/Loss
------------------- ------------------
<S> <C> <C>
Amounts reported in Annual Statement ............. $148,038 $ 528
Adjustment to federal income tax benefit ......... (4,458) (4,458)
-------- --------
Amounts reported herein .......................... $143,580 $ (3,930)
======== ========
</TABLE>
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
SUMMARY OF INVESTMENTS OTHER THAN
INVESTMENTS IN RELATED PARTIES
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
SCHEDULE I
<TABLE>
<CAPTION>
AMOUNT AT WHICH
FAIR SHOWN IN THE
TYPE OF INVESTMENT COST (1) VALUE BALANCE SHEET
- ------------------------------------------------------------ ------------ ---------- ----------------
<S> <C> <C> <C>
FIXED MATURITIES
Bonds:
United States Government and government
agencies and authorities ................................ $ 5,827 $ 5,820 $ 5,827
States, municipalities and political subdivisions ......... 7,110 7,275 7,110
Public utilities .......................................... 13,134 12,895 13,134
All other corporate bonds ................................. 93,660 93,086 93,660
--------- ------- ---------
Total fixed maturities ..................................... 119,731 119,076 119,731
EQUITY SECURITIES
Common stocks:
Affiliated entities ....................................... 243 2,156 2,156
Industrial, miscellaneous and all other ................... 302 358 358
--------- ------- ---------
Total equity securities .................................... 545 2,514 2,514
Mortgage loans on real estate .............................. 9,698 9,698
Real estate ................................................ 45,144 45,144
Policy loans ............................................... 182,975 182,975
Cash and short-term investments ............................ 23,932 23,932
--------- ---------
Total investments .......................................... $ 382,025 $ 383,994
========= =========
</TABLE>
- ----------------
(1) Original cost of equity securities and, as to fixed maturities, original
cost reduced by repayments and adjusted for amortization of premiums or
accruals of discounts.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
SUPPLEMENTARY INSURANCE INFORMATION
(DOLLARS IN THOUSANDS)
SCHEDULE III
<TABLE>
<CAPTION>
BENEFITS,
CLAIMS,
FUTURE POLICY POLICY AND NET LOSSES AND OTHER
BENEFITS AND CONTRACT PREMIUM INVESTMENT SETTLEMENT OPERATING
EXPENSES LIABILITIES REVENUE INCOME* EXPENSES EXPENSES*
--------------- ------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Individual life ................ $ 291,106 $ 9,152 $ 583,656 $ 10,754 $ 178,237 $ 261,284
Group life ..................... 11,032 100 1,073 706 1,437 599
Annuity ........................ 268,864 17 1,104,525 28,129 651,520 116,006
--------- -------- ----------- -------- --------- ---------
$ 571,002 $ 9,269 $ 1,689,254 $ 39,589 $ 831,194 $ 377,889
========= ======== =========== ======== ========= =========
YEAR ENDED DECEMBER 31, 1998
Individual life ................ $ 221,050 $ 8,624 $ 474,120 $ 9,884 $ 122,542 $ 230,368
Group life ..................... 10,546 100 1,933 723 1,962 2,281
Annuity ........................ 265,418 509 794,841 25,708 545,532 91,505
--------- -------- ----------- -------- --------- ---------
$ 497,014 $ 9,233 $ 1,270,894 $ 36,315 $ 670,036 $ 324,154
========= ======== =========== ======== ========= =========
YEAR ENDED DECEMBER 31, 1997
Individual life ................ $ 177,088 $ 9,533 $ 390,452 $ 13,742 $ 88,738 $ 176,303
Group life ..................... 9,435 805 3,918 810 3,986 3,292
Annuity ........................ 296,290 591 822,149 25,461 389,726 83,179
--------- -------- ----------- -------- --------- ---------
$ 482,813 $ 10,929 $ 1,216,519 $ 40,013 $ 482,450 $ 262,774
========= ======== =========== ======== ========= =========
</TABLE>
- ----------------
* Allocations of net investment income and other operating expenses are based
on a number of assumptions and estimates, and the results would change if
different methods were applied.
<PAGE>
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
REINSURANCE
(DOLLARS IN THOUSANDS)
SCHEDULE IV
<TABLE>
<CAPTION>
ASSUMED PERCENTAGE
CEDED TO FROM OF AMOUNT
GROSS OTHER OTHER NET ASSUMED
AMOUNT COMPANIES COMPANIES AMOUNT TO NET
-------------- -------------- ------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Life insurance in force ........ $63,040,741 $11,297,250 $ -- $51,743,494 0.0%
=========== =========== ========== =========== ===
Premiums:
Individual life ............... $ 604,628 $ 20,972 $ -- $ 583,656 0.0%
Group life and health ......... 1,383 310 -- 1,073 0.0
Annuity ....................... 1,142,254 37,729 -- 1,104,525 0.0
----------- ----------- ---------- ----------- ---
$ 1,748,265 $ 59,011 $ -- $ 1,689,254 0.0%
=========== =========== ========== =========== ===
YEAR ENDED DECEMBER 31, 1998
Life insurance in force ........ $51,064,173 $ 9,862,460 $ -- $41,201,713 0.0%
=========== =========== ========== =========== ===
Premiums:
Individual life ............... $ 493,633 $ 19,512 $ -- $ 474,121 0.0%
Group life and health ......... 1,691 220 461 1,932 23.8
Annuity ....................... 850,428 55,587 -- 794,841 0.0
----------- ----------- ---------- ----------- ----
$ 1,345,752 $ 75,319 $ 461 $ 1,270,894 .03%
=========== =========== ========== =========== ====
YEAR ENDED DECEMBER 31, 1997
Life insurance in force ........ $40,221,361 $ 6,776,447 $2,692,822 $36,137,736 7.5%
=========== =========== ========== =========== ====
Premiums:
Individual life ............... $ 395,361 $ 4,910 $ -- $ 390,452 0.0%
Group life and health ......... 1,761 231 2,389 3,918 61.0
Annuity ....................... 822,149 -- -- 822,149 0.0
----------- ----------- ---------- ----------- ----
$ 1,219,271 $ 5,141 $ 2,389 $ 1,216,519 0.2%
=========== =========== ========== =========== ====
</TABLE>
