<PAGE>
PAGE 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 5 TO
FORM S-6
FILE NO. 33-5210
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust: IDS Life Variable Account
for Smith Barney
B. Name of depositor: IDS LIFE INSURANCE COMPANY
C. Complete address of depositor's principal executive
offices:
IDS Tower 10
Minneapolis, Minnesota 55440-0010
D. Name and complete address of agent for service:
Mary Ellyn Minenko, Esq.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440-0010
E. Title and amount of securities being registered:
Single Premium Variable Life Insurance Policy
F. Proposed maximum aggregate offering price to the public of the
securities being registered:
Registration of indefinite amount of securities pursuant to Rule 24f-2
under the Investment Company Act of 1940.
G. Amount of filing fee:
Registrant's Rule 24f-2 Notice for its most recent fiscal year was filed on
or about February 14, 1997.
H. Approximate date of proposed public offering:
It is proposed that this filing will become effective (check
appropriate box)
____immediately upon filing pursuant to paragraph (b)
X on April 30, 1997 pursuant to paragraph (b)
____60 days after filing pursuant to paragraph (a)(1) ____on (date) pursuant to
paragraph (a)(1) of Rule 485 ____this post-effective amendment designates a new
effective date for a previously filed post-effective amendment.
<PAGE>
PAGE 2
The prospectus consisting of 33 pages is incorporated by reference to
Registrant's Post-Effective Amendment No. 3 filed on or about April 25, 1988.
<PAGE>
Annual Financial Information
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying individual and combined statements of net
assets of the segregated asset subaccounts of IDS Life Variable Account for
Smith Barney for Single Premium Variable Life Insurance as of December 31, 1996,
and the related statements of operations and changes in net assets for each of
the three years in the period then ended, except for the S95 subaccount which is
for the year ended December 31, 1994 and the period January 1, 1995 to November
15, 1995 (date of maturity of the securities in the Trust). These financial
statements are the responsibility of the management of IDS Life Insurance
Company. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1996 with the affiliated mutual
fund manager and the unit investment trust sponsor. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the individual and combined financial position of the
segregated asset subaccounts of IDS Life Variable Account for Smith Barney for
Single Premium Variable Life Insurance at December 31, 1996 and the individual
and combined results of their operations and the changes in their net assets for
the periods described above, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Minneapolis, Minnesota
March 21, 1997
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account for Smith Barney
- -----------------------------------------------------------------------------------------------------------------------------------
Statements of Net Assets Dec. 31, 1996
Segregated Asset Subaccounts Combined
------------------------------------------------------------------ Variable
Assets SAP SMM SHI STR SGO S04 Account
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments in shares of mutual
fund portfolios and units of
the trust at market value:
IDS Life Series Fund
Equity Portfolio - 510,496 shares
at net asset value of $25.65 per
share (cost $7,953,076) ................ $13,096,399 $ -- $ -- $ -- $ -- $ -- $13,096,399
IDS Life Series Fund
Income Portfolio - 1,395,665 shares
at net asset value of $1.00 per
share (cost $1,395,542) ................ -- 1,395,533 -- -- -- -- 1,395,533
IDS Life Series Fund Money Market
Portfolio - 139,900 shares at
net asset value of $10.17 per
share (cost $1,515,491) ................ -- -- 1,422,314 -- -- -- 1,422,314
IDS Life Series Fund
Managed Portfolio - 345,894 shares
at net asset value of $17.06 per
share (cost $4,723,705) ................ -- -- -- 5,900,448 -- -- 5,900,448
IDS Life Series Fund Government
Securities Portfolio - 159,337
shares at net asset value
of $10.03 per share (cost $1,550,790) .. -- -- -- -- 1,597,959 -- 1,597,959
Smith Barney Inc. Stripped
("Zero Coupon") U. S. Treasury
Securities Fund, Series A 2004
Trust - 304,363 shares
at net asset value of
$0.61 per share (cost $157,872) ........ -- -- -- -- -- 185,478 185,478
- -----------------------------------------------------------------------------------------------------------------------------------
13,096,399 1,395,533 1,422,314 5,900,448 1,597,959 185,478 23,598,131
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends receivable ................... -- 5,974 8,062 -- 7,840 -- 21,876
Accounts receivable from IDS Life
for contract purchase payments ...... 13,209 -- -- 13,774 -- -- 26,983
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets ........................... 13,109,608 1,401,507 1,430,376 5,914,222 1,605,799 185,478 23,646,990
- -----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------------
Payable to IDS Life for:
Mortality and expense risk fee ....... 53,021 2,968 2,974 23,554 3,350 206 86,073
Minimum death benefit guarantee
risk charge ........................ -- -- -- -- -- 39 39
Issue and administrative expense
charge ............................. -- -- -- -- -- 39 39
Distribution expense charge .......... -- -- -- -- -- 49 49
Mortality charge ..................... -- -- -- -- -- 29 29
Premium tax charge ................... -- -- -- -- -- 20 20
Transaction charge ................... -- -- -- -- -- 25 25
Payable to mutual fund portfolios for
investments purchased ................ 13,209 3,005 5,088 13,774 4,491 -- 39,567
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities ...................... 66,230 5,973 8,062 37,328 7,841 407 125,841
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to
Variable Life contracts in
accumulation period .................... $13,043,378 $1,395,534 $1,422,314 $5,876,894 $1,597,958 $185,071 $23,521,149
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding ......... 3,372,075 1,055,223 1,021,781 2,287,669 991,272 96,078
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit .. $ 3.85 $ 1.32 $ 1.39 $ 2.57 $ 1.61 $ 1.90
- -----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account for Smith Barney
- -----------------------------------------------------------------------------------------------------------------------------------
Statements of Operations Year ended Dec. 31, 1996
Segregated Asset Subaccounts Combined
-------------------------------------------------------------- Variable
SAP SMM SHI STR SGO S04 Account
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Dividend income from mutual fund portfolios .$ 2,074,894 $ 55,631 $ 96,268 $ 452,040 $108,372 $ -- $2,787,205
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charge ........... 113,889 6,956 8,643 35,953 9,722 2,901 178,064
Minimum death benefit guarantee risk charge . 44,086 4,646 5,774 24,017 6,494 1,836 86,853
Issue and administrative expense charge ..... 44,086 4,646 5,774 24,017 6,494 1,836 86,853
Distribution charge ......................... 32,999 3,478 4,322 17,977 4,861 1,377 65,014
Mortality charge ............................ 54,910 5,787 7,191 29,913 8,088 2,295 108,184
Premium tax charge .......................... 21,911 2,309 2,870 11,936 3,228 917 43,171
Transaction charge .......................... -- -- -- -- -- 1,147 1,147
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses .............................. 311,881 27,822 34,574 143,813 38,887 12,309 569,286
- -----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net .............. 1,763,013 27,809 61,694 308,227 69,485 (12,309) 2,217,919
- -----------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)on Investments - Net
- -----------------------------------------------------------------------------------------------------------------------------------
Realized gain on sales of investments in
mutual fund portfolios and in the trusts:
Proceeds from sales ......................... 2,463,451 1,103,070 384,711 1,031,121 124,181 557,795 5,664,329
Cost of investments sold .................... 1,395,185 1,103,081 418,426 845,728 119,993 486,356 4,368,769
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain(loss) on investments ...... 1,068,266 (11) (33,715) 185,393 4,188 71,439 1,295,560
Net change in unrealized appreciation or
depreciation of investments ................. (823,689) 3 (15,687) 157,510 (92,975) (53,998) (828,836)
- -----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments .............. 244,577 (8) (49,402) 342,903 (88,787) 17,441 466,724
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations ................... $2,007,590 $ 27,801 $ 12,292 $ 651,130 $(19,302) $ 5,132 $2,684,643
- -----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account for Smith Barney
- -----------------------------------------------------------------------------------------------------------------------
Statements of Operations Year ended Dec. 31, 1995
Segregated Asset Subaccounts Combined
----------------------------------------------------------------------------- Variable
SAP SMM SHI STR SGO S95* S04 Account
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Dividend income from
mutual fund portfolios.....$ 268,604 $ 63,687 $ 88,953 $ 300,012 $ 97,485 $ -- $ -- $ 818,741
- -----------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense
risk charge ............... 69,242 7,380 7,802 44,426 12,045 4,122 1,646 146,663
Minimum death benefit
guarantee risk charge...... 46,254 4,930 5,212 22,999 5,788 2,748 1,097 89,028
Issue and administrative
expense charge ............ 46,254 4,930 5,212 22,999 5,788 2,748 1,097 89,028
Distribution expense
charge .................... 34,621 3,691 3,901 16,869 4,333 2,061 823 66,299
Mortality charge .......... 57,610 6,140 6,492 28,646 7,209 3,435 1,371 110,903
Premium tax charge ........ 22,988 2,450 2,590 11,776 2,877 1,374 548 44,603
Transaction charge ........ -- -- -- -- -- 1,717 686 2,403
- -----------------------------------------------------------------------------------------------------------------------
Total expenses............. 276,969 29,521 31,209 147,715 38,040 18,205 7,268 548,927
- -----------------------------------------------------------------------------------------------------------------------
Investment income (loss) --
net....................... (8,365) 34,166 57,744 152,297 59,445 (18,205) (7,268) 269,814
- -----------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments -- Net
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales
of investments in mutual fund
portfolios and in the trusts:
Proceeds from sales........ 1,847,284 860,714 159,993 1,331,998 146,245 824,274 133,665 5,304,173
Cost of investments sold... 1,081,307 860,734 184,473 1,182,522 141,246 683,352 87,161 4,220,795
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on investments............. 765,977 (20) (24,480) 149,476 4,999 140,922 46,504 1,083,378
Net change in unrealized
appreciation or depreciation
of investments............. 2,603,618 15 183,529 623,831 158,503 (98,959) 25,013 3,495,550
- -----------------------------------------------------------------------------------------------------------------------
Net gain (loss) on
investments................ 3,369,595 (5) 159,049 773,307 163,502 41,963 71,517 4,578,928
- -----------------------------------------------------------------------------------------------------------------------
Net increase in
net assets resulting from
operations ................$3,361,230 $ 34,161 $ 216,793 $ 925,604 $ 222,947 $ 23,758 $ 64,249 $4,848,742
- -----------------------------------------------------------------------------------------------------------------------
* For the period Jan. 1, 1995, to Nov. 15, 1995, date of maturity of securities in the 1995 Trust.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account for Smith Barney
- --------------------------------------------------------------------------------------------------------------------------------
Statements of Operations Year ended Dec. 31, 1994
Segregated Asset Subaccounts Combined
--------------------------------------------------------------------------------- Variable
SAP SMM SHI STR SGO S95 S04 Account
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Dividend income from
mutual fund portfolios..... $1,063,619 $ 38,282 $ 95,109 $ 758,258 $ 110,768 $ -- $ -- $2,066,036
- --------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense
risk charge ............... 70,402 6,483 2,628 44,393 9,859 4,854 1,318 139,937
Minimum death benefit
guarantee risk charge...... 37,747 4,330 6,513 25,122 6,586 3,236 879 84,413
Issue and administrative
expense charge ............ 37,747 4,330 6,513 25,122 6,586 3,236 879 84,413
Distribution expense
charge .................... 28,254 3,241 4,875 18,804 4,929 2,427 659 63,189
Mortality charge .......... 47,015 5,394 8,112 31,289 8,203 4,045 1,095 105,153
Premium tax charge ........ 18,761 2,152 3,237 12,486 3,273 1,618 442 41,969
Transaction charge ........ -- -- -- -- -- 2,022 549 2,571
- --------------------------------------------------------------------------------------------------------------------------------
Total expenses............. 239,926 25,930 31,878 157,216 39,436 21,438 5,821 521,645
- --------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) --
net....................... 823,693 12,352 63,231 601,042 71,332 (21,438) (5,821) 1,544,391
- --------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments -- Net
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales
of investments in mutual fund
portfolios and in the trusts:
Proceeds from sales........ 1,122,644 1,238,579 202,700 953,599 481,242 358,380 13,821 4,370,965
Cost of investments sold... 737,207 1,238,587 235,785 849,236 462,641 312,437 9,126 3,845,019
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on investments............. 385,437 (8) (33,085) 104,363 18,601 45,943 4,695 525,946
Net change in unrealized
appreciation or depreciation
of investments............. (1,175,401) (28) (124,885) (817,558) (215,484) (34,087) (26,816) (2,394,259)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on
investments................ (789,964) (36) (157,970) (713,195) (196,883) 11,856 (22,121) (1,868,313)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations ................ $ 33,729 $ 12,316 $ (94,739) $ (112,153) $(125,551) $ (9,582) $(27,942) $ (323,922)
- ---------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account for Smith Barney
- --------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets Year ended Dec. 31, 1996
Segregated Asset Subaccounts Combined
---------------------------------------------------------------------------- Variable
Operations SAP SMM SHI STR SGO S04 Account
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss) - net ... $ 1,763,013 $ 27,809 $ 61,694 $ 308,227 $ 69,485 $(12,309) $ 2,217,919
Net realized gain (loss)
on investments.................. 1,068,266 (11) (33,715) 185,393 4,188 71,439 1,295,560
Net change in unrealized
appreciation or
depreciation of investments ...... (823,689) 3 (15,687) 157,510 (92,975) (53,998) (828,836)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations . 2,007,590 27,801 12,292 651,130 (19,302) 5,132 2,684,643
- --------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- --------------------------------------------------------------------------------------------------------------------------------
Net transfers* ................... (60,419) 47,499 117,069 (26,624) (35,049) (42,280) 196
Transfers for policy loans ....... (108,461) (18,730) 60,629 (119,615) (9,028) (364) (195,569)
Policy charges ................... -- -- -- -- -- -- --
Contract terminations:
Surrender benefits ............... (1,141,243) (274,026) (186,939) (696,013) (76,608) (40) (2,374,869)
Death benefits ................... -- -- -- (25,291) -- -- (25,291)
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions ............ (1,310,123) (245,257) (9,241) (867,543) (120,685) (42,684) (2,595,533)
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year .. 12,345,911 1,612,990 1,419,263 6,093,307 1,737,945 222,623 23,432,039
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year ........ $13,043,378 $1,395,534 $1,422,314 $5,876,894 $1,597,958 $185,071 $23,521,149
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- --------------------------------------------------------------------------------------------------------------------------------
Units outstanding at
beginning of year............... 3,739,368 1,249,006 1,030,438 2,652,684 1,068,232 112,267
Net transfers* ................... (20,628) 31,341 86,005 (11,417) (22,468) (15,967)
Transfers for policy loans ....... (31,349) (14,304) 45,513 (50,916) (5,690) (201)
Contract terminations:
Surrender benefits ............... (315,316) (210,820) (140,175) (292,276) (48,802) (21)
Death benefits ................... -- -- -- (10,406) -- --
- --------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year.. 3,372,075 1,055,223 1,021,781 2,287,669 991,272 96,078
- --------------------------------------------------------------------------------------------------------------------------------
*Includes transfer activity from (to) other subaccounts.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account for Smith Barney
- -----------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets Year ended Dec. 31, 1995
Segregated Asset Subaccounts Combined
------------------------------------------------------------------------------------- Variable
Operations SAP SMM SHI STR SGO S95** S04 Account
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income
(loss) -- net......... $ (8,365) $ 34,166 $ 57,744 $ 152,297 $ 59,445 $(18,205) $ (7,268) $ 269,814
Net realized gain
(loss) on investments. 765,977 (20) (24,480) 149,476 4,999 140,922 46,504 1,083,378
Net change in unrealized
appreciation or depreciation
of investments........ 2,603,618 15 183,529 623,831 158,503 (98,959) 25,013 3,495,550
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in
net assets resulting from
operations............ 3,361,230 34,161 216,793 925,604 222,947 23,758 64,249 4,848,742
- ----------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- -----------------------------------------------------------------------------------------------------------------------------
Net transfers*........ (296,536) 715,785 37,201 41,957 230,395 (795,854) 67,927 875
Transfers for policy
loans................. (300,101) (17,359) (51,160) (230,174) (9,698) (502) (446) (609,440)
Policy charges (Note 3) (12) -- (8) -- -- -- -- (20)
Contract terminations:
Surrender benefits
(Note 10)............. (524,947) (92,138) (20,709) (854,418) (91,812) (8,017) (126,106) (1,718,147)
Death benefits........ (9,260) (13,995) (1,749) (3,892) (18,396) -- -- (47,292)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions. (1,130,856) 592,293 (36,425) (1,046,527) 110,489 (804,373) (58,625) (2,374,024)
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at beginning
of year............... 10,115,537 986,536 1,238,895 6,214,230 1,404,509 780,615 216,999 20,957,321
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at end
of year............... $12,345,911 $1,612,990 $1,419,263 $6,093,307 $1,737,945 $ -- $ 222,623 $23,432,039
- ----------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ----------------------------------------------------------------------------------------------------------------------------
Units outstanding at
beginning of year..... 4,142,587 786,564 1,064,043 3,145,108 994,719 544,506 139,733
Net transfers*........ (115,120) 558,464 29,935 13,084 151,909 (538,654) 39,068
Transfers for policy
loans................. (106,416) (13,520) (45,198) (107,778) (6,626) (347) (253)
Deductions for policy
charges............... (5) -- (7) -- -- -- --
Contract terminations:
Surrender benefits.... (178,399) (71,634) (16,837) (395,731) (59,983) (5,505) (66,281)
Death benefits........ (3,279) (10,868) (1,498) (1,999) (11,787) -- --
- ------------------------------------------------------------------------------------------------------------------
Units outstanding at
end of year........... 3,739,368 1,249,006 1,030,438 2,652,684 1,068,232 -- 112,267
- ------------------------------------------------------------------------------------------------------------------
* Includes transfer activity from (to) other subaccounts.
**For the period Jan. 1, 1995 to Nov. 15, 1995, date of maturity of securities in the 1995 Trust.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account for Smith Barney
- ----------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets Year Ended Dec. 31, 1994
Segregated Asset Subaccounts Combined
-------------------------------------------------------------------------------------- Variable
Operations SAP SMM SHI STR SGO S95 S04 Account
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income
(loss) -- net......... $ 823,693 $ 12,352 $ 63,231 $ 601,042 $ 71,332 $(21,438) $ (5,821) $1,544,391
Net realized gain
(loss) on investments. 385,437 (8) (33,085) 104,363 18,601 45,943 4,695 525,946
Net change in unrealized
appreciation or depreciation
of investments........ (1,175,401) (28) (124,885) (817,558) (215,484) (34,087) (26,816) (2,394,259)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations............ 33,729 12,316 (94,739) (112,153) (125,551) (9,582) (27,942) (323,922)
- -----------------------------------------------------------------------------------------------------------------------------
Contract Transactions _
- -----------------------------------------------------------------------------------------------------------------------------
Net transfers*........ 204,398 28,171 56,429 17,261 (316,901) 9,618 1,580 556
Transfers for policy
loans................. (154,689) (17,876) (18,631) (122,120) (17,390) (11,647) (449) (342,802)
Contract terminations:
Surrender benefits
(Note 10)............. (252,988) (253,707) (109,500) (377,514) (53,297) (162,800) -- (1,209,806)
Death benefits........ (67,012) -- (21,013) (20,525) (3,470) -- -- (112,020)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions. (270,291) (243,412) (92,715) (502,898) (391,058) (164,829) 1,131 (1,664,072)
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at beginning
of year............... 10,352,099 1,217,632 1,426,349 6,829,281 1,921,118 955,026 243,810 22,945,315
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at end
of year............... $10,115,537 $ 986,536 $1,238,895 $6,214,230 $1,404,509 $780,615 $216,999 $20,957,321
- ----------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ----------------------------------------------------------------------------------------------------------------------------
Units outstanding at
beginning of year..... 4,254,205 981,708 1,143,994 3,397,116 1,264,164 660,189 138,773
Net transfers*........ 86,542 22,488 45,456 8,100 (218,043) 5,961 1,251
Transfers for policy
loans................. (64,791) (14,355) (15,372) (61,148) (11,674) (8,155) (291)
Contract terminations:
Surrender benefits.... (104,732) (203,277) (92,623) (187,978) (37,314) (113,489) --
Death benefits........ (28,637) -- (17,412) (10,982) (2,414) -- --
- ----------------------------------------------------------------------------------------------------------------------------
Units outstanding at
end of year........... 4,142,587 786,564 1,064,043 3,145,108 994,719 544,506 139,733
- ----------------------------------------------------------------------------------------------------------------------------
*Includes transfer activity from (to) other subaccounts.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
IDS Life Variable Account for Smith Barney
Notes to Financial Statements
- ----------------------------------------------------------
1. Organization
IDS Life Variable Account for Smith Barney (the Variable Account) was
established on April 23, 1986 as a segregated asset account of IDS Life
Insurance Company (IDS Life) under Minnesota law and is registered as a single
unit investment trust under the Investment Company Act of 1940. Operations of
the Variable Account commenced on Oct. 3, 1986.
The Variable Account is comprised of six subaccounts. Prior to Nov. 15, 1995,
the date of maturity of securities in the 1995 Trust, the Variable Account was
comprised of seven subaccounts. The assets of each subaccount of the Variable
Account are not chargeable with liabilities arising out of the business
conducted by any other subaccount, account or by IDS Life. The assets of the
Variable Account shall be available, however, to cover the liabilities of IDS
Life to the extent the assets of the Variable Account exceed its liabilities
arising under the policies supported by it. Five of the Variable Account
subaccounts invest in shares of the corresponding portfolios of the IDS Life
Series Fund, Inc. (the mutual fund). The other subaccount invests in units of
the Smith Barney Inc. Stripped ("Zero Coupon") U.S. Treasury Securities Fund,
Series A (the Trust). Policy owners allocate their premium payment to one or
more of the six subaccounts. Such funds are then invested in shares of five
portfolios of IDS Life Series Fund, Inc. or in units of one Trust of Smith
Barney Inc. Stripped ("Zero Coupon") U.S. Treasury Securities Fund, Series A.
The 1995 Trust matured on Nov. 15, 1995 and is no longer available for
investment.
The mutual fund, which commenced operations Jan. 20, 1986, is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. Funds allocated to Subaccount SAP are invested in the shares
of the Equity Portfolio; Subaccount SMM invests in the shares of the Money
Market Portfolio; Subaccount SHI invests in the shares of the Income Portfolio;
Subaccount STR invests in the shares of the Managed Portfolio; and Subaccount
SGO invests in the shares of the Government Securities Portfolio.
The Trust, which commenced operations Aug. 4, 1986, is registered under the
Investment Company Act of 1940 as a unit investment trust. Funds allocated to
the 2004 subaccount (S04) invest in units of the 2004 Trust, and the 1995
subaccount (S95) funds were invested in units of the 1995 Trust.
Prior to Dec. 28, 1990, the Subaccounts invested in the shares of the Shearson
Lehman Series Fund, which was formed on April 18, 1986. It is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company and commenced operations on Nov. 3, 1986. Prior to Dec. 28,
1990, funds allocated to Subaccount SAP were invested in the shares of the
Appreciation Portfolio; Subaccount SMM invested in the shares of the Money
Market Portfolio; Subaccount SHI invested in the shares of the High Income Bond
Portfolio; Subaccount STR invested in the shares of the Total Return Portfolio;
and Subaccount SGO invested in the shares of the Government Securities
Portfolio.
IDS Life acts as the investment manager and American Express Financial
Corporation acts as the investment advisor of the IDS Life Series Fund, Inc. IDS
Life serves as the distributor for the Variable Account and the underlying
mutual fund. Smith Barney Inc. serves as sponsor for the Trust.
- ----------------------------------------------------------
2. Summary of Significant Accounting Policies
Investments in Mutual Fund
Investments in shares of the mutual fund portfolios are stated at market value
which is the net asset value per share as determined by the respective
portfolios. Investment transactions are accounted for on the date the shares are
purchased and sold. The cost of investments sold and redeemed is determined on
the average cost method. Dividend distributions received from the portfolios are
reinvested, net of any expenses payable to IDS Life, in additional shares of the
portfolios and recorded as income by the subaccounts on the ex-dividend date.
Unrealized appreciation or depreciation of investments in the accompanying
financial statements represents the subaccounts' share of the portfolios'
undistributed net investment income, undistributed realized gain or loss and the
unrealized appreciation or depreciation on their investment securities.
Investments in the Trust
Investments in units of the Trust are stated at market value which is the net
asset value per unit as determined by the respective trust. Investment
transactions are accounted for on the date the units are purchased and sold. The
cost of investments sold and redeemed is determined on the average cost method.
<PAGE>
Unrealized appreciation or depreciation of investments in the accompanying
financial statements represents the subaccounts' share of the Trust's
undistributed net investment income, undistributed realized gain or loss and the
unrealized appreciation or depreciation on their investment securities.
Federal Income Taxes
IDS Life is taxed as a life insurance company. The Variable Account is treated
as part of IDS Life for federal income tax purposes. Under existing federal
income tax law, no income taxes are payable with respect to any investment
income of the Variable Account.
- ----------------------------------------------------------
3. Mortality Charge
IDS Life deducts a mortality charge equal (except as explained below), on an
annual basis, to 0.5 percent of the daily net asset value of the Variable
Account. Prior to the maturity date of the policy, the death benefit will always
be higher than the policy value. This deduction will enable IDS Life to pay this
additional amount. Although IDS Life does not expect to charge more than the
rate mentioned above, its charge for providing life insurance protection could
be greater. If, at any time, IDS Life assesses a charge higher than 0.5 percent
for a policy, it will waive any surrender charges which may exist on that
policy. IDS Life guarantees that its charge will never be greater than an amount
based upon the 1958 Commissioners' Standard Ordinary Mortality Table.
- ----------------------------------------------------------
4. Mortality and Expense Risk Charge
IDS Life makes contractual assurances to the Variable Account that possible
future adverse changes in administrative expenses and mortality experience of
the policy owners and beneficiaries will not affect the Variable Account. The
mortality and expense risk fee paid to IDS Life is computed daily and is equal,
on an annual basis, to 0.6 percent of the daily net asset value of the Variable
Account.
- ----------------------------------------------------------
5. Minimum Death Benefit Guarantee Risk Charge
IDS Life deducts a minimum death benefit guarantee risk charge equal, on an
annual basis, to 0.4 percent of the daily net asset value of the Variable
Account. This deduction is made to compensate IDS Life for the risk it assumes
by providing a guaranteed minimum death benefit. The deduction will be made from
the Variable Account and computed on a daily basis. This charge is guaranteed
for the life of the contract and may not be increased.
- ----------------------------------------------------------
6. Issue and Administrative Expense Charge
IDS Life deducts a charge to compensate it for expenses it incurs in
administering the policy, such as the costs of underwriting the policy,
conducting any medical examinations, establishing and maintaining records, and
providing reports to policy owners. This charge is deducted daily and is
equivalent, on an annual basis, to 0.4 percent of the daily net asset value of
the Variable Account during the first 10 years of the policy, and to 0.3 percent
thereafter. There is not necessarily a relationship between the amount of the
charge imposed on a particular policy and the amount of administrative expenses
that may be attributable to that policy.
- ----------------------------------------------------------
7. Premium Tax Charge
To cover the premium taxes assessed by the various states and to compensate IDS
Life for the average premium tax expense it incurs when issuing the policy, IDS
Life deducts a charge equivalent, on an annual basis, to 0.2 percent of the
daily net asset value of the Variable Account during the first 10 policy years,
and 0 percent thereafter.
- ----------------------------------------------------------
8. Distribution Expense Charge
IDS Life incurs certain sales and other distribution expenses at the time the
policies are issued. This charge is equal, on an annual basis, to 0.3 percent of
the daily average net asset value of the Variable Account for the first 10
policy years and 0 percent thereafter. IDS Life anticipates that this charge,
together with any applicable surrender charge, will cover the expected costs of
distributing the policies. In no event will the sum of the surrender charge
deducted on surrender and cumulative distribution expense charges previously
deducted exceed 9 percent of the single premium paid.
<PAGE>
- ----------------------------------------------------------
9. Transaction Charge
IDS Life makes a daily charge against the assets of the subaccount investing in
the Trust. This charge is intended to reimburse IDS Life for the transaction
charge paid directly by IDS Life to Smith Barney Inc. on the sale of the Trust
units to the Variable Account. IDS Life pays these amounts from its general
account assets. The amount of the asset charge is equivalent to an effective
annual rate of 0.25 percent of the account value invested in the Trust. This
amount may be increased in the future but in no event will it exceed an
effective annual rate of 0.5 percent of the Variable Account value. The charge
will be cost-based (taking into account a loss of interest) with no anticipated
element of profit for IDS Life. This charge also varies directly with the size
of the account value.
- ----------------------------------------------------------
10. Surrender Charge
IDS Life will use a surrender charge to help it recover certain selling
expenses. The surrender charge will be deducted during the first eight policy
years. Further, IDS Life guarantees that the total cumulative distribution
expense charges and the surrender charge will never exceed 9 percent of the
single premium. Charges by IDS Life for surrenders are not available on an
individual segregated asset account basis. Charges for all segregated asset
accounts amounted to $11,956,753 in 1996, $10,125,762 in 1995 and $6,969,493 in
1994. Such charges are not an expense of the subaccounts or Variable Account.
They are deducted from contract surrender benefits paid by IDS Life.
- ----------------------------------------------------------
11. Investment Transactions
The subaccounts' purchases of portfolio shares or trust units (net of charges),
including reinvestment of dividend distributions, were as follows:
<TABLE>
<CAPTION>
Year Ended Dec. 31,
------------------------------------
Subaccount Investment 1996 1995 1994
------------------------------------------------------------------------------------
<S> <C> <C> <C>
SAP Equity Portfolio................ $2,920,271 $ 717,367 $1,673,247
SMM Money Market Portfolio.......... 885,621 1,487,172 1,007,521
SHI Income Portfolio................ 437,164 181,311 173,216
STR Managed Portfolio............... 470,506 438,831 1,047,157
SGO Government Securities Portfolio. 72,982 316,179 161,516
S95 1995 Trust...................... -- --* 171,662
S04 2004 Trust...................... 502,585 67,928 9,056
------------------------------------------------------------------------------------
$5,289,129 $3,208,788 $4,243,375
------------------------------------------------------------------------------------
*For the period Jan. 1, 1995 to Nov. 15, 1995, date of maturity of securities in the
1995 Trust.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Condensed Financial Information (unaudited)
Year Ended Dec. 31,
------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Subaccount SAP (invests in Equity Portfolio)
Accumulation unit value at beginning of
period.................................... $3.30 $2.44 $2.43 $2.20 $2.14 $1.32 $1.35 $1.05 $0.97 $1.01
Accumulation unit value at end of period.. $3.87 $3.30 $2.44 $2.43 $2.20 $2.14 $1.32 $1.35 $1.05 $0.97
Number of accumulation units outstanding
at end of period (000 omitted)............ 3,372 3,739 4,143 4,254 4,592 4,902 5,464 5,590 6,111 7,324
- -------------------------------------------------------------------------------------------------------------------------
Subaccount SMM (invests in Money Market Portfolio)
Accumulation unit value at beginning of
period.................................... $1.29 $1.25 $1.24 $1.24 $1.23 $1.18 $1.13 $1.08 $1.04 $1.01
Accumulation unit value at end of period.. $1.32 $1.29 $1.25 $1.24 $1.24 $1.23 $1.18 $1.13 $1.08 $1.04
Number of accumulation units outstanding
at end of period (000 omitted)............ 1,055 1,249 787 982 1,452 1,822 2,038 2,005 1,603 2,169
- -------------------------------------------------------------------------------------------------------------------------
Subaccount SHI (invests in Income Portfolio)
Accumulation unit value at beginning of
period.................................... $1.38 $1.16 $1.24 $1.11 $1.04 $0.92 $1.13 $1.18 $1.06 $1.01
Accumulation unit value at end of period.. $1.39 $1.38 $1.16 $1.24 $1.11 $1.04 $0.92 $1.13 $1.18 $1.06
Number of accumulation units outstanding
at end of period (000 omitted)............ 1,021 1,030 1,064 1,144 901 947 1,310 2,331 3,401 2,666
- -------------------------------------------------------------------------------------------------------------------------
Subaccount STR (invests in Managed Portfolio)
Accumulation unit value at beginning of
period.................................... $2.30 $1.98 $2.01 $1.72 $1.59 $1.23 $1.25 $1.09 $0.95 $1.00
Accumulation unit value at end of period.. $2.57 $2.30 $1.98 $2.01 $1.72 $1.59 $1.23 $1.25 $1.09 $0.95
Number of accumulation units outstanding
at end of period (000 omitted)............ 2,287 2,653 3,145 3,397 3,515 3,784 4,173 4,388 4,789 4,668
- -------------------------------------------------------------------------------------------------------------------------
Subaccount SGO (invests in Government Securities Portfolio)
Accumulation unit value at beginning of
period.................................... $1.63 $1.41 $1.52 $1.39 $1.33 $1.17 $1.12 $1.04 $1.00 $1.01
Accumulation unit value at end of period.. $1.61 $1.63 $1.41 $1.52 $1.39 $1.33 $1.17 $1.12 $1.04 $1.00
Number of accumulation units outstanding
at end of period (000 omitted)............ 991 1,068 995 1,264 1,486 1,724 1,548 1,598 1,672 1,792
- -------------------------------------------------------------------------------------------------------------------------
Subaccount S95 (invests in 1995 Trust)*
Accumulation unit value at beginning of
period.................................... $ -- $1.43 $1.44 $1.39 $1.32 $1.17 $1.09 $0.97 $0.92 $1.00
Accumulation unit value at end of period.. $ -- $ -- $1.43 $1.44 $1.39 $1.32 $1.17 $1.09 $0.97 $0.92
Number of accumulation units outstanding
at end of period (000 omitted)............ -- -- 545 660 313 585 811 499 467 176
- -------------------------------------------------------------------------------------------------------------------------
Subaccount S04 (invests in 2004 Trust)
Accumulation unit value at beginning of
period.................................... $1.98 $1.55 $1.74 $1.47 $1.38 $1.17 $1.16 $0.96 $0.86 $0.98
Accumulation unit value at end of period.. $1.90 $1.98 $1.55 $1.74 $1.47 $1.38 $1.17 $1.16 $0.96 $0.86
Number of accumulation units outstanding
at end of period (000 omitted)............ 96 112 140 139 280 261 605 636 464 282
- -------------------------------------------------------------------------------------------------------------------------
*For the period Jan. 6, 1987 to Nov. 15, 1995, date of maturity of securities in the 1995 Trust.
</TABLE>
<PAGE>
IDS Life Financial Information
The financial statements shown below are those of the insurance company and not
those of any other entity. They are included for the purpose of informing the
investor as to the financial condition of the insurance company and its ability
to carry out its obligations under its variable contracts.
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 31,
ASSETS 1996 1995
- ------ ---- ---------
(thousands)
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1996, $10,521,650; 1995, $11,878,377) .............. $10,236,379 $11,257,591
Available for sale, at fair value (Amortized cost:
1996, $11,008,622; 1995, $10,146,136) .............. 11,146,845 10,516,212
Mortgage loans on real estate ...................... 3,493,364 2,945,495
Policy loans ....................................... 459,902 424,019
Other investments .................................. 251,465 146,894
Total investments .................................. 25,587,955 25,290,211
Cash and cash equivalents .......................... 224,603 72,147
Amounts recoverable from reinsurers ................ 157,722 114,387
Amounts due from brokers ........................... 11,047 --
Other accounts receivable .......................... 44,089 39,108
Accrued investment income .......................... 343,313 348,008
Deferred policy acquisition costs .................. 2,330,805 2,025,725
Deferred income taxes .............................. 33,923 --
Other assets ....................................... 37,364 36,410
Separate account assets ............................ 18,535,160 14,974,082
Total assets ....................................... $47,305,981 $42,900,078
=========== ===========
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS (continued)
Dec. 31, Dec. 31
LIABILITIES AND STOCKHOLDER'S EQUITY 1996 1995
- ------------------------------------ ---- ----
(thousands)
Liabilities:
Future policy benefits:
Fixed annuities .................................... $21,838,008 $21,404,836
Universal life-type insurance ...................... 3,177,149 3,076,847
Traditional life insurance ......................... 209,685 209,249
Disability income and long-term care insurance ..... 424,200 327,157
Policy claims and other
policyholders' funds ............................... 83,634 56,323
Deferred income taxes .............................. -- 112,904
Amounts due to brokers ............................. 261,987 121,618
Other liabilities .................................. 332,078 285,354
Separate account liabilities ....................... 18,535,160 14,974,082
Total liabilities .................................. 44,861,901 40,568,370
Stockholder's equity:
Capital stock, $30 par value per share;
100,000 shares authorized, issued and outstanding .. 3,000 3,000
Additional paid-in capital ......................... 283,615 278,814
Net unrealized gain on investments ................. 86,102 230,129
Retained earnings .................................. 2,071,363 1,819,765
Total stockholder's equity ......................... 2,444,080 2,331,708
Total liabilities and stockholder's equity ......... $47,305,981 $42,900,078
=========== ===========
Commitments and contingencies (Note 6)
See accompanying notes to consolidated financial statements.
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years ended Dec. 31,
1996 1995 1994
---- ---- ----
(thousands)
<S> <C> <C> <C>
Revenues:
Premiums:
Traditional life insurance $ 51,403 $ 50,193 $ 48,184
Disability income and long-term care insurance 131,518 111,337 96,456
Total premiums 182,921 161,530 144,640
Policyholder and contractholder charges 302,999 256,454 219,936
Management and other fees 271,342 215,581 164,169
Net investment income 1,965,362 1,907,309 1,781,873
Net realized loss on investments (159) (4,898) (4,282)
Total revenues 2,722,465 2,535,976 2,306,336
Benefits and expenses:
Death and other benefits:
Traditional life insurance 26,919 29,528 28,263
Universal life-type insurance
and investment contracts 85,017 71,691 52,027
Disability income and
long-term care insurance 19,185 16,259 13,393
Increase (decrease) in liabilities for future policy benefits:
Traditional life insurance 1,859 (1,315) (3,229)
Disability income and
long-term care insurance 57,230 51,279 37,912
Interest credited on universal life-type
insurance and investment contracts 1,370,468 1,315,989 1,174,985
Amortization of deferred policy acquisition costs 278,605 280,121 280,372
Other insurance and operating expenses 261,468 211,642 210,101
Total benefits and expenses 2,100,751 1,975,194 1,793,824
Income before income taxes 621,714 560,782 512,512
Income taxes 207,138 195,842 176,343
Net income $ 414,576 $ 364,940 $ 336,169
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
Three years ended Dec. 31, 1996
(thousands)
Additional Net Unrealized
Capital Paid-In Gain (Loss) on Retained
Stock Capital Investments Earnings Total
----- ------- ----------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance, Dec. 31, 1993 $3,000 $ 222,000 $ 114 $1,468,230 $1,693,344
Initial adoption of SFAS No. 115 -- -- 181,269 -- 181,269
Net income -- -- -- 336,169 336,169
Change in net unrealized
gain (loss) on investments -- -- (457,091) -- (457,091)
Cash dividends -- -- -- (165,000) (165,000)
Balance, Dec. 31, 1994 3,000 222,000 (275,708) 1,639,399 1,588,691
Net income -- -- -- 364,940 364,940
Change in net unrealized
gain (loss) on investments -- -- 505,837 -- 505,837
Capital contribution from parent -- 56,814 -- -- 56,814
Loss on reinsurance transaction
with affiliate -- -- -- (4,574) (4,574)
Cash dividends -- -- -- (180,000) (180,000)
Balance, Dec. 31, 1995 3,000 278,814 230,129 1,819,765 2,331,708
Net income -- -- -- 414,576 414,576
Change in net unrealized
gain (loss) on investments -- -- (144,027) -- (144,027)
Capital contribution from parent -- 4,801 -- -- 4,801
Other changes -- -- -- 2,022 2,022
Cash dividends -- -- -- (165,000) (165,000)
Balance, Dec. 31, 1996 $3,000 $283,615 $ 86,102 $2,071,363 $2,444,080
===== ======= ====== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended Dec. 31,
1996 1995 1994
---- ---- ----
(thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 414,576 $ 364,940 $ 336,169
Adjustments to reconcile net income to
net cash (used in) provided by operating activities:
Policy loan issuance, excluding universal
life-type insurance (49,314) (46,011) (37,110)
Policy loan repayment, excluding universal
life-type insurance 41,179 36,416 33,384
Change in amounts recoverable from reinsurers (43,335) (34,083) (25,006)
Change in other accounts receivable (4,981) 12,231 (28,551)
Change in accrued investment income 4,695 (30,498) (10,333)
Change in deferred policy acquisition
costs, net (294,755) (196,963) (192,768)
Change in liabilities for future policy
benefits for traditional life,
disability income and
long-term care insurance 97,479 85,575 55,354
Change in policy claims and other
policyholders' funds 27,311 6,255 5,552
Change in deferred income taxes (65,609) (33,810) (19,176)
Change in other liabilities 46,724 (6,548) (122)
(Accretion of discount)
amortization of premium, net (23,032) (22,528) 30,921
Net realized loss on investments 159 4,898 4,282
Policyholder and contractholder
charges, non-cash (154,286) (140,506) (126,918)
Other, net (10,816) 3,849 (8,709)
Net cash (used in) provided by operating
activities $ (14,005) $ 3,217 $ 16,969
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Years ended Dec. 31,
1996 1995 1994
(thousands)
<S> <C> <C> <C>
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases $ (43,751) $ (1,007,208) $ (879,740)
Maturities, sinking fund payments and calls 759,248 538,219 1,651,762
Sales 279,506 332,154 58,001
Fixed maturities available for sale:
Purchases (2,299,198) (2,452,181) (2,763,278)
Maturities, sinking fund payments and calls 1,270,240 861,545 1,234,401
Sales 238,905 136,825 374,564
Other investments, excluding policy loans:
Purchases (904,536) (823,131) (634,807)
Sales 236,912 160,521 243,862
Change in amounts due from brokers (11,047) 7,933 (2,214)
Change in amounts due to brokers 140,369 (105,119) (124,749)
Net cash used in investing activities (333,352) (2,350,442) (842,198)
Cash flows from financing activities:
Activity related to universal life-type insurance
and investment contracts:
Considerations received 3,567,586 4,189,525 3,566,814
Surrenders and death benefits (4,250,294) (3,141,404) (3,602,392)
Interest credited to account balances 1,370,468 1,315,989 1,174,985
Universal life-type insurance policy loans:
Issuance (86,501) (84,700) (78,239)
Repayment 58,753 52,188 50,554
Capital contribution from parent 4,801 -- --
Cash dividends to parent (165,000) (180,000) (165,000)
Net cash provided by financing activities 499,813 2,151,598 946,722
Net increase (decrease) in cash and
cash equivalents 152,456 (195,627) 121,493
Cash and cash equivalents at
beginning of year 72,147 267,774 146,281
Cash and cash equivalents at
end of year $ 224,603 $ 72,147 $ 267,774
========= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ thousands)
1. Summary of significant accounting policies
Nature of business
IDS Life Insurance Company (the Company) is a stock life insurance company
organized under the laws of the State of Minnesota. The Company is a wholly
owned subsidiary of American Express Financial Corporation, which is a wholly
owned subsidiary of American Express Company. The Company serves residents of
all states except New York. IDS Life Insurance Company of New York is a
wholly owned subsidiary of the Company and serves New York State residents.
The Company also wholly owns American Enterprise Life Insurance Company,
American Centurion Life Assurance Company (ACLAC) and American Partners Life
Insurance Company.
The Company's principal products are deferred annuities and universal life
insurance, which are issued primarily to individuals. It offers single
premium and flexible premium deferred annuities on both a fixed and variable
dollar basis. Immediate annuities are offered as well. The Company's
insurance products include universal life (fixed and variable), whole life,
single premium life and term products (including waiver of premium and
accidental death benefits). The Company also markets disability income and
long-term care insurance.
Basis of presentation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All material intercompany
accounts and transactions have been eliminated in consolidation.
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles which vary in
certain respects from reporting practices prescribed or permitted by state
insurance regulatory authorities.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investments
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and carried at
amortized cost. All other fixed maturities and all marketable equity
securities are classified as available for sale and carried at fair value.
Unrealized gains and losses on securities classified as available for sale
are carried as a separate component of stockholder's equity, net of deferred
taxes.
Realized investment gain or loss is determined on an identified cost basis.
Prepayments are anticipated on certain investments in mortgage-backed
securities in determining the constant effective yield used to recognize
interest income. Prepayment estimates are based on information received from
brokers who deal in mortgage-backed securities.
Mortgage loans on real estate are carried at amortized cost less reserves for
mortgage loan losses. The estimated fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage interest rates
currently offered for mortgages of similar maturities.
Impairment of mortgage loans is measured as the excess of the loan's recorded
investment over its present value of expected principal and interest payments
discounted at the loan's effective interest rate, or the fair value of
collateral. The amount of the impairment is recorded in a reserve for
mortgage loan losses. The reserve for mortgage loans losses is maintained at
a level that management believes is adequate to absorb estimated losses in
the portfolio. The level of the reserve account is determined based on
several factors, including historical experience, expected future principal
and interest payments, estimated collateral values, and current and
anticipated economic and political conditions. Management regularly evaluates
the adequacy of the reserve for mortgage loan losses.
The Company generally stops accruing interest on mortgage loans for which
interest payments are delinquent more than three months. Based on
management's judgement as to the ultimate collectibility of principal,
interest payments received are either recognized as income or applied to the
recorded investment in the loan.
The cost of interest rate caps and floors is amortized to investment income
over the life of the contracts and payments received as a result of these
agreements are recorded as investment income when realized. The amortized
cost of interest rate caps and floors is included in other investments.
Amounts paid or received under interest rate swap agreements are recognized
as an adjustment to investment income.
Policy loans are carried at the aggregate of the unpaid loan balances which
do not exceed the cash surrender values of the related policies.
When evidence indicates a decline, which is other than temporary, in the
underlying value or earning power of individual investments, such investments
are written down to the fair value by a charge to income.
Statements of cash flows
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These securities
are carried principally at amortized cost which approximates fair value.
Supplementary information to the consolidated statements of cash flows
for the years ended Dec. 31 is summarized as follows:
1996 1995 1994
--------- -------- -----
Cash paid during the year for:
Income taxes $317,283 $191,011 $226,365
Interest on borrowings 4,119 5,524 1,553
Recognition of profits on annuity contracts and insurance policies
Profits on fixed deferred annuities are recognized by the Company over the
lives of the contracts, using primarily the interest method. Profits
represent the excess of investment income earned from investment of contract
considerations over interest credited to contract owners and other expenses.
The retrospective deposit method is used in accounting for universal
life-type insurance. This method recognizes profits over the lives of the
policies in proportion to the estimated gross profits expected to be
realized.
Premiums on traditional life, disability income and long-term care insurance
policies are recognized as revenue when due, and related benefits and
expenses are associated with premium revenue in a manner that results in
recognition of profits over the lives of the insurance policies. This
association is accomplished by means of the provision for future policy
benefits and the deferral and subsequent amortization of policy acquisition
costs.
Policyholder and contractholder charges include the monthly cost of insurance
charges and issue and administrative fees. These charges also include the
minimum death benefit guarantee fees received from the variable life
insurance separate accounts. Management and other fees include investment
management fees and mortality and expense risk fees from the variable annuity
and variable life insurance separate accounts and underlying funds.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales compensation, policy
issue costs, underwriting and certain sales expenses, have been deferred on
insurance and annuity contracts. The deferred acquisition costs for most
single premium deferred annuities and installment annuities are amortized in
relation to surrender charge revenue and a portion of the excess of
investment income earned from investment of the contract considerations over
the interest credited to contract owners. The costs for universal life-type
insurance and certain installment annuities are amortized as a percentage of
the estimated gross profits expected to be realized on the policies. For
traditional life, disability income and long-term care insurance policies,
the costs are amortized over an appropriate period in proportion to premium
revenue.
Liabilities for future policy benefits
Liabilities for universal life-type insurance, single premium deferred
annuities and installment annuities are accumulation values.
Liabilities for fixed annuities in a benefit status are based on the
Progressive Annuity Table with interest at 5 percent, the 1971 Individual
Annuity Table with interest at 7 percent or 8.25 percent, or the 1983a Table
with various interest rates ranging from 5.5 percent to 9.5 percent,
depending on year of issue.
Liabilities for future benefits on traditional life insurance are based on
the net level premium method and anticipated rates of mortality, policy
persistency and interest earnings. Anticipated mortality rates generally
approximate the 1955-1960 Select and Ultimate Basic Table for policies issued
prior to 1980, the 1965-1970 Select and Ultimate Basic Table for policies
issued from 1981-1984 and the 1975-1980 Select and Ultimate Basic Table for
policies issued after 1984. Anticipated policy persistency rates vary by
policy form, issue age and policy duration with persistency on cash value
plans generally anticipated to be better than persistency on term insurance
plans. Anticipated interest rates are 4% for policies issued before 1974,
5.25% for policies issued from 1974-1980, and range from 10% to 6% depending
on policy form, issue year and policy duration for policies issued after
1980.
Liabilities for future disability income policy benefits include both policy
reserves and claim reserves. Policy reserves are based on the net level
premium method and anticipated rates of morbidity, mortality, policy
persistency and interest earnings. Anticipated morbidity rates are based on
the 1964 Commissioners Disability Table for policies issued before 1996 and
the 1985 CIDA table for policies issued in 1996. Anticipated mortality rates
are based on the 1958 Commissioners Standard Ordinary Table for policies
issued before 1996 and the 1975-1980 Basic Table for policies issued in 1996.
Anticipated policy persistency rates vary by policy form, occupation class,
issue age and policy duration. Anticipated interest rates are 3% for policies
issued before 1996 and grade from 7.5% to 5% over five years for policies
issued in 1996. Claim reserves are calculated on the basis of anticipated
rates of claim continuance and interest earnings. Anticipated claim
continuance rates are based on the 1964 Commissioners Disability Table for
claims incurred before 1993 and the 1985 CIDA Table for claims incurred after
1992. Anticipated interest rates are 8% for claims incurred prior to 1992, 7%
for claims incurred in 1992 and 6% for claims incurred after 1992.
Liabilities for future long-term care policy benefits include both policy
reserves and claim reserves. Policy reserves are based on the net level
premium method and anticipated rates of morbidity, mortality, policy
persistency and interest earnings. Anticipated morbidity rates are based on
the 1985 National Nursing Home Survey. Anticipated mortality rates are based
on the 1983a Table. Anticipated policy persistency rates vary by policy form,
issue age and policy duration. Anticipated interest rates are 9.5% grading to
7% over 10 years for policies issued from 1989-1992 and 7.75% grading to 7%
over 4 years for policies issued after 1992. Claim reserves are calculated on
the basis of anticipated rates of claim continuance and interest earnings.
Anticipated claim continuance rates are based on the 1985 National Nursing
Home Survey. Anticipated interest rates are 8% for claims incurred prior to
1992, 7% claims incurred in 1992 and 6% for claims incurred after 1992.
Reinsurance
The maximum amount of life insurance risk retained by the Company on any one
life is $750 of life and waiver of premium benefits plus $50 of accidental
death benefits. The maximum amount of disability income risk retained by the
Company on any one life is $6 of monthly benefit for benefit periods longer
than three years. The excesses are reinsured with other life insurance
companies on a yearly renewable term basis. Graded premium whole life and
long-term care policies are primarily reinsured on a coinsurance basis.
Federal income taxes
The Company's taxable income is included in the consolidated federal income
tax return of American Express Company. The Company provides for income taxes
on a separate return basis, except that, under an agreement between American
Express Financial Corporation and American Express Company, tax benefit is
recognized for losses to the extent they can be used on the consolidated tax
return. It is the policy of American Express Financial Corporation to
reimburse subsidiaries for all tax benefits.
Included in other liabilities at Dec. 31, 1996 and 1995 are $33,358 and
($13,415), respectively, receivable from/(payable to) American Express
Financial Corporation for federal income taxes.
Separate account business
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity and variable life insurance
contract owners.
The Company makes contractual mortality assurances to the variable annuity
contract owners that the net assets of the separate accounts will not be
affected by future variations in the actual life expectancy experience of the
annuitants and the beneficiaries from the mortality assumptions implicit in
the annuity contracts. The Company makes periodic fund transfers to, or
withdrawals from, the separate accounts for such actuarial adjustments for
variable annuities that are in the benefit payment period. For variable life
insurance, the Company guarantees that the rates at which insurance charges
and administrative fees are deducted from contract funds will not exceed
contractual maximums. The Company also guarantees that the death benefit will
continue payable at the initial level regardless of investment performance so
long as minimum premium payments are made.
Accounting changes
The Financial Accounting Standards Board's (FASB) Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," was effective
Jan. 1, 1996. The new rule did not have a material impact on the Company's
results of operations or financial condition. The Company adopted SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities." The
effect of adopting the new rule was to increase stockholder's equity by
$181,269, net of tax, as of Jan. 1, 1994, but the adoption had no impact on
the Company's net income.
Reclassification
Certain 1995 and 1994 amounts have been reclassified to conform to the 1996
presentation.
2. Investments
Fair values of investments in fixed maturities represent quoted market prices
and estimated values when quoted prices are not available. Estimated values
are determined by established procedures involving, among other things,
review of market indices, price levels of current offerings of comparable
issues, price estimates and market data from independent brokers and
financial files.
Net realized gain (loss) on investments for the years ended Dec. 31 is
summarized as follows:
1996 1995 1994
-------- -------- --------
Fixed maturities ............ $ 8,736 $ 9,973 $ (1,575)
Mortgage loans .............. (8,745) (13,259) (3,013)
Other investments ........... (150) (1,612) 306
-------- -------- --------
$ (159) $ (4,898) $ (4,282)
======== ======== ========
<PAGE>
Changes in net unrealized appreciation (depreciation) of investments for the
years ended Dec. 31 are summarized as follows:
1996 1995 1994
---------- ------------ -----------
Fixed maturities:
Held to maturity ....... $ (335,515) $ 1,195,847 $(1,329,740)
Available for sale ..... (231,853) 811,649 (720,449)
Equity securities ......... (52) 3,118 (2,917)
The amortized cost, gross unrealized gains and losses and fair values of
investments in fixed maturities and equity securities at Dec. 31, 1996 are as
follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- ---- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 44,002 $ 933 $ 1,276 $ 43,659
State and municipal obligations 9,685 412 -- 10,097
Corporate bonds and obligations 8,057,997 356,687 47,639 8,367,045
Mortgage-backed securities 2,124,695 21,577 45,423 2,100,849
------------ --------- ------- ------------
$10,236,379 $379,609 $94,338 $10,521,650
=========== ======== ======= ===========
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ ---- ----- ------ -----
U.S. Government agency obligations $ 77,944 $ 2,607 $ 96 $ 80,455
State and municipal obligations 11,032 1,336 -- 12,368
Corporate bonds and obligations 3,701,604 122,559 24,788 3,799,375
Mortgage-backed securities 7,218,042 104,808 68,203 7,254,647
---------- -------- ------ -----------
Total fixed maturities 11,008,622 231,310 93,087 11,146,845
Equity securities 3,000 308 -- 3,308
----------- -------- ------- -----------
$11,011,622 $231,618 $93,087 $11,150,153
=========== ======== ======= ===========
</TABLE>
The amortized cost, gross unrealized gains and losses and fair values of
investments in fixed maturities and equity securities at Dec. 31, 1995 are as
follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 64,523 $ 3,919 $ -- $ 68,442
State and municipal obligations 11,936 362 32 12,266
Corporate bonds and obligations 8,921,431 620,327 36,786 9,504,972
Mortgage-backed securities 2,259,701 42,684 9,688 2,292,697
----------- --------- ------- -----------
$11,257,591 $667,292 $46,506 $11,878,377
=========== ======== ======= ===========
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
U.S. Government agency obligations $ 84,082 $ 3,248 $ 50 $ 87,280
State and municipal obligations 11,020 1,476 -- 12,496
Corporate bonds and obligations 2,514,308 186,596 3,451 2,697,453
Mortgage-backed securities 7,536,726 206,288 24,031 7,718,983
---------- -------- ------- ----------
Total fixed maturities 10,146,136 397,608 27,532 10,516,212
Equity securities 3,156 361 -- 3,517
---------- -------- ------- ----------
$10,149,292 $397,969 $27,532 $10,519,729
=========== ======== ======= ===========
</TABLE>
<PAGE>
The amortized cost and fair value of investments in fixed maturities at Dec.
31, 1996 by contractual maturity are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
Amortized Fair
Held to maturity Cost Value
Due in one year or less $ 197,711 $ 200,134
Due from one to five years 2,183,374 2,294,335
Due from five to ten years 4,606,775 4,779,690
Due in more than ten years 1,123,824 1,146,642
Mortgage-backed securities 2,124,695 2,100,849
------------ ------------
$10,236,379 $10,521,650
Amortized Fair
Available for sale Cost Value
Due in one year or less $ 227,051 $ 229,650
Due from one to five years 851,428 899,098
Due from five to ten years 2,140,579 2,182,079
Due in more than ten years 571,522 581,371
Mortgage-backed securities 7,218,042 7,254,647
------------ ------------
$11,008,622 $11,146,845
During the years ended Dec. 31, 1996, 1995 and 1994, fixed maturities
classified as held to maturity were sold with amortized cost of $277,527,
$333,508 and $61,290, respectively. Net gains and losses on these sales were
not significant. The sale of these fixed maturities was due to significant
deterioration in the issuers' creditworthiness.
As a result of adopting the FASB Special Report, "A Guide to Implementation
of Statement 115 on Accounting for Certain Investments in Debt and Equity
Securities," the Company reclassified securities with a book value of $91,760
and net unrealized gains of $881 from held to maturity to available for sale
in December 1995.
In addition, fixed maturities available for sale were sold during 1996 with
proceeds of $238,905 and gross realized gains and losses of $571 and $16,084,
respectively. Fixed maturities available for sale were sold during 1995 with
proceeds of $136,825 and gross realized gains and losses of $nil and $5,781,
respectively. Fixed maturities available for sale were sold during 1994 with
proceeds of $374,564 and gross realized gains and losses of $1,861 and
$7,602, respectively.
At Dec. 31, 1996, bonds carried at $13,571 were on deposit with various
states as required by law.
<PAGE>
Net investment income for the years ended Dec. 31 is summarized as follows:
1996 1995 1994
--------- ------- -----
Interest on fixed maturities $1,666,929 $1,656,136 $1,556,756
Interest on mortgage loans 283,830 232,827 196,521
Other investment income 43,283 35,936 38,366
Interest on cash equivalents 5,754 5,363 6,872
------------- ------- -----------
1,999,796 1,930,262 1,798,515
Less investment expenses 34,434 22,953 16,642
------------ --------- ----------
$1,965,362 $1,907,309 $1,781,873
========== ========== ==========
At Dec. 31, 1996, investments in fixed maturities comprised 84 percent of the
Company's total invested assets. These securities are rated by Moody's and
Standard & Poor's (S&P), except for securities carried at approximately $1.9
billion which are rated by American Express Financial Corporation internal
analysts using criteria similar to Moody's and S&P. A summary of investments
in fixed maturities, at amortized cost, by rating on Dec. 31 is as follows:
Rating 1996 1995
------ ----------- -----------
Aaa/AAA ....................... $ 9,460,134 $ 9,907,664
Aaa/AA ........................ 2,870 3,112
Aa/AA ......................... 241,914 279,403
Aa/A .......................... 192,631 154,846
A/A ........................... 2,949,895 3,104,122
A/BBB ......................... 1,034,661 871,782
Baa/BBB ....................... 4,531,515 4,417,654
Baa/BB ........................ 768,285 657,633
Below investment grade ........ 2,063,096 2,007,511
----------- -----------
$21,245,001 $21,403,727
At Dec. 31, 1996, 95 percent of the securities rated Aaa/AAA are GNMA, FNMA
and FHLMC mortgage-backed securities. No holdings of any other issuer are
greater than 1 percent of the Company's total investments in fixed
maturities.
<PAGE>
At Dec. 31, 1996, approximately 13.7 percent of the Company's invested assets
were mortgage loans on real estate. Summaries of mortgage loans by region of
the United States and by type of real estate are as follows:
Dec. 31, 1996 Dec. 31, 1995
------------------------- ------------------------
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
------------------ ----------- ----------- ----------- ----------
East North Central $ 777,960 $ 19,358 $ 720,185 $ 67,206
West North Central 389,285 29,620 303,113 34,411
South Atlantic 891,852 35,007 732,529 111,967
Middle Atlantic 553,869 17,959 508,634 37,079
New England 310,177 14,042 244,816 40,452
Pacific 190,770 4,997 168,272 23,161
West South Central 105,173 11,246 61,860 27,978
East South Central 75,176 -- 58,462 10,122
Mountain 236,597 11,401 184,964 16,774
---------- -------- -------- ------
3,530,859 143,630 2,982,835 369,150
Less allowance for losses 37,495 -- 37,340 --
---------- -------- ------- ---
$3,493,364 $143,630 $2,945,495 $369,150
========== ======== ========== ========
Dec. 31, 1996 Dec. 31, 1995
------------------------- ------------------------
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
- ----------------------- --------- --------- ----------- -----------
Department/retail stores $1,154,179 $ 68,032 $ 985,660 $ 134,538
Apartments 1,119,352 23,246 1,038,446 84,978
Office buildings 611,395 27,653 464,381 62,664
Industrial buildings 296,944 6,716 255,469 22,721
Hotels/motels 97,870 6,257 31,335 48,816
Nursing/retirement homes 88,226 1,877 80,864 4,378
Mixed Use 73,120 -- 53,169 --
Medical buildings 67,178 8,289 57,772 2,495
Other 22,595 1,560 15,739 8,560
------------ ---------- --------- --------
3,530,859 143,630 2,982,835 369,150
Less allowance for losses 37,495 -- 37,340 --
------------ ------ --------- ------
$3,493,364 $143,630 $2,945,495 $369,150
========== ======== ========== ========
<PAGE>
Mortgage loan fundings are restricted by state insurance regulatory authorities
to 80 percent or less of the market value of the real estate at the time of
origination of the loan. The Company holds the mortgage document, which gives
the right to take possession of the property if the borrower fails to perform
according to the terms of the agreement. The fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage interest rates
currently offered for mortgages of similar maturities. Commitments to purchase
mortgages are made in the ordinary course of business. The fair value of the
mortgage commitments is $nil.
At Dec. 31, 1996 and 1995, the Company's recorded investment in impaired loans
was $79,441 and $83,874 with a reserve of $16,162 and $19,307, respectively.
During 1996 and 1995, the average recorded investment in impaired loans was
$74,338 and $74,567, respectively.
The Company recognized $4,889 and $5,014 of interest income related to impaired
loans for the year ended Dec. 31, 1996 and 1995, respectively.
The following table presents changes in the reserve for investment losses
related to all loans:
1996 1995
--------- --------
Balance, Jan. 1 .................... $ 37,340 $ 35,252
Provision for investment losses .... 10,005 15,900
Loan payoffs ....................... (4,700) (11,900)
Foreclosures ....................... (5,150) (1,350)
Other .............................. -- (562)
-------- --------
Balance, Dec. 31 ................... $ 37,495 $ 37,340
======== ========
At Dec. 31, 1996, the Company had commitments to purchase affordable housing
limited partnership investments of $28,476, which is recorded as a liability in
the accompanying balance sheets. The total amounts committed in 1997 and 1998
are $25,234 and $3,242, respectively. The Company also had commitments to
purchase real estate investments for $35,425. Commitments to purchase real
estate investments are made in the ordinary course of business. The fair value
of these commitments is $nil.
<PAGE>
3. Income taxes
The Company qualifies as a life insurance company for federal income tax
purposes. As such, the Company is subject to the Internal Revenue Code
provisions applicable to life insurance companies.
Income tax expense consists of the following:
1996 1995 1994
------ -------- -------
Federal income taxes:
Current $260,357 $218,040 $186,508
Deferred (65,609) (33,810) (19,175)
-------- -------- --------
194,748 184,230 167,333
State income taxes-current 12,390 11,612 9,010
--------- ------- ------
Income tax expense $207,138 $195,842 $176,343
======== ======== ========
Increases (decreases) to the federal tax provision applicable to pretax
income based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ----------------- -----------------
Provision Rate Provision Rate Provision Rate
<S> <C> <C> <C> <C> <C> <C>
Federal income
taxes based on
the statutory rate $217,600 35.0% $196,274 35.0% $179,379 35.0%
Increases (decreases)
are attributable to:
Tax-excluded interest
and dividend income (9,636) (1.6) (8,524) (1.5) (9,939) (2.0)
Other, net (13,216) (2.1) (3,520) (0.6) (2,107) (0.4)
--------- ----- -------- ---- -------- ----
Federal income taxes $194,748 31.3% $184,230 32.9% $167,333 32.6%
======== ===== ======== ==== ======== ====
</TABLE>
A portion of life insurance company income earned prior to 1984 was not
subject to current taxation but was accumulated, for tax purposes, in a
policyholders' surplus account. At Dec. 31, 1996, the Company had a
policyholders' surplus account balance of $20,114. The policyholders' surplus
account is only taxable if dividends to the stockholder exceed the
stockholder's surplus account or if the Company is liquidated. Deferred
income taxes of $7,040 have not been established because no distributions of
such amounts are contemplated.
<PAGE>
Significant components of the Company's deferred tax assets and liabilities
as of Dec. 31 are as follows:
1996 1995
------- -----
Deferred tax assets:
Policy reserves $724,412 $600,176
Life insurance guarantee
fund assessment reserve 29,854 26,785
Other 2,763 --
--------- -------
Total deferred tax assets 757,029 626,961
--------- -------
Deferred tax liabilities:
Deferred policy acquisition costs 665,685 590,762
Unrealized gain on investments 48,486 129,653
Investments, other 8,935 17,152
Other -- 2,298
-------- -------
Total deferred tax liabilities 723,106 739,865
-------- -------
Net deferred tax assets (liabilities)$ 33,923 $(112,904)
========= =========
The Company is required to establish a "valuation allowance" for any portion
of the deferred tax assets that management believes will not be realized. In
the opinion of management, it is more likely than not that the Company will
realize the benefit of the deferred tax assets and, therefore, no such
valuation allowance has been established.
4. Stockholder's equity
During 1996, the Company received a $4,801 capital contribution from its
parent, American Express Financial Corporation. During 1995, the Company
received a $39,700 capital contribution from its parent in the form of
investments in fixed maturities and mortgage loans. In addition, effective
Jan. 1, 1995, the Company began consolidating the financial results of ACLAC.
This change reflected the transfer of ownership of ACLAC from Amex Life
Assurance Company (Amex Life), a former affiliate, to the Company prior to
the sale of Amex Life to an unaffiliated third party on Oct. 2, 1995. This
transfer of ownership to the Company has been reflected as a capital
contribution of $17,114 in the accompanying financial statements. The effect
of this change in reporting entity was not significant and prior periods have
not been restated.
As discussed in Note 5, the Company entered into a reinsurance agreement with
Amex Life during 1995. As a result of this transaction, a loss of $4,574 was
realized and reported as a direct charge to retained earnings.
Other changes in the statements of stockholder's equity are primarily related
to reinsurance transactions with affiliates.
Retained earnings available for distribution as dividends to the parent are
limited to the Company's surplus as determined in accordance with accounting
practices prescribed by state insurance regulatory authorities. Statutory
unassigned surplus aggregated $1,261,592 as of Dec. 31, 1996 and $1,103,993
as of Dec. 31, 1995 (see Note 3 with respect to the income tax effect of
certain distributions). In addition, any dividend distributions in 1997 in
excess of approximately $351,306 would require approval of the Department of
Commerce of the State of Minnesota.
Statutory net income for the years ended Dec. 31 and capital and surplus as
of Dec. 31 are summarized as follows:
1996 1995 1994
------ ------ ------
Statutory net income $ 365,585 $ 326,799 $ 294,699
Statutory capital and surplus 1,565,082 1,398,649 1,261,958
Dividends paid to American Express Financial Corporation were $165,000 in
1996, $180,000 in 1995, and $165,000 in 1994.
5. Related party transactions
The Company has loaned funds to American Express Financial Corporation under
a collateral loan agreement. The balance of the loan was $11,800 and $25,800
at Dec. 31, 1996 and 1995, respectively. This loan can be increased to a
maximum of $75,000 and pays interest at a rate equal to the preceding month's
effective new money rate for the Company's permanent investments. It is
collateralized by equity securities valued at $116,543 at Dec. 31, 1996.
Interest income on related party loans totaled $780, $1,371 and $2,894 in
1996, 1995 and 1994, respectively.
The Company purchased a five year secured note from an affiliated company
which had an outstanding balance of $nil and $19,444 at Dec. 31, 1996 and
1995, respectively. The note bears a fixed rate of 8.42 percent. Interest
income on the above note totaled $1,637, $1,937 and $2,278 in 1996, 1995 and
1994, respectively.
The Company has a reinsurance agreement whereby it assumed 100 percent of a
block of single premium life insurance business from Amex Life Assurance
Company (Amex Life), a former affiliate. The accompanying consolidated
balance sheets at Dec. 31, 1996 and 1995 include $758,812 and $764,663,
respectively, of future policy benefits related to this agreement.
The Company has a reinsurance agreement to cede 50 percent of its long-term
care insurance business to Amex Life. The accompanying consolidated balance
sheets at Dec. 31, 1996 and 1995 include $134,121 and $95,484, respectively,
of reinsurance receivables related to this agreement. Premiums ceded amounted
to $32,917, $25,553 and $20,360 and reinsurance recovered from reinsurers
amounted to $5,135, $4,998 and $3,022 for the years ended Dec. 31, 1996, 1995
and 1994, respectively.
The Company has a reinsurance agreement to assume deferred annuity contracts
from Amex Life. At Oct. 1, 1995, a $803,618 block of deferred annuities and
$28,327 of deferred policy acquisition costs were transferred to the Company.
The accompanying consolidated balance sheet at Dec. 31, 1996 includes
$828,298 of future policy benefits related to this agreement. Contracts with
future policy benefits totaling $50,400 were still reinsured with the former
affiliate at Dec. 31, 1996. The remaining contracts had been novated to
Company contracts.
Until July 1, 1995, the Company participated in the IDS Retirement Plan of
American Express Financial Corporation which covered all permanent employees
age 21 and over who had met certain employment requirements. Effective July
1, 1995, the IDS Retirement Plan was merged with American Express Company's
American Express Retirement Plan, which simultaneously was amended to include
a cash balance formula and a lump sum distribution option. Employer
contributions to the plan are based on participants' age, years of service
and total compensation for the year. Funding of retirement costs for this
plan complies with the applicable minimum funding requirements specified by
ERISA. The Company's share of the total net periodic pension cost was $174,
$155 and $156 in 1996, 1995 and 1994, respectively.
The Company also participates in defined contribution pension plans of
American Express Company which cover all employees who have met certain
employment requirements. Company contributions to the plans are a percent of
either each employee's eligible compensation or basic contributions. Costs of
these plans charged to operations in 1996, 1995 and 1994 were $990, $815 and
$957, respectively.
The Company participates in defined benefit health care plans of American
Express Financial Corporation that provide health care and life insurance
benefits to retired employees and retired financial advisors. The plans
include participant contributions and service related eligibility
requirements. Upon retirement, such employees are considered to have been
employees of American Express Financial Corporation. American Express
Financial Corporation expenses these benefits and allocates the expenses to
its subsidiaries. Accordingly, costs of such benefits to the Company are
included in employee compensation and benefits and cannot be identified on a
separate company basis.
Charges by American Express Financial Corporation for use of joint
facilities, marketing services and other services aggregated $397,362,
$377,139, and $335,183 for 1996, 1995 and 1994, respectively. Certain of
these costs are included in deferred policy acquisition costs. In addition,
the Company rents its home office space from American Express Financial
Corporation on an annual renewable basis.
6. Commitments and contingencies
At Dec. 31, 1996 and 1995, traditional life insurance and universal life-type
insurance in force aggregated $67,274,354 and $59,683,532, respectively, of
which $3,875,921 and $3,771,204 were reinsured at the respective year ends.
The Company also reinsures a portion of the risks assumed under disability
income and long-term care policies. Under all reinsurance agreements,
premiums ceded to reinsurers amounted to $48,250, $39,399 and $31,016 and
reinsurance recovered from reinsurers amounted to $15,612, $14,088, and
$10,778 for the years ended Dec. 31, 1996, 1995 and 1994. Reinsurance
contracts do not relieve the Company from its primary obligation to
policyholders.
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which the Company and its subsidiaries do business involving
insurers' sales practices, alleged agent misconduct, failure to properly
supervise agents, and other matters. In December 1996, an action of this type
was brought against the Company and its parent, American Express Financial
Corporation. The plaintiffs purport to represent a class consisting of all
persons who replaced existing Company policies with new Company policies from
and after Jan. 1, 1985. The complaint puts at issue various alleged sales
practices and misrepresentations, alleged breaches of fiduciary duties and
alleged violations of consumer fraud statutes. Plaintiffs seek damages in an
unspecified amount and seek to establish a claims resolution facility for the
determination of individual issues. The Company and its parent believe they
have meritorious defenses to the claims raised in the lawsuit. The outcome of
any litigation cannot be predicted with certainty, particularly in the early
stages of an action. In the opinion of management, however, the ultimate
resolution of the above lawsuit and others filed against the Company should
not have a material adverse effect on the Company's consolidated financial
position.
During 1996, the Company settled the federal tax audit for 1987 through 1989
tax years. There was no material impact as a result of that audit. Also, the
IRS is currently auditing the Company's 1990 through 1992 tax years.
Management does not believe there will be a material impact as a result of
this audit.
7. Lines of credit
The Company has available lines of credit with two banks and its parent
aggregating $175,000, of which $100,000 is with its parent. The lines of
credit are at 40 to 80 basis points over the lenders' cost of funds or equal
to the prime rate, depending on which line of credit agreement is used. The
$25,000 line of credit with one bank expired on Dec. 31, 1996 and the Company
did not seek renewal. The $50,000 line of credit with the other bank expires
on June 30, 1997 and the Company expects to seek renewal. Borrowings
outstanding under these agreements were $nil at Dec. 31, 1996 and 1995.
8. Derivative financial instruments
The Company enters into transactions involving derivative financial
instruments to manage its exposure to interest rate risk, including hedging
specific transactions. The Company does not hold derivative instruments for
trading purposes. The Company manages risks associated with these instruments
as described below.
Market risk is the possibility that the value of the derivative financial
instruments will change due to fluctuations in a factor from which the
instrument derives its value, primarily an interest rate. The Company is not
impacted by market risk related to derivatives held for non-trading purposes
beyond that inherent in cash market transactions. Derivatives held for
purposes other than trading are largely used to manage risk and, therefore,
the cash flow and income effects of the derivatives are inverse to the
effects of the underlying transactions.
Credit risk is the possibility that the counterparty will not fulfill the
terms of the contract. The Company monitors credit exposure related to
derivative financial instruments through established approval procedures,
including setting concentration limits by counterparty and industry, and
requiring collateral, where appropriate. A vast majority of the Company's
counterparties are rated A or better by Moody's and Standard & Poor's.
Credit exposure related to interest rate caps and floors is measured by the
replacement cost of the contracts. The replacement cost represents the fair
value of the instruments.
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid over the
life of the agreement. Notional amounts are not recorded on the balance
sheet. Notional amounts far exceed the related credit exposure.
<PAGE>
The Company's holdings of derivative financial instruments are as follows:
Notional Carrying Fair Total Credit
Dec. 31, 1996 Amount Value Value Exposure
------------- --------- ------- -------- ------------
Assets:
Interest rate caps $ 4,000,000 $16,227 $ 7,439 $ 7,439
Interest rate floors 1,000,000 2,041 4,341 4,341
Interest rate swaps 1,000,000 -- (24,715) --
---------- ------- -------- -------
$6,000,000 $18,268 $(12,935) $11,780
========== ======= ======== =======
Dec. 31, 1995
Assets:
Interest rate caps $5,100,000 $26,680 $ 8,366 $ 8,366
========== ======= ======== =======
The fair values of derivative financial instruments are based on market
values, dealer quotes or pricing models. The interest rate caps and floors
expire on various dates from 1996 to 2001. The interest rate swaps are in
effect through 2001.
Interest rate caps, swaps and floors are used principally to manage the
Company's interest rate risk. These instruments are used to protect the
margin between interest rates earned on investments and the interest rates
credited to related annuity contract holders.
9. Fair values of financial instruments
The Company discloses fair value information for most on- and off-balance
sheet financial instruments for which it is practicable to estimate that
value. Fair values of life insurance obligations and all non-financial
instruments, such as deferred acquisition costs are excluded. Off-balance
sheet intangible assets, such as the value of the field force, are also
excluded. Management believes the value of excluded assets is significant.
The fair value of the Company, therefore, cannot be estimated by aggregating
the amounts presented.
1996 1995
------ -----
<TABLE>
<CAPTION>
Carrying Fair Carrying Fair
Financial Assets Value Value Value Value
---------------- ----- ----- ----- -----
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $10,236,379 $10,521,650 $11,257,591 $11,878,377
Available for sale 11,146,845 11,146,845 10,516,212 10,516,212
Mortgage loans on
real estate (Note 2) 3,493,364 3,606,077 2,945,495 3,184,666
Other:
Equity securities (Note 2) 3,308 3,308 3,517 3,517
Derivative financial
instruments (Note 8) 18,268 (12,935) 26,680 8,366
Other 63,993 66,242 52,182 52,182
Cash and
cash equivalents (Note 1) 224,603 224,603 72,147 72,147
Separate account assets
(Note 1) 18,535,160 18,535,160 14,974,082 14,974,082
Financial Liabilities
Future policy benefits
for fixed annuities 20,641,986 19,721,968 20,259,265 19,603,114
Separate account
liabilities 17,358,087 16,688,519 14,208,619 13,665,636
</TABLE>
<PAGE>
At Dec. 31, 1996 and 1995, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related contracts
carried at $1,112,155 and $1,070,598, respectively, and policy loans of
$83,867 and $74,973, respectively. The fair value of these benefits is based
on the status of the annuities at Dec. 31, 1996 and 1995. The fair value of
deferred annuities is estimated as the carrying amount less any applicable
surrender charges and related loans. The fair value for annuities in non-life
contingent payout status is estimated as the present value of projected
benefit payments at rates appropriate for contracts issued in 1996 and 1995.
At Dec. 31, 1996 and 1995, the fair value of liabilities related to separate
accounts is estimated as the carrying amount less any applicable surrender
charges and less variable insurance contracts carried at $1,177,073 and
$765,463, respectively.
10.Segment information
The Company's operations consist of two business segments; first, individual
and group life insurance, disability income and long-term care insurance, and
second, annuity products designed for individuals, pension plans, small
businesses and employer-sponsored groups. The consolidated condensed
statements of income for the years ended Dec. 31, 1996, 1995 and 1994 and
total assets at Dec. 31, 1996, 1995 and 1994 by segment are summarized as
follows:
1996 1995 1994
------ ------ -----
Net investment income:
Life, disability income
and long-term care insurance $ 262,998 $ 256,242 $ 247,047
Annuities 1,702,364 1,651,067 1,534,826
----------- ----------- ------------
$ 1,965,362 $ 1,907,309 $ 1,781,873
=========== =========== ============
Premiums, charges and fees:
Life, disability income
and long-term care insurance $ 448,389 $ 384,008 $ 335,375
Annuities 308,873 249,557 193,370
------------ ------------ -------------
$ 757,262 $ 633,565 $ 528,745
============ ============ =============
Income before income taxes:
Life, disability income
and long-term care insurance $ 161,115 $ 125,402 $ 122,677
Annuities 460,758 440,278 394,117
Net loss on investments (159) (4,898) (4,282)
------------- ------------- --------------
$ 621,714 $ 560,782 $ 512,512
============ ============ =============
Total assets:
Life, disability income
and long-term care insurance $ 7,028,906 $ 6,195,870 $ 5,269,188
Annuities 40,277,075 36,704,208 30,478,355
----------- ----------- -----------
$47,305,981 $42,900,078 $35,747,543
=========== =========== ===========
Allocations of net investment income and certain general expenses are based
on various assumptions and estimates.
Assets are not individually identifiable by segment and have been allocated
principally based on the amount of future policy benefits by segment.
Capital expenditures and depreciation expense are not material, and
consequently, are not reported.
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying consolidated balance sheets of IDS Life
Insurance Company (a wholly owned subsidiary of American Express Financial
Corporation) as of December 31, 1996 and 1995, and the related consolidated
statements of income, stockholder's equity and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of IDS Life Insurance
Company at December 31, 1996 and 1995, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for certain investments in debt and equity
securities in 1994.
Ernst & Young LLP
February 7, 1997
Minneapolis, Minnesota
<PAGE>
PAGE 3
PART II
UNDERTAKINGS TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission hereto or hereafter duly adopted pursuant to authority conferred in
that section.
RULE 484 UNDERTAKING
The By-Laws of IDS Life Insurance Company provide that:
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party, by reason of the fact that he is or was a Manager
of Variable Annuity Funds A and B, director, officer, employee or agent of this
Corporation, or is or was serving at the direction of the Corporation as a
Manager of Variable Annuity Funds A and B, director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
or any threatened, pending or completed action, suit or proceeding, wherever
brought, to the fullest extent permitted by the laws of the State of Minnesota,
as now existing or hereafter amended, provided that this Article shall not
indemnify or protect any such Manager of Variable Annuity Funds A and B,
director, officer, employee or agent against any liability to the Corporation or
its security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the performance of his duties or
by reason of his reckless disregard of his obligations and duties.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
PAGE 4
REPRESENTATION PURSUANT TO SECTION 205 OF THE NATIONAL
SECURITIES MARKETS IMPROVEMENT ACT OF 1996
The sponsoring insurance company represents that the fees and charges deducted
under the contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by the
insurance company.
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 5 TO REGISTRATION
STATEMENT NO. 33-5210
This Post-Effective Amendment No. 5 comprises the following papers and
documents:
The facing sheet.
The prospectus consisting of 33 pages is incorporated by reference to
Registrant's Post-Effective Amendment No. 3 filed on or about April
25, 1988.
The undertakings to file reports.
The signatures.
The following exhibits:
1. A. Copies of all exhibits required by paragraph A of
instructions for Exhibits in Form N-8B-2.
(1) - Incorporated by reference to Registrant's
original Form N-8B-2.* (File No. 811-4652).
(2) - Not applicable.
(3) - Incorporated by reference to Registrant's
original Form N-8B-2.* (File No. 811-4652).
(4) - Not applicable.
(5) - Single Premium Variable Life Insurance Policy*
(6) - Incorporated by reference to Registrant's
original Form N-8B-2.* (File No. 811-4652).
(7) - Not applicable.
(8) - Incorporated by reference to Registrant's
original Form N-8B-2.* (File No. 811-4652).
(9) - None.
(10) - Application Form for the Policy*
(11) - Memorandum on Transfer and Redemption
Procedures, and Method of Computing Adjustments
on Conversion.*
<PAGE>
PAGE 5
B. (1) Not applicable.
(2) Not applicable.
C. Not applicable.
2. Opinion and consent of counsel as to the legality of the
securities being registered is filed with Registrant's most
recent 24f-2 Notice.
3. Financial Statement Schedules are filed electronically
herewith.
Schedule I - Consolidated Summary of Investments other
than Investments in Related Parties
Schedule III - Supplementary Insurance Information Schedule IV -
Reinsurance Schedule V - Valuation and Qualifying Accounts Report of
Independent Auditors dated February 7, 1997.
All other schedules to the consolidated financial statements required by
Article 7 of Regulation S-X are not required under the related
instructions or are inapplicable and, therefore, have been omitted.
4. Not applicable.
5. Financial Data Schedules are filed electronically herewith.
(a) Financial Data Schedule - IDS Life Variable Account for
Smith Barney
(b) Financial Data Schedule - IDS Life Insurance Company
6. Opinion of Michael J. O'Connor, F.S.A., M.A.A.A.*
7. (a) Written consent of William A. Stoltzmann.*
(b) Written consent of Michael J. O'Connor.*
(c) Consent of Independent Auditors, filed electronically
herewith.
(d) Power of Attorney to sign amendments to this Registration
Statement, dated March 12, 1997, filed electronically
herewith.
* Filed as an exhibit to the original Registration Statement
(File No. 33-5210) and/or Pre-Effective Amendments No. 1,
No. 2, No. 3 or No. 4 thereto.
<PAGE>
PAGE 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, IDS Life Insurance Company, on behalf of the Registrant,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on behalf of the Registrant by the undersigned, thereunto
duly authorized, in the City of Minneapolis, and State of Minnesota on the 30th
day of April, 1997.
IDS Life Variable Account for Smith Barney
(Registrant)
By IDS Life Insurance Company
(Sponsor)
By /s/ Richard W. Kling*
Richard W. Kling, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed by the following persons in the
capacities indicated on the 30th day of April, 1997.
Signature Title
/s/ James A. Mitchell* Director, Chairman of the
James A. Mitchell Board and Chief Executive
Officer
/s/ Richard W. Kling* Director and President
Richard W. Kling
/s/ David R. Hubers* Director
David R. Hubers
/s/ Paul F. Kolkman* Director and Executive
Paul F. Kolkman Vice President
/s/ Barry J. Murphy* Director and Executive Vice
Barry J. Murphy President, Client Service
/s/ Stuart A. Sedlacek* Director and Executive Vice
Stuart A. Sedlacek President, Assured Assets
/s/ Melinda S. Urion* Director, Executive Vice
Melinda S. Urion President and Controller
*Signed pursuant to Power of Attorney, dated March 12, 1997, filed
electronically herewith as Exhibit 7(d).
By:_______________________________
Mary Ellyn Minenko
<PAGE>
PAGE 1
IDS Life Variable Account for Smith Barney
Registration No. 33-5210/811-4652
3. Financial Statement Schedules and Report of Independent
Auditors.
5. Financial Data Schedules.
IDS Life Variable Account for Smith Barney
IDS Life Insurance Company
7.(c) Consent of Independent Auditors.
7.(d) Power of Attorney.
<PAGE>
IDS LIFE INSURANCE COMPANY
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Column A Column B Column C Column D
Type of Investment Cost Value Amount at which
shown in the
balance sheet
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities:
Held to maturity:
United States Government and
government agencies and
authorities (a) $ 2,085,280 $ 2,060,778 $ 2,085,280
States, municipalities and
political subdivisions 9,685 10,097 9,685
All other corporate bonds 8,141,414 8,450,775 8,141,414
------------- --------------- -----------------
Total held to maturity 10,236,379 10,521,650 10,236,379
Available for sale:
United States Government and
government agencies and
authorities (b) 6,925,876 6,960,002 6,960,002
States, municipalities and
political subdivisions 11,032 12,368 12,368
All other corporate bonds 4,071,714 4,174,475 4,174,475
------------- --------------- -----------------
Total available for sale 11,008,622 11,146,845 11,146,845
Mortgage loans on real estate 3,493,364 XXXXXXXXX 3,493,364
Policy loans 459,902 XXXXXXXXX 459,902
Other investments 251,465 XXXXXXXXX 251,465
------------- -----------------
Total investments $ 25,449,732 $ XXXXXXXXX $ 25,587,955
============= =================
(a) - Includes mortgage-backed securities with a cost and market value of $2,041,278 and $2,017,119,
respectively.
(b) - Includes mortgage-backed securities with a cost and market value of $6,847,932 and $6,879,547,
respectively.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,398,025 $ 21,838,008 $ - $ 50,137 $ - $1,702,364 $ 2,724 $ 189,645 $ 180,942 N/A
Life, DI, and
Long-term
Care Insurance 932,780 3,811,034 - 33,497 182,921 262,998 187,486 88,960 80,526 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 2,330,805 $ 25,649,042 $ - $ 83,634 $ 182,921 $1,965,362 $ 190,210 $ 278,605 $ 261,468 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,227,169 $ 21,404,836 $ - $ 28,191 $ - $1,651,067 $ 2,693 $ 189,626 $ 166,191 N/A
Life, DI,
and Long-term
Care Insurance 798,556 3,613,253 - 28,132 161,530 256,242 164,749 90,495 45,451 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 2,025,725 $ 25,018,089 $ - $ 56,323 $ 161,530 $1,907,309 $ 167,442 $ 280,121 $ 211,642 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,150,585 $ 19,361,979 $ - $ 23,888 $ - $1,534,826 $ (5,762) $ 194,060 $ 131,515 N/A
Life, DI, and
Long-term Care
Insurance 714,739 3,346,931 - 26,180 144,640 247,047 134,128 86,312 78,586 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 1,865,324 $ 22,708,910 $ - $ 50,068 $ 144,640 $1,781,873 $ 128,366 $ 280,372 $ 210,101 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
SCHEDULE IV - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
Gross amount Ceded to other Assumed from Net % of amount
companies other companies Amount assumed to net
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
Life insurance in force $ 65,571,173 $ 3,875,921 $ 1,703,181 $63,398,433 2.69%
===================================================================================================
Premiums:
Life insurance $ 54,111 $ 3,253 $ 545 $ 51,403 1.06%
DI & LTC insurance 164,561 33,043 -- 131,518 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 218,672 $ 36,296 $ 545 $ 182,921 0.30%
===================================================================================================
For the year ended
December 31, 1995
Life insurance in force $ 57,895,180 $ 3,771,204 $ 1,788,352 $55,912,328 3.20%
===================================================================================================
Premiums:
Life insurance $ 53,089 $ 2,648 $ (248) $ 50,193 -0.49%
DI & LTC insurance 137,016 25,679 -- 111,337 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 190,105 $ 28,327 $ (248) $ 161,530 -0.15%
===================================================================================================
For the year ended
December 31, 1994
Life insurance in force $ 50,814,651 $ 3,246,608 $ 1,851,916 $49,419,959 3.75%
===================================================================================================
Premiums:
Life insurance $ 51,219 $ 3,354 $ 319 $ 48,184 0.66%
DI & LTC insurance 114,049 17,593 -- 96,456 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 165,268 $ 20,947 $ 319 $ 144,640 0.22%
===================================================================================================
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-------------
Balance at Charged to
Description Beginning Charged to Other Accounts- Deductions- Balance at End
of Period Costs & Expenses Describe Describe * of Period
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
- ------------------------------
Reserve for Mortgage Loans $37,340 $155 $0 $0 $37,495
Reserve for Other Investments $4,713 ($750) $0 $0 $3,963
For the year ended
December 31, 1995
- ------------------------------
Reserve for Mortgage Loans $35,252 $1,088 $0 ($1,000) $37,340
Reserve for Other Investments $7,515 ($2,802) $0 $0 $4,713
For the year ended
December 31, 1994
- ------------------------------
Reserve for Mortgage Loans $35,020 $232 $0 $0 $35,252
Reserve for Fixed Maturities $22,777 ($16,777) $0 $6,000 $0
Reserve for Other Investments $10,700 ($3,185) $0 $0 $7,515
* 1995 amount represents a reserve on mortgage loans which were transferred from an affiliate.
1994 amount represents a direct writedown of the related investments in fixed maturities.
</TABLE>
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the consolidated financial statements of IDS Life Insurance
Company as of December 31, 1996 and 1995, and for each of the three years in the
period ended December 31, 1996, and have issued our report thereon dated
February 7, 1997 (included elsewhere in this Registration Statement). Our audits
also included the financial statement schedules listed in Item 3 of this
Registration Statement. These schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Ernst & Young LLP
Minneapolis, Minnesota
February 7, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000792901
<NAME> IDS Life Variable Account for Smith Barney
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 17296477
<INVESTMENTS-AT-VALUE> 23598131
<RECEIVABLES> 48859
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 23646990
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (125841)
<TOTAL-LIABILITIES> (125842)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 8824098
<SHARES-COMMON-PRIOR> 9851995
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 23521149
<DIVIDEND-INCOME> 2787205
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (569286)
<NET-INVESTMENT-INCOME> 2217919
<REALIZED-GAINS-CURRENT> 1295560
<APPREC-INCREASE-CURRENT> (828836)
<NET-CHANGE-FROM-OPS> 2684643
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 162859
<NUMBER-OF-SHARES-REDEEMED> (1190756)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 89110
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (569286)
<AVERAGE-NET-ASSETS> 23476594
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<CIK> 0000792901
<NAME> IDS Life Insurance Company
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-TYPE> YEAR
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 11146845
<DEBT-CARRYING-VALUE> 10236379
<DEBT-MARKET-VALUE> 10521650
<EQUITIES> 3308
<MORTGAGE> 3493364
<REAL-ESTATE> 70290
<TOTAL-INVEST> 25587955
<CASH> 224603
<RECOVER-REINSURE> 1803
<DEFERRED-ACQUISITION> 2330805
<TOTAL-ASSETS> 47305981
<POLICY-LOSSES> 25649042
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 83634
<NOTES-PAYABLE> 0
<COMMON> 3000
0
0
<OTHER-SE> 2144080
<TOTAL-LIABILITY-AND-EQUITY> 47305981
182921
<INVESTMENT-INCOME> 1965362
<INVESTMENT-GAINS> (159)
<OTHER-INCOME> 574341
<BENEFITS> 1560678
<UNDERWRITING-AMORTIZATION> 278605
<UNDERWRITING-OTHER> 261468
<INCOME-PRETAX> 621714
<INCOME-TAX> 207138
<INCOME-CONTINUING> 414576
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</TABLE>
<PAGE>
PAGE 1
Consent of Independent Auditors
We consent to the use of our reports dated February 7, 1997 on the financial
statements and schedules of IDS Life Insurance Company and our report dated
March 21, 1997 on the financial statements of IDS Life Variable Account for
Smith Barney in Post-Effective Amendment No. 5 to the Registration Statement
(Form S-6, No. 33- 5210) for the registration of the Single Premium Variable
Life Insurance Policy offered by IDS Life Insurance Company.
Ernst & Young LLP
Minneapolis, Minnesota
April 29, 1997
<PAGE>
PAGE 1
IDS LIFE INSURANCE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as directors of IDS Life Insurance Company on
behalf of the below listed registrants that previously have filed registration
statements and amendments thereto pursuant to the requirements of the Securities
Act of 1933 and the Investment Company Act of 1940 with the Securities and
Exchange Commission:
1933 Act 1940 Act
Reg. Number Reg. Number
IDS Life Variable Account 10
IDS Life Flexible Portfolio Annuity 33-62407 811-07355
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Flexible Annuity 33-4173 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Variable Retirement and Combination
Retirement Annuities 2-73114 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Employee Benefit Annuity 33-52518 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Group Variable Annuity Contract 33-47302 811-3217
IDS Life Insurance Company
IDS Life Group Variable Annuity Contract
(Fixed Account) 33-48701 N/A
IDS Life Insurance Company
IDS Life Guaranteed Term Annuity 33-28976 N/A
IDS Life Insurance Company
IDS Life Flexible Payment Market Value Annuity 33-50968 N/A
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy 33-11165 811-4298
IDS Life Variable Life Separate Account
Flexible Premium Survivorship Variable
Life Insurance Policy 33-62457 811-4298
IDS Life Variable Life Separate Account
Single Premium Variable Life
Insurance Policy 2-97637 811-4298
IDS Life Variable Account for Smith Barney
Single Premium Variable Life Insurance Policy 33-5210 811-4652
IDS Life Account SBS
Symphony Annuity 33-40779 812-7731
IDS Life Account RE
IDS Life Real Estate Variable Annuity 33-13375 N/A
IDS Life Variable Annuity Fund A 2-29081 811-1653
IDS Life Variable Annuity Fund B 2-47430 811-1674
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn
Minenko, Eileen J. Newhouse, Sherilyn K. Beck, Colin Lancaster,
Bruce Kohn and Timothy S. Meehan or any one of them, as her or his
attorney-in-fact and agent, to sign for her or him in her or his
name, place and stead any and all filings, applications (including
<PAGE>
PAGE 2
applications for exemptive relief), periodic reports, registration statements
(with all exhibits and other documents required or desirable in connection
therewith), other documents, and amendments thereto and to file such filings,
applications, periodic reports, registration statements, other documents, and
amendments thereto with the Securities and Exchange Commission, and any
necessary states, and grants to any or all of them the full power and authority
to do and perform each and every act required or necessary in connection
therewith.
Dated the 12th day of March, 1997.
/s/ David R. Hubers March 10, 1997
- ---------------------------------
David R. Hubers
Director
/s/ Richard W. Kling March 12, 1997
- ---------------------------------
Richard W. Kling
Director and President
/s/ Paul F. Kolkman March 11, 1997
- ---------------------------------
Paul F. Kolkman
Director and Executive Vice
President
/s/ James A. Mitchell March 10, 1997
- ---------------------------------
James A. Mitchell
Director, Chairman of the
Board and Chief Executive Officer
/s/ Barry J. Murphy March 10, 1997
- ---------------------------------
Barry J. Murphy
Director and Executive Vice
President, Client Service
/s/ Stuart A. Sedlacek March 7, 1997
- ---------------------------------
Stuart A. Sedlacek
Director and Executive Vice
President, Assured Assets
/s/ Melinda S. Urion March 10, 1997
- ---------------------------------
Melinda S. Urion
Director, Executive Vice
President and Controller
