<PAGE> 1
LETTER FROM SAFECO LIFE'S PRESIDENT
DEAR SPINNAKER PLUS PARTICIPANT:
We are pleased to present the SAFECO Life Spinnaker Plus Variable Annuity
Annual Report. Inside you will find schedules of investments and financial
statements for each of the 12 portfolios. In addition, reports from each of the
portfolio managers are provided. The information presented covers the year
ending December 31, 1996.
1996 FINANCIAL MARKET REVIEW
We entered 1996 with rather modest expectations for the equity markets and look
what happened. The Standard & Poor's 500 index gained 22.94% on the heels of
its astonishing 37.50% growth in 1995. The good news is, investors who had the
conviction to stay invested in common stocks were amply rewarded. For the second
straight year, we're glad to have been "in" the market, rather than "out".
The bad news is that such market conditions can cause amnesia -- amnesia when
it comes to the volatile nature of the stock market (which delivered 1.32% in
1994), and forgetfulness regarding the diversification that bonds and money
market funds provide.
The neglected cousins of 1996 were the bond markets. Bonds struggled through the
year -- despite the fact inflation remained at bay -- reversing directions and
ultimately delivering lackluster total returns. The broader market as measured
by Lehman Brothers Government/Corporate Index, returned 2.90% for the year.
Three elements seem to be props for the stock market. Inflation has remained in
control, corporate earnings have continued to grow and there has been a
fundamental shift in the way individuals invest. Investors are increasingly
recognizing the superior long-term potential of stocks, at the same time they
are taking control of more of their retirement savings.
FINANCIAL OUTLOOK
While the shift from traditional company-controlled pensions to employee
directed plans such as 401(k)s seems irreversible, it doesn't seem possible for
the stock market to sustain its present level of growth. Still, we believe
common stocks offer the potential for superior long-term returns as they have
over the past 70 years. At the same time, we remind you of the historical level
of stock market returns.
All in all, our 1997 outlook is that the financial markets will do "okay". We
anticipate bonds will earn, or nearly earn, their coupons. And that stream of
interest payments is what people should buy bonds for anyway. In short, do not
expect big gains in bond prices, just steady income. Stocks will have a more
difficult time, especially if corporate earnings fail to meet expectations.
Nonetheless, there are always opportunities for stock pickers. And that's what
we do best.
SAFECO LIFE'S COMMITMENT
SAFECO Life remains committed to providing you quality service with efficient
and accurate reporting. We have added new customer service representatives in
our IRA and TSA units as well as toll free telephone lines designed to link you
directly with the service representative handling your account. Watch for news
in 1997 about a voice responsive unit allowing you access to your information
and an investor newsletter to better serve your needs.
We appreciate your business and the opportunity to serve you. Call us at the
toll free number listed on your statement any time between 7:00 am and 4:30 pm
(PST) if we can be of assistance.
Sincerely,
/s/ RICHARD E. ZUNKER
- -------------------------
Richard E. Zunker
President
<PAGE> 2
TABLE OF CONTENTS: PAGE:
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES 4
STATEMENT OF OPERATIONS 6
STATEMENT OF CHANGES IN NET ASSETS 8
NOTES TO FINANCIAL STATEMENTS 11
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS 14
<PAGE> 3
December 31, 1996
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
SUB-ACCOUNTS
------------------------------------------------------------
SAFECO SAFECO SAFECO SAFECO SAFECO
AS OF DECEMBER 31, 1996 EQUITY GROWTH NW BOND MMKT
- -------------------------------------------------------------------------------------------------------
-- (In Thousands, Except Per-Unit and Per Share Amounts) --
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in underlying Portfolios:
Investments, at cost $118,571 $ 40,221 $ 2,471 $ 9,443 $ 5,104
======== ======== ======== ======== ========
Shares owned 6,101 2,344 219 844 5,104
Net asset value per share $ 21.75 $ 19.26 $ 12.12 $ 10.75 $ 1.00
-------- -------- -------- -------- --------
Investments, at value 132,704 45,154 2,652 9,073 5,104
Cash 26 2 -- 2 1
-------- -------- -------- -------- --------
Total assets 132,730 45,156 2,652 9,075 5,105
LIABILITIES:
Mortality and expense risk charge
payable 146 48 3 10 6
Fees payable 26 2 -- 2 1
-------- -------- -------- -------- --------
Total liabilities 172 50 3 12 7
-------- -------- -------- -------- --------
NET ASSETS $132,558 $ 45,106 $ 2,649 $ 9,063 $ 5,098
======== ======== ======== ======== ========
ACCUMULATION UNITS OUTSTANDING 3,328 1,666 221 504 341
======== ======== ======== ======== ========
ACCUMULATION UNIT VALUE*
(Net assets divided by accumulation
units outstanding) $ 39.829 $ 27.082 $ 11.968 $ 17.991 $ 14.944
======== ======== ======== ======== ========
</TABLE>
* Redemption price per unit is the unit value less any applicable contingent
deferred sales charge.
See Notes to Financial Statements
4
<PAGE> 4
SAFECO RESOURCE VARIABLE ACCOUNT B
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUB-ACCOUNTS
-----------------------------------------------------------------------------------------
LEXINGTON LEXINGTON FEDERATED
SCUDDER SCUDDER NATURAL EMERGING FEDERATED HIGH FEDERATED
INT'L BAL RESOURCES MARKETS UTILITY INCOME INT'L
- ---------------------------------------------------------------------------------------------
-- (In Thousands, Except Per-Unit and Per Share Amounts) --
<S> <C> <C> <C> <C> <C> <C> <C>
$ 12,236 $ 6,773 $ 346 $ 206 $ 260 $ 111 $ 42
======== ======== ======== ======== ======== ======== ========
1,049 628 27 20 24 11 4
$ 13.25 $ 11.61 $ 14.29 $ 10.08 $ 11.81 $ 10.24 $ 11.16
-------- -------- -------- -------- -------- -------- --------
13,902 7,288 384 200 280 115 43
1 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
13,903 7,288 384 200 280 115 43
15 8 -- -- -- -- --
1 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
16 8 -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
$ 13,887 $ 7,280 $ 384 $ 200 $ 280 $ 115 $ 43
======== ======== ======== ======== ======== ======== ========
1,061 523 27 20 23 11 4
======== ======== ======== ======== ======== ======== ========
$ 13.083 $ 13.919 $ 14.169 $ 9.968 $ 12.106 $ 10.933 $ 11.052
======== ======== ======== ======== ======== ======== ========
</TABLE>
See Notes to Financial Statements
5
<PAGE> 5
December 31, 1996
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SUB-ACCOUNTS
------------------------------------------------------------
PERIOD ENDED DECEMBER 31, 1996
SAFECO SAFECO SAFECO SAFECO SAFECO
EQUITY* GROWTH* NW* BOND* MMKT*
------------------------------------------------------------
-- ($ in Thousands) --
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Income dividends and capital gain
distributions $ 12,467 $ 3,680 $ 18 $ 495 $ 241
EXPENSES:
Mortality and expense risk charge 1,394 395 30 111 63
-------- -------- -------- -------- --------
NET INVESTMENT INCOME (LOSS) 11,073 3,285 (12) 384 178
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on
investments 4,626 1,462 66 (20) -
Net change in unrealized appreciation 7,840 3,825 175 (425) -
-------- -------- -------- -------- --------
NET GAIN (LOSS) ON INVESTMENTS 12,466 5,287 241 (445) -
-------- -------- -------- -------- --------
NET CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS $ 23,539 $ 8,572 $ 229 $ (61) $ 178
======== ======== ======== ======== ========
</TABLE>
* For the year ended December 31, 1996.
+ For the period February 15, 1996 (inception date) through December 31, 1996.
See Notes to Financial Statements
6
<PAGE> 6
SAFECO RESOURCE VARIABLE ACCOUNT B
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUB-ACCOUNTS
- -------------------------------------------------------------------------------------------
PERIOD ENDED DECEMBER 31, 1996
LEXINGTON LEXINGTON FEDERATED
SCUDDER SCUDDER NATURAL EMERGING FEDERATED HIGH FEDERATED
INT'L* BAL* RESOURCES+ MRKTS+ UTILITY+ INCOME+ INT'L+
- -------------------------------------------------------------------------------------------
-- ($ in Thousands) --
<S> <C> <C> <C> <C> <C> <C>
$ 219 $ 249 $ 1 $ - $ 6 $ 5 $ -
142 70 3 1 2 - -
- -------- -------- -------- -------- -------- -------- --------
77 179 (2) (1) 4 5 -
173 218 9 - - - -
1,164 148 38 (5) 20 4 1
- -------- -------- -------- -------- -------- -------- --------
1,337 366 47 (5) 20 4 1
- -------- -------- -------- -------- -------- -------- --------
$ 1,414 $ 545 $ 45 $ (6) $ 24 $ 9 $ 1
======== ======== ======== ======== ======== ======== ========
</TABLE>
See Notes to Financial Statements
7
<PAGE> 7
December 31, 1996
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SUB-ACCOUNTS
----------------------------------------------------------------------------
SAFECO SAFECO SAFECO
EQUITY GROWTH NW
---------------------- ---------------------- ----------------------
FOR THE YEAR ENDED DECEMBER 31
1996 1995 1996 1995 1996 1995
---------------------- ---------------------- ----------------------
-- (In Thousands) --
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 11,073 $ 9,089 $ 3,285 $ 2,382 $ (12) $ 7
Net realized gain (loss) on
investments 4,626 2,869 1,462 523 66 32
Net change in unrealized
appreciation 7,840 5,057 3,825 1,050 175 1
-------- -------- -------- -------- -------- --------
Net change in net assets
resulting from operations 23,539 17,015 8,572 3,955 229 40
NET ACCUMULATION UNIT TRANSACTIONS 19,372 18,584 17,470 8,825 534 740
-------- -------- -------- -------- -------- --------
TOTAL CHANGE IN NET ASSETS 42,911 35,599 26,042 12,780 763 780
NET ASSETS AT BEGINNING OF PERIOD 89,647 54,048 19,064 6,284 1,886 1,106
-------- -------- -------- -------- -------- --------
NET ASSETS AT END OF PERIOD $ 132,558 $ 89,647 $ 45,106 $ 19,064 $ 2,649 $ 1,886
======== ======== ======== ======== ======== ========
OTHER INFORMATION
Increase (Decrease) in Units and
Amounts
UNITS:
Sales 925 905 940 659 84 90
Redemptions (371) (257) (193) (163) (38) (24)
-------- -------- -------- -------- -------- --------
Net change 554 648 747 496 46 66
======== ======== ======== ======== ======== ========
AMOUNTS:
Sales $ 32,687 $ 25,905 $ 22,046 $ 11,610 $ 969 $ 1,000
Redemptions (13,315) (7,321) (4,576) (2,785) (435) (260)
-------- -------- -------- -------- -------- --------
Net change $ 19,372 $ 18,584 $ 17,470 $ 8,825 $ 534 $ 740
======== ======== ======== ======== ======== ========
DECEMBER 31, 1996:
Paid in capital $ 79,810 $ 32,162 $ 2,363
Par value per unit None None None
Accumulation units authorized Unlimited Unlimited Unlimited
Accumulation units owned by
SAFECO 200 - -
</TABLE>
See Notes to Financial Statements
8
<PAGE> 8
SAFECO RESOURCE VARIABLE ACCOUNT B
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUB-ACCOUNTS
-----------------------------------------------------------------------------------------------------------
SAFECO SAFECO SCUDDER SCUDDER
BOND MMKT INT'L BAL
----------------------- ----------------------- ----------------------- -----------------------
FOR THE YEAR ENDED DECEMBER 31
1996 1995 1996 1995 1996 1995 1996 1995
----------------------- ----------------------- ----------------------- -----------------------
-- (In Thousands) --
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 384 $ 422 $ 178 $ 187 $ 77 $ (61) $ 179 $ 43
(20) (29) - - 173 95 218 19
(425) 773 - - 1,164 638 148 381
-------- -------- -------- -------- -------- -------- -------- --------
(61) 1,166 178 187 1,414 672 545 443
405 89 478 (473) 4,162 2,735 3,452 1,607
-------- -------- -------- -------- -------- -------- -------- --------
344 1,255 656 (286) 5,576 3,407 3,997 2,050
8,719 7,464 4,442 4,728 8,311 4,904 3,283 1,233
-------- -------- -------- -------- -------- -------- -------- --------
$ 9,063 $ 8,719 $ 5,098 $ 4,442 $ 13,887 $ 8,311 $ 7,280 $ 3,283
======== ======== ======== ======== ======== ======== ======== ========
87 87 717 587 465 445 334 157
(65) (86) (684) (621) (124) (191) (72) (19)
-------- -------- -------- -------- -------- -------- -------- --------
22 1 33 (34) 341 254 262 138
======== ======== ======== ======== ======== ======== ======== ========
1,555 $ 1,469 $ 10,520 $ 8,274 $ 5,680 $ 4,856 $ 4,418 $ 1,826
(1,150) (1,380) (10,042) (8,747) (1,518) (2,121) (966) (219)
-------- -------- -------- -------- -------- -------- -------- --------
$ 405 $ 89 $ 478 $ (473) $ 4,162 $ 2,735 $ 3,452 $ 1,607
======== ======== ======== ======== ======== ======== ======== ========
$ 6,681 $ 3,856 $ 11,932 $ 6,299
None None None None
Unlimited Unlimited Unlimited Unlimited
200 200 - -
</TABLE>
See Notes to Financial Statements
9
<PAGE> 9
December 31, 1996
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SUB-ACCOUNTS
----------------------------------------------------------------------
LEXINGTON LEXINGTON FEDERATED
NATURAL EMERGING FEDERATED HIGH FEDERATED
RESOURCES MRKTS UTILITY INCOME INT'L
---------- --------- --------- --------- ---------
FOR THE PERIOD ENDED DECEMBER 31
1996+ 1996+ 1996+ 1996+ 1996+
---------- --------- --------- --------- ---------
-- (In Thousands) --
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss) $ (2) $ (1) $ 4 $ 5 $ -
Net realized gain (loss) on
investments 9 - - - -
Net change in unrealized
appreciation 38 (5) 20 4 1
-------- -------- -------- -------- --------
Net change in net assets
resulting from operations 45 (6) 24 9 1
NET ACCUMULATION UNIT
TRANSACTIONS 339 206 256 106 42
-------- -------- -------- -------- --------
TOTAL CHANGE IN NET ASSETS 384 200 280 115 43
NET ASSETS AT BEGINNING OF
PERIOD - - - - -
-------- -------- -------- -------- --------
NET ASSETS AT END OF PERIOD $ 384 $ 200 $ 280 $ 115 $ 43
======== ======== ======== ======== ========
OTHER INFORMATION
Increase (Decrease) in Units
and Amounts
UNITS:
Sales 27 20 24 11 4
Redemptions - - (1) - -
-------- -------- -------- -------- --------
Net change 27 20 23 11 4
======== ======== ======== ======== ========
AMOUNTS:
Sales $ 344 $ 207 $ 265 $ 109 $ 43
Redemptions (5) (1) (9) (3) (1)
-------- -------- -------- -------- --------
Net change $ 339 $ 206 $ 256 $ 106 $ 42
======== ======== ======== ======== ========
DECEMBER 31, 1996:
Paid in capital $ 339 $ 206 $ 256 $ 106 $ 42
Par value per unit None None None None None
Accumulation units
authorized Unlimited Unlimited Unlimited Unlimited Unlimited
Accumulation units owned by
SAFECO - - - - -
</TABLE>
+ For the period February 15, 1996 (inception date) through December 31, 1996.
See Notes to Financial Statements
10
<PAGE> 10
SAFECO RESOURCE VARIABLE ACCOUNT B
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
SAFECO Resource Variable Account B (Variable Account B) is registered under
the Investment Company Act of 1940, as amended, as a segregated unit
investment trust of SAFECO Life Insurance Company (SAFECO), a wholly-owned
subsidiary of SAFECO Corporation. Purchasers of variable annuity products
direct their investment to one or more of the sub-accounts of Variable
Account B. Each sub-account invests in shares of a designated portfolio as
indicated below.
<TABLE>
<CAPTION>
SUB-ACCOUNT UNDERLYING PORTFOLIO
--------------------------------------------------------------------------------------------
<S> <C>
SAFECO Resource Series Trust --
SAFECO Resource Equity (SAFECO Equity) Equity Portfolio
SAFECO Resource Growth (SAFECO Growth) Growth Portfolio
SAFECO Resource Northwest (SAFECO NW) Northwest Portfolio
SAFECO Resource Bond (SAFECO Bond) Bond Portfolio
SAFECO Resource Money Market (SAFECO MMKT) Money Market Portfolio
Scudder Variable Life Investment Fund --
Scudder International (Scudder Int'l) Scudder International Portfolio
Scudder Balanced (Scudder Bal) Scudder Balanced Portfolio
Lexington Natural Resources Trust --
Lexington Natural Resources Natural Resources Portfolio
Lexington Emerging Markets Fund, Inc. --
Lexington Emerging Markets Emerging Markets Portfolio
Federated Insurance Series --
Federated Utility Utility Portfolio
Federated High Income Bond (Federated High Income) High Income Bond Portfolio
Federated International Equity (Federated Int'l) International Equity Portfolio
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION -- Investments in portfolio shares are carried in the
statement of assets and liabilities at net asset value as reported by the
respective portfolio. Realized gains or losses on securities transactions
are determined using the First-In First-Out (FIFO) cost method. Security
transactions are recorded on the trade date.
DISTRIBUTIONS -- The net investment income and realized capital gains of
Variable Account B are not distributed, but are retained and reinvested for
the benefit of accumulation unit owners.
FEDERAL INCOME TAX -- Operations of Variable Account B are included in the
federal income tax return of SAFECO, which is taxed as a "life insurance
company" under the Internal Revenue Code. Under current federal income tax
law, no income taxes are payable with respect to operations of Variable
Account B.
11
<PAGE> 11
December 31, 1996
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued)
3. EXPENSES
SAFECO deducts on each valuation date a mortality and expense risk charge
which is equal on an annual basis to 1.25% of the daily net asset value of
Variable Account B. The mortality risks assumed by SAFECO arise from its
contractual obligation to make annuity payments after the annuity date for
the life of the owner, to waive contingent deferred sales charges in the
event of the death of the owner and to guarantee the payment of the greater
of the guaranteed minimum death benefit or the contract value upon death of
the owner.
In certain situations where an owner withdraws all or a portion of his or
her contract value, a contingent deferred sales charge is deducted from the
withdrawal. This charge is imposed on withdrawals made in the first eight
(8) contract years. Any premium tax levied by a state or government entity
with respect to the Variable Account B contract will be charged against the
contract.
4. INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
SUB-ACCOUNTS
------------------------------------------------------------
SAFECO SAFECO SAFECO SAFECO SAFECO
EQUITY* GROWTH* NW* BOND* MMKT*
-------------------------------------------------------------------------------------------------------------
-- ($ in Thousands) --
<S> <C> <C> <C> <C> <C>
PURCHASES for the period ended December 31,
1996 $ 46,553 $ 26,062 $ 1,033 $ 2,256 $ 12,206
======== ======== ======== ======== ========
SALES for the period ended December 31, 1996 $ 16,050 $ 5,278 $ 510 $ 1,465 $ 11,549
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
SUB-ACCOUNTS
--------------------------------------------------
LEXINGTON LEXINGTON
SCUDDER SCUDDER NATURAL EMERGING
INT'L* BAL* RESOURCES+ MRKTS+
------------------------------------------------------------------------------------------------------
-- ($ in Thousands) --
<S> <C> <C> <C> <C>
PURCHASES for the period ended December 31, 1996 $ 6,052 $ 4,760 $ 734 $ 208
======== ======== ========= =========
SALES for the period ended December 31, 1996 $ 1,806 $ 1,124 $ 396 $ 2
======== ======== ========= =========
</TABLE>
* For the year ended December 31, 1996.
+ For the period February 15, 1996 (inception date) through December 31, 1996.
12
<PAGE> 12
SAFECO RESOURCE VARIABLE ACCOUNT B
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued)
4. INVESTMENT TRANSACTIONS -- CONTINUED
<TABLE>
<CAPTION>
SUB-ACCOUNTS
-------------------------------------
FEDERATED
FEDERATED HIGH FEDERATED
UTILITY+ INCOME+ INT'L+
-----------------------------------------------------------------------------------------------------
-- ($ in Thousands) --
<S> <C> <C> <C>
PURCHASES for the period ended December 31, 1996 $ 271 $ 115 $ 43
========= ========= =========
SALES for the period ended December 31, 1996 $ 11 $ 4 $ 1
========= ========= =========
</TABLE>
+ For the period February 15, 1996 (inception date) through December 31, 1996.
5. ACCUMULATION UNIT DATA
<TABLE>
<CAPTION>
SUB-ACCOUNTS
------------------------------------------------------------
SAFECO SAFECO SAFECO SAFECO SAFECO
EQUITY GROWTH NW BOND MMKT
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 31, 1992 $18.704 -- -- $14.882 $13.335
January 7, 1993 (inception date) -- $10.000 $10.000 -- --
December 31, 1993 23.630 13.480 9.923 16.253 13.516
December 31, 1994 25.424 14.897 10.156 15.559 13.837
December 31, 1995 32.321 20.756 10.777 18.117 14.417
December 31, 1996 39.829 27.082 11.968 17.991 14.944
</TABLE>
<TABLE>
<CAPTION>
SUB-ACCOUNTS
-----------------------------------------------------------------------
LEXINGTON LEXINGTON FEDERATED
SCUDDER SCUDDER NATURAL EMERGING FEDERATED HIGH FEDERATED
INT'L BAL RESOURCES MRKTS UTILITY INCOME INT'L
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1992 -- -- -- -- -- -- --
March 12, 1993 $8.250 $10.060 -- -- -- -- --
(inception date)
December 31, 1993 10.743 10.346 -- -- -- -- --
December 31, 1994 10.519 10.066 -- -- -- -- --
December 31, 1995 11.540 12.596 -- -- -- -- --
February 15, 1996 -- -- $11.920 $10.540 $11.410 $10.050 $10.480
(inception date)
December 31, 1996 13.083 13.919 14.169 9.968 12.106 10.933 11.052
</TABLE>
13
<PAGE> 13
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
TO THE BOARD OF DIRECTORS OF SAFECO LIFE INSURANCE COMPANY AND
PARTICIPANTS OF SAFECO RESOURCE VARIABLE ACCOUNT B
We have audited the accompanying statements of assets and liabilities of the
Sub-Accounts of SAFECO Resource Variable Account B (comprising, respectively,
the SAFECO Resource Equity, SAFECO Resource Growth, SAFECO Resource Northwest,
SAFECO Resource Bond, SAFECO Resource Money Market, Scudder International,
Scudder Balanced, Lexington Natural Resources, Lexington Emerging Markets,
Federated Utility, Federated High Income Bond, and Federated International
Equity Sub-Accounts) as of December 31, 1996, and the related statements of
operations, the statements of changes in net assets, and the accumulation unit
data for each of the periods indicated therein. These financial statements and
accumulation unit data are the responsibility of the SAFECO Resource Variable
Account B's management. Our responsibility is to express an opinion on these
financial statements and accumulation unit data 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 and accumulation
unit data are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and accumulation unit data. Our procedures included confirmation of
securities owned as of December 31, 1996, by correspondence with SAFECO Resource
Series Trust, Scudder Variable Life Investment Fund, Lexington Natural Resources
Trust, Lexington Emerging Markets Fund, Inc., and Federated Insurance Series. 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 and accumulation unit data referred to
above present fairly, in all material respects, the financial position of each
of the respective Sub-Accounts of SAFECO Resource Variable Account B as listed
above at December 31, 1996, the results of their operations, the changes in
their net assets, and the accumulation unit data for each of the periods
indicated therein, in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Seattle, Washington ------------------------
January 31, 1997
14
