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SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
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Issued By: Administered By:
Allianz Life Insurance Company Valuemark Service Center
of North America 300 Berwyn Park , P.O. Box 3031
1750 Hennepin Avenue Berwyn, PA 19312-0031
Minneapolis, MN 55403 (800) 624-0197
(800) 542-5427
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This Prospectus describes a single premium variable life insurance policy
("Policy") offered by Allianz Life Insurance Company of North
America ("Company"). On April 1, 1993, the Company changed its name
from North American Life and Casualty Company ("NALAC") to its present name.
The Policy has been designed to be used in connection with estate planning and
other insurance needs of individuals.
Upon acceptance, premiums will be allocated to Allianz Life Variable Account A
("Variable Account"), a separate account of the Company. Prior to May 1,
1993, the name of the Variable Account was NALAC Variable Account A. The
Variable Account invests in shares of Franklin Valuemark Funds (the "Trust").
The Trust is a series fund with twenty-two Funds: the Money Market Fund,
the Adjustable U.S. Government Fund, the Global Income Fund, the High
Income Fund, the Investment Grade Intermediate Bond Fund, the U.S.
Government Securities Fund, the four Zero Coupon Funds, the Growth
and Income Fund, the Income Securities Fund, the Real Estate Securities
Fund, the Rising Dividends Fund, the Templeton Global Asset Allocation
Fund, the Utility Equity Fund, the Precious Metals Fund, the Small Cap Fund,
the Templeton Developing Markets Equity Fund, the Templeton Global Growth
Fund, the Templeton International Equity Fund and the Templeton Pacific
Growth Fund. Prior to May 1, 1995, the Growth and Income Fund was known
as the Equity Growth Fund. IN CALIFORNIA, THE TEMPLETON GLOBAL ASSET
ALLOCATION FUND AND THE SMALL CAP FUND ARE NOT AVAILABLE UNTIL APPROVED
BY THE CALIFORNIA INSURANCE DEPARTMENT. (CHECK WITH YOUR AGENT REGARDING
AVAILABILITY). See "Summary" and "Diversification" for a discussion of owner
control of the underlying investments in a variable life policy.
It may not be advantageous to purchase the Policy as a replacement for another
type of life insurance.
The Policy's single premium requirement is such that Policies issued on or
after June 21, 1988 are modified endowment contracts. Loan proceeds and/or
surrenders from modified endowment contracts are fully taxable to the extent
of income in the Policy and may be subject to an additional 10% federal income
tax penalty. (See "Tax Status".)
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The Company intends to utilize a simplified underwriting method for the
majority of the Policies which are applied for. The Company has determined
that using the simplified underwriting method presents additional mortality
risks. This additional mortality risk arises because, when using simplified
underwriting, the Company obtains only limited underwriting information.
Therefore, the Company intends to charge all Policies issued pursuant to
simplified underwriting higher cost of insurance rates than those Policies
issued standard/fully underwritten.
Simplified underwriting will be used for all applicants who fall within the
simplified underwriting limits unless the application discloses information
which would require additional investigation and additional underwriting.
(For information on the simplified underwriting limits, see "Cost of
Insurance".)
The Company assesses a sales load through the Deferred Issue Charge. (See
"Deductions and Charges".)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.
THIS PROSPECTUS MUST BE ACCOMPANIED BY OR PRECEDED BY A CURRENT PROSPECTUS FOR
FRANKLIN VALUEMARK FUNDS.
In the State of Oregon, all references to "Franklin Valuemark Life" refer to
"Valuemark Life."
Dated: November 1, 1995
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TABLE OF CONTENTS
Page
DEFINITIONS
SUMMARY
THE COMPANY
THE VARIABLE ACCOUNT
FRANKLIN VALUEMARK FUNDS
Description of the Funds
General
Substitution of Securities
PREMIUM PAYMENTS
Single Premium
Grace Period
Reinstatement
Allocation of Premium
DEDUCTIONS AND CHARGES
Mortality and Expense Risk Charge
Administrative Charge
Cost of Insurance
Deferred Issue Charge
Income Tax Charge
Transfer Fee
DEATH BENEFIT
Death Benefit
Variable Insurance Amount
Guaranteed Death Benefit
ACCOUNT VALUE, CASH SURRENDER VALUE AND TRANSFER RIGHTS
Account Value
Method of Determining Sub-Account Values
Cash Surrender Value
Transfer Rights
LOAN PROVISIONS
Policy Loan
Effect of a Loan
Payment of Interest, Loan Repayment and Policy Lapsation
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OWNERSHIP
Owner
Transfer of Ownership
Assignment
BENEFICIARY PROVISIONS
Beneficiary
Change of Beneficiary
Death of Beneficiary
DELAY OF PAYMENTS
MANAGEMENT OF THE COMPANY
ADMINISTRATION OF THE POLICIES
TAX STATUS
Introduction
Diversification
Tax Treatment of the Policy
Policy Proceeds
Tax Treatment of Loans and Surrenders
Multiple Policies
Tax Treatment of Assignments
Qualified Plans
VARIABLE ACCOUNT VOTING RIGHTS
Disregard of Voting Instructions
DISTRIBUTION OF THE POLICY
REPORTS TO OWNERS
LEGAL PROCEEDINGS
EXPERTS
LEGAL OPINIONS
FINANCIAL STATEMENTS
APPENDIX A
Illustration of Policy Values
APPENDIX B
Table of Net Single Premium Factors
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DEFINITIONS
ACCOUNT VALUE - The sum of the Sub-Account values and the Loan Account value
attributable to the Policy.
ATTAINED AGE - Age last birthday as of the most recent Policy Anniversary.
BENEFICIARY, CONTINGENT BENEFICIARY - The person or persons who will receive
any death benefit. The Contingent Beneficiary, if any, will become the
Beneficiary should the Beneficiary die prior to the date of death of the
Insured.
CASH SURRENDER VALUE - The Account Value of the Policy less the sum of the
uncollected portion of any Deductions or accrued Deductions and any
Indebtedness.
DEDUCTIONS - Charges levied by the Company in connection with the Policy.
ELIGIBLE FUNDS - Those investments available under the Policy.
GENERAL ACCOUNT - The general investment account of the Company which contains
all of the Company's assets, except for the Variable Account and other
separate accounts.
GUARANTEED DEATH BENEFIT - The Company guarantees that the Policy will remain
in force regardless of investment experience, unless the Indebtedness exceeds
the Account Value less uncollected Deductions. If there is no Indebtedness,
the Policy cannot lapse even if the Account Value is $0.
INDEBTEDNESS - The amount of any existing Policy loans plus the pro-rata
portion of any accrued interest.
INSURED - The person whose life is covered by the Policy.
ISSUE AGE - Attained Age on the Policy Date.
ISSUE DATE - The month, day and year that underwriting is completed and the
Company issues the Policy.
LOAN ACCOUNT - That portion of the Company's General Account that contains
Account Values attributable to Policy loans.
OWNER, JOINT OWNER, CONTINGENT OWNER - The Owner is the person having all
rights under the Policy. Joint Owners are two or more natural persons who own
the Policy equally with a right of survivorship. The Contingent Owner is the
person or persons who will own the Policy following the Owner's death or upon
the death of all the Joint Owners.
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POLICY DATE - The date when the Insured's life is covered under the Policy.
POLICY PROCESSING DATE - The Policy Date and the same day of the month as the
Policy Date at the end of each successive 3-month period, (or, if that day
should fall on a day beyond the end of any month, then the first day of the
next month). The Policy Processing Date is when the Company deducts charges
and recalculates the death benefit.
POLICY PROCESSING PERIOD - A period of time commencing on any Policy
Processing Date and ending on the day preceding the next Policy Processing
Date.
POLICY YEAR, POLICY ANNIVERSARY - The first Policy Year starts on the Policy
Date. Future Policy Years start on the same month and day in each subsequent
year, known as a Policy Anniversary.
SERVICE OFFICE - The Company's Valuemark Service Center shown on the cover
page.
VALUATION DATE - The Variable Account will be valued each day that the New
York Stock Exchange is open for trading which is Monday through Friday, except
for normal business holidays.
VALUATION PERIOD - The period commencing at the close of business of the New
York Stock Exchange on each Valuation Date and ending at the close of business
for the next succeeding Valuation Date.
VARIABLE ACCOUNT - A separate account maintained by the Company into which
premiums for the Policy and certain other policies are allocated. The Variable
Account has been designated "Allianz Life Variable Account A". Prior to May
1, 1993, the name of the Variable Account was NALAC Variable Account A.
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SUMMARY
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The Policy
The Policy is a single premium variable life insurance policy. Upon
acceptance, the premium is allocated to the Variable Account. During the Free
Look Period, the premium will be allocated to the Money Market Sub-Account
(see "Free-Look Period").
The Policy provides life insurance coverage on the Insured. The Company
guarantees that the Policy will remain in force regardless of investment
experience, unless Indebtedness exceeds the Account Value less the uncollected
Deductions. If there is no Indebtedness, the Policy cannot lapse even if the
Account Value is $0.
While the Policy is in force, the Account Value and, under certain
circumstances, the death benefit, will vary with the investment experience of
the Variable Account. However, as long as the Policy is in force without
loan, the death benefit will never be less than the face amount of insurance
at issue.
During the life of the Insured, the Owner can surrender the Policy for the
Cash Surrender Value. The Company does not guarantee any minimum Cash
Surrender Value.
The Policy has been designed to comply with the definition of life insurance
contained in Section 7702 of the Internal Revenue Code of 1986, as amended
(the "Code"). However, the law in this regard is very complex and unclear.
While every attempt has been made to comply, there is the risk that the
Internal Revenue Service will not concur with the Company's interpretations of
Section 7702 that were made in determining such compliance. For a further
discussion, see "Tax Status - Tax Treatment of the Policy".
Limitations on Surrenders and Loans
The Code alters the tax treatment accorded to loans and certain distributions
from life insurance policies which are deemed to be "modified endowment
contracts".
The Policy's single premium requirement is such that Policies issued on or
after June 21, 1988 are modified endowment contracts.
For modified endowment contracts, partial or full surrenders and/or loan
proceeds are taxable to the extent of income in the Policy. Such
distributions are deemed to be on a last-in, first-out basis, which means the
taxable income is distributed first. Loan proceeds and/or surrender payments
will also be subject to an additional 10% federal income tax penalty applied
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to the income. The penalty shall not, however, apply to any distribution:
(1) made on or after the date on which the taxpayer reaches age 59 1/2; (2)
which is attributable to the taxpayer becoming disabled (within the meaning of
Section 72(m)(7) of the Code); or (3) which is part of a series of
substantially equal periodic payments made (not less frequently than annually)
for the life (or life expectancy) of the taxpayer or the joint lives (or joint
life expectancies) of such taxpayer and his beneficiary. Policy Owners should
consult a tax adviser regarding the possible tax consequences of loans and/or
surrenders from the Policy. (See "Tax Status - Tax Treatment of Loans and
Surrenders".)
The Code further provides that multiple modified endowment contracts which are
issued within a calendar year period to the same Policy Owner by one company
or its affiliates are treated as one modified endowment contract for purposes
of determining the taxable portion of any loans or distributions. Such
treatment may result in adverse tax consequences including more rapid taxation
of the loans or distributed amounts from such combination of contracts.
For Policies issued prior to June 21, 1988, material modification of the
Policy may result in the Policy being deemed to be a modified endowment
contract.
Policy Owners should seek competent tax advice on the tax consequences of
purchasing additional Policies, taking loans, surrendering any Policy issued,
or making any material modification to their Policies. (See "Tax Status".)
The Company intends to utilize a simplified underwriting method for the
majority of the Policies which are applied for. The Company has determined
that using the simplified underwriting method presents additional mortality
risks. BECAUSE OF THE ADDITIONAL RISKS TO THE COMPANY ASSOCIATED WITH
SIMPLIFIED UNDERWRITING, THE COMPANY TREATS APPLICANTS IN THIS CLASS AS
SUBSTANDARD AND THIS MAY RESULT IN AN APPLICANT PAYING A HIGHER COST OF
INSURANCE CHARGE. THE COST OF INSURANCE CHARGE FOR BOTH THE SIMPLIFIED
UNDERWRITING AND THE STANDARD ISSUE CLASS IS BASED UPON THE COMMISSIONERS 1980
STANDARD ORDINARY MALE AND FEMALE, SMOKER AND NON-SMOKER MORTALITY TABLES
("1980 CSO TABLE"). FOR THE SIMPLIFIED UNDERWRITING CLASS THE GUARANTEED
RATES CONTAINED IN THE POLICY ARE APPROXIMATELY EQUAL TO 150% THEREOF.
HOWEVER, THE COMPANY CURRENTLY USES LOWER, NON-GUARANTEED RATES WHICH ARE ALSO
BASED UPON THE 1980 CSO TABLE AND WHICH VARY ACCORDING TO THE AGE OF THE
INSURED. THE CURRENT RATE IS EQUAL TO APPROXIMATELY 85% OF THE 1980 CSO
TABLE. FOR THE STANDARD ISSUE CLASS THE MAXIMUM RATE IS 100% OF THE 1980 CSO
TABLE AND THE CURRENT RATE IS APPROXIMATELY 75% OF THE 1980 CSO TABLE.
HEALTHY PERSONS MAY BE ABLE TO OBTAIN A DIFFERENT POLICY WITH A LOWER
GUARANTEED COST OF INSURANCE. WHEN A POLICY IS ISSUED STANDARD/FULLY
UNDERWRITTEN, AN INSURED MUST SUPPLY MORE INFORMATION AND POSSIBLY SUBMIT TO A
MEDICAL EXAM. THIS PROCESS NECESSARILY TAKES LONGER THAN SIMPLIFIED
UNDERWRITING. HOWEVER, SINCE THE COMPANY HAS MORE UNDERWRITING INFORMATION
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AVAILABLE TO IT, A POLICY CAN BE ISSUED WHICH MORE CLOSELY APPROACHES THE RISK
CLASS OF THE INSURED. THUS, AS A RESULT OF A STANDARD FULL UNDERWRITING, A
HEALTHY PERSON CAN EXPECT TO PAY A LOWER COST OF INSURANCE AND A PERSON WHO IS
RATED AS A SUBSTANDARD RISK CAN EXPECT TO PAY A HIGHER COST OF INSURANCE AND,
DEPENDING UPON THE RATING CLASS, MAY PAY A HIGHER COST OF INSURANCE THAN THAT
PURSUANT TO SIMPLIFIED UNDERWRITING.
The Variable Account
The Variable Account is a separate account of the Company which was
established to hold the investments which underlie the Policy. The Variable
Account is divided into Sub-Accounts. Each of the Sub-Accounts is invested
solely in the shares of one of the twenty-two Funds of the Trust. (See
"Franklin Valuemark Funds.")
The Treasury Department has indicated that guidelines may be forthcoming under
which a variable life insurance policy will not be treated as life insurance
for tax purposes if the Owner of the Policy has excessive control over the
investment underlying the Policy. The issuance of such guidelines may require
the Company to impose limitations on the Owner's right to control the
investment. It is not known whether any such guidelines would have a
retroactive effect. (See "Tax Status - Diversification".)
Deductions and Charges
The Company makes certain Deductions from the assets of the Variable Account
and the Account Value of the Policy. These Deductions are made for mortality
and expense risks, for premium taxes, for Policy issue costs, for
administrative expenses, for sales charges and for providing life insurance
protection.
Mortality and Expense Risk Charge - This risk charge is equal, on an annual
basis, to 0.60% of the average daily net assets of each Sub-Account and is
deducted on each Valuation Date from the Sub-Account.
Administrative Charge - This charge is equal, on an annual basis, to 0.15% of
the average daily net assets of each Sub-Account and is deducted on each
Valuation Date from the Sub-Account.
Deferred Issue Charge - When the single premium is received by the Company, a
Deferred Issue Charge is accrued. It is for premium taxes (2.5% of the single
premium), sales charge (4.0% of the single premium) and Policy issue charge
(0.5% of the single premium). For policies issued in the state of California
only, the Deferred Issue Charge is for premium taxes (2.35% of the single
premium); sales charge (4.15% of the single premium); and Policy issue charge
(0.5% of the single premium). This charge is deducted in ten equal annual
deductions on succeeding Policy Anniversaries for the first ten Policy Years.
If the Policy is surrendered before the full amount is deducted, the
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uncollected portion of this charge will be deducted from the proceeds.
Cost of Insurance - On each Policy Processing Date, the Company deducts from
the Policy's Account Value the cost of insurance for the past Policy
Processing Period. This charge provides death benefit protection for the
period.
Transfer Fee - Under certain circumstances, there may be assessed a transfer
fee when an Owner transfers values from one Sub-Account to another (see
"Transfer Fee").
Other Expenses - The investment managers for the Trust are paid fees for
their services based upon each Fund's net assets. (See "Franklin Valuemark
Funds" in this Prospectus and the Prospectus for the Trust.)
Surrenders
The Owner may surrender the Policy for its Cash Surrender Value at any time.
(See "Account Value, Cash Surrender Value and Transfer Rights".)
Free-Look Period
The Policy may be returned within 10 days after it is received (or for a
longer period in states where required)("Free-Look Period"). In states where
required, the Policy may be returned on the later of 45 days from the date on
the application or 10 days from the date of receipt of the Policy. It can be
mailed or delivered to either the Company or the agent who sold it. Return of
the Policy by mail is effective on being postmarked, properly addressed and
postage prepaid. The returned Policy will be treated as if the Company had
never issued it. The Company will promptly pay the greater of the Policy's
Account Value as of the date the Company received the Policy or the premium
paid. Any amounts refunded by the Company will include all Policy fees and
charges, including charges assessed against the Variable Account assets. The
Company will allocate monies to the Money Market Sub-Account until the
expiration of the Free-Look Period. Upon the expiration of the Free-Look
Period, the Sub-Account value of the Money Market Sub-Account will be
allocated to the Sub-Accounts in accordance with the selection made by
the Policy Owner.
Exchange Provisions
The Policy may be exchanged for a policy with benefits that do not vary with
the investment results of a separate account. The exchange must be elected
within 24 months from the Issue Date. No evidence of insurability will be
required as long as the benefits under the new policy are equal to or less
than the benefits under the Policy at the time of exchange.
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THE COMPANY
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Allianz Life Insurance Company of North America (the "Company") is a stock
life insurance company organized under the laws of the state of Minnesota in
1896. On April 1, 1993, the Company changed its name from North American Life
and Casualty Company ("NALAC") to its present name. The Company is a
wholly-owned subsidiary of Allianz Versicherungs-AG Holding ("Allianz").
Allianz is headquartered in Munich, Germany, and has sales outlets throughout
the world. Both NALAC and Fidelity Union Life Insurance Company of Dallas,
Texas have been owned by Allianz since 1979. Over the last decade there has
been a gradual consolidation of operations. On May 31, 1993, Fidelity Union
was consolidated into the Company. The Company offers fixed and variable life
insurance and annuities, and group life, accident and health insurance.
NALAC Financial Plans, Inc. is a wholly-owned subsidiary of the Company. It
provides marketing services for the Company and is the principal underwriter
of the Policies. NALAC Financial Plans, Inc. is reimbursed for expenses
incurred in the distribution of the Policies.
Administration for the Policy is provided at the Company's Service Office:
Valuemark Service Center, 300 Berwyn Park, P.O. Box 3031, Berwyn, Pennsylvania
19312, (800) 624-0197.
THE VARIABLE ACCOUNT
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The Board of Directors of the Company established the Variable Account on May
31, 1985. The Variable Account is registered with the Securities and Exchange
Commission as a unit investment trust under the Investment Company Act of
1940, as amended (the "1940 Act").
The assets of the Variable Account are the property of the Company. However,
the assets of the Variable Account equal to the reserves and other policy
liabilities with respect to the Variable Account are not chargeable with
liabilities arising out of any other business the Company may conduct. Income,
gains and losses, whether or not realized, are, in accordance with the
Policies, credited to or charged against the Variable Account without regard
to other income, gains or losses of the Company. The Company's obligations
arising under the Policies are general corporate obligations.
The Variable Account meets the definition of a "separate account" under the
federal securities laws.
The Variable Account is divided into Sub-Accounts with the assets of each
Sub-Account invested in one Fund of Franklin Valuemark Funds. Franklin
Valuemark Funds is comprised of twenty-two Funds.
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FRANKLIN VALUEMARK FUNDS
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Each of the twenty-two Sub-Accounts of the Variable Account is invested solely
in the shares of one of the twenty-two Funds of Franklin Valuemark Funds
("Trust"). The Trust is an open-end management investment company registered
under the 1940 Act. While a brief summary of the investment objectives is set
forth below, more comprehensive information, including a discussion of
potential risks, is found in the prospectus for the Trust which is included
with this Prospectus. PURCHASERS SHOULD READ THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS FOR THE TRUST CAREFULLY BEFORE INVESTING.
Franklin Advisers, Inc. ("Advisers"), 777 Mariners Island Blvd., San Mateo,
California 94404, serves as each Fund's (except the Templeton Global Growth
Fund, the Templeton Developing Markets Equity Fund and the Templeton Global
Asset Allocation Fund) investment manager. The investment manager for the
Templeton Global Growth Fund and the Templeton Global Asset Allocation Fund is
Templeton, Galbraith & Hansberger, Ltd., Lyford Cay Nassau, N.P. Bahamas. As
of October 1, 1995 the investment manager for the Templeton Developing Markets
Equity Fund is Templeton Investment Management (Singapore) Pte Ltd., 20
Raffles Place, Ocean Towers, Singapore. All investment managers or advisers
are referred to collectively as "Managers." The Managers are direct or
indirect wholly-owned subsidiaries of Franklin Resources, Inc., a
publicly-owned holding company. The Managers, subject to the overall policies,
control and direction and review of the Board of Trustees of the Trust, are
responsible for recommending and providing advice with respect to each Fund's
investments, and for determining which securities will be purchased, retained
or sold as well as for execution of portfolio transactions. Certain Managers
have retained one or more Sub-Advisers to handle the day-to-day management of
a Fund. Advisers acts as investment manager or administrator to 33 U.S.
registered investment companies (111 separate series) with aggregate assets of
over $75 billion.
Templeton Global Investors, Inc., Broward Financial Centre, Suite 2100, Ft.
Lauderdale, Florida, provides certain administrative facilities and services
for certain of the Funds.
Franklin Templeton Investor Services, Inc., 777 Mariners Island Blvd., San
Mateo, California 94404, also a wholly-owned subsidiary of Franklin Resources,
Inc., maintains the records of the Trust's shareholder accounts, processes
purchases and redemptions of shares, and serves as each Fund's dividend paying
agent.
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DESCRIPTION OF THE FUNDS
FUND SEEKING STABILITY
OF PRINCIPAL AND INCOME
Money Market Fund
The Money Market Fund seeks high current income consistent with capital
preservation and liquidity. The Fund will pursue its objective by investing
exclusively in high quality money market instruments. An investment in the
Fund is neither insured nor guaranteed by the U.S. Government. The Fund
attempts to maintain a stable net asset value of $1.00 per share, although no
assurances can be given that the Fund will be able to do so.
FUNDS SEEKING CURRENT INCOME
Adjustable U.S. Government Fund
The Adjustable U.S. Government Fund seeks a high level of current income,
consistent with lower volatility of principal, by investing primarily in
adjustable rate securities which are issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Global Income Fund
The Global Income Fund seeks a high level of current income, consistent with
preservation of capital, with capital appreciation as a secondary
consideration, through investing in foreign and domestic debt obligations,
including up to 25% in high yield, high risk, lower rated debt obligations
(commonly referred to as "junk bonds") and related currency transactions.
Investing in a non-diversified fund of global securities including those of
developing markets issuers involves increased susceptibility to the special
risks associated with foreign investing.
High Income Fund
The High Income Fund seeks a high level of current income, with capital
appreciation as a secondary objective, by investing in debt obligations and
dividend-paying common and preferred stocks. Debt obligations include high
yield, high risk lower rated obligations (commonly referred to as "junk
bonds") which involve increased risks related to the creditworthiness of their
issuers.
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Investment Grade Intermediate Bond Fund
The Investment Grade Intermediate Bond Fund seeks current income, consistent
with preservation of capital, primarily through investment in
intermediate-term investment grade corporate obligations and in U.S.
government securities.
The U.S. Government Securities Fund
The U.S. Government Securities Fund seeks current income and safety of capital
by investing exclusively in obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities.
Zero Coupon Funds
There are four Zero Coupon Funds. Each of the Funds matures in the specified
target year as follows:
Zero Coupon Fund - 1995
Zero Coupon Fund - 2000
Zero Coupon Fund - 2005
Zero Coupon Fund - 2010
The four Zero Coupon Funds seek a high investment return consistent with the
preservation of capital by investing primarily in zero coupon securities. In
response to interest rate changes, these securities may experience greater
fluctuations in market value than interest paying securities of similar
maturities. The Funds may not be appropriate for short-term investors or
those who intend to withdraw money before the maturity date.
Additional Zero Coupon Funds may be added to the Trust in the future. Should
any such Funds be available for investment at the maturity date of any
existing Zero Coupon Fund, such Funds will be available as an investment
option for Owners who select such option. If no selection has been
made by an Owner prior to the maturity date of a Zero Coupon Fund, the
Account Value held in the Sub-Account underlying the Owner's Policy will be
automatically transferred to the Money Market Sub-Account. The Company will
notify the Owner of a maturing Zero Coupon Fund in writing at least 30 days
prior to the maturity. Included with the notification will be investment
options available at that time as well as the automatic Money Market option.
THE ZERO COUPON FUND-1995 WILL MATURE DECEMBER 15, 1995. The Zero Coupon
Funds may not be appropriate for Owners who do not plan to have their
premium payments invested in the Zero Coupon Sub-Accounts for the long-term or
until maturity of the portfolio.
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FUNDS SEEKING GROWTH AND INCOME
Growth and Income Fund
The Growth and Income Fund (formerly the Equity Growth Fund) seeks capital
appreciation, with current income return as a secondary objective, by
investing primarily in U.S. common stocks and securities convertible into
common stocks, preferred stocks and debt securities.
Income Securities Fund
The Income Securities Fund seeks to maximize income while maintaining
prospects for capital appreciation by investing in a diversified portfolio of
domestic and foreign, including developing markets, debt obligations and/or
equity securities. Debt obligations include high yield, high risk lower
rated obligations (commonly referred to as "junk bonds") which involve
increased risks related to the creditworthiness of their issuers.
Real Estate Securities Fund
The Real Estate Securities Fund seeks capital appreciation, with current
income return as a secondary objective, by concentrating its investments
in publicly traded securities of U.S. companies in the real estate industry.
Rising Dividends Fund
The Rising Dividends Fund seeks capital appreciation, primarily through
investment in the equity securities of companies that have paid consistently
rising dividends over the past ten years. Preservation of capital is also an
important consideration. The Fund seeks current income incidental to capital
appreciation.
Templeton Global Asset Allocation Fund
The Templeton Global Asset Allocation Fund seeks a high level of total return
through a flexible policy of investing in equity securities, debt obligations,
and money market instruments of issuers in any nation, including developing
markets. The mix of investments among the three market segments will
be adjusted in an attempt to capitalize on total return potential produced by
changing economic conditions throughout the world. Foreign investing involves
special risks.
Utility Equity Fund
The Utility Equity Fund seeks both capital appreciation and current income by
investing in securities of domestic and foreign, including developing markets,
issuers engaged in the public utilities industry.
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FUNDS SEEKING CAPITAL GROWTH
Precious Metals Fund
The Precious Metals Fund seeks capital appreciation, with current income
return as a secondary objective, by concentrating its investments in
securities of U.S. and foreign companies, including those in developing
markets, engaged in mining, processing or dealing in gold and other precious
metals.
Small Cap Fund
The Small Cap Fund seeks long-term capital growth. The Fund seeks to
accomplish its objective by investing primarily in equity securities of small
capitalization growth companies. The Fund may also invest in foreign
securities, including those of developing market issuers. Because of the
Fund's investments in small capitalization companies, an investment in the
Fund may involve greater risks and higher volatility and should not be
considered a complete investment program.
Templeton Developing Markets Equity Fund
The Templeton Developing Markets Equity Fund seeks long-term capital
appreciation. The Fund seeks to achieve this objective by investing primarily
in equities of issuers in countries having developing markets. The Fund is
subject to the heightened foreign securities investment risks that accompany
foreign developing markets and an investment in the Fund may be considered
speculative.
Templeton Global Growth Fund
The Templeton Global Growth Fund seeks long-term capital growth. The Fund
hopes to achieve its objective through a flexible policy of investing in
stocks and debt obligations of companies and governments of any nation,
including developing markets. The realization of income, if any, is only
incidental to accomplishment of the Fund's objective of long-term capital
growth. Foreign investing involves special risks.
Templeton International Equity Fund
The Templeton International Equity Fund seeks long-term growth of capital.
Under normal conditions, the Templeton International Equity Fund will
invest at least 65% of its total assets in an internationally mixed
portfolio of foreign equity securities which trade on markets in countries
other than the U.S. including developing markets, and are (i) issued by
companies domiciled in countries other than the U.S. or (ii) issued by
companies that derive at least 50% of either their revenues or pre-tax
<PAGE>
income from activities outside of the U.S. Foreign investing involves
special risks.
Templeton Pacific Growth Fund
The Templeton Pacific Growth Fund seeks long-term growth of capital, primarily
through investing at least 65% of its total assets in equity securities which
trade on markets in the Pacific Rim including developing markets, and are (i)
issued by companies domiciled in the Pacific Rim including developing markets
or (ii) issued by companies that derive at least 50% of either their revenues
or pre-tax income from activities in the Pacific Rim. Investing in a
portfolio of geographically concentrated foreign securities, including
developing markets, involves increased susceptibility to the special risks of
foreign investing and an investment in the Fund may be considered speculative.
THE TEMPLETON GLOBAL ASSET ALLOCATION FUND, TEMPLETON DEVELOPING MARKETS
EQUITY FUND, TEMPLETON GLOBAL GROWTH FUND, GLOBAL INCOME FUND, INCOME
SECURITIES FUND, INVESTMENT GRADE INTERMEDIATE BOND FUND, TEMPLETON
INTERNATIONAL EQUITY FUND, MONEY MARKET FUND, TEMPLETON PACIFIC GROWTH FUND,
PRECIOUS METALS FUND, SMALL CAP FUND AND UTILITY EQUITY FUND MAY INVEST MORE
THAN 10% OF THEIR TOTAL NET ASSETS IN FOREIGN SECURITIES WHICH ARE SUBJECT TO
SPECIAL AND ADDITIONAL RISKS RELATED TO CURRENCY FLUCTUATIONS, MARKET
VOLATILITY AND ECONOMIC, SOCIAL AND POLITICAL UNCERTAINTY; INVESTING IN
DEVELOPING MARKETS INVOLVES SIMILAR BUT HEIGHTENED RISKS RELATED TO THE
RELATIVELY SMALL SIZE AND LESSER LIQUIDITY OF THESE MARKETS. SEE "HIGHLIGHTED
RISK CONSIDERATIONS - FOREIGN TRANSACTIONS" IN THE TRUST PROSPECTUS.
THE HIGH INCOME FUND AND THE INCOME SECURITIES FUND MAY INVEST UP TO 100% OF
THEIR RESPECTIVE NET ASSETS IN DEBT OBLIGATIONS RATED BELOW INVESTMENT GRADE,
COMMONLY KNOWN AS "JUNK BONDS", OR IN OBLIGATIONS WHICH HAVE NOT BEEN RATED BY
ANY RATING AGENCY. INVESTMENTS RATED BELOW INVESTMENT GRADE INVOLVE GREATER
RISKS, INCLUDING PRICE VOLATILITY AND RISK OF DEFAULT THAN INVESTMENTS IN
HIGHER RATED OBLIGATIONS. INVESTORS SHOULD CAREFULLY CONSIDER THE RISKS
ASSOCIATED WITH AN INVESTMENT IN THESE FUNDS IN LIGHT OF THE SECURITIES IN
WHICH THEY INVEST. SEE "HIGHLIGHTED RISK CONSIDERATIONS - LOWER RATED DEBT
OBLIGATIONS" IN THE TRUST PROSPECTUS.
General
There is no assurance that the investment objectives of any of the Funds will
be met. Owners bear the complete investment risk for Account Values allocated
to a Sub-Account.
Additional Funds and/or additional Eligible Funds may, from time to time, be
made available as investments to underlie the Policy. However, the right to
make such selections will be limited by the terms and conditions imposed on
such transactions by the Company, (See "Premium Payments - Allocation of
Premium").
<PAGE>
Trust shares are issued and redeemed only in connection with variable annuity
contracts and variable life insurance policies issued through separate
accounts of the Company and its affiliates. The Trust does not foresee any
disadvantage to Owners arising out of the fact that the Trust may be made
available to separate accounts which are used in connection with both variable
annuity and variable life insurance products. Nevertheless, the Trust's Board
of Trustees intends to monitor events in order to identify any material
irreconcilable conflicts which may possibly arise and to determine what
action, if any, should be taken in response thereto. If such a conflict were
to occur, one of the separate accounts might withdraw its investment in the
Trust. This might force the Trust to sell portfolio securities at
disadvantageous prices.
Substitution of Securities
If the shares of any Fund of the Trust should no longer be available for
investment by the Variable Account or, if in the judgement of the Company,
further investment in such shares should become inappropriate in view of the
purpose of the Policy, the Company may substitute shares of another Eligible
Fund (or Fund within the Trust). No substitution of securities in any
Sub-Account may take place without prior approval of the Securities and
Exchange Commission and under such requirements as it may impose.
PREMIUM PAYMENTS
______________________________________________________________________________
Single Premium
The single premium is due on the Policy Date. Before the Policy will take
effect, the application and the premium must be in good order as determined by
the Company's administrative rules. The minimum single premium which the
Company will accept is $10,000.
Grace Period
The Policy will lapse if the total Indebtedness exceeds the Account Value less
the uncollected Deductions. If there is no Indebtedness, the Policy cannot
lapse even if the Account Value equals $0. If the Policy lapses, a grace
period of 31 days shall be allowed for the Owner to repay the loan by at least
an amount which provides sufficient Cash Surrender Value to keep the Policy in
force for three Policy Processing Periods. If such loan repayment is not made
by the end of the grace period, the Policy will lapse and all coverage under
the Policy will terminate without value. The Company will mail the notice
that the grace period is in effect to the Owner and any assignee of record to
the last known addresses. The Policy will continue in force during the grace
period. If the Insured dies during the grace period, the death benefit will
be the death benefit in effect immediately prior to the start of the grace
period less any accrued Deductions and less any Indebtedness.
<PAGE>
Reinstatement
Subject to the following conditions, the Policy may be reinstated during the
lifetime of the Insured, unless it was surrendered for cash. The requirements
for reinstatement are:
1. the Service Office must receive a properly executed application for
reinstatement;
2. evidence of insurability satisfactory to the Company must be submitted;
3. a minimum premium sufficient to keep the Policy in force for three Policy
Processing Periods must be paid; and
4. any Indebtedness must be paid.
The Policy Date of a reinstated Policy will be the Policy Processing Date on
or next following the date the Company approves the reinstatement application.
For those states that allow it, the suicide and incontestability provisions
will apply from the Policy Date of reinstatement. Otherwise, the suicide and
incontestability provisions will only apply from the initial Policy Date. If
the Policy has been in force for two years during the lifetime of the Insured,
it will be contestable only as to statements made in the reinstatement
application.
Allocation of Premium
The premium is allocated to one or more of the Sub-Accounts of the Variable
Account. During the Free Look Period, the single premium is allocated to the
Money Market Sub-Account.
At the end of the Free Look Period, the Account Value will be allocated to one
or more of the Sub-Accounts in accordance with the premium allocation on
record. This allocation is not deemed to be a transfer subject to the
transfer fee provision (see "Deductions and Charges - Transfer Fee"). The
Company reserves the right to limit the number of allocations that an Owner
can have at any one time.
DEDUCTIONS AND CHARGES
______________________________________________________________________________
The Deductions under the Policy will be made as follows:
Mortality and Expense Risk Charge
The Company deducts a Mortality and Expense Risk Charge from each Sub-Account
on each Valuation Date. This risk charge is equal, on an annual basis, to
<PAGE>
0.60% of the average daily net assets of the Sub-Account. This risk charge
compensates the Company for assuming the mortality and expense risks under the
Policy. The mortality risk assumed by the Company is that the Insureds, as a
group, may not live as long as expected. The expense risk assumed by the
Company is that actual expenses may be greater than those assumed. The
Company is responsible for all administration of the Policies and the Variable
Account. The Company expects to profit from this charge.
Administrative Charge
The Company deducts an Administrative Charge from each Sub-Account on each
Valuation Date. This risk charge is equal, on an annual basis, to 0.15% of
the average daily net assets of the Sub-Account. This charge reimburses the
Company for expenses incurred in the administration of the Policies and the
Variable Account. Such expenses include but are not limited to:
confirmations, annual reports and account statements, maintenance of Policy
records, maintenance of Variable Account records, administrative personnel
costs, mailing costs, data processing costs, legal fees, accounting fees,
filing fees, the costs of other services necessary for Policy Owner servicing
and all accounting, valuation, regulatory and updating requirements. The
Company will not profit from this charge. This charge will be reduced to the
extent that the amount of this charge is in excess of that necessary to
reimburse the Company for its administrative expenses. Should this charge
prove to be insufficient, the Company will not increase this charge and will
incur the loss.
Cost of Insurance
On each Policy Processing Date, the Company deducts a charge for the Cost of
Insurance for the past Policy Processing Period. This charge is deducted from
the Account Value and provides death benefit protection for the Policy
Processing Period.
This charge is deducted from each Sub-Account in the same proportion that the
Policy's Account Value in the Sub-Account bears to the Policy's non-loaned
Account Value.
The current cost of insurance for a Policy Processing Period is:
1. the current cost of insurance rate, multiplied by
2. the net amount at risk for the Policy Processing Period.
The Company intends to use for standard (fully underwritten) risks a current
cost of insurance rate which may vary from time to time. However, the cost of
insurance rate will never be more than the guaranteed maximum cost of
insurance rates. The guaranteed maximum cost of insurance rates vary by sex
(in states where permitted), Attained Age and underwriting class. The
<PAGE>
guaranteed maximum cost of insurance rates are shown in the Policy Schedule
and are equal to 100% of the Commissioners Standard 1980 Ordinary Male and
Female, Smoker and Non-smoker Mortality Tables.
The net amount at risk is approximately equal to the death benefit minus the
sum of the Cash Surrender Value and the Loan Account Value attributable to the
Policy.
Insurance underwriting is designed to group applicants of the same age and sex
(in states where permitted) into classifications which can be expected to
produce mortality experience consistent with the actuarial structure for that
class. The Company intends to utilize a simplified underwriting method for
the majority of the Policies which are applied for. The following table shows
the Policies eligible for simplified underwriting.
<TABLE>
<CAPTION>
Simplified Underwriting Limits
Issue Age Single Premium
<C> <S>
30-39 $50,000
40-49 $100,000
50-75 $150,000
</TABLE>
The Company has determined that using the simplified underwriting method
presents additional mortality risks. Because of the additional risks to the
Company associated with simplified underwriting, the Company treats applicants
in this class as substandard. Therefore, the Company intends to charge all
Policies issued pursuant to simplified underwriting a higher cost of insurance
rate than those Policies issued standard/fully underwritten. The cost of
insurance charge for both the simplified underwriting class and the standard
issue class is based upon the Commissioners 1980 Standard Ordinary Male and
Female, Smoker and Non-smoker Mortality Tables ("1980 CSO Table"). For the
simplified underwriting class, the guaranteed rates contained in the Policy
are approximately equal to 150% thereof. However, the Company currently uses
lower, non-guaranteed rates which are also based upon the 1980 CSO Table and
which vary according to the age of the Insured. The current rate is
approximately 85% of the 1980 CSO Table. Policy Owners will be notified of
any change, prior to implementation, in the current rates to be charged.
For Policies that are not issued pursuant to simplified underwriting, the
Company will require more comprehensive information. The Company will then
determine the underwriting class in to which the Policy belongs. For all
Policies fully underwritten and determined to be standard risk, the current
cost of insurance rates described above will be used. The current rate for
<PAGE>
standard risk policies is approximately 75% of the 1980 CSO Table. The
current rate varies according to the age of the Insured.
Deferred Issue Charge
When the single premium is received at the Company, a Deferred Issue Charge is
accrued. The Company deducts this charge in ten equal annual deductions on
succeeding Policy Anniversaries for the first ten Policy Years. If the Owner
surrenders the Policy before the full amount is deducted, the uncollected
portion of this charge is deducted from the Account Value. The Deferred Issue
Charge is for premium taxes (2.5% of the single premium); sales charge (4.0%
of the single premium); and Policy issue charge (0.5% of the single premium).
For policies issued in the state of California only, the Deferred Issue Charge
is for premium taxes (2.35% of the single premium); sales charge (4.15% of the
single premium); and Policy issue charge (0.5% of the single premium).
Premium Taxes - All states and certain jurisdictions, such as cities and
counties, tax premium payments. Premium taxes vary from state to state and
are generally in the range of 2% to 3%.
Sales Charge - This sales charge reimburses the Company for expenses incurred
in connection with the promotion, sale and distribution of the Policy. This
charge from the single premium is not expected to cover the distribution
costs. To the extent that this charge is insufficient to cover the
distribution costs, the Company may make up the difference from the general
assets of the Company including the profit it expects from the Mortality and
Expense Risk Charge.
Policy Issue Charge - This charge is designed to cover the administrative
expenses incurred in connection with issuing a Policy. Such expenses include
initial underwriting review, medical examinations, inspection reports,
attending physicians' statements, insurance underwriting costs, Policy
issuance costs, establishing permanent Policy records, preparation of
illustrations, preparation of riders and the initial confirmation of the
transaction.
Income Tax Charge
The Company does not currently assess any charge for income taxes incurred by
the Company as a result of the operations of the Sub-Accounts of the Variable
Account. The Company reserves the right to assess a charge for such taxes
against the Sub-Accounts if the Company determines that such taxes will be
incurred.
Transfer Fee
Currently, the Company permits twelve transfers per Policy Year without the
imposition of any charge. For transfers in excess of that number the Company
<PAGE>
currently charges $25 per transfer (or 2% of the amount transferred, if less).
The transfer fee at any given time will not be set at a level greater than
its cost and will contain no element of profit.
DEATH BENEFIT
______________________________________________________________________________
Death Benefit
The death benefit is the greater of the face amount at the Policy Date or the
variable insurance amount as of the date the Service Office receives proof of
death of the Insured. The death benefit will be paid to the Beneficiary upon
receipt of due proof of the Insured's death. The amount payable will be the
death benefit reduced by any Indebtedness and any accrued Deductions, and
increased by amounts due from riders.
Variable Insurance Amount
The variable insurance amount on the Policy Date equals the face amount.
Thereafter, the variable insurance amount will be the Account Value of the
Policy less the uncollected Deductions multiplied by the net single premium
factor for the Insured's Attained Age and sex (in states where permitted) as
of such date. Appendix B is a Table of Net Single Premium Factors as is also
contained in the Policy. The amount of insurance purchased by $1.00
decreases with the age of an Insured. Therefore, the death benefit under
such a Policy will decrease unless the Account Value has increased during
the period.
Therefore, when divided into the Account Value of a Policy, it will
reduce the death benefit under such a Policy unless the Account Value
has increased at a greater rate than the increase in the applicable net
single premium factor.
Guaranteed Death Benefit
If there is no Indebtedness under the Policy, it will not lapse even if the
Account Value is $0. This Policy will terminate without value, as described
in the Grace Period provision, if Indebtedness on the Policy is greater than
the Account Value less the uncollected Deductions.
<PAGE>
ACCOUNT VALUE, CASH SURRENDER VALUE AND
TRANSFER RIGHTS
______________________________________________________________________________
Account Value
On any Valuation Date, the Account Value of the Policy is equal to the sum of
the Sub-Account values and the Loan Account attributable to the Policy.
Method of Determining Sub-Account Values
Sub-Account values will fluctuate in accordance with the investment experience
of the applicable underlying Fund held within the Sub-Account. In order to
determine these Sub-Account values, the Company utilizes Sub-Account valuation
units. The value of a unit applicable during any Valuation Period is
determined at the end of that Period.
When the first shares of the Funds were purchased for the Sub-Accounts, each
Sub-Account valuation unit was valued at $10. The value of a unit within each
Sub-Account on any Valuation Date thereafter is determined by dividing (a) by
(b), where:
(a) is equal to:
1. total value of the net assets in the Sub-Account; minus
2. the daily charge for assuming the mortality and expense risks; minus
3. the daily charge for administrative expenses; plus or minus
4. a charge or credit for any tax provision established for the Sub-Account.
and (b) is the total number of units applicable to that Sub-Account at the end
of the Valuation Period.
A valuation unit may increase or decrease in value from Valuation Date to
Valuation Date.
Cash Surrender Value
The Policy may be surrendered for its Cash Surrender Value by submitting a
written request to the Service Office. The Cash Surrender Value is equal to
the Account Value of the Policy less the sum of:
1. the uncollected portion of any Deductions or accrued Deductions; and
2. any Indebtedness.
<PAGE>
Surrendering the Policy will cancel it. There are no partial surrenders
allowed under the Policy.
This Policy is considered to be a modified endowment contract under TAMRA.
Surrender payments are fully taxable to the extent of income in the Policy and
may further be subject to an additional 10% tax penalty. The penalty shall
not apply, however, to any distribution: (a) made on or after the date on
which the taxpayer reaches age 59 1/2; (b) which is attributable to the
taxpayer becoming disabled (within the meaning of Section 72(m)(7) of the
Code); or (c) which is part of a series of substantially equal periodic
payments made not less frequently than annually for the life (or life
expectancy) of the taxpayer or the joint lives (or joint life expectancies) of
such taxpayer and his beneficiary.
Transfer Rights
The Owner may transfer by telephone or written request non-loaned Account
Values among the Sub-Accounts subject to the following:
1. the minimum value that may be transferred from any Sub-Account is $500 (or
the total value if it is less than $500);
2. the deduction from the Account Value of any transfer fee charge that the
Company may assess. The Company currently allows twelve (12) free transfers
per Policy Year. For additional transfers there is a $25 transfer fee (or 2%
of the amount transferred, if less);
3. any limit on the number of transfers per Policy Year that the Company may
impose. Currently the only limits are as set out in 2 above.
Neither the Variable Account nor the Trust are designed for professional
market timing organizations or other entities using programmed and frequent
transfers. A pattern of exchanges that coincides with a "market timing"
strategy may be disruptive to a Fund. In coordination with the Trust, the
Company reserves the right to restrict the transfer privilege or reject any
specific premium allocation request for any person whose transactions seem to
follow a timing pattern.
An Owner may elect to make transfers by telephone. To elect this option the
Owner must do so in writing to the Company. If there are Joint Owners, unless
the Company is informed to the contrary, instructions will be accepted from
either one of the Joint Owners. The Company will use reasonable procedures to
confirm that instructions communicated by telephone are genuine. If it does
not, the Company may be liable for any losses due to unauthorized or
fraudulent instructions. The Company tape records all telephone transactions.
<PAGE>
LOAN PROVISIONS
______________________________________________________________________________
Policy Loan
The Owner may borrow money from the Company while the Policy is in effect. The
Policy will be the only security the Company will require for the Policy loan.
The minimum loan amount is $1,000 where permitted by state law. The maximum
loan value is 90% of the Cash Surrender Value. The Company calculates the
Cash Surrender Value as of the end of the Valuation Period during which the
loan request is received in good order at the Service Office. Any existing
loan will be added to the new loan to determine the total loan.
This Policy is considered to be a modified endowment contract under the Code.
Loan payments are fully taxable to the extent of income in the Policy and may
further be subject to an additional 10% tax penalty. The penalty shall not
apply, however, to any distribution: (a) made on or after the date on which
the taxpayer reaches age 59 1/2; (b) which is attributable to the taxpayer
becoming disabled (within the meaning of Section 72(m)(7) of the Code); or (c)
which is part of a series of substantially equal periodic payments made not
less frequently than annually for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of such taxpayer and
his beneficiary.
The Code also provides that multiple modified endowment contracts that are
issued within a calendar year period to the same owner by one company or its
affiliates are treated as one modified endowment contract for purposes of
determining the tax consequences of any loans or distributions. Such
treatment may result in adverse tax consequences including more rapid taxation
of the loans or distributed amounts from such combination of policies. Owners
should consult a tax advisor prior to purchasing more than one modified
endowment contract in any calendar year period.
Effect of a Loan
A Policy loan will result in valuation units being redeemed from the
Sub-Accounts and the proceeds being transferred to the Loan Account. The
Company will pay interest on the Loan Account at an annual rate of 4.0%. If
the Owner does not specify from which Sub-Account(s) the loan is to be made,
the loan will be made from the Sub-Accounts in the same proportion as the
value in each Sub-Account bears to the non-loaned Account Value.
A Policy loan, whether or not repaid, will have a permanent effect on the
death benefits and Policy values, because the amount of the Policy loan will
not share in the investment results of the Sub-Accounts in which it had been
invested. If not repaid, the Policy loan will reduce the amount of the death
benefit and Cash Surrender Value.
Payment of Interest, Loan Repayment and
Policy Lapsation
The interest rate for a Policy loan is 4.75% annually. The interest is
payable in arrears on each Policy Anniversary for the past Policy Year. If
interest is not paid when it is due, it will be added to the Policy loan and
charged the same interest rate as the Policy loan. The additional interest
will be deducted from the Sub-Accounts in the proportion that the value of
each Sub-Account bears to the non-loaned Account Value.
An Owner may repay all or part of the Policy loan at any time while the
Insured is living. The minimum permissible amount of repayment is $1,000. The
repayment will be transferred from the Loan Account to the Sub-Accounts in
accordance with the Policy Owner's instructions. If no such instructions are
on record, the repayment will be allocated in the proportion that the value of
each Sub-Account bears to the non-loaned Account Value as of the date of
repayment.
If the Indebtedness exceeds the Account Value less the uncollected Deductions,
the Company will terminate the Policy. The Company will not do this, however,
until 31 days after it mails notice of intent to terminate. The Company will
notify, at the last known address, the Owner and anyone who holds the Policy
as collateral.
OWNERSHIP
______________________________________________________________________________
Owner
The Owner, any Joint Owner and any Contingent Owner are named in the
application. If more than one person is named as Owner or Contingent Owner
and the designation does not state otherwise, the Company will treat such
persons as Joint Owners with rights of survivorship. Any designations may be
changed by the Owner.
While the Insured is alive, the Owner may exercise all the rights of the
Policy subject to the rights of:
1. any assignee under an assignment filed with the Service Office; and
2. any irrevocably named Beneficiary.
If the Owner dies, the Owner's rights will pass to any surviving Joint
Owner(s); otherwise to any Contingent Owner(s) then alive; otherwise to the
Owner's estate.
<PAGE>
Transfer of Ownership
While the Insured is living, the Owner may transfer ownership of the Policy. A
written request, dated and signed by the Owner, must be sent to the Service
Office. The Company may require that the Policy be returned for an
endorsement. The transfer will take effect as of the date the request was
signed.
Any transfer of ownership terminates the interest of any existing Contingent
Owner. It does not change the Beneficiary, nor transfer the Beneficiary's
interest. Any change or transfer of ownership is subject to any benefit
payment made by the Company before endorsement.
Assignment
The Owner may assign the Policy. A copy of any assignment must be filed with
the Service Office. The Company is not responsible for the validity of any
assignment. If the Owner assigns the Policy, the Owner's rights and those of
any revocably-named person will be subject to the assignment. An assignment
will not affect any payments the Company may make or actions it may take
before such assignment has been recorded at the Service Office.
BENEFICIARY PROVISIONS
______________________________________________________________________________
Beneficiary
The Beneficiary and any Contingent Beneficiary are named in the application.
They may be changed by the Owner.
Change of Beneficiary
While the Insured is living, the Owner may change the Beneficiary. A written
request, dated and signed by the Owner, must be filed at the Service Office.
After the change is recorded, it will take effect as of the date the request
was signed. If the request reaches the Service Office after the Insured dies
but before any benefit payment is made, the change will be valid.
Death of Beneficiary
If all of the named Beneficiaries die prior to the Insured's death, the
Company will pay the death benefit in one sum to the Owner's estate.
DELAY OF PAYMENTS
______________________________________________________________________________
The Company will generally pay Policy proceeds within seven business days of
receipt of a completed request for such payment. The Company reserves the
<PAGE>
right to suspend or postpone any type of payment from the Variable Account for
any period when:
a. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
b. trading on the New York Stock Exchange is restricted;
c. an emergency exists as a result of which disposal of securities held in
the Variable Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Variable Account's net assets; or
d. the Securities and Exchange Commission, by order, so permits delay for the
protection of Owners.
The applicable rules of the Securities and Exchange Commission will govern as
to whether the conditions described in (b) and (c) exist.
MANAGEMENT OF THE COMPANY
______________________________________________________________________________
The directors and officers of the Company and their principal occupations for
the past 5 years are as follows:
<TABLE>
<CAPTION>
Principal Occupations During the
Name Past Five Years
<S> <C>
Lowell C. Anderson Chairman, President and Chief
Executive Officer and Director
of the Company since October,
1988. From 1985 to 1988, Mr.
Anderson was President and Chief
Operating Officer of the Company.
Herbert F. Hansmeyer Chairman of Allianz of America Corp.
Member of the Board of Management
of Allianz Versicherungs-AG,
Munich, Germany, since 1986;
formerly Chief Executive Officer
of Allianz Insurance Company,
Los Angeles, California.
Dr. Jerry Robertson Former Executive Vice President,
3M/Life Sciences Sector.
<PAGE>
Dr. Gerhard Rupprecht Chairman of the Board of
Management - Allianz
Lebensversicherungs since 1979.
Rex B. Shannon Former Vice Chairman of the Board of the
Company; formerly Chairman and
Chief Executive Officer of
Fidelity Union Life Insurance
Company.
Michael P. Sullivan President, Chief Executive Officer
and Director of International
Dairy Queen, Inc. since 1987.
Alan A. Grove Vice President - Corporate Legal
Officer and Secretary of the Company.
Robert S. James President - Individual Marketing
Division of the Company since
March 31, 1995. Previously
President of Financial Markets
Division.
Edward J. Bonach Senior Vice President -
Chief Financial Officer
and Treasurer of the Company since
1993. Senior Vice President and
Chief Actuary previously.
Ronald L. Wobbeking President - Mass Marketing
Division of the Company since
September 1991. Previously Senior
Vice President Mass Marketing.
</TABLE>
ADMINISTRATION OF THE POLICIES
______________________________________________________________________________
While the Company has primary responsibility for all administration of the
Policies and the Variable Account, it has retained the services of Delaware
Valley Financial Services, Inc. ("DVFS" or "Valuemark Service Center")
pursuant to an Administrative Agreement. Such administrative services include
issuance of the Policies and maintenance of Policy Owners' records. The
Company pays all charges and fees assessed by DVFS. DVFS serves as the
administrator to various insurance companies offering variable and fixed
annuity and variable life insurance contracts. The Company's ability to
administer the Policies could be adversely affected should DVFS elect to
terminate the Agreement.
<PAGE>
TAX STATUS
______________________________________________________________________________
NOTE: The following description is based upon the Company's understanding of
current federal income tax law applicable to life insurance in general. The
Company cannot predict the probability that any changes in such laws will be
made. Purchasers are cautioned to seek competent tax advice regarding the
possibility of such changes. Section 7702 of the Internal Revenue Code of
1986, as amended ("Code"), defines the term "life insurance contract" for
purposes of the Code. The Company believes that the Policies to be issued
will qualify as "life insurance contracts" under Section 7702. The Company
does not guarantee the tax status of the Policies. Purchasers bear the
complete risk that the Policies may not be treated as "life insurance" under
federal income tax laws. Purchasers should consult their own tax advisers.
It should be further understood that the following discussion is not
exhaustive and that special rules not described in this Prospectus may be
applicable in certain situations.
Introduction
The discussion contained herein is general in nature and is not intended as
tax advice. Each person concerned should consult a competent tax adviser. No
attempt is made to consider any applicable state or other tax laws. Moreover,
the discussion herein is based upon the Company's understanding of current
federal income tax laws as they are currently interpreted. No representation
is made regarding the likelihood of continuation of those current federal
income tax laws or of the current interpretations by the Internal Revenue
Service.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Variable Account is not a separate entity from the
Company and its operations form a part of the Company.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable life insurance policies. The Code provides that
a variable life insurance policy will not be treated as life insurance for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury
Department ("Treasury Department"), adequately diversified. Disqualification
of the Policy as a life insurance contract would result in imposition of
federal income tax to the Owner with respect to earnings allocable to the
Policy prior to the receipt of payments under the Policy. The Code contains a
safe harbor provision which provides that life insurance policies such as the
Policies meet the diversification requirements if, as of the close of each
quarter, the underlying assets meet the diversification standards for a
regulated investment company and no more than fifty-five (55%) percent of the
<PAGE>
total assets consist of cash, cash items, U.S. Government securities and
securities of other regulated investment companies. There is an exception for
securities issued by the U.S. Treasury in connection with variable life
insurance policies.
On March 2, 1989, the Treasury Department issued Regulations (Treas. Reg.
Section 1.817-5), which established diversification requirements for the
investment portfolios underlying variable contracts such as the Policies. The
Regulations amplify the diversification requirements for variable contracts
set forth in the Code and provide an alternative to the safe harbor provision
described above. Under the Regulations, an investment portfolio will be
deemed adequately diversified if: (i) no more than 55% of the value of the
total assets of the portfolio is represented by any one investment; (ii) no
more than 70% of the value of the total assets of the portfolio is represented
by any two investments; (iii) no more than 80% of the value of the total
assets of the portfolio is represented by any three investments; and (iv) no
more than 90% of the value of the total assets of the portfolio is represented
by any four investments. For purposes of these Regulations, all securities of
the same issuer are treated as a single investment.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable
contracts by Section 817(h) of the Code have been met, "each United States
government agency or instrumentality shall be treated as a separate issuer".
The Company intends that each Fund of the Trust underlying the Policies will
be managed by the Managers for the Trust in such a manner as to comply with
these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Variable Account will cause the Owner to be treated as the
owner of the assets of the Variable Account, thereby resulting in the loss of
favorable tax treatment for the Policy. At this time it cannot be determined
whether additional guidance will be provided and what standards may be
contained in such guidance.
The amount of Owner control which may be exercised under the Policy is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available,
would cause the Owner to be considered as the owner of the assets of the
Variable Account.
In the event any forthcoming guidance or ruling is considered to set forth a
new position, such guidance or ruling will generally be applied only
<PAGE>
prospectively. However, if such ruling or guidance was not considered to set
forth a new position, it may be applied retroactively resulting in the Owner
being retroactively determined to be the owner of the assets of the Variable
Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Policy in an attempt to maintain favorable tax treatment.
Tax Treatment of the Policy
The Policy has been designed to comply with the definition of life insurance
contained in Section 7702 of the Code. Although some interim guidance has been
provided and proposed regulations have been issued, final regulations have
not been adopted. Section 7702 of the Code requires the use of reasonable
mortality and other expense charges. In establishing these charges, the
Company has relied on the interim guidance provided in IRS Notice 88-128 and
proposed regulations issued on July 5, 1991. Currently, there is even less
guidance as to a Policy issued on a substandard risk basis and thus it is even
less clear whether a Policy issued on such basis would meet the requirements
of Section 7702 of the Code.
While the Company has attempted to comply with Section 7702, the law in this
area is very complex and unclear. There is a risk, therefore, that the
Internal Revenue Service will not concur with the Company's interpretations of
Section 7702 that were made in determining such compliance. In the event the
Policy is determined not to so comply, it would not qualify for the favorable
tax treatment usually accorded life insurance policies. Owners should consult
their tax advisers with respect to the tax consequences of purchasing the
Policy.
Policy Proceeds
Loan proceeds and/or surrender payments from the Policies are fully taxable to
the extent of income in the Policy and may further be subject to an additional
10% federal income tax penalty. (See "Tax Treatment of Loans and Surrenders".)
Otherwise, the Policy should receive the same federal income tax treatment as
any other type of life insurance. As such, the death benefit thereunder is
excludable from the gross income of the Beneficiary under Section 101(a) of
the Code. Also, the Owner is not deemed to be in constructive receipt of the
Account Value or Cash Surrender Value, including increments thereon, under a
Policy until surrender thereof.
Federal, state and local estate, inheritance and other tax consequences of
ownership, or receipt of Policy proceeds, depend on the circumstances of each
Policy Owner or Beneficiary.
<PAGE>
Tax Treatment of Loans and Surrenders
The Code alters the tax treatment accorded to loans and certain distributions
from life insurance policies which are deemed to be "modified endowment
contracts". The Policy's single premium requirement is such that Policies
issued on or after June 21, 1988 are modified endowment contracts. A Policy
received in exchange for a modified endowment contract is also a modified
endowment contract regardless of whether it meets the 7-pay test.
The status of an exchange of a contract issued before June 21, 1988 is
unclear. However, the Internal Revenue Service has taken the position in a
Private Letter Ruling that a contract received in an exchange on or after June
21, 1988 will be considered as entered into as of the date of the exchange and
therefore subject to Section 7702A.
A Policy that was entered into prior to June 21, 1988 may be deemed to be a
modified endowment contract if it is materially changed and fails to meet the
7-pay test. A Policy fails to meet the 7-pay test when the cumulative amount
paid under the Policy at any time during the first 7 Policy Years exceeds the
sum of the net level premiums which would have been paid on or before such
time if the Policy provided for paid-up future benefits after the payment of
seven (7) level annual premiums. A material change would include any increase
in the future benefits provided under a policy unless the increase is
attributable to: (1) the payment of premiums necessary to fund the lowest
death benefit and qualified additional benefits payable in the first seven
policy years; or (2) the crediting of interest or other earnings (including
policyholder dividends) with respect to such premiums.
In that the Policy is a modified endowment contract, surrenders and/or loan
proceeds are taxable to the extent of income in the Policy. Such
distributions are deemed to be on a last-in, first-out basis, which means the
taxable income is distributed first. Loan proceeds and/or surrender payments
may also be subject to an additional 10% federal income tax penalty applied to
the income portion of such distribution. The penalty shall not apply, however,
to any distribution: (1) made on or after the date on which the taxpayer
reaches age 59 1/2;(2) which is attributable to the taxpayer becoming
disabled (within the meaning of Section 72(m)(7) of the Code); or (3) which is
part of a series of substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy) of the taxpayer or
the joint lives (or joint life expectancies) of such taxpayer and his
beneficiary.
Policy Owners should seek competent tax advice on the tax consequences of
taking loans, surrendering any Policy issued since June 21, 1988, or making
any material modifications to their Policies.
<PAGE>
Multiple Policies
The Code further provides that multiple modified endowment contracts that are
issued within a calendar year period to the same owner by one company or its
affiliates are treated as one modified endowment contract for purposes of
determining the taxable portion of any loans or distributions. Such treatment
may result in adverse tax consequences including more rapid taxation of the
loans or distributed amounts from such combination of contracts. Policy
Owners should consult a tax adviser prior to purchasing more than one modified
endowment contract in any calendar year period.
Tax Treatment of Assignments
An assignment of a Policy may be a taxable event. Policy Owners should
therefore consult competent tax advisers should they wish to assign their
Policies.
Qualified Plans
The Policies may be used in conjunction with certain Qualified Plans. Because
the rules governing such use are complex, a purchaser should not do so until
he has consulted a competent Qualified Plans consultant.
VARIABLE ACCOUNT VOTING RIGHTS
______________________________________________________________________________
In accordance with its view of present applicable law, the Company will vote
the shares of the Trust held in the Variable Account at special meetings of
the shareholders of the Trust in accordance with instructions received from
Owners (or Beneficiaries if applicable) having the voting interest in the
Variable Account. The Company will vote shares for which it has not received
instructions in the same proportion as it votes shares for which it has
received instructions. The Company will vote shares it owns in the same
proportion as it votes shares for which it has received instructions. The
Trust does not hold regular meetings of shareholders.
If the 1940 Act or any regulation thereunder should be amended or if the
present interpretation thereof should change, and as a result the Company
determines that it is permitted to vote the shares of the Trust in its own
right, it may elect to do so.
The voting interests of the Owner (or the Beneficiary if applicable) in the
Trust will be determined as follows: Owners may cast one vote for each $100
of Account Value of the Policy allocated to the Sub-Account on the record date
for the shareholder meeting of the Trust. Fractional votes are counted.
The number of shares which a person has a right to vote will be determined as
of the date to be chosen by the Company not more than sixty (60) days prior to
<PAGE>
the meeting of the Trust. Voting instructions will be solicited by written
communication at least fourteen (14) days prior to such meeting.
Each Owner (or Beneficiary if applicable) having the voting interest in the
Variable Account will receive periodic reports relating to the Trust in which
he or she has an interest, proxy material and a form with which to give such
voting instructions with respect to the proportion of the shares held in the
Variable Account corresponding to his or her interest in the Variable Account.
Disregard of Voting Instructions
The Company may, when required to do so by state insurance authorities, vote
shares of the Trust without regard to instructions from Owners if such
instructions would require such shares to be voted to cause any Fund of the
Trust to make (or refrain from making) investments which would result in
changes in the sub-classification or investment objectives of the Trust or a
Fund. The Company may also disapprove changes in the investment policy
initiated by the Owners or trustees of the Trust, if such disapproval is
reasonable and is based on a good faith determination by the Company that the
change would violate state or federal law or the change would not be
consistent with the investment objectives of the Trust or a Fund or which
varies from the general quality and nature of investments and investment
techniques used by other funds with similar investment objectives underlying
other separate accounts of the Company or of an affiliated life insurance
company. In the event the Company does disregard voting instructions, a
summary of this action and the reasons for such action will be included in the
next semi-annual report to Owners.
DISTRIBUTION OF THE POLICY
______________________________________________________________________________
The Policy is sold by licensed insurance agents, where the Policy may be
lawfully sold, who are registered representatives of broker-dealers which are
registered under the Securities Exchange Act of 1934 and are members of the
National Association of Securities Dealers, Inc.
The Policy is distributed through the principal underwriter for the Variable
Account, NALAC Financial Plans, Inc., 1750 Hennepin Avenue, Minneapolis, MN, a
wholly-owned subsidiary of the Company.
Commissions will be paid to broker-dealers who sell the Policies.
Broker-dealers will be paid commissions at the time of purchase up to 5.25% of
the single premium. Broker-dealers are also paid a trail commission of up to
25 basis points of the Policy Account Value. In addition, under certain
circumstances, the Company may pay certain sellers production bonuses which
will take into account, among other things, the total premiums which have been
paid under Policies associated with the broker-dealer. Additional payments may
be made for other services not directly related to the sale of the Policies.
<PAGE>
REPORTS TO OWNERS
______________________________________________________________________________
The Company will send to each Owner semi-annual and annual reports of the
Variable Account. Within 30 days after each Policy Anniversary, an annual
statement will be sent to each Owner. The statement will show the current
amount of death benefit payable under the Policy, the current Account Value,
the current Cash Surrender Value, current Indebtedness and will show all
transactions previously confirmed. The statement will also show premiums
paid, investment returns and all charges deducted during the Policy Year.
Confirmations will be mailed to Policy Owners within seven days of the
transaction of: (a) the receipt of premium; (b) any transfer between
Sub-Accounts; (c) any loan, interest repayment, or loan repayment; (d) any
surrender; (e) exercise of the free look privilege; (f) any exchange of the
Policy; and (g) payment of the death benefit under the Policy. Upon request a
Policy Owner shall be entitled to a receipt of premium payment.
LEGAL PROCEEDINGS
______________________________________________________________________________
There are no legal proceedings to which the Variable Account or the
Distributor is a party or to which the assets of the Variable Account are
subject. The Company is not involved in any litigation that is of material
importance in relation to its total assets or that relates to the Variable
Account.
EXPERTS
______________________________________________________________________________
The financial statements of Allianz Life Variable Account A and the
consolidated financial statements of the Company included in this Prospectus
have been audited by KPMG Peat Marwick LLP, independent auditors, as indicated
in their reports included in this Prospectus, and are included herein, in
reliance upon such reports and upon the authority of said firm as experts in
accounting and auditing.
LEGAL OPINIONS
______________________________________________________________________________
Legal matters in connection with the Policy described herein are being passed
upon by the law firm of Blazzard, Grodd & Hasenauer, P.C., Westport,
Connecticut.
<PAGE>
FINANCIAL STATEMENTS
______________________________________________________________________________
The consolidated financial statements of the Company that are included herein
should be considered only as bearing upon the ability of the Company to meet
its obligations under the Policy.
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (Unaudited)
June 30, 1995
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements
Statements of Assets and Liabilities
June 30, 1995 (unaudited)
Real U.S.
Money Growth and Precious High Estate Government Utility
Market Income Metals Income Securities Securities Equity
Fund Fund Fund Fund Fund Fund Fund
--------- ---------- -------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Money Market Fund, 621,633 shares,
cost $621,633 $621,633 - - - - - -
Growth and Income Fund, 56,565
shares, cost $681,328 - 840,559 - - - - -
Precious Metals Fund, 18,816
shares, cost $242,357 - - 261,351 - - - -
High Income Fund, 91,824 shares,
cost $1,042,374 - - - 1,187,278 - - -
Real Estate Securities Fund, 7,633
shares, cost $101,573 - - - - 117,776 - -
U.S. Government Securities Fund,
46,696 shares, cost $487,928 - - - - - 615,451 -
Utility Equity Fund, 83,366
shares, cost $1,022,644 - - - - - - 1,280,500
--------- ---------- -------- --------- ---------- ---------- ---------
Total assets 621,633 840,559 261,351 1,187,278 117,776 615,451 1,280,500
--------- ---------- -------- --------- ---------- ---------- ---------
Liabilities:
Accrued mortality and expense
risk charges (25,221) 3,814 26,674 4,674 1,172 2,481 5,061
Accrued administrative charges (6,305) 954 6,668 1,169 293 621 1,266
--------- ---------- -------- --------- ---------- ---------- ---------
<PAGE>
Total liabilities (31,526) 4,768 33,342 5,843 1,465 3,102 6,327
--------- ---------- -------- --------- ---------- ---------- ---------
Net assets $653,159 835,791 228,009 1,181,435 116,311 612,349 1,274,173
========= ========== ======== ========= ========== ========== =========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Assets and Liabilities (cont.)
June 30, 1995 (unaudited)
Zero Zero Zero Zero Investment
Coupon Coupon Coupon Coupon Global Grade Income
Fund - Fund - Fund - Fund - Income Intermediate Securities
1995 2000 2005 2010 Fund Bond Fund Fund
-------- ------- ------- ------- ------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Zero Coupon Fund - 1995, 21,416 shares,
cost $222,437 $250,786 - - - - - -
Zero Coupon Fund - 2000, 21,864 shares,
cost $232,841 - 324,246 - - - - -
Zero Coupon Fund - 2005, 19,684 shares,
cost $207,641 - - 309,628 - - - -
Zero Coupon Fund - 2010, 6,556 shares,
cost $87,910 - - - 102,608 - - -
Global Income Fund, 6,182 shares,
cost $76,944 - - - - 78,391 - -
Investment Grade Intermediate Bond Fund,
7,213 shares, cost $95,460 - - - - - 97,522 -
Income Securities Fund, 23,860 shares,
cost $355,631 - - - - - - 359,810
-------- ------- ------- ------- ------ ------------ ----------
Total assets 250,786 324,246 309,628 102,608 78,391 97,522 359,810
-------- ------- ------- ------- ------ ------------ ----------
Liabilities:
Accrued mortality and expense risk charges 1,403 1,682 1,632 926 506 557 4,898
Accrued administrative charges 351 421 408 232 127 139 1,224
-------- ------- ------- ------- ------ ------------ ----------
<PAGE>
Total liabilities 1,754 2,103 2,040 1,158 633 696 6,122
-------- ------- ------- ------- ------ ------------ ----------
Net assets $249,032 322,143 307,588 101,450 77,758 96,826 353,688
======== ======= ======= ======= ====== ============ ==========
</TABLE>
See accompanying notes to unaudited financial statements.
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Assets and Liabilities (cont.)
June 30, 1995 (unaudited)
Templeton Templeton
Adjustable Templeton Templeton Developing Templeton Global
U.S. Pacific Rising International Markets Global Asset Total
Government Growth Dividends Equity Equity Growth Allocation All
Fund Fund Fund Fund Fund Fund Fund Funds
----------- --------- --------- ------------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net
asset value:
Franklin Valuemark Funds:
Adjustable U.S. Government
Fund, 2,022 shares,
cost $21,652 $ 20,987 - - - - - -
Templeton Pacific Growth
Fund, 18,029 shares,
cost $234,643 - 237,801 - - - - -
Rising Dividends Fund, 7,223
shares, cost $76,937 - - 80,180 - - - -
Templeton International
Equity Fund, 29,402
shares, cost $374,677 - - - 381,338 - - -
Templeton Developing Markets
Equity Fund, 15,648
<PAGE>
shares, cost $149,406 - - - - 153,510 - -
Templeton Global Growth
Fund, 19,334 shares,
cost $205,686 - - - - - 215,961 -
Templeton Global Asset
Allocation Fund,
0 shares,cost $0 - - - - - - -
----------- --------- --------- ------------- ---------- --------- ----------
Total assets $ 20,987 237,801 80,180 381,338 153,510 215,961 - 7,537,316
----------- --------- --------- ------------- ---------- --------- ---------- ---------
Liabilities:
Accrued mortality and
expense risk charges 311 2,791 168 1,528 2,240 2,210 - 39,507
Accrued administrative
charges 78 698 42 382 560 552 - 9,880
----------- --------- --------- ------------- ---------- --------- ---------- ---------
Total liabilities 389 3,489 210 1,910 2,800 2,762 - 49,387
----------- --------- --------- ------------- ---------- --------- ---------- ---------
Net assets $ 20,598 234,312 79,970 379,428 150,710 213,199 - 7,487,929
=========== ========= ========= ============= ========== ========= ========== =========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Money Market Fund Growth and Income Fund Precious Metals
---------- -------- -------- ----------- -------- --------- --------- -------
1995 1994 1993 1995 1994 1993 1995 1994
---------- -------- -------- ----------- -------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in fund shares $ 18,284 5,038 4,991 10,179 3,957 5,989 3,600 605
---------- -------- -------- ----------- -------- --------- --------- -------
Expenses:
Mortality and expense risk charges 1,026 1,006 1,206 2,544 1,992 2,215 1,804 312
Administrative charges 256 251 302 636 498 554 451 78
---------- -------- -------- ----------- -------- --------- --------- -------
Total expenses 1,282 1,257 1,508 3,180 2,490 2,769 2,255 390
---------- -------- -------- ----------- -------- --------- --------- -------
Investment income (loss), net 17,002 3,781 3,483 6,999 1,467 3,220 1,345 215
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - 22,157 8,957 - 2,665 -
---------- -------- -------- ----------- -------- --------- --------- -------
Realized gains (losses) on
sales of investments:
Proceeds from sales 549,798 63,613 99,621 10,160 34,447 157,480 43,391 10,570
Cost of investments sold (549,798) (63,613) (99,621) (8,104) (27,906) (130,795) (39,844) (9,081)
---------- -------- -------- ----------- -------- --------- --------- -------
Total realized gains (losses)
on sales of investments, net - - - 2,056 6,541 26,685 3,547 1,489
---------- -------- -------- ----------- -------- --------- --------- -------
<PAGE>
Realized gains (losses)
on investments, net - - - 24,213 15,498 26,685 6,212 1,489
Net change in unrealized
appreciation (depreciation)
on investments - - - 67,121 (46,728) (9,396) (4,167) (9,637)
---------- -------- -------- ----------- -------- --------- --------- -------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on investments, net - - - 91,334 (31,230) 17,289 2,045 (8,148)
---------- -------- -------- ----------- -------- --------- --------- -------
Net increase (decrease) in net assets
from operations $ 17,002 3,781 3,483 98,333 (29,763) 20,509 3,390 (7,933)
========== ======== ======== =========== ======== ========= ========= =======
Fund
---------
1993
---------
<S> <C>
Investment Income:
Dividends reinvested in fund shares 1,029
---------
Expenses:
Mortality and expense risk charges 607
Administrative charges 152
---------
Total expenses 759
---------
Investment income (loss), net 270
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain distributions
on mutual funds -
---------
Realized gains (losses) on
sales of investments:
Proceeds from sales 134,510
Cost of investments sold (133,172)
---------
<PAGE>
Total realized gains (losses)
on sales of investments, net 1,338
---------
Realized gains (losses)
on investments, net 1,338
Net change in unrealized
appreciation (depreciation)
on investments 43,838
---------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on investments, net 45,176
---------
Net increase (decrease) in net assets
from operations 45,446
=========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
High Income Fund Real Estate Securities Fund
--------- -------- -------- ------------ ----------- -------
1995 1994 1993 1995 1994 1993
--------- -------- -------- ------------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in fund shares $ 78,044 44,184 37,831 3,875 598 603
--------- -------- -------- ------------ ----------- -------
Expenses:
Mortality and expense risk charges 3,363 2,866 3,122 476 167 204
Administrative charges 841 716 780 119 42 51
--------- -------- -------- ------------ ----------- -------
Total expenses 4,204 3,582 3,902 595 209 255
--------- -------- -------- ------------ ----------- -------
Investment income (loss), net 73,840 40,602 33,929 3,280 389 348
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - 6,061 - - - -
--------- -------- -------- ------------ ----------- -------
Realized gains (losses) on sales of investments:
Proceeds from sales 26,080 41,411 17,493 12,040 5,232 9,411
Cost of investments sold (21,670) (36,790) (15,580) (10,081) (3,555) (6,762)
--------- -------- -------- ------------ ----------- -------
Total realized gains (losses) on
sales of investments, net 4,410 4,621 1,913 1,959 1,677 2,649
--------- -------- -------- ------------ ----------- -------
Realized gains (losses) on investments, net 4,410 10,682 1,913 1,959 1,677 2,649
<PAGE>
Net change in unrealized appreciation
(depreciation) on investments 58,580 (96,383) 45,346 (757) (213) 3,644
--------- -------- -------- ------------ ----------- -------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 62,990 (85,701) 47,259 1,202 1,464 6,293
--------- -------- -------- ------------ ----------- -------
Net increase (decrease) in net assets from operations $136,830 (45,099) 81,188 4,482 1,853 6,641
========= ======== ======== ============ =========== =======
U.S.
Government Securities Fund
----------- ----------- -------
1995 1994 1993
----------- ----------- -------
<S> <C> <C> <C>
Investment Income:
Dividends reinvested in fund shares 41,763 29,066 24,746
----------- ----------- -------
Expenses:
Mortality and expense risk charges 1,931 1,716 2,054
Administrative charges 483 429 513
----------- ----------- -------
Total expenses 2,414 2,145 2,567
----------- ----------- -------
Investment income (loss), net 39,349 26,921 22,179
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - 2,285 3,795
----------- ----------- -------
Realized gains (losses) on sales of investments:
Proceeds from sales 5,470 108,232 7,901
Cost of investments sold (4,146) (81,141) (5,599)
----------- ----------- -------
Total realized gains (losses) on
sales of investments, net 1,324 27,091 2,302
----------- ----------- -------
Realized gains (losses) on investments, net 1,324 29,376 6,097
<PAGE>
Net change in unrealized appreciation
(depreciation) on investments 24,422 (93,645) 16,024
----------- ----------- -------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 25,746 (64,269) 22,121
----------- ----------- -------
Net increase (decrease) in net assets from operations 65,095 (37,348) 44,300
=========== =========== =======
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Zero Zero
Utility Equity Fund Coupon Fund - 1995 Coupon
--------- --------- -------- -------- -------- ------- -------
1995 1994 1993 1995 1994 1993 1995
--------- --------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in fund shares $ 70,912 44,690 25,962 17,379 15,154 15,253 13,993
--------- --------- -------- -------- -------- ------- -------
Expenses:
Mortality and expense risk charges 3,792 3,310 4,095 810 826 786 1,057
Administrative charges 948 827 1,024 202 206 197 264
--------- --------- -------- -------- -------- ------- -------
Total expenses 4,740 4,137 5,119 1,012 1,032 983 1,321
--------- --------- -------- -------- -------- ------- -------
Investment income (loss), net 66,172 40,553 20,843 16,367 14,122 14,270 12,672
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - 7,958 138 86 625 3,220 -
--------- --------- -------- -------- -------- ------- -------
Realized gains (losses) on sales of investments:
Proceeds from sales 87,913 131,451 151,341 16,544 3,056 2,879 2,219
Cost of investments sold (69,779) (96,053) (98,318) (13,644) (2,507) (2,185) (1,544)
--------- --------- -------- -------- -------- ------- -------
Total realized gains (losses) on
sales of investments, net 18,134 35,398 53,023 2,900 549 694 675
--------- --------- -------- -------- -------- ------- -------
Realized gains (losses) on investments, net 18,134 43,356 53,161 2,986 1,174 3,914 675
<PAGE>
Net change in unrealized appreciation
(depreciation) on investments 49,278 (301,798) 55,296 (9,108) (17,883) (6,236) 24,775
--------- --------- -------- -------- -------- ------- -------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 67,412 (258,442) 108,457 (6,122) (16,709) (2,322) 25,450
--------- --------- -------- -------- -------- ------- -------
Net increase (decrease) in net assets
from operations $133,584 (217,889) 129,300 10,245 (2,587) 11,948 38,122
========= ========= ======== ======== ======== ======= =======
Fund - 2000
-------- -------
1994 1993
-------- -------
<S> <C> <C>
Investment Income:
Dividends reinvested in fund shares 14,100 12,537
-------- -------
Expenses:
Mortality and expense risk charges 918 949
Administrative charges 230 237
-------- -------
Total expenses 1,148 1,186
-------- -------
Investment income (loss), net 12,952 11,351
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds 2,038 637
-------- -------
Realized gains (losses) on sales of investments:
Proceeds from sales 12,631 3,337
Cost of investments sold (9,351) (2,253)
-------- -------
Total realized gains (losses) on
sales of investments, net 3,280 1,084
-------- -------
Realized gains (losses) on investments, net 5,318 1,721
<PAGE>
Net change in unrealized appreciation
(depreciation) on investments (40,008) 21,268
-------- -------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net (34,690) 22,989
-------- -------
Net increase (decrease) in net assets
from operations (21,738) 34,340
======== =======
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Zero Zero
Coupon Fund - 2005 Coupon Fund - 2010 Global Income
-------- -------- -------- ------- -------- ------- ------- -------
1995 1994 1993 1995 1994 1993 1995 1994
-------- -------- -------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in fund shares $12,928 11,417 12,406 3,109 7,253 5,501 2,871 491
-------- -------- -------- ------- -------- ------- ------- -------
Expenses:
Mortality and expense risk charges 1,044 954 1,107 426 517 351 214 41
Administrative charges 261 238 277 106 129 88 53 10
-------- -------- -------- ------- -------- ------- ------- -------
Total expenses 1,305 1,192 1,384 532 646 439 267 51
-------- -------- -------- ------- -------- ------- ------- -------
Investment income (loss), net 11,623 10,225 11,022 2,577 6,607 5,062 2,604 440
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - 3,569 138 - 3,560 224 - 204
-------- -------- -------- ------- -------- ------- ------- -------
Realized gains (losses) on sales of investments:
Proceeds from sales 2,962 73,922 22,857 1,139 2,552 1,443 1,784 2,141
Cost of investments sold (1,950) (51,264) (15,159) (994) (2,417) (1,053) (1,757) (2,005)
-------- -------- -------- ------- -------- ------- ------- -------
Total realized gains (losses) on
sales of investments, net 1,012 22,658 7,698 145 135 390 27 136
-------- -------- -------- ------- -------- ------- ------- -------
Realized gains (losses) on investments, net 1,012 26,227 7,836 145 3,695 614 27 340
<PAGE>
Net change in unrealized appreciation
(depreciation) on investments 36,402 (74,485) 37,406 16,690 (34,808) 7,103 1,975 (2,246)
-------- -------- -------- ------- -------- ------- ------- -------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 37,414 (48,258) 45,242 16,835 (31,113) 7,717 2,002 (1,906)
-------- -------- -------- ------- -------- ------- ------- -------
Net increase (decrease) in net assets
from operations $49,037 (38,033) 56,264 19,412 (24,506) 12,779 4,606 (1,466)
======== ======== ======== ======= ======== ======= ======= =======
Fund
------
1993
------
<S> <C>
Investment Income:
Dividends reinvested in fund shares 798
------
Expenses:
Mortality and expense risk charges 75
Administrative charges 19
------
Total expenses 94
------
Investment income (loss), net 704
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds 259
------
Realized gains (losses) on sales of investments:
Proceeds from sales 253
Cost of investments sold (241)
------
Total realized gains (losses) on
sales of investments, net 12
------
Realized gains (losses) on investments, net 271
<PAGE>
Net change in unrealized appreciation
(depreciation) on investments 874
------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 1,145
------
Net increase (decrease) in net assets
from operations 1,849
======
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Investment Grade Adjustable
Intermediate Bond Fund Income Securities Fund U.S.
-------------- ------ ----- -------- ----------- ------ -----------
1995 1994 1993 1995 1994 1993 1995
-------------- ------ ----- -------- ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in fund shares $ 3,949 223 195 19,772 2,402 813 1,373
-------------- ------ ----- -------- ----------- ------ -----------
Expenses:
Mortality and expense risk charges 302 27 25 494 233 91 66
Administrative charges 75 7 6 123 58 23 17
-------------- ------ ----- -------- ----------- ------ -----------
Total expenses 377 34 31 617 291 114 83
-------------- ------ ----- -------- ----------- ------ -----------
Investment income (loss), net 3,572 189 164 19,155 2,111 699 1,290
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - 36 32 1,592 367 118 -
-------------- ------ ----- -------- ----------- ------ -----------
Realized gains (losses) on sales of investments:
Proceeds from sales 1,873 62 62 28,351 998 215 9,822
Cost of investments sold (1,786) (57) (57) (28,417) (981) (201) (9,767)
-------------- ------ ----- -------- ----------- ------ -----------
Total realized gains (losses) on
sales of investments, net 87 5 5 (66) 17 14 55
-------------- ------ ----- -------- ----------- ------ -----------
Realized gains (losses) on investments, net 87 41 37 1,526 384 132 55
<PAGE>
Net change in unrealized appreciation
(depreciation) on investments 1,117 (465) 234 9,225 (8,183) 1,934 (625)
-------------- ------ ----- -------- ----------- ------ -----------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 1,204 (424) 271 10,751 (7,799) 2,066 (570)
-------------- ------ ----- -------- ----------- ------ -----------
Net increase (decrease) in net assets
from operations $ 4,776 (235) 435 29,906 (5,688) 2,765 720
============== ====== ===== ======== =========== ====== ===========
Government Fund
----------- -----
1994 1993
----------- -----
<S> <C> <C>
Investment Income:
Dividends reinvested in fund shares 182 192
----------- -----
Expenses:
Mortality and expense risk charges 11 18
Administrative charges 3 5
----------- -----
Total expenses 14 23
----------- -----
Investment income (loss), net 168 169
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - -
----------- -----
Realized gains (losses) on sales of investments:
Proceeds from sales 755 62
Cost of investments sold (745) (60)
----------- -----
Total realized gains (losses) on
sales of investments, net 10 2
----------- -----
Realized gains (losses) on investments, net 10 2
<PAGE>
Net change in unrealized appreciation
(depreciation) on investments (197) (65)
----------- -----
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net (187) (63)
----------- -----
Net increase (decrease) in net assets
from operations (19) 106
=========== =====
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Templeton Templeton
Pacific Growth Fund Rising Dividends Fund International
----------- -------- ----- ------- ---------- ------- --------------
1995 1994 1993 1995 1994 1993 1995
----------- -------- ----- ------- ---------- ------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in fund shares $ 4,502 316 - 1,695 586 99 6,289
----------- -------- ----- ------- ---------- ------- --------------
Expenses:
Mortality and expense risk charges 170 429 21 208 87 93 793
Administrative charges 42 107 5 52 22 23 198
----------- -------- ----- ------- ---------- ------- --------------
Total expenses 212 536 26 260 109 116 991
----------- -------- ----- ------- ---------- ------- --------------
Investment income (loss), net 4,290 (220) (26) 1,435 477 (17) 5,298
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds 1,872 672 - - - - 7,792
----------- -------- ----- ------- ---------- ------- --------------
Realized gains (losses) on sales of investments:
Proceeds from sales 37,869 27,789 51 1,473 491 276 22,614
Cost of investments sold (37,446) (24,644) (49) (1,445) (519) (281) (22,446)
----------- -------- ----- ------- ---------- ------- --------------
Total realized gains (losses) on
sales of investments, net 423 3,145 2 28 (28) (5) 168
----------- -------- ----- ------- ---------- ------- --------------
Realized gains (losses) on investments, net 2,295 3,817 2 28 (28) (5) 7,960
<PAGE>
Net change in unrealized appreciation
(depreciation) on investments (181) (13,674) 710 6,067 (2,508) (2,210) 8,831
----------- -------- ----- ------- ---------- ------- --------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 2,114 (9,857) 712 6,095 (2,536) (2,215) 16,791
----------- -------- ----- ------- ---------- ------- --------------
Net increase (decrease) in net assets
from operations $ 6,404 (10,077) 686 7,530 (2,059) (2,232) 22,089
=========== ======== ===== ======= ========== ======= ==============
Equity Fund
------- ----
1994 1993
------- ----
<S> <C> <C>
Investment Income:
Dividends reinvested in fund shares 44 -
------- ----
Expenses:
Mortality and expense risk charges 48 -
Administrative charges 12 -
------- ----
Total expenses 60 -
------- ----
Investment income (loss), net (16) -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds 95 -
------- ----
Realized gains (losses) on sales of investments:
Proceeds from sales 195 -
Cost of investments sold (176) -
------- ----
Total realized gains (losses) on
sales of investments, net 19 -
------- ----
Realized gains (losses) on investments, net 114 -
<PAGE>
Net change in unrealized appreciation
(depreciation) on investments (156) -
------- ----
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net (42) -
------- ----
Net increase (decrease) in net assets
from operations (58) -
======= ====
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Templeton Developing Templeton Templeton
Markets Equity Fund Global Growth Fund Asset
----------- ---------- ---- ---------- ------ ---- ---------
1995 1994 1993 1995 1994 1993 1995
----------- ---------- ---- ---------- ------ ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in fund shares $ 562 - - 1,137 - - -
----------- ---------- ---- ---------- ------ ---- ---------
Expenses:
Mortality and expense risk charges 301 - - 505 - - -
Administrative charges 75 - - 126 - - -
----------- ---------- ---- ---------- ------ ---- ---------
Total expenses 376 - - 631 - - -
----------- ---------- ---- ---------- ------ ---- ---------
Investment income (loss), net 186 - - 506 - - -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds 132 - - - - - -
----------- ---------- ---- ---------- ------ ---- ---------
Realized gains (losses) on sales of investments:
Proceeds from sales 14,489 - - 20,643 - - -
Cost of investments sold (15,179) - - (20,512) - - -
----------- ---------- ---- ---------- ------ ---- ---------
Total realized gains (losses) on
sales of investments, net (690) - - 131 - - -
----------- ---------- ---- ---------- ------ ---- ---------
Realized gains (losses) on investments, net (558) - - 131 - - -
<PAGE>
Net change in unrealized appreciation
(depreciation) on investments 7,055 - - 10,419 - - -
----------- ---------- ---- ---------- ------ ---- ---------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 6,497 - - 10,550 - - -
----------- ---------- ---- ---------- ------ ---- ---------
Net increase (decrease) in net assets
from operations $ 6,683 - - 11,056 - - -
=========== ========== ==== ========== ====== ==== =========
Global
Allocation Fund
---------- ----
1994 1993
---------- ----
<S> <C> <C>
Investment Income:
Dividends reinvested in fund shares - -
---------- ----
Expenses:
Mortality and expense risk charges - -
Administrative charges - -
---------- ----
Total expenses - -
---------- ----
Investment income (loss), net - -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - -
---------- ----
Realized gains (losses) on sales of investments:
Proceeds from sales - -
Cost of investments sold - -
---------- ----
Total realized gains (losses) on
sales of investments, net - -
---------- ----
Realized gains (losses) on investments, net - -
<PAGE>
Net change in unrealized appreciation
(depreciation) on investments - -
---------- ----
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net - -
---------- ----
Net increase (decrease) in net assets
from operations - -
========== ====
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Total All Funds
---------- --------- ---------
1995 1994 1993
---------- --------- ---------
<S> <C> <C> <C>
Investment Income:
Dividends reinvested in fund shares $ 316,216 180,306 148,945
---------- --------- ---------
Expenses:
Mortality and expense risk charges 21,326 15,460 17,019
Administrative charges 5,328 3,863 4,256
---------- --------- ---------
Total expenses 26,654 19,323 21,275
---------- --------- ---------
Investment income (loss), net 289,562 160,983 127,670
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds 36,296 36,427 8,561
---------- --------- ---------
Realized gains (losses) on sales of investments:
Proceeds from sales 896,634 519,548 609,192
Cost of investments sold (860,309) (412,805) (511,386)
---------- --------- ---------
Total realized gains (losses) on
sales of investments, net 36,325 106,743 97,806
---------- --------- ---------
Realized gains (losses) on investments, net 72,621 143,170 106,367
<PAGE>
Net change in unrealized appreciation
(depreciation) on investments 307,119 (743,017) 215,770
---------- --------- ---------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 379,740 (599,847) 322,137
---------- --------- ---------
Net increase (decrease) in net assets
from operations $ 669,302 (438,864) 449,807
========== ========= =========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Money Market Fund Growth and Income Fund Precious
---------- -------- -------- ----------- -------- --------- ---------
1995 1994 1993 1995 1994 1993 1995
---------- -------- -------- ----------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 17,002 3,781 3,483 6,999 1,467 3,220 1,345
Realized gains (losses) on investments, net - - - 24,213 15,498 26,685 6,212
Net change in unrealized appreciation
(depreciation) on investments - - - 67,121 (46,728) (9,396) (4,167)
---------- -------- -------- ----------- -------- --------- ---------
Net increase (decrease) in net assets
from operations 17,002 3,781 3,483 98,333 (29,763) 20,509 3,390
---------- -------- -------- ----------- -------- --------- ---------
Contract transactions:
Purchase payments 819,388 - - 95,573 - - 12,326
Transfers between funds (630,037) 101,580 90,315 51,316 33,113 (16,026) 16,598
Surrenders and terminations (1,047) (58,207) (57,564) (612) (25,045) (63,694) (12)
Other transactions (note 2) (82,712) (4,180) (3,755) (34,801) (6,965) (20,977) (5,588)
---------- -------- -------- ----------- -------- --------- ---------
Net increase (decrease) in net assets
resulting from contract transactions 105,592 39,193 28,996 111,476 1,103 (100,697) 23,324
---------- -------- -------- ----------- -------- --------- ---------
Increase (decrease) in net assets 122,594 42,974 32,479 209,809 (28,660) (80,188) 26,714
---------- -------- -------- ----------- -------- --------- ---------
Net assets at beginning of period 530,565 308,920 358,105 625,982 629,549 725,302 201,295
---------- -------- -------- ----------- -------- --------- ---------
<PAGE>
Net assets at end of period $ 653,159 351,894 390,584 835,791 600,889 645,114 228,009
========== ======== ======== =========== ======== ========= =========
Metals Fund
-------- --------
1994 1993
-------- --------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net 215 270
Realized gains (losses) on investments, net 1,489 1,338
Net change in unrealized appreciation
(depreciation) on investments (9,637) 43,838
-------- --------
Net increase (decrease) in net assets
from operations (7,933) 45,446
-------- --------
Contract transactions:
Purchase payments - -
Transfers between funds 1,756 (61,075)
Surrenders and terminations (8,168) -
Other transactions (note 2) (1,097) 450
-------- --------
Net increase (decrease) in net assets
resulting from contract transactions (7,509) (60,625)
-------- --------
Increase (decrease) in net assets (15,442) (15,179)
-------- --------
Net assets at beginning of period 122,135 163,472
-------- --------
Net assets at end of period 106,693 148,293
======== ========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Real U.S.
High Income Fund Estate Securities Fund Government
----------- ---------- ---------- -------- ----------- ------- -----------
1995 1994 1993 1995 1994 1993 1995
----------- ---------- ---------- -------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 73,840 40,602 33,929 3,280 389 348 39,349
Realized gains (losses) on investments, net 4,410 10,682 1,913 1,959 1,677 2,649 1,324
Net change in unrealized appreciation
(depreciation) on investments 58,580 (96,383) 45,346 (757) (213) 3,644 24,422
----------- ---------- ---------- -------- ----------- ------- -----------
Net increase (decrease) in net assets
from operations 136,830 (45,099) 81,188 4,482 1,853 6,641 65,095
----------- ---------- ---------- -------- ----------- ------- -----------
Contract transactions:
Purchase payments 20,643 - - 27,464 - - 11,226
Transfers between funds 6,493 (14,156) 7,109 16,881 (3,089) (8,572) 10,546
Surrenders and terminations (14,248) (11,586) - (1,097) - - -
Other transactions (note 2) (14,802) (12,070) (4,752) (9,728) (583) 1,591 (8,569)
----------- ---------- ---------- -------- ----------- ------- -----------
Net increase (decrease) in net assets
resulting from contract transactions (1,914) (37,812) 2,357 33,520 (3,672) (6,981) 13,203
----------- ---------- ---------- -------- ----------- ------- -----------
Increase (decrease) in net assets 134,916 (82,911) 83,545 38,002 (1,819) (340) 78,298
----------- ---------- ---------- -------- ----------- ------- -----------
Net assets at beginning of period 1,046,519 1,107,418 975,210 78,309 57,318 51,275 534,051
----------- ---------- ---------- -------- ----------- ------- -----------
<PAGE>
Net assets at end of period $1,181,435 1,024,507 1,058,755 116,311 55,499 50,935 612,349
=========== ========== ========== ======== =========== ======= ===========
Securities Fund
----------- --------
1994 1993
----------- --------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net 26,921 22,179
Realized gains (losses) on investments, net 29,376 6,097
Net change in unrealized appreciation
(depreciation) on investments (93,645) 16,024
----------- --------
Net increase (decrease) in net assets
from operations (37,348) 44,300
----------- --------
Contract transactions:
Purchase payments - -
Transfers between funds (100,921) -
Surrenders and terminations - -
Other transactions (note 2) (5,110) (5,401)
----------- --------
Net increase (decrease) in net assets
resulting from contract transactions (106,031) (5,401)
----------- --------
Increase (decrease) in net assets (143,379) 38,899
----------- --------
Net assets at beginning of period 686,329 646,356
----------- --------
Net assets at end of period 542,950 685,255
=========== ========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Zero Zero
Utility Equity Fund Coupon Fund - 1995 Coupon
----------- ---------- ---------- -------- -------- -------- --------
1995 1994 1993 1995 1994 1993 1995
----------- ---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 66,172 40,553 20,843 16,367 14,122 14,270 12,672
Realized gains (losses) on investments, net 18,134 43,356 53,161 2,986 1,174 3,914 675
Net change in unrealized appreciation
(depreciation) on investments 49,278 (301,798) 55,296 (9,108) (17,883) (6,236) 24,775
----------- ---------- ---------- -------- -------- -------- --------
Net increase (decrease) in net assets
from operations 133,584 (217,889) 129,300 10,245 (2,587) 11,948 38,122
----------- ---------- ---------- -------- -------- -------- --------
Contract transactions:
Purchase payments 52,759 - - - - - -
Transfers between funds 75,953 (67,462) (43,517) (14,684) - - -
Surrenders and terminations (23,762) (20,472) (91,319) - - - -
Other transactions (note 2) (38,534) (11,521) (11,405) (1,860) (2,054) (1,878) (2,219)
----------- ---------- ---------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from contract transactions 66,416 (99,455) (146,241) (16,544) (2,054) (1,878) (2,219)
----------- ---------- ---------- -------- -------- -------- --------
Increase (decrease) in net assets 200,000 (317,344) (16,941) (6,299) (4,641) 10,070 35,903
----------- ---------- ---------- -------- -------- -------- --------
Net assets at beginning of period 1,074,173 1,351,721 1,353,865 255,331 258,760 245,536 286,240
----------- ---------- ---------- -------- -------- -------- --------
<PAGE>
Net assets at end of period $1,274,173 1,034,377 1,336,924 249,032 254,119 255,606 322,143
=========== ========== ========== ======== ======== ======== ========
Fund - 2000
-------- --------
1994 1993
-------- --------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net 12,952 11,351
Realized gains (losses) on investments, net 5,318 1,721
Net change in unrealized appreciation
(depreciation) on investments (40,008) 21,268
-------- --------
Net increase (decrease) in net assets
from operations (21,738) 34,340
-------- --------
Contract transactions:
Purchase payments - -
Transfers between funds - -
Surrenders and terminations (7,535) -
Other transactions (note 2) (3,897) (2,238)
-------- --------
Net increase (decrease) in net assets
resulting from contract transactions (11,432) (2,238)
-------- --------
Increase (decrease) in net assets (33,170) 32,102
-------- --------
Net assets at beginning of period 323,131 283,774
-------- --------
Net assets at end of period 289,961 315,876
======== ========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Zero Zero
Coupon Fund - 2005 Coupon Fund - 2010 Global Income
--------- --------- -------- -------- -------- ------- ------- -------
1995 1994 1993 1995 1994 1993 1995 1994
--------- --------- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 11,623 10,225 11,022 2,577 6,607 5,062 2,604 440
Realized gains (losses) on investments, net 1,012 26,227 7,836 145 3,695 614 27 340
Net change in unrealized appreciation
(depreciation) on investments 36,402 (74,485) 37,406 16,690 (34,808) 7,103 1,975 (2,246)
--------- --------- -------- -------- -------- ------- ------- -------
Net increase (decrease) in net assets
from operations 49,037 (38,033) 56,264 19,412 (24,506) 12,779 4,606 (1,466)
--------- --------- -------- -------- -------- ------- ------- -------
Contract transactions:
Purchase payments - - - - - - 20,542 -
Transfers between funds - (41,224) - - - - 18,320 (1,867)
Surrenders and terminations - (28,826) - - - - (10) -
Other transactions (note 2) (2,962) (2,674) (11,856) (1,140) (1,853) (1,043) (8,518) (175)
--------- --------- -------- -------- -------- ------- ------- -------
Net increase (decrease) in net assets
resulting from contract transactions (2,962) (72,724) (11,856) (1,140) (1,853) (1,043) 30,334 (2,042)
--------- --------- -------- -------- -------- ------- ------- -------
Increase (decrease) in net assets 46,075 (110,757) 44,408 18,272 (26,359) 11,736 34,940 (3,508)
--------- --------- -------- -------- -------- ------- ------- -------
Net assets at beginning of period 261,513 372,147 335,065 83,178 183,310 78,869 42,818 21,976
--------- --------- -------- -------- -------- ------- ------- -------
<PAGE>
Net assets at end of period $307,588 261,390 379,473 101,450 156,951 90,605 77,758 18,468
========= ========= ======== ======== ======== ======= ======= =======
Fund
-------
1993
-------
<S> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net 704
Realized gains (losses) on investments, net 271
Net change in unrealized appreciation
(depreciation) on investments 874
-------
Net increase (decrease) in net assets
from operations 1,849
-------
Contract transactions:
Purchase payments -
Transfers between funds -
Surrenders and terminations -
Other transactions (note 2) (237)
-------
Net increase (decrease) in net assets
resulting from contract transactions (237)
-------
Increase (decrease) in net assets 1,612
-------
Net assets at beginning of period 19,280
-------
Net assets at end of period 20,892
=======
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Investment Grade Adjustable
Intermediate Bond Fund Income Securities Fund U.S.
-------------- ------- ------ -------- ----------- ------- -----------
1995 1994 1993 1995 1994 1993 1995
-------------- ------- ------ -------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 3,572 189 164 19,155 2,111 699 1,290
Realized gains (losses) on investments, net 87 41 37 1,526 384 132 55
Net change in unrealized appreciation
(depreciation) on investments 1,117 (465) 234 9,225 (8,183) 1,934 (625)
-------------- ------- ------ -------- ----------- ------- -----------
Net increase (decrease) in net assets
from operations 4,776 (235) 435 29,906 (5,688) 2,765 720
-------------- ------- ------ -------- ----------- ------- -----------
Contract transactions:
Purchase payments 5,488 - - 93,440 - - 6,220
Transfers between funds 6,688 32,187 - 111,496 51,497 12,979 9,338
Surrenders and terminations (520) - - (626) - - -
Other transactions (note 2) (3,497) (62) (62) (50,932) (696) (217) (3,107)
-------------- ------- ------ -------- ----------- ------- -----------
Net increase (decrease) in net assets
resulting from contract transactions 8,159 32,125 (62) 153,378 50,801 12,762 12,451
-------------- ------- ------ -------- ----------- ------- -----------
Increase (decrease) in net assets 12,935 31,890 373 183,284 45,113 15,527 13,171
-------------- ------- ------ -------- ----------- ------- -----------
Net assets at beginning of period 83,891 8,158 7,652 170,404 36,655 23,648 7,427
-------------- ------- ------ -------- ----------- ------- -----------
<PAGE>
Net assets at end of period $ 96,826 40,048 8,025 353,688 81,768 39,175 20,598
============== ======= ====== ======== =========== ======= ===========
Government Fund
----------- ------
1994 1993
----------- ------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net 168 169
Realized gains (losses) on investments, net 10 2
Net change in unrealized appreciation
(depreciation) on investments (197) (65)
----------- ------
Net increase (decrease) in net assets
from operations (19) 106
----------- ------
Contract transactions:
Purchase payments - -
Transfers between funds (726) -
Surrenders and terminations - -
Other transactions (note 2) (27) (61)
----------- ------
Net increase (decrease) in net assets
resulting from contract transactions (753) (61)
----------- ------
Increase (decrease) in net assets (772) 45
----------- ------
Net assets at beginning of period 4,622 4,577
----------- ------
Net assets at end of period 3,850 4,622
=========== ======
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Templeton Templeton
Pacific Growth Fund Rising Dividends Fund International Equity
----------- -------- ------ ------ ---------- ------- ------------- -------
1995 1994 1993 1995 1994 1993 1995 1994
----------- -------- ------ ------ ---------- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 4,290 (220) (26) 1,435 477 (17) 5,298 (16)
Realized gains (losses) on investments, net 2,295 3,817 2 28 (28) (5) 7,960 114
Net change in unrealized appreciation
(depreciation) on investments (181) (13,674) 710 6,067 (2,508) (2,210) 8,831 (156)
----------- -------- ------ ------ ---------- ------- ------------- -------
Net increase (decrease) in net assets
from operations 6,404 (10,077) 686 7,530 (2,059) (2,232) 22,089 (58)
----------- -------- ------ ------ ---------- ------- ------------- -------
Contract transactions:
Purchase payments 68,386 - - 3,048 - - 10,551 -
Transfers between funds 55,137 1,351 - 12,343 4,000 18,787 136,295 3,961
Surrenders and terminations (3,067) - - - - - - -
Other transactions (note 2) (57,332) 20,515 (51) 12,522 (293) (276) 69,200 (196)
----------- -------- ------ ------ ---------- ------- ------------- -------
Net increase (decrease) in net assets
resulting from contract transactions 63,124 21,866 (51) 27,913 3,707 18,511 216,046 3,765
----------- -------- ------ ------ ---------- ------- ------------- -------
Increase (decrease) in net assets 69,528 11,789 635 35,443 1,648 16,279 238,135 3,707
----------- -------- ------ ------ ---------- ------- ------------- -------
Net assets at beginning of period 164,784 142,972 5,750 44,527 37,377 20,717 141,293 16,931
----------- -------- ------ ------ ---------- ------- ------------- -------
<PAGE>
Net assets at end of period $ 234,312 154,761 6,385 79,970 39,025 36,996 379,428 20,638
=========== ======== ====== ====== ========== ======= ============= =======
Fund
----
1993
----
<S> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net -
Realized gains (losses) on investments, net -
Net change in unrealized appreciation
(depreciation) on investments -
----
Net increase (decrease) in net assets
from operations -
----
Contract transactions:
Purchase payments -
Transfers between funds -
Surrenders and terminations -
Other transactions (note 2) -
----
Net increase (decrease) in net assets
resulting from contract transactions -
----
Increase (decrease) in net assets -
----
Net assets at beginning of period -
----
Net assets at end of period -
====
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Templeton Developing Templeton Templeton Global
Markets Equity Fund Global Growth Fund Asset Allocation Fund
----------- ---------- ---- ---------- ------ ---- --------- ---------- ----
1995 1994 1993 1995 1994 1993 1995 1994 1993
----------- ---------- ---- ---------- ------ ---- --------- ---------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 186 - - 506 - - - - -
Realized gains (losses) on investments, net (558) - - 131 - - - - -
Net change in unrealized appreciation
(depreciation) on investments 7,055 - - 10,419 - - - - -
----------- ---------- ---- ---------- ------ ---- --------- ---------- ----
Net increase (decrease) in net assets
from operations 6,683 - - 11,056 - - - - -
----------- ---------- ---- ---------- ------ ---- --------- ---------- ----
Contract transactions:
Purchase payments 74,168 - - 103,952 - - - - -
Transfers between funds 42,293 - - 68,625 - - - - -
Surrenders and terminations (718) - - (157) - - - - -
Other transactions (note 2) (27,667) - - (37,037) - - - - -
----------- ---------- ---- ---------- ------ ---- --------- ---------- ----
Net increase (decrease) in net assets
resulting from contract transactions 88,076 - - 135,383 - - - - -
----------- ---------- ---- ---------- ------ ---- --------- ---------- ----
Increase (decrease) in net assets 94,759 - - 146,439 - - - - -
----------- ---------- ---- ---------- ------ ---- --------- ---------- ----
Net assets at beginning of period 55,951 - - 66,760 - - - - -
----------- ---------- ---- ---------- ------ ---- --------- ---------- ----
<PAGE>
Net assets at end of period $ 150,710 - - 213,199 - - - - -
=========== ========== ==== ========== ====== ==== ========= ========== ====
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the periods ended June 30, 1995, 1994 and 1993 (unaudited)
Total All Funds
----------- ---------- ----------
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 289,562 160,983 127,670
Realized gains (losses) on investments, net 72,621 143,170 106,367
Net change in unrealized appreciation
(depreciation) on investments 307,119 (743,017) 215,770
----------- ---------- ----------
Net increase (decrease) in net assets
from operations 669,302 (438,864) 449,807
----------- ---------- ----------
Contract transactions:
Purchase payments 1,425,174 - -
Transfers between funds (6,399) - -
Surrenders and terminations (45,876) (159,839) (212,577)
Other transactions (note 2) (309,283) (32,938) (62,168)
----------- ---------- ----------
Net increase (decrease) in net assets
resulting from contract transactions 1,063,616 (192,777) (274,745)
----------- ---------- ----------
Increase (decrease) in net assets 1,732,918 (631,641) 175,062
----------- ---------- ----------
Net assets at beginning of period 5,755,011 5,669,429 5,298,453
----------- ---------- ----------
<PAGE>
Net assets at end of period $7,487,929 5,037,788 5,473,515
=========== ========== ==========
</TABLE>
See accompanying notes to unaudited financial statements.
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements
June 30, 1995 (unaudited)
1. ORGANIZATION
Allianz Life Variable Account A (Variable Account) is a segregated investment
account of Allianz Life Insurance Company of North America (Allianz Life)
registered with the Securities and Exchange Commission as a unit investment
trust pursuant to the provisions of the Investment Company Act of 1940 (as
amended). The Variable Account was established on May 31, 1985 and commenced
operations September 8, 1987. Accordingly, it is an accounting entity wherein
all segregated account transactions are reflected.
The Variable Account's assets are the property of Allianz Life and are held
for the benefit of the owners and other persons entitled to payments under
variable life policies issued through the Variable Account and underwritten by
Allianz Life. The assets of the Variable Account, equal to the reserves and
other liabilities of the Variable Account, are not chargeable with liabilities
that arise from any other business which Allianz Life may conduct.
The Variable Account's sub-accounts may invest, at net asset values, in one or
more of the funds of the Franklin Valuemark Funds (FVF), managed by Franklin
Advisers, Inc., in accordance with the selection made by the policyowner. Not
all funds are available as investment options for the products which comprise
the Variable Account.
Certain officers and trustees of the FVF are also officers and/or directors of
Franklin Advisers, Inc. and/or Allianz Life.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
Investments of the Variable Account are valued daily at market value using net
asset values provided by Franklin Advisers, Inc.
<PAGE>
Realized investment gains include realized gain distributions received from
the respective funds and gains on the sale of fund shares as determined by the
average cost method.
Realized gain distributions are reinvested in the respective funds. Dividend
distributions received from the FVF are reinvested in additional shares of the
FVF and are recorded as income to the Variable Account on the ex-dividend
date.
The Templeton Developing Markets Equity Fund, Templeton Global Growth Fund and
fixed rate General Account were added as available investment options on July
1, 1994. The Templeton Global Asset Allocation Fund was added as an available
investment option on May 1, 1995.
In April 1995, the Equity Growth Fund name was changed to Growth and Income
Fund.
EXPENSES
ASSET BASED EXPENSES
A mortality and expense risk charge is deducted from the Variable Account on a
daily basis equal, on an annual basis, to .60% of the daily net assets of the
Variable Account.
An administrative charge is deducted from the Variable Account on a daily
basis equal, on an annual basis, to .15% of the daily net assets of the
Variable Account.
CONTRACT BASED EXPENSES
A cost of insurance charge is deducted against each policy by liquidating
units. The amount of the charge is based upon age, sex, rate class and net
amount at risk (death benefit less total cash surrender value). Total cost of
insurance charges paid by the policy owners for the periods ended June 30,
1995, 1994 and 1993 were $231,690, $26,195 and $24,053, respectively.
A deferred issue charge is deducted annually, at the end of the policy year,
against each policy for the first ten policy years by liquidating units.
The amount of the charge is 7% of the single premium consisting of 2.5% for
premium taxes, 4% for sales charge and .5% for policy issue charge (in the
State of California, 2.35%, 4.15% and .5%, respectively). If the policy
is surrendered before the full amount is collected, the uncollected
portion of this charge is deducted from the account value. Total deferred
issue charges paid by the policy owners for the periods ended June 30, 1995,
1994 and 1993 were $22,683, $27,567 and $22,436, respectively.
A policy charge is deducted on each monthly anniversary date from each
<PAGE>
variable universal life policy by liquidating units. The amount of the charge
is equal to 2.5% of each premium payment for premium taxes and $20 per month
for the first policy year and $9 per month guaranteed thereafter. Currently,
the charge is $5 per month after the first policy year. If the policy is
surrendered before the full amount is collected, the uncollected portion of
this charge is deducted from the account value. Total policy charges paid by
the policy owners for the period ended June 30, 1995 were $115,463.
Twelve free transfers are permitted each contract year. Thereafter, the fee
is the lesser of $25 or 2% of the amount transferred. Prior to May 1, 1992,
only five free transfers were permitted each year, with additional transfers
costing $15 per transfer. No transfer charges were paid by the policy owners
during the periods ended June 30, 1995, 1994 and 1993, respectively.
Transfers to the fixed rate General Account were $6,399 during the period
ended June 30, 1995.
The cost of insurance, deferred issue, policy and transfer charges paid are
reflected in the unaudited financial statements as other transactions.
3. INVESTMENT TRANSACTIONS
The sub-account purchases of fund shares, including reinvestment of dividend
distributions, were as follows during the period ended June 30, 1995:
<TABLE>
<CAPTION>
<S> <C>
Money Market Fund $639,426
Growth and Income Fund 154,032
Precious Metals Fund 103,387
High Income Fund 102,599
Real Estate Securities Fund 49,436
U.S. Government Securities Fund 60,220
Utility Equity Fund 225,553
Zero Coupon Fund - 1995 17,464
Zero Coupon Fund - 2000 13,993
Zero Coupon Fund - 2005 12,928
Zero Coupon Fund - 2010 3,109
Global Income Fund 35,059
Investment Grade Intermediate Bond Fund 13,974
Income Securities Fund 207,610
Adjustable U.S. Government Fund 23,645
Templeton Pacific Growth Fund 108,474
Rising Dividends Fund 30,660
Templeton International Equity Fund 253,070
Templeton Developing Markets Equity Fund 99,890
Templeton Global Growth Fund 157,348
</TABLE>
<PAGE>
4. FEDERAL INCOME TAXES
Operations of the Variable Account form a part of, and are taxed with,
operations of Allianz Life, which is taxed as a life insurance company under
the Internal Revenue Code.
Allianz Life does not expect to incur any federal income taxes in the
operation of the Variable Account. If in the future Allianz Life determines
that the Variable Account may incur federal income taxes, it may then assess a
charge against the Variable Account for such taxes.
<TABLE>
<CAPTION>
5. CONTRACT TRANSACTIONS - UNIT ACTIVITY
Transactions in units for each fund for the period ended June 30, 1995 and the years ended December 31, 1994 and 1993, were
as follows:
Real U.S.
Money Growth and Precious High Estate Government Utility
Market Income Metals Income Securities Securities Equity
Fund Fund Fund Fund Fund Fund Fund
--------- ----------- --------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1992 26,464 36,756 16,401 65,825 3,450 39,596 72,790
Contract transactions:
Transfers between funds 1,266 (4,296) (8,477) (59) (272) (451) (998)
Surrenders and terminations (4,833) (3,404) - - - - (4,617)
Other transactions (467) 84 9 (701) 87 (533) (934)
--------- ----------- --------- ---------- ----------- ----------- ----------
Net increase (decrease) in units
resulting from contract transactions (4,034) (7,616) (8,468) (760) (185) (984) (6,549)
--------- ----------- --------- ---------- ----------- ----------- ----------
Units outstanding at December 31, 1993 22,430 29,140 7,933 65,065 3,265 38,612 66,241
========= =========== ========= ========== =========== =========== ==========
Accumulation unit value per unit
at December 31, 1993 $ 13.373 21.604 15.396 17.020 17.556 17.775 20.406
========= =========== ========= ========== =========== =========== ==========
Contract transactions:
Purchase payments 59,285 751 67 265 419 62 654
Transfers between funds (31,325) 4,606 6,162 (637) 861 (6,440) (3,468)
Surrenders and terminations (7,250) (2,364) (578) (869) - - (1,253)
Other transactions (5,759) (2,338) (143) (444) (177) (520) (2,205)
--------- ----------- --------- ---------- ----------- ----------- ----------
<PAGE>
Net increase (decrease) in units
resulting from contract transactions 14,951 655 5,508 (1,685) 1,103 (6,898) (6,272)
--------- ----------- --------- ---------- ----------- ----------- ----------
Units outstanding at December 31, 1994 37,381 29,795 13,441 63,380 4,368 31,714 59,969
========= =========== ========= ========== =========== =========== ==========
Accumulation unit value per unit
at December 31, 1994 $ 14.194 21.010 14.977 16.512 17.928 16.840 17.912
========= =========== ========= ========== =========== =========== ==========
Contract transactions (unaudited):
Purchase payments 57,105 4,182 843 1,196 1,565 623 2,763
Transfers between funds (43,756) 2,245 1,231 372 961 592 3,951
Surrenders and terminations (73) (27) (1) (768) (62) - (1,317)
Other transactions (5,763) (1,522) (379) (827) (583) (473) (2,020)
--------- ----------- --------- ---------- ----------- ----------- ----------
Net increase (decrease) in units
resulting from contract transactions 7,513 4,878 1,694 (27) 1,881 742 3,377
--------- ----------- --------- ---------- ----------- ----------- ----------
Units outstanding at
June 30, 1995 (unaudited) 44,894 34,673 15,135 63,353 6,249 32,456 63,346
========= =========== ========= ========== =========== =========== ==========
Accumulation unit value per unit
at June 30, 1995 (unaudited) $ 14.549 24.105 15.065 18.648 18.615 18.867 20.114
========= =========== ========= ========== =========== =========== ==========
Accumulation net assets at
June 30, 1995 (unaudited) $653,159 835,791 228,009 1,181,435 116,311 612,349 1,274,173
========= =========== ========= ========== =========== =========== ==========
Zero Zero Zero Zero
Coupon Coupon Coupon Coupon
Fund - Fund - Fund - Fund -
1995 2000 2005 2010
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1992 14,686 15,439 17,524 3,968
Contract transactions:
Transfers between funds - - (1,326) 3,524
Surrenders and terminations - - - -
Other transactions (175) (190) (156) (84)
-------- -------- -------- --------
<PAGE>
Net increase (decrease) in units
resulting from contract transactions (175) (190) (1,482) 3,440
-------- -------- -------- --------
Units outstanding at December 31, 1993 14,511 15,249 16,042 7,408
======== ======== ======== ========
Accumulation unit value per unit
at December 31, 1993 17.832 21.191 23.198 24.745
======== ======== ======== ========
Contract transactions:
Purchase payments - - - -
Transfers between funds - - (1,953) (3,442)
Surrenders and terminations - (379) (1,348) -
Other transactions (186) (276) (182) (162)
-------- -------- -------- --------
Net increase (decrease) in units
resulting from contract transactions (186) (655) (3,483) (3,604)
-------- -------- -------- --------
Units outstanding at December 31, 1994 14,325 14,594 12,559 3,804
======== ======== ======== ========
Accumulation unit value per unit
at December 31, 1994 17.823 19.614 20.821 21.866
======== ======== ======== ========
Contract transactions (unaudited):
Purchase payments - - - -
Transfers between funds (798) - - -
Surrenders and terminations - - - -
Other transactions (101) (103) (125) (45)
-------- -------- -------- --------
Net increase (decrease) in units
resulting from contract transactions (899) (103) (125) (45)
-------- -------- -------- --------
Units outstanding at
June 30, 1995 (unaudited) 13,426 14,491 12,434 3,759
======== ======== ======== ========
Accumulation unit value per unit
at June 30, 1995 (unaudited) 18.547 22.230 24.723 26.986
======== ======== ======== ========
<PAGE>
Accumulation net assets at
June 30, 1995 (unaudited) 249,032 322,143 307,588 101,450
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
5. CONTRACT TRANSACTIONS - UNIT ACTIVITY (CONT.)
Investment Adjustable Templeton Templeton
Global Grade Income U.S. Pacific Rising International
Income Intermediate Securities Government Growth Dividends Equity
Fund Bond Fund Fund Fund Fund Fund Fund
-------- ------------- ----------- ----------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1992 1,562 588 1,598 410 586 1,899 -
Contract transactions:
Transfers between funds - - 527 - 9,382 1,714 1,375
Surrenders and terminations - - - - - - -
Other transactions (25) (6) (21) (7) (44) (37) (7)
-------- ------------- ----------- ----------- ---------- ---------- --------------
Net increase (decrease) in units
resulting from contract transactions (25) (6) 506 (7) 9,338 1,677 1,368
-------- ------------- ----------- ----------- ---------- ---------- --------------
Units outstanding at
December 31, 1993 1,537 582 2,104 403 9,924 3,576 1,368
======== ============= =========== =========== ========== ========== ==============
Accumulation unit value per unit
at December 31, 1993 $14.297 14.017 17.423 11.481 14.407 10.453 12.375
======== ============= =========== =========== ========== ========== ==============
Contract transactions:
Purchase payments 133 100 1,334 495 998 418 2,526
Transfers between funds 1,607 5,385 9,100 (213) 6,850 601 8,168
Surrenders and terminations - - - - - - -
Other transactions (102) (65) (2,024) (31) (5,137) (121) (659)
-------- ------------- ----------- ----------- ---------- ---------- --------------
Net increase (decrease) in units
resulting from contract transactions 1,638 5,420 8,410 251 2,711 898 10,035
-------- ------------- ----------- ----------- ---------- ---------- --------------
<PAGE>
Units outstanding at
December 31, 1994 3,175 6,002 10,514 654 12,635 4,474 11,403
======== ============= =========== =========== ========== ========== ==============
Accumulation unit value per unit
at December 31, 1994 $13.483 13.978 16.208 11.374 13.042 9.952 12.390
======== ============= =========== =========== ========== ========== ==============
Contract transactions (unaudited):
Purchase payments 1,470 381 5,472 531 5,319 284 851
Transfers between funds 1,325 465 6,596 822 4,344 1,171 10,797
Surrenders and terminations (1) (36) (37) - (233) - -
Other transactions (611) (243) (3,001) (284) (4,452) 1,161 5,494
-------- ------------- ----------- ----------- ---------- ---------- --------------
Net increase (decrease) in units
resulting from contract transactions 2,183 567 9,030 1,069 4,978 2,616 17,142
-------- ------------- ----------- ----------- ---------- ---------- --------------
Units outstanding at
June 30, 1995 (unaudited) 5,358 6,569 19,544 1,723 17,613 7,090 28,545
======== ============= =========== =========== ========== ========== ==============
Accumulation unit value per unit
at June 30, 1995 (unaudited) $14.512 14.739 18.097 11.961 13.303 11.279 13.292
======== ============= =========== =========== ========== ========== ==============
Accumulation net assets at
June 30, 1995 (unaudited) $77,758 96,826 353,688 20,598 234,312 79,970 379,428
======== ============= =========== =========== ========== ========== ==============
Templeton Templeton
Developing Templeton Global
Markets Global Asset Total
Equity Growth Allocation All
Fund Fund Fund Funds
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Units outstanding at
December 31, 1992 - - - 319,542
Contract transactions:
Transfers between funds - - - 1,909
Surrenders and terminations - - - (12,854)
Other transactions - - - (3,207)
----------- ---------- ---------- ----------
Net increase (decrease) in units
resulting from contract transactions - - - (14,152)
----------- ---------- ---------- ----------
<PAGE>
Units outstanding at
December 31, 1993 - - - 305,390
=========== ========== ========== ==========
Accumulation unit value per unit
at December 31, 1993 - - -
=========== ========== ==========
Contract transactions:
Purchase payments 2,054 2,721 - 72,282
Transfers between funds 4,590 4,585 - 5,037
Surrenders and terminations - - - (14,041)
Other transactions (545) (558) - (21,634)
----------- ---------- ---------- ----------
Net increase (decrease) in units
resulting from contract transactions 6,099 6,748 - 41,644
----------- ---------- ---------- ----------
Units outstanding at
December 31, 1994 6,099 6,748 - 347,034
=========== ========== ========== ==========
Accumulation unit value per unit
at December 31, 1994 9.173 9.894 -
=========== ========== ==========
Contract transactions (unaudited):
Purchase payments 8,270 10,271 - 101,126
Transfers between funds 4,795 6,839 - 1,952
Surrenders and terminations (79) (16) - (2,650)
Other transactions (3,088) (3,657) - (20,622)
----------- ---------- ---------- ----------
Net increase (decrease) in units
resulting from contract transactions 9,898 13,437 - 79,806
----------- ---------- ---------- ----------
Units outstanding at
June 30, 1995 (unaudited) 15,997 20,185 - 426,840
=========== ========== ========== ==========
Accumulation unit value per unit
at June 30, 1995 (unaudited) 9.421 10.562 10.107
=========== ========== ==========
Accumulation net assets at
June 30, 1995 (unaudited) 150,710 213,199 - 7,487,929
=========== ========== ========== ==========
</TABLE>
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements
December 31, 1994
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT A
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
INDEPENDENT AUDITORS' REPORT
The Board of Directors of Allianz Life Insurance Company of North America
and Policyholders of Allianz Life Variable Account A:
We have audited the accompanying statements of assets and liabilities of the
sub-accounts of Allianz Life Variable Account A as of December 31, 1994, and
the related statements of operations and changes in net assets for each of the
years in the three-year period ended December 31, 1994. These financial
statements are the responsibility of the Variable Account'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.
Investment securities held in custody for the benefit of the Variable Account
were confirmed to us by the Franklin Valuemark Funds. 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 assets and liabilities of the sub-accounts of
Allianz Life Variable Account A at December 31, 1994, and the results of their
operations and the changes in their net assets for each of the years in the
three-year period ended December 31, 1994, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 20, 1995
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements
Statements of Assets and Liabilities
December 31, 1994
U.S.
Money Equity Precious High Real Estate Government Utility
Market Growth Metals Income Securities Securities Equity
Fund Fund Fund Fund Fund Fund Fund
-------- ------- -------- --------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Money Market Fund, 532,005
shares, cost $532,005 $532,005 - - - - - -
Equity Growth Fund,
46,759 shares, cost $535,401 - 627,511 - - - - -
Precious Metals Fund,
14,335 shares, cost $178,814 - - 201,975 - - - -
High Income Fund, 85,812 shares,
cost $961,445 - - - 1,047,769 - - -
Real Estate Securities Fund,
5,172 shares, cost $62,218 - - - - 79,178 - -
U.S. Government Securities Fund,
42,558 shares, cost $431,854 - - - - - 534,955 -
Utility Equity Fund, 74,580
shares, cost $866,870 - - - - - - 1,075,448
-------- ------- -------- --------- ----------- ---------- ---------
Total assets 532,005 627,511 201,975 1,047,769 79,178 534,955 1,075,448
-------- ------- -------- --------- ----------- ---------- ---------
Liabilities:
Accrued mortality and expense
risk charges 1,152 1,223 544 1,000 695 723 1,020
Accrued administrative charges 288 306 136 250 174 181 255
-------- ------- -------- --------- ----------- ---------- ---------
<PAGE>
Total liabilities 1,440 1,529 680 1,250 869 904 1,275
-------- ------- -------- --------- ----------- ---------- ---------
Net assets $530,565 625,982 201,295 1,046,519 78,309 534,051 1,074,173
======== ======= ======== ========= =========== ========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Assets and Liabilities (cont.)
December 31, 1994
Zero Zero Zero Zero Investment
Coupon Coupon Coupon Coupon Global Grade Income
Fund - Fund - Fund - Fund - Income Intermediate Securities
1995 2000 2005 2010 Fund Bond Fund Fund
-------- ------- ------- ------ ------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Zero Coupon Fund - 1995, 21,251
shares, cost $218,616 $256,073 - - - - - -
Zero Coupon Fund - 2000, 21,074
shares, cost $220,392 - 287,022 - - - - -
Zero Coupon Fund - 2005,
19,059 shares, cost $196,664 - - 262,249 - - - -
Zero Coupon Fund - 2010,
6,436 shares, cost $85,795 - - - 83,803 - - -
Global Income Fund, 3,537
shares, cost $43,641 - - - - 43,113 - -
Investment Grade Intermediate
Bond Fund, 6,327 shares,
cost $83,272 - - - - - 84,217 -
Income Securities Fund,
11,977 shares, cost $176,437 - - - - - - 171,391
-------- ------- ------- ------ ------ ------------ ----------
Total assets 256,073 287,022 262,249 83,803 43,113 84,217 171,391
-------- ------- ------- ------ ------ ------------ ----------
Liabilities:
Accrued mortality and expense
risk charges 593 626 589 500 236 261 790
Accrued administrative charges 149 156 147 125 59 65 197
-------- ------- ------- ------ ------ ------------ ----------
<PAGE>
Total liabilities 742 782 736 625 295 326 987
-------- ------- ------- ------ ------ ------------ ----------
Net assets $255,331 286,240 261,513 83,178 42,818 83,891 170,404
======== ======= ======= ====== ====== ============ ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Assets and Liabilities (cont.)
December 31, 1994
Templeton
Adjustable Templeton Templeton Developing Templeton
U.S. Pacific Rising International Markets Global Total
Government Growth Dividends Equity Equity Growth All
Fund Fund Fund Fund Fund Fund Funds
----------- --------- --------- ------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Adjustable U.S. Government Fund,
734 shares, cost $7,774 $ 7,734 - - - - -
Templeton Pacific Growth Fund,
12,610 shares, cost $163,615 - 166,954 - - - -
Rising Dividends Fund,
4,503 shares, cost $47,722 - - 44,898 - - -
Templeton International
Equity Fund, 11,342 shares,
cost $144,054 - - - 141,884 - -
Templeton Developing Markets
Equity Fund, 6,459 shares,
cost $64,695 - - - - 61,744 -
Templeton Global Growth Fund,
6,556 shares, cost $68,850 - - - - - 68,706
----------- --------- --------- ------------- ---------- ---------
Total assets 7,734 166,954 44,898 141,884 61,744 68,706 5,778,629
----------- --------- --------- ------------- ---------- --------- ---------
Liabilities:
Accrued mortality and expense
risk charges 246 1,736 297 473 4,634 1,557 18,895
Accrued administrative charges 61 434 74 118 1,159 389 4,723
----------- --------- --------- ------------- ---------- --------- ---------
<PAGE>
Total liabilities 307 2,170 371 591 5,793 1,946 23,618
----------- --------- --------- ------------- ---------- --------- ---------
Net assets $ 7,427 164,784 44,527 141,293 55,951 66,760 5,755,011
=========== ========= ========= ============= ========== ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations
For the years ended December 31, 1994, 1993 and 1992
Money Market Fund Equity Growth Fund Precious Metals
---------- --------- --------- -------- --------- --------- --------- ---------
1994 1993 1992 1994 1993 1992 1994 1993
---------- --------- --------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in
fund shares $ 14,466 9,437 13,689 4,301 5,989 7,395 626 1,029
---------- --------- --------- -------- --------- --------- --------- ---------
Expenses:
Mortality and expense
risk charges 2,689 2,266 2,712 3,726 4,110 4,422 700 999
Administrative charges 672 567 678 932 1,028 1,106 175 250
---------- --------- --------- -------- --------- --------- --------- ---------
Total expenses 3,361 2,833 3,390 4,658 5,138 5,528 875 1,249
---------- --------- --------- -------- --------- --------- --------- ---------
Investment income (loss), net 11,105 6,604 10,299 (357) 851 1,867 (249) (220)
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain
distributions on mutual funds - - - 8,957 - 79 - -
---------- --------- --------- -------- --------- --------- --------- ---------
Realized gains (losses)
on sales of investments:
Proceeds from sales 513,009 202,473 204,145 114,661 228,561 151,419 11,123 220,760
Cost of investments sold (513,009) (202,473) (204,145) (94,631) (188,907) (134,413) (9,528) (208,874)
---------- --------- --------- -------- --------- --------- --------- ---------
<PAGE>
Total realized gains (losses)
on sales of investments, net - - - 20,030 39,654 17,006 1,595 11,886
---------- --------- --------- -------- --------- --------- --------- ---------
Realized gains (losses) on
investments, net - - - 28,987 39,654 17,085 1,595 11,886
Net change in unrealized
appreciation (depreciation)
on investments - - - (45,642) 19,332 20,605 (2,094) 49,249
---------- --------- --------- -------- --------- --------- --------- ---------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on
investments, net - - - (16,655) 58,986 37,690 (499) 61,135
---------- --------- --------- -------- --------- --------- --------- ---------
Net increase (decrease) in
net assets from operations $ 11,105 6,604 10,299 (17,012) 59,837 39,557 (748) 60,915
========== ========= ========= ======== ========= ========= ========= =========
Fund
--------
1992
--------
<S> <C>
Investment Income:
Dividends reinvested in
fund shares 5,353
--------
Expenses:
Mortality and expense
risk charges 957
Administrative charges 239
--------
Total expenses 1,196
--------
Investment income (loss), net 4,157
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
<PAGE>
Realized capital gain
distributions on mutual funds -
--------
Realized gains (losses)
on sales of investments:
Proceeds from sales 20,264
Cost of investments sold (20,837)
--------
Total realized gains (losses)
on sales of investments, net (573)
--------
Realized gains (losses) on
investments, net (573)
Net change in unrealized
appreciation (depreciation)
on investments (21,400)
--------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on
investments, net (21,973)
--------
Net increase (decrease) in
net assets from operations (17,816)
========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations (cont.)
For the years ended December 31, 1994, 1993 and 1992
Real U.S.
High Income Fund Estate Securities Fund Government Securities
---------- -------- --------- ------- ----------- ------- ----------- -----------
1994 1993 1992 1994 1993 1992 1994 1993
---------- -------- --------- ------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in
fund shares $ 44,601 37,831 45,692 613 603 903 29,171 24,746
---------- -------- --------- ------- ----------- ------- ----------- -----------
Expenses:
Mortality and expense
risk charges 6,671 6,406 5,645 672 385 340 3,380 4,158
Administrative charges 1,668 1,602 1,411 168 96 85 845 1,039
---------- -------- --------- ------- ----------- ------- ----------- -----------
Total expenses 8,339 8,008 7,056 840 481 425 4,225 5,197
---------- -------- --------- ------- ----------- ------- ----------- -----------
Investment income (loss), net 36,262 29,823 38,636 (227) 122 478 24,946 19,549
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain
distributions on mutual funds 6,061 - - - - - 2,285 3,795
----------- --------- --------- ------- ------------ ------ ---------- -----------
Realized gains (losses) on sales
of investments:
Proceeds from sales 51,287 40,079 112,024 5,838 10,124 1,654 131,317 22,770
Cost of investments sold (45,931) (35,650) (110,585) (4,033) (7,269) (1,430) (99,718) (16,285)
---------- -------- --------- ------- ----------- ------- ----------- -----------
<PAGE>
Total realized gains
(losses) on
sales of investments, net 5,356 4,429 1,439 1,805 2,855 224 31,599 6,485
---------- -------- --------- ------- ----------- ------- ----------- -----------
Realized gains (losses) on
investments, net 11,417 4,429 1,439 1,805 2,855 224 33,884 10,280
Net change in unrealized
appreciation (depreciation)
on investments (81,774) 110,533 97,206 759 5,891 4,375 (91,983) 27,413
---------- -------- --------- ------- ----------- ------- ----------- -----------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on
investments, net (70,357) 114,962 98,645 2,564 8,746 4,599 (58,099) 37,693
---------- -------- --------- ------- ----------- ------- ----------- -----------
Net increase (decrease) in
net assets from operations ($34,095) 144,785 137,281 2,337 8,868 5,077 (33,153) 57,242
========== ======== ========= ======= =========== ======= =========== ===========
Fund
--------
1992
--------
<S> <C>
Investment Income:
Dividends reinvested in
fund shares 20,309
--------
Expenses:
Mortality and expense
risk charges 3,942
Administrative charges 985
--------
Total expenses 4,927
Investment income (loss), net 15,382
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
<PAGE>
Realized capital gain
distributions on mutual funds 420
Realized gains (losses) on sales
of investments:
Proceeds from sales 35,218
Cost of investments sold (26,501)
--------
Total realized gains
(losses) on
sales of investments, net 8,717
--------
Realized gains (losses) on
investments, net 9,137
Net change in unrealized
appreciation (depreciation)
on investments 17,210
--------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on
investments, net 26,347
--------
Net increase (decrease) in
net assets from operations 41,729
========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations (cont.)
For the years ended December 31, 1994, 1993 and 1992
Zero Zero
Utility Equity Fund Coupon Fund - 1995 Coupon Fund - 2000
----------- --------- -------- -------- ------- -------- -------- ------- -------
1994 1993 1992 1994 1993 1992 1994 1993 1992
----------- --------- -------- -------- ------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in
fund shares $ 44,904 25,962 23,326 15,282 15,253 14,442 14,292 12,537 10,238
----------- --------- -------- -------- ------- -------- -------- ------- -------
Expenses:
Mortality and expense
risk charges 6,698 8,255 7,110 1,529 1,574 1,441 1,769 1,943 1,576
Administrative charges 1,674 2,064 1,778 383 394 360 442 486 394
----------- --------- -------- -------- ------- -------- -------- ------- -------
Total expenses 8,372 10,319 8,888 1,912 1,968 1,801 2,211 2,429 1,970
----------- --------- -------- -------- ------- -------- -------- ------- -------
Investment income (loss), net 36,532 15,643 14,438 13,370 13,285 12,641 12,081 10,108 8,268
----------- --------- -------- -------- ------- -------- -------- ------- -------
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain
distributions on mutual funds 7,958 138 76 625 3,220 977 2,038 637 -
----------- --------- -------- -------- ------- -------- -------- ------- -------
Realized gains (losses) on sales
of investments:
Proceeds from sales 183,473 185,645 40,384 4,692 5,351 20,293 14,723 6,582 5,755
Cost of investments sold (138,153) (121,008) (29,136) (3,908) (4,170) (16,209) (10,946) (4,419) (4,348)
----------- --------- -------- -------- ------- -------- -------- ------- -------
<PAGE>
Total realized gains
(losses) on sales of
investments, net 45,320 64,637 11,248 784 1,181 4,084 3,777 2,163 1,407
----------- --------- -------- -------- ------- -------- -------- ------- -------
Realized gains (losses)
on investments, net 53,278 64,775 11,324 1,409 4,401 5,061 5,815 2,800 1,407
Net change in unrealized
appreciation (depreciation)
on investments (253,440) 47,455 68,305 (14,916) (1,412) (700) (41,764) 30,329 11,651
----------- --------- -------- -------- ------- -------- -------- ------- -------
Total realized gains
(losses) and unrealized
appreciation (depreciation)
on investments, net (200,162) 112,230 79,629 (13,507) 2,989 4,361 (35,949) 33,129 13,058
----------- --------- -------- -------- ------- -------- -------- ------- -------
Net increase (decrease) in
net assets from operations ($163,630) 127,873 94,067 (137) 16,274 17,002 (23,868) 43,237 21,326
=========== ========= ======== ======== ======= ======== ======== ======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations (cont.)
For the years ended December 31, 1994, 1993 and 1992
Zero Zero
Coupon Fund - 2005 Coupon Fund - 2010 Global Income Fund
---------- -------- -------- -------- ------- ------- ------- ------- -------
1994 1993 1992 1994 1993 1992 1994 1993 1992
---------- -------- -------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in
fund shares $ 11,417 12,406 15,955 7,316 5,501 4,149 494 798 512
---------- -------- -------- -------- ------- ------- ------- ------- -------
Expenses:
Mortality and expense
risk charges 1,741 2,279 2,064 926 827 497 129 151 86
Administrative charges 435 570 516 231 207 124 32 38 22
---------- -------- -------- -------- ------- ------- ------- ------- -------
Total expenses 2,176 2,849 2,580 1,157 1,034 621 161 189 108
---------- -------- -------- -------- ------- ------- ------- ------- -------
Investment income (loss), net 9,241 9,557 13,375 6,159 4,467 3,528 333 609 404
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain
distributions on mutual funds 3,569 138 - 3,560 224 - 204 259 194
---------- -------- -------- -------- ------- ------- ------- ------- -------
Realized gains (losses) on sales
of investments:
Proceeds from sales 75,603 47,063 40,022 79,261 3,258 2,123 2,577 449 1,281
Cost of investments sold (52,536) (30,041) (30,007) (81,331) (2,479) (1,785) (2,445) (429) (1,186)
---------- -------- -------- -------- ------- ------- ------- ------- -------
<PAGE>
Total realized gains (losses)
on sales of investments, net 23,067 17,022 10,015 (2,070) 779 338 132 20 95
---------- -------- -------- -------- ------- ------- ------- ------- -------
Realized gains (losses)
on investments, net 26,636 17,160 10,015 1,490 1,003 338 336 279 289
Net change in unrealized
appreciation (depreciation)
on investments (72,608) 44,629 9,065 (29,320) 10,850 2,971 (2,030) 2,156 (1,005)
---------- -------- -------- -------- ------- ------- ------- ------- -------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on
investments, net (45,972) 61,789 19,080 (27,830) 11,853 3,309 (1,694) 2,435 (716)
---------- -------- -------- -------- ------- ------- ------- ------- -------
Net increase (decrease) in
net assets from operations ($36,731) 71,346 32,455 (21,671) 16,320 6,837 (1,361) 3,044 (312)
========== ======== ======== ======== ======= ======= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations (cont.)
For the years ended December 31, 1994, 1993 and 1992
Investment Grade Adjustable
Intermediate Bond Fund Income Securities Fund U.S. Government
-------------- ------ ----- -------- ----------- ----- ----------- -----------
1994 1993 1992 1994 1993 1992 1994 1993
-------------- ------ ----- -------- ----------- ----- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in
fund shares $ 253 195 192 2,467 813 257 184 192
-------------- ------ ----- -------- ----------- ----- ----------- -----------
Expenses:
Mortality and expense
risk charges 169 51 37 963 221 38 27 34
Administrative charges 42 13 9 241 55 10 7 9
-------------- ------ ----- -------- ----------- ----- ----------- -----------
Total expenses 211 64 46 1,204 276 48 34 43
-------------- ------ ----- -------- ----------- ----- ----------- -----------
Investment income (loss), net 42 131 146 1,263 537 209 150 149
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain
distributions on mutual funds 36 32 13 367 118 106 - -
-------------- ------ ----- -------- ----------- ----- ----------- -----------
Realized gains (losses) on sales
of investments:
Proceeds from sales 577 85 80 29,910 5,434 86 8,733 82
Cost of investments sold (565) (77) (78) (30,339) (4,871) (84) (8,814) (80)
-------------- ------ ----- -------- ----------- ----- ----------- -----------
<PAGE>
Total realized gains (losses)
on sales of investments, net 12 8 2 (429) 563 2 (81) 2
-------------- ------ ----- -------- ----------- ----- ----------- -----------
Realized gains (losses) on
investments, net 48 40 15 (62) 681 108 (81) 2
Net change in unrealized
appreciation (depreciation)
on investments 150 419 375 (9,527) 4,145 335 (98) (25)
-------------- ------ ----- -------- ----------- ----- ----------- -----------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on
investments, net 198 459 390 (9,589) 4,826 443 (179) (23)
-------------- ------ ----- -------- ----------- ----- ----------- -----------
Net increase (decrease) in
net assets from operations $ 240 590 536 (8,326) 5,363 652 (29) 126
============== ====== ===== ======== =========== ===== =========== ===========
Fund
--------
1992
--------
<S> <C>
Investment Income:
Dividends reinvested in
fund shares 287
--------
Expenses:
Mortality and expense
risk charges 109
Administrative charges 27
--------
Total expenses 136
--------
Investment income (loss), net 151
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
<PAGE>
Realized capital gain
distributions on mutual funds -
--------
Realized gains (losses) on sales
of investments:
Proceeds from sales 35,697
Cost of investments sold (34,639)
--------
Total realized gains (losses)
on sales of investments, net 1,058
--------
Realized gains (losses) on
investments, net 1,058
Net change in unrealized
appreciation (depreciation)
on investments (524)
--------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on
investments, net 534
--------
Net increase (decrease) in
net assets from operations 685
========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations (cont.)
For the years ended December 31, 1994, 1993 and 1992
Templeton Templeton
Pacific Growth Fund Rising Dividends Fund International Equity Fund
----------- ------- ----- ------- ---------- ------- -------------- -------- ----
1994 1993 1992 1994 1993 1992 1994 1993 1992
----------- ------- ----- ------- ---------- ------- -------------- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in fund shares $ 347 - - 601 99 - 71 - -
----------- ------- ----- ------- ---------- ------- -------------- -------- ----
Expenses:
Mortality and expense
risk charges 689 315 17 227 208 25 323 93 -
Administrative charges 172 79 4 57 52 6 81 23 -
----------- ------- ----- ------- ---------- ------- -------------- -------- ----
Total expenses 861 394 21 284 260 31 404 116 -
----------- ------- ----- ------- ---------- ------- -------------- -------- ----
Investment income (loss), net (514) (394) (21) 317 (161) (31) (333) (116) -
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain
distributions on mutual funds 672 - - - - - 95 - -
----------- ------- ----- ------- ---------- ------- -------------- -------- ----
Realized gains (losses) on
sales of investments:
Proceeds from sales 116,746 743 16 752 394 3,767 895 88,730 -
Cost of investments sold (108,205) (666) (19) (796) (402) (3,769) (878) (84,735) -
----------- ------- ----- ------- ---------- ------- -------------- -------- ----
<PAGE>
Total realized gains (losses)
on sales of investments, net 8,541 77 (3) (44) (8) (2) 17 3,995 -
----------- ------- ----- ------- ---------- ------- -------------- -------- ----
Realized gains (losses) on
investments, net 9,213 77 (3) (44) (8) (2) 112 3,995 -
Net change in unrealized
appreciation (depreciation)
on investments (24,505) 28,189 (345) (2,053) (1,565) 793 (3,562) 1,391 -
----------- ------- ----- ------- ---------- ------- -------------- -------- ----
Total realized gains (losses)
and unrealized appreciation
(depreciation) on
investments, net (15,292) 28,266 (348) (2,097) (1,573) 791 (3,450) 5,386 -
----------- ------- ----- ------- ---------- ------- -------------- -------- ----
Net increase (decrease) in
net assets from operations $ (15,806) 27,872 (369) (1,780) (1,734) 760 (3,783) 5,270 -
=========== ======= ===== ======= ========== ======= ============== ======== ====
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Operations (cont.)
For the years ended December 31, 1994, 1993 and 1992
Templeton Developing Templeton
Markets Equity Fund Global Growth Fund Total All Funds
----------- ---------- ---- ---------- ------ ---- ----------- ---------- ---------
1994 1993 1992 1994 1993 1992 1994 1993 1992
----------- ---------- ---- ---------- ------ ---- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends reinvested in
fund shares - - - - - - 191,406 153,391 162,699
----------- ---------- ---- ---------- ------ ---- ----------- ---------- ---------
Expenses:
Mortality and expense
risk charges $ 3,197 - - 65 - - 36,290 34,275 31,018
Administrative charges 799 - - 16 - - 9,072 8,572 7,754
----------- ---------- ---- ---------- ------ ---- ----------- ---------- ---------
Total expenses 3,996 - - 81 - - 45,362 42,847 38,772
----------- ---------- ---- ---------- ------ ---- ----------- ---------- ---------
Investment income (loss), net (3,996) - - (81) - - 146,044 110,544 123,927
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain
distributions on mutual funds - - - - - - 36,427 8,561 1,865
----------- ---------- ---- ---------- ------ ---- ----------- ---------- ---------
Realized gains (losses) on
sales of investments:
Proceeds from sales 2,518 - - 3,901 - - 1,351,596 1,068,583 674,228
Cost of investments sold (2,585) - - (3,952) - - (1,212,303) (912,835) (619,171)
----------- ---------- ---- ---------- ------ ---- ----------- ---------- ---------
<PAGE>
Total realized gains (losses)
on sales of investments, net (67) - - (51) - - 139,293 155,748 55,057
----------- ---------- ---- ---------- ------ ---- ----------- ---------- ---------
Realized gains (losses) on
investments, net (67) - - (51) - - 175,720 164,309 56,922
Net change in unrealized
appreciation (depreciation)
on investments (2,951) - - (144) - - (677,502) 378,979 208,917
----------- ---------- ---- ---------- ------ ---- ----------- ---------- ---------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on
investments, net (3,018) - - (195) - - (501,782) 543,288 265,839
----------- ---------- ---- ---------- ------ ---- ----------- ---------- ---------
Net increase (decrease) in
net assets from operations $ (7,014) - - (276) - - (355,738) 653,832 389,766
=========== ========== ==== ========== ====== ==== =========== ========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets
For the years ended December 31, 1994, 1993 and 1992
Money Market Fund Equity Growth Fund Precious Metals Fund
---------- -------- --------- -------- --------- -------- --------- --------- --------
1994 1993 1992 1994 1993 1992 1994 1993 1992
---------- -------- --------- -------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets:
Operations:
Investment income (loss), net $ 11,105 6,604 10,299 (357) 851 1,867 (249) (220) 4,157
Realized gains (losses) on
investments, net - - - 28,987 39,654 17,085 1,595 11,886 (573)
Net change in unrealized
appreciation (depreciation)
on investments - - - (45,642) 19,332 20,605 (2,094) 49,249 (21,400)
---------- -------- --------- -------- --------- -------- --------- --------- --------
Net increase (decrease) in
net assets from operations 11,105 6,604 10,299 (17,012) 59,837 39,557 (748) 60,915 (17,816)
---------- -------- --------- -------- --------- -------- --------- --------- --------
Contract transactions:
Purchase payments 835,456 - - 15,811 - - 988 - -
Transfers between funds (442,767) 16,604 (193,347) 97,056 (88,021) 11,870 89,216 (102,112) 71,870
Surrenders and terminations (101,035) (66,017) - (49,775) (67,969) (7,851) (8,168) - -
Other transactions (note 2) (81,114) (6,376) (7,298) (49,647) 400 (74,162) (2,128) (140) 560
---------- -------- --------- -------- --------- -------- --------- --------- --------
Net increase (decrease) in
net assets resulting from
contract transactions 210,540 (55,789) (200,645) 13,445 (155,590) (70,143) 79,908 (102,252) 72,430
---------- -------- --------- -------- --------- -------- --------- --------- --------
Increase (decrease) in net assets 221,645 (49,185) (190,346) (3,567) (95,753) (30,586) 79,160 (41,337) 54,614
---------- -------- --------- -------- --------- -------- --------- --------- --------
<PAGE>
Net assets at beginning of year 308,920 358,105 548,451 629,549 725,302 755,888 122,135 163,472 108,858
---------- -------- --------- -------- --------- -------- --------- --------- --------
Net assets at end of year $ 530,565 308,920 358,105 625,982 629,549 725,302 201,295 122,135 163,472
========== ======== ========= ======== ========= ======== ========= ========= ========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1994, 1993 and 1992
Real U.S.
High Income Fund Estate Securities Fund Government Securities
----------- ---------- -------- ------- ----------- ------- ----------- -----------
1994 1993 1992 1994 1993 1992 1994 1993
----------- ---------- -------- ------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets:
Operations:
Investment income (loss), net $ 36,262 29,823 38,636 (227) 122 478 24,946 19,549
Realized gains (losses) on
investments, net 11,417 4,429 1,439 1,805 2,855 224 33,884 10,280
Net change in unrealized
appreciation (depreciation)
on investments (81,774) 110,533 97,206 759 5,891 4,375 (91,983) 27,413
----------- ---------- -------- ------- ----------- ------- ----------- -----------
Net increase (decrease) in
net assets from operations (34,095) 144,785 137,281 2,337 8,868 5,077 (33,153) 57,242
----------- ---------- -------- ------- ----------- ------- ----------- -----------
Contract transactions:
Purchase payments 4,791 - - 7,592 - - 1,041 -
Transfers between funds (10,182) (1,243) (89,831) 14,088 (4,205) (596) (111,346) (8,013)
<PAGE>
Surrenders and terminations (14,141) - - - - - - -
Other transactions (note 2) (7,272) (11,334) (2,322) (3,026) 1,380 3,196 (8,820) (9,256)
----------- ---------- -------- ------- ----------- ------- ----------- -----------
Net increase (decrease) in
net assets resulting from
contract transactions (26,804) (12,577) (92,153) 18,654 (2,825) 2,600 (119,125) (17,269)
----------- ---------- -------- ------- ----------- ------- ----------- -----------
Increase (decrease) in net assets (60,899) 132,208 45,128 20,991 6,043 7,677 (152,278) 39,973
----------- ---------- -------- ------- ----------- ------- ----------- -----------
Net assets at beginning of year 1,107,418 975,210 930,082 57,318 51,275 43,598 686,329 646,356
----------- ---------- -------- ------- ----------- ------- ----------- -----------
Net assets at end of year $1,046,519 1,107,418 975,210 78,309 57,318 51,275 534,051 686,329
=========== ========== ======== ======= =========== ======= =========== ===========
Fund
--------
1992
--------
<S> <C>
Increase (decrease) in
net assets:
Operations:
Investment income (loss), net 15,382
Realized gains (losses) on
investments, net 9,137
Net change in unrealized
appreciation (depreciation)
on investments 17,210
--------
Net increase (decrease) in
net assets from operations 41,729
--------
Contract transactions:
Purchase payments -
Transfers between funds (1,127)
Surrenders and terminations -
Other transactions (note 2) (9,780)
--------
<PAGE>
Net increase (decrease) in
net assets resulting from
contract transactions (10,907)
--------
Increase (decrease) in net assets 30,822
--------
Net assets at beginning of year 615,534
--------
Net assets at end of year 646,356
========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1994, 1993 and 1992
Zero Zero
Utility Equity Fund Coupon Fund - 1995 Coupon Fund -
----------- ---------- ---------- -------- -------- -------- -------- --------
1994 1993 1992 1994 1993 1992 1994 1993
----------- ---------- ---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets:
Operations:
Investment income (loss), net $ 36,532 15,643 14,438 13,370 13,285 12,641 12,081 10,108
Realized gains (losses) on
investments, net 53,278 64,775 11,324 1,409 4,401 5,061 5,815 2,800
Net change in unrealized
appreciation (depreciation)
on investments (253,440) 47,455 68,305 (14,916) (1,412) (700) (41,764) 30,329
----------- ---------- ---------- -------- -------- -------- -------- --------
Net increase (decrease) in
net assets from operations (163,630) 127,873 94,067 (137) 16,274 17,002 (23,868) 43,237
----------- ---------- ---------- -------- -------- -------- -------- --------
Contract transactions:
Purchase payments 11,599 - - - - - - -
Transfers between funds (62,456) (19,863) 132,262 - - (15,219) - -
Surrenders and terminations (23,338) (91,320) (6,252) - - - (7,535) -
Other transactions (note 2) (39,723) (18,834) (18,170) (3,292) (3,050) (2,975) (5,488) (3,880)
----------- ---------- ---------- -------- -------- -------- -------- --------
Net increase (decrease) in
net assets resulting from
contract transactions (113,918) (130,017) 107,840 (3,292) (3,050) (18,194) (13,023) (3,880)
----------- ---------- ---------- -------- -------- -------- -------- --------
Increase (decrease) in net assets (277,548) (2,144) 201,907 (3,429) 13,224 (1,192) (36,891) 39,357
----------- ---------- ---------- -------- -------- -------- -------- --------
<PAGE>
Net assets at beginning of year 1,351,721 1,353,865 1,151,958 258,760 245,536 246,728 323,131 283,774
----------- ---------- ---------- -------- -------- -------- -------- --------
Net assets at end of year $1,074,173 1,351,721 1,353,865 255,331 258,760 245,536 286,240 323,131
=========== ========== ========== ======== ======== ======== ======== ========
2000
--------
1992
--------
<S> <C>
Increase (decrease) in
net assets:
Operations:
Investment income (loss), net 8,268
Realized gains (losses) on
investments, net 1,407
Net change in unrealized
appreciation (depreciation)
on investments 11,651
--------
Net increase (decrease) in
net assets from operations 21,326
--------
Contract transactions:
Purchase payments -
Transfers between funds 6,409
Surrenders and terminations -
Other transactions (note 2) (3,455)
--------
Net increase (decrease) in
net assets resulting from
contract transactions 2,954
--------
Increase (decrease) in net assets 24,280
--------
Net assets at beginning of year 259,494
--------
Net assets at end of year 283,774
========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets (Cont.)
For the years ended December 31, 1994, 1993 and 1992
Zero Zero
Coupon Fund - 2005 Coupon Fund - 2010 Global Income Fund
---------- -------- -------- --------- -------- ------- ------- ------- -------
1994 1993 1992 1994 1993 1992 1994 1993 1992
---------- -------- -------- --------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets:
Operations:
Investment income (loss), net $ 9,241 9,557 13,375 6,159 4,467 3,528 333 609 404
Realized gains (losses) on
investments, net 26,636 17,160 10,015 1,490 1,003 338 336 279 289
Net change in unrealized
appreciation (depreciation)
on investments (72,608) 44,629 9,065 (29,320) 10,850 2,971 (2,030) 2,156 (1,005)
---------- -------- -------- --------- -------- ------- ------- ------- -------
Net increase (decrease) in
net assets from operations (36,731) 71,346 32,455 (21,671) 16,320 6,837 (1,361) 3,044 (312)
---------- -------- -------- --------- -------- ------- ------- ------- -------
Contract transactions:
Purchase payments - - - - - - 1,813 - -
Transfers between funds (41,224) (31,627) - (74,884) 90,077 - 21,778 - 16,476
Surrenders and terminations (28,826) - - - - - - - -
Other transactions (note 2) (3,853) (2,637) (37,422) (3,577) (1,956) (1,424) (1,388) (348) (1,283)
---------- -------- -------- --------- -------- ------- ------- ------- -------
Net increase (decrease) in
net assets resulting from
contract transactions (73,903) (34,264) (37,422) (78,461) 88,121 (1,424) 22,203 (348) 15,193
---------- -------- -------- --------- -------- ------- ------- ------- -------
Increase (decrease) in net assets (110,634) 37,082 (4,967) (100,132) 104,441 5,413 20,842 2,696 14,881
---------- -------- -------- --------- -------- ------- ------- ------- -------
<PAGE>
Net assets at beginning of year 372,147 335,065 340,032 183,310 78,869 73,456 21,976 19,280 4,399
---------- -------- -------- --------- -------- ------- ------- ------- -------
Net assets at end of year $ 261,513 372,147 335,065 83,178 183,310 78,869 42,818 21,976 19,280
========== ======== ======== ========= ======== ======= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1994, 1993 and 1992
Investment Grade Adjustable
Intermediate Bond Fund Income Securities Fund U.S. Government
-------------- ------ ------ -------- ----------- ------- ----------- -----------
1994 1993 1992 1994 1993 1992 1994 1993
-------------- ------ ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets:
Operations:
Investment income (loss), net $ 42 131 146 1,263 537 209 150 149
Realized gains (losses) on
investments, net 48 40 15 (62) 681 108 (81) 2
Net change in unrealized
appreciation (depreciation)
on investments 150 419 375 (9,527) 4,145 335 (98) (25)
-------------- ------ ------ -------- ----------- ------- ----------- -----------
Net increase (decrease) in
net assets from operations 240 590 536 (8,326) 5,363 652 (29) 126
-------------- ------ ------ -------- ----------- ------- ----------- -----------
Contract transactions:
Purchase payments 1,391 - - 22,483 - - 5,636 -
Transfers between funds 75,010 - 7,196 153,200 7,985 23,082 (2,444) -
Surrenders and terminations - - - - - - - -
<PAGE>
Other transactions (note 2) (908) (84) (80) (33,608) (341) (86) (358) (81)
-------------- ------ ------ -------- ----------- ------- ----------- -----------
Net increase (decrease) in
net assets resulting from
contract transactions 75,493 (84) 7,116 142,075 7,644 22,996 2,834 (81)
-------------- ------ ------ -------- ----------- ------- ----------- -----------
Increase (decrease) in net assets 75,733 506 7,652 133,749 13,007 23,648 2,805 45
-------------- ------ ------ -------- ----------- ------- ----------- -----------
Net assets at beginning of year 8,158 7,652 - 36,655 23,648 - 4,622 4,577
-------------- ------ ------ -------- ----------- ------- ----------- -----------
Net assets at end of year $ 83,891 8,158 7,652 170,404 36,655 23,648 7,427 4,622
============== ====== ====== ======== =========== ======= =========== ===========
Fund
--------
1992
--------
<S> <C>
Increase (decrease) in
net assets:
Operations:
Investment income (loss), net 151
Realized gains (losses) on
investments, net 1,058
Net change in unrealized
appreciation (depreciation)
on investments (524)
--------
Net increase (decrease) in
net assets from operations 685
--------
Contract transactions:
Purchase payments -
Transfers between funds 4,832
Surrenders and terminations (13,663)
Other transactions (note 2) (733)
--------
Net increase (decrease) in
net assets resulting from
contract transactions (9,564)
--------
<PAGE>
Increase (decrease) in net assets (8,879)
--------
Net assets at beginning of year 13,456
--------
Net assets at end of year 4,577
========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1994, 1993 and 1992
Templeton Templeton
Pacific Growth Fund Rising Dividends Fund International Equity Fund
----------- -------- ------ ------- ---------- ------- -------------- ------- ----
1994 1993 1992 1994 1993 1992 1994 1993 1992
----------- -------- ------ ------- ---------- ------- -------------- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets:
Operations:
Investment income (loss), net (514) (394) (21) 317 (161) (31) (333) (116) -
Realized gains (losses) on
investments, net 9,213 77 (3) (44) (8) (2) 112 3,995 -
Net change in unrealized
appreciation (depreciation)
on investments (24,505) 28,189 (345) (2,053) (1,565) 793 (3,562) 1,391 -
----------- -------- ------ ------- ---------- ------- -------------- ------- ----
Net increase (decrease) in
net assets from operations (15,806) 27,872 (369) (1,780) (1,734) 760 (3,783) 5,270 -
----------- -------- ------ ------- ---------- ------- -------------- ------- ----
Contract transactions:
<PAGE>
Purchase payments 13,634 - - 4,169 - - 32,269 - -
Transfers between funds 91,481 109,893 6,137 5,960 18,787 19,986 104,241 11,738 -
Surrenders and terminations - - - - - - - - -
Other transactions (note 2) (67,497) (543) (18) (1,199) (393) (29) (8,365) (77) -
----------- -------- ------ ------- ---------- ------- -------------- ------- ----
Net increase (decrease) in
net assets resulting from
contract transactions 37,618 109,350 6,119 8,930 18,394 19,957 128,145 11,661 -
----------- -------- ------ ------- ---------- ------- -------------- ------- ----
Increase (decrease) in net assets 21,812 137,222 5,750 7,150 16,660 20,717 124,362 16,931 -
----------- -------- ------ ------- ---------- ------- -------------- ------- ----
Net assets at beginning of year 142,972 5,750 - 37,377 20,717 - 16,931 - -
----------- -------- ------ ------- ---------- ------- -------------- ------- ----
Net assets at end of year $ 164,784 142,972 5,750 44,527 37,377 20,717 141,293 16,931 -
=========== ======== ====== ======= ========== ======= ============== ======= ====
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1994, 1993 and 1992
Templeton Developing Templeton
Markets Equity Fund Global Growth Fund Total All Funds
----------- ---------- ---- ---------- ------ ---- ---------- ---------- ----------
1994 1993 1992 1994 1993 1992 1994 1993 1992
----------- ---------- ---- ---------- ------ ---- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets:
<PAGE>
Operations:
Investment income (loss), net ($3,996) - - (81) - - 146,044 110,544 123,927
Realized gains (losses)
on investments, net (67) - - (51) - - 175,720 164,309 56,922
Net change in unrealized
appreciation (depreciation)
on investments (2,951) - - (144) - - (677,502) 378,979 208,917
----------- ---------- ---- ---------- ------ ---- ---------- ---------- ----------
Net increase (decrease) in
net assets from operations (7,014) - - (276) - - (355,738) 653,832 389,766
----------- ---------- ---- ---------- ------ ---- ---------- ---------- ----------
Contract transactions:
Purchase payments 19,997 - - 27,117 - - 1,005,787 - -
Transfers between funds 44,206 - - 45,458 - - (3,609) - -
Surrenders and terminations - - - - - - (232,818) (225,306) (27,766)
Other transactions (note 2) (1,238) - - (5,539) - - (328,040) (57,550) (155,481)
----------- ---------- ---- ---------- ------ ---- ---------- ---------- ----------
Net increase (decrease) in
net assets resulting from
contract transactions 62,965 - - 67,036 - - 441,320 (282,856) (183,247)
----------- ---------- ---- ---------- ------ ---- ---------- ---------- ----------
Increase (decrease) in net assets 55,951 - - 66,760 - - 85,582 370,976 206,519
----------- ---------- ---- ---------- ------ ---- ---------- ---------- ----------
Net assets at beginning of year - - - - - - 5,669,429 5,298,453 5,091,934
----------- ---------- ---- ---------- ------ ---- ---------- ---------- ----------
Net assets at end of year $ 55,951 - - 66,760 - - 5,755,011 5,669,429 5,298,453
=========== ========== ==== ========== ====== ==== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements
December 31, 1994
1. ORGANIZATION
Allianz Life Variable Account A (Variable Account) is a segregated investment
account of Allianz Life Insurance Company of North America (Allianz Life)
registered with the Securities and Exchange Commission as a unit investment
trust pursuant to the provisions of the Investment Company Act of 1940 (as
amended). The Variable Account was established on May 31, 1985 and commenced
operations September 8, 1987. Accordingly, it is an accounting entity
wherein all segregated account transactions are reflected.
The Variable Account's assets are the property of Allianz Life and are held
for the benefit of the owners and other persons entitled to payments under
variable life policies issued through the Variable Account and underwritten by
Allianz Life. The assets of the Variable Account, equal to the reserves and
other liabilities of the Variable Account, are not chargeable with liabilities
that arise from any other business which Allianz Life may conduct.
The Variable Account's sub-accounts may invest at net asset values, in one or
more of the funds of the Franklin Valuemark Funds (FVF), managed by Franklin
Advisers, Inc., in accordance with the selection made by the policyowner. Not
all funds are available as investment options for the products which comprise
the Variable Account.
Certain officers and trustees of the FVF are also officers and/or directors of
Franklin Advisers, Inc. and/or Allianz Life.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
Investments of the Variable Account are valued daily at market value using net
asset values provided by Franklin Advisers, Inc.
Realized investment gains include realized gain distributions received from
the respective funds and gains on the sale of fund shares as determined by the
average cost method.
Realized gain distributions are reinvested in the respective funds. Dividend
distributions received from the FVF are reinvested in additional shares of the
<PAGE>
FVF and are recorded as income to the Variable Account on the ex-dividend
date.
The Templeton Pacific Growth Fund, Rising Dividends Fund and Templeton
International Equity Fund were added as available investment options on May 1,
1992. In October, 1993 the Pacific Growth Fund and International Equity Fund
names were changed to Templeton Pacific Growth Fund and Templeton
International Equity Fund, respectively.
The Templeton Developing Markets Equity Fund, Templeton Global Growth Fund and
fixed rate General Account were added as available investment options on July
1, 1994.
EXPENSES
ASSET BASED EXPENSES
A mortality and expense risk charge is deducted from the Variable Account on a
daily basis equal, on an annual basis, to .60% of the daily net assets of the
Variable Account.
An administrative charge is deducted from the Variable Account on a daily
basis equal, on an annual basis, to .15% of the daily net assets of the
Variable Account.
CONTRACT BASED EXPENSES
A cost of insurance charge is deducted quarterly against each policy by
liquidating units. The amount of the charge is based upon age, sex, rate
class and net amount at risk (death benefit less total cash surrender value).
Total cost of insurance charges paid by the policy owners for the years ended
December 31, 1994, 1993 and 1992 were $123,231, $46,026 and $42,396,
respectively.
A deferred issue charge is deducted annually, at the end of the policy year,
against each policy for the first ten policy years by liquidating units. The
amount of the charge is 7% of the single premium consisting of 2.5% for
premium taxes, 4% for sales charge and .5% for policy issue charge (in the
State of California, 2.35%, 4.15% and .5%, respectively). If the policy is
surrendered before the full amount is collected, the uncollected portion of
this charge is deducted from the account value. Total deferred issue charges
paid by the policy owners for the years ended December 31, 1994, 1993 and 1992
were $71,217, $34,016 and $29,394, respectively.
Twelve free transfers are permitted each contract year. Thereafter, the fee
is the lesser of $25 or 2% of the amount transferred. Prior to May 1, 1992,
only five free transfers were permitted each year, with additional transfers
<PAGE>
costing $15 per transfer. No transfer charges were paid by the policy owners
during the years ended December 31, 1994, 1993 and 1992, respectively.
Transfers to the fixed rate General Account were $3,609 during 1994.
The cost of insurance charges, deferred issued charges and transfer charges
paid are reflected in the financial statements as other transactions.
3. INVESTMENT TRANSACTIONS
The sub-account purchases of fund shares, including reinvestment of dividend
distributions, were as follows during the year ended December 31, 1994:
<TABLE>
<CAPTION>
<S> <C>
Money Market Fund $735,775
Equity Growth Fund 137,944
Precious Metals Fund 91,257
High Income Fund 67,795
Real Estate Securities Fund 24,921
U.S. Government Securities Fund 40,027
Utility Equity Fund 114,996
Zero Coupon Fund - 1995 15,908
Zero Coupon Fund - 2000 16,330
Zero Coupon Fund - 2005 14,985
Zero Coupon Fund - 2010 10,877
Global Income Fund 25,375
Investment Grade Intermediate Bond Fund 76,359
Income Securities Fund 174,377
Adjustable U.S. Government Fund 11,751
Templeton Pacific Growth Fund 156,477
Rising Dividends Fund 10,079
Templeton International Equity Fund 129,277
Templeton Developing Markets Equity Fund 67,280
Templeton Global Growth Fund 72,802
</TABLE>
4. FEDERAL INCOME TAXES
Operations of the Variable Account form a part of, and are taxed with,
operations of Allianz Life, which is taxed as a life insurance company under
the Internal Revenue Code.
Allianz Life does not expect to incur any federal income taxes in the
operation of the Variable Account. If in the future Allianz Life determines
<PAGE>
that the Variable Account may incur federal income taxes, it may then assess a
charge against the Variable Account for such taxes.
<TABLE>
<CAPTION>
5. CONTRACT TRANSACTIONS - UNIT ACTIVITY
Transactions in units for each fund for the years ended December 31, 1994, 1993, and 1992, were as follows:
Real U.S. Zero
Money Equity Precious High Estate Government Utility Coupon
Market Growth Metals Income Securities Securities Equity Fund -
Fund Fund Fund Fund Fund Fund Fund 1995
--------- -------- --------- ---------- ----------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1991 41,456 40,571 9,742 72,436 3,264 40,293 66,828 15,802
Contract transactions:
Transfers between funds (14,448) 694 6,596 (6,411) (45) (67) 7,392 (930)
Surrenders and terminations - (412) - - - - (379) -
Other transactions (544) (4,097) 63 (200) 231 (630) (1,051) (186)
--------- -------- --------- ---------- ----------- ----------- ---------- --------
Net increase (decrease)
in units resulting from
contract transactions (14,992) (3,815) 6,659 (6,611) 186 (697) 5,962 (1,116)
--------- -------- --------- ---------- ----------- ----------- ---------- --------
Units outstanding at
December 31,1992 26,464 36,756 16,401 65,825 3,450 39,596 72,790 14,686
========= ======== ========= ========== =========== =========== ========== ========
Accumulation unit value per unit
at December 31, 1992 $ 13.532 19.733 9.967 14.815 14.862 16.324 18.600 16.719
========= ======== ========= ========== =========== =========== ========== ========
Contract transactions:
Transfers between funds 1,266 (4,296) (8,477) (59) (272) (451) (998) -
Surrenders and terminations (4,833) (3,404) - - - - (4,617) -
Other transactions (467) 84 9 (701) 87 (533) (934) (175)
--------- -------- --------- ---------- ----------- ----------- ---------- --------
Net increase (decrease)
in units resulting from
contract transactions (4,034) (7,616) (8,468) (760) (185) (984) (6,549) (175)
--------- -------- --------- ---------- ----------- ----------- ---------- --------
Units outstanding at
December 31, 1993 22,430 29,140 7,933 65,065 3,265 38,612 66,241 14,511
========= ======== ========= ========== =========== =========== ========== ========
<PAGE>
Accumulation unit value per unit
at December 31, 1993 $ 13.773 21.604 15.396 17.020 17.556 17.775 20.406 17.832
========= ======== ========= ========== =========== =========== ========== ========
Contract transactions:
Purchase payments 59,285 751 67 265 419 62 654 -
Transfers between funds (31,325) 4,606 6,162 (637) 861 (6,440) (3,468) -
Surrenders and terminations (7,250) (2,364) (578) (869) - - (1,253) -
Other transactions (5,759) (2,338) (143) (444) (177) (520) (2,205) (186)
--------- -------- --------- ---------- ----------- ----------- ---------- --------
Net increase (decrease)
in units resulting from
contract transactions 14,951 655 5,508 (1,685) 1,103 (6,898) (6,272) (186)
--------- -------- --------- ---------- ----------- ----------- ---------- --------
Units outstanding at
December 31, 1994 37,381 29,795 13,441 63,380 4,368 31,714 59,969 14,325
========= ======== ========= ========== =========== =========== ========== ========
Accumulation unit value per unit
at December 31, 1994 $ 14.194 21.010 14.977 16.512 17.928 16.840 17.912 17.823
========= ======== ========= ========== =========== =========== ========== ========
Accumulation net assets at
December 31, 1994 $530,565 625,982 201,295 1,046,519 78,309 534,051 1,074,173 255,331
========= ======== ========= ========== =========== =========== ========== ========
Zero Zero
Coupon Coupon
Fund - Fund -
2000 2005
-------- --------
<S> <C> <C>
Units outstanding at
December 31, 1991 15,283 19,558
Contract transactions:
Transfers between funds 357 -
Surrenders and terminations - -
Other transactions (201) (2,034)
-------- --------
Net increase (decrease)
in units resulting from
contract transactions 156 (2,034)
-------- --------
Units outstanding at
December 31,1992 15,439 17,524
======== ========
<PAGE>
Accumulation unit value per unit
at December 31, 1992 18.380 19.121
======== ========
Contract transactions:
Transfers between funds - (1,326)
Surrenders and terminations - -
Other transactions (190) (156)
-------- --------
Net increase (decrease)
in units resulting from
contract transactions (190) (1,482)
-------- --------
Units outstanding at
December 31, 1993 15,249 16,042
======== ========
Accumulation unit value per unit
at December 31, 1993 21.191 23.198
======== ========
Contract transactions:
Purchase payments - -
Transfers between funds - (1,953)
Surrenders and terminations (379) (1,348)
Other transactions (276) (182)
-------- --------
Net increase (decrease)
in units resulting from
contract transactions (655) (3,483)
-------- --------
Units outstanding at
December 31, 1994 14,594 12,559
======== ========
Accumulation unit value per unit
at December 31, 1994 19.614 20.821
======== ========
Accumulation net assets at
December 31, 1994 286,240 261,513
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
5. CONTRACT TRANSACTIONS - UNIT ACTIVITY (CONTINUED)
Zero Investment Adjustable Templeton
Coupon Global Grade Income U.S Pacific Rising
Fund - Income Intermediate Securities Government Growth Dividends
2010 Fund Bond Fund Fund Fund Fund Fund
-------- ------- ------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1991 4,047 352 - - 1,249 - -
Contract transactions:
Transfers between funds - 1,311 595 1,604 474 588 1,902
Surrenders and terminations - - - - (1,246) - -
Other transactions (79) (101) (7) (6) (67) (2) (3)
-------- ------- ------------- ----------- ----------- ---------- ----------
Net increase (decrease)
in units resulting from
contract transactions (79) 1,210 588 1,598 (839) 586 1,899
-------- ------- ------------- ----------- ----------- ---------- ----------
Units outstanding at
December 31, 1992 3,968 1,562 588 1,598 410 586 1,899
======== ======= ============= =========== =========== ========== ==========
Accumulation unit value per unit
at December 31, 1992 $19.877 12.346 13.009 14.799 11.170 9.816 10.909
======== ======= ============= =========== =========== ========== ==========
Contract transactions:
Transfers between funds 3,524 - - 527 - 9,382 1,714
Surrenders and terminations - - - - - - -
Other transactions (84) (25) (6) (21) (7) (44) (37)
-------- ------- ------------- ----------- ----------- ---------- ----------
Net increase (decrease)
in units resulting from
contract transactions 3,440 (25) (6) 506 (7) 9,338 1,677
-------- ------- ------------- ----------- ----------- ---------- ----------
Units outstanding at
December 31, 1993 7,408 1,537 582 2,104 403 9,924 3,576
======== ======= ============= =========== =========== ========== ==========
<PAGE>
Accumulation unit value per unit
at December 31, 1993 $24.745 14.297 14.017 17.423 11.481 14.407 10.453
======== ======= ============= =========== =========== ========== ==========
Contract transactions:
Purchase payments - 133 100 1,334 495 998 418
Transfers between funds (3,442) 1,607 5,385 9,100 (213) 6,850 601
Surrenders and terminations - - - - - - -
Other transactions (162) (102) (65) (2,024) (31) (5,137) (121)
-------- ------- ------------- ----------- ----------- ---------- ----------
Net increase (decrease)
in units resulting from
contract transactions (3,604) 1,638 5,420 8,410 251 2,711 898
-------- ------- ------------- ----------- ----------- ---------- ----------
Units outstanding at
December 31, 1994 3,804 3,175 6,002 10,514 654 12,635 4,474
======== ======= ============= =========== =========== ========== ==========
Accumulation unit value per unit
at December 31, 1994 $21.866 13.483 13.978 16.208 11.374 13.042 9.952
======== ======= ============= =========== =========== ========== ==========
Accumulation net assets at
December 31, 1994 $83,178 42,818 83,891 170,404 7,427 164,784 44,527
======== ======= ============= =========== =========== ========== ==========
Templeton
Templeton Developing Templeton
International Markets Global
Equity Equity Growth
Fund Fund Fund
-------------- ----------- ----------
<S> <C> <C> <C>
Units outstanding at
December 31, 1991 - - -
Contract transactions:
Transfers between funds - - -
Surrenders and terminations - - -
Other transactions - - -
-------------- ----------- ----------
Net increase (decrease)
in units resulting from
contract transactions - - -
-------------- ----------- ----------
<PAGE>
Units outstanding at
December 31, 1992 - - -
============== =========== ==========
Accumulation unit value per unit
at December 31, 1992 - - -
============== =========== ==========
Contract transactions:
Transfers between funds 1,375 - -
Surrenders and terminations - - -
Other transactions (7) - -
-------------- ----------- ----------
Net increase (decrease)
in units resulting from
contract transactions 1,368 - -
-------------- ----------- ----------
Units outstanding at
December 31, 1993 1,368 - -
============== =========== ==========
Accumulation unit value per unit
at December 31, 1993 12.375 - -
============== =========== ==========
Contract transactions:
Purchase payments 2,526 2,054 2,721
Transfers between funds 8,168 4,590 4,585
Surrenders and terminations - - -
Other transactions (659) (545) (558)
-------------- ----------- ----------
Net increase (decrease)
in units resulting from
contract transactions 10,035 6,099 6,748
-------------- ----------- ----------
Units outstanding at
December 31, 1994 11,403 6,099 6,748
============== =========== ==========
Accumulation unit value per unit
at December 31, 1994 12.390 9.173 9.894
============== =========== ==========
Accumulation net assets at
December 31, 1994 141,293 55,951 66,760
============== =========== ==========
</TABLE>
<PAGE>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1994 and 1993
<PAGE>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA AND SUBSIDIARIES
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Allianz Life Insurance Company of North America:
We have audited the accompanying consolidated balance sheets of Allianz Life
Insurance Company of North America (a wholly owned subsidiary of Allianz of
America, Inc.) and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of income, stockholder's equity and cash flows
for each of the years in the three-year period ended December 31, 1994. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Allianz Life Insurance Company of North America and subsidiaries as of
December 31, 1994 and 1993, and the results of their operations and changes in
stockholder's equity and cash flows for each of the years in the three-year
period ended December 31, 1994, in conformity with generally accepted
accounting principles.
<PAGE>
In 1994, as discussed in note 1 to the consolidated financial statements, the
Company adopted the provisions of Financial Accounting Standards Board's
Statement of Accounting Standards No. 115, Accounting for Certain Investments
in Debt and Equity Securities. In 1993, as discussed in notes 1, 8 and 10 to
the consolidated financial statements, the Company adopted the provisions of
Financial Accounting Standards Board's Statements of Financial Accounting
Standards No. 106, Accounting for Postretirement Benefits Other Than Pensions;
No. 109, Accounting for Income Taxes; and No. 113, Accounting and Reporting
for Reinsurance of Short-Duration and Long-Duration Contracts.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 7, 1995
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Financial Statements
Consolidated Balance Sheets
December 31, 1994 and 1993
(in thousands except share data)
Assets 1994 1993
- ----------------------------------------------------------- ----------- ---------
<S> <C> <C>
Investments:
Fixed maturities, at amortized cost $ 90,615 1,985,684
Fixed maturities, at market 1,906,208 0
Equity securities, at market 131,712 143,649
Mortgage loans on real estate 163,099 127,196
Real estate, at cost 4,685 5,071
Investment in real estate partnerships, at equity 12,551 10,566
Certificates of deposit and short-term securities 155,307 58,963
Policy loans 101,899 98,117
Other long-term investments 1,117 650
----------- ---------
Total investments 2,567,193 2,429,896
Cash 63,883 35,488
Accrued investment income 34,786 34,022
Receivables (net of allowance for uncollectible
accounts of $9,607 in 1994 and $10,560 in 1993) 111,874 123,914
Reinsurance receivable:
Funds held on deposit 927,353 781,084
Recoverable on future policy benefit reserves 35,387 28,722
Recoverable on unpaid claims 105,603 90,101
Receivable on paid claims 26,736 20,186
Prepaid insurance premiums 4,317 3,606
Home office property and equipment (net of accumulated
depreciation of $28,547 in 1994 and $26,731 in 1993) 11,612 12,983
Deferred acquisition costs 798,442 666,352
Federal income tax recoverable 3,794 0
Other assets 9,344 10,685
----------- ---------
Assets exclusive of separate account assets 4,700,324 4,237,039
<PAGE>
Separate account assets 6,965,755 5,535,243
----------- ---------
Total assets $11,666,079 9,772,282
=========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Financial Statements (cont.)
Consolidated Balance Sheets, (cont.)
December 31, 1994 and 1993
(in thousands except share data)
Liabilities 1994 1993
- ----------------------------------------------------------------- ------------ ----------
<S> <C> <C>
Future policy benefit reserves:
Life $ 1,022,537 989,309
Annuity 2,304,560 1,978,203
Policy and contract claims 355,411 322,924
Unearned premiums 40,376 41,570
Reinsurance payable 81,507 61,728
Current income taxes 0 2,461
Deferred income taxes 5,807 28,708
Accrued expenses 29,065 29,210
Commissions due and accrued 24,190 20,874
Other policyholder funds 75,533 83,094
Other liabilities 74,231 19,353
------------ ----------
Liabilities exclusive of separate account liabilities 4,013,217 3,577,434
Separate account liabilities 6,965,755 5,535,243
------------ ----------
Total liabilities 10,978,972 9,112,677
------------ ----------
Minority interest in subsidiary 7,662 8,189
------------ ----------
Stockholder's equity
- -----------------------------------------------------------------
Common stock, $1 par value, 20,000,000 shares
authorized, issued and outstanding 20,000 20,000
Preferred stock, $1 par value, cumulative, 200 million
shares authorized, 40 million shares issued and outstanding 40,000 0
Additional paid-in capital 406,494 401,304
<PAGE>
Net unrealized holding loss on available-for-sale
securities, net of deferred federal income taxes (62,073) 0
Net unrealized gain on equity investments, net of
deferred federal income taxes 0 9,071
Net unrealized Canadian currency loss (3,787) (2,708)
Retained earnings 278,811 223,749
------------ ----------
Total stockholder's equity 679,445 651,416
------------ ----------
Commitments and contingencies (Notes 7 and 12)
Total liabilities and stockholder's equity $11,666,079 9,772,282
============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Financial Statements (cont.)
Consolidated Statements of Income
Years Ended December 31, 1994, 1993 and 1992
(in thousands)
1994 1993 1992
---------- --------- ---------
<S> <C> <C> <C>
Revenue:
Life insurance premiums $ 234,498 217,885 228,530
Other life policy considerations 92,254 88,003 78,216
Annuity considerations 117,029 67,202 32,716
Accident and health premiums 547,508 508,785 481,437
---------- --------- ---------
Total premiums and considerations 991,289 881,875 820,899
Premiums ceded 241,978 201,254 174,664
---------- --------- ---------
Net premiums and considerations 749,311 680,621 646,235
Investment income, net 181,291 174,831 169,982
Realized investment gains, net 829 28,318 22,876
Other 12,703 9,347 12,851
---------- --------- ---------
Total revenue 944,134 893,117 851,944
---------- --------- ---------
Benefits and expenses:
Life insurance benefits 254,530 233,862 241,486
Annuity benefits 128,582 111,119 98,998
Accident and health insurance benefits 379,122 341,676 344,067
---------- --------- ---------
Total benefits 762,234 686,657 684,551
Benefit recoveries 209,915 153,393 171,048
---------- --------- ---------
Net benefits 552,319 533,264 513,503
Commissions and other agent compensation 313,715 398,161 274,760
General and administrative expenses 111,116 109,333 87,728
<PAGE>
Taxes, licenses and fees 22,514 25,239 20,297
Increase in deferred acquisition costs (132,090) (253,234) (115,379)
Minority interest in income of consolidated subsidiary (66) 0 0
---------- --------- ---------
Total benefits and expenses 867,508 812,763 780,909
---------- --------- ---------
Income from operations before income taxes 76,626 80,354 71,035
---------- --------- ---------
Income tax expense (benefit):
Current 5,098 30,215 14,330
Deferred 16,053 (6,496) 10,702
---------- --------- ---------
Total income tax expense 21,151 23,719 25,032
---------- --------- ---------
Net income before cumulative effect of
changes in accounting 55,475 56,635 46,003
Cumulative effect of changes in accounting 0 26,875 0
---------- --------- ---------
Net income $ 55,475 83,510 46,003
========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Financial Statements (cont.)
Consolidated Statements of Stockholder's Equity
Years Ended December 31, 1994, 1993 and 1992
(in thousands)
1994 1993 1992
---------- -------- --------
<S> <C> <C> <C>
Common stock:
Balance at beginning and end of year $ 20,000 20,000 20,000
---------- -------- --------
Preferred Stock:
Balance at beginning of year 0 0 0
Issuance of stock during the year 40,000 0 0
---------- -------- --------
Balance at end of year 40,000 0 0
---------- -------- --------
Additional paid-in capital:
Balance at beginning of year 401,304 401,304 401,304
Additional contribution from parent 5,190 0 0
---------- -------- --------
Balance at end of year 406,494 401,304 401,304
---------- -------- --------
Net unrealized gain (loss) on investments:
Balance at beginning of year 9,071 12,071 19,594
Cumulative effect of implementation of Statement
No. 115, net of deferred federal income taxes 74,866 0 0
Net unrealized loss during the year,
net of deferred federal income taxes (146,010) (3,000) (7,523)
---------- -------- --------
Balance at end of year (62,073) 9,071 12,071
---------- -------- --------
Net unrealized Canadian currency gain (loss):
Balance at beginning of year (2,708) (1,835) 1,058
<PAGE>
Net unrealized loss during the year,
net of deferred federal income taxes (1,079) (873) (2,893)
---------- -------- --------
Balance at end of year (3,787) (2,708) (1,835)
---------- -------- --------
Retained earnings:
Balance at beginning of year 223,749 140,239 114,236
Net income 55,475 83,510 46,003
Cash dividend to stockholder (413) 0 (20,000)
---------- -------- --------
Balance at end of year 278,811 223,749 140,239
---------- -------- --------
Total stockholder's equity $ 679,445 651,416 571,779
========== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Financial Statements (cont.)
Consolidated Statements of Cash Flows
Years Ended December 31, 1994, 1993 and 1992
(in thousands)
1994 1993 1992
---------- --------- ---------
<S> <C> <C> <C>
Cash flows used in operating activities:
Net income $ 55,475 83,510 46,003
---------- --------- ---------
Adjustments to reconcile net income to net
cash used in operating activities:
Realized (gains) on investments (829) (28,318) (22,876)
Deferred federal income tax (benefit) expense 16,053 (6,496) 10,702
Cumulative effect of changes in accounting 0 (26,875) 0
Charges to policy account balances (125,488) (105,912) (83,935)
<PAGE>
Interest credited to policy account balances 150,490 147,983 134,516
Change in:
Future policy benefit reserves 20,791 (9,557) (1,489)
Policy and contract claims 25,072 40,211 16,673
Deferred acquisition costs (132,090) (253,234) (115,379)
Deferred tax liability 0 15,936 0
Receivables 12,040 (20,206) 3,389
Reinsurance receivables (93,453) (107,809) (177,920)
Reinsurance payable 19,779 31,653 7,374
Unearned premiums (1,194) (2,111) 2,211
Commissions due and accrued 3,316 1,461 (519)
Accrued expenses and other liabilities 54,626 14,657 1,464
Current taxes (6,255) 1,085 (410)
Accrued investment income (764) (2,725) (3,914)
Depreciation and amortization (11,498) (7,681) (816)
Other, net (86) 2,303 9,266
---------- --------- ---------
Total adjustments (69,490) (315,635) (221,663)
---------- --------- ---------
Net cash used in operating activities (14,015) (232,125) (175,660)
---------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Financial Statements (cont.)
Consolidated Statements of Cash Flows, (cont.)
Years Ended December 31, 1994, 1993 and 1992
(in thousands)
1994 1993 1992
---------- ----------- ---------
<S> <C> <C> <C>
Cash flows used in investing activities:
Purchase of fixed maturities, at amortized cost $ 0 (1,191,749) (863,085)
Purchase of fixed maturities, at market (928,532) 0 0
Purchase of equity securities (145,267) (205,345) (282,780)
Purchase of other long-term investments (467) (650) (6,600)
<PAGE>
Funding of mortgage loans (64,808) (20,097) (3,379)
Sale of fixed maturities, at amortized cost 0 666,893 374,388
Sale of fixed maturities, at market 791,659 0 0
Matured or redeemed fixed maturities, at amortized cost 4,342 314,223 223,459
Matured fixed maturities, at market 32,508 0 0
Sale of equity securities 150,347 217,524 247,407
Repayment of mortgage loans 28,206 15,989 29,776
Sale of minority interest in subsidiary 0 8,189 0
Net change in certificates of deposit and
short-term securities (96,344) 33,330 (61,614)
Other (6,232) 782 (701)
---------- ----------- ---------
Net cash used in investing activities (234,588) (160,911) (343,129)
---------- ----------- ---------
Cash flows used in financing activities:
Policyholders' deposits to account balances $ 526,918 639,633 606,525
Policyholders' withdrawals from account balances (235,309) (164,911) (118,786)
Change in assets held under reinsurance agreements (59,349) (75,658) 68,901
Net change in mortgage notes payable (39) (36) (33)
Additional paid-in capital from parent 5,190 0 0
Sale of preferred stock 40,000 0 0
Cash dividends paid (413) 0 (20,000)
---------- ----------- ---------
Net cash used in financing activities 276,998 399,028 536,607
---------- ----------- ---------
Net change in cash 28,395 5,992 17,818
Cash at beginning of year 35,488 29,496 11,678
---------- ----------- ---------
Cash at end of year $ 63,883 35,488 29,496
========== =========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
(in thousands)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Allianz Life Insurance Company of North America (the Company) is a wholly
owned subsidiary of Allianz of America, Inc. (AZOA), a majority-owned
subsidiary of Allianz A.G. Holding, a Federal Republic of Germany company.
Following is a summary of the significant accounting policies reflected in the
accompanying consolidated financial statements.
BASIS OF PRESENTATION
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles (GAAP) which vary in certain respects
from accounting rules prescribed or permitted by state insurance regulatory
authorities. The accounts of the Company's major subsidiaries, Preferred Life
Insurance Company of New York and Canadian American Financial Corporation and
other less significant subsidiaries have been consolidated. All significant
intercompany balances and transactions have been eliminated in consolidation.
Certain amounts as previously reported have been reclassified to be consistent
with the current year's presentation.
RECOGNITION OF TRADITIONAL LIFE, GROUP LIFE AND GROUP ACCIDENT AND HEALTH
REVENUE
Traditional life products include products with guaranteed premiums and
benefits and consist principally of whole life and term insurance policies,
limited payment contracts and certain annuity products with life
contingencies.
Premiums on traditional life and group life products are recognized as income
when due. Group accident and health premiums are recognized as earned on a pro
rata basis over the risk coverage periods. Benefits and expenses for
traditional and group products are matched with earned premiums so that
profits are recognized over the premium paying periods of the contracts. This
matching is accomplished by establishing provisions for future policy benefits
and policy and contract claims, and deferring and amortizing related policy
acquisition costs.
<PAGE>
RECOGNITION OF NONTRADITIONAL AND VARIABLE LIFE AND ANNUITY REVENUE
Nontraditional and variable life insurance and interest sensitive contracts
that have significant mortality or morbidity risk are accounted for in
accordance with the retrospective deposit method. Interest sensitive
contracts that do not have significant mortality or morbidity risk are
accounted for in a manner consistent with interest bearing financial
instruments. For both types of contracts, premium receipts are reported as
deposits to the contractholder's account while revenues consist of amounts
assessed against contractholders including surrender charges and earned
administrative service fees. Mortality or morbidity charges are also
accounted for as revenue on those contracts containing mortality or morbidity
risk. Benefits consist of interest credited to contractholder's accounts and
claims or benefits incurred in excess of the contractholder's balance.
DEFERRED ACQUISITION COSTS
Acquisition costs, consisting of commissions and other costs which vary with
and are primarily related to production of new business, are deferred. For
traditional life and group life products, such costs are amortized over the
revenue-producing period of the related policies using the same actuarial
assumptions used in computing future policy benefit reserves. Acquisition
costs for accident and health insurance policies are deferred and amortized
over the lives of the policies in the same manner as premiums are earned. For
interest sensitive products, acquisition costs are amortized in relation to
the present value of expected future gross profits from investment margins and
mortality, morbidity and expense charges. Deferred acquisition costs amortized
during 1994, 1993 and 1992 were $108,676, $72,431 and $57,264, respectively.
FUTURE POLICY BENEFIT RESERVES
Future policy benefit reserves on traditional life products are computed by
the net level premium method based upon estimated future investment yield,
mortality and withdrawal assumptions, commensurate with the Company's
experience, modified as necessary to reflect anticipated trends, including
possible unfavorable deviations. Most life reserve interest assumptions are
graded from 9% to 5.5%.
Future policy benefit reserves for interest sensitive products are generally
carried at accumulated contract values. Reserves on some deferred annuity
contracts are computed based on contractholder cash value accumulations,
adjusted for mortality, withdrawal and interest margin assumptions.
Fair values of investment contracts, which include deferred annuities and
other annuities without significant mortality risk, were determined by testing
amounts payable on demand against discounted cash flows using interest rates
commensurate with the risks involved. Fair values are based on the amount
payable on demand at December 31, 1994 and 1993.
<PAGE>
POLICY AND CONTRACT CLAIMS
Policy and contract claims represent an estimate of claims and claim
adjustment expenses on accident and health and life insurance policies that
have been reported but not yet paid and incurred but not yet reported as of
December 31.
REINSURANCE
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 113, Accounting and Reporting for Reinsurance
of Short-Duration and Long-Duration Contracts. Pursuant to SFAS No. 113,
insurance liabilities are reported before the effects of reinsurance. Amounts
paid or deemed to have been paid for claims covered by reinsurance contracts
are recorded as reinsurance receivable. Reinsurance receivables are recognized
in a manner consistent with the liabilities related to the underlying
reinsured contracts.
INVESTMENTS
On January 1, 1994, the Company adopted SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities which addresses the accounting and
reporting for investments in equity securities that have readily determinable
fair values and for all investments in debt securities. Those investments are
classified in one of three categories. Debt securities that the Company has
the positive intent and ability to hold to maturity are classified as
"held-to-maturity securities" and are reported at amortized cost. Debt and
equity securities that are bought and held principally for the purpose of
selling them in the near term are classified as "trading securities" and are
reported at fair value, with unrealized gains and losses included in earnings.
Debt and equity securities not classified as either "held-to-maturity
securities" or "trading securities" are classified as "available-for-sale
securities" and are reported at fair value, with unrealized gains and losses
reported in a separate component of stockholders' equity, net of deferred
taxes. SFAS No. 115 does not permit retroactive application of its
provisions. The Company classified the majority of its investment portfolio
as "available-for-sale securities" with a limited number of securities
classified as "held-to-maturity" at January 1, 1994.
In 1993, prior to adoption of SFAS No. 115, investments in fixed maturities
and nonredeemable preferred stocks were carried at amortized cost reduced by a
provision for loss due to declines in value expected to be other than
temporary. Common stocks were reflected at market value. Unrealized gains or
losses on investments in common stocks, net of deferred income taxes, were
reflected directly in stockholder's equity.
Short-term investments are carried at amortized cost which approximates
market. Policy loans are reflected at their unpaid principal balances.
<PAGE>
Mortgage loans are reflected at unpaid principal balances adjusted for premium
and discount amortization and an allowance for uncollectible balances.
Investments in real estate are reflected at the lower of cost or market value.
Real estate occupied by the Company is reflected at cost, less accumulated
depreciation. Investments in real estate, exclusive of land, are being
depreciated on a straight-line basis over estimated useful lives ranging from
3 to 30 years.
Realized gains and losses are computed based on the specific identification
method.
As of December 31, 1994 and 1993, investments with a carrying value of $44,337
and $35,577, respectively, were held on deposit with various insurance
departments as required by statutory regulations.
The fair values of invested assets, excluding investments in real estate, are
deemed by management to approximate their estimated market values. The fair
value of mortgage loans has been calculated using discounted cash flows and is
based on pertinent information available to management as of year end. Policy
loan balances which are supported by the underlying cash value of the policies
approximate fair value. Changes in market conditions subsequent to year end
may cause estimates of fair values to differ from the amounts presented
herein.
SEPARATE ACCOUNTS
Separate accounts represent funds for which investment income and investment
gains and losses accrue directly to the policyholders and contractholders.
Each account has specific investment objectives and the assets are carried at
market value. The assets of each account are legally segregated and are not
subject to claims which arise out of any other business of the Company.
Fair values of separate accounts assets were determined using the market value
of the investments held in segregated fund accounts. Fair values of separate
accounts liabilities were determined using the cash surrender values of the
contractholder's account.
INCOME TAXES
Effective January 1, 1993, the Company adopted SFAS No. 109, Accounting for
Income Taxes. The primary provision of SFAS No. 109 is the change from the
deferred method of accounting for income taxes to the asset and liability
method. The Company implemented the change in accounting principle in 1993
which resulted in a one-time cumulative adjustment to increase income by
$30,881 determined as of January 1, 1993. The 1992 financial statements were
not restated to apply the provisions of this Statement.
<PAGE>
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Under SFAS No. 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
Under the deferred method of accounting for income taxes prescribed by the
Accounting Principles Board (APB) Opinion 11, which was applied in 1992 and
prior years, deferred income taxes were recognized for income and expense
items reported in different years for financial reporting purposes and income
tax purposes, using the tax rate in effect for the year of the calculation.
Under the deferred method, deferred taxes were not adjusted for subsequent
changes in tax rates.
RECEIVABLES
Receivable balances approximate estimated fair values. This is based on
pertinent information available to management as of year end including the
financial condition and credit worthiness of the parties underlying the
receivables. Changes in market conditions subsequent to year end may cause
estimates of fair values to differ from the amounts presented herein.
ACCOUNTING CHANGES
The impact of implementation of SFAS No. 115 in 1994 was an increase in equity
of $74,866 at January 1, 1994.
The table below presents the cumulative effect of changes, net of tax, in
accounting principles implemented in 1993 on after tax net income:
<TABLE>
<CAPTION>
<S> <C>
SFAS No. 106 $(4,006)
SFAS No. 109 30,881
--------
Total cumulative effect on after tax net income
of changes in accounting principles $26,875
========
</TABLE>
<PAGE>
(2) BUSINESS COMBINATION
On May 31, 1993, the Company acquired the majority of the assets and
liabilities of Fidelity Union Life Insurance Company (FULICO), a wholly owned
subsidiary of AZOA, through an assumption reinsurance arrangement. FULICO
remained in existence retaining only its corporate charter and those assets
necessary to maintain its charter and licenses to conduct life insurance and
annuity business until it was sold in 1994.
The Company accounted for this transaction as an "as-if pooling of interests"
involving the combination of entities under the common control of AZOA.
Accordingly, all financial data for periods prior to May 31, 1993 were
restated to include the operations of FULICO and all intercompany transactions
were eliminated.
Total revenues and net income, before adoption of any changes in accounting,
of the separate companies for the five months ended May 31, 1993 and for the
year ended December 31, 1992 were:
<TABLE>
<CAPTION>
Allianz Life FULICO Combined
------------- ------- --------
<S> <C> <C> <C>
Five months ended May 31, 1993:
Total revenue $ 309,159 78,814 387,973
Net income 19,224 12,944 32,168
Year ended December 31, 1992:
Total revenue $ 685,997 165,947 851,944
Net income 28,571 17,432 46,003
</TABLE>
<PAGE>
(3) INVESTMENTS
Investments at December 31, 1994 consist of:
<TABLE>
<CAPTION>
Amount
Amortized Estimated shown on
cost market balance
or cost value sheet
---------- --------- ---------
<S> <C> <C> <C>
Fixed maturities - held-to-maturity:
Corporate securities $ 90,615 85,559 90,615
Fixed maturities - available-for-sale:
U.S. government 495,048 463,694 463,694
States and political subdivisions 519 498 498
Foreign government 44,818 43,494 43,494
Public utilities 79,170 80,002 80,002
Corporate securities 1,099,623 1,042,867 1,042,867
Mortgage backed securities 228,894 221,079 221,079
Collateralized mortgage obligations 57,739 54,574 54,574
---------- --------- ---------
Total fixed maturities 2,096,426 1,991,767 1,996,823
---------- --------- ---------
Equity securities - available-for-sale:
Common stocks:
Public utilities 4,001 3,938 3,938
Banks, trusts and insurance companies 4,202 3,700 3,700
Industrial and miscellaneous 111,351 116,798 116,798
Nonredeemable preferred stocks 7,494 7,276 7,276
---------- --------- ---------
Total equity securities 127,048 131,712 131,712
---------- --------- ---------
Other investments:
Mortgage loans on real estate 163,099 XXXXXXXXX 163,099
Real estate:
Investment properties 4,685 XXXXXXXXX 4,685
Partnerships 12,551 XXXXXXXXX 12,551
Certificates of deposit and short-term securities 155,307 XXXXXXXXX 155,307
<PAGE>
Policy loans 101,899 XXXXXXXXX 101,899
Other long-term investments 1,117 XXXXXXXXX 1,117
---------- --------- ---------
Total other investments 438,658 XXXXXXXXX 438,658
---------- --------- ---------
Total investments $2,662,132 XXXXXXXXX 2,567,193
========== ========= =========
</TABLE>
At December 31, 1994 and 1993, the amortized cost, gross unrealized gains,
gross unrealized losses and estimated market values of marketable securities
are as follows:
<TABLE>
<CAPTION>
Amortized Gross Gross Estimated
cost unrealized unrealized market
or cost gains losses value
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
1994:
Held-to-maturity:
Corporate securities $ 90,615 110 5,166 85,559
---------- ---------- ---------- ---------
Total held-to-maturity 90,615 110 5,166 85,559
---------- ---------- ---------- ---------
Available-for-sale:
U.S. government 495,048 49 31,403 463,694
States and political subdivisions 519 3 24 498
Foreign government 44,818 562 1,886 43,494
Public utilities 79,170 1,154 322 80,002
Corporate securities 1,099,623 7,034 63,790 1,042,867
Mortgage backed securities 228,894 0 7,815 221,079
Collateralized mortgage obligations 57,739 0 3,165 54,574
---------- ---------- ---------- ---------
Total fixed maturities 2,005,811 8,802 108,405 1,906,208
Equity securities 127,048 18,556 13,892 131,712
---------- ---------- ---------- ---------
Total available-for-sale 2,132,859 27,358 122,297 2,037,920
---------- ---------- ---------- ---------
<PAGE>
Total $2,223,474 27,468 127,463 2,123,479
========== ========== ========== =========
1993:
Available-for-sale:
U.S. government $ 374,160 15,416 1,847 387,729
States and political subdivisions 519 14 0 533
Foreign government 161,190 9,109 62 170,237
Public utilities 108,955 11,694 0 120,649
Corporate securities 1,206,417 86,149 6,307 1,286,259
Mortgage backed securities 72,002 4,928 0 76,930
Collateralized mortgage obligations 62,441 389 1,114 61,716
---------- ---------- ---------- ---------
Total fixed maturities 1,985,684 127,699 9,330 2,104,053
Common stock 123,229 23,454 9,203 137,480
Preferred stock 6,169 689 136 6,722
---------- ---------- ---------- ---------
Total $2,115,082 151,842 18,669 2,248,255
========== ========== ========== =========
</TABLE>
The change in unrealized losses on available-for-sale securities was
$(214,245) and the change in unrealized losses on held-to-maturity securities
was $(8,783) for the year ended December 31, 1994.
The changes in unrealized gains (losses) from fixed maturities were $33,645
and $(17,852) for the years ended December 31, 1993 and 1992, respectively.
The changes in unrealized gains (losses) in equity investments, which include
common stocks and nonredeemable preferred stocks, and other investments were
$(9,587), $(2,468) and $(11,398) for the years ended December 31, 1994, 1993
and 1992, respectively.
The amortized cost and estimated market value of fixed maturities at December
31, 1994, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
<PAGE>
<TABLE>
<CAPTION>
Amortized Estimated
cost market value
---------- ------------
<S> <C> <C>
Held-to-maturity:
Due in one year or less $ 6,000 5,850
Due after one year through five years 11,000 11,110
Due after five years through ten years 67,615 63,185
Due after ten years 6,000 5,414
---------- ------------
Totals $ 90,615 85,559
========== ============
Available-for-sale:
Due in one year or less $ 42,793 43,097
Due after one year through five years 489,443 480,623
Due after five years through ten years 885,459 834,011
Due after ten years 359,222 327,399
Mortgage backed securities 228,894 221,078
---------- ------------
Totals $2,005,811 1,906,208
========== ============
</TABLE>
Proceeds from sales of investments in available-for-sale securities during
1994 were $791,659. Gross gains of $14,615 and gross losses of $17,327 were
realized on sales of available-for-sale securities in 1994, related taxes were
$0. Proceeds from redemptions of held-to-maturity securities during 1994 were
$4,342 with no gain or loss realized on the transactions. Proceeds from sales
of fixed maturity securities in 1993 and 1992 were $666,893 and $374,388,
respectively. Gross gains of $25,229 and $18,651 and gross losses of $2,102
and $54 were realized on sales of fixed maturities in 1993 and 1992,
respectively. Related taxes were $8,094, and $6,323 in 1993 and 1992,
respectively.
Net realized investment gains (losses) for the respective years ended December
31 are summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992
-------- ------- -------
<S> <C> <C> <C>
Fixed maturities, at amortized cost $ 0 23,127 18,597
Fixed maturities, at market (2,712) 0 0
Equity securities 2,745 5,876 4,129
Mortgage loans (1,667) (189) (1,069)
Real estate 2,067 (513) 1,091
Other 396 17 128
-------- ------- -------
Net gains before taxes 829 28,318 22,876
Tax expense on net realized gains 352 10,329 7,819
-------- ------- -------
Net gains after taxes $ 477 17,989 15,057
======== ======= =======
</TABLE>
The Company may enter into mortgage backed security reverse repurchase
transactions ("dollar rolls") with certain securities dealers. Under this
program, the Company sells certain securities for delivery in the current
month and simultaneously contracts with the same dealer to repurchase similar,
but not identical, securities on a specified future date. The Company gives
up the right to receive principal and interest on the securities sold. As of
December 31, 1994, mortgage backed securities underlying the agreements are
carried at market values of $58,174 and other liabilities includes $58,150 for
funds received under these agreements. Average balances outstanding during
1994 were $66,110 and weighted average interest rates were 6.5%. The
agreements at December 31, 1994 mature within 2 months. The agreements may be
rolled over into new agreements at maturity by mutual consent of the Company
and the dealers.
The Company participates in a securities lending program that is administered
by Allianz Investment Corporation. Under this program, the Company loans U.S.
Treasury Notes to qualified third parties. The Company obtains collateral for
the loan equal to 102 percent of the estimated market value and accrued
interest of the loaned securities and receives a portion of the interest
earned on the collateral. In addition, the Company maintains full ownership
rights to the securities loaned, including investment income and has the
ability to sell the securities while they are on loan with the consent of the
borrower. As of December 31, 1994, the estimated market value of the loaned
securities was $110,063, collateralized by investments in FNMA securities.
<PAGE>
The valuation allowances at December 31, 1994, 1993 and 1992 and the changes
in the allowance for the years then ended are summarized as follows:
<TABLE>
<CAPTION>
Beginning End
of year Additions Reductions of year
---------- --------- ---------- -------
<S> <C> <C> <C> <C>
December 31, 1994:
Mortgage loans $ 12,450 1,598 1,598 12,450
Investment in real estate 1,550 0 0 1,550
---------- --------- ---------- -------
Total valuation allowance $ 14,000 1,598 1,598 14,000
========== ========= ========== =======
December 31, 1993:
Mortgage loans $ 13,602 0 1,152 12,450
Investment in real estate 1,854 973 1,277 1,550
---------- --------- ---------- -------
Total valuation allowance $ 15,456 973 2,429 14,000
========== ========= ========== =======
December 31, 1992:
Mortgage loans $ 18,583 485 5,466 13,602
Investment in real estate 1,854 0 0 1,854
Other long-term investments 428 0 428 0
---------- --------- ---------- -------
Total valuation allowance $ 20,437 485 5,466 15,456
========== ========= ========== =======
</TABLE>
Major categories of net investment income for the respective years ended
December 31 are:
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992
-------- ------- -------
<S> <C> <C> <C>
Interest:
Fixed maturities, at amortized cost $141,611 142,814 130,239
Fixed maturities, at market 6,966 0 0
Mortgage loans 13,706 12,764 15,357
Policy loans 6,329 6,404 5,840
Short-term investments 3,012 4,159 6,586
Dividends:
Preferred stock 495 231 149
Common stock 2,673 2,496 2,055
Rental income on real estate 3,135 2,540 2,899
Interest on assets held by reinsurers 10,470 10,074 10,207
Other 577 1,131 5,485
-------- ------- -------
Total investment income 188,974 182,613 178,817
Investment expenses 7,683 7,782 8,835
-------- ------- -------
Net investment income $181,291 174,831 169,982
======== ======= =======
</TABLE>
(4) SUMMARY TABLE OF FAIR VALUE DISCLOSURES
<TABLE>
<CAPTION>
1994 1994 1993 1993
Carrying Fair Carrying Fair
Amount Value Amount Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Financial assets
- -------------------------------------------------------
Fixed maturities, at amortized cost:
U.S. Government $ 0 $ 0 $ 374,160 $ 387,729
States and political subdivisions 0 0 519 533
Foreign governments 0 0 161,190 170,237
Public utilities 0 0 108,955 120,649
<PAGE>
Corporate securities 90,615 85,559 1,206,417 1,286,259
Mortgage backed securities 0 0 72,002 76,930
Collateralized mortgage obligations 0 0 62,441 61,716
Fixed maturities, at market:
U.S. Government 463,694 463,694 0 0
States and political subdivisions 498 498 0 0
Foreign governments 43,494 43,494 0 0
Public utilities 80,002 80,002 0 0
Corporate securities 1,042,867 1,042,867 0 0
Mortgage backed securities 221,079 221,079 0 0
Collateralized mortgage obligations 54,574 54,574 0 0
Equity securities 131,712 131,712 143,649 144,202
Mortgage loans 163,099 162,903 127,196 133,872
Short-term investments 155,307 155,307 58,963 58,963
Policy loans 101,899 101,899 98,117 98,117
Other long-term investments 1,117 1,117 650 650
Receivables 111,874 111,874 123,914 123,914
Separate accounts assets 6,965,755 6,965,755 5,535,243 5,535,243
Financial liabilities
Investment contracts 2,753,304 2,319,872 1,921,650 1,605,135
Separate account liabilities 6,965,755 6,715,730 5,535,243 5,340,781
Financial instruments
Commitments to purchase mortgage backed securities 0 0 78,323 78,323
</TABLE>
See Note 1 "Summary of Significant Accounting Policies" for description of the
methods and significant assumptions used to estimate fair values.
(5) RECEIVABLES
Receivables at December 31 consist of the following:
<TABLE>
<CAPTION>
1994 1993
-------- -------
<S> <C> <C>
Premiums due $ 76,840 80,732
Agents balances 7,299 13,217
Related party receivables 1,516 3,893
<PAGE>
Reinsurance commission receivable 13,723 9,988
Scholarship enrollment fees 6,753 5,933
Due from administrators 2,674 6,373
Other 3,069 3,778
-------- -------
Total receivables $111,874 123,914
======== =======
</TABLE>
(6) ACCIDENT AND HEALTH CLAIMS RESERVES
Accident and health claims reserves are based on long-range projections
subject to uncertainty. Uncertainty regarding reserves of a given accident
year is gradually reduced as new information emerges each succeeding year,
allowing more reliable re-evaluations of such reserves. While management
believes that reserves as of December 31, 1994 are adequate, uncertainties in
the reserving process could cause such reserves to develop favorably or
unfavorably as new or additional information emerges. Any adjustments to
reserves are reflected in the operating results of the periods in which they
are made. Movements in reserves which are small relative to the amount of
such reserves could significantly impact future reported earnings of the
Company.
Activity in the accident and health claims reserves, exclusive of long-term
care, hospital indemnity and AIDS reserves of $11,149, $8,742 and $7,247 in
1994, 1993 and 1992, respectively, is summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- -------- -------
<S> <C> <C> <C>
Balance at January 1, net of reinsurance
recoverables of $86,551, $91,303 and $64,295 $170,123 168,872 156,414
Incurred related to:
Current year 230,995 226,815 225,329
Prior years (7,290) (8,432) 899
--------- -------- -------
Total incurred 223,705 218,383 226,228
--------- -------- -------
<PAGE>
Paid related to:
Current year 82,338 84,172 80,015
Prior years 126,462 132,960 133,755
--------- -------- -------
Total paid 208,800 217,132 213,770
--------- -------- -------
Balance at December 31, net of reinsurance
recoverables of $96,090, $86,551 and $91,303 $185,028 170,123 168,872
========= ======== =======
</TABLE>
There were no significant adjustments to accident and health claim liabilities
resulting from changes in estimates of benefits related to prior years.
(7) REINSURANCE
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by ceding
risks under excess coverage and coinsurance contracts. The Company retains a
maximum of $1 million coverage per individual life.
Reinsurance contracts do not relieve the Company from its obligations to
policyholders. Failure of reinsurers to honor their obligations could result
in losses to the Company; consequently, allowances are established for amounts
deemed uncollectible. The Company evaluates the financial condition of its
reinsurers and monitors concentrations of credit risk to minimize its exposure
to significant losses from reinsurer insolvencies.
Included in reinsurance receivables at December 31, 1994 are $867,605 and
$82,600 recoverable from insurers who, as of December 31, 1994, were both
rated A+ by Best's Insurance Reports. A contingent liability exists to the
extent that the Company's reinsurers are unable to meet their contractual
obligations. Management is of the opinion that no liability will accrue to the
Company with respect to this contingency.
Life insurance, annuities and accident and health business assumed from and
ceded to other companies is as follows:
<PAGE>
<TABLE>
<CAPTION>
Percentage
Assumed Ceded of amount
Gross from other to other Net assumed
Year ended amount companies companies amount to net
- ---------------------------------- ----------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
December 31, 1994:
Life insurance in force $39,789,859 24,411,513 6,893,030 57,308,342 42.6%
----------- ---------- --------- ---------- -----------
Premiums:
Life insurance and annuities 346,567 97,214 40,154 403,627 24.1%
Accident and health insurance 388,760 158,748 201,824 345,684 45.9%
----------- ---------- --------- ---------- -----------
Total premiums 735,327 255,962 241,978 749,311 34.2%
=========== ========== ========= ========== ===========
December 31, 1993:
Life insurance in force $39,784,564 21,861,833 6,297,943 55,348,454 39.5%
----------- ---------- --------- ---------- -----------
Premiums:
Life insurance and annuities 287,060 86,030 47,306 325,784 26.4%
Accident and health insurance 365,894 142,891 153,948 354,837 40.3%
----------- ---------- --------- ---------- -----------
Total premiums 652,954 228,921 201,254 680,621 33.6%
=========== ========== ========= ========== ===========
December 31, 1992:
Life insurance in force $42,573,771 22,113,198 5,978,013 58,708,956 37.7%
----------- ---------- --------- ---------- -----------
Premiums:
Life insurance and annuities 244,320 95,142 34,806 304,656 31.2%
Accident and health insurance 384,373 97,064 139,858 341,579 28.4%
----------- ---------- --------- ---------- -----------
Total premiums 628,693 192,206 174,664 646,235 29.7%
=========== ========== ========= ========== ===========
</TABLE>
<PAGE>
Of the amounts ceded to others, the Company ceded life insurance inforce of
$86,055, $30,841 and $17,189 in 1994, 1993 and 1992, respectively, and life
insurance premiums earned of $203, $98 and $4 in 1994, 1993 and 1992,
respectively, to its affiliate Allianz Aktiengesellshaft. In addition, the
Company ceded accident and health premiums earned of $12,256, $8,966 and
$1,348 in 1994, 1993 and 1992, respectively, to its affiliate Allianz
Versicherungs.
(8) INCOME TAXES
As discussed in note 1, the Company adopted SFAS No. 109 as of January 1, 1993
and the $30,881 cumulative effect of this change is reported in the 1993
Consolidated Statement of Income. The 1992 financial statements have not been
restated to apply the provisions of SFAS No. 109. In accordance with SFAS No.
109, all balances related to previous business combinations accounted for
under the purchase method, pursuant to APB Opinion 16, were written off with
the adoption of SFAS No. 109. The effect of this write-off, which is included
in the $30,881 above, was a net decrease in liabilities of $21,869.
INCOME TAX EXPENSE
Total income tax expense (benefit) for the years ended December 31, 1994, 1993
and 1992 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- -------- -------
<S> <C> <C> <C>
Income tax expense attributable to operations:
Current tax expenses $ 5,098 30,215 14,330
--------- -------- -------
Deferred tax (benefit) expense 16,053 (10,847) 10,702
Benefit of operating loss carryforwards 0 3,406 0
Adjustment of deferred tax assets and
liabilities for enacted change in tax rates 0 945 0
--------- -------- -------
Total deferred tax (benefit) expense 16,053 (6,496) 10,702
--------- -------- -------
Total income tax expense attributable to operations $ 21,151 23,719 25,032
Income tax effect on equity:
<PAGE>
Income tax allocated to cumulative effect of
adoption of SFAS No. 106 0 (2,064) 0
Income tax allocated to stockholder's equity:
Adoption of SFAS No. 115 40,312 0 0
Attributable to unrealized gains and losses for the year (79,201) 62 (5,432)
--------- -------- -------
Total income tax effect on equity $(17,738) 21,717 19,600
========= ======== =======
</TABLE>
COMPONENTS OF INCOME TAX EXPENSE
Income tax expense computed at the statutory rate of 35% in 1994 and 1993 and
34% in 1992, varies from tax expense reported in the Consolidated Statements
of Income for the respective years ended December 31 as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- ------- -------
<S> <C> <C> <C>
Income tax expense computed at the statutory rate $26,819 28,125 24,151
Dividends received deductions and tax-exempt interest (3,967) (2,189) (1,653)
Foreign tax (79) (1,324) 250
Interest on tax deficiency (716) 528 (91)
Impact of statutory rate change on deferred tax liability 0 945 0
Acquisition adjustments to future policy benefits 0 0 1,948
Utilization of net operating loss and alternative
minimum tax credits 0 (2,549) 0
Other (906) 183 427
-------- ------- -------
Income tax expense as reported $21,151 23,719 25,032
======== ======= =======
</TABLE>
COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES ON THE BALANCE SHEET
Tax effects of temporary differences giving rise to the significant components
of the net deferred tax liability at December 31, 1994 and 1993 are as
follows:
<PAGE>
<TABLE>
<CAPTION>
1994 1993
-------- -------
<S> <C> <C>
Deferred tax assets:
Provision for post retirement benefits $ 1,885 2,147
Allowance for uncollectible accounts 2,961 3,325
Policy reserves 188,602 166,508
Unrealized losses on investments in available for sale securities 35,584 0
-------- -------
Total deferred tax assets 229,032 171,980
-------- -------
Deferred tax liabilities:
Deferred acquisition costs 229,577 194,942
Net unrealized gain 0 3,305
Other 5,262 2,441
-------- -------
Total deferred tax liabilities 234,839 200,688
-------- -------
Net deferred tax liability $ 5,807 28,708
======== =======
</TABLE>
The Company has determined it is not necessary to establish a valuation
allowance for the deferred tax asset as it is more likely than not the
deferred tax asset will be realized principally through future reversals of
existing taxable temporary differences and future taxable income.
DEFERRED TAX EXPENSE UNDER PREVIOUS ACCOUNTING RULES
The components of deferred income tax expense for the year ended December 31,
1992 computed in accordance with APB Opinion 11 were as follows:
<TABLE>
<CAPTION>
<S> <C>
Acquisition costs and future policy benefits $ 651
Foreign income 1,628
<PAGE>
Investment income 1,330
Tax allocation adjustments 7,711
Other (618)
--------
Total deferred income tax expense $10,702
========
</TABLE>
As of December 31, 1994, the Company had no tax loss carryforwards or
alternative minimum tax credits.
The Company files a consolidated federal income tax return with AZOA and all
of its wholly owned subsidiaries. The consolidated tax allocation agreement
stipulates that each company participating in the return will bear its share
of the tax liability pursuant to United States Treasury Department
regulations. The Company and each of its insurance subsidiaries generally
will be paid for the tax benefit on their losses, and any other tax
attributes, to the extent they could have obtained a benefit against their
post-1990 separate return taxable income or tax. Income taxes paid by the
Company were $15,162, $28,465 and $15,511 in 1994, 1993 and 1992,
respectively. At December 31, 1994 the Company has a tax recoverable from
AZOA of $5,095 and a payable to Revenue Canada Taxation of $1,301. At
December 31, 1993 the Company had a tax payable to AZOA of $5,259 and a
recoverable from Revenue Canada Taxation of $2,798.
(9) RELATED PARTY TRANSACTIONS
In March 1994, AZOA contributed additional paid-in capital to the Company of
$5,190.
In June 1994, the Company authorized 200 million shares of preferred stock
with a par value of $1 per share. The preferred stock is issued in series
with the number of shares, redemption rights and dividend rate designated by
the Board of Directors for each series. Dividends are cumulative at a rate
reflective of prevailing market conditions at time of issue and are payable
semiannually. Dividend payments are restricted by provisions in State of
Minnesota statutes. The Company currently has 40 million shares issued and
outstanding. In June 1994, the Company issued 25 millions shares of Series A
preferred stock with a dividend rate of 6.4% to AZOA for $25,000. In December
1994, the Company issued 15 million shares of Series B preferred stock with a
dividend rate of 6.95% to AZOA for $15,000.
In December 1993, AZOA purchased 400 non-voting common shares in the Company's
subsidiary, Canadian American Financial Corporation, for $8,189. The
<PAGE>
acquisition of the shares reduced the Company's equity ownership to 71% but
the Company maintains its ownership interest in voting common shares of 100%.
As of December 31, 1994 and 1993, Allianz Real Estate (AzRE), a wholly owned
subsidiary of AZOA, owned 100% of the stock of certain corporations whose
assets include mortgage loans issued by the Company amounting to $12,100 and
$17,900, respectively. Included in the mortgage loans are properties
originally foreclosed upon by the Company of which the balances at December
31, 1994 and 1993 are $4,575 and $10,400, respectively.
Allianz Investment Corporation (AIC) manages the Company's investment
portfolio. The Company paid AIC $1,285, $1,207 and $1,505 in 1994, 1993 and
1992, respectively, for investment advisory fees. The Company's liability to
AIC was $0 and $102 at December 31, 1994 and 1993, respectively.
The Company shares a data center with affiliated insurance companies. Usage
charges paid to the data center by the Company were $4,228, $4,715 and $2,400
in 1994, 1993 and 1992, respectively. The Company's liability for data center
charges was $457 and $0 at December 31, 1994 and 1993, respectively.
The Company reimbursed AZOA $817, $339, and $285 in 1994, 1993 and 1992,
respectively, for certain administrative services performed. The Company's
liability to AZOA was $264, and $186 at December 31, 1994 and 1993,
respectively.
(10) EMPLOYEE BENEFIT PLANS
The Company participates in the Allianz Primary Retirement Plan (Primary
Retirement Plan), a defined contribution plan. The Company makes
contributions to a money purchase pension plan on behalf of eligible
participants. All employees, excluding agents, are eligible to participate in
the Primary Retirement Plan after two years of service. The contributions are
based on a percentage of the participant's salary with the participants being
100% vested upon eligibility. It is the Company's policy to fund the plan
costs as accrued. Total pension contributions were $918, $1,363 and $1,885 in
1994, 1993 and 1992, respectively.
The Company participates in the Allianz Asset Accumulation Plan (Allianz
Plan), a defined contribution plan sponsored by AZOA. Under the Allianz Plan
provisions, the Company will match from 50% to 100% of eligible employees'
contributions up to a maximum of 6% of a participant's compensation. In 1994,
the Company matched 50%. Any additional match for 1994 plan participants will
be determined during 1995. In 1993 and 1992, the total Company match was
100%. All employees, excluding agents, are eligible to participate after one
year of service and are fully vested in the Company's matching contribution
after three years of service. The Allianz Plan will accept participants'
pretax or after-tax contributions up to 15% of the participant's compensation.
<PAGE>
It is the Company's policy to fund the Allianz Plan costs as accrued. The
Company has accrued $1,266, $1,270 and $1,150 in 1994, 1993 and 1992,
respectively, towards planned contributions.
The Company sponsors an asset accumulation plan for field agents. Under the
Plan provisions, the Company will match 100% of eligible agents' contributions
up to a maximum of 3% of a participant's compensation. Agents are eligible to
participate after one year under a statutory career agent contract and are
fully vested in the Company's matching contribution after five years of
service. The Plan will accept participant's pretax or after tax contributions
up to 10% of participant's compensation. It is the Company's policy to fund
the Plan costs as accrued. Total Company contributions to the Plan were $386,
$319, and $439 in 1994, 1993 and 1992, respectively.
The Company adopted SFAS No. 106, effective January 1, 1993 which requires
benefits paid to retirees, other than pension benefits, to be accrued. The
transition obligation associated with this adoption was $4,006, which is net
of $2,064 tax benefit. The Company's current plan obligation is $5,386 and
the liability is included in "Other liabilities" in the accompanying balance
sheet.
(11) STATUTORY FINANCIAL DATA AND DIVIDEND RESTRICTIONS
Statutory accounting is directed toward insurer solvency and protection of
policyholders. Accordingly, certain items recorded in financial statements
prepared under GAAP are excluded in determining statutory policyholders'
surplus. These items include, among other, deferred acquisition costs,
furniture and fixtures, accident and health premiums receivable which are more
than 90 days past due, deferred taxes and undeclared dividends to
policyholders. Additionally, future life policy and annuity benefit reserves
are calculated using more conservative assumptions with no provisions for
withdrawals for statutory accounting.
The differences between stockholder's equity and net income reported in
accordance with statutory accounting practices and the accompanying
consolidated financial statements as of and for the year ended December 31,
1994 are as follows:
<PAGE>
<TABLE>
<CAPTION>
Stockholder's Net
equity income
--------------- ---------
<S> <C> <C>
Statutory basis $ 294,335 6,895
Adjustments:
Change in reserve basis (339,283) (109,473)
Deferred acquisition costs 798,442 132,090
Net deferred taxes (5,807) (16,053)
Statutory asset valuation reserve 59,169
Statutory interest maintenance reserve 16,305 (4,768)
Modified coinsurance reinsurance (51,947) 44,920
Unrealized losses on investments (99,408)
Nonadmitted assets 2,302
Other 5,337 1,864
--------------- ---------
As reported in the accompanying consolidated
financial statements $ 679,445 55,475
=============== =========
</TABLE>
The Company is required to meet minimum statutory capital and surplus
requirements. The statutory capital and surplus as of December 31, 1994 and
1993 was $294,335 and $245,712, respectively, which is in compliance with
these requirements. Statutory income for the years ended December 31, 1994,
1993 and 1992 was $6,895, $657 and $13,381. The maximum amount of dividends
which can be paid by Minnesota insurance companies to stockholders without
prior approval of the Commissioner of Commerce is subject to restrictions
relating to statutory earned surplus, also known as unassigned funds.
Unassigned funds shall be determined in accordance with the accounting
procedures and practices governing preparation of its annual statement, minus
25% of earned surplus attributable to unrealized capital gains. In accordance
with Minnesota Statutes, the Company may declare and pay from its surplus,
cash dividends of not more than the greater of 10% of its beginning of the
year statutory surplus in any year, or the net gain from operations of the
insurer, not including realized gains, for the 12-month period ending the 31st
day of the next preceding year. In 1994 the Company paid dividends on
preferred stock in the amount of $413 to AZOA. Dividends of $22,571 could be
paid in 1995 without prior approval of the Commissioner of Commerce.
<PAGE>
REGULATORY RISK BASED CAPITAL
An insurance enterprise's state of domicile imposes minimum risk-based capital
requirements that were developed by the National Association of Insurance
Commissioners (NAIC). The formulas for determining the amount of risk-based
capital specify various weighting factors that are applied to financial
balances or various levels of activity based on the perceived degree of risk.
Regulatory compliance is determined by a ratio of an enterprise's regulatory
total adjusted capital to its authorized control level risk-based capital, as
defined by the NAIC. Enterprises below specific triggerpoints or ratios are
classified within certain levels, each of which requires specified corrective
action. The levels and ratios are as follows:
<TABLE>
<CAPTION>
Ratio of total adjusted capital to
authorized control level risk-based
Regulatory Event capital (less than or equal to)
- ------------------------ ------------------------------------
<S> <C>
Company action level 2 (or 2.5 with negative trends)
Regulatory action level 1.5
Authorized control level 1
Mandatory control level 0.7
</TABLE>
The Company met the minimum risk-based capital requirements for the years
ended December 31, 1994 and 1993.
PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company is required to file annual statements with insurance regulatory
authorities which are prepared on an accounting basis prescribed or permitted
by such authorities. Prescribed statutory accounting practices include state
laws, regulations, and general administrative rules, as well as a variety of
publications of the NAIC. Permitted statutory accounting practices encompass
all accounting practices that are not prescribed; such practices differ from
state to state, may differ from company to company within a state, and may
change in the future. Furthermore, the NAIC has a project to codify statutory
accounting practices, the result of which is expected to constitute the only
source of "prescribed" statutory accounting practices. Accordingly, that
project, which is expected to be completed in 1995, will likely change the
definition of what comprises prescribed versus permitted statutory accounting
practices, and may result in changes to the accounting policies that insurance
enterprises use to prepare their statutory financial statements. The Company
<PAGE>
does not currently use permitted statutory accounting practices which could
have a significant impact on its statutory financial statements.
(12) COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are subject to claims and lawsuits that arise
in the ordinary course of business. In the opinion of management, the ultimate
resolution of such litigation will not have a material adverse effect on the
consolidated financial position of the Company.
The Company is contingently liable for possible future assessments under
regulatory requirements pertaining to insolvencies and impairments of
unaffiliated insurance companies. Provision has been made for assessments
currently received and assessments anticipated for known insolvencies.
In December 1994, the Company approved a plan to discontinue support of its
individual agency field force and to make strategic changes in administrative
operations. Costs expected to be incurred in 1995 for terminations and
restructuring as specific actions are determined and communicated have not yet
been determined.
In December 1994, the Company approved a plan to enter into a joint marketing
agreement and expanded reinsurance arrangement with an unrelated insurance
entity covering existing products of each company as well as new products. In
conjunction therewith, the Company will provide the other insurance entity
with $30,000 in exchange for a fifteen year convertible debenture, paying 5%
interest for the first five years with the interest rate reset annually
thereafter at the one-year LIBOR plus 1%.
(13) FOREIGN CURRENCY TRANSLATION
<TABLE>
<CAPTION>
1994 1993 1992
-------- ------- -------
<S> <C> <C> <C>
Beginning amount of cumulative translation adjustments $(2,708) (1,835) 1,058
-------- ------- -------
Ending amount of cumulative translation adjustments (3,787) (2,708) (1,835)
-------- ------- -------
Aggregate adjustment for the period resulting from translation adjustments (1,659) (1,746) (4,360)
<PAGE>
Amount of income tax benefit for period related to aggregate adjustment 580 873 1,467
-------- ------- -------
Net aggregate translation included in equity $(1,079) (873) (2,893)
======== ======= =======
Canadian foreign exchange rate at end of year 0.7129 0.7554 0.7865
</TABLE>
(14) ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED
In May 1993, the Financial Accounting Standards Board issued SFAS No. 114,
Accounting by Creditors for Impairment of a Loan, and SFAS No. 118, an
amendment to SFAS No. 114, which are effective for fiscal years beginning
after December 15, 1994. These Statements require impaired loans within the
scope of the Statements to be measured based on the present value of expected
future cash flows discounted at the loan's original effective interest rate,
the loan's observable market price, or the fair value of the collateral if the
loan is collateral dependent. The impact of adoption of these Statements on
the financial position of the Company has not been determined.
(15) SUPPLEMENTARY INSURANCE INFORMATION
The following table summarizes certain financial information by line of
business for 1994, 1993 and 1992:
<TABLE>
<CAPTION>
As of December 31 For the years ended
------------ ------------ -------- ---------- -------------- ---------- ---------- -------------
Future Benefits,
policy Other Premium claims Amortization
Deferred benefits, policy revenue losses, of deferred
policy losses, claims and and other Net and policy
acquisition claims and Unearned benefits contract investment settlement acquisition
costs loss expense premiums payable considerations income expenses costs (a)
------------ ------------ -------- ---------- -------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994:
Life $ 188,390 1,022,537 6,012 63,728 291,174 78,100 223,355 6,889
Accident and health 14,772 0 34,364 291,323 345,684 17,023 236,614 1,797
<PAGE>
Annuities 595,280 2,304,560 0 360 112,453 86,168 92,350 (140,776)
------------ ------------ -------- ---------- -------------- ---------- ---------- -------------
$ 798,442 3,327,097 40,376 355,411 749,311 181,291 552,319 (132,090)
============ ============ ======== ========== ============== ========== ========== =============
1993:
Life $ 195,279 989,309 7,389 57,763 263,465 80,422 216,911 (10,925)
Accident and health 16,569 0 34,181 264,583 354,837 15,735 241,466 804
Annuities 454,504 1,986,801 0 578 62,319 78,674 74,887 (243,113)
------------ ------------ -------- ---------- -------------- ---------- ---------- -------------
$ 666,352 2,976,110 41,570 322,924 680,621 174,831 533,264 (253,234)
============ ============ ======== ========== ============== ========== ========== =============
1992:
Life $ 184,693 936,238 7,766 56,921 275,702 88,295 222,103 (9,481)
Accident and health 17,365 0 36,915 265,105 341,579 14,602 228,320 294
Annuities 211,060 1,539,911 0 264 28,954 66,872 63,080 (106,192)
------------ ------------ -------- ---------- -------------- ---------- ---------- -------------
$ 413,118 2,476,149 44,681 322,290 646,235 169,769 513,503 (115,379)
============ ============ ======== ========== ============== ========== ========== =============
December 31
--------- ---------
Other Premiums
operating written
expenses (b)
--------- ---------
<S> <C> <C>
1994:
Life 114,767
Accident and health 121,645
Annuities 210,933
---------
447,345
=========
1993:
<PAGE>
Life 186,457
Accident and health 154,493
Annuities 191,783
---------
532,733
=========
1992:
Life 132,646
Accident and health 110,818
Annuities 139,321
---------
382,785
=========
</TABLE>
(a) Represents the net change in deferred policy acquisition cost reported in
the income statement.
(b) Premiums written are not applicable for life insurance companies.
<PAGE>
APPENDIX A
ILLUSTRATION OF POLICY VALUES
The following tables illustrate how Account Values, Cash Surrender Values and
death benefits of a Policy change with the investment experience of the
Sub-Accounts. The Account Values, Cash Surrender Values and death benefits in
the tables take into account all charges and deductions against the Policy.
These tables assume that the cost of insurance rates for the Policy are based
on the current and guaranteed rates appropriate to the class indicated. These
tables also assume that a $100,000 single premium is paid. For premiums of
other than $100,000, the tables shown can be adjusted (i.e. for a $10,000
premium, multiply the attached tables by $10,000 divided by 100,000 or for a
$200,000 premium, multiply the attached tables by 200,000 divided by 100,000).
These tables all assume that the Insured is in the most favorable risk
status, i.e., Non-Smoker. For Insureds who are classified as Smoker or less
favorable risk status, the cost of insurance will be greater and thus Policy
values will be less given the same assumed hypothetical gross annual
investment rates of return.
Gross investment returns of 0%, 6% and 12% are assumed to be level for all
years shown. The values would be different if the rates of return averaged
0%, 6% and 12% over the period of years but fluctuated above and below those
averages during individual years.
The values shown reflect the fact that the net investment return of the
Sub-Accounts is lower than the gross investment return on the assets held in
the Funds because of the charges levied against the Sub-Accounts. The daily
investment advisory fee is assumed to be equivalent to an annual rate of .50%
of the net assets of the Fund of the Trust (which is the average of the
investment advisory fees assessed the Trust in 1994 weighted by Sub-Account
value as of 12/31/94). The values also assume that each Fund of the Trust
will incur expenses annually which are assumed to be .05% of the average net
assets of the Fund. This is the average in 1994, weighted by Sub-Account
value as of 12/31/94. The Sub-Accounts will be assessed for mortality and
expense risks at an annual rate of 0.60% of the average daily net assets of
the Sub-Account and for administrative expenses at an annual rate of 0.15% of
the average daily net assets of the Sub-Account. After taking these expenses
and charges into consideration, the illustrated gross annual investment rates
of 0%, 6% and 12% are equivalent to net rates of -1.30%, 4.63% and 10.55%.
The Company deducts the cost of insurance for a Policy Processing Period from
<PAGE>
the Account Values. The cost of insurance rate is based on the sex (where
permitted by state law), Attained Age and rate class of the Insured.
Upon request, the Company will provide a comparable illustration based upon
the Attained Age, sex (where permitted by state law) and rate class of the
proposed Insured and for the face amount or premium requested.
<PAGE>
Allianz Life Insurance Company of North America Designed For: Jane Doe
Minneapolis, Minnesota Prepared By: Any Representative
FRANKLIN VALUEMARK
SINGLE PREMIUM VARIABLE LIFE INSURANCE
FEMALE NON-SMOKER SIMPLIFIED ISSUE
Initial Face Amount: $448,956 Single Premium: $100,000
Issue age: 35 State: MN
Summary of end of year values assuming 0.00% gross rate of return.
This illustration is based on CURRENT mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 97,606 91,306 448,956
2 0 110,250 0 95,215 89,615 448,956
3 0 115,762 0 92,820 87,920 448,956
4 0 121,550 0 90,418 86,218 448,956
5 0 127,628 0 88,007 84,507 448,956
10 0 162,889 0 75,655 75,655 448,956
15 0 207,892 0 66,007 66,007 448,956
20 0 265,329 0 54,648 54,648 448,956
25 0 338,635 0 40,565 40,565 448,956
30 0 432,194 0 21,751 21,751 448,956
Summary of end of year values assuming 0.00% gross rate of return.
This illustration is based on GUARANTEED mortality costs>>
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 97,472 91,172 448,956
2 0 110,250 0 94,938 89,338 448,956
3 0 115,762 0 92,391 87,491 448,956
4 0 121,550 0 89,827 85,627 448,956
5 0 127,628 0 87,242 83,742 448,956
10 0 162,889 0 73,787 73,787 448,956
15 0 207,892 0 62,582 62,582 448,956
20 0 265,329 0 48,926 48,926 448,956
25 0 338,635 0 31,396 31,396 448,956
30 0 432,194 0 7,132 7,132 448,956
<PAGE>
IT IS EMPHASIZED THAT THE ASSUMED INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND RATES OF RETURN FOR THE FUNDS. THE
DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE
COMPANY OR THE TRUST THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
Allianz Life Insurance Company of North America Designed For: Jane Doe
Minneapolis, Minnesota Prepared By: Any Representative
FRANKLIN VALUEMARK
SINGLE PREMIUM VARIABLE LIFE INSURANCE
FEMALE NON-SMOKER SIMPLIFIED ISSUE
Initial Face Amount: $448,956 Single Premium: $100,000
Issue age: 35 State: MN
Summary of end of year values assuming 6.00% gross rate of return.
This illustration is based on CURRENT mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 103,509 97,209 469,275
2 0 110,250 0 107,152 101,552 473,997
3 0 115,762 0 110,930 106,030 478,555
4 0 121,550 0 114,849 110,649 481,881
5 0 127,628 0 118,908 115,408 487,290
10 0 162,889 0 141,449 141,449 507,342
15 0 207,892 0 172,150 172,150 526,714
20 0 265,329 0 208,679 208,679 547,139
25 0 338,635 0 251,935 251,935 569,120
30 0 432,194 0 302,782 302,782 591,875
Summary of end of year values assuming 6.00% gross rate of return.
This illustration is based on GUARANTEED mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 103,369 97,069 468,598
2 0 110,250 0 106,856 101,256 472,616
3 0 115,762 0 110,462 105,562 476,440
4 0 121,550 0 114,189 109,989 479,007
5 0 127,628 0 118,036 114,536 483,609
10 0 162,889 0 139,141 139,141 499,062
15 0 207,892 0 167,658 167,658 512,970
20 0 265,329 0 200,946 200,946 526,863
25 0 338,635 0 239,543 239,543 541,127
30 0 432,194 0 283,832 283,832 554,833
<PAGE>
IT IS EMPHASIZED THAT THE ASSUMED INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND RATES OF RETURN FOR THE FUNDS. THE
DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE
COMPANY OR THE TRUST THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
Allianz Life Insurance Company of North America Designed For: Jane Doe
Minneapolis, Minnesota Prepared By: Any Representative
FRANKLIN VALUEMARK
SINGLE PREMIUM VARIABLE LIFE INSURANCE
FEMALE NON-SMOKER SIMPLIFIED ISSUE
Initial Face Amount: $448,956 Single Premium: $100,000
Issue age: 35 State: MN
Summary of end of year values assuming 12.00% gross rate of return.
This illustration is based on CURRENT mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ --------- --------- ---------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 109,407 103,107 497,746
2 0 110,250 0 119,748 114,148 532,787
3 0 115,762 0 131,110 126,210 569,632
4 0 121,550 0 143,593 139,393 607,066
5 0 127,628 0 157,303 153,803 649,406
10 0 162,889 0 248,738 248,738 892,159
15 0 207,892 0 398,670 398,670 1,219,780
20 0 265,329 0 636,431 636,431 1,668,664
25 0 338,635 0 1,011,869 1,011,869 2,285,811
30 0 432,194 0 1,601,516 1,601,516 3,130,627
Summary of end of year values assuming 12.00% gross rate of return.
This illustration is based on GUARANTEED mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ --------- --------- ---------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 109,258 102,958 497,029
2 0 110,250 0 119,416 113,816 531,239
3 0 115,762 0 130,554 125,654 567,123
4 0 121,550 0 142,765 138,565 603,460
5 0 127,628 0 156,146 152,646 644,519
10 0 162,889 0 244,691 244,691 877,643
15 0 207,892 0 388,287 388,287 1,188,011
20 0 265,329 0 612,878 612,878 1,606,910
25 0 338,635 0 962,146 962,146 2,173,489
30 0 432,194 0 1,501,362 1,501,362 2,934,848
<PAGE>
IT IS EMPHASIZED THAT THE ASSUMED INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND RATES OF RETURN FOR THE FUNDS. THE
DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE
COMPANY OR THE TRUST THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
Allianz Life Insurance Company of North America Designed For: Jane Doe
Minneapolis, Minnesota Prepared By: Any Representative
FRANKLIN VALUEMARK
SINGLE PREMIUM VARIABLE LIFE INSURANCE
FEMALE NON-SMOKER JET ISSUE
Initial Face Amount: $275,773 Single Premium: $100,000
Issue age: 50 State: MN
Summary of end of year values assuming 0.00% gross rate of return.
This illustration is based on CURRENT mortality costs>>
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 97,334 91,034 275,773
2 0 110,250 0 94,642 89,042 275,773
3 0 115,762 0 91,918 87,018 275,773
4 0 121,550 0 89,152 84,952 275,773
5 0 127,628 0 86,343 82,843 275,773
10 0 162,889 0 71,523 71,523 275,773
15 0 207,892 0 57,699 57,699 275,773
20 0 265,329 0 37,880 37,880 275,773
25 0 338,635 0 6,044 6,044 275,773
30 0 432,194 0 0 0 275,773
Summary of end of year values assuming 0.00% gross rate of return.
This illustration is based on GUARANTEED mortality costs>>
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 96,816 90,516 275,773
2 0 110,250 0 93,565 87,965 275,773
3 0 115,762 0 90,231 85,331 275,773
4 0 121,550 0 86,800 82,600 275,773
5 0 127,628 0 83,266 79,766 275,773
10 0 162,889 0 63,792 63,792 275,773
15 0 207,892 0 42,450 42,450 275,773
20 0 265,329 0 8,484 8,484 275,773
25 0 338,635 0 0 0 275,773
30 0 432,194 0 0 0 275,773
<PAGE>
IT IS EMPHASIZED THAT THE ASSUMED INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND RATES OF RETURN FOR THE FUNDS. THE
DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE
COMPANY OR THE TRUST THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
Allianz Life Insurance Company of North America Designed For: Jane Doe
Minneapolis, Minnesota Prepared By: Any Representative
FRANKLIN VALUEMARK
SINGLE PREMIUM VARIABLE LIFE INSURANCE
FEMALE NON-SMOKER JET ISSUE
Initial Face Amount: $275,773 Single Premium: $100,000
Issue age: 50 State: MN
Summary of end of year values assuming 6.00% gross rate of return.
This illustration is based on CURRENT mortality costs>>
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 103,226 96,926 287,415
2 0 110,250 0 106,553 100,953 290,184
3 0 115,762 0 109,978 105,078 292,849
4 0 121,550 0 113,502 109,302 295,424
5 0 127,628 0 117,130 113,630 297,929
10 0 162,889 0 137,024 137,024 309,537
15 0 207,892 0 163,747 163,747 320,091
20 0 265,329 0 193,729 193,729 331,199
25 0 338,635 0 226,702 226,702 342,413
30 0 432,194 0 260,412 260,412 354,158
Summary of end of year values assuming 6.00% gross rate of return.
This illustration is based on GUARANTEED mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 102,690 96,390 285,824
2 0 110,250 0 105,425 99,825 286,942
3 0 115,762 0 108,199 103,299 287,889
4 0 121,550 0 111,005 106,805 288,674
5 0 127,628 0 113,849 110,349 289,324
10 0 162,889 0 128,769 128,769 290,890
15 0 207,892 0 148,304 148,304 289,903
20 0 265,329 0 167,799 167,799 286,870
25 0 338,635 0 186,211 186,211 281,256
30 0 432,194 0 199,589 199,589 275,773
<PAGE>
IT IS EMPHASIZED THAT THE ASSUMED INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND RATES OF RETURN FOR THE FUNDS. THE
DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE
COMPANY OR THE TRUST THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
Allianz Life Insurance Company of North America Designed For: Jane Doe
Minneapolis, Minnesota Prepared By: Any Representative
FRANKLIN VALUEMARK
SINGLE PREMIUM VARIABLE LIFE INSURANCE
FEMALE NON-SMOKER JET ISSUE
Initial Face Amount: $275,773 Single Premium: $100,000
Issue age: 50 State: MN
Summary of end of year values assuming 12.00% gross rate of return.
This illustration is based on CURRENT mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ --------- --------- ---------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 109,107 102,807 304,854
2 0 110,250 0 119,076 113,476 326,180
3 0 115,762 0 129,980 125,080 348,594
4 0 121,550 0 141,904 137,704 372,188
5 0 127,628 0 154,944 151,444 397,072
10 0 162,889 0 240,981 240,981 544,375
15 0 207,892 0 379,249 379,249 741,352
20 0 265,329 0 590,896 590,896 1,010,196
25 0 338,635 0 910,620 910,620 1,375,409
30 0 432,194 0 1,377,553 1,377,553 1,873,458
Summary of end of year values assuming 12.00% gross rate of return.
This illustration is based on GUARANTEED mortality costs>>
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ --------- --------- ---------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 108,539 102,239 303,169
2 0 110,250 0 117,811 112,211 322,546
3 0 115,762 0 127,869 122,969 342,710
4 0 121,550 0 138,770 134,570 363,718
5 0 127,628 0 150,588 147,088 385,651
10 0 162,889 0 226,509 226,509 511,683
15 0 207,892 0 343,551 343,551 671,569
20 0 265,329 0 511,910 511,910 875,161
25 0 338,635 0 748,126 748,126 1,129,977
30 0 432,194 0 1,058,031 1,058,031 1,438,912
<PAGE>
IT IS EMPHASIZED THAT THE ASSUMED INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND RATES OF RETURN FOR THE FUNDS. THE
DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE
COMPANY OR THE TRUST THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
Allianz Life Insurance Company of North America Designed For: John Doe
Minneapolis, Minnesota Prepared By: Any Representative
FRANKLIN VALUEMARK
SINGLE PREMIUM VARIABLE LIFE INSURANCE
MALE NON-SMOKER SIMPLIFIED ISSUE
Initial Face Amount: $400,205 Single Premium: $100,000
Issue age: 35 State: MN
Summary of end of year values assuming 0.00% gross rate of return.
This illustration is based on CURRENT mortality costs>>
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 97,610 91,310 400,205
2 0 110,250 0 95,229 89,629 400,205
3 0 115,762 0 92,848 87,948 400,205
4 0 121,550 0 90,465 86,265 400,205
5 0 127,628 0 88,077 84,577 400,205
10 0 162,889 0 75,893 75,893 400,205
15 0 207,892 0 66,246 66,246 400,205
20 0 265,329 0 54,372 54,372 400,205
25 0 338,635 0 37,988 37,988 400,205
30 0 432,194 0 13,120 13,120 400,205
Summary of end of year values assuming 0.00% gross rate of return.
This illustration is based on GUARANTEED mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 97,478 91,178 400,205
2 0 110,250 0 94,957 89,357 400,205
3 0 115,762 0 92,429 87,529 400,205
4 0 121,550 0 89,889 85,689 400,205
5 0 127,628 0 87,334 83,834 400,205
10 0 162,889 0 74,103 74,103 400,205
15 0 207,892 0 62,896 62,896 400,205
20 0 265,329 0 48,527 48,527 400,205
25 0 338,635 0 27,806 27,806 400,205
30 0 432,194 0 0 0 400,205
<PAGE>
IT IS EMPHASIZED THAT THE ASSUMED INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND RATES OF RETURN FOR THE FUNDS. THE
DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE
COMPANY OR THE TRUST THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
Allianz Life Insurance Company of North America Designed For: John Doe
Minneapolis, Minnesota Prepared By: Any Representative
FRANKLIN VALUEMARK
SINGLE PREMIUM VARIABLE LIFE INSURANCE
MALE NON-SMOKER SIMPLIFIED ISSUE
Initial Face Amount: $400,205 Single Premium: $100,000
Issue age: 35 State: MN
Summary of end of year values assuming 6.00% gross rate of return.
This illustration is based on CURRENT mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 103,514 97,214 418,337
2 0 110,250 0 107,169 101,569 422,565
3 0 115,762 0 110,965 106,065 426,631
4 0 121,550 0 114,906 110,706 430,573
5 0 127,628 0 118,998 115,498 434,401
10 0 162,889 0 141,823 141,823 452,080
15 0 207,892 0 172,833 172,833 469,037
20 0 265,329 0 209,480 209,480 486,923
25 0 338,635 0 251,843 251,843 506,207
30 0 432,194 0 299,751 299,751 527,089
Summary of end of year values assuming 6.00% gross rate of return.
This illustration is based on GUARANTEED mortality costs>>
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 103,375 97,075 417,740
2 0 110,250 0 106,878 101,278 421,357
3 0 115,762 0 110,507 105,607 424,791
4 0 121,550 0 114,265 110,065 428,079
5 0 127,628 0 118,155 114,655 431,231
10 0 162,889 0 139,631 139,631 445,093
15 0 207,892 0 168,546 168,546 457,402
20 0 265,329 0 201,976 201,976 469,479
25 0 338,635 0 239,426 239,426 481,248
30 0 432,194 0 280,048 280,048 492,441
<PAGE>
IT IS EMPHASIZED THAT THE ASSUMED INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND RATES OF RETURN FOR THE FUNDS. THE
DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE
COMPANY OR THE TRUST THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
Allianz Life Insurance Company of North America Designed For: John Doe
Minneapolis, Minnesota Prepared By: Any Representative
FRANKLIN VALUEMARK
SINGLE PREMIUM VARIABLE LIFE INSURANCE
MALE NON-SMOKER SIMPLIFIED ISSUE
Initial Face Amount: $400,205 Single Premium: $100,000
Issue age: 35 State: MN
Summary of end of year values assuming 12.00% gross rate of return.
This illustration is based on CURRENT mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ --------- --------- ---------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 109,412 103,112 443,718
2 0 110,250 0 119,766 114,166 474,975
3 0 115,762 0 131,150 126,250 507,826
4 0 121,550 0 143,665 139,465 542,428
5 0 127,628 0 157,422 153,922 578,920
10 0 162,889 0 249,393 249,393 794,978
15 0 207,892 0 400,251 400,251 1,086,205
20 0 265,329 0 638,871 638,871 1,485,010
25 0 338,635 0 1,011,496 1,011,496 2,033,116
30 0 432,194 0 1,585,480 1,585,480 2,787,939
Summary of end of year values assuming 12.00% gross rate of return.
This illustration is based on GUARANTEED mortality costs>>
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ --------- --------- ---------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 109,265 102,965 443,086
2 0 110,250 0 119,441 113,841 473,621
3 0 115,762 0 130,608 125,708 505,643
4 0 121,550 0 142,861 138,661 539,299
5 0 127,628 0 156,303 152,803 574,712
10 0 162,889 0 245,551 245,551 782,730
15 0 207,892 0 390,342 390,342 1,059,313
20 0 265,329 0 616,013 616,013 1,431,880
25 0 338,635 0 961,672 961,672 1,932,969
30 0 432,194 0 1,481,333 1,481,333 2,604,806
<PAGE>
IT IS EMPHASIZED THAT THE ASSUMED INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND RATES OF RETURN FOR THE FUNDS. THE
DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE
COMPANY OR THE TRUST THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
Allianz Life Insurance Company of North America Designed For: John Doe
Minneapolis, Minnesota Prepared By: Any Representative
FRANKLIN VALUEMARK
SINGLE PREMIUM VARIABLE LIFE INSURANCE
MALE NON-SMOKER JET ISSUE
Initial Face Amount: $244,544 Single Premium: $100,000
Issue age: 50 State: MN
Summary of end of year values assuming 0.00% gross rate of return.
This illustration is based on CURRENT mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 97,346 91,046 244,544
2 0 110,250 0 94,657 89,057 244,544
3 0 115,762 0 91,921 87,021 244,544
4 0 121,550 0 89,127 84,927 244,544
5 0 127,628 0 86,263 82,763 244,544
10 0 162,889 0 70,444 70,444 244,544
15 0 207,892 0 53,587 53,587 244,544
20 0 265,329 0 27,157 27,157 244,544
25 0 338,635 0 0 0 244,544
30 0 432,194 0 0 0 244,544
Summary of end of year values assuming 0.00% gross rate of return.
This illustration is based on GUARANTEED mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 96,838 90,538 244,544
2 0 110,250 0 93,590 87,990 244,544
3 0 115,762 0 90,234 85,334 244,544
4 0 121,550 0 86,749 82,549 244,544
5 0 127,628 0 83,111 79,611 244,544
10 0 162,889 0 61,732 61,732 244,544
15 0 207,892 0 34,292 34,292 244,544
20 0 265,329 0 0 0 244,544
25 0 338,635 0 0 0 244,544
30 0 432,194 0 0 0 244,544
<PAGE>
IT IS EMPHASIZED THAT THE ASSUMED INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND RATES OF RETURN FOR THE FUNDS. THE
DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE
COMPANY OR THE TRUST THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
Allianz Life Insurance Company of North America Designed For: John Doe
Minneapolis, Minnesota Prepared By: Any Representative
FRANKLIN VALUEMARK
SINGLE PREMIUM VARIABLE LIFE INSURANCE
MALE NON-SMOKER JET ISSUE
Initial Face Amount: $244,544 Single Premium: $100,000
Issue age: 50 State: MN
Summary of end of year values assuming 6.00% gross rate of return.
This illustration is based on CURRENT mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 103,240 96,940 254,904
2 0 110,250 0 106,574 100,974 257,328
3 0 115,762 0 110,000 105,100 259,663
4 0 121,550 0 113,514 109,314 261,910
5 0 127,628 0 117,113 113,613 264,087
10 0 162,889 0 136,354 136,354 274,073
15 0 207,892 0 161,165 161,165 283,397
20 0 265,329 0 187,814 187,814 293,271
25 0 338,635 0 215,406 215,406 303,540
30 0 432,194 0 242,548 242,548 314,740
Summary of end of year values assuming 6.00% gross rate of return.
This illustration is based on GUARANTEED mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- -------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 102,714 96,414 253,521
2 0 110,250 0 105,463 99,863 254,495
3 0 115,762 0 108,237 103,337 255,306
4 0 121,550 0 111,025 106,825 255,947
5 0 127,628 0 113,820 110,320 256,430
10 0 162,889 0 127,659 127,659 256,595
15 0 207,892 0 144,195 144,195 253,555
20 0 265,329 0 158,844 158,844 248,035
25 0 338,635 0 169,531 169,531 244,544
30 0 432,194 0 167,239 167,239 244,544
<PAGE>
IT IS EMPHASIZED THAT THE ASSUMED INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND RATES OF RETURN FOR THE FUNDS. THE
DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE
COMPANY OR THE TRUST THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
Allianz Life Insurance Company of North America Designed For: John Doe
Minneapolis, Minnesota Prepared By: Any Representative
FRANKLIN VALUEMARK
SINGLE PREMIUM VARIABLE LIFE INSURANCE
MALE NON-SMOKER JET ISSUE
Initial Face Amount: $244,544 Single Premium: $100,000
Issue age: 50 State: MN
Summary of end of year values assuming 12.00% gross rate of return.
This illustration is based on CURRENT mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ --------- --------- ---------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 109,122 102,822 270,370
2 0 110,250 0 119,100 113,500 289,249
3 0 115,762 0 130,006 125,106 309,090
4 0 121,550 0 141,918 137,718 329,966
5 0 127,628 0 154,921 151,421 351,967
10 0 162,889 0 239,803 239,803 482,006
15 0 207,892 0 373,270 373,270 656,366
20 0 265,329 0 572,854 572,854 894,511
25 0 338,635 0 865,247 865,247 1,219,262
30 0 432,194 0 1,283,050 1,283,050 1,664,938
Summary of end of year values assuming 12.00% gross rate of return.
This illustration is based on GUARANTEED mortality costs
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5% LOAN VALUE VALUE BENEFIT
- ------ ------- -------- ------ ------- --------- ---------
[S] [C] [C] [C] [C] [C] [C]
1 100,000 105,000 0 108,565 102,265 268,905
2 0 110,250 0 117,854 112,254 286,073
3 0 115,762 0 127,914 123,014 303,922
4 0 121,550 0 138,795 134,595 322,483
5 0 127,628 0 150,549 147,049 341,805
10 0 162,889 0 224,556 224,556 451,359
15 0 207,892 0 334,032 334,032 587,369
20 0 265,329 0 484,590 484,590 756,687
25 0 338,635 0 683,444 683,444 963,075
30 0 432,194 0 932,983 932,983 1,210,677
<PAGE>
IT IS EMPHASIZED THAT THE ASSUMED INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND RATES OF RETURN FOR THE FUNDS. THE
DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE BY THE
COMPANY OR THE TRUST THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
APPENDIX B
TABLE OF NET SINGLE PREMIUM FACTORS
<TABLE>
<CAPTION>
Attained Factors Factors Attained Factors Factors Attained Factors Factors
Age Male* Female* Age Male* Female* Age Male* Female*
- -------- -------- -------- -------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 12.62467 14.69383 35 4.30327 4.82748 70 1.52757 1.66607
1 12.50646 14.48692 36 4.16038 4.66752 71 1.49533 1.62425
2 12.16372 14.08281 37 4.02237 4.51338 72 1.46481 1.58427
3 11.82118 13.67851 38 3.88934 4.36506 73 1.43608 1.54629
4 11.48209 13.27838 39 3.76113 4.22232 74 1.40915 1.51041
5 11.14463 12.88451 40 3.63755 4.08498 75 1.38398 1.47664
6 10.80849 12.49577 41 3.51861 3.95303 76 1.36040 1.44488
7 10.47450 12.11263 42 3.40410 3.82624 77 1.33828 1.41498
8 10.14347 11.73553 43 3.29382 3.70425 78 1.31741 1.38673
9 9.81784 11.36605 44 3.18765 3.58674 79 1.29764 1.35999
10 9.49960 11.00434 45 3.08543 3.47344 80 1.27888 1.33468
11 9.19034 10.65053 46 2.98710 3.36425 81 1.26112 1.31079
12 8.89337 10.30762 47 2.89249 3.25897 82 1.24440 1.28836
13 8.61119 9.97611 48 2.80143 3.15749 83 1.22879 1.26746
14 8.34507 9.65635 49 2.71381 3.05962 84 1.21434 1.24807
15 8.09470 9.34852 50 2.62950 2.96530 85 1.20100 1.22998
16 7.85593 9.04683 51 2.54845 2.87445 86 1.18868 1.21335
17 7.62788 8.75962 52 2.47062 2.78696 87 1.17723 1.19789
18 7.40829 8.48131 53 2.39595 2.70281 88 1.16647 1.18342
19 7.19529 8.21157 54 2.32443 2.62191 89 1.15617 1.16975
20 6.98773 7.95007 55 2.25594 2.54404 90 1.14612 1.15668
21 6.78427 7.69599 56 2.19040 2.46904 91 1.13609 1.14399
22 6.58380 7.44915 57 2.12767 2.39670 92 1.12581 1.13142
23 6.38615 7.20889 58 2.06757 2.32674 93 1.11497 1.11871
24 6.19122 6.97553 59 2.01001 2.25900 94 1.10328 1.10559
25 5.99922 6.74889 60 1.95494 2.19345 95 1.09064 1.09192
26 5.81010 6.52878 61 1.90230 2.13013 96 1.07717 1.07777
27 5.62462 6.31538 62 1.85199 2.06916 97 1.06337 1.06359
28 5.44313 6.10815 63 1.80404 2.01067 98 1.05029 1.05034
29 5.26593 5.90723 64 1.75842 1.95479 99 1.04000 1.04000
30 5.09324 5.71269 65 1.71504 1.90144
31 4.92522 5.52403 66 1.67380 1.85048
32 4.76215 5.34132 67 1.63456 1.80168
33 4.60408 5.16433 68 1.59713 1.75478
34 4.45114 4.99306 69 1.56150 1.70960
</TABLE>
*In states requiring unisex rates, male rates should apply.
<PAGE>
