Registration Nos. 33-15464
811-4965
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 16
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUST
REGISTERED ON FORM N-8B-2
ALLIANZ LIFE VARIABLE ACCOUNT A
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(Exact Name of Trust)
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
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(Name of Depositor)
1750 Hennepin Avenue, Minneapolis, MN 55403-2195
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Name and Address of Agent for Service
Michael T. Westermeyer
Allianz Life Insurance Company of North America
1750 Hennepin Avenue
Minneapolis, MN 55403-2195
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
Title and amount of securities being registered:
Individual Single Premium Variable Life Insurance Policies.
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on November 8, 1996 pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
_____ on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
[ ] This Post-Effective Amendment designates a new effective date for
a previously filed post-effective amendment.
Registrant has declared that it has registered an indefinite number or amount of
securities in accordance with Rule 24f-2 under the Investment Company Act of
1940. Registrant filed a Rule 24f-2 Notice for the most recent fiscal year on or
about February 28, 1996.
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
<TABLE>
<CAPTION>
<S> <C>
N-8B-2 Item Caption in Prospectus
1 The Company, The Variable Account
2 The Company
3 Not Applicable
4 Distribution of the Policy
5 The Variable Account
6(a) Not Applicable
(b) Not Applicable
9 Not Applicable
10 Premium Payments
11 Franklin Valuemark Funds
12 Franklin Valuemark Funds
13 Deductions and Charges
14 Premium Payments
15 The Variable Account
16 Franklin Valuemark Funds
17 Account Value, Cash Surrender
Value and Transfer Rights
18 Premium payments
19 Not Applicable
20 Not Applicable
21 Not Applicable
22 Not Applicable
23 Not Applicable
24 Not Applicable
25 The Company
</TABLE>
CROSS REFERENCE TO ITEMS REQUIRED (cont'd)
BY FORM N-8B-2
<TABLE>
<CAPTION>
<S> <C>
N-8B-2 Item Caption in Prospectus
26 The Company
27 The Company
28 The Company
29 The Company
30 The Company
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 The Company
37 Not Applicable
38 Distribution of the Policy
39 Distribution of the Policy
40 Not Applicable
41(a) Distribution of the Policy
42 Not Applicable
43 Not Applicable
44 Premium Payments
45 Not Applicable
46 Account Value, Cash Surrender
Value and Transfer Rights
47 Not Applicable
48 Not Applicable
</TABLE>
CROSS REFERENCE TO ITEMS REQUIRED (cont'd)
BY FORM N-8B-2
<TABLE>
<CAPTION>
<S> <C>
N-8B-2 Item Caption in Prospectus
49 Not Applicable
50 Not Applicable
51 The Company
52 Franklin Valuemark Funds
53 Tax Status
54 Financial Statements
55 Not Applicable
</TABLE>
SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
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
Minneapolis, MN 55403 (800) 624-0197
(800) 542-5427
This Prospectus describes a single premium variable life insurance policy
("Policy" or "Valuemark Life") offered by Allianz Life Insurance Company of
North America ("Company"). 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. The Variable Account
invests in shares of Franklin Valuemark Funds (the "Trust"). The Trust is a
series fund with twenty-three Funds: the Money Market Fund, the High Income
Fund, the Templeton Global Income Securities Fund, The U. S. Government
Securities Fund, the Zero Coupon Funds-2000, 2005, and 2010, the Growth and
Income Fund, the Income Securities Fund, the Mutual Shares Securities Fund, the
Real Estate Securities Fund, the Rising Dividends Fund, the Templeton Global
Asset Allocation Fund, the Utility Equity Fund, the Capital Growth Fund, the
Mutual Discovery Securities 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, the Templeton International Smaller
Companies Fund and the Templeton Pacific Growth Fund. Prior to May 1, 1996, the
Templeton Global Income Securities Fund was known as the Global Income Fund. See
"Highlights" and "Tax Status" for a discussion of owner control of the
underlying investments in a variable life policy. IN CALIFORNIA, THE MUTUAL
SHARES SECURITIES FUND AND THE MUTUAL DISCOVERY SECURITIES FUND ARE NOT
AVAILABLE UNTIL APPROVED BY THE CALIFORNIA INSURANCE DEPARTMENT. (CHECK WITH
YOUR AGENT REGARDING AVAILABILITY.)
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.")
The Company intends to utilize a jet/simplified underwriting method for the
majority of the Policies which are applied for. The Company has determined that
using the jet/simplified underwriting method presents additional mortality
risks. This additional mortality risk arises because, when using jet/simplified
underwriting, the Company obtains only limited underwriting information.
Therefore, the Company intends to charge all Policies issued pursuant to
jet/simplified underwriting higher cost of insurance rates than those Policies
issued standard/fully underwritten.
Jet/simplified underwriting will be used for all applicants who fall within the
jet/simplified underwriting limits unless the application discloses information
which would require additional investigation and additional underwriting. (For
information on the jet/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 8, 1996
Table of Contents Page
DEFINITIONS...................................... 2
SUMMARY.......................................... 3
THE COMPANY...................................... 5
THE VARIABLE ACCOUNT............................. 6
FRANKLIN VALUEMARK FUNDS......................... 6
General......................................... 7
Substitution of Securities...................... 7
PREMIUM PAYMENTS................................. 7
Single Premium.................................. 7
Grace Period.................................... 7
Reinstatement................................... 7
Allocation of Premium........................... 8
DEDUCTIONS AND CHARGES........................... 8
Mortality and Expense Risk Charge............... 8
Administrative Charge........................... 8
Cost of Insurance............................... 8
Deferred Issue Charge........................... 9
Income Tax Charge............................... 10
Transfer Fee.................................... 10
DEATH BENEFIT.................................... 10
Death Benefit................................... 10
Variable Insurance Amount....................... 10
Guaranteed Death Benefit........................ 10
ACCOUNT VALUE, CASH SURRENDER
VALUE AND TRANSFER RIGHTS....................... 10
Account Value................................... 10
Method of Determining
Sub-Account Values............................. 10
Cash Surrender Value............................ 10
Transfer Rights................................. 11
LOAN PROVISIONS.................................. 11
Policy Loan..................................... 11
Effect of a Loan................................ 12
Payment of Interest, Loan Repayment
and Policy Lapsation........................... 12
OWNERSHIP........................................ 12
Owner........................................... 12
Transfer of Ownership........................... 12
Assignment...................................... 12
BENEFICIARY PROVISIONS........................... 12
Beneficiary..................................... 12
Change of Beneficiary........................... 12
Death of Beneficiary............................ 13
DELAY OF PAYMENTS................................ 13
MANAGEMENT OF THE COMPANY ....................... 13
ADMINISTRATION OF THE POLICIES................... 13
TAX STATUS....................................... 14
Introduction.................................... 14
Diversification................................. 14
Tax Treatment of the Policy..................... 15
Policy Proceeds................................. 15
Tax Treatment of Loans and Surrenders........... 15
Multiple Policies............................... 16
Tax Treatment of Assignments.................... 16
Qualified Plans................................. 16
VARIABLE ACCOUNT VOTING RIGHTS................... 16
Disregard of Voting Instructions................ 16
DISTRIBUTION OF THE POLICY....................... 17
REPORTS TO OWNERS................................ 17
LEGAL PROCEEDINGS................................ 17
EXPERTS.......................................... 17
LEGAL OPINIONS................................... 17
FINANCIAL STATEMENTS............................. 17
APPENDIX A
Illustration of Policy Values................... 91
APPENDIX B
Table of Net Single Premium Factors............. 104
Definitions
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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.
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.
SUB-ACCOUNT - A segment of the Variable Account. Each Sub-Account is invested in
shares of a Fund of an Eligible Investment.
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" .
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 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 591/2; (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 jet/simplified underwriting method for the
majority of the Policies which are applied for. The Company has determined that
using the jet/simplified underwriting method presents additional mortality
risks. BECAUSE OF THE ADDITIONAL RISKS TO THE COMPANY ASSOCIATED WITH
JET/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 JET/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 JET/SIMPLIFIED UNDERWRITING CLASS THE GUARANTEED RATES
CONTAINED IN THE POLICY ARE APPROXIMATELY EQUAL TO 150% (135% IN PENNSYLVANIA)
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 SUBMITTING TO JET/SIMPLIFIED UNDERWRITING MAY BE ABLE TO OBTAIN A LOWER
COST OF INSURANCE IN A DIFFERENT POLICY. 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 JET/SIMPLIFIED
UNDERWRITING. HOWEVER, SINCE THE COMPANY HAS MORE UNDERWRITING INFORMATION
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 JET/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-three 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 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 Managers and Business 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 Variable Account(s) in
accordance with the selection made by the 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.
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.
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. 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 Policy. 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
- --------------------------------------------------------------------------------
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-three Funds.
Franklin Valuemark Funds
- --------------------------------------------------------------------------------
Each of the twenty-three Sub-Accounts of the Variable Account is invested solely
in the shares of one of the Funds of Franklin Valuemark Funds ("Trust"). The
Trust is an open-end management investment company registered under the 1940
Act. The investment objectives of each Fund and a discussion of potential risks
are found in the accompanying prospectus for the Trust, which is included with
this Prospectus and incorporated herein by reference.
PURCHASERS SHOULD READ THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS FOR THE
TRUST CAREFULLY BEFORE INVESTING.
Franklin Advisers, Inc. ("Advisers") serves as each Fund's (except the Rising
Dividends Fund, the Templeton Global Growth Fund, the Templeton Developing
Markets Equity Fund, the Templeton Global Asset Allocation Fund, the Templeton
International Smaller Companies Fund, the Mutual Shares Securities Fund and the
Mutual Discovery Securities Fund) investment manager. The investment manager for
the Templeton Global Growth Fund and the Templeton Global Asset Allocation Fund
is Templeton Global Advisors Limited. The investment manager for the Templeton
Developing Markets Equity Fund is Templeton Asset Management Ltd. The investment
manager for the Templeton International Smaller Companies Fund is Templeton
Investment Counsel, Inc. The investment manager for the Mutual Shares Securities
Fund and the Mutual Discovery Securities Fund is Franklin Mutual Advisers, Inc.
Franklin Advisory Services, Inc. replaced Advisers as the manager for the Rising
Dividends Fund on July 1, 1996. All investment managers or subadvisers 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, 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 subadvisers.
Franklin Templeton Services, Inc. ("Fund Administrator") provides certain
administrative facilities and services for the Funds.
Franklin Templeton Investor Services, Inc., 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.
<PAGE>
The following Funds are available:
FUND SEEKING STABILITY
OF PRINCIPAL AND INCOME
Money Market Fund
FUNDS SEEKING CURRENT INCOME
High Income Fund
Templeton Global Income Securities Fund
The U.S. Government Securities Fund
Zero Coupon Funds - 2000, 2005, 2010
FUNDS SEEKING GROWTH AND INCOME
Growth and Income Fund
Income Securities Fund
Mutual Shares Securities Fund
Real Estate Securities Fund
Rising Dividends Fund
Templeton Global Asset Allocation Fund
Utility Equity Fund
FUNDS SEEKING CAPITAL GROWTH
Capital Growth Fund
Mutual Discovery Securities Fund
Precious Metals Fund
Small Cap Fund
Templeton Developing Markets Equity Fund
Templeton Global Growth Fund
Templeton International Equity Fund
Templeton International Smaller Companies Fund
Templeton Pacific Growth Fund
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").
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 judgment of the Company, the
substitution of shares of any Fund for another would be in the best interests of
Owners 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.
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. IN CALIFORNIA, THE MUTUAL SHARES SECURITIES FUND AND
THE MUTUAL DISCOVERY SECURITIES FUND ARE NOT AVAILABLE UNTIL APPROVED BY THE
CALIFORNIA INSURANCE DEPARTMENT (CHECK WITH YOUR AGENT REGARDING AVAILABILITY).
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 "Transfer Fee"). The Company reserves the right to limit the
number of allocations that an Owner can have at any one time. Currently, the
Owner may initially select up to nine Sub-Accounts and may only be invested in a
maximum of ten Sub-Accounts at any one time throughout the life of the policy.
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 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 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 jet/simplified underwriting method for
the majority of the Policies which are applied for. The following table shows
the Policies eligible for jet/simplified underwriting.
Jet/Simplified Underwriting Limits
Issue Age Single Premium
--------- --------------
30-39 $ 50,000
40-49 100,000
50-75 150,000
The Company has determined that using the jet/simplified underwriting method
presents additional mortality risks. Because of the additional risks to the
Company associated with jet/simplified underwriting, the Company treats
applicants in this class as substandard. Therefore, the Company intends to
charge all Policies issued pursuant to jet/simplified underwriting a higher cost
of insurance rate than those Policies issued standard/fully underwritten. The
cost of insurance charge for both the jet/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
jet/simplified underwriting class, the guaranteed rates contained in the Policy
are approximately equal to 150% (135% in Pennsylvania) 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. 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 jet/simplified underwriting, the
Company will require more comprehensive information. The Company will then
determine the underwriting class 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 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
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.
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.
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 591/2;(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 or her
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 is designed for professional market
timing organizations, other entities, or individuals using programmed, large or
frequent transfers. A pattern of exchanges that coincides with a "market timing"
strategy may be disruptive to the Fund and may be refused. Accounts under common
ownership or control may be aggregated for purposes of transfer limits. 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.
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 591/2; (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 or her
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 adviser 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 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.
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 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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The directors and officers of the Company and their principal occupations for
the past 5 years are as follows:
Name Principal Occupations During the Past Five Years
- --------------------------------------------------------------------------------
<S> <C>
Lowell C. Anderson Chairman, President and Chief Executive Officer 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, AZOAC. 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. Formerly President
and CEO of FFIC.
Dr. Jerry E. Robertson Former Executive Vice President, 3M/Life Sciences
Sector since November 1988.
Dr. Gerhard Rupprecht Chairman of the Board of Management - Allianz
Lebensversicherungs since 1979.
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 since June 1974.
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.
Rev. Dennis J. Dease President, University of St. Thomas, St. Paul since
July 1991.
James R. Campbell Executive Vice President of Norwest Corporation since
February 1988.
</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.
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 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 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
Owner or Beneficiary.
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
591/2;(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 or her beneficiary.
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.
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. 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. 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 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.
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 as of and for the year ended December 31,
1995 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.
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.
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
===========================================================================================================================
Financial Statements
Statements of Assets and Liabilities
June 30, 1996 (unaudited)
U.S.
Money Growth and Precious High Real Estate Government
Market Income Metals Income Securities Securities
Fund Fund Fund Fund Fund Fund
------- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Money Market Fund, 585,291 shares,
cost $585,291....................................... $585,291 - - - - -
Growth and Income Fund, 81,453 shares,
cost $1,132,201..................................... - 1,321,173 - - - -
Precious Metals Fund, 10,856 shares,
cost $146,078....................................... - - 161,977 - - -
High Income Fund, 151,154 shares,
cost $1,868,905..................................... - - - 1,949,883 - -
Real Estate Securities Fund, 10,776 shares,
cost $158,082....................................... - - - - 192,884 -
U.S. Government Securities Fund, 48,169 shares,
cost $519,320....................................... - - - - - 617,045
-------- --------- ------- --------- ------- -------
Total assets...................................... 585,291 1,321,173 161,977 1,949,883 192,884 617,045
-------- --------- ------- --------- ------- -------
Liabilities:
Accrued mortality and expense risk charges............ 7,838 10,502 3,803 13,534 1,806 6,530
Accrued administrative charges........................ 1,959 2,625 951 3,383 452 1,632
-------- --------- ------- --------- ------- -------
Total liabilities................................. 9,797 13,127 4,754 16,917 2,258 8,162
-------- --------- ------- --------- ------- -------
Net assets........................................ $575,494 1,308,046 157,223 1,932,966 190,626 608,883
======== ========= ======= ========= ======= =======
Policy owners' equity (note 5)......................... $575,494 1,308,046 157,223 1,932,966 190,626 608,883
======== ========= ======= ========= ======= =======
Units outstanding..................................... 37,821 44,911 9,552 95,262 8,537 31,064
======== ========= ======= ========= ======= =======
Accumulation unit value per unit...................... $15.216 29.125 16.459 20.291 22.330 19.601
======== ========= ======= ========= ======= =======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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, 1996 (unaudited)
Templeton Investment
Utility Zero Zero Zero Global Income Grade
Equity Coupon Coupon Coupon Securities Intermediate
Fund Fund - 2000 Fund - 2005 Fund - 2010 Fund Bond Fund
-------- ------- ------- ------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Utility Equity Fund, 87,205 shares,
cost $1,126,934................................ $1,546,145 - - - - -
Zero Coupon Fund - 2000, 23,622 shares,
cost $259,837.................................. - 342,993 - - - -
Zero Coupon Fund - 2005, 24,052 shares,
cost $279,161.................................. - - 368,954 - - -
Zero Coupon Fund - 2010, 9,999 shares,
cost $147,400.................................. - - - 149,592 - -
Templeton Global Income Securities Fund,
8,104 shares, cost $102,391.................... - - - - 101,945 -
Investment Grade Intermediate Bond Fund,
5,213 shares, cost $69,606..................... - - - - - 69,861
---------- ------- ------- ------- ------- ------
Total assets................................. 1,546,145 342,993 368,954 149,592 101,945 69,861
---------- ------- ------- ------- ------- ------
Liabilities:
Accrued mortality and expense risk charges....... 16,217 3,765 3,662 1,522 975 975
Accrued administrative charges................... 4,054 941 915 380 244 244
---------- ------- ------- ------- ------- ------
Total liabilities............................ 20,271 4,706 4,577 1,902 1,219 1,219
---------- ------- ------- ------- ------- ------
Net assets................................... $1,525,874 338,287 364,377 147,690 100,726 68,642
========== ======= ======= ======= ======= ======
Policy owners' equity (note 5).................... $1,525,874 338,287 364,377 147,690 100,726 68,642
========== ======= ======= ======= ======= ======
Units outstanding................................ 62,808 14,763 14,389 5,353 6,505 4,481
========== ======= ======= ======= ======= ======
Accumulation unit value per unit................. $24.294 22.914 25.324 27.592 15.484 15.320
========== ======= ======= ======= ======= ======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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, 1996 (unaudited)
Adjustable Templeton Templeton Templeton
Income U.S. Pacific Rising International Developing
Securities Government Growth Dividends Equity Markets Equity
Fund Fund Fund Fund Fund Fund
------- -------- ------- ------ -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Income Securities Fund, 42,538 shares,
cost $657,631..................................... $684,440 - - - - -
Adjustable U.S. Government Fund, 23,318 shares,
cost $252,996..................................... - 238,309 - - - -
Templeton Pacific Growth Fund, 25,774 shares,
cost $351,629..................................... - - 384,035 - - -
Rising Dividends Fund, 16,462 shares,
cost $195,835..................................... - - - 218,946 - -
Templeton International Equity Fund,
54,455 shares, cost $721,556...................... - - - - 768,353 -
Templeton Developing Markets Equity Fund,
32,352 shares, cost $329,116...................... - - - - - 357,486
-------- ------- ------- ------- ------- -------
Total assets.................................... 684,440 238,309 384,035 218,946 768,353 357,486
-------- ------- ------- ------- ------- -------
Liabilities:
Accrued mortality and expense risk charges.......... 4,627 646 3,282 1,443 4,905 1,909
Accrued administrative charges...................... 1,157 161 820 361 1,226 477
-------- ------- ------- ------- ------- -------
Total liabilities............................... 5,784 807 4,102 1,804 6,131 2,386
-------- ------- ------- ------- ------- -------
Net assets...................................... $678,656 237,502 379,933 217,142 762,222 355,100
======== ======= ======= ======= ======= =======
Policy owners' equity (note 5)....................... $678,656 237,502 379,933 217,142 762,222 355,100
======== ======= ======= ======= ======= =======
Units outstanding................................... 33,252 18,770 24,327 15,857 50,090 32,858
======== ======= ======= ======= ======= =======
Accumulation unit value per unit.................... $20.410 12.653 15.617 13.693 15.217 10.807
======== ======= ======= ======= ======= =======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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, 1996 (unaudited)
Templeton Templeton
Global Global Asset Small Total
Growth Allocation Cap All
Fund Fund Fund Funds
------- -------- ----- --------
<S> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Templeton Global Growth Fund, 46,273 shares, cost $533,989.................... $583,504 - -
Templeton Global Asset Allocation Fund, 45,671 shares, cost $512,881.......... - 519,284 -
Small Cap Fund, 1,407 shares, cost $16,927.................................... - - 17,096
-------- ------- ------
Total assets............................................................... 583,504 519,284 17,096 11,179,196
-------- ------- ------ ----------
Liabilities:
Accrued mortality and expense risk charges..................................... 2,776 424 3 91,144
Accrued administrative charges................................................. 694 106 - 22,782
-------- ------- ------ ----------
Total liabilities.......................................................... 3,470 530 3 113,926
-------- ------- ------ ----------
Net assets................................................................. $580,034 518,754 17,093 11,065,270
======== ======= ====== ==========
Policy owners' equity (note 5).................................................. $580,034 518,754 17,093 11,065,270
======== ======= ====== ==========
Units outstanding.............................................................. 47,459 45,232 1,422 604,713
======== ======= ====== ==========
Accumulation unit value per unit............................................... $12.222 11.469 12.022
======== ======= ======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
===========================================================================================================================
Financial Statements (cont.)
Statements of Operations
For the period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Money Market Fund Growth and Income Fund Precious Metals Fund
----------------------------- -------------------------- ---------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
--------- ------- ------ ------- ------ ------ ------ ------- ------
<S> <C> <C> <C>
Investment income:
Dividends reinvested in
fund shares.................. $ 17,843 33,164 14,466 28,758 10,179 4,301 2,102 3,600 626
---------- ------- ------- ------- ------- ------- ------ ------- ------
Expenses:
Mortality and expense
risk charges................. 2,292 4,898 2,689 3,948 5,842 3,726 775 2,489 700
Administrative charges........ 573 1,225 672 987 1,460 932 194 622 175
---------- ------- ------- ------- ------- ------- ------ ------- ------
Total expenses........... 2,865 6,123 3,361 4,935 7,302 4,658 969 3,111 875
---------- ------- ------- ------- ------- ------- ------ ------- ------
Investment income
(loss), net............. 14,978 27,041 11,105 23,823 2,877 (357) 1,133 489 (249)
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain distri-
butions on mutual funds..... - - - 101,857 22,157 8,957 1,927 2,665 -
---------- ------- ------- ------- ------- ------- ------ ------- ------
Realized gains (losses) on
sales of investments:
Proceeds from sales........ 1,839,290 965,636 513,009 87,012 97,576 114,661 47,031 161,878 11,123
Cost of investments sold... (1,839,290) (965,636) (513,009) (65,362) (77,218) (94,631) (37,645) (146,847) (9,528)
---------- ------- ------- ------- ------- ------- ------ ------- ------
Total realized gains
(losses) on sales of
investments, net......... - - - 21,650 20,358 20,030 9,386 15,031 1,595
---------- ------- ------- ------- ------- ------- ------ ------- ------
Realized gains (losses)
on investments, net...... - - - 123,507 42,515 28,987 11,313 17,696 1,595
Net change in unrealized
appreciation (depreciation)
on investments.............. - - - (87,411) 184,273 (45,642) 2,882 (10,144) (2,094)
---------- ------- ------- ------- ------- ------- ------ ------- ------
Total realized gains
(losses) and unrealized
appreciation
(depreciation) on
investments, net......... - - - 36,096 226,788 (16,655) 14,195 7,552 (499)
---------- ------- ------- ------- ------- ------- ------ ------- ------
Net increase (decrease) in
net assets from operations.... $ 14,978 27,041 11,105 59,919 229,665 (17,012) 15,328 8,041 (748)
========== ======= ======= ======= ======= ======= ====== ======= ======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Real U.S.
High Income Fund Estate Securities Fund Government Securities Fund
---------------------------- ------------------------ --------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
-------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares.. $167,136 78,044 44,601 7,595 3,875 613 45,170 41,763 29,171
-------- ------- ------ ------ ------ ----- ------ ------- -------
Expenses:
Mortality and expense risk charges... 4,831 7,709 6,671 618 833 672 1,837 3,974 3,380
Administrative charges............... 1,208 1,927 1,668 154 208 168 459 994 845
-------- ------- ------ ------ ------ ----- ------ ------- -------
Total expenses.................. 6,039 9,636 8,339 772 1,041 840 2,296 4,968 4,225
-------- ------- ------ ------ ------ ----- ------ ------- -------
Investment income (loss), net... 161,097 68,408 36,262 6,823 2,834 (227) 42,874 36,795 24,946
Realized gains (losses) and unrealized
appreciation (depreciation)
on investments:
Realized capital gain distributions
on mutual funds.................... 8,872 - 6,061 - - - - - 2,285
-------- ------- ------ ------ ------ ----- ------ ------- -------
Realized gains (losses) on sales
of investments:
Proceeds from sales............... 64,922 47,176 51,287 5,499 22,803 5,838 37,213 33,799 131,317
Cost of investments sold.......... (57,029) (39,566) (45,931) (4,326) (19,244) (4,033) (30,654) (26,326) (99,718)
-------- ------- ------ ------ ------ ----- ------ ------- -------
Total realized gains (losses)
on sales of investments, net... 7,893 7,610 5,356 1,173 3,559 1,805 6,559 7,473 31,599
-------- ------- ------ ------ ------ ----- ------ ------- -------
Realized gains (losses)
on investments, net............ 16,765 7,610 11,417 1,173 3,559 1,805 6,559 7,473 33,884
Net change in unrealized appreciation
(depreciation) on investments...... (128,310) 122,964 (81,774) 3,354 14,488 759 (61,549) 56,173 (91,983)
-------- ------- ------ ------ ------ ----- ------ ------- -------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on
investments, net............... (111,545) 130,574 (70,357) 4,527 18,047 2,564 (54,990) 63,646 (58,099)
-------- ------- ------ ------ ------ ----- ------ ------- -------
Net increase (decrease) in net assets
from operations...................... $ 49,552 198,982 (34,095) 11,350 20,881 2,337 (12,116) 100,441 (33,153)
======== ======= ====== ====== ====== ===== ====== ======= =======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Utility Equity Fund Zero Coupon Fund - 1995 Zero Coupon Fund - 2000
----------------------------- ------------------------ -------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
------- ------ ------- ---- ------- ------ ------ ------ ------
<S> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares. $ 75,714 70,912 44,904 - 17,379 15,282 19,213 13,993 14,292
-------- ------- ------- ---- ------- ------ ------ ------ ------
Expenses:
Mortality and expense risk charges.. 6,251 8,983 6,698 - (594) 1,529 961 2,179 1,769
Administrative charges.............. 1,563 2,246 1,674 - (149) 383 240 545 442
-------- ------- ------- ---- ------- ------ ------ ------ ------
Total expenses................. 7,814 11,229 8,372 - (743) 1,912 1,201 2,724 2,211
-------- ------- ------- ---- ------- ------ ------ ------ ------
Investment income (loss), net.. 67,900 59,683 36,532 - 18,122 13,370 18,012 11,269 12,081
Realized gains (losses) and
unrealized appreciation (depreciation)
on investments:
Realized capital gain distributions
on mutual funds................... - - 7,958 - 86 625 190 - 2,038
-------- ------- ------- ---- ------- ------ ------ ------ ------
Realized gains (losses) on
sales of investments:
Proceeds from sales.............. 134,932 112,297 183,473 - 273,701 4,692 2,451 3,895 14,723
Cost of investments sold......... (93,100) (88,887) (138,153) - (236,082) (3,908) (1,759) (2,731) (10,946)
-------- ------- ------- ---- ------- ------ ------ ------ ------
Total realized gains (losses)
on sales of investments, net... 41,832 23,410 45,320 - 37,619 784 692 1,164 3,777
-------- ------- ------- ---- ------- ------ ------ ------ ------
Realized gains (losses) on
investments, net............... 41,832 23,410 53,278 - 37,705 1,409 882 1,164 5,815
Net change in unrealized
appreciation (depreciation)
on investments.................... (49,053) 259,686 (253,440) - (37,457) (14,916) (27,487) 44,013 (41,764)
-------- ------- ------- ---- ------- ------ ------ ------ ------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on
investments, net............... (7,221) 283,096 (200,162) - 248 (13,507) (26,605) 45,177 (35,949)
-------- ------- ------- ---- ------- ------ ------ ------ ------
Net increase (decrease) in net assets
from operations..................... $ 60,679 342,779 (163,630) - 18,370 (137) (8,593) 56,446 (23,868)
======== ======= ======= ==== ======= ====== ====== ====== ======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Templeton Global
Zero Coupon Fund - 2005 Zero Coupon Fund - 2010 Income Securities Fund
------------------------- ------------------------- -----------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
------- ----- ------ ------ ----- ------ ----- ------ ------
<S> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares...... $19,668 12,928 11,417 8,167 3,109 7,316 7,568 2,871 494
------- ------ ------ ------ ------ ------ ----- ------ -----
Expenses:
Mortality and expense risk charges....... 845 2,227 1,741 106 916 926 292 470 129
Administrative charges................... 211 557 435 26 229 231 73 118 32
------- ------ ------ ------ ------ ------ ----- ------ -----
Total expenses...................... 1,056 2,784 2,176 132 1,145 1,157 365 588 161
------- ------ ------ ------ ------ ------ ----- ------ -----
Investment income (loss), net....... 18,612 10,144 9,241 8,035 1,964 6,159 7,203 2,283 333
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds........................ - - 3,569 2,213 - 3,560 - - 204
------- ------ ------ ------ ------ ------ ----- ------ -----
Realized gains (losses) on sales
of investments:
Proceeds from sales................... 6,300 4,311 75,603 1,498 1,827 79,261 5,658 15,642 2,577
Cost of investments sold.............. (4,250) (2,816) (52,536) (1,403) (1,569) (81,331) (5,332) (15,250) (2,445)
------- ------ ------ ------ ------ ------ ----- ------ -----
Total realized gains (losses)
on sales of investments, net........ 2,050 1,495 23,067 95 258 (2,070) 326 392 132
------- ------ ------ ------ ------ ------ ----- ------ -----
Realized gains (losses)
on investments, net................. 2,050 1,495 26,636 2,308 258 1,490 326 392 336
Net change in unrealized appreciation
(depreciation) on investments............ (44,112) 68,320 (72,608) (27,978) 32,162 (29,320) (6,552) 6,634 (2,030)
------- ------ ------ ------ ------ ------ ----- ------ -----
Total realized gains (losses) and
unrealized appreciation
(depreciation) on investments, net.. (42,062) 69,815 (45,972) (25,670) 32,420 (27,830) (6,226) 7,026 (1,694)
------- ------ ------ ------ ------ ------ ----- ------ -----
Net increase (decrease) in net assets
from operations.......................... ($23,450) 79,959 (36,731) (17,635) 34,384 (21,671) 977 9,309 (1,361)
======= ====== ====== ====== ====== ====== ===== ====== =====
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Investment Grade Adjustable U.S.
Intermediate Bond Fund Income Securities Fund Government Fund
----------------------- ------------------------- --------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
------ ------ ---- ------ ------ ------ ------ ------ -----
<S> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares........ $3,706 3,949 253 33,370 19,772 2,467 18,030 1,373 184
------ ------ --- ------ ------ ------ ------ ------ -----
Expenses:
Mortality and expense risk charges......... 205 529 169 1,917 2,265 963 265 139 27
Administrative charges..................... 51 132 42 479 566 241 66 35 7
------ ------ --- ------ ------ ------ ------ ------ -----
Total expenses........................ 256 661 211 2,396 2,831 1,204 331 174 34
------ ------ --- ------ ------ ------ ------ ------ -----
Investment income (loss), net......... 3,450 3,288 42 30,974 16,941 1,263 17,699 1,199 150
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds.......................... - - 36 5,550 1,592 367 - - -
------ ------ --- ------ ------ ------ ------ ------ -----
Realized gains (losses) on sales
of investments:
Proceeds from sales..................... 2,848 44,251 577 16,603 55,949 29,910 2,347 11,606 8,733
Cost of investments sold................ (2,696) (43,145) (565) (15,183) (55,228) (30,339) (2,329) (11,571) (8,814)
------ ------ --- ------ ------ ------ ------ ------ -----
Total realized gains (losses) on
sales of investments, net............. 152 1,106 12 1,420 721 (429) 18 35 (81)
------ ------ --- ------ ------ ------ ------ ------ -----
Realized gains (losses)
on investments, net................... 152 1,106 48 6,970 2,313 (62) 18 35 (81)
Net change in unrealized appreciation
(depreciation) on investments.............. (3,320) 2,630 150 (15,459) 47,314 (9,527) (14,887) 240 (98)
------ ------ --- ------ ------ ------ ------ ------ -----
Total realized gains (losses)
and unrealized appreciation
(depreciation) on investments, net.... (3,168) 3,736 198 (8,489) 49,627 (9,589) (14,869) 275 (179)
------ ------ --- ------ ------ ------ ------ ------ -----
Net increase (decrease) in net assets
from operations............................ $ 282 7,024 240 22,485 66,568 (8,326) 2,830 1,474 (29)
====== ====== === ====== ====== ====== ====== ====== =====
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Templeton Templeton
Pacific Growth Fund Rising Dividends Fund International Equity Fund
---------------------------- ------------------------ -------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
------- ------ ------- ------ ------ ----- ------ ------ -----
<S> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares..... $10,710 4,502 347 3,981 1,695 601 19,177 6,289 71
------- ------ ------- ------ ------ ----- ------ ------ -----
Expenses:
Mortality and expense risk charges...... 1,323 1,485 689 563 587 227 2,394 2,178 323
Administrative charges.................. 331 371 172 141 147 57 598 545 81
------- ------ ------- ------ ------ ----- ------ ------ -----
Total expenses..................... 1,654 1,856 861 704 734 284 2,992 2,723 404
------- ------ ------- ------ ------ ----- ------ ------ -----
Investment income (loss), net...... 9,056 2,646 (514) 3,277 961 317 16,185 3,566 (333)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds....................... 6,208 1,872 672 - - - 23,468 7,792 95
------- ------ ------- ------ ------ ----- ------ ------ -----
Realized gains (losses) on sales
of investments:
Proceeds from sales.................. 44,827 60,917 116,746 13,787 6,910 752 29,567 37,517 895
Cost of investments sold............. (39,575) (59,672) (108,205) (12,131) (6,447) (796) (26,803) (36,911) (878)
------- ------ ------- ------ ------ ----- ------ ------ -----
Total realized gains (losses)
on sales of investments, net....... 5,252 1,245 8,541 1,656 463 (44) 2,764 606 17
------- ------ ------- ------ ------ ----- ------ ------ -----
Realized gains (losses)
on investments, net................ 11,460 3,117 9,213 1,656 463 (44) 26,232 8,398 112
Net change in unrealized appreciation
(depreciation) on investments........... 15,942 13,125 (24,505) 6,234 19,701 (2,053) 29,913 19,054 (3,562)
------- ------ ------- ------ ------ ----- ------ ------ -----
Total realized gains (losses)
and unrealized appreciation
(depreciation) on investments, net. 27,402 16,242 (15,292) 7,890 20,164 (2,097) 56,145 27,452 (3,450)
------- ------ ------- ------ ------ ----- ------ ------ -----
Net increase (decrease) in net assets
from operations......................... $36,458 18,888 (15,806) 11,167 21,125 (1,780) 72,330 31,018 (3,783)
======= ====== ======= ====== ====== ===== ====== ====== =====
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Templeton Templeton Templeton Global
Developing Markets Equity Fund Global Growth Fund Asset Allocation Fund
-------------------------- ------------------------- ------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
------ ------ ------ ------ ------ ----- ----- ---- ---
<S> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares............ $ 2,914 562 - 8,202 1,137 - 228 4 -
------- ------ ----- ------ ------ ----- ----- --- --
Expenses:
Mortality and expense risk charges............. 1,025 3,898 3,197 1,513 1,255 65 448 25 -
Administrative charges......................... 256 975 799 378 314 16 112 6 -
------- ------ ----- ------ ------ ----- ----- --- --
Total expenses............................ 1,281 4,873 3,996 1,891 1,569 81 560 31 -
------- ------ ----- ------ ------ ----- ----- --- --
Investment income (loss), net............. 1,633 (4,311) (3,996) 6,311 (432) (81) (332) (27) -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds.............................. 5,391 132 - 8,202 - - 456 - -
------- ------ ----- ------ ------ ----- ----- --- --
Realized gains (losses) on sales of investments:
Proceeds from sales.......................... 20,302 37,410 2,518 12,721 28,814 3,901 113 168 -
Cost of investments sold..................... (18,302) (37,995) (2,585) (11,394) (28,227) (3,952) (114) (151) -
------- ------ ----- ------ ------ ----- ----- --- --
Total realized gains (losses) on sales
of investments, net....................... 2,000 (585) (67) 1,327 587 (51) (1) 17 -
------- ------ ----- ------ ------ ----- ----- --- --
Realized gains (losses) on
investments, net.......................... 7,391 (453) (67) 9,529 587 (51) 455 17 -
Net change in unrealized appreciation
(depreciation) on investments.................. 26,899 4,422 (2,951) 26,191 23,468 (144) 6,418 (15) -
------- ------ ----- ------ ------ ----- ----- --- --
Total realized gains (losses) and
unrealized appreciation (depreciation)
on investments, net....................... 34,290 3,969 (3,018) 35,720 24,055 (195) 6,873 2 -
------- ------ ----- ------ ------ ----- ----- --- --
Net increase (decrease) in net assets
from operations................................ $35,923 (342) (7,014) 42,031 23,623 (276) 6,541 (25) -
======= ====== ===== ====== ====== ===== ===== === ==
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Small Cap Fund Total All Funds
------------------ --------------------------------
1996 1995 1994 1996 1995 1994
---- --- --- ------ ------ --------
<S> <C> <C>
Investment income:
Dividends reinvested in fund shares............................. - - - 499,252 331,100 191,406
---- -- -- --------- --------- ---------
Expenses:
Mortality and expense risk charges.............................. $ 2 - - 32,411 52,287 36,290
Administrative charges.......................................... - - - 8,100 13,073 9,072
---- -- -- --------- --------- ---------
Total expenses............................................. 2 - - 40,511 65,360 45,362
---- -- -- --------- --------- ---------
Investment income (loss), net.............................. (2) - - 458,741 265,740 146,044
Realized gains (losses) and unrealized appreciation
(depreciation) on investments:
Realized capital gain distributions on mutual funds............ - - - 164,334 36,296 36,427
---- -- -- --------- --------- ---------
Realized gains (losses) on sales of investments:
Proceeds from sales........................................... - - - 2,374,921 2,024,083 1,351,596
Cost of investments sold...................................... - - - (2,268,677) (1,901,519) (1,212,303)
---- -- -- --------- --------- ---------
Total realized gains (losses) on sales of investments, net.. - - - 106,244 122,564 139,293
---- -- -- --------- --------- ---------
Realized gains (losses) on investments, net................. - - - 270,578 158,860 175,720
Net change in unrealized appreciation (depreciation)
on investments.................................................. 169 - - (348,116) 871,051 (677,502)
---- -- -- --------- --------- ---------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net............ 169 - - (77,538) 1,029,911 (501,782)
---- -- -- --------- --------- ---------
Net increase (decrease) in net assets from operations............ $167 - - 381,203 1,295,651 (355,738)
==== == == ========= ========= =========
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Money Market Fund Growth and Income Fund Precious Metals Fund
-------------------------------- ---------------------------- --------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
--------- ------- ------- ------- ------- ------ ------ ------ ------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income
(loss), net.............. $ 14,978 27,041 11,105 23,823 2,877 (357) 1,133 489 (249)
Realized gains (losses)
on investments, net....... - - - 123,507 42,515 28,987 11,313 17,696 1,595
Net change in unrealized
appreciation (depreciation)
on investments............ - - - (87,411) 184,273 (45,642) 2,882 (10,144) (2,094)
--------- --------- ------- --------- --------- ------- ------- ------- -------
Net increase (decrease)
in net assets from
operations.............. 14,978 27,041 11,105 59,919 229,665 (17,012) 15,328 8,041 (748)
--------- --------- ------- --------- --------- ------- ------- ------- -------
Policy transactions (note 5):
Purchase payments......... 1,667,413 1,140,571 835,456 180,201 233,408 15,811 8,911 24,963 988
Transfers between funds... (1,763,540) (843,539) (442,767) 101,254 111,030 97,056 (19,482) 23,956 89,216
Surrenders and
terminations............. (26,428) (48,126) (101,035) (26,091) (54,886) (49,775) (6,871) (81,139) (8,168)
Policy loan transactions.. (5,692) (251) (354) 12,088 842 (35,837) (524) 282 13
Other transactions
(note 2)................. 6,911 (124,409) (80,760) (72,491) (92,875) (13,810) (4,923) (12,614) (2,141)
--------- --------- ------- --------- --------- ------- ------- ------- -------
Net increase
(decrease) in net
assets resulting from
policy transactions..... (121,336) 124,246 210,540 194,961 197,519 13,445 (22,889) (44,552) 79,908
--------- --------- ------- --------- --------- ------- ------- ------- -------
Increase (decrease) in
net assets.................. (106,358) 151,287 221,645 254,880 427,184 (3,567) (7,561) (36,511) 79,160
--------- --------- ------- --------- --------- ------- ------- ------- -------
Net assets at beginning
of period................... 681,852 530,565 308,920 1,053,166 625,982 629,549 164,784 201,295 122,135
--------- --------- ------- --------- --------- ------- ------- ------- -------
Net assets at end of period.. $ 575,494 681,852 530,565 1,308,046 1,053,166 625,982 157,223 164,784 201,295
========= ========= ======= ========= ========= ======= ======= ======= =======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Real U.S.
High Income Fund Estate Securities Fund Government Securities Fund
-------------------------------- ------------------------- --------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
-------- ------- ------- ------ ------ ----- ------ ------ ------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net. $ 161,097 68,408 36,262 6,823 2,834 (227) 42,874 36,795 24,946
Realized gains (losses)
on investments, net.......... 16,765 7,610 11,417 1,173 3,559 1,805 6,559 7,473 33,884
Net change in unrealized
appreciation (depreciation)
on investments............... (128,310) 122,964 (81,774) 3,354 14,488 759 (61,549) 56,173 (91,983)
---------- --------- --------- --------- ------- ------ ------- ------- -------
Net increase (decrease)
in net assets from
operations.................. 49,552 198,982 (34,095) 11,350 20,881 2,337 (12,116) 100,441 (33,153)
---------- --------- --------- --------- ------- ------ ------- ------- -------
Policy transactions (note 5):
Purchase payments.............. 28,601 44,935 4,791 26,082 53,203 7,592 11,779 25,128 1,041
Transfers between funds........ 586,891 37,055 (10,182) 7,936 38,779 14,088 (20,849) 24,109 (111,346)
Surrenders and terminations.... (3,551) (14,331) (14,141) (675) (8,139) - (7,837) (18,462) -
Policy loan transactions....... 8,073 1,359 9,224 (1,383) (145) 222 148 (2,060) (18)
Other transactions (note 2).... (18,942) (32,177) (16,496) (12,209) (23,363) (3,248) (9,191) (16,258) (8,802)
---------- --------- --------- --------- ------- ------ ------- ------- -------
Net increase (decrease)
in net assets resulting
from policy transactions..... 601,072 36,841 (26,804) 19,751 60,335 18,654 (25,950) 12,457 (119,125)
---------- --------- --------- --------- ------- ------ ------- ------- -------
Increase (decrease) in net assets 650,624 235,823 (60,899) 31,101 81,216 20,991 (38,066) 112,898 (152,278)
---------- --------- --------- --------- ------- ------ ------- ------- -------
Net assets at beginning of period 1,282,342 1,046,519 1,107,418 159,525 78,309 57,318 646,949 534,051 686,329
---------- --------- --------- --------- ------- ------ ------- ------- -------
Net assets at end of period...... $1,932,966 1,282,342 1,046,519 190,626 159,525 78,309 608,883 646,949 534,051
========== ========= ========= ========= ======= ====== ======= ======= =======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Utility Equity Fund Zero Coupon Fund - 1995 Zero Coupon Fund - 2000
------------------------------- ----------------------- -------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
-------- ------ ------ ---- ------- ------ ------ ------ ------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net... $ 67,900 59,683 36,532 - 18,122 13,370 18,012 11,269 12,081
Realized gains (losses)
on investments, net............ 41,832 23,410 53,278 - 37,705 1,409 882 1,164 5,815
Net change in unrealized
appreciation (depreciation)
on investments................. (49,053) 259,686 (253,440) - (37,457) (14,916) (27,487) 44,013 (41,764)
---------- --------- --------- --- ------- ------- ------- ------- -------
Net increase (decrease) in
net assets from operations.. 60,679 342,779 (163,630) - 18,370 (137) (8,593) 56,446 (23,868)
---------- --------- --------- --- ------- ------- ------- ------- -------
Policy transactions (note 5):
Purchase payments............... 64,900 116,016 11,599 - - - - - -
Transfers between funds......... (32,833) 124,589 (62,456) - (270,886) - - 10,631 -
Surrenders and terminations..... (35,982) (35,449) (23,338) - - - - - (7,535)
Policy loan transactions........ (40,859) (13,309) (18,349) - - - (64) (64) (1,409)
Other transactions (note 2)..... (35,953) (62,877) (21,374) - (2,815) (3,292) (2,478) (3,831) (4,079)
---------- --------- --------- --- ------- ------- ------- ------- -------
Net increase (decrease)
in net assets resulting
from policy transactions..... (80,727) 128,970 (113,918) - (273,701) (3,292) (2,542) 6,736 (13,023)
---------- --------- --------- --- ------- ------- ------- ------- -------
Increase (decrease) in net assets. (20,048) 471,749 (277,548) - (255,331) (3,429) (11,135) 63,182 (36,891)
---------- --------- --------- --- ------- ------- ------- ------- -------
Net assets at beginning of period. 1,545,922 1,074,173 1,351,721 - 255,331 258,760 349,422 286,240 323,131
---------- --------- --------- --- ------- ------- ------- ------- -------
Net assets at end of period....... $1,525,874 1,545,922 1,074,173 - - 255,331 338,287 349,422 286,240
========== ========= ========= === ======= ======= ======= ======= =======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Templeton Global
Zero Coupon Fund - 2005 Zero Coupon Fund - 2010 Income Securities Fund
---------------------------- --------------------------- -------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
------- ------- ------- ------ ------ ------- ------ ------ -----
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net...... $ 18,612 10,144 9,241 8,035 1,964 6,159 7,203 2,283 333
Realized gains (losses) on
investments, net.................. 2,050 1,495 26,636 2,308 258 1,490 326 392 336
Net change in unrealized appreciation
(depreciation) on investments..... (44,112) 68,320 (72,608) (27,978) 32,162 (29,320) (6,552) 6,634 (2,030)
-------- ------- ------- ------- ------- ------- ------- ------ ------
Net increase (decrease) in
net assets from operations..... (23,450) 79,959 (36,731) (17,635) 34,384 (21,671) 977 9,309 (1,361)
-------- ------- ------- ------- ------- ------- ------- ------ ------
Policy transactions (note 5):
Purchase payments.................. - - - - - - 19,841 42,908 1,813
Transfers between funds............ 57,144 - (41,224) 51,099 - (74,884) 633 18,457 21,778
Surrenders and terminations........ (3,894) - (28,826) - - - (2,101) (6,040) -
Policy loan transactions........... - (687) (10) (176) (169) (158) 198 (638) -
Other transactions (note 2)........ (2,583) (3,625) (3,843) (1,334) (1,657) (3,419) (7,850) (17,786) (1,388)
-------- ------- ------- ------- ------- ------- ------- ------ ------
Net increase (decrease) in
net assets resulting from
policy transactions............ 50,667 (4,312) (73,903) 49,589 (1,826) (78,461) 10,721 36,901 22,203
-------- ------- ------- ------- ------- ------- ------- ------ ------
Increase (decrease) in net assets.... 27,217 75,647 (110,634) 31,954 32,558 (100,132) 11,698 46,210 20,842
-------- ------- ------- ------- ------- ------- ------- ------ ------
Net assets at beginning of period.... 337,160 261,513 372,147 115,736 83,178 183,310 89,028 42,818 21,976
-------- ------- ------- ------- ------- ------- ------- ------ ------
Net assets at end of period.......... $364,377 337,160 261,513 147,690 115,736 83,178 100,726 89,028 42,818
======== ======= ======= ======= ======= ======= ======= ====== ======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Investment Grade Adjustable U.S.
Intermediate Bond Fund Income Securities Fund Government Fund
------------------------- ------------------------- ------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
------ ------ ----- ------ ------ ------ ------ ------ -----
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net........... $ 3,450 3,288 42 30,974 16,941 1,263 17,699 1,199 150
Realized gains (losses) on
investments, net....................... 152 1,106 48 6,970 2,313 (62) 18 35 (81)
Net change in unrealized appreciation
(depreciation) on investments.......... (3,320) 2,630 150 (15,459) 47,314 (9,527) (14,887) 240 (98)
------- ------ ------ ------- ------- ------- ------- ------ -----
Net increase (decrease) in
net assets from operations.......... 282 7,024 240 22,485 66,568 (8,326) 2,830 1,474 (29)
------- ------ ------ ------- ------- ------- ------- ------ -----
Policy transactions (note 5):
Purchase payments....................... 6,957 14,163 1,391 141,743 223,737 22,483 4,453 12,633 5,636
Transfers between funds................. 494 8,123 75,010 53,797 186,849 153,200 208,788 11,222 (2,444)
Surrenders and terminations............. (677) (40,771) - (11,477) (14,487) - (1,178) - -
Policy loan transactions................ - - - (3,887) (19,420) (26,076) 45 (1,764) -
Other transactions (note 2)............. (3,404) (7,440) (908) (48,071) (89,585) (7,532) (2,301) (6,127) (358)
------- ------ ------ ------- ------- ------- ------- ------ -----
Net increase (decrease) in net assets
resulting from policy transactions.. 3,370 (25,925) 75,493 132,105 287,094 142,075 209,807 15,964 2,834
------- ------ ------ ------- ------- ------- ------- ------ -----
Increase (decrease) in net assets......... 3,652 (18,901) 75,733 154,590 353,662 133,749 212,637 17,438 2,805
------- ------ ------ ------- ------- ------- ------- ------ -----
Net assets at beginning of period......... 64,990 83,891 8,158 524,066 170,404 36,655 24,865 7,427 4,622
------- ------ ------ ------- ------- ------- ------- ------ -----
Net assets at end of period............... $68,642 64,990 83,891 678,656 524,066 170,404 237,502 24,865 7,427
======= ====== ====== ======= ======= ======= ======= ====== =====
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Templeton Templeton
Pacific Growth Fund Rising Dividends Fund International Equity Fund
-------------------------- -------------------------- ---------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
------- ------ ------ ------ ------ ----- ------ ------- ------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net....... $ 9,056 2,646 (514) 3,277 961 317 16,185 3,566 (333)
Realized gains (losses) on
investments, net................... 11,460 3,117 9,213 1,656 463 (44) 26,232 8,398 112
Net change in unrealized appreciation
(depreciation) on investments...... 15,942 13,125 (24,505) 6,234 19,701 (2,053) 29,913 19,054 (3,562)
-------- ------- ------- ------- ------- ------ ------- ------- -------
Net increase (decrease) in
net assets from operations...... 36,458 18,888 (15,806) 11,167 21,125 (1,780) 72,330 31,018 (3,783)
-------- ------- ------- ------- ------- ------ ------- ------- -------
Policy transactions (note 5):
Purchase payments................... 99,087 141,914 13,634 31,831 52,764 4,169 194,883 297,409 32,269
Transfers between funds............. 7,839 74,887 91,481 58,266 38,476 5,960 35,186 206,753 104,241
Surrenders and terminations......... (16,478) (10,270) - (7,225) (264) - (23,579) (9,230) -
Policy loan transactions............ (2,792) (27,456) (58,475) - - - (5,311) (1,799) 260
Other transactions (note 2)......... (42,195) (64,733) (9,022) (14,026) (19,499) (1,199) (66,563) (110,168) (8,625)
-------- ------- ------- ------- ------- ------ ------- ------- -------
Net increase (decrease) in
net assets resulting from
policy transactions............. 45,461 114,342 37,618 68,846 71,477 8,930 134,616 382,965 128,145
-------- ------- ------- ------- ------- ------ ------- ------- -------
Increase (decrease) in net assets..... 81,919 133,230 21,812 80,013 92,602 7,150 206,946 413,983 124,362
-------- ------- ------- ------- ------- ------ ------- ------- -------
Net assets at beginning of period..... 298,014 164,784 142,972 137,129 44,527 37,377 555,276 141,293 16,931
-------- ------- ------- ------- ------- ------ ------- ------- -------
Net assets at end of period........... $379,933 298,014 164,784 217,142 137,129 44,527 762,222 555,276 141,293
======== ======= ======= ======= ======= ====== ======= ======= =======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Templeton Templeton Templeton Global
Developing Markets Equity Fund Global Growth Fund Asset Allocation Fund
--------------------------- ------------------------- -------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
------- ------ ----- ------ ------ ----- ------ ---- ---
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net................ $ 1,633 (4,311) (3,996) 6,311 (432) (81) (332) (27) -
Realized gains (losses) on investments, net.. 7,391 (453) (67) 9,529 587 (51) 455 17 -
Net change in unrealized appreciation
(depreciation) on investments............... 26,899 4,422 (2,951) 26,191 23,468 (144) 6,418 (15) -
-------- ------- ------ ------- ------- ------ ------- --- ---
Net increase (decrease) in net assets
from operations.......................... 35,923 (342) (7,014) 42,031 23,623 (276) 6,541 (25) -
-------- ------- ------ ------- ------- ------ ------- --- ---
Policy transactions (note 5):
Purchase payments............................ 122,186 169,165 19,997 171,392 237,156 27,117 73 - -
Transfers between funds...................... 38,903 63,297 44,206 85,565 114,188 45,458 512,106 311 -
Surrenders and terminations.................. (8,337) (18,763) - (9,153) (6,710) - - - -
Policy loan transactions..................... (1,746) - - (3,001) (3,177) - - - -
Other transactions (note 2).................. (39,648) (61,489) (1,238) (55,159) (83,481) (5,539) (186) (66) -
-------- ------- ------ ------- ------- ------ ------- --- ---
Net increase (decrease) in net assets
resulting from policy transactions....... 111,358 152,210 62,965 189,644 257,976 67,036 511,993 245 -
-------- ------- ------ ------- ------- ------ ------- --- ---
Increase (decrease) in net assets.............. 147,281 151,868 55,951 231,675 281,599 66,760 518,534 220 -
-------- ------- ------ ------- ------- ------ ------- --- ---
Net assets at beginning of period.............. 207,819 55,951 - 348,359 66,760 - 220 - -
-------- ------- ------ ------- ------- ------ ------- --- ---
Net assets at end of period.................... $355,100 207,819 55,951 580,034 348,359 66,760 518,754 220 -
======== ======= ====== ======= ======= ====== ======= === ===
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994
Small Cap Fund Total All Funds
------------------- ---------------------------------
1996 1995 1994 1996 1995 1994
------ ---- ---- -------- -------- --------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net..................................... $ (2) - - 458,741 265,740 146,044
Realized gains (losses) on investments, net....................... - - - 270,578 158,860 175,720
Net change in unrealized appreciation (depreciation)
on investments................................................... 169 - - (348,116) 871,051 (677,502)
------- --- --- ---------- --------- ---------
Net increase (decrease) in net assets from operations........ 167 - - 381,203 1,295,651 (355,738)
------- --- --- ---------- --------- ---------
Policy transactions (note 5):
Purchase payments................................................. - - - 2,780,333 2,830,073 1,005,787
Transfers between funds........................................... 16,926 - - (13,877) (21,713) (3,609)
Surrenders and terminations....................................... - - - (191,534) (367,067) (232,818)
Policy loan transactions.......................................... - - - (44,883) (68,456) (130,967)
Other transactions (note 2)....................................... - - - (432,596) (836,875) (197,073)
------- --- --- ---------- --------- ---------
Net increase (decrease) in net assets resulting
from policy transactions...................................... 16,926 - - 2,097,443 1,535,962 441,320
------- --- --- ---------- --------- ---------
Increase (decrease) in net assets................................... 17,093 - - 2,478,646 2,831,613 85,582
------- --- --- ---------- --------- ---------
Net assets at beginning of period................................... - - - 8,586,624 5,755,011 5,669,429
------- --- --- ---------- --------- ---------
Net assets at end of period......................................... $17,093 - - 11,065,270 8,586,624 5,755,011
======= === === ========== ========= =========
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT A
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements
June 30, 1996 (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 policy owner. 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
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investments
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
FVF and are recorded as income to the Variable Account on the ex-dividend date.
A Fixed Account investment option is available to variable universal life policy
owners. This account is comprised of equity and fixed income investments which
are part of the general assets of Allianz Life. The liabilities of the Fixed
Account are part of the general obligations of Allianz Life and are not included
in the Variable Account. The guaranteed minimum rate of return on the Fixed
Account is 3.5%.
The Templeton Developing Markets Equity Fund, Templeton Global Growth Fund and
Fixed Account were added as available investment options on July 1, 1994. The
Templeton Global Asset Allocation Fund and Small Cap Fund were added as
available investment options on May 1, 1995 and November 1, 1995, respectively.
The Small Cap Fund had no investment activity during 1995. The Zero Coupon -
1995 Fund matured and was closed on December 15, 1995.
The Capital Growth Fund and Templeton International Smaller Companies Fund were
added as available investment options on May 1, 1996. These funds had no
investment activity during the period ended June 30, 1996 (unaudited).
On May 1, 1995, the Equity Growth Fund name was changed to Growth and Income
Fund. The Global Income Fund name was changed to Templeton Global Income
Securities Fund on May 1, 1996.
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.
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT A
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements (cont.)
June 30, 1996 (unaudited)
2. Significant Accounting Policies (cont.)
Expenses (cont.)
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 period ended June 30, 1996 (unaudited)
and the years ended December 31, 1995 and 1994 were $343,065, $581,193 and
$123,231, respectively.
A deferred issue charge is deducted annually, at the end of the policy year,
from each single premium variable life 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 period ended June 30,
1996 (unaudited) and the years ended December 31, 1995 and 1994 were $24,480,
$28,613 and $32,516, respectively.
A policy charge is deducted on each monthly anniversary date from each variable
universal life policy by liquidating units. The amount of the charge is equal to
2.5% of each premium payment for premium taxes plus $20 per month for the first
policy year and $9 per month guaranteed thereafter. Currently, Allianz Life has
agreed to voluntarily limit the charge to $5 per month after the first policy
year. Total policy charges paid by the policy owners for the period ended June
30, 1996 (unaudited) and the years ended December 31, 1995 and 1994 were
$100,993, $292,695 and $64,030, respectively.
Twelve free transfers are permitted each contract year. Thereafter, the fee is
the lesser of $25 or 2% of the amount transferred. No transfer charges were paid
by the policy owners during the period ended June 30, 1996 (unaudited) and the
years ended December 31, 1995 and 1994, respectively. Transfers to the Fixed
Account during the period ended June 30, 1996 (unaudited) and the years ended
December 31, 1995 and 1994 were $13,877, $21,713 and $3,609, respectively.
The cost of insurance, deferred issue, policy and transfer charges paid are
reflected in the Statements of Changes in Net Assets 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, 1996
(unaudited):
<TABLE>
<CAPTION>
<S> <C>
Money Market Fund ................................ $1,735,798
Growth and Income Fund............................ 412,588
Precious Metals Fund.............................. 28,170
High Income Fund.................................. 842,003
Real Estate Securities Fund....................... 32,845
U.S. Government Securities Fund................... 56,433
Utility Equity Fund............................... 129,918
Zero Coupon Fund - 2000........................... 19,311
Zero Coupon Fund - 2005........................... 76,636
Zero Coupon Fund - 2010........................... 61,467
Templeton Global Income Securities Fund........... 23,946
Investment Grade Intermediate Bond Fund........... 9,924
Income Securities Fund............................ 187,629
Adjustable U.S. Government Fund................... 230,185
Templeton Pacific Growth Fund..................... 107,207
Rising Dividends Fund............................. 86,612
Templeton International Equity Fund............... 206,828
Templeton Developing Markets Equity Fund.......... 139,966
Templeton Global Growth Fund...................... 218,770
Templeton Global Asset Allocation Fund............ 512,759
Small Cap Fund.................................... 16,927
</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 that the
Variable Account may incur federal income taxes, it may then assess a charge
against the Variable Account for such taxes.
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT A
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements (cont.)
June 30, 1996 (unaudited)
5. Policy Transactions - Unit Activity
Transactions in units for each fund for the period ended June 30, 1996
(unaudited) and the years ended December 31, 1995 and 1994, were as follows:
<TABLE>
<CAPTION>
Growth Real U.S. Zero
Money and Precious High Estate Government Utility Coupon
Market Income 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, 1993.... 22,430 29,140 7,933 65,065 3,265 38,612 66,241 14,511
Policy 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) -
Policy loan transactions................. (25) (1,687) (1) 558 14 (1) (1,010) -
Other transactions....................... (5,734) (651) (142) (1,002) (191) (519) (1,195) (186)
------- ------ ------ ------ ----- ------ ------ ------
Net increase (decrease) in units
resulting from policy 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
======= ====== ====== ====== ===== ====== ====== ======
Policy transactions:
Purchase payments........................ 77,441 9,561 1,662 2,463 2,884 1,355 5,744 -
Transfers between funds.................. (57,166) 4,664 1,698 1,925 2,056 1,281 6,185 (14,174)
Surrenders and terminations.............. (3,275) (2,237) (5,150) (772) (427) (965) (1,893) -
Policy loan transactions................. (17) 38 20 75 (7) (111) (695) -
Other transactions....................... (8,596) (3,800) (840) (1,738) (1,246) (872) (3,112) (151)
------- ------ ------ ------ ----- ------ ------ ------
Net increase (decrease) in units
resulting from policy transactions.. 8,387 8,226 (2,610) 1,953 3,260 688 6,229 (14,325)
------- ------ ------ ------ ----- ------ ------ ------
Units outstanding at December 31, 1995.... 45,768 38,021 10,831 65,333 7,628 32,402 66,198 -
======= ====== ====== ====== ===== ====== ====== ======
Policy transactions (unaudited):
Purchase payments........................ 108,969 6,462 506 1,425 1,206 600 2,789 -
Transfers between funds.................. (115,307) 3,512 (1,092) 29,217 364 (1,077) (1,376) -
Surrenders and terminations.............. (1,770) (926) (382) (177) (32) (400) (1,537) -
Policy loan transactions................. (376) 442 (29) 405 (64) 7 (1,721) -
Other transactions....................... 537 (2,600) (282) (941) (565) (468) (1,545) -
------- ------ ------ ------ ----- ------ ------ ------
Net increase (decrease) in units
resulting from policy transactions.. (7,947) 6,890 (1,279) 29,929 909 (1,338) (3,390) -
------- ------ ------ ------ ----- ------ ------ ------
Units outstanding at
June 30, 1996 (unaudited)................ 37,821 44,911 9,552 95,262 8,537 31,064 62,808 -
======= ====== ====== ====== ===== ====== ====== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements (cont.)
June 30, 1996 (unaudited)
5. Policy Transactions - Unit Activity (cont.)
Zero Zero Zero Templeton Investment Adjustable Templeton
Coupon Coupon Coupon Global Income Grade Income U.S. Pacific
Fund - Fund - Fund - Securities Intermediate Securities Government Growth
2000 2005 2010 Fund Bond Fund Fund Fund Fund
----- ----- ----- --------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1993................... 15,249 16,042 7,408 1,537 582 2,104 403 9,924
Policy transactions:
Purchase payments................... - - - 133 100 1,334 495 998
Transfers between funds............. - (1,953) (3,442) 1,607 5,385 9,100 (213) 6,850
Surrenders and terminations......... (379) (1,348) - - - - - -
Policy loan transactions............ (72) - (7) - - (1,567) - (4,457)
Other transactions.................. (204) (182) (155) (102) (65) (457) (31) (680)
------ ------ ----- ----- ----- ------- ------ ------
Net increase (decrease)
in units resulting from
policy transactions............ (655) (3,483) (3,604) 1,638 5,420 8,410 251 2,711
------ ------ ----- ----- ----- ------- ------ ------
Units outstanding at
December 31, 1994................... 14,594 12,559 3,804 3,175 6,002 10,514 654 12,635
====== ====== ===== ===== ===== ======= ====== ======
Policy transactions:
Purchase payments................... - - - 2,992 963 12,397 1,060 10,718
Transfers between funds............. 458 - - 1,333 562 10,593 966 5,757
Surrenders and terminations......... - - - (416) (2,761) (783) - (779)
Policy loan transactions............ (3) (30) (6) (44) - (1,137) (151) (2,141)
Other transactions.................. (175) (147) (63) (1,239) (507) (4,970) (516) (4,868)
------ ------ ----- ----- ----- ------- ------ ------
Net increase (decrease)
in units resulting from
policy transactions............ 280 (177) (69) 2,626 (1,743) 16,100 1,359 8,687
------ ------ ----- ----- ----- ------- ------ ------
Units outstanding at
December 31, 1995................... 14,874 12,382 3,735 5,801 4,259 26,614 2,013 21,322
====== ====== ===== ===== ===== ======= ====== ======
Policy transactions (unaudited):
Purchase payments................... - - - 1,303 457 7,098 356 6,700
Transfers between funds............. - 2,259 1,673 42 33 2,721 16,676 396
Surrenders and terminations......... - (149) - (138) (44) (574) (94) (1,072)
Policy loan transactions............ (3) - (7) 13 - (195) 4 (183)
Other transactions.................. (108) (103) (48) (516) (224) (2,412) (185) (2,836)
------ ------ ----- ----- ----- ------- ------ ------
Net increase (decrease)
in units resulting from
policy transactions............ (111) 2,007 1,618 704 222 6,638 16,757 3,005
------ ------ ----- ----- ----- ------- ------ ------
Units outstanding at
June 30, 1996 (unaudited)........... 14,763 14,389 5,353 6,505 4,481 33,252 18,770 24,327
====== ====== ===== ===== ===== ======= ====== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements (cont.)
June 30, 1996 (unaudited)
5. Policy Transactions - Unit Activity (cont.)
Templeton Templeton
Templeton Developing Templeton Global
Rising International Markets Global Asset Small Total
Dividends Equity Equity Growth Allocation Cap All
Fund Fund Fund Fund Fund Fund Funds
------ -------- ------- ------- ------- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1993........... 3,576 1,368 - - - - 305,390
Policy transactions:
Purchase payments............................... 418 2,526 2,054 2,721 - - 72,282
Transfers between funds......................... 601 8,168 4,590 4,585 - - 5,037
Surrenders and terminations..................... - - - - - - (14,041)
Policy loan transactions........................ - 20 - - - - (8,235)
Other transactions.............................. (121) (679) (545) (558) - - (13,399)
------ ------ ------ ------ ------ ----- -------
Net increase (decrease) in units
resulting from policy transactions......... 898 10,035 6,099 6,748 - - 41,644
------ ------ ------ ------ ------ ----- -------
Units outstanding at December 31, 1994........... 4,474 11,403 6,099 6,748 - - 347,034
====== ====== ====== ====== ====== ===== =======
Policy transactions:
Purchase payments............................... 4,625 22,647 18,183 22,517 - - 197,212
Transfers between funds......................... 3,323 15,984 6,624 11,063 27 - 3,159
Surrenders and terminations..................... (23) (691) (2,067) (627) - - (22,866)
Policy loan transactions........................ - (130) (211) (307) - - (4,857)
Other transactions.............................. (1,699) (8,383) (6,418) (7,923) (6) - (57,269)
------ ------ ------ ------ ------ ----- -------
Net increase (decrease) in units
resulting from policy transactions......... 6,226 29,427 16,111 24,723 21 - 115,379
------ ------ ------ ------ ------ ----- -------
Units outstanding at December 31, 1995........... 10,700 40,830 22,210 31,471 21 - 462,413
====== ====== ====== ====== ====== ===== =======
Policy transactions (unaudited):
Purchase payments............................... 2,391 13,483 11,995 14,716 7 - 180,463
Transfers between funds......................... 4,369 2,360 3,488 7,068 45,221 1,422 1,969
Surrenders and terminations..................... (548) (1,605) (785) (791) - - (11,024)
Policy loan transactions........................ - (364) (169) (260) - - (2,500)
Other transactions.............................. (1,055) (4,614) (3,881) (4,745) (17) - (26,608)
------ ------ ------ ------ ------ ----- -------
Net increase (decrease) in units
resulting from policy transactions......... 5,157 9,260 10,648 15,988 45,211 1,422 142,300
------ ------ ------ ------ ------ ----- -------
Units outstanding at June 30, 1996 (unaudited)... 15,857 50,090 32,858 47,459 45,232 1,422 604,713
====== ====== ====== ====== ====== ===== =======
</TABLE>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements
December 31, 1995
<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, 1995, and
the related statements of operations and changes in net assets for each of the
years in the three-year period then ended. 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, 1995, and the results of their
operations and the changes in their net assets for each of the years in the
three-year period then ended, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 22, 1996
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Assets and Liabilities
December 31, 1995
U.S.
Money Growth and Precious High Real Estate Government
Market Income Metals Income Securities Securities
Fund Fund Fund Fund Fund Fund
-------- ---------- -------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Money Market Fund, 688,783
shares, cost $688,783 $688,783 - - - - -
Growth and Income Fund,
61,923 shares, cost $784,975 - 1,061,358 - - - -
Precious Metals Fund,
11,972 shares, cost $155,552 - - 168,569 - - -
High Income Fund, 94,672
shares, cost $1,083,932 - - - 1,293,220 - -
Real Estate Securities Fund,
9,253 shares, cost $129,563 - - - - 161,011 -
U.S. Government Securities Fund,
46,630 shares, cost $493,541 - - - - - 652,815
-------- ---------- -------- --------- ----------- ----------
Total assets 688,783 1,061,358 168,569 1,293,220 161,011 652,815
-------- ---------- -------- --------- ----------- ----------
Liabilities:
Accrued mortality and expense risk charges 5,545 6,553 3,028 8,702 1,189 4,693
Accrued administrative charges 1,386 1,639 757 2,176 297 1,173
-------- ---------- -------- --------- ----------- ----------
Total liabilities 6,931 8,192 3,785 10,878 1,486 5,866
-------- ---------- -------- --------- ----------- ----------
Net assets $681,852 1,053,166 164,784 1,282,342 159,525 646,949
======== ========== ======== ========= =========== ==========
Policy owners' equity (note 5) $681,852 1,053,166 164,784 1,282,342 159,525 646,949
======== ========== ======== ========= =========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Assets and Liabilities (Continued)
December 31, 1995
Zero Zero Zero
Utility Coupon Coupon Coupon Global
Equity Fund - Fund - Fund - Income
Fund 2000 2005 2010 Fund
---------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Utility Equity Fund, 87,060
shares, cost $1,090,116 $1,558,380 - - - -
Zero Coupon Fund - 2000,
22,437 shares, cost $242,285 - 352,928 - - -
Zero Coupon Fund - 2005,
19,602 shares, cost $206,775 - - 340,680 - -
Zero Coupon Fund - 2010,
6,514 shares, cost $87,335 - - - 117,505 -
Global Income Fund,
6,678 shares, cost $83,776 - - - - 89,882
---------- ------- ------- ------- ------
Total assets 1,558,380 352,928 340,680 117,505 89,882
---------- ------- ------- ------- ------
Liabilities:
Accrued mortality and expense risk charges 9,966 2,805 2,816 1,415 683
Accrued administrative charges 2,492 701 704 354 171
---------- ------- ------- ------- ------
Total liabilities 12,458 3,506 3,520 1,769 854
---------- ------- ------- ------- ------
Net assets $1,545,922 349,422 337,160 115,736 89,028
========== ======= ======= ======= ======
Policy owners' equity (note 5) $1,545,922 349,422 337,160 115,736 89,028
========== ======= ======= ======= ======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Assets and Liabilities (Continued)
December 31, 1995
Investment Adjustable Templeton Templeton
Grade Income U.S. Pacific Rising International
Intermediate Securities Government Growth Dividends Equity
Bond Fund Fund Fund Fund Fund Fund
------------- ---------- ---------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Investment Grade Intermediate Bond
Fund, 4,694 shares, cost $62,378 $ 65,953 - - - - -
Income Securities Fund,
32,025 shares, cost $485,185 - 527,453 - - - -
Adjustable U.S. Government Fund,
2,355 shares, cost $25,140 - - 25,340 - - -
Templeton Pacific Growth Fund,
21,600 shares, cost $283,997 - - - 300,461 - -
Rising Dividends Fund,
10,919 shares, cost $121,353 - - - - 138,230 -
Templeton International Equity Fund,
41,923 shares, cost $541,531 - - - - - 558,415
------------- ---------- ---------- --------- --------- -------------
Total assets 65,953 527,453 25,340 300,461 138,230 558,415
------------- ---------- ---------- --------- --------- -------------
Liabilities:
Accrued mortality and expense risk charges 771 2,710 380 1,958 881 2,511
Accrued administrative charges 192 677 95 489 220 628
------------- ---------- ---------- --------- --------- -------------
Total liabilities 963 3,387 475 2,447 1,101 3,139
------------- ---------- ---------- --------- --------- -------------
Net assets $ 64,990 524,066 24,865 298,014 137,129 555,276
============= ========== ========== ========= ========= =============
Policy owners' equity (note 5) $ 64,990 524,066 24,865 298,014 137,129 555,276
============= ========== ========== ========= ========= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Assets and Liabilities (Continued)
December 31, 1995
Templeton Templeton
Developing Templeton Global
Markets Global Asset Total
Equity Growth Allocation All
Fund Fund Fund Funds
----------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Templeton Developing Markets Equity
Fund, 21,362 shares, cost $207,452 $ 208,923 - -
Templeton Global Growth Fund,
29,782 shares, cost $326,613 - 349,937 -
Templeton Global Asset Allocation
Fund, 21 shares, cost $236 - - 221
----------- --------- ----------
Total assets 208,923 349,937 221 8,660,064
----------- --------- ---------- ---------
Liabilities:
Accrued mortality and expense risk charges 883 1,262 1 58,752
Accrued administrative charges 221 316 - 14,688
----------- --------- ---------- ---------
Total liabilities 1,104 1,578 1 73,440
----------- --------- ---------- ---------
Net assets $ 207,819 348,359 220 8,586,624
=========== ========= ========== =========
Policy owners' equity (note 5) $ 207,819 348,359 220 8,586,624
=========== ========= ========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Operations
For the years ended December 31, 1995, 1994 and 1993
Growth Growth Growth
Money Money Money and and and
Market Market Market Income Income Income
Fund Fund Fund Fund Fund Fund
---------- --------- --------- -------- -------- ---------
1995 1994 1993 1995 1994 1993
---------- --------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 33,164 14,466 9,437 10,179 4,301 5,989
---------- --------- --------- -------- -------- ---------
Expenses:
Mortality and expense risk charges 4,898 2,689 2,266 5,842 3,726 4,110
Administrative charges 1,225 672 567 1,460 932 1,028
---------- --------- --------- -------- -------- ---------
Total expenses 6,123 3,361 2,833 7,302 4,658 5,138
---------- --------- --------- -------- -------- ---------
Investment income (loss), net 27,041 11,105 6,604 2,877 (357) 851
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - - - 22,157 8,957 -
---------- --------- --------- -------- -------- ---------
Realized gains (losses) on sales of investments:
Proceeds from sales 965,636 513,009 202,473 97,576 114,661 228,561
Cost of investments sold (965,636) (513,009) (202,473) (77,218) (94,631) (188,907)
---------- --------- --------- -------- -------- ---------
Total realized gains (losses) on
sales of investments, net - - - 20,358 20,030 39,654
---------- --------- --------- -------- -------- ---------
Realized gains (losses) on investments, net - - - 42,515 28,987 39,654
Net change in unrealized appreciation
(depreciation) on investments - - - 184,273 (45,642) 19,332
---------- --------- --------- -------- -------- ---------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net - - - 226,788 (16,655) 58,986
---------- --------- --------- -------- -------- ---------
Net increase (decrease) in net assets from operations $ 27,041 11,105 6,604 229,665 (17,012) 59,837
========== ========= ========= ======== ======== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Operations (Continued)
For the years ended December 31, 1995, 1994 and 1993
Precious Precious Precious High High High
Metals Metals Metals Income Income Income
Fund Fund Fund Fund Fund Fund
---------- --------- --------- -------- -------- --------
1995 1994 1993 1995 1994 1993
---------- --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 3,600 626 1,029 78,044 44,601 37,831
---------- --------- --------- -------- -------- --------
Expenses:
Mortality and expense risk charges 2,489 700 999 7,709 6,671 6,406
Administrative charges 622 175 250 1,927 1,668 1,602
---------- --------- --------- -------- -------- --------
Total expenses 3,111 875 1,249 9,636 8,339 8,008
---------- --------- --------- -------- -------- --------
Investment income (loss), net 489 (249) (220) 68,408 36,262 29,823
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds 2,665 - - - 6,061 -
---------- --------- --------- -------- -------- --------
Realized gains (losses) on sales of investments:
Proceeds from sales 161,878 11,123 220,760 47,176 51,287 40,079
Cost of investments sold (146,847) (9,528) (208,874) (39,566) (45,931) (35,650)
---------- --------- --------- -------- -------- --------
Total realized gains (losses) on
sales of investments, net 15,031 1,595 11,886 7,610 5,356 4,429
---------- --------- --------- -------- -------- --------
Realized gains (losses) on investments, net 17,696 1,595 11,886 7,610 11,417 4,429
Net change in unrealized appreciation
(depreciation) on investments (10,144) (2,094) 49,249 122,964 (81,774) 110,533
---------- --------- --------- -------- -------- --------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 7,552 (499) 61,135 130,574 (70,357) 114,962
---------- --------- --------- -------- -------- --------
Net increase (decrease) in net assets from operations $ 8,041 (748) 60,915 198,982 (34,095) 144,785
========== ========= ========= ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Operations (Continued)
For the years ended December 31, 1995, 1994 and 1993
Real Real Real U.S. U.S. U.S.
Estate Estate Estate Government Government Government
Securities Securities Securities Securities Securities Securities
Fund Fund Fund Fund Fund Fund
------------ ----------- ----------- ----------- ----------- -----------
1995 1994 1993 1995 1994 1993
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 3,875 613 603 41,763 29,171 24,746
------------ ----------- ----------- ----------- ----------- -----------
Expenses:
Mortality and expense risk charges 833 672 385 3,974 3,380 4,158
Administrative charges 208 168 96 994 845 1,039
------------ ----------- ----------- ----------- ----------- -----------
Total expenses 1,041 840 481 4,968 4,225 5,197
------------ ----------- ----------- ----------- ----------- -----------
Investment income (loss), net 2,834 (227) 122 36,795 24,946 19,549
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 22,803 5,838 10,124 33,799 131,317 22,770
Cost of investments sold (19,244) (4,033) (7,269) (26,326) (99,718) (16,285)
------------ ----------- ----------- ----------- ----------- -----------
Total realized gains (losses) on
sales of investments, net 3,559 1,805 2,855 7,473 31,599 6,485
------------ ----------- ----------- ----------- ----------- -----------
Realized gains (losses) on investments, net 3,559 1,805 2,855 7,473 33,884 10,280
Net change in unrealized appreciation
(depreciation) on investments 14,488 759 5,891 56,173 (91,983) 27,413
------------ ----------- ----------- ----------- ----------- -----------
Total realized gains (losses) and
unrealized appreciation (depreciation)
on investments, net 18,047 2,564 8,746 63,646 (58,099) 37,693
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
net assets from operations $ 20,881 2,337 8,868 100,441 (33,153) 57,242
============ =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Operations (Continued)
For the years ended December 31, 1995, 1994 and 1993
Zero Zero Zero
Utility Utility Utility Coupon Coupon Coupon
Equity Equity Equity Fund - Fund - Fund -
Fund Fund Fund 1995 1995 1995
--------- --------- --------- --------- -------- -------
1995 1994 1993 1995 1994 1993
--------- --------- --------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 70,912 44,904 25,962 17,379 15,282 15,253
--------- --------- --------- --------- -------- -------
Expenses:
Mortality and expense risk charges 8,983 6,698 8,255 (594) 1,529 1,574
Administrative charges 2,246 1,674 2,064 (149) 383 394
--------- --------- --------- --------- -------- -------
Total expenses 11,229 8,372 10,319 (743) 1,912 1,968
--------- --------- --------- --------- -------- -------
Investment income (loss), net 59,683 36,532 15,643 18,122 13,370 13,285
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 112,297 183,473 185,645 273,701 4,692 5,351
Cost of investments sold (88,887) (138,153) (121,008) (236,082) (3,908) (4,170)
--------- --------- --------- --------- -------- -------
Total realized gains (losses) on
sales of investments, net 23,410 45,320 64,637 37,619 784 1,181
--------- --------- --------- --------- -------- -------
Realized gains (losses) on investments, net 23,410 53,278 64,775 37,705 1,409 4,401
Net change in unrealized appreciation
(depreciation) on investments 259,686 (253,440) 47,455 (37,457) (14,916) (1,412)
--------- --------- --------- --------- -------- -------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 283,096 (200,162) 112,230 248 (13,507) 2,989
--------- --------- --------- --------- -------- -------
Net increase (decrease) in net assets from operations $342,779 (163,630) 127,873 18,370 (137) 16,274
========= ========= ========= ========= ======== =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Operations (Continued)
For the years ended December 31, 1995, 1994 and 1993
Zero Zero Zero Zero Zero Zero
Coupon Coupon Coupon Coupon Coupon Coupon
Fund - Fund - Fund - Fund - Fund - Fund -
2000 2000 2000 2005 2005 2005
-------- -------- ------- ------- -------- --------
1995 1994 1993 1995 1994 1993
-------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $13,993 14,292 12,537 12,928 11,417 12,406
-------- -------- ------- ------- -------- --------
Expenses:
Mortality and expense risk charges 2,179 1,769 1,943 2,227 1,741 2,279
Administrative charges 545 442 486 557 435 570
-------- -------- ------- ------- -------- --------
Total expenses 2,724 2,211 2,429 2,784 2,176 2,849
-------- -------- ------- ------- -------- --------
Investment income (loss), net 11,269 12,081 10,108 10,144 9,241 9,557
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - 2,038 637 - 3,569 138
-------- -------- ------- ------- -------- --------
Realized gains (losses) on sales of investments:
Proceeds from sales 3,895 14,723 6,582 4,311 75,603 47,063
Cost of investments sold (2,731) (10,946) (4,419) (2,816) (52,536) (30,041)
-------- -------- ------- ------- -------- --------
Total realized gains (losses) on
sales of investments, net 1,164 3,777 2,163 1,495 23,067 17,022
-------- -------- ------- ------- -------- --------
Realized gains (losses) on investments, net 1,164 5,815 2,800 1,495 26,636 17,160
Net change in unrealized appreciation
(depreciation) on investments 44,013 (41,764) 30,329 68,320 (72,608) 44,629
-------- -------- ------- ------- -------- --------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 45,177 (35,949) 33,129 69,815 (45,972) 61,789
-------- -------- ------- ------- -------- --------
Net increase (decrease) in net assets from operations $56,446 (23,868) 43,237 79,959 (36,731) 71,346
======== ======== ======= ======= ======== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Operations (Continued)
For the years ended December 31, 1995, 1994 and 1993
Zero Zero Zero
Coupon Coupon Coupon Global Global Global
Fund - Fund - Fund - Income Income Income
2010 2010 2010 Fund Fund Fund
-------- -------- ------- -------- ------- -------
1995 1994 1993 1995 1994 1993
-------- -------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 3,109 7,316 5,501 2,871 494 798
-------- -------- ------- -------- ------- -------
Expenses:
Mortality and expense risk charges 916 926 827 470 129 151
Administrative charges 229 231 207 118 32 38
-------- -------- ------- -------- ------- -------
Total expenses 1,145 1,157 1,034 588 161 189
-------- -------- ------- -------- ------- -------
Investment income (loss), net 1,964 6,159 4,467 2,283 333 609
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - 3,560 224 - 204 259
-------- -------- ------- -------- ------- -------
Realized gains (losses) on sales of investments:
Proceeds from sales 1,827 79,261 3,258 15,642 2,577 449
Cost of investments sold (1,569) (81,331) (2,479) (15,250) (2,445) (429)
-------- -------- ------- -------- ------- -------
Total realized gains (losses) on
sales of investments, net 258 (2,070) 779 392 132 20
-------- -------- ------- -------- ------- -------
Realized gains (losses) on investments, net 258 1,490 1,003 392 336 279
Net change in unrealized appreciation
(depreciation) on investments 32,162 (29,320) 10,850 6,634 (2,030) 2,156
-------- -------- ------- -------- ------- -------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 32,420 (27,830) 11,853 7,026 (1,694) 2,435
-------- -------- ------- -------- ------- -------
Net increase (decrease) in net assets from operations $34,384 (21,671) 16,320 9,309 (1,361) 3,044
======== ======== ======= ======== ======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Operations (Continued)
For the years ended December 31, 1995, 1994 and 1993
Investment Investment Investment
Grade Grade Grade Income Income Income
Intermediate Intermediate Intermediate Securities Securities Securities
Bond Fund Bond Fund Bond Fund Fund Fund Fund
-------------- ------------- ------------- ----------- ----------- -----------
1995 1994 1993 1995 1994 1993
-------------- ------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 3,949 253 195 19,772 2,467 813
-------------- ------------- ------------- ----------- ----------- -----------
Expenses:
Mortality and expense risk charges 529 169 51 2,265 963 221
Administrative charges 132 42 13 566 241 55
-------------- ------------- ------------- ----------- ----------- -----------
Total expenses 661 211 64 2,831 1,204 276
-------------- ------------- ------------- ----------- ----------- -----------
Investment income (loss), net 3,288 42 131 16,941 1,263 537
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 44,251 577 85 55,949 29,910 5,434
Cost of investments sold (43,145) (565) (77) (55,228) (30,339) (4,871)
-------------- ------------- ------------- ----------- ----------- -----------
Total realized gains (losses) on
sales of investments, net 1,106 12 8 721 (429) 563
-------------- ------------- ------------- ----------- ----------- -----------
Realized gains (losses)
on investments, net 1,106 48 40 2,313 (62) 681
Net change in unrealized appreciation
(depreciation) on investments 2,630 150 419 47,314 (9,527) 4,145
-------------- ------------- ------------- ----------- ----------- -----------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on investments, net 3,736 198 459 49,627 (9,589) 4,826
-------------- ------------- ------------- ----------- ----------- -----------
Net increase (decrease) in
net assets from operations $ 7,024 240 590 66,568 (8,326) 5,363
============== ============= ============= =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Operations (Continued)
For the years ended December 31, 1995, 1994 and 1993
Adjustable Adjustable Adjustable Templeton Templeton Templeton
U.S. U.S. U.S. Pacific Pacific Pacific
Government Government Government Growth Growth Growth
Fund Fund Fund Fund Fund Fund
------------ ----------- ----------- ---------- ---------- ----------
1995 1994 1993 1995 1994 1993
------------ ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 1,373 184 192 4,502 347 -
------------ ----------- ----------- ---------- ---------- ----------
Expenses:
Mortality and expense risk charges 139 27 34 1,485 689 315
Administrative charges 35 7 9 371 172 79
------------ ----------- ----------- ---------- ---------- ----------
Total expenses 174 34 43 1,856 861 394
------------ ----------- ----------- ---------- ---------- ----------
Investment income (loss), net 1,199 150 149 2,646 (514) (394)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments
Realized capital gain
distributions on mutual funds - - - 1,872 672 -
------------ ----------- ----------- ---------- ---------- ----------
Realized gains (losses)
on sales of investments:
Proceeds from sales 11,606 8,733 82 60,917 116,746 743
Cost of investments sold (11,571) (8,814) (80) (59,672) (108,205) (666)
------------ ----------- ----------- ---------- ---------- ----------
Total realized gains (losses) on
sales of investments, net 35 (81) 2 1,245 8,541 77
------------ ----------- ----------- ---------- ---------- ----------
Realized gains (losses) on investments, net 35 (81) 2 3,117 9,213 77
Net change in unrealized appreciation
(depreciation) on investments 240 (98) (25) 13,125 (24,505) 28,189
------------ ----------- ----------- ---------- ---------- ----------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on investments, net 275 (179) (23) 16,242 (15,292) 28,266
------------ ----------- ----------- ---------- ---------- ----------
Net increase (decrease) in
net assets from operations $ 1,474 (29) 126 18,888 (15,806) 27,872
============ =========== =========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Operations (Continued)
For the years ended December 31, 1995, 1994 and 1993
Rising Rising Rising Templeton Templeton Templeton
Dividends Dividends Dividends International International International
Fund Fund Fund Equity Fund Equity Fund Equity Fund
----------- ---------- ---------- -------------- -------------- --------------
1995 1994 1993 1995 1994 1993
----------- ---------- ---------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 1,695 601 99 6,289 71 -
----------- ---------- ---------- -------------- -------------- --------------
Expenses:
Mortality and expense risk charges 587 227 208 2,178 323 93
Administrative charges 147 57 52 545 81 23
----------- ---------- ---------- -------------- -------------- --------------
Total expenses 734 284 260 2,723 404 116
----------- ---------- ---------- -------------- -------------- --------------
Investment income (loss), net 961 317 (161) 3,566 (333) (116)
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain
distributions on mutual funds - - - 7,792 95 -
----------- ---------- ---------- -------------- -------------- --------------
Realized gains (losses)
on sales of investments:
Proceeds from sales 6,910 752 394 37,517 895 88,730
Cost of investments sold (6,447) (796) (402) (36,911) (878) (84,735)
----------- ---------- ---------- -------------- -------------- --------------
Total realized gains (losses) on
sales of investments, net 463 (44) (8) 606 17 3,995
----------- ---------- ---------- -------------- -------------- --------------
Realized gains (losses)
on investments, net 463 (44) (8) 8,398 112 3,995
Net change in unrealized appreciation
(depreciation) on investments 19,701 (2,053) (1,565) 19,054 (3,562) 1,391
----------- ---------- ---------- -------------- -------------- --------------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on investments, net 20,164 (2,097) (1,573) 27,452 (3,450) 5,386
----------- ---------- ---------- -------------- -------------- --------------
Net increase (decrease) in
net assets from operations $ 21,125 (1,780) (1,734) 31,018 (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
Statements of Operations (Continued)
For the years ended December 31, 1995, 1994 and 1993
Templeton Templeton Templeton
Developing Developing Developing Templeton Templeton Templeton
Markets Markets Markets Global Global Global
Equity Equity Equity Growth Growth Growth
Fund Fund Fund Fund Fund Fund
------------ ----------- ---------- ---------- ---------- ---------
1995 1994 1993 1995 1994 1993
------------ ----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 562 - - 1,137 - -
------------ ----------- ---------- ---------- ---------- ---------
Expenses:
Mortality and expense risk charges 3,898 3,197 - 1,255 65 -
Administrative charges 975 799 - 314 16 -
------------ ----------- ---------- ---------- ---------- ---------
Total expenses 4,873 3,996 - 1,569 81 -
------------ ----------- ---------- ---------- ---------- ---------
Investment income (loss), net (4,311) (3,996) - (432) (81) -
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 37,410 2,518 - 28,814 3,901 -
Cost of investments sold (37,995) (2,585) - (28,227) (3,952) -
------------ ----------- ---------- ---------- ---------- ---------
Total realized gains (losses) on
sales of investments, net (585) (67) - 587 (51) -
------------ ----------- ---------- ---------- ---------- ---------
Realized gains (losses) on investments, net (453) (67) - 587 (51) -
Net change in unrealized appreciation
(depreciation) on investments 4,422 (2,951) - 23,468 (144) -
------------ ----------- ---------- ---------- ---------- ---------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on investments, net 3,969 (3,018) - 24,055 (195) -
------------ ----------- ---------- ---------- ---------- ---------
Net increase (decrease) in
net assets from operations $ (342) (7,014) - 23,623 (276) -
============ =========== ========== ========== ========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Operations (Continued)
For the years ended December 31, 1995, 1994 and 1993
Templeton Templeton Templeton
Global Global Global
Asset Asset Asset Total Total Total
Allocation Allocation Allocation All All All
Fund Fund Fund Funds Funds Funds
------------ ---------- ---------- ----------- ----------- ----------
1995 1994 1993 1995 1994 1993
------------ ---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 4 - - 331,100 191,406 153,391
------------ ---------- ---------- ----------- ----------- ----------
Expenses:
Mortality and expense risk charges 25 - - 52,287 36,290 34,275
Administrative charges 6 - - 13,073 9,072 8,572
------------ ---------- ---------- ----------- ----------- ----------
Total expenses 31 - - 65,360 45,362 42,847
------------ ---------- ---------- ----------- ----------- ----------
Investment income (loss), net (27) - - 265,740 146,044 110,544
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 168 - - 2,024,083 1,351,596 1,068,583
Cost of investments sold (151) - - (1,901,519) (1,212,303) (912,835)
------------ ---------- ---------- ----------- ----------- ----------
Total realized gains (losses) on
sales of investments, net 17 - - 122,564 139,293 155,748
------------ ---------- ---------- ----------- ----------- ----------
Realized gains (losses)
on investments, net 17 - - 158,860 175,720 164,309
Net change in unrealized appreciation
(depreciation) on investments (15) - - 871,051 (677,502) 378,979
------------ ---------- ---------- ----------- ----------- ----------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on investments, net 2 - - 1,029,911 (501,782) 543,288
------------ ---------- ---------- ----------- ----------- ----------
Net increase (decrease) in
net assets from operations $ (25) - - 1,295,651 (355,738) 653,832
============ ========== ========== =========== =========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Changes in Net Assets
For the years ended December 31, 1995, 1994 and 1993
Growth Growth Growth
Money Money Money and and and
Market Market Market Income Income Income
Fund Fund Fund Fund Fund Fund
----------- --------- -------- ---------- -------- ---------
1995 1994 1993 1995 1994 1993
----------- --------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 27,041 11,105 6,604 2,877 (357) 851
Realized gains (losses) on investments, net - - - 42,515 28,987 39,654
Net change in unrealized appreciation
(depreciation) on investments - - - 184,273 (45,642) 19,332
----------- --------- -------- ---------- -------- ---------
Net increase (decrease) in net assets
from operations 27,041 11,105 6,604 229,665 (17,012) 59,837
----------- --------- -------- ---------- -------- ---------
Contract transactions (note 5):
Purchase payments 1,140,571 835,456 - 233,408 15,811 -
Transfers between funds (843,539) (442,767) 16,604 111,030 97,056 (88,021)
Surrenders and terminations (48,126) (101,035) (66,017) (54,886) (49,775) (67,969)
Other transactions (note 2) (124,660) (81,114) (6,376) (92,033) (49,647) 400
----------- --------- -------- ---------- -------- ---------
Net increase (decrease) in net assets
resulting from contract transactions 124,246 210,540 (55,789) 197,519 13,445 (155,590)
----------- --------- -------- ---------- -------- ---------
Increase (decrease) in net assets 151,287 221,645 (49,185) 427,184 (3,567) (95,753)
----------- --------- -------- ---------- -------- ---------
Net assets at beginning of year 530,565 308,920 358,105 625,982 629,549 725,302
----------- --------- -------- ---------- -------- ---------
Net assets at end of year $ 681,852 530,565 308,920 1,053,166 625,982 629,549
=========== ========= ======== ========== ======== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995, 1994 and 1993
Precious Precious Precious High High High
Metals Metals Metals Income Income Income
Fund Fund Fund Fund Fund Fund
---------- --------- --------- ---------- ---------- ----------
1995 1994 1993 1995 1994 1993
---------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 489 (249) (220) 68,408 36,262 29,823
Realized gains (losses) on investments, net 17,696 1,595 11,886 7,610 11,417 4,429
Net change in unrealized appreciation
(depreciation) on investments (10,144) (2,094) 49,249 122,964 (81,774) 110,533
---------- --------- --------- ---------- ---------- ----------
Net increase (decrease) in net assets
from operations 8,041 (748) 60,915 198,982 (34,095) 144,785
---------- --------- --------- ---------- ---------- ----------
Contract transactions (note 5):
Purchase payments 24,963 988 - 44,935 4,791 -
Transfers between funds 23,956 89,216 (102,112) 37,055 (10,182) (1,243)
Surrenders and terminations (81,139) (8,168) - (14,331) (14,141) -
Other transactions (note 2) (12,332) (2,128) (140) (30,818) (7,272) (11,334)
---------- --------- --------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from contract transactions (44,552) 79,908 (102,252) 36,841 (26,804) (12,577)
---------- --------- --------- ---------- ---------- ----------
Increase (decrease) in net assets (36,511) 79,160 (41,337) 235,823 (60,899) 132,208
---------- --------- --------- ---------- ---------- ----------
Net assets at beginning of year 201,295 122,135 163,472 1,046,519 1,107,418 975,210
---------- --------- --------- ---------- ---------- ----------
Net assets at end of year $ 164,784 201,295 122,135 1,282,342 1,046,519 1,107,418
========== ========= ========= ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995, 1994 and 1993
Real Real Real U.S. U.S. U.S.
Estate Estate Estate Government Government Government
Securities Securities Securities Securities Securities Securities
Fund Fund Fund Fund Fund Fund
------------ ----------- ----------- ----------- ----------- -----------
1995 1994 1993 1995 1994 1993
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 2,834 (227) 122 36,795 24,946 19,549
Realized gains (losses) on investments, net 3,559 1,805 2,855 7,473 33,884 10,280
Net change in unrealized appreciation
(depreciation) on investments 14,488 759 5,891 56,173 (91,983) 27,413
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
from operations 20,881 2,337 8,868 100,441 (33,153) 57,242
------------ ----------- ----------- ----------- ----------- -----------
Contract transactions (note 5):
Purchase payments 53,203 7,592 - 25,128 1,041 -
Transfers between funds 38,779 14,088 (4,205) 24,109 (111,346) (8,013)
Surrenders and terminations (8,139) - - (18,462) - -
Other transactions (note 2) (23,508) (3,026) 1,380 (18,318) (8,820) (9,256)
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from contract transactions 60,335 18,654 (2,825) 12,457 (119,125) (17,269)
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets 81,216 20,991 6,043 112,898 (152,278) 39,973
------------ ----------- ----------- ----------- ----------- -----------
Net assets at beginning of year 78,309 57,318 51,275 534,051 686,329 646,356
------------ ----------- ----------- ----------- ----------- -----------
Net assets at end of year $ 159,525 78,309 57,318 646,949 534,051 686,329
============ =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995, 1994 and 1993
Zero Zero Zero
Utility Utility Utility Coupon Coupon Coupon
Equity Equity Equity Fund - Fund - Fund -
Fund Fund Fund 1995 1995 1995
----------- ---------- ---------- --------- -------- --------
1995 1994 1993 1995 1994 1993
----------- ---------- ---------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 59,683 36,532 15,643 18,122 13,370 13,285
Realized gains (losses) on investments, net 23,410 53,278 64,775 37,705 1,409 4,401
Net change in unrealized appreciation
(depreciation) on investments 259,686 (253,440) 47,455 (37,457) (14,916) (1,412)
----------- ---------- ---------- --------- -------- --------
Net increase (decrease) in net assets
from operations 342,779 (163,630) 127,873 18,370 (137) 16,274
----------- ---------- ---------- --------- -------- --------
Contract transactions (note 5):
Purchase payments 116,016 11,599 - - - -
Transfers between funds 124,589 (62,456) (19,863) (270,886) - -
Surrenders and terminations (35,449) (23,338) (91,320) - - -
Other transactions (note 2) (76,186) (39,723) (18,834) (2,815) (3,292) (3,050)
----------- ---------- ---------- --------- -------- --------
Net increase (decrease) in net assets
resulting from contract transactions 128,970 (113,918) (130,017) (273,701) (3,292) (3,050)
----------- ---------- ---------- --------- -------- --------
Increase (decrease) in net assets 471,749 (277,548) (2,144) (255,331) (3,429) 13,224
----------- ---------- ---------- --------- -------- --------
Net assets at beginning of year 1,074,173 1,351,721 1,353,865 255,331 258,760 245,536
----------- ---------- ---------- --------- -------- --------
Net assets at end of year $1,545,922 1,074,173 1,351,721 - 255,331 258,760
=========== ========== ========== ========= ======== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995, 1994 and 1993
Zero Zero Zero Zero Zero Zero
Coupon Coupon Coupon Coupon Coupon Coupon
Fund - Fund - Fund - Fund - Fund - Fund -
2000 2000 2000 2005 2005 2005
--------- -------- -------- -------- --------- --------
1995 1994 1993 1995 1994 1993
--------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 11,269 12,081 10,108 10,144 9,241 9,557
Realized gains (losses) on investments, net 1,164 5,815 2,800 1,495 26,636 17,160
Net change in unrealized appreciation
(depreciation) on investments 44,013 (41,764) 30,329 68,320 (72,608) 44,629
--------- -------- -------- -------- --------- --------
Net increase (decrease) in net assets
from operations 56,446 (23,868) 43,237 79,959 (36,731) 71,346
--------- -------- -------- -------- --------- --------
Contract transactions (note 5):
Purchase payments - - - - - -
Transfers between funds 10,631 - - - (41,224) (31,627)
Surrenders and terminations - (7,535) - - (28,826) -
Other transactions (note 2) (3,895) (5,488) (3,880) (4,312) (3,853) (2,637)
--------- -------- -------- -------- --------- --------
Net increase (decrease) in net assets
resulting from contract transactions 6,736 (13,023) (3,880) (4,312) (73,903) (34,264)
--------- -------- -------- -------- --------- --------
Increase (decrease) in net assets 63,182 (36,891) 39,357 75,647 (110,634) 37,082
--------- -------- -------- -------- --------- --------
Net assets at beginning of year 286,240 323,131 283,774 261,513 372,147 335,065
--------- -------- -------- -------- --------- --------
Net assets at end of year $349,422 286,240 323,131 337,160 261,513 372,147
========= ======== ======== ======== ========= ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995, 1994 and 1993
Zero Zero Zero
Coupon Coupon Coupon Global Global Global
Fund - Fund - Fund - Income Income Income
2010 2010 2010 Fund Fund Fund
--------- --------- -------- -------- ------- -------
1995 1994 1993 1995 1994 1993
--------- --------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 1,964 6,159 4,467 2,283 333 609
Realized gains (losses) on investments, net 258 1,490 1,003 392 336 279
Net change in unrealized appreciation
(depreciation) on investments 32,162 (29,320) 10,850 6,634 (2,030) 2,156
--------- --------- -------- -------- ------- -------
Net increase (decrease) in net assets
from operations 34,384 (21,671) 16,320 9,309 (1,361) 3,044
--------- --------- -------- -------- ------- -------
Contract transactions (note 5):
Purchase payments - - - 42,908 1,813 -
Transfers between funds - (74,884) 90,077 18,457 21,778 -
Surrenders and terminations - - - (6,040) - -
Other transactions (note 2) (1,826) (3,577) (1,956) (18,424) (1,388) (348)
--------- --------- -------- -------- ------- -------
Net increase (decrease) in net assets
resulting from contract transactions (1,826) (78,461) 88,121 36,901 22,203 (348)
--------- --------- -------- -------- ------- -------
Increase (decrease) in net assets 32,558 (100,132) 104,441 46,210 20,842 2,696
--------- --------- -------- -------- ------- -------
Net assets at beginning of year 83,178 183,310 78,869 42,818 21,976 19,280
--------- --------- -------- -------- ------- -------
Net assets at end of year $115,736 83,178 183,310 89,028 42,818 21,976
========= ========= ======== ======== ======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995, 1994 and 1993
Investment Investment Investment
Grade Grade Grade Income Income Income
Intermediate Intermediate Intermediate Securities Securities Securities
Bond Fund Bond Fund Bond Fund Fund Fund Fund
-------------- ------------- ------------- ----------- ----------- -----------
1995 1994 1993 1995 1994 1993
-------------- ------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 3,288 42 131 16,941 1,263 537
Realized gains (losses)
on investments, net 1,106 48 40 2,313 (62) 681
Net change in unrealized
appreciation (depreciation)
on investments 2,630 150 419 47,314 (9,527) 4,145
-------------- ------------- ------------- ----------- ----------- -----------
Net increase (decrease) in
net assets from operations 7,024 240 590 66,568 (8,326) 5,363
-------------- ------------- ------------- ----------- ----------- -----------
Contract transactions (note 5):
Purchase payments 14,163 1,391 - 223,737 22,483 -
Transfers between funds 8,123 75,010 - 186,849 153,200 7,985
Surrenders and terminations (40,771) - - (14,487) - -
Other transactions (note 2) (7,440) (908) (84) (109,005) (33,608) (341)
-------------- ------------- ------------- ----------- ----------- -----------
Net increase (decrease) in
net assets resulting from
contract transactions (25,925) 75,493 (84) 287,094 142,075 7,644
-------------- ------------- ------------- ----------- ----------- -----------
Increase (decrease) in net assets (18,901) 75,733 506 353,662 133,749 13,007
-------------- ------------- ------------- ----------- ----------- -----------
Net assets at beginning of year 83,891 8,158 7,652 170,404 36,655 23,648
-------------- ------------- ------------- ----------- ----------- -----------
Net assets at end of year $ 64,990 83,891 8,158 524,066 170,404 36,655
============== ============= ============= =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995, 1994 and 1993
Adjustable Adjustable Adjustable Templeton Templeton Templeton
U.S. U.S. U.S. Pacific Pacific Pacific
Government Government Government Growth Growth Growth
Fund Fund Fund Fund Fund Fund
------------ ----------- ----------- ---------- ---------- ----------
1995 1994 1993 1995 1994 1993
------------ ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 1,199 150 149 2,646 (514) (394)
Realized gains (losses) on investments, net 35 (81) 2 3,117 9,213 77
Net change in unrealized appreciation
(depreciation) on investments 240 (98) (25) 13,125 (24,505) 28,189
------------ ----------- ----------- ---------- ---------- ----------
Net increase (decrease) in net assets
from operations 1,474 (29) 126 18,888 (15,806) 27,872
------------ ----------- ----------- ---------- ---------- ----------
Contract transactions (note 5):
Purchase payments 12,633 5,636 - 141,914 13,634 -
Transfers between funds 11,222 (2,444) - 74,887 91,481 109,893
Surrenders and terminations - - - (10,270) - -
Other transactions (note 2) (7,891) (358) (81) (92,189) (67,497) (543)
------------ ----------- ----------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from contract transactions 15,964 2,834 (81) 114,342 37,618 109,350
------------ ----------- ----------- ---------- ---------- ----------
Increase (decrease) in net assets 17,438 2,805 45 133,230 21,812 137,222
------------ ----------- ----------- ---------- ---------- ----------
Net assets at beginning of year 7,427 4,622 4,577 164,784 142,972 5,750
------------ ----------- ----------- ---------- ---------- ----------
Net assets at end of year $ 24,865 7,427 4,622 298,014 164,784 142,972
============ =========== =========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995, 1994 and 1993
Templeton Templeton Templeton
Rising Rising Rising International International International
Dividends Dividends Dividends Equity Equity Equity
Fund Fund Fund Fund Fund Fund
----------- ---------- ---------- -------------- -------------- --------------
1995 1994 1993 1995 1994 1993
----------- ---------- ---------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 961 317 (161) 3,566 (333) (116)
Realized gains (losses)
on investments, net 463 (44) (8) 8,398 112 3,995
Net change in unrealized
appreciation (depreciation)
on investments 19,701 (2,053) (1,565) 19,054 (3,562) 1,391
----------- ---------- ---------- -------------- -------------- --------------
Net increase (decrease) in
net assets from operations 21,125 (1,780) (1,734) 31,018 (3,783) 5,270
----------- ---------- ---------- -------------- -------------- --------------
Contract transactions (note 5):
Purchase payments 52,764 4,169 - 297,409 32,269 -
Transfers between funds 38,476 5,960 18,787 206,753 104,241 11,738
Surrenders and terminations (264) - - (9,230) - -
Other transactions (note 2) (19,499) (1,199) (393) (111,967) (8,365) (77)
----------- ---------- ---------- -------------- -------------- --------------
Net increase (decrease) in
net assets resulting from
contract transactions 71,477 8,930 18,394 382,965 128,145 11,661
----------- ---------- ---------- -------------- -------------- --------------
Increase (decrease) in net assets 92,602 7,150 16,660 413,983 124,362 16,931
----------- ---------- ---------- -------------- -------------- --------------
Net assets at beginning of year 44,527 37,377 20,717 141,293 16,931 -
----------- ---------- ---------- -------------- -------------- --------------
Net assets at end of year $ 137,129 44,527 37,377 555,276 141,293 16,931
=========== ========== ========== ============== ============== ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995, 1994 and 1993
Templeton Templeton Templeton
Developing Developing Developing Templeton Templeton Templeton
Markets Markets Markets Global Global Global
Equity Equity Equity Growth Growth Growth
Fund Fund Fund Fund Fund Fund
------------ ----------- ---------- ---------- ---------- ---------
1995 1994 1993 1995 1994 1993
------------ ----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net ($4,311) (3,996) - (432) (81) -
Realized gains (losses) on investments, net (453) (67) - 587 (51) -
Net change in unrealized appreciation
(depreciation) on investments 4,422 (2,951) - 23,468 (144) -
------------ ----------- ---------- ---------- ---------- ---------
Net increase (decrease) in net assets
from operations (342) (7,014) - 23,623 (276) -
------------ ----------- ---------- ---------- ---------- ---------
Contract transactions (note 5):
Purchase payments 169,165 19,997 - 237,156 27,117 -
Transfers between funds 63,297 44,206 - 114,188 45,458 -
Surrenders and terminations (18,763) - - (6,710) - -
Other transactions (note 2) (61,489) (1,238) - (86,658) (5,539) -
------------ ----------- ---------- ---------- ---------- ---------
Net increase (decrease) in net assets
resulting from contract transactions 152,210 62,965 - 257,976 67,036 -
------------ ----------- ---------- ---------- ---------- ---------
Increase (decrease) in net assets 151,868 55,951 - 281,599 66,760 -
------------ ----------- ---------- ---------- ---------- ---------
Net assets at beginning of year 55,951 - - 66,760 - -
------------ ----------- ---------- ---------- ---------- ---------
Net assets at end of year $ 207,819 55,951 - 348,359 66,760 -
============ =========== ========== ========== ========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT A
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995, 1994 and 1993
Templeton Templeton Templeton
Global Global Global
Asset Asset Asset Total Total Total
Allocation Allocation Allocation All All All
Fund Fund Fund Funds Funds Funds
------------ ---------- ---------- ---------- ---------- ----------
1995 1994 1993 1995 1994 1993
------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net ($27) - - 265,740 146,044 110,544
Realized gains (losses) on investments, net 17 - - 158,860 175,720 164,309
Net change in unrealized appreciation
(depreciation) on investments (15) - - 871,051 (677,502) 378,979
------------ ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
from operations (25) - - 1,295,651 (355,738) 653,832
------------ ---------- ---------- ---------- ---------- ----------
Contract transactions (note 5):
Purchase payments - - - 2,830,073 1,005,787 -
Transfers between funds 311 - - (21,713) (3,609) -
Surrenders and terminations - - - (367,067) (232,818) (225,306)
Other transactions (note 2) (66) - - (905,331) (328,040) (57,550)
------------ ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from contract transactions 245 - - 1,535,962 441,320 (282,856)
------------ ---------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets 220 - - 2,831,613 85,582 370,976
------------ ---------- ---------- ---------- ---------- ----------
Net assets at beginning of year - - - 5,755,011 5,669,429 5,298,453
------------ ---------- ---------- ---------- ---------- ----------
Net assets at end of year $ 220 - - 8,586,624 5,755,011 5,669,429
============ ========== ========== ========== ========== ==========
</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, 1995
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 policy owner.
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
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENTS
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
FVF and are recorded as income to the Variable Account on the ex-dividend
date.
A Fixed Account investment option is available to variable universal life
policy owners. This account is comprised of equity and fixed income
investments which are part of the general assets of Allianz Life. The
liabilities of the Fixed Account are part of the general obligations of
Allianz Life and are not included in the Variable Account. The guaranteed
minimum rate of return on the Fixed Account is 3.5%.
The Templeton Developing Markets Equity Fund, Templeton Global Growth Fund and
Fixed Account were added as available investment options on July 1, 1994. The
Templeton Global Asset Allocation Fund and Small Cap Fund were added as
available investment options on May 1, 1995 and November 1, 1995,
respectively. The Small Cap Fund had no investment activity during 1995. The
Zero Coupon - 1995 Fund matured and was closed on December 15, 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 years ended December 31,
1995, 1994 and 1993 were $581,193, $123,231 and $46,026, respectively.
A deferred issue charge is deducted annually, at the end of the policy year,
from each single premium variable life 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, 1995, 1994 and 1993 were $28,613, $32,516 and $34,016, respectively.
A policy charge is deducted on each monthly anniversary date from each
variable universal life policy by liquidating units. The amount of the charge
is equal to 2.5% of each premium payment for premium taxes plus $20 per month
for the first policy year and $9 per month guaranteed thereafter. Currently,
Allianz Life has agreed to voluntarily limit the charge to $5 per month after
the first policy year. Total policy charges paid by the policy owners for the
years ended December 31, 1995 and 1994 were $292,695 and $64,030,
respectively. There were no variable universal life policies issued during
the year ended December 31, 1993.
Twelve free transfers are permitted each contract year. Thereafter, the fee
is the lesser of $25 or 2% of the amount transferred. No transfer charges
were paid by the policy owners during the years ended December 31, 1995, 1994
and 1993, respectively. Transfers to the Fixed Account during the years ended
December 31, 1995 and 1994 were $21,713 and $3,609, respectively.
The cost of insurance, deferred issue, policy and transfer charges paid are
reflected in the Statements of Changes in Net Assets 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, 1995:
<TABLE>
<CAPTION>
<S> <C>
Money Market Fund $1,122,415
Growth and Income Fund 326,793
Precious Metals Fund 123,585
High Income Fund 162,053
Real Estate Securities Fund 86,588
U.S. Government Securities Fund 88,014
Utility Equity Fund 312,133
Zero Coupon Fund - 1995 17,464
Zero Coupon Fund - 2000 24,625
Zero Coupon Fund - 2005 12,928
Zero Coupon Fund - 2010 3,109
Global Income Fund 55,385
Investment Grade Intermediate Bond Fund 22,252
Income Securities Fund 363,976
Adjustable U.S. Government Fund 28,937
Templeton Pacific Growth Fund 180,053
Rising Dividends Fund 80,078
Templeton International Equity Fund 434,389
Templeton Developing Markets Equity Fund 180,752
Templeton Global Growth Fund 285,990
Templeton Global Asset Allocation Fund 387
</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
that the Variable Account may incur federal income taxes, it may then assess a
charge against the Variable Account for such taxes.
<PAGE>
5. CONTRACT TRANSACTIONS - UNIT ACTIVITY
Transactions in units for each fund for the years ended December 31, 1995,
1994 and 1993, were as follows:
<TABLE>
<CAPTION>
Growth Real U.S.
Money and Precious High Estate Government
Market Income Metals Income Securities Securities
Fund Fund Fund Fund Fund Fund
--------- ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1992 26,464 36,756 16,401 65,825 3,450 39,596
Contract transactions:
Transfers between funds 1,266 (4,296) (8,477) (59) (272) (451)
Surrenders and terminations (4,833) (3,404) - - - -
Other transactions (467) 84 9 (701) 87 (533)
--------- ---------- --------- ---------- ----------- -----------
Net increase (decrease) in units
resulting from contract transactions (4,034) (7,616) (8,468) (760) (185) (984)
--------- ---------- --------- ---------- ----------- -----------
Units outstanding at December 31, 1993 22,430 29,140 7,933 65,065 3,265 38,612
========= ========== ========= ========== =========== ===========
Accumulation unit value
per unit at December 31, 1993 $ 13.773 21.604 15.396 17.020 17.556 17.775
========= ========== ========= ========== =========== ===========
Contract transactions:
Purchase payments 59,285 751 67 265 419 62
Transfers between funds (31,325) 4,606 6,162 (637) 861 (6,440)
Surrenders and terminations (7,250) (2,364) (578) (869) - -
Other transactions (5,759) (2,338) (143) (444) (177) (520)
--------- ---------- --------- ---------- ----------- -----------
Net increase (decrease) in units
resulting from contract transactions 14,951 655 5,508 (1,685) 1,103 (6,898)
--------- ---------- --------- ---------- ----------- -----------
Units outstanding at December 31, 1994 37,381 29,795 13,441 63,380 4,368 31,714
========= ========== ========= ========== =========== ===========
Accumulation unit value
per unit at December 31, 1994 $ 14.194 21.010 14.977 16.512 17.928 16.840
========= ========== ========= ========== =========== ===========
Contract transactions:
Purchase payments 77,441 9,561 1,662 2,463 2,884 1,355
Transfers between funds (57,166) 4,664 1,698 1,925 2,056 1,281
Surrenders and terminations (3,275) (2,237) (5,150) (772) (427) (965)
Other transactions (8,613) (3,762) (820) (1,663) (1,253) (983)
--------- ---------- --------- ---------- ----------- -----------
Net increase (decrease) in units
resulting from contract transactions 8,387 8,226 (2,610) 1,953 3,260 688
--------- ---------- --------- ---------- ----------- -----------
Units outstanding at December 31, 1995 45,768 38,021 10,831 65,333 7,628 32,402
========= ========== ========= ========== =========== ===========
Accumulation unit value
per unit at December 31, 1995 $ 14.898 27.700 15.214 19.628 20.913 19.966
========= ========== ========= ========== =========== ===========
Accumulation net assets at December 31, 1995 $681,852 1,053,166 164,784 1,282,342 159,525 646,949
========= ========== ========= ========== =========== ===========
</TABLE>
<PAGE>
5. CONTRACT TRANSACTIONS - UNIT ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
Zero Zero Zero Zero
Utility Coupon Coupon Coupon Coupon Global
Equity Fund - Fund - Fund - Fund - Income
Fund 1995 2000 2005 2010 Fund
----------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1992 72,790 14,686 15,439 17,524 3,968 1,562
Contract transactions:
Transfers between funds (998) - - (1,326) 3,524 -
Surrenders and terminations (4,617) - - - - -
Other transactions (934) (175) (190) (156) (84) (25)
----------- -------- -------- -------- -------- -------
Net increase (decrease) in units
resulting from contract transactions (6,549) (175) (190) (1,482) 3,440 (25)
----------- -------- -------- -------- -------- -------
Units outstanding at December 31, 1993 66,241 14,511 15,249 16,042 7,408 1,537
=========== ======== ======== ======== ======== =======
Accumulation unit value
per unit at December 31, 1993 $ 20.406 17.832 21.191 23.198 24.745 14.297
=========== ======== ======== ======== ======== =======
Contract transactions:
Purchase payments 654 - - - - 133
Transfers between funds (3,468) - - (1,953) (3,442) 1,607
Surrenders and terminations (1,253) - (379) (1,348) - -
Other transactions (2,205) (186) (276) (182) (162) (102)
----------- -------- -------- -------- -------- -------
Net increase (decrease) in units
resulting from contract transactions (6,272) (186) (655) (3,483) (3,604) 1,638
----------- -------- -------- -------- -------- -------
Units outstanding at December 31, 1994 59,969 14,325 14,594 12,559 3,804 3,175
=========== ======== ======== ======== ======== =======
Accumulation unit value
per unit at December 31, 1994 $ 17.912 17.823 19.614 20.821 21.866 13.483
=========== ======== ======== ======== ======== =======
Contract transactions:
Purchase payments 5,744 - - - - 2,992
Transfers between funds 6,185 (14,174) 458 - - 1,333
Surrenders and terminations (1,893) - - - - (416)
Other transactions (3,807) (151) (178) (177) (69) (1,283)
----------- -------- -------- -------- -------- -------
Net increase (decrease) in units
resulting from contract transactions 6,229 (14,325) 280 (177) (69) 2,626
----------- -------- -------- -------- -------- -------
Units outstanding at December 31, 1995 66,198 - 14,874 12,382 3,735 5,801
=========== ======== ======== ======== ======== =======
Accumulation unit value
per unit at December 31, 1995 $ 23.353 - 23.491 27.229 30.991 15.347
=========== ======== ======== ======== ======== =======
Accumulation net assets at December 31, 1995 $1,545,922 - 349,422 337,160 115,736 89,028
=========== ======== ======== ======== ======== =======
</TABLE>
<PAGE>
5. CONTRACT TRANSACTIONS - UNIT ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
Investment
Grade Adjustable Templeton
Intermediate Income U.S. Pacific Rising
Bond Securities Government Growth Dividends
Fund Fund Fund Fund Fund
-------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1992 588 1,598 410 586 1,899
Contract transactions:
Transfers between funds - 527 - 9,382 1,714
Surrenders and terminations - - - - -
Other transactions (6) (21) (7) (44) (37)
-------------- ----------- ----------- ---------- ----------
Net increase (decrease) in units
resulting from contract transactions (6) 506 (7) 9,338 1,677
-------------- ----------- ----------- ---------- ----------
Units outstanding at December 31, 1993 582 2,104 403 9,924 3,576
============== =========== =========== ========== ==========
Accumulation unit value
per unit at December 31, 1993 $ 14.017 17.423 11.481 14.407 10.453
============== =========== =========== ========== ==========
Contract transactions:
Purchase payments 100 1,334 495 998 418
Transfers between funds 5,385 9,100 (213) 6,850 601
Surrenders and terminations - - - - -
Other transactions (65) (2,024) (31) (5,137) (121)
-------------- ----------- ----------- ---------- ----------
Net increase (decrease) in units
resulting from contract transactions 5,420 8,410 251 2,711 898
-------------- ----------- ----------- ---------- ----------
Units outstanding at December 31, 1994 6,002 10,514 654 12,635 4,474
============== =========== =========== ========== ==========
Accumulation unit value
per unit at December 31, 1994 $ 13.978 16.208 11.374 13.042 9.952
============== =========== =========== ========== ==========
Contract transactions:
Purchase payments 963 12,397 1,060 10,718 4,625
Transfers between funds 562 10,593 966 5,757 3,323
Surrenders and terminations (2,761) (783) - (779) (23)
Other transactions (507) (6,107) (667) (7,009) (1,699)
-------------- ----------- ----------- ---------- ----------
Net increase (decrease) in units
resulting from contract transactions (1,743) 16,100 1,359 8,687 6,226
-------------- ----------- ----------- ---------- ----------
Units outstanding at December 31, 1995 4,259 26,614 2,013 21,322 10,700
============== =========== =========== ========== ==========
Accumulation unit value
per unit at December 31, 1995 $ 15.260 19.691 12.352 13.977 12.816
============== =========== =========== ========== ==========
Accumulation net assets at December 31, 1995 $ 64,990 524,066 24,865 298,014 137,129
============== =========== =========== ========== ==========
</TABLE>
<PAGE>
5. CONTRACT TRANSACTIONS - UNIT ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
Templeton Templeton
Templeton Developing Templeton Global
International Markets Global Asset Total
Equity Equity Growth Allocation All
Fund Fund Fund Fund Funds
--------------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1992 - - - - 319,542
Contract transactions:
Transfers between funds 1,375 - - - 1,909
Surrenders and terminations - - - - (12,854)
Other transactions (7) - - - (3,207)
--------------- ----------- ---------- ----------- ----------
Net increase (decrease) in units
resulting from contract transactions 1,368 - - - (14,152)
--------------- ----------- ---------- ----------- ----------
Units outstanding at December 31, 1993 1,368 - - - 305,390
=============== =========== ========== =========== ==========
Accumulation unit value
per unit at December 31, 1993 $ 12.375 - - -
=============== =========== ========== ===========
Contract transactions:
Purchase payments 2,526 2,054 2,721 - 72,282
Transfers between funds 8,168 4,590 4,585 - 5,037
Surrenders and terminations - - - - (14,041)
Other transactions (659) (545) (558) - (21,634)
--------------- ----------- ---------- ----------- ----------
Net increase (decrease) in units
resulting from contract transactions 10,035 6,099 6,748 - 41,644
--------------- ----------- ---------- ----------- ----------
Units outstanding at December 31, 1994 11,403 6,099 6,748 - 347,034
=============== =========== ========== =========== ==========
Accumulation unit value
per unit at December 31, 1994 $ 12.390 9.173 9.894 -
=============== =========== ========== ===========
Contract transactions:
Purchase payments 22,647 18,183 22,517 - 197,212
Transfers between funds 15,984 6,624 11,063 27 3,159
Surrenders and terminations (691) (2,067) (627) - (22,866)
Other transactions (8,513) (6,629) (8,230) (6) (62,126)
--------------- ----------- ---------- ----------- ----------
Net increase (decrease) in units
resulting from contract transactions 29,427 16,111 24,723 21 115,379
--------------- ----------- ---------- ----------- ----------
Units outstanding at December 31, 1995 40,830 22,210 31,471 21 462,413
=============== =========== ========== =========== ==========
Accumulation unit value
per unit at December 31, 1995 $ 13.600 9.357 11.069 10.637
=============== =========== ========== ===========
Accumulation net assets at December 31, 1995 $ 555,276 207,819 348,359 220 8,586,624
=============== =========== ========== =========== ==========
</TABLE>
<PAGE>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1995 and 1994
<PAGE>
KPMG Peat Marwick LLP
4200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
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, 1995 and 1994, 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, 1995. 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, 1995 and 1994, 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, 1995, in conformity with generally accepted
accounting principles.
In 1994, as discussed in note 1 to the consolidated financial statements, the
Company adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial 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 the Financial Accounting Standards Board's Statements of
Financial Accounting Standards No. 106, Accounting for Postretirement Benefits
Other Than Pensions and No. 109, Accounting for Income Taxes.
KPMG Peat Marwick LLP
February 6, 1996
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1995 and 1994
(in thousands except share data)
Assets 1995 1994
- ---------------------------------------------------------- ----------- ----------
<S> <C> <C>
Investments:
Fixed maturities, at amortized cost $ 0 90,615
Fixed maturities, at market 2,549,598 1,906,208
Equity securities, at market 254,458 131,712
Mortgage loans on real estate 203,128 163,099
Real estate, at cost 8,806 4,685
Investment in real estate partnerships, at equity 11,975 12,551
Certificates of deposit and short-term securities 31,501 155,307
Policy loans 104,184 101,899
Other long-term investments 650 1,117
----------- ----------
Total investments 3,164,300 2,567,193
Cash 10,936 63,883
Accrued investment income 36,858 34,786
Receivables (net of allowance for uncollectible
accounts of $7,697 in 1995 and $9,607 in 1994) 124,700 111,400
Reinsurance receivable:
Funds held on deposit 1,060,566 927,353
Recoverable on future policy benefit reserves 43,248 35,387
Recoverable on unpaid claims 109,075 105,603
Receivable on paid claims 22,172 26,736
Prepaid insurance premiums 4,078 4,317
Home office property and equipment (net of accumulated
depreciation of $21,256 in 1995 and $28,547 in 1994) 8,790 11,612
Deferred acquisition costs 826,994 798,442
Federal income tax recoverable 3,947 3,794
Other assets 11,048 9,818
----------- ----------
Assets, exclusive of separate account assets 5,426,712 4,700,324
Separate account assets 8,402,003 6,965,755
----------- ----------
Total assets $13,828,715 11,666,079
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Balance Sheets, continued
December 31, 1995 and 1994
(in thousands except share data)
Liabilities and Stockholder's Equity 1995 1994
- --------------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Liabilities:
Future policy benefit reserves:
Life $ 1,088,964 1,022,537
Annuity 2,601,943 2,304,560
Policy and contract claims 371,898 355,411
Unearned premiums 34,181 40,376
Reinsurance payable 72,838 81,507
Deferred income taxes 140,174 5,807
Accrued expenses 41,266 29,006
Commissions due and accrued 22,979 24,190
Other policyholder funds 82,138 73,509
Other liabilities 19,137 76,314
------------ -----------
Liabilities, exclusive of separate account liabilities 4,475,518 4,013,217
Separate account liabilities 8,402,003 6,965,755
------------ -----------
Total liabilities 12,877,521 10,978,972
------------ -----------
Minority interest in subsidiary 0 7,662
------------ -----------
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, 25 million shares issued and outstanding
in 1995 and 40 million shares issued and outstanding in 1994 25,000 40,000
Additional paid-in capital 407,088 406,494
Net unrealized holding gain (loss) on securities
available-for-sale, net of deferred federal income taxes 139,204 (62,073)
Net unrealized Canadian currency loss (3,455) (3,787)
Retained earnings 363,357 278,811
------------ -----------
Total stockholder's equity 951,194 679,445
------------ -----------
Commitments and contingencies (notes 7 and 12)
Total liabilities and stockholder's equity $13,828,715 11,666,079
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Statements of Income
Years Ended December 31, 1995, 1994 and 1993
(in thousands)
1995 1994 1993
----------- --------- ---------
<S> <C> <C> <C>
Revenue:
Life insurance premiums $ 257,647 234,295 217,717
Other life policy considerations 93,158 92,254 88,003
Annuity considerations 147,112 120,240 69,583
Accident and health premiums 527,059 547,508 508,785
----------- --------- ---------
Total premiums and considerations 1,024,976 994,297 884,088
Premiums ceded 223,226 244,208 202,904
----------- --------- ---------
Net premiums and considerations 801,750 750,089 681,184
Investment income, net 201,158 181,291 174,831
Realized investment gains, net 29,202 829 28,318
Other 10,140 12,703 9,347
----------- --------- ---------
Total revenue 1,042,250 944,912 893,680
----------- --------- ---------
Benefits and expenses:
Life insurance benefits 268,163 254,326 233,694
Annuity benefits 145,636 131,793 113,500
Accident and health insurance benefits 374,743 379,122 341,676
----------- --------- ---------
Total benefits 788,542 765,241 688,870
Benefit recoveries 210,702 212,144 155,043
----------- --------- ---------
Net benefits 577,840 553,097 533,827
Commissions and other agent compensation 233,939 313,715 398,161
General and administrative expenses 115,419 111,116 109,333
Taxes, licenses and fees 17,672 22,514 25,239
Increase in deferred acquisition costs, net (28,552) (132,090) (253,234)
Minority interest in income of consolidated subsidiary (30) (66) 0
----------- --------- ---------
Total benefits and expenses 916,288 868,286 813,326
----------- --------- ---------
Income from operations before income taxes 125,962 76,626 80,354
----------- --------- ---------
Income tax expense (benefit):
Current 12,993 5,098 30,215
Deferred 25,772 16,053 (6,496)
----------- --------- ---------
Total income tax expense 38,765 21,151 23,719
----------- --------- ---------
Income before cumulative effect of
changes in accounting 87,197 55,475 56,635
Cumulative effect of changes in accounting 0 0 26,875
----------- --------- ---------
Net income $ 87,197 55,475 83,510
=========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Statements of Stockholder's Equity
Years Ended December 31, 1995, 1994 and 1993
(in thousands)
1995 1994 1993
--------- --------- --------
<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 40,000 0 0
Issuance of stock during the year 0 40,000 0
Redemption of stock during the year (15,000) 0 0
--------- --------- --------
Balance at end of year 25,000 40,000 0
--------- --------- --------
Additional paid-in capital:
Balance at beginning of year 406,494 401,304 401,304
Additional contribution from parent 594 5,190 0
--------- --------- --------
Balance at end of year 407,088 406,494 401,304
--------- --------- --------
Net unrealized gain (loss) on investments:
Balance at beginning of year (62,073) 9,071 12,071
Cumulative effect of implementation of Statement
No. 115, net of deferred federal income taxes 0 74,866 0
Net unrealized gain on securities transferred
from held-to-maturity to available-for-sale
classification, net of deferred federal income taxes 1,789 0 0
Net unrealized gain (loss) during the year,
net of deferred federal income taxes 199,488 (146,010) (3,000)
--------- --------- --------
Balance at end of year 139,204 (62,073) 9,071
--------- --------- --------
Net unrealized Canadian currency gain (loss):
Balance at beginning of year (3,787) (2,708) (1,835)
Net unrealized gain (loss) during the year,
net of deferred federal income taxes 332 (1,079) (873)
--------- --------- --------
Balance at end of year (3,455) (3,787) (2,708)
--------- --------- --------
Retained earnings:
Balance at beginning of year 278,811 223,749 140,239
Net income 87,197 55,475 83,510
Cash dividend to stockholder (2,651) (413) 0
--------- --------- --------
Balance at end of year 363,357 278,811 223,749
--------- --------- --------
Total stockholder's equity $951,194 679,445 651,416
========= ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
(in thousands)
1995 1994 1993
---------- --------- ---------
<S> <C> <C> <C>
Cash flows used in operating activities:
Net income $ 87,197 55,475 83,510
---------- --------- ---------
Adjustments to reconcile net income to net
cash used in operating activities:
Realized gains on investments (29,202) (829) (28,318)
Deferred federal income tax (benefit) expense 25,772 16,053 (6,496)
Cumulative effect of changes in accounting 0 0 (26,875)
Charges to policy account balances (120,254) (125,488) (105,912)
Interest credited to policy account balances 169,151 150,490 147,983
Change in:
Accrued investment income (2,072) (764) (2,725)
Receivables (13,300) 12,040 (20,206)
Reinsurance receivables (190,953) (93,453) (107,809)
Deferred acquisition costs (28,552) (132,090) (253,234)
Future policy benefit reserves 66,932 20,791 (9,557)
Policy and contract claims 25,116 25,072 40,211
Unearned premiums (6,195) (1,194) (2,111)
Reinsurance payable (8,669) 19,779 31,653
Current tax recoverable (153) (6,255) 1,085
Deferred tax liability 0 0 15,936
Accrued expenses and other liabilities (43,867) 54,626 14,657
Commissions due and accrued (1,211) 3,316 1,461
Depreciation and amortization (23,391) (11,498) (7,681)
Other, net 916 (86) 2,303
---------- --------- ---------
Total adjustments (179,932) (69,490) (315,635)
---------- --------- ---------
Net cash used in operating activities (92,735) (14,015) (232,125)
---------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Statements of Cash Flows, continued
Years Ended December 31, 1995, 1994 and 1993
(in thousands)
1995 1994 1993
------------ --------- -----------
<S> <C> <C> <C>
Cash flows used in investing activities:
Purchase of fixed maturities, at amortized cost $ 0 0 (1,191,749)
Purchase of fixed maturities, at market (1,533,290) (928,532) 0
Purchase of equity securities (166,701) (145,267) (205,345)
Purchase of other long-term investments 0 (467) (650)
Funding of mortgage loans (66,301) (64,808) (20,097)
Sale of fixed maturities, at amortized cost 0 0 666,893
Sale of fixed maturities, at market 1,242,988 791,659 0
Matured or redeemed fixed maturities, at amortized cost 7,022 4,342 314,223
Matured fixed maturities, at market 38,991 32,508 0
Sale of equity securities 97,619 150,347 217,524
Repayment of mortgage loans 25,563 28,206 15,989
Sale of minority interest in subsidiary 0 0 8,189
Purchase of minority interest's shares in subsidiary (7,903) 0 0
Net change in certificates of deposit and
short-term securities 123,806 (96,344) 33,330
Other (2,851) (6,232) 782
------------ --------- -----------
Net cash used in investing activities (241,057) (234,588) (160,911)
------------ --------- -----------
Cash flows used in financing activities:
Policyholders' deposits to account balances $ 553,699 526,918 639,633
Policyholders' withdrawals from account balances (291,102) (235,309) (164,911)
Change in assets held under reinsurance agreements 36,354 (59,349) (75,658)
Net change in mortgage notes payable (1,049) (39) (36)
Additional paid-in capital from parent 594 5,190 0
Preferred stock transactions (15,000) 40,000 0
Cash dividends paid (2,651) (413) 0
------------ --------- -----------
Net cash used in financing activities 280,845 276,998 399,028
------------ --------- -----------
Net change in cash (52,947) 28,395 5,992
Cash at beginning of year 63,883 35,488 29,496
------------ --------- -----------
Cash at end of year $ 10,936 63,883 35,488
============ ========= ===========
</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, 1995, 1994 and 1993
(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.
The Company is a life insurance company which is licensed to sell both group
and individual life, annuity and accident and health policies in the United
States, Canada and several U.S. territories. Based on 1995 gross premium
volume, 13%, 71% and 16% of the Company's business is life, annuity and
accident and health, respectively. The Company's primary distribution
channels are through strategic alliances with other insurance companies and
third party marketing organizations. The Company has a significant
relationship as of December 31, 1995 with a mutual fund company and its
broker/dealer network related to sales of its variable life and variable
annuity products and another significant administration, marketing and
reinsurance relationship with an unrelated insurance 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.
The preparation of financial statements in conformity with GAAP requires
management to make certain estimates and assumptions that affect reported
assets and liabilities including reporting or disclosure of contingent assets
and liabilities as of the balance sheet date and the reported amounts of
revenues and expenses during the reporting period. Actual results could vary
significantly from management's estimates.
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 1995, 1994 and 1993 were $117,782, $108,676 and $72,431, 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, 1995 and 1994.
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
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.
<PAGE>
INVESTMENTS
On January 1, 1994, the Company adopted Statement of Financial Accounting
Standards (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 reported at amortized cost. Debt and equity securities bought
and held principally for the purpose of selling them in the near term are
classified as "trading securities" and 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 reported at fair value, with
unrealized gains and losses reported as a separate component of stockholders'
equity, net of deferred taxes. SFAS No. 115 did 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.
At December 31, 1995, the Company transferred all of its securities with an
amortized cost of $83,357 classified as "held-to-maturity' to the
"available-for-sale" classifications as provided in the Financial Accounting
Standards Board (FASB) Special Report on the implementation of SFAS No. 115.
The effect of this transfer was an increase in stockholder's equity of $1,789.
All of the Company's investment portfolio is classified as
"available-for-sale" at December 31, 1995.
Short-term investments are carried at amortized cost which approximates
market. Policy loans are reflected at their unpaid principal balances.
Mortgage loans are reflected at unpaid principal balances adjusted for premium
and discount amortization and an allowance for uncollectible balances. During
1995, the Company adopted SFAS No. 114, Accounting by Creditors for Impairment
of a Loan and SFAS No. 118, Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures. SFAS No. 114 addresses accounting by
creditors for impairment of certain loans. It requires that impaired loans
within the scope of the Statement be measured based on the present value of
expected future cash flows discounted at the loan's effective interest rate
or, alternatively, at the loan's observable market price of the fair value of
supporting collateral. The Company analyzes loan impairment at least once a
year when assessing the adequacy of the allowance for possible credit losses.
SFAS No. 118 permits existing income recognition practices to continue. The
Company does not accrue interest on impaired loans and accounts for interest
income on a cash basis. The adoption of these Statements did not have a
material impact on the Company's net income or financial position.
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, 1995 and 1994, investments with a carrying value of $37,879
and $44,337, 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
<PAGE>
may cause estimates of fair values to differ from the amounts presented
herein.
INCOME TAXES
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. 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.
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
policyholder's and contractholder's account.
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.
<TABLE>
<CAPTION>
The table below presents the cumulative effect of changes, net of tax, in
accounting principles implemented in 1993 on after tax net income:
<S> <C>
SFAS No. 106, Accounting for Postretirement Benefits Other Than Pensions $(4,006)
SFAS No. 109, Accounting for Income Taxes 30,881
--------
Total cumulative effect on after tax net income
of changes in accounting principles $26,875
========
</TABLE>
ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED
In March 1995, the FASB issued SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
SFAS No. 121 also addresses the accounting for long-lived assets that are
expected to be disposed of by a company. The Company will adopt SFAS No. 121
in the first quarter of 1996 and, based on current circumstances, does not
believe the effect of adoption will be material.
<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.
<TABLE>
<CAPTION>
Total revenues and net income, before adoption of any changes in accounting,
of the separate companies for the five-months ended May 31, 1993 were:
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
</TABLE>
(3) INVESTMENTS
<TABLE>
<CAPTION>
Investments at December 31, 1995 consist of:
Amount
Amortized Estimated shown on
cost fair balance
or cost value sheet
---------- --------- ---------
<S> <C> <C> <C>
Fixed maturities - Available-for-sale:
U.S. government $ 793,311 867,793 867,793
States and political subdivisions 469 481 481
Foreign government 254,457 265,797 265,797
Public utilities 32,100 36,728 36,728
Corporate securities 709,906 747,609 747,609
Mortgage backed securities 516,538 548,182 548,182
Collateralized mortgage obligations 80,949 83,008 83,008
---------- --------- ---------
Total fixed maturities $2,387,730 2,549,598 2,549,598
---------- --------- ---------
Equity securities - Available-for-sale:
Common stocks:
Public utilities 9,305 10,377 10,377
Banks, trusts and insurance companies 6,305 7,108 7,108
Industrial and miscellaneous 171,163 221,002 221,002
Nonredeemable preferred stocks 14,835 15,971 15,971
---------- --------- ---------
Total equity securities $ 201,608 254,458 254,458
---------- --------- ---------
<PAGE>
Other investments:
Mortgage loans on real estate 203,128 XXXXXXXXX 203,128
Real estate:
Investment properties 8,806 XXXXXXXXX 8,806
Partnerships 11,975 XXXXXXXXX 11,975
Certificates of deposit and short term securities 31,501 XXXXXXXXX 31,501
Policy loans 104,184 XXXXXXXXX 104,184
Other long term investments 650 XXXXXXXXX 650
---------- --------- ---------
Total other investments $ 360,244 XXXXXXXXX 360,244
---------- --------- ---------
Total investments $2,949,582 XXXXXXXXX 3,164,300
========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
At December 31, 1995 and 1994, the amortized cost, gross unrealized gains, gross
unrealized losses and estimated fair values of marketable securities are as follows:
Amortized Gross Gross Estimated
cost unrealized unrealized fair
or cost gains losses value
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
1995:
Available-for-sale:
U.S. government $ 793,311 74,482 0 867,793
States and political subdivisions 469 12 0 481
Foreign government 254,457 11,613 273 265,797
Public utilities 32,100 4,628 0 36,728
Corporate securities 709,906 41,746 4,043 747,609
Mortgage backed securities 516,538 31,644 0 548,182
Collateralized mortgage obligations 80,949 2,751 692 83,008
---------- ---------- ---------- ---------
Total fixed maturities 2,387,730 166,876 5,008 2,549,598
Equity securities 201,608 61,753 8,903 254,458
---------- ---------- ---------- ---------
Total $2,589,338 228,629 13,911 2,804,056
========== ========== ========== =========
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
---------- ---------- ---------- ---------
Total $2,223,474 27,468 127,463 2,123,479
========== ========== ========== =========
</TABLE>
<PAGE>
The changes in unrealized gains (losses) on fixed maturities
available-for-sale securities were $261,471 and $(214,245) and the changes in
unrealized losses on held-to-maturity securities were $0 and $(8,783) for the
years ended December 31, 1995 and 1994, respectively. The change in
unrealized gains from fixed maturities was $33,645 for the year ended December
31, 1993.
The changes in unrealized gains (losses) in equity investments, which include
common stocks and nonredeemable preferred stocks, and other investments were
$48,186, $(9,587) and $(2,468) for the years ended December 31, 1995, 1994 and
1993, respectively.
<TABLE>
<CAPTION>
The amortized cost and estimated fair value of fixed maturities at December
31, 1995, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
Amortized Estimated
cost fair value
---------- ----------
<S> <C> <C>
Available-for-sale:
Due in one year or less $ 3,494 3,552
Due after one year through five years 282,290 295,698
Due after five years through ten years 1,252,516 1,337,963
Due after ten years 251,943 281,195
Mortgage backed securities 597,487 631,190
---------- ----------
Totals $2,387,730 2,549,598
========== ==========
</TABLE>
Gross gains of $41,962 and $26,848 and gross losses of $14,607 and $26,805
were realized on sales of available-for-sale securities in 1995 and 1994,
respectively; related taxes were $9,574 and $715 in 1995 and 1994,
respectively. Proceeds from redemptions of held-to-maturity securities
during 1995 and 1994 were $7,022 and $4,342, respectively, with no gain
or loss realized on the transactions. Proceeds from sales of fixed
maturity securities in 1993 were $666,893. Gross gains of $25,229 and
gross losses of $2,102 were realized on sales of fixed maturities in 1993;
related taxes were $8,094.
<TABLE>
<CAPTION>
Net realized investment gains (losses) for the respective years ended December
31 are summarized as follows:
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Fixed maturities, at amortized cost $ 0 0 23,127
Fixed maturities, at market 21,877 (2,712) 0
Equity securities 5,478 2,745 5,876
Mortgage loans (687) (1,667) (189)
Real estate 2,530 2,067 (513)
Other 4 396 17
-------- ------- -------
Net gains before taxes 29,202 829 28,318
<PAGE>
Tax expense on net realized gains 10,218 352 10,329
-------- ------- -------
Net gains after taxes $18,984 477 17,989
======== ======= =======
</TABLE>
In 1995, in conjunction with an expanded marketing agreement, the Company
provided an unrelated insurance company with $30 million 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%. If converted, the Company would obtain approximately 10% equity ownership
in the unrelated company. The Company has no intention of converting the
debenture in the near term.
During 1995 and 1994, the Company entered 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, 1995 there were no outstanding
amounts under the Company's dollar roll program. As of December 31, 1994,
mortgage backed securities underlying the agreements were carried at a market
value of $58,174 and other liabilities included $58,150 for funds received
under these agreements. Average balances outstanding were $67,735 and $66,110
and weighted average interest rates were 7.4% and 6.5% during 1995 and 1994,
respectively.
During 1995 and 1994 the Company participated in a securities lending program
that is administered by Allianz Investment Corporation (AIC), an affiliated
company. 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 on 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. There were no
securities on loan at December 31, 1995. As of December 31, 1994, the
estimated market value of the loaned securities was $110,063, collateralized
by investments in FNMA securities.
<TABLE>
<CAPTION>
Impaired mortgage loans are defined as those where it is probable that amounts
due according to contractual terms, including principal and interest, will not
be collected. Impaired mortgage loans are measured by the Company at the fair
value of collateral. Interest income on impaired mortgage loans is recorded
on a cash basis. Below is a summary of impaired mortgage loans as of December
31, 1995.
Impaired Impaired Total
mortgage loans mortgage loans impaired
with a related without a related mortgage
allowance allowance loans
--------------- ----------------- --------
<S> <C> <C> <C>
Balance $ 9,210 8,541 17,751
Related allowance 3,580 - 3,580
--------------- ----------------- --------
Balance, net of allowance $ 5,630 8,541 14,171
=============== ================= ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Below is a summary of interest income on impaired mortgage loans.
1995
-------
<S> <C>
Average impaired mortgage loans $19,671
Total interest income on impaired mortgage loans 1,100
Interest income on impaired mortgage loans recorded on a cash basis 1,100
</TABLE>
<TABLE>
<CAPTION>
The valuation allowances at December 31, 1995, 1994 and 1993 and the changes in the
allowance for the years then ended are summarized as follows:
Writedowns
Beginning Charged to Charged to End
of year Operations Allowance Recoveries of year
---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
December 31, 1995:
Mortgage loans $ 11,552 914 0 1,979 10,487
Investment in real estate 1,550 0 0 1,550 0
---------- ---------- ---------- ---------- -------
Total valuation allowance $ 13,102 914 0 3,529 10,487
========== ========== ========== ========== =======
December 31, 1994:
Mortgage loans $ 11,552 1,598 0 1,598 11,552
Investment in real estate 1,550 0 0 0 1,550
---------- ---------- ---------- ---------- -------
Total valuation allowance $ 13,102 1,598 0 1,598 13,102
========== ========== ========== ========== =======
December 31, 1993:
Mortgage loans $ 13,602 0 0 2,050 11,552
Investment in real estate 1,854 973 0 1,277 1,550
---------- ---------- ---------- ---------- -------
Total valuation allowance $ 15,456 973 0 3,327 13,102
========== ========== ========== ========== =======
</TABLE>
<TABLE>
<CAPTION>
Major categories of net investment income for the respective years ended
December 31 are:
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Interest:
Fixed maturities, at amortized cost $ 6,284 6,966 142,814
Fixed maturities, at market 158,421 141,611 0
Mortgage loans 16,125 13,706 12,764
Policy loans 6,688 6,329 6,404
Short-term investments 7,182 3,012 4,159
<PAGE>
Dividends:
Preferred stock 581 495 231
Common stock 3,204 2,673 2,496
Rental income on real estate 2,781 3,135 2,540
Interest on assets held by reinsurers 10,445 10,470 10,074
Other 833 577 1,131
-------- ------- -------
Total investment income 212,544 188,974 182,613
Investment expenses 11,386 7,683 7,782
-------- ------- -------
Net investment income $201,158 181,291 174,831
======== ======= =======
</TABLE>
(4) SUMMARY TABLE OF FAIR VALUE DISCLOSURES
<TABLE>
<CAPTION>
1995 1995 1994 1994
---------- ---------- ---------- ----------
Carrying Fair Carrying Fair
Amount Value Amount Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Financial assets
- -------------------------------------------
Fixed maturities, at amortized cost:
Corporate securities $ 0 $ 0 $ 90,615 $ 85,559
Fixed maturities, at market:
U.S. Government 867,793 867,793 463,694 463,694
States and political subdivisions 481 481 498 498
Foreign governments 265,797 265,797 43,494 43,494
Public utilities 36,728 36,728 80,002 80,002
Corporate securities 747,609 747,609 1,042,867 1,042,867
Mortgage backed securities 548,182 548,182 221,079 221,079
Collateralized mortgage obligations 83,008 83,008 54,574 54,574
Equity securities 254,458 254,458 131,712 131,712
Mortgage loans 203,128 212,766 163,099 162,903
Short term investments 31,501 31,501 155,307 155,307
Policy loans 104,184 104,184 101,899 101,899
Other long term investments 650 650 1,117 1,117
Receivables 124,700 124,700 111,874 111,874
Separate accounts assets 8,402,003 8,402,003 6,965,755 6,965,755
Financial liabilities
- -------------------------------------------
Investment contracts 3,063,100 2,542,260 2,753,304 2,319,872
Separate account liabilities 8,402,003 8,181,725 6,965,755 6,715,730
</TABLE>
See Note 1 "Summary of Significant Accounting Policies" for description of the
methods and significant assumptions used to estimate fair values.
(5) RECEIVABLES
<TABLE>
<CAPTION>
<PAGE>
Receivables at December 31 consist of the following:
1995 1994
-------- -------
<S> <C> <C>
Premiums due $ 83,695 76,840
Agents balances 7,236 7,299
Related party receivables 922 1,042
Reinsurance commission receivable 16,693 13,723
Scholarship enrollment fees 6,822 6,753
Due from administrators 6,149 2,735
Other 3,183 3,008
-------- -------
Total receivables $124,700 111,400
======== =======
</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,
thereby allowing more reliable re-evaluations of such reserves. While
management believes that reserves as of December 31, 1995 are adequate,
uncertainties in the reserving process could cause such reserves to develop
favorably or unfavorably in the near term 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.
<TABLE>
<CAPTION>
Activity in the accident and health claims reserves, exclusive of long term
care, hospital indemnity and AIDS reserves of $18,858, $11,149 and $8,742 in
1995, 1994 and 1993, respectively, is summarized as follows:
1995 1994 1993
--------- -------- --------
<S> <C> <C> <C>
Balance at January 1, net of reinsurance
recoverables of $96,090, $86,551 and $91,303 $185,028 170,123 168,872
Incurred related to:
Current year 242,024 230,995 226,815
Prior years (9,163) (7,290) (8,432)
--------- -------- --------
Total incurred 232,861 223,705 218,383
--------- -------- --------
Paid related to:
Current year 100,165 82,338 84,172
Prior years 125,920 126,462 132,960
--------- -------- --------
Total paid 226,085 208,800 217,132
--------- -------- --------
Balance at December 31, net of reinsurance
recoverables of $99,292, $96,090 and $86,551 $191,804 185,028 170,123
========= ======== ========
</TABLE>
There were no significant adjustments to accident and health claim liabilities
resulting from changes in estimates of benefits related to prior years.
<PAGE>
(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, 1995 are $873,724, $67,819
and $148,319 recoverable from insurers who, as of December 31, 1995, were
rated A+, A+ and B++, respectively 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.
<TABLE>
<CAPTION>
Life insurance, annuities and accident and health business assumed from and ceded to other
companies is as follows:
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, 1995:
Life insurance In force $39,601,531 28,790,199 6,884,645 61,507,085 46.8%
----------- ---------- --------- ---------- -----------
Premiums:
Life insurance 242,704 108,102 40,291 310,515 34.8%
Annuities 145,994 1,117 10,376 136,735 0.8%
Accident and health insurance 361,290 165,769 172,559 354,500 46.8%
----------- ---------- --------- ---------- -----------
Total premiums 749,988 274,988 223,226 801,750 34.3%
=========== ========== ========= ========== ===========
December 31, 1994:
Life insurance In force $39,789,859 24,411,513 6,893,030 57,308,342 42.6%
----------- ---------- --------- ---------- -----------
Premiums:
Life insurance 230,241 96,308 35,578 290,971 33.1%
Annuities 119,045 1,195 6,806 113,434 1.1%
Accident and health insurance 388,759 158,749 201,824 345,684 45.9%
----------- ---------- --------- ---------- -----------
Total premiums 738,045 256,252 244,208 750,089 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 220,287 85,433 42,323 263,397 32.4%
Annuities 68,713 870 6,633 62,950 1.4%
Accident and health insurance 365,894 142,891 153,948 354,837 40.3%
----------- ---------- --------- ---------- -----------
Total premiums 654,894 229,194 202,904 681,184 33.6%
=========== ========== ========= ========== ===========
</TABLE>
<PAGE>
Of the amounts ceded to others, the Company ceded life insurance inforce of
$182,638, $86,055 and $30,841 in 1995, 1994 and 1993, respectively, and life
insurance premiums earned of $641, $203 and $98 in 1995, 1994 and 1993,
respectively, to its ultimate parent Allianz Aktiengesellshaft. The Company
also ceded accident and health premiums earned to Allianz Aktiengesellshaft of
$(7,520), $12,256 and $8,966 in 1995, 1994 and 1993.
In addition to the above transactions, the Company ceded a portion of its
mortality risk associated with the variable annuity product to Allianz
Aktiengesellshaft. The Company recorded a recoverable on future policy
benefit reserves of $930 as of December 31, 1995.
(8) INCOME TAXES
INCOME TAX EXPENSE
<TABLE>
<CAPTION>
Total income tax expense (benefit) for the years ended December 31 are as follows:
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Income tax expense attributable to operations:
Current tax expenses $ 12,993 5,098 30,215
-------- -------- --------
Deferred tax (benefit) expense 25,772 16,053 (10,847)
Benefit of operating loss carryforwards 0 0 3,406
Adjustment of deferred tax assets and
liabilities for enacted change in tax rates 0 0 945
-------- -------- --------
Total deferred tax (benefit) expense 25,772 16,053 (6,496)
-------- -------- --------
Total income tax expense attributable to operations 38,765 21,151 23,719
Income tax effect on equity:
Income tax allocated to cumulative effect of
adoption of SFAS No. 106 0 0 (2,064)
Income tax allocated to stockholder's equity:
Adoption of SFAS No. 115 0 40,312 0
Attributable to unrealized gains and losses for the year 108,559 (79,201) 62
-------- -------- --------
Total income tax effect on equity $147,324 (17,738) 21,717
======== ======== ========
</TABLE>
COMPONENTS OF INCOME TAX EXPENSE
<TABLE>
<CAPTION>
Income tax expense computed at the statutory rate of 35% in 1995, 1994 and 1993,
varies from tax expense reported in the Consolidated Statements of Income for the
respective years ended December 31 as follows:
<PAGE>
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Income tax expense computed at the statutory rate $44,087 26,819 28,125
Dividends received deductions and tax-exempt interest (5,430) (3,967) (2,189)
Foreign tax (464) (79) (1,324)
Interest on tax deficiency 408 (716) 528
Impact of statutory rate change on deferred tax liability 0 0 945
Utilization of net operating loss and alternative
minimum tax credits 0 0 (2,549)
Other 164 (906) 183
-------- ------- -------
Income tax expense as reported $38,765 21,151 23,719
======== ======= =======
</TABLE>
COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES ON THE BALANCE SHEET
<TABLE>
<CAPTION>
Tax effects of temporary differences giving rise to the significant components of the
net deferred tax liability at December 31 are as follows:
1995 1994
-------- -------
<S> <C> <C>
Deferred tax assets:
Provision for post retirement benefits $ 1,936 1,885
Allowance for uncollectible accounts 2,283 2,961
Policy reserves 175,963 188,602
Unrealized losses on investments in available for sale securities 0 35,584
-------- -------
Total deferred tax assets 180,182 229,032
-------- -------
Deferred tax liabilities:
Deferred acquisition costs 234,393 229,577
Net unrealized gain 72,975 0
Other 12,988 5,262
-------- -------
Total deferred tax liabilities 320,356 234,839
-------- -------
Net deferred tax liability $140,174 5,807
======== =======
</TABLE>
Although realization is not assured, the Company believes 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. The amount of the deferred tax asset considered realizable, however,
could be reduced in the near term if estimates of future reversals of existing
taxable temporary differences and future taxable income are reduced.
As of December 31, 1995, 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
<PAGE>
post-1990 separate return taxable income or tax. Income taxes paid by the
Company were $14,865, $15,162 and $28,465 in 1995, 1994 and 1993,
respectively. At December 31, 1995 and 1994 the Company has a tax recoverable
from AZOA of $3,257 and $5,095 and a recoverable from Revenue Canada Taxation
of $690 and a payable to Revenue Canada Taxation of $1,301, respectively.
(9) RELATED PARTY TRANSACTIONS
In November 1995, the Company purchased the 400 non-voting common shares in
its subsidiary, Canadian American Financial Corporation from AZOA for $7,903.
The acquisition of the shares increased the Company's equity ownership in both
voting and non-voting common stock to 100%.
As of December 31, 1995 and 1994, Allianz Real Estate (AzRE), a wholly owned
subsidiary of AZOA, owned 100% of the stock or was a limited partner of
certain entities whose assets include mortgage loans issued by the Company
amounting to $6,245 and $12,100, respectively. Included in the mortgage loans
are properties originally foreclosed upon by the Company of which the balances
at December 31, 1995 and 1994 are $1,650 and $4,575, respectively.
Allianz Investment Corporation (AIC) manages the Company's investment
portfolio. The Company paid AIC $1,024, $1,285 and $1,207 in 1995, 1994 and
1993, respectively, for investment advisory fees. The Company's liability to
AIC was $377 and $0 at December 31, 1995 and 1994, respectively.
The Company shares a data center with affiliated insurance companies. Usage
charges paid to the data center by the Company were $3,752, $4,228 and $4,715
in 1995, 1994 and 1993, respectively. The Company's liability for data center
charges was $337 and $457 at December 31, 1995 and 1994, respectively.
The Company reimbursed AZOA $738, $817 and $339 in 1995, 1994 and 1993,
respectively, for certain administrative services performed. The Company's
liability to AZOA was $528 and $264 at December 31, 1995 and 1994,
respectively.
In June 1994, the Company authorized 200 million shares of preferred stock
with a par value of $1 per share. This preferred stock is issuable 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. 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 millions shares of Series B preferred
stock with a dividend rate of 6.95% to AZOA for $15,000. In December 1995,
the Company redeemed and canceled the 15 million shares of Series B preferred
stock issued to AZOA. There are currently 25 million shares of Series A
preferred stock issued and outstanding.
In 1995 and 1994, AZOA contributed additional capital to the Company of $594
and $5,190, 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 $860, $918 and $1,363 in
1995, 1994 and 1993, respectively.
<PAGE>
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. The
total Company match for 1995, 1994 and 1993 Plan participants 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. It is the
Company's policy to fund the Allianz Plan costs as accrued. The Company has
accrued $1,188, $1,266 and $1,270 in 1995, 1994 and 1993, respectively, toward
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. The Plan accepts
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.
In 1995, the Company discontinued support of its individual agency field force
and suspended contributions to the Plan as of January 1, 1996. Also during
1995, participation in the Plan decreased significantly resulting in a partial
plan termination whereby participants as of January 1, 1995 became fully
vested in the Plan. The Company has no intention to fully terminate the Plan
in the near term. Total Company contributions to the Plan were $118, $386 and
$319 in 1995, 1994 and 1993, 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 a $2,064 tax benefit. The Company's current plan obligation is $5,532 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
calculated for statutory accounting do not include provisions for withdrawals.
<TABLE>
<CAPTION>
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 are as follows:
Stockholder's Stockholder's Net Net Net
equity equity Income Income Income
--------------- -------------- -------- --------- ---------
1995 1994 1995 1994 1993
--------------- -------------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Statutory basis $ 299,186 294,334 11,565 6,895 657
Adjustments:
Change in reserve basis (211,678) (339,283) (43,642) (109,473) (138,864)
Deferred acquisition costs 826,994 798,442 28,552 132,090 253,240
Net deferred taxes (140,174) (5,807) (25,772) (16,053) 6,496
Statutory asset valuation reserve 100,462 59,169 0 0 0
Statutory interest maintenance reserve 25,061 16,305 8,756 (4,768) 11,178
Modified coinsurance reinsurance (119,178) (51,947) 104,222 44,920 (75,611)
<PAGE>
Unrealized gains (losses) on investments 163,237 (99,408) 0 0 0
Nonadmitted assets 1,471 2,302 0 0 0
Cumulative effect of accounting changes 0 0 0 0 26,875
Other 5,813 5,338 3,516 1,864 (461)
--------------- -------------- -------- --------- ---------
As reported in the accompanying
consolidated financial statements $ 951,194 679,445 87,197 55,475 83,510
=============== ============== ======== ========= =========
</TABLE>
The Company is required to meet minimum statutory capital and surplus
requirements. The Company's statutory capital and surplus as of December 31,
1995 and 1994 was in compliance with these requirements. 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 are determined in accordance with the accounting
procedures and practices governing preparation of the statutory 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 1995 and 1994,
respectively, the Company paid dividends on preferred stock in the amount of
$2,651 and $413, respectively to AZOA. Dividends of $23,433 could be paid in
1996 without prior approval of the Commissioner of Commerce.
REGULATORY RISK BASED CAPITAL
<TABLE>
<CAPTION>
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:
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, 1995 and 1994.
<PAGE>
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. Currently, 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. The NAIC currently has a
project underway to codify statutory accounting practices, the result of which
is expected to constitute the only source of "prescribed" statutory accounting
practices. Accordingly, that project will likely change the definition of
what comprises prescribed versus permitted statutory accounting practices, and
may result in changes to existing accounting policies insurance enterprises
use to prepare their statutory financial statements. The Company does not
currently use permitted statutory accounting practices which have a
significant impact on its statutory financial statements.
(12) COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are involved in various pending or threatened
legal proceedings arising from the conduct of their 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.
(13) FOREIGN CURRENCY TRANSLATION
<TABLE>
<CAPTION>
The net assets of the Company's foreign operations are translated into U.S.
dollars using exchange rates in effect at each year end. Translation adjustments
arising from differences in exchange rates from period to period are included in
the accumulated foreign currency translation adjustment reported as a separate
component of stockholder's equity. An analysis of this account for the respective
years ended December 31 follows:
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Beginning amount of cumulative translation adjustments $(3,787) (2,708) (1,835)
-------- ------- -------
Aggregate adjustment for the period resulting from
translation adjustments 511 (1,659) (1,746)
Amount of income tax benefit for period related to
aggregate adjustment (179) 580 873
-------- ------- -------
Net aggregate translation included in equity 332 (1,079) (873)
-------- ------- -------
Ending amount of cumulative translation adjustments $(3,455) (3,787) (2,708)
======== ======= =======
Canadian foreign exchange rate at end of year 0.7329 0.7129 0.7554
</TABLE>
<PAGE>
(14) SUPPLEMENTARY INSURANCE INFORMATION
<TABLE>
<CAPTION>
The following table summarizes certain financial information by line of business for 1995, 1994 and 1993:
As of December 31 For the year ended December 31
--------- --------- -------- -------- --------- ------- --------- --------- --------- ---------
Amortiz-
Future Premium Benefits, ation
policy Other revenue claims of
Deferred benefits, policy and losses, deferred
policy losses, claims other Net and policy
acquis- claims and contract invest- settle- acquis- Other Premiums
ition and loss Unearned benefits consider- ment ment ition operating written
costs expense premiums payable ations income expenses costs (a) expenses (b)
--------- --------- -------- -------- --------- ------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995:
Life $ 179,915 1,088,964 5,493 62,660 310,514 83,741 239,287 8,475 124,415
Annuities 629,515 2,601,943 0 580 136,736 98,214 89,321 (34,235) 137,000
Accident
and health 17,564 0 28,688 308,658 354,500 19,203 249,232 (2,792) 105,615
--------- --------- -------- -------- --------- ------- --------- --------- ---------
$ 826,994 3,690,907 34,181 371,898 801,750 201,158 577,840 (28,552) 367,030
========= ========= ======== ======== ========= ======= ========= ========= =========
1994:
Life $ 188,390 1,022,537 6,012 63,728 290,971 78,100 228,383 6,889 114,767
Annuities 595,280 2,304,560 0 360 113,434 86,168 88,100 (140,776) 210,933
Accident
and health 14,772 0 34,364 291,323 345,684 17,023 236,614 1,797 121,645
--------- --------- -------- -------- --------- ------- --------- --------- ---------
$ 798,442 3,327,097 40,376 355,411 750,089 181,291 553,097 (132,090) 447,345
========= ========= ======== ======== ========= ======= ========= ========= =========
1993:
Life $ 195,279 989,309 7,389 57,763 263,397 80,422 206,157 (10,925) 186,457
Annuities 454,504 1,986,801 0 578 62,950 78,674 86,227 (243,113) 191,783
Accident
and health 16,569 0 34,181 264,583 354,837 15,735 241,443 804 154,493
--------- --------- -------- -------- --------- ------- --------- --------- ---------
$ 666,352 2,976,110 41,570 322,924 681,184 174,831 533,827 (253,234) 532,733
========= ========= ======== ======== ========= ======= ========= ========= =========
</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>
<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 for Policies issued using standard underwriting and jet/simplified
underwriting. 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 0.50%
of the net assets of the Fund of the Trust (which is the average of the
investment advisory fees assessed the Trust in 1995 weighted by Sub-Account
value as of 12/31/95). The values also assume that each Fund of the Trust will
incur expenses annually which are assumed to be 0.03% of the average net assets
of the Fund. This is the average in 1995, weighted by Sub-Account value as of
12/31/95. 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 -1.27%, 4.65% and 10.58%.
The Company deducts the cost of insurance for a Policy Processing Period from
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>
<TABLE>
<CAPTION>
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 STANDARD 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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $100,000 $105,000 0 $97,626 $91,326 $448,956
2 0 110,250 0 95,253 89,653 448,956
3 0 115,762 0 92,877 87,977 448,956
4 0 121,550 0 90,493 86,293 448,956
5 0 127,628 0 88,099 84,599 448,956
10 0 162,889 0 75,822 75,822 448,956
15 0 207,892 0 66,235 66,235 448,956
20 0 265,329 0 54,925 54,925 448,956
25 0 338,635 0 40,880 40,880 448,956
30 0 432,194 0 22,090 22,090 448,956
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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
1 $100,000 $105,000 0 $97,492 $91,192 $448,956
2 0 110,250 0 94,977 89,377 448,956
3 0 115,762 0 92,448 87,548 448,956
4 0 121,550 0 89,901 85,701 448,956
5 0 127,628 0 87,333 83,833 448,956
10 0 162,889 0 73,953 73,953 448,956
15 0 207,892 0 62,808 62,808 448,956
20 0 265,329 0 49,198 49,198 448,956
25 0 338,635 0 31,701 31,701 448,956
30 0 432,194 0 7,454 7,454 448,956
<FN>
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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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 STANDARD 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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $100,000 $105,000 0 $103,530 $ 97,230 $469,376
2 0 110,250 0 107,196 101,596 474,199
3 0 115,762 0 110,998 106,098 478,859
4 0 121,550 0 114,942 110,742 482,288
5 0 127,628 0 119,029 115,529 487,802
10 0 162,889 0 141,741 141,741 508,388
15 0 207,892 0 172,678 172,678 528,329
20 0 265,329 0 209,528 209,528 549,365
25 0 338,635 0 253,212 253,212 572,007
30 0 432,194 0 304,622 304,622 595,472
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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
1 $100,000 $105,000 0 $103,390 $ 97,090 $468,698
2 0 110,250 0 106,900 101,300 472,818
3 0 115,762 0 110,529 105,629 476,743
4 0 121,550 0 114,281 110,081 479,411
5 0 127,628 0 118,156 114,656 484,116
10 0 162,889 0 139,428 139,428 500,091
15 0 207,892 0 168,172 168,172 514,542
20 0 265,329 0 201,764 201,764 529,007
25 0 338,635 0 240,758 240,758 543,872
30 0 432,194 0 285,558 285,558 558,205
<FN>
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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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 STANDARD 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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $100,000 $105,000 0 $ 109,429 $ 103,129 $ 497,853
2 0 110,250 0 119,796 114,196 533,012
3 0 115,762 0 131,189 126,289 569,991
4 0 121,550 0 143,710 139,510 607,573
5 0 127,628 0 157,463 153,963 650,080
10 0 162,889 0 249,246 249,246 893,981
15 0 207,892 0 399,884 399,884 1,223,494
20 0 265,329 0 639,007 639,007 1,675,419
25 0 338,635 0 1,016,981 1,016,981 2,297,361
30 0 432,194 0 1,611,218 1,611,218 3,149,593
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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
1 $100,000 $105,000 0 $ 109,280 $ 102,980 $ 497,135
2 0 110,250 0 119,464 113,864 531,464
3 0 115,762 0 130,633 125,733 567,480
4 0 121,550 0 142,881 138,681 603,964
5 0 127,628 0 156,304 152,804 645,189
10 0 162,889 0 245,191 245,191 879,436
15 0 207,892 0 389,470 389,470 1,191,629
20 0 265,329 0 615,359 615,359 1,612,416
25 0 338,635 0 967,008 967,008 2,184,471
30 0 432,194 0 1,510,458 1,510,458 2,952,628
<FN>
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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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/SIMPLIFIED 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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $100,000 $105,000 0 $97,353 $91,053 $275,773
2 0 110,250 0 94,681 89,081 275,773
3 0 115,762 0 91,975 87,075 275,773
4 0 121,550 0 89,227 85,027 275,773
5 0 127,628 0 86,435 82,935 275,773
10 0 162,889 0 71,691 71,691 275,773
15 0 207,892 0 57,928 57,928 275,773
20 0 265,329 0 38,160 38,160 275,773
25 0 338,635 0 6,366 6,366 275,773
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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
1 $100,000 $105,000 0 $96,836 $90,536 $275,773
2 0 110,250 0 93,604 88,004 275,773
3 0 115,762 0 90,288 85,388 275,773
4 0 121,550 0 86,875 82,675 275,773
5 0 127,628 0 83,357 79,857 275,773
10 0 162,889 0 63,956 63,956 275,773
15 0 207,892 0 42,673 42,673 275,773
20 0 265,329 0 8,750 8,750 275,773
25 0 338,635 0 0 0 275,773
30 0 432,194 0 0 0 275,773
<FN>
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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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/SIMPLIFIED 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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $100,000 $105,000 0 $103,247 $ 96,947 $287,477
2 0 110,250 0 106,596 100,996 290,307
3 0 115,762 0 110,045 105,145 293,035
4 0 121,550 0 113,595 109,395 295,673
5 0 127,628 0 117,250 113,750 298,241
10 0 162,889 0 137,306 137,306 310,175
15 0 207,892 0 164,249 164,249 321,072
20 0 265,329 0 194,517 194,517 332,547
25 0 338,635 0 227,852 227,852 344,150
30 0 432,194 0 261,995 261,995 356,311
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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
1 $100,000 $105,000 0 $102,710 $ 96,410 $285,885
2 0 110,250 0 105,468 99,868 287,064
3 0 115,762 0 108,264 103,364 288,072
4 0 121,550 0 111,095 106,895 288,918
5 0 127,628 0 113,965 110,465 289,628
10 0 162,889 0 129,035 129,035 291,490
15 0 207,892 0 148,759 148,759 290,792
20 0 265,329 0 168,482 168,482 288,037
25 0 338,635 0 187,156 187,156 282,683
30 0 432,194 0 201,060 201,060 275,773
<FN>
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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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/SIMPLIFIED 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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $100,000 $105,000 0 $ 109,129 $ 102,829 $ 304,919
2 0 110,250 0 119,124 113,524 326,318
3 0 115,762 0 130,059 125,159 348,813
4 0 121,550 0 142,019 137,819 372,499
5 0 127,628 0 155,101 151,601 397,484
10 0 162,889 0 241,473 241,473 545,487
15 0 207,892 0 380,404 380,404 743,610
20 0 265,329 0 593,288 593,288 1,014,286
25 0 338,635 0 915,221 915,221 1,382,359
30 0 432,194 0 1,385,898 1,385,898 1,884,808
Summary of end of year values assuming 12.00% gross rate of return.
This llustration is based on GUARANTEED mortality costs.
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
1 $100,000 $105,000 0 $ 108,561 $ 102,261 $ 303,233
2 0 110,250 0 117,859 112,259 322,683
3 0 115,762 0 127,947 123,047 342,927
4 0 121,550 0 138,883 134,683 364,022
5 0 127,628 0 150,741 147,241 386,052
10 0 162,889 0 226,972 226,972 512,729
15 0 207,892 0 344,597 344,597 673,615
20 0 265,329 0 513,983 513,983 878,705
25 0 338,635 0 751,907 751,907 1,135,687
30 0 432,194 0 1,064,441 1,064,441 1,447,630
<FN>
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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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 STANDARD 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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $100,000 $105,000 0 $97,630 $91,330 $400,205
2 0 110,250 0 95,268 89,668 400,205
3 0 115,762 0 92,905 88,005 400,205
4 0 121,550 0 90,539 86,339 400,205
5 0 127,628 0 88,169 84,669 400,205
10 0 162,889 0 76,060 76,060 400,205
15 0 207,892 0 66,475 66,475 400,205
20 0 265,329 0 54,651 54,651 400,205
25 0 338,635 0 38,306 38,306 400,205
30 0 432,194 0 13,465 13,465 400,205
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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
1 $100,000 $105,000 0 $97,497 $91,197 $400,205
2 0 110,250 0 94,996 89,396 400,205
3 0 115,762 0 92,486 87,586 400,205
4 0 121,550 0 89,963 85,763 400,205
5 0 127,628 0 87,425 83,925 400,205
10 0 162,889 0 74,270 74,270 400,205
15 0 207,892 0 63,123 63,123 400,205
20 0 265,329 0 48,802 48,802 400,205
25 0 338,635 0 28,116 28,116 400,205
30 0 432,194 0 0 0 400,205
<FN>
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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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 STANDARD 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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $100,000 $105,000 0 $103,535 $ 97,235 $418,427
2 0 110,250 0 107,212 101,612 422,745
3 0 115,762 0 111,032 106,132 426,902
4 0 121,550 0 114,999 110,799 430,936
5 0 127,628 0 119,119 115,619 435,857
10 0 162,889 0 142,115 142,115 453,013
15 0 207,892 0 173,363 173,363 470,475
20 0 265,329 0 210,333 210,333 488,903
25 0 338,635 0 253,120 253,120 508,774
30 0 432,194 0 301,573 301,573 530,293
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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
1 $100,000 $105,000 0 $103,396 $ 97,096 $417,830
2 0 110,250 0 106,922 101,322 421,536
3 0 115,762 0 110,574 105,674 425,061
4 0 121,550 0 114,357 110,157 428,440
5 0 127,628 0 118,275 114,775 431,683
10 0 162,889 0 139,919 139,919 446,012
15 0 207,892 0 169,063 169,063 458,804
20 0 265,329 0 202,798 202,798 471,389
25 0 338,635 0 240,640 240,640 483,690
30 0 432,194 0 281,750 281,750 495,435
<FN>
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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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 STANDARD 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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $100,000 $105,000 0 $ 109,434 $ 103,134 $ 443,813
2 0 110,250 0 119,815 114,215 475,176
3 0 115,762 0 131,230 126,330 508,146
4 0 121,550 0 143,782 139,582 542,881
5 0 127,628 0 157,582 154,082 579,521
10 0 162,889 0 249,903 249,903 796,602
15 0 207,892 0 401,470 401,470 1,089,512
20 0 265,329 0 641,457 641,457 1,491,022
25 0 338,635 0 1,016,607 1,016,607 2,043,389
30 0 432,194 0 1,595,085 1,595,085 2,804,829
Summary of end of year values assuming 12.00% gross rate of return.
This llustration is based on GUARANTEED mortality costs.
PREMIUM CASH
POLICY ACCUM POLICY ACCOUNT SURRENDER DEATH
YEAR PAYMENT @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
1 $100,000 $105,000 0 $ 109,287 $ 102,987 $ 443,180
2 0 110,250 0 119,489 113,889 473,821
3 0 115,762 0 130,687 125,787 505,962
4 0 121,550 0 142,976 138,776 539,749
5 0 127,628 0 156,462 152,962 575,309
10 0 162,889 0 246,052 246,052 784,329
15 0 207,892 0 391,530 391,530 1,062,539
20 0 265,329 0 618,507 618,507 1,437,677
25 0 338,635 0 966,531 966,531 1,942,737
30 0 432,194 0 1,490,307 1,490,307 2,620,586
<FN>
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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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/SIMPLIFIED 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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $100,000 $105,000 0 $97,366 $91,066 $244,544
2 0 110,250 0 94,696 89,096 244,544
3 0 115,762 0 91,978 87,078 244,544
4 0 121,550 0 89,202 85,002 244,544
5 0 127,628 0 86,355 82,855 244,544
10 0 162,889 0 70,612 70,612 244,544
15 0 207,892 0 53,820 53,820 244,544
20 0 265,329 0 27,445 27,445 244,544
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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
1 $100,000 $105,000 0 $96,858 $90,558 $244,544
2 0 110,250 0 93,628 88,028 244,544
3 0 115,762 0 90,291 85,391 244,544
4 0 121,550 0 86,823 82,623 244,544
5 0 127,628 0 83,203 79,703 244,544
10 0 162,889 0 61,899 61,899 244,544
15 0 207,892 0 34,521 34,521 244,544
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
<FN>
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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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/SIMPLIFIED 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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $100,000 $105,000 0 $103,261 $ 96,961 $254,959
2 0 110,250 0 106,617 101,017 257,438
3 0 115,762 0 110,067 105,167 259,828
4 0 121,550 0 113,606 109,406 262,131
5 0 127,628 0 117,233 113,733 264,364
10 0 162,889 0 136,635 136,635 274,638
15 0 207,892 0 161,659 161,659 284,265
20 0 265,329 0 188,578 188,578 294,464
25 0 338,635 0 216,499 216,499 305,080
30 0 432,194 0 244,022 244,022 316,653
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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
1 $100,000 $105,000 0 $102,735 $ 96,435 $253,575
2 0 110,250 0 105,505 99,905 254,604
3 0 115,762 0 108,302 103,402 255,468
4 0 121,550 0 111,115 106,915 256,163
5 0 127,628 0 113,935 110,435 256,700
10 0 162,889 0 127,922 127,922 257,125
15 0 207,892 0 144,637 144,637 254,332
20 0 265,329 0 159,490 159,490 249,044
25 0 338,635 0 170,653 170,653 244,544
30 0 432,194 0 169,965 169,965 244,544
<FN>
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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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/SIMPLIFIED 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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $100,000 $105,000 0 $ 109,144 $ 102,844 $ 270,428
2 0 110,250 0 119,148 113,548 289,371
3 0 115,762 0 130,085 125,185 309,285
4 0 121,550 0 142,033 137,833 330,242
5 0 127,628 0 155,078 151,578 352,333
10 0 162,889 0 240,293 240,293 482,991
15 0 207,892 0 374,407 374,407 658,365
20 0 265,329 0 575,173 575,173 898,133
25 0 338,635 0 869,619 869,619 1,225,423
30 0 432,194 0 1,290,824 1,290,824 1,675,024
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 @ 5.00% LOAN VALUE VALUE BENEFIT
- ------------------------------------------------------------------------------------------------------------------
1 $100,000 $105,000 0 $108,587 $102,287 $ 268,963
2 0 110,250 0 117,901 112,301 286,194
3 0 115,762 0 127,992 123,092 304,114
4 0 121,550 0 138,907 134,707 322,752
5 0 127,628 0 150,702 147,202 342,160
10 0 162,889 0 225,014 225,014 452,281
15 0 207,892 0 335,050 335,050 589,158
20 0 265,329 0 486,552 486,552 759,751
25 0 338,635 0 686,897 686,897 967,942
30 0 432,194 0 938,636 938,636 1,218,012
<FN>
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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPENDIX B
Table of Net Single Premium Factors
Attained FACTORS Attained FACTORS Attained 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
<FN>
*In states requiring unisex rates, male rates should apply.
</FN>
</TABLE>
PART II
UNDERTAKINGS TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission theretofore or hereafter duly adopted pursuant to authority conferred
in that section.
REPRESENTATION
Allianz Life Insurance Compnay of North America ("Company") hereby represents
that the fees and charges deducted under the Policy described in the Prospectus,
in the aggregate, are reasonable in relation to the services rendered, the
expenses to be incurred and the risks assumed by the Company.
INDEMNIFICATION
Under its Bylaws, Article XI, the Company indemnifies, to the extent permitted
by the laws of the State of Minnesota, each person (and the heirs, executors,
and administrators of such person) made or threatened to be made a party to any
action, civil or criminal, by reason of being or having been a director, officer
or employee of the Company (or by reason of serving any other organization at
the request of the Company).
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to such provisions of the bylaws or statutes or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in said
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any such action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
Policies issued by the Variable Account, the Company will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in said Act and will be governed by the
final adjudication of such issue.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet
The Prospectus consisting of 80 pages
Representations
The signatures
Part II
Other Information
Page 2
The following exhibits:
A. Copies of all exhibits required by paragraph A of instructions for
Exhibits in Form N-8B-2.
1. Resolution of the Board of Directors of the Company#
2. Not Applicable
3.a. Principal Underwriter's Agreement*
3.b. General Agency Agreement**
4. Not Applicable
5. Individual Single Premium Variable Life Insurance Policy ##
6.a. Articles of Incorporation of the Company#
6.b. Bylaws of the Company#
7. Not Applicable
8. Not Applicable
9.a. Administrative Agreement***
9.b. Fund Participation Agreement ##
10. Application Form ##
12. Illustrative Calculations for the Exchange of the Single Premium
Variable Life Insurance Policy for a Whole Life Policy**
13. Powers of Attorney ****
27. Financial Data Schedule
B. Opinion and Consent of Counsel
C. Consent of Actuary##
D. Independent Auditors' Consent
* incorporated by reference to Form N-8B-2 for NALAC Variable Account A,
File No. 811-4965 filed on July 28, 1987
** incorporated by reference to Registrant's Form S-6, File No. 33-15464
filed on June 29, 1987
*** incorporated by reference to Pre-Effective Amendment No. 1 to Form
S-6, File No. 33-11158 filed on October 19, 1987
**** incorporated by reference to Post-Effective Amendment No. 10 to
Registrants Form S-6, File No. 33-15464 filed on April 29, 1994 and to
Post-Effective Amendment No. 15 to Registrants form S-6 File No.
33-15464 electronically filed on April 23, 1996.
# incorporated by reference to Post-Effective Amendment No. 14 to
Registrants Form S-6 electronically filed on November 1, 1995.
## incorporated by reference to Post-Effective Amendment No. 15 to
Registrants Form S-6 electronically filed on April 23, 1996.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and it has caused this Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized in the City of
Minneapolis and State of Minnesota, on this 5th day of November, 1996.
<TABLE>
<CAPTION>
<S> <C> <C>
ALLIANZ LIFE
VARIABLE ACCOUNT A
(Registrant)
By: ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By: /S/ ALAN A. GROVE
------------------
Alan A. Grove
Attest: /S/ MICHAEL T. WESTERMEYER
---------------------------
Michael T. Westermeyer
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature and Title
<TABLE>
<CAPTION>
<S> <C> <C>
Chairman of the Board,
Lowell C. Anderson* President 11-5-96
Lowell C. Anderson and Chief Executive Officer
Herbert F. Hansmeyer* Director 11-5-96
Herbert F. Hansmeyer
Michael P. Sullivan* Director 11-5-96
Michael P. Sullivan
Dr.Jerry E. Robertson* Director 11-5-96
Dr.Jerry E. Robertson
Dr. Gerhard Rupprecht* Director 11-5-96
Dr. Gerhard Rupprecht
Edward J. Bonach* Chief Financial Officer 11-5-96
Edward J. Bonach
Rev. Dennis J. Dease* Director 11-5-96
Rev. Dennis J. Dease
James R. Campbell* Director 11-5-96
James R. Campbell
</TABLE>
*By Power of Attorney
By: /S/ ALAN A. GROVE
---------------------------------
Alan A. Grove
Attorney-in-Fact
EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 16
TO
FORM S-6
ALLIANZ LIFE VARIABLE ACCOUNT A
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
INDEX TO EXHIBITS
Exhibit Page
EX99.B Opinion and Consent of Counsel
EX99.D Independent Auditors' Consent
EX99.A.27 Financial Data Schedule
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
(203) 226-7866
October 23, 1996
Board of Directors
Allianz Life Insurance Company of North America
1750 Hennepin Avenue
Minneapolis, MN 55403-2195
Re: Opinion and Consent of Counsel
Allianz Life Variable Account A
Dear Sir or Madam:
You have requested our Opinion of Counsel in connection with the filing with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended, of a Registration Statement on Form S-6 for the Individual Single
Premium Variable Life Insurance Policies to be issued by Allianz Life Insurance
Company of North America and its separate account, Allianz Life Variable Account
A.
We are of the following opinions:
1. Allianz Life Insurance Company of North America is a valid and existing
stock life insurance company of the state of Minnesota.
2. Allianz Life Variable Account A is a separate investment account of Allianz
Life Insurance Company of North America created and validly existing
pursuant to the Minnesota Insurance Laws and the Regulations thereunder.
3. Upon the acceptance of premium payments made by an Owner pursuant to a
Policy issued in accordance with the Prospectus contained in the
Registration Statement and upon compliance with applicable law, such an
Owner will have a legally-issued, fully-paid, non-assessable contractual
interest under such Policy.
You may use this opinion letter, or copy hereof, as an exhibit to the
Registration Statement.
We consent to the reference to our Firm under the caption "Legal Opinions"
contained in the Prospectus which forms a part of the Registration Statement.
Sincerely,
BLAZZARD, GRODD, & HASENAUER, P.C.
By: /s/ LYNN KORMAN STONE
- ----------------------------------
Lynn Korman Stone
KPMG Peat Marwick LLP
4200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
Independent Auditors' Consent
The Board of Directors of Allianz Life Insurance Company of North America
and the Policy Owners of Allianz Life Variable Account A:
We consent to the use of our report, dated January 22, 1996, on the financial
statements of Allianz Life Variable Account A and our report dated February 6,
1996, on the consolidated financial statements of Allianz Life Insurance Company
of North America and subsidiaries included herein and to the reference to our
Firm under the heading "EXPERTS".
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 4, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000808468
<NAME> Allianz Life Variable Account A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 9,967,766
<INVESTMENTS-AT-VALUE> 11,179,196
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,179,196
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 113,926
<TOTAL-LIABILITIES> 113,926
<SENIOR-EQUITY> 6,660,140
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 604,713
<SHARES-COMMON-PRIOR> 462,413
<ACCUMULATED-NII-CURRENT> 2,049,019
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,077,816
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,278,295
<NET-ASSETS> 11,065,270
<DIVIDEND-INCOME> 499,252
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 40,511
<NET-INVESTMENT-INCOME> 458,741
<REALIZED-GAINS-CURRENT> 270,578
<APPREC-INCREASE-CURRENT> (348,116)
<NET-CHANGE-FROM-OPS> 381,203
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 40,132
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,478,646
<ACCUMULATED-NII-PRIOR> 1,590,278
<ACCUMULATED-GAINS-PRIOR> 807,238
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 40,511
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 40,511
<AVERAGE-NET-ASSETS> 9,825,947
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .004
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
