SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Post-Effective Amendment No. 17
FORM S-6
File No. 33-15290
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM
N-8B-2
A. Exact name of trust: IDS Life of New York Account 8
B. Name of depositor: IDS LIFE INSURANCE COMPANY OF NEW YORK
C. Complete address of depositor's principal executive offices:
20 Madison Avenue Ext. Albany, NY 12203
D. Name and complete address of agent for service:
Mary Ellyn Minenko, Esq.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440-0010
It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[x] on May 1, 1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1) of rule (485)
[ ] this post-effective amendment designates a new effective date
for a previously filed post effective amendment.
E. Title of securities being registered:
Flexible Premium Variable Life Insurance Policy
F. Approximate date of proposed public offering:
[ ] Check box if it is proposed that this filing will become effective on (date)
at (time) pursuant to Rule 487.
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
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N-8B-2 Item Caption in Prospectus
1 Cover Page; The variable account
2 IDS Life of New York
3 Not applicable
4 Distribution of the policy
5 The variable account
6 The variable account
7 Not applicable
8 Not applicable
9 Not applicable
10 Surrender charge; Total surrenders; Partial surrenders; Taxation of
policy proceeds; Reinstatement; Transfers between the fixed account
and the subaccounts; Grace period; Voting rights; Substitution of
investments; Payment of premiums; The fixed account; Allocation of
premiums; Transfers between the fixed account and the subaccounts;
Right to examine policy
11 The fund; The trust
12 The fund; The trust; Cover page
13 Loads, fees, and charges
14 Purchasing your policy; Application
15 Premiums; Payment of premiums; Transfers between the fixed account
and the subaccounts; The fund, The trust
16 Premiums; Payment of premiums, Transfers between the fixed account
and the subaccounts; The fund; The trust
17 Two ways to request a transfer, loan or surrender; Policy surrenders
18 The fund; The trust
19 Reports
20 Not applicable
21 Policy loans; Two ways to request a transfer, loan or surrender
22 Not applicable
23 Management of IDS Life of New York
24 Policy value; Death benefits; Payment of policy proceeds
25 IDS Life of New York
26 Not applicable
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27 IDS Life of New York
28 Management of IDS Life of New York
29 Ownership
30 Not applicable
31 Not applicable
32 Not applicable
33 Not applicable
34 Not applicable
35 Not applicable
36 Not applicable
37 Not applicable
38 Distribution of the policy
39 IDS Life of New York; Distribution of the policy
40 Not applicable
41 Distribution of the policy; IDS Life of New York
42 Management of IDS Life of New York
43 Not applicable
44 Premiums; Transfers between the fixed account and subaccounts;
Subaccount values
45 Not applicable
46 Subaccount values
47 Not applicable
48 IDS Life of New York
49 Not applicable
50 Not applicable
51 The variable account
52 Substitution of investments
53 IDS Life of New York's tax status
54 Not applicable
55 Not applicable
56 Not applicable
57 Not applicable
58 Not applicable
59 Not applicable
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Flexible Premium Variable Life Insurance Policy
Prospectus May 1, 1998
The Flexible Premium Variable Life Insurance Policy described in this prospectus
is designed to provide life insurance coverage on the insured named in the
policy and flexibility of premium payments and death benefits. This flexibility
allows you to meet changing insurance needs with a single insurance policy. The
policy is intended to qualify as a life insurance policy under Sections 72, 101
and 7702 of the Internal Revenue Code.
You may allocate policy value to one or more of nine subaccounts of IDS Life of
New York Account 8 (Variable Account). Six subaccounts invest in the portfolios
of IDS Life Series Fund: Equity, Income, Money Market, Managed, Government
Securities and International Equity. One subaccount invests in the AIM V.I.
Growth and Income Fund. One subaccount invests in Putnam VT New Opportunities
Fund. One subaccount invests in the Smith Barney Inc. Stripped ("Zero Coupon")
U.S. Treasury Securities Fund, Series A. There is no guaranteed minimum policy
value with respect to the subaccounts and you bear the entire investment risk.
You may also allocate policy value to the fixed account, which earns at least a
guaranteed minimum interest rate. The fixed account is the general investment
account of IDS Life of New York.
You may withdraw a portion of the policy's cash surrender value after the first
policy year or surrender it in full at any time for its cash surrender value.
Surrender charges are described under "Loads, fees and charges." You may also
take out policy loans.
The frequency of and amount of premium payments are flexible, subject to certain
restrictions and conditions. Payment of the scheduled premium will not
necessarily keep a policy from lapsing if the cash surrender value is less than
the amount needed to pay the monthly deduction. (See "Loads, fees and charges.")
However, a policy will not lapse if the premiums needed to keep the death
benefit guarantee in effect are paid. The death benefit guarantee may remain in
effect until the insured reaches attained insurance age 65 or the policy has
been in effect for five years, whichever is later.
This prospectus contains detailed information about these and other policy
features, including certain restrictions and limitations that apply. This
prospectus also discusses how the investment return earned by the policy can
affect the policy's death benefit and cash surrender value.
As in the case of other life insurance policies, it may not be advantageous to
purchase flexible premium variable life insurance as a replacement for, or in
addition to an existing flexible premium variable or other life insurance
policy.
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IDS Life of New York Account 8
Flexible Premium Variable Life Insurance Policy
Issued and sold by: IDS Life Insurance Company of New York (IDS Life of New
York), 20 Madison Avenue Extension, Albany, New York 12203. Telephone: (518)
869-8613; (800) 541-2251
This prospectus is valid only when accompanied or preceded by the prospectuses
of the IDS Life Series Fund, Inc., AIM Variable Insurance Funds, Inc., Putnam
Variable Trust, and of the Smith Barney Inc. Stripped ("Zero Coupon") U.S.
Treasury Securities Fund, Series A. All prospectuses should be retained for
future reference. This policy is only offered in New York.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission, nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
IDS Life of New York is not a bank or financial institution and the securities
it offers are not deposits or obligations of, backed or guaranteed or endorsed
by any bank or financial institution nor are they insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other agency.
Investments in this policy involve investment risk including the possible loss
of principal.
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Table of contents
Key terms
The policy in brief
The variable account
The funds
IDS Life Series Fund-Equity Portfolio
IDS Life Series Fund-Income Portfolio
IDS Life Series Fund-Money Market Portfolio
IDS Life Series Fund-Managed Portfolio
IDS Life Series Fund-Government Securities Portfolio
IDS Life Series Fund-International Equity Portfolio
AIM V.I. Growth and Income Fund
Putnam VT New Opportunities Fund
Fund objectives
Relationship between funds and subaccounts
Rates of return of the funds and subaccounts
The trust
Objectives and major investments
Estimated rates of return
Trust maturity
Roles of Smith Barney Inc. and IDS Life of New York
The fixed account
Purchasing your policy
Application
Right to examine policy
Premiums
Loads, fees and charges
Premium expense charge
Monthly deduction
Surrender charge
Partial surrender fee
Mortality and expense risk charge
Transaction charge Fund expenses
Death benefit guarantee
Grace period
Reinstatement
Policy value
Fixed account value
Subaccount values
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Death benefits
Change in death benefit option
Changes in specified amount
Misstatement of age or sex
Suicide
Beneficiary
Transfers between the fixed account and subaccounts
Fixed account transfer policies
Minimum transfer amounts
Maximum transfer amounts
Maximum number of transfers per year
Two ways to request a transfer, loan or surrender
Automated transfers
Automated dollar-cost averaging
Policy loans
Policy surrenders
Total surrenders
Partial surrenders
Allocations of partial surrenders
Effects of partial surrenders
Taxes
Optional insurance benefits
Waiver of monthly deduction
Accidental death benefit
Other insured rider
Children's insurance rider
Payment of policy proceeds
Federal taxes
IDS Life of New York's tax status
Taxation of policy proceeds
Modified endowment contracts
Other tax considerations
Ownership
State Regulation
Distribution of the policy
Legal proceedings
Experts
IDS Life of New York
Ownership
State regulator
Distribution of the policy
Legal proceedings
Experts
Management of IDS Life of New York
A I M Advisors, Inc., Putnam Investment Management, Inc. and Smith Barney Inc.
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Other information
Voting rights
Reports
Policy illustrations
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Key terms
These terms can help you understand details about your policy
Accumulation unit - An accounting unit used to calculate the policy value of the
subaccounts prior to the insured's death. It is a measure of the net investment
results of each of the subaccounts.
Attained insurance age - The insured's insurance age plus the number of policy
anniversaries since the policy date. Attained insurance age changes only on a
policy anniversary.
Cash surrender value - Proceeds received if the policy is surrendered in full or
matures, equal to the policy value minus any indebtedness and any applicable
surrender charges.
Code - The Internal Revenue Code of 1986, as amended.
Close of business - Closing time of the New York Stock Exchange, normally 4
p.m., Eastern time.
Death benefit guarantee - A feature of the policy guaranteeing that the policy
will not lapse before the insured's attained insurance age 65 (or five policy
years, if later). The guarantee is in effect if, on each monthly anniversary,
total premiums paid, minus any partial surrenders and any indebtedness, equal or
exceed the total required minimum monthly premium payments specified in the
policy.
Fixed account - The general investment account of IDS Life of New York. The
fixed account is made up of all of IDS Life of New York's assets other than
those held in any separate account.
Fixed account value - The portion of the policy value that is allocated to the
fixed account, including indebtedness.
Funds - Mutual funds or portfolios, each with a different investment objective.
You may allocate your premiums into variable subaccounts investing in shares of
any or all of these funds. The following funds are available:
o Under the IDS Life Series Fund, Inc. - Equity Portfolio, Income Portfolio,
Money Market Portfolio, Managed Portfolio, Government Securities Portfolio
and International Equity Portfolio;
o Under the AIM Variable Insurance Funds, Inc. - AIM V.I. Growth and Income
Fund;
o Under the Putnam Variable Trust - Putnam VT New Opportunities Fund.
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IDS Life of New York - In this prospectus, "we," "us," "our" and "IDS Life of
New York" refer to IDS Life Insurance Company of New York.
Indebtedness - All existing loans on the policy plus interest that has either
been accrued or added to the policy loan.
Insurance age - The age of the insured, based upon his or her nearest birthday
on the date of the application.
Insured - The person whose life is insured by the policy.
Maturity date - The insured's attained insurance age 100, if living.
Minimum monthly premium - A monthly premium amount specified in the policy that
determines the total payment required to keep the death benefit guarantee in
effect. The initial minimum monthly premium, determined by IDS Life of New York
when the policy is issued, depends on the insured's sex, insurance age, rate
classification, optional insurance benefits added by rider, and the initial
specified amount. An increase or decrease in specified amount, or the addition,
change or termination of a policy rider will change the minimum monthly premium.
Monthly date - The same day each month as the policy date. If there is no
monthly date in a calendar month, the monthly date is the first day of the next
calendar month.
Net amount at risk - A portion of the death benefit, equal to the total current
death benefit minus the policy value. This is the amount to which cost of
insurance rates are applied in determining the monthly cost of insurance.
Net premium - The portion of a premium that is credited to the policy, equal to
the premium you pay minus a charge of 2.5% to cover sales loads and a charge of
1% to cover state premium taxes.
Owner - The entity to which, or individual to whom, the policy is issued or to
whom ownership is subsequently transferred. In the prospectus "you" and "your"
refer to the owner.
Policy anniversary - The same day and month as the policy date each year the
policy remains in force.
Policy date - The date the policy is issued and from which policy anniversaries,
policy years and policy months are determined.
Policy value - The sum of the fixed account value plus the variable account
value.
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Proceeds - The amount payable under the policy as follows:
o Upon death of the insured, proceeds will be the death benefit under the
death benefit option in effect as of the date of the insured's death,
minus any indebtedness.
o On the maturity date, proceeds will be the cash surrender value.
o On surrender of the policy prior to the maturity date, the proceeds
will be the cash surrender value.
Rate classification - A group of insureds that IDS Life of New York expects will
have similar mortality experience.
Scheduled premium - A premium, selected by the owner at the time of application,
of a level amount, at a fixed interval of time.
Specified amount - An amount used to determine the death benefit and the
proceeds payable upon death. Under Option 1, it is the death benefit originally
applied for. Under Option 2, it is the initial net amount at risk. The initial
specified amount is shown in your policy.
Subaccount(s) - One or more of the investment divisions of the variable account,
each of which invests in a particular fund or trust.
Surrender charge - A contingent deferred issue and administrative expense charge
and a contingent deferred sales charge assessed against the policy value at the
time of surrender during the first 10 years of the policy and for 10 years after
an increase in coverage.
Trust - A unit investment trust, which is part of Smith Barney Inc. Stripped
("Zero Coupon") U.S. Treasury Securities Fund, Series A. One subaccount of the
variable account invests in the trust, which contains certain debt obligations
of the United States.
Valuation date - A normal business day, Monday through Friday, on which the New
York Stock Exchange is open. The value of each subaccount is set at the close of
business on each valuation date.
Valuation period - The interval commencing at the close of business on each
valuation date and ending at the close of business on the next valuation date.
Variable account - IDS Life of New York Account 8 is a separate account of IDS
Life of New York. Each subaccount invests in a particular fund or unit
investment trust. The policy value in each subaccount depends on the performance
of the particular fund or trust.
Variable account value - The sum of the values that are allocated to the
subaccounts of the variable account.
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The policy in brief
The Flexible Premium Variable Life Insurance Policy (the policy) is designed to
provide insurance protection on the life of the insured and to build cash value.
Like other life insurance, the policy provides a death benefit that is payable
to the beneficiary upon the insured's death. Unlike traditional, fixed-premium
life insurance, the policy allows you, as the policy owner, to allocate your
premiums (payments), or transfer policy value, to:
The variable account, consisting of subaccounts, each of which invests
in a fund or unit investment trust with a particular investment
objective. You may direct premiums to any or all of nine of these
subaccounts. Your policy's value may increase or decrease daily,
depending on the investment return. No minimum amount is guaranteed, as
it would be in a traditional life insurance policy. (p.)
The fixed account, which earns interest at rates that are adjusted
periodically by IDS Life of New York. This rate will never be lower
than 4.5%. (p.)
The funds: Six subaccounts of the variable account invest in IDS Life Series
Fund, Inc. which includes Equity, Income, Money Market, Managed, Government
Securities and International Equity Portfolios. One subaccount invests in AIM
Variable Insurance Funds, Inc.-AIM V.I. Growth and Income Fund. One subaccount
invests in Putnam Variable Trust-Putnam VT New Opportunities Fund. (p.)
The trust: One subaccount of the variable account invests in units of the Smith
Barney Inc. Stripped ("Zero Coupon") U.S. Treasury Securities Fund, Series A,
consisting of a unit investment trust. (p.)
Purchasing your policy: To apply, send a completed application and premium
payment to IDS Life of New York's home office. For your application to be
accepted, you will need to meet certain conditions stated in the application
form and to supply medical and other evidence that the person you propose to
insure (yourself or someone else) is insurable according to our underwriting
rules. (p.)
Right to examine policy: You may return your policy for any reason and receive a
full refund of your premiums by mailing us the policy and a written request for
cancellation within a specified period. (p.)
Premiums: In applying for your policy, you state how much you intend to pay and
whether you will pay quarterly, semiannually or annually. You may also make
additional, unscheduled premium payments in any amount from $25 to $500,000. We
may refuse premiums in order to comply with the Code. (p.)
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Loads, fees and charges: Your policy is subject to the following charges, which
compensate IDS Life of New York for administering and distributing the policy as
well as paying policy benefits and assuming related risks:
o Premium expense charge -- 2.5% sales charge and 1% premium tax charge
for a total of 3.5% of each premium payment. This charge pays some
distribution expenses and state and local premium taxes.
o Monthly deduction -- charged against the value of your policy each
month, covering the cost of insurance, cost of issuing the policy,
certain administrative expenses, a death benefit guarantee charge and
optional insurance benefits.
o Surrender charge -- applies if you surrender your policy for its full cash
surrender value, or the policy lapses, during the first 10 years and for 10
years after requesting an increase in the specified amount (the minimum
death benefit specified in your application). The surrender charge consists
of a deferred charge for costs of issuing the policy and a deferred sales
charge. It is based on the initial specified amount and on any increase in
the specified amount.
o Partial surrender fee -- applies if you surrender part of the value of your
policy; equals $25 or 2% of the amount surrendered, if less.`
o Mortality and expense risk charge -- applies only to the subaccounts;
equals, on an annual basis, 0.9% of the average daily net asset value of
the subaccounts.
o Transaction charge -- applies only to subaccounts that invest in the
trusts; equals, on an annual basis, 0.25% of their average daily net asset
value.
o Fund expenses -- applies only to the funds. As of Dec. 31, 1997, the
investment management fee was as follows: 0.5% of the average daily net
assets of the IDS Life Series Fund-Money Market Portfolio; 0.95% of the
average daily net assets of IDS Life Series Fund-International Equity
Portfolio; 0.58% of the average daily net assets of Putnam VT New
Opportunities Fund; 0.63% of the average daily net assets of the AIM V.I.
Growth and Income Fund and 0.7% of the average daily net assets of the IDS
Life Series Fund-Equity, Income, Managed and Government Securities
Portfolios. The fund also pay taxes, brokerage commissions and nonadvisory
expenses. IDS Life has agreed to a voluntary limit of 0.1%, on an annual
basis, of the average daily net assets of each IDS Life Series Fund
portfolio for these nonadvisory expenses. (p.)
Death benefit guarantee: Your policy will not lapse regardless of investment
performance if the death benefit guarantee is in effect. To keep the death
benefit guarantee in effect, you must pay the minimum monthly premiums specified
in the policy. The death benefit guarantee applies only until the insured
reaches attained insurance age 65 or the policy has been in effect for five
years, whichever is later. (p.)
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Grace period: If the cash surrender value of your policy becomes less than the
amount needed to pay the monthly deduction and the death benefit guarantee is
not in effect, you will have 61 days to pay a premium that raises the cash
surrender value to an amount sufficient to pay the monthly deduction. If you
don't, the policy will lapse. (p.)
Reinstatement: If your policy lapses, it can be reinstated within five years, if
you make certain payments and present evidence satisfactory to IDS Life of New
York that the insured remains insurable.
The death benefit guarantee cannot be reinstated. (p.)
Death benefits: Your policy's death benefit can never be less than the specified
amount in your policy application, unless you change that amount or your policy
has outstanding indebtedness. The relationship between the policy value and the
death benefit depends on which of two options you choose:
o Option 1 level amount: The death benefit is the greater of the
specified amount or a percentage of policy value.
o Option 2 variable amount: The death benefit is the greater of the
specified amount plus the policy value, or a percentage of policy
value.
You may change the death benefit option or specified amount within certain
limits; doing so will generally affect policy charges. (p.)
Transfers between the fixed account and subaccounts: You may, at no charge,
transfer policy value from one subaccount to another or between subaccounts and
the fixed account. (Certain restrictions apply to transfers involving the fixed
account.) You can request up to five transfers per year by phone or mail. You
can also arrange for automated transfers on a monthly, quarterly, semiannual or
annual basis. (p.)
Policy loans: You may borrow against your policy's cash surrender value. A
policy loan, even if repaid, can have a permanent effect on the death benefit
and policy value. A loan may also have tax consequences if your policy lapses or
you surrender it. (p.)
Policy surrenders: You may cancel the policy while the insured is living and
receive its cash surrender value. The cash surrender value is the policy value
minus indebtedness, minus any applicable surrender charges. (p.)
Exchange right: For two years after the policy is issued, you can exchange it
for one that provides benefits that do not vary with the investment return of
the subaccounts. Because the policy itself offers a fixed return option, all you
need do is transfer all of the policy value in the subaccounts to the fixed
account. (p.)
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Payment of policy proceeds: Proceeds will be paid when you surrender the policy,
the insured dies or the policy matures, which occurs when the insured reaches
attained insurance age 100. You or the beneficiary may choose whether payment is
to be made in a lump sum or under one or more of certain options. (p.)
Federal taxes: The death benefit is not considered part of the beneficiary's
income and thus is not subject to federal income taxes. Part or all of any
proceeds received through full or partial surrender, maturity, lapse, policy
loan or assignment of policy value may be subject to federal income tax as
ordinary income. Proceeds other than death benefits from certain policies,
classified as "modified endowments," are taxed differently from proceeds of
conventional life insurance contracts and may also be subject to an additional
10% IRS penalty tax if you are younger than 59 1/2. A policy is considered to be
a modified endowment if it was applied for or materially changed after June 21,
1988, and premiums paid in the early years exceed certain modified endowment
limits. (p.)
The variable account
You can direct your premiums to any or all of nine subaccounts of the variable
account. These subaccounts invest in the following funds:
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Subaccount invests exclusively in shares of
Equity IDS Life Series Fund Equity Portfolio
Income IDS Life Series Fund Income Portfolio
Money Market IDS Life Series Fund Money Market Portfolio
Managed IDS Life Series Fund Managed Portfolio
Government Securities IDS Life Series Fund Government Securities Portfolio
International Equity IDS Life Series Fund International Equity Portfolio
YGI AIM V.I. Growth and Income Fund
YNO Putnam VT New Opportunities Fund
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One subaccount invests in units of the Smith Barney Inc. Stripped ("Zero
Coupon") U.S. Securities Fund, Series A, a unit investment trust:
Subaccount invests in a trust with maturity date of
2004 Nov. 15, 2004
The variable account was established on Sept. 12, 1985, under New York law and
is registered as a single unit investment trust under the Investment Company Act
of 1940. Such registration does not involve any SEC supervision of the account's
management or investment practices or policies. International Equity subaccount
was added to the variable account on Oct. 28, 1994. YGI and YNO subaccounts were
added to the variable account on Nov. 22, 1996.
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The variable account meets the definition of a "separate account" under federal
securities laws. Income, capital gains or capital losses of each subaccount are
credited to or charged against the assets of that subaccount alone. No
subaccount will be charged with liabilities of any other subaccount or of any
other business conducted by IDS Life of New York.
At all times, IDS Life of New York will maintain assets in the subaccounts with
total market value at least equal to the reserves and other liabilities required
to cover insurance benefits under all contracts participating in the subaccount.
The funds
IDS Life Series Fund, Inc., a Minnesota corporation, is a diversified, open-end
management investment company incorporated on May 8, 1985. IDS Life Series Fund
consists of six portfolios:
IDS Life Series Fund-Equity Portfolio
Objective: capital appreciation. Invests primarily in common stocks and other
securities convertible into common stock.
IDS Life Series Fund-Income Portfolio
Objective: to maximize current income while attempting to conserve the value of
the investment and to continue the high level of income for the longest period
of time. At least 50% of net assets will normally be invested in high-quality,
lower-risk corporate bonds, unrated corporate bonds believed to have the same
investment qualities and government bonds. Other investments may include
lower-rated corporate bonds, bonds and common stocks sold together as a unit,
preferred stock and foreign securities.
IDS Life Series Fund-Money Market Portfolio
Objective: to provide maximum current income consistent with liquidity and
conservation of capital. Invests in relatively short-term money market
securities, such as marketable debt securities issued or guaranteed as to
principal and interest by the U.S. government or its agencies or
instrumentalities, bank certificates of deposit, bankers' acceptances, letters
of credit and high-grade commercial paper.
IDS Life Series Fund-Managed Portfolio
Objective: to maximize total investment return through a combination of capital
appreciation and current income. If the investment manager believes the stock
market will be moving higher, it can emphasize stocks that offer potential for
appreciation. At other times, the manager may increase the portfolio's holdings
in bonds and money-market securities providing high current income.
<PAGE>
IDS Life Series Fund-Government Securities Portfolio
Objective: to provide a high current return and safety of principal. Invests
primarily in debt obligations issued or guaranteed as to principal and interest
by the U.S. government, its agencies and instrumentalities.
IDS Life Series Fund-International Equity Portfolio
Objective: capital appreciation. Invests primarily in common stocks of foreign
issuers and foreign securities convertible into common stock. Other investments
may include certain international bonds if the portfolio manager believes they
have greater potential for capital appreciation than equities.
AIM Variable Insurance Funds, Inc., a Maryland corporation, is an open-end,
series, management investment company incorporated on January 22, 1993. The
variable account invests in the following fund:
AIM V.I. Growth and Income Fund
Objective: to seek growth of capital, with current income as a secondary
objective. The Fund seeks to achieve its objective by generally investing at
least 65% of its net assets in stocks of companies believed by management to
have the potential for above average growth in revenues and earnings.
Putnam Variable Trust is a Massachusetts business trust organized on September
24, 1987. The variable account invests in the following fund:
Putnam VT New Opportunities Fund
Objective: seeks long term capital appreciation by investing principally in
common stocks of companies in sectors of the economy which Putnam Investment
Management, Inc. ("Putnam Management") management believes possesses
above-average long-term growth potential.
Fund objectives
Fund objectives for all funds except Putnam VT New Opportunities Fund can be
changed only if holders of a majority of outstanding shares agree. The objective
of Putnam VT New Opportunities Fund may be changed by the Trustees without a
vote of the shareholders, but as a matter of policy, the Trustees would not
materially change the fund's objectives without shareholder approval. Because
fund investments are subject to the risk of changing economic conditions and the
ability of the investment manager to anticipate such changes, there can be no
guarantee that the investment objectives of a fund will be achieved.
<PAGE>
Relationship between funds and subaccounts
Shares of each fund are sold to the appropriate subaccount at net asset value
without a sales charge. Dividends and capital gain distributions from a fund are
reinvested at net asset value without a sales charge and retained as an asset of
the appropriate subaccount. Fund shares will be redeemed by the appropriate
subaccount, without fee to the subaccount, to the extent necessary to make death
benefit or other payments under the policy.
Currently, shares of the IDS Life Series Fund portfolios are available to serve
as the underlying investment for variable life insurance. Shares of AIM V.I.
Growth and Income Fund and Putnam VT New Opportunities Fund are available to
serve as the underlying investment for variable life insurance contracts,
variable annuities and qualified plans. In the future, shares of the IDS Life
Series Fund portfolios may be available to serve as the underlying investment
for variable life insurance contracts, variable annuities and qualified plans.
It is conceivable that in the future it may be disadvantageous for variable life
insurance separate accounts, variable annuity separate accounts and/or qualified
plans to invest in the available funds simultaneously. Although IDS Life and the
funds do not currently foresee any such disadvantages, the boards of directors
or trustees of the appropriate funds will monitor events in order to identify
any material conflicts between such policy owners, contract owners and qualified
plans to determine what action, if any, should be taken in response to a
conflict. If a board were to conclude that separate funds should be established
for variable life insurance, variable annuity and qualified plan separate
accounts, the variable life insurance policyholders would not bear any expenses
associated with establishing separate accounts. Please refer to the fund
prospectuses for risk disclosure regarding mixed and shared funding.
IDS Life acts as the investment manager and American Express Financial
Corporation acts as investment advisor of the IDS Life Series Fund, Inc.
American Express Trust Company acts as custodian of the IDS Life Series Fund
Inc.'s investments.
AIM Advisors, Inc. acts as the investment advisor for AIM V.I. Growth and Income
Fund. Putnam Management acts as the investment manager for Putnam VT New
Opportunities Fund.
The investment managers or advisors receive fees for their services as described
under "Loads, fees and charges."
Detailed information about the funds, their investment objectives, policies and
risks, may be found in the fund prospectuses.
Diversification: The Internal Revenue Service (IRS) has issued final regulations
relating to the diversification requirements under Section 817(h) of the Code.
Each fund intends to comply with these requirements.
<PAGE>
Ownership rules: The U.S. Treasury and the IRS have indicated they may provide
additional guidance concerning how many subaccounts may be offered and how many
exchanges among subaccounts may be allowed before the owner is considered to
have investment control and thus is currently taxed on income earned within
subaccount assets. We do not know at this time what the additional guidance will
be or when action will be taken. We reserve the right to modify the policy, as
necessary, to ensure that the owner will not be subject to current taxation as
the owner of the subaccount assets.
Rates of return of the funds and subaccounts
This section presents rates of return first for the funds, and then for the
corresponding subaccounts. Rates of return are different in the two cases
because those of the subaccounts reflect additional charges. All expenses
mentioned in the section are explained fully under "Loads, fees and charges".
Rates of return of the funds:
In the following table are average annual rates of return based on the actual
investment performance of the funds after deduction of applicable fund expenses
(including the investment management fees) for the periods indicated. These
rates do not reflect charges that apply to the subaccounts or the policy and
therefore do not illustrate how actual investment performance will affect policy
benefits. Moreover, these rates of return are not an estimate or guarantee of
future performance.
<TABLE>
<CAPTION>
Period Ending 12/31/97
10 years or
Fund 1 year 3 years 5 years Since
commencement*
- --------------------------------------------- --------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
IDS Life Series Fund - Equity (Beta 0.86**) 21.13% 26.21% 18.55% 18.08%
IDS Life Series Fund - Income 8.03 10.60 8.25 9.14
IDS Life Series Fund - Money Market 5.03 5.02 4.27 5.35
IDS Life Series Fund - Managed (Beta 0.62**) 17.91 17.14 14.17 15.75
IDS Life Series Fund - Government Securities 8.60 9.15 6.77 8.42
IDS Life Series Fund - International Equity 6.20 21.47 -- 20.39
AIM V.I. Growth and Income Fund 25.72 -- -- 21.11
Putnam VT New Opportunities Fund 23.29 -- -- 22.86
</TABLE>
IDS Life Series Fund - International Equity Portfolio commenced operations on
October 28, 1994. AIM V.I. Growth and Income Fund and Putnam VT New
Opportunities Fund each commenced operations on May 2, 1994.
**Beta is a volatility measure based on calculations of the fund's monthly
returns compared to the S&P 500 Index. A beta less than 1 indicates performance
that is less volatile than the market; a beta more than 1 indicates performance
that is more volatile than the market.
<PAGE>
Rates of return of subaccounts
Average annual rates of return in the following table reflect all charges
incurred by the portfolios and charges against the subaccounts (including the
mortality and expense risk charge). The rates do not reflect the premium expense
charge, surrender charge or monthly deduction. For all subaccounts, we show
actual performance from the date the subaccounts began investing in the funds.
We also show performance from the commencement date of the funds.*
<TABLE>
<CAPTION>
Since commencement Since commencement
of the subaccounts of the Funds
10 years or 10 years or
Since Since
Subaccount Investment 1 year 3 years 5 years commencement 1 year 3 years 5 years commencement
- ------------------------- ---------- ------------- ------------ ----------------- ----------- ---------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity 20.05% 25.07% 17.49% 16.97% 20.05% 25.07% 17.49 16.97%
Income 7.04 9.62 7.30 8.19 7.04 9.62 7.30 8.14
Money Market 4.15 4.17 3.39 4.42 4.15 4.17 3.39 4.42
Managed 16.88 16.09 13.14 14.66 16.88 16.09 13.14 14.66
Government Securities 7.66 8.19 5.83 7.35 7.66 8.19 5.83 7.35
International Equity** 5.25 21.28 -- 19.41 5.25 21.28 -- 19.41
YGI** 24.59 -- -- 22.15 24.59 25.23 -- 20.00
YNO** 22.18 -- -- 17.34 22.18 24.19 -- 21.76
*In most cases, the subaccounts and the funds commenced operations at the same
time, so the performance for both is the same. However, the AIM VI Growth and
Income Fund and the Putnam VT New Opportunities Fund commenced operations before
the subaccounts that invest in those funds, so the subaccount and the fund
performance is different. We show performance from commencement of these two
funds as if the subaccount had invested in the funds at that time.
**International Equity subaccount commenced operations on Oct. 28, 1994. YGI and
YNO subaccounts each commenced operations on Nov. 22, 1996.
</TABLE>
The trust
Smith Barney Inc. Stripped ("Zero Coupon") U.S. Treasury Securities Fund, Series
A, consists of a unit investment trust. Currently one is available for
investment which matures in 2004.
Objectives and major investments
The objective of the trust is to provide safety of capital and income through
investment in a portfolio consisting primarily of:
o bearer debt obligations issued by the United States that have been stripped
of their unmatured interest coupons,
o coupons stripped from debt obligations of the United States, and
o receipts and certificates for such stripped debt obligations and coupons.
<PAGE>
The trust will also contain a Treasury note or notes providing interest income
to pay anticipated expenses of the trust.
U.S. Treasury securities that have been stripped of their unmatured interest
coupons are essentially bonds or notes that pay no interest. For this reason
they are purchased at a deep discount from their face value and, if held to
maturity, return the full face value.
Before maturity, the value of trust units will be more volatile than would the
value of units of a trust containing unstripped U.S. Treasury securities of
comparable maturities. The value may affect death benefits and policy value,
which will fluctuate accordingly.
Estimated rates of return
Because amounts invested in stripped U.S. Treasury securities will grow to their
face values if held to maturity, we can estimate the compound rate of growth to
maturity, based on certain assumptions about trust expenses. The net rate of
return to maturity is calculated based on the estimated compound rate of growth
in the units and these charges. Since the value of the trust's units will vary
daily, reflecting the market value of the underlying securities, the compound
rate of growth to maturity and net rate of return to maturity will also vary
daily. Estimated net rates of return from March 31, 1998 to maturity for the
trust, taking account of anticipated expenses are:
Trust maturity date Net rate of return to maturity
Nov. 15, 2004 5.69%
Rates of return to owners will be less than rates of return for trust units
themselves because the units are held in subaccounts of the variable account,
which are subject to policy charges not reflected in the above estimates. (See
"Loads, fees, and charges" for a full discussion of applicable charges.)
Trust maturity
On the maturity date of a particular trust, the policy value allocated to the
subaccount that invests in the trust will automatically be reallocated to the
Money Market subaccount, which invests in the Money Market Portfolio, unless you
give us other directions in writing at least seven days before the maturity
date. We will notify you in writing 30 days before the trust matures.
Roles of Smith Barney Inc. and IDS Life of New York
Smith Barney sponsors the trust and sells units to the subaccounts. Because the
trust invests in a specified portfolio, there is no investment manager.
<PAGE>
The price of the trust's units includes a transaction charge, paid directly by
IDS Life of New York to Smith Barney out of IDS Life of New York's general
account assets. This charge is limited by agreement between IDS Life of New York
and Smith Barney and will not be greater than that ordinarily paid by a dealer
for similar securities. We will seek reimbursement for the amounts paid through
a daily asset charge, described under "Loads, fees and charges."
Trust units will be sold to the extent necessary for IDS Life of New York to
provide benefits and make reallocation under the policies. Units will be sold to
Smith Barney, which has undertaken to maintain a secondary market in units of
the trust.
IDS Life of New York and Smith Barney reserve the right to discontinue the sale
of new units of a trust and to create additional trusts in the future.
More detailed information may be found in the current prospectus for the Smith
Barney Inc. Stripped ("Zero Coupon") U.S. Treasury Securities Fund, Series A.
The fixed account
You can allocate premiums to the fixed account or transfer policy value from the
subaccounts to the fixed account (with certain restrictions, explained in
"Transfers between the fixed account and subaccounts").
The fixed account is the general investment account of IDS Life of New York. It
includes all assets owned by IDS Life of New York other than those in the
variable account and other separate accounts. Subject to applicable law, IDS
Life of New York has sole discretion to decide how assets of the fixed account
will be invested.
Placing policy value in the fixed account does not entitle you to share in the
fixed account's investment experience, nor does it expose you to the account's
investment risk. Instead, IDS Life of New York guarantees that the policy value
you place in the fixed account will accrue interest at an effective annual rate
of at least 4.5%, independent of the actual investment experience of the
account. IDS Life of New York bears the full investment risk for amounts
allocated to the fixed account.
IDS Life of New York is not obligated to credit interest at any rate higher than
4.5%, although we may do so at our sole discretion. In recent years, interest
was credited as follows:
<PAGE>
1988 8.0 to 9.25%
1989 8.25 to 9.5%
1990 8.25 to 9.2%
1991 7.55 to 8.55%
1992 6.5 to 8.05%
1993 5.7 to 7.4%
1994 5.7 to 7.6%
1995 5.75 to 7.6%
1996 5.5 to 7.2%
1997 5.5 to 6.95%
These rates are not indicative of future interest rates. The rate of return to
you as owner will be less than the rate credited because policy charges
(described under "Loads, fees and charges") reduce your net return.
Interest in excess of 4.5% will not be credited on any portion of policy value
in the fixed account against which you have a policy loan outstanding.
Because of exemptive and exclusionary provisions, interests in the fixed account
have not been registered under the Securities Act of 1933, and the fixed account
has not been registered as an investment company under the Investment Company
Act of 1940. Accordingly, neither the fixed account nor any interests in it are
subject to the provisions of these Acts, and the staff of the SEC has not
reviewed the disclosures in this prospectus relating to the fixed account.
Disclosures regarding the fixed account may, however, be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
Purchasing your policy
Application
To apply for coverage, complete an application and send it with your premium
payment to IDS Life of New York's home office. In your application, you:
o select a specified amount of insurance;
o select a death benefit option;
o designate a beneficiary; and
o state how premiums are to be allocated among the fixed account and/or the
subaccounts.
Insurability: Before issuing your policy, IDS Life of New York requires
satisfactory evidence of the insurability of the person whose life you propose
to insure (yourself or someone else). Our underwriting department will review
your application and any medical information or other data required to determine
whether the proposed individual
<PAGE>
is insurable under our underwriting rules. Your application may be declined if
IDS Life of New York determines the individual is not insurable and any premium
you have paid will be returned.
Age limit: IDS Life of New York generally will not issue a policy to persons
over the insurance age of 75. It may, however, do so at its sole discretion.
Rate classification: The rate classification is based on the insured's health,
occupation or other relevant underwriting standards. This classification will
affect your monthly deduction and may affect the cost of certain optional
insurance benefits. (See "Loads, fees and charges" and "Optional insurance
benefits.")
Other conditions: In addition to proving insurability, you and the insured must
also meet certain conditions, stated in the application form, before coverage
will become effective and your policy will be delivered to you.
Death of the insured: If the insured dies before the policy is issued and:
o if all conditions stated in the application have not been met, IDS Life
of New York's sole liability will be to return the premium paid plus
any interest earned.
o if all conditions stated in the application have been met, IDS Life of
New York's liability will be the lesser of the death benefit applied
for or $150,000.
Incontestability: IDS Life of New York will have two years from the effective
date of your policy to contest the truth of statements or representations in
your application. After the policy has been in force during the insured's
lifetime for two years from the policy date, IDS Life of New York cannot contest
the policy.
Right to examine policy
You may return your policy for any reason and receive a full refund of all
premiums paid. To do so, you must mail or deliver the policy to IDS Life of New
York or your financial advisor with a written request for cancellation, by the
latest of:
o the 10th day after you receive it;
o the 10th day after IDS Life of New York mails or personally delivers a
written notice of withdrawal right; or
o the 45th day after you sign your application.
On the date your request is postmarked or received, the policy will immediately
be considered void from the start.
<PAGE>
Premiums
Payment of premiums:
In applying for your policy, you decide how much you intend to pay and how often
you will make payments. During the first several policy years, IDS Life of New
York requires that premiums sufficient to keep the death benefit guarantee in
effect be paid to keep the policy in force.
You may schedule payments annually, semiannually or quarterly. (Payment at any
other interval must be approved by IDS Life of New York.) This premium schedule
is shown in your policy.
The scheduled premium serves only as an indication of your intent as to the
frequency and amount of future premium payments. You may skip scheduled premium
payments at any time if your cash surrender value is sufficient to pay the
monthly deduction or if the death benefit guarantee will remain in effect.
You may also change the amount and frequency of scheduled premium payments by
written request. IDS Life of New York reserves the right to limit the amount of
such changes. Any change in the premium amount is subject to applicable tax laws
and regulations. Although you have flexibility in paying premiums, the amount
and frequency of your payments will affect the policy value, cash surrender
value and length of time your policy will remain in force, as well as affect
whether the death benefit guarantee remains in effect.
Premium limitations:
You may make unscheduled premium payments at any time and in any amount from $25
to $500,000. IDS Life of New York reserves the right to limit the number and
amount of unscheduled premium payments.
Also, in order to receive favorable tax treatment under the Code, premiums paid
during the life of the policy must not exceed certain limitations. To comply
with the Code, IDS Life of New York can either refuse excess premiums as they
are paid or refund excess premiums with interest no later than 60 days after the
end of the policy year in which they were paid.
Allocation of premiums:
Until your application is approved by IDS Life of New York, we hold all premiums
in the fixed account and we credit interest on the net premiums (gross premiums
minus premium expense charge) at the current fixed account rate. As of the date
your
<PAGE>
application is approved, we will allocate the net premiums plus accrued interest
to the account(s) you have selected in your application. At that time, we will
begin to assess the various loads, fees, charges and expenses.
Any amount allocated to a subaccount is converted into accumulation units of
that subaccount, as explained under "Policy value." Similarly, when transferring
value between subaccounts, accumulation units in one subaccount are converted
into a cash value, which is then converted into accumulation units of the second
subaccount.
Your ability to allocate policy value to the trust may be limited by the
availability of trust units.
Loads, fees and charges
Policy charges compensate IDS Life of New York for:
o providing the insurance benefits of the policy;
o issuing the policy;
o administering the policy;
o assuming certain risks in connection with the policy; and
o distributing the policy.
Some of these charges are deducted from your premium payments. Others are
deducted periodically from your policy value in the fixed and/or subaccounts.
You may also be assessed a charge if you surrender your policy or the policy
lapses.
Premium expense charge
We deduct this charge from each premium payment. The amount remaining after the
deduction, called the net premium, is credited to the account(s) you have
selected. The premium expense charge has two parts:
Sales charge: 2.5% of each premium payment. Partially compensates IDS Life of
New York for expenses in distributing the policy, including agents' commissions,
advertising and printing of prospectuses and sales literature. (These expenses
also may be partially compensated by the contingent deferred sales charge,
discussed under "Surrender charge," below.)
Premium tax charge: 1% of each premium payment. Compensates IDS Life of New York
for paying taxes imposed by the state of New York on premiums received by
insurance companies.
<PAGE>
Monthly deduction
On each monthly date we deduct from the value of your policy in the fixed and/or
subaccounts an amount equal to the sum of:
1. the cost of insurance for the policy month;
2. the policy fee shown in your policy;
3. the death benefit guarantee charge shown in your policy; and
4. charges for any optional insurance benefits provided by rider for the policy
month.
Each of the four components is explained below.
You specify, in your policy application, what percentage of the monthly
deduction from 0% to 100% will be taken from the fixed account and from each of
the subaccounts. You may change these percentages for future monthly deductions
by written request.
Monthly deductions will be taken from the fixed account and the subaccounts on a
pro rata basis if:
o you do not specify the accounts from which the monthly deduction is to be
taken; or
o the value in the fixed account or any subaccount is insufficient to pay the
portion of the monthly deduction you have specified.
If the cash surrender value of your policy is not enough to cover the monthly
deduction on a monthly anniversary, the policy may lapse. However, the policy
will not lapse if the death benefit guarantee is in effect. (See "Death benefit
guarantee"; also "Grace period" and "Reinstatement" at the end of this section
on policy costs.)
Components of the monthly deduction:
1. Cost of insurance: primarily, the cost of providing the death benefit under
your policy, which depends on:
o the amount of the death benefit;
o the policy value; and
o the statistical risk that the insured will die in a given period.
The cost of insurance for a policy month is calculated as:
[a x (b - c)] + d
<PAGE>
where:
(a) is the monthly cost of insurance rate, which reflects the insured's
statistical mortality risk, based on his or her sex, attained insurance age (age
at last policy anniversary) and rate classification. Generally, the cost of
insurance rate will increase as the insured's attained insurance age increases.
Rates are set by IDS Life of New York, based on its expectations as to future
mortality experience. We may change the rates from time to time; any change will
apply to all individuals of the same rate classification. However, rates will
not exceed the Guaranteed Maximum Monthly Cost of Insurance Rates shown in your
policy, which are based on the 1980 Commissioners Standard Ordinary Smoker and
Nonsmoker Mortality Tables, Age Nearest Birthday.
Policies purchased on or after May 1, 1991 with an initial specified amount of
$350,000 or greater qualify for lower cost of insurance rates than policies
purchased with a specified amount less than $350,000. In addition, all policies
purchased on or after May 1, 1993 and before November 20, 1997 qualify for lower
cost of insurance rates than policies purchased earlier. Cost of insurance rates
that are modified to reflect IDS Life of New York and industry-wide changes in
mortality experience apply to all policies purchased on or after November 20,
1997.
(b) is the death benefit on the monthly date divided by 1.0036748 (which reduces
IDS Life of New York's net amount at risk, solely for computing the cost of
insurance, by taking into account assumed monthly earnings at an annual rate of
4.5%);
(c) is the policy value on the monthly date. At this point, the policy value has
been reduced by the policy fee, death benefit guarantee charge and any charges
for optional riders;
(d) is any flat extra insurance charges assessed as a result of special
underwriting considerations.
2. Policy fee: $5 per month. This charge reimburses IDS Life of New York for
expenses of issuing the policy, such as processing the application (primarily
underwriting) and setting up computer records; and of administering the policy,
such as processing claims, maintaining records, making policy changes and
communicating with owners.
3. Death benefit guarantee charge: 1 cent per $1,000 of the current specified
amount and 1 cent per $1,000 of coverage under any other insured rider. This
charge compensates IDS Life of New York for the risk assumed in providing the
death benefit guarantee. The charge is included in the monthly deduction in the
first five policy years or until the insured's attained insurance age 65,
whichever is later. The charge will not be deducted if the death benefit
guarantee is no longer in effect. For any policy month in which the monthly
deduction is paid by a waiver of monthly deduction rider, the minimum monthly
<PAGE>
premium will be zero. (See "Death benefit guarantee," later in this section for
an explanation of the minimum monthly premium and "Other insured rider," under
"Optional insurance benefits.")
4. Optional insurance benefit charges: charges for any optional benefits added
to the policy by rider. See "Optional insurance benefits".
Surrender charge
If you surrender your policy or the policy lapses during the first 10 policy
years and in the 10 years following an increase in specified amount a surrender
charge will be assessed. The surrender charge is the sum of two parts:
Contingent deferred issue and administrative expense charge:
Reimburses IDS Life of New York for costs of issuing the policy, such as
processing the application (primarily underwriting) and setting up computer
records. For the initial specified amount, this charge is $4 per thousand
dollars of initial specified amount. It remains level during the first five
policy years and then decreases monthly until it is zero at the end of 10 policy
years. If the specified amount of the policy is increased, an additional charge
will apply. The additional charge will be $4 per thousand dollars of increase in
specified amount. It remains level during the first five years following the
effective date of the increase and then decreases monthly until it is zero at
the end of the 10th year following the increase.
Contingent deferred sales charge:
Partially compensates IDS Life of New York for expenses of distributing the
policy, including financial advisors' commissions, advertising and printing the
prospectus and sales literature. For the initial specified amount, this charge
is the sum of 27.5% of premium payments up to a maximum amount shown in the
policy plus 6.5% of all other premium payments. The maximum amount shown in the
policy will be based on the insured's insurance age, sex, rate classification
and initial specified amount. If the specified amount of the policy is
increased, an additional charge will apply. The additional charge will be 6.5%
of all premium payments attributable to the increase. Premiums attributable to
the increase are calculated as
a x (b + c)
where:
(a) is the amount of the increase in the specified amount divided by the total
specified amount after the increase;
(b) is the policy value on the date of the increase; and
(c) is all premium payments paid on or after the date of the increase.
<PAGE>
Maximum surrender charge:
The total surrender charge is subject to an overall upper limit or "maximum
surrender charge." The "maximum surrender charge" for the initial specified
amount will be shown in the policy. It is based on the insured's insurance age,
sex, rate classification and initial specified amount. The "maximum surrender
charge" for the initial specified amount will remain level during the first five
policy years and then decrease monthly until it is zero at the end of 10 policy
years. If the specified amount is increased, an "additional maximum surrender
charge" will apply. The "additional maximum surrender charge" will be shown in a
revised policy. It will be based on the insured's attained insurance age, sex,
rate classification and the amount of the increase. The "additional maximum
surrender charge" will remain level during the first five years following the
effective date of the increase and then decrease monthly until it is zero at the
end of the 10th year following the increase.
If premium payments are equal to or somewhat higher than the premiums needed to
keep the death benefit guarantee in effect, for several years the surrender
charge will generally be the charge described in the "Contingent deferred issue
and administrative expense charge" and "Contingent deferred sales charge"
sections above. After that, the "Maximum surrender charge" will generally apply.
If premium payments are paid at a significantly higher level, the "Maximum
surrender charge" will generally apply in all years.
Partial surrender fee
If you surrender part of the value of your policy, you will be charged $25 (or
2% of the amount surrendered, if less). This fee is guaranteed not to increase
for the duration of your policy.
Mortality and expense risk charge
This charge applies only to the subaccounts and not to the fixed account. It is
equal, on an annual basis, to 0.9% of the daily net asset value of the
subaccounts -- a level guaranteed for the life of the policy. The subaccounts
pay this fee at the time that dividends are distributed from the funds in which
they invest. Computed daily, the charge compensates IDS Life of New York for:
o Mortality risk -- the risk that the cost of insurance charge will be
insufficient to meet actual claims.
o Expense risk -- the risk that the policy fee and the contingent deferred
issue and administrative expense charge (described above) may be
insufficient to cover the cost of administering the policy.
<PAGE>
Any profit from the mortality and expense risk charge would be available to IDS
Life of New York for any proper corporate purpose including, among others,
payment of sales and distribution expenses, which we do not expect to be covered
by the sales and surrender charges discussed earlier. Any further deficit will
have to be made up from IDS Life of New York's general assets.
Transaction charge
IDS Life of New York makes a daily charge against the assets of the subaccount
that invests in the trust. This charge is intended to reimburse us for the
transaction fee we pay from our general account assets to Smith Barney Inc. on
the sale of the trust units to the subaccounts.
The asset charge is equivalent to an effective annual rate of 0.25% of the value
of the subaccounts investing in the trust. This amount may be increased in the
future but will not exceed an effective annual rate of 0.5% of the value of
these subaccounts. The charge will be based on our costs (taking into account
the interest we lose on the amounts paid to Smith Barney).
Fund expenses
The investment managers receive fees for their services to the funds. The funds
also pay taxes, brokerage commissions and nonadvisory expenses, such as
custodian and trustee fees, registration fees for shares, postage, fidelity, and
security bond costs, legal fees and other miscellaneous fees and charges. IDS
Life has agreed to a voluntary limit of 0.1%, on an annual basis, of the average
daily net assets of each of the IDS Life Series Fund Portfolios for these
nonadvisory expenses, even though actual expenses on IDS Life Series
Fund-Government Securities Portfolio ranged up to 0.15%, IDS Life Series
Fund-Money Market Portfolios ranged up to 0.14% and IDS Life Series
Fund-International Equity Portfolio ranged up to 0.27%. IDS Life reserves the
right to discontinue limiting these nonadvisory expenses at 0.1%. However, its
present intention is to continue to limit until the time that actual expenses
are less than the limit. Other expenses for the year ended Dec. 31, 1997 were
0.05% for Putnam VT New Opportunities Fund. For AIM V.I. Growth and Income Fund
other expenses were 0.06% for the period ended Dec. 31, 1997.
The investment management fee is deducted from the IDS Life Series Fund -
Equity, Income, Money Market, Managed, Government Securities, International
Equity Portfolios and Putnam VT New Opportunities Fund and the AIM V.I. Growth
and Income Fund daily.
As of Dec. 31, 1997, the investment management fee was as follows:
o IDS Life Series Fund-Money Market Portfolio - 0.5% of average daily net assets
o Putnam VT New Opportunites Fund - 0.58% of average daily net assets
<PAGE>
o AIM V.I. Growth and Income Fund 0.63% of average daily net assets
o IDS Life Series Fund-Equity, Income, Managed and Government Securities
Portfolios - 0.7% of average daily net assets
o IDS Life Series Fund-International Equity Portfolio - 0.95% of average
daily net assets
IDS Life of New York has entered into certain arrangements under which it is
compensated by the advisors and/or distributors of the AIM V.I. Growth and
Income Fund and the Putnam VT New Opportunities Fund for the administrative
services it provides to these funds.
Other information on charges:
IDS Life of New York may reduce or eliminate various fees and charges when we
incur lower sales costs and/or perform fewer administrative services than usual.
The two most common cases are:
o Policies made available by an employer to a group of employees.
o Policies purchased on or after May 1, 1991 with an initial specified amount
of $350,000 or greater.
Death benefit guarantee
Your policy will remain in force even if the cash surrender value is
insufficient to cover the monthly deduction if you have paid the minimum monthly
premiums shown in the policy. Although the minimum premium is specified as a
monthly amount, you may pay on any schedule you choose, as long as:
the sum of premiums paid - partial surrenders - outstanding indebtedness
equals or exceeds
minimum monthly premium x number of months since policy date (including the
current month)
This guarantee applies only until the insured reaches attained insurance age 65
or the policy has been in force for five years, whichever is later. For factors
affecting the minimum monthly premium, see "Changes in specified amount" under
"Death benefit" and "Optional insurance benefits."
If, on a monthly date, you have not paid enough premiums to keep the death
benefit guarantee in effect, we will mail a notice to your last known address,
asking you to pay a premium sufficient to bring your total up to the required
minimum. If you do not pay this
<PAGE>
amount within 61 days, your policy will lapse (terminate) if the cash surrender
value is less than the amount needed to pay the monthly deduction. Although the
policy can be reinstated as explained below, the death benefit guarantee cannot
be reinstated.
Grace period
If on a monthly date the cash surrender value of your policy is less than the
amount needed to pay the next monthly deduction, your policy will still remain
in force for at least 61 days.
IDS Life of New York will mail a notice to your last known address, requesting
payment of a premium that will raise the cash surrender value to an amount
sufficient to cover the next three monthly deductions. If we receive this
premium before the end of the 61-day grace period, we will use the payment to
cover all monthly deductions and any other charges then due. Any balance will be
added to the policy value and allocated in the same manner as other premium
payments. If you do not pay the premium, the policy will lapse without value,
unless the death benefit guarantee described above is in effect.
If a policy lapses with outstanding indebtedness, any excess of the outstanding
indebtedness over the premium paid generally will be taxable to the owner. (See
"Federal taxes.") If the insured dies during the grace period, any overdue
monthly deductions will be deducted from the death benefit.
Reinstatement
Your policy may be reinstated within five years after it lapses, unless you
surrendered it for cash. To reinstate, IDS Life of New York will require:
o a written request;
o evidence satisfactory to IDS Life of New York that the insured remains
insurable;
o payment of a premium that will keep the policy in force for at least three
months;
o payment of the monthly deductions that were not collected during the grace
period; and
o payment or reinstatement of any indebtedness.
The effective date of a reinstated policy will be the monthly date on or next
following the day IDS Life of New York accepts your application for
reinstatement. The suicide period (see "Death benefits") will apply from the
effective date of reinstatement. Surrender charges will also be reinstated.
IDS Life of New York will have two years from the effective date of
reinstatement to contest the truth of statements or representations in the
reinstatement application.
<PAGE>
Policy value
The value of your policy is the sum of values in the fixed account and each
subaccount of the variable account.
Fixed account value
The value in the fixed account on the policy date (when the policy is issued)
equals the portion of your initial net premium that you have allocated to the
fixed account, plus interest accrued before the policy date, minus the portion
of the monthly deduction for the first policy month that you have allocated to
the fixed account. On any later date, the value in the fixed account equals:
o the value on the previous monthly date; plus
o net premiums allocated to the fixed account since the last monthly date;
plus
o any transfers to the fixed account from the subaccounts, including loan
transfers, since the last monthly date; plus
o accrued interest on all of the above; minus
o any transfers from the fixed account to the subaccounts, including loan
repayment transfers, since the last monthly date; minus
o any partial surrenders or partial surrender fees allocated to the fixed
account since the last monthly date; minus
o interest on any transfers or partial surrenders, from the date of the
transfer or surrender to the date of calculation; minus
o any portion of the monthly deduction for the coming month that is allocated
to the fixed account if the date of calculation is a monthly date.
Subaccount values
The value in each subaccount changes daily, depending on the investment
performance of the fund or trust in which that subaccount invests and on other
factors detailed below. There is no guaranteed minimum subaccount value. You as
owner bear the entire investment risk.
Calculation of subaccount value: The value of each subaccount on each valuation
date equals:
<PAGE>
o the value of the subaccount on the preceding valuation date, multiplied by
the net investment factor for the current valuation period (explained
below); plus
o net premiums received and allocated to the subaccount during the current
valuation period; plus
o any transfers to the subaccount (from the fixed account or other
subaccounts, including loan repayment transfers) during the period; minus
o any transfers from the subaccount including loan transfers during the
current valuation period; minus
o any partial surrenders and partial surrender fees allocated to the
subaccount during the period; minus
o any portion of the monthly deduction allocated to the subaccount during the
period.
The net investment factor measures the investment performance of a subaccount
from one valuation period to the next. Because performance may fluctuate, the
value of a subaccount may increase or decrease from day to day.
Accumulation units: The policy value allocated to each subaccount is converted
into accumulation units. Each time you direct a premium payment or transfer
policy value into one of the subaccounts, a certain number of accumulation units
are credited to your policy for that subaccount. Conversely, each time you take
a partial surrender or transfer value out of a subaccount, a certain number of
accumulation units are subtracted.
Accumulation units are the true measure of investment value in each subaccount.
For subaccounts investing in the funds, they're related to, but not the same as,
the net asset value of the corresponding fund. The dollar value of each
accumulation unit can rise or fall daily, depending on the investment
performance of the underlying fund, on any change in the value of trust units
and on certain charges. Here's how unit values are calculated:
Number of units: To calculate the number of units for a particular subaccount,
we divide your investment (net premium or transfer amount) by the current
accumulation unit value.
Accumulation unit value: The current value for each subaccount equals the last
value times the current net investment factor.
Net investment factor: Determined at the end of each valuation period, this
factor equals (a divided by b) - c, where:
<PAGE>
(a) equals:
o net asset value per share of the fund or value of a unit of the trust; plus
o per-share amount of any dividend or capital gain distribution made by the
relevant fund to the subaccount; plus
o any credit or minus any charge for reserves to cover any tax liability
resulting from the investment operations of the subaccount.
(b) equals:
o net asset value per share of the fund or value of a unit of the trust at
the end of the preceding valuation period; plus
o any credit or minus any charge for reserves to cover any tax liability in
the preceding valuation period.
(c) is a percentage factor representing the mortality and expense risk charge
and, for the subaccount investing in the trust, the transaction charge, as
described in "Loads, fees and charges," above.
Factors that affect subaccount accumulation units:
Accumulation units may change in two ways; in number and in value. Here are the
factors that influence those changes:
The number of accumulation units you own may fluctuate due to:
o additional purchase payments allocated to the subaccounts;
o transfers into or out of the subaccount(s);
o partial surrenders and partial surrender fees;
o surrender charges; and/or
o monthly deductions.
Accumulation unit values will fluctuate due to:
o changes in underlying fund(s) net asset value or the value of the trust;
o dividends distributed to the subaccount(s);
o capital gains or losses of underlying funds;
o fund operating expenses;
o mortality and expense risk charges; and/or
o the transaction charge for the subaccount investing in the trust.
<PAGE>
Death benefits
When you purchase your policy, you decide on the minimum amount of protection
you want for the beneficiary if the insured dies. This amount is called the
specified amount. Your policy's death benefit can never be less than this amount
unless you change it or unless your policy has an outstanding indebtedness.
You also choose one of two death benefit options, which determines how the
policy's value will affect the amount paid to the beneficiary if the insured
dies while the policy is in force:
Option 1 (level amount): Under this option, the policy's value is part of the
specified amount. The Option 1 death benefit is the greater of:
o the specified amount on the date of the insured's death; or
o the applicable percentage of the policy value on the date of death, if
death occurs on a valuation date, or on the next valuation date
following the date of death. (See table below.)
Thus, the death benefit remains level -- at the specified amount -- as long as
the applicable percentage of policy value is less than or equal to that amount.
Only when the applicable percentage of policy value exceeds the specified amount
will the death benefit vary with the policy value. After attained insurance age
40, the applicable percentage decreases as the insured's age increases.
<TABLE>
<CAPTION>
Applicable percentage table
Youngest Insured's Applicable percentage of Youngest Insured's Applicable percentage of
attained insurance age policy value attained insurance age policy value
<S> <C> <C> <C> <C>
40 or younger 250% 61 128%
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75 - 95 105
55 150 96 104
56 146 97 103
57 142 98 102
58 138 99 101
59 134 100 100
60 130
</TABLE>
<PAGE>
Option 2 (variable amount): Under this option, the policy value is added to the
specified amount. The Option 2 death benefit is the greater of:
o the policy value plus the specified amount; or
o the applicable percentage of policy value (from the preceding table) on
the date of death, if death occurs on a valuation date, or on the next
valuation date following the date of death.
Under Option 2 the death benefit will always vary as the policy value varies.
The death benefit will equal the sum of the specified amount plus the policy
value until the applicable percentage of the policy value exceeds that sum.
Examples: Option 1 Option 2
- --------- -------- --------
specified amount $1,000,000 $1,000,000
policy value $50,000 $50,000
death benefit $1,000,000 $1,050,000
policy value increases to $80,000 $80,000
death benefit $1,000,000 $1,080,000
policy value decreases to $30,000 $30,000
death benefit $1,000,000 $1,030,000
If you want to have premium payments and favorable investment performance
reflected partly in the form of an increasing death benefit, you should consider
Option 2. If you are satisfied with the specified amount of insurance protection
and prefer to have premium payments and favorable investment performance
reflected to the maximum extent in the policy value, you should consider Option
1. Under Option 1, the cost of insurance is lower because IDS Life of New York's
net amount at risk is generally lower; for this reason the monthly deduction is
less and a larger portion of your premiums and investment returns is retained in
the policy value.
Change in death benefit option
You may make a written request to change the death benefit option once per
policy year. A change in the death benefit option also will change the specified
amount. You do not need to provide additional evidence of insurability.
If you change from Option 1 to Option 2: The specified amount will decrease by
an amount equal to the policy value on the effective date of the change. You
cannot change from Option 1 to Option 2 if the resulting specified amount would
fall below the minimum specified amount (currently $50,000 for the first two
policy years, $40,000 in years three through 10 and $25,000 thereafter).
<PAGE>
The minimum specified amount for policies purchased on or after May 1, 1991 with
an initial specified amount of $350,000 or more is $350,000 in the first policy
year, $325,000 in years two to five, $300,000 in years six to 10 and $275,000
thereafter.
If you change from Option 2 to Option 1: The specified amount will increase by
an amount equal to the policy value on the effective date of the change.
An increase or decrease in specified amount resulting from a change in the death
benefit option will affect the monthly deduction because the cost of insurance
and the death benefit guarantee charge both depend upon the specified amount.
The charge for certain optional insurance benefits may also change.
The surrender charge, however, will not be affected.
Changes in specified amount
Subject to certain limitations, you may make a written request to increase or
decrease the specified amount once each policy year after the first. Changes in
specified amount may have tax implications, discussed in the section "Modified
endowment contracts" under "Federal taxes."
Increases: If you increase the specified amount, additional evidence of
insurability that is satisfactory to IDS Life of New York may be required. The
effective date of the increase will be the monthly anniversary on or next
following our approval of the increase. The increase may not be less than
$10,000, and no increase will be permitted after the insured's attained
insurance age 75.
An increase in the specified amount will have the following effects on policy
charges:
o Your monthly deduction will increase because the cost of insurance and the
death benefit guarantee charge both depend upon the specified amount.
o Charges for certain optional insurance benefits will increase.
o The minimum monthly premium will increase if the death benefit guarantee is
in effect.
o The surrender charge will increase.
At the time of the increase in specified amount, the cash surrender value of
your policy must be sufficient to pay the monthly deduction on the next monthly
anniversary. The increased surrender charge will reduce the cash surrender
value. If the remaining cash surrender value is not sufficient to cover the
monthly deduction, we will require you to pay additional premiums within the
61-day grace period. If you do not, the policy will
<PAGE>
lapse unless the death benefit guarantee is in effect. Because the minimum
monthly premium will increase, additional premiums may also be required to keep
the death benefit guarantee in effect.
Decreases: Any decrease in specified amount will take effect on the monthly
anniversary on or next following our receipt of your written request. The
specified amount remaining after the decrease may not be less than the minimum
specified amount (currently $50,000 for the first two policy years, $40,000 in
years three through 10, and $25,000 thereafter). If, following a decrease in
specified amount, the policy would no longer qualify as life insurance under
federal tax law, the decrease may be limited to the extent necessary to meet
these requirements.
The minimum specified amount for policies purchased on or after May 1, 1991 with
an initial specified amount of $350,000 or more is $350,000 in the first policy
year, $325,000 in years two to five, $300,000 in years six to 10 and $275,000
thereafter.
A decrease in specified amount will affect your costs as follows:
o Your monthly deduction will decrease because the cost of insurance and the
death benefit guarantee charge both depend upon the specified amount.
o Charges for certain optional insurance benefits will decrease.
o The minimum monthly premium will decrease if the death benefit guarantee is
in effect.
o The surrender charge will not change.
No surrender charge is imposed when you request a decrease in the specified
amount.
Decreases in the specified amount will be deducted from the current specified
amount in this order: 1. First from the portion due to the most recent increase;
2. Next from portions due to the next most recent increases successively; and 3.
Then from the initial specified amount when the policy was issued.
This procedure may affect the cost of insurance if different rate
classifications have been applied to the current specified amount. The rate
classification applicable to the most recent increase in the specified amount
will be eliminated first, then the rate classification applicable to the next
most recent increase, and so on.
<PAGE>
Misstatement of age or sex
If the insured's age or sex has been misstated, the proceeds payable upon death
will be:
o the policy value on the date of death; plus
o the amount of insurance that would have been purchased by the cost of
insurance deducted for the policy month during which death occurred, if
that cost had been calculated using rates for the correct age and sex;
minus
o the amount of any outstanding indebtedness on the date of death.
Suicide
Suicide by the insured, whether sane or insane, within two years from the policy
date is not covered by the policy. If suicide occurs, the only amount payable to
the beneficiary will be the premiums paid minus the amount of any outstanding
indebtedness.
Beneficiary
Initially, the beneficiary will be the person you designate in your application
for the policy. You may change the beneficiary by giving written notice to IDS
Life of New York, subject to requirements and restrictions stated in the policy.
If you do not designate a beneficiary, or if the designated beneficiary dies
before the insured, the beneficiary will be you or your estate.
Transfers between the fixed account and subaccounts
You may transfer policy values from one subaccount to another or between
subaccounts and the fixed account. For most transfers, we will process your
transfer request at the end of the valuation period during which your request is
received. There is no charge for transfers. Before transferring policy value,
you should consider the risks involved in switching investments.
We may suspend or modify the transfer privilege at any time. Transfers involving
the fixed account are subject to the restrictions below.
Fixed account transfer policies
o Transfers from the fixed account must be made during a 30-day period
starting on a policy anniversary, except for automated transfers, which can
be set up for monthly, quarterly or semiannual transfer periods.
o If we receive your request to transfer amounts from the fixed account
within 30 days before the policy anniversary, the transfer will become
effective on the anniversary.
<PAGE>
o If we receive your request on or within 30 days after the policy
anniversary, the transfer will be effective on the day we receive it.
o We will not accept requests for transfers from the fixed account at any
other time.
o If you have made a transfer from the fixed account to one or more
subaccounts, you may not make a transfer from any subaccount back to the
fixed account until the next policy anniversary. We will waive this
limitation once during the first two policy years if you exercise the
policy's right to exchange provision. (See "Exchange right.")
Minimum transfer amounts
From a subaccount to another subaccount or the fixed account:
For mail and phone transfers, $250 or the entire subaccount balance, whichever
is less.
For automated transfers, $50.
From the fixed account to a subaccount:
$250 or the entire fixed account balance minus any outstanding indebtedness,
whichever is less.
For automated transfers, $50.
Maximum transfer amounts
From a subaccount to another subaccount or the fixed account: None.
From the fixed account to a subaccount: Entire fixed account balance minus any
outstanding indebtedness.
Maximum number of transfers per year
Five for mail and phone transfers. Twelve for automated transfers.
Two ways to request a transfer, loan or surrender
Provide your name, policy number, Social Security Number or Taxpayer
Identification Number when you request a transfer.
<PAGE>
1 By letter
Regular mail:
IDS Life Insurance Company of New York
P.O. Box 5144
Albany, NY 12205
Express mail:
IDS Life Insurance Company of New York
20 Madison Ave. Extension
Albany, NY 12203
2 By phone
Call between 8 a.m. and 6 p.m. (Monday - Thursday); and 8 a.m. and 4:30 p.m.
(Friday), All Eastern Times 1-800-541-2251 (toll free) or (518) 869-8613 (Albany
area)
o We answer phone requests promptly, but you may experience delays when
call volume is unusually high. If you are unable to get through, use
mail procedure as an alternative.
o We will honor any telephone transfer or surrender request believed to
be authentic and will use reasonable procedures to confirm that they
are. These include asking identifying questions and tape recording
calls. As long as these procedures are followed, neither IDS Life of
New York nor its affiliates will be liable for any loss resulting from
fraudulent requests.
o Telephone transfers are automatically available. You may request that
telephone transfers not be authorized from your account by writing IDS
Life of New York.
Automated transfers
In addition to written and phone requests, you can arrange to have policy value
transferred from one account to another automatically. Your financial advisor
can help you set up an automated transfer.
Automated transfer policies:
o Minimum automated transfer: $50
o Frequency: monthly, quarterly, semiannually or annually
<PAGE>
o Only one automated transfer arrangement can be in effect at any time.
Policy values may be transferred to one or more subaccounts and the
fixed account but can be transferred from only one subaccount.
o You can start or stop this service by written request. You must allow
seven days for us to change any instructions that are currently in
place.
o Automated transfers from the fixed account may not exceed an amount
that, if continued, would deplete the fixed account within 12 months.
o If you have made a transfer from the fixed account to one or more
subaccounts, you may not make a transfer from any subaccount back to
the fixed account until the next policy anniversary.
o If your request is submitted with an application for a policy, it will
not take effect until the policy is issued.
o If the value of the account from which policy value is being
transferred is less than the $50 minimum, the transfer arrangement will
automatically be stopped.
o Automated transfers are subject to all other policy provisions and
terms including provisions relating to the transfer of money between
the fixed account and the subaccounts.
Automated dollar-cost averaging
You can use automated transfers to take advantage of dollar-cost averaging --
investing a fixed amount at regular intervals. For example, you might have a set
amount transferred monthly from a relatively conservative subaccount to a more
aggressive one, or to several others.
This systematic approach can help you benefit from fluctuations in accumulation
unit value, caused by fluctuations in the market value(s) of the underlying
fund. Since you invest the same amount each period, you automatically acquire
more units when the market value falls, fewer units when it rises. The potential
effect is to lower your average cost per unit. There is no charge for
dollar-cost averaging.
<PAGE>
How dollar-cost averaging works
Accumulation Number of units
Month Amount invested unit value purchased
Jan $100 $20 5.00
Feb 100 16 6.25
Mar 100 9 11.11
Apr 100 5 20.00
May 100 7 14.29
June 100 10 10.00
July 100 15 6.67
Aug 100 20 5.00
Sept 100 17 5.88
Oct 100 12 8.33
(footnotes to table) By investing an equal number of dollars each month...
(arrow in table pointing to April) you automatically buy more units when the per
unit market price is low.
(arrow in table pointing to August) and fewer units when the per unit market
price is high.
You have paid an average price of $10.81 per unit over the 10 months, while the
average market price actually was $13.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value,
nor will it protect against a decline in value if market prices fall. Because
this strategy involves continuous investing, your success with dollar-cost
averaging will depend upon your willingness to continue to invest regularly
through periods of low price levels. Dollar-cost averaging can be an effective
way to help meet your long-term goals.
Policy loans
You may borrow against your policy by written or telephone request. (See chart
under "Transfers between the fixed account and subaccounts" for address and
phone numbers for your requests.) Loans by telephone are limited to $50,000. We
will process your loan request at the end of the valuation period during which
your request is received.
Interest rate: 6.1% payable in advance, which is equivalent to a 6.5% effective
rate. For policies purchased on or after May 1, 1993, we expect to reduce the
loan interest rate after a policy's 10th anniversary to 4.3% payable in advance,
equivalent to a 4.5% effective rate.
<PAGE>
Minimum loan: $200 or the remaining loan value, whichever is less.
Maximum loan: 85% of the policy value minus surrender charges.
We will compute the maximum loan value as of the end of the valuation period
during which we receive your loan request. In doing so, we will deduct from the
loan value interest for the period until the next policy anniversary.
Payment of loaned funds: Generally, we will pay loans within seven days after we
receive your request (with certain exceptions - see "Deferral of payments,"
under "Payment of policy proceeds").
Allocation of loans to accounts: If you do not specify whether the loan is to
come from the fixed account or the subaccounts, it will be made from the
subaccounts and the fixed account in proportion to their values, minus
indebtedness. When a loan is made from a subaccount, accumulation units are
redeemed and the proceeds transferred into the fixed account. We will credit the
loaned amount with 4.5% annual interest.
Repayments: Loan repayments will be allocated to subaccounts and/or the fixed
account using the premium allocation percentages in effect unless you tell us
otherwise. Repayments must be in amounts of at least $25.
Overdue interest: If accrued interest is not paid when due, we will increase the
amount of indebtedness in the fixed account to cover the amount due. Interest
added to a policy loan will be charged the same interest rate as the loan
itself. We will take such interest from the fixed account and/or subaccounts,
using the monthly deduction allocation percentages. If the value in the fixed
account or any subaccount is not enough to pay the interest so allocated, all of
the interest will be taken from all of the accounts in proportion to their
value, minus indebtedness.
Effects of policy loans: If you do not repay your loan, it will reduce the death
benefit and policy value. Even if you do repay it, your loan can have a
permanent effect on death benefits and policy values, because money borrowed
against the subaccounts will not share in the investment results of the relevant
fund(s) or trust.
Taxes: If your policy lapses or you surrender it with an outstanding
indebtedness, and the amount of outstanding indebtedness plus the cash surrender
value is more than the sum of premiums you paid, you will generally be liable
for taxes on the excess. (See "Federal taxes.")
<PAGE>
Policy surrenders
You may surrender your policy in full or in part by written or telephone
request. (See chart under "Transfers between the fixed account and
subaccounts.") We will process your surrender request at the end of the
valuation period during which your request is received.
We will normally process your payment within seven days; however, we reserve the
right to defer payment. (See "Deferral of payments," under "Payment of policy
proceeds.")
Total surrenders: If you surrender your policy totally, you receive its cash
surrender value -- the policy value minus outstanding indebtedness and
applicable surrender charges. (See "Loads, fees and charges.") We will compute
the value of each subaccount as of the end of the valuation period during which
your request is received.
Partial surrenders: After the first policy year, you may surrender any amount
from $200 up to 85% of the policy's cash surrender value. (Partial surrenders by
telephone are limited to $50,000.) You will be charged a partial surrender fee,
described under "Loads, fees and charges."
Allocation of partial surrenders: Unless you specify otherwise, IDS Life of New
York will make partial surrenders from the fixed account and subaccounts in
proportion to their values at the end of the valuation period during which your
request is received. In determining these proportions, we first subtract the
amount of any outstanding indebtedness from the fixed account value.
Effects of partial surrenders:
o The policy value will be reduced by the amount of the partial surrender and
fee.
o The death benefit will be reduced by the amount of the partial surrender
and fee, or, if the death benefit is based on the applicable percentage of
policy value, by an amount equal to the applicable percentage times the
amount of the partial surrender.
o A partial surrender may terminate the death benefit guarantee. The
surrender amount is deducted from total premiums paid, which may reduce the
total below the level required to keep the death benefit guarantee in
effect.
o If Option 1 is in effect, the specified amount will be reduced by the
amount of the partial surrender and fee. IDS Life of New York will deduct
this decrease from the current specified amount in this order:
<PAGE>
1. First from the specified amount provided by the most recent increase; 2. Next
from the next most recent increases successively; 3. Then from the initial
specified amount when the policy was issued.
Because they reduce the specified amount, partial surrenders may affect the cost
of insurance. IDS Life of New York will not allow a partial surrender if it
would reduce the specified amount below the required minimum. (See "Decreases"
under "Death benefits".)
o If Option 2 is in effect, a partial surrender does not affect the specified
amount.
Taxes
Upon surrender, you will generally be liable for taxes on any excess of the cash
surrender value plus outstanding indebtedness over the premium paid. (See
"Federal taxes.")
Exchange right
For two years after the policy is issued, you can exchange it for one that
provides benefits that do not vary with the investment return of the
subaccounts. Because the policy itself offers a fixed return option, all you
need to do is transfer all of the policy value in the subaccounts to the fixed
account. We will automatically credit all future premium payments to the fixed
account unless you request a different allocation.
Such transfer will not count against the five-transfers-per-year limit. Also,
any restrictions on transfers into the fixed account will be waived.
There will be no effect on the policy's death benefit, specified amount, net
amount at risk, rate classification(s) or issue age. Only the method of funding
the policy value will be affected.
Paid-up insurance option
You may request that the cash surrender value of the policy be used to purchase
an amount of paid-up insurance. Your request may be made in writing during the
30 days before any policy anniversary. The paid-up insurance policy will take
effect as of the policy anniversary and will mature on the original policy's
maturity date. You will forfeit all rights to make future premium payments and
all riders will terminate.
The amount and cash surrender value of the paid-up insurance will be based on
the cost of insurance rates guaranteed in the policy and on the fixed account
guaranteed interest rate. The paid-up policy's death benefit amount, minus its
cash surrender value, cannot be greater than your current policy's death
benefit, minus its policy value (both as of the date of the paid-up policy's
purchase). The amount of paid-up insurance will remain level and will not be
less than required by law.
<PAGE>
Any cash surrender value that is not used to purchase the paid-up insurance
amount will be paid to you. At any time before the insured's death, you may
surrender the paid-up insurance for its cash surrender value.
Optional insurance benefits
You may choose to add the following benefits to your policy, in the form of
riders (if certain requirements are met):
Waiver of monthly deduction (WMD) Under WMD, we will waive the monthly deduction
if the insured becomes totally disabled for six months or longer prior to the
attained insurance age 60 policy anniversary. The waiver will not start until
the disability has continued for at least six months; however, once it starts,
monthly deductions taken from policy values during the six-month waiting period
will be credited back to the policy, using the premium allocation percentage
then in effect. Monthly deductions will then be waived as long as the insured
remains disabled. For any month in which the monthly deduction is covered by
this rider, the minimum monthly premium needed to keep the death benefit
guarantee in effect will be zero.
During disability the specified amount cannot be increased, the death benefit
option cannot be changed to Option 1 and any benefits provided by riders cannot
be increased.
Accidental death benefit (ADB) ADB provides an additional death benefit if the
insured's death is caused by accidental injury prior to the insured's attained
insurance age 70 policy anniversary.
Other insured rider (OIR) OIR provides a level, adjustable death benefit on the
life of each other insured covered. The minimum face amount that can be issued
to each other insured is $25,000. OIR does not develop policy value.
Coverage under OIR will terminate on the earliest of the following:
o The monthly anniversary date on or next following receipt of a written
request to end coverage.
o The date the basic policy matures, is surrendered or terminates for any
reason other than the insured's death.
o 31 days after the insured's death. No charge is made for coverage during
this period.
o The date of conversion of the coverage to an individual life insurance
policy on the life of the other insured. OIR is convertible to any level
benefit, level premium whole life or flexible premium adjustable whole life
insurance policy offered by us at the time of conversion.
<PAGE>
o The date the other insured attains insurance age 70.
If the other insured's age or sex has been misstated, the amount payable upon
his or her death will be the amount of insurance that would have been purchased
by the cost of the OIR for the policy month during which death occurred, had the
cost been calculated using rates for the correct age and sex.
Children's insurance rider (CIR) Each unit of CIR provides $1,000 level term
insurance on each eligible child. To be eligible, children must:
o be insurable children, stepchildren or legally adopted children of the
insured;
o be named in the application for this rider;
o be members of the primary insured's household (actually living with the
insured) at the time of application; and
o be at least 15 days old and have not passed their 19th birthday.
After the CIR is issued, it automatically insures children born to, legally
adopted by, or who become stepchildren of the insured after the date of the CIR
application, if they are at least 15 days old and have not passed their 19th
birthday. The maximum number of units for one family is 10.
Insurance under CIR expires on the earlier of the child's 22nd birthday or the
primary insured's attained insurance age 65 policy anniversary. If the primary
insured parent dies, the insurance on each child will be changed to paid-up term
insurance, which will provide the same coverage as provided under the CIR and
will expire at the same time coverage under the CIR would have expired.
The coverage provided on each child may be converted, without evidence of
insurability, to level premium whole life or flexible premium adjustable whole
life insurance within 31 days before or after the earlier of the child's 22nd
birthday or the primary insured's attained insurance age 65 policy anniversary.
Up to five times the amount of insurance on each child may be converted.
Payment of policy proceeds
Proceeds will be paid when:
o you surrender the policy;
o the insured dies; or
o the policy maturity date is reached, which occurs when the insured
reaches attained insurance age 100.
<PAGE>
All proceeds will be paid by check. We will compute the amount of the death
benefit and pay it in a single sum unless you select one of the payment options
below. We will pay interest at a rate not less than 4% per year on single sum
death proceeds, from the date of the insured's death to the settlement date (the
date on which proceeds are paid in a lump sum or first placed under a payment
option). You will be charged a fee if you request express mail delivery.
Payment options:
During the insured's lifetime, you may request in writing that we pay policy
proceeds under one or more of the three payment options below. (The beneficiary
may also select a payment option, unless you say that he or she can't.) You
decide how much of the proceeds will be placed under each option (minimum:
$5,000). Any such amount will be transferred to IDS Life of New York's general
account. Unless we agree otherwise, payments under all options must be made to a
natural person.
You may also, by written request, change a prior choice of payment option, or
elect a payment option other than the three below if we agree.
If you elect a payment option for pre-death proceeds, payments under this option
may be subject to federal income tax as ordinary income. If you elect Option A,
the full pre-death proceeds will be taxed as a full surrender or maturity as
described in "Taxation of policy proceeds" and may also be subject to an
additional 10% penalty tax if the policy is a modified endowment. The interest
paid under Option A will be ordinary income subject to income tax in the year
earned. The interest payments will not be subject to the 10% penalty tax.
If you elect Option B or Option C for payment of pre-death proceeds, any
indebtedness at the time of election will be taxed as a partial surrender as
described in "Taxation of policy proceeds" and may also be subject to an
additional 10% penalty tax if the policy is a modified endowment. The remainder
of the proceeds will be used to make payments under the option elected. A
portion of each payment will be taxed as ordinary income and a portion of each
payment will be considered a return of the investment in the policy and will not
be taxed. An owner's investment in the policy is described in "Taxation of
policy proceeds." All payments made after the investment in the policy is fully
recovered will be subject to tax. Amounts paid under Option B or Option C that
are subject to tax may also be subject to an additional 10% penalty tax. (See
"Penalty tax.")
Death benefit proceeds applied to any payment option are not considered part of
the beneficiary's income and thus are not subject to federal income tax.
Payments of interest under Option A will be ordinary income subject to tax.
Under Option B or Option C, a portion of each payment will be ordinary income,
subject to tax and a portion of each payment will be considered a return of the
beneficiary's investment in the policy. The
<PAGE>
beneficiary's investment in the policy is the death benefit proceeds applied to
the payment option. All payments made after the investment in the policy is
fully recovered will be subject to tax.
Option A -- Interest payments: We will pay interest on any proceeds placed under
this option at a rate of 4% per year compounded annually, at regular intervals
and for a period that is agreeable to both you and us. At the end of any payment
interval, you may withdraw proceeds in amounts of at least $100. At any time,
you may withdraw all of the proceeds that remain or you may place them under a
different payment option approved by us.
Option B -- Payments for a specified period: We will make fixed monthly payments
for any number of years you specify. Here are examples of monthly payments for
each $1,000 placed under this option:
Payment period Monthly Payment per $1,000
(years) placed under Option B
5 $18.32
10 10.06
15 7.34
20 6.00
25 5.22
30 4.72
Monthly amounts for other payment periods will be furnished at your request,
free of charge.
Option C -- Lifetime income: We will make monthly payments for the life of the
person (payee) who is to receive the income. Payment will be guaranteed for 10,
15 or 20 years.
The amount of each monthly payment per $1,000 placed under this option will be
based on the table of settlement rates in effect at the time of the first
payment. The amount depends on the sex and adjusted age of the payee on that
date. Adjusted age means the age of the payee (on the payee's nearest birthday)
minus an adjustment as follows:
<TABLE>
<CAPTION>
Calendar year of payee's Adjustment Calendar year of payee's Adjustment
birth birth
<S> <C> <C> <C>
Before 1920 0 1945 - 1949 6
1920 - 1924 1 1950 - 1959 7
1925 - 1929 2 1960 - 1969 8
1930 - 1934 3 1970 - 1979 9
1935 - 1939 4 1980 - 1989 10
1940 - 1944 5 After 1989 11
</TABLE>
<PAGE>
The amount of each monthly payment per $1,000 placed under this option will not
be less than amounts shown in the next table. Monthly amounts for any adjusted
age not shown will be furnished at your request, without charge.
Adjusted age of payee life income per $1,000 with payments guaranteed for:
<TABLE>
<CAPTION>
Adjusted age payee Life income per $1,000 with payments guaranteed for
- --------------------------- --------------------------------------------------------------------------------
10 years 15 years 20 years
Male Female Male Female Male Female
- --------------------------- ------------- ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $4.81 $4.47 $4.74 $4.45 $4.65 $4.40
55 5.20 4.80 5.09 4.74 4.94 4.87
60 5.70 5.22 5.51 5.12 5.25 4.98
65 6.35 5.77 5.98 5.58 5.54 5.32
70 7.14 6.50 6.47 6.12 5.77 5.63
75 8.00 7.40 6.87 6.64 5.91 5.85
</TABLE>
Deferral of payments:
We reserve the right to defer payments of cash surrender value, policy loans or
variable death benefits in excess of the specified amount if:
o the payments derive from a premium payment made by a check that has not
cleared the banking system (good payment has not been collected);
o the NYSE is closed (other than customary weekend and holiday closings);
o in accordance with SEC rules, trading on the NYSE is restricted or,
because of an emergency, it is not practical to dispose of securities
held in the subaccount or determine the value of the subaccount's net
assets.
Any loans or surrenders from the fixed account may be delayed up to six months
from the date we receive the request. If we postpone the payment of surrender
proceeds more than 10 days, we will pay you interest on the amount surrendered
at an annual rate of 4% for the period of postponement.
Federal taxes
The following is a general discussion of the policy's federal income tax
implications. It is not intended as tax advice. Because the effect of taxes on
the value and benefits of your policy depends on your individual situation as
well as IDS Life of New York's tax status, YOU SHOULD CONSULT A TAX ADVISOR TO
FIND OUT HOW THESE GENERAL CONSIDERATIONS APPLY TO YOU. The discussion is based
on our understanding of federal income tax laws as currently interpreted by the
Internal Revenue Service (IRS); both the laws and their interpretation may
change.
<PAGE>
The policy is intended to qualify as a life insurance policy for federal income
tax purposes. To that end, the provisions of the policy are to be interpreted to
ensure or maintain this tax qualification. IDS Life of New York reserves the
right to change the policy in order to ensure that it will continue to qualify
as life insurance for tax purposes. We will send you a copy of any changes.
IDS Life of New York's tax status
IDS Life of New York is taxed as a life insurance company under the Code. For
federal income tax purposes, the subaccounts are considered a part of IDS Life
of New York, although their operations are treated separately in accounting and
financial statements. Investment income from the subaccounts is reinvested and
becomes part of the subaccounts' value. This investment income, including
realized capital gains, is not taxed to IDS Life of New York and therefore no
charge is made against the subaccounts for our federal income taxes. IDS Life of
New York reserves the right to make such a charge in the future if there is a
change in the tax treatment of variable life insurance contracts or in IDS Life
of New York's tax status as we currently understand it.
Taxation of policy proceeds
The death benefit is not considered part of the beneficiary's income and thus is
not subject to federal income taxes. Part or all of any pre-death proceeds
received through full surrender or maturity, lapse, partial surrender, policy
loan or assignment of policy value, or payment options may be subject to federal
income tax as ordinary income. (See the following table.) In some cases, the tax
liability depends on whether the policy is a modified endowment (explained
following the table). The taxable amount may also be subject to an additional
10% penalty tax if the policy is a modified endowment.
<TABLE>
<CAPTION>
<S> <C>
Source of proceeds Taxable portion of pre-death proceeds
Full surrender: Amount received plus any indebtedness, minus your investment
in the policy.*
Lapse: Any outstanding indebtedness minus your investment in the
policy.*
Partial surrenders Lesser of:
(modified endowments): the amount received or policy value minus your investment in
the policy.*
Policy loans and assignments Lesser of:
(modified endowments): the amount of the loan / assignment or policy value minus
your investment in the policy.*
<PAGE>
Partial surrenders Generally, if the amount received is greater than your
(other policies): investment in the policy,* the amount in excess of your
investment is taxable. However,
during the first 15 policy years,
a different amount may be taxable
if the partial surrender results
in or is necessitated by a
reduction in benefits.
Policy loans and assignments None
(other policies)
Payment options: If proceeds of the policy
will be paid under one of the
payment options, see the "Payment
option" section for tax
information.
</TABLE>
* The owner's investment is equal to premiums paid, minus the nontaxable portion
of any previous partial surrenders, plus the taxable portion of any previous
policy loans.
Modified endowment contracts
In 1988, Congress created a new class of life insurance policies called
"Modified Endowment Contracts," which are taxed differently from conventional
life insurance contracts. Policies applied for, or materially changed, on or
after June 21, 1988, are considered to be modified endowments if premiums paid
in the first seven years of the policy, or the first seven years following a
material change, exceed certain limits. (Also, any life insurance policy
received in exchange for a modified endowment is itself a modified endowment.)
We have established procedures for monitoring whether a contract may become a
modified endowment contract.
Modified endowment limits are calculated when the policy is issued and are based
on the benefits provided and on the risk classification of the insured. They are
later recalculated if certain increases or reductions in benefits occur.
Increases in benefits: Limits are recalculated when an increase is considered a
"material change," as are most increases requested by the owner, such as an
increase in specified amount, addition of a rider benefit or an increase in an
existing rider benefit. (Automatic increases under the terms of the policy, such
as an increase in death benefit due to operation of the applicable percentage
table described in the "Death benefits" section or to policy value growth under
Option 2, are generally not considered material changes.) A policy becomes a
modified endowment if premiums paid in the early years following a material
change exceed the recalculated limits.
<PAGE>
Reductions in benefits: When benefits are reduced within seven years after issue
or after the most recent material change, the limits are recalculated as if the
reduced level of benefits had always been in effect. In most cases, this
recalculation will further restrict the amount of premium that can be paid
without exceeding modified endowment limits. If premiums already paid exceed the
recalculated limits, the policy becomes a modified endowment even if no further
premiums are paid.
Distributions affected: Modified endowment rules apply to distributions in the
year the policy becomes a modified endowment and in all subsequent years. In
addition, the rules apply to distributions taken two years before the policy
becomes a modified endowment, which are presumed to be taken in anticipation of
that event.
Serial purchase of modified endowments: All modified endowments issued by the
same insurer (or affiliated companies of the insurer) to the same owner during
any calendar year are treated as one policy in determining the amount of any
loan or distribution that is taxable.
Penalty tax: If a policy is a modified endowment, the taxable portion of
pre-death proceeds from a full surrender, maturity, lapse, partial surrender,
policy loan or assignment of policy value, or certain payment options may be
subject to a 10% penalty tax unless:
o the distribution occurs after the owner attains age 59-1/2;
o the distribution is attributable to the owner becoming disabled (within the
meaning of Code Section 72(m)(7); or
o the distribution is part of a series of substantially equal periodic
payments made at least once a year over the life (or life expectancy) of
the owner or over the joint lives (or life expectancies) of the owner and
the owner's beneficiary.
Other tax considerations
Interest paid on policy loans: If the loan is used for personal purposes, such
interest is not tax-deductible. Other rules apply if the loan is used for trade
or business or investment purposes, or if the policy is owned by a business or a
corporation.
Policy changes: Changing ownership, exchanging or assigning the policy may have
tax consequences, depending on the circumstances.
Other taxes: Federal estate tax, state and local estate tax, inheritance tax,
gift tax and other tax consequences of ownership or receipt of policy proceeds
will also depend on the circumstances.
Qualified retirement plans: The policy may be used in conjunction with certain
qualified plans. Since the rules governing such use are complex, a purchaser
should consult a competent pension consultant.
<PAGE>
On July 6, 1983, the Supreme Court held in Arizona Governing Committee v. Norris
that optional annuity benefits provided under an employee's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women on the basis of sex. Since the policy's cost of
insurance rates and purchase rates for certain settlement options distinguish
between men and women, employers and employee organizations should consult with
legal counsel before purchasing the policy for any employment-related insurance
or benefit program.
IDS Life of New York
IDS Life of New York is a stock life insurance company organized under the laws
of the State of New York in 1972. Our address is 20 Madison Ave. Extension,
Albany, NY 12203.
IDS Life of New York is licensed in New York and North Dakota, and it conducts a
conventional life insurance business in the state of New York. All annuity
contracts and insurance policies issued by IDS Life of New York, including the
policy described in this prospectus, are non-participating.
Ownership
IDS Life of New York, a New York corporation, is a wholly-owned subsidiary of
IDS Life, a Minnesota corporation, which is a wholly-owned subsidiary of
American Express Financial Corporation (AEFC). AEFC, a Delaware corporation, is
a wholly-owned subsidiary of American Express Company.
State regulation
IDS Life of New York is subject to the laws of New York governing insurance
companies and to regulation by the New York Department of Insurance. An annual
statement in a prescribed form is filed with New York's Department of Insurance.
IDS Life of New York's books and accounts are subject to review by the New York
Department of Insurance at all times and a full examination of its operations is
conducted periodically. Such regulation does not, however, involve any
supervision of management or investment practices or policies.
Distribution of the policy
American Express Financial Advisors Inc., a registered broker/dealer and an
affiliate of IDS Life of New York, is the sole distributor of the policy. IDS
Life of New York pays its representatives a commission of up to 47.5% of the
initial minimum monthly premium (annualized) when the policy is sold, plus 3% of
all premiums in excess of 12 times the minimum monthly premium. Additional
commissions are paid if an increase in coverage
<PAGE>
occurs. IDS Life of New York also pays approximately 27% of the total
representative's commission to the field vice presidents and district sales
managers of the selling representative.
Legal proceedings
There are no material legal proceedings to which the variable account is a party
or to which the assets of the variable account are subject. IDS Life of New York
is engaged in various kinds of routine litigation that, in IDS Life of New
York's judgment, are not of material importance in relation to its total assets.
None of such litigation relates to the variable account.
Experts
The financial statements of IDS Life of New York at Dec. 31, 1997 and 1996, and
for each of the three years in the period ended Dec. 31, 1997, and the
individual and combined financial statements of the segregated asset subaccounts
of IDS Life of New York Account 8 for Flexible Premium Variable Life Insurance,
as of Dec. 31, 1997, and for each of the three years in the period then ended,
except for the following subaccounts: YGI and YNO subaccounts which are for the
year ended Dec. 31, 1997 and the period Nov. 22, 1996 (commencement of
operations) to Dec. 31, 1996, and the Y95 subaccount which is for the period
Jan. 1, 1995 to Nov. 15, 1995 (date of maturity of securities in the trust),
appearing in this prospectus have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
Actuarial matters included in the prospectus have been examined by Eugene C.
Chen, Chief Actuary, as stated in his opinion filed as an exhibit to the
Registration Statement.
Management of IDS Life of New York
Directors
John C. Boeder
Vice president, Mature Market Group, AEFC, since March 1994; president and chief
operating officer, IDS Life of New York, from 1991 to 1994; vice president and
chief operating officer, IDS Life of New York, from 1989 to 1991.
Roger C. Corea
Group vice president, Upstate New York, AEFA, since January 1995; vice
president, Northeast Region, AEFA, from May 1987 to December 1994.
<PAGE>
Charles A. Cuccinello
Retired since 1982; former senior vice president, American Express Company.
Milton R. Fenster
President, Milton Fenster Associates.
Robert R. Grew
Lawyer & Partner, Carter, Ledyard & Milburn, NYC, 1957-present
Robert A. Hatton
Vice president and chief operating officer, IDS Life of New York since June
1994; special assignment/Project leader, AEFA, December 1992 to June 1994;
manager/Analyst operations, AEFA, August 1989 to December 1992.
Richard W. Kling
President and chairman of the board, IDS Life of New York, since April 1994;
director, IDS Life, since February 1984; President, IDS Life, since March 1994;
executive vice president, Marketing and Products, IDS Life, from January 1988 to
March 1994; senior vice president, Risk Management Products, AEFC, since May
1994; vice president, AEFC, from January 1988 to May 1994; director and
president of IDS Life Series Fund, Inc.; chairman of the board of managers and
president of IDS Life Variable Annuity Funds A and B.
Edward Landes
Retired, former Development Consultants; director, IDS Life Series Fund Inc.
since September 1985; member of the board of Managers of IDS Life Variable
Annuity Funds A and B since October 1988. Director of IDS Life Insurance Company
of New York; vice President of Financial YMCA Development, YMCA, since 1985.
Thomas V. Nicolosi
Director since October 1996; group vice president, AEFA, from January 1995 to
present; field vice president, AEFA, from January 1988 to December 1994.
Stephen P. Norman
Secretary, American Express, since 1982.
Carl N. Platou
Retired since 1990; member of the board of directors, St. Thomas University,
since 1990; chief financial officer, Fairview Hospital, from 1953 to 1990.
Gordon H. Ritz
President, Con Rad Broadcasting Corporation (Minneapolis), since 1975.
<PAGE>
Richard M. Starr
Director since October 1996; managing counsel, American Express Company, since
March 1995; senior counsel, American Express Company, from May 1992 to March
1995; counsel, American Express Company, from June 1989 to May 1992.
Michael R. Woodward
Senior vice president, Field Management, AEFC, since June 1991; region vice
president, Atlantic Region, AEFC, from 1988 to June 1991.
Principal officers other than directors
Mario Alaia
Claims officer and assistant secretary since 1988.
Darrell C. Beckstrom
Underwriting officer since 1994; underwriting technical manager, IDS Life, since
1990; senior underwriter, IDS Life, from 1987 to 1992.
Eugene C. Chen
Chief actuary since November 1996; manager of Life Planning and Analysis, AEFA,
from May 1995 to November 1996; senior staff actuary - Product Development Risk
Management, IDS Life, from August 1992 to May 1995.
Darlene S. Farron
Treasurer since June 1996; financial project manager - Finance Department from
September 1994 to June 1996; team leader of Premium, Investment and External
Reporting - Finance Department from March 1988 to September 1994.
Donna Gaglione
Secretary since 1995; manager of Administrative Services since 1992; treasurer
from 1985 to 1992.
Margaret M. Grogan, M.D.
Medical director since 1986.
Lorraine R. Hart
Investment officer since March 1992; vice president, Insurance Investments, IDS
Life, since October 1989.
F. Dale Simmons
Vice president and assistant treasurer since 1994; vice president and senior
portfolio manager, Insurance Investments, AEFC, since 1990.
<PAGE>
William A. Stoltzmann
Counsel and assistant secretary since March 1990.
The officers, employees and sales force of IDS Life of New York are bonded, in
the amount of $100 million, by virtue of a blanket fidelity bond issued to
American Express Company by Saint Paul Fire and Marine, the lead underwriter.
A I M Advisors, Inc., Putnam Investment Management, Inc. and Smith Barney Inc.
A I M Advisors, Inc.
A I M Advisors, Inc. ("AIM") was organized in 1976 and is headquartered in
Houston, Texas. AIM is a wholly owned subsidiary of A I M Management Group Inc.,
a holding company engaged in the financial services business and an indirect
wholly-owned subsidiary of AMVESCAP PLC.
Putnam Management
Putnam Management been managing mutual funds since 1937. Today, the firm serves
as the investment manager for the funds in the Putnam Family, with nearly $182
billion in assets under management in over 9 million shareholder accounts at
December 31, 1997.
Smith Barney, Inc.
Smith Barney, sponsor of the trust, a Delaware corporation and a subsidiary of
The Travelers Inc., is engaged in the underwriting, securities and commodities
brokerage business, and is a member of the NYSE, other major securities
exchanges and commodity exchanges and the National Association of Securities
Dealers, Inc. The sponsor sponsors seven open-end investment companies and three
closed-end investment companies as well as a variety of unit investment trusts.
The sponsor has acted as principal underwriter and managing underwriter of other
investment companies. The sponsor, in addition to participating as a member of
various selling groups or as an agent of other investment companies, executes
orders on behalf of investment companies for the purchase and sale of securities
of such companies and sells securities to such companies in its capacity as a
broker or dealer in securities.
Other information
A registration statement has been filed with the Securities and Exchange
Commission (SEC) under the Securities Act of 1933, as amended. For further
information concerning the policy, its separate account (the variable account)
and IDS Life of New York, please refer to the registration statement, as
amended, with exhibits.
<PAGE>
Voting rights
All shares issued by the funds are the same class (kind) -- capital stock. They
are fully paid and nonassessable and can be redeemed or transferred. They can be
issued as full shares or fractions. All shares have equal voting rights; a
fraction of a share has the same kind of rights and privileges as a full share.
Each of the funds issues its own series of common stock. The shares of each fund
represent an interest only in that fund's assets (and profits or losses) and in
the event of liquidation, each share of a fund would have the same rights to
dividends and assets as every other share of that fund.
Each share of a fund has one vote. On some issues, such as election of
directors, all shares of IDS Life Series Fund Portfolios vote together as one
series. When electing directors of IDS Life Series Fund, all shares of IDS Life
Series Fund Portfolios have cumulative voting rights. Cumulative voting means
that shareholders are entitled to a number of votes equal to the number of
shares they hold multiplied by the number of directors to be elected, and they
have the right to divide votes among candidates.
On an issue affecting only one fund -- for example, a fundamental investment
restriction pertaining only to that fund -- its shares vote as a separate
series. If shareholders of a particular fund vote approval of the Investment
Management and Services Agreement, the agreement becomes effective with respect
to that fund, whether or not it is approved by shareholders of the other funds.
IDS Life of New York is the owner of all fund shares and as such holds all
voting rights. However, IDS Life of New York will vote the shares of each fund
in accordance with instructions received from owners. If we do not receive
timely instructions from you, we will vote your shares in the same proportion as
the shares for which instructions are received. Fund shares that are not
otherwise attributable to owners will also be voted by IDS Life of New York in
the same proportion as those shares in that subaccount for which instructions
are received.
We determine the number of fund shares in each subaccount for which you may give
instructions by applying your percentage interest in the subaccount to the total
number of votes attributable to the subaccount. The number will be determined as
of a date chosen by IDS Life of New York, but not more than 60 days before the
meeting of the fund.
Fractional votes are counted. You will receive notice of each shareholder
meeting, together with any proxy solicitation materials and a statement of the
number of votes for which you are entitled to give instructions.
<PAGE>
If required by state insurance officials, IDS Life of New York may disregard
voting instructions that would change the goals of one or more of the funds or
would result in approval or disapproval of an investment advisory contract. In
addition, IDS Life of New York itself may disregard voting instructions that
would require changes in the investment policy or investment advisor of one or
more of the funds, if IDS Life of New York reasonably disapproves such changes
in accordance with applicable federal regulations. If IDS Life of New York does
disregard voting instructions, it will, in its next report to owners, advise
them of that action and the reasons for it.
Generally, ownership of units of a unit investment trust does not involve the
exercise of voting rights. However, unit holders in the trust may vote for
removal of the trustee or for amendment or termination of the trust indenture.
In the event of such a vote, IDS Life of New York, as the owner of the units,
would solicit voting instructions from owners under the same procedures used for
votes affecting the fund.
Reports
At least once a year IDS Life of New York will mail to you, at your last known
address of record, a report containing all information required by law or
regulation, including a statement showing the current policy value.
Policy illustrations
The following tables illustrate how policy values, cash surrender values and
death benefits may change with the investment experience of the subaccount. The
tables show how these amounts might vary, for a 35-year-old male nonsmoker,
under Death Benefit Option 1, if:
o the annual rate of return of the fund is 0%, 6% or 12%.
o cost of insurance rates and policy fees are -- current rates and fees
for policies purchased on or after November 20, 1997, and on or after
May 1, 1993 and before November 20, 1997 -- current rates and fees for
policies purchased before May 1, 1993 -- guaranteed rates and fees.
Any such illustration involves a number of detailed assumptions, (See chart,
"Understanding the illustrations.") To the extent that your own circumstances
differ from those assumed in the illustrations, your expected results would also
differ.
Upon request, you will be furnished with comparable tables illustrating death
benefits, policy values and cash surrender values based on the actual age of the
person you propose to insure and on an initial specified amount and premium
payment schedule. In addition, after you have purchased a policy, you may
request illustrations based on policy values at the time of request.
<PAGE>
Understanding the illustrations:
Rates of return: assumed to be uniform, gross, after-tax, annual rates of 0%, 6%
or 12% for the funds. Results would differ depending on allocations among the
subaccounts, if returns averaged 0%, 6% and 12% for the funds as a whole but
differed across individual funds.
Insured: assumed to be a male insurance age 35, in a standard rate
classification, qualifying for the nonsmoker rate. Results would be lower if the
insured were in a substandard rate classification or did not qualify for the
non-smoker rate.
Premiums: A $900 premium is assumed to be paid in full at the beginning of each
policy year. Results would differ if premiums were paid on a different schedule.
Policy loans and partial withdrawals: It is assumed that none have been made.
(Since indebtedness is assumed to be zero, the cash surrender value in all cases
equals the policy value minus the surrender charge.)
Effect of expenses and charges: The net investment return of the subaccounts,
shown in the tables, is lower than the gross, after-tax return of the fund
because expenses paid by the fund and charges made against the subaccounts have
been deducted. These include:
o the daily investment management fee paid by the funds, assumed to be
equivalent to an annual rate of 0.7% of the fund's average daily net
assets;
o the daily mortality and expense risk charge, equivalent to 0.9% of the
daily net asset value of the subaccounts annually; and
o a nonadvisory expense charge of 0.1% of each fund's average daily net
assets for direct expenses incurred by the fund.
The nonadvisory expense charge for IDS Life Series Fund is capped by IDS Life at
0.1%, even though actual expenses on the IDS Life Series Fund-Government
Securities Portfolio ranged up to 0.15%, IDS Life Series Fund-Money Market
Portfolio ranged up to 0.14% and IDS Life Series Fund-International Equity
Portfolio ranged up to 0.27%. Although IDS Life reserves the right to
discontinue capping these expenses, IDS Life's present intent is to continue the
cap indefinitely until actual expenses are less than the cap. Should IDS Life
discontinue the cap prior to that time, the policy values and death benefits in
the tables generally would be less. Other expenses for the period ended Dec. 31,
1997 were 0.05% for Putnam VT New Opportunities Fund. For AIM V.I. Growth and
Income Fund other expenses were 0.63% for the period ended Dec. 31, 1997.
<PAGE>
After deduction of the above expenses and charges, the illustrated gross annual
investment rates of return of 0%, 6% and 12% correspond to approximate net
annual rates of -1.69%, 4.21% and 10.11%, respectively.
Taxes: Results shown in the tables reflect the fact that IDS Life of New York
does not currently charge the subaccount for federal income tax. If such a
charge is taken in the future, the funds will have to earn more than they do now
in order to produce the death benefits and policy values illustrated.
<PAGE>
<TABLE>
<CAPTION>
Illustration Policies purchased on or after November 20, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------- ------------------------------------------------------------ ---------------------------------
Initial specified amount $100,000 Male - age 35 Current costs assumed
Death benefit Option 1 nonsmoker annual premium $900
- ------------------------------------- ------------------------------------------------------------ ---------------------------------
Premium Death benefit (1)(2) Policy value (1)(2) Cash surrender value (1)(2)
accumulated assuming hypothetical gross assuming hypothetical gross assuming hypothetical gross
End of with annual annual investment return of annual investment return of annual investment return of
policy interest
year at 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------------ ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 945 $ 100,000 $ 100,000 $ 100,000 $ 621 $ 665 $ 709 $ 0 $ 7 $ 61
2 1,937 100,000 100,000 100,000 1,232 1,328 1,490 508 635 766
3 2,979 100,000 100,000 100,000 1,823 2,071 2,340 1,040 1,288 1,547
4 4,073 100,000 100,000 100,000 2,393 2,802 3,265 1,552 1,961 2,424
5 5,222 100,000 100,000 100,000 2,943 3,554 4,273 2,043 2,655 3,374
6 6,428 100,000 100,000 100,000 3,473 4,328 5,374 2,752 3,607 4,653
7 7,694 100,000 100,000 100,000 3,984 5,125 6,576 3,444 4,584 6,036
8 9,024 100,000 100,000 100,000 4,474 5,942 7,889 4,113 5,582 7,529
9 10,420 100,000 100,000 100,000 4,942 6,782 9,324 4,762 6,602 9,144
10 11,886 100,000 100,000 100,000 5,384 7,639 10,888 5,384 7,639 10,888
11 13,425 100,000 100,000 100,000 5,800 8,516 12,595 5,800 8,516 12,595
12 15,042 100,000 100,000 100,000 6,192 9,413 14,462 6,192 9,413 14,462
13 16,739 100,000 100,000 100,000 6,555 10,328 16,503 6,555 10,328 16,503
14 18,521 100,000 100,000 100,000 6,889 11,261 18,735 6,889 11,261 18,735
15 20,392 100,000 100,000 100,000 7,194 12,213 21,179 7,194 12,213 21,179
16 22,356 100,000 100,000 100,000 7,465 13,180 23,854 7,465 13,180 23,854
17 24,419 100,000 100,000 100,000 7,699 14,160 26,784 7,699 14,160 26,789
18 26,585 100,000 100,000 100,000 7,893 15,149 29,994 7,893 15,149 29,994
19 28,859 100,000 100,000 100,000 8,041 16,145 33,512 8,041 16,145 33,512
20 31,247 100,000 100,000 100,000 8,141 17,145 37,373 8,141 17,145 37,373
age 60 45,102 100,000 100,000 100,000 7,714 22,042 63,312 7,714 22,042 63,312
age 65 62,785 100,000 100,000 129,185 5,182 26,336 105,889 5,182 26,336 105,889
(1) Assumes no policy loans or partial withdrawals have been made.
(2) Assumes a $900 premium is paid at the beginning of each policy year. Values
will be different if premiums are paid in different amounts or with a
different frequency.
The above hypothetical investment results are illustrative only and should not
be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown. The death benefit,
policy value and cash surrender value would be different from those shown if
returns averaged 0%, 6% and 12% over a period of years, but fluctuated above and
below those averages for individual policy years. No representation can be made
that these hypothetical rates of return can be achieved for any one year or
sustained over any period of time.
<PAGE>
Illustration Policies purchased on or after May 1, 1993 and before November 20, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------- ------------------------------------------------------------ ---------------------------------
Initial specified amount $100,000 Male - age 35 Current costs assumed
Death benefit Option 1 nonsmoker annual premium $900
- ------------------------------------- ------------------------------------------------------------ ---------------------------------
Premium Death benefit (1)(2) Policy value (1)(2) Cash surrender value (1)(2)
accumulated assuming hypothetical gross assuming hypothetical gross assuming hypothetical gross
End of with annual annual investment return of annual investment return of annual investment return of
policy interest
year at 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------------ ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ---------
1 $ 945 $ 100,000 $ 100,000 $ 100,000 $ 618 $ 662 $ 705 $ 0 $ 14 $ 58
2 1,937 100,000 100,000 100,000 1,226 1,352 1,483 503 628 760
3 2,979 100,000 100,000 100,000 1,814 2,061 2,329 1,032 1,279 1,547
4 4,073 100,000 100,000 100,000 2,381 2,790 3,250 1,540 1,949 2,409
5 5,222 100,000 100,000 100,000 2,929 3,538 4,254 2,029 2,639 3,355
6 6,428 100,000 100,000 100,000 3,456 4,308 5,350 2,735 3,587 4,629
7 7,694 100,000 100,000 100,000 3,965 5,101 6,547 3,424 4,560 6,007
8 9,024 100,000 100,000 100,000 4,452 5,914 7,854 4,091 5,554 7,494
9 10,420 100,000 100,000 100,000 4,915 6,747 9,279 4,735 6,567 9,099
10 11,886 100,000 100,000 100,000 5,352 7,598 10,833 5,352 7,598 10,833
11 13,425 100,000 100,000 100,000 5,763 8,467 12,529 5,763 8,467 12,529
12 15,042 100,000 100,000 100,000 6,149 9,356 14,384 6,149 9,356 14,384
13 16,739 100,000 100,000 100,000 6,508 10,263 16,411 6,508 10,263 16,411
14 18,521 100,000 100,000 100,000 6,837 11,188 18,628 6,837 11,188 18,628
15 20,392 100,000 100,000 100,000 7,134 12,128 21,053 7,134 12,128 21,053
16 22,356 100,000 100,000 100,000 7,397 13,082 23,707 7,397 13,082 23,707
17 24,419 100,000 100,000 100,000 7,625 14,050 26,615 7,625 14,050 26,615
18 26,585 100,000 100,000 100,000 7,811 15,027 29,800 7,811 15,027 29,800
19 28,859 100,000 100,000 100,000 7,952 16,008 33,291 7,952 16,008 33,291
20 31,247 100,000 100,000 100,000 8,042 16,992 37,120 8,042 16,992 37,120
age 60 45,102 100,000 100,000 100,000 7,565 21,792 62,844 7,565 21,792 62,844
age 65 62,785 100,000 100,000 128,223 4,981 25,956 105,101 4,981 25,956 105,101
(1) Assumes no policy loans or partial withdrawals have been made.
(2) Assumes a $900 premium is paid at the beginning of each policy year. Values
will be different if premiums are paid in different amounts or with a
different frequency.
The above hypothetical investment results are illustrative only and should not
be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown. The death benefit,
policy value and cash surrender value would be different from those shown if
returns averaged 0%, 6% and 12% over a period of years, but fluctuated above and
below those averages for individual policy years. No representation can be made
that these hypothetical rates of return can be achieved for any one year or
sustained over any period of time.
<PAGE>
Illustration
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------- ------------------------------------------------------------ ---------------------------------
Initial specified amount $100,000 Male - age 35 Guaranteed costs assumed
Death benefit Option 1 nonsmoker annual premium $900
- ------------------------------------- ------------------------------------------------------------ ---------------------------------
Premium Death benefit (1)(2) Policy value (1)(2) Cash surrender value (1)(2)
accumulated assuming hypothetical gross assuming hypothetical gross assuming hypothetical gross
End of with annual annual investment return of annual investment return of annual investment return of
policy interest
year at 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------------ ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ---------
1 $ 945 $ 100,000 $ 100,000 $ 100,000 $ 618 $ 662 $ 705 $ 0 $ 14 $ 58
2 1,937 100,000 100,000 100,000 1,226 1,352 1,483 503 628 760
3 2,979 100,000 100,000 100,000 1,814 2,061 2,329 1,032 1,279 1,547
4 4,073 100,000 100,000 100,000 2,381 2,790 3,250 1,540 1,949 2,409
5 5,222 100,000 100,000 100,000 2,929 3,538 4,254 2,029 2,639 3,355
6 6,428 100,000 100,000 100,000 3,445 4,297 5,338 2,724 3,576 4,617
7 7,694 100,000 100,000 100,000 3,942 5,077 6,522 3,402 4,536 5,982
8 9,024 100,000 100,000 100,000 4,410 5,869 7,806 4,049 5,509 7,446
9 10,420 100,000 100,000 100,000 4,859 6,686 9,212 4,679 6,506 9,032
10 11,886 100,000 100,000 100,000 5,280 7,516 10,742 5,280 7,516 10,742
11 13,425 100,000 100,000 100,000 5,673 8,362 12,409 5,673 8,362 12,409
12 15,042 100,000 100,000 100,000 6,038 9,224 14,229 6,038 9,224 14,229
13 16,739 100,000 100,000 100,000 6,365 10,093 16,208 6,365 10,093 16,208
14 18,521 100,000 100,000 100,000 6,665 10,979 18,375 6,665 10,979 18,375
15 20,392 100,000 100,000 100,000 6,929 11,875 20,741 6,929 11,875 20,741
16 22,356 100,000 100,000 100,000 7,146 12,770 23,318 7,146 12,770 23,318
17 24,419 100,000 100,000 100,000 7,327 13,675 26,141 7,327 13,675 26,141
18 26,585 100,000 100,000 100,000 7,462 14,581 29,230 7,462 14,581 29,230
19 28,859 100,000 100,000 100,000 7,541 15,480 32,608 7,541 15,480 32,608
20 31,247 100,000 100,000 100,000 7,554 16,360 36,301 7,554 16,360 36,301
age 60 45,102 100,000 100,000 100,000 6,486 20,369 61,016 6,486 20,369 61,056
age 65 62,785 100,000 100,000 124,007 2,602 22,855 101,645 2,602 22,855 101,645
(1) Assumes no policy loans or partial withdrawals have been made.
(2) Assumes a $900 premium is paid at the beginning of each policy year. Values
will be different if premiums are paid in different amounts or with a
different frequency.
The above hypothetical investment results are illustrative only and should not
be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown. The death benefit,
policy value and cash surrender value would be different from those shown if
returns averaged 0%, 6% and 12% over a period of years, but fluctuated above and
below those averages for individual policy years. No representation can be made
that these hypothetical rates of return can be achieved for any one year or
sustained over any period of time.
<PAGE>
Illustration Policies purchased before May 1, 1993
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------- ------------------------------------------------------------ ---------------------------------
Initial specified amount $100,000 Male - age 35 Current costs assumed
Death benefit Option 1 nonsmoker annual premium $900
- ------------------------------------- ------------------------------------------------------------ ---------------------------------
Premium Death benefit (1)(2) Policy value (1)(2) Cash surrender value (1)(2)
accumulated assuming hypothetical gross assuming hypothetical gross assuming hypothetical gross
End of with annual annual investment return of annual investment return of annual investment return of
policy interest
year at 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ------------ ------------ ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ---------
1 $ 945 $ 100,000 $ 100,000 $ 100,000 $ 618 $ 662 $ 705 $ 0 $ 14 $ 58
2 1,937 100,000 100,000 100,000 1,226 1,352 1,483 499 625 756
3 2,979 100,000 100,000 100,000 1,814 2,061 2,329 1,028 1,276 1,544
4 4,073 100,000 100,000 100,000 2,381 2,790 3,250 1,537 1,945 2,406
5 5,222 100,000 100,000 100,000 2,929 3,538 4,254 2,028 2,637 3,353
6 6,428 100,000 100,000 100,000 3,445 4,297 5,338 2,724 3,576 4,617
7 7,694 100,000 100,000 100,000 3,942 5,077 6,522 3,402 4,536 5,982
8 9,024 100,000 100,000 100,000 4,410 5,869 7,806 4,049 5,509 7,446
9 10,420 100,000 100,000 100,000 4,859 6,686 9,212 4,679 6,506 9,032
10 11,886 100,000 100,000 100,000 5,280 7,516 10,742 5,280 7,516 10,742
11 13,425 100,000 100,000 100,000 5,673 8,362 12,409 5,673 8,362 12,409
12 15,042 100,000 100,000 100,000 6,038 9,224 14,229 6,038 9,224 14,229
13 16,739 100,000 100,000 100,000 6,365 10,093 16,208 6,365 10,093 16,208
14 18,521 100,000 100,000 100,000 6,665 10,979 18,375 6,665 10,979 18,375
15 20,392 100,000 100,000 100,000 6,929 11,875 20,741 6,929 11,875 20,741
16 22,356 100,000 100,000 100,000 7,157 12,780 23,328 7,157 12,780 23,328
17 24,419 100,000 100,000 100,000 7,338 13,686 26,152 7,338 13,686 26,152
18 26,585 100,000 100,000 100,000 7,473 14,593 29,242 7,473 14,593 29,242
19 28,859 100,000 100,000 100,000 7,552 15,492 33,621 7,552 15,492 33,621
20 31,247 100,000 100,000 100,000 7,564 16,373 36,316 7,564 16,373 36,316
age 60 45,102 100,000 100,000 100,000 7,565 21,792 61,747 7,565 21,792 61,747
age 65 62,785 100,000 100,000 113,472 3,434 23,746 93,010 3,434 23,746 93,010
(1) Assumes no policy loans or partial withdrawals have been made.
(2) Assumes a $900 premium is paid at the beginning of each policy year. Values
will be different if premiums are paid in different amounts or with a
different frequency.
The above hypothetical investment results are illustrative only and should not
be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown. The death benefit,
policy value and cash surrender value would be different from those shown if
returns averaged 0%, 6% and 12% over a period of years, but fluctuated above and
below those averages for individual policy years. No representation can be made
that these hypothetical rates of return can be achieved for any one year or
sustained over any period of time.
</TABLE>
<PAGE>
IDS Life Of New York Account 8
Annual Financial Information
- --------------------------------------------------------------------------------
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company of New York
We have audited the accompanying individual and combined statements of net
assets of the segregated asset subaccounts of IDS Life of New York Account 8 for
Flexible Premium Variable Life Insurance (comprised of subaccounts YEQ, YIN,
YMM, YMA, YGS, YIT, YGI, YNO and Y04) as of December 31, 1997, and the related
statements of operations and changes in net assets for each of the three years
in the period then ended, except for the YGI and YNO subaccounts which are for
the year ended December 31, 1997 and the period November 22, 1996 (commencement
of operations) to December 31, 1996. We have also audited the accompanying
statements of operations and changes in net assets for the former Y95 subaccount
which are for the period January 1, 1995 to November 15, 1995 (date of maturity
of securities in the trust). These financial statements are the responsibility
of the management of IDS Life Insurance Company of New York. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1997 with the affiliated mutual
fund manager and the unit investment trust sponsor. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the individual and combined financial position of the
segregated asset subaccounts of IDS Life of New York Account 8 Flexible Premium
Variable Life Insurance at December 31, 1997, and the individual and combined
results of their operations and the changes in their net assets for the periods
described above, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Minneapolis, Minnesota
March 13, 1998
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Account 8 - Flexible Premium Variable Life Subaccounts
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Net Assets Dec. 31, 1997
Segregated Asset Subaccounts Combined
- ------------------------------------------------------------------------------------------------------------------------- Variable
Assets YEQ YIN YMM YMA YGS YIT YGI YNO Y04 Account
====================================================================================================================================
Investments in shares of funds,
mutual fund portfolios, and
the trust at market value:
IDS Life Series Fund Equity
Portfolio 1,514,538 shares at
net asset value of $29.98
per share
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(cost $33,397,298) $45,412,138 $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $45,412,138
IDS Life Series Fund Income
Portfolio 482,937 shares at
net asset value of $10.23 per share
(cost $4,820,267) -- 4,940,244 -- -- -- -- -- -- -- 4,940,244
IDS Life Series Fund Money Market
Portfolio 1,152,926 shares at net
asset value of $1.00 per share
(cost $1,152,813) -- -- 1,152,818 -- -- -- -- -- -- 1,152,818
IDS Life Series Fund Managed Portfolio
1,743,731 shares at net asset value of
$18.26 per share
(cost $26,897,603) -- -- -- 31,836,091 -- -- -- -- -- 31,836,091
IDS Life Series Fund Government
Securities Portfolio
52,953 shares at net asset value
of $10.18 per share
(cost $537,150) -- -- -- -- 539,182 -- -- -- -- 539,182
IDS Life Series Fund International
Equity Portfolio
544,784 shares at net asset
value of $15.54 per share
(cost $8,211,734) -- -- -- -- -- 8,464,494 -- -- -- 8,464,494
AIM V.I. Growth and Income Fund
163,042 shares at net
asset value of $18.87 per share
(cost $2,893,352) -- -- -- -- -- -- 3,076,597 -- -- 3,076,597
Putnam VT New Opportunities Fund
125,298 shares at net
asset value of $21.23 per share
(cost $2,406,602) -- -- -- -- -- -- -- 2,660,082 -- 2,660,082
Smith Barney Inc. Stripped
("Zero Coupon") U. S.
Treasury Securities Fund,
Series A 2004 1,131,653 units
at net asset value
of $0.68 per unit
(cost $515,767) -- -- -- -- -- -- -- -- 767,946 767,946
- ------------------------------------------------------------------------------------------------------------------------------------
45,412,138 4,940,244 1,152,818 31,836,091 539,182 8,464,494 3,076,597 2,660,082 767,946 98,849,592
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends receivable -- 29,578 5,430 -- 2,726 -- -- -- -- 37,734
Accounts receivable from
IDS Life of New York for
contract purchase payments 4,428 1,978 3,258 4,156 10,357 904 -- -- -- 34,081
====================================================================================================================================
Total assets 45,416,566 4,971,800 1,161,506 31,840,247 545,265 8,465,398 3,076,597 2,660,082 776,946 98,921,407
====================================================================================================================================
Liabilities
====================================================================================================================================
Payable to IDS Life of New York for:
Mortality and expense risk fee 71,328 4,000 931 47,406 439 12,341 2,326 2,020 1,269 142,060
Transaction charge -- -- -- -- -- -- -- -- 176 176
Payable to mutual fund
portfolios, funds and the trust
for investments purchased 4,428 27,556 7,757 4,156 11,185 904 -- -- -- 55,986
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 75,756 31,556 8,688 51,562 11,624 13,245 2,326 2,020 1,445 198,222
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable
to Variable Life contracts $45,340,810$4,940,244$1,152,818 $31,788,685 $540,641 $8,452,153 $3,074,271$2,658,062 $775,501 $98,723,185
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation units
outstanding 11,923,765 2,183,554 734,855 9,079,176 256,101 4,819,920 2,465,393 2,226,094 257,951
====================================================================================================================================
Net asset value per
accumulation unit $ 3.80$ 2.26$ 1.57 $ 3.50 $ 2.11 $ 1.75 $ 1.25 $ 1.19 $ 3.01
====================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Account 8 - Flexible Premium Variable Life Subaccounts
- -----------------------------------------------------------------------------------------------------------------------------------
Statements of Operations Year ended Dec. 31, 1997
Segregated Asset Subaccounts
- ----------------------------------------------------------------------------------------------------------------------- Combined
Variable
Investment income YEQ YIN YMM YMA YGS YIT YGI YNO Y04 Account
====================================================================================================================================
Dividend income from mutual
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
fund portfolios and funds $1,459,523 $322,998 $ 49,171 $2,754,122 $ 37,545 $209,995 $ 3,724 $ -- $ -- $4,837,078
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fee 354,681 40,932 8,873 257,676 4,929 62,452 11,474 10,317 8,890 760,224
Transaction charge -- -- -- -- -- -- -- -- 1,938 1,938
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses 354,681 40,932 8,873 257,676 4,929 62,452 11,474 10,317 10,828 762,162
- -----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss)-- net 1,104,842 282,066 40,298 2,496,446 32,616 147,543 (7,750) (10,317)(10,828) 4,074,916
===================================================================================================================================
Realized and unrealized gain (loss) on investments -- net
===================================================================================================================================
Realized gain (loss) on sales of investments in mutual fund portfolios, funds
and in the trust:
Proceeds from sales 751,190 476,335 1,548,607 679,787 227,327 544,898 52,916 56,134 156,382 4,493,576
Cost of investments sold 596,675 465,590 1,548,623 571,899 227,369 504,067 50,365 53,706 111,327 4,129,621
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain(loss)
on investments 154,515 10,745 (16) 107,888 (42) 40,831 2,551 2,428 45,055 363,955
Net change in unrealized
appreciation or
depreciation of investments 5,965,530 17,158 5 1,711,453 7,613 80,848 180,079 253,559 36,532 8,252,777
- -----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 6,120,045 27,903 (11) 1,819,341 7,571 121,679 182,630 255,987 81,587 8,616,732
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting
from operations $7,224,887 $309,969 $ 40,287 $4,315,787 $ 40,187 $269,222 $174,880 $ 245,670$ 70,759 $12,691,648
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Account 8 - Flexible Premium Variable Life Subaccounts
- -----------------------------------------------------------------------------------------------------------------------------------
Statements of Operations Year ended Dec. 31, 1996
Segregated Asset Subaccounts
- ---------------------------------------------------------------------------------------------------------------------- Combined
Variable
Investment income YEQ YIN YMM YMA YGS YIT YGI* YNO* Y04 Account
===================================================================================================================================
Dividend income from
mutual fund portfolios
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
and funds $4,256,160 $252,288 $27,500 $1,556,968 $38,169 $369,589 $ 284 $ -- $ -- $6,500,958
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense
risk fee 238,970 34,107 4,683 188,866 5,146 25,967 55 33 6,817 504,644
Transaction charge -- -- -- -- -- -- -- -- 1,913 1,913
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses 238,970 34,107 4,683 188,866 5,146 25,967 55 33 8,730 506,557
- -----------------------------------------------------------------------------------------------------------------------------------
Investment income
(loss) - net 4,017,190 218,181 22,817 1,368,102 33,023 343,622 229 (33) (8,730) 5,994,401
===================================================================================================================================
Realized and unrealized gain (loss) on investments - net
===================================================================================================================================
Realized gain on sales of investments in mutual fund portfolios, funds and in
the trusts:
Proceeds from sales 810,674 299,105 1,020,483 594,770 118,200 705,857 1,783 -- 108,552 3,659,424
Cost of investments sold 647,479 295,360 1,020,488 527,763 119,926 698,109 1,743 -- 79,747 3,390,615
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain
(loss) on investments 163,195 3,745 (5) 67,007 (1,726) 7,748 40 -- 28,805 268,809
Net change in unrealized
appreciation or
depreciation of
investments 227,037 (101,695) 3 1,242,208 (29,290) (5,575) 3,166 (79) (32,185) 1,303,590
- -----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss)
on investments 390,232 (97,950) (2) 1,309,215 (31,016) 2,173 3,206 (79) (3,380) 1,572,399
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations $4,407,422 $120,231 $22,815 $2,677,317 $ 2,007 $345,795 $3,435 $(112) $(12,110) $7,566,800
===================================================================================================================================
* For the period Nov. 22, 1996 (commencement of operations) to Dec. 31, 1996.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Account 8 - Flexible Premium Variable Life Subaccounts
- -----------------------------------------------------------------------------------------------------------------------------------
Statements of Operations Year ended Dec. 31, 1995
Segregated Asset Subaccounts
- ----------------------------------------------------------------------------------------------------------------------- Combined
Variable
Investment income YEQ YIN YMM YMA YGS YIT Y95* Y04 Account
===================================================================================================================================
Dividend income from mutual
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
fund portfolios and funds $ 365,168 $191,968 $ 18,332 $ 738,863 $32,693 $ 6,898 $ -- $ -- $1,353,922
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fee 148,582 25,384 2,588 139,149 4,797 5,471 1,533 5,928 333,432
Transaction charge -- -- -- -- -- -- 426 1,647 2,073
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses 148,582 25,384 2,588 139,149 4,797 5,471 1,959 7,575 335,505
- -----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss)-- net 216,586 166,584 15,744 599,714 27,896 1,427 (1,959) (7,575) 1,018,417
===================================================================================================================================
Realized and unrealized gain (loss) on investments -- net
===================================================================================================================================
Realized gain (loss) on sales of investments in mutual fund portfolios, funds
and in the trusts:
Proceeds from sales 490,632 272,924 352,853 729,876 80,977 54,522 217,232 61,502 2,260,518
Cost of investments sold 388,384 269,516 352,863 706,047 81,252 47,643 148,740 46,239 2,040,684
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on investments 102,248 3,408 (10) 23,829 (275) 6,879 68,492 15,263 219,834
Net change in unrealized
appreciation
or depreciation
of investments 4,708,717 341,906 8 2,003,441 54,903 178,601 (57,647) 158,169 7,388,098
- -----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss)
on investments 4,810,965 345,314 (2) 2,027,270 54,628 185,480 10,845 173,432 7,607,932
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net
assets resulting
from operations $5,027,551 $511,898 $ 15,742 $2,626,984 $82,524 $186,907 $ 8,886 $165,857 $8,626,349
===================================================================================================================================
*For the period Jan. 1, 1995 to Nov. 15, 1995, date of maturity of securities in the 1995 Trust.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Account 8 - Flexible Premium Variable Life Subaccounts
- -----------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets Year ended Dec. 31, 1997
Segregated Asset Subaccounts
- --------------------------------------------------------------------------------------------------------------------- Combined
Variable
Operations YEQ YIN YMM YMA YGS YIT YGI YNO Y04 Account
===================================================================================================================================
Investment income
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(loss)-- net $1,104,842 $282,066 $40,298 $2,496,446 $32,616 $147,543 $(7,750) $(10,317)$(10,828) $4,074,916
Net realized gain (loss)
on investments 154,515 10,745 (16) 107,888 (42) 40,831 2,551 2,428 45,055 363,955
Net change in
unrealized appreciation or
depreciation of
investments 5,965,530 17,158 5 1,711,453 7,613 80,848 180,079 253,559 36,532 8,252,777
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 7,224,887 309,969 40,287 4,315,787 40,187 269,222 174,880 245,670 70,759 12,691,648
- -----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
===================================================================================================================================
Contract purchase
payments 7,441,563 784,805 890,628 4,816,210 119,153 2,330,345 828,706 881,192 91,529 18,184,131
Net transfers* 2,009,267 142,593 (455,707) 1,374,196 (100,924) 1,512,734 2,014,043 1,557,633 (81,712) 7,972,123
Transfers for
policy loans (598,478) (66,319) (71,130) (441,258) (5,109) (61,032) (5,786) (11,001) (9,127) (1,269,240)
Policy charges (1,997,018) (286,765) (104,917) (1,554,701) (46,144) (361,587) (68,945) (77,116) (46,193) (4,543,386)
Contract terminations:
Surrender benefits (1,045,185) (233,575) (20,637) (793,080) (37,707) (99,532) (16,584) (20,126) (37,839) (2,304,265)
Death benefits (69,049) (6,276) (43,028) (16,407) (6,354) (1,487) -- -- -- (142,601)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease)
from contract
transactions 5,741,100 334,463 195,209 3,384,960 (77,085) 3,319,441 2,751,434 2,330,582 (83,342) 17,896,762
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets
at beginning of year 32,374,823 4,295,812 917,322 24,087,938 577,539 4,863,490 147,957 81,810 788,084 68,134,775
===================================================================================================================================
Net assets at
end of year $45,340,810 $4,940,244 $1,152,818 $31,788,685 $540,641 $8,452,153 $3,074,271 $2,658,062 $775,501 $98,723,185
===================================================================================================================================
Accumulation Unit Activity
===================================================================================================================================
Units outstanding at
beginning of year 10,218,855 2,032,494 605,111 8,043,384 295,283 2,922,492 147,682 83,723 290,576
Contract purchase
payments 2,193,598 358,800 577,058 1,469,705 60,085 1,327,806 697,652 805,177 32,546
Net transfers* 603,566 64,605 (292,656) 425,487 (51,527) 866,461 1,695,960 1,434,487 (32,030)
Transfers for
policy loans (176,623) (29,936) (45,562) (134,833) (2,557) (34,345) (4,945) (9,924) (3,167)
Policy charges (588,039) (131,741) (68,238) (475,355) (23,054) (205,879) (57,282) (69,750) (16,379)
Contract terminations:
Surrender benefits (308,629) (107,894) (13,385) (244,414) (19,111) (55,746) (13,674) (17,619) (13,595)
Death benefits (18,963) (2,774) (27,473) (4,798) (3,018) (869) -- -- --
===================================================================================================================================
Units outstanding
at end of year 11,923,765 2,183,554 734,855 9,079,176 256,101 4,819,920 2,465,393 2,226,094 257,951
===================================================================================================================================
* Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life of New York's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Account 8 - Flexible Premium Variable Life Subaccounts
- -----------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets Year ended Dec. 31, 1996
Segregated Asset Subaccounts
- ----------------------------------------------------------------------------------------------------------------------- Combined
Variable
Operations YEQ YIN YMM YMA YGS YIT YGI** YNO** Y04 Account
===================================================================================================================================
Investment income
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(loss) - net $ 4,017,190 $ 218,181 $ 22,817 $ 1,368,102 $ 33,023 $ 343,622 $ 229 $ (33) $(8,730) $ 5,994,401
Net realized gain (loss)
on investments 163,195 3,745 (5) 67,007 (1,726) 7,748 40 -- 28,805 268,809
Net change in unrealized
appreciation or depreciation
of investments 227,037 (101,695) 3 1,242,208 (29,290) (5,575) 3,166 (79) (32,185) 1,303,590
===================================================================================================================================
Net increase (decrease)
in net assets resulting
from operations 4,407,422 120,231 22,815 2,677,317 2,007 345,795 3,435 (112) (12,110) 7,566,800
===================================================================================================================================
Contract Transactions
===================================================================================================================================
Contract purchase
payments 6,573,071 906,414 421,727 4,258,738 128,415 1,399,027 1,212 2,327 106,648 13,797,579
Net transfers* 4,592,956 411,398 84,784 1,920,764 (32,588) 2,388,202 143,217 79,670 (471) 9,587,932
Transfers for
policy loans (505,653) (62,503) 3,059 (356,351) (9,286) (36,027) 203 203 (9,996) (976,351)
Policy charges (1,632,273) (261,231) (59,118) (1,378,652) (53,375) (181,270) (110) (278) (48,708) (3,615,015)
Contract terminations:
Surrender benefits (1,066,592) (138,797) (68,038) (750,212) (37,811) (80,784) -- -- (24,330) (2,166,564)
Death benefits (96,266) (9,994) (488) (64,115) (4,633) (642) -- -- -- (176,138)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions 7,865,243 845,287 381,926 3,630,172 (9,278) 3,488,506 144,522 81,922 23,143 16,451,443
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets
at beginning of year 20,102,158 3,330,294 512,581 17,780,449 584,810 1,029,189 -- -- 777,051 44,116,532
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets
at end of year $32,374,823 $4,295,812 $917,322 $24,087,938 $577,539 $4,863,490 $147,957 $81,810 $788,084 $68,134,775
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
===================================================================================================================================
Units outstanding
at beginning of year 7,545,186 1,614,264 351,572 6,737,143 300,900 759,139 -- -- 278,550
Contract purchase payments 2,226,541 448,584 284,151 1,529,296 67,086 862,329 1,221 2,412 40,078
Net transfers* 1,568,157 201,620 54,143 691,235 (17,357) 1,485,306 146,370 81,389 3,047
Transfers for policy loans (172,189) (30,740) 2,027 (127,659) (4,888) (22,490) 201 209 (3,781)
Policy charges (555,329) (128,282) (39,921) (495,019) (28,020) (111,831) (110) (287) (18,322)
Contract terminations:
Surrender benefits (361,430) (67,972) (46,534) (269,131) (19,955) (49,577) -- -- (8,996)
Death benefits (32,081) (4,980) (327) (22,481) (2,483) (384) -- -- --
===================================================================================================================================
Units outstanding
at end of year 10,218,855 2,032,494 605,111 8,043,384 295,283 2,922,492 147,682 83,723 290,576
===================================================================================================================================
*Includes transfer activity from (to) other subaccounts and transfers from (to) IDS Life of New York's fixed account.
**For the period Nov. 22, 1996 (commencement of operations) to Dec. 31, 1996.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Account 8 - Flexible Premium Variable Life Subaccounts
- -----------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets Year ended Dec. 31, 1995
Segregated Asset Subaccounts
- ---------------------------------------------------------------------------------------------------------------------- Combined
Variable
Operations YEQ YIN YMM YMA YGS YIT Y95** Y04 Account
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss)-- net$ 216,586 $ 166,584 $ 15,744 $ 599,714 $ 27,896 $ 1,427 $ (1,959) $ (7,575) $ 1,018,417
Net realized gain (loss)
on investments 102,248 3,408 (10) 23,829 (275) 6,879 68,492 15,263 219,834
Net change in unrealized
appreciation or depreciation of
investments 4,708,717 341,906 8 2,003,441 54,903 178,601 (57,647) 158,169 7,388,098
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 5,027,551 511,898 15,742 2,626,984 82,524 186,907 8,886 165,857 8,626,349
===================================================================================================================================
Contract Transactions
===================================================================================================================================
Contract purchase payments 3,794,832 584,353 81,641 3,321,378 122,755 326,063 12,881 103,254 8,347,157
Net transfers* 1,229,446 157,500 238,223 605,901 (13,926) 465,906 (185,387) 39,181 2,536,844
Transfers for policy loans (315,444) (17,868) (10,292) (354,356) (8,919) (19,573) (292) (9,584) (736,328)
Policy charges (1,228,453) (220,918) (32,357) (1,200,990) (52,035) (44,302) (8,262) (47,833) (2,835,150)
Contract terminations:
Surrender benefits (532,822) (102,633) (21,712) (494,500) (16,005) (13,988) (15,334) (7,463) (1,204,457)
Death benefits (42,827) (2,511) (30,660) (146,900) (723) -- -- (771) (224,392)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from contract
transactions 2,904,732 397,923 224,843 1,730,533 31,147 714,106 (196,394) 76,784 5,883,674
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning
of year 12,169,875 2,420,473 271,996 13,422,932 471,139 128,176 187,508 534,410 29,606,509
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $20,102,158 $3,330,294 $512,581 $17,780,449 $584,810 $1,029,189 $ -- $777,051 $44,116,532
===================================================================================================================================
Accumulation Unit Activity
===================================================================================================================================
Units outstanding at
beginning of year 6,264,819 1,408,215 196,238 5,999,602 283,647 130,380 105,071 247,625
Contract purchase payments 1,670,681 308,878 57,494 1,406,500 68,039 288,272 7,049 42,187
Net transfers* 534,034 79,609 165,152 256,018 (7,789) 406,561 (99,144) 15,433
Transfers for policy loans (139,658) (9,737) (7,381) (149,809) (5,170) (16,732) (159) (3,951)
Policy charges (539,694) (117,478) (22,780) (507,431) (28,858) (38,369) (4,506) (19,366)
Contract terminations:
Surrender benefits (226,906) (53,959) (15,145) (207,716) (8,585) (10,973) (8,311) (3,088)
Death benefits (18,090) (1,264) (22,006) (60,021) (384) -- -- (290)
===================================================================================================================================
Units outstanding
at end of year 7,545,186 1,614,264 351,572 6,737,143 300,900 759,139 -- 278,550
===================================================================================================================================
*Includes transfer activity from (to) other subaccounts and transfers from (to) IDS Life of New York's fixed account.
**For the period from Jan. 1, 1995 to Nov. 15, 1995, date of maturity of securities in the 1995 Trust.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
IDS Life Of New York Account 8
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Organization
IDS Life of New York Account 8 (the Variable Account) was established on Sept.
12, 1985 as a segregated asset account of IDS Life Insurance Company of New York
(IDS Life of New York) under New York law and is registered as a single unit
investment trust under the Investment Company Act of 1940. Operations of the
Variable Account commenced on Aug. 31, 1987. The Variable Account is comprised
of various subaccounts. The assets of each subaccount of the Variable Account
are not chargeable with liabilities arising out of the business conducted by any
other segregated asset account or by IDS Life of New York. Flexible Premium
Variable Life policy owners allocate their premium payment to one or more of the
nine subaccounts which are used in connection with those policies. Such funds
are then invested in shares of six portfolios of IDS Life Series Fund, Inc. (the
Mutual Fund); or in shares of the AIM V.I. Growth and Income Fund; or in shares
of the Putnam VT New Opportunities Fund or in units of one Trust of Smith Barney
Inc., Stripped ("Zero Coupon") U.S. Treasury Securities Fund, Series A
(individually, a Trust or collectively, the Trusts).
The Mutual Fund, which was incorporated on May 8, 1985 and commenced operations
Jan. 20, 1986, is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. AIM Variable Insurance
Funds, Inc., a Maryland corporation, which was incorporated on Jan. 22, 1993 and
Putnam Variable Trust, a Massachusetts business trust, which was organized on
Sept. 24, 1987 are diversified open-end management companies. AIM V.I. Growth
and Income Fund and Putnam VT New Opportunities Fund both commenced operations
on May 2, 1994. Premiums are allocated to the subaccounts which are used in
connection with Flexible Premium Variable Life Policies: Equity Subaccount (YEQ)
are invested in the shares of the Equity Portfolio; Income Subaccount (YIN)
invests in the shares of the Income Portfolio; Money Market Subaccount (YMM)
invests in the shares of the Money Market Portfolio; Managed Subaccount (YMA)
invests in the shares of the Managed Portfolio; Government Securities Subaccount
(YGS) invests in the shares of the Government Securities Portfolio;
International Equity Subaccount (YIT) invests in shares of the International
Equity Portfolio; YGI Subaccount invests in shares of the AIM V.I. Growth and
Income Fund and YNO Subaccount invests in shares of the Putnam VT New
Opportunities Fund. The Trusts, which commenced operations Aug. 4, 1986, are
registered under the Investment Company Act of 1940 as a unit investment trust.
Funds allocated to 1995 U.S. Treasury Securities Subaccount (Y95) were invested
in units of the 1995 Trust and the 2004 U.S. Treasury Securities Subaccount
(Y04) invests in units of the 2004 Trust. The 1995 Trust matured on Nov. 15,
1995 and is no longer available for investment. IDS Life Insurance Company,
parent company of IDS Life of New York, acts as the investment manager and
American Express Financial Corporation acts as the investment advisor of the
Mutual Fund. A I M Management Group Inc. acts as the investment manager for AIM
V.I. Growth and Income Fund. Putnam Investments acts as the investment manager
for Putman VT New Opportunities Fund. Smith Barney Inc. serves as sponsor for
the Trust. IDS Life serves as distributor of the Flexible Premium Variable Life
Insurance Policy.
- --------------------------------------------------------------------------------
2. Summary of Significant Accounting Policies
Investments in Mutual Funds
Investments in shares of the mutual fund portfolios and funds are stated at
market value which is the net asset value per share as determined by the
respective portfolios or funds. Investment transactions are accounted for on the
date the shares are purchased and sold. The cost of investments sold and
redeemed is determined on the average cost method. Dividend distributions
received from the portfolios are reinvested in additional shares of the
portfolios and funds and are recorded as income by the subaccounts on the
ex-dividend date.
Unrealized appreciation or depreciation of investments in the accompanying
financial statements represents the subaccounts' share of the portfolios'
undistributed net investment income, undistributed realized gain or loss and the
unrealized appreciation or depreciation on their investment securities.
Investments in Trusts
Investments in units of the Trusts are stated at market value which is the net
asset value per unit as determined by the respective trust. Investment
transactions are accounted for on the date the units are purchased and sold. The
cost of investments sold and redeemed is determined on the average cost method.
Unrealized appreciation or depreciation of investments in the accompanying
financial statements represents the subaccounts' share of the Trusts'
undistributed net investment income, undistributed realized gain or loss and the
unrealized appreciation or depreciation on their investment securities.
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 increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Federal Income Taxes
IDS Life of New York is taxed as a life insurance company. The Variable Account
is treated as part of IDS Life of New York for federal income tax purposes.
Under existing federal income tax law, no income taxes are payable with respect
to any investment income of the Variable Account.
- --------------------------------------------------------------------------------
3. Mortality and Expense Risk Fee and Policy Charges
IDS Life of New York makes contractual assurances to the Variable Account that
possible future adverse changes in administrative expenses and mortality
experience of the policy owners and beneficiaries will not affect the Variable
Account. The mortality and expense risk fee paid to IDS Life of New York is
computed daily and is equal on an annual basis to 0.9 percent of the daily net
asset value of the Variable Account. A monthly deduction is made for the cost of
insurance, and the policy fee. The cost of insurance for the policy month is
determined on the monthly date by determining the net amount at risk, as of that
day, and by then applying the cost of insurance rates to the net amount at risk
which IDS Life of New York is assuming for the succeeding month. The monthly
deduction will be taken from the subaccounts as specified in the application for
the policy.
IDS Life of New York deducts a policy fee of $5 per month. This charge
reimburses IDS Life of New York for expenses incurred in administering the
policy, such as processing claims, maintaining records, making policy changes
and communicating with owners of policies. IDS Life of New York does not
anticipate that it will make any profit on this charge.
- --------------------------------------------------------------------------------
4. Death Benefit Guarantee Charge and Optional Insurance Benefit Charge
For each policy month the death benefit guarantee is in effect, IDS Life of New
York deducts a charge of $.01 per $1,000 of the amount used to determine the
death benefit (specified amount) and $.01 per $1,000 coverage under the other
insured rider to compensate it for the risk assumed in providing the death
benefit guarantee. Each month IDS Life of New York deducts charges for any
optional insurance benefits added to the policy by rider.
- --------------------------------------------------------------------------------
5. Premium Expense Charge
IDS Life of New York deducts charges for two separate items from each premium
payment. The total of these charges is called the premium expense charge.
Details regarding these two charges follows. A sales charge of 2.5 percent of
each premium payment will be deducted to compensate IDS Life of New York for
expenses relating to the distribution of the policy, including agents'
commissions, advertising, and the printing of the prospectuses and sales
literature. The policy provides that a charge of 1 percent of each premium
payment will be deducted to cover the premium taxes imposed by the state of New
York.
- --------------------------------------------------------------------------------
6. Transaction Charge
IDS Life of New York makes a daily charge against the assets of each subaccount
investing in the Trust. This charge is intended to reimburse IDS Life of New
York for the transaction charge paid directly by IDS Life of New York to Smith
Barney Inc. on the sale of the Trust units to the Variable Account. IDS Life of
New York pays these amounts from its general account assets. The amount of the
asset charge is equivalent to an effective annual rate of 0.25 percent of the
account value invested in the Trust. This amount may be increased in the future
but in no event will it exceed an effective annual rate of 0.5 percent of the
account value. The charge will be cost-based (taking into account a loss of
interest) with no anticipated element of profit for IDS Life of New York.
- --------------------------------------------------------------------------------
7. Surrender Charge
There are surrender charges for full surrender in the first 10 years of the
policy and for 10 years following an increase in specified amount. They are
generally level for 5 years and decreasing the next 5 years. The surrender
charge is based on the specified amount, the insured's age, sex and smoker class
and the total gross premium paid. Charges by IDS Life of New York for surrenders
are not identified on an individual segregated asset account basis. Charges for
all segregated asset accounts amounted to $688,445 in 1997, $551,374 in 1996,
$464,724 in 1995. Such charges are not treated as a separate expense of the
subaccounts or Variable Account. They are ultimately deducted from contract
surrender benefits paid by IDS Life of New York.
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
8. Investment Transactions
The subaccounts' purchases of portfolio shares or trust units, including
reinvestment of dividend distributions, were as follows:
Year Ended Dec. 31,
- ---------------------------------------------------------------------------------------------------------------------------
Subaccount Investment 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
YEQ IDS Life Series Fund Equity Portfolio........... $ 7,620,803 $12,711,900 $3,623,207
YIN IDS Life Series Fund Income Portfolio.......... 1,092,864 1,362,573 837,431
YMM IDS Life Series Fund Money Market Portfolio.... 1,784,114 1,273,437 745,230
YMA IDS Life Series Fund Managed Portfolio......... 6,573,036 5,602,928 3,068,323
YGS IDS Life Series Fund Government Securities Portfolio 172,859 150,485 140,020
YIT IDS Life Series Fund International Equity Portfolio 4,017,372 4,543,458 771,320
YGI AIM V.I. Growth and Income Fund................. 2,798,870 146,590* --
YNO Putnam VT New Opportunities Fund................ 2,378,386 81,922* --
Y95 1995 Trust..................................... -- -- 18,702**
Y04 2004 Trust..................................... 53,932 122,983 130,917
===========================================================================================================================
Combined Variable Account $26,492,236 $25,996,276 $9,335,150
===========================================================================================================================
* Commenced operations Nov. 22, 1996.
** For the period Jan. 1, 1995 to Nov. 15, 1995, date of maturity of securities in the 1995 Trust.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
9. Year 2000 Issue (Unaudited)
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Variable Account.
The Variable Account has no computer systems of its own but is dependent upon
the systems maintained by AEFC and certain other third parties.
A comprehensive review AEFC's computer systems and business processes has been
conducted to identify the major systems that could be affected by the Year 2000
issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each system by the end of
1998 and to continue compliance efforts through 1999.
The Year 2000 readiness of unaffiliated investment managers and other third
parties whose system failures could have an impact on the Variable Account's
operations currently is being evaluated. The potential materiality of any such
impact is not known at this time.
<PAGE>
<TABLE>
<CAPTION>
IDS Life Of New York Account 8
Condensed Financial Information (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
The following tables give per-unit information about the financial history of
each variable subaccount.
Year Ended Dec. 31,
- ---------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
=================================================================================================================================
Subaccount YEQ IDSLife Series Fund (Equity)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit value at beginning of period $3.17 $2.66 $1.94 $1.91 $1.70 $1.63 $0.98 $1.04 $0.85 $0.79
Accumulation unit value at end of period $3.80 $3.17 $2.66 $1.94 $1.91 $1.70 $1.63 $0.98 $1.04 $0.85
Number of accumulation units outstanding at
end of period (000 omitted) 11,924 10,219 7,545 6,265 4,382 2,916 1,668 1,061 572 349
- ---------------------------------------------------------------------------------------------------------------------------------
Subaccount YIN IDSLife Series Fund (Income)
Accumulation unit value at beginning of period $2.11 $2.06 $1.72 $1.81 $1.59 $1.47 $1.29 $1.23 $1.10 $1.03
Accumulation unit value at end of period $2.26 $2.11 $2.06 $1.72 $1.81 $1.59 $1.47 $1.29 $1.23 $1.10
Number of accumulation units outstanding
at end of period (000 omitted) 2,184 2,032 1,614 1,408 1,308 744 517 369 215 70
- ---------------------------------------------------------------------------------------------------------------------------------
Subaccount YMM IDSLife Series Fund (Money Market)
Accumulation unit value at beginning of period $1.52 $1.46 $1.39 $1.35 $1.33 $1.29 $1.24 $1.16 $1.07 $1.02
Accumulation unit value at end of period. $1.57 $1.52 $1.46 $1.39 $1.35 $1.33 $1.29 $1.24 $1.16 $1.07
Number of accumulation units outstanding
at end of period (000 omitted) 735 605 352 196 193 147 191 167 119 73
- ---------------------------------------------------------------------------------------------------------------------------------
Subaccount YMA IDSLife Series Fund (Managed)
Accumulation unit value at beginning of period $2.99 $2.64 $2.24 $2.24 $1.89 $1.73 $1.32 $1.23 $0.96 $0.89
Accumulation unit value at end of period $3.50 $2.99 $2.64 $2.24 $2.24 $1.89 $1.73 $1.32 $1.23 $0.96
Number of accumulation units outstanding
at end of period (000 omitted) 9,079 8,043 6,737 6,000 4,308 2,720 1,912 1,236 679 454
- ---------------------------------------------------------------------------------------------------------------------------------
Subaccount YGS IDSLife Series Fund (Government Securities)
Accumulation unit value at beginning of period $1.96 $1.94 $1.66 $1.76 $1.58 $1.50 $1.30 $1.23 $1.09 $1.03
Accumulation unit value at end of period $2.11 $1.96 $1.94 $1.66 $1.76 $1.58 $1.50 $1.30 $1.23 $1.09
Number of accumulation units outstanding
at end of period (000 omitted) 256 295 301 284 244 159 112 69 33 26
- ---------------------------------------------------------------------------------------------------------------------------------
Subaccount YIT1 IDSLife Series Fund (International Equity)
Accumulation unit value at beginning of period $1.66 $1.36 $0.98 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.75 $1.66 $1.36 $0.98 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 4,820 2,922 759 130 -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Subaccount YGI2 (AIM V.I. Growth and Income)
Accumulation unit value at beginning of period $1.00 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.25 $1.00 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 2,465 148 -- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Subaccount YNO2 (Putnam VT New Opportunities)
Accumulation unit value at beginning of period $0.98 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.19 $0.98 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 2,226 84 -- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Subaccount Y953 (1995)
Accumulation unit value at beginning of period -- -- $1.78 $1.77 $1.68 $1.58 $1.37 $1.26 $1.11 $1.04
Accumulation unit value at end of period -- -- -- $1.78 $1.77 $1.68 $1.58 $1.37 $1.26 $1.11
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- 105 107 105 104 102 83 29
- ---------------------------------------------------------------------------------------------------------------------------------
Subaccount Y04 (2004)
Accumulation unit value at beginning of period $2.71 $2.79 $2.16 $2.41 $2.00 $1.85 $1.55 $1.51 $1.23 $1.09
Accumulation unit value at end of period $3.01 $2.71 $2.79 $2.16 $2.41 $2.00 $1.85 $1.55 $1.51 $1.23
Number of accumulation units outstanding
at end of period (000 omitted) 258 291 279 248 207 183 153 146 105 112
- ---------------------------------------------------------------------------------------------------------------------------------
1 Operations commenced on Oct. 28, 1994.
2 Operations commenced on Nov. 22, 1996.
3 Securities in the 1995 Trust matured on Nov. 15, 1995.
</TABLE>
<PAGE>
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company of New York
We have audited the accompanying balance sheets of IDS Life
Insurance Company of New York (a wholly owned subsidiary of IDS
Life Insurance Company) as of December 31, 1997 and 1996, and the
related statements of income, stockholder's equity and cash flows
for each of the three years in the period ended December 31, 1997.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of IDS Life Insurance Company of New York at December 31, 1997
and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31,
1997, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Minneapolis, Minnesota
February 5, 1998
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
- --------------------------------------------------------------------------
BALANCE SHEETS Dec. 31, 1997 Dec. 31, 1996
ASSETS (thousands)
- --------------------------------------------------------------------------
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1997, $562,979; 1996, $604,635) $ 535,651 $ 585,812
Available for sale, at fair value (Fair value:
1996, $582,962; 1996, $590,608) 603,576 601,623
Mortgage loans on real estate 178,826 160,017
Policy loans 23,349 20,077
Other investments 970 1,374
- --------------------------------------------------------------------------
Total investments 1,342,372 1,368,903
- --------------------------------------------------------------------------
Accrued investment income 20,205 21,068
Deferred policy acquisition costs 126,614 119,183
Other assets 4,227 3,950
Separate account assets 1,236,759 950,018
- --------------------------------------------------------------------------
Total assets $2,730,177 $2,463,122
- --------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDER'S EQUITY
- --------------------------------------------------------------------------
Liabilities:
Future policy benefits:
Fixed annuities $964,483 $1,054,954
Universal life-type insurance 147,744 142,278
Traditional life, disability income
and long-term care insurance 50,469 45,338
Policy claims and other policyholders' funds 4,013 3,155
Deferred income taxes 11,445 9,046
Amounts due to brokers 29,054 3,007
Other liabilities 28,931 25,463
Separate account liabilities 1,236,759 950,018
- --------------------------------------------------------------------------
Total liabilities 2,472,898 2,233,259
- --------------------------------------------------------------------------
Stockholder's equity:
Capital stock, $10 par value per share;
200,000 shares authorized, issued and outstanding 2,000 2,000
Additional paid-in capital 49,000 49,000
Net unrealized gain on investments 13,175 6,937
Retained earnings 193,104 171,926
- --------------------------------------------------------------------------
Total stockholder's equity 257,279 229,863
- --------------------------------------------------------------------------
Total liabilities and stockholder's equity $2,730,177 $2,463,122
- --------------------------------------------------------------------------
See accompanying notes.
<PAGE>
- -------------------------------------------------------------------------------
STATEMENTS OF INCOME
Years ended Dec. 31,
1997 1996 1995
(thousands)
- -------------------------------------------------------------------------------
Revenues:
Traditional life, disability income
and long-term care insurance
premiums $ 12,376 $ 10,931 $ 9,280
Policyholder and contractholder charges 18,319 15,832 13,216
Mortality and expense risk fees 11,312 8,574 6,213
Net investment income 106,274 109,468 110,924
Net realized gains (losses) on investments 547 (1,424) 1,548
- -------------------------------------------------------------------------------
Total revenues 148,828 143,381 141,181
- -------------------------------------------------------------------------------
Benefits and expenses:
Death and other benefits:
Traditional life, disability income
and long-term care insurance 3,633 4,182 3,354
Universal life-type insurance
and investment contracts 3,852 4,409 4,548
Increase in liabilities for future
policy benefits for traditional life,
disability income and
long-term care insurance 3,979 2,324 1,958
Interest credited on universal life-type
insurance and investment contracts 62,294 65,099 68,630
Amortization of deferred policy
acquisition costs 17,201 16,071 13,085
Other insurance and operating expenses 10,220 8,972 7,474
- -------------------------------------------------------------------------------
Total benefits and expenses 101,179 101,057 99,049
- -------------------------------------------------------------------------------
Income before income taxes 47,649 42,324 42,132
Income taxes 16,471 14,640 14,745
- -------------------------------------------------------------------------------
Net income $ 31,178 $ 27,684 $ 27,387
- -------------------------------------------------------------------------------
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF STOCKHOLDER'S EQUITY
Three years ended December 31, 1997
(thousands)
Additional Net Unrealized
Capital Paid-In Gains (Losses) Retained
Stock Capital on Investments Earnings Total
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 $2,000 $ 49,000 $ (12,369) $133,090 $171,721
Net income -- -- -- 27,387 27,387
Change in net unrealized
gains (losses) on investments -- -- 27,710 -- 27,710
Cash dividends -- -- -- (8,000) (8,000)
Loss on investment transfer
to parent -- -- -- (235) (235)
- ----------------------------------------------------------------------------------------
Balance, December 31, 1995 2,000 49,000 15,341 152,242 218,583
Net income -- -- -- 27,684 27,684
Change in net unrealized
gains (losses) on investments -- -- (8,404) -- (8,404)
Cash dividends -- -- -- (8,000) (8,000)
- ----------------------------------------------------------------------------------------
Balance, December 31, 1996 2,000 49,000 6,937 171,926 229,863
Net income -- -- -- 31,178 31,178
Change in net unrealized
gains (losses) on investments -- -- 6,238 -- 6,238
Cash dividends -- -- -- (10,000) (10,000)
- ----------------------------------------------------------------------------------------
Balance, December 31, 1997 $2,000 $49,000 $ 13,175 $193,104 $257,279
- ----------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS Years ended Dec. 31,
1997 1996 1995
(thousands)
- --------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $31,178 $27,684 $27,387
Adjustments to reconcile net income to net
cash provided by operating activities:
Policy loan issuance, excluding universal
life-type insurance (3,073) (2,473) (2,093)
Policy loan repayment, excluding universal
life-type insurance 1,897 1,571 881
Change in accrued investment income 863 1,504 (1,055)
Change in deferred policy acquisition
costs, net (7,431) (9,087) (11,017)
Change in liabilities for future policy
benefits for traditional life, disability income
and long-term care insurance 5,131 2,861 1,931
Change in policy claims and other
policyholders' funds 858 (489) 427
Deferred income tax benefit (960) (2,095) (1,301)
Change in other liabilities 3,468 4,434 2,429
(Accretion of discount)
amortization of premium, net (352) (652) (480)
Net realized (gain) loss on investments (547) 1,424 (1,548)
Policyholder and contractholder
charges, non-cash (8,772) (7,831) (6,962)
Other, net (557) (1,781) (508)
- --------------------------------------------------------------------------------
Net cash provided by operating activities $21,703 $15,070 $ 8,091
- --------------------------------------------------------------------------------
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases $ -- $ -- $ (37,540)
Maturities, sinking fund payments and calls 36,511 39,082 34,216
Sales 12,616 14,465 28,905
Fixed maturities available for sale:
Purchases (101,818) (97,370) (133,503)
Maturities, sinking fund payments and calls 84,229 71,939 44,234
Sales 27,055 15,669 8,839
Other investments, excluding policy loans:
Purchases (33,243) (14,802) (1,939)
Sales 14,233 12,659 5,993
Change in amounts due from broker 995 -- --
Change in amounts due to broker 26,047 (6,993) 10,000
- --------------------------------------------------------------------------------
Net cash provided by (used in) investing
activities 66,625 34,649 (40,795)
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Activity related to universal life-type insurance
and investment contracts:
Considerations received 112,732 131,011 159,431
Surrenders and death benefits (251,259) (236,689) (190,695)
Interest credited to account balances 62,294 65,099 68,630
Universal life-type insurance policy loans:
Issuance (4,848) (4,490) (4,870)
Repayment 2,753 3,350 2,946
Cash dividend to parent (10,000) (8,000) (8,000)
- --------------------------------------------------------------------------------
Net cash (used in) provided by financing
activities (88,328) (49,719) 27,442
- --------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents -- -- (5,262)
Cash and cash equivalents at beginning of year -- -- 5,262
- --------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ -- $ -- $ --
- --------------------------------------------------------------------------------
See accompanying notes.
<PAGE>
NOTES TO FINANCIAL STATEMENTS ($ thousands)
1. Summary of significant accounting policies
------------------------------------------
Nature of business
IDS Life Insurance Company of New York (the Company) is engaged in the
insurance and annuity business in the state of New York. The Company's
principal products are deferred annuities and universal life insurance
which are issued primarily to individuals. It offers single premium
and flexible premium deferred annuities on both a fixed and variable
dollar basis. Immediate annuities are offered as well. The Company's
insurance products include universal life (fixed and variable), whole
life, single premium life and term products (including waiver of
premium and accidental death benefits). The Company also markets
disability income and long-term care insurance.
Basis of presentation
The Company is a wholly owned subsidiary of IDS Life Insurance Company
(IDS Life), which is a wholly owned subsidiary of American Express
Financial Corporation (AEFC), which is a wholly owned subsidiary of
American Express Company. The accompanying financial statements have
been prepared in conformity with generally accepted accounting
principles which vary in certain respects from reporting practices
prescribed or permitted by the New York Department of Insurance as
reconciled in Note 11.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Investments
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and
carried at amortized cost. All other fixed maturities and all
marketable equity securities are classified as available for sale and
carried at fair value. Unrealized gains and losses on securities
classified as available for sale are reported as a separate component
of stockholder's equity, net of deferred income taxes.
Realized investment gains or losses are determined on an identified
cost basis.
Prepayments are anticipated on certain investments in mortgage-backed
securities in determining the constant effective yield used to
recognize interest income. Prepayment estimates are based on
information received from brokers who deal in mortgage-backed
securities.
Mortgage loans on real estate are carried at amortized cost less
allowances for mortgage loan losses. The estimated fair value of the
mortgage loans is determined by a discounted cash flow analysis using
mortgage interest rates currently offered for mortgages of similar
maturities.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------------------
Impairment of mortgage loans is measured as the excess of the loan's
recorded investment over its present value of expected principal and
interest payments discounted at the loan's effective interest rate, or
the fair value of collateral. The amount of the impairment is recorded
in an allowance for mortgage loan losses. The allowance for mortgage
loan losses is maintained at a level that management believes is
adequate to absorb estimated losses in the portfolio. The level of the
allowance account is determined based on several factors, including
historical experience, expected future principal and interest payments,
estimated collateral values, and current and anticipated economic and
political conditions. Management regularly evaluates the adequacy of
the allowance for mortgage loan losses.
The Company generally stops accruing interest on mortgage loans for
which interest payments are delinquent more than three months. Based
on management's judgment as to the ultimate collectibility of
principal, interest payments received are either recognized as income
or applied to the recorded investment in the loan.
The cost of interest rate caps is amortized to investment income over
the life of the contracts and payments received as a result of these
agreements are recorded as investment income when realized. The
amortized cost of interest rate caps is included in other investments.
Policy loans are carried at the aggregate of the unpaid loan balances
which do not exceed the cash surrender values of the related policies.
When evidence indicates a decline, which is other than temporary, in
the underlying value or earning power of individual investments, such
investments are written down to the fair value by a charge to income.
Statements of cash flows
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These
securities are carried principally at amortized cost which approximates
fair value.
Supplementary information to the statements of cash flows for the years
ended December 31 is summarized as follows:
1997 1996 1995
---- ---- ----
Cash paid during the year for:
Income taxes $17,811 $15,247 $15,026
Interest on borrowings 1,026 777 742
Recognition of profits on annuity contracts and insurance policies
Profits on fixed deferred annuities are recognized by the Company over
the lives of the contracts, using primarily the interest method.
Profits represent the excess of investment income earned from
investment of contract considerations over interest credited to
contract owners and other expenses.
The retrospective deposit method is used in accounting for universal
life-type insurance. This method recognizes profits over the lives of
the policies in proportion to the estimated gross profits expected to
be realized.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------------------
Premiums on traditional life, disability income and long-term care
insurance policies are recognized as revenue when due, and related
benefits and expenses are associated with premium revenue in a manner
that results in recognition of profits over the lives of the insurance
policies. This association is accomplished by means of the provision
for future policy benefits and the deferral and subsequent amortization
of policy acquisition costs.
Policyholder and contractholder charges include the monthly cost of
insurance charges and issue and administrative fees. These charges
also include the minimum death benefit guarantee fees received from the
variable life insurance separate accounts. Mortality and expense fees
are charged to the variable annuity and variable life insurance
separate accounts.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales compensation,
policy issue costs, underwriting and certain sales expenses, have been
deferred on insurance and annuity contracts.
The deferred acquisition costs for most single premium deferred
annuities and installment annuities are amortized in relation to
accumulation values and surrender charge revenue. The costs for
universal life-type insurance and certain installment annuities are
amortized as a percentage of the estimated gross profits expected to be
realized on the policies. For traditional life, disability income and
long-term care insurance policies, the costs are amortized over an
appropriate period in proportion to premium revenue.
Liabilities for future policy benefits
Liabilities for universal life-type insurance and deferred annuities
are accumulation values.
Liabilities for fixed annuities in a benefit status are based on
mortality tables with various interest rates ranging from 5% to 9.5%,
depending on year of issue.
Liabilities for future benefits on traditional life insurance are based
on the net level premium method, using anticipated mortality, policy
persistency and interest earning rates. Anticipated mortality rates
are based on established industry mortality tables. Anticipated policy
persistency rates vary by policy form, issue age and policy duration
with persistency on cash value plans generally anticipated to be better
than persistency on term insurance plans. Anticipated interest rates
range from 4% to 10%, depending on policy form, issue year and policy
duration.
Liabilities for future disability income and long-term care policy
benefits include both policy reserves and claim reserves. Policy
reserves are based on the net level premium method, using anticipated
morbidity, mortality, policy persistency and interest earning rates.
Anticipated morbidity and mortality rates are based on established
industry morbidity and mortality tables. Anticipated policy
persistency rates vary by policy form, issue age, policy duration and,
for disability income policies, occupation class. Anticipated interest
rates for disability income and long-term care policy reserves are 3%
to 9.5% at policy issue and grade to ultimate rates of 5% to 7% over 4
to 10 years.
Claim reserves are calculated based on claim continuance tables and
anticipated interest earnings. Anticipated claim continuance rates are
based on a national survey. Anticipated interest rates for claim
reserves for both disability income and long-term care range from 6% to
8%.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------------------
Reinsurance
The maximum amount of life insurance risk retained by the Company on
any one life is $750 of life and waiver of premium benefits plus $50 of
accidental death benefits. The maximum amount of disability income
risk retained by the Company on any one life is $6 of monthly benefit
for benefit periods longer than three years. The excesses are
reinsured with other life insurance companies on a yearly renewable
term basis. Long-term care policies are primarily reinsured on a
coinsurance basis.
Federal income taxes
The Company's taxable income is included in the consolidated federal
income tax return of American Express Company. The Company provides
for income taxes on a separate return basis, except that, under an
agreement between AEFC and American Express Company, tax benefit is
recognized for losses to the extent they can be used on the
consolidated tax return. It is the policy of AEFC and its subsidiaries
that AEFC will reimburse subsidiaries for all tax benefits.
Included in other liabilities at December 31, 1997 and 1996 are $5,026
and $5,161, respectively, payable to IDS Life for federal income taxes.
Separate account business
The separate account assets and liabilities represent funds held for
the exclusive benefit of the variable annuity and variable life
insurance contract owners. The Company receives mortality and expense
risk fees from the variable annuity separate accounts.
The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the separate accounts
will not be affected by future variations in the actual life expectancy
experience of the annuitants and the beneficiaries from the mortality
assumptions implicit in the annuity contracts. The Company makes
periodic fund transfers to, or withdrawals from, the separate accounts
for such actuarial adjustments for variable annuities that are in the
benefit payment period. For variable life insurance, the Company
guarantees that the rates at which insurance charges and administrative
fees are deducted from contract funds will not exceed contractual
maximums. The Company also guarantees that the death benefit will
continue payable at the initial level regardless of investment
performance so long as minimum premium payments are made.
Reclassifications
Certain 1996 and 1995 amounts have been reclassified to conform to the
1997 presentation.
<PAGE>
2. Investments
-----------
Fair values of investments in fixed maturities represent quoted market
prices and estimated values when quoted prices are not available.
Estimated values are determined by established procedures involving,
among other things, review of market indices, price levels of current
offerings of comparable issues, price estimates and market data from
independent brokers and financial files.
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1997 are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- ---- ----- ------ -----
U.S. Government agency
obligations $ 3,690 $ 253 $ -- $ 3,943
Corporate bonds and
obligations 476,108 27,361 444 503,025
Mortgage-backed securities 55,853 452 294 56,011
------- ------ --- -------
$535,651 $28,066 $738 $562,979
======= ====== === =======
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ ---- ----- ------ -----
State and municipal
obligations $ 104 $ 10 $ -- $ 114
Corporate bonds and
obligations 281,555 14,272 1,635 294,192
Mortgage-backed securities 301,303 8,253 286 309,270
------- ------ ----- -------
$582,962 $22,535 $1,921 $603,576
======= ====== ===== =======
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1996 are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- ---- ----- ------ -----
U.S. Government agency
obligations $ 4,498 $ 144 $ -- $ 4,642
Corporate bonds and
obligations 523,807 23,060 2,964 543,903
Mortgage-backed securities 57,507 409 1,826 56,090
------- ------ ----- -------
$585,812 $23,613 $4,790 $604,635
======= ====== ===== =======
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ --------- ---------- ---------- -----
State and municipal
obligations $ 105 $ 10 $ -- $ 115
Corporate bonds and
obligations 260,966 8,857 1,181 268,642
Mortgage-backed securities 329,537 5,788 2,459 332,866
------- ------ ----- -------
$590,608 $14,655 $3,640 $601,623
======= ====== ===== =======
<PAGE>
2. Investments (continued)
-----------------------
The amortized cost and fair value of investments in fixed maturities at
December 31, 1997 by contractual maturity are shown below. Expected
maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call
or prepayment penalties.
Amortized Fair
Held to maturity Cost Value
---------------- --------- -----
Due in one year or less $18,376 $ 18,593
Due from one to five years 84,712 89,432
Due from five to ten years 309,104 325,967
Due in more than ten years 67,606 72,976
Mortgage-backed securities 55,853 56,011
------- -------
$535,651 $562,979
======= =======
Amortized Fair
Available for sale Cost Value
------------------ --------- -----
Due in one year or less $12,635 $ 12,747
Due from one to five years 39,808 42,497
Due from five to ten years 139,686 145,567
Due in more than ten years 89,530 93,495
Mortgage-backed securities 301,303 309,270
------- -------
$582,962 $603,576
======= =======
During the years ended December 31, 1997, 1996 and 1995, fixed
maturities classified as held to maturity were sold with amortized cost
of $12,737, $14,507 and $27,971, respectively. Net gains and losses on
these sales were not significant. The sale of these fixed maturities
was due to significant deterioration in the issuers' creditworthiness.
Fixed maturities available for sale were sold during 1997 with proceeds
of $27,055 and gross realized gains and losses of $461 and $309,
respectively. Fixed maturities available for sale were sold during
1996 with proceeds of $15,669 and gross realized gains and losses of
$28 and $1,541, respectively. Fixed maturities available for sale were
sold during 1995 with proceeds of $8,839 and gross realized gains and
losses of $nil and $74, respectively.
At December 31, 1997, bonds carried at $259 were on deposit with the
state of New York as required by law.
<PAGE>
2. Investments (continued)
-----------------------
At December 31, 1997, investments in fixed maturities comprised
85 percent of the Company's total invested assets. These securities
are rated by Moody's and Standard & Poor's (S&P), except for securities
carried at approximately $117 million which are rated by AEFC internal
analysts using criteria similar to Moody's and S&P. A summary of
investments in fixed maturities, at amortized cost, by rating on
December 31 is as follows:
Rating 1997 1996
--------- ---- ----
Aaa/AAA $ 367,242 $ 396,097
Aa/AA 9,685 13,996
Aa/A 13,646 10,197
A/A 162,275 196,542
A/BBB 81,463 62,488
Baa/BBB 343,519 336,706
Baa/BB 21,519 51,639
Below investment grade 119,264 108,755
--------- ---------
$1,118,613 $1,176,420
========= =========
At December 31, 1997, 96 percent of the securities rated Aaa/AAA are
GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of any
other issuer are greater than one percent of the Company's total
investments in fixed maturities.
At December 31, 1997, approximately 13 percent of the Company's
investments were mortgage loans on real estate. Summaries of mortgage
loans by region of the United States and by type of real estate are as
follows:
December 31, 1997 December 31, 1996
----------------------- -----------------------
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
------ ----- ----------- ----- -----------
West North Central $ 27,833 $ -- $ 23,191 $1,342
East North Central 33,515 -- 33,430 1,708
South Atlantic 34,182 2,750 35,501 --
Middle Atlantic 24,485 -- 22,889 --
Pacific 9,873 -- 12,986 --
Mountain 32,864 6,417 15,425 --
New England 8,624 -- 8,805 --
East South Central 8,698 -- 8,825 --
West South Central 252 -- 265 --
------- ----- ------- -----
180,326 9,167 161,317 3,050
Less allowance for
losses 1,500 -- 1,300 --
------- ----- ------- -----
$178,826 $9,167 $160,017 $3,050
======= ===== ======= =====
December 31, 1997 December 31, 1996
---------------------- ------------------------
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
-------------- ----- ----------- ----- -----------
Apartments $ 68,823 $ -- $ 70,292 $1,708
Department/retail 54,622 6,417 48,476 1,342
stores
Office buildings 25,042 1,650 18,684 --
Industrial buildings 17,975 1,100 11,956 --
Nursing/retirement 6,035 -- 6,477 --
Medical buildings 7,577 -- 5,167 --
Hotels/motels 252 -- 265 --
------- ----- ------- -----
180,326 9,167 161,317 3,050
Less allowance for
losses 1,500 -- 1,300 --
------- ----- ------- -----
$178,826 $9,167 $160,017 $3,050
======= ===== ======= =====
<PAGE>
2. Investments (continued)
-----------------------
Mortgage loan fundings are restricted by state insurance regulatory
authority to 80 percent or less of the market value of the real estate
at the time of origination of the loan. The Company holds the mortgage
document, which gives it the right to take possession of the property
if the borrower fails to perform according to the terms of the
agreement. The fair value of the mortgage loans is determined by a
discounted cash flow analysis using mortgage interest rates currently
offered for mortgages of similar maturities. Commitments to purchase
mortgages are made in the ordinary course of business. The fair value
of the mortgage commitments is $nil.
At December 31, 1997 and 1996, the Company's recorded investment in
impaired loans was $1,299 and $1,327, with allowances of $300 and $300,
respectively. During 1997 and 1996, the average recorded investment in
impaired loans was $1,312 and $1,628, respectively.
The Company recognized $126 and $152 of interest income related to
impaired loans for the years ended December 31, 1997 and 1996,
respectively.
The following table presents changes in the allowance for investment
losses related to all loans:
1997 1996 1995
---- ---- ----
Balance, January 1 $1,300 $ 445 $445
Provision for investment losses 200 855 --
----- ----- ---
Balance, December 31 $1,500 $1,300 $445
===== ===== ===
Net investment income for the years ended December 31 is summarized as
follows:
1997 1996 1995
---- ---- ----
Interest on fixed maturities $ 92,007 $ 95,574 $ 97,092
Interest on mortgage loans 14,228 14,171 13,888
Other investment income 1,715 1,293 1,291
Interest on cash equivalents 91 67 186
------- ------- -------
108,041 111,105 112,457
Less investment expenses 1,767 1,637 1,533
------- ------- -------
$106,274 $109,468 $110,924
======= ======= =======
Net realized gains (losses) on investments for the years ended December
31 is summarized as follows:
1997 1996 1995
---- ---- ----
Fixed maturities $844 $ (572) $1,997
Mortgage loans (200) (855) (487)
Other investments (97) 3 38
---- ------ -----
$547 $(1,424) $1,548
=== ===== =====
Changes in net unrealized appreciation (depreciation) of investments
for the years ended December 31 are summarized as follows:
1997 1996 1995
---- ---- ----
Fixed maturities
available for sale 9,599 (13,215) 43,726
<PAGE>
3. Income taxes
------------
The Company qualifies as a life insurance company for federal income
tax purposes. As such, the Company is subject to the Internal Revenue
Code provisions applicable to life insurance companies.
The income tax expense for the years ending December 31 consists of the
following:
1997 1996 1995
---- ---- ----
Federal income taxes:
Current $16,371 $15,735 $15,146
Deferred (960) (2,095) (1,301)
------ -------- --------
15,411 13,640 13,845
State income taxes-current 1,060 1,000 900
------ ------ ------
Income tax expense $16,471 $14,640 $14,745
====== ====== ======
Increases (decreases) to the federal tax provision applicable to pretax
income based on the statutory
rate are attributable to:
1997 1996 1995
-------------- -------------- -------------
Provision Rate Provision Rate Provision Rate
--------- ---- --------- ---- --------- ----
Federal income taxes based
on the statutory rate $16,677 35.0% $14,814 35.0% $14,746 35.0%
Increases (decreases)
are attributable to:
Tax-excluded interest
and dividend income (569) (1.2) (458) (1.1) (464) (1.1)
State tax, net benefit 689 1.4 650 1.5 585 1.4
Other, net (326) (0.6) (366) (0.8) (122) (0.3)
------ ---- ------ ---- ------ ----
Federal income taxes $16,471 34.6% $14,640 34.6% $14,745 35.0%
====== ==== ====== ==== ====== ====
A portion of life insurance company income earned prior to 1984 was not
subject to current taxation but was accumulated, for tax purposes, in a
"policyholders' surplus account." At December 31, 1997, the Company
had a policyholders' surplus account balance of $798. The
policyholders' surplus account is only taxable if dividends to the
stockholder exceed the stockholder's surplus account or if the Company
is liquidated. Deferred income taxes of $279 have not been established
because no distributions of such amounts are contemplated.
Significant components of the Company's deferred income tax assets and
liabilities as of December 31 are as follows:
1997 1996
Deferred income tax assets:
Policy reserves $28,922 $28,809
Other 5,467 4,018
----- -----
Total deferred income tax assets 34,389 32,827
Deferred income tax liabilities:
Deferred policy acquisition costs 36,594 35,302
Investments 9,240 6,571
------ -------
Total deferred income tax
liabilities 45,834 41,873
------ ------
Net deferred income tax liabilities $11,445 $9,046
====== =====
<PAGE>
3. Income taxes (continued)
------------------------
The Company is required to establish a valuation allowance for any
portion of the deferred income tax assets that management believes will
not be realized. In the opinion of management, it is more likely than
not that the Company will realize the benefit of the deferred tax
assets and, therefore, no such valuation allowance has been established.
4. Stockholder's equity
--------------------
Retained earnings available for distribution as dividends to the parent
are limited to the Company's surplus as determined in accordance with
accounting practices prescribed by the New York Department of
Insurance. All dividend distributions must be approved by the New York
Department of Insurance. Statutory unassigned surplus aggregated
$115,828 and $94,007 as of December 31, 1997 and 1996, respectively
(see Note 3 with respect to the income tax effect of certain
distributions and Note 11 for a reconciliation of net income and
stockholder's equity per the accompanying financial statements to
statutory net income and surplus).
5. Benefit plans
-------------
The Company participates in the American Express Company Retirement
Plan which covers all permanent employees age 21 and over who have met
certain employment requirements. Employer contributions to the plan
are based on participants' age, years of service and total compensation
for the year. Funding of retirement costs for this plan complies with
the applicable minimum funding requirements specified by ERISA. The
Company's share of the total net periodic pension cost was $39, $34 and
$33 in 1997, 1996 and 1995, respectively.
The Company has a "Sales Benefit Plan" which is an unfunded,
noncontributory retirement plan for all eligible financial advisors.
Total plan costs for 1997, 1996 and 1995, which are calculated on the
basis of commission earnings of the individual financial advisors, were
$1,965, $1,474 and $1,392, respectively. Such costs are included in
deferred policy acquisition costs.
The Company also participates in defined contribution pension plans of
American Express Company which cover all employees who have met certain
employment requirements. Company contributions to the plans are a
percent of either each employee's eligible compensation or basic
contributions. Costs of these plans charged to operations in 1997,
1996 and 1995 were $312, $248 and $231, respectively.
The Company participates in defined benefit health care plans of AEFC
that provide health care and life insurance benefits to retired
employees and retired financial advisors. The plans include
participant contributions and service-related eligibility
requirements. Upon retirement, such employees are considered to have
been employees of AEFC. AEFC expenses these benefits and allocates the
expenses to its subsidiaries. Accordingly, costs of such benefits to
the Company are included in employee compensation and benefits and
cannot be identified on a separate company basis.
<PAGE>
6. Incentive plan and related party operating expenses
---------------------------------------------------
The Company maintains a "Persistency Payment Plan." Under the terms of
this plan, financial advisors earn additional compensation based on the
volume and persistency of insurance sales. The total costs for the
plan for 1997, 1996 and 1995 were $1,490, $1,424 and $1,720,
respectively. Such costs are included in deferred policy acquisition
costs.
Charges by IDS Life and AEFC for the use of joint facilities, marketing
services and other services aggregated $11,589, $12,389 and $12,122 for
1997, 1996 and 1995, respectively. Certain of these costs are included
in deferred policy acquisition costs.
7. Commitments and contingencies
-----------------------------
At December 31, 1997 and 1996, traditional life insurance and universal
life-type insurance in force aggregated $4,513,251 and $4,053,561,
respectively, of which $220,798 and $203,963 were reinsured at the
respective year ends.
In addition, the Company has a stop loss reinsurance agreement with IDS
Life covering ordinary life benefits. IDS Life agrees to pay all death
benefits incurred each year which exceed 125 percent of normal claims,
where normal claims are defined in the agreement as .095 percent of the
mean retained life insurance in force. Premiums ceded to IDS Life
amounted to $115, $98 and $85 for the years ended December 31, 1997,
1996 and 1995, respectively. Claim recoveries under the terms of this
reinsurance agreement were $963, $861 and $1,426 in 1997, 1996 and
1995, respectively.
Premiums ceded to reinsurers other than IDS Life amounted to $1,583,
$747 and $667 for the years ended December 31, 1997, 1996 and 1995,
respectively. Reinsurance recovered from reinsurers other than IDS
Life amounted to $1,366, $66 and $576 for the years ended
December 31, 1997, 1996 and 1995.
Reinsurance contracts do not relieve the Company from its primary
obligations to policyholders.
The Company has an agreement to assume a block of extended term life
insurance business. The amount of insurance in force related to this
agreement was $303,263 and $345,943 at December 31, 1997 and 1996,
respectively. The accompanying statement of income includes premiums of
$nil for the years ended December 31, 1997, 1996 and 1995, and decreases
in liabilities for future policy benefits of $1,889, $2,010 and $2,039
related to this agreement for the years ended December 31, 1997, 1996 and
1995, respectively.
8. Lines of credit
---------------
The Company has an available line of credit with AEFC aggregating
$25,000. The line of credit is at 45 basis points over the Federal
Funds rate. A $20,000 line of credit with another bank expired on
June 30, 1997 and the Company did not seek renewal. Outstanding
borrowings under these agreements were $nil at December 31, 1997 and
1996.
9. Derivative financial instruments
--------------------------------
The Company enters into transactions involving derivative financial
instruments to manage its exposure to interest rate risk, including
hedging specific transactions. The Company does not hold derivative
instruments for trading purposes. The Company manages risks associated
with these instruments as described below.
<PAGE>
9. Derivative financial instruments (continued)
--------------------------------------------
Market risk is the possibility that the value of the derivative
financial instruments will change due to fluctuations in a factor from
which the instrument derives its value, primarily an interest rate.
The Company is not impacted by market risk related to derivatives held
for non-trading purposes beyond that inherent in cash market
transactions. Derivatives held for purposes other than trading are
largely used to manage risk and, therefore, the cash flow and income
effects of the derivatives are inverse to the effects of the underlying
transactions.
Credit risk is the possibility that the counterparty will not fulfill
the terms of the contract. The Company monitors credit risk related to
derivative financial instruments through established approval
procedures, including setting concentration limits by counterparty and
industry, and requiring collateral, where appropriate. A vast majority
of the Company's counterparties are rated A or better by Moody's and
Standard & Poor's.
Credit risk related to interest rate caps is measured by replacement
cost of the contracts. The replacement cost represents the fair value
of the instruments.
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid
over the life of the agreement. Notional amounts are not recorded on
the balance sheet. Notional amounts far exceed the related credit
exposure.
The Company's holdings of derivative financial instruments are as
follows:
Notional Carrying Fair Total Credit
December 31, 1997 Amount Amount Value Exposure
----------------- ------ ------ ----- --------
Assets:
Interest rate caps $200,000 $ 970 $ 62 $ 62
======= === == ==
December 31, 1996
-----------------
Assets:
Interest rate caps $250,000 $1,374 $832 $832
======= ===== === ===
The fair values of derivative financial instruments are based on market
values, dealer quotes or pricing models. The interest rate caps expire
on various dates through 2000.
Interest rate caps are used to manage the Company's exposure to
interest rate risk. These instruments are used primarily to protect
the margin between interest rates earned on investments and the
interest rates credited to related annuity contract holders.
10. Fair values of financial instruments
------------------------------------
The Company discloses fair value information for most on- and
off-balance sheet financial instruments for which it is practicable to
estimate that value. Fair values of life insurance obligations,
receivables and all non-financial instruments, such as deferred
acquisition costs, are excluded. Off-balance sheet intangible assets,
such as the value of the field force, are also excluded. Management
believes the value of excluded assets and liabilities is significant.
The fair value of the Company, therefore, cannot be estimated by
aggregating the amounts presented.
<PAGE>
10. Fair values of financial instruments (continued)
------------------------------------------------
1997 1996
------------------ -----------------
Carrying Fair Carrying Fair
Financial Assets Amount Value Amount Value
---------------- ------ ----- ------ -----
Investments:
Fixed maturities (Note 2):
Held to maturity $ 535,651 $ 562,979 $585,812 $604,635
Available for sale 603,576 603,576 601,623 601,623
Mortgage loans on real estate 178,826 187,992 160,017 164,444
(Note 2)
Other:
Derivative financial 970 62 1,374 832
instruments (Note 9)
Separate accounts assets (Note 1) 1,236,759 1,236,759 950,018 950,018
Financial Liabilities
Future policy benefits for
fixed annuities 880,809 852,391 979,030 946,359
Separate account liabilities 1,136,408 1,086,565 880,160 838,492
At December 31, 1997 and 1996, the carrying amount and fair value of
future policy benefits for fixed annuities exclude life
insurance-related contracts carried at $78,853 and $72,252,
respectively, and policy loans of $4,821 and $3,672, respectively. The
fair value of these benefits is based on the status of the annuities at
December 31, 1997 and 1996. The fair value of deferred annuities is
estimated as the carrying amount less any surrender charges and related
loans. The fair value for annuities in non-life contingent payout
status is estimated as the present value of projected benefit payments
at rates appropriate for contracts issued in 1997 and 1996.
At December 31, 1997 and 1996, the fair value of liabilities related to
separate accounts is estimated as the carrying amount less applicable
surrender charges and less variable insurance contracts carried at
$100,351and $69,859, respectively.
<PAGE>
11. Statutory insurance accounting practices
----------------------------------------
Reconciliations of net income for 1997, 1996 and 1995 and stockholder's
equity at December 31, 1997 and 1996, as shown in the accompanying
financial statements, to that determined using statutory accounting
practices are as follows:
1997 1996 1995
---- ---- ----
Net income, per accompanying
financial statements $31,178 $27,684 $27,387
Deferred policy acquisition costs (7,432) (9,087) (11,017)
Adjustments of future policy
benefit liabilities (4,928) (9,683) (10,655)
Deferred income tax benefit (960) (2,095) (1,301)
Provision for losses on 296 877 --
investments
IMR gain/loss transfer and (119) 1,010 (331)
amortization
Adjustment to separate account 10,267 8,863 20,769
reserves
Other, net 430 116 948
------ ------ ------
Net income, on basis of
statutory accounting practices $28,732 $17,685 $25,800
====== ====== ======
Stockholder's equity, per accompanying
financial statements $257,279 $229,863
Deferred policy acquisition costs (126,614) (119,183)
Adjustments of future policy 9,452 13,458
benefit
liabilities
Deferred income taxes 11,445 9,046
Asset valuation reserve (16,698) (19,446)
Adjustments of separate account 53,456 43,189
liabilities
Adjustments of investments to
amortized cost (20,613) (11,016)
Premiums due, deferred and advance 1,237 1,149
Deferred revenue liability 1,941 1,342
Allowance for losses 1,645 1,349
Non-admitted assets (552) (634)
Interest maintenance reserve (1,551) (1,432)
Other, net (1,463) (281)
-------- --------
Stockholder's equity, on basis of
statutory accounting practices $168,963 $147,404
======= =======
<PAGE>
12. Year 2000 Issue (unaudited)
---------------------------
The Year 2000 issue is the result of computer programs having been
written using two digits rather than four to define a year. Any
programs that have time-sensitive software may recognize a date using "00"
as the year 1900 rather than 2000. This could result in the failure of
major systems or miscalculations, which could have a material impact on
the operations of the Company. All of the systems used by the Company are
maintained by AEFC and are utilized by multiple subsidiaries and
affiliates of AEFC. The Company's business is heavily dependent upon
AEFC's computer systems and has significant interactions with systems of
third parties.
A comprehensive review of AEFC's computer systems and business
processes, including those specific to the Company, has been
conducted to identify the major systems that could be affected by the
Year 2000 issue. Steps are being taken to resolve any potential
problems including modification to existing software and the purchase
of new software. These measures are scheduled to be completed and
tested on a timely basis. AEFC's goal is to complete internal remediation
and testing of each system by the end of 1998 and to continue compliance
efforts through 1999.
AEFC is evaluating the Year 2000 readiness of advisors and other third
parties whose system failures could have an impact on the Company's
operations. The potential materiality of any such impact is not known at
this time.
<PAGE>
(REG2)
PART II
UNDERTAKINGS TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission hereto or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
The By-Laws of IDS Life Insurance Company of New York provide that:
To the extent permitted and in the manner prescribed by law, the
Corporation shall indemnify any person made, or threatened to be made,
a party to any action, suit or proceeding, civil or criminal, by reason
of the fact that he, his testator or intestate, is or was Director or
Officer of the Corporation or of any other corporation of any type or
kind, domestic or foreign, which he served in any capacity at the
request of the Corporation, against judgments, fines, amounts paid in
settlement and reasonable expenses (which the Corporation may advance),
including attorneys' fees, actually and necessarily incurred as a
result of such action, suit or proceeding, or any appeal therein.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
REPRESENTATION PURSUANT TO SECTION 26(e) OF THE INVESTMENT COMPANY ACT OF 1940.
The sponsoring insurance company represents that the fees and charges deducted
under the contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by the
insurance company.
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 17 TO REGISTRATION STATEMENT NO.
33-15290
This Post-Effective Amendment No. 17 to Registration Statement No. 33-15290
comprises the following papers and documents:
The facing sheet.
The prospectus consisting of 93 pages.
The undertakings to file reports.
The signatures.
The following exhibits:
1. A. Copies of all exhibits required by paragraph A of instructions for
Exhibits in Form N-8B-2 to the Registration Statement.
(1) Resolution of Board of Directors of IDS Life of New York
authorizing the Trust, adopted September 12, 1985, filed
electronically as Exhibit 1.A.(1) to Registrant's Form N-8B-2
with Post-Effective Amendment No. 11, File No. 33-15290 is
incorporated herein by reference.
(2) Not applicable.
(3) (a) Not applicable.
(b) i) Explanation of New York Sales Agreements, filed
electronically as Exhibit 1.A.(3)(b)(i) to Registrant's
Form N-8B-2 with Post-Effective Amendment No. 11, File
No. 33-15290 is incorporated herein by reference.
ii) Form of Personal Financial Planner's Agreement with IDS
Financial Services Inc., filed electronically as
Exhibit 1.A.(3)(b)(ii) to Registrant's Form N-8B-2 with
Post-Effective Amendment No. 11, File No. 33-15290 is
incorporated herein by reference.
iii) Form of Personal Financial Planner's Agreement with IDS
Life Insurance Company of New York, filed
electronically as Exhibit 1.A.(3)(b)(iii) to
Registrant's Form N-8B-2 with Post-Effective Amendment
No. 11, File No. 33-15290 is incorporated herein by
reference.
<PAGE>
iv) Form of "Field Trainer's" Rider to Personal Financial
Planner's Agreement, filed electronically as Exhibit
1.A.(3)(b)(iv) to Registrant's Form N-8B-2 with
Post-Effective Amendment No. 11, File No. 33-15290 is
incorporated herein by reference.
v) Form of District Manager's Rider to Personal Financial
Planner's Agreement, filed electronically as Exhibit
1.A.(3)(b)(v) to Registrant's Form N-8B-2 with
Post-Effective Amendment No. 11, File No. 33-15290 is
incorporated herein by reference.
vi) Form of "New York District Manager-Insurance" Rider to
Personal Financial Planner's Agreement, filed
electronically as Exhibit 1.A.(3)(b)(vi) to
Registrant's Form N-8B-2 with Post-Effective Amendment
No. 11, File No. 33-15290 is incorporated herein by
reference.
vii) Form of Division Manager's Agreement with IDS Financial
Services Inc., filed electronically as Exhibit
1.A.(3)(b)(vii) to Registrant's Form N-8B-2 with
Post-Effective Amendment No. 11, File No. 33-15290 is
incorporated herein by reference.
viii)Form of "New York Division Manager-Insurance" Rider to
Division Manager's Agreement with IDS Financial
Services Inc., filed electronically as Exhibit
1.A.(3)(b)(viii) to Registrant's Form N-8B-2 with
Post-Effective Amendment No. 11, File No. 33-15290 is
incorporated herein by reference.
(c) Flexible Premium Variable Life Insurance Compensation: IDS
Life of New York, filed electronically as Exhibit 1.A.(3)(c)
to Registrant's Form N-8B-2 with Post-Effective Amendment
No. 11, File No. 33-15290 is incorporated herein by
reference.
(4) Not applicable.
(5) Flexible Premium Variable Life Insurance Policy, dated April 1,
1987, filed electronically as Exhibit 1.A.(5) to Registrant's
Form N-8B-2 with Post-Effective Amendment No. 11, File No.
33-15290 is incorporated herein by reference.
(6) (a) Certificate of Amendment of the Certificate of Incorporation
of IDS Life Insurance Company of New York, filed
electronically as Exhibit 1.A.(6)(a) to Registrant's Form
N-8B-2 with Post-Effective Amendment No. 11, File No.
33-15290 is incorporated herein by reference.
<PAGE>
(b) Amended Bylaws of IDS Life Insurance Company of New York,
dated May 1992, filed electronically as Exhibit 1.A.(6)(b)
to Post-Effective Amendment No. 12, File No. 33-15290 is
incorporated herein by reference.
(7) Not applicable.
(8) (a) Investment Management and Services Agreement between IDS
Life Insurance Company and IDS Life Series Fund, Inc., dated
December 17, 1985, filed electronically as Exhibit
1.A.(8)(a) to Registrant's Form N-8B-2 with Post-Effective
Amendment No. 11, File No. 33-15290 is incorporated herein
by reference.
(b) Investment Advisory Agreement between IDS Life Insurance
Company (IDS Life) and IDS/American Express Inc. (IDS),
dated July 11, 1984, filed electronically as Exhibit
1.A.(8)(b) to Registrant's Form N-8B-2 with Post-Effective
Amendment No. 11, File No. 33-15290 is incorporated herein
by reference.
(c) Reference Trust Indenture among Shearson Lehman Brothers
Inc., the Bank of New York and Standard & Poor's
Corporation, dated August 4, 1986, filed electronically as
Exhibit 1.A.(8)(c) to Registrant's Form N-8B-2 with
Post-Effective Amendment No. 11, File No. 33-15290 is
incorporated herein by reference.
(d) Standard Terms and Conditions of Trust, effective August 4,
1986, filed electronically as Exhibit 1.A.(8)(d) to
Registrant's Form N-8B-2 with Post-Effective Amendment No.
11, File No. 33-15290 is incorporated herein by reference.
(9) None.
(10) Application form for the Flexible Premium Variable Life Insurance
Policy, filed electronically as Exhibit 1.A.(10) to Registrant's
Form N-8B-2 with Post-Effective Amendment No. 11, File No.
33-15290 is incorporated herein by reference.
(11) Description of Transfer and Redemption Procedures and Method of
Conversion to Fixed Benefit Policies, filed electronically as
Exhibit 1.A.(11) to Registrant's Form N-8B-2 with Post-Effective
Amendment No. 11, File No. 33-15290 is incorporated herein by
reference.
B. (1) Not applicable.
(2) Not applicable.
C. Not applicable.
<PAGE>
2. Opinion of counsel is filed electronically herewith.
3. Financial Statement Schedules are filed electronically herewith.
Schedule I Consolidated Summary of Investments other than Investments
in Related Parties
Schedule II Supplementary Insurance Information
Schedule IV Reinsurance
Schedule V Valuation and Qualifying Accounts
Report of Independent Auditors dated February 5, 1998.
All other schedules to the consolidated financial statements required by
Article 7 of Regulation S-X are not required under the related instructions
or are inapplicable and, therefore, have been omitted.
4. Not applicable.
5. Financial Data Schedules are filed electronically herewith.
6. Actuarial Opinion of Eugene C. Chen is filed electronically herewith.
7. (a) Written actuarial consent of Eugene C. Chen is filed electronically
herewith.
(b) Written auditor consent of Ernst & Young LLP is filed electronically
herewith.
(c) Power of Attorney to sign amendments to this Registration Statement
dated March 26, 1997, filed as Exhibit 7(d) to Registrant's Form
N-8B-2 with Post-Effective Amendment No. 15, File No. 33-15290 is
incorporated herein by reference.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 IDS Life Insurance Company of New York, on behalf of the
Registrant, certifies that it meets all of the requirements for effectiveness of
this Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on behalf of the Registrant by the undersigned, thereunto
duly authorized, in this City of Minneapolis, and State of Minnesota on the 29th
day of April, 1998.
IDS Life of New York Account 8
(Registrant)
By IDS Life Insurance Company of New York
(Sponsor)
By /s/ Richard W. Kling*
Richard W. Kling, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed by the following persons in the
capacities indicated on the 29th day of April, 1998:
Signature Title
/s/ Richard W. Kling* Director, Chairman of the
Richard W. Kling Board and President
/s/ John C. Boeder* Director
John C. Boeder
/s/ Roger C. Corea* Director
Roger C. Corea
/s/ Charles A. Cuccinello* Director
Charles A. Cuccinello
/s/ Darlene S. Farron* Treasurer
Darlene S. Farron
/s/ Robert A. Hatton* Director, Vice President
Robert A. Hatton and Chief Operating Officer
/s/ Edward Landes* Director
Edward Landes
<PAGE>
Signature Title
/s/ Thomas V. Nicolosi* Director
Thomas V. Nicolosi
/s/ Stephen P. Norman* Director
Steven P. Norman
/s/ Carl Platou* Director
Carl Platou
/s/ Gordon H. Ritz* Director
Gordon H. Ritz
/s/ Richard M. Starr* Director
Richard M. Starr
/s/ Michael R. Woodward* Director
Michael R. Woodward
*Signed pursuant to Power of Attorney dated March 26, 1997 filed as Exhibit No.
7(d) to Registrant's Registration Statement No. 33-15290 is incorporated herein
by reference.
By: ________________________________
Mary Ellyn Minenko
IDS Life of New York Account 8
Registration No. 33-15290/811-5213
Exhibit Index
2. Opinion of counsel
3. Financial Statement Schedules
5. Financial Data Schedules
6. Opinion of Actuary
7(a) Consent of Actuary
7(b) Consent of Independent Auditors
April 29, 1998
IDS Life Insurance Company of New York
20 Madison Avenue Ext.
Albany, NY 12203
RE: IDS Life of New York Account 8, Form S-6
Post-Effective Amendment No. 17
File No. 33-15290/811-5213
Ladies and Gentlemen:
I am familiar with the establishment of the IDS Life of New York Account 8
("Account"), which is a separate account of IDS Life Insurance Company of New
York ("Company") established by the Company's Board of Directors according to
applicable insurance law. I also am familiar with the above-referenced
Registration Statement filed by the Company on behalf of the Account with the
Securities and Exchange Commission.
I have made such examination of law and examined such documents and records as
in my judgment are necessary and appropriate to enable me to give the following
opinion:
1. The Company is duly incorporated, validly existing and in good standing
under applicable state law and is duly licensed or qualified to do
business in each jurisdiction where it transacts business. The Company
has all corporate powers required to carry on its business and to issue
the contracts.
2. The Account is a validly created and existing separate account of the
Company and is duly authorized to issue the securities registered.
3. The contracts issued by the Company during the past fiscal year, when
offered and sold in accordance with the prospectus contained in the
Registration Statement and in compliance with applicable law, were
legally issued and represent binding obligations of the Company in
accordance with their terms.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely
Mary Ellyn Minenko
Senior Counsel
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company of New York
We have audited the financial statements of IDS Life Insurance Company of New
York (a wholly owned subsidiary of IDS Life Insurance Company) as of December
31, 1997 and 1996, and for each of the three years in the period ended December
31, 1997 and have issued our report thereon dated February 5, 1998 (included
elsewhere in this Registration Statement). Our audits also included the
financial statement schedules listed in the index to financial statement
schedules of this Registration Statement. These schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Ernst & Young LLP
Minneapolis, Minnesota
February 5, 1998
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1997
- -----------------------------------------------------------------------------
Column A Column B Column C Column D
Type of Investment Cost Value Amount at which
shown in the
balance sheet
- -----------------------------------------------------------------------------
Fixed maturities:
Held to maturity:
United States Government and
government agencies and
authorities (a) $ 59,543 $ 59,954 $ 59,543
All other corporate bonds 476,108 503,025 476,108
---------- ----------- ----------------
Total held to maturity 535,651 562,979 535,651
Available for sale:
United States Government and
government agencies and
authorities (b) 293,815 301,506 301,506
States, municipalities and
political subdivisions 104 114 114
All other corporate bonds 289,043 301,956 301,956
---------- ----------- ----------------
Total available for sale 582,962 603,576 603,576
Mortgage loans on real estate 178,826 XXXXXXXXX 178,826
Policy loans 23,349 XXXXXXXXX 23,349
Other investments 970 XXXXXXXXX 970
---------- ----------------
Total investments $ 1,321,758 $XXXXXXXXX $ 1,342,372
========== ================
(a)- Includes mortgage-backed securities with a cost and market value of
$55,853 and $56,011, respectively.
(b)- Includes mortgage-backed securities with a cost and market value of
$293,815 and $301,506, respectively.
(c)- Includes mortgage-backed securities with a cost and market value
of $7,488 and $7,764, respectively.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1997
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other Premium Net Benefits, Amortization Other Premiums
policy policy premiums policy revenue investment claims, of deferred operating written
acquisition benefits, claims income* losses and policy expenses*
cost losses, and settlement acquisition
claims and benefits expenses costs
loss payable
expenses
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $68,386 $964,483 $ - $ 1,848 $ - $ 89,268 $ 495 $ 12,266 $ 4,653 N/A
Life, DI and
Long-term Care
Insurance 58,228 198,213 - 2,165 12,376 17,006 10,969 4,935 5,567 N/A
- -------------------------------------------------------------------------------------------------------------------------
Total $126,614 $1,162,696 $ - $ 4,013 $12,376 $106,274 $11,464 $ 17,201 $10,220 N/A
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Allocations of net investment income and other operating expenses are based on
various assumptions and estimates.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1996
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other Premium Net Benefits, Amortization Other Premiums
policy policy premiums policy revenue investment claims, of deferred operating written
acquisition benefits, claims income* losses and policy expenses*
cost losses, and settlement acquisition
claims and benefits expenses costs
loss payable
expenses
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $67,568 $1,054,954$ - $ 1,055 $ - $ 93,319 $ 80 $ 11,257 $ 3,923 N/A
Life, DI and
Long-term Care
Insurance 51,615 187,616 - 2,100 10,931 16,149 10,835 4,814 5,049 N/A
- -----------------------------------------------------------------------------------------------------------
Total $119,183 $1,242,570$ - $ 3,155 $10,931 $109,468 $10,915 $ 16,071 $ 8,972 N/A
- ------------------------------------------------------------------------------------------------------------
</TABLE>
*Allocations of net investment income and other operating expenses are based on
various assumptions and estimates.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1995
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other Premium Net Benefits, Amortization Other Premiums
policy policy premiums policy revenue investment claims, of deferred operating written
acquisition benefits, claims income* losses and policy expenses*
cost losses, and settlement acquisition
claims and benefits expenses costs
loss payable
expenses
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 65,283 $1,109,167$ - $ 2,222 $ - $ 95,323 $ 171 $ 9,138 $ 6,908 N/A
Life, DI and
Long-term Care
Insurance 44,517 178,952 - 1,422 9,280 15,601 9,689 3,947 566 N/A
- -----------------------------------------------------------------------------------------------------------------
Total $ 109,800 $1,288,119$ - $ 3,644 $ 9,280 $110,924 $ 9,860 $ 13,085 $ 7,474 N/A
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
*Allocations of net investment income and other operating expenses are based on
various assumptions and estimates.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE IV - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- ---------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
Gross amount Ceded to other Assumed from Net % of amount
companies other companies Amount assumed to net
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1997
Life insurance in force $ 4,209,990 $ 220,798 $ 303,263 $ 4,292,455 7.07%
===================================================================================================
Premiums:
Life insurance & annuities $ 2,822 $ 346 $ -- $ 2,476 0.00%
DI & long-term care insurance 10,658 759 -- 9,899 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 13,480 $ 1,105 $ 0 $ 12,375 0.00%
===================================================================================================
For the year ended
December 31, 1996
Life insurance in force $ 3,707,618 $ 203,963 $ 345,943 $ 3,849,598 8.99%
===================================================================================================
Premiums:
Life insurance & annuities $ 2,634 $ 222 $ -- $ 2,412 0.00%
DI & long-term care insurance 8,651 132 -- 8,519 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 11,285 $ 354 $ 0 $ 10,931 0.00%
===================================================================================================
For the year ended
December 31, 1995
Life insurance in force $ 3,110,745 $ 163,462 $ 392,106 $ 3,339,389 11.74%
===================================================================================================
Premiums:
Life insurance & annuities $ 2,327 $ 185 $ -- $ 2,142 0.00%
DI & long-term care insurance 7,221 83 -- 7,138 0.00%
- ---------------------------------------------------------------------------------------------------
Total premiums $ 9,548 $ 268 $ 0 $ 9,280 0.00%
===================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- -----------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
---------------------------------
Balance at Charged to
Description Beginning Charged to Other Accounts-Deductions- Balance at End
of Period Costs & Expenses Describe Describe of Period
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1997
- ---------------------------
Reserve for Mortgage Loans . $1,300 $ 200 $ 0 $ 0 $1,500
Reserve for Fixed Maturities $ 49 $ 96 $ 0 $ 0 $ 145
For the year ended
December 31, 1996
- ---------------------------
Reserve for Mortgage Loans . $ 445 $ 855 $ 0 $ 0 $1,300
Reserve for Fixed Maturities $ 26 $ 23 $ 0 $ 0 $ 49
For the year ended
December 31, 1995
- ---------------------------
Reserve for Mortgage Loans . $ 445 $ 0 $ 0 $ 0 $ 445
Reserve for Fixed Maturities $ 0 $ 26 $ 0 $ 0 $ 26
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 80832586
<INVESTMENTS-AT-VALUE> 98849592
<RECEIVABLES> 71815
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 98921407
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (198222)
<TOTAL-LIABILITIES> (198222)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 33946809
<SHARES-COMMON-PRIOR> 24639600
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 98723185
<DIVIDEND-INCOME> 4837078
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (762162)
<NET-INVESTMENT-INCOME> 4074916
<REALIZED-GAINS-CURRENT> 363955
<APPREC-INCREASE-CURRENT> 8252777
<NET-CHANGE-FROM-OPS> 12691648
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12612993
<NUMBER-OF-SHARES-REDEEMED> (3305784)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 30588410
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (762162)
<AVERAGE-NET-ASSETS> 83428980
<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> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLAR
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<PERIOD-TYPE> YEAR
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 603576
<DEBT-CARRYING-VALUE> 535651
<DEBT-MARKET-VALUE> 562979
<EQUITIES> 0
<MORTGAGE> 178826
<REAL-ESTATE> 0
<TOTAL-INVEST> 1342372
<CASH> 0
<RECOVER-REINSURE> 9
<DEFERRED-ACQUISITION> 126614
<TOTAL-ASSETS> 2730177
<POLICY-LOSSES> 1162696
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 4013
<NOTES-PAYABLE> 0
<COMMON> 2000
0
0
<OTHER-SE> 255279
<TOTAL-LIABILITY-AND-EQUITY> 2730177
12376
<INVESTMENT-INCOME> 106274
<INVESTMENT-GAINS> 547
<OTHER-INCOME> 29631
<BENEFITS> 73758
<UNDERWRITING-AMORTIZATION> 17201
<UNDERWRITING-OTHER> 10220
<INCOME-PRETAX> 47649
<INCOME-TAX> 16471
<INCOME-CONTINUING> 31178
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31178
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 1480
<PROVISION-CURRENT> 7485
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 7297
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 1668
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
April 20, 1998
Gentlemen:
This opinion is furnished in connection with Post-effective Amendment No. 17 to
the registration by IDS Life Insurance Company of New York of a Flexible Premium
Variable Life Insurance Policy ("the Policy") under the Securities Act of 1933,
File #33-15290. The prospectus included on Form S-6 in the post-effective
amendment to the registration statement describes the Policy. I am familiar with
the Policy, the post-effective amendment, the registration statement and the
exhibits thereto. In my opinion, the illustrations of Death Benefits, Policy
Values, and Surrender Values included in the section of the prospectus entitled
"illustrations", under the assumptions stated in that section, are consistent
with the provisions of the Policy.
I hereby consent to the use of this opinion as an exhibit to the post-effective
amendment to the registration statement and to the reference of my name under
the heading "Experts" in this prospectus.
Very truly yours,
Eugene C. Chen
Chief Actuary
Albany, New York
April 20, 1998
CONSENT OF ACTUARY
The Board of Directors
IDS Life Insurance Company of New York
I consent to the reference to me under the caption "Experts" and to use the use
of my opinion dated April 20, 1998 on the illustrations used by IDS Life
Insurance Company of New York in the Prospectus for the Flexible Premium
Variable Life Insurance Policy offered by IDS Life Insurance Company of New York
as part of post-effective Amendment #17 to the Registration Statement being
filed under the Securities Act of 1933.
Eugene C. Chen
Chief Actuary
Albany, New York
April 20, 1998
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated February 5, 1998 on the financial statements and
schedules of IDS Life Insurance Company of New York and our report dated March
13, 1998 on the financial statements of IDS Life of New York Account 8 for
Flexible Premium Variable Life Insurance in Post-Effective Amendment No. 17 to
the Registration Statement (Form S-6, No. 33-15290) and related Prospectus for
the registration of the Flexible Premium Variable Life Insurance Policy to be
offered by IDS Life Insurance Company of New York.
Ernst & Young LLP
Minneapolis, Minnesota
April 27, 1998
