ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Independent Auditors' Report
The Board of Directors of Allianz Life Insurance Company of North America and
Contract Owners of Allianz Life Variable Account B:
We have audited the accompanying statements of assets and liabilities of the
sub-accounts of Allianz Life Variable Account B as of December 31, 1996, the
related statements of operations for the year then ended and the statements of
changes in net assets for each of the years in the two-years then ended. These
financial statements are the responsibility of the Variable Account's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Investment
securities held in custody for the benefit of the Variable Account were
confirmed to us by the Franklin Valuemark Funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets and liabilities of the sub-accounts of Allianz
Life Variable Account B at December 31, 1996, the results of their operations
for the year then ended and the changes in their net assets for each of the
years in the two-years then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 24, 1997
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ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements
Statements of Assets and Liabilities
December 31, 1996
(In thousands except per unit data)
U.S.
Money Growth and Precious High Real Estate Government
Market Income Metals Income Securities Securities
Fund Fund Fund Fund Fund Fund
------- ------- ------ ------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Money Market Fund, 375,683 shares, cost $375,683........ $375,683 - - - - -
Growth and Income Fund, 55,678 shares, cost $793,252.... - 977,147 - - - -
Precious Metals Fund, 7,086 shares, cost $103,815....... - - 101,257 - - -
High Income Fund, 28,418 shares, cost $367,146.......... - - - 402,400 - -
Real Estate Securities Fund, 13,634 shares,
cost $217,032.......................................... - - - - 301,991 -
U.S. Government Securities Fund, 55,160 shares,
cost $719,883......................................... - - - - - 743,008
------- ------- ------- ------- ------- -------
Total assets......................................... 375,683 977,147 101,257 402,400 301,991 743,008
------- ------- ------- ------- ------- -------
Liabilities:
Accrued mortality and expense risk charges............... 48 33 8 19 15 31
Accrued administrative charges........................... 6 4 1 2 2 4
------- ------- ------- ------- ------- -------
Total liabilities.................................... 54 37 9 21 17 35
------- ------- ------- ------- ------- -------
Net assets........................................... $375,629 977,110 101,248 402,379 301,974 742,973
======= ======= ======= ======= ======= =======
Contract owners' equity:
Contracts in accumulation period (note 6)................ $374,865 975,004 101,248 401,759 301,930 742,567
Contracts in annuity payment period (note 2)............. 764 2,106 - 620 44 406
------- ------- ------- ------- ------- -------
Total contract owners' equity........................ $375,629 977,110 101,248 402,379 301,974 742,973
======= ======= ======= ======= ======= =======
Accumulation units outstanding........................... 28,060 50,027 6,998 20,736 12,757 44,598
======= ======= ======= ======= ======= =======
Accumulation unit value per unit......................... $13.359 19.490 14.467 19.375 23.668 16.650
======= ======= ======= ======= ======= =======
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Assets and Liabilities (cont.)
December 31, 1996
(In thousands except per unit data)
Templeton
Utility Zero Zero Zero Global Income Income
Equity Coupon Coupon Coupon Securities Securities
Fund Fund - 2000 Fund - 2005 Fund - 2010 Fund Fund
-------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Utility Equity Fund, 60,392 shares, cost $948,947 $1,097,920 - - - - -
Zero Coupon Fund - 2000, 6,855 shares,
cost $95,941.................................... - 104,135 - - - -
Zero Coupon Fund - 2005, 4,492 shares,
cost $66,082.................................... - - 73,443 - - -
Zero Coupon Fund - 2010, 4,357 shares,
cost $66,131.................................... - - - 70,977 - -
Templeton Global Income Securities Fund,
14,609 shares, cost $185,728.................... - - - - 198,981 -
Income Securities Fund,
72,742 shares, cost $1,082,408.................. - - - - - 1,251,888
--------- ------- ------- ------- ------- ---------
Total assets................................... 1,097,920 104,135 73,443 70,977 198,981 1,251,888
--------- ------- ------- ------- ------- ---------
Liabilities:
Accrued mortality and expense risk charges........ 42 9 8 7 12 39
Accrued administrative charges.................... 5 1 1 1 1 5
--------- ------- ------- ------- ------- --------
Total liabilities.............................. 47 10 9 8 13 44
--------- ------- ------- ------- ------- ---------
Net assets..................................... $1,097,873 104,125 73,434 70,969 198,968 1,251,844
========= ======= ======= ======= ======= =========
Contract owners' equity:
Contracts in accumulation period (note 6)......... $1,096,456 104,125 73,434 70,969 198,968 1,248,321
Contracts in annuity payment period (note 2)...... 1,417 - - - - 3,523
--------- ------- ------- ------- ------- ---------
Total contract owners' equity.................. $1,097,873 104,125 73,434 70,969 198,968 1,251,844
========= ======= ======= ======= ======= =========
Accumulation units outstanding.................... 53,086 5,636 3,579 3,297 11,857 57,504
========= ======= ======= ======= ======== ========
Accumulation unit value per unit.................. $20.654 18.475 20.517 21.522 16.781 21.708
========= ======= ======= ======= ======== ========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Assets and Liabilities (cont.)
December 31, 1996
(In thousands except per unit data)
Templeton Templeton Templeton Templeton Templeton
Pacific Rising International Developing Global Global Asset
Growth Dividends Equity Markets Equity Growth Allocation
Fund Fund Fund Fund Fund Fund
------- ------- ------------- ------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Templeton Pacific Growth Fund,
22,370 shares, cost $307,615.................... $330,175 - - - - -
Rising Dividends Fund,
35,399 shares, cost $393,224.................... - 545,147 - - - -
Templeton International Equity Fund,
67,098 shares, cost $853,455.................... - - 1,036,664 - - -
Templeton Developing Markets Equity Fund,
22,377 shares, cost $231,910.................... - - - 259,352 - -
Templeton Global Growth Fund,
39,862 shares, cost $454,602.................... - - - - 550,097 -
Templeton Global Asset Allocation Fund,
4,140 shares, cost $45,904...................... - - - - - 52,122
------- ------- --------- ------- ------- ------
Total assets................................. 330,175 545,147 1,036,664 259,352 550,097 52,122
------- ------- --------- ------- ------- ------
Liabilities:
Accrued mortality and expense risk charges........ 14 18 72 5 28 4
Accrued administrative charges.................... 2 2 9 1 3 1
------- ------- --------- ------- ------- -------
Total liabilities............................ 16 20 81 6 31 5
------- ------- --------- ------- ------- -------
Net assets................................... $330,159 545,127 1,036,583 259,346 550,066 52,117
======= ======= ========= ======= ======= =======
Contract owners' equity:
Contracts in accumulation period (note 6)......... $329,409 544,315 1,035,240 257,584 546,814 51,362
Contracts in annuity payment period (note 2)...... 750 812 1,343 1,762 3,252 755
------- ------- --------- ------- ------- -------
Total contract owners' equity................ $330,159 545,127 1,036,583 259,346 550,066 52,117
======= ======= ========= ======= ======= =======
Accumulation units outstanding.................... 22,061 35,569 64,375 22,423 40,327 4,104
======= ======= ========= ======= ======= =======
Accumulation unit value per unit.................. $14.932 15.303 16.081 11.487 13.560 12.514
======= ======= ========= ======= ======= =======
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Assets and Liabilities (cont.)
December 31, 1996
(In thousands except per unit data)
Templeton
International Mutual Mutual
Small Capital Smaller Discovery Shares Total
Cap Growth Companies Securities Securities All
Fund Fund Fund Fund Fund Funds
------- ----- ------------ ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Small Cap Fund, 12,545 shares, cost $148,931............ $165,591 - - - -
Capital Growth Fund, 3,708 shares, cost $40,307......... - 42,118 - - -
Templeton International Smaller Companies Fund,
1,381 shares, cost $14,403............................. - - 15,534 - -
Mutual Discovery Securities Fund,
1,478 shares, cost $14,879............................. - - - 15,079 -
Mutual Shares Securities Fund,
2,623 shares, cost $26,543............................. - - - - 27,147
------- ------ ------ ------ ------
Total assets........................................ 165,591 42,118 15,534 15,079 27,147 8,737,856
------- ------ ------ ------ ------ ---------
Liabilities:
Accrued mortality and expense risk charges............... 12 7 6 4 5 446
Accrued administrative charges........................... 1 1 1 1 1 56
------- ------ ------ ------ ------ ---------
Total liabilities................................... 13 8 7 5 6 502
------- ------ ------ ------ ------ ---------
Net assets.......................................... $165,578 42,110 15,527 15,074 27,141 8,737,354
======= ====== ====== ====== ====== =========
Contract owners' equity:
Contracts in accumulation period (note 6)................ $165,073 41,883 15,467 14,976 26,991 8,718,760
Contracts in annuity payment period (note 2)............. 505 227 60 98 150 18,594
------- ------ ------ ------ ------ ---------
Total contract owners' equity....................... $165,578 42,110 15,527 15,074 27,141 8,737,354
======= ====== ====== ====== ====== =========
Accumulation units outstanding.......................... 12,784 3,722 1,388 1,471 2,613 508,972
======= ====== ====== ====== ====== =========
Accumulation unit value per unit......................... $12.913 11.254 11.145 10.180 10.330
======= ====== ====== ====== ======
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
===================================================================================================================================
Financial Statements (cont.)
Statements of Operations
For the year ended December 31, 1996
(In thousands)
U.S.
Money Growth and Precious High Real Estate Government
Market Income Metals Income Securities Securities
Fund Fund Fund Fund Fund Fund
-------- ---------- -------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares..................... $ 20,371 20,139 1,477 27,936 9,054 36,122
-------- ------- ------ ------- ------ -------
Expenses:
Mortality and expense risk charges...................... 5,107 11,169 1,463 4,365 2,832 7,067
Administrative charges.................................. 613 1,340 176 524 340 848
-------- ------- ------ ------- ------ -------
Total expenses..................................... 5,720 12,509 1,639 4,889 3,172 7,915
-------- ------- ------ ------- ------ -------
Investment income (loss), net...................... 14,651 7,630 (162) 23,047 5,882 28,207
Realized gains (losses) and unrealized appreciation
(depreciation) on investments:
Realized capital gain distributions on mutual funds.... - 71,329 1,354 1,483 - -
-------- ------- ------ ------- ------ -------
Realized gains (losses) on sales of investments:
Proceeds from sales................................... 451,939 87,838 70,163 101,305 16,530 114,831
Cost of investments sold.............................. (451,939) (72,627) (66,041) (93,324) (13,792) (111,215)
-------- ------- ------ ------- ------ -------
Total realized gains (losses) on sales of
investments, net.................................. - 15,211 4,122 7,981 2,738 3,616
-------- ------- ------ ------- ------ -------
Realized gains (losses) on investments, net........ - 86,540 5,476 9,464 2,738 3,616
Net change in unrealized appreciation (depreciation)
on investments.......................................... - 13,214 (5,135) 8,973 58,128 (18,709)
-------- ------- ------ ------- ------ -------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net... - 99,754 341 18,437 60,866 (15,093)
-------- ------- ------ ------- ------ -------
Net increase (decrease) in net assets from operations.... $ 14,651 107,384 179 41,484 66,748 13,114
======== ======= ====== ======= ====== =======
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Operations (cont.)
For the year ended December 31, 1996
(In thousands)
Templeton Investment
Utility Zero Zero Zero Global Income Grade
Equity Coupon Coupon Coupon Securities Intermediate
Fund Fund - 2000 Fund - 2005 Fund - 2010 Fund Bond Fund
-------- ----------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares.............. $ 59,963 5,915 3,734 3,687 15,325 7,793
-------- ------ ------- ------ ------ -----
Expenses:
Mortality and expense risk charges............... 14,961 1,350 898 890 2,579 1,516
Administrative charges........................... 1,795 162 108 107 310 182
-------- ------ ------- ------ ------ -----
Total expenses.............................. 16,756 1,512 1,006 997 2,889 1,698
-------- ------ ------- ------ ------ -----
Investment income (loss), net............... 43,207 4,403 2,728 2,690 12,436 6,095
Realized gains (losses) and unrealized appreciation
(depreciation) on investments:
Realized capital gain distributions on
mutual funds................................... - 58 - 999 - -
-------- ------ ------- ------ ------ -------
Realized gains (losses) on sales of investments:
Proceeds from sales............................ 298,295 19,016 9,028 33,589 45,486 161,712
Cost of investments sold....................... (264,853) (17,510) (8,221) (31,159) (43,916) (156,449)
-------- ------ ------- ------ ------ -------
Total realized gains (losses) on sales of
investments, net........................... 33,442 1,506 807 2,430 1,570 5,263
-------- ------ ------- ------ ------ --------
Realized gains (losses) on investments, net. 33,442 1,564 807 3,429 1,570 5,263
Net change in unrealized appreciation (depreciation)
on investments.................................. (17,145) (4,982) (4,814) (9,041) 1,397 (8,886)
-------- ------ ------- ------ ------ --------
Total realized gains (losses) and
unrealized appreciation (depreciation)
on investments, net........................ 16,297 (3,418) (4,007) (5,612) 2,967 (3,623)
-------- ------ ------- ------ ------ --------
Net increase (decrease) in net assets
from operations.................................. $ 59,504 985 (1,279) (2,922) 15,403 2,472
======== ====== ======= ====== ====== ========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Operations (cont.)
For the year ended December 31, 1996
(In thousands)
Adjustable Templeton Templeton Templeton
Income U.S. Pacific Rising International Developing
Securities Government Growth Dividends Equity Markets Equity
Fund Fund Fund Fund Fund Fund
-------- ---------- -------- --------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares.............. $ 62,078 12,299 10,182 9,452 23,741 2,088
-------- -------- ------- ------ ------- ------
Expenses:
Mortality and expense risk charges............... 15,271 1,678 4,369 5,805 11,564 2,769
Administrative charges........................... 1,833 201 524 697 1,388 332
-------- -------- ------- ------ ------- ------
Total expenses............................... 17,104 1,879 4,893 6,502 12,952 3,101
-------- -------- ------- ------ ------- ------
Investment income (loss), net................ 44,974 10,420 5,289 2,950 10,789 (1,013)
Realized gains (losses) and unrealized appreciation
(depreciation) on investments:
Realized capital gain distributions on
mutual funds.................................. 10,324 - 5,901 - 29,052 3,862
-------- -------- ------- ------ ------- ------
Realized gains (losses) on sales of investments:
Proceeds from sales........................... 116,053 195,626 125,924 48,263 65,043 29,440
Cost of investments sold...................... (103,909) (201,593) (115,808) (39,102) (57,533) (28,163)
-------- -------- ------- ------ ------- ------
Total realized gains (losses) on sales of
investments, net........................... 12,144 (5,967) 10,116 9,161 7,510 1,277
-------- -------- ------- ------ ------- ------
Realized gains (losses) on investments, net 22,468 (5,967) 16,017 9,161 36,562 5,139
Net change in unrealized appreciation (depreciation)
on investments................................... 45,516 1,206 8,976 84,727 129,022 30,681
-------- -------- ------- ------ ------- ------
Total realized gains (losses) and
unrealized appreciation (depreciation)
on investments, net...................... 67,984 (4,761) 24,993 93,888 165,584 35,820
-------- -------- ------- ------ ------- ------
Net increase (decrease) in net assets
from operations.................................. $112,958 5,659 30,282 96,838 176,373 34,807
======== ======== ======= ====== ======= ======
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Operations (cont.)
For the year ended December 31, 1996
(In thousands)
Templeton Templeton
Templeton Global International Mutual
Global Asset Small Capital Smaller Discovery
Growth Allocation Cap Growth Companies Securities
Fund Fund Fund Fund Fund Fund
------- ---------- ------- ------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares......................... $ 6,984 14 34 - - -
------- ------ ------ ----- ----- ----
Expenses:
Mortality and expense risk charges.......................... 5,483 397 1,212 167 85 16
Administrative charges...................................... 658 48 145 20 10 2
------- ------ ------ ----- ----- ----
Total expenses......................................... 6,141 445 1,357 187 95 18
------- ------ ------ ----- ----- ----
Investment income (loss), net.......................... 843 (431) (1,323) (187) (95) (18)
Realized gains (losses) and unrealized appreciation
(depreciation) on investments:
Realized capital gain distributions on mutual funds........ 6,984 27 3 - - -
------- ------ ------ ----- ----- ----
Realized gains (losses) on sales of investments:
Proceeds from sales....................................... 16,063 2,629 50,761 3,099 3,111 -
Cost of investments sold.................................. (14,521) (2,488) (49,958) (3,075) (3,051) -
------- ------ ------ ----- ----- ----
Total realized gains (losses) on sales of
investments, net...................................... 1,542 141 803 24 60 -
------- ------ ------ ----- ----- ----
Realized gains (losses) on investments, net............ 8,526 168 806 24 60 -
Net change in unrealized appreciation (depreciation)
on investments.............................................. 68,710 5,895 16,477 1,811 1,131 200
------- ------ ------ ----- ----- ----
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net...... 77,236 6,063 17,283 1,835 1,191 200
------- ------ ------ ----- ----- ----
Net increase (decrease) in net assets from operations........ $78,079 5,632 15,960 1,648 1,096 182
======= ====== ====== ===== ===== ====
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Operations (cont.)
For the year ended December 31, 1996
(In thousands)
Mutual
Shares Total
Securities All
Fund Funds
---------- --------
<S> <C> <C>
Investment income:
Dividends reinvested in fund shares................................................................... $ - 338,388
------ ---------
Expenses:
Mortality and expense risk charges.................................................................... 30 103,043
Administrative charges................................................................................ 4 12,367
------ ---------
Total expenses.................................................................................. 34 115,410
------ ---------
Investment income (loss), net................................................................... (34) 222,978
Realized gains (losses) and unrealized appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds................................................... - 131,376
------ ---------
Realized gains (losses) on sales of investments:
Proceeds from sales.................................................................................. - 2,065,744
Cost of investments sold............................................................................. - (1,950,247)
------ ---------
Total realized gains (losses) on sales of investments, net...................................... - 115,497
------ ---------
Realized gains (losses) on investments, net..................................................... - 246,873
Net change in unrealized appreciation (depreciation) on investments.................................... 604 407,956
------ ---------
Total realized gains (losses) and unrealized appreciation (depreciation) on investments, net.... 604 654,829
------ ---------
Net increase (decrease) in net assets from operations.................................................. $570 877,807
====== =========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Changes in Net Assets
For the years ended December 31, 1996 and 1995
(In thousands)
Money Market Fund Growth and Income Fund Precious Metals Fund High Income Fund
---------------- ---------------------- -------------------- ----------------
1996 1995 1996 1995 1996 1995 1996 1995
------- ------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net...... $ 14,651 17,718 7,630 (1,279) (162) 52 23,047 15,167
Realized gains (losses) on
investments, net.................. - - 86,540 21,076 5,476 2,150 9,464 3,298
Net change in unrealized
appreciation (depreciation)
on investments.................... - - 13,214 147,406 (5,135) (2,147) 8,973 27,669
------- ------- ------- ------- ------- ------- ------ ------
Net increase (decrease) in
net assets from operations.... 14,651 17,718 107,384 167,203 179 55 41,484 46,134
------- ------- ------- ------- ------- ------- ------ ------
Contract transactions (note 6):
Purchase payments................... 175,341 190,018 134,960 98,725 20,879 11,049 51,687 47,086
Transfers between funds............. (91,126) (169,358) 35,764 150,088 (5,980) (17,212) 30,106 46,491
Surrenders and terminations......... (120,353) (120,722) (111,266) (73,514) (11,177) (11,728) (43,860) (43,591)
Rescissions......................... (2,971) (5,198) (2,911) (1,783) (321) (326) (691) (1,643)
Other transactions (note 2)......... 152 238 447 240 38 (36) 73 77
------- ------- ------- ------- ------- ------- ------ ------
Net increase (decrease) in
net assets resulting from
contract transactions......... (38,957) (105,022) 56,994 173,756 3,439 (18,253) 37,315 48,420
------- ------- ------- ------- ------- ------- ------ ------
Increase (decrease) in net assets.... (24,306) (87,304) 164,378 340,959 3,618 (18,198) 78,799 94,554
Net assets at beginning of year...... 399,935 487,239 812,732 471,773 97,630 115,828 323,580 229,026
------- ------- ------- ------- ------- ------- ------- ------
Net assets at end of year............ $375,629 399,935 977,110 812,732 101,248 97,630 402,379 323,580
======= ======= ======= ======= ======= ======= ======= =======
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1996 and 1995
(In thousands)
Real Estate U.S. Government Zero Coupon Fund -
Securities Fund Securities Fund Utility Equity Fund 1995
---------------- --------------- ------------------- -----------------
1996 1995 1996 1995 1996 1995 1996 1995
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net....... $ 5,882 3,361 28,207 30,379 43,207 48,876 - 2,395
Realized gains (losses) on
investments, net................... 2,738 1,477 3,616 2,695 33,442 1,589 - 600
Net change in unrealized
appreciation (depreciation)
on investments..................... 58,128 22,517 (18,709) 54,968 (17,145) 255,500 - (597)
------- ------- ------- ------ ------ ------- ---- -------
Net increase (decrease) in
net assets from operations.... 66,748 27,355 13,114 88,042 59,504 305,965 - 2,398
------- ------- ------- ------ ------ ------- ---- -------
Contract transactions (note 6):
Purchase payments.................... 30,999 19,829 42,193 47,766 56,194 73,558 - 1,557
Transfers between funds.............. 27,778 (12,435) 211,454 (5,307) (148,616) 10,721 - (36,522)
Surrenders and terminations.......... (22,133) (17,397) (82,684) (74,423) (174,285) (141,926) - (13,413)
Rescissions.......................... (204) (277) (717) (1,813) (734) (1,891) - (49)
Other transactions (note 2).......... 13 99 379 132 315 537 - 88
------- ------- ------- ------ ------- ------- ---- -------
Net increase (decrease) in
net assets resulting from
contract transactions......... 36,453 (10,181) 170,625 (33,645) (267,126) (59,001) - (48,339)
------- ------- ------- ------ --------- ------- ---- -------
Increase (decrease) in net assets..... 103,201 17,174 183,739 54,397 (207,622) 246,964 - (45,941)
Net assets at beginning of year....... 198,773 181,599 559,234 504,837 1,305,495 1,058,531 - 45,941
------- ------- ------- ------- --------- --------- ---- -------
Net assets at end of year............. $301,974 198,773 742,973 559,234 1,097,873 1,305,495 - -
======= ======= ======= ======= ========= ========= ==== =======
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1996 and 1995
(In thousands)
Zero Coupon Fund - Zero Coupon Fund - Zero Coupon Fund - Templeton Global
2000 2005 2010 Income Securities Fund
---------------- ----------------- ----------------- ----------------------
1996 1995 1996 1995 1996 1995 1996 1995
------- ------ ----- ----- ----- ----- ------- ------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net............. $ 4,403 2,895 2,728 1,752 2,690 1,068 12,436 5,291
Realized gains (losses) on
investments, net......................... 1,564 1,081 807 753 3,429 2,987 1,570 (206)
Net change in unrealized appreciation
(depreciation) on investments............ (4,982) 12,514 (4,814) 13,063 (9,041) 15,696 1,397 22,286
------- ------- ----- ------ ----- ------ ------- ------
Net increase (decrease) in net assets
from operations...................... 985 16,490 (1,279) 15,568 (2,922) 19,751 15,403 27,371
------- ------- ------ ------ ----- ------ ------- ------
Contract transactions (note 6):
Purchase payments.......................... 12,076 16,203 10,095 13,119 12,642 12,239 11,615 13,098
Transfers between funds.................... (5,558) 13,339 (2,776) 4,711 (8,596) 9,807 (19,697) (21,421)
Surrenders and terminations................ (14,126) (10,927) (5,726) (4,654) (7,034) (5,624) (28,371) (29,898)
Rescissions................................ (214) (263) (158) (185) (244) (469) (174) (400)
Other transactions (note 2)................ (3) (17) (14) (23) (13) 177 49 25
------- ------- ------ ------ ----- ------ ------- ------
Net increase (decrease) in net assets
resulting from contract transactions. (7,825) 18,335 1,421 12,968 (3,245) 16,130 (36,578) (38,596)
------- ------- ------ ------ ----- ------ ------- ------
Increase (decrease) in net assets........... (6,840) 34,825 142 28,536 (6,167) 35,881 (21,175) (11,225)
Net assets at beginning of year............. 110,965 76,140 73,292 44,756 77,136 41,255 220,143 231,368
------- ------- ------ ------ ------ ------ ------- -------
Net assets at end of year................... $104,125 110,965 73,434 73,292 70,969 77,136 198,968 220,143
======= ======= ====== ====== ====== ====== ======= =======
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1996 and 1995
(In thousands)
Investment Grade Adjustable U.S. Templeton
Intermediate Bond Fund Income Securities Fund Government Fund Pacific Growth Fund
---------------------- ---------------------- --------------- -------------------
1996 1995 1996 1995 1996 1995 1996 1995
-------- ------ ------- -------- ------- ------ ------- ------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net.... $ 6,095 3,922 44,974 44,301 10,420 9,723 5,289 1,633
Realized gains (losses) on
investments, net................ 5,263 624 22,468 7,100 (5,967) (1,327) 16,017 3,150
Net change in unrealized
appreciation (depreciation)
on investments.................. (8,886) 7,237 45,516 145,457 1,206 6,258 8,976 14,929
-------- ------ -------- ------- ------- ------- ------- ------
Net increase (decrease) in
net assets from operations.. 2,472 11,783 112,958 196,858 5,659 14,654 30,282 19,712
-------- ------ -------- ------- ------- ------- ------- ------
Contract transactions (note 6):
Purchase payments................. 11,116 15,136 152,823 145,910 26,642 43,555 32,634 27,022
Transfers between funds........... (149,196) 364 (37,286) 33,034 (185,683) (75,287) (1,902) (52,319)
Surrenders and terminations....... (14,036) (16,323) (149,073) (125,202) (20,600) (27,666) (37,424) (35,125)
Rescissions....................... (275) (379) (3,237) (3,470) (559) (1,087) (382) (1,057)
Other transactions (note 2)....... 37 (24) 516 670 34 296 108 (45)
-------- ------ -------- -------- ------- ------- ------- ------
Net increase (decrease) in
net assets resulting from
contract transactions....... (152,354) (1,226) (36,257) 50,942 (180,166) (60,189) (6,966) (61,524)
-------- ------ --------- --------- ------- ------- ------- ------
Increase (decrease) in net assets.. (149,882) 10,557 76,701 247,800 (174,507) (45,535) 23,316 (41,812)
Net assets at beginning of year.... 149,882 139,325 1,175,143 927,343 174,507 220,042 306,843 348,655
-------- ------- --------- --------- ------- ------- ------- -------
Net assets at end of year.......... $ - 149,882 1,251,844 1,175,143 - 174,507 330,159 306,843
======== ======= ========= ========= ======= ======= ======= =======
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1996 and 1995
(In thousands)
Templeton Templeton Developing Templeton
Rising Dividends Fund International Equity Fund Markets Equity Fund Global Growth Fund
--------------------- ------------------------- -------------------- ------------------
1996 1995 1996 1995 1996 1995 1996 1995
------- ------ ------- ------ ------ ------ ------- ------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net........ $ 2,950 2,452 10,789 1,998 (1,013) (1,241) 843 (2,008)
Realized gains (losses) on
investments, net.................... 9,161 1,323 36,562 20,155 5,139 (277) 8,526 303
Net change in unrealized
appreciation (depreciation)
on investments...................... 84,727 81,539 129,022 42,587 30,681 3,149 68,710 26,429
------- ------ ------- ------ ------- ------ ------- ------
Net increase (decrease) in
net assets from operations...... 96,838 85,314 176,373 64,740 34,807 1,631 78,079 24,724
------- ------ ------- ------ ------- ------ ------- ------
Contract transactions (note 6):
Purchase payments..................... 51,514 42,756 106,669 99,403 54,987 42,027 139,155 119,490
Transfers between funds............... 24,084 50,303 50,892 (30,418) 36,529 22,865 46,194 46,237
Surrenders and terminations........... (49,247) (35,907) (90,832) (72,338) (16,917) (7,387) (33,945) (15,658)
Rescissions........................... (1,165) (750) (1,605) (2,115) (568) (1,069) (1,728) (1,966)
Other transactions (note 2)........... 111 131 416 59 27 (55) 27 64
------- ------ ------- ------ ------- ------ ------- -------
Net increase (decrease) in
net assets resulting from
contract transactions........... 25,297 56,533 65,540 (5,409) 74,058 56,381 149,703 148,167
------- ------- ------- ------ ------- ------- ------- -------
Increase (decrease) in net assets...... 122,135 141,847 241,913 59,331 108,865 58,012 227,782 172,891
Net assets at beginning of year........ 422,992 281,145 794,670 735,339 150,481 92,469 322,284 149,393
------- ------- --------- ------- ------- ------- ------- -------
Net assets at end of year.............. $545,127 422,992 1,036,583 794,670 259,346 150,481 550,066 322,284
======= ======= ========= ======= ======= ======= ======= =======
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1996 and 1995
(In thousands)
Templeton Global Templeton International
Asset Allocation Fund Small Cap Fund Capital Growth Fund Smaller Companies Fund
--------------------- -------------- ------------------- -----------------------
1996 1995 1996 1995 1996 1995 1996 1995
------ ------ ------ ----- ------ ---- --------- ------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net........... $ (431) 127 (1,323) (25) (187) - (95) -
Realized gains (losses) on
investments, net....................... 168 71 806 - 24 - 60 -
Net change in unrealized appreciation
(depreciation) on investments.......... 5,895 323 16,477 183 1,811 - 1,131 -
------ ------ ------ ----- ------ ---- ------ ---
Net increase (decrease) in
net assets from operations.......... 5,632 521 15,960 158 1,648 - 1,096 -
------ ------ ------ ----- ------ ---- ------ ---
Contract transactions (note 6):
Purchase payments........................ 19,536 5,580 51,827 2,140 13,726 - 5,995 -
Transfers between funds.................. 14,964 9,316 93,997 11,013 28,227 - 9,255 -
Surrenders and terminations.............. (2,138) (1,163) (9,173) (36) (1,326) - (763) -
Rescissions.............................. (139) (27) (459) (19) (185) - (46) -
Other transactions (note 2).............. 28 7 166 4 20 - (10) -
------ ------ ------ ----- ------ ---- ------ ---
Net increase (decrease) in net assets
resulting from contract transactions 32,251 13,713 136,358 13,102 40,462 - 14,431 -
------ ------ ------ ------ ------ ---- ------ ---
Increase (decrease) in net assets......... 37,883 14,234 152,318 13,260 42,110 - 15,527 -
Net assets at beginning of year........... 14,234 - 13,260 - - - - -
------ ------ ------- ------ ------ ---- ------ ---
Net assets at end of year................. $52,117 14,234 165,578 13,260 42,110 - 15,527 -
====== ====== ======= ====== ====== ==== ====== ====
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
====================================================================================================================================
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1996 and 1995
(In thousands)
Mutual Discovery Mutual Shares
Securities Fund Securities Fund Total All Funds
---------------- --------------- ---------------
1996 1995 1996 1995 1996 1995
------ ---- ---- ---- ------ ------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net.................................... $ (18) - (34) - 222,978 188,557
Realized gains (losses) on investments, net...................... - - - - 246,873 68,622
Net change in unrealized appreciation (depreciation)
on investments.................................................. 200 - 604 - 407,956 896,966
------- --- ---- --- --------- ---------
Net increase (decrease) in net assets from operations........ 182 - 570 - 877,807 1,154,145
------- --- ---- --- --------- ---------
Contract transactions (note 6):
Purchase payments................................................. 3,317 - 8,157 - 1,236,779 1,087,266
Transfers between funds........................................... 12,081 - 18,952 - (16,139) (11,990)
Surrenders and terminations....................................... (506) - (537) - (1,047,532) (884,622)
Rescissions....................................................... - - - - (19,687) (26,236)
Other transactions (note 2)....................................... - - (1) - 2,915 2,644
------- --- ---- --- --------- ---------
Net increase (decrease) in net assets resulting
from contract transactions.................................. 14,892 - 26,571 - 156,336 167,062
------- --- ------ --- --------- ---------
Increase (decrease) in net assets.................................. 15,074 - 27,141 - 1,034,143 1,321,207
Net assets at beginning of year.................................... - - - - 7,703,211 6,382,004
------- --- ------ --- --------- ---------
Net assets at end of year.......................................... $15,074 - 27,141 - 8,737,354 7,703,211
======= === ====== === ========= =========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements
December 31, 1996
1. Organization
Allianz Life Variable Account B (Variable Account) is a segregated investment
account of Allianz Life Insurance Company of North America (Allianz Life) and is
registered with the Securities and Exchange Commission as a unit investment
trust pursuant to the provisions of the Investment Company Act of 1940
(as amended). The Variable Account was established on May 31, 1985 and commenced
operations January 24, 1989. Accordingly, it is an accounting entity wherein all
segregated account transactions are reflected.
The Variable Account's assets are the property of Allianz Life and are held for
the benefit of the owners and other persons entitled to payments under variable
annuity contracts issued through the Variable Account and underwritten by
Allianz Life. The assets of the Variable Account, equal to the reserves and
other liabilities of the Variable Account, are not chargeable with liabilities
that arise from any other business which Allianz Life may conduct.
The Variable Account's sub-accounts may invest, at net asset values, in one or
more of the funds of the Franklin Valuemark Funds (FVF), managed by Franklin
Advisers, Inc. or other of its affiliated adviser entities, in accordance with
the selection made by the contract owner. Not all funds are available as
investment options for the products which comprise the Variable Account.
Certain officers and trustees of the FVF are also officers and/or directors of
Franklin Advisers, Inc. and/or Allianz Life.
2. Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investments
Investments of the Variable Account are valued daily at market value using net
asset values provided by Franklin Advisers, Inc.
Realized investment gains include realized gain distributions received from the
respective funds and gains on the sale of fund shares as determined by the
average cost method. Realized gain distributions are reinvested in the
respective funds. Dividend distributions received from the FVF are reinvested in
additional shares of the FVF and are recorded as income to the Variable Account
on the ex-dividend date.
A Fixed Account investment option is available to deferred annuity contract
owners. This account is comprised of equity and fixed income investments which
are part of the general assets of Allianz Life. The liabilities of the Fixed
Account are part of the general obligations of Allianz Life and are not included
in the Variable Account. The guaranteed minimum rate of return on the Fixed
Account is 3%.
The Templeton Global Asset Allocation Fund, Fixed Account and Small Cap Fund
were added as available investment options on May 1, 1995, October 1, 1995 and
November 1, 1995, respectively. The Zero Coupon - 1995 Fund matured and was
closed on December 15, 1995. The Capital Growth Fund and Templeton International
Smaller Companies Fund were added as available investment options on May 1,
1996. The Mutual Discovery Securities Fund and Mutual Shares Securities Fund
were added as available investment options on November 8, 1996.
The Investment Grade Intermediate Bond Fund and Adjustable U.S. Government Fund
were closed on October 25, 1996 when shares of the U.S. Government Securities
Fund were substituted for all shares of both funds.
On May 1, 1995, the Equity Growth Fund name was changed to Growth and Income
Fund. The Global Income Fund name was changed to Templeton Global Income
Securities Fund on May 1, 1996.
Contracts in Annuity Payment Period
Annuity reserves are computed for currently payable contracts according to the
1983 Individual Annuity Mortality Table, using an assumed investment return
(AIR) equal to the AIR of the specific contracts, either 3% or 5%. Charges to
annuity reserves for mortality and risk expense are reimbursed to Allianz Life
if the reserves required are less than originally estimated. If additional
reserves are required, Allianz Life reimburses the account.
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements (cont.)
December 31, 1996
2. Significant Accounting Policies (cont.)
Expenses
Asset Based Expenses
A mortality and expense risk charge is deducted from the Variable Account on a
daily basis equal, on an annual basis, to 1.25% of the daily net assets of the
Variable Account.
An administrative charge is deducted from the Variable Account on a daily basis
equal, on an annual basis, to 0.15% of the daily net assets of the Variable
Account.
Contract Based Expenses
A contract maintenance charge is paid by the contract owner annually from each
deferred annuity contract by liquidating contract units at the end of the
contract year and at the time of full surrender. The amount of the charge is $30
each year. Contract maintenance charges paid by the contract owners during the
years ended December 31, 1996 and 1995 were $4,491,487 and $4,294,361,
respectively. These contract charges are reflected in the Statements of Changes
in Net Assets as other transactions.
A contingent deferred sales charge is deducted from the contract value at the
time of a surrender. This charge applies only to a surrender of purchase
payments received within five years of the date of surrender. For this purpose,
purchase payments are allocated on a first-in, first-out basis. The amount of
the contingent deferred sales charge is calculated by: (a) allocating purchase
payments to the amount surrendered; and (b) multiplying each allocated purchase
payment that has been held under the contract for the period shown below by the
charge shown below:
<TABLE>
<CAPTION>
Valuemark II Valuemark III
--------------------------- ----------------------------
Years Since Payment Charge Years Since Payment Charge
------------------- ------ ------------------- ------
<S> <C> <C>
0-1 5% 0-1 6%
1-2 5% 1-2 5%
2-3 4% 2-3 4%
3-4 3% 3-4 3%
4-5 1.5% 4-5 1.5%
5+ 0% 5+ 0%
</TABLE>
and (c) adding the products of each multiplication in (b) above.
A deferred annuity contract owner may, not more frequently than once annually on
a cumulative basis, make a surrender each contract year of fifteen percent (15%)
of purchase payments paid, less any prior surrenders, without incurring a
contingent deferred sales charge. For a partial surrender, the contingent
deferred sales charge will be deducted from the remaining contract value, if
sufficient; otherwise it will be deducted from the amount surrendered. Total
contingent deferred sales charges paid by the contract owners for the years
ended December 31, 1996 and 1995 were $10,529,337 and $12,373,225,
respectively.
Currently, twelve transfers are permitted each contract year. Thereafter, the
fee is $25 per transfer, or 2% of the amount transferred, if less. Currently,
transfers associated with the dollar cost averaging program are not counted.
Total transfer charges paid by the contract owners for the years ended
December 31, 1996 and 1995 were $93,255 and $119,180, respectively. Transfer
charges are reflected in the Statements of Changes in Net Assets as other
transactions. Net transfers to the Fixed Account for the years ended December
31, 1996 and 1995 were $16,138,672 and $11,989,631, respectively.
Premium taxes or other taxes payable to a state or other governmental entity
will be charged against the contract values. Allianz Life may, in its sole
discretion, pay taxes when due and deduct that amount from the contract value at
a later date. Payment at an earlier date does not waive any right Allianz Life
may have to deduct such amounts at a later date.
On certain contracts, a systematic withdrawal plan is available which allows an
owner to withdraw up to 9% of purchase payments less prior surrenders
annually, paid monthly or quarterly, without incurring a contingent deferred
sales charge. The exercise of the systematic withdrawal plan in any contract
year replaces the 15% penalty free privilege for that year.
A rescission is defined as a contract that is returned to the Company by the
Contract Owner and canceled within the free-look period, generally within 10
days.
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements (cont.)
December 31, 1996
3. Capitalization
Allianz Life provides capital for the establishment of new funds as investment
options of the Variable Account. The capitalization transactions were as follows
during the years ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
Capitalization Date of Market Value Date of
Fund Amount Capitalization at Withdrawal Withdrawal
- ------------------------------------------------- -------------- -------------- ------------- ----------
<S> <C> <C> <C> <C>
Templeton Global Asset Allocation Fund........... $500,000 4/18/95 $525,500 12/21/95
Small Cap Fund................................... $250,000 9/18/95 $313,250 5/29/96
Capital Growth Fund.............................. $250,000 4/30/96 $281,250 11/7/96
Templeton International Smaller Companies Fund... $250,000 4/30/96 $269,250 11/7/96
Mutual Discovery Securities Fund................. $250,000 11/8/96 $252,250 12/23/96
Mutual Shares Securities Fund.................... $250,000 11/8/96 $255,750 12/23/96
</TABLE>
4. Investment Transactions
The sub-account purchases of fund shares, including reinvestment of dividend
distributions, were as follows during the year ended December 31, 1996 (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Money Market Fund................................. $ 427,380
Growth and Income Fund............................ 223,414
Precious Metals Fund.............................. 74,746
High Income Fund.................................. 162,983
Real Estate Securities Fund....................... 58,740
U.S. Government Securities Fund................... 313,392
Utility Equity Fund............................... 73,703
Zero Coupon Fund - 2000........................... 15,596
Zero Coupon Fund - 2005........................... 13,140
Zero Coupon Fund - 2010........................... 33,995
Templeton Global Income Securities Fund........... 21,233
Investment Grade Intermediate Bond Fund........... 15,348
Income Securities Fund............................ 134,521
Adjustable U.S. Government Fund................... 25,745
Templeton Pacific Growth Fund..................... 130,000
Rising Dividends Fund............................. 76,266
Templeton International Equity Fund............... 169,986
Templeton Developing Markets Equity Fund.......... 106,281
Templeton Global Growth Fund...................... 173,466
Templeton Global Asset Allocation Fund............ 34,368
Small Cap Fund.................................... 185,786
Capital Growth Fund............................... 43,381
Templeton International Smaller Companies Fund.... 17,454
Mutual Discovery Securities Fund.................. 14,879
Mutual Shares Securities Fund..................... 26,453
</TABLE>
5. Federal Income Taxes
Operations of the Variable Account form a part of, and are taxed with,
operations of Allianz Life, which is taxed as a life insurance company under the
Internal Revenue Code.
Allianz Life does not expect to incur any federal income taxes in the operation
of the Variable Account. If, in the future, Allianz Life determines that the
Variable Account may incur federal income taxes, it may then assess a charge
against the Variable Account for such taxes.
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements (cont.)
December 31, 1996
6. Contract Transactions - Accumulation Unit Activity (In thousands)
Transactions in units for each fund for the years ended December 31, 1996 and
1995 were as follows:
<TABLE>
<CAPTION>
Growth U.S. Zero Zero
Money and Precious High Real Estate Government Utility Coupon Coupon
Market Income Metals Income Securities Securities Equity Fund - Fund -
Fund Fund Fund Fund Fund Fund Fund 1995 2000
------ ------ ----- ----- ----------- ---------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding
at December 31, 1994............ 39,437 35,695 8,285 15,679 11,645 36,490 70,082 3,195 4,953
Contract transactions:
Purchase payments................ 15,069 6,403 796 2,877 1,233 3,115 4,303 106 966
Transfers between funds.......... (13,495) 9,757 (1,290) 2,959 (792) (266) 736 (2,398) 800
Surrenders and terminations...... (9,580) (4,859) (846) (2,661) (1,077) (4,916) (8,372) (905) (636)
Rescissions...................... (410) (118) (24) (102) (17) (118) (113) (3) (16)
Other transactions............... 19 15 (2) 4 6 8 33 5 (1)
------ ------ ------ ----- ------ ------ ------ ----- -----
Net increase (decrease)
in accumulation units
resulting from contract
transactions.............. (8,397) 11,198 (1,366) 3,077 (647) (2,177) (3,413) (3,195) 1,113
------ ------ ----- ----- ------ ------ ------ ----- -----
Accumulation units outstanding
at December 31, 1995............. 31,040 46,893 6,919 18,756 10,998 34,313 66,669 - 6,066
====== ====== ===== ====== ====== ====== ====== ===== =====
Contract transactions:
Purchase payments................ 13,261 7,454 1,298 2,862 1,562 2,609 2,847 - 672
Transfers between funds.......... (6,879) 1,961 (484) 1,598 1,332 12,819 (7,585) - (308)
Surrenders and terminations...... (9,147) (6,143) (717) (2,446) (1,125) (5,122) (8,824) - (782)
Rescissions...................... (226) (163) (20) (38) (11) (44) (37) - (12)
Other transactions............... 11 25 2 4 1 23 16 - -
------ ------ ----- ----- ----- ------ ------ ----- -----
Net increase (decrease)
in accumulation units
resulting from contract
transactions.............. (2,980) 3,134 79 1,980 1,759 10,285 (13,583) - (430)
------ ------ ----- ----- ----- ------ ------- ----- -----
Accumulation units outstanding
at December 31, 1996............. 28,060 50,027 6,998 20,736 12,757 44,598 53,086 - 5,636
====== ====== ===== ====== ====== ====== ====== ===== =====
</TABLE>
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements (cont.)
December 31, 1996
6. Contract Transactions - Accumulation Unit Activity (In thousands) (cont.)
<TABLE>
<CAPTION>
Templeton
Zero Zero Global Investment Adjustable Templeton Templeton
Coupon Coupon Income Grade Income U.S. Pacific Rising International
Fund - Fund - Securities Intermediate Securities Government Growth Dividends Equity
2005 2010 Fund Bond Fund Fund Fund Fund Fund Fund
------ ------ ---------- ------------ -------- --------- -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding
at December 31, 1994.......... 2,780 2,589 16,855 9,772 56,569 19,865 27,231 28,778 60,464
Contract transactions:
Purchase payments............. 715 652 904 1,016 7,979 3,753 2,065 3,782 7,774
Transfers between funds....... 269 511 (1,494) 30 1,879 (6,551) (4,013) 4,493 (2,530)
Surrenders and terminations... (249) (297) (2,058) (1,099) (6,965) (2,397) (2,714) (3,208) (5,662)
Rescissions................... (10) (27) (28) (25) (192) (95) (82) (68) (168)
Other transactions............ (1) 9 2 (2) 39 25 (4) 12 5
----- ----- ------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
in accumulation units
resulting from contract
transactions........... 724 848 (2,674) (80) 2,740 (5,265) (4,748) 5,011 (581)
----- ----- ------ ------ ------ ------ ------ ------ ------
Accumulation units outstanding
at December 31, 1995.......... 3,504 3,437 14,181 9,692 59,309 14,600 22,483 33,789 59,883
===== ===== ====== ====== ====== ====== ====== ====== ======
Contract transactions:
Purchase payments............. 513 618 740 719 7,457 2,202 2,196 3,849 7,288
Transfers between funds....... (139) (403) (1,254) (9,490) (1,819) (15,066) (62) 1,653 3,483
Surrenders and terminations... (290) (342) (1,802) (905) (7,308) (1,693) (2,537) (3,644) (6,198)
Rescissions................... (8) (12) (11) (18) (159) (46) (26) (87) (110)
Other transactions............ (1) (1) 3 2 24 3 7 9 29
----- ----- ------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
in accumulation units
resulting from contract
transactions........... 75 (140) (2,324) (9,692) (1,805) (14,600) (422) 1,780 4,492
----- ----- ------ ------ ------ ------ ------ ------ ------
Accumulation units outstanding
at December 31, 1996.......... 3,579 3,297 11,857 - 57,504 - 22,061 35,569 64,375
===== ===== ====== ====== ====== ====== ====== ====== ======
</TABLE>
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements (cont.)
December 31, 1996
6. Contract Transactions - Accumulation Unit Activity (In thousands) (cont.)
<TABLE>
<CAPTION>
Templeton Templeton Templeton
Developing Templeton Global International Mutual Mutual
Markets Global Asset Small Capital Smaller Discovery Shares Total
Equity Growth Allocation Cap Growth Companies Securities Securities All
Fund Fund Fund Fund Fund Fund Fund Fund Funds
--------- --------- ---------- ----- ------ ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding
at December 31, 1994.............. 9,774 14,637 - - - - - - 474,775
Contract transactions:
Purchase payments................. 4,364 10,991 538 212 - - - - 79,613
Transfers between funds........... 2,372 4,306 916 1,096 - - - - (2,705)
Surrenders and terminations....... (773) (1,448) (114) (4) - - - - (60,840)
Rescissions....................... (112) (183) (3) (2) - - - - (1,916)
Other transactions................ (7) 6 1 - - - - - 172
----- ------ ----- ----- ---- ---- ---- ---- -------
Net increase (decrease)
in accumulation units
resulting from contract
transactions............... 5,844 13,672 1,338 1,302 - - - - 14,324
----- ------ ----- ----- ---- ---- ---- ---- -------
Accumulation units outstanding
at December 31, 1995.............. 15,618 28,309 1,338 1,302 - - - - 489,099
====== ====== ===== ===== ==== ==== ==== ==== =======
Contract transactions:
Purchase payments................. 5,057 11,183 1,657 4,358 1,261 568 327 797 83,355
Transfers between funds........... 3,367 3,694 1,303 7,933 2,597 897 1,194 1,869 2,211
Surrenders and terminations....... (1,569) (2,720) (184) (786) (121) (72) (50) (53) (64,580)
Rescissions....................... (53) (141) (12) (38) (17) (4) - - (1,293)
Other transactions................ 3 2 2 15 2 (1) - - 180
------ ------ ----- ----- ----- ---- ----- ----- -------
Net increase (decrease)
in accumulation units
resulting from contract
transactions................ 6,805 12,018 2,766 11,482 3,722 1,388 1,471 2,613 19,873
------ ------ ----- ------ ----- ----- ----- ----- -------
Accumulation units outstanding
at December 31, 1996.............. 22,423 40,327 4,104 12,784 3,722 1,388 1,471 2,613 508,972
====== ====== ===== ====== ===== ===== ===== ===== =======
</TABLE>
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements (cont.)
December 31, 1996
7. Unit Values
A summary of accumulation unit values and accumulation units outstanding for
variable annuity contracts and the expense ratios, including expenses of the
underlying funds, for each of the five years in the period ended December 31,
1996 follows.
<TABLE>
<CAPTION>
Accumulation Ratio of Expenses
Units Outstanding Accumulation Net Assets to Average
(in thousands) Unit Value (in thousands) Net Assets*
----------------- ------------ -------------- -----------
<S> <C> <C> <C> <C>
Money Market Fund
December 31,
1996........................................................... 28,060 $13.359 $ 375,629 1.83%
1995........................................................... 31,040 12.883 399,935 1.80
1994........................................................... 39,437 12.354 487,239 1.86
1993........................................................... 10,247 12.066 123,639 2.06
1992........................................................... 6,951 11.932 82,944 2.09
Growth and Income Fund
December 31,
1996........................................................... 50,027 19.490 977,110 1.90
1995........................................................... 46,893 17.310 812,732 1.92
1994........................................................... 35,695 13.215 471,773 1.94
1993........................................................... 24,719 13.677 338,082 1.98
1992........................................................... 17,144 12.574 215,559 2.02
Precious Metals Fund
December 31,
1996........................................................... 6,998 14.467 101,248 2.05
1995........................................................... 6,919 14.109 97,630 2.06
1994........................................................... 8,285 13.979 115,828 2.08
1993........................................................... 4,685 14.464 67,770 2.08
1992........................................................... 1,419 9.424 13,374 2.09
High Income Fund
December 31,
1996........................................................... 20,736 19.375 402,379 1.94
1995........................................................... 18,756 17.252 323,580 1.96
1994........................................................... 15,679 14.608 229,026 2.00
1993........................................................... 11,787 15.155 178,627 2.04
1992........................................................... 4,780 13.278 63,462 2.08
Real Estate Securities Fund
December 31,
1996........................................................... 12,757 23.668 301,974 1.97
1995........................................................... 10,998 18.073 198,773 1.99
1994........................................................... 11,645 15.594 181,599 2.02
1993........................................................... 5,589 15.369 85,896 2.07
1992........................................................... 1,052 13.095 13,782 2.09
U.S. Government Securities Fund
December 31,
1996........................................................... 44,598 16.650 742,973 1.91
1995........................................................... 34,313 16.298 559,234 1.92
1994........................................................... 36,490 13.835 504,837 1.93
1993........................................................... 40,402 14.698 593,842 1.94
1992........................................................... 25,054 13.586 340,391 1.99
</TABLE>
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements (cont.)
December 31, 1996
7. Unit Values (cont.)
<TABLE>
<CAPTION>
Accumulation Ratio of Expenses
Units Outstanding Accumulation Net Assets to Average
(in thousands) Unit Value (in thousands) Net Assets*
----------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Utility Equity Fund
December 31,
1996........................................................... 53,086 $20.654 $1,097,873 1.90%
1995........................................................... 66,669 19.565 1,305,495 1.90
1994........................................................... 70,082 15.104 1,058,531 1.92
1993........................................................... 84,217 17.319 1,458,533 1.91
1992........................................................... 39,387 15.889 625,803 1.95
Zero Coupon Fund - 1995
December 31,
1995 1......................................................... 1,670 15.200 25,382 1.80+
1994........................................................... 3,195 14.380 45,941 1.80
1993........................................................... 3,092 14.480 44,771 1.76
1992........................................................... 2,871 13.665 39,236 1.65
Zero Coupon Fund - 2000
December 31,
1996........................................................... 5,636 18.475 104,125 1.80
1995........................................................... 6,066 18.294 110,965 1.80
1994........................................................... 4,953 15.373 76,140 1.80
1993........................................................... 3,787 16.717 63,301 1.77
1992........................................................... 2,886 14.595 42,124 1.65
Zero Coupon Fund - 2005
December 31,
1996........................................................... 3,579 20.517 73,434 1.80
1995........................................................... 3,504 20.914 73,292 1.80
1994........................................................... 2,780 16.096 44,756 1.80
1993........................................................... 2,020 18.050 36,469 1.77
1992........................................................... 1,090 14.975 16,321 1.65
Zero Coupon Fund - 2010
December 31,
1996........................................................... 3,297 21.522 70,969 1.80
1995........................................................... 3,437 22.431 77,136 1.80
1994........................................................... 2,589 15.930 41,255 1.80
1993........................................................... 1,405 18.144 25,489 1.65
1992........................................................... 849 14.670 12,456 1.65
Templeton Global Income Securities Fund
December 31,
1996........................................................... 11,857 16.781 198,968 2.01
1995........................................................... 14,181 15.522 220,143 2.04
1994........................................................... 16,855 13.726 231,368 2.11
1993........................................................... 13,054 14.650 191,246 2.13
1992........................................................... 5,487 12.733 69,860 2.07
Investment Grade Intermediate Bond Fund
December 31,
1996 2......................................................... 8,323 15.740 131,012 2.00+
1995........................................................... 9,692 15.463 149,882 2.01
1994........................................................... 9,772 14.257 139,325 2.03
1993........................................................... 7,677 14.389 110,466 2.06
1992........................................................... 3,333 13.442 44,807 2.08
</TABLE>
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements (cont.)
December 31, 1996
7. Unit Values (cont.)
<TABLE>
<CAPTION>
Accumulation Ratio of Expenses
Units Outstanding Accumulation Net Assets to Average
(in thousands) Unit Value (in thousands) Net Assets*
----------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Income Securities Fund
December 31,
1996........................................................... 57,504 $21.708 $1,251,844 1.90%
1995........................................................... 59,309 19.785 1,175,143 1.91
1994........................................................... 56,569 16.392 927,343 1.94
1993........................................................... 38,967 17.734 691,056 1.96
1992........................................................... 11,397 15.163 172,807 2.07
Adjustable U.S. Government Fund
December 31,
1996 2......................................................... 10,926 12.389 135,355 1.99+
1995........................................................... 14,600 11.951 174,507 1.99
1994........................................................... 19,865 11.077 220,042 1.97
1993........................................................... 24,975 11.254 281,061 1.98
1992........................................................... 21,858 11.020 240,875 2.00
Templeton Pacific Growth Fund
December 31,
1996........................................................... 22,061 14.932 330,159 2.39
1995........................................................... 22,483 13.630 306,843 2.41
1994........................................................... 27,231 12.802 348,655 2.47
1993........................................................... 14,240 14.233 202,676 2.54
1992 3......................................................... 534 9.761 5,209 2.71+
Rising Dividends Fund
December 31,
1996........................................................... 35,569 15.303 545,127 2.16
1995........................................................... 33,789 12.498 422,992 2.18
1994........................................................... 28,778 9.769 281,145 2.20
1993........................................................... 26,256 10.327 271,147 2.19
1992 3......................................................... 8,388 10.848 90,995 2.07+
Templeton International Equity Fund
December 31,
1996........................................................... 64,375 16.081 1,036,583 2.29
1995........................................................... 59,883 13.263 794,670 2.32
1994........................................................... 60,464 12.161 735,339 2.39
1993........................................................... 24,026 12.226 293,740 2.52
1992 3......................................................... 1,329 9.642 12,812 3.17+
Templeton Developing Markets Equity Fund
December 31,
1996........................................................... 22,423 11.487 259,346 2.89
1995........................................................... 15,618 9.582 150,481 2.81
1994 4......................................................... 9,774 9.454 92,469 2.93+
Templeton Global Growth Fund
December 31,
1996........................................................... 40,327 13.560 550,066 2.33
1995........................................................... 28,309 11.339 322,284 2.37
1994 4......................................................... 14,637 10.201 149,393 2.54+
Templeton Global Asset Allocation Fund
December 31,
1996........................................................... 4,104 12.514 52,117 2.26
1995 5......................................................... 1,338 10.591 14,234 2.30+
</TABLE>
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
================================================================================
Notes to Financial Statements (cont.)
December 31, 1996
7. Unit Values (cont.)
<TABLE>
<CAPTION>
Accumulation Ratio of Expenses
Units Outstanding Accumulation Net Assets to Average
(in thousands) Unit Value (in thousands) Net Assets*
----------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Small Cap Fund
December 31,
1996........................................................... 12,784 $12.913 $ 165,578 2.17%
1995 6......................................................... 1,302 10.146 13,260 2.30+
Capital Growth Fund
December 31,
1996 7......................................................... 3,722 11.254 42,110 2.17+
Templeton International Smaller Companies Fund
December 31,
1996 7......................................................... 1,388 11.145 15,527 2.18+
Mutual Discovery Securities Fund
December 31,
1996 8......................................................... 1,471 10.180 15,074 2.77+
Mutual Shares Securities Fund
December 31,
1996 8......................................................... 2,613 10.330 27,141 2.40+
<FN>
*For the year ended December 31, including the effect of the expenses of the
underlying funds.
+Annualized.
1Period from January 1, 1995 to December 15, 1995 (fund closure).
2Period from January 1, 1996 to October 25, 1996 (fund closure).
3Period from January 27, 1992 (fund commencement) to December 31, 1992.
4Period from March 15, 1994 (fund commencement) to December 31, 1994.
5Period from May 1, 1995 (fund commencement) to December 31, 1995.
6Period from November 1, 1995 (fund commencement) to December 31, 1995.
7Period from May 1, 1996 (fund commencement) to December 31, 1996.
8Period from November 8, 1996 (fund commencement) to December 31, 1996.
</FN>
</TABLE>
