File Nos. 333-63719
811-05618
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ( )
Pre-Effective Amendment No. ( )
Post-Effective Amendment No. 2 (X)
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ( )
Amendment No. 52 (X)
(Check appropriate box or boxes.)
ALLIANZ LIFE VARIABLE ACCOUNT B
-------------------------------
(Exact Name of Registrant)
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
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(Name of Depositor)
1750 Hennepin Avenue, Minneapolis, MN 55403
------------------------------------------- -----
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 347-6596
Name and Address of Agent for Service
-------------------------------------
Michael T. Westermeyer
Allianz Life Insurance Company of North America
1750 Hennepin Avenue
Minneapolis, MN 55403
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
_____ on (Date) pursuant to paragraph (b) of Rule 485
__X__ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
_____ on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following:
_____ this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Title of Securities Registered:
Individual Deferred Variable Annuity Contracts
CROSS REFERENCE SHEET
(Required by Rule 495)
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Location
- - -------- --------
PART A
Item 1. Cover Page . . . . . . . . . . . . . . . . . Cover Page
Item 2. Definitions . . . . . . . . . . . . . . . . Index of Terms
Item 3. Synopsis or Highlights. . . . . . . . . . . Profile
Item 4. Condensed Financial Information. . . . . . . Appendix - Condensed
Item 5. General Description of Registrant, Depositor,
and Portfolio Companies. . . . . . . . . . . . Other Information-
The Separate Account,
Allianz Life,
Investment Options
Item 6. Deductions. . . . . . . . .. . . . . . . . . . Expenses
Item 7. General Description of Variable
Annuity Contracts . . . . . . . . . . . . . . .The Franklin Valuemark
Charter Variable Annuity
Contract
Item 8. Annuity Period. . .. . . . . . . . . . . . . . Annuity Payments
(The Payout Phase)
Item 9. Death Benefit. . . . . . . . . . . . . . . . . Death Benefit
Item 10. Purchases and Contract Value. . . . . . . . . .Purchase
Item 11. Redemptions. . . . . . . . . . . . . . . . . . Access to Your Money
Item 12. Taxes. . . . . . . . . . . . . . . . . . . . . Taxes
Item 13. Legal Proceedings. . . . . . . . . . . . . . . None
Item 14. Table of Contents of the Statement of
Additional Information. . . . . . . . . . . Table of Contents
of the Statement of
Additional Information
</TABLE>
CROSS REFERENCE SHEET (cont'd)
(Required by Rule 495)
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Location
- - -------- --------------------
PART B
Item 15. Cover Page. . . . . . . . .. . . . . . . . Cover Page
Item 16. Table of Contents. . . . . . . . . . . . . Table of Contents
Item 17. General Information and History. . . . . . Insurance Company
Item 18. Services. . . . . . . . . . . . .. . . . . Not Applicable
Item 19. Purchase of Securities Being Offered. . . . Not Applicable
Item 20. Underwriters. . . . . . . . . . . . . . . . Distributor
Item 21. Calculation of Performance Data. . . . . . Calculation of
Performance Data
Item 22. Annuity Payments. . . . . . . . . . . . . . Annuity Provisions
Item 23. Financial Statements. . . . . . . . . . . Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered, in Part C to this Registration Statement.
<PAGE>
PART A
<<
THE FRANKLIN(R) VALUEMARK(R) CHARTER VARIABLE ANNUITY CONTRACT
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
This prospectus describes the Franklin Valuemark Charter Variable Annuity
Contract with a Fixed Account offered by Allianz Life Insurance Company of North
America (Allianz Life). All references to "we", "us" and "our" refer to Allianz
Life.
The annuity offers the Variable Options listed below, and a Fixed Account of
Allianz Life. You can select up to 10 investment choices (which includes any of
the Variable Options and the Fixed Account). The Fixed Account and some of the
Variable Options may not be available in your state.
Variable Options:
AIM VARIABLE INSURANCE FUNDS INC.:
Portfolio Seeking Capital Growth
AIM V.I. Growth Fund
THE ALGER AMERICAN FUND:
Portfolios Seeking Capital Growth
Alger American Growth Fund
Alger American Leveraged AllCap Fund
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST:
Portfolio Seeking Capital Preservation and Income
Franklin Money Market Fund
Portfolios Seeking Income
Franklin High Income Fund
Franklin U.S. Government Securities Fund
Templeton Global Income Securities Fund
Portfolios Seeking Growth and Income
Franklin Global Utilities Securities Fund*
Franklin Growth and Income Fund
Franklin Income Securities Fund
Franklin Mutual Shares Securities Fund
Franklin Real Estate Securities Fund
Franklin Rising Dividends Fund
Franklin Value Securities Fund
Templeton Global Asset Allocation Fund
Portfolios Seeking Capital Growth
Franklin Capital Growth Fund
Franklin Global Health Care Securities Fund
Franklin Mutual Discovery Securities Fund
Franklin Natural Resources Securities Fund
Franklin S&P 500 Index Fund
Franklin Small Cap Fund
Templeton Developing Markets Equity Fund
Templeton Global Growth Fund
Templeton International Equity Fund
Templeton International Smaller Companies Fund
Templeton Pacific Growth Fund
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST:
Portfolio Seeking Capital Growth
USAllianz VIP Growth Fund
Portfolios Seeking Growth and Income
USAllianz VIP Diversified Assets Fund
USAllianz VIP Intermediate Fixed Income Fund
* Effective November 15, 1999, Franklin Global Utilities Securities Fund's name
will be changed to Franklin Global Communications Securities Fund.
Please read this prospectus before investing and keep it for future reference.
It contains important information about the Franklin Valuemark Charter Variable
Annuity Contract with a Fixed Account.
To learn more about the annuity offered by this prospectus, you can obtain a
copy of the Statement of Additional Information (SAI) dated October 25, 1999.
The SAI has been filed with the Securities and Exchange Commission (SEC) and is
legally a part of this prospectus. The Table of Contents of the SAI is on page
- -- of this prospectus. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference and other information about
companies that file electronically with the SEC. For a free copy of the SAI,
call us at (800) 342-3863 or write us at:
1750 Hennepin Avenue, Minneapolis, Minnesota 55403-2195.
The Franklin Valuemark Charter Variable Annuity Contracts:
o are not bank deposits
o are not federally insured
o are not endorsed by any bank or government agency
o are not guaranteed and may be subject to loss of principal
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
This prospectus is not an offering of the securities in any state, country, or
jurisdiction in which we are not authorized to sell the Contracts. You should
rely only on the information contained in this prospectus or that we have
referred you to. We have not authorized anyone to provide you with information
that is different.
Dated: October 25, 1999
<PAGE>
TABLE OF CONTENTS
Index of Terms 3
Summary _
Fee Table 4
1. The Franklin Valuemark Charter
Variable Annuity Contract 8
Contract Owner 8
Joint Owner 8
Annuitant 8
Beneficiary 8
Assignment 8
2. Annuity Payments (The Payout Phase) 9
Annuity Options 9
3. Purchase 10
Purchase Payments 10
Automatic Investment Plan 10
Allocation of Purchase Payments 10
Free Look 10
Accumulation Units 11
4. Investment Options 11
Transfers 12
Dollar Cost Averaging Program 12
Flexible Rebalancing 13
Financial Advisers - Asset Allocation Programs 13
Voting Privileges 13
Substitution 13
5. Expenses 13
Insurance Charges 13
Mortality and Expense Risk Charge 13
Administrative Charge 14
Contract Maintenance Charge 14
<PAGE>
Transfer Fee 14
Premium Taxes 14
Income Taxes 14
Portfolio Expenses 14
6. Taxes 14
Annuity Contracts in General 14
Qualified and Non-Qualified Contracts 15
Multiple Contracts 15
Withdrawals - Non-Qualified Contracts 15
Withdrawals - Qualified Contracts 15
Withdrawals - Tax-Sheltered Annuities 15
Diversification 16
7. Access to Your Money 16
Systematic Withdrawal Program 16
Minimum Distribution Program 16
Suspension of Payments or Transfers 16
8. Performance 17
9. Death Benefit 17
Upon Your Death 17
Death of Annuitant 18
10. Other Information 18
Allianz Life 18
Year 2000 18
The Separate Account 18
Distribution 19
Administration 19
Financial Statements 19
Table of Contents of the
Statement of Additional Information 19
<PAGE>
Index of Terms
This prospectus is written in plain English to make it as understandable as
possible. However, there are some technical terms used which are capitalized in
the prospectus. The page that is indicated below is where you will find the
definition for the word or term.
Page
Accumulation Phase 8
Accumulation Unit 11
Annuitant 8
Annuity Options 9
Annuity Payments 9
Annuity Unit 11
Beneficiary 8
Contract 8
Contract Owner 8
Fixed Account 8
Page
Income Date 9
Joint Owner 8
Non-Qualified 15
Payout Phase 8
Portfolios 11
Purchase Payment 10
Qualified 15
Tax Deferral 8
Variable Option 8
<PAGE>
Summary
The sections in this summary correspond to sections in this prospectus which
discuss the topics in more detail.
The Variable Annuity Contract: The annuity contract offered by Allianz Life
provides a means for investing on a tax-deferred basis in Variable Options and
the Allianz Life Fixed Account for retirement savings or other long-term
investment purposes. The Contract provides either a Traditional Death Benefit
Option or an Enhanced Death Benefit Option.
Annuity Payments: If you want to receive regular income from your annuity, you
can choose an Annuity Option. You can choose whether to have payments come from
our general account, the available Variable Options or both. If you choose to
have any part of your payments come from the Variable Options, the dollar amount
of your payments may go up or down based on the performance of the Portfolios.
Purchase: You can buy the Contract with $25,000 or more under most
circumstances. You can add $250 or more any time you like during the
Accumulation Phase.
Investment Options: You can put your money in the Variable Options and/or you
can invest in the Allianz Life Fixed Account. The investment returns on the
Portfolios are not guaranteed. You can make or lose money. You can make
transfers between investment choices.
Expenses: The Contract has insurance features and investment features, and there
are costs related to each.
Each year, Allianz Life deducts a $40 contract maintenance charge from your
Contract. During the Accumulation Phase, Allianz Life currently waives this
charge if the value of your Contract is at least $100,000.
Allianz Life deducts a mortality and expense risk charge which varies depending
upon whether you select the Traditional Death Benefit or the Enhanced Death
Benefit. During the Accumulation Phase, the charge is equal, on an annual basis,
to 1.00% of the average daily value of the Contract invested in a Variable
Option if you select the Traditional Death Benefit and 1.20% of the average
daily value of the Contract invested in a Variable Option if you select the
Enhanced Death Benefit. Allianz Life also deducts an administrative charge which
is equal, on an annual basis, to .15% of the value of the Contract invested in a
Variable Option.
You can make 12 free transfers each year. After that, Allianz Life deducts $25
or 2% of the amount that is transferred, whichever is less, for each additional
transfer.
There are also daily investment charges which range, on an annual basis, from
0.49% to 1.71% of the average daily value of the Portfolio, depending upon the
Portfolio.
Taxes: Your earnings are not taxed until you take them out. If you take money
out during the Accumulation Phase, earnings come out first and are taxed as
income. If you are younger than 59 1/2 when you take money out, you may be
charged a 10% federal tax penalty.
Access to Your Money: You can take money out of your Contract at any time during
the Accumulation Phase. You may also have to pay income tax and a tax penalty on
any money you take out.
Death Benefit: If you die before moving to the Payout Phase, the person you have
chosen as a Beneficiary will receive a death benefit. The amount of the death
benefit depends on whether you select the Traditional Death Benefit or the
Enhanced Death Benefit.
Free-Look: You can cancel the Contract within 10 days after receiving it (or
whatever period is required in your state). Allianz Life will refund the value
of your Contract on the day it receives your request to cancel the Contract.
This may be more or less than your original payment. In certain states, or if
you have purchased the Contract as in individual retirement annuity, Allianz
Life will refund the Purchase Payment.
<PAGE>
FEE TABLE
The purpose of this Fee Table is to help you understand the costs of investing,
directly or indirectly, in the Variable Options under the Contract. The Fee
Table reflects expenses of the Separate Account as well as the Portfolios.
CONTRACT OWNER TRANSACTION FEES
Transfer Fee* First 12 transfers in a Contract year are free. Thereafter, the
fee is $25 or 2% of the amount transferred, if less. Dollar Cost Averaging
transfers and Flexible Rebalancing transfers are not counted.
Contract Maintenance Charge** $40 per Contract per year
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Contracts withContracts with
Traditional Enhanced
Death BenefitDeath Benefit
- -------------------------------------------------------------------------------
Mortality and Expense Risk Charge 1.00% 1.20%
Administrative Charge 0 .15% 0 .15%
------ ------
Total Separate Account Annual Expenses 1.15% 1.35%
*The Contract provides that if more than three transfers have been made in a
Contract year, Allianz Life reserves the right to deduct a transfer fee. Market
timing transfers may not be permitted.
**During the Accumulation Phase, the charge is waived if .the value of your
Contract is at least $100,000. If you own more than one Franklin Valuemark
Charter Contract (registered with the same social security number), we will
determine the total value of all your Contracts. If the total value of all your
Contracts is at least $100,000, the charge is waived.
<PAGE>
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES
(as a percentage of the funds' average net assets)
See the accompanying fund prospectuses for more information.
Management
and Portfolio Total
Administration 12b-1 Other Annual
Fees1 Fees Expenses Expenses
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Growth Fund.......................................... .64% - .08% .72%
Alger American Growth Fund.................................... .75% - .04% .79%
Alger American Leveraged AllCap Fund.......................... .85% - .11%2 .96%
Franklin Capital Growth Fund ................................. .75% .25% .02% 1.02%
Franklin Global Health Care Securities Fund3.................. .75% .25% .09% 1.09%
Franklin Global Utilities Securities Fund5 ................... .47% .25% .03% .75%
Franklin Growth and Income Fund .............................. .47% .25% .02% .74%
Franklin High Income Fund .................................... .50% .25% .03% .78%
Franklin Income Securities Fund .............................. .47% .25% .05% .74%
Franklin Money Market Fund ................................... .51% .25% .02% .78%
Franklin Mutual Discovery Securities Fund .................... .95% .25% .05% 1.25%
Franklin Mutual Shares Securities Fund ....................... .74% .25% .03% 1.02%
Franklin Natural Resources Securities Fund ................... .62% .25% .02% .89%
Franklin Real Estate Securities Fund ......................... .52% .25% .02% .79%
Franklin Rising Dividends Fund ............................... .70% .25% .02% .97%
Franklin S&P 500 Index Fund4.................................. % % % %
Franklin Small Cap Fund....................................... .75% .25% .02% 1.02%
Franklin U.S. Government Securities Fund ..................... .48% .25% .02% .75%
Franklin Value Securities Fund3............................... .75% .25% .08% 1.08%
Templeton Developing Markets Equity Fund ..................... 1.25% .25% .16% 1.66%
Templeton Global Asset Allocation Fund ....................... .80% .25% .04% 1.09%
Templeton Global Growth Fund ................................. .83% .25% .05% 1.13%
Templeton Global Income Securities Fund ...................... .57% .25% .06% .88%
Templeton International Equity Fund .......................... .80% .25% .08% 1.13%
Templeton International Smaller Companies Fund ............... 1.00% .25% .10% 1.35%
Templeton Pacific Growth Fund ................................ .99% .25% .11% 1.35%
USAllianz VIP Growth Fund4 ................................... % % % %
USAllianz VIP Diversified Assets Fund4 ....................... % % % %
USAllianz VIP Intermediate Fixed Income Fund4................. % % % %
<FN>
1. The Portfolio Administration Fee is a direct expense for the Franklin Global Health Care Securities Fund, the Franklin Mutual
Discovery Securities Fund, the Franklin Mutual Shares Securities Fund, the Templeton Global Asset Allocation Fund, the Templeton
International Smaller Companies Fund, and the Franklin Value Securities Fund; other Portfolios pay for similar services indirectly
through the Management Fee. See the accompanying Franklin Templeton Variable Insurance Products Trust prospectus for further
information regarding these fees.
2. Other Expenses for the Alger American Leveraged AllCap Portfolio include .03% of interest expense.
3. The Franklin Global Health Care Securities Fund and the Franklin Value Securities Fund commenced operations May 1, 1998. The
expenses shown above for these Portfolios are therefore estimated for 1999.
4. The Franklin S&P 500 Index Fund, USAllianz VIP Growth Fund, USAllianz VIP Diversified Assets Fund and USAllianz VIP
Intermediate Fixed Income Fund commenced operations October 25, 1999. The expenses shown above for these Portfolios are therefore
estimated for 1999.
5. Effective November 15, 1999, Franklin Global Utilities Securities Fund's name will change to Franklin Global Communications
Securities Fund.
</FN>
</TABLE>
<PAGE>
EXAMPLES
o There are two sets of examples below. The examples in Chart 1 assume you have
selected the traditional death benefit. The examples in Chart 2 assume you have
selected the enhanced death benefit. The examples below should not be considered
a representation of past or future expenses. Actual expenses may be greater or
less than those shown.
o The $40 contract maintenance charge is included in the examples as a prorated
charge of $1. Since the average Contract size is greater than $1,000, the
contract maintenance charge is reduced accordingly.
o Premium taxes are not reflected in the tables. Premium taxes may apply.
o For additional information, see Section 5 - "Expenses" and the accompanying
fund prospectuses.
<TABLE>
<CAPTION>
CHART 1. CONTRACTS WITH TRADITIONAL DEATH BENEFIT OPTION
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money regardless of whether you surrender your Contract
at the end of each time period:
Variable Option 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Growth Fund...................................................
Alger American Growth Fund.............................................
Alger American Leverage AllCap Fund....................................
Franklin Capital Growth ............................................... $23 $71 $121 $260
Franklin Global Health Care Securities* ............................... $24 $73 $125 $267
Franklin Global Utilities Securities .................................. $20 $63 $108 $232
Franklin Growth and Income ............................................ $20 $62 $107 $231
Franklin High Income .................................................. $21 $64 $109 $235
Franklin Income Securities ............................................ $20 $62 $107 $231
Franklin Money Market ................................................. $21 $64 $109 $235
Franklin Mutual Discovery Securities .................................. $25 $78 $133 $284
Franklin Mutual Shares Securities ..................................... $23 $71 $121 $260
Franklin Natural Resources Securities ................................. $22 $67 $115 $247
Franklin Real Estate Securities ....................................... $21 $64 $110 $236
Franklin Rising Dividends ............................................. $23 $69 $119 $255
Franklin S&P 500 Index Fund............................................
Franklin Small Cap .................................................... $23 $71 $121 $260
Franklin U.S. Government Securities ................................... $20 $63 $108 $232
Franklin Value Securities* ............................................ $24 $73 $124 $266
Templeton Developing Markets Equity ................................... $29 $90 $153 $324
Templeton Global Asset Allocation ..................................... $24 $73 $125 $267
Templeton Global Growth ............................................... $24 $74 $127 $272
Templeton Global Income Securities .................................... $22 $67 $114 $246
Templeton International Equity ........................................ $24 $74 $127 $272
Templeton International Smaller Companies ............................. $26 $81 $138 $294
Templeton Pacific Growth .............................................. $26 $81 $138 $294
USAllianz VIP Growth Fund* ............................................
USAllianz VIP Diversified Assets Fund* ................................
USAllianz VIP Intermediate Fixed Income Fund*..........................
<FN>
*Estimated
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CHART 2. CONTRACTS WITH ENHANCED DEATH BENEFIT OPTION
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money regardless of whether you surrender your Contract
at the end of each time period:
Variable Option 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Growth Fund...................................................
Alger American Growth Fund.............................................
Alger American Leveraged AllCap Fund...................................
Franklin Capital Growth ............................................... $25 $77 $132 $281
Franklin Global Health Care Securities* ............................... $26 $79 $135 $288
Franklin Global Utilities Securities .................................. $22 $69 $118 $253
Franklin Growth and Income ............................................ $22 $68 $117 $252
Franklin High Income .................................................. $23 $70 $119 $256
Franklin Income Securities ............................................ $22 $68 $117 $252
Franklin Money Market ................................................. $23 $70 $119 $256
Franklin Mutual Discovery Securities .................................. $27 $84 $143 $303
Franklin Mutual Shares Securities ..................................... $25 $77 $132 $281
Franklin Natural Resources Securities ................................. $24 $73 $125 $267
Franklin Real Estate Securities ....................................... $23 $70 $120 $257
Franklin Rising Dividends ............................................. $25 $75 $129 $276
Franklin S&P 500 Index Fund............................................
Franklin Small Cap .................................................... $25 $77 $132 $281
Franklin U.S. Government Securities ................................... $22 $69 $118 $253
Franklin Value Securities* ............................................ $26 $79 $135 $287
Templeton Developing Markets Equity ................................... $31 $96 $163 $343
Templeton Global Asset Allocation ..................................... $26 $79 $135 $288
Templeton Global Growth ............................................... $26 $80 $137 $292
Templeton Global Income Securities .................................... $24 $73 $124 $266
Templeton International Equity ........................................ $26 $80 $137 $292
Templeton International Smaller Companies ............................. $28 $87 $148 $313
Templeton Pacific Growth .............................................. $28 $87 $148 $313
USAllianz VIP Growth Fund*.............................................
USAllianz VIP Diversified Assets Fund*.................................
USAllianz VIP Intermediate Fixed Income Fund*..........................
<FN>
*Estimated
</FN>
</TABLE>
See the Appendix for Accumulation Unit Values - Condensed Financial Information.
<PAGE>
- -------------------------------------------------------------------------------
1. THE FRANKLIN VALUEMARK CHARTER VARIABLE ANNUITY CONTRACT
This prospectus describes a variable deferred annuity contract with a Fixed
Account offered by Allianz Life.
An annuity is a contract between you, the owner, and an insurance company (in
this case Allianz Life), where the insurance company promises to pay you (or
someone else you choose) an income, in the form of Annuity Payments. The Annuity
Payments must begin on a designated date that is at least two years in the
future. Until you decide to begin receiving Annuity Payments, your annuity is in
the Accumulation Phase. Once you begin receiving Annuity Payments, your Contract
switches to the Payout Phase.
The Contract benefits from Tax Deferral. Tax Deferral means that you are not
taxed on any earnings or appreciation on the assets in your Contract until you
take money out of your Contract.
Your investment choices include Variable Options and the Fixed Account of
Allianz Life. The Contract is called a variable annuity because you can choose
among the Variable Options and, depending upon market conditions, you can make
or lose money in the Contract based on the investment performance of the
Portfolios. The Portfolios are designed to offer a better return than the Fixed
Account. However, this is not guaranteed. If you select the variable annuity
portion of the Contract, the amount of money you are able to accumulate in your
Contract during the Accumulation Phase depends in large part upon the investment
performance of the Portfolio(s) you select. The amount of the Annuity Payments
you receive during the Payout Phase from the variable annuity portion of the
Contract also depends in large part upon the investment performance of the
Portfolios you select for the Payout Phase.
The Contract also contains a Fixed Account. The Fixed Account offers an interest
rate that is guaranteed by Allianz Life for all deposits you make within a
twelve month period. Your initial interest rate is set on the date when your
money is invested in the Fixed Account and remains effective for one year.
Initial interest rates are declared monthly. Allianz Life guarantees that the
interest credited to the Fixed Account will not be less than 3% per year. If you
select the Fixed Account, your money will be placed with the other general
assets of Allianz Life. Allianz Life may change the terms of the Fixed Account
in the future - please contact Allianz Life for the most current terms.
If you select the Fixed Account, the amount of money you are able to accumulate
in your Contract during the Accumulation Phase depends upon the total interest
credited to your Contract.
We will not make any changes to your Contract without your permission except as
may be required by law.
CONTRACT OWNER
You, as the Contract Owner, have all the rights under the Contract. The Contract
Owner is as designated at the time the Contract is issued, unless changed. You
may change Contract Owners at any time. This may be a taxable event. You should
consult with your tax adviser before doing this.
JOINT OWNER
The Contract can be owned by Joint Owners. Any Joint Owner must be the spouse of
the other Contract Owner (except in Pennsylvania, Oregon and New Jersey). Upon
the death of either Joint Owner, the surviving Joint Owner will be the
designated Beneficiary. Any other Beneficiary designation at the time the
Contract was issued or as may have been later changed will be treated as a
contingent Beneficiary unless otherwise indicated.
ANNUITANT
The Annuitant is the natural person on whose life we base Annuity Payments. You
name an Annuitant. You may change the Annuitant at any time before the Income
Date unless the Contract is owned by a non-individual (for example, a
corporation).
BENEFICIARY
The Beneficiary is the person(s) or entity you name to receive any death
benefit. The Beneficiary is named at the time the Contract is issued unless
changed at a later date. Unless an irrevocable Beneficiary has been named, you
can change the Beneficiary or contingent Beneficiary.
ASSIGNMENT
You can transfer ownership (assign) the Contract at any time during your
lifetime. Allianz Life will not be bound by the assignment until it receives the
written notice of the assignment. Allianz Life will not be liable for any
payment or other action we take in accordance with the Contract before we
receive notice of the assignment. Any assignment made after the death benefit
has become payable can only be done with our consent. AN ASSIGNMENT MAY BE A
TAXABLE EVENT.
If the Contract is issued pursuant to a Qualified plan, you may be unable to
assign the Contract.
2. ANNUITY PAYMENTS
(THE PAYOUT PHASE)
- -------------------------------------------------------------------------------
You can receive regular monthly income payments under your Contract. You can
choose the month and year in which those payments begin. We call that date the
Income Date. Your Income Date must be the first day of a calendar month and must
be at least 2 years after you buy the Contract. You can also choose among income
plans. We call those Annuity Options.
We ask you to choose your Income Date when you purchase the Contract. You can
change it at any time before the Income Date with 30 days notice to us. Annuity
Payments must begin by the Annuitant's 85th birthday or 10 years (5 years in
Pennsylvania) from the date the Contract was issued, whichever is later. This
limitation may not apply when the Contract is issued to a charitable remainder
trust. You (or someone you designate) will receive the Annuity Payments. You
will receive tax reporting on those payments.
You may elect to receive your Annuity Payments as a variable payout, a fixed
payout, or a combination of both. Under a fixed payout, all of the Annuity
Payments will be the same dollar amount (equal installments). If you choose a
variable payout, you can select from the available Variable Options. If you do
not tell us otherwise, your Annuity Payments will be based on the investment
allocations that were in place on the Income Date.
If you choose to have any portion of your Annuity Payments based on the
investment performance of the Variable Option(s), the dollar amount of your
payments will depend upon three things:
1) the value of your Contract in the Variable Option(s) on the Income Date,
2) the assumed investment rate (AIR) used in the annuity table for the Contract,
and
3) the performance of the Variable Option(s) you selected.
You can choose a 3%, 5% or 7% AIR in most states. If the actual performance
exceeds the 3%, 5% or 7% AIR you selected, your Annuity Payments will increase.
Similarly, if the actual rate is less than 3%, 5% or 7% (you selected), your
Annuity Payments will decrease.
ANNUITY OPTIONS
You can choose one of the following Annuity Options or any other Annuity Option
you want and that Allianz Life agrees to provide. After Annuity Payments begin,
you cannot change the Annuity Option. If you do not choose an Annuity Option
prior to the Income Date, we will assume that you selected Option 2 which
provides a life annuity with 5 years of guaranteed payments.
OPTION 1. Life Annuity. Under this option, we will make monthly Annuity Payments
so long as the Annuitant is alive. After the Annuitant dies, we stop making
Annuity Payments.
OPTION 2. Life Annuity with 5, 10, 15 or 20 Year Payments Guaranteed. Under this
option, we will make monthly Annuity Payments so long as the Annuitant is alive.
However, if the Annuitant dies before the end of the selected guaranteed period,
we will continue to make Annuity Payments to you or any person you designate for
the rest of the guaranteed period. If you do not want to receive Annuity
Payments after the Annuitant's death, you can ask us for a single lump sum.
OPTION 3. Joint and Last Survivor Annuity. Under this option, we will make
monthly Annuity Payments during the joint lifetime of the Annuitant and the
joint Annuitant. When the Annuitant dies, if the joint Annuitant is still alive,
we will continue to make Annuity Payments so long as the joint Annuitant
continues to live. The amount of the Annuity Payments we will make to the
Contract Owner can be equal to 100%, 75% or 50% of the amount that was being
paid when both Annuitants were alive. The monthly Annuity Payments will end when
the last surviving Annuitant dies.
OPTION 4. Joint and Last Survivor Annuity with 5, 10, 15 or 20 Year Payments
Guaranteed. Under this option, we will make monthly Annuity Payments during the
joint lifetime of the Annuitant and the joint Annuitant. When the Annuitant
dies, if the joint Annuitant is still alive, we will continue to make Annuity
Payments, so long as the surviving Annuitant continues to live, at 100% of the
amount that was being paid when both were alive. If, when the last death occurs,
we have made Annuity Payments for less than the selected guaranteed period, we
will continue to make Annuity Payments to you or any person you designate for
the rest of the guaranteed period. If you do not want to receive Annuity
Payments after the Annuitant's death, you can ask us for a single lump sum.
OPTION 5. Refund Life Annuity. Under this option, we will make monthly Annuity
Payments during the Annuitant's lifetime. The last Annuity Payment will be made
before the Annuitant dies and if the value of the Annuity Payments made is less
than the value applied to the Annuity Option, then you will receive a refund as
set forth in the Contract.
3. PURCHASE
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PURCHASE PAYMENTS
A Purchase Payment is the money you invest in the Contract. The minimum payment
Allianz Life will accept is $25,000. The maximum amount we will accept without
our prior approval is $1 million. You can make additional Purchase Payments of
$250 or more (or as low as $100 if you have selected the Automatic Investment
Plan). Allianz Life may, at its sole discretion, waive the minimum payment
requirements. We reserve the right to decline any Purchase Payment. At the time
you buy the Contract, you and the Annuitant cannot be older than 85 years old.
This product is not designed for professional market timing organizations, other
entities, or persons using programmed, large or frequent transfers.
AUTOMATIC INVESTMENT PLAN
The Automatic Investment Plan (AIP) is a program which allows you to make
additional Purchase Payments to your Contract on a monthly or quarterly basis by
electronic transfer of monies from your savings or checking account. You may
participate in this program by completing the appropriate form. We must receive
your form by the first of the month in order for AIP to begin that same month.
Investments will take place on the 20th of the month, or the next business day.
The minimum investment that can be made by AIP is $100. You may stop AIP at any
time you want. We need to be notified by the first of the month in order to stop
or change AIP that month. If AIP is used for a Qualified Contract, you should
consult your tax adviser for advice regarding maximum contributions.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a Contract, we will allocate your Purchase Payment to the
Fixed Account and/or one or more of the Variable Options you have selected. We
ask that you allocate your money in either whole percentages or round dollars.
The Fixed Account may not be available in your state (check with your registered
representative). Transfers do not change the allocation instructions for
payments. You can instruct us how to allocate additional Purchase Payments you
make. If you do not instruct us, we will allocate them in the same way as your
previous instructions to us. You may change the allocation of future payments
without fee, penalty or other charge upon written notice or telephone
instructions to the Valuemark Service Center. A change will be effective for
payments received on or after we receive your notice or instructions. Allianz
Life reserves the right to limit the number of Variable Options that you may
invest in at one time. Currently, you may invest in up to 10 investment choices
at any one time (which includes any of the Variable Options and the Allianz Life
Fixed Account). We may change this in the future. However, we will always allow
you to invest in at least five Variable Options.
Once we receive your Purchase Payment and the necessary information, we will
issue your Contract and allocate your first Purchase Payment within 2 business
days. If you do not give us all of the information we need, we will contact you
or your registered representative to get it. If for some reason we are unable to
complete this process within 5 business days, we will either send back your
money or get your permission to keep it until we get all of the necessary
information. If you make additional Purchase Payments, we will credit these
amounts to your Contract within one business day. Our business day closes when
the New York Stock Exchange closes, which is usually at 4:00 p.m. Eastern time.
FREE LOOK
If you change your mind about owning the Contract, you can cancel it within 10
days after receiving it (or the period required in your state). You will receive
back whatever your Contract is worth on the day we receive your request. In
certain states, or if you have purchased the Contract as an IRA, we may be
required to give you back your Purchase Payment if you decide to cancel your
Contract within 10 days after receiving it (or whatever period is required in
your state). If that is the case, we reserve the right to allocate your initial
Purchase Payment to the Franklin Money Market Fund for 15 days after we receive
it. (In some states, the period may be longer.) At the end of that period, we
will re-allocate your money as you selected. Currently, however, we will
directly allocate your money to the Variable Options and/or the Fixed Account as
you have selected.
ACCUMULATION UNITS
The value of the portion of your Contract allocated to the Variable Options will
go up or down based upon the investment performance of the Variable Options you
choose. The value of your Contract will also depend on the expenses of the
Contract. In order to keep track of the value of your Contract, we use a
measurement called an Accumulation Unit (which is like a share of a mutual
fund). During the Payout Phase of the Contract we call it an Annuity Unit.
Every business day we determine the value of an Accumulation Unit for each
Variable Option by multiplying the Accumulation Unit value for the previous
period by a factor for the current period. The factor is determined by:
1. dividing the value of a Portfolio at the end of the current period by the
value of a Portfolio for the previous period; and
2. multiplying it by one minus the daily amount of the insurance charges and any
charges for taxes.
The value of an Accumulation Unit may go up or down from day to day.
When you make a Purchase Payment, we credit your Contract with Accumulation
Units for any portion of your Purchase Payment allocated to a Variable Option.
The number of Accumulation Units credited is determined by dividing the amount
of the Purchase Payment allocated to a Variable Option by the value of the
corresponding Accumulation Unit.
We calculate the value of each Accumulation Unit after the New York Stock
Exchange closes each day and then credit your Contract.
EXAMPLE:
On Wednesday we receive an additional Purchase Payment of $3,000 from you. You
have told us you want this to go to the Franklin Growth and Income Fund. When
the New York Stock Exchange closes on that Wednesday, we determine that the
value of an Accumulation Unit based on an investment in the Franklin Growth and
Income Fund is $12.50. We then divide $3,000 by $12.50 and credit your Contract
on Wednesday night with 240 Accumulation Units.
4. INVESTMENT OPTIONS
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The Contract offers Variable Options, which invest in Portfolios of AIM Variable
Insurance Funds Inc., The Alger American Fund, Franklin Templeton Variable
Insurance Products Trust and the USAllianz Variable Insurance Products Trust.
The Contract also offers a Fixed Account of Allianz Life. Additional Portfolios
may be available in the future.
You should read the fund prospectuses (which are attached to this prospectus)
carefully before investing.
AIM Variable Insurance Funds, Inc., The Alger American Fund, Franklin Templeton
Variable Insurance Products Trust and USAllianz Variable Insurance Products
Trust are the mutual funds underlying your Contract. Each Portfolio has its own
investment objective.
Franklin Templeton Variable Insurance Products Trust (formerly, Franklin
Valuemark Funds) issues two classes of shares which are described in the
attached Franklin Templeton Variable Insurance Products Trust prospectus. Only
Class 2 shares of the Franklin Templeton Variable Insurance Products Trust are
available in connection with the Franklin Valuemark Charter Variable Annuity
Contract. Class 2 shares have Rule 12b-1 plan expenses.
Investment advisers for each Portfolio are listed in the table below and are as
follows: A I M Advisors, Inc., Allianz of America, Inc., Fred Alger Management,
Inc., Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Mutual
Advisers, LLC, Templeton Asset Management Ltd., Templeton Global Advisors
Limited, and Templeton Investment Counsel, Inc. Certain advisers have retained
one or more subadvisers to help them manage the Portfolios.
The investment objectives and policies of certain Portfolios are similar to the
investment objectives and policies of other mutual funds that certain of the
investment advisers manage. Although the objectives and policies may be similar,
the investment results of the Portfolios may be higher or lower than the results
of such other mutual funds. The investment advisers cannot guarantee, and make
no representation, that the investment results of similar funds will be
comparable even though the funds have the same investment advisers.
The following is a list of the Portfolios available under the Contract:
<TABLE>
<CAPTION>
Investment
Available Portfolios Advisers
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<S> <C>
AIM VARIABLE INSURANCE FUNDS INC.:
Portfolio Seeking Capital Growth
AIM V.I. Growth Fund AIM Advisors, Inc.
THE ALGER AMERICAN FUND:
Portfolios Seeking Capital Growth
Alger American Growth Fund Alger Management, Inc.
Alger American Leveraged AllCap Fund Alger Management, Inc.
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST:
Portfolio Seeking Capital Preservation and Income
Franklin Money Market Fund Franklin Advisers, Inc.
Portfolios Seeking Income
Franklin High Income Fund Franklin Advisers, Inc.
Franklin U.S. Government Securities Fund Franklin Advisers, Inc.
Templeton Global Income Securities Fund Franklin Advisers, Inc.
Portfolios Seeking Growth and Income
Franklin Global Utilities Securities Fund* Franklin Advisers, Inc.
Franklin Growth and Income Fund Franklin Advisers, Inc.
Franklin Income Securities Fund Franklin Advisers, Inc.
Franklin Mutual Shares Securities Fund Franklin Mutual Advisers, LLC
Franklin Real Estate Securities Fund Franklin Advisers, Inc.
Franklin Rising Dividends Fund Franklin Advisory Services, LLC
Franklin Value Securities Fund Franklin Advisory Services, LLC
Templeton Global Asset Allocation Fund Templeton Global Advisors Limited
Portfolios Seeking Capital Growth
Franklin Capital Growth Fund Franklin Advisers, Inc.
Franklin Global Health Care Securities Fund Franklin Advisers, Inc.
Franklin Mutual Discovery Securities Fund Franklin Mutual Advisers, LLC
Franklin Natural Resources Securities Fund Franklin Advisers, Inc.
Franklin S&P 500 Index Fund Franklin Advisers, Inc.
Franklin Small Cap Fund Franklin Advisers, Inc.
Templeton Developing Markets Equity Fund Templeton Asset Management Ltd.
Templeton Global Growth Fund Templeton Global Advisors Limited
Templeton International Equity Fund Franklin Advisers, Inc.
Templeton International Smaller Companies Fund Templeton Investment Counsel, Inc.
Templeton Pacific Growth Fund Franklin Advisers, Inc.
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST:
Portfolio Seeking Capital Growth
USAllianz VIP Growth Fund Allianz of America, Inc.
Portfolios Seeking Growth and Income
USAllianz VIP Diversified Assets Fund Allianz of America, Inc.
USAllianz VIP Intermediate Fixed Income Fund Allianz of America, Inc.
<FN>
*Effective November 15, 1999, Global Utilities Securities Fund's name will
change to Franklin Global Communications Securities Fund.
</FN>
</TABLE>
Shares of the funds may be offered in connection with certain variable annuity
contracts and variable life insurance policies of various insurance companies
which may or may not be affiliated with Allianz Life. Certain funds may also be
sold directly to qualified plans. The funds believe that offering their shares
in this manner will not be disadvantageous to you.
Allianz Life may enter into certain arrangements under which it is reimbursed by
the funds' advisers, distributors and/or affiliates for the administrative
services which it provides to the portfolios.
TRANSFERS
You can transfer money among the Variable Options and/or the Fixed Account.
Allianz Life currently allows you to make as many transfers as you want to each
year. Allianz Life may change this practice in the future. However, this product
is not designed for professional market timing organizations or other persons
using programmed, large, or frequent transfers. Such activity may be disruptive
to a Portfolio. We reserve the right to reject any specific Purchase Payment
allocation or transfer request from any person, if in the Portfolio manager's
judgment, a Portfolio would be unable to invest effectively in accordance with
its investment objectives and policies, or would otherwise potentially be
adversely affected.
Your Contract provides that you can make 3 transfers every year without charge.
However, currently Allianz Life permits you to make 12 transfers every year
without charge. We measure a year from the anniversary of the day we issued your
Contract. You can make a transfer to or from the Fixed Account and to or from
any Variable Option. If you make more than 12 transfers in a year, there is a
transfer fee deducted. The fee is $25 per transfer or, if less, 2% of the amount
transferred. The following applies to any transfer:
1. The minimum amount which you can transfer is $1,000 or your entire value in
the Variable Option or Fixed Account, if less. This requirement is waived if the
transfer is in connection with the Dollar Cost Averaging Program or Flexible
Rebalancing (which are described below).
2. We may not allow you to make transfers during the free look period.
3. Your request for a transfer must clearly state which Variable Option(s) or
the Fixed Account is involved in the transfer.
4. Your request for a transfer must clearly state how much the transfer is for.
5. You cannot make any transfers within 7 calendar days prior to the date your
first Annuity Payment is due.
6. During the Payout Phase, you may not make a transfer from a fixed Annuity
Option to a variable Annuity Option.
7. During the Payout Phase, you can make at least one transfer from a variable
Annuity Option to a fixed Annuity Option.
Allianz Life has reserved the right to modify the transfer provisions subject to
the guarantees described above and subject to applicable state law.
You can make transfers by telephone. We may allow you to authorize someone else
to make transfers by telephone on your behalf. If you own the Contract with a
Joint Owner, unless Allianz Life is instructed otherwise, Allianz Life will
accept instructions from either one of you. Allianz Life will use reasonable
procedures to confirm that instructions given to us by telephone are genuine. If
we do not use such procedures, we may be liable for any losses due to
unauthorized or fraudulent instructions. Allianz Life tape records all telephone
instructions.
DOLLAR COST AVERAGING PROGRAM
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount of money each month or quarter from any one Variable Option or the Fixed
Account to up to eight of the other Variable Options. The Variable Option(s) you
transfer from may not be the Variable Option(s) you transfer to in this program.
By allocating amounts on a regularly scheduled basis, as opposed to allocating
the total amount at one particular time, you may be less susceptible to the
impact of market fluctuations. You may only participate in this program during
the Accumulation Phase.
Dollar Cost Averaging requires a $3,000 minimum investment and participation for
at least six months (or two quarters). All Dollar Cost Averaging transfers will
be made on the 10th day of the month unless that day is not a business day. If
it is not, then the transfer will be made the next business day. You may elect
this program by properly completing the Dollar Cost Averaging form provided by
Allianz Life.
Your participation in the program will end when any of the following occurs:
(1) the number of desired transfers have been made;
(2) you do not have enough money in the Variable Option(s) or the Fixed Account
to make the transfer (if less money is available, that amount will be
transferred under the program and the program will end);
(3) you request to terminate the program (your request must be received by us by
the first of the month to terminate that month); or
(4) the Contract is terminated.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the program are not taken into account in determining any transfer fee.
You may not participate in the Dollar Cost Averaging Program and Flexible
Rebalancing at the same time.
FLEXIBLE REBALANCING
Once your money has been invested, the performance of the Variable Options may
cause your chosen allocation to shift. Flexible Rebalancing is designed to help
you maintain your specified allocation mix among the different Variable Options.
You can direct us to readjust your Contract value on a quarterly, semi-annual or
annual basis to return to your original Variable Option allocations. Flexible
Rebalancing transfers will be made on the 20th day of the month unless that day
is not a business day. If it is not, then the transfer will be made on the
previous day.
If you participate in Flexible Rebalancing, the transfers made under the program
are not taken into account in determining any transfer fee. The Fixed Account is
not permitted to be part of Flexible Rebalancing.
FINANCIAL ADVISERS -
ASSET ALLOCATION PROGRAMS
Allianz Life understands the importance of advice from a financial adviser
regarding your investments in the Contract (asset allocation program). Certain
investment advisers have made arrangements with us to make their services
available to you. Allianz Life has not made any independent investigation of
these advisers and is not endorsing such programs. You may be required to enter
into an advisory agreement with your investment adviser to have the fees paid
out of your Contract during the Accumulation Phase.
Allianz Life will, pursuant to an agreement with you, make a partial withdrawal
from the value of your Contract to pay for the services of the investment
adviser. If the Contract is Non-Qualified, the withdrawal will be treated like
any other distribution and may be included in gross income for federal tax
purposes and, if you are under age 591/2, may be subject to a tax penalty. If
the Contract is Qualified, the withdrawal for the payment of fees may not be
treated as a taxable distribution if certain conditions are met. You should
consult a tax adviser regarding the tax treatment of the payment of investment
adviser fees from your Contract.
VOTING PRIVILEGES
Allianz Life is the legal owner of the Portfolio shares. However, when a
Portfolio solicits proxies in conjunction with a shareholder vote which affects
your investment, Allianz Life will obtain from you and other affected Contract
Owners instructions as to how to vote those shares. When we receive those
instructions, we will vote all of the shares we own in proportion to those
instructions. This will also include any shares that Allianz Life owns on its
own behalf. Should Allianz Life determine that it is no longer required to
comply with the above, we will vote the shares in our own right.
SUBSTITUTION
Allianz Life may substitute one of the Variable Options you have selected with
another Variable Option. We would not do this without the prior approval of the
Securities and Exchange Commission. We will give you notice of our intention to
do this. We may also limit further investment in a Variable Option if we deem
the investment inappropriate.
5. EXPENSES
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There are charges and other expenses associated with the Contract that will
reduce your investment return. These charges and expenses are:
INSURANCE CHARGES
Each day, Allianz Life makes a deduction for its insurance charges. Allianz Life
does this as part of its calculation of the value of the Accumulation Units and
the Annuity Units. The insurance charge has two parts:
1) the mortality and expense risk charge, and
2) the administrative charge.
Mortality and Expense Risk Charge. The amount of the Mortality and Expense Risk
Charge for your Contract depends upon the death benefit option you select when
you buy the Contract. If you choose the traditional death benefit option, this
charge is equal, on an annual basis, to 1.00% of the average daily value of the
Contract invested in a Variable Option, after the deduction of expenses. If you
choose the enhanced death benefit option, this charge is equal, on an annual
basis, to 1.20% of the average daily value of the Contract invested in a
Variable Option, after the deduction of expenses. This charge compensates us for
all the insurance benefits provided by your Contract (for example, our
contractual obligation to make Annuity Payments, the death benefits, certain
expenses related to the Contract, and for assuming the risk (expense risk) that
the current charges will be insufficient in the future to cover the cost of
administering the Contract).
Administrative Charge. This charge is equal, on an annual basis, to .15% of the
average daily value of the Contract invested in a Variable Option, after the
deduction of expenses. This charge, together with the contract maintenance
charge (which is explained below), is for all the expenses associated with the
administration of the Contract. Some of these expenses include: preparation of
the Contract, confirmations, annual statements, maintenance of Contract records,
personnel costs, legal and accounting fees, filing fees, and computer and
systems costs.
CONTRACT MAINTENANCE CHARGE
Every year, at each Contract anniversary, Allianz Life deducts $40 from your
Contract as a contract maintenance charge. The fee is assessed on the last day
of each Contract year. (In South Carolina, if your Contract is in force on the
20th Contract anniversary, we will waive the contract maintenance charge that is
to be deducted after the 20th Contract anniversary). This charge is for
administrative expenses (see above). This charge can not be increased.
However, during the Accumulation Phase, if the value of your Contract is at
least $100,000 when the deduction for the charge is to be made, Allianz Life
will not deduct this charge. If you own more than one Franklin Valuemark Charter
Contract, Allianz Life will determine the total value of all your Franklin
Valuemark Charter Contracts. If the total value of all Franklin Valuemark
Charter Contracts registered under the same social security number is at least
$100,000, Allianz Life will not assess the contract maintenance charge. If the
Contract is owned by a non-natural person (e.g., a corporation), Allianz Life
will look to the Annuitant to determine if it will assess the charge.
If you make a complete withdrawal from your Contract, the contract maintenance
charge will also be deducted. During the Payout Phase, the charge will be
collected monthly out of each Annuity Payment.
TRANSFER FEE
You can make 12 free transfers every year. We measure a year from the day we
issue your Contract. If you make more than 12 transfers a year, we will deduct a
transfer fee of $25 or 2% of the amount that is transferred, whichever is less,
for each additional transfer. If the transfer is part of the Dollar Cost
Averaging Program or Flexible Rebalancing, it will not count in determining the
transfer fee.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. Allianz Life is responsible for the payment of
these taxes and will make a deduction from the value of the Contract for them.
Some of these taxes are due when the Contract is issued, others are due when
Annuity Payments begin. It is Allianz Life's current practice to not charge you
for these taxes until you die, Annuity Payments begin or you make a complete
withdrawal. Allianz Life may, some time in the future, discontinue this practice
and assess the charge when the tax is due. Premium taxes generally range from 0%
to 3.5% of the Purchase Payment, depending on the state.
INCOME TAXES
Allianz Life reserves the right to deduct from the Contract for any income taxes
which it may incur because of the Contract. Currently, Allianz Life is not
making any such deductions.
PORTFOLIO EXPENSES
There are deductions from the assets of the various Portfolios for operating
expenses (including management fees), which are described in the Fee Table in
this prospectus and the accompanying fund prospectuses.
6. TAXES
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Note: Allianz Life has prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice. You should consult
your own tax adviser about your own circumstances. Allianz Life has included
additional information regarding taxes in the Statement of Additional
Information.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Basically, these rules provide that you will not be taxed on any earnings on the
money held in your annuity Contract until you take the money out. This is
referred to as Tax Deferral. There are different rules regarding how you will be
taxed depending upon how you take the money out and the type of Contract -
Qualified or Non-Qualified (see following sections).
You, as the Contract Owner, will not be taxed on increases in the value of your
Contract until a distribution occurs either as a withdrawal or as Annuity
Payments. When you make a withdrawal you are taxed on the amount of the
withdrawal that is earnings. For Annuity Payments, different rules apply. A
portion of each Annuity Payment you receive will be treated as a partial return
of your Purchase Payments and will not be taxed. The remaining portion of the
Annuity Payment will be treated as ordinary income. How the Annuity Payment is
divided between taxable and non-taxable portions depends upon the period over
which the Annuity Payments are expected to be made. Annuity Payments received
after you have received all of your Purchase Payments are fully includible in
income.
When a Non-Qualified Contract is owned by a non-natural person (e.g., a
corporation or certain other entities other than a trust holding the Contract as
an agent for a natural person), the Contract will generally not be treated as an
annuity for tax purposes. This means that the Contract may not receive the
benefits of Tax Deferral. Income may be taxed as ordinary income every year.
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the Contract under a Qualified plan, your Contract is referred
to as a Qualified Contract. Examples of Qualified plans are: Individual
Retirement Annuities (IRAs), Tax-Sheltered Annuities (sometimes referred to as
403(b) contracts) and pension and profit-sharing plans, which include 401(k)
plans and H.R. 10 plans. If you do not purchase the Contract under a Qualified
plan, your Contract is referred to as a Non-Qualified Contract.
MULTIPLE CONTRACTS
The Code provides that multiple Non-Qualified annuity contracts which are issued
within a calendar year period to the same Contract Owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences, including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange. You
should consult a tax adviser prior to purchasing more than one Non-Qualified
annuity contract in any calendar year period.
WITHDRAWALS - NON-QUALIFIED CONTRACTS
If you make a withdrawal from your Contract, the Code treats such a withdrawal
as first coming from earnings and then from your Purchase Payments. In most
cases, such withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a tax penalty. The amount of the penalty
is equal to 10% of the amount that is includible in income. Some withdrawals
will be exempt from the penalty. They include any amounts:
(1) paid on or after the taxpayer reaches age 591/2;
(2) paid after you die;
(3) paid if the taxpayer becomes totally disabled (as that term is defined in
the Code);
(4) paid in a series of substantially equal payments made annually (or more
frequently) for life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which come from purchase payments made prior to August 14, 1982.
WITHDRAWALS - QUALIFIED CONTRACTS
The above information describing the taxation of Non-Qualified Contracts does
not apply to Qualified Contracts. There are special rules that govern Qualified
Contracts. A more complete discussion of withdrawals from Qualified Contracts is
contained in the Statement of Additional Information.
WITHDRAWALS - TAX-SHELTERED ANNUITIES
The Code limits the withdrawal of Purchase Payments made by Contract Owners from
certain Tax-Sheltered Annuities. Withdrawals can only be made when a Contract
Owner:
(1) reaches age 591/2;
(2) leaves his/her job;
(3) dies;
(4) becomes disabled (as that term is defined in the Code); or
(5) in the case of hardship. However, in the case of hardship, the Contract
Owner can only withdraw the Purchase Payments and not any earnings.
DIVERSIFICATION
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Allianz Life believes that the Portfolios are being managed so
as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not Allianz Life,
would be considered the owner of the shares of the Portfolios. If you are
considered the owner of the shares, it will result in the loss of the favorable
tax treatment for the Contract. It is unknown to what extent under federal tax
law Contract Owners are permitted to select Portfolios, to make transfers among
the Portfolios or the number and type of Portfolios Contract Owners may select
from without being considered the owner of the shares. If any guidance is
provided which is considered a new position, then the guidance would generally
be applied prospectively. However, if such guidance is considered not to be a
new position, it may be applied retroactively. This would mean that you, as the
owner of the Contract, could be treated as the owner of the Portfolios.
Due to the uncertainty in this area, Allianz Life reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
7. ACCESS TO YOUR MONEY
- -------------------------------------------------------------------------------
You can have access to the money in your Contract:
(1) by making a withdrawal (either a partial or a total withdrawal);
(2) by receiving Annuity Payments; or
(3) when a death benefit is paid to your Beneficiary.
Withdrawals can only be made during the Accumulation Phase.
When you make a complete withdrawal you will receive the value of the Contract
on the day you made the withdrawal, less any premium tax and less any contract
maintenance charge. (See Section 5 - "Expenses" for a discussion of the
charges.)
Any partial withdrawal must be for at least $500 and, unless you instruct
Allianz Life otherwise, will be made pro-rata from all the Variable Options and
the Fixed Account you selected. Allianz Life requires that after you make a
partial withdrawal the value of your Contract must be at least $5,000.
We will pay the amount of any withdrawal from the Variable Options within seven
(7) days of when we receive your request in good order unless the Suspension of
Payments or Transfers provision is in effect (see below).
Income taxes, tax penalties and certain restrictions may apply to any withdrawal
you make.
There are limits to the amount you can withdraw from a Qualified plan referred
to as a 403(b) plan. For a more complete explanation see Section 6 - "Taxes" and
the discussion in the SAI.
SYSTEMATIC WITHDRAWAL PROGRAM
Allianz Life offers a program which provides automatic monthly or quarterly
payments to you each year. All systematic withdrawals will be made on the 9th
day of the month unless that day is not a business day. If it is not, then the
withdrawal will be made the previous business day.
Income taxes, tax penalties and certain restrictions may apply to systematic
withdrawals.
MINIMUM DISTRIBUTION PROGRAM
If you own a Contract that is an Individual Retirement Annuity (IRA), you may
select the Minimum Distribution Program. Under this program, Allianz Life will
make payments to you from your Contract that are designed to meet the applicable
minimum distribution requirements imposed by the Code for IRAs. If the value of
your Contract is at least $25,000, Allianz Life will make payments to you on a
monthly or quarterly basis.
SUSPENSION OF PAYMENTS OR TRANSFERS
Allianz Life may be required to suspend or postpone payments for withdrawals or
transfers for any period when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of the Portfolio shares is
not reasonably practicable or Allianz Life cannot reasonably value the Portfolio
shares;
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Contract Owners.
Allianz Life has reserved the right to defer payment for a withdrawal or
transfer from the Fixed Account for the period permitted by law but not for more
than six months.
<PAGE>
8. PERFORMANCE
- -------------------------------------------------------------------------------
Allianz Life periodically advertises performance of the Variable Options.
Allianz Life will calculate performance by determining the percentage change in
the value of an Accumulation Unit by dividing the increase (decrease) for that
unit by the value of the Accumulation Unit at the beginning of the period. This
performance number reflects the deduction of the insurance charges and the
Portfolio expenses. It may not reflect the deduction of any applicable contract
maintenance charge. The deduction of any applicable contract maintenance charge
would reduce the percentage increase or make greater any percentage decrease.
Any advertisement will also include average annual total return figures which
reflect the deduction of the insurance charges, contract maintenance charge and
the expenses of the Portfolios. Allianz Life may also advertise cumulative total
return information. Cumulative total return is determined the same way except
that the results are not annualized. Performance information for the underlying
Portfolios may also be advertised; see the accompanying funds' prospectuses for
more information.
Certain Portfolios have been in existence for some time and have investment
performance history. However, the Contracts are new. In order to demonstrate how
the historical investment experience of the Portfolios may affect your
Accumulation Unit values, Allianz Life has prepared performance information
which can be found in the SAI. There is performance shown which is based on the
historical performance of the Portfolios, modified to reflect the current
charges and expenses of your Contract as if the Contract had been in existence
for the time periods shown.
For the Franklin Templeton Variable Insurance Products Trust, the performance is
based on the Portfolio's Class 1 shares. Class 2 shares are relatively new and
effective July 1, 1999 currently have Rule 12b-1 Plan expenses of .25% per year
which will affect future performance. Prior to July 1, 1999 the Class 2 shares
had 12b-1 plan expenses of .30% per year. The information is based upon the
historical experience of the Portfolios' Class 1 shares and does not represent
past performance or predict future performance.
Allianz Life may in the future also advertise yield information. If it does, it
will provide you with information regarding how yield is calculated. More
detailed information regarding how performance is calculated is found in the
SAI.
Any performance advertised will be based on historical data and does not
guarantee future results of the Portfolios.
9. DEATH BENEFIT
- -------------------------------------------------------------------------------
UPON YOUR DEATH
If you die during the Accumulation Phase, Allianz Life will pay a death benefit
to your Beneficiary (see below). No death benefit is paid if you die during the
Payout Phase.
The amount of the death benefit depends upon which death benefit option you
select. You must choose a death benefit option (traditional death benefit or
enhanced death benefit) when you purchase the Contract. Once selected, you
cannot change the death benefit option. The Mortality and Expense Risk Charge
for Contracts with the enhanced death benefit option is higher than for
Contracts with the traditional death benefit option.
If you select the traditional death benefit option, the amount of the death
benefit will be the greater of:
(1) the value of your Contract, less any applicable premium taxes; or
(2) any payments you have made, less any withdrawals and applicable premium
taxes.
If you select the enhanced death benefit option, the amount of the death benefit
will be the greater of:
(1) the value of your Contract, less any applicable premium taxes; or
(2) the guaranteed minimum death benefit, less any applicable premium taxes.
The guaranteed minimum death benefit is the greater of:
(a) the sum of all payments you have made, less any withdrawals; or
(b) the greatest value of your Contract Anniversaries prior to your 86th
birthday (your Contract Anniversaries equal the value of your Contract on a
Contract anniversary, increased by the amount of any payments you have made
since that anniversary, less the amount of any withdrawals you have made since
that anniversary).
If you have a Joint Owner, the age of the oldest Contract Owner will be used to
determine the guaranteed minimum death benefit. The guaranteed minimum death
benefit will be reduced by any amounts withdrawn after the date of death. If the
Contract is owned by a non-natural person, then all references to you mean the
Annuitant.
The death benefits described above may not be available in your state. In
addition, only one of the options may be approved in your state. If neither
death benefit is available, the death benefit will be equal to the value of your
Contract (less any premium taxes) on the close of the business day that Allianz
Life receives proof of the death and payment instructions.
In the case of Joint Owners, if a Joint Owner dies, the surviving Joint Owner
will be considered the Beneficiary. Joint Owners must be spouses (except in
Pennsylvania, Oregon and New Jersey).
A Beneficiary may request that the death benefit be paid in one of the following
ways: (1) payment of the entire death benefit within 5 years of the date of
death; or (2) payment of the death benefit under an Annuity Option. The death
benefit payable under an Annuity Option must be paid over the Beneficiary's
lifetime or for a period not extending beyond the Beneficiary's life expectancy.
Payment must begin within one year of the date of death. If the Beneficiary is
the spouse of the Contract Owner, he/she can choose to continue the Contract in
his/her own name at the then current value, or if greater, the death benefit
value. If a lump sum payment is elected and all the necessary requirements,
including any required tax consent from some states, are met, the payment will
be made within 7 days. Payment of the death benefit may be delayed pending
receipt of any applicable tax consents and/or forms from a state.
If you (or any Joint Owner) die during the Payout Phase and you are not the
Annuitant, any payments which are remaining under the Annuity Option selected
will continue at least as rapidly as they were being paid at your death. If you
die during the Payout Phase, the Beneficiary becomes the Contract Owner.
DEATH OF ANNUITANT
If the Annuitant, who is not a Contract Owner or Joint Owner, dies during the
Accumulation Phase, you can name a new Annuitant. If a new Annuitant is not
named within 30 days of the death of the Annuitant, you will become the
Annuitant. However, if the Contract Owner is a non-natural person (e.g., a
corporation), then the death of the Annuitant will be treated as the death of
the Contract Owner, and a new Annuitant may not be named.
If the Annuitant dies after Annuity Payments have begun, the remaining amounts
payable, if any, will be as provided for in the Annuity Option selected. The
remaining amounts payable will be paid to the Contract Owner at least as rapidly
as they were being paid at the Annuitant's death.
10. OTHER INFORMATION
- -------------------------------------------------------------------------------
ALLIANZ LIFE
Allianz Life Insurance Company of North America (Allianz Life), 1750 Hennepin
Avenue, Minneapolis, Minnesota 55403, was organized under the laws of the state
of Minnesota in 1896. Allianz Life offers fixed and variable life insurance and
annuities and group life, accident and health insurance. Allianz Life is
licensed to do business in 49 states and the District of Columbia. Allianz Life
is a wholly-owned subsidiary of Allianz Versicherungs-AG Holding.
YEAR 2000
Allianz Life has initiated programs to ensure that all of the computer systems
utilized to provide services and administer policies will function properly in
the year 2000. An assessment of the total expected costs specifically related to
the year 2000 conversion has been completed. These costs are expensed as
incurred and total costs are not expected to have a significant effect on
Allianz Life's financial position or results of operations. Allianz Life
believes it is taking steps that are reasonably designed to address the
potential failure of computer systems used by its service providers and to
ensure its year 2000 program is completed on a timely basis. There can be no
assurance, however, that the steps taken by Allianz Life will be adequate to
avoid any adverse impact.
THE SEPARATE ACCOUNT
Allianz Life established a separate account named Allianz Life Variable Account
B (Separate Account), to hold the assets that underlie the Contracts, except
assets allocated to the Fixed Account. The Board of Directors of Allianz Life
adopted a resolution to establish the Separate Account under Minnesota insurance
law on May 31, 1985. Allianz Life has registered the Separate Account with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940. The Separate Account is divided into Variable
Options (also known as sub-accounts). Each Variable Option invests in one Class
of shares of a Portfolio.
The assets of the Separate Account are held in Allianz Life's name on behalf of
the Separate Account and legally belong to Allianz Life. However, those assets
that underlie the variable Contracts are not chargeable with liabilities arising
out of any other business Allianz Life may conduct. All the income, gains and
losses (realized or unrealized) resulting from these assets are credited to or
charged against the Contracts and not against any other contracts Allianz Life
may issue.
DISTRIBUTION
NALAC Financial Plans, LLC (NFP), 1750 Hennepin Avenue, Minneapolis, MN 55403,
acts as the distributor of the Contracts. NFP is a wholly-owned subsidiary of
Allianz Life.
Commissions will be paid to broker-dealers who sell the Contracts.
Broker-dealers will be paid commissions up to 2.00% of Purchase Payments and
quarterly trail commissions at an annual rate of 1% beginning 13 months after
the Contract is issued. In addition, Allianz Life may pay certain sellers for
other services not directly related to the sale of the Contracts (such as
special marketing support allowances). Commissions may be recovered from a
broker-dealer if a withdrawal occurs within 12 months of a Purchase Payment.
ADMINISTRATION
Allianz Life has hired Delaware Valley Financial Services, Inc. (DVFS), 300
Berwyn Park, Berwyn, Pennsylvania, to perform certain administrative services
regarding the Contracts. The administrative services include issuance of the
Contracts and maintenance of Contract Owner's records.
FINANCIAL STATEMENTS
The consolidated financial statements of Allianz Life and the Separate Account
have been included in the Statement of Additional Information.
<PAGE>
TABLE OF CONTENTS
OF THE STATEMENT OF
ADDITIONAL INFORMATION
Insurance Company 2
Experts 2
Legal Opinions 2
Distributor 2
Calculation of Performance Data 2
Federal Tax Status 6
Annuity Provisions 11
Mortality and Expense Risk Guarantee 11
Financial Statements 11
APPENDIX
- -------------------------------------------------------------------------------
Condensed Financial Information
The consolidated financial statements of Allianz Life Insurance Company of North
America and the financial statements of Allianz Life Variable Account B may be
found in the Statement of Additional Information.
The table below includes Accumulation Unit values for the periods indicated.
This information should be read in conjunction with the financial statements and
related notes of the Separate Account included in the Statement of Additional
Information.
(Number of units in thousands)
Period
Sub-Accounts: June 30, 1999
- -------------------------------------------------------------------------------
Franklin Capital Growth
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Franklin Global Health Care Securities*
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Franklin Global Utilities Securities
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Franklin Growth and Income
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Franklin High Income
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Franklin Income Securities
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Franklin Money Market
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Franklin Mutual Discovery Securities
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Franklin Mutual Shares Securities
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
(Number of units in thousands)
Franklin Natural Resources Securities
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Franklin Real Estate Securities
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Franklin Rising Dividends
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Franklin Small Cap
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Franklin U.S. Government Securities
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Franklin Value Securities*
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Templeton Developing Markets Equity
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Templeton Global Asset Allocation
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Templeton Global Growth
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Templeton Global Income Securities
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Templeton International Equity
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
(Number of units in thousands)
Templeton International Smaller Companies
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
Templeton Pacific Growth
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
*The Franklin Global Health Care Securities and the Franklin Value Securities
Sub-Accounts commenced operations May 1, 1998.
There are no accumulation unit values shown for the Franklin S&P 500 Index, AIM
V.I. Growth, Alger American Growth, Alger American Leveraged AllCap, USAllianz
Growth, USAllianz Diversified Assets, and USAllianz Intermediate Fixed Income
sub-accounts because they commence operations as of the date of this prospectus
and therefore had no assets as of June 30, 1999.
PART B
STATEMENT OF ADDITIONAL INFORMATION
FRANKLIN VALUEMARK CHARTER
INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
October 25, 1999
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS WHICH ARE REFERRED TO HEREIN. THE PROSPECTUS
CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW
BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, CALL OR WRITE THE INSURANCE
COMPANY AT:
1750 Hennepin Avenue, Minneapolis, MN 55403-2195,
(800) 342-3863.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE PROSPECTUS ARE DATED OCTOBER
25, 1999, AND AS MAY BE AMENDED FROM TIME TO TIME.
Table of Contents
ContentsPage
Insurance Company ............................... 2
Experts ......................................... 2
Legal Opinions .................................. 2
Distributor ..................................... 2
Calculation of Performance Data ................. 2
Federal Tax Status .............................. 6
Annuity Provisions .............................. 11
Mortality and Expense Risk Guarantee ............ 11
Financial Statements ............................ 11
<PAGE>
Insurance Company
- -------------------------------------------------------------------------------
Allianz Life Insurance Company of North America (the "Insurance Company") is a
stock life insurance company organized under the laws of the state of Minnesota
in 1896. The Insurance Company is a wholly-owned subsidiary of Allianz
Versicherungs-AG Holding ("Allianz"). Allianz is headquartered in Munich,
Germany, and has sales outlets throughout the world. The Insurance Company
offers fixed and variable life insurance and annuities, and group life, accident
and health insurance. On April 1, 1993, the Insurance Company changed its name
from North American Life and Casualty Company to its present name.
The Insurance Company is rated A+ (Superior) by A.M. BEST, an independent
analyst of the insurance industry. The financial strength of an insurance
company may be relevant insofar as the ability of a company to make fixed
annuity payments from its general account.
Experts
- -------------------------------------------------------------------------------
The financial statements of Allianz Life Variable Account B and the consolidated
financial statements of the Insurance Company as of and for the year ended
December 31, 1998 included in this Statement of Additional Information have been
audited by independent auditors, as indicated in their reports included in this
Statement of Additional Information and are included herein in reliance upon
such reports and upon the authority of said firm as experts in accounting and
auditing.
Legal Opinions
- -------------------------------------------------------------------------------
Blazzard, Grodd & Hasenauer, P.C., Westport, Connecticut has provided advice on
certain matters relating to the federal securities and income tax laws in
connection with the Contracts.
Distributor
- -------------------------------------------------------------------------------
NALAC Financial Plans, LLC, a subsidiary of the Insurance Company, acts as the
distributor. The offering is on a continuous basis.
Calculation of Performance Data
- -------------------------------------------------------------------------------
Total Return
From time to time, the Insurance Company may advertise the performance data for
the Contract's accumulation unit values in sales literature, advertisements,
personalized hypothetical illustrations, and Contract Owner communications. Such
data will show the percentage change in the value of an accumulation unit based
on the performance of a Portfolio over a stated period of time which is
determined by dividing the increase (or decrease) in value for that unit by the
accumulation unit value at the beginning of the period.
Any such performance data will include total return figures for the one, five,
and ten year (or since inception) time periods indicated. Such total return
figures will reflect the deduction of the Mortality and Expense Risk Charge, the
Administrative Charge, the operating expenses of the underlying Portfolios and
any applicable Contract Maintenance Charge ("Standardized Total Return"). Two
sets of standardized total returns will be presented (one calculated with a
1.00% Mortality and Expense Risk Charge and the other with a 1.20% Mortality and
Expense Risk Charge). The Contract Maintenance Charge deductions are calculated
assuming a Contract is surrendered at the end of the reporting period.
The hypothetical value of a Contract purchased for the time periods described
will be determined by using the actual accumulation unit values for an initial
$1,000 purchase payment, and deducting any applicable Contract Maintenance
Charges to arrive at the ending hypothetical value. The average annual total
return is then determined by computing the fixed interest rate that a $1,000
purchase payment would have to earn annually, compounded annually, to grow to
the hypothetical value at the end of the time periods described. The formula
used in these calculations is:
P(1 + T)n = ERV
where:
P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years;
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the time periods used at the end of such time periods (or
fractional portion thereof).
The Insurance Company may also advertise performance data which will be
calculated in the same manner as described above but which will not reflect the
deduction of the Contract Maintenance Charge. The Insurance Company may also
advertise cumulative and average total return information over different periods
of time. The Company may also present performance information computed on a
different basis ("Non-Standardized Total Return").
Cumulative total return is calculated in a similar manner, except that the
results are not annualized. Each calculation assumes that no sales load is
deducted from the initial $1,000 payment at the time it is allocated to the
Portfolios and assumes that the income earned by the investment in the Portfolio
is reinvested.
Contract Owners should note that investment results will fluctuate over time,
and any presentation of total return for any period should not be considered as
a representation of what an investment may earn or what a Contract Owner's total
return may be in any future period.
Yield
The Franklin Money Market Sub-Account. The Insurance Company may advertise yield
information for the Franklin Money Market Sub-Account. The Franklin Money Market
Sub-Account's current yield may vary each day, depending upon, among other
things, the average maturity of the underlying Portfolio's investment securities
and changes in interest rates, operating expenses, the deduction of the
Mortality and Expense Risk Charge, the Administrative Charge, the Contract
Maintenance Charge and the expenses of the underlying Portfolios' Class 2 shares
and, in certain instances, the value of the underlying Portfolio's investment
securities. The fact that the Portfolio's current yield will fluctuate and that
the principal is not guaranteed should be taken into consideration when using
the Portfolio's current yield as a basis for comparison with savings accounts or
other fixed-yield investments. The yield at any particular time is not
indicative of what the yield may be at any other time.
The Franklin Money Market Sub-Account's current yield will be computed on a base
period return of a hypothetical Contract having a beginning balance of one
accumulation unit for a particular period of time (generally seven days). The
return will be determined by dividing the net change (exclusive of any capital
changes) in such accumulation unit by its beginning value, and then multiplying
it by 365/7 to get the annualized current yield. The calculation of net change
will reflect the value of additional shares purchased with the dividends paid by
the Portfolio, and the deduction of the Mortality and Expense Risk Charge, the
Administrative Charge and Contract Maintenance Charge. The effective yield will
reflect the effects of compounding and represents an annualization of the
current return with all dividends reinvested. (Effective Yield = [(Base Period
Return + 1)365/7] - 1.)
For the seven-day period ending on 12/31/98, the Franklin Money Market
Sub-Account had a current yield of 3.63% and an effective yield of 3.70% for
contracts with the traditional death benefit and a current yield of 3.43% and an
effective yield of 3.49% for contracts with the enhanced death benefit. The
yield information assumes that the Sub-Account was invested in the Franklin
Money Market Fund for the time period shown. Because the Portfolios' Class 2
shares are new, the yield is based on the historical yield of the Portfolios'
Class 1 shares. Class 2 shares have 12b-1 plan expenses currently equal to .30%
per year which will affect future yields.
Other Sub-Accounts. The Insurance Company may also quote yield in sales
literature, advertisements, personalized hypothetical illustrations, and
Contract Owner communications for the other Sub-Accounts. Each Sub-Account
(other than the Franklin Money Market Sub-Account) will publish standardized
total return information with any quotation of current yield.
The yield computation is determined by dividing the net investment income per
accumulation unit earned during the period (minus the deduction for the
Mortality and Expense Risk Charge, Administrative Charge and Contract
Maintenance Charge) by the accumulation unit value on the last day of the period
and annualizing the resulting figure, according to the following formula:
Yield = 2 [((a-b) + 1)6 - 1]
- -------------------------------------------------------------------------------
cd
where:
a = net investment income earned during the period by the Portfolio
attributable to shares owned by the Sub-Account;
b = expenses accrued for the period (net of reimbursements, if applicable);
c = the average daily number of accumulation units outstanding during the
period;
d = the maximum offering price per accumulation unit on the last day of the
period.
The above formula will be used in calculating quotations of yield, based on
specified 30-day periods (or one month) identified in the sales literature,
advertisement, or communication. Yield calculations assume no sales load. The
Insurance Company does not currently advertise yield information for any
Portfolio (other than the Franklin Money Market Fund).
Performance Ranking
Total return may be compared to relevant indices, including U.S. domestic and
international indices and data from Lipper Analytical Services, Inc., Standard &
Poor's Indices, or VARDS(R). From time to time, evaluation of performance by
independent sources may also be used.
Performance Information
In order to show how investment performance of the Portfolios affects
accumulation unit values, the following performance information was developed.
Section A
The charts below in Section A show accumulation unit performance which assume
that the accumulation units were invested in each of the Portfolios for the same
periods. Because the Franklin Templeton Variable Insurance Products Trust
Portfolios' Class 2 shares are new, the performance for the Portfolios of
Franklin Templeton Variable Insurance Products Trust below is based on the
historical performance of the Portfolios' Class 1 shares. Class 2 shares have
Rule 12b-1 plan expenses currently equal to .25% per year, which will affect
future performance.
The performance figures in Chart I represent performance figures for the
accumulation units which reflect the deduction of the Mortality and Expense Risk
Charge of 1.00% (for Contracts with the traditional death benefit option), the
Administrative Charge, and the operating expenses of the Portfolios. Chart II
presents performance figures for the accumulation units which are identical to
Chart I except the Mortality and Expense Risk Charge is calculated as 1.20% (for
Contracts with the enhanced death benefit option). Chart III represents
performance figures for the accumulation units which reflects the Mortality and
Expense Risk Charge (of 1.00%), the Administrative Charge, the Contract
Maintenance Charge and the operating expenses of the Portfolios. Chart IV
presents performance figures for the accumulation units which are identical to
Chart III except the Mortality and Expense Risk Charge is calculated as 1.20%.
Past performance does not guarantee future results.
<PAGE>
<TABLE>
<CAPTION>
Total Return for the periods ended June 30, 1999:
Chart I - Contracts with traditional death benefit
(reflects mortality and expense risk charge, administrative charge and portfolio expenses.)
Separate Account
Inception Since
Variable Option Date One Year Three Years Five Years Inception
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Franklin Capital Growth 5/1/96 18.92% N/A N/A 18.36%
Franklin Global Health Care Securities 5/1/98 N/A N/A N/A 9.54%
Franklin Global Utilities Securities 1/24/89 9.92% 13.39% 10.60% 11.31%
Franklin Growth and Income 1/24/89 7.09% 15.14% 14.19% 10.46%
Franklin High Income 1/24/89 -0.23% 7.39% 7.22% 8.12%
Franklin Income Securities 1/24/89 0.48% 8.56% 7.48% 9.98%
Franklin Money Market+ 1/24/89 4.02% 4.00% 3.84% 3.98%
Franklin Mutual Discovery Securities 11/8/96 -6.08% N/A N/A 5.80%
Franklin Mutual Shares Securities 11/8/96 -1.06% N/A N/A 8.45%
Franklin Natural Resources Securities 1/24/89 -26.23% -15.31% -9.85% -1.37%
Franklin Real Estate Securities 1/24/89 -17.77% 8.81% 8.77% 9.06%
Franklin Rising Dividends 1/27/92 5.70% 19.49% 15.72% 11.70%
Franklin Small Cap 11/1/95 -2.11% N/A N/A 12.97%
Franklin U.S. Government Securities 3/14/89 6.21% 5.54% 5.55% 7.04%
Franklin Value Securities 5/1/98 N/A N/A N/A -31.96%
Templeton Developing Markets Equity 3/15/94 -22.51% -5.63% N/A -4.32%
Templeton Global Asset Allocation 5/1/95 -1.18% 8.93% N/A 8.98%
Templeton Global Growth 3/15/94 7.73% 13.16% N/A 11.00%
Templeton Global Income Securities 1/24/89 5.86% 5.14% 4.36% 6.30%
Templeton International Equity 1/27/92 4.36% 11.88% 8.83% 9.50%
Templeton International Smaller
Companies 5/1/96 -13.28% N/A N/A -2.19%
Templeton Pacific Growth 1/27/92 -14.13% -15.79% -10.49% -2.79%
<FN>
The Franklin Global Health Care Securities and the Franklin Value Securities Sub-Accounts commenced operations on May 1, 1998.
The Franklin S&P 500 Index, USAllianz VIP Growth, USAllianz VIP Diversified Assets, and the USAllianz VIP Intermediate Fixed
Income Sub-Accounts commenced operations on October 25, 1999.
+Calculated with waiver of fees.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Chart II - Contracts with enhanced death benefit
(reflects mortality and expense risk charge, administrative charge and portfolio expenses.)
Separate Account
Inception Since
Variable Option Date One Year Three Years Five Years Inception
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Franklin Capital Growth 5/1/96 18.68% N/A N/A 18.12%
Franklin Global Health Care Securities 5/1/98 N/A N/A N/A 9.32%
Franklin Global Utilities Securities 1/24/89 9.70% 13.16% 10.38% 11.09%
Franklin Growth and Income 1/24/89 6.88% 14.91% 13.96% 10.24%
Franklin High Income 1/24/89 -0.43% 7.18% 7.01% 7.91%
Franklin Income Securities 1/24/89 0.28% 8.34% 7.27% 9.76%
Franklin Money Market+ 1/24/89 3.81% 3.80% 3.63% 3.78%
Franklin Mutual Discovery Securities 11/8/96 -6.27% N/A N/A 5.59%
Franklin Mutual Shares Securities 11/8/96 -1.25% N/A N/A 8.23%
Franklin Natural Resources Securities 1/24/89 -26.38% -15.48% -10.03% -1.57%
Franklin Real Estate Securities 1/24/89 -17.93% 8.59% 8.55% 8.84%
Franklin Rising Dividends 1/27/92 5.49% 19.25% 15.49% 11.48%
Franklin Small Cap 11/1/95 -2.31% N/A N/A 12.75%
Franklin U.S. Government Securities 3/14/89 6.00% 5.33% 5.34% 6.83%
Franklin Value Securities 5/1/98 N/A N/A N/A -32.10%
Templeton Developing Markets Equity 3/15/94 -22.66% -5.82% N/A -4.51%
Templeton Global Asset Allocation 5/1/95 -1.38% 8.72% N/A 8.77%
Templeton Global Growth 3/15/94 7.51% 12.94% N/A 10.78%
Templeton Global Income Securities 1/24/89 5.65% 4.93% 4.15% 6.09%
Templeton International Equity 1/27/92 4.15% 11.66% 8.62% 9.28%
Templeton International Smaller
Companies 5/1/96 -13.45% N/A N/A -2.38%
Templeton Pacific Growth 1/27/92 -14.30% -15.96% -10.66% -2.98%
<FN>
The Franklin Global Health Care Securities and the Franklin Value Securities Sub-Accounts commenced operation on May 1, 1998.
The Franklin S&P 500 Index, USAllianz VIP Growth, USAlliana VIP Diversified Assets, and USAllianz Intermediate Fixed Income
Sub-Accounts commenced operation on Octoer 25, 1999.
+Calculated with waiver of fees.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Chart III - Contracts with traditional death benefit
(reflects mortality and expense risk charge, administrative charge, contract
maintenance charge and portfolio expenses.)
Separate Account
Inception Since
Variable Option Date One Year Three Years Five Years Inception
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Franklin Capital Growth 5/1/96 18.82% N/A N/A 18.26%
Franklin Global Health Care Securities 5/1/98 N/A N/A N/A 9.38%
Franklin Global Utilities Securities 1/24/89 9.82% 13.30% 10.51% 11.24%
Franklin Growth and Income 1/24/89 6.99% 15.06% 14.11% 10.38%
Franklin High Income 1/24/89 -0.33% 7.30% 7.13% 8.05%
Franklin Income Securities 1/24/89 0.38% 8.47% 7.39% 9.91%
Franklin Money Market+ 1/24/89 3.92% 3.91% 3.75% 3.90%
Franklin Mutual Discovery Securities 11/8/96 -6.18% N/A N/A 5.67%
Franklin Mutual Shares Securities 11/8/96 -1.16% N/A N/A 8.32%
Franklin Natural Resources Securities 1/24/89 -26.33% -15.42% -9.96% -1.46%
Franklin Real Estate Securities 1/24/89 -17.87% 8.73% 8.69% 8.99%
Franklin Rising Dividends 1/27/92 5.60% 19.41% 15.64% 11.61%
Franklin Small Cap 11/1/95 -2.21% N/A N/A 12.87%
Franklin U.S. Government Securities 3/14/89 6.11% 5.44% 5.45% 6.96%
Franklin Value Securities 5/1/98 N/A N/A N/A -32.09%
Templeton Developing Markets Equity 3/15/94 -22.61% -5.72% N/A -4.42%
Templeton Global Asset Allocation 5/1/95 -1.28% 8.85% N/A 8.89%
Templeton Global Growth 3/15/94 7.63% 13.08% N/A 10.92%
Templeton Global Income Securities 1/24/89 5.76% 5.04% 4.26% 6.22%
Templeton International Equity 1/27/92 4.26% 11.80% 8.75% 9.42%
Templeton International Smaller
Companies 5/1/96 -13.38% N/A N/A -2.29%
Templeton Pacific Growth 1/27/92 -14.23% -15.90% -10.60% -2.88%
<FN>
The Franklin Global Health Care Securities and the Franklin Value Securities Sub-Accounts commenced operations on May 1, 1998.
The Franklin S&P 500 Index, USAllianz VIP Growth, USAllianz VIP Diversified Assets, and the USAllianz VIP Intermediate Fixed
Income Sub-Accounts commenced operations on October 25, 1999.
+Calculated with waiver of fees.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Chart IV - Contracts with enhanced death benefit
(reflects mortality and expense risk charge, administrative charge, contract
maintenance charge and portfolio expenses.)
Separate Account
Inception Since
Variable Option Date One Year Three Years Five Years Inception
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Franklin Capital Growth 5/1/96 18.58% N/A N/A 18.02%
Franklin Global Health Care Securities 5/1/98 N/A N/A N/A 9.17%
Franklin Global Utilities Securities 1/24/89 9.60% 13.07% 10.29% 11.02%
Franklin Growth and Income 1/24/89 6.78% 14.83% 13.88% 10.16%
Franklin High Income 1/24/89 -0.53% 7.09% 6.92% 7.83%
Franklin Income Securities 1/24/89 0.18% 8.25% 7.18% 9.70%
Franklin Money Market+ 1/24/89 3.71% 3.70% 3.54% 3.69%
Franklin Mutual Discovery Securities 11/8/96 -6.37% N/A N/A 5.46%
Franklin Mutual Shares Securities 11/8/96 -1.35% N/A N/A 8.10%
Franklin Natural Resources Securities 1/24/89 -26.48% -15.59% -10.14% -1.65%
Franklin Real Estate Securities 1/24/89 -18.03% 8.51% 8.47% 8.77%
Franklin Rising Dividends 1/27/92 5.39% 19.17% 15.41% 11.39%
Franklin Small Cap 11/1/95 -2.41% N/A N/A 12.64%
Franklin U.S. Government Securities 3/14/89 5.90% 5.23% 5.24% 6.75%
Franklin Value Securities 5/1/98 N/A N/A N/A -32.23%
Templeton Developing Markets Equity 3/15/94 -22.76% -5.91% N/A -4.62%
Templeton Global Asset Allocation 5/1/95 -1.48% 8.63% N/A 8.67%
Templeton Global Growth 3/15/94 7.41% 12.85% N/A 10.70%
Templeton Global Income Securities 1/24/89 5.55% 4.83% 4.05% 6.01%
Templeton International Equity 1/27/92 4.05% 11.58% 8.53% 9.20%
Templeton International Smaller
Companies 5/1/96 -13.55% N/A N/A -2.48%
Templeton Pacific Growth 1/27/92 -14.40% -16.07% -10.78% -3.07%
<FN>
The Franklin Global Health Care Securities and the Franklin Value Securities Sub-Accounts commenced operations on May 1, 1998.
The Franklin S&P 500 Index, USAllianz VIP Growth, USAllianz VIP Diversified Assets, and the USAllianz VIP Intermediate Fixed
Income Sub-Accounts commenced operations on October 25, 1999.
+Calculated with waiver of fees.
</FN>
</TABLE>
Section B
The Chart below in Section B shows hypothetical accumulation unit performance
based on the historical performance of the AIM V.I. Growth Fund, the Alger
American Growth Fund and the Alger American Leveraged AllCap Fund. The
performance figures assume that your Contract was invested in each of the
Portfolios commencing from the inception date of the Portfolio. The performance
figures in Column I reflect the deduction of the Mortality and Expense Risk
Charge, Administrative Charge and the operating expensed of the Portfolios.
The performance figures in Column II reflect the deduction of the Mortality and
Expense Risk Charge, Administrative Charge, the Contract Maintenance Charge,
the operating expenses of the Portfolios and assumes that you make a withdrawal
at the end of the period. Past performance does not guarantee future results.
<TABLE> <CAPTION>
Total Return for the periods ended June 30, 1999
Column I Column II
Portfolio Portfolio One Three Five Ten One Three Five Ten Years/
Inception Year Years Years Years/ Year Years Years Since
Date Since Inception
Inception
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AIM V.I. Growth 5/5/93
Alger American 1/9/89
Growth
Alger American 1/25/95
Leveraged AllCap
</TABLE>
Federal Tax Status
- -------------------------------------------------------------------------------
Note: The following description is based upon the Insurance Company's
understanding of current federal income tax law applicable to annuities in
general. The Insurance Company cannot predict the probability that any changes
in such laws will be made. Purchasers are cautioned to seek competent tax advice
regarding the possibility of such changes. The Insurance Company does not
guarantee the tax status of the Contracts. Purchasers bear the complete risk
that the Contracts may not be treated as "annuity contracts" under federal
income tax laws. It should be further understood that the following discussion
is not exhaustive and that special rules not described herein may be applicable
in certain situations. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
General
Section 72 of the Internal Revenue Code of 1986, as amended ("Code") governs
taxation of annuities in general. A Contract Owner is not taxed on increases in
the value of a Contract until distribution occurs, either in the form of a lump
sum payment or as annuity payments under the Annuity Option elected. For a lump
sum payment received as a total surrender (total redemption) or death benefit,
the recipient is taxed on the portion of the payment that exceeds the cost basis
of the Contract. For Non-Qualified Contracts, this cost basis is generally the
purchase payments, while for Qualified Contracts there may be no cost basis. The
taxable portion of the lump sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period certain or refund
feature) bears to the expected return under the Contract. The exclusion amount
for payments based on a variable annuity option is determined by dividing the
cost basis of the Contract (adjusted for any period certain or refund guarantee)
by the number of years over which the annuity is expected to be paid. Payments
received after the investment in the Contract has been recovered (i.e. when the
total of the excludible amounts equal the investment in the Contract) are fully
taxable. The taxable portion is taxed at ordinary income rates. For certain
types of Qualified Plans there may be no cost basis in the Contract within the
meaning of Section 72 of the Code. Contract Owners, annuitants and beneficiaries
under the Contracts should seek competent financial advice about the tax
consequences of any distributions.
The Insurance Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the Separate Account is not a separate entity from
the Insurance Company, and its operations form a part of the Insurance Company.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contracts meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Insurance Company intends that all Portfolios underlying the Contracts will
be managed by the investment advisers in such a manner as to comply with these
diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Contract Owner control
of the investments of the Separate Account will cause the Contract Owner to be
treated as the owner of the assets of the Separate Account, thereby resulting in
the loss of favorable tax treatment for the Contract. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of Contract Owner control which may be exercised under the Contract
is different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Contract Owner's ability to transfer
among investment choices or the number and type of investment choices available,
would cause the Contract Owner to be considered as the owner of the assets of
the Separate Account resulting in the imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to
receipt of payments under the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Contract Owner being
retroactively determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, the Insurance Company reserves the right to
modify the Contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year period to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences, including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange.
Contract Owners should consult a tax adviser prior to purchasing more than one
non-qualified annuity contract in any calendar year period.
Contracts Owned by Other than Natural Persons
Under Section 72(u) of the Code, the investment earnings on purchase payments
for the Contracts will be taxed currently to the Contract Owner if the Owner is
a non-natural person, e.g., a corporation or certain other entities. Such
Contracts generally will not be treated as annuities for federal income tax
purposes. However, this treatment is not applied to Contracts held by a trust or
other entity as an agent for a natural person nor to Contracts held by qualified
plans. Purchasers should consult their own tax counsel or other tax adviser
before purchasing a Contract to be owned by a non-natural person.
Tax Treatment of Assignments
An assignment or pledge of a Contract may be a taxable event. Contract Owners
should therefore consult competent tax advisers should they wish to assign or
pledge their Contracts.
Death Benefits
Any death benefits paid under the Contract are taxabel to the beneficiary. The
rules governing the taxation of payments from an annuity contract, as discussed
above, generally apply to the payment of death benefits and depend on whether
the death benefits are paid as a lump sum or as annuity payments. Estate taxes
may also apply.
Income Tax Withholding
All distributions or the portion thereof which is includible in the gross income
of the Contract Owner are subject to federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at the
rate of 10% from non-periodic payments. However, the Contract Owner, in most
cases, may elect not to have taxes withheld or to have withholding done at a
different rate.
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, which are not directly rolled
over to another eligible retirement plan or individual retirement account or
individual retirement annuity, are subject to a mandatory 20% withholding for
federal income tax. The 20% withholding requirement generally does not apply to:
a) a series of substantially equal payments made at least annually for the life
or life expectancy of the participant or joint and last survivor expectancy of
the participant and a designated beneficiary, or for a specified period of 10
years or more; or b) distributions which are required minimum distributions; or
c) the portion of the distributions not includible in gross income (i.e. returns
of after-tax contributions); or d) hardship withdrawals. Participants should
consult their own tax counsel or other tax adviser regarding withholding
requirements.
Tax Treatment of Withdrawals -
Non-Qualified Contracts
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the contract value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any distribution. However, the penalty is not imposed on amounts received: (a)
after the taxpayer reaches age 591/2; (b) after the death of the Contract Owner;
(c) if the taxpayer is totally disabled (for this purpose disability is as
defined in Section 72(m)(7) of the Code); (d) in a series of substantially equal
periodic payments made not less frequently than annually for the life (or life
expectancy) of the taxpayer or for the joint lives (or joint life expectancies)
of the taxpayer and his beneficiary; (e) under an immediate annuity; or (f)
which are allocable to purchase payments made prior to August 14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 591/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts.")
Qualified Plans
The Contracts offered by the Prospectus are designed to be suitable for use
under various types of Qualified Plans. Because of the minimum purchase payment
requirements, these Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified Plan varies with
the type of plan and terms and conditions of each specific plan. Contract
Owners, annuitants and beneficiaries are cautioned that benefits under a
Qualified Plan may be subject to the terms and conditions of the plan regardless
of the terms and conditions of the Contracts issued pursuant to the plan. Some
retirement plans are subject to distribution and other requirements that are not
incorporated into the Insurance Company's administrative procedures. Contract
Owners, participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law. Following are general descriptions of the
types of Qualified Plans with which the Contracts may be used. Such descriptions
are not exhaustive and are for general informational purposes only. The tax
rules regarding Qualified Plans are very complex and will have differing
applications, depending on individual facts and circumstances. Each purchaser
should obtain competent tax advice prior to purchasing a Contract issued under a
Qualified Plan.
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Insurance Company in
connection with Qualified Plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
the prospectus and this Statement of Additional Information. Generally,
Contracts issued pursuant to Qualified Plans are not transferable except upon
surrender or annuitization. Various penalty and excise taxes may apply to
contributions or distributions made in violation of applicable limitations.
Furthermore, certain withdrawal penalties and restrictions may apply to
withdrawals from Qualified Contracts. (See "Tax Treatment of Withdrawals -
Qualified Contracts.")
a. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the Contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employee until the
employee receives distributions from the Contract. The amount of contributions
to the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals - Qualified Contracts" and "Tax-Sheltered Annuities -
Withdrawal Limitations.") Employee loans are not allowed under these Contracts.
Any employee should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
b. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which may be deductible from the individual's taxable income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts.") Under
certain conditions, distributions from other IRAs and other Qualified Plans may
be rolled over or transferred on a tax-deferred basis into an IRA. Sales of
Contracts for use with IRAs are subject to special requirements imposed by the
Code, including the requirement that certain informational disclosure be given
to persons desiring to establish an IRA. Purchasers of Contracts to be qualified
as Individual Retirement Annuities should obtain competent tax advice as to the
tax treatment and suitability of such an investment.
Roth IRAs
Section 408A of the Code provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum of $2,000 per year and are not
deductible from taxable income. Lower maximum limitations apply to individuals
with adjusted gross incomes between $95,000 and $110,000 in the case of single
taxpayers, between $150,000 and $160,000 in the case of married taxpayers filing
joint returns, and between $0 and $10,000 in the case of married taxpayers
filing separately. An overall $2,000 annual limitation continues to apply to all
of a taxpayer's IRA contributions, including Roth IRAs and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA for at
least five years and, in addition, that the distribution is made either after
the individual reaches age 591/2, on the individual's death or disability, or as
a qualified first-time home purchase, subject to a $10,000 lifetime maximum, for
the individual, a spouse, child, grandchild, or ancestor. Any distribution which
is not a qualified distribution is taxable to the extent of earnings in the
distribution. Distributions are treated as made from contributions first and
therefore no distributions are taxable until distributions exceed the amount of
contributions to the Roth IRA. The 10% penalty tax and the regular IRA
exceptions to the 10% penalty tax apply to taxable distributions from a Roth
IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution. However, for rollovers in 1998, the
individual may pay that tax ratably over the four taxable year periods beginning
with tax year 1998.
Purchasers of Contracts to be qualified as a Roth IRA should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
c. Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit employers, including self-employed
individuals, to establish various types of retirement plans for employees. These
retirement plans may permit the purchase of the Contracts to provide benefits
under the Plan. Contributions to the Plan for the benefit of employees will not
be includible in the gross income of the employee until distributed from the
Plan. The tax consequences to participants may vary, depending upon the
particular Plan design. However, the Code places imitations and restrictions on
all Plans, including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions and withdrawals.
Participant loans are not allowed under the Contracts purchased in connection
with these Plans. (See "Tax Treatment of Withdrawals - Qualified Contracts.")
Purchasers of Contracts for use with Pension or Profit-Sharing Plans should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.
Tax Treatment of Withdrawals -
Qualified Contracts
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Contracts
issued and qualified under Code Sections 401 (Pension and Profit-Sharing Plans),
403(b) (Tax-Sheltered Annuities) and 408 and 408A (Individual Retirement
Annuities). To the extent amounts are not includible in gross income because
they have been properly rolled over to an IRA or to another eligible Qualified
Plan, no tax penalty will be imposed. The tax penalty will not apply to the
following distributions: (a) if distribution is made on or after the date on
which the Contract Owner or Annuitant (as applicable) reaches age 591/2; (b)
distributions following the death or disability of the Contract Owner or
Annuitant (as applicable) (for this purpose disability is as defined in Section
72(m)(7) of the Code); (c) after separation from service, distributions that are
part of substantially equal periodic payments made not less frequently than
annually for the life (or life expectancy) of the Contract Owner or Annuitant
(as applicable) or the joint lives (or joint life expectancies) of such Contract
Owner or Annuitant (as applicable) and his or her designated beneficiary; (d)
distributions to a Contract Owner or Annuitant (as applicable) who has separated
from service after he or she has attained age 55; (e) distributions made to the
Contract Owner or Annuitant (as applicable) to the extent such distributions do
not exceed the amount allowable as a deduction under Code Section 213 to the
Contract Owner or Annuitant (as applicable) for amounts paid during the taxable
year for medical care; (f) distributions made to an alternate payee pursuant to
a qualified domestic relations order; (g) distributions from an Individual
Retirement Annuity for the purchase of medical insurance (as described in
Section 213(d)(1)(D) of the Code) for the Contract Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Contract Owner or
Annuitant (as applicable) has received unemployment compensation for at least 12
weeks (this exception no longer applies after the Contract Owner or Annuitant
(as applicable) has been re-employed for at least 60 days); (h) distributions
from an Individual Retirement Annuity made to the Owner or Annuitant (as
applicable) to the extent such distributions do not exceed the qualified higher
education expenses (as defined in Section 72(t)(7) of the Code) of the Owner or
Annuitant (as applicable) for the taxable year; and (i) distributions from an
Individual Retirement Annuity made to the Owner or Annuitant (as applicable)
which are qualified first-time home buyer distributions (as defined in Section
72(t)(8) of the Code). The exceptions stated in items (d) and (f) above do not
apply in the case of an Individual Retirement Annuity. The exception stated in
item (c) applies to an Individual Retirement Annuity without the requirement
that there be a separation from service.
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 591/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
Generally, distributions from a Qualified Plan must commence no later than April
1 of the calendar year following the later of: (a) the year in which the
employee attains age 701/2, or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
Tax-Sheltered Annuities -
Withdrawal Limitations
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Contract Owner: (1) attains age 591/2;
(2) separates from service; (3) dies; (4) becomes disabled (within the meaning
of Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Contract Owner's
Contract Value which represents contributions by the Contract Owner and does not
include any investment results. The limitations on withdrawals became effective
on January 1, 1989 and apply only to salary reduction contributions made after
December 31, 1988, and to income attributable to such contributions and to
income attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect rollovers and transfers between certain Qualified
Plans. Contract Owners should consult their own tax counsel or other tax adviser
regarding any distributions.
Annuity Provisions
- --------------------------------------------------------------------------------
Fixed Annuity Payout
A fixed annuity is an annuity with payments which are guaranteed as to dollar
amount by the Insurance Company and do not vary with the investment experience
of a Portfolio. The Fixed Account value on the day immediately preceding the
Income Date will be used to determine the Fixed Annuity monthly payment. The
monthly Annuity Payment will be based upon the Contract Value at the time of
annuitization, the Annuity Option selected, the age of the Annuitant and any
joint Annuitant and the sex of the Annuitant and joint Annuitant where allowed.
Variable Annuity Payout
A variable annuity is an annuity with payments which:(1) are not predetermined
as to dollar amount; and (2) will vary in amount with the net investment results
of the applicable Portfolio(s).
Annuity Unit Value
On the Income Date, a fixed number of Annuity Units will be purchased as
follows:
The first Annuity Payment is equal to the Adjusted Contract Value, divided first
by $1,000 and then multiplied by the appropriate Annuity Payment amount for each
$1,000 of value for the Annuity Option selected. In each Portfolio the fixed
number of Annuity Units is determined by dividing the amount of the initial
Annuity Payment determined for each Portfolio by the Annuity Unit value on the
Income Date. Thereafter, the number of Annuity Units in each Portfolio remains
unchanged unless the Contract Owner elects to transfer between Portfolios. All
calculations will appropriately reflect the Annuity Payment frequency selected.
On each subsequent Annuity Payment date, the total Annuity Payment is the sum of
the Annuity Payments for each Portfolio. The Annuity Payment in each Portfolio
is determined by multiplying the number of Annuity Units then allocated to such
Portfolio by the Annuity Unit value for that Portfolio.
On each subsequent Valuation Date, the value of an Annuity Unit is determined in
the following way:
First: The Net Investment Factor is determined as described in the Prospectus
under "Purchase - Accumulation Units."
Second: The value of an Annuity Unit for a Valuation Period is equal to:
a. the value of the Annuity Unit for the immediately preceding Valuation Period.
b. multiplied by the Net Investment Factor for the current Valuation Period;
c. divided by the Assumed Net Investment Factor (see below) for the Valuation
Period.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. You may choose a 3%, 5% or
7% Assumed Investment Return. The Insurance Company may agree to use a different
value.
Mortality and Expense Risk Guarantee
- --------------------------------------------------------------------------------
The Insurance Company guarantees that the dollar amount of each annuity payment
after the first annuity payment will not be affected by variations in mortality
and expense experience.
Financial Statements
- --------------------------------------------------------------------------------
The audited consolidated financial statements of the Insurance Company as of and
for the year ended December 31, 1998, included herein should be considered only
as bearing upon the ability of the Insurance Company to meet its obligations
under the Contracts. The audited financial statements of the Separate Account as
of and for the year ended December 31, 1998, and the unaudited financial
statements as of and for the period ended June 30, 1999 are also included
herein.>>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements
The financial statements of the Company and the Variable Account will be
Filed by amendment.
b. Exhibits
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Variable Account(1)
2. Not Applicable
3. Principal Underwriter's Agreement(2)
4. Individual Variable Annuity Contract(3)
4. (i) Enhanced Death Benefit Endorsements(3)
4. (ii) Charitable Remainder Trust Endorsement(3)
5. Application for Individual Variable Annuity Contract(3)
6. (i) Copy of Articles of Incorporation of the Company(1)
(ii) Copy of the Bylaws of the Company(1)
7. Not Applicable
8. Form of Fund Participation Agreement(1)(4)
9. Opinion and Consent of Counsel(4)
10. Independent Auditors' Consent(4)
11. Not Applicable
12. Not Applicable
13. Calculation of Performance Information(4)
14. Company Organizational Chart(2)
27. Not Applicable
(1) Incorporated by reference to Registrant's Form N-4 (File Nos. 333-06709
and 811-05618) electronically filed on June 24, 1996.
(2) Incorporated by reference to Pre-Effective Amendment No. 1 to Registrant's
Form N-4 (File Nos. 333-06709 and 811-05618) electronically filed on December
13, 1996.
(3) Incorporated by reference to Registrant's Form N-4 (File Nos. 333-63719 and
811-5618) electronically filed on September 18, 1998.
(4) To be filed by amendment.
Item 25. Directors and Officers of the Depositor
The following are the Officers and Directors of the Insurance Company:
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Positions and Offices
Business Address with Depositor
- - - ---------------------------- ---------------------------------
Lowell C. Anderson Chairman, President, Chief
1750 Hennepin Avenue Executive Officer and Director
Minneapolis, MN 55403
Herbert F. Hansmeyer Director
777 San Marin Drive
Novato, CA 94998
Michael P. Sullivan Director
7505 Metro Boulevard
Minneapolis, MN 55439
Dr. Gerhard Rupprecht Director
Reinsburgstrasse 19
D-70178
Stuttgart, Germany
Edward J. Bonach Executive Vice President, Chief
1750 Hennepin Avenue Financial Officer and Treasurer
Minneapolis, MN 55403
Robert S. James President - Individual
1750 Hennepin Avenue Division
Minneapolis, MN 55403
Ronald L. Wobbeking President-Mass Marketing Division
1750 Hennepin Avenue
Minneapolis, MN 55403
Rev. Dennis Dease Director
c/o University of St. Thomas
215 Summit Avenue
St. Paul, MN 55105-1096
James R. Campbell Director
c/o Norwest Corp.
Norwest Center
Sixth & Marquette
Minneapolis, MN 55479-0116
Robert M. Kimmitt Director
Wilmer, Cutler & Pickering
2445 M Street NW
Washington, DC 20037-1420
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant
The Company organizational chart is incorporated by reference to Pre-Effective
Amendment No. 1 (File Nos.333-06709 and 811-05618).
Item 27. Number of Contract Owners
As of June 30, 1999 there were 13 qualified Contract Owners and 59 non-
qualified Contract Owners with Contracts in the Separate Account.
Item 28. Indemnification
The Bylaws of the Insurance Company provide that:
Each person (and the heirs, executors, and administrators of such person) made
or threatened to be made a party to any action, civil or criminal, by reason of
being or having been a Director, officer, or employee of the corporation (or by
reason of serving any other organization at the request of the corporation)
shall be indemnified to the extent permitted by the laws of the State of
Minnesota, and in the manner prescribed therein.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted for directors and officers or controlling persons of the
Insurance Company pursuant to the foregoing, or otherwise, the Insurance Company
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,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Insurance Company of expenses
incurred or paid by a director, officer or controlling person of the Insurance
Company 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 Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. Principal Underwriters
a. NALAC Financial Plans, LLC is the principal underwriter for the
Contracts. It also is the principal underwriter for:
Allianz Life Variable Account A
Preferred Life Variable Account C
b. The following are the officers (managers) and directors (Board of
Governors) of NALAC Financial Plans, LLC:
<TABLE>
<CAPTION>
<S> <C>
Positions and Offices
Business Address with Underwriter
- - - ---------------------- ----------------------
Chrisopher H. Pinerton Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Thomas B. Clifford Chief Manager and Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael T. Westermeyer Secretary and Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael J. Yates Treasurer
1750 Hennepin Avenue
Minneapolis, MN 55403
Edward J. Bonach Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Catherine L. Mielke Compliance Officer
1750 Hennepin Avenue
Minneapolis, MN 55403
</TABLE>
Item 30. Location of Accounts and Records
Thomas Clifford, whose address is 1750 Hennepin Avenue, Minneapolis, Minnesota,
maintains physical possession of the accounts, books or documents of the
Variable Account required to be maintained by Section 31(a) of the Investment
Company Act of 1940, as amended, and the rules promulgated thereunder.
Item 31. Management Services
Not Applicable
Item 32. Undertakings
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
d. Allianz Life Insurance Company of North America ("Company") hereby
represents that the fees and charges deducted under the Contract described in
the Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
REPRESENTATIONS
The Insurance Company hereby represents that it is relying upon a No Action
Letter issued to the American Council of Life Insurance, dated November 28, 1988
(Commission ref. IP-6-88), and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by Section
403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment alternatives
available under the employer's Section 403(b) arrangement to which the
participant may elect to transfer his contract value.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, as amended, the Registrant certifies that it has caused this
Registration Statement to be signed on its behalf in the City of Minneapolis and
State of Minnesota, on this __ day of August, 1999.
ALLIANZ LIFE VARIABLE ACCOUNT B
(Registrant)
By: ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By: /s/ MICHAEL T. WESTERMEYER
--------------------------------
Michael T. Westermeyer
ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By: /s/ MICHAEL T. WESTERMEYER
------------------------------
Michael T. Westermeyer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature and Title
<TABLE>
<CAPTION>
<S> <C> <C>
Chairman of the Board, 08/19/99
Lowell C. Anderson* President
Lowell C. Anderson and Chief Executive Officer
Herbert F. Hansmeyer* Director 08/19/99
Herbert F. Hansmeyer
Michael P. Sullivan* Director 08/19/99
Michael P. Sullivan
Dr. Gerhard Rupprecht* Director 08/19/99
Dr. Gerhard Rupprecht
Edward J. Bonach* Chief Financial Officer 08/19/99
Edward J. Bonach
Rev. Dennis J. Dease* Director 08/19/99
Rev. Dennis J. Dease
James R. Campbell* Director 08/19/99
James R. Campbell
Robert M. Kimmitt* Director 08/19/99
Robert M. Kimmitt
</TABLE>
*By: Power of Attorney
By: /s/ MICHAEL T. WESTERMEYER
--------------------------------
Michael T. Westermeyer
Attorney-in-Fact
ALLIANZ LIFE VARIABLE ACCOUNT B
POST-EFFECTIVE AMENDMENT NO. 2
TO
REGISTRATION STATEMENT ON FORM N-4
INDEX TO EXHIBITS
EXHIBIT PAGE
To be filed by amendment.
