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As Filed with the Securities and Exchange Commission on February 11, 1998
Registration Nos. 33-59261, 811-5626
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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. 8
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 52
SEPARATE ACCOUNT B
(EXACT NAME OF REGISTRANT)
GOLDEN AMERICAN LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
1001 Jefferson Street
Wilmington, DE 19801
302-576-3400
(ADDRESS AND TELEPHONE NUMBER OF DEPOSITOR'S PRINCIPAL OFFICES)
Marilyn Talman, Esq. COPY TO:
Golden American Life Insurance Company Stephen E. Roth, Esq.
1001 Jefferson Street, Suite 400 Sutherland, Asbill & Brennan LLP
Wilmington, DE 19801 1275 Pennsylvania Avenue, N.W.
(NAME AND ADDRESS OF AGENT FOR SERVICE Washington, D.C. 20004-2404
OF PROCESS)
Approximate date of commencement of proposed sale to the public:
A soon as practical after the effective date of the Registration Statement
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
[ ] immediately upon filing pursuant to paragraph (b)
[x] on February 12,1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on _________ pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on _________ pursuant to paragraph (a)(ii) of Rule 485
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[ ] this Post-Effective Amendment designates a new effective date for
a previously filed Post-Effective Amendment.
TITLE OF SECURITIES BEING REGISTERED:
Deferred Combination Vairable and Fixed Annuity Contracts
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CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
PART A
N-4 Item Prospectus Heading
1. Cover Page Cover Page
2. Definitions Definition of Terms
3. Synopsis Summary of the Contracts
4. Condensed Financial Information Condensed Financial Information
5. General Description of Facts About the Company
Registrant Depositor, and the Accounts
and Portfolio Companies
6. Deductions and Expenses Charges and Fees
7. General Description of Variable Facts About the Contracts
Annuity Contracts
8. Annuity Period Choosing an Income Plan
9. Death Benefit Facts About the Contracts
10. Purchases and Contract Value Facts About the Contracts,
Charges and Fees
11. Redemptions Facts About the Contracts
12. Taxes Federal Tax Considerations
Additional Considerations
13. Legal Proceedings Regulatory Information
14. Table of Contents of the Statement of Additional Information
Statement of Additional
Information
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PART B
Statement of Additional
N-4 Item Information Heading
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and Description of Golden American
History Life Insurance Company
18. Services Safekeeping of Assets,
Independent Auditors
19. Purchase of Securities Distribution of Contracts
Being Offered
20. Underwriters Distribution of Contracts
21. Calculation of Performance Performance Information
Data
22. Annuity Payments Part A
23. Financial Statements Financial Statements of Separate
Account B;
Financial Statements of The Managed
Global Account of Separate
Account D; and
Financial Statements of Golden
American Life Insurance Company,
see Part A
PART C
Items required in Part C are located therein.
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PART A
EXPLANATORY NOTE
The Granite PrimElite Prospectus is not effected by this
Post-Effective Amendment and is not included in this Post-
Effective Amendment No. 8. It was last filed with the
Securities Exchange Commission as part of Registrant's
Post-Effective Amendment No. 7 on May 1, 1997.
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PROSPECTUS SUPPLEMENT
DVA PLUS PROSPECTUS SUPPLEMENT
FOR USE IN STATES WHICH DO NOT PERMIT MARKET VALUE ADJUSTMENTS
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PROSPECTUS SUPPLEMENT
Dated February 12, 1998
Supplement to the
Prospectus dated February 12, 1998 for
Deferred Combination Variable and Fixed Annuity Contracts
issued by Golden American Life Insurance Company
(the "GoldenSelect DVA PLUS Prospectus")
__________
This supplement should be retained with your
GoldenSelect DVA PLUS Prospectus.
A Fixed Interest Division option may be available through
the group and individual deferred combination variable and
fixed annuity contracts offered by Golden American Life
Insurance Company. The Fixed Interest Division is part of
the Golden American General Account. Interests in the Fixed
Interest Division have not been registered under the
Securities Act of 1933, and neither the Fixed Interest
Division nor the General Account are registered under the
Investment Company Act of 1940.
Interests in the Fixed Interest Division are offered through
an Offering Brochure, dated September 3, 1996. When reading
through the GoldenSelect DVA PLUS Prospectus, the Fixed
Interest Division should be counted among the various
divisions available for the allocation of your premiums.
The Fixed Interest Division may not be available in some
states. Some restrictions may apply.
More complete information relating to the Fixed Interest
Division is found in the Offering Brochure. Please read it
carefully before you send money.
IN 3306 FID 2/98
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PROSPECTUS SUPPLEMENT
ACCESS PROSPECTUS 5.5% WA SUPPLEMENT
FOR USE ONLY IN THE STATE OF WASHINGTON
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Prospectus Supplement
Supplement to the Prospectus dated February 12, 1998 for
Deferred Combination Variable and
Fixed Annuity Contracts issued
by Golden American Life Insurance Company
for use only in the State of Washington
____________
February 12, 1998
The following information supplements and replaces certain
information contained in the Deferred Combination Variable
and Fixed Annuity Prospectus, dated February 12, 1998 (the
"Prospectus"). All capitalized terms have the meaning set
forth in the Prospectus. This supplement should be retained
with your Prospectus.
GoldenSelect DVA Plus contracts issued to delivery in the
State of Washington will have a "5.5% Enhanced Death Benefit
Option." This option replaces that referred to as the "7%
Solution Enhanced Death Benefit Option" in the Prospectus.
The following describes the option and its features.
The following replaces the paragraph titled "7% Solution
Enhanced Death Benefit Option" on page 4 of the Prospectus:
5.5% Solution Enhanced Death Benefit Option
An enhanced death benefit option that may be elected only at
issue and only if the Owner or Annuitant (when the Owner is
other than an individual) is age 80 or younger. The
enhanced death benefit provided by this option is equal to
premiums paid accumulated at an annual rate of return of
5.5%, except those premiums invested in the Liquid Asset
Division, Limited Maturity Bond Division, and the General
Account, as adjusted for additional premiums and partial
withdrawals. Each accumulated initial or additional premium
payment reduced by any partial withdrawals taken will
continue to grow at 5.5% for as long as the contract remains
in force.
The following supplements the section titled "Fee Table,"
appearing on pages 7 and 8 of the Prospectus:
The following changes the table titled "Annual Contract
Fees" on page 7:
Administrative Charge...................... $30
The following changes the table titled "Separate Account
Annual Expenses" on page 7:
Replace the column headed "7% Solution" with a column
identical to the column "Annual Ratchet" but headed "5.5%
Solution" under the heading "Enhanced Death Benefit" (shown
below):
5.5% Solution
Mortality and Expense Risk Charge........ 1.25%
Asset Based Administrative Charge........ 0.15%
------
Total Separate Account Expenses.......... 1.40%
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The examples shown on pages 8 and 9 of the Prospectus are
the highest expenses associated with a contract which would
occur based on the election of the 7% Solution Enhanced
Death Benefit Option. If all other assumptions are the
same, the fees associated with an election of the 5.5%
Solution Enhanced Death Benefit Option would not exceed
those shown on pages 8 and 9.
The following changes the first two paragraphs under the
heading "Death Benefit Options" on page 27:
Replace the text "7% Solution" with "5.5% Solution" in all
instances.
The following replaces the discussion titled "7% Solution
Enhanced Death Benefit Option" beginning on page 27 of the
Prospectus:
5.5% Solution Enhanced Death Benefit Option
(1) We take the enhanced death benefit from the prior
Valuation Date. On the Contract Date, the enhanced
death benefit is equal to the Initial Premium.
(2) We calculate interest on (1) for the current Valuation
Period at the enhanced death benefit interest rate,
which rate is an annual rate of 5.5%; except that with
respect to amounts in the Liquid Asset Division and the
Limited Maturity Bond Division, the interest rate
applied to such amounts will be the respective net rate
of return for such Divisions during the current
Valuation Period, if it is less than an annual rate of
5.5%; and except with respect to amounts in a Fixed
Allocation, the interest rate applied to such amounts
will be the interest credited to such Fixed Allocation
during the current Valuation Period, if it is less that
an annual rate of 5.5%.
(3) We add (1) and (2).
(4) We add to (3) any additional premiums paid during the
current Valuation Period.
(5) We subtract from (4) any partial withdrawals (including
any surrender charges incurred) made during the current
Valuation Period.
The following supplements the paragraph titled "Administrative
Charge," appearing on page 30 of the Prospectus:
The administrative charge, if applicable, is $30 per Contract
Year.
The following supplements the paragraph titled "Mortality and
Expense Risk Charge," beginning on page 30 of the Prospectus:
The annual charge for the mortality and expense risk is the
same a s that described for the Annual Ratchet Death Benefit
Option. If the 5.5% Solution Death Benefit Option is elected,
the charge is equivalent, on an annual basis, to 1.25% of
the assets in each Division. The charge is deducted on each
Valuation Date at the rate of .003446% for each day in the
Valuation Period. Approximately 0.90% is allocated to the
mortality risk and .35% is allocated to the expense risk.
Golden American Life Insurance Company
Golden American Life Insurance Company is a stock company
domiciled in Wilmington, Delaware
IN 3307 WA DVA PLUS 2/98
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GOLDEN AMERICAN LIFE INSURANCE COMPANY
Golden American Life Insurance Company is a stock company domiciled in
Wilmington, Delaware
DEFERRED COMBINATION VARIABLE AND
FIXED ANNUITY PROSPECTUS
GOLDENSELECT DVA PLUS
____________________________________________________________________
This prospectus describes group and individual deferred variable annuity
Contracts (the "Contract") offered by Golden American Life Insurance
Company ("Golden American" "we" "our" or "us"). The Owner ("you" or
"your") purchases the Contract with an Initial Premium and is permitted
to make additional premium payments.
The Contract is funded by two accounts, Separate Account B ("Account B")
and the Fixed Account (collectively, the "Accounts").
Twenty-one Divisions of Account B are currently available under the
Contract. The investments available through the Divisions of Account B
include mutual fund portfolios (the "Series") of The GCG Trust (the "GCG
Trust") and the Equi-Select Series Trust (the "ESS Trust"). The
investments available through the Fixed Account include various Fixed
Allocations which we credit with fixed rates of interest for the
Guarantee Periods you select. We currently offer Guarantee Periods with
durations of 1, 3, 5, 7 and 10 years. We reserve the right at any time
to increase or decrease the number of Guarantee Periods offered. Not all
Guarantee Periods may be available.
This prospectus describes the Contract and provides background
information regarding Account B and the Fixed Account. The prospectuses
for the GCG Trust and the ESS Trust (individually, "a Trust," and
collectively, "the Trusts"), which must accompany this prospectus,
provide information regarding investment activities and policies of the
Trusts.
You may allocate your premiums among the twenty-one Divisions and the
Fixed Allocations available under the Contract in any way you choose,
subject to certain restrictions. You may change the allocation of your
Accumulation Value during a Contract Year free of charge. We reserve the
right, however, to assess a charge for each allocation change after the
twelfth allocation change in a Contract Year.
Your Accumulation Value in Account B will vary in accordance with the
investment performance of the Divisions selected by you. Therefore, you
bear the entire investment risk for all amounts allocated to Account B.
You also bear investment risk with respect to surrenders, partial
withdrawals, transfers and annuitization from a Fixed Allocation prior
to the end of the applicable Guarantee Period. Such surrender, partial
withdrawal, transfer or annuitization may be subject to a Market Value
Adjustment, which could have the effect of either increasing or
decreasing your Accumulation Value.
We will pay a death benefit to the Beneficiary if the Owner dies prior
to the Annuity Commencement Date or the Annuitant dies prior to the
Annuity Commencement Date when the Owner is other than an individual.
This prospectus describes your principal rights and limitations and sets
forth the information concerning the Accounts that investors should know
before investing. A Statement of Additional Information, dated February
12, 1998, about Account B has been filed with the Securities and Exchange
Commission ("SEC") and is available without charge upon request. To obtain
a copy of this document call or write our Customer Service Center. The
Table of Contents of the Statement of Additional Information may be found
on the last page of this prospectus. The Statement of Additional
Information is incorporated herein by reference.
____________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
CONTRACTS AND UNDERLYING SERIES SHARES WHICH FUND THE CONTRACTS ARE NOT
INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO
MARKET FLUCTUATION, REINVESTMENT RISK AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS NOT VALID
UNLESS ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE GCG TRUST AND THE ESS
TRUST.
THE FIXED ACCOUNT AND ENHANCED DEATH BENEFITS MAY NOT BE AVAILABLE IN ALL
STATES. YOU MAY CONTACT OUR CUSTOMER SERVICE CENTER TO FIND OUT ABOUT STATE
AVAILABILITY.
ISSUED BY: DISTRIBUTED BY: ADMINISTERED AT:
Golden American Life Directed Services, Inc. Customer Service Center
Insurance Company Wilmington, Delaware Mailing Address:
19801 P.O. Box 8794
Wilmington, Delaware
19899-8794
1-800-366-0066
PROSPECTUS DATED: FEBRUARY 12, 1998
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TABLE OF CONTENTS
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PAGE
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DEFINITION OF TERMS............................................... 3
SUMMARY OF THE CONTRACT........................................... 5
FEE TABLE......................................................... 7
CONDENSED FINANCIAL AND OTHER INFORMATION......................... 10
Index of Investment Experience
Financial Statements
Performance Related Information
INTRODUCTION...................................................... 12
FACTS ABOUT THE COMPANY AND THE ACCOUNTS.......................... 12
Golden American
The GCG Trust and the ESS Trust
Separate Account B
Account B Divisions
Changes Within Account B
The Fixed Account
FACTS ABOUT THE CONTRACT.......................................... 19
The Owner
The Annuitant
The Beneficiary
Change of Owner or Beneficiary
Availability of the Contract
Types of Contracts
Your Right to Select or Change Contract Options
Premiums
Making Additional Premium Payments
Crediting Premium Payments
Restrictions on Allocation of Premium Payments
Your Right to Reallocate
Dollar Cost Averaging
What Happens if a Division is Not Available
Your Accumulation Value
Accumulation Value in Each Division
Measurement of Investment Experience
Cash Surrender Value
Surrendering to Receive the Cash Surrender Value
Partial Withdrawals
Automatic Rebalancing
Proceeds Payable to the Beneficiary
Death Benefit Options
Reports to Owners
When We Make Payments
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CHARGES AND FEES................................................... 29
Charge Deduction Division
Charges Deducted from the Accumulation Value
Charges Deducted from the Divisions
Trust Expenses
CHOOSING YOUR ANNUITIZATION OPTIONS................................ 31
Annuitization of Your Contract
Annuity Commencement Date Selection
Frequency Selection
The Annuitization Options
Payment When Named Person Dies
OTHER CONTRACT PROVISIONS.......................................... 33
In Case of Errors in Application Information
Contract Changes -- Applicable Tax Law
Your Right to Cancel or Exchange Your Contract
Other Contract Changes
Group or Sponsored Arrangements
Selling the Contract
REGULATORY INFORMATION............................................. 34
Voting Rights
State Regulation
Legal Proceedings
Legal Matters
Experts
MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY...... 35
Selected Financial Data
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Directors and Executive Officers
Compensation Tables and Other Information
FEDERAL TAX CONSIDERATIONS......................................... 50
Introduction
Tax Status of Golden American
Taxation on Non-Qualified Annuities
IRA Contracts and Other Qualified Retirement Plans
Federal Income Tax Withholding
UNAUDITED FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE
COMPANY....................................................... 58
AUDITED FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE
COMPANY....................................................... 68
STATEMENT OF ADDITIONAL INFORMATION................................ 93
APPENDIX A......................................................... A1
Market Value Adjustment Examples
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THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED
TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS.
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____________________________________________________________________
DEFINITION OF TERMS
ACCOUNTS
Separate Account B and the Fixed Account.
ACCUMULATION VALUE
The total amount invested under the Contract. Initially, this amount is
equal to the premium paid. Thereafter, the Accumulation Value will reflect
the premiums paid, investment experience of the Divisions and interest
credited to your Fixed Allocations, charges deducted and any partial
withdrawals.
ANNUAL RATCHET ENHANCED DEATH BENEFIT OPTION
An enhanced death benefit option that may be elected only at issue and
only if the Owner or Annuitant (when the Owner is other than an individual)
is age 79 or younger. The enhanced death benefit provided by this option
is the highest Accumulation Value on any Contract Anniversary on or prior
to the Owner turning age 80, as adjusted for additional premiums and
partial withdrawals.
ANNUITANT
The person designated by the Owner to be the measuring life in
determining Annuity Payments.
ANNUITY COMMENCEMENT DATE
The date on which Annuity Payments begin.
ANNUITY OPTIONS
Options the Owner selects that determine the form and amount of Annuity
Payments.
ANNUITY PAYMENT
The periodic payment an Owner receives. It may be either a fixed or a
variable amount based on the Annuity Option chosen.
ATTAINED AGE
The Issue Age of the Owner or Annuitant plus the number of full years
elapsed since the Contract Date.
BENEFICIARY
The person designated to receive benefits in the case of the death of
the Owner or the Annuitant (when the Owner is other than an individual).
BUSINESS DAY
Any day the New York Stock Exchange ("NYSE") is open for trading,
exclusive of Federal holidays, or any day on which the SEC requires that
mutual funds, unit investment trusts or other investment portfolios be
valued.
CASH SURRENDER VALUE
The amount the Owner receives upon surrender of the Contract, including
any Market ValueAdjustment.
CHARGE DEDUCTION DIVISION
The Division from which all charges are deducted if so designated by you.
The Charge Deduction Division currently is the Liquid Asset Division.
CONTINGENT ANNUITANT
The person designated by the Owner who, upon the Annuitant's death prior
to the Annuity Commencement Date, becomes the Annuitant.
CONTRACT
The entire Contract consisting of the basic Contract and any riders or
endorsements.
CONTRACT ANNIVERSARY
The anniversary of the Contract Date.
CONTRACT DATE
The date on which we have received the Initial Premium and upon which
we begin determining the Contract values. It may or may not be the same
as the Issue Date. This date is used to determine Contract months,
processing dates, years and anniversaries.
CONTRACT PROCESSING DATES
The days when we deduct certain charges from the Accumulation Value. If
the Contract Processing Date is not a Valuation Date, it will be on the
next succeeding Valuation Date. The Contract Processing Dates will be
once each year on the Contract Anniversary.
CONTRACT PROCESSING PERIOD
The first Contract processing period begins with the Contract Date and
ends at the close of business on the first Contract Processing Date. All
subsequent Contract processing periods begin at the close of business on
the most recent Contract Processing Date and extend to the close of
business on the next Contract Processing Date. There is one Contract
processing period each year.
CONTRACT YEAR
The period between Contract anniversaries.
CUSTOMER SERVICE CENTER
Where service is provided to you. The mailing address and telephone number
of the Customer Service Center are shown on the cover.
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DIVISIONS
The investment options available under Account B.
ENDORSEMENTS
An endorsement changes or adds provisions to the Contract.
EXCHANGE CONTRACTS
Contracts issued by insurance companies not affiliated with Golden
American.
EXPERIENCE FACTOR
The factor which reflects the investment experience of the portfolio
in which a Division invests and also reflects the charges assessed
against the Division for a Valuation Period.
FIXED ACCOUNT
An Account which contains all of our assets that support Owner Fixed
Allocations and any interest credited thereto.
FIXED ALLOCATION
An amount allocated to the Fixed Account that is credited with a
Guaranteed Interest Rate for a specified Guarantee Period.
FREE LOOK PERIOD
The period of time within which the Owner may examine the Contract and
return it for a refund.
GUARANTEED INTEREST RATE
The effective annual interest rate which we will credit for a specified
Guarantee Period. The Guaranteed Interest Rate will never be less than 3%.
GUARANTEE PERIOD
The period of time for which a rate of interest is guaranteed to be
credited to a Fixed Allocation. We currently offer Guarantee Periods
with durations of 1, 3, 5, 7 and 10 years.
INDEX OF INVESTMENT EXPERIENCE
The index that measures the performance of a Division.
INITIAL PREMIUM
The payment required to put a Contract into effect.
ISSUE AGE
The Owner's or Annuitant's age on his or her last birthday on or before
the Contract Date.
ISSUE DATE
The date the Contract is issued at our Customer Service Center.
MARKET VALUE ADJUSTMENT
A positive or negative adjustment made to a Fixed Allocation. It may
apply to certain withdrawals and transfers, whether in whole or in part,
and annuitizations of all or part of a Fixed Allocation prior to the end
of a Guarantee Period.
MATURITY DATE
The date on which a Guarantee Period matures.
OWNER
The person who owns the Contract and is entitled to exercise all rights
under the Contract. This person's death also initiates payment of the
death benefit.
RIDER
A rider amends the Contract, in certain instances adding benefits.
7% SOLUTION ENHANCED DEATH BENEFIT OPTION
An enhanced death benefit option that may be elected only at issue and
only if the Owner or Annuitant (when the Owner is other than an
individual) is age 80 or younger. The enhanced death benefit provided
by this option is equal to premiums paid accumulated at an annual rate
of return of 7%, except those premiums invested in the Liquid Asset
Division, Limited Maturity Bond Division, and the Fixed Account, as
adjusted for additional premiums and partial withdrawals. Each
accumulated initial or additional premium payment reduced by any partial
withdrawals taken will continue to grow at 7% until it reaches the
maximum enhanced death benefit.
SPECIALLY DESIGNATED DIVISION
The Division to which distributions from a portfolio underlying a
Division in which reinvestment is not available will be allocated unless
you specify otherwise. The Specially Designated Division currently is
the Liquid Asset Division.
STANDARD DEATH BENEFIT OPTION
The death benefit option that you will receive under the Contact unless
one of the enhanced death benefit options is elected. The death benefit
provided by this option is equal to the greatest of (i) Accumulation
Value; (ii) total premium payments less any partial withdrawals; and
(iii) Cash Surrender Value.
VALUATION DATE
The day at the end of a Valuation Period when each Division is valued.
VALUATION PERIOD
Each business day together with any non-business days before it.
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____________________________________________________________________
SUMMARY OF THE CONTRACT
This prospectus has been designed to provide you with information
regarding the Contract and the Accounts which fund the Contract.
Information concerning the Series underlying the Divisions of Account B
and the Fixed Account is set forth in the Trusts' prospectuses.
This summary is intended to provide only a very brief overview of the
more significant aspects of the Contract. Further detail is provided
in this prospectus and in the Contract. The Contract, together with any
riders or endorsements, constitutes the entire agreement between you and
us and should be retained.
This prospectus has been designed to provide you with the necessary
information to make a decision on purchasing the Contract. You have a
choice of investments. We do not promise that your Accumulation Value
will increase. Depending on the investment experience of the Divisions
and interest credited to the Fixed Allocations in which you are invested,
your Accumulation Value, Cash Surrender Value and death benefit may
increase or decrease on any day. You bear the investment risk.
DESCRIPTION OF THE CONTRACT
The Contract is designed to establish retirement benefits for two types
of purchasers. The first type of purchaser is one who is eligible to
participate in, and purchases a Contract for use with, an individual
retirement annuity ("IRA") meeting the requirements of section 408(b) of
the Internal Revenue Code of 1986 ("qualified plan"). For a Contract
funding a qualified plan, distributions may be made to you to satisfy
requirements imposed by Federal tax law. The second type of purchaser is
one who purchases a Contract outside of a qualified plan ("non-qualified
plan").
The Contract also offers a choice of Annuity Options to which you may
apply all or a portion of the Accumulation Value on the Annuity
Commencement Date or the Cash Surrender Value upon surrender of the
Contract. See Choosing Your Annuity Options.
AVAILABILITY
We can issue a Contract if both the Annuitant and the Owner are not
older than age 85 and accept additional premium payments until either
the Annuitant or Owner reaches the Attained Age of 85 for non-qualified
plans (age 70 for qualified plans, except for rollover contributions).
The minimum Initial Premium is $10,000 for a non-qualified plan and $1,500
for a qualified plan. We may change the minimum initial or additional
premium requirements for certain group or sponsored arrangements. See
Other Contract Provisions, Group or Sponsored Arrangements.
The minimum additional premium payment we will accept is $500 for a
non-qualified plan and $250 for a qualified plan. You must receive
our prior approval before making a premium payment that causes the
Accumulation Value of all annuities that you maintain with us to
exceed $1,000,000.
THE DIVISIONS
Each of the twenty-one Divisions of Account B offered under this
prospectus invests in a mutual fund portfolio with its own distinct
investment objectives and policies. Each Division of Account B invests
in a corresponding Series of the GCG Trust or a corresponding Series of
the ESS Trust. Both Trusts are managed by Directed Services, Inc.
("DSI"). From its inception through December 31, 1997, the ESS Trust was
managed by Equitable Investment Services, Inc. ("EISI"), an affiliate of
DSI. As of January 1, 1998, DSI assumed EISI's management
responsibilities of the ESS Trust. The Trusts and DSI have retained
several portfolio managers to manage the assets of each Series. See
Facts About the Company and the Accounts, Account B Divisions.
HOW THE ACCUMULATION VALUE VARIES
The Accumulation Value in the Divisions varies each day based on
investment results. You bear the risk of poor investment performance and
you receive the benefits from favorable investment performance. The
Accumulation Value also reflects premium payments, charges deducted and
partial withdrawals. See Facts About the Contract, Accumulation Value in
Each Division.
THE FIXED ACCOUNT
The investments available through the Fixed Account include various
Fixed Allocations which we credit with fixed rates of interest for
the Guarantee Periods you select. We reset the interest rates for new
Guarantee Periods periodically based on our sole discretion. We may
offer Guarantee Periods from one to ten years. We currently offer
Guarantee Periods with durations of 1, 3, 5, 7 and 10 years.
You bear investment risk with respect to surrenders, partial withdrawals,
transfers and annuitization from your Fixed Allocations. A surrender,
partial withdrawal, transfer or annuitization made prior to the end of
a Guarantee Period may be subject to a Market Value Adjustment, which
could have the effect of either increasing or decreasing your
Accumulation Value. We will not apply a Market Value Adjustment on a
surrender, partial withdrawal, transfer or annuitization made within 30
days prior to the Maturity Date of the applicable Guarantee Period or
certain transfers made in connection with the dollar cost averaging
program.
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Systematic withdrawals from a Fixed Allocation also are not subject to
a Market Value Adjustment.
MARKET VALUE ADJUSTMENT
We will apply a Market Value Adjustment, subject to certain exceptions,
to a surrender, partial withdrawal, transfer or annuitization from a
Fixed Allocation made prior to the end of a Guarantee Period. The Market
Value Adjustment does not apply to amounts invested in Account B.
SURRENDERING YOUR CONTRACT
You may surrender the Contract and receive its Cash Surrender Value at
any time while both the Annuitant and Owner are living and before the
Annuity Commencement Date. See Facts About the Contract, Cash Surrender
Value and Surrendering to Receive the Cash Surrender Value.
TAKING PARTIAL WITHDRAWALS
After the Free Look Period, prior to the annuity commencement date and
while the Contract is in effect, you may take partial withdrawals from
the Accumulation Value of your Contract. You may elect in advance to
take systematic partial withdrawals on a monthly, quarterly, or annual
basis. If you have an IRA Contract, you may elect IRA partial withdrawals
on a monthly, quarterly or annual basis.
Partial withdrawals are subject to certain restrictions as defined in
this prospectus, including a surrender charge and a Market Value
Adjustment. Partial withdrawals above a specified percentage of your
Accumulation Value may be subject to a surrender charge. See Facts
About the Contract, Partial Withdrawals.
DOLLAR COST AVERAGING
Under this program, you may choose to have a specified dollar amount
transferred from either the Limited Maturity Bond Division, Liquid
Asset Division or a Fixed Allocation with a one year Guarantee Period
to the other Divisions of Account B on a monthly basis with the
objective of shielding your investment from short-term price
fluctuations. See Facts About the Contract, Dollar Cost Averaging.
YOUR RIGHT TO CANCEL THE CONTRACT
You may cancel your Contract within the Free Look Period which is a
ten day period of time beginning once you receive the Contract. For
purposes of administering our allocation and certain other
administrative rules, we deem this period to end 15 days after the
Contract is mailed from our Customer Service Center. Some states may
require that we provide a longer free look period. In some states we
restrict the Initial Premium allocation during the Free Look Period.
See Other Contract Provisions, Your Right to Cancel or Exchange Your
Contract.
YOUR RIGHT TO CHANGE THE CONTRACT
The Contract may be changed to another annuity plan subject to our rules at
the time of the change. See Other Contract Provisions, Other Contract Changes.
DEATH BENEFIT OPTIONS
The Contract provides a death benefit to the beneficiary if the Owner
dies prior to the Annuity Commencement Date. Subject to our rules, there
are three death benefit options that may be available to you under the
Contract: the Standard Death Benefit Option; the 7% Solution Enhanced
Death Benefit Option; and the Annual Ratchet Enhanced Death Benefit
Option. See Facts About the Contract, Death Benefit Options. We may
offer a reduced death benefit under certain group and sponsored
arrangements. See Other Contract Provisions, Group or Sponsored
Arrangements.
DEDUCTIONS FOR CHARGES AND FEES
We invest the entire amount of the initial and any additional premium
payments in the Divisions and the Fixed Allocations you select, subject
to certain restrictions we impose. See Facts About the Contract,
Restrictions on Allocation of Premium Payments. We then may deduct an
annual Contract fee from your Accumulation Value. See Other Contract
Provisions, Charges and Fees. We may reduce certain charges under group
or sponsored arrangements. See Other Contract Provisions, Group or
Sponsored Arrangements. Unless you have elected the Charge Deduction
Division, charges are deducted proportionately from all Account B
Divisions in which you are invested. If there is no Accumulation Value
in these Divisions, charges will be deducted from your Fixed Allocations
starting with Guarantee Periods nearest their Maturity Dates until such
charges have been deducted.
6
<PAGE>
<PAGE>
____________________________________________________________________
FEE TABLE
FEDERAL INCOME TAXES
The ultimate effect of Federal income taxes on the amounts held under an annu-
ity Contract, on Annuity Payments and on the economic benefits to the Owner,
Annuitant or Beneficiary depends on Golden American's tax status and upon the
tax status of the individuals concerned. In general, an Owner is not taxed on
increases in value under an annuity Contract until some form of distribution
is made under it. There may be tax penalties if you make a withdrawal or sur-
render the Contract before reaching age 59 1/2. See Federal Tax Considera-
tions.
TRANSACTION EXPENSES(/1/)
Contingent Deferred Sales Charge(/2/) (imposed as a percentage of premium pay-
ments withdrawn upon excess partial withdrawal or surrender):(/3/)
<TABLE>
<CAPTION>
COMPLETE YEARS ELAPSED SURRENDER
SINCE PREMIUM PAYMENT CHARGE
<S> <C>
0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 1%
7+ 0%
</TABLE>
<TABLE>
<S> <C>
Excess Allocation Charge.................................. $0(/4/)
</TABLE>
ANNUAL CONTRACT FEES:
<TABLE>
<S> <C>
Administrative Charge........................................ $40
(Waived if the Accumulation Value equals or exceeds $100,000 at the
end of the Contract Year, or once the sum of premiums paid equals or
exceeds $100,000.)
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES (percentage of assets in each Division)(/5/):
<TABLE>
<CAPTION>
STANDARD ENHANCED DEATH BENEFIT
DEATH --------------------------
BENEFIT ANNUAL RATCHET 7% SOLUTION
-------- -------------- -----------
<S> <C> <C> <C>
Mortality and Expense Risk Charge.... 1.10% 1.25% 1.40%
Asset Based Administrative Charge.... 0.15% 0.15% 0.15%
----- ----- -----
Total Separate Account Expenses...... 1.25% 1.40% 1.55%
</TABLE>
THE GCG TRUST ANNUAL EXPENSES (based on combined net assets of the indicated
groups of Series):
<TABLE>
<CAPTION>
OTHER TOTAL
SERIES FEES(/6/) EXPENSES(/7/) EXPENSES
------ --------- ----------------------- --------------
<S> <C> <C> <C>
Multiple Allocation,
Fully Managed, Capital
Appreciation, Rising
Dividends, All-Growth,
Real Estate, Hard 0.99% 0.01% 1.00%
Assets, Value Equity,
Strategic Equity, and
Small Cap Series:
Growth Opportunities
Series: 1.15% 0.01% 1.16%
Managed Global
Series:(/8/) 1.25% 0.01% 1.26%
Emerging Markets (/9/)
and Developing World
Series: 1.75% 0.05% 1.80%
Limited Maturity Bond 0.60% 0.01% 0.61%
and Liquid Asset Series:
THE ESS TRUST ANNUAL EXPENSES:
<CAPTION>
OTHER TOTAL
EXPENSES EXPENSES
AFTER EXPENSE AFTER EXPENSE
SERIES FEES(/6/) REIMBURSEMENTS (/10/) REIMBURSEMENTS
------ --------- ----------------------- --------------
<S> <C> <C> <C>
OTC, Research, and Total
Return Portfolios: 0.80% 0.40% 1.20%
Growth & Income and
Value + Growth 0.95% 0.40% 1.35%
Portfolios:
</TABLE>
7
<PAGE>
<PAGE>
- -------------------
(1) A Market Value Adjustment, which may increase or decrease your Accumula-
tion Value, may apply to certain transactions. See Market Value Adjust-
ment.
(2) We also deduct a charge for premium taxes (which can range from 0% to
3.5% of premium) from your Accumulation Value upon surrender, excess par-
tial withdrawals or on the Annuity Commencement Date. See Premium Taxes.
(3) For purposes of calculating the surrender charge for the excess partial
withdrawal, (i) we treat premium payments as being withdrawn on a first-
in first-out basis, and (ii) amounts withdrawn which are not considered
an excess partial withdrawal are not treated as a withdrawal of any pre-
mium payments. See Charges Deducted from the Accumulation Value, Surren-
der Charge for Excess Partial Withdrawals.
(4) We reserve the right to impose a charge in the future at a maximum of $25
for each allocation change in excess of twelve per Contract Year. See Ex-
cess Allocation Charge.
(5) See Facts About the Contract, Death Benefit Options, for a description of
the Contract's Standard and Enhanced Death Benefit Options.
(6) Fees decline as combined assets increase (see Account B Divisions and the
Trust prospectuses for details).
(7) Other Expenses generally consist of independent trustees
fees and expenses. Other Expenses are estimated for the Growth
Opportunities and Developing World Series, since as of December
31, 1997, these Series had not yet commenced operations.
(8) The expenses for the Managed Global Series are based on the actual expe-
rience of the Series together with that of its predecessor for accounting
purposes, the Managed Global Account of Separate Account D. On September
3, 1996, the Managed Global Account was reorganized into the Managed
Global Division of Account B and the Managed Global Series of the GCG
Trust.
(9) Expenses have been restated to reflect current fees.
(10)Other expenses shown take into account the effect of EISI's agreement to
reimburse the portfolios for all operating expenses, excluding management
fees, that exceed 0.40% of their average daily net assets. This reimburse-
ment agreement commenced February 1, 1997. Prior to February 1, 1997, EISI
reimbursed the portfolios for all operating expenses, excluding management
fees, that exceeded 0.75% of their average daily net assets. This reim-
bursement is voluntary and can be terminated at any time. In the absence of
the current reimbursement agreement, Other Expenses would have been 0.55%,
0.51%, 0.45%, 0.69%, and 0.95%, respectively, for the OTC, Research, Total
Return, Growth & Income, and Value + Growth Portfolios for the year ended
December 31, 1996.
Examples:
The examples do not take into account any deduction for premium taxes. Premium
taxes currently range from 0% to 3.5% of premium payments. There may be sur-
render charges if you choose to annuitize within the first three Contract
Years.
If at issue you elect the 7% Solution Enhanced Death Benefit Option and you
surrender your Contract at the end of the applicable time period, you would
pay the following expenses for each $1,000 of Initial Premium assuming a 5%
annual return on assets:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVISION ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Multiple Allocation................... $ 96.43 $131.15 $168.46 $293.91
Fully Managed......................... $ 96.43 $131.15 $168.46 $293.91
Capital Appreciation.................. $ 96.43 $131.15 $168.46 $293.91
Rising Dividends...................... $ 96.43 $131.15 $168.46 $293.91
All-Growth............................ $ 96.43 $131.15 $168.46 $293.91
Real Estate........................... $ 96.43 $131.15 $168.46 $293.91
Hard Assets........................... $ 96.43 $131.15 $168.46 $293.91
Value Equity.......................... $ 96.43 $131.15 $168.46 $293.91
Strategic Equity...................... $ 96.43 $131.15 $168.46 $293.91
Small Cap............................. $ 96.43 $131.15 $168.46 $293.91
Emerging Markets...................... $104.39 $154.79 $207.41 $369.51
Managed Global........................ $ 99.02 $138.90 $181.30 $319.09
Growth Opportunities.................. $ 98.03 $135.92 $176.38 $309.49
Developing World...................... $104.39 $154.79 $207.41 $369.51
OTC................................... $ 98.42 $137.11 $178.35 $313.34
Research.............................. $ 98.42 $137.11 $178.35 $313.34
Total Return.......................... $ 98.42 $137.11 $178.35 $313.34
Growth & Income....................... $ 99.92 $141.56 $185.70 $327.64
Value + Growth........................ $ 99.92 $141.56 $185.70 $327.64
Limited Maturity Bond................. $ 92.52 $119.41 $148.87 $254.79
Liquid Asset.......................... $ 92.52 $119.41 $148.87 $254.79
</TABLE>
- -------------------------------------------------------------------------------
8
<PAGE>
<PAGE>
If at issue you elect the 7% Solution Enhanced Death Benefit Option and you do
not surrender your Contract or if you annuitize on the Annuity Commencement
Date, you would pay the following expenses for each $1,000 of initial premium
assuming a 5% annual return on assets:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVISION ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Multiple Allocation................... $26.43 $ 81.15 $138.46 $293.91
Fully Managed......................... $26.43 $ 81.15 $138.46 $293.91
Capital Appreciation.................. $26.43 $ 81.15 $138.46 $293.91
Rising Dividends...................... $26.43 $ 81.15 $138.46 $293.91
All-Growth............................ $26.43 $ 81.15 $138.46 $293.91
Real Estate........................... $26.43 $ 81.15 $138.46 $293.91
Hard Assets........................... $26.43 $ 81.15 $138.46 $293.91
Value Equity.......................... $26.43 $ 81.15 $138.46 $293.91
Strategic Equity...................... $26.43 $ 81.15 $138.46 $293.91
Small Cap............................. $26.43 $ 81.15 $138.46 $293.91
Emerging Markets...................... $34.39 $104.79 $177.41 $369.51
Managed Global........................ $29.02 $ 88.90 $151.30 $319.09
Growth Opportunities.................. $28.03 $ 85.92 $146.38 $309.49
Developing World...................... $34.39 $104.79 $177.41 $369.51
OTC................................... $28.42 $ 87.11 $148.35 $313.34
Research.............................. $28.42 $ 87.11 $148.35 $313.34
Total Return.......................... $28.42 $ 87.11 $148.35 $313.34
Growth & Income....................... $29.92 $ 91.56 $155.70 $327.64
Value + Growth........................ $29.92 $ 91.56 $155.70 $327.64
Limited Maturity Bond................. $22.52 $ 69.41 $118.87 $254.79
Liquid Asset.......................... $22.52 $ 69.41 $118.87 $254.79
</TABLE>
- -------------------------------------------------------------------------------
The purpose of the Fee Table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. For purposes of
computing the annual per Contract administrative charge, the dollar amounts
shown in the examples are based on an Initial Premium of $65,000.
The examples reflect the election at issue of the 7% Solution Enhanced Death
Benefit Option. If the Standard Death Benefit Option or the Annual Ratchet En-
hanced Death Benefit Option is elected, the actual expenses incurred will be
less than those represented in the Examples.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN, SUBJECT TO
THE GUARANTEES UNDER THE CONTRACT.
9
<PAGE>
<PAGE>
____________________________________________________________________
CONDENSED FINANCIAL AND OTHER INFORMATION
INDEX OF INVESTMENT EXPERIENCE
The upper table gives the index of investment experience for each
Division of Account B available under the Contract for each death
benefit option. Information for the Growth Opportunities and
Developing World Divisions is not available because they had not
commenced operations as of December 31, 1997. Except for the Small
Cap, OTC, Research, Total Return, Growth & Income, Value + Growth,
Growth Opportunities and Developing World Divisions, each Division
commenced operations on October 2, 1995 (The Managed Global Division
commenced operations initially as a division of another separate
account, the Managed Global Account of Separate Account D; however,
the index of investment experience is unchanged). The index of
investment experience is equal to the value of a unit for each
Division of the Accounts. The total investment value of each
Division as of the end of each period is shown in the lower table.
<TABLE>
<CAPTION>
------------------------------------------------
------------------------------------------------
STANDARD
----------------------------------------------
10/2/95 12/31/95 12/31/96 9/30/97
------- -------- -------- -------
<S> <C> <C> <C> <C>
Multiple Allocation..... $16.10 $16.72 $17.96 $20.71
Fully Managed........... 14.77 15.23 17.50 19.66
Capital Appreciation.... 14.31 14.71 17.46 22.05
Rising Dividends........ 12.16 13.24 15.77 19.29
All-Growth.............. 13.88 14.10 13.85 15.69
Real Estate............. 15.06 15.94 21.30 25.50
Hard Assets............. 14.86 15.11 19.89 24.16
Value Equity............ 12.43 13.37 14.61 18.73
Strategic Equity........ 10.00(/1/) 10.01 11.81 14.10
Small Cap............... --(/2/) --(/2/) 11.86 13.88
Emerging Markets........ 9.50 9.23 9.78 10.74
Managed Global.......... 9.32 9.58 10.62 12.55
OTC..................... --(/3/) --(/3/) 15.77 19.05
Research................ --(/4/) --(/4/) --(/4/) 19.33
Total Return............ --(/4/) --(/4/) --(/4/) 15.78
Growth & Income......... --(/3/) --(/3/) 12.50 15.92
Value + Growth.......... --(/4/) --(/4/) --(/4/) 15.23
Limited Maturity Bond... 14.49 14.86 15.31 15.90
Liquid Asset............ 12.89 13.03 13.51 13.88
<CAPTION>
INDEX OF INVESTMENT EXPERIENCE
------------------------------------------------
ENHANCED DEATH BENEFITS
------------------------------------------------
ANNUAL RACHET
------------------------------------------------
10/2/95 12/31/95 12/31/96 9/30/97
------- -------- -------- -------
<S> <C> <C> <C> <C>
Multiple Allocation..... $15.94 $16.55 $17.75 $20.44
Fully Managed........... 14.62 15.07 17.29 19.41
Capital Appreciation.... 14.23 14.63 17.34 21.87
Rising Dividends........ 12.12 13.19 15.69 19.18
All-Growth.............. 13.74 13.96 13.68 15.48
Real Estate............. 14.91 15.78 21.04 25.17
Hard Assets............. 14.71 14.96 19.65 23.85
Value Equity............ 12.41 13.36 14.57 18.66
Strategic Equity........ 10.00(/1/) 10.01 11.78 14.06
Small Cap............... --(/2/) --(/2/) 11.84 13.85
Emerging Markets........ 9.47 9.20 9.74 10.67
Managed Global.......... 9.28 9.53 10.55 12.46
OTC..................... --(/3/) --(/3/) 15.70 18.93
Research................ --(/4/) --(/4/) --(/4/) 19.25
Total Return............ --(/4/) --(/4/) --(/4/) 15.72
Growth & Income......... --(/3/) --(/3/) 12.49 15.88
Value + Growth.......... --(/4/) --(/4/) --(/4/) 15.19
Limited Maturity Bond... 14.35 14.71 15.13 15.69
Liquid Asset............ 12.76 12.89 13.35 13.70
<CAPTION>
----------------------------------------------
----------------------------------------------
7% SOLUTION
----------------------------------------------
10/2/95 12/31/95 12/31/96 9/30/97
------- -------- -------- -------
<S> <C> <C> <C> <C>
Multiple Allocation..... $15.78 $16.38 $17.54 $20.17
Fully Managed........... 14.47 14.91 17.08 19.16
Capital Appreciation.... 14.16 14.55 17.22 21.70
Rising Dividends........ 12.09 13.15 15.62 19.06
All-Growth.............. 13.60 13.81 13.52 15.28
Real Estate............. 14.76 15.61 20.79 24.85
Hard Assets............. 14.57 14.80 19.42 23.54
Value Equity............ 12.40 13.34 14.53 18.58
Strategic Equity........ 10.00(/1/) 10.01 11.76 14.02
Small Cap............... --(/2/) --(/2/) 11.82 13.81
Emerging Markets........ 9.44 9.17 9.69 10.61
Managed Global.......... 9.24 9.49 10.49 12.37
OTC..................... --(/3/) --(/3/) 15.66 18.88
Research................ --(/4/) --(/4/) --(/4/) 19.16
Total Return............ --(/4/) --(/4/) --(/4/) 15.64
Growth & Income......... --(/3/) --(/3/) 12.47 15.84
Value + Growth.......... --(/4/) --(/4/) --(/4/) 15.16
Limited Maturity Bond... 14.20 14.56 14.95 15.49
Liquid Asset............ 12.63 12.76 13.19 13.53
</TABLE>
<TABLE>
<CAPTION>
TOTAL INVESTMENT VALUE IN THOUSANDS
-------------------------------------------------------------------------------------------------
ENHANCED DEATH BENEFITS
----------------------------------------------------------------
STANDARD ANNUAL RACHET 7% SOLUTION
------------------------------- ---------------------------- --------------------------------
12/31/95 12/31/96 9/30/97 12/31/95 12/31/96 9/30/97 12/31/95 12/31/96 9/30/97
-------- -------- ------- -------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Multiple Allocation..... $1,747 $5,207 $6,942 $349 $2,675 $4,368 $6,068 $19,593 $27,594
Fully Managed........... 748 3,568 7,650 211 2,999 6,238 2,750 16,273 28,962
Capital Appreciation.... 355 2,839 6,446 239 3,028 5,564 4,752 19,054 33,511
Rising Dividends........ 303 4,699 13,319 476 5,575 12,696 3,956 25,976 57,460
All-Growth.............. 309 1,795 3,185 231 2,000 3,198 3,479 10,173 14,355
Real Estate............. 43 1,155 3,997 46 899 2,517 955 8,004 19,517
Hard Assets............. 375 1,873 3,709 43 850 1,810 394 6,635 12,846
Value Equity............ 458 2,649 6,261 312 3,642 7,041 2,394 15,282 27,940
Strategic Equity........ 762(/1/) 4,374 5,294 475(/1/) 2,729 7,054 1,528(/1/) 11,396 17,939
Small Cap............... --(/2/) 2,352 5,015 --(/2/) 2,692 5,664 --(/2/) 15,569 24,848
Emerging Markets........ 145 957 2,436 115 995 2,094 1,475 6,581 11,043
Managed Global.......... 256 2,402 5,841 262 2,446 4,921 1,983 14,422 28,993
OTC..................... --(/3/) 471 1,082 --(/3/) 443 1,495 --(/3/) 880 6,843
Research................ --(/4/) --(/4/) 2,762 --(/4/) --(/4/) 2,085 --(/4/) --(/4/) 9,745
Total Return............ --(/4/) --(/4/) 2,543 --(/4/) --(/4/) 1,786 --(/4/) --(/4/) 5,814
Growth & Income......... --(/3/) 627 4,194 --(/3/) 475 3,003 --(/3/) 2,167 13,072
Value + Growth.......... --(/4/) --(/4/) 1,626 --(/4/) --(/4/) 1,119 --(/4/) --(/4/) 5,260
Limited Maturity Bond... 401 1,285 2,031 174 701 1,102 1,988 5,224 5,726
Liquid Asset............ 494 1,033 3,313 801 1,134 2,242 1,190 5,054 12,048
</TABLE>
- -------------------
(1) The Strategic Equity Division became available for investment on October
2, 1995, starting with an index of investment experience of $10.00.
(2) The Small Cap Equity Division became available for investment on January
2, 1996, starting with an index of investment experience of $10.00.
(3) The OTC Division and Growth & Income Divisions became available for in-
vestment on September 3, 1996, starting with indices of investment experi-
ence of $14.64 and $10.94, respectively.
(4) The Research, Total Return and Value + Growth Divisions became available
for investment on January 20, 1997, starting with indices of investment
experience of $16.43, $13.76, and $11.99, respectively.
10
<PAGE>
<PAGE>
FINANCIAL STATEMENTS
The unaudited financial statements of Separate Account B for the nine
months ended September 30, 1997,
the audited financial statements of Separate Account B for the years ended De-
cember 31, 1996 and 1995 (as well as the auditors' report thereon) and the au-
dited financial statements of the Managed Global Account of Separate Account
D, the predecessor entity of the Managed Global Series for accounting purpos-
es, for the years ended December 31, 1995 and 1994 (as well as the auditors'
report thereon) appear in the Statement of Additional Information. The
unaudited financial statements of Golden American
for the nine months ended September 30, 1997 and the audited
financial statements of Golden American prepared in accordance with generally
accepted accounting principles for the years ended December 31, 1996, 1995 and
1994 (as well as the auditors' report thereon) are contained in the Prospec-
tus.
PERFORMANCE RELATED INFORMATION
Performance information for the Divisions of Account B, including the yield
and effective yield of the Liquid Asset Division, the yield of the remaining
Divisions, and the total return of all Divisions may appear in reports and
promotional literature to current or prospective Owners.
Current yield for the Liquid Asset Division will be based on income received
by a hypothetical investment over a given 7-day period (less expenses accrued
during the period), and then "annualized" (i.e., assuming that the 7-day yield
would be received for 52 weeks, stated in terms of an annual percentage return
on the investment). "Effective yield" for the Liquid Asset Division is calcu-
lated in a manner similar to that used to calculate yield, but when
annualized, the income earned by the investment is assumed to be reinvested.
The "effective yield" will be slightly higher than the "yield" because of the
compounding effect of earnings.
For the remaining Divisions, quotations of yield will be based on all invest-
ment income per unit (Accumulation Value divided by the index of investment
experience, see Facts About the Contract, Measurement of Investment Experi-
ence, Index of Investment Experience and Unit Value) earned during a given 30-
day period, less expenses accrued during the period ("net investment income").
Quotations of average annual total return for any Division will be expressed
in terms of the average annual compounded rate of return on a hypothetical in-
vestment in a Contract over a period of one, five, and ten years (or, if less,
up to the life of the Division), and will reflect the deduction of the appli-
cable surrender charge, the administrative charge and the applicable mortality
and expense risk charge. See Charges and Fees. Quotations of total return may
simultaneously be shown for other periods that do not take into account cer-
tain contractual charges, such as the surrender charge. Quotations of yield
and average annual total return for the Managed Global Division take into ac-
count the period prior to September 3, 1996, during which it was maintained as
a division of Separate Account D.
Performance information for a Division may be compared, in reports and promo-
tional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P 500"),
Dow Jones Industrial Average ("DJIA"), Donoghue Money Market Institutional Av-
erages, or other indices measuring performance of a pertinent group of securi-
ties so that investors may compare a Division's results with those of a group
of securities widely regarded by investors as representative of the securities
markets in general; (ii) other variable annuity separate accounts or other in-
vestment products tracked by Lipper Analytical Services, a widely used inde-
pendent research firm which ranks mutual funds and other investment companies
by overall performance, investment objectives, and assets, or tracked by other
ratings services, including VARDS, companies, publications, or persons who
rank separate accounts or other investment products on overall performance or
other criteria; and (iii) the Consumer Price Index (measure for inflation) to
assess the real rate of return from an investment in the Contract. Unmanaged
indices may assume the reinvestment of dividends but generally do not reflect
deductions for administrative and management costs and expenses.
Performance information for any Division reflects only the performance of a
hypothetical Contract under which the Accumulation Value is allocated to a Di-
vision during a particular time period on which the calculations are based.
Performance information should be considered in light of the investment objec-
tives and policies, characteristics and quality of the portfolio of the Series
of the respective Trust in which the Division invests and the market condi-
tions during the given time period, and should not be considered as a repre-
sentation of what may be achieved in the future. For a description of the
methods used to determine yield and total return for the Divisions, see the
Statement of Additional Information.
Reports and promotional literature may also contain other information includ-
ing the ranking of any Division derived from rankings of variable annuity sep-
arate accounts or other investment products tracked by Lipper Analytical Serv-
ices or by rating services, companies, publications, or other persons who rank
separate accounts or other investment products on overall performance or other
criteria.
11
<PAGE>
<PAGE>
____________________________________________________________________
INTRODUCTION
The following information describes the Contract and the Accounts which fund
the Contract, Account B and the Fixed Account. Account B invests in mutual
fund portfolios of the Trusts. The Fixed Account contains all of the assets
that support Owner Fixed Allocations which we credit with Guaranteed Interest
Rates for the Guarantee Periods you select.
____________________________________________________________________
FACTS ABOUT THE COMPANY AND THE ACCOUNTS
GOLDEN AMERICAN
Golden American Life Insurance Company ("Golden American" or the "Company") is
a stock life insurance company organized under the laws of the State of Dela-
ware and is a wholly owned subsidiary of Equitable of Iowa Companies, Inc.
("Equitable of Iowa")which, in turn, is a wholly owned subsidiary of ING
Groep, N.V. ("ING"). Prior to December 30, 1993, Golden American was a Minnesota
corporation. Prior to August 13, 1996, Golden American was a wholly owned in-
direct subsidiary of Bankers Trust Company. We are authorized to do business
in all jurisdictions except New York. In May 1996, we established a subsidi-
ary, First Golden American Life Insurance Company of New York, which is autho-
rized to do business in New York. We offer variable annuities and variable
life insurance. Administrative services for the Contract are provided at our
Customer Service Center, the address is shown on the cover.
Equitable of Iowa is the holding company for Equitable Life Insurance Company
of Iowa, USG Annuity & Life Company, Locust Street Securities, Inc., Equitable
American Insurance Company, Eq-
uitable of Iowa Securities Network, Inc., Directed Services, Inc. ("DSI"), and
Golden American.
On October 24, 1997, ING acquired all interest in Equitable of Iowa
Companies and its subsidiaries including Golden American.
ING, headquartered in the Netherlands, is a global financial
services holding company with over $289 billion in assets.
Equitable and another ING affiliate own ING Investment Management,
LLC, who assumed EISI's portfolio management responsibilities for
the GCG Trust and the ESS Trust as of January 1, 1998.
THE GCG TRUST AND THE ESS TRUST
The GCG Trust is an open-end management investment company, more commonly
called a mutual fund. The GCG Trust's shares may also be available to certain
separate accounts funding variable life insurance policies offered by Golden
American. This is called "mixed funding."
The GCG Trust may also sell its shares to separate accounts of other insurance
companies, both affiliated and not affiliated with Golden American. This is
called "shared funding." Although we do not anticipate any inherent difficul-
ties arising from either mixed or shared funding, it is theoretically possible
that, due to differences in tax treatment or other considerations, the inter-
est of Owners of various Contracts participating in the GCG Trust might at
sometime be in conflict. After the GCG Trust receives the requisite order from
the SEC, shares of the GCG Trust may also be sold to certain qualified pension
and retirement plans. The Board of Trustees of the GCG Trust, DSI,
and we and any other insurance companies participating in the GCG
Trust are required to monitor events to identify any material conflicts that
arise from the use of the GCG Trust for mixed and/or shared funding or between
various policy Owners and pension and retirement plans. For more information
about the risks of mixed and shared funding, please refer to the GCG Trust
prospectus.
The ESS Trust is also an open-end management investment company. Currently,
the ESS Trust's shares are not available to separate accounts of other insur-
ance companies other than insurance companies affiliated with Equitable of
Iowa such as Golden American.
You will find complete information about both the GCG Trust and the ESS Trust,
including the risks associated with each Series, in the accompanying Trusts'
prospectuses. You should read them carefully in conjunction with this prospec-
tus before investing. Additional copies of the Trusts' prospectuses may be ob-
tained by contacting our Customer Service Center.
SEPARATE ACCOUNT B
All obligations under the Contract are general obligations of Golden American.
Account B is a separate investment account used to support our variable annu-
ity Contracts and for other purposes as permitted by applicable laws and regu-
lations. The assets of Account B are kept separate from our general account
and any other separate accounts we may have. We may offer other variable annu-
ity Contracts investing in Account B which are not discussed in this prospec-
tus. Account B may also invest in other series which are not available to the
Contract described in this prospectus.
We own all the assets in Account B. Income and realized and unrealized gains
or losses from assets
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in the account are credited to or charged against that account without regard
to other income, gains or losses in our other investment accounts. As
required, the assets in Account B are at least equal to the reserves and other
liabilities of that account. These assets may not be charged with liabilities
from any other business we conduct.
They may, however, be subject to liabilities arising from Divisions whose as-
sets are attributable to other variable annuity Contracts supported by Account
B. If the assets exceed the required reserves and other liabilities, we may
transfer the excess to our general account.
Account B was established on July 14, 1988 to invest in mutual funds, unit in-
vestment trusts or other investment portfolios which we determine to be suit-
able for the Contract's purposes. Account B is treated as a unit investment
trust under Federal securities laws. It is registered with the SEC under the
Investment Company Act of 1940 (the "1940 Act") as an investment company and
meets the definition of a separate account under the Federal securities laws.
It is governed by the laws of Delaware, our state of domicile, and may also be
governed by the laws of other states in which we do business. Registration
with the SEC does not involve any supervision by the SEC of the management or
investment policies or practices of Account B.
ACCOUNT B DIVISIONS
Account B is divided into Divisions. The Managed Global Division was a divi-
sion of Separate Account D of Golden American until September 3, 1996 when it
was converted to a division of Account B. Currently, each Division of Account
B offered under this prospectus invests in a portfolio of the GCG Trust or the
ESS Trust. DSI serves as the Manager to each Series of the GCG Trust and
the ESS Trust. See the Trusts' pro-
spectuses for details. The Trusts and DSI have retained several portfo-
lio managers to manage the assets of each Series as indicated below. There may
be restrictions on the amount of the allocation to certain Divisions based on
state laws and regulations. The investment objectives of the various Series in
the Trusts are described below. There is no guarantee that any portfolio or
Series will meet its investment objectives. Meeting objectives depends on var-
ious factors, including, in certain cases, how well the portfolio managers an-
ticipate changing economic and market conditions. Account B also has other Di-
visions investing in other series which are not available to the Contract
described in this prospectus.
DSI provides the overall business management and administrative serv-
ices necessary for the Series' operation and provide or procure the services
and information necessary to the proper conduct of the business of the Series.
See the Trusts' prospectuses for details.
DSI is responsible for providing or procuring, at DSI's expense, the services
reasonably necessary for the ordinary operation of the Series of the GCG
Trust. DSI does not bear the expense of brokerage fees and other transactional
expenses for securities or other assets (which are generally considered part
of the cost for assets), taxes (if any) paid by a Series of the GCG Trust, in-
terest on borrowing, fees and expenses of the independent trustees, and ex-
traordinary expenses, such as litigation or indemnification expenses. See the
GCG Trust prospectus for details.
Each Trust pays DSI for its services a fee, payable month-
ly, based on the annual rates of the average daily net assets of the Series
shown in the tables below. DSI (and not the Trusts) pays each portfo-
lio manager a monthly fee for managing the assets of the Series.
THE GCG TRUST
<TABLE>
<CAPTION>
FEES (based on combined
assets of the indicated
SERIES groups of Series)
------------------------------------------------ -----------------------------
<S> <C>
Multiple Allocation, Fully Managed, Capital 1.00% of first $750 million;
Appreciation, Rising Dividends, All-Growth, 0.95% of next $1.250 billion;
Real Estate, Hard Assets, Value Equity, 0.90% of next $1.5 billion;
Strategic Equity, and Small Cap Series: and
0.85% of amount in excess of
$3.5 billion
Growth Opportunities Series: 1.15% of first $250 million;
1.10% of next $400 million;
1.00% of next $450 million; and
0.95% of amount in excess of
$1.1 billion
Managed Global Series: 1.25% of first $500 million;
1.05% of amount in excess of
$500 million
Emerging Markets and Developing World 1.75% of average daily net
Series: assets
Limited Maturity Bond and 0.60% of first $200 million;
Liquid Asset Series: 0.55% of next $300 million;
and
0.50% of amount in excess of
$500 million
- -------------------------------------------------------------------------------
</TABLE>
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THE ESS TRUST
<TABLE>
<CAPTION>
SERIES FEES
------------------------------------------------ ----------------------------
<C> <S>
OTC, Research, and Total Return Portfolios: 0.80% of first $300 million;
0.55% of amount in excess of
$300 million
Growth & Income and Value + Growth Portfolios: 0.95% of first $200 million;
0.75% of amount in excess of
$200 million
- ------------------------------------------------------------------------------
</TABLE>
The following Divisions invest in designated Series of the GCG Trust.
MULTIPLE ALLOCATION DIVISION
MULTIPLE ALLOCATION SERIES
OBJECTIVE
The highest total return, consisting of capital appreciation and current in-
come, consistent with the preservation of capital and elimination of unneces-
sary risk.
INVESTMENTS
Investment in equity and debt securities and the use of certain sophisticated
investment strategies and techniques.
PORTFOLIO MANAGER
Zweig Advisors Inc.
FULLY MANAGED DIVISION
FULLY MANAGED SERIES
OBJECTIVE
High total investment return over the long term, consistent with the preser-
vation of capital and prudent investment risk.
INVESTMENTS
Pursues an active asset allocation strategy whereby investments are allocat-
ed, based upon an evaluation of economic and market trends and the antici-
pated relative total return available, among three asset classes -- debt se-
curities, equity securities and money market instruments.
PORTFOLIO MANAGER
T. Rowe Price Associates, Inc.
CAPITAL APPRECIATION DIVISION
CAPITAL APPRECIATION SERIES
OBJECTIVE
Long-term capital growth.
INVESTMENTS
Invests in common stocks and preferred stock that will be allocated among
various categories of stocks referred to as "components" which consist of the
following: (i) The Growth Component -- Securities that the portfolio manager
believes have the following characteristics: stability and quality of earn-
ings and positive earnings momentum; dominant competitive positions; and dem-
onstrate above-average growth rates as compared to published S&P 500 earnings
projections; and (ii) The Value Component-Securities that the portfolio man-
ager regards as fundamentally undervalued, i.e., securities selling at a dis-
count to asset value and securities with a relatively low price/earnings
ratio. The securities eligible for this component may include real estate
stocks, such as securities of publicly-owned companies that, in the portfolio
manager's judgement, offer an optimum combination of current dividend yield,
expected dividend growth, and discount to current real estate value.
PORTFOLIO MANAGER
Chancellor LGT Asset Management, Inc.
RISING DIVIDENDS DIVISION
RISING DIVIDENDS SERIES
OBJECTIVE
Capital appreciation, with dividend income as a secondary objective.
INVESTMENTS
Investment in equity securities of high quality companies that meet the fol-
lowing four criteria: consistent dividend increases; substantial dividend in-
creases; reinvested profits; and an under-leveraged balance sheet.
PORTFOLIO MANAGER
Kayne Anderson Investment Management, LLC
ALL-GROWTH DIVISION
ALL-GROWTH SERIES
OBJECTIVE
Capital appreciation.
INVESTMENTS
Investment in securities selected for their long- term growth prospects.
PORTFOLIO MANAGER
Pilgrim Baxter & Associates, Ltd.
REAL ESTATE DIVISION
REAL ESTATE SERIES
OBJECTIVE
Capital appreciation, with current income as a secondary objective.
INVESTMENTS
Investment in publicly traded equity securities of companies in the real es-
tate industry listed on national exchanges or on the National Associa-
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tion of Securities Dealers Automated Quotation System.
PORTFOLIO MANAGER
EII Realty Securities, Inc.
HARD ASSETS DIVISION (FORMERLY NATURAL RESOURCES)
HARD ASSETS SERIES
OBJECTIVE
Long-term capital appreciation.
INVESTMENTS
Investment in equity and debt securities of companies engaged in the explora-
tion, development, production, management, and distribution of hard assets.
PORTFOLIO MANAGER
Van Eck Associates Corporation
VALUE EQUITY DIVISION
VALUE EQUITY SERIES
OBJECTIVE
Capital appreciation with a secondary objective of dividend income.
INVESTMENTS
Investment primarily in equity securities of U.S. and foreign issuers which,
when purchased, meet quantitative standards believed by the Portfolio Manager
to indicate above average financial soundness and high intrinsic value rela-
tive to price.
PORTFOLIO MANAGER
Eagle Asset Management, Inc.
STRATEGIC EQUITY DIVISION
STRATEGIC EQUITY SERIES
OBJECTIVE
Long-term capital appreciation.
INVESTMENTS
Investment primarily in equity securities based on various equity market tim-
ing techniques. The amount of the Series' assets allocated to equities shall
vary from time to time to seek positive investment performance from advancing
equity markets and to reduce exposure to equities when risk/reward character-
istics are believed to be less attractive.
PORTFOLIO MANAGER
Zweig Advisors Inc.
SMALL CAP DIVISION
SMALL CAP SERIES
OBJECTIVE
Long-term capital appreciation.
INVESTMENTS
Investment primarily in equity securities of companies that, at the time of
purchase, have a total market capitalization -- present market value per
share multiplied by the total number of shares outstanding -- within the
range of companies included in the Russell 2000 Growth Index.
PORTFOLIO MANAGER
Fred Alger Management, Inc.
EMERGING MARKETS DIVISION
EMERGING MARKETS SERIES
OBJECTIVE
Long-term growth of capital.
INVESTMENTS
Investment primarily in equity securities of companies that are considered to
be in emerging market countries in the Pacific Basin, Latin America and else-
where. Income is not an objective, and any production of current income is
considered incidental to the objective of growth of capital.
PORTFOLIO MANAGER
Putnam Investment Management, Inc.
MANAGED GLOBAL DIVISION
MANAGED GLOBAL SERIES
OBJECTIVE
Capital appreciation.
INVESTMENTS
Investment primarily in common stocks of both domestic and foreign issuers.
PORTFOLIO MANAGER
Putnam Investment Management, Inc.
GROWTH OPPORTUNITIES DIVISION
GROWTH OPPORTUNITIES SERIES
OBJECTIVE
Capital appreciation.
INVESTMENTS
Investment primarily in equity securities of domestic
companies emphasizing companies with market capitalizations of $1
billion or more.
PORTFOLIO MANAGER
Montgomery Asset Management, LLC
DEVELOPING WORLD DIVISION
DEVELOPING WORLD SERIES
OBJECTIVE
Capital appreciation.
INVESTMENTS
Investment primarily in equity securities of companies
in countries having economies and markets generally considered to be
emerging or developing.
PORTFOLIO MANAGER
Montgomery Asset Management, LLC
LIMITED MATURITY BOND DIVISION
LIMITED MATURITY BOND SERIES
OBJECTIVE
Highest current income consistent with low risk to principal and liquidity.
Also seeks to enhance its total return through capital appreciation when mar-
ket factors indicate that capital appreciation may be available without sig-
nificant risk to principal.
INVESTMENTS
Investment primarily in a diversified portfolio of limited maturity debt se-
curities. No individual security will at the time of purchase have a remain-
ing maturity longer than seven years and the dollar-weighted average maturity
of the Series will not exceed five years.
PORTFOLIO MANAGER
ING Investment Management, LLC
LIQUID ASSET DIVISION
LIQUID ASSET SERIES
OBJECTIVE
High level of current income consistent with the preservation of capital and
liquidity.
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INVESTMENTS
Obligations of the U.S. Government and its agencies and instrumentalities;
bank obligations; commercial paper and short-term corporate debt securities.
TERM
All issues maturing in less than one year.
PORTFOLIO MANAGER
ING Investment Management, LLC
The following Divisions invest in designated Series of the ESS Trust.
OTC DIVISION
OTC PORTFOLIO
OBJECTIVE
Long-term growth of capital.
INVESTMENTS
Investment primarily in securities of companies that are traded principally
on the over-the-counter (OTC) market.
PORTFOLIO MANAGER
Massachusetts Financial Services Company
RESEARCH DIVISION
RESEARCH PORTFOLIO
OBJECTIVE
Long term growth of capital and future income.
INVESTMENTS
Investment primarily in common stocks or securities convertible into common
stocks of companies believed to possess better than average prospects for
long-term growth.
PORTFOLIO MANAGER
Massachusetts Financial Services Company
TOTAL RETURN DIVISION
TOTAL RETURN PORTFOLIO
OBJECTIVE
Above-average income consistent with prudent employment of capital.
INVESTMENTS
Investment primarily in equity securities.
PORTFOLIO MANAGER
Massachusetts Financial Services Company
GROWTH & INCOME DIVISION
GROWTH & INCOME PORTFOLIO
OJECTIVE
Long-term total return.
INVESTMENTS
Investment primarily in equity and debt securities, focusing on small- and
mid-cap companies that offer potential appreciation, current income, or both.
PORTFOLIO MANAGER
Robertson, Stephens & Company Investment Management, L.P.
VALUE + GROWTH DIVISION
VALUE + GROWTH PORTFOLIO
OBJECTIVE
Capital appreciation.
INVESTMENTS
Investment primarily in mid-cap growth companies with favorable relationships
between price/earnings ratios and growth rates. Mid-cap companies are those
with market capitalizations ranging from $750 million to approximately $2
billion.
PORTFOLIO MANAGER
Robertson, Stephens & Company Investment Management, L.P.
CHANGES WITHIN ACCOUNT B
We may from time to time make additional Divisions available. These Divisions
will invest in investment portfolios we find suitable for the Contract. We
also have the right to eliminate investment Divisions from Account B, to com-
bine two or more Divisions, or to substitute a new portfolio for the portfolio
in which a Division invests. A substitution may become necessary if, in our
judgment, a portfolio no longer suits the purposes of the Contract. This may
happen due to a change in laws or regulations, or a change in a portfolio's
investment objectives or restrictions, or because the portfolio is no longer
available for investment, or for some other reason. In addition, we reserve
the right to transfer assets of Account B, which we determine to be associated
with the class of Contracts to which your Contract belongs, to another ac-
count. If necessary, we will get prior approval from the insurance department
of our state of domicile before making such a substitution or transfer. We
will also get any required approval from the SEC and any other required ap-
provals before making such a substitution or transfer. We will notify you as
soon as practicable of any proposed changes.
When permitted by law, We reserve the right to:
(1) deregister Account B under the 1940 Act;
(2) operate Account B as a management company under the 1940 Act if it is op-
erating as a unit investment trust;
(3) operate Account B as a unit investment trust under the 1940 Act if it is
operating as a managed separate account;
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(4) restrict or eliminate any voting rights as to Account B; and
(5) combine Account B with other accounts.
THE FIXED ACCOUNT
Premium payments may be allocated to the Fixed Account at the time of the Ini-
tial Premium payment or as subsequently made. In addition, all or part of of
your Accumulation Value may be transferred to the Fixed Account. Assets sup-
porting amounts allocated to the Fixed Account are available to fund the
claims of all classes of our customers, Owners and other creditors. Interests
under your Contract relating to the Fixed Account are registered under the Se-
curities Act of 1933 but the Fixed Account is not registered under the 1940
Act.
SELECTING A GUARANTEE PERIOD
You may select one or more Fixed Allocations with specified Guarantee Periods
for investment. We currently offer Guarantee Periods with durations of 1, 3,
5, 7 and 10 years. We reserve the right at any time to decrease or increase
the number of Guarantee Periods offered. Not all Guarantee Periods may be
available for new allocations. Each Fixed Allocation will have a Maturity
Date corresponding to the last day of the calendar month of the applicable
Guarantee Period.
Your Accumulation Value in the Fixed Account equals the sum of your Fixed Al-
locations plus the interest credited thereto, as adjusted for any partial
withdrawals, reallocations or other charges we may impose. Your Fixed Alloca-
tion will be credited with the Guaranteed Interest Rate in effect on the date
we receive and accept your premium or reallocation of Accumulation Value. The
Guaranteed Interest Rate will be credited daily to yield the quoted Guaran-
teed Interest Rate.
GUARANTEED INTEREST RATES
Each Guarantee Period will have an interest rate that is guaranteed. We do
not have a specific formula for establishing the Guaranteed Interest Rates
for the different Guarantee Periods. The determination made will be influ-
enced by, but not necessarily correspond to, interest rates available on
fixed income investments which we may acquire with the amounts we receive as
premium payments or reallocations of Accumulation Value under the Contracts.
These amounts will be invested primarily in investment-grade fixed income se-
curities including: securities issued by the United States Government or its
agencies or instrumentalities, which issues may or may not be guaranteed by
the United States Government; debt securities that have an investment grade
rating, at the time of purchase, within the four highest grades assigned by
Moody's Investor Services, Inc. (Aaa, Aa, A or Baa), Standard & Poor's Rat-
ings Group (AAA, AA, A or BBB) or any other nationally recognized rating
service; mortgage-backed securities collateralized by the Federal Home Loan
Mortgage Association, the Federal National Mortgage Association or the Gov-
ernment National Mortgage Association, or that have an investment grade rat-
ing at the time of purchase within the four highest grades described above;
other debt investments; commercial paper; and cash or cash equivalents. You
will have no direct or indirect interest in these investments. We will also
consider other factors in determining the Guaranteed Interest Rates, includ-
ing regulatory and tax requirements, sales commissions and administrative ex-
penses borne by us, general economic trends and competitive factors. We can-
not predict or guarantee the level of future interest rates. However, no
Fixed Allocation will ever have a Guaranteed Interest Rate of less than 3%
per year.
While the foregoing generally describes our investment strategy with respect
to the Fixed Account, we are not obligated to invest according to any partic-
ular strategy, except as may be required by Delaware and other state insur-
ance laws.
TRANSFERS FROM A FIXED ALLOCATION
You may transfer your Accumulation Value from a Fixed Allocation to one or
more new Fixed Allocations with new Guarantee Periods of any length offered
by us or to the Divisions of Account B. Unless you specify in writing the
Fixed Allocations from which such transfers will be made, we will transfer
amounts from the Fixed Allocations starting with the Guarantee Period nearest
its Maturity Date, until we have honored your transfer request.
Transfers from a Fixed Allocation made within 30 days prior to the Maturity
Date of the applicable Guarantee Period or pursuant to the dollar cost aver-
aging program will not be subject to a Market Value Adjustment. All other
transfers from your Fixed Allocations will be subject to a Market Value Ad-
justment. The minimum amount that can be transferred to or from any Fixed Al-
location is $250. If a transfer request would reduce the Accumulation Value
remaining in your Fixed Allocation to less than $250, we will treat such
transfer request as a request to
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transfer the entire Accumulation Value in such Fixed Allocation.
At the end of a Fixed Allocation's Guarantee Period, you may transfer amounts
in that Fixed Allocation to the Divisions and one or more new Fixed Alloca-
tions with Guarantee Periods of any length then offered by us. You may not,
however, transfer amounts to any Fixed Allocation with a Guarantee Period
that extends beyond your Annuity Commencement Date.
At least 30 calendar days prior to a Maturity Date of any of your Fixed Allo-
cations, or earlier if required by state law, we will send you a notice of
the Guarantee Periods then available. Prior to the Maturity Date of your
Fixed Allocations you must notify us as to which Division or new Guarantee
Period you have selected. If timely instructions are not received, we will
transfer your Accumulation Value in the maturing Fixed Allocation to a Fixed
Allocation with a Guarantee Period equal in length to the expiring Guarantee
Period. If such Guarantee Period is not available or extends beyond your an-
nuity commencement date, we will transfer your Accumulation Value in the ma-
turing Fixed Allocation to the next shortest Guarantee Period which does not
extend beyond the Annuity Commencement Date. If no such Guarantee Period is
available, we will transfer your Accumulation Value to the Specially Desig-
nated Division.
PARTIAL WITHDRAWALS FROM A FIXED ALLOCATION
Prior to the Annuity Commencement Date and while your Contract is in effect,
you may take partial withdrawals from the Accumulation Value in a Fixed Allo-
cation by sending satisfactory notice to our Customer Service Center. You may
make systematic withdrawals of interest earnings only from a Fixed Allocation
under our Systematic Partial Withdrawal Option. (See, Partial Withdrawals,
Systematic Partial Withdrawal Option.) Systematic withdrawals from a Fixed
Allocation are not permitted if such Fixed Allocation participates in the
dollar cost averaging program. Withdrawals from a Fixed Allocation taken
within 30 days prior to the Maturity Date and systematic withdrawals are not
subject to a Market Value Adjustment; however, a surrender charge may be im-
posed. Withdrawals may have federal income tax consequences, including a 10%
penalty tax. See Surrender Charge, Surrender Charge for Excess Partial With-
drawals and Federal Tax Considerations.
If you specify a Fixed Allocation from which your partial withdrawal will be
made, we will assess the partial withdrawal against that Fixed Allocation. If
you do not specify the investment option from which the partial withdrawal
will be taken, we will not assess your partial withdrawal against any Fixed
Allocations unless the partial withdrawal exceeds the Accumulation Value in
the Divisions of Account B. If there is no Accumulation Value in those Divi-
sions, partial withdrawals will be deducted from your Fixed Allocations
starting with the Guarantee Periods nearest their Maturity Dates until we
have honored your request.
MARKET VALUE ADJUSTMENT
We will apply a Market Value Adjustment, determined by application of the
formula described below, in the following circumstances: (i) whenever you
make a withdrawal or transfer from a Fixed Allocation, other than withdrawals
or transfers made within 30 days prior to the Maturity Date of the applicable
Guarantee Period, systematic partial withdrawals, or pursuant to the dollar
cost averaging program; and (ii) on the Annuity Commencement Date with re-
spect to any Fixed Allocation having a Guarantee Period that does not end on
or within 30 days after the annuity commencement date.
The Market Value Adjustment is determined by multiplying the amount with-
drawn, transferred or annuitized by the following factor:
( 1+I ) N/365
(---------) -1
(1+J+.0025)
Where "I" is the Index Rate for a Fixed Allocation as of the first day of the
applicable Guarantee Period; "J" is the Index Rate for new Fixed Allocations
with Guarantee Periods equal to the number of years (fractional years are
rounded up to the next full year except in Pennsylvania) remaining in the
Guarantee Period at the time of the withdrawal, transfer or annuitization;
and "N" is the remaining number of days in the Guarantee Period at the time
of the withdrawal, transfer or annuitization.
The Index Rate is the average of the Ask Yields for U.S. Treasury Strips as
reported by a national quoting service for the applicable maturity. The aver-
age currently is based on the period from the 22nd day of the calendar month
two months prior to the calendar month of the Index Rate determination to the
21st day of the calendar month
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immediately prior to the month of determination. The applicable maturity is
the maturity date for these U.S. Treasury Strips on or next following the
last day of the Guarantee Period. If the Ask Yields are no longer available,
the Index Rate will be determined using a suitable replacement method ap-
proved where required.
We currently calculate the Index Rate once each calendar month. However, we
reserve the right to calculate the Index Rate more frequently than monthly,
but in no event will such Index Rate be based upon a period of less than 28
days.
The Market Value Adjustment may result in either an increase or decrease in
the Accumulation Value of your Fixed Allocation. If a full surrender, trans-
fer or annuitization from the Fixed Allocation has been requested, the bal-
ance of the Market Value Adjustment will be added to or subtracted from the
amount surrendered, transferred or annuitized. If a partial withdrawal,
transfer or annuitization has been requested, the Market Value Adjustment
will be calculated on the total amount that must be withdrawn, transferred or
annuitized in order to provide the amount requested. If a negative Market
Value Adjustment exceeds the Accumulation Value in the Fixed Allocation, such
transaction will be considered a full surrender, transfer or annuitization.
The Appendix contains several examples which illustrate the application of
the Market Value Adjustment.
____________________________________________________________________
FACTS ABOUT THE CONTRACT
THE OWNER
You are the Owner. You are also the Annuitant unless another Annuitant is
named in the application or enrollment form. You have the rights and options
described in the Contract. One or more persons may own the Contract. If there
are multiple Owners named, the age of the oldest Owner shall determine the ap-
plicable death benefit.
Death of an Owner activates the death benefit provision. In the case of a sole
Owner who dies prior to the annuity commencement date, we will pay the Benefi-
ciary the death benefit when due. The sole Owner's estate will be the Benefi-
ciary if no Beneficiary designation is in effect, or if the designated Benefi-
ciary has predeceased the Owner. In the case of a joint Owner of the Contract
dying prior to the annuity commencement date, we will designate the surviving
Owner(s) as the Beneficiary(ies). This supersedes any previous Beneficiary
designation.
In the case where the Owner is a trust and a beneficial Owner of the trust has
been designated, the beneficial Owner will be treated as the Owner of the Con-
tract solely for the purpose of determining the death benefit provisions. If a
beneficial Owner is changed or added after the Contract Date, this will be
treated as a change of Owner for purposes of determining the death benefit.
See Change of Owner or Beneficiary. If no beneficial Owner of the Trust has
been designated, the availability of enhanced death benefits will be deter-
mined by the age of the Annuitant at issue.
THE ANNUITANT
The Annuitant is the person designated by the Owner to be the measuring life
in determining Annuity Payments. The Owner will receive the annuity benefits
of the Contract if the Annuitant is living on the Annuity Commencement Date.
If the Annuitant dies before the Annuity Commencement Date, and a contingent
Annuitant has been named, the contingent Annuitant becomes the Annuitant (un-
less the Owner is not an individual, in which case the death benefit becomes
payable). Once named, the Annuitant may not be changed at any time.
If there is no contingent Annuitant when the Annuitant dies prior to the Annu-
ity Commencement Date, the Owner will become the Annuitant. The Owner may des-
ignate a new Annuitant within 60 days of the death of the Annuitant.
If there is no contingent Annuitant when the Annuitant dies prior to the Annu-
ity Commencement Date and the Owner is not an individual, we will pay the Ben-
eficiary the death benefit then due. The Beneficiary will be as provided in
the Beneficiary designation then in effect. If no Beneficiary designation is
in effect, or if there is no designated Beneficiary living, the Owner will be
the Beneficiary. If the Annuitant was the sole Owner and there is no Benefi-
ciary designation, the Annuitant's estate will be the Beneficiary.
Regardless of whether a death benefit is payable, if the Annuitant dies and
any Owner is not an individual, such death will trigger application of the
distribution rules imposed by Federal tax law.
THE BENEFICIARY
The Beneficiary is the person to whom we pay death benefit proceeds and who
becomes the succes-
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sor Owner if the Owner dies prior to the annuity commencement date. We pay
death benefit proceeds to the primary Beneficiary (unless there are joint
Owners, in which case death proceeds are payable to the surviving Owner(s)).
See Proceeds Payable to the Beneficiary.
If the Beneficiary dies before the Annuitant or Owner, the death benefit pro-
ceeds are paid to the contingent Beneficiary, if any. If there is no surviving
Beneficiary, we pay the death benefit proceeds to the Owner's estate.
One or more persons may be named as Beneficiary or contingent Beneficiary. In
the case of more than one Beneficiary, unless otherwise specified, we will as-
sume any death benefit proceeds are to be paid in equal shares to the surviv-
ing beneficiaries.
You have the right to change beneficiaries during the Annuitant's lifetime un-
less you have designated an irrevocable Beneficiary. When an irrevocable Bene-
ficiary has been designated, you and the irrevocable Beneficiary may have to
act together to exercise certain rights and options under the Contract.
CHANGE OF OWNER OR BENEFICIARY
During the Annuitant's lifetime and while your Contract is in effect, you may
transfer ownership of the Contract (if purchased in connection with a non-
qualified plan) subject to our published rules at the time of the change. A
change in Ownership may affect the amount of the death benefit and the
guaranteed death benefit. You may also change the Beneficiary. To make either
of these changes, you must send us written notice of the change in a form
satisfactory to us. The change will take effect as of the day the notice is
signed. The change will not affect any payment made or action taken by us
before recording the change at our Customer Service Center. See Federal Tax
Considerations, Transfer of Annuity Contracts, and Assignments.
AVAILABILITY OF THE CONTRACT
We can issue a Contract if both the Annuitant and the Owner are not older than
age 85.
TYPES OF CONTRACTS
QUALIFIED CONTRACTS
The Contract may be issued as an Individual Retirement Annuity or in connec-
tion with an individual retirement account. In the latter case, the Contract
will be issued without an Individual Retirement Annuity endorsement, and the
rights of the participant under the Contract will be affected by the terms
and conditions of the particular individual retirement trust or custodial ac-
count, and by provisions of the Code and the regulations thereunder. For ex-
ample, the individual retirement trust or custodial account will impose mini-
mum distribution rules, which may require distributions to commence not later
than April 1st of the calendar year following the calendar year in which you
attain age 70 1/2. For both Individual Retirement Annuities and individual
retirement accounts, the minimum Initial Premium is $1,500.
IF THE CONTRACT IS PURCHASED TO FUND A QUALIFIED PLAN, DISTRIBUTION MUST
COMMENCE NOT LATER THAN APRIL 1ST OF THE CALENDAR YEAR FOLLOWING THE CALENDAR
YEAR IN WHICH YOU ATTAIN AGE 70 1/2. IF YOU OWN MORE THAN ONE QUALIFIED PLAN,
YOU SHOULD CONSULT YOUR TAX ADVISOR.
NON-QUALIFIED CONTRACTS
The Contract may fund any non-qualified plan. Non-qualified Contracts do not
qualify for any tax-favored treatment other than the benefits provided for by
annuities.
YOUR RIGHT TO SELECT OR CHANGE CONTRACT OPTIONS
Before the Annuity Commencement Date, you may change the Annuity Commencement
Date, frequency of Annuity Payments or the Annuity Option by sending a written
request to our Customer Service Center. The Annuitant may not be changed at
any time.
PREMIUMS
You purchase the Contract with an Initial Premium. After the end of the Free
Look Period, you may make additional premium payments. See Making Additional
Premium Payments. The minimum Initial Premium is $10,000 for a non-qualified
Contract and $1,500 for a qualified Contract.
You must receive our prior approval before making a premium payment that
causes the Accumulation Value of all annuities that you maintain with us to
exceed $1,000,000. We may change the minimum initial or additional premium re-
quirements for certain group or sponsored arrangements. See Group or Sponsored
Arrangements.
QUALIFIED PLANS
For IRA Contracts, the annual premium on behalf of any individual Contract
may not exceed
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$2,000. Provided your spouse does not make a contribution to
an IRA, you may set up a spousal IRA even if your spouse has earned some com-
pensation during the year. The maximum deductible amount for a spousal IRA
program is the lesser of $2,250 or 100% of your compensation reduced by the
contribution (if any) made by you for the taxable year to your own IRA. How-
ever, no more than $2,000 can go to either your or your spouse's IRA in any
one year. For example, $1,750 may go to your IRA and $500 to your spouse's
IRA. These maximums are not applicable if the premium is the result of a
rollover from another qualified plan.
WHERE TO MAKE PAYMENTS
Remit premium payments to our Customer Service Center. The address is shown
on the cover. We will send you a confirmation notice.
MAKING ADDITIONAL PREMIUM PAYMENTS
You may make additional premium payments after the end of the Free Look Peri-
od. We can accept additional premium payments until either the Annuitant or
Owner reaches the Attained Age of 85 under non-qualified plans. For qualified
plans, no contributions may be made to an IRA Contract for the taxable year in
which you attain age 70 1/2 and thereafter (except for rollover contribu-
tions). The minimum additional premium payment we will accept is $500 for a
non-qualified plan and $250 for a qualified plan.
CREDITING PREMIUM PAYMENTS
The Initial Premium will be accepted or rejected within two business days of
receipt by us if accompanied by information sufficient to permit us to deter-
mine if we are able to issue a Contract. We may retain an Initial Premium for
up to five business days while attempting to obtain information sufficient to
enable us to issue the Contract. If we are unable to do so within five busi-
ness days, the applicant or enrollee will be informed of the reasons for the
delay and the Initial Premium will be returned immediately unless the appli-
cant or enrollee consents to our retaining the Initial Premium until we have
received the information we require. Thereafter, all additional premiums will
be accepted on the day received.
In certain states we will also accept, by agreement with broker-dealers,
transmittal of initial and additional premium payments by wire order from the
broker-dealer to our Customer Service Center. Such transmittals must be accom-
panied by a simultaneous telephone facsimile or other electronic data trans-
mission containing the essential information we require to open an account and
allocate the premium payment. Contact our Customer Service Center to find out
about state availability and broker-dealer requirements.
Upon our acceptance of premium payments received via wire order and accompa-
nied by sufficient electronically transmitted data, we will issue the Con-
tract, allocate the premium payment according to your instructions, and invest
the payment at the value next determined following receipt. See Restrictions
on Allocation of Premium Payments. Wire orders not accompanied by sufficient
data to enable us to accept the premium payment may be retained for up to five
business days while we attempt to obtain information sufficient to enable us
to issue the Contract. If we are unable to do so, our Customer Service Center
will inform the broker-dealer, on behalf of the applicant or enrollee, of the
reasons for the delay and return the premium payment immediately to the bro-
ker-dealer for return to the applicant or enrollee, unless the applicant or
enrollee specifically consents to allow us to retain the premium payment until
our Customer Service Center receives the required information.
On the date we receive and accept your initial or additional premium payment:
(1) We allocate the Initial Premium among the Divisions and Fixed Allocations
according to your instructions, subject to any restrictions. See Restric-
tions on Allocation of Premium Payments. For additional premium payments,
the Accumulation Value will increase by the amount of the premium. If we
do not receive instructions from you, the increase in the Accumulation
Value will be allocated among the Divisions in proportion to the amount
of Accumulation Value in each Division as of the date we receive and accept
the additional premium payment. If there is no Accumulation Value in the
Divisions, the increase in the Accumulation Value will be allocated to a
Fixed Allocation with the shortest Guarantee Period then available.
(2) For an Initial Premium, we calculate your applicable death benefit. When
an additional premium payment is made, we increase your applicable death
benefit in accordance with the death benefit option in effect for your
Contract.
Following receipt and acceptance of the wire order and accompanying data, and
investment of the premium payment, we will follow one of the two procedures
set forth below. The one we follow is deter-
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ined by state availability and the
procedures of the broker-dealer which submitted the wire order.
(1) We will issue the Contract. However, until we have received and accepted a
properly completed application or enrollment form, we reserve the right to
rescind the Contract. If the form is not received within fifteen days of
receipt of the premium payment, we will refund the Accumulation Value plus
any charges we deducted, and the Contract will be voided. Some states re-
quire that we return the premium paid. In these states, different rules
will apply.
(2) Based on the information provided, we will issue the Contract. We will
mail the Contract to you, together with an Application Acknowledgement
Statement. You must execute the Application Acknowledgement Statement and
return it to us at our Customer Service Center. Until we receive the exe-
cuted Application Acknowledgement Statement, neither you nor the broker-
dealer may execute any financial transactions with respect to the Contract
unless such transactions are appropriately requested in writing by you.
RESTRICTIONS ON ALLOCATION OF PREMIUM PAYMENTS
We may require that an Initial Premium designated for a Division of Account B
be allocated to the Specially Designated Division during the Free Look Period
for Initial Premiums received from some states. After the free look period, if
your Initial Premium was allocated to the Specially Designated Division, we
will transfer the Accumulation Value to the Divisions you previously selected
based on the index of investment experience next computed for each Division.
See Facts About the Contract, Measurement of Investment Experience, Index of
Investment Experience and Unit Value. Initial premiums designated for the
Fixed Account will be allocated to a Fixed Allocation with the Guarantee Pe-
riod you have chosen.
YOUR RIGHT TO REALLOCATE
You may reallocate your Accumulation Value among the Divisions and Fixed Allo-
cations at the end of the free look period. We currently do not assess a
charge for allocation changes made during a Contract Year. We reserve the
right, however, to assess a $25 charge for each allocation change after the
twelfth allocation change in a Contract Year. We require that each realloca-
tion of your Accumulation Value equal at least $250 or, if less, your entire
Accumulation Value within a Division or Fixed Allocation. We reserve the right
to limit, upon notice, the maximum number of reallocations you may make within
a Contract Year. In addition, we reserve the right to defer the reallocation
privilege at any time we are unable to purchase or redeem shares of the GCG
Trust or the ESS Trust. We also reserve the right to modify or terminate your
right to reallocate your Accumulation Value at any time in accordance with ap-
plicable law. Reallocations from the Fixed Account are subject to the Market
Value Adjustment unless taken as part of the dollar cost averaging program or
within 30 days prior to the Maturity Date of the applicable Guarantee Period.
To make a reallocation change, you must provide us with satisfactory notice at
our Customer Service Center.
We reserve the right to limit the number of reallocations of your Accumulation
Value among the Divisions and Fixed Allocations or refuse any reallocation re-
quest if we believe that: (a) excessive trading by you or a specific realloca-
tion request may have a detrimental effect on unit values or the share prices
of the underlying Series; or (b) we are informed by the GCG Trust or the ESS
Trust that the purchase or redemption of shares is to be restricted because of
excessive trading or a specific reallocation or group of reallocations is
deemed to have a detrimental effect on share prices of the GCG Trust or the
ESS Trust.
Where permitted by law, we may accept your authorization of third party real-
location on your behalf, subject to our rules. We may suspend or cancel such
acceptance at any time. We will notify you of any such suspension or cancella-
tion. We may restrict the Divisions and Fixed Allocations that will be avail-
able to you for reallocations of premiums during any period in which you au-
thorize such third party to act on your behalf. We will give you prior
notification of any such restrictions. However, we will not enforce such re-
strictions if we are provided evidence satisfactory to us that: (a) such third
party has been appointed by a court of competent jurisdiction to act on your
behalf; or (b) such third party has been appointed by you to act on your be-
half for all your financial affairs.
Some restrictions may apply based on the free look provisions of the state
where the Contract is issued. See Your Right to Cancel or Exchange Your
Contract.
DOLLAR COST AVERAGING
If you have at least $10,000 of Accumulation Value in the Limited Maturity
Bond Division, the Liquid
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Asset Division or a Fixed Allocation with a one year
Guarantee Period, you may elect the dollar cost averaging program and have a
specified dollar amount transferred from those Divisions or such Fixed Alloca-
tion on a monthly basis.
The main objective of dollar cost averaging is to attempt to shield your in-
vestment from short-term price fluctuations. Since the same dollar amount is
transferred to other Divisions each month, more units are purchased in a Divi-
sion if the value per unit is low and less units are purchased if the value
per unit is high.
Therefore, a lower than average value per unit may be achieved over the long
term. This plan of investing allows investors to take advantage of market
fluctuations but does not assure a profit or protect against a loss in declin-
ing markets.
Dollar cost averaging may be elected at issue or at a later date. The minimum
amount that may be transferred each month is $250. The maximum amount which
may be transferred is equal to your Accumulation Value in the Limited Maturity
Bond Division, the Liquid Asset Division or a Fixed Allocation with a one year
Guarantee Period when you elect the dollar cost averaging program, divided by
12.
The transfer date will be the same calendar day each month as the Contract
Date. The dollar amount will be allocated to the Divisions in which you are
invested in proportion to your Accumulation Value in each Division unless you
specify otherwise. If, on any transfer date, your Accumulation Value is equal
to or less than the amount you have elected to have transferred, the entire
amount will be transferred and the program will end. You may change the trans-
fer amount once each Contract Year, or cancel this program by sending satis-
factory notice to our Customer Service Center at least seven days before the
next transfer date. Any allocation under this program will not be included in
determining if the excess allocation charge will apply. We currently do not
permit transfers under the dollar cost averaging program from Fixed Alloca-
tions with other than one year Guarantee Periods. Transfers from a Fixed Allo-
cation under the dollar cost averaging program will not be subject to a Market
Value Adjustment. See, Market Value Adjustment. A Fixed Allocation may not
participate simultaneously in both the dollar cost averaging program and the
Systematic Partial Withdrawal Option.
WHAT HAPPENS IF A DIVISION IS NOT AVAILABLE
When a distribution is made from an investment portfolio supporting a Division
of Account B in which reinvestment is not available, we will allocate the dis-
tribution, unless you specify otherwise, to the Specially Designated Division.
Such a distribution can occur when (a) an investment portfolio matures, or (b)
a distribution from a portfolio or Division cannot be reinvested in the port-
folio or Division due to the unavailability of securities for acquisition.
When an investment portfolio matures, we will notify you in writing 30 days in
advance of that date. To elect an allocation of the distribution to other than
the Specially Designated Division, you must provide satisfactory notice to us
at least seven days prior to the date the portfolio matures. Such allocations
are not counted for purposes of the number of free allocation changes permit-
ted. When a distribution from a portfolio or Division cannot be reinvested in
the portfolio due to the unavailability of securities for acquisition, we will
notify you promptly after the allocation has occurred. If within 30 days you
allocate the Accumulation Value from the Specially Designated Division to
other Divisions or Fixed Allocations of your choice, such allocations will not
be included in determining if the excess allocation charge will apply.
YOUR ACCUMULATION VALUE
Your Accumulation Value is the sum of the amounts in each of the Divisions and
the Fixed Allocations in which you are invested, and is the amount available
for investment at any time. You select the Divisions and Fixed Allocations to
which to allocate your Accumulation Value. We adjust your Accumulation Value
on each Valuation Date to reflect the Divisions' investment performance and
interest credited to your Fixed Allocations, any additional premium payments
or partial withdrawals since the previous Valuation Date, and on each Contract
processing date to reflect any deduction of the annual Contract fee. Your
Accumulation Value is applied to your choice of an Annuity Option on the
Annuity Commencement Date subject to our published rules at such time. See
Choosing an Income Plan.
ACCUMULATION VALUE IN EACH DIVISION
ON THE CONTRACT DATE
On the Contract Date, your Accumulation Value is allocated to each Division
as you have specified, unless the Contract is issued in a state that requires
the return of premium payments during the Free Look Period, in which case,
the portion
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of your Initial Premium not allocated to a Fixed Allocation will
be allocated to the Specially Designated Division during the Free Look Peri-
od. See Your Right to Cancel or Exchange Your Contract.
ON EACH VALUATION DATE
At the end of each subsequent Valuation Period, the amount of Accumulation
Value in each Division will be calculated as follows:
(1) We take the Accumulation Value in the Division at the end of the preced-
ing Valuation Period.
(2) We multiply (1) by the Division's net rate of return for the current Val-
uation Period.
(3) We add (1) and (2).
(4) We add to (3) any additional premium payments allocated to the Division
during the current Valuation Period.
(5) We add or subtract allocations to or from that Division during the cur-
rent Valuation Period.
(6) We subtract from (5) any partial withdrawals and any associated charges
allocated to that Division during the current Valuation Period.
(7) We subtract from (6) the amounts allocated to that Division for:
(a)any Contract fees; and
(b)any charge for premium taxes.
All amounts in (7) are allocated to each Division in the proportion that (6)
bears to the Accumulation Value in Account B, unless the Charge Deduction Di-
vision has been specified. See Charges Deducted from the Accumulation Value.
MEASUREMENT OF INVESTMENT EXPERIENCE
INDEX OF INVESTMENT EXPERIENCE AND UNIT VALUE
The investment experience of a Division is determined on each Valuation Date.
We use an index to measure changes in each Division's experience during a
Valuation Period. We set the index at $10 when the first investments in a Di-
vision are made, except for the OTC, Research, Total Return, Growth and In-
come, and Value + Growth Divisions, which started with indices of $14.64,
$16.43, $13.76, $10.94, and $11.99, respectively. The index for a current
Valuation Period equals the index for the preceding Valuation Period multi-
plied by the experience factor for the current Valuation Period.
We may express the value of amounts allocated to the Divisions in terms of
units. We determine the number of units for a given amount on a Valuation
Date by dividing the dollar value of that amount by the index of investment
experience for that date. The index of investment experience is equal to the
value of a unit.
HOW WE DETERMINE THE EXPERIENCE FACTOR
For Divisions of Account B the experience factor reflects the investment ex-
perience of the Series of the Trust in which a Division invests as well as
the charges assessed against the Division for a Valuation Period. The factor
is calculated as follows:
(1) We take the net asset value of the portfolio in which the Division in-
vests at the end of the current Valuation Period.
(2) We add to (1) the amount of any dividend or capital gains distribution
declared for the investment portfolio and reinvested in such portfolio
during the current Valuation Period. We subtract from that amount a
charge for our taxes, if any.
(3) We divide (2) by the net asset value of the portfolio at the end of the
preceding Valuation Period.
(4) We subtract the applicable daily mortality and expense risk charge from
each Division for each day in the valuation period.
(5) We subtract the daily asset based administrative charge from each Divi-
sion for each day in the valuation period.
Calculations for Divisions investing in a Series are made on a per share ba-
sis.
NET RATE OF RETURN FOR A DIVISION
The net rate of return for a Division during a valuation period is the expe-
rience factor for that Valuation Period minus one.
CASH SURRENDER VALUE
Your Contract's Cash Surrender Value fluctuates daily with the investment re-
sults of the Divisions, interest credited to Fixed Allocations and any Market
Value Adjustment. We do not guarantee any minimum Cash Surrender Value. On any
date before the Annuity Commencement Date while the
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Contract is in effect, the cash surrender value is calculated as follows:
(1) We take the Contract's Accumulation Value;
(2) We deduct from (1) any surrender charge and any charge for premium taxes;
(3) We deduct from (2) any charges incurred but not yet deducted; and
(4) We adjust (3) for any Market Value Adjustment.
SURRENDERING TO RECEIVE THE CASH SURRENDER VALUE
The Contract may be surrendered by the Owner at any time while the Annuitant
is living and before the Annuity Commencement Date.
A surrender will be effective on the date your written request and the Con-
tract are received at our Customer Service Center. The Cash Surrender Value is
determined and all benefits under the Contract will then be terminated, as of
that date. You may receive the Cash Surrender Value in a single sum payment or
apply it under one or more Annuity Options. See The Annuity Options. We will
usually pay the Cash Surrender Value within seven days but we may delay pay-
ment. See When We Make Payments.
PARTIAL WITHDRAWALS
Prior to the Annuity Commencement Date, while the Annuitant is living and the
Contract is in effect, you may take partial withdrawals from the Accumulation
Value by sending satisfactory notice to our Customer Service Center. Unless
you specify otherwise, the amount of the withdrawal, including any surrender
charge and Market Value Adjustment, will be taken in proportion to the amount
of Accumulation Value in each Division in which you are invested. If there is
no Accumulation Value in those Divisions, partial withdrawals will be deducted
from your Fixed Allocations starting with the Guarantee Periods nearest their
Maturity Dates until we have honored your request.
There are three options available for selecting partial withdrawals, the Con-
ventional Partial Withdrawal Option, the Systematic Partial Withdrawal Option
and the IRA Partial Withdrawal Option. All three options are described below.
The maximum amount you may withdraw each Contract Year without incurring a
surrender charge is 15% of your Accumulation Value. See Surrender Charge for
Excess Partial Withdrawals. Partial withdrawals may not be repaid. A partial
withdrawal request for an amount in excess of 90% of the Cash Surrender Value
will be treated as a request to surrender the Contract.
CONVENTIONAL PARTIAL WITHDRAWAL OPTION
After the Free Look Period, you may take conventional partial withdrawals.
The minimum amount you may withdraw under this option is $1,000. A conven-
tional partial withdrawal from a Fixed Allocation may be subject to a Market
Value Adjustment.
SYSTEMATIC PARTIAL WITHDRAWAL OPTION
This option may be elected at the time you apply for a Contract, or at a
later date. This option may be elected to commence in a Contract Year where a
conventional partial withdrawal has been taken. However, it may not be
elected while the IRA Partial Withdrawal Option is in effect.
You may choose to receive systematic partial withdrawals on a monthly, quar-
terly, or annual basis from your Accumulation Value in the Divisions or the
Fixed Allocations. The commencement of payments under this option may not be
elected to start sooner than 28 days after the Contract Issue Date. You se-
lect the date when the withdrawals will be made but no later than the 28th
day of the month. If no date is selected, the withdrawals will be made on the
same calendar day of each month as the Contract Date.
You may select a dollar amount or a percentage of the Accumulation Value from
the Divisions in which you are invested as the amount of your withdrawal sub-
ject to the following maximums, but in no event can a payment be less than
$100:
<TABLE>
<CAPTION>
FREQUENCY MAXIMUM PERCENTAGE
--------- ------------------
<S> <C>
Monthly 1.25%
Quarterly 3.75%
Annual 15.00%
</TABLE>
If a dollar amount is selected and the amount to be systematically withdrawn
would exceed the applicable maximum percentage of your Accumulation Value on
the withdrawal date, the amount withdrawn will be reduced so that it equals
such percentage. For example, if a $500 monthly withdrawal was elected and on
the withdrawal date 1.25% of the Accumulation Value equaled $300, the with-
drawal amount would be reduced to $300. If a percentage is selected and the
amount to be systematically withdrawn based on that percentage would be less
than the minimum of $100, we would increase the amount to $100 provided it
does not exceed the maximum percentage. If it is below the maximum percentage
we will send the minimum. If it is above the maxi-
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mum percentage we will send
the amount and then cancel the option. For example, if you selected 1.0% to
be systematically withdrawn on a monthly basis and that amount equaled $90,
and since $100 is less than 1.25% of the Accumulation Value, we would send
$100. If 1.0% equaled $75, and since $100 is more than 1.25% of the Accumula-
tion Value we would send $75 and then cancel the option. In such a case, in
order to receive systematic partial withdrawals in the future, you would be
required to submit a new notice to our Customer Service Center.
Systematic Partial Withdrawals from Fixed Allocations are limited to interest
earnings during the prior month, quarter, or year, depending on the frequency
chosen. Systematic withdrawals are not subject to a Market Value Adjustment.
A Fixed Allocation, however, may not participate simultaneously in both the
dollar cost averaging program and the Systematic Partial Withdrawal Option.
You may change the amount or percentage of your withdrawal once each Contract
Year or cancel this option at any time by sending satisfactory notice to our
Customer Service Center at least seven days prior to the next scheduled with-
drawal date. However, you may not change the amount or percentage of your
withdrawals in any Contract Year during which you have previously taken a
conventional partial withdrawal.
IRA PARTIAL WITHDRAWAL OPTION
If you have an IRA Contract and will attain age 70 1/2 in the current calen-
dar year, distributions may be made to you to satisfy requirements imposed by
Federal tax law. IRA partial withdrawals provide payout of amounts required
to be distributed by the Internal Revenue Service rules governing mandatory
distributions under qualified plans. See Federal Tax Considerations. We will
send you a notice before your distributions commence, and you may elect this
option at that time, or at a later date. You may not elect IRA partial with-
drawals while the Systematic Partial Withdrawal Option is in effect. If you
do not elect the IRA Partial Withdrawal Option, and distributions are re-
quired by Federal tax law, distributions adequate to satisfy the requirements
imposed by Federal tax law may be made. Thus, if the Systematic Partial With-
drawal Option is in effect, distributions under that option must be adequate
to satisfy the mandatory distribution rules imposed by Federal tax law.
You may choose to receive IRA partial withdrawals on a monthly, quarterly or
annual frequency. You select the day of the month when the withdrawals will
be made, but it cannot be later than the 28th day of the month. If no date is
selected, the withdrawals will be made on the same calendar day of the month
as the Contract Date.
At your request, we will determine the amount that is required to be with-
drawn from your Contract each year based on the information you give us and
various choices you make. For information regarding the calculation and
choices you have to make, see the Statement of Additional Information. The
minimum dollar amount you can withdraw is $100. At the time we determine the
required partial withdrawal amount for a taxable year based on the frequency
you select, if that amount is less than $100, we will pay $100. At any time
where the partial withdrawal amount is greater than the Accumulation Value,
we will cancel the Contract and send you the amount of the Cash Surrender
Value.
You may change the payment frequency of your withdrawals once each Contract
Year or cancel this option at any time by sending us satisfactory notice to
our Customer Service Center at least seven days prior to the next scheduled
withdrawal date.
An IRA partial withdrawal in excess of the amount allowed under the System-
atic Partial Withdrawal Option may be subject to a Market Value Adjustment.
PARTIAL WITHDRAWALS IN GENERAL
CONSULT YOUR TAX ADVISOR REGARDING THE TAX CONSEQUENCES ASSOCIATED WITH TAK-
ING PARTIAL WITHDRAWALS. A partial withdrawal made before the taxpayer
reaches age 59 1/2 may result in imposition of a tax penalty of 10% of the
taxable portion withdrawn. See Federal Tax Considerations for more details.
AUTOMATIC REBALANCING
If you have at least $10,000 of Accumulation Value invested in the Divisions,
you may elect to participate in our automatic rebalancing program. Automatic
rebalancing provides you with an easy way to maintain the particular asset al-
location that you and your financial advisor have determined are most suitable
for your individual long-term investment goals. We do not charge a fee for
participating in our automatic rebalancing program.
Under the program you may elect to have all your allocations among the Divi-
sions rebalanced on a quarterly, semi-annual, or annual calendar basis.
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The minimum size of an allocation to a Division must be in full percentage
points. Rebalancing does not affect any amounts that you have allocated to the
Fixed Account. The program may be used in conjunction with the systematic
partial withdrawal option only where such withdrawals are taken pro rata.
Automatic rebalancing is not available if you participate in dollar cost
averaging. Automatic rebalancing will not take place during the free look
period.
To participate in automatic rebalancing you must submit to our Customer Serv-
ice Center written notice in a form satisfactory to us. We will begin the pro-
gram on the last Valuation Date of the applicable calendar period in which we
receive the notice. You may cancel the program at any time. The program will
automatically terminate if you choose to reallocate your Accumulation Value
among the Divisions or if you make an additional premium payment or partial
withdrawal on other than a pro rata basis. Additional premium payments and
partial withdrawals effected on a pro rata basis will not cause the automatic
rebalancing program to terminate.
PROCEEDS PAYABLE TO THE BENEFICIARY
If the Owner or the Annuitant (when the Owner is other than an individual)
dies prior to the annuity commencement date, we will pay the Beneficiary the
death benefit proceeds under the Contract. Such amount may be received in a
single sum or applied to any of the Annuity Options. See The Annuity Options.
If we do not receive a request to apply the death benefit proceeds to an Annu-
ity Option, a single sum distribution will be made. Any distributions from
non-qualified Contracts must comply with applicable Federal tax law distribu-
tion requirements.
DEATH BENEFIT OPTIONS
Subject to our rules, there are three death benefit options that may be
elected by you at issue under the Contract: the Standard Death Benefit Option;
the 7% Solution Enhanced Death Benefit Option; and the Annual Ratchet Enhanced
Death Benefit Option.
The 7% Solution Enhanced Death Benefit Option may only be elected at issue and
only if the Owner or Annuitant (when the Owner is other than an individual) is
age 80 or younger at issue. The 7% Solution Enhanced Death Benefit Option may
not be available where a Contract is held by joint Owners. The Annual Ratchet
Enhanced Death Benefit Option may only be elected at issue and only if the
Owner or Annuitant (when the Owner is other than an individual) is age 79 or
younger at issue.
If an enhanced death benefit is elected, the death benefit under the Contract
is equal to the greatest of: (i) the Accumulation Value; (ii) total premium
payments less any partial withdrawals; (iii) the Cash Surrender Value; and
(iv) the enhanced death benefit (see below).
We may offer a reduced death benefit under certain group and sponsored ar-
rangements. See Other Contract Provisions, Group or Sponsored Arrangements.
STANDARD DEATH BENEFIT OPTION
You will automatically receive the Standard Death Benefit Option unless you
elect one of the enhanced death benefits. The Standard Death Benefit Option
for the Contract is equal to the greatest of: (i) your Accumulation Value;
(ii) total premiums less any partial withdrawals; and (iii) the Cash Surren-
der Value.
7% SOLUTION ENHANCED DEATH BENEFIT OPTION
(1) We take the enhanced death benefit from the prior Valuation Date. On the
Contract Date, the enhanced death benefit is equal to the Initial Premium.
(2) We calculate interest on (1) for the current Valuation Period at the en-
hanced death benefit interest rate, which rate is an annual rate of 7%;
except that with respect to amounts in the Liquid Asset Division and Lim-
ited Maturity Bond Division, the interest rate applied to such amounts
will be the respective net rate of return for such Divisions during the
current Valuation Period, if it is less than an annual rate of 7%; and ex-
cept with respect to amounts in a Fixed Allocation, the interest rate ap-
plied to such amounts will be the interest credited to such Fixed
Allocation during the current Valuation Period, if it is less than an
annual rate of 7%.
Each accumulated initial or additional premium payment reduced by any par-
tial withdrawals (including any associated Market Value Adjustment and sur-
render charge incurred) allocated to such premium will continue to grow at
the enhanced death benefit interest rate until reaching the maximum en-
hanced death benefit. Such maximum enhanced death benefit is equal to two
times the initial or each additional premium paid, as reduced by partial
withdrawals. Each partial withdrawal reduces the maximum enhanced
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death benefit as follows: first, the maximum enhanced death benefit is
reduced by the amount of any partial withdrawal of earnings; second, the
maximum enhanced death benefit is reduced in proportion to the reduction in
the Accumulation Value for any partial withdrawal of premium (in each case,
including any associated market value adjustment and surrender charge
incurred). To the extent that partial withdrawals in a contract year do not
exceed 7% of cumulative premiums and did not exceed 7% of cumulative premiums
in any prior contract year, such withdrawals will be treated as withdrawals
of earnings for the purpose of calculating the maximum enhanced death benefit.
(3) We add (1) and (2).
(4) We add to (3) any additional premiums paid during the current Valuation Pe-
riod.
(5) We subtract from (4) any partial withdrawals (including any Market Value
Adjustments and surrender charges incurred) made during the current Valua-
tion Period.
ANNUAL RATCHET ENHANCED DEATH BENEFIT OPTION
(1) We take the enhanced death benefit from the prior Valuation Date. On the
Contract Date, the enhanced death benefit is equal to the Initial Premium.
(2) We add to (1) any additional premiums paid since the prior Valuation Date
and subtract from (1) any partial withdrawals (including any Market Value
Adjustments and surrender charges incurred) taken since the prior Valuation
Date.
(3) On a Valuation Date that occurs on or prior to the Owner's Attained Age 80
which is also a Contract Anniversary, we set the enhanced death benefit
equal to the greater of (2) or the Accumulation Value as of such date.
On all other Valuation Dates, the enhanced death benefit is equal to (2).
HOW TO CLAIM PAYMENTS TO BENEFICIARY
We must receive due proof of the death of the Owner or the Annuitant (if the
Owner is other than an individual) (such as an official death certificate) at
our Customer Service Center before we will make any payments to the Benefi-
ciary. We will calculate the death benefit as of the date we receive due
proof of death. The Beneficiary should contact our Customer Service Center
for instructions.
REPORTS TO OWNERS
We will send you a report once each calendar quarter within 31 days after the
end of each calendar quarter. The report will show the Accumulation Value, the
Cash Surrender Value, and the death benefit as of the end of the calendar quar-
ter. The report will also show the allocation of your Accumulation Value as of
such date and the amounts deducted from or added to the Accumulation Value
since the last report. The report will also include any other information that
may be currently required by the insurance supervisory official of the juris-
diction in which the Contract is delivered.
We will also send you copies of any shareholder reports of the portfolios or
securities in which Account B invests, as well as any other reports, notices or
documents required by law to be furnished to Owners.
WHEN WE MAKE PAYMENTS
We will generally pay death benefit proceeds and the cash surrender value
within seven days after our Customer Service Center receives all the informa-
tion needed to process the payment.
However, we may delay payment of amounts derived from the Divisions if it is
not practical for us to value or dispose of shares of Account B because:
(1) The NYSE is closed for trading;
(2) The SEC determines that a state of emergency exists;
(3) An order or pronouncement of the SEC permits a delay for the protection of
Owners; or,
(4) The check used to pay the premium has not cleared through the banking sys-
tem. This may take up to 15 days.
During such times, as to amounts allocated to the Divisions, we may delay:
(1) Determination and payment of any Cash Surrender Value;
(2) Determination and payment of any death benefit if death occurs before the
Annuity Commencement Date;
(3) Allocation changes of the Accumulation Value; or,
(4) Application under an Annuity Option of the Accumulation Value.
We reserve the right to delay payment of amounts from the Fixed Account for up
to six months.
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____________________________________________________________________
CHARGES AND FEES
We deduct the charges described below to cover our cost and expenses, services
provided and risks assumed under the Contracts. We incur certain costs and ex-
penses for the distribution and administration of the Contracts, for providing
the benefits payable thereunder and for bearing various risks thereunder. The
amount of a charge will not necessarily correspond to the costs associated
with providing the services or benefits indicated by the designation of the
charge. For example, the Surrender Charge collected may not fully cover all of
the distribution expenses incurred by us.
CHARGE DEDUCTION DIVISION
You may specify at issue if you wish to have all charges against the Accumula-
tion Value deducted from the Liquid Asset Division. We call this the Charge
Deduction Division Option, and within this context refer to the Liquid Asset
Division as the Charge Deduction Division. If you do not elect this option, or
if the amount of the charges is greater than the amount in the Division, the
charges will be deducted as discussed below. You may also choose to elect or
cancel this option while the Contract is in force by sending satisfactory no-
tice to our Customer Service Center.
CHARGES DEDUCTED FROM THE ACCUMULATION VALUE
We invest the entire amount of the initial and any additional premium payments
in the Divisions and the Fixed Allocations you select, subject to certain re-
strictions. See Restrictions on Allocation of Premium Payments. We then may
deduct certain amounts from your Accumulation Value. We may reduce certain
fees and charges, including any surrender, administration, and mortality and
expense risk charges, under group or sponsored arrangements. See Group or
Sponsored Arrangements. Unless you have elected the Charge Deduction Division,
charges are deducted proportionately from all affected Divisions in which you
are invested. If there is no Accumulation Value in those Divisions, we will
deduct charges from your Fixed Allocations starting with the Guarantee Periods
nearest their Maturity Dates until such charges have been paid. The charges we
deduct are:
SURRENDER CHARGE
A contingent deferred sales charge ("Surrender Charge") is imposed as a per-
centage of each premium payment if the Contract is surrendered or an excess
partial withdrawal is taken during the seven year period from the date we re-
ceive and accept such premium payment. The percentage of premium payments de-
ducted at the time of surrender or excess partial withdrawal depends upon the
number of complete years that have elapsed since that premium payment was
made. We determine the surrender charge as a percentage of each premium pay-
ment as follows:
<TABLE>
<CAPTION>
Complete Years Elapsed Surrender
Since Premium Payment Charge
------------------- ---------
<S> <C>
0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 1%
7+ 0%
</TABLE>
Subject to our rules and as described in the Contract, the surrender charge
arising from a surrender or excess partial withdrawal will be waived in the
following events:
(1) you begin receiving qualified extended medical care on or after the first
Contract anniversary for at least 45 days during any continuous sixty-day
period, and your request for the surrender or withdrawal, together with
all required proof of such qualified extended medical care, must be re-
ceived at our Customer Service Center during the term of such care or
within ninety days after the last day upon which you received such care.
(2) you are first diagnosed by a qualifying medical professional, on or after
the first Contract Anniversary, as having a Qualifying Terminal Illness.
Written proof of terminal illness, satisfactory to us, must be received
at our Customer Service Center. We reserve the right to require an
examination by a physician of our choice.
See your Contract for more information. The waiver of surrender charge may
not be available in all states.
SURRENDER CHARGE FOR EXCESS PARTIAL WITHDRAWALS
There is considered to be an excess partial withdrawal in any Contract Year
in which the amount withdrawn exceeds 15% of your Accumulation Value on the
date of the withdrawal minus any amount withdrawn during that Contract Year.
Where you are receiving systematic partial withdrawals, any combination of
conventional partial withdrawals taken and any systematic partial withdrawals
expected to be received in a Contract Year will be considered in determining
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the amount of the excess partial withdrawal. Such a withdrawal will be con-
sidered a partial surrender of the Contract and we will impose a surrender
charge and any associated premium tax. See Facts About the Contract, The
Fixed Account, Market Value Adjustment. Such charges will be deducted from
the Accumulation Value in proportion to the Accumulation Value in each Divi-
sion or Fixed Allocation from which the excess partial withdrawal was taken.
In instances where the excess partial withdrawal equals the entire Accumula-
tion Value in each such Division or Fixed Allocation, charges will be de-
ducted proportionately from all other Divisions and Fixed Allocations in
which you are invested.
For purposes of calculating the surrender charge for the excess partial with-
drawal, (i) we treat premium payments as being withdrawn on a first-in first-
out basis, and (ii) amounts withdrawn which are not considered an excess par-
tial withdrawal are not treated as a withdrawal of any premium payments.
Although we treat premium payments as being withdrawn before earnings for
purposes of calculating the surrender charge for excess partial withdrawals,
the Federal income tax law treats earnings as withdrawn first. See Federal
Tax Considerations, Taxation of Non-Qualified Annuities.
For example, the following assumes an Initial Premium payment of $10,000 and
additional premium payments of $10,000 in each of the second and third Con-
tract Years, for total premium payments under the Contract of $30,000. It
also assumes a partial withdrawal at the beginning of the fourth Contract
Year of 20% of the Accumulation Value of $35,000.
In this example, $5,250 ($35,000 x .15) is the maximum partial withdrawal
that may be withdrawn during the Contract Year without the imposition of a
surrender charge. The total partial withdrawal would be $7,000 ($35,000 x
.2). Therefore, $1,750 ($7,000-$5,250) is considered an excess partial with-
drawal of a part of the Initial Premium payment of $10,000 and would be sub-
ject to a 5% surrender charge of $87.50 ($1,750 x .05). This example does not
take into account any Market Value Adjustment or deduction of any premium
taxes.
PREMIUM TAXES
We make a charge for state and local premium taxes in certain states which
can range from 0% to 3.5% of premium. The charge depends on the Owner's state
of residence. We reserve the right to change this amount to conform with
changes in the law or if the Owner changes state of residence.
Premium taxes are generally incurred on the annuity commencement date and a
charge for such premium taxes is then deducted from your Accumulation Value
on such date. However, some jurisdictions impose a premium tax at the time
that initial and additional premiums are paid, regardless of the Annuity Com-
mencement Date. In those states we may initially defer collection of the
amount of the charge for premium taxes from your Accumulation Value and de-
duct it against Accumulation Value on surrender of the Contract, excess par-
tial withdrawals or on the Annuity Commencement Date.
ADMINISTRATIVE CHARGE
The administrative charge is incurred at the beginning of the Contract
processing period and deducted at the end of each Contract processing period.
We deduct this charge when determining the Cash Surrender Value payable if
you surrender the Contract prior to the end of a Contract processing period.
If the Accumulation Value at the end of the Contract processing period equals
or exceeds $100,000 or the sum of the premiums paid equals or exceeds
$100,000, the charge is zero. Otherwise, the amount deducted is $40 per Con-
tract Year.
EXCESS ALLOCATION CHARGE
We currently do not assess a charge for allocation changes made during a Con-
tract Year. We reserve the right, however, to assess a $25 charge for each
allocation change after the twelfth allocation change in a Contract Year.
This amount represents the maximum we will charge. The charge would be
deducted from the Divisions and the Fixed Allocations from which each such
reallocation is made in proportion to the amount being transferred from each
such Division and Fixed Allocation unless you have chosen to use the Charge
Deduction Division. The excess allocation charge is set at a level that is
not designed to produce profit for Golden American or any affiliate. Any
allocations or transfers due to the election of dollar cost averaging and
reallocation under the provision What Happens if a Division is Not Available
will not be included in determining if the excess allocation charge should
apply.
CHARGES DEDUCTED FROM THE DIVISIONS
MORTALITY AND EXPENSE RISK CHARGE
The amount of the mortality and expense risk charge depends on the death ben-
efit option that has been elected. If the Standard Death Benefit
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Option is elected, the charge is equivalent, on an annual basis, to 1.10% of
the assets in each Division. The charge is deducted on each Valuation Date at
the rate of .003030% for each day in the Valuation Period. If an enhanced
death benefit is elected, the charge is equivalent, on an annual basis, to
1.25% for the Annual Ratchet Death Benefit Option, or 1.40% for the 7%
Solution Death Benefit Option, of the assets in each Division. The charge is
deducted on each Valuation Date at the rate of .003446% or .003863%,
respectively, for each day in the Valuation Period.
ASSET BASED ADMINISTRATIVE CHARGE
We will deduct a daily charge from the assets in each Division, to compensate
us for a portion of the administrative expenses under the Contract. The daily
charge is at a rate of 0.000411% (equivalent to an annual rate of 0.15%) on
the assets in each Division.
TRUST EXPENSES
There are fees and charges deducted from each Series of the GCG Trust and the
ESS Trust. Please read the respective Trust prospectus for details.
____________________________________________________________________
CHOOSING YOUR ANNUITIZATION OPTIONS
ANNUITIZATION OF YOUR CONTRACT
If the Annuitant and Owner are living on the Annuity Commencement Date, we
will begin making payments to the Owner under an income plan. We will make
these payments under the Annuity Option chosen. You may change an Annuity Op-
tion by making a written request to us at least 30 days prior to the Annuity
Commencement Date of the Contract. The amount of the payments will be deter-
mined by applying your Accumulation Value adjusted for any applicable Market
Value Adjustment on the Annuity Commencement Date in accordance with The Annu-
ity Options section below, subject to our published rules at such time. See
When We Make Payments.
You may also elect an Annuity Option on surrender of the Contract for its Cash
Surrender Value or you may choose one or more Annuity Options for the payment
of death benefit proceeds while it is in effect and before the Annuity Com-
mencement Date. If, at the time of the Owner's death or the Annuitant's death
(if the Owner is not an individual), no option has been chosen for paying
death benefit proceeds, the Beneficiary may choose an option within 60 days.
In all events, payments of death benefit proceeds must comply with the distri-
bution requirements of applicable Federal tax law.
The minimum monthly annuity income payment that we will make is $20. We may
require that a single sum payment be made if the Accumulation Value is less
than $2,000 or if the calculated monthly annuity income payment is less than
$20.
For each option we will issue a separate written agreement putting the option
into effect. Before we pay any annuity benefits, we require the return of the
Contract. If your Contract has been lost, we will require that you complete
and return the applicable Contract form. Various factors will affect the level
of annuity benefits including the Annuity Option chosen, the applicable pay-
ment rate used and the investment results of the Divisions and interest cred-
ited to the Fixed Allocations in which the Accumulation Value has been invest-
ed.
Some annuity options may provide only for fixed payments. Fixed Annuity Pay-
ments are regular payments, the amount of which is fixed and guaranteed by us.
The amount of the payments will depend only on the form and duration of pay-
ments chosen, the age of the Annuitant or Beneficiary (and sex, where
appropriate), the total Accumulation Value applied to purchase the fixed op-
tion, and the applicable payment rate.
Our approval is needed for any option where:
(1) The person named to receive payment is other than the Owner or Beneficia-
ry;
(2) The person named is not a natural person, such as a corporation; or
(3) Any income payment would be less than the minimum annuity income payment
allowed.
ANNUITY COMMENCEMENT DATE SELECTION
You select the Annuity Commencement Date. You may select any date following
the third Contract Anniversary but before the Contract Processing Date in the
month following the Annuitant's 90th birthday, or 10 years from the contract
date, if later. If, on the Annuity Commencement Date, a Surrender Charge
remains, the elected Annuity Option must include a period certain of at least
five years duration. If you do not select a date, the annuity commencement
date will be in the month following the Annuitant's 90th birthday, or 10
years from the contract date, if later. If
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the Annuity Commencement Date occurs when the Annuitant is at an advanced age,
such as over age 85, it is possible that the Contract will not be considered an
annuity for Federal tax purposes. See Federal Tax Considerations. For a
Contract purchased in connection with a qualified plan, distribution must
commence not later than April 1st of the calendar year following the calendar
year in which you attain age 70 1/2. Consult your tax advisor.
FREQUENCY SELECTION
You choose the frequency of the Annuity Payments. They may be monthly, quar-
terly, semi-annually or annually. If we do not receive written notice from
you, the payments will be made monthly. There may be certain restrictions on
minimum payments that we will allow.
THE ANNUITIZATION OPTIONS
There are four options to choose from as shown below. Options 1 through 3 are
fixed and option 4 may be fixed or variable. For a fixed option, the Accumula-
tion Value in the Divisions is transferred to the general account.
OPTION 1. INCOME FOR A FIXED PERIOD
Payment is made in equal installments for a fixed number of years based on
the Accumulation Value as of the annuity commencement date. We guarantee that
each monthly payment will be at least the amount set forth in the Contract.
Guaranteed amounts for annual, semi-annual and quarterly payments are avail-
able upon request. Illustrations are available upon request. If the Cash Sur-
render Value or Accumulation Value is applied under this option, a 10% pen-
alty tax may apply to the taxable portion of each income payment until the
Owner reaches age 59 1/2.
OPTION 2. INCOME FOR LIFE
Payment is made in equal monthly installments and guaranteed for at least a
period certain. The period certain can be 10 or 20 years. Other periods cer-
tain may be available on request. A refund certain may be chosen instead. Un-
der this arrangement, income is guaranteed until payments equal the amount
applied. If the person named lives beyond the guaranteed period, payments
continue until his or her death. We guarantee that each payment will be at
least the amount set forth in the Contract corresponding to the person's age
on his or her last birthday before the option's effective date. Amounts for
ages not shown in the Contract are available upon request.
OPTION 3. JOINT LIFE INCOME
This option is available if there are two persons named to receive payments.
At least one of the persons named must be either the Owner or Beneficiary of
the Contract. Monthly payments are guaranteed and are made as long as at
least one of the named persons is living. There is no minimum number of pay-
ments. Monthly payment amounts are available upon request.
OPTION 4. ANNUITY PLAN
An amount can be used to buy any single premium annuity we offer on the op-
tion's effective date.
PAYMENT WHEN NAMED PERSON DIES
When the person named to receive payment dies, we will pay any amounts still
due as provided by the option agreement. The amounts still due are determined
as follows:
(1) For option 1, or any remaining guaranteed payments under option 2, pay-
ments will be continued. Under options 1 and 2, the discounted values of
the remaining guaranteed payments may be paid in a single sum. This means
we deduct the amount of the interest each remaining guaranteed payment
would have earned had it not been paid out early. The discount interest
rate is never less than 3% for option 1 and 3.50% for option 2 per year.
We will, however, base the discount interest rate on the interest rate
used to calculate the payments for options 1 and 2 if such payments were
not based on the tables in the Contract.
(2) For option 3, no amounts are payable after both named persons have died.
(3) For option 4, the annuity agreement will state the amount due, if any.
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____________________________________________________________________
OTHER CONTRACT PROVISIONS
IN CASE OF ERRORS IN APPLICATION INFORMATION
If an age or sex given in the application or enrollment form is misstated, the
amounts payable or benefits provided by the Contract shall be those that the
premium payment would have bought at the correct age or sex.
SENDING NOTICE TO US
Any written notices, inquiries or requests should be sent to our Customer
Service Center. Please include your name, your Contract number and, if you
are not the Annuitant, the name of the Annuitant.
ASSIGNING THE CONTRACT AS COLLATERAL
You may assign a non-qualified Contract as collateral security for a loan or
other obligation. This does not change the Ownership. However, your rights
and any Beneficiary's rights are subject to the terms of the assignment. See
Transfer of Annuity Contracts, and Assignments. An assignment may have Fed-
eral tax consequences. See Federal Tax Considerations.
You must give us satisfactory written notice at our Customer Service Center
in order to make or release an assignment. We are not responsible for the va-
lidity of any assignment.
NON-PARTICIPATING
The Contract does not participate in the divisible surplus of Golden Ameri-
can.
AUTHORITY TO MAKE AGREEMENTS
All agreements made by us must be signed by our president or a vice president
and by our secretary or an assistant secretary. No other person, including an
insurance agent or broker, can change any of the Contract's terms, make any
can change any of the Contract's terms, make any agreements binding on us or
extend the time for premium payments.
CONTRACT CHANGES -- APPLICABLE TAX LAW
We reserve the right to make changes in the Contract to the extent we deem it
necessary to continue to qualify the Contract as an annuity. Any such changes
will apply uniformly to all Contracts that are affected. You will be given ad-
vance written notice of such changes.
YOUR RIGHT TO CANCEL OR EXCHANGE YOUR CONTRACT
CANCELLING YOUR CONTRACT
You may cancel your Contract within your Free Look Period, which is ten days
after you receive your Contract. For purposes of administering our allocation
and administrative rules, we deem this period to expire 15 days after the
Contract is mailed to you. Some states may require a longer Free Look Period.
If you decide to cancel, you may mail or deliver the Contract to our Customer
Service Center. We will refund the Accumulation Value plus any charges we de-
ducted, and the Contract will be voided as of the date we receive the Con-
tract and your request. Some states require that we return the premium paid.
In these states, we require your premiums designated for investment in the
Divisions of Account B be allocated to the Specially Designated Division dur-
ing the Free Look Period. Premiums designated for the Fixed Account will be
allocated to a Fixed Allocation with the Guarantee Period you have chosen. If
you do not choose to exercise your right to cancel during the Free Look Peri-
od, then at the end of the Free Look Period your money will be invested in
the Divisions chosen by you, based on the index of investment experience next
computed for each Division. See Facts About the Contract, Measurement of In-
vestment Experience, Index of Experience and Unit Value.
EXCHANGING YOUR CONTRACT
For information regarding exchanges under Section 1035 of the Internal Reve-
nue Code of 1986, as amended, see Federal Tax Considerations.
OTHER CONTRACT CHANGES
You may change the Contract to another annuity plan subject to our rules at
the time of the change.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce any surrender, ad-
ministration, and mortality and expense risk charges. We may also change the
minimum initial and additional premium requirements, or offer a reduced death
benefit. Group arrangements include those in which a trustee or an employer,
for example, purchases Contracts covering a group of individuals on a group
basis. Sponsored arrangements include those in which an employer allows us to
sell Contracts to its employees on an individual basis.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the group among other factors. We take all these factors
into account when reducing charges. To qualify for reduced charges, a group or
sponsored arrangement must meet certain requirements, including our require-
ments for size and number of years in existence. Group or sponsored arrange-
ments that have been set up solely to buy Contracts or that
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have been in existence less than six months will not qualify for reduced
charges.
We will make these and any similar reductions according to our rules in effect
when an application or enrollment form for a Contract is approved. We may
change these rules from time to time. Any variation in the administrative
charge will reflect differences in costs or services and will not be unfairly
discriminatory.
SELLING THE CONTRACT
DSI is principal underwriter and distributor of the Contract as well as for
other Contracts issued through Account B and other separate accounts of Golden
American. We pay DSI for acting as principal underwriter under a distribution
agreement. The offering of the Contract will be continuous.
DSI has entered into and will continue to enter into sales agreements with
broker-dealers to solicit for the sale of the Contract through registered rep-
resentatives who are licensed to sell securities and variable insurance prod-
ucts including variable annuities. These agreements provide that applications
for Contracts may be solicited by registered representatives of the broker-
dealers appointed by Golden American to sell its variable life insurance and
variable annuities. These broker-dealers are registered with the SEC and are
members of the National Association of Securities Dealers, Inc. ("NASD"). The
registered representatives are authorized under applicable state regulations
to sell variable life insurance and variable annuities. The writing agent will
receive commissions of up to 6.5% of any initial or additional premium pay-
ments made.
____________________________________________________________________
REGULATORY INFORMATION
VOTING RIGHTS
ACCOUNT B. We will vote the shares of a Trust owned by Account B
according to your instructions. However, if the Investment Company
Act of 1940 or any related regulations should change, or if
interpretations of it or related regulations should change, and we
decide that we are permitted to vote the shares of a Trust in our
own right, we may decide to do so.
We determine the number of shares that you have in a Division by
dividing the Contract's Accumulation Value in that Division by the
net asset value of one share of the portfolio in which a Division
invests. Fractional votes will be counted. We will determine the
number of shares you can instruct us to vote 180 days or less before
a Trust's meeting. We will ask you for voting instructions by mail
at least 10 days before the meeting.
If we do not get your instructions in time, we will vote the shares
in the same proportion as the instructions received from all
Contracts in that Division. We will also vote shares we hold in
Account B which are not attributable to Owners in the same
proportion.
STATE REGULATION
We are regulated and supervised by the Insurance Department of the
State of Delaware, which periodically examines our financial
condition and operations. We are also subject to the insurance laws
and regulations of all jurisdictions where we do business. The
variable Contract offered by this prospectus has been approved by
the Insurance Department of the State of Delaware and by the
Insurance Departments of other jurisdictions. We are required to
submit annual statements of our operations, including financial
statements, to the Insurance Departments of the various
jurisdictions in which we do business to determine solvency and
compliance with state insurance laws and regulations.
LEGAL PROCEEDINGS
Golden American, as an insurance company, is ordinarily involved in
litigation. We do not believe that any current litigation is
material and we do not expect to incur significant losses from such
actions.
LEGAL MATTERS
The legal validity of the Contract described in this prospectus has
been passed on by Myles R. Tashman, Esquire, Executive Vice
President, General Counsel and Secretary of Golden American.
Sutherland, Asbill & Brennan LLP of Washington, D.C. has provided
advice on certain matters relating to Federal securities laws.
EXPERTS
The audited financial statements of Golden American Life Insurance
Company, Separate Account B and The Managed Global Account of
Separate Account D appearing or incorporated by reference in the
Statement of Additional Information and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set
forth in
34
<PAGE>
<PAGE>
their reports thereon appearing or incorporated by
reference in the Statement of Additional Information and in the
Registration Statement and are included or incorporated by reference
in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
____________________________________________________________________
MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY
SELECTED FINANCIAL DATA
The following selected financial data prepared in accordance with
generally accepted accounting principles ("GAAP") for Golden
American should be read in conjunction with the financial statements
and notes thereto included in this Prospectus.
On August 13, 1996, Equitable of Iowa acquired all the outstanding
capital stock of BT Variable, Inc., the parent of Golden American.
For GAAP financial statement purposes, the change in control of
Golden American through the acquisition was accounted for as a
purchase acquisition. As a result, the GAAP financial data presented
below for periods subsequent to August 13, 1996, are presented on
the Post-Acquisition new basis of accounting while the financial
statement data prior to August 14, 1996 is presented on a Pre-
Acquisition historical basis of accounting.
<TABLE>
<CAPTION>
SELECTED GAAP BASIS FINANCIAL DATA
(IN THOUSANDS)
----------------------------------------------------------------------------------------
POST-ACQUISITION | PRE-ACQUISITION
------------------------------- | --------------------------------------------------------
FOR THE 9 FOR THE PERIOD | FOR THE PERIOD
MONTHS ENDED AUGUST 14, 1996 | JANUARY 1, 1996
SEPTEMBER 30, THROUGH | THROUGH FOR THE FISCAL YEARS ENDED DECEMBER 31
1997 DECEMBER 31, | AUGUST 13, ----------------------------------------
(UNAUDITED) 1996 | 1996 1995 1994 1993 1992(a)
--------------- --------------- | --------------- ---------- ---------- -------- --------
<S> <C> <C> | <C> <C> <C> <C> <C>
Annuity and Interest |
Sensitive Life Product |
Charges................ $ 15,937 $ 8,768 | $12,259 $ 18,388 $ 17,519 $ 10,192 $ 694
Net Income before |
Federal Income Tax..... $ 343 $ 570 | $ 1,736 $ 3,364 $ 2,222 $ (1,793) $ (508)
Net Income (Loss)....... $ 342 $ 350 | $ 3,199 $ 3,364 $ 2,222 $ (1,793) $ (508)
Total Assets............ $2,194,532 $1,677,899 | N/A $1,203,057 $1,044,760 $886,155 $320,539
Total Liabilities....... $2,050,911 $1,537,415 | N/A $1,104,932 $ 955,254 $857,558 $306,197
Total Stockholder's |
Equity................. $ 143,621 $ 140,484 | N/A $ 98,125 $ 89,506 $ 28,597 $ 14,342
</TABLE>
________________
(a)Results for 1992 are for the period September 30, 1992 (date of
acquisition) to December 31, 1992.
The following selected financial data was prepared on the basis of
statutory accounting practices ("SAP"), which have been prescribed
by the Department of Insurance of the State of Delaware and the
National Association of Insurance Commissioners. These practices
differ in certain respects from GAAP. The selected financial data
should be read in conjunction with the financial statements and
notes thereto included in this Prospectus, which describe the
differences between SAP and GAAP. See the Company's Annual Report
for more detail.
<TABLE>
<CAPTION>
SELECTED STATUTORY FINANCIAL DATA
(IN THOUSANDS)
----------------
FOR THE 9 MONTHS ------------------------------------------------------
ENDED SEPTEMBER 30, FOR THE FISCAL YEARS ENDED DECEMBER 31
1997 ------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
---------------- ---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Premiums & Annuity
Considerations......... $ 387,606 $ 442,852 $ 124,687 $294,550 $505,465 $191,039
Net Income (Loss) before
Federal Income Tax..... $ 314 $ (9,137) $ (4,117) $(11,260) $ (9,417) $ (4,225)
Net Income (Loss)....... $ 510 $ (9,188) $ (4,117) $(11,260) $ (9,401) $ (3,986)
Total Assets............ $2,036,172 $1,544,931 $1,124,840 $988,180 $834,123 $302,200
Total Liabilities....... $1,956,544 $1,464,502 $1,058,483 $921,888 $815,301 $289,995
Total Capital &
Surplus................ $ 79,628 $ 80,430 $ 66,357 $ 66,292 $ 18,822 $ 12,205
</TABLE>
35
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The purpose of this section is to discuss and analyze the Company's
condensed consolidated results of operations. In addition, some
analysis and information regarding financial condition and liquidity
and capital resources has also been provided. This analysis should
be read in conjunction with the condensed consolidated financial
statements and related notes which appear elsewhere in this report.
The Company reports financial results on a consolidated basis. The
consolidated condensed financial statements include the accounts of
Golden American Life Insurance Company ("Golden American") and its
subsidiary, First Golden American Life Insurance Company of New York
("First Golden," and collectively with Golden American the
"Company").
RESULTS OF OPERATIONS
CHANGE IN CONTROL. On August 13, 1996, Equitable of Iowa Companies
("Equitable") acquired all of the outstanding capital stock of BT
Variable, Inc. ("BT Variable") and its wholly owned subsidiaries
Golden American and Directed Services Inc. ("DSI") for $144 million.
The purchase price consisted of $93 million in cash paid to
Whitewood (parent of BT Variable) and $51 million in cash paid to
Bankers Trust (parent of Whitewood) to retire certain debt owed by
BT Variable to Bankers Trust. Subsequent to the acquisition, the BT
Variable, Inc. name was changed to EIC Variable, Inc. On April 30,
1997, EIC Variable, Inc. was liquidated and its investments in Golden
American and DSI were transferred to Equitable while the remainder
of its net assets were contributed to Golden American.
For financial statement purposes, the change in control of Golden
American through the acquisition of BT Variable was accounted for as
a purchase acquisition effective August 14, 1996. This acquisition
resulted in a new basis of accounting reflecting estimated fair
values of assets and liabilities at that date. As a result, the
Company's financial statements for periods subsequent to August 13,
1996, are presented on the Post-Acquisition new basis of accounting,
while the financial statements prior to August 13, 1996 are
presented on the Pre-Acquisition historical cost basis of
accounting.
The purchase price was allocated to the three companies purchased -
BT Variable, DSI, and Golden American. Goodwill of $41.1 million
was established for the excess of the acquisition cost over the fair
value of the assets and liabilities and pushed down to Golden
American. The acquisition cost was preliminary with respect to the
final settlement of taxes with Bankers Trust and estimated expenses.
At June 30, 1997, goodwill was increased by $1.8 million to adjust
the value of a receivable existing at the acquisition date. The
allocation of the purchase price to Golden American was
approximately $139.9 million. Goodwill resulting from the
acquisition is being amortized over 25 years on a straight line
basis. The carrying value will be reviewed periodically for any
indication of impairment in value.
BUSINESS ENVIRONMENT. The current business and regulatory
environment remains challenging for the insurance industry.
Increasing competition from traditional insurance carriers as well
as banks and mutual fund companies offer consumers many choices.
However, overall demand for variable products remains strong for
several reasons including: strong stock market performance over the
last 3 years; relatively low interest rates; an aging U.S.
population that is increasingly concerned about retirement and
estate planning, as well as maintaining their standard of living in
retirement; and potential reductions in government and employer-
provided benefits at retirement as well as lower public confidence
in the adequacy of those benefits.
In 1995, Golden American experienced a significant decline in sales,
due to a number of factors. First, some portfolio managers performed
poorly in 1993 and 1994. Second, as more products came to market the
cost structure of the DVA product became less competitive. Third,
because no fixed interest rate options were available in 1994 during
a time of rising interest rates and flat or declining equity
markets, market share was lost. Consequently, the Company took steps
to respond to these business challenges. Several portfolio managers
were replaced and new funds were added to give contract holders more
options. In October of 1995, the Company introduced the Combination
Deferred Variable and Fixed Annuity (GoldenSelect DVA PLUS) and the
GoldenSelect Genesis I and Genesis Flex life insurance products.
In October of 1997, Golden American introduced three new variable
annuity products which are expected to contribute significantly to
sales.
36
<PAGE>
<PAGE>
THE FIRST NINE MONTHS OF 1997 COMPARED TO THE SAME PERIOD OF 1996.
PREMIUMS
<TABLE>
<CAPTION>
POST-ACQUISITION COMBINED PRE-ACQUISITION
------------------------------------------------------------
|For the Period| Nine Months | For the Period
Nine Months | August 14, | ended | January 1,
ended | 1996 through |September 30,| 1996 through
September 30, |September 30, | 1996 | August 13,
1997 | 1996 | Combined | 1996
- ----------------------------------|--------------|-------------|----------------
| (Dollars in thousands) |
<S> <C> | <C> | <C> | <C>
Variable annuity | | |
premiums: | | |
Separate account $149,726 | $13,911 | $140,930 | $127,019
Fixed account 228,524 | 16,075 | 147,428 | 131,353
--------------|--------------|-------------|----------------
Total variable annuity | | |
premiums 378,250 | 29,986 | 288,358 | 258,372
Variable life | | |
premiums 13,639 | 1,451 | 11,957 | 10,506
--------------|--------------|-------------|----------------
Total premiums $391,889 | $31,437 | $300,315 | $268,878
============================================================
</TABLE>
Variable annuity separate account and variable life premiums
increased 6.2% and 14.1%, respectively, during the first nine months
of 1997. The fixed account portion of the Company's variable
annuity premiums increased 55.0% during the first nine months of
1997 due to the Company's marketing emphasis on fixed rates during
the second and third quarters of 1997. Premiums, net of
reinsurance, for variable products from six significant sellers
totaled $299.2 million or 76% of total premiums for the first nine
months of 1997.
REVENUES
<TABLE>
<CAPTION>
POST-ACQUISITION COMBINED PRE-ACQUISITION
--------------------------------------------------------------
|For the Period | Nine Months | For the Period
Nine Months | August 14, | ended | January 1,
ended | 1996 through |September 30, | 1996 through
September 30, | September 30, | 1996 | August 13,
1997 | 1996 | Combined | 1996
- -------------------------------|---------------|--------------|----------------
| (Dollars in thousands) |
<S> <C> | <C> | <C> | <C>
Annuity and | | |
interest sensi- | | |
tive life | | |
product charges $15,937 | $2,397 | $14,656 | $12,259
Management fee | | |
revenue 2,014 | 280 | 1,670 | 1,390
Net investment | | |
income 18,955 | 1,656 | 6,646 | 4,990
Realized gains | | |
(losses) on | | |
investments 58 | -- | (420)| (420)
Other income 427 | 143 | 213 | 70
--------------|---------------|--------------|----------------
$37,391 | $4,476 | $22,765 | $18,289
==============================================================
</TABLE>
Total revenues increased 64.3% in the first nine months of 1997.
Annuity and interest sensitive life product charges increased 8.7%
in the first nine months of 1997 due to additional fees earned from
the increasing block of business under management in the Separate
Accounts and an increase in the collection of surrender charges.
Golden American provides certain managerial and supervisory services
to DSI. This fee, calculated as a percentage of average assets in
the variable separate accounts, was $2.0 million for the first nine
months of 1997 ($0.3 million and $1.4 million for the periods August 14,
1996 through September 30, 1996 and January 1, 1996 through August
13, 1996, respectively).
Net investment income increased 185.2% in the first nine months of
1997 due to the increase in invested assets. The company had
$58,000 of realized gains on the sale of investments in the first
nine months of 1997, compared a loss of $0.4 million in the same period
of 1996.
Other income increased 100.8% in the first nine months of 1997
primarily as a result of increased income from a modified
coinsurance agreement with an unaffiliated reinsurer.
EXPENSES
Total insurance benefits and expenses increased $14.6 million, or
70.9%, to $35.2 million in the first nine months of 1997. Interest
credited to account balances increased $10.9 million, or 181.7% to
$16.8 million
37
<PAGE>
<PAGE>
in the first nine months of 1997 as a result of higher
account balances associated with the Company's fixed account option
within its variable products. Benefit claims incurred in excess of
account balances decreased $0.8 million, or 86.8%, to $0.1 million in the
first nine months of 1997.
Commissions increased $4.7 million or 24.9%, to $23.3 million, in
the first nine months of 1997. Insurance taxes increased $0.3 million or
22.3%, to $1.7 million, in the first nine months of 1997. Increases
and decreases in commissions and insurance taxes are generally
related to changes in the level of variable product sales. Insurance
taxes are impacted by several other factors as well as the level of
variable product sales. These factors include an increase in FICA
taxes primarily due to bonuses and an increase in state licenses and
fees. Most costs incurred as the result of new sales have been
deferred, thus having very little impact on earnings.
General expenses increased $0.6 million or 5.6%, to $11.6 million, in
the first nine months of 1997. The Company uses a network of
wholesalers to distribute its products and the salaries of these
wholesalers are included in general expenses. The portion of these
salaries and related expenses which vary with sales production
levels are deferred, thus having little impact on earnings.
Management expects general expenses to continue to increase in 1997
as a result of the emphasis on expanding the salaried wholesaler
distribution network and certain expenses associated with the merger
occurring on October 24, 1997.
The Company's deferred policy acquisition costs ("DPAC"), previous
balance of present value of in force acquired ("PVIF") and unearned
revenue reserve were eliminated as of the purchase date, and an
asset of $85.8 million representing the PVIF was established for all
policies in force at the acquisition date. The amortization of PVIF
and DPAC increased $1.4 million, or 31.7%, in the first nine months
of 1997. During the second quarter of 1997, PVIF was unlocked by
$2.3 million to reflect narrower current spreads than the gross
profit model assumed. Based on current conditions and assumptions
as to the impact of future events on acquired policies in force,
amortization of PVIF is expected to be approximately $2.3 million
for the remainder of 1997, $10.1 million in 1998, $9.6 million in
1999, $8.3 million in 2000, $7.2 million in 2001 and $6.1 million in
2002. Actual amortization may vary based upon changes in assumptions
and experience. The elimination of the unearned revenue reserve,
related to in force acquired at the acquisition date, will result in
lower annuity and interest sensitive life product charges compared
to pre-acquisition levels on the in force acquired.
Amortization of goodwill during the first nine months of 1997
totaled $1.3 million. Goodwill resulting from the acquisition is
being amortized on a straight-line basis over 25 years and is
expected to approximate $1.6 million annually. The amount of goodwill
and corresponding amortization will change as a result of the
merger which occurred on October 24, 1997.
Interest expense on the surplus note issued in December 1996, was
$1.5 million, in the first nine months of 1997. The Company also
paid $0.3 million in the first nine months of 1997 to Equitable for
interest on the line of credit.
INCOME
Net income for the first nine months of 1997 was $0.3 million, a
decrease of $3.1 million, or 90.2%, from the same period of 1996.
38
<PAGE>
<PAGE>
1996 COMPARED TO 1995.
The following analysis combines the post-acquisition and pre-
acquisition activity for 1996 in order to compare the results to
1995. Such a comparison does not recognize the impact of the
purchase accounting and goodwill amortization except for the period
after August 13, 1996.
PREMIUMS
<TABLE>
<CAPTION>
POST- |
ACQUISITION | COMBINED | PRE-ACQUISITION
--------------- | ------------ | ----------------------------
FOR THE PERIOD | FOR THE YEAR |
AUGUST 14, 1996 | ENDED | FOR THE PERIOD FOR THE YEAR
THROUGH | DECEMBER 31, | JANUARY 1,1996 ENDED
DECEMBER 31, | 1996 | THROUGH DECEMBER 31,
1996 | COMBINED | AUGUST 13, 1996 1995
--------------- | ------------ | --------------- ------------
| (DOLLARS IN | THOUSANDS)
<S> <C> | <C> | <C> <C>
Variable annuity | |
premiums............... $169,258 | $427,630 | $258,372 $110,587
Variable life premiums.. 3,619 | 14,125 | 10,506 5,114
-------- | -------- | -------- --------
Total premiums......... $172,877 | $441,755 | $268,878 $115,701
======== | ======== | ======== ========
</TABLE>
Variable annuity premiums increased 286.4%, or $317.0 million, in
1996, and variable life premiums increased 176.2%, or $9.0 million,
in 1996. Strong stock market returns, a relatively low interest rate
environment and flat yield curve have made returns provided by
variable annuities and mutual funds more attractive than fixed rate
products such as certificates of deposits and fixed annuities.
During 1995, the fund offerings underlying Golden American's
variable products were improved and a fixed account option was
added. These changes and the current environment have contributed to
the significant growth in the Company's variable annuity premiums
from 1995. Premiums, net of reinsurance, for variable products from
two significant sellers for the year ended December 31, 1996,
totaled $298.0 million, or 67% of premiums.
REVENUES
<TABLE>
<CAPTION>
POST- |
ACQUISITION | COMBINED | PRE-ACQUISITION
--------------- | ------------ | ----------------------------
FOR THE PERIOD | FOR THE YEAR |
AUGUST 14, 1996 | ENDED | FOR THE PERIOD FOR THE YEAR
THROUGH | DECEMBER 31, | JANUARY 1, 1996 ENDED
DECEMBER 31, | 1996 | THROUGH DECEMBER 31,
1996 | COMBINED | AUGUST 13, 1996 1995
--------------- | ------------ | --------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Annuity and interest | |
sensitive life product | |
charges................ $ 8,768 | $21,027 | $12,259 $18,388
Management fee revenue.. 877 | 2,267 | 1,390 987
Net investment income... 5,795 | 10,785 | 4,990 2,818
Realized gains (losses) | |
on investments......... 42 | (378) | (420) 297
Other income............ 486 | 556 | 70 63
------- | ------- | ------- -------
$15,968 | $34,257 | $18,289 $22,553
======= | ======= | ======= =======
</TABLE>
Total revenues increased 51.9%, or $11.7 million, to $34.3 million
in 1996. Annuity and interest sensitive life product charges
increased 14.4%, or $2.6 million in 1996. The increase is due to
additional fees earned from the increasing block of business under
management in the Separate Accounts and an increase in the
collection of surrender charges partially offset by a decrease in
the revenue recognition of net distribution fees.
Golden American provides certain managerial and supervisory services
to DSI. This fee, calculated as a percentage of average assets in
the variable separate accounts, was $2.3 million for 1996 and $1.0
million for 1995.
Net investment income increased 282.7%, or $8.0 million, to $10.8
million in 1996 from $2.8 million in 1995. This increase resulted
from growth in invested assets. During 1996, the Company had
realized losses on the disposal of investments, which were the
result of voluntary sales, of $0.4 million compared to realized
gains of $0.3 million in 1995.
39
<PAGE>
<PAGE>
EXPENSES
<TABLE>
<CAPTION>
POST- |
ACQUISITION | COMBINED | PRE-ACQUISITION
--------------- | ------------ | -----------------------------
FOR THE PERIOD | FOR THE YEAR | FOR THE PERIOD
AUGUST 14, 1996 | ENDED | JANUARY 1, 1996 FOR THE YEAR
THROUGH | DECEMBER 31, | THROUGH ENDED
DECEMBER 31, | 1996 | AUGUST 13, DECEMBER 31,
1996 | COMBINED | 1996 1995
--------------- | ------------ | --------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Insurance benefits and expenses: | |
Annuity and interest sensitive | |
life benefits: | |
Interest credited to account balances.... $ 5,741 | $ 10,096 | $ 4,355 $ 1,322
Benefit claims incurred in excess of | |
account balances....................... 1,262 | 2,177 | 915 1,824
Underwriting, acquisition, and insurance | |
expenses: | |
Commissions.............................. 9,866 | 26,415 | 16,549 7,983
General expenses......................... 5,906 | 15,328 | 9,422 12,650
Insurance taxes.......................... 672 | 1,897 | 1,225 952
Policy acquisition costs deferred........ (11,712) | (31,012) | (19,300) (9,804)
Amortization: | |
Deferred policy acquisition costs....... 244 | 2,680 | 2,436 2,710
Present value of in force acquired...... 2,745 | 3,696 | 951 1,552
Goodwill................................ 589 | 589 | -- --
-------- | -------- | -------- -------
$ 15,313 | $ 31,866 | $ 16,553 $19,189
======== | ======== | ======== =======
</TABLE>
Total insurance benefits and expenses increased 66.1%, or $12.7
million, in 1996 from $19.2 million in 1995. Interest credited to
account balances increased 663.6%, or $8.8 million, in 1996 as a
result of higher account balances associated with the Company's
fixed account option within its variable products. Benefit claims
incurred in excess of account balances increased 19.4%, or $0.4
million, in 1996 from $1.8 million in 1995.
Commissions increased 230.9%, or $18.4 million, in 1996 from $8.0
million in 1995. Insurance taxes increased 99.3%, or $0.9 million,
in 1996 from $1.0 million in 1995. Increases and decreases in
commissions and insurance taxes are generally related to changes in
the level of variable product sales. Most costs incurred as the
result of new sales have been deferred, thus having very little
impact on earnings.
General expenses increased 21.2%, or $2.7 million, in 1996 from
$12.7 million in 1995. The Company uses a network of wholesalers to
distribute its products and the salaries of these wholesalers are
included in general expenses. The portion of these salaries and
related expenses which vary with sales production levels are
deferred, thus having little impact on earnings. Management expects
general expenses to continue to increase in 1997 as a result of the
emphasis on expanding the salaried wholesaler distribution network.
The Company's deferred policy acquisition costs ("DPAC"), previous
balance of present value of in force acquired ("PVIF") and unearned
revenue reserve, as of the purchase date, were eliminated and an
asset of $85.8 million representing the PVIF was established for all
policies in force at the acquisition date. The amortization of PVIF
and DPAC increased $2.1 million, or 49.6%, in 1996. Based on current
conditions and assumptions as to the impact of future events on
acquired policies in force, amortization of PVIF is expected to be
approximately $9.7 million in 1997, $10.1 million in 1998, $9.2
million in 1999, $7.9 million in 2000 and $6.8 million in 2001. The
elimination of the unearned revenue reserve, related to in force
acquired at the acquisition date, will result in lower annuity and
interest sensitive life product charges compared to 1995 levels.
Amortization of goodwill during the period from the acquisition date
to December 31, 1996 totaled $0.6 million. Goodwill resulting from
the acquisition is being amortized on a straight-line basis over 25
years and is expected to total $1.6 million annually.
INCOME. Net income on a combined basis for 1996 was $3.5 million,
an increase of $0.2 million, or 5.5%, from 1995.
1995 COMPARED TO 1994.
Net income for 1995 was $3.4 million, an increase of $1.1 million or
51% from 1994.
Variable life and annuity product fees and policy charges were $18.4
million in 1995, an increase of $0.9 million or 5% from 1994. This
increase was due to an additional $0.9 million in fees
40
<PAGE>
<PAGE>
earned from
the increasing block of business under management in the separate
accounts, an increase of $1.5 million in the collection of surrender
charges, and a decrease of $1.5 million in the revenue recognition
of net distribution fees.
Net investment income was $2.8 million for 1995, an increase of $2.3
million or 403% over the comparable 1994 period. Approximately $1.5
million of the increase was due to the additional investment income
earned on invested assets held to back the fixed interest divisions
that were introduced in 1995. The balance of the increase in
investment income was attributable to an increase in the investment
income on surplus.
In 1995, the service agreement between DSI and Golden American was
amended to provide for a management fee from DSI to Golden American
for certain managerial and supervisory services provided by Golden
American. This fee, calculated as a percentage of average assets in
the variable separate accounts, was $1.0 million for 1995.
Policy benefits were $3.2 million for 1995, an increase of $3.1
million from 1994. In 1995, benefit expenses increased $1.3 million
as a result of interest credited to policyholders related to the
fixed interest divisions introduced in 1995. Additionally, death
benefit costs net of reinsurance increased by $0.3 million in 1995 as
compared to 1994. Additionally, 1994 policy benefits reflected a
$1.5 million decrease in mortality reserves.
Commissions and overrides were $7.7 million in 1995, a decrease of
$9.1 million or 54% from 1994. The decrease in commissions resulted
from the decrease in new business premium receipts which went from
$310.7 million in 1994 to $130.5 million in 1995, a decrease of 55%.
Employee related expenses and general administrative and operating
expenses were a combined $13.7 million for 1995, an increase of $0.3
million or 2.5% from 1994.
Interest expense was $0 for 1995 as compared to $2.0 million in
1994. The elimination of interest expense in 1995 resulted from the
retirement of the Company's debt in December 1994 with the proceeds
from the issuance of preferred stock. In 1995, the Company paid
dividends on preferred stock of $3.4 million. There were no
preferred stock dividends in 1994.
Amortization of intangible assets, deferred policy acquisition costs
and unamortized cost assigned to insurance contracts in force, was
$4.3 million for 1995, a decrease of $2.5 million or 37% from the
prior year. The intangible assets are being amortized over the lives
of the policies in relation to the present value of estimated future
gross profits. The relatively strong performance of the funds in
1995 has slowed the amortization in 1995 as compared to 1994.
Additionally, amortization was increased in 1994 due to the decrease
in mortality reserves during 1994.
FINANCIAL CONDITION
INVESTMENTS
The financial statement carrying value of the Company's total
investment portfolio grew 46.0% in the first nine months of 1997 and
381.9% in 1996. The amortized cost basis of the Company's total
investment portfolio grew 44.8% and 388.3% during the same respective
periods. All of the Company's investments, other than mortgage loans,
are carried at fair value in the Company's financial statements. As
such, growth in the carrying value of the Company's investment
portfolio included changes in unrealized appreciation and depreciation
of fixed maturity and equity securities as well as growth in the cost
basis of these securities. Growth in the cost basis of the Company's
investment portfolio resulted from the investment of premiums from the
sale of the Company's fixed account option. The Company manages the
growth of its insurance operations in order to maintain adequate
capital ratios.
To support the fixed account option of the Company's variable
insurance products, cash flow was invested primarily in fixed
maturity securities and mortgage loans. At September 30, 1997, the
Company's investment portfolio at amortized cost was $455.8 million
with a yield of 7.1% and carrying value of $460.1 million. At
December 31, 1996, the Company's investment portfolio at amortized
cost was $314.7 million with a yield of 6.9% and carrying value of
$315.1 million.
FIXED MATURITY SECURITIES: At September 30, 1997, the company had
fixed maturities with an amortized cost of $384.8 million and an
estimated fair value of $389.2 million and at December 31, 1996,
an amortized cost of $275.2 million and a market value of $275.6
million. At September 30, 1997, the ratings assigned by
Standard & Poor's Corporation ("Standard & Poor's") to the
individual securities in the Company's fixed maturities portfolio
(at amortized cost) include investment grade securities comprising
U.S. governments, agencies and AAA to BBB- corporates ($340.9
million or 88.6%), and below investment grade securities BB+ to BB-
($41.1 million or 10.7%). Securities not rated by
41
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<PAGE>
Standard & Poor's
had an NAIC rating of 1 or 3 ($2.8 million or 0.7%).
The Company classifies 100% of its securities as available for sale.
On September 30, 1997, fixed income securities with an amortized cost
of $384.8 million and an estimated fair value of $389.2 million were
designated as available for sale, and on December 31, 1996, fixed
income securities with an amortized cost of $275.2 million and an
estimated fair value of $275.6 million were designated as available
for sale. At September 30, 1997, net unrealized appreciation of fixed
maturity securities of $4.4 million was comprised of gross
appreciation of $4.6 million and gross depreciation of $0.2 million.
At December 31, 1997, net unrealized appreciation of fixed maturity
securities of $0.4 million was comprised of gross appreciation of
$1.2 million and gross depreciation of $0.8 million. Unrealized
holding gains on these securities, net of adjustments to deferred
policy acquisition costs, present value of in force acquired and
deferred income taxes, increased stockholder's equity by $2.0 million
and $0.3 million at September 30, 1997 and December 30, 1997,
respectively.
The Company began investing in below investment grade securities
during 1996. At September 30, 1997, the amortized cost value of the
Company's total investment in below investment grade securities was
$39.0 million, or 8.5%, of the Company's investment portfolio. The
Company intends to purchase additional below investment grade
securities, but it does not expect the percentage of its portfolio
invested in below investment grade securities to exceed 10% of its
investment portfolio. At September 30, 1997, the yield at amortized
cost on the Company's below investment grade portfolio was 8.7%
compared to 6.8% for the Company's investment grade corporate bond
portfolio. The Company estimates the fair value of its below
investment grade portfolio was $39.8 million, or 102.2% of amortized
cost value, at September 30, 1997.
Below investment grade securities have different characteristics
than investment grade corporate debt securities. Risk of loss upon
default by the borrower is significantly greater with respect to
below investment grade securities than with other corporate debt
securities. Below investment grade securities are generally
unsecured and are often subordinated to other creditors of the
issuer. Also, issuers of below investment grade securities usually
have higher levels of debt and are more sensitive to adverse
economic conditions, such as recession or increasing interest rates,
than are investment grade issuers. The Company attempts to reduce
the overall risk in its below investment grade portfolio, as in all
of its investments, through careful credit analysis, strict
investment policy guidelines, and diversification by company and by
industry.
The Company analyzes its investment portfolio, including below
investment grade securities, at least quarterly in order to
determine if its ability to realize its carrying value on any
investment has been impaired. For debt and equity securities, if
impairment in value is determined to be other than temporary (i.e.
if it is probable that the Company will be unable to collect all
amounts due according to the contractual terms of the security), the
cost basis of the impaired security is written down to fair value,
which becomes the security's new cost basis. The amount of the write-
down is included in earnings as a realized loss. Future events may
occur, or additional or updated information may be received, which
may necessitate future write-downs of securities in the Company's
portfolio. Significant write-downs in the carrying value of
investments could materially adversely affect the Company's net
income in future periods.
During the first nine months of 1997, fixed maturity securities
designated as available for sale with a combined amortized cost of
$23.8 million were called or repaid by their issuers. In total, net
pre-tax gains from sales, calls and repayments of fixed maturity
investments amounted to $58,000 in the first nine months of 1997.
At September 30, 1997, no fixed maturity securities were deemed to
have impairments in value that are other than temporary. The
Company's fixed maturity investment portfolio had a combined yield
at amortized cost of 7.1% at September 30, 1997.
EQUITY SECURITIES: At September 30, 1997, the Company owned
equity securities with a combined cost of $4.9 million and an
estimated fair value of $4.8 million. Gross unrealized depreciation
of equity securities totaled $0.1 million. Equity securities are
primarily comprised of the Company's investment in shares of the
mutual funds underlying the Company's registered separate accounts.
MORTGAGE LOANS: Mortgage loans represent 14.1% of the Company's
investment portfolio. Mortgages outstanding were $64.5 million at
September 30, 1997, with an estimated fair value of $66.5 million.
The Company's mortgage loan portfolio includes 39 loans with an
average size of $1.7 million and average seasoning of 1.2 years if
weighted by the number of loans, and .5 years if weighted by
mortgage loan carrying values. The Company's mortgage loans are
typically secured by occupied buildings in major metropolitan
locations and not speculative developments, and are diversified by
type of property and geographic location. At September 30, 1997, the
yield on the Company's mortgage loan portfolio was 7.8%.
At September 30, 1997, no mortgage loans were delinquent by 90 days
or more. The Company does not expect to incur material losses from
its mortgage loan portfolio. The Company's loan investment strategy
is consistent with other life insurance subsidiaries of its ultimate
parent, Equitable. Equitable has experienced a historically low
default rate in its mortgage loan portfolio and has been able to
recover 100.8% of the principal amount of problem mortgages resolved
in the last three years.
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<PAGE>
At September 30, 1997, the Company had no investments in default.
The Company estimates its total investment portfolio, excluding
policy loans, had a fair value approximately equal to 101.4% of its
amortized cost value for accounting purposes at September 30, 1997.
OTHER ASSETS
Accrued investment income increased $2.8 million during the first
nine months of 1997 due to an increase in the overall size of the
portfolio resulting from the investment of premiums allocated to the
fixed account option of the Company's variable products.
The Company's DPAC and previous balance of PVIF were eliminated as
of the purchase date, and an asset representing the PVIF was
established for all policies in force at the acquisition date. PVIF
is amortized into income in proportion to the expected gross profits
of the in force acquired in a manner similar to DPAC amortization.
Any expenses which vary with the sales of the Company's products are
deferred and amortized. At September 30, 1997, the Company had DPAC
and PVIF balances of $34.6 million and $78.2 million, respectively.
Goodwill totaling $41.1 million, representing the excess of the
acquisition cost over the fair value of net assets acquired, was
established at the acquisition date. At June 30, 1997, goodwill was
increased by $1.8 million to adjust the value of a receivable
existing at the acquisition date. Amortization of goodwill through
September 30, 1997, was $1.3 million.
At September 30, 1997, the Company had $1.5 billion of separate
account assets compared to $1.2 billion at December 31, 1996. The
increase in separate account assets is due to growth in sales of the
Company's variable annuity and variable life separate account
products.
At September 30, 1997, the Company had total assets of $2.2 billion,
a 30.8% increase from December 31, 1996.
LIABILITIES
In conjunction with the volume of variable insurance sales, the
Company's total liabilities increased $513.5 million, or 33.4%,
during the first nine months of 1997 and totaled $2.1 billion at
September 30, 1997. Future policy benefits for annuity and interest
sensitive life products increased $155.2 million, or 54.4%, to
$440.4 million reflecting premium growth in the Company's fixed
account option of its variable products. Premium growth, net of
redemptions and market appreciation also accounted for the $332.6
million, or 27.6%, increase in separate account liabilities to $1.5
billion at September 30, 1997.
On December 17, 1996, Golden American issued a $25 million, 8.25%
surplus note to Equitable. The note matures on December 17, 2026.
During the nine months ended September 30, 1997, Golden American
made interest payments totaling $1.5 million. On December 17, 1996,
Golden American contributed the $25 million to First Golden,
acquiring 200,000 shares of common stock (100% of shares
outstanding) of First Golden.
Golden American maintained a line of credit agreement with Equitable
to facilitate the handling of unusual and/or unanticipated short-
term cash requirements. Under the current agreement, which became
effective December 1, 1996 and expired on December 31, 1997, Golden
American could borrow up to $25 million. Interest on any borrowings is
charged at the rate of Equitable's monthly average aggregate cost of
short-term funds plus 1.00%. The Company incurred interest expense
of $0.3 million during the first nine months of 1997 under this
agreement. At September 30, 1997, $17.0 million was outstanding
under this agreement. As of the date of this prospectus, the
Company anticipates funding its short term capital needs for 1998
and beyond through a credit facility with an ING affiliate.
The effects of inflation and changing prices on the Company are not
material since insurance assets and liabilities are both primarily
monetary and remain in balance. An effect of inflation, which has
been low in recent years, is a decline in purchasing power when
monetary assets exceed monetary liabilities.
LIQUIDITY AND CAPITAL RESOURCES
The liquidity requirements of the Company are met by cash flow from
variable insurance premiums, investment income and maturities of
fixed maturity investments and mortgage loans. The Company
primarily uses funds for the payment of insurance benefits,
commissions, operating expenses and the purchase of new investments.
The Company's home office operations are currently housed in a
leased location in Wilmington, Delaware and a leased location in New
York, New York. The Company intends to spend $1.2 million on
capital needs during 1997.
The ability of Golden American to pay dividends to its parent is
restricted because prior approval of insurance regulatory
authorities is required for payment of dividends to the stockholder
which exceed an annual limitation. During the remainder of 1997,
Golden American could pay dividends to its parent of approximately
$2.2 million without prior approval of statutory authorities. The
Company has maintained adequate statutory capital and surplus and
has not used surplus relief or financial reinsurance, which have
come under scrutiny by many state insurance departments.
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The NAIC's risk-based capital requirements require insurance
companies to calculate and report information under a risk-based
capital formula. These requirements are intended to allow insurance
regulators to identify inadequately capitalized insurance companies
based upon the type and mixture of risks inherent in the company's
operations. The formula includes components for asset risk,
liability risk, interest rate exposure and other factors. Golden
American and First Golden have complied with the NAIC's risk-based
capital reporting requirements. Amounts reported indicate that
Golden American and First Golden have total adjusted capital well
above all required capital levels.
SURPLUS NOTE: On December 17, 1996, Golden American issued a
surplus note in the amount of $25 million to Equitable. The note
matures on December 17, 2026 and accrues interest of 8.25% per annum
until paid. The note and accrued interest thereon shall be
subordinate to payments due to policyholders, claimant and
beneficiary claims, as well as debts owed to all other classes of
debtors of Golden American. Any payment of principal made shall be
subject to the prior approval of the Delaware Insurance
Commissioner. On December 17, 1996, Golden American contributed the
$25 million to First Golden acquiring 200,000 shares of common stock
(100% of shares outstanding) of First Golden.
LINE OF CREDIT: Golden American maintained a line of credit
agreement with Equitable to facilitate the handling of unusual
and/or unanticipated short-term cash requirements. The maximum
borrowing allowed under this facility is $25 million which expired on
December 31, 1997. At September 30, 1997, $17.0 million was
outstanding under this agreement. As of the date of this
prospectus, the Company anticipates funding its short term
capital needs for 1998 and beyond through a credit facility with
an ING affiliate.
YEAR 2000 PROJECT: The Company has studied its computer software
and hardware to determine its exposure to the change of the century
date issue (year 2000 date problem). Management believes the
systems are compliant and has engaged third-party consultants to
validate this assumption. The only system known to be affected by
this issue is a system maintained by an affiliate who will incur the
related costs.
MERGER: On October 23, 1997, Equitable of Iowa Companies
("Equitable") shareholders approved the Agreement and Plan of Merger
("Merger Agreement") dated as of July 7, 1997, among Equitable, PFHI
Holdings, Inc. ("PFHI"), and ING Groep N.V ("ING"). On October 24,
1997, PFHI, a Delaware corporation, acquired all of the outstanding
capital stock of Equitable pursuant to the Merger Agreement. PFHI
is a wholly owned subsidiary of ING, a global financial services
holding company based in The Netherlands. Equitable, an Iowa
corporation, in turn, owns all the outstanding capital stock of
Equitable Life Insurance Company of Iowa and Golden American Life
Insurance Company and their wholly owned subsidiaries. Equitable
also owns all the outstanding capital stock of Locust Street
Securities, Inc., Equitable Investment Services, Inc. ("EISI"), Directed
Services, Inc., Equitable of Iowa Companies Capital Trust, Equitable
of Iowa Companies Capital Trust II and Equitable of Iowa Securities
Network, Inc. In exchange for the outstanding capital stock of
Equitable, ING paid total consideration of approximately $2.1
billion in cash and stock plus the assumption of approximately $400
million in debt according to the Merger Agreement. As a result of
the merger, Equitable of Iowa Companies was merged into PFHI which
was simultaneously renamed Equitable of Iowa Companies, Inc.
Subsequent to the merger, during 1998, the remainder of EISI's
net assets will be liquidated and transferred to various Equitable
of Iowa Companies, Inc. subsidiaries and ING Investment Management,
LLC, another ING affiliate, and its investment management
responsibilities were assumed in part by DSI.
ACCOUNTING TREATMENT: The merger will be accounted for as a
purchase resulting in a new basis of accounting, reflecting
estimated fair values for assets and liabilities for Equitable and
its subsidiaries as of the date of the merger. The excess of the
total acquisition cost over the fair value of the net assets
acquired will be recorded as goodwill.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Any forward-looking statement contained herein or in any other oral
or written statement by the Company or any of its officers,
directors or employees is qualified by the fact that actual results
of the Company may differ materially from such statement due to the
following important factors, among other risks and uncertainties
inherent in the Company's business:
1. Prevailing interest rate levels and stock market performance,
which may affect the ability of the Company to sell its
products, the market value of the Company's investments and the
lapse rate of the Company's policies, notwithstanding product
design features intended to enhance persistency of the Company's
products.
2. Changes in the federal income tax laws and regulations which may
affect the relative tax advantages of the Company's products.
3. Changes in the regulation of financial services, including bank
sales and underwriting of insurance products, which may affect
the competitive environment for the Company's products.
4. Increasing competition in the sale of the Company's products.
5. Other factors affecting the performance of the Company,
including, but not limited to, market conduct claims and other
litigation, insurance industry insolvencies, investment
performance of the underlying portfolios of the variable
products, variable product design and sales volume by
significant sellers of the Company's variable products.
SEGMENT INFORMATION. During the period since the acquisition by
Bankers Trust, September 30, 1992 to date of this Prospectus, Golden
American's operations consisted of one business segment, the sale of
annuity and life insurance products. Golden American and its
affiliate Directed Services, Inc. are party to in excess of 140
sales agreements with broker-dealers, two of whom, Locust Street
Securities, Inc. and Vestax Securities Coproration, are affiliates
of Golden American. Six broker-dealers, including Locust Street
Securities, Inc., sell a substantial portion of its business.
REINSURANCE. Golden American reinsures its mortality risk
associated with the Contract's guaranteed death benefit with one or
more appropriately licensed insurance companies. Golden American
also, effective June 1, 1994, entered into a reinsurance agreement
on a modified coinsurance basis with an affiliate of a broker-dealer
which distributes Golden American's products with respect to 25% of
the business produced by that broker-dealer.
RESERVES. In accordance with the life insurance laws and
regulations under which Golden American operates, it is obligated to
carry on its books, as liabilities, actuarially determined reserves
to meet its obligations on outstanding Contracts. Reserves, based on
valuation mortality tables in general use in the United States,
where applicable, are computed to equal amounts which, together with
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interest on such reserves computed annually at certain assumed
rates, make adequate provision according to presently accepted
actuarial standards of practice, for the anticipated cash flows
required by the contractual obligations and related expenses of
Golden American.
COMPETITION. Golden American is engaged in a business that is
highly competitive because of the large number of stock and mutual
life insurance companies and other entities marketing insurance
products comparable to those of Golden American. There are
approximately 2,350 stock, mutual and other types of insurers in the
life insurance business in the United States, a substantial number
of which are significantly larger than Golden American.
CERTAIN AGREEMENTS. Beginning in 1994 and continuing until August
13, 1996, Bankers Trust (Delaware), a subsidiary of Bankers Trust
New York Corporation ("BT New York Corporation"), and Golden
American became parties to a service agreement pursuant to which
Bankers Trust (Delaware) agreed to provide certain accounting,
actuarial, tax, underwriting, sales, management and other services
to Golden American. Expenses incurred by Bankers Trust (Delaware) in
relation to this service agreement were reimbursed by Golden
American on an allocated cost basis. Charges billed to Golden
American by Bankers Trust (Delaware) pursuant to the service
agreement for 1996 through its termination as of August 13, 1996,
1995 and 1994 were $0.5 million, $0.8 million and $0.3 million
respectively.
Prior to 1994, Golden American had arranged with EIC Variable to
perform services related to the development and administration of
its products. For the year 1993, fees earned by EIC Variable from
Golden American for these services aggregated $2.7 million. The
agreement was terminated as of January 1, 1994.
In addition, one or more affiliates of Equitable of Iowa provided to
Golden American certain personnel to perform management,
administrative and clerical services and the use of certain of its
facilities. Golden American was charged for such expenses and all
other general and administrative costs, first on the basis of direct
charges when identifiable, and second allocated based on the
estimated amount of time spent by an affiliate's employees on behalf
of Golden American. For the year 1993, EIC Variable allocated to
Golden American $1.5 million. The agreement was terminated on
January 1, 1994. During 1994, such expenses were allocated directly
by BT New York Corporation to Golden American and totaled $1.4
million for the year.
DISTRIBUTION AGREEMENT. Prior to 1994, Golden American had entered
into agreements with DSI to perform services related to the
management of its investments and the distribution of its products.
For the year 1993, Golden American incurred $0.3 million,
respectively, for such services. The agreement was terminated as of
January 1, 1994.
Under a distribution agreement, DSI acts as the principal
underwriter (as defined in the Securities Act of 1933 and the
Investment Company Act of 1940, as amended) of the variable
insurance products issued by Golden American which as of December
31, 1996, are sold primarily through two broker/dealer institutions.
For the first nine months of 1997 and the years 1996, 1995 and 1994,
commissions paid by Golden American to DSI aggregated $23.3 million,
$27.1 million, $8.4 million and $17.6 million, respectively.
Golden American provided to DSI certain of its personnel to perform
management, administrative and clerical services and the use of
certain facilities. Golden American charged DSI for such expenses
and all other general and administrative costs, first on the basis
of direct charges when identifiable, and the remainder allocated
based on the estimated amount of time spent by Golden American's
employees on behalf of DSI. In the opinion of management, this
method of cost allocation is reasonable. For the years ended
December 31, 1994 and 1993, expenses allocated to DSI were $2.0
million and $2.0 million, respectively, which were comprised of
allocated salary charges, premise and equipment charges, and other
expenses.
In 1995, the service agreement between DSI and Golden American was
amended to provide for a management fee from DSI to Golden American
for managerial and supervisory services provided by Golden American.
This fee, calculated as a percentage of average assets in the
variable separate accounts, was $2.0 million, $2.3 million and $1.0
million for the first nine months of 1997 and the years 1996 and 1995,
respectively.
EMPLOYEES. Golden American, as a result of its Service Agreements
with each of Bankers Trust (Delaware) and EIC Variable had very few
direct employees. Instead, various management services were provided
by Bankers Trust (Delaware), EIC Variable and Bankers Trust New York
Corporation, as described above under "Certain Agreements." The
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cost
of these services were allocated to Golden American. Since August
14, 1996, Golden American has looked to Equitable of Iowa and its
affiliates for management services.
Certain officers of Golden American are also officers of EIC
Variable and DSI, and their salaries are allocated among the three
companies. Certain officers of Golden American are also officers of
Equitable of Iowa. See "Directors and Executive Officers."
PROPERTIES. Golden American's principal office is located at 1001
Jefferson Street, Suite 400, Wilmington, Delaware 19801, where all
of Golden American's records are maintained. This office space is
leased.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
POSITION(S) WITH THE
NAME (AGE) COMPANY
- ----------------------------- ---------------------------
<S> <C>
Terry L. Kendall (51) Director, President and
Chief Executive Officer
Myles R. Tashman (55) Director, Executive Vice
President, General
Counsel and Secretary
Susan B. Watson (31) Director, Senior Vice
President and Chief
Financial Officer
Beth B. Neppl (40) Director and Vice President
Paul E. Larson (45) Director
Paul R. Schlaack (51) Director and Chairman
Barnett Chernow (48) Executive Vice President
James R. McInnis (49) Executive Vice President
Dennis D. Hargens (55) Treasurer
David L. Jacobson (48) Senior Vice President
and Assistant Secretary
Stephen J. Preston (40) Senior Vice President
and Chief Actuary
William B. Lowe (33) Senior Vice President
Edward M. Syring, Jr. (59) Senior Vice President
</TABLE>
Each director is elected to serve for one year or until the next
annual meeting of shareholders or until his or her successor is
elected. Most directors are directors of insurance company
subsidiaries of Golden American's parent, Equitable of Iowa
Companies, Inc.
The principal positions of Golden American's directors and senior
executive officers for the past five years are listed below:
Mr. Terry L. Kendall became Director, President and Chief Executive
Officer of Golden American in September, 1993. From September 1993
through September 1996, he also served as Chairman of Golden
American. Since June, 1996, he has also served as President, Chief
Executive Officer and Chairman of First Golden American Life
Insurance Company of New York, Golden American's New York
subsidiary. From 1982 through June 1993, he was President and Chief
Executive Officer of United Pacific Life Insurance Company.
Mr. Myles R. Tashman joined Golden American in August 1994 as Senior
Vice President and was named Executive Vice President, General
Counsel and Secretary effective January 1, 1996. He was elected to
serve as a director of Golden American in January, 1998. From 1986
through 1993, he was Senior Vice President and General Counsel of
United Pacific Life Insurance Company.
Ms. Susan B. Watson joined Equitable Life Insurance Company of
Iowa ("Equitable Life") in 1991 as an Assistant Vice Presidant and
Corporate Actuary and is currently Senior Vice President and Chief
Financial Officer for Equitable of Iowa and its subsidiaries. She
was elected to serve as a director of Golden American in
January, 1998.
Ms. Beth B. Neppl joined Equitable of Iowa in 1987 and is currently
a Vice President. She was elected to serve as a director of Golden
American in August 1996.
Mr. Paul E. Larson joined Equitable of Iowa in 1977 and is currently
President of Equitable Life.
He was elected to serve as a director of Golden American in
August, 1996. He also served as Executive Vice President, CFO, and
Assistant Secretary of Golden American from December, 1996 through
December, 1997.
Mr. Paul R. Schlaack joined Equitable Investment Services, Inc. in
1984. He currently serves as the Chairman or as a director of many
of the Equitable of Iowa Companies. He was elected to serve as a
director of Golden American in August, 1996 and as Chairman of the
Board in January, 1998.
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Mr. Barnett Chernow joined Golden American in October 1993 as
Executive Vice President. From 1977 through 1993, he held various
positions with Reliance Insurance Companies and was Senior Vice
President and Chief Financial Officer of United Pacific Life
Insurance Company from 1984 through 1993.
Mr. James R. McInnis joined Golden American in December, 1997 as
Executive Vice President. From 1982 through November, 1997,
he was with the Endeavor Group and was President upon
leaving.
Mr. Dennis D. Hargens was elected Treasurer of Golden American in
December, 1996. He joined Equitable Life Insurance Company of Iowa in
1961 and is currently Treasurer and was elected Treasurer of USG
Annuity & Life Company in 1996.
Mr. David L. Jacobson joined Golden American in November, 1993 as
Senior Vice President and Assistant Secretary. From April, 1974
through November, 1993, he held various positions with United Pacific
Life Insurance Company and was Vice President upon leaving.
Mr. Stephen J. Preston joined Golden American in December, 1993 as
Senior Vice President, Chief Actuary and Controller. He currently
serves as Senior Vice President and Chief Actuary. From September
1993 through November, 1993, he was Senior Vice President and Actuary
for Mutual of America Insurance Company. From July, 1987 through
August 1993, he held various positions with United Pacific Life
Insurance Company and was Vice President and Actuary upon leaving.
Mr. William B. Lowe joined Equitable Life as Vice President, Sales
& Marketing in January, 1994. He became a Senior Vice President, Sales
& Marketing, of Golden American in August, 1997. He is also President
of Equitable of Iowa Securities Network, Inc. Prior to joining
Equitable Life, he was an Associate Vice President of Lincoln Benefit
Life from July, 1990 through December, 1993.
Mr. Edward Syring, Jr. joined Golden American in February as a Senior
Vice President, Sales & Marketing. Prior to joining Golden American,
he was with Putnam Mutual Funds form April, 1991 through February, 1995.
COMPENSATION TABLES AND OTHER INFORMATION
The following sets forth information with respect to the Chief
Executive Officer of Golden American as well as the annual salary
and bonus for the next five highly compensated executive officers
for the fiscal year ended December 31, 1996. Certain executive
officers of Golden American are also officers of DSI. The salaries
of such individuals are allocated between Golden American and DSI.
Executive officers of Golden American are also officers of DSI. The
salaries of such individuals are allocated between Golden American
and DSI pursuant to an arrangement among these companies. Throughout
1995 and until August 13, 1996, Mr. Kendall served as a Managing
Director at Bankers Trust New York Corporation. Compensation amounts
for Mr. Kendall which are reflected throughout these tables prior to
August 14, 1996 were not charged to Golden American, but were
instead absorbed by Bankers Trust New York Corporation.
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EXECUTIVE COMPENSATION TABLE
The following table sets forth information with respect to the
annual salary and bonus for Golden American's Chief Executive
Officer and the next five most highly compensated executive officers
for the fiscal year ended December 31, 1996. (Information for 1997
is not yet available.)
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- ------------------------
RESTRICTED SECURITIES
NAME AND STOCK AWARDS UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (/1/) OPTIONS (/2/) OPTIONS COMPENSATION
- ------------------ ---- -------- ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Terry L. Kendall,...... 1996 $288,298 $400,000 $ 11,535(/4/)
President and Chief 1995 $250,000 $400,000 8,000 $ 6,706(/4/)
Executive Officer(/3/) 1994 $250,000 $200,000 $103,551 8,000
(September 1993 to
Present)
Barnett Chernow,....... 1996 $207,526 $150,000 $ 7,755(/4/)
Executive Vice 1995 $190,000 $165,000 $ 15,444(/4/)(/5/)
President 1994 $185,000 $ 35,000 500 $ 98,212(/5/)
Edward C. Wilson,...... 1996 $190,582 $327,473
Executive Vice
President
Myles R. Tashman,...... 1996 $176,138 $ 90,000 $ 5,127(/4/)
Executive Vice 1995 $160,000 $ 25,000
President, General 1994 $ 66,667
Counsel and Secretary
Mitchell R. Katcher,... 1996 $116,667 $150,000 $130,068(/4/)(/6/)
Former Executive Vice 1995 $175,000 $150,000 $ 9,389(/4/)
President 1994 $175,000 $ 62,500
Stephen J. Preston,.... 1996 $156,937 $ 58,326 $ 9,734(/4/)
Senior Vice President 1995 $140,000 $ 50,000 $ 4,721(/5/)
and Chief Actuary and 1994 $131,667
Controller
</TABLE>
________________
(1) The amount shown relates to bonuses paid in 1996, 1995 and
1994. $50,000 of Mr. Wilson's bonus paid in 1996 and Mr.
Chernow's bonus paid in 1994 represent signing bonuses.
(2) The number of shares underlying the restricted stock award
granted in 1994 represented 1,870 shares of Bankers Trust New
York Corporation at the end of 1994. The value shown above was
computed using the price of common stock of Bankers Trust New
York Corporation at the end of 1994. As of 1996, none of the
executive officers listed above had any restricted stock
holdings of Bankers Trust New York Corporation. During 1996,
Bankers Trust New York Corporation redeemed the following
restricted stock holdings: Mr. Kendall 3,000 shares, value
$233,062; Mr. Chernow 500 shares, value $38,844.
(3) Mr. Kendall has served as President and Chief Executive
Officer of Golden American since September of 1993. From that
time until September of 1996, he also served as Chairman of
Golden American. Until August 14, 1996, Mr. Kendall's salary and
bonuses were paid directly by Bankers Trust New York
Corporation.
(4) Contributions were made by the Company on behalf of the
employee to PartnerShare, the deferred compensation plan
sponsored by Bankers Trust New York Corporation and its
affiliates for the benefit of all Bankers Trust employees, in
February of the current year to employees on record as of
December 31 of the previous year, after the employee completes
one year of service with the company. This contribution may be
in the form of deferred compensation and/or a cash payment. In
1996, Mr. Kendall received $9,000 of deferred compensation and
$2,535 of cash payment from the plan; Mr. Chernow received
$6,000 of deferred compensation and $1,755 of cash payment from
the plan; Mr. Tashman received $4,000 of deferred compensation
and $1,127 of cash payment from the plan; Mr. Preston received
$5,433 of deferred compensation and $4,301 of cash payment from
the plan; Mr. Katcher received $9,000 of deferred compensation
and $2,535 of cash payment from the plan. Mr. Wilson was not
eligible for contributions to the PartnerShare Plan in 1996. In
1995, Mr. Kendall received $2,956 of deferred compensation and
$3,750 of cash payment from the plan; Mr. Chernow received
$1,013 of deferred compensation and $1,267 of cash payment from
the plan; Mr. Katcher received $4,139 of deferred compensation
and $5,250 of cash payment from the plan. Mr. Wilson, Mr.
Tashman and Mr. Preston were not eligible for contributions to
the PartnerShare Plan in 1995. In 1994, all executives listed
above were not eligible for contributions to the PartnerShare
Plan in 1994.
(5) Amounts shown for 1994 and 1995 represent relocation
expenses paid on behalf of the employee.
(6) Amount shown for 1996 includes $118,533 severance
compensation.
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OPTION GRANTS IN LAST FISCAL YEAR (1996)
On October 24, 1997, in conjunction with the acquisition of
Equitable of Iowa, all outstanding options vested and were
cashed out for the difference between $68.00 and the strike
price. The table below represents the options granted in
1996. Information for 1997 is not yet available.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION
SECURITIES GRANTED TO FOR OPTION
UNDERLYING EMPLOYEES TERM (/4/)
OPTIONS IN FISCAL EXERCISE EXPIRATION -------------------
NAME GRANTED (/1/) YEAR PRICE (/2/) DATE (/3/) 5% 10%
- ---- ------------- ---------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Terry L. Kendall........ 20,000 36.4 $37.50 8/13/2006 $471,671 $1,195,307
Barnett Chernow......... 8,000 14.5 $37.50 8/13/2006 $188,668 $ 478,123
Edward C. Wilson........ 8,000 14.5 $37.50 8/13/2006 $188,668 $ 478,123
Myles Tashman........... 6,000 10.9 $37.50 8/13/2006 $141,501 $ 358,592
Stephen J. Preston...... 2,000 3.6 $37.50 8/13/2006 $ 47,167 $ 119,531
</TABLE>
________________
(1) Stock options granted on August 13, 1996 by Equitable of
Iowa to the officers of Golden American have a five-year vesting
period with 20% exercisable after 3rd year, an additional 30%
after 4th year, and the final 50% after 5th year. The options
will vest in the event of a change of control of Equitable of
Iowa.
(2) The exercise price was equal to the fair market value of
the Common Stock on the date of grant.
(3) Incentive Stock Options have a term of ten years. They are
subject to earlier termination in certain events related to
termination of employment.
(4) Total dollar gains based on indicated rates of appreciation
of share price over a ten-year term.
Directors of Golden American receive no additional compensation for
serving as a director.
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____________________________________________________________________
FEDERAL TAX CONSIDERATIONS
INTRODUCTION
The following discussion of the federal income tax treatment of the
Contract is not exhaustive, does not purport to cover all
situations, and is not intended as tax advice. The federal income
tax treatment of the Contract is unclear in certain circumstances,
and a qualified tax adviser should always be consulted with regard
to the application of the tax law to individual circumstances. This
discussion is based on the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury Department regulations, and interpretations
existing on the date of this prospectus. These authorities, however,
are subject to change by Congress, the Treasury Department, and
judicial decisions.
This discussion does not address state or local tax consequences
associated with the purchase of the contract. In addition, GOLDEN
AMERICAN MAKES NO GUARANTEE REGARDING ANY TAX TREATMENT - FEDERAL,
STATE OR LOCAL - OF ANY CONTRACT OR OF ANY TRANSACTION INVOLVING A
CONTRACT.
TAX STATUS OF GOLDEN AMERICAN
Golden American is taxed as a life insurance company under the Code.
Since the operations of Account B are a part of, and are taxed with,
the operations of Golden American, Account B is not separately taxed
as a "regulated investment company" under the Code. Under existing
federal income tax laws, investment income and capital gains of
Account B are not taxed to Golden American to the extent they are
applied to increase reserves under a contract. Since, under the
contracts, investment income and realized capital gains of Account B
attributable to contract obligations are automatically applied to
increase reserves, Golden American does not anticipate that it will
incur any federal income tax liability in Account B attributable to
contract obligations, and therefore Golden American does not intend
to make provision for any such taxes. If Golden American is taxed on
investment income or capital gains of Account B, then Golden
American may impose a charge against Account B, as appropriate, in
order to make provision for such taxes.
TAXATION OF NON-QUALIFIED ANNUITIES
TAX DEFERRAL DURING ACCUMULATION PERIOD. Under existing provisions
of the Code, except as described below, any increase in an owner's
Accumulation Value is generally not taxable to the owner until
amounts are received from the Contract, either in the form of
annuity payments as contemplated by the Contract, or in some other
form of distribution. However, this rule allowing deferral applies
only if (1) the investments of Account B are "adequately
diversified" in accordance with Treasury Department regulations, (2)
Golden American, rather than the owner, is considered the owner of
the assets of Account B for federal income tax purposes, and (3) the
owner is an individual. In addition to the foregoing, if the
Contract's Annuity Commencement Date occurs at a time when the
annuitant is at an advanced age, such as over age 85, it is possible
that the owner will be taxable currently on the annual increase in
the Accumulation Value.
Diversification Requirements. The Code and Treasury Department
regulations prescribe the manner in which the investments of a
segregated asset account, such as the Divisions of Account B, are to
be "adequately diversified." If a Division of Account B failed to
comply with these diversification standards, contracts based on that
segregated asset account would not be treated as an annuity contract
for federal income tax purposes and the Owner would generally be
taxable currently on the income on the contract (as defined in the
tax law) beginning with the period of non-diversification. Golden
American expects that the Divisions of Account B will comply with
the diversification requirements prescribed by the Code and Treasury
Department regulations.
Ownership Treatment. In certain circumstances, variable annuity
contract owners may be considered the owners, for federal income tax
purposes, of the assets of a segregated asset account, such as the
Divisions of Account B, used to support their contracts. In those
circumstances, income and gains from the segregated asset account
would be includible in the contract owners' gross income. The
Internal Revenue Service (the "IRS") has stated in published rulings
that a variable contract owner will be considered the owner of the
assets of a segregated asset account if the owner possesses
incidents of ownership in those assets, such as the ability to
exercise investment control over the assets. In addition, the
Treasury Department announced, in connection with the issuance of
regulations concerning investment diversification, that those
regulations "do not provide guidance concerning the circumstances in
which investor control of the investments of a segregated asset
account may cause the investor, rather than the insurance company,
to be treated as the owner of the assets in the
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account." This
announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may
direct their investments to particular sub-accounts (of a segregated
asset account) without being treated as owners of the underlying
assets." As of the date of this prospectus, no such guidance has
been issued.
The ownership rights under the Contract are similar to, but
different in certain respects from, those described by the IRS in
rulings in which it was determined that contract owners were not
owners of the assets of a segregated asset account. For example, the
Owner of this Contract has the choice of more investment options to
which to allocate purchase payments and the Accumulation Value, and
may be able to transfer among investment options more frequently,
than in such rulings. These differences could result in the Owner
being treated as the owner of all or a portion of the assets of
Account B. In addition, Golden American does not know what standards
will be set forth in the regulations or rulings which the Treasury
Department has stated it expects to issue. Golden American therefore
reserves the right to modify the Contract as necessary to attempt to
prevent Contract Owners from being considered the owners of the
assets of Account B. However, there is no assurance that such
efforts would be successful.
Frequently, if the IRS or the Treasury Department sets forth a new
position which is adverse to taxpayers, the position is applied on a
prospective basis only. Thus, if the IRS or the Treasury Department
were to issue regulations or a ruling which treated an Owner of this
Contract as the owner of Account B, that treatment might apply on a
prospective basis. However, if the regulations or ruling were not
considered to set forth a new position, an owner might retroactively
be determined to be the owner of the assets of Account B.
Non-Natural Owner. As a general rule, contracts held by "non-natural
persons" such as a corporation, trust or other similar entity, as
opposed to a natural person, are not treated as annuity contracts
for federal tax purposes. The income on such contracts (as defined
in the tax law) is taxed as ordinary income that is received or
accrued by the Owner of the Contract during the taxable year. There
are several exceptions to this general rule for non-natural Owners.
First, contracts will generally be treated as held by a natural
person if the nominal Owner is a trust or other entity which holds
the Contract as an agent for a natural person. However, this special
exception will not apply in the case of any employer who is the
nominal Owner of a contract under a non-qualified deferred
compensation arrangement for its employees.
In addition, exceptions to the general rule for non-natural Owners
will apply with respect to (1) Contracts acquired by an estate of a
decedent by reason of the death of the decedent, (2) certain
Contracts issued in connection with qualified retirement plans, (3)
certain Contracts purchased by employers upon the termination of
certain qualified retirement plans, (4) certain Contracts used in
connection with structured settlement agreements, and (5) Contracts
purchased with a single purchase payment when the annuity starting
date (as defined in the tax law) is no later than a year from
purchase of the Contract and substantially equal periodic payments
are made, not less frequently than annually, during the annuity
period.
The remainder of this discussion assumes that the Contract will be
treated as an annuity contract for federal income tax purposes.
TAXATION OF PARTIAL WITHDRAWALS AND SURRENDERS. In the case of a
partial withdrawal prior to the Annuity Commencement Date, amounts
received generally are includible in income to the extent the
Owner's Accumulation Value (determined without regard to any
surrender charge, within the meaning of the tax law) before the
surrender exceeds his or her "investment in the contract." In the
case of a surrender of the Contract for the Cash Surrender Value,
amounts received are includible in income to the extent they exceed
the "investment in the contract." For these purposes, the investment
in the Contract at any time equals the total of the premium payments
made under the Contract to that time (to the extent such payments
were neither deductible when made nor excludable from income as, for
example, in the case of certain contributions to IRAs and other
qualified retirement plans) less any amounts previously received
from the Contract which were not includible in income.
In the case of systematic partial withdrawals, the amount of each
withdrawal will generally be taxed in the same manner as a partial
withdrawal made prior to the Annuity Commencement Date, as described
above. However, there is some uncertainty
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regarding the tax
treatment of systematic partial withdrawals, and it is possible that
additional amounts may be includible in income.
The Contract provides a Death Benefit that in certain circumstances
may exceed the greater of the premium payments and the Accumulation
Value. As described elsewhere in this prospectus, Golden American
imposes certain charges with respect to the Death Benefit. It is
possible that some portion of those charges could be treated for
federal tax purposes as a partial withdrawal from the Contract.
In certain circumstances, surrender charges may be waived because of
the Owner's need for extended medical care or because of the Owner's
terminal illness. Distributions made in respect of which surrender
charges are waived are treated as partial withdrawals or surrenders,
as the case may be, for income tax purposes.
TAXATION OF ANNUITY PAYMENTS. Normally, the portion of each annuity
payment taxable as ordinary income is equal to the excess of the
payment over the exclusion amount. In the case of fixed annuity
payments, the exclusion amount is the amount determined by
multiplying (1) the fixed annuity payment by (2) the ratio of the
"investment in the contract" (defined above), adjusted for any
period certain or refund feature, allocated to the fixed annuity
option to the total expected amount of fixed annuity payments for
the period of the Contract (determined under Treasury Department
regulations). In the case of variable annuity payments, the
exclusion amount for each variable annuity payment is a specified
dollar amount equal to the investment in the Contract allocated to
the variable annuity option when payments begin divided by the
number of variable payments expected to be made (determined by
Treasury Department regulations).
Once the total amount of the investment in the Contract is excluded
using these formulas, annuity payments will be fully taxable. If
annuity payments cease because of the death of the Annuitant and
before the total amount of the investment in the Contract is
recovered, the unrecovered amount generally will be allowed as a
deduction to the annuitant or beneficiary (depending upon the
circumstances).
TAXATION OF DEATH BENEFIT PROCEEDS. Prior to the Annuity
Commencement Date, amounts may be distributed from a Contract
because of the death of an Owner or, in certain circumstances, the
death of the Annuitant. Such Death Benefit proceeds are includible
in income as follows: (1) if distributed in a lump sum, they are
taxed in the same manner as a surrender, as described above, or (2)
if distributed under an annuity option, they are taxed in the same
manner as annuity payments, as described above. After the Annuity
Commencement Date, where a guaranteed period exists under an annuity
option and the Annuitant dies before the end of that period,
payments made to the Beneficiary for the remainder of that period
are includible in income as follows: (1) if received in a lump sum,
they are includible in income to the extent that they exceed the
unrecovered investment in the contract at that time, or (2) if
distributed in accordance with the existing annuity option selected,
they are fully excludable from income until the remaining investment
in the contract is deemed to be recovered, and all annuity payments
thereafter are fully includible in income.
If certain amounts become payable in a lump sum from a Contract,
such as the Death Benefit, it is possible that such amounts might be
viewed as constructively received and thus subject to tax, even
though not actually received. A lump sum will not be constructively
received if it is applied under an annuity option within 60 days
after the date on which it becomes payable. (Any annuity option
selected must comply with applicable minimum distribution
requirements imposed by the Code.)
ASSIGNMENTS, PLEDGES, AND GRATUITOUS TRANSFERS. Other than in the
case of Contracts issued as IRAs or in connection with certain other
qualified retirement plans (which generally cannot be assigned or
pledged), any assignment or pledge (or agreement to assign or
pledge) of any portion of the value of the Contract is treated for
federal income tax purposes as a partial withdrawal of such amount
or portion. The investment in the Contract is increased by the
amount includible as income with respect to such assignment or
pledge, though it is not affected by any other aspect of the
assignment or pledge (including its release). If an Owner transfers
a Contract without adequate consideration to a person other than the
Owner's spouse (or to a former spouse incident to divorce), the
Owner will be taxed on the difference between the cash surrender
value (within the meaning of the tax law) and the investment in the
contract at the time of transfer. In such case, the transferee's
investment in the contract will be increased to reflect the increase
in the transferor's income.
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SECTION 1035 EXCHANGES. Code section 1035 provides that no gain or
loss is recognized when an annuity contract is received in exchange
for a life, endowment, or annuity contract, provided that no cash or
other property is received in the exchange transaction. Special
rules and procedures apply in order for an exchange to meet the
requirements of section 1035. Also, there are additional tax
considerations involved when the contracts are issued in connection
with qualified retirement plans. Prospective Owners of this Contract
should consult a tax advisor before entering into a section 1035
exchange (with respect to non-qualified annuity contracts) or a
trustee-to-trustee transfer or rollover (with respect to qualified
annuity contracts).
PENALTY TAX ON PREMATURE DISTRIBUTIONS. Where a contract has not
been issued as an IRA or in connection with another qualified
retirement plan, there generally is a 10% penalty tax on the taxable
amount of any payment from the Contract unless the payment is: (a)
received on or after the Owner reaches age 59 1/2; (b) attributable to
the Owner's becoming disabled (as defined in the tax law); (c) made
on or after the death of the Owner or, if the Owner is not an
individual, on or after the death of the primary annuitant (as
defined in the tax law); (d) made as a series of substantially equal
periodic payments (not less frequently than annually) for the life
(or life expectancy) of the Owner or the joint lives (or joint life
expectancies) of the Owner and a designated beneficiary (as defined
in the tax law), or (e) made under a Contract purchased with a
single purchase payment when the annuity starting date (as defined
in the tax law) is no later than a year from purchase of the
Contract and substantially equal periodic payments are made, not
less frequently than annually, during the annuity period.
In the case of systematic partial withdrawals, it is unclear whether
such withdrawals will qualify for exception (d) above. (For
reporting purposes, we currently treat such withdrawals as if they
do not qualify for this exception). In addition, if withdrawals are
of interest amounts only, as is the case with systematic partial
withdrawals from a Fixed Allocation, exception (d) will not apply.
AGGREGATION OF CONTRACTS. In certain circumstances, the amount of
an annuity payment, withdrawal or surrender from a Contract that is
includible in income is determined by combining some or all of the
annuity contracts owned by an individual not issued in connection
with qualified retirement plans. For example, if a person purchases
two or more deferred annuity contracts from the same insurance
company (or its affiliates) during any calendar year, all such
contracts will be treated as one contract for purposes of
determining whether any payment not received as an annuity
(including withdrawals and surrenders prior to the Annuity
Commencement Date) is includible in income. In addition, if a person
purchases a Contract offered by this prospectus and also purchases
at approximately the same time an immediate annuity, the IRS may
treat the two contracts as one contract. The effects of such
aggregation are not clear, however, it could affect the time when
income is taxable and the amount which might be subject to the 10%
penalty tax described above.
IRA CONTRACTS AND OTHER QUALIFIED RETIREMENT PLANS
IN GENERAL. In addition to issuing the Contracts as non-qualified
annuities, Golden American also currently issues the Contracts as
IRAs. (As indicated above, in this prospectus, IRAs are referred to
as "qualified plans.") Golden American may also issue the Contracts
in connection with certain other types of qualified retirement plans
which receive favorable treatment under the Code. Numerous special
tax rules apply to the owners under IRAs and other qualified
retirement plans and to the contracts used in connection with such
plans. These tax rules vary according to the type of plan and the
terms and conditions of the plan itself. For example, for both
surrenders and annuity payments under certain contracts issued in
connection with qualified retirement plans, there may be no
"investment in the contract" and the total amount received may be
taxable. Also, special rules apply to the time at which
distributions must commence and the form in which the distributions
must be paid. Therefore, no attempt is made to provide more than
general information about the use of Contracts with the various
types of qualified retirement plans. A qualified tax advisor should
be consulted before purchase of a Contract in connection with a
qualified retirement plan.
When issued in connection with a qualified retirement plan, a
Contract will be amended as necessary to conform to the requirements
of the plan. However, Owners, Annuitants, and Beneficiaries are
cautioned that the rights of any person to any benefits under
qualified retirement
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plans may be subject to the terms and
conditions of the plans themselves, regardless of the terms and
conditions of the Contract. In addition, Golden American is not
bound by terms and conditions of qualified retirement plans to the
extent such terms and conditions contradict the Contract, unless
Golden American consents.
INDIVIDUAL RETIREMENT ANNUITIES. As indicated above, Golden
American currently issues the Contract as an IRA. If the Contract is
used for this purpose, the Owner must be the Annuitant.
Premium Payments. Both the premium payments that may be paid, and
the tax deduction that the owner may claim for such premium
payments, are limited under an IRA. In general, the premium payments
that may be made for an IRA for any year are limited to the lesser
of $2,000 or 100% of the individual's earned income for the year.
Also, in the case of an individual who has less income than his or
her spouse, premium payments may be made by that individual into an
IRA to the extent of (1) $2,000, or the (2) sum of (i) the
compensation includible in the gross income of the individual's
spouse for the taxable year and (ii) the compensation includible in
the gross income of the individual's spouse for the taxable year
reduced by the amount allowed as a deduction for IRA contributions
to such spouse. An excise tax is imposed on IRA contributions that
exceed the law's limits.
The deductible amount of the premium payments made for an IRA for
any taxable year (including a contract for a noncompensated spouse)
is limited to the amount of premium payments that may be paid for
the contract for that year, or a lesser amount where the individual
or his or her spouse is an active participant in certain qualified
retirement plans. For a single person who is an active participant
in a qualified retirement plan (including a qualified pension,
profit-sharing, or annuity plan, a simplified employee pension plan,
or a "section 403(b)" annuity plan, as discussed below) and who has
adjusted gross income in excess of $35,000 may not deduct premium
payments, and such a person with adjusted gross income between
$25,000 and $35,000 may deduct only a portion of such payments.
Also, married persons who file a joint return, one of whom is an
active participant in a qualified retirement plan, and who have
adjusted gross income in excess of $50,000 may not deduct premium
payments, and those with adjusted gross income between $40,000 and
$50,000 may deduct only a portion of such payments. Married persons
filing separately may not deduct premium payments if either the
taxpayer or the taxpayer's spouse is an active participant in a
qualified retirement plan.
In applying these and other rules applicable to an IRA, all
individual retirement accounts and IRAs owned by an individual are
treated as one contract, and all amounts distributed during any
taxable year are treated as one distribution.
Tax Deferral During Accumulation Period. Until distributions are
made from an IRA, increases in the Accumulation Value of the
Contract are not taxed.
IRAs and individual retirement accounts (that may invest in this
contract) generally may not invest in life insurance contracts, but
an annuity contract that is issued as an IRA (or that is purchased
by an individual retirement account) may provide a death benefit
that equals the greater of the premiums paid and the contract's cash
value. The Contract provides a Death Benefit that in certain
circumstances may exceed the greater of the premium payments and the
Accumulation Value.
Taxation of Distributions and Rollovers. If all premium payments
made to an IRA were deductible, all amounts distributed from the
Contract are included in the recipient's income when distributed.
However, if nondeductible premium payments were made to an IRA
(within the limits allowed by the tax laws), a portion of each
distribution from the Contract typically is includible in income
when it is distributed. In such a case, any amount distributed as an
annuity payment or in a lump sum upon death or surrender is taxed as
described above in connection with such a distribution from a non-
qualified contract, treating as the investment in the contract the
sum of the nondeductible premium payments at the end of the taxable
year in which the distribution commences or is made (less any
amounts previously distributed that were excluded from income).
Also, in such a case, any amount
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distributed upon a partial
withdrawal is partially includible in income. The includible amount
is the excess of the distribution over the exclusion amount, which
in turn generally equals the distribution multiplied by the ratio of
the investment in the Contract to the Accumulation Value.
In any event, subject to the direct rollover and mandatory
withholding requirements (discussed below), amounts may be "rolled
over" from certain qualified retirement plans to an IRA (or from one
IRA or individual retirement account to an IRA) without incurring
current income tax if certain conditions are met. Only certain types
of distributions to eligible individuals from qualified retirement
plans, individual retirement accounts, and IRAs may be rolled over.
Penalty Taxes. Subject to certain exceptions, a penalty tax is
imposed on distributions from an IRA equal to 10% of the amount of
the distribution includible in income. (Amounts rolled over from an
IRA generally are excludable from income.) The exceptions provide,
however, that this penalty tax does not apply to distributions made
to the Owner (1) on or after age 59 1/2, (2) on or after death or
because of disability (as defined in the tax law), or (3) as part of
a series of substantially equal periodic payments over the life (or
life expectancy) of the Owner or the joint lives (or joint life
expectancies) of the Owner and his or her beneficiary (as defined in
the tax law). In addition to the foregoing, failure to comply with a
minimum distribution requirement will result in the imposition of a
penalty tax of 50% of the amount by which a minimum required
distribution exceeds the actual distribution from an IRA. Under this
requirement, distributions of minimum amounts from an IRA as
specified in the tax law must generally commence by April 1 of the
calendar year following the calendar year in which the Owner attains
age 70 1/2.
OTHER TYPES OF QUALIFIED RETIREMENT PLANS. The following sections
describe tax considerations of Contracts used in connection with
various types of qualified retirement plans other than IRAs. Golden
American does not currently offer all of the types of qualified
retirement plans described and may not offer them in the future.
Prospective purchasers of Contracts for use in connection with such
qualified retirement plans should therefore contact Golden
American's Customer Service Center to ascertain the availability of
the Contract for qualified retirement plans at any given time.
Simplified Employee Pensions (SEP-IRAs). Section 408(k) of the Code
allows employers to establish simplified employee pension plans for
their employees, using the employees' IRAs for such purposes, if
certain criteria are met. Under these plans the employer may, within
specified limits, make deductible contributions on behalf of the
employees to IRAs. Employers intending to use the contract in
connection with such plans should seek competent advice.
SIMPLE IRAs. Section 408(p) of the Code permits certain small
employers to establish "SIMPLE retirement accounts," including
SIMPLE IRAs, for their employees. Under SIMPLE IRAs, certain
deductible contributions are made by both employees and employers.
SIMPLE IRAs are subject to various requirements, including limits on
the amounts that may be contributed, the persons who may be
eligible, and the time when distributions may commence. Employers
intending to use the Contract in connection with a SIMPLE retirement
account should seek competent advice.
Roth IRAs. Effective immediately, Golden American is offering
Contracts in connection with Roth Individual Retirement Annuities
("Roth IRAs"). New Section 408A of the Code permits eligible
individuals to contribute to Roth IRAs. Under applicable
limitations, certain amounts may be contributed to a Roth IRA. The
contributions are not deductible from the individual's gross income,
but if certain qualifications are met, distributions of earnings are
not included in taxable income. Rollovers from regular IRAs or
conversions of regular IRAs to Roth IRAs are permitted, but the
owner must include the amount rolled over or converted in taxable
income (with the ability to spread the tax liability over four years
if the rollover or conversion takes place in 1998). Roth IRAs are
subject to limitations on eligibility, contributions,
transferability, and distributions. Purchasers of Contracts who
intend for them to be qualified as Roth IRAs should seek competent
tax advice. Please check with Golden American's Customer Service
Center for state availability.
Generally, earnings on a ROTH IRA accrue federally tax-deferred, and
distributions are not subject to federal income tax or 10% penalty
tax if five years have passed since the first contribution was made
or any conversion from a traditional IRA was effected, and the
distribution is made (a) once the owner is 59 1/2 or older, (b) upon
the death or disability of the owner, or (c) for a limited amount,
for qualified first-time home buyer expenses. Distributions that do
not meet these conditions would be subject to ordinary federal income
tax and may be subject to the 10% penalty tax. Roth IRAs are not
subject to required distributions at age 70 1/2.
Corporate and Self-Employed ("H.R. 10" or "Keogh") Pension and
Profit-Sharing Plans. Sections 401(a) and 403(a) of the Code permit
corporate employers to establish various types of tax-favored
retirement plans for employees. The Self-Employed Individuals' Tax
Retirement Act of 1962, as amended, commonly referred to as "H.R.
10" or "Keogh," permits self-employed individuals also to establish
such tax-favored retirement plans for themselves and their
employees. Such retirement plans may permit the purchase of the
Contract in order to provide benefits under the plans. The Contract
provides a Death Benefit that in certain circumstances may exceed
the greater of the premium payments and the Accumulation Value. It
is possible that such Death Benefit could be characterized as an
incidental death benefit. There are limitations on the amount of
55
<PAGE>
<PAGE>
incidental benefits that may be provided under pension and profit
sharing plans. In addition, the provision of such benefits may
result in currently taxable income to participants. Employers
intending to use the Contract in connection with such plans should
seek competent advice.
Section 403(b) Annuity Contracts. Section 403(b) of the Code permits
public school employees, employees of certain types of charitable,
educational and scientific organizations exempt from tax under
section 501(c)(3) of the Code, and employees of certain types of
State educational organizations specified in section
170(b)(l)(A)(ii), to have their employers purchase annuity contracts
for them and, subject to certain limitations, to exclude the amount
of premium payments from gross income for federal income tax
purposes. Purchasers of the contracts for use as a "Section 403(b)
Annuity Contract" should seek competent advice as to eligibility,
limitations on permissible amounts of premium payments and other tax
consequences associated with such contacts. In particular,
purchasers and their advisors should consider that this Contract
provides a Death Benefit that in certain circumstances may exceed
the greater of the premium payments and the Accumulation Value. It
is possible that such Death Benefit could be characterized as an
incidental death benefit. If the Death Benefit were so
characterized, this could result in currently taxable income to
purchasers. In addition, there are limitations on the amount of
incidental death benefits that may be provided under a Section
403(b) Annuity Contract. Even if the Death Benefit under the
contract were characterized as an incidental death benefit, it is
unlikely to violate those limits unless the purchaser also purchases
a life insurance contract as part of his or her Section 403(b)
Annuity Contract.
Section 403(b) Annuity Contracts contain restrictions on withdrawals
of (i) contributions made pursuant to a salary reduction agreement
in years beginning after December 31, 1988, (ii) earnings on those
contributions, and (iii) earnings after 1988 on amounts attributable
to salary reduction contributions (and earnings on those
contributions) held as of the last year beginning before January 1,
1989. These amounts can be paid only if the employee has reached age
59 1/2, separated from service, died, become disabled (within the
meaning of the tax law), or in the case of hardship. Amounts
permitted to be distributed in the event of hardship are limited to
actual contributions; earnings thereon cannot be distributed on
account of hardship. (These limitations on withdrawals do not apply
to the extent Golden American is directed to transfer some or all of
the Accumulation Value as a tax-free direct transfer to the issue of
another Section 403(b) Annuity Contract or into a section 403(b)(7)
custodial account subject to withdrawal restrictions which are at
least as stringent.)
Eligible Deferred Compensation Plans of State and Local Governments
and Tax-Exempt Organizations. Section 457 of the Code permits
employees of state and local governments and tax-exempt
organizations to defer a portion of their compensation without
paying current federal income taxes. The employees must be
participants in an eligible deferred compensation plan. Generally, a
Contract purchased by a state or local government or a tax-exempt
organization will not be treated as an annuity contract for federal
income tax purposes. Those who intend to use the contracts in
connection with such plans should seek competent advice.
DIRECT ROLLOVERS AND FEDERAL INCOME TAX WITHHOLDING FOR "ELIGIBLE
ROLLOVER DISTRIBUTIONS." In the case of an annuity contract used in
connection with a pension, profit-sharing, or annuity plan qualified
under sections 401(a) or 403(a) of the Code, or that is a Section
403(b) Annuity Contract, any "eligible rollover distribution" from
the contract will be subject to direct rollover and mandatory
withholding requirements. An eligible rollover distribution
generally is the taxable portion of any distribution from a
qualified pension plan under section 401(a) of the Code, qualified
annuity plan under Section 403(a) of the Code, or Section 403(b)
Annuity or custodial account, excluding certain amounts (such as
minimum distributions required under section 401(a)(9) of the Code
and distributions which are part of a "series of substantially equal
periodic payments" made for the life (or life expectancy) of the
employee, or for the joint lives (or joint life expectancies) of the
employee and the employee's designated beneficiary (within the
meaning of the tax law), or for a specified period of 10 years or
more).
Under these new requirements, federal income tax equal to 20% of the
eligible rollover distribution will be withheld from the amount of
the distribution. Unlike withholding on certain other amounts
distributed from the Contract, discussed below, the taxpayer cannot
elect out of
56
<PAGE>
<PAGE>
withholding with respect to an eligible rollover
distribution. However, this 20% withholding will not apply to that
portion of the eligible rollover distribution which, instead of
receiving, the taxpayer elects to have directly transferred to
certain eligible retirement plans (such as to this Contract when
issued as an IRA).
If this Contract is issued in connection with a pension, profit-
sharing, or annuity plan qualified under sections 401(a) or 403(a)
of the Code, or is a Section 403(b) Annuity Contract, then, prior to
receiving an eligible rollover distribution, the owner will receive
a notice (from the plan administrator or Golden American) explaining
generally the direct rollover and mandatory withholding requirements
and how to avoid the 20% withholding by electing a direct transfer.
FEDERAL INCOME TAX WITHHOLDING
Golden American will withhold and remit to the federal government a
part of the taxable portion of each distribution made under the
Contract unless the distributee notifies Golden American at or
before the time of the distribution that he or she elects not to
have any amounts withheld. In certain circumstances, Golden American
may be required to withhold tax, as explained above. The withholding
rates applicable to the taxable portion of periodic annuity payments
(other than eligible rollover distributions) are the same as the
withholding rates generally applicable to payments of wages. In
addition, the withholding rate applicable to the taxable portion of
non-periodic payments (including surrenders prior to the Annuity
Commencement Date) is 10%. Regardless of whether you elect to have
federal income tax withheld, you are still liable for payment of
federal income tax on the taxable portion of the payment. As
discussed above, the withholding rate applicable to eligible
rollover distributions is 20%.
57
<PAGE>
<PAGE>
____________________________________________________________________
UNAUDITED FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
58
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
POST-ACQUISITION | PRE-ACQUISITION
--------------------------------------| ----------------
For the Period | For the Period
For the Nine August 14, 1996 | January 1, 1996
Months ended through | through
September 30, 1997 September 30, 1996| August 13, 1996
--------------------------------------| ----------------
(Current Year) (Preceding Year) | (Preceding Year)
|
(Dollars in thousands) |
<S> <C> <C> | <C>
REVENUES: |
Annuity and interest |
sensitive life |
product charges $15,937 $2,397 | $12,259
Management fee revenue 2,014 280 | 1,390
Net investment income 18,955 1,656 | 4,990
Realized gains (losses) |
on investments 58 -- | (420)
Other income 427 143 | 70
------------------ ------------------| ----------------
37,391 4,476 | 18,289
|
INSURANCE BENEFITS AND |
EXPENSES: |
Annuity and interest |
sensitive life benefits: |
Interest credited to |
account balances 16,840 1,624 | 4,355
Benefit claims incurred |
in excess of |
account balances 118 (25)| 915
Underwriting, acquisition, |
and insurance expenses: |
Commissions 23,323 2,118 | 16,549
General expenses 11,552 1,517 | 9,422
Insurance taxes 1,693 160 | 1,225
Policy acquisition |
costs deferred (25,464) (2,625)| (19,300)
Amortization: |
Deferred policy |
acquisition costs 1,433 176 | 2,436
Present value of in |
force acquired 4,465 915 | 951
Goodwill 1,261 196 | --
------------------ ------------------| ----------------
35,221 4,056 | 16,553
Interest expense 1,827 -- | --
------------------ ------------------|----------------
37,048 4,056 | 16,553
------------------ ------------------|----------------
343 420 | 1,736
|
Income taxes expense |
(benefit): |
Current 54 147 | --
Deferred (53) -- | (1,463)
------------------ ------------------|----------------
1 147 | (1,463)
------------------ ------------------|----------------
NET INCOME $342 $273 | $3,199
================== ==================|================
</TABLE>
See accompanying notes.
59
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------- -----------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities available for sale,
at fair value (cost: 1997 - $384,765;
1996 - $275,153) $389,172 $275,563
Equity securities, at fair value
(cost: 1997 - $4,901; 1996 - $36) 4,766 33
Mortgage loans 64,500 31,459
Policy loans 8,316 4,634
Short-term investments 1,478 12,631
------------------- -----------------
Total Investments 468,232 324,320
Cash and cash equivalents 18,672 5,839
Due from affiliates 246 --
Accrued investment income 6,901 4,139
Deferred policy acquisition costs 34,638 11,468
Present value of in force acquired 78,156 83,051
Current income taxes recoverable 229 --
Property and equipment, less allowances
for depreciation of $624 in 1997 and
$63 in 1996 1,262 699
Goodwill, less accumulated amortization
of $1,850 in 1997 and $589 in 1996 39,263 38,665
Other assets 7,074 2,471
Separate account assets 1,539,859 1,207,247
------------------- -----------------
TOTAL ASSETS $2,194,532 $1,677,899
=================== =================
LIABILITIES AND STOCKHOLDER'S EQUITY
Policy liabilities and accruals:
Annuity and interest sensitive life
products $440,441 $285,287
Unearned revenue reserve 5,092 2,063
------------------- -----------------
445,533 287,350
Deferred income taxes 1,210 365
Line of credit with affiliate 16,960 --
Surplus note 25,000 25,000
Due to affiliates 720 1,504
Accrued expenses and other liabilities 21,629 15,949
Separate account liabilities 1,539,859 1,207,247
------------------- -----------------
TOTAL LIABILITIES 2,050,911 1,537,415
Commitments and contingencies
Stockholder's equity:
Redeemable preferred stock, par value
$5,000 per share, 50,000 shares
authorized -- --
Common stock, par value $10 per share,
authorized, issued and outstanding
250,000 shares 2,500 2,500
Additional paid-in capital 138,492 137,372
Unrealized appreciation of securities
at fair value 1,937 262
Retained earnings 692 350
------------------- -----------------
TOTAL STOCKHOLDER'S EQUITY 143,621 140,484
------------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY $2,194,532 $1,677,899
=================== =================
</TABLE>
See accompanying notes.
60
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
-----------------------------------| -----------------
For the Nine For the Period | For the Period
Months ended August 14, 1996 | January 1, 1996
September 30, through | through
1997 September 30, 1996| August 13, 1996
-----------------------------------| -----------------
(Current Year) (Preceding Year) | (Preceding Year)
|
(Dollars in thousands)|
<S> <C> <C> | <C>
NET CASH USED IN |
OPERATING ACTIVITIES ($1,659) ($1,440)| ($4,320)
|
INVESTING ACTIVITIES |
Sale, maturity or |
repayment of investments: |
Fixed maturities |
- available for sale 35,590 391 | 55,091
Mortgage loans on real |
estate 5,017 -- | --
Short-term investments |
- net 11,153 -- | 354
--------------- ------------------| -----------------
51,760 391 | 55,445
|
Acquisition of investments: |
Fixed maturities |
- available for sale (146,376) -- | (184,589)
Equity securities (4,864) -- | --
Mortgage loans on real |
estate (38,058) -- | --
Policy loans - net (3,682) (161)| (1,977)
Short-term investments |
- net -- (12,626)| --
--------------- ------------------| -----------------
(192,980) (12,787)| (186,566)
Purchase of property and |
equipment (659) (15)| --
--------------- ------------------| -----------------
NET CASH USED IN |
INVESTING ACTIVITIES (141,879) (12,411)| (131,121)
|
FINANCING ACTIVITIES |
Issuance of notes |
payable 86,522 -- | --
Repayment of notes |
payable (69,562) -- | --
Receipts from annuity and |
interest sensitive life |
policies credited to |
policyholder account |
balances 232,635 18,930 | 149,750
Return of policyholder |
account balances on |
annuity and interest |
sensitive life |
policies (12,674) (1,061)| (2,695)
Net reallocations to |
Separate Accounts (81,561) (2,144)| (8,286)
Dividends paid on |
preferred stock -- -- | (719)
Contribution from parent 1,011 -- | --
--------------- ------------------| -----------------
NET CASH PROVIDED BY |
FINANCING ACTIVITIES 156,371 15,725 | 138,050
|
INCREASE IN CASH AND |
CASH EQUIVALENTS 12,833 1,874 | 2,609
|
CASH AND CASH EQUIVALENTS |
AT BEGINNING OF PERIOD 5,839 7,655 | 5,046
--------------- ------------------| -----------------
CASH AND CASH EQUIVALENTS |
AT END OF PERIOD $18,672 $9,529 | $7,655
=============== ==================| =================
SUPPLEMENTAL DISCLOSURE |
OF CASH FLOW INFORMATION |
|
Cash paid during the period
for income taxes $283 -- --
Non-cash financing activities:
Contribution of property,
plant and equipment from
EIC Variable, Inc. net of
$353 of accumulated
depreciation $110 -- --
</TABLE>
See accompanying notes.
61
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and the
instructions to Form 10-Q and Article 10 of Regulation S-X. This
form is being filed with the reduced disclosure format specified in
General Instruction H (1)(a) and (b) of Form 10-Q. Accordingly, the
financial statements do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation have been
included. All adjustments were of a normal recurring nature, unless
otherwise noted in Management's Discussion and Analysis and the
Notes to Financial Statements. Operating results for the nine months
ended September 30, 1997 are not necessarily indicative of the
results that may be expected for periods reported at December 31,
1997. For further information, refer to the financial statements
and footnotes thereto included in the Golden American Life Insurance
Company Annual Report on Form 10-K for the year ended December 31,
1996.
Consolidation
The condensed consolidated financial statements include Golden
American Life Insurance Company ("Golden American") and its wholly
owned subsidiary, First Golden American Life Insurance Company of
New York ("First Golden" and collectively the "Company"). First
Golden was capitalized by Golden American on December 17, 1996. All
significant intercompany accounts and transactions have been
eliminated.
Organization
Golden American offers variable insurance products and is
licensed as a life insurance company in the District of Columbia and
all states except New York. On January 2, 1997, First Golden became
licensed to sell insurance products in the state of New York. The
Company's products are marketed by broker/dealers, financial
institutions and insurance agents. The Company's primary customers
are individuals and families.
On August 13, 1996, Equitable of Iowa Companies ("Equitable")
acquired all of the outstanding capital stock of BT Variable, Inc.
("BT Variable") and its wholly owned subsidiaries, Golden American
and Directed Services, Inc. ("DSI") from Whitewood Properties
Corporation ("Whitewood") pursuant to the terms of a Stock Purchase
Agreement between Equitable and Whitewood (the "Purchase
Agreement"). Subsequent to the acquisition, the BT Variable, Inc.
name was changed to EIC Variable, Inc. On April 30, 1997, EIC
Variable, Inc. was liquidated and its investment in Golden American
and DSI were transferred to Equitable while the remainder of its net
assets were contributed to Golden American. Refer to Note 3 for additional
information.
For financial statement purposes, the change in control of Golden
American through the acquisition of BT Variable was accounted for as
a purchase acquisition effective August 14, 1996. This acquisition
resulted in a new basis of accounting reflecting estimated fair
values of assets and liabilities at that date. As a result, the
Company's financial statements for periods subsequent to August 13,
1996, are presented on the Post-Acquisition new basis of accounting,
while the financial statements prior to August 13, 1996 are
presented on the Pre-Acquisition historical cost basis of
accounting.
For purposes of the condensed consolidated statements of cash
flows, the Company considers all demand deposits and interest
bearing accounts not related to the investment function to be cash
equivalents. All interest-bearing accounts classified as cash
equivalents have original maturities of three months or less.
62
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SEPTEMBER 30, 1997
1. BASIS OF PRESENTATION -- (CONTINUED)
Certain amounts in the 1996 financial statements have been
reclassified to conform to the 1997 financial statement
presentation.
2. INVESTMENTS
At September 30, 1997 and December 31, 1996, amortized cost, gross
unrealized gains and losses and estimated fair values of fixed
maturity securities, all of which are designated as available for
sale, are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
September 30, 1997 Cost Gains Losses Value
- ------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
U.S. government and
governmental agencies
and authorities:
Mortgage-backed securities $65,243 $517 ($104) $65,656
Other 3,069 7 -- 3,076
Foreign governments 2,050 30 -- 2,080
Public utilities 26,717 258 (4) 26,971
Investment grade corporate 213,422 2,750 (79) 216,093
Below investment grade
corporate 38,951 884 (22) 39,813
Mortgage-backed securities 35,313 199 (29) 35,483
-----------------------------------------------
Total $384,765 $4,645 ($238) $389,172
===============================================
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
December 31, 1996 Cost Gains Losses Value
- ------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
U.S. government and
governmental agencies
and authorities:
Mortgage-backed securities $70,902 $122 ($247) $70,777
Other 3,082 2 (4) 3,080
Public utilities 35,893 193 (38) 36,048
Investment grade corporate 134,487 586 (466) 134,607
Below investment grade
corporate 25,921 249 (56) 26,114
Mortgage-backed securities 4,868 69 -- 4,937
-----------------------------------------------
Total $275,153 $1,221 ($811) $275,563
===============================================
</TABLE>
No fixed maturity securities were designated as held for
investment at September 30, 1997 or December 31, 1996. Short-term
investments with maturities of 30 days or less have been excluded
from the above schedules. Amortized cost approximates fair value for
these securities.
Amortized cost and estimated fair value of fixed maturity
securities designated as available for sale, by contractual
maturity, at September 30, 1997, are shown below. Expected maturities
will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or
prepayment penalties.
63
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SEPTEMBER 30, 1997
2. INVESTMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
Estimated
Amortized Fair
September 30, 1997 Cost Value
- -----------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Due within one year $10,926 $10,947
Due after one year through five years 131,585 133,293
Due after five years through ten years 131,544 133,196
Due after ten years 10,154 10,597
------------- -------------
284,209 288,033
Mortgage-backed securities 100,556 101,139
------------- -------------
Total $384,765 $389,172
============= =============
</TABLE>
During the first nine months of 1997, fixed maturity securities
designated as available for sale with a combined amortized cost of
$23,792,000 were called or repaid by their issuers. In total, net
pre-tax gains from sales, calls and repayments of fixed maturity
investments amounted to $58,000 in the first nine months of 1997.
During the first nine months of 1997, no investments were
identified as having an impairment other than temporary.
Investment Diversifications: The Company's investment policies
related to its investment portfolio require diversification by asset
type, company and industry and set limits on the amount which can be
invested in an individual issuer. Such policies are at least as
restrictive as those set forth by regulatory authorities. The
following percentages relate to holdings at September 30, 1997 and
December 31, 1996, respectively. Fixed maturity investments included
investments in various government bonds and government or agency
mortgage-backed securities (18% in 1997, 27% in 1996), public
utilities (7% in 1997, 13% in 1996), basic industrials (31% in 1997,
30% in 1996) and financial companies (24% in 1997, 18% in 1996).
Mortgage loans on real estate have been analyzed by geographical
location with concentrations by state identified as Utah (14% in
1997, 4% in 1996) and California (12% in 1997, 7% in 1996), and
Georgia (8% in 1997, 17% in 1996). There are no other
concentrations of mortgage loans in any state exceeding ten percent
at September 30, 1997 and December 31, 1996. Mortgage loans on real
estate have also been analyzed by collateral type with significant
concentrations identified in office buildings (41% in 1997, 36% in
1996), industrial buildings (37% in 1997, 31% in 1996), multi-family
residential buildings (12% in 1997, 27% in 1996) and retail
facilities (10% in 1997, 6% in 1996). Equity securities (which
represent 1.1% of the Company's investments) consists primarily of
investments in the Company's registered separate accounts. Equity
securities and investments accounted for by the equity method are
not significant to the Company's overall investment portfolio.
3. ACQUISITION
Transaction: On August 13, 1996, Equitable acquired all of the
outstanding capital stock of BT Variable from Whitewood, a wholly
owned subsidiary of Bankers Trust, pursuant to the terms of the
Purchase Agreement dated as of May 3, 1996 between Equitable and
Whitewood. In exchange for the outstanding capital stock of BT
Variable, Equitable paid $93,000,000 in cash to Whitewood in
accordance with the terms of the Purchase Agreement. Equitable also
paid $51,000,000 in cash to Bankers Trust to retire certain debt
owed by BT Variable to Bankers Trust pursuant to a revolving credit
arrangement. Subsequent to the acquisition, the BT Variable, Inc.
name was changed to EIC Variable, Inc. On April 30, 1997, EIC
Variable, Inc. was liquidated and its investments in Golden American
and DSI were transferred to Equitable while the remainder of its net
assets were contributed to Golden American.
64
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<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SEPTEMBER 30, 1997
3. ACQUISITION -- (CONTINUED)
Accounting Treatment: The acquisition was accounted for as a
purchase resulting in a new basis of accounting, reflecting
estimated fair values for assets and liabilities at August 13, 1996.
The purchase price was allocated to the three companies purchased -
BT Variable, DSI and Golden American. Goodwill was established for
the excess of the acquisition cost over the fair value of the net
assets acquired and pushed down to Golden American. The acquisition
cost was preliminary with respect to the final settlement of taxes
with Bankers Trust and estimated expenses. The allocation of the
purchase price to Golden American was approximately $139,872,000.
The amount of goodwill relating to the acquisition was $41,113,000
at the acquisition date, and is being amortized over 25 years on a
straight line basis. At June 30, 1997, goodwill was increased by
$1,848,000 to adjust the value of a receivable existing at the
acquisition date. The carrying value of goodwill will be reviewed
periodically for any indication of impairment in value.
Present Value of In Force Acquired: As part of the acquisition,
a portion of the acquisition cost was allocated to the right to
receive future cash flows from the insurance contracts existing with
Golden American at the date of acquisition. This allocated cost
represents the present value of in force acquired ("PVIF") which
reflects the value of those purchased policies calculated by
discounting the actuarially determined expected future cash flows at
the discount rate determined by Equitable.
An analysis of the PVIF asset is as follows:
<TABLE>
<CAPTION>
For the Nine
Months ended
September 30, 1997
-----------------------
(Dollars in thousands)
<S> <C>
Beginning balance $83,051
Imputed interest 4,653
Amortization (9,118)
Adjustment for unrealized gains
on available for sale securities (430)
-----------------------
Ending balance $78,156
=======================
</TABLE>
Interest is imputed on the unamortized balance of PVIF at rates
of 7.70% to 7.80%. Amortization of PVIF is charged to expense and
the asset is adjusted for the change in unrealized gains (losses) on
available for sale securities. During the second quarter of 1997,
PVIF was unlocked by $2,293,000 to reflect narrower current spreads than the
gross profit model assumed. Based on current conditions and
assumptions as to the effect of future events on acquired policies
in force, the expected approximate net amortization for the next
five years, relating to the balance of the PVIF as of September
30, 1997, is as follows:
<TABLE>
<CAPTION>
Year Amount
- ----------------------------------------------------
(Dollars in thousands)
<S> <C>
Remainder of 1997 $2,300
1998 10,100
1999 9,600
2000 8,300
2001 7,200
2002 6,100
</TABLE>
Actual amortization may vary from the schedule above based upon
changes in assumptions and experience.
65
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SEPTEMBER 30, 1997
4. MERGER
Transaction: On October 23, 1997, Equitable shareholders approved
the Agreement and Plan of Merger ("Merger Agreement")
dated as of July 7, 1997, between Equitable, PFHI Holdings, Inc.
("PFHI"), and ING Groep, N.V. ("ING").
On October 24, 1997, PFHI, a Delaware corporation, acquired all of
the outstanding capital stock of Equitable pursuant to the Merger
Agreement. PFHI is a wholly owned subsidiary of ING, a global
financial services holding company based in The Netherlands.
Equitable, an Iowa corporation, in turn, owns all the outstanding
capital stock of
Equitable Life Insurance Company of Iowa and Golden American Life
Insurance Company and their wholly owned subsidiaries. Equitable
also owns all the outstanding capital stock of Locust Street
Securities, Inc., Equitable Investment Services, Inc., Directed
Services, Inc., Equitable of Iowa Companies Capital Trust, Equitable
of Iowa Companies Capital Trust II, and Equitable of Iowa Securities
Network, Inc. In
exchange for the outstanding capital stock of Equitable, ING will
pay total consideration of approximately $2,100,000,000 in cash and
stock plus the assumption of approximately $400,000,000 in debt
according to the Merger Agreement. As a result of the merger,
Equitable of Iowa Companies was merged into PFHI which was
simultaneously renamed Equitable of Iowa Companies, Inc.
Accounting Treatment: The merger will be accounted for as a
purchase resulting in a new basis of accounting, reflecting
estimated fair values for assets and liabilities for Equitable and
its subsidiaries as of the date of the merger. The excess of the
total acquisition cost over the fair value of the net assets
acquired will be recorded as goodwill.
5. RELATED PARTY TRANSACTIONS
DSI acts as the principal underwriter (as defined in the
Securities Act of 1933 and the Investment Company Act of 1940, as
amended) of the variable insurance products issued by the Company,
which as of September 30, 1997, are sold primarily through six
broker/dealer institutions. The Company paid commissions to DSI
totaling $8,849,000 in the third quarter and $23,113,000 for the
first nine months of 1997, ($17,070,000 for the period January 1,
1996 through August 13, 1996 and $1,955,000 for the period August 14,
1996 through September 30, 1996).
Golden American provides certain managerial and supervisory
services to DSI. The fee for these services is calculated as a
percentage of average assets in the variable separate accounts. For
the third quarter and the first nine months of 1997, the fee was
$736,000 and $2,014,000, respectively ($1,390,000 for the period
January 1, 1996 through August 13, 1996 and $280,000 for the period
August 14, 1996 through September 30, 1996).
On August 14, 1996, the Company began purchasing investment
management services from an affiliate. Payments for these services
totaled $263,000 for the third quarter and $673,000 for the first
nine months of 1997 ($3,000 for the period August 14, 1996 through
September 30, 1996). On August 14, 1996, all employees of Golden
American, except wholesalers, became statutory employees of
Equitable Life Insurance Company of Iowa ("Equitable Life"), an
affiliate.
Golden American has a guaranty agreement with Equitable Life. In
consideration of an annual fee, payable June 30, Equitable Life
guarantees to Golden American that it will make funds available, if
needed, to Golden American to pay the contractual claims made under
the provisions of Golden American's life insurance and annuity
contracts. The agreement is not, and nothing contained therein or
done pursuant thereto by Equitable Life shall be deemed to
constitute, a direct or indirect guaranty by Equitable Life of the
payment of any debt or other obligation, indebtedness or liability,
of any kind or character whatsoever, of Golden American. The
agreement does not guarantee the value of the underlying assets held
in separate accounts in which funds of variable life insurance and
variable annuity policies have been invested. The calculation of
the annual fee is based on risk based capital. As Golden American's
risk based capital level was above required amounts, no annual fee
was payable.
Surplus Note: On December 17, 1996, Golden American issued an
8.25% surplus note in the amount of $25,000,000 to Equitable.
Golden American made interest payments totaling $510,000 during the
third quarter and $1,548,000 during the first nine months of 1997.
On December 17, 1996, Golden American contributed the $25,000,000 to
First Golden acquiring 200,000 shares of common stock (100% of
outstanding stock) of First Golden.
Line of Credit: Golden American maintains a line of credit
agreement with Equitable to facilitate the handling of unusual
and/or unanticipated short-term cash requirements. Under the
current agreement, which became effective December 1, 1996 and
expires on December 31, 1997, Golden
66
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<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SEPTEMBER 30, 1997
5. RELATED PARTY TRANSACTIONS -- (CONTINUED)
American can borrow up to
$25,000,000. Interest on any borrowings is charged at the rate of
Equitable's monthly average aggregate cost of short-term funds plus
1.00%. The Company incurred interest expense of $165,000 during the
third quarter and $279,000 during the first nine months of 1997
under this agreement. At September 30, 1997, $16,960,000 was outstanding
under this agreement.
6. COMMITMENTS AND CONTINGENCIES
Reinsurance: At September 30, 1997, Golden American had reinsurance
treaties with 5 unaffiliated reinsurers covering a significant
portion of the mortality risks under its variable contracts. Golden
American remains liable to the extent its reinsurers do not meet
their obligations under the reinsurance agreements. At September 30,
1997, the Company has a net payable of $4,000 for reserve
credits, reinsurance claims or other receivables from these
reinsurers comprised of $199,000 for claims recoverable from
reinsurers and a payable of $203,000 for reinsurance premiums.
Included in the accompanying financial statements are net
considerations to reinsurers of $467,000 during the third quarter
and $1,318,000 for the first nine months of 1997 ($467,000 and
$600,000, for the periods August 14, 1996 through September 30, 1996
and for January 1, 1996 through August 13, 1996, respectively). Also
included in the accompanying financial statements are net policy
benefits of $142,000 during the third quarter and $571,000 for the
first nine months of 1997 ($206,000 and $1,267,000, for the periods
August 14, 1996 through September 30, 1996, and for January 1, 1996
through August 13, 1996, respectively).
Effective June 1, 1994, Golden American entered into a modified
coinsurance agreement with an unaffiliated reinsurer. The
accompanying financial statements are presented net of the effects
of the treaty which resulted in other income of $430,000 in 1997.
Investment Commitments: At September 30, 1997, outstanding
commitments to fund mortgage loans on real estate totaled
$9,175,000.
Guaranty Fund Assessments: Assessments are levied on the Company
by life and health guaranty associations in most states in which the
Company is licensed to cover losses of policyholders of insolvent or
rehabilitated insurers. In some states, these assessments can be
partially recovered through a reduction in future premium taxes.
The Company cannot predict whether and to what extent legislative
initiatives may affect the right to offset. The associated cost for
a particular insurance company can vary significantly based upon its
fixed account premium volume by line of business and state premiums
levels as well as its potential for premium tax offset. The Company
has established a reserve to cover such assessments and regularly
reviews information regarding known failures and revises its
estimates of future guaranty fund assessments. Accordingly, the
Company accrued and charged to expense an additional $135,000 for
the third quarter and $417,000 for the first nine months of 1997.
At September 30, 1997, the Company has an undiscounted reserve of
$1,188,000 to cover estimated future assessments (net of related
anticipated premium tax credits) and has established an asset
totaling $22,000 for assessments paid which may be recoverable
through future premium tax offsets. The Company believes this
reserve is sufficient to cover expected future insurance guaranty
fund assessments, based upon previous premium levels, and known
insolvencies at this time.
Litigation: The Company is not involved in any legal proceeding as
of the date of this report.
Vulnerability from Concentrations: The Company has various
concentrations in its investment portfolio (see Note 2 for further
information). The Company's asset growth, net investment income and
cash flow are primarily generated from the sale of variable products
and associated future policy benefits and separate account
liabilities. A significant portion of the Company's sales are
generated by six broker/dealers. Substantial changes in tax laws
that would make these products less attractive to consumers, extreme
fluctuations in interest rates or stock market returns which may
result in higher lapse experience than assumed, could cause a severe
impact to the Company's financial condition.
67
<PAGE>
<PAGE>
____________________________________________________________________
AUDITED FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE
COMPANY
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
Golden American Life Insurance Company
We have audited the accompanying consolidated balance sheets of
Golden American Life Insurance Company as of December 31, 1996 and
1995, and the related consolidated statements of income, changes in
stockholder's equity, and cash flows for the post-acquisition period
from August 14, 1996 to December 31, 1996 and the pre-acquisition
period from January 1, 1996 to August 13, 1996 and for each of the
years ended December 31, 1995 and 1994. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Golden American Life Insurance Company at
December 31, 1996 and 1995, and the consolidated results of their
operations and their cash flows for the post-acquisition period from
August 14, 1996 to December 31, 1996 and the pre-acquisition period
from January 1, 1996 to August 13, 1996 and for each of the years
ended December 31, 1995 and 1994, in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Des Moines, Iowa
February 11, 1997
68
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
POST-ACQUISITION | PRE-ACQUISITION
----------------- | -----------------
DECEMBER 31, 1996 | DECEMBER 31, 1995
----------------- | -----------------
<S> <C> <C>
ASSETS: |
Investments: |
Fixed maturities, available for sale, at fair value |
(cost: 1996 -- $275,153; 1995 -- $48,671).................... $ 275,563 | $ 49,629
Equity securities, at fair value (cost: 1996 -- $36; |
1995 -- $27)................................................. 33 | 29
Mortgage loans on real estate................................. 31,459 | --
Policy loans.................................................. 4,634 | 2,021
Short-term investments........................................ 12,631 | 15,614
---------- | ----------
Total Investments............................................ 324,320 | 67,293
Cash and cash equivalents...................................... 5,839 | 5,046
Accrued investment income...................................... 4,139 | 768
Deferred policy acquisition costs.............................. 11,468 | 67,314
Present value of in force acquired............................. 83,051 | 6,057
Property and equipment, less allowances for depreciation of |
$63 in 1996 and $86 in 1995.................................. 699 | 490
Goodwill, less accumulated amortization of $589 in 1996........ 38,665 | --
Other assets................................................... 2,471 | 7,136
Separate account assets........................................ 1,207,247 | 1,048,953
---------- | ----------
Total Assets................................................. $1,677,899 | $1,203,057
========== | ==========
LIABILITIES AND STOCKHOLDER'S EQUITY: |
Policy liabilities and accruals: |
Future policy benefits: |
Annuity and interest sensitive life products................. $ 285,287 | $ 33,673
Unearned revenue reserve..................................... 2,063 | 6,556
---------- | ----------
287,350 | 40,229
Deferred income taxes.......................................... 365 | --
Surplus note................................................... 25,000 | --
Due to affiliates.............................................. 1,504 | 675
Other liabilities.............................................. 15,949 | 15,075
Separate account liabilities................................... 1,207,247 | 1,048,953
---------- | ----------
Total Liabilities............................................ 1,537,415 | 1,104,932
Commitments and contingencies |
STOCKHOLDER'S EQUITY: |
Common stock, par value $10 per share, authorized, issued and |
outstanding 250,000 shares.................................. 2,500 | 2,500
Redeemable preferred stock, par value $5,000 per share, 50,000 |
shares authorized (1995 -- 10,000 shares issued and |
outstanding)................................................ -- | 50,000
Additional paid-in capital.................................... 137,372 | 45,030
Unrealized appreciation (depreciation) of securities at fair |
value....................................................... 262 | 658
Retained earnings (deficit)................................... 350 | (63)
---------- | ----------
Total Stockholder's Equity................................... 140,484 | 98,125
---------- | ----------
Total Liabilities and Stockholder's Equity................... $1,677,899 | $1,203,057
========== | ==========
</TABLE>
See accompanying notes.
69
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
POST-ACQUISITION | PRE-ACQUISITION
----------------- | --------------------------------------------------
FOR THE PERIOD | FOR THE PERIOD
AUGUST 14, 1996 | JANUARY 1, 1996 FOR THE YEAR FOR THE YEAR
THROUGH | THROUGH ENDED ENDED
DECEMBER 31, 1996 |AUGUST 13, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- |--------------- ----------------- -----------------
<S> <C> <C> <C> <C>
REVENUES: |
Annuity and interest |
sensitive life product |
charges..................... $ 8,768 | $ 12,259 $18,388 $ 17,519
Management fee revenue........ 877 | 1,390 987 --
Net investment income......... 5,795 | 4,990 2,818 560
Realized gains (losses) on |
investments................. 42 | (420) 297 65
Other income.................. 486 | 70 63 --
-------- | -------- ------- --------
15,968 | 18,289 22,553 18,144
|
INSURANCE BENEFITS AND EXPENSES: |
Annuity and interest |
sensitive life benefits: |
Interest credited to account |
balances.................... 5,741 | 4,355 1,322 40
Benefit claims incurred in |
excess of account balances.. 1,262 | 915 1,824 (5)
Underwriting, acquisition, |
and insurance expenses: |
Commissions.................. 9,866 | 16,549 7,983 16,978
General expenses............. 5,906 | 9,422 12,650 12,921
Insurance taxes.............. 672 | 1,225 952 373
Policy acquisition costs |
deferred.................... (11,712) | (19,300) (9,804) (23,119)
Amortization: |
Deferred policy acquisition |
costs..................... 244 | 2,436 2,710 4,608
Present value of in force |
acquired.................. 2,745 | 951 1,552 2,164
Goodwill.................... 589 | -- -- --
-------- | -------- ------- --------
15,313 | 16,553 19,189 13,960
Interest expense............... 85 | -- -- 1,962
-------- | -------- ------- --------
15,398 | 16,553 19,189 15,922
-------- | -------- ------- --------
570 | 1,736 3,364 2,222
Income taxes................... 220 | (1,463) -- --
-------- | -------- ------- --------
Net Income..................... $ 350 | $ 3,199 $ 3,364 $ 2,222
======== | ======== ======= ========
</TABLE>
See accompanying notes.
70
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRE-ACQUISITION
-------------------------------------------------------------------
UNREALIZED
APPRECIATION
REDEEMABLE ADDITIONAL (DEPRECIATION) RETAINED TOTAL
COMMON PREFERRED PAID-IN OF SECURITIES EARNINGS STOCKHOLDER'S
STOCK STOCK CAPITAL AT FAIR VALUE (DEFICIT) EQUITY
------ ---------- ---------- -------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994........ $2,500 $ 28,336 $ 62 $(2,301) $ 28,597
Issuance of 10,000 shares of
preferred stock.................. -- $ 50,000 -- -- -- 50,000
Contribution of capital.......... -- -- 8,750 -- -- 8,750
Net income for 1994.............. -- -- -- -- 2,222 2,222
Unrealized depreciation of
securities at fair value......... -- -- -- (63) -- (63)
------ -------- -------- ------- ------- --------
Balance at December 31, 1994...... 2,500 50,000 37,086 (1) (79) 89,506
Contribution of capital.......... -- -- 7,944 -- -- 7,944
Net income for 1995.............. -- -- -- -- 3,364 3,364
Preferred stock dividends........ -- -- -- -- (3,348) (3,348)
Unrealized appreciation of
securities at fair value......... -- -- -- 659 -- 659
------ -------- -------- ------- ------- --------
Balance at December 31, 1995...... 2,500 50,000 45,030 658 (63) 98,125
Net income for the period
January 1, 1996 to August 13,
1996............................. -- -- -- -- 3,199 3,199
Preferred stock dividends........ -- -- -- -- (719) (719)
Unrealized depreciation of
securities at fair value......... -- -- -- (1,175) -- (1,175)
------ -------- -------- ------- ------- --------
Balance at August 13, 1996........ $2,500 $ 50,000 $ 45,030 $ (517) $ 2,417 $ 99,430
====== ======== ======== ======= ======= ========
<CAPTION>
POST-ACQUISITION
-------------------------------------------------------------------
UNREALIZED
APPRECIATION
REDEEMABLE ADDITIONAL (DEPRECIATION) RETAINED TOTAL
COMMON PREFERRED PAID-IN OF SECURITIES EARNINGS STOCKHOLDER'S
STOCK STOCK CAPITAL AT FAIR VALUE (DEFICIT) EQUITY
------ ---------- ---------- -------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at August 14, 1996........ $2,500 $ 50,000 $ 87,372 -- -- $139,872
Contribution of preferred
stock to additional paid-in
capital.......................... -- (50,000) 50,000 -- -- --
Net income for the period
August 14, 1996 to December
31, 1996......................... -- -- -- -- $ 350 350
Unrealized appreciation of
securities at fair value......... -- -- -- $ 262 -- 262
------ -------- -------- ------- ------- --------
Balance at December 31, 1996...... $2,500 $ -- $137,372 $ 262 $ 350 $140,484
====== ======== ======== ======= ======= ========
</TABLE>
See accompanying notes.
71
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
POST-ACQUISITION | PRE-ACQUISITION
----------------- | -----------------------------------------
FOR THE PERIOD | FOR THE PERIOD FOR THE FOR THE
AUGUST 14, 1996 | JANUARY 1, 1996 YEAR ENDED YEAR ENDED
THROUGH | THROUGH DECEMBER 31, DECEMBER 31,
DECEMBER 31, 1996 | AUGUST 13, 1996 1995 1994
----------------- | --------------- ------------ ------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES |
Net income........................ $ 350 | $ 3,199 $ 3,364 $ 2,222
Adjustments to reconcile net |
income to net cash provided by |
(used in) operations: |
Adjustments related to annuity |
and interest sensitive life products: |
Change in annuity and interest |
sensitive life product |
reserves...................... 5,106 | 4,472 4,664 (1,370)
Change in unearned revenues..... 2,063 | 2,084 4,949 1,594
Increase in accrued investment |
income......................... (877) | (2,494) (676) (24)
Policy acquisition costs |
deferred....................... (11,712) | (19,300) (9,804) (23,119)
Amortization of deferred policy |
acquisition costs.............. 244 | 2,436 2,710 4,608
Amortization of present value |
of in force acquired........... 2,745 | 951 1,552 2,164
Change in other assets, other |
liabilities and accrued |
income taxes................... (96) | 4,672 4,686 (4,543)
Provision for depreciation and |
amortization................... 1,242 | 703 (142) 13
Provision for deferred income |
taxes.......................... 220 | (1,463) -- --
Realized (gains) losses on |
investments.................... (42) | 420 (297) (65)
-------- | -------- ------- --------
Net cash provided by (used in) |
operating activities........... (757) | (4,320) 11,006 (18,520)
INVESTING ACTIVITIES |
Sale, maturity or repayment of |
investments: |
Fixed maturities--available |
for sale....................... 47,453 | 55,091 24,026 --
Fixed maturities--held for |
investment..................... -- | -- -- 321
Equity securities................ -- | -- -- 313
Mortgage loans on real estate.... 40 | -- -- --
Short-term investments--net...... 2,629 | 354 -- 1,299
-------- | -------- ------- --------
50,122 | 55,445 24,026 1,933
Acquisition of investments: |
Fixed maturities--available |
for sale....................... (147,170) | (184,589) (61,723) --
Fixed maturities--held for |
investment..................... -- | -- -- (857)
Equity securities................ (5) | -- (10) (7)
Mortgage loans on real estate.... (31,499) | -- -- --
Policy loans--net................ (637) | (1,977) (1,508) (369)
Short-term investments--net...... -- | -- (1,681) --
-------- | -------- ------- --------
(179,311) | (186,566) (64,922) (1,233)
Funds held in escrow pursuant |
to an Exchange Agreement....... -- | -- (1,242) (1,382)
Purchase of property and |
equipment...................... (137) | -- -- --
-------- | -------- ------- --------
Net cash used in investing |
activities..................... (129,326) | (131,121) (42,138) (682)
</TABLE>
See accompanying notes.
72
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
POST-ACQUISITION | PRE-ACQUISITION
----------------- | -----------------------------------------
FOR THE PERIOD | FOR THE PERIOD FOR THE FOR THE
AUGUST 14, 1996 | JANUARY 1, 1996 YEAR ENDED YEAR ENDED
THROUGH | THROUGH DECEMBER 31, DECEMBER 31,
DECEMBER 31, 1996 | AUGUST 13, 1996 1995 1994
----------------- | --------------- ------------ ------------
<S> <C> <C> <C> <C>
FINANCING ACTIVITIES |
Retirement of short-term debt........... -- | -- -- $(40,000)
Proceeds from issuance of surplus note.. $ 25,000 | -- -- --
Receipts from annuity and interest |
sensitive life policies credited to |
policyholder account balances......... 116,819 | $ 149,750 $ 29,501 --
Return of policyholder account balances |
on annuity and interest sensitive |
life policies......................... (3,315) | (2,695) (1,543) --
Net reallocations (to) from Separate |
Accounts.............................. (10,237) | (8,286) -- --
Contributions of capital by parent...... -- | -- 7,944 8,750
Issuance of preferred stock............. -- | -- -- 50,000
Dividends paid on preferred stock....... -- | (719) (3,348) --
--------- | --------- -------- --------
Net cash provided by financing |
activities............................ 128,267 | 138,050 32,554 18,750
--------- | --------- -------- --------
Increase (decrease) in cash and |
cash equivalents...................... (1,816) | 2,609 1,422 (452)
Cash and cash equivalents at beginning |
of period............................. 7,655 | 5,046 3,624 4,076
--------- | --------- -------- --------
Cash and cash equivalents at end of |
period................................ $ 5,839 | $ 7,655 $ 5,046 $ 3,624
========= | ========= ======== ========
</TABLE>
See accompanying notes.
73
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<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include Golden American
Life Insurance Company ("Golden American") and its wholly owned
subsidiary, First Golden American Life Insurance Company of New York
("First Golden") collectively the "Company." First Golden was
capitalized by Golden American on December 17, 1996. All significant
intercompany accounts and transactions have been eliminated.
Organization
Golden American offers variable insurance products and is
licensed as a life insurance company in the District of Columbia and
all states except New York. On January 2, 1997, First Golden became
licensed to sell insurance products in the state of New York. The
Company's products are marketed by broker/dealers, financial
institutions and insurance agents. The Company's primary customers
are individuals and families.
On August 13, 1996, Equitable of Iowa Companies ("Equitable")
acquired all of the outstanding capital stock of BT Variable, Inc.
("BT Variable") and its wholly owned subsidiaries, Golden American
and Directed Services, Inc. ("DSI") from Whitewood Properties
Corporation ("Whitewood") pursuant to the terms of a Stock Purchase
Agreement between Equitable and Whitewood (the "Purchase
Agreement"). See Note 5 for additional information.
For financial statement purposes, the change in control of Golden
American through the acquisition of BT Variable was accounted for as
a purchase acquisition effective August 14, 1996. This acquisition
resulted in a new basis of accounting reflecting estimated fair
values of assets and liabilities at that date. As a result, the
Company's financial statements for periods subsequent to August 13,
1996, are presented on the Post-Acquisition new basis of accounting,
while the financial statements for August 13, 1996 and prior periods
are presented on the Pre-Acquisition historical cost basis of
accounting.
Investments
Fixed Maturities: Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" requires fixed maturity securities to be
designated as either "available for sale," "held for investment" or
"trading." Sales of fixed maturities designated as "available for
sale" are not restricted by SFAS No. 115. Available for sale
securities are reported at fair value and unrealized gains and
losses on these securities are included directly in stockholder's
equity, after adjustment for related changes in deferred policy
acquisition costs, present value of in force acquired, policy
reserves and deferred income taxes. At December 31, 1996 and 1995,
all of the Company's fixed maturity securities are designated as
available for sale although the Company is not precluded from
designating fixed maturity securities as held for investment or
trading at some future date. Securities the Company has the positive
intent and ability to hold to maturity are designated as "held for
investment." Held for investment securities are reported at cost
adjusted for amortization of premiums and discounts. Changes in the
fair value of these securities, except for declines that are other
than temporary, are not reflected in the Company's financial
statements. Sales of securities designated as held for investment
are severely restricted by SFAS No. 115. Securities that are bought
and held principally for the purpose of selling them in the near
term are designated as trading securities. Unrealized gains and
losses on trading securities are included in current earnings.
Transfers of securities between categories are restricted and are
recorded at fair value at the time of the transfer. Securities that
are determined to have a decline in value that is other than
temporary are written down to estimated fair value which becomes the
security's new cost basis by a
74
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
charge to realized losses in the
Company's Statements of Income. Premiums and discounts are
amortized/accrued utilizing the scientific interest method which
results in a constant yield over the security's expected life.
Amortization/accrual of premiums and discounts on mortgage-backed
securities incorporates a prepayment assumption to estimate the
securities' expected lives.
Equity Securities: Equity securities are reported at estimated
fair value if readily marketable or at cost if not readily
marketable. The change in unrealized appreciation and depreciation
of marketable equity securities (net of related deferred income
taxes, if any) is included directly in stockholder's equity. Equity
securities that are determined to have a decline in value that is
other than temporary are written down to estimated fair value which
becomes the security's new cost basis by a charge to realized losses
in the Company's Statement of Income.
Mortgage loans: Mortgage loans on real estate are reported at
cost adjusted for amortization of premiums and accrual of discounts.
If the value of any mortgage loan is determined to be impaired
(i.e., when it is probable that the Company will be unable to
collect all amounts due according to the contractual terms of the
loan agreement), the carrying value of the mortgage loan is reduced
to the present value of expected future cash flows from the loan,
discounted at the loan's effective interest rate, or to the loan's
observable market price, or the fair value of the underlying
collateral. The carrying value of impaired loans is reduced by the
establishment of a valuation allowance which is adjusted at each
reporting date for significant changes in the calculated value of
the loan. Changes in this valuation allowance are charged or
credited to income.
Other investments: Policy loans are reported at unpaid principal.
Short-term investments are reported at cost adjusted for
amortization of premiums and accrual of discounts.
Fair Values: Estimated fair values, as reported herein, of
publicly traded fixed maturity securities are as reported by an
independent pricing service. Fair values of conventional mortgage-
backed securities not actively traded in a liquid market are
estimated using a third party pricing system. This pricing system
uses a matrix calculation assuming a spread over U.S. Treasury bonds
based upon the expected average lives of the securities. Fair values
of private placement bonds are estimated using a matrix that assumes
a spread (based on interest rates and a risk assessment of the
bonds) over U.S. Treasury bonds. Estimated fair values of equity
securities which consists of the Company's investment in its
registered separate accounts are based upon the quoted fair value of
the securities comprising the individual portfolios underlying the
separate accounts. Realized gains and losses are determined on the
basis of specific identification and average cost methods for
manager initiated and issuer initiated disposals, respectively.
Cash and Cash Equivalents
For purposes of the consolidated statement of cash flows, the
Company considers all demand deposits and interest-bearing accounts
not related to the investment function to be cash equivalents. All
interest-bearing accounts classified as cash equivalents have
original maturities of three months or less.
Deferred Policy Acquisition Costs
Certain costs of acquiring new insurance business, principally
commissions and other expenses related to the production of new
business, have been deferred. Acquisition costs for variable annuity
and life products are being amortized generally in proportion to the
present value (using the assumed crediting rate) of expected future
gross profits. This amortization is adjusted retrospectively, or
"unlocked," when the Company revises its estimate of current or
future gross profits to be realized from a group of products.
Deferred policy acquisition costs are adjusted to reflect the pro
forma impact of unrealized gains and losses on fixed maturity
securities the Company has designated as "available for sale" under
SFAS No. 115.
75
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
Present Value of in Force Acquired
As a result of the acquisition of Golden American, a portion of
the acquisition cost was allocated to the right to receive future
cash flows from the existing insurance contracts. This allocated
cost represents the present value of in force acquired ("PVIF")
which reflects the value of those purchased policies calculated by
discounting actuarially determined expected cash flows at the
discount rate determined by the purchaser. Interest is imputed on
the unamortized balance of PVIF at rates of 7.70% to 7.80%.
Amortization of PVIF is charged to expense in proportion to expected
gross profits. This amortization is adjusted retrospectively, or
"unlocked," when the Company revises its estimate of current or
future gross profits to be realized from the insurance contracts
acquired. PVIF is adjusted to reflect the pro forma impact of
unrealized gains (losses) on available for sale fixed maturities.
Property and Equipment
Property and equipment primarily represent leasehold improvements
at the Golden American headquarters, office furniture and equipment
and capitalized computer software and are not considered to be
significant to the Company's overall operations. Property and
equipment are reported at cost less allowances for depreciation.
Depreciation expense is computed primarily on the basis of straight-
line method over the estimated useful lives of the assets.
Goodwill
Goodwill was established as a result of the acquisition discussed
above and is being amortized over 25 years on a straight line basis.
See Note 5 for additional information.
Future Policy Benefits
Future policy benefits for fixed interest divisions of the
variable products, are established utilizing the retrospective
deposit accounting method. Policy reserves represent the premiums
received plus accumulated interest, less mortality and
administration charges. Interest credited to these policies ranged
from 4.00% to 7.25% during 1996.
The unearned revenue reserve represents unearned distribution
fees discussed below. These distribution fees have been deferred and
are amortized over the life of the contract in proportion to its
expected gross profits.
Separate Accounts
Assets and liabilities of the separate accounts reported in the
accompanying balance sheets represent funds that are separately
administered principally for variable annuity and variable life
contracts. Contractholders, rather than the Company, bear the
investment risk for variable products. At the direction of the
contractholders, the separate accounts invest the premiums from the
sale of variable annuity and variable life products in shares of
specified mutual funds. The assets and liabilities of the separate
accounts are clearly identified and segregated from other assets and
liabilities of the Company. The portion of the separate account
assets applicable to variable annuity and variable life contracts
cannot be charged with liabilities arising out of any other business
the Company may conduct.
Variable separate account assets carried at fair value of the
underlying investments generally represent contractholder investment
values maintained in the accounts. Variable separate account
liabilities represent account balances for the variable annuity and
variable life contracts invested in the separate accounts. Net
investment income and realized and unrealized capital gains and
losses related to separate account assets are not reflected in the
accompanying Statement of Income.
76
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
Product charges recorded by the Company from variable annuity and
variable life products consist of charges applicable to each
contract for mortality and expense risk, cost of insurance, contract
administration and surrender charges. In addition, some variable
annuity and all variable life contracts provide for a distribution
fee collected for a limited number of years after each premium
deposit. Revenue recognition of collected distribution fees is
amortized over the life of the contract in proportion to its
expected gross profits. The balance of unrecognized revenue related
to the distribution fees is reported as an unearned revenue reserve.
Deferred Income Taxes
Deferred tax assets or liabilities are computed based on the
difference between the financial statement and income tax bases of
assets and liabilities using the enacted marginal tax rate. Deferred
tax assets or liabilities are adjusted to reflect the pro forma
impact of unrealized gains and losses on equity securities and fixed
maturity securities the Company has designated as available for sale
under SFAS No. 115. Changes in deferred tax assets or liabilities
resulting from this SFAS No. 115 adjustment are charged or credited
directly to stockholder's equity. Deferred income tax expenses or
credits reflected in the Company's Statement of Income are based on
the changes in the deferred tax asset or liability from period to
period (excluding the SFAS No. 115 adjustment).
Dividend Restrictions
Golden American's ability to pay dividends to its parent is
restricted because prior approval of insurance regulatory
authorities is required for payment of dividends to the stockholder
which exceed an annual limitation. During 1997, Golden American
could pay dividends to its parent of approximately $2,186,000
without prior approval of statutory authorities. The Company has
maintained adequate statutory capital and surplus and has not used
surplus relief or financial reinsurance, which have come under
scrutiny by many state insurance departments.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expenses during the preparation period. Actual results
could differ from those estimates.
Management is required to utilize historical experience and
assumptions about future events and circumstances in order to
develop estimates of material reported amounts and disclosures.
Included among the material (or potentially material) reported
amounts and disclosures that require extensive use of estimates and
assumptions are (1) estimates of fair values of investments in
securities and other financial instruments, as well as fair values
of policyholder liabilities, (2) policyholder liabilities, (3)
deferred policy acquisition costs and present value of in force
acquired, (4) fair values of assets and liabilities recorded as a
result of acquisition transactions, (5) asset valuation allowances,
(6) guaranty fund assessment accruals, (7) deferred tax benefits
(liabilities) and (8) estimates for commitments and contingencies
including legal matters, if a liability is anticipated and can be
reasonably estimated. Estimates and assumptions regarding all of the
preceding are inherently subject to change and are reassessed
periodically. Changes in estimates and assumptions could materially
impact the financial statements.
Reclassification
Certain amounts in the 1995 and 1994 financial statements have
been reclassified to conform to the 1996 financial statement
presentation.
77
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
2. BASIS OF FINANCIAL REPORTING
The financial statements of the Company differ from related
statutory-basis financial statements principally as follows: (1)
acquisition costs of acquiring new business are deferred and
amortized over the life of the policies rather than charged to
operations as incurred; (2) an asset representing the present value
of future cash flows from insurance contracts acquired was
established as a result of an acquisition and is amortized and
charged to expense; (3) future policy benefit reserves for the fixed
interest divisions of the variable products are based on full
account values, rather than the greater of cash surrender value or
amounts derived from discounting methodologies utilizing statutory
interest rates; (4) reserves are reported before reduction for
reserve credits related to reinsurance ceded and a receivable is
established, net of an allowance for uncollectible amounts, for
these credits rather than presented net of these credits; (5) fixed
maturity investments are designated as "available for sale" and
valued at fair value with unrealized appreciation/depreciation, net
of adjustments to deferred income taxes (if applicable) and deferred
policy acquisition costs, credited/charged directly to stockholder's
equity rather than valued at amortized cost; (6) the carrying value
of fixed maturity securities is reduced to fair value by a charge to
realized losses in the Statements of Income when declines in
carrying value are judged to be other than temporary, rather than
through the establishment of a formula-determined statutory
investment reserve (carried as a liability), changes in which are
charged directly to surplus; (7) deferred income taxes are provided
for the difference between the financial statement and income tax
bases of assets and liabilities; (8) net realized gains or losses
attributed to changes in the level of interest rates in the market
are recognized when the sale is completed rather than deferred and
amortized over the remaining life of the fixed maturity security;
(9) a liability is established for anticipated guaranty fund
assessments, net of related anticipated premium tax credits, rather
than capitalized when assessed and amortized in accordance with
procedures permitted by insurance regulatory authorities; (10)
revenues for variable annuity and variable life products consist of
policy charges for the cost of insurance, policy administration
charges, amortization of policy initiation fees and surrender
charges assessed rather than premiums received; and (11) assets and
liabilities are restated to fair values when a change in ownership
occurs, with provisions for goodwill and other intangible assets,
rather than continuing to be presented at historical cost.
Net income (loss) for Golden American, as determined in
accordance with statutory accounting practices was $(9,188,000) in
1996, $(4,117,000) in 1995 and $(11,260,000) in 1994. Total
statutory capital and surplus was $80,430,000 at December 31, 1996
and $66,357,000 at December 31, 1995.
78
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
3. INVESTMENT OPERATIONS
Investment Results
Major categories of net investment income are summarized below:
<TABLE>
<CAPTION>
POST-ACQUISITION | PRE-ACQUISITION
----------------- | -----------------------------------------
FOR THE PERIOD | FOR THE PERIOD FOR THE FOR THE
AUGUST 14, 1996 | JANUARY 1, 1996 YEAR ENDED YEAR ENDED
THROUGH | THROUGH AUGUST DECEMBER 31, DECEMBER 31,
DECEMBER 31, 1996 | 13, 1996 1995 1994
----------------- | --------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Fixed maturities..................... $5,083 | $4,507 $1,610 $142
Equity securities.................... 103 | -- -- 1
Mortgage loans on real estate........ 203 | -- -- --
Policy loans......................... 78 | 73 56 11
Short-term investments............... 441 | 341 899 226
Other, net........................... 2 | 22 148 99
Funds held in escrow................. -- | 145 166 83
------ | ------ ------ ----
Gross investment income.............. 5,910 | 5,088 2,879 562
Less investment expenses............. (115) | (98) (61) (2)
------ | ------ ------ ----
Net investment income................ $5,795 | $4,990 $2,818 $560
====== | ====== ====== ====
</TABLE>
Realized gains (losses) are as follows:
<TABLE>
<CAPTION>
REALIZED*
-------------------------------------------------------------
POST-ACQUISITION | PRE-ACQUISITION
----------------- | -----------------------------------------
FOR THE PERIOD | FOR THE PERIOD
AUGUST 14, 1996 | JANUARY 1, 1996 YEAR ENDED YEAR ENDED
THROUGH | THROUGH AUGUST DECEMBER 31, DECEMBER 31,
DECEMBER 31, 1996 | 13, 1996 1995 1994
----------------- | --------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Fixed maturities: |
Available for sale.................. $42 | $(420) $297
Held for investment................. -- | -- -- $ 2
Equity securities.................... -- | -- -- 63
--- | ----- ---- ---
Realized gains (losses) on |
investments........................ $42 | $(420) $297 $65
=== | ===== ==== ===
</TABLE>
________________
* See Note 6 for the income tax effects attributable to
realized gains and losses on investments.
79
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
The change in unrealized appreciation (depreciation) on
securities at fair value is as follows:
<TABLE>
<CAPTION>
UNREALIZED
--------------------------------------------------------------
POST-ACQUISITION | PRE-ACQUISITION
------------------- | -----------------------------------------
FOR THE PERIOD | FOR THE PERIOD
AUGUST 14, 1996 | JANUARY 1, 1996 YEAR ENDED YEAR ENDED
THROUGH | THROUGH AUGUST DECEMBER 31, DECEMBER 31,
DECEMBER 31, 1996** | 13, 1996 1995 1994
------------------- | --------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Fixed maturities: |
Available for sale................ $410 | $(2,087) $ 958 $ (65)
Held for investment............... -- | -- 90 --
Equity securities.................. (3) | 1 3 (63)
---- | ------- ------ -----
Unrealized appreciation |
(depreciation) of securities..... $407 | $(2,086) $1,051 $(128)
==== | ======= ====== =====
</TABLE>
________________
** On August 13, 1996, all fixed maturities and equity
securities in the Company's investment portfolio were marked to
market.
At December 31, 1996 and December 31, 1995, amortized cost, gross
unrealized gains and losses and estimated fair values of fixed
maturity securities, all of which are designated as available for
sale, are as follows:
<TABLE>
<CAPTION>
POST-ACQUISITION
-----------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
DECEMBER 31, 1996 COST GAINS LOSSES VALUE
----------------- --------- ---------- ---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. government and governmental
agencies and authorities:
Mortgage-backed securities.... $ 70,902 $ 122 $(247) $ 70,777
Other......................... 3,082 2 (4) 3,080
Public utilities................. 35,893 193 (38) 36,048
Investment grade corporate....... 134,487 586 (466) 134,607
Below investment grade
corporate....................... 25,921 249 (56) 26,114
Mortgage-backed securities....... 4,868 69 -- 4,937
-------- ------ ----- --------
Total............................ $275,153 $1,221 $(811) $275,563
======== ====== ===== ========
</TABLE>
<TABLE>
<CAPTION>
PRE-ACQUISITION
-----------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
DECEMBER 31, 1995 COST GAINS LOSSES VALUE
----------------- --------- ---------- ---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. government and governmental
agencies and authorities--Other $13,334 $176 $13,510
Public utilities................. 5,276 26 5,302
Investment grade corporate....... 27,042 700 $(31) 27,711
Mortgage-backed securities....... 3,019 87 -- 3,106
------- ---- ---- -------
Total............................ $48,671 $989 $(31) $49,629
======= ==== ==== =======
</TABLE>
At December 31, 1996, net unrealized investment gains on fixed
maturities designated as available for sale totaled $410,000. This
appreciation caused an increase to stockholder's equity of $265,000
80
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
at December 31, 1996 (net of deferred income taxes of $145,000). No
fixed maturity securities were designated as held for investment at
December 31, 1996 or 1995. Short-term investments with maturities of
30 days or less have been excluded from the above schedules.
Amortized cost approximates fair value for these securities.
Amortized cost and estimated fair value of fixed maturities
designated as available for sale, by contractual maturity, at
December 31, 1996, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
POST-ACQUISITION
-------------------
ESTIMATED
AMORTIZED FAIR
DECEMBER 31, 1996 COST VALUE
----------------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Due within one year...................................... $ 15,908 $ 15,930
Due after one year through five years.................... 122,958 123,487
Due after five years through ten years................... 60,517 60,432
-------- --------
199,383 199,849
Mortgage-backed securities............................... 75,770 75,714
-------- --------
Total.................................................... $275,153 $275,563
======== ========
</TABLE>
An analysis of sales, maturities and principal repayments of the
Company's fixed maturities portfolio is as follows:
<TABLE>
<CAPTION>
GROSS GROSS PROCEEDS
AMORTIZED REALIZED REALIZED FROM
COST GAINS LOSSES SALE
--------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
For the period August 14, 1996 through
December 31, 1996:
Scheduled principal repayments, calls
and tenders......................... $ 1,612 $ 1,612
Sales................................. 45,799 $115 $ (73) 45,841
------- ---- ----- -------
Total.................................. $47,411 $115 $ (73) $47,453
======= ==== ===== =======
For the period January 1, 1996 through
August 13, 1996:
Scheduled principal repayments, calls
and tenders......................... $ 1,801 $ 1,801
Sales................................. 53,710 $152 $(572) 53,290
------- ---- ----- -------
Total.................................. $55,511 $152 $(572) $55,091
======= ==== ===== =======
Year ended December 31, 1995:
Scheduled principal repayments, calls
and tenders......................... $20,279 $305 $ (16) $20,568
Sales................................. 3,450 8 -- 3,458
------- ---- ----- -------
Total.................................. $23,729 $313 $ (16) $24,026
======= ==== ===== =======
Year ended December 31, 1994:
Scheduled principal repayments,
tenders (available for sale only) and
calls--held for investment.......... $ 319 $ 2 $ -- $ 321
------- ---- ----- -------
Total.................................. $ 319 $ 2 $ -- $ 321
======= ==== ===== =======
</TABLE>
Investment Valuation Analysis: The company analyzes its
investment portfolio at least quarterly in order to determine if the
carrying value of any of its investments has been impaired. The
carrying
81
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
value of debt and equity securities is written down to fair
value by a charge to realized losses when an impairment in value
appears to be other than temporary. During 1996 and 1995, no
investments were identified as having an impairment other than
temporary.
Investments on Deposit: At December 31, 1996 and 1995, affidavits
of deposits covering bonds with a par value of $6,605,000 and
$2,695,000, respectively, were on deposit with regulatory
authorities pursuant to certain statutory requirements.
Investment Diversifications: The Company's investment policies
related to its investment portfolio require diversification by asset
type, company and industry and set limits on the amount which can be
invested in an individual issuer. Such policies are at least as
restrictive as those set forth by regulatory authorities. Fixed
maturity investments included investments in various government
bonds and government or agency mortgage-backed securities (27% in
1996 and 1995), public utilities (13% in 1996, 11% in 1995), basic
industrials (30% in 1996, 20% in 1995) and financial companies (18%
in 1996, 30% in 1995). Mortgage loans on real estate have been
analyzed by geographical location and 17% of all mortgage loans are
in Georgia. There are no other concentrations of mortgage loans in
any state exceeding ten percent in 1996. Mortgage loans on real
estate have also been analyzed by collateral type with significant
concentrations identified in office buildings (36% in 1996),
industrial buildings (31% in 1996) and multi-family residential
buildings (27% in 1996). Equity securities and investments accounted
for by the equity method are not significant to the Company's
overall investment portfolio.
No investment in any person or its affiliates (other than bonds
issued by agencies of the United States government) exceeded ten
percent of stockholder's equity at December 31, 1996.
4. FAIR VALUES OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments" requires disclosure of estimated fair value of all
financial instruments, including both assets and liabilities
recognized and not recognized in a Company's balance sheet, unless
specifically exempted. SFAS No. 119, "Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments"
requires additional disclosures about derivative financial
instruments. Most of the Company's investments, insurance
liabilities and debt fall within the standards' definition of a
financial instrument. Although the Company's insurance liabilities
are specifically exempted from this disclosure requirement,
estimated fair value disclosure of these liabilities is also
provided in order to make the disclosures more meaningful.
Accounting, actuarial and regulatory bodies are continuing to study
the methodologies to be used in developing fair value information,
particularly as it relates to such things as liabilities for
insurance contracts. Accordingly, care should be exercised in
deriving conclusions about the Company's business or financial
condition based on the information presented herein.
The Company closely monitors the composition and yield of its
invested assets, the duration and interest credited on insurance
liabilities and resulting interest spreads and timing of cash flows.
These amounts are taken into consideration in the Company's overall
management of interest rate risk, which attempts to minimize
exposure to changing interest rates through the matching of
investment cash flows with amounts expected to be due under
insurance contracts. As discussed below, the Company has used
discount rates in its determination of fair values for its
liabilities which are consistent with market yields for related
assets. The use of the asset market yield is consistent with
management's opinion that the risks inherent in its asset and
liability portfolios are similar. This assumption, however, might
not result in values consistent with those obtained through an
actuarial appraisal of the Company's business or values that might
arise in a negotiated transaction.
82
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
The following compares carrying values as shown for financial
reporting purposes with estimated fair values.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------
CARRYING ESTIMATED
VALUE FAIR VALUE
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Assets
Balance sheet financial assets:
Fixed maturities available for sale................. $ 275,563 $ 275,563
Equity securities................................... 33 33
Mortgage loans on real estate....................... 31,459 30,979
Short-term investments.............................. 12,631 12,631
Cash and cash equivalents........................... 5,839 5,839
Other receivables................................... 4,214 4,214
Separate account assets............................. 1,207,247 1,207,247
---------- ----------
1,536,986 1,536,506
Deferred policy acquisition costs.................... 11,468 --
Present value of in force acquired................... 83,051 --
Goodwill............................................. 38,665 --
Deferred income taxes on fair value adjustments...... -- 7,741
Non-financial assets................................. 3,095 3,095
---------- ----------
Total assets......................................... $1,673,265 $1,547,342
========== ==========
Liabilities and Stockholder's Equity
Balance sheet financial liabilities:
Future policy benefits (net of related policy
loans):
Annuity products................................... $ 280,076 $ 253,012
Interest sensitive life products................... 2,640 2,368
---------- ----------
282,716 255,380
Surplus note......................................... 25,000 28,878
Separate account liabilities......................... 1,207,247 1,119,158
---------- ----------
1,514,963 1,403,416
Non-financial liabilities............................ 17,818 17,818
---------- ----------
Total liabilities.................................... 1,532,781 1,421,234
Stockholder's equity................................. 140,484 126,108
---------- ----------
Total liabilities and stockholder's equity........... $1,673,265 $1,547,342
========== ==========
</TABLE>
The following methods and assumptions were used by the Company in
estimating fair values.
Fixed maturities: Estimated fair values of publicly traded
securities are as reported by an independent pricing service.
Estimated fair values of conventional mortgage-backed securities not
actively traded in a liquid market are estimated using a third party
pricing system. This pricing system uses a matrix calculation
assuming a spread over U.S. Treasury bonds based upon the expected
average lives of the securities.
Equity securities: Estimated fair values of equity securities,
which consist of the Company's investment in the portfolios
underlying its separate accounts, are based upon the quoted fair
value of the individual securities comprising the individual
portfolios underlying the separate accounts. For equity securities
not actively traded, estimated fair values are based upon values of
issues of comparable yield and quality.
Mortgage loans on real estate: Fair values are estimated by
discounting expected cash flows, using interest rates currently
offered for similar loans.
83
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
Short-term investments, cash and cash equivalents, and other
receivables: Carrying values reported in the Company's historical
cost basis balance sheet approximate estimated fair value for these
instruments, due to their short-term nature.
Deferred policy acquisition costs, present value of in force
acquired and goodwill: For historical cost purposes, the recovery of
policy acquisition costs and present value of in force acquired is
based on the realization, among other things, of future interest
spreads and gross premiums on in force business. Because these cash
flows are considered in the computation of the future policy benefit
cash flows, the deferred policy acquisition cost and present value
of in force acquired balances do not appear on the estimated fair
value balance sheet. Goodwill does not appear in the estimated fair
value balance sheet because no cash flows are related to this asset.
Separate account assets: Separate account assets represent the
estimated fair values of the underlying securities in the Company's
historical cost and estimated fair value basis balance sheets.
Future policy benefits: Estimated fair values of the Company's
liabilities for future policy benefits for the fixed interest
division of the variable products are based upon discounted cash
flow calculations. Cash flows of future policy benefits are
discounted using the market yield rate of the assets supporting
these liabilities. Estimated fair values are presented net of the
estimated fair value of corresponding policy loans due to the
interdependent nature of the cash flows associated with these items.
Surplus note: Estimated fair value of the Company's surplus note
was based upon discounted future cash flows using a discount rate
approximating the Company's return on invested assets.
Separate account liabilities: Separate account liabilities are
reported at full account value in the Company's historical cost
balance sheet. Estimated fair values of separate account liabilities
are based upon assumptions using an estimated long-term average
market rate of return to discount future cash flows. The reduction
in fair values for separate account liabilities reflect the present
value of future revenue from product charges, distribution fees or
surrender charges.
Deferred income taxes on fair value adjustments: Deferred income
taxes have been reported at the statutory rate for the differences
(except for those attributed to permanent differences) between the
carrying value and estimated fair value of assets and liabilities
set forth herein.
Non-financial assets and liabilities: Values are presented at
historical cost. Non-financial assets consist primarily of property
and equipment, receivable from the Separate Accounts and restricted
stock assets. Non-financial liabilities consist primarily of
outstanding checks, guaranty fund assessments payable, payables for
investments and suspense accounts.
At December 31, 1995, the carrying amounts reported for the
financial instruments consisting primarily of short-term
investments, policy loans, the adjustable principal amount
promissory note and insurance and annuity reserves approximate fair
value.
SFAS No. 107 and SFAS No. 119 require disclosure of estimated
fair value information about financial instruments, whether or not
recognized in the consolidated balance sheets, for which it is
practicable to estimate that value. In cases where quoted market
prices are not available, estimated fair values are based on
estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. In
that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many
cases, could not be realized in immediate settlement of the
instrument. The above presentation should not be viewed as an
appraisal as there are several factors, such as the fair value
associated with customer or agent relationships and other intangible
items, which
84
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
have not been considered. In addition, interest rates
and other assumptions might be modified if an actual appraisal were
to be performed. Accordingly, the aggregate estimated fair value
-----------------------------------------------
amounts presented herein are limited by each of these factors and do
- --------------------------------------------------------------------
not purport to represent the underlying value of the Company.
- -------------------------------------------------------------
5. ACQUISITION
Transaction: On August 13, 1996, Equitable acquired all of the
outstanding capital stock of BT Variable from Whitewood, a wholly
owned subsidiary of Bankers Trust, pursuant to the terms of the
Purchase Agreement dated as of May 3, 1996 between Equitable and
Whitewood. In exchange for the outstanding capital stock of BT
Variable, Equitable paid the sum of $93,000,000 in cash to Whitewood
in accordance with the terms of the Purchase Agreement. Equitable
also paid the sum of $51,000,000 in cash to Bankers Trust to retire
certain debt owed by BT Variable to Bankers Trust pursuant to a
revolving credit arrangement. Subsequent to the acquisition, the BT
Variable, Inc. name was changed to EIC Variable, Inc.
Accounting Treatment: The acquisition was accounted for as a
purchase resulting in a new basis of accounting, reflecting
estimated fair values for assets and liabilities at August 13, 1996.
The purchase price was allocated to the three companies purchased--
BT Variable, DSI and Golden American. Goodwill was established for
the excess of the acquisition cost over the fair value of the net
assets acquired and pushed down to Golden American. The acquisition
cost is preliminary with respect to the final settlement of taxes
with Bankers Trust and estimated expenses and, as a result, goodwill
may change. The allocation of the purchase price to Golden American
was approximately $139,872,000. The amount of goodwill relating to
the acquisition was $39,254,000 at the acquisition date and is being
amortized over 25 years on a straight line basis. The carrying value
of goodwill will be reviewed periodically for any indication of
impairment in value.
Pro Forma Information (Unaudited): The following pro forma
information is presented as if the acquisition had occurred on
January 1, 1995. The information is combined to reflect the purchase
accounting in the pre-acquisition periods of January 1, 1996 through
August 13, 1996 and for the year ended December 31, 1995. This
information is intended for informational purposes only and may not
be indicative of the Company's future results of operations.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------
1996 1995
------- -------
(DOLLARS IN
THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Revenues..................................................... $35,955 $25,149
Net income................................................... 799 1,093
</TABLE>
The primary pro forma effects are revised amortization of
deferred policy acquisition costs, present value of in force
acquired, unearned revenue, goodwill and the elimination of deferred
tax benefits.
Present Value of In Force Acquired: As part of the acquisition, a
portion of the acquisition cost was allocated to the right to
receive future cash flows from the insurance contracts existing with
Golden American at the date of acquisition. This allocated cost
represents the present value of in force acquired ("PVIF") which
reflects the value of those purchased policies calculated by
discounting the actuarially determined expected future cash flows at
the discount rate determined by Equitable.
85
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
An analysis of the PVIF asset is as follows:
<TABLE>
<CAPTION>
POST-ACQUISITION | PRE-ACQUISITION
-----------------|-----------------------------------------
FOR THE PERIOD |FOR THE PERIOD
AUGUST 14, 1996 |JANUARY 1, 1996 YEAR ENDED YEAR ENDED
THROUGH | THROUGH DECEMBER 31, DECEMBER 31,
DECEMBER 31, 1996|AUGUST 13, 1996 1995 1994
-----------------|--------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Beginning balance.................... $85,796 | $ 6,057 $ 7,620 $ 9,784
Imputed interest..................... 2,465 | 273 548 696
Amortization......................... (5,210) | (1,224) (2,100) (2,860)
Adjustment for unrealized gains on |
available for sale securities...... -- | 11 (11) --
------- | ------- ------- -------
Ending balance....................... $83,051 | $ 5,117 $ 6,057 $ 7,620
======= | ======= ======= =======
</TABLE>
Pre-Acquisition PVIF represents the remaining value assigned to
in force contracts when Bankers Trust purchased Golden American from
Mutual Benefit on September 30, 1992. See Note 8, contingent
liability for additional information.
Interest is imputed on the unamortized balance of PVIF at rates
of 7.70% to 7.80% for the period August 14, 1996 through December
31, 1996. PVIF is charged to expense and adjusted for the unrealized
gains (losses) on available for sale securities. Based on current
conditions and assumptions as to the future events on acquired
policies in force, the expected approximate net amortization for the
next five years, relating to the balance of the PVIF as of December
31, 1996, is as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
1997.................................................. $9,664
1998.................................................. 10,109
1999.................................................. 9,243
2000.................................................. 7,919
2001.................................................. 6,798
</TABLE>
6. INCOME TAXES
The Company files a federal income tax return separate from its
parent company. Under the Internal Revenue Service Code, a newly
acquired insurance company must file a separate return for 5 years.
Deferred income taxes have been established based upon the temporary
differences, the reversal of which will result in taxable or
deductible amounts in future years when the related asset or
liability is recovered or settled.
At December 31, 1995 and 1994, Golden American had net operating
loss ("NOL") carryforwards for federal income tax purposes of
approximately $22,600,000 and $17,400,000, respectively. As a result
of the election made in connection with the acquisition, the Company
will be treated as a new taxpayer commencing on August 14, 1996. For
the period August 14, 1996 through December 31, 1996, the Company
incurred a NOL of $4,725,000.
86
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
Income Tax Expense: Income tax expenses (credits) are included in
the consolidated financial statements as follows:
<TABLE>
<CAPTION>
POST-ACQUISITION | PRE-ACQUISITION
----------------- | ---------------
FOR THE PERIOD | FOR THE PERIOD
AUGUST 14, 1996 | JANUARY 1, 1996
THROUGH | THROUGH AUGUST
DECEMBER 31, 1996 | 13, 1996
----------------- | ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Taxes provided in consolidated statements of income--deferred.. $220 | $(1,463)
Taxes provided in consolidated statement of changes in |
stockholder's equity on unrealized gains--deferred........... 145 | --
---- | -------
$365 | $(1,463)
==== | =======
</TABLE>
Income tax expense (credits) attributed to realized gains and
losses on investments amounted to $15,000 and $(147,000) and for the
periods August 14, 1996 through December 31, 1996, and January 1,
1996 through August 13, 1996, respectively. The effective tax rate
on income before income taxes and equity income (loss) is different
from the prevailing federal income tax rate as follows:
<TABLE>
<CAPTION>
POST-ACQUISITION | PRE-ACQUISITION
----------------- | -----------------------------------------
FOR THE PERIOD | FOR THE PERIOD
AUGUST 14, 1996 | JANUARY 1, 1996 YEAR ENDED YEAR ENDED
THROUGH | THROUGH AUGUST DECEMBER 31, DECEMBER 31,
DECEMBER 31, 1996 | 13, 1996 1995 1994
----------------- | --------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Income before income taxes........... $570 | $ 1,736 $3,364 $2,222
Income tax at federal statutory rate. 200 | 607 1,177 778
Tax effect (decrease) of: |
Realization of NOL carryforwards.... -- | (1,214) -- --
Dividends received deduction........ -- | -- (350) (368)
Other items......................... 20 | -- 17 (210)
Valuation allowance................. -- | (856) (844) (200)
---- | ------- ------ ------
Income tax expense (benefit)......... $220 | $(1,463) $ -- $ --
==== | ======= ====== ======
</TABLE>
87
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
Deferred Income Taxes: The tax effect of temporary differences
giving rise to the Company's deferred income tax assets and
liabilities at December 31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
POST-ACQUISITION | PRE-ACQUISITION
---------------- | ---------------
December 31, 1996 | 1995
- ------------ ----------------- |----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Deferred tax assets: |
Future policy benefits......................................... $19,102 | $15,520
Deferred policy acquisition costs.............................. 1,985 | 3,666
Goodwill....................................................... 5,918 | --
Net operating loss carryforwards............................... 1,653 | 7,891
Other.......................................................... 235 | 57
------- | -------
28,893 | 27,134
Deferred tax liabilities: |
Net unrealized appreciation of available for sale fixed |
maturity securities......................................... 145 | --
Deferred policy acquisition costs.............................. -- | 23,560
Unamortized cost assigned to present value of in force acquired 29,068 | 2,120
Other.......................................................... 45 | 598
------- | -------
29,258 | 26,278
Valuation allowance, for deferred tax assets.................... -- | (856)
------- | -------
Deferred income tax liability................................... $ 365 | $ --
======= | =======
</TABLE>
7. RELATED PARTY TRANSACTIONS
DSI acts as the principal underwriter (as defined in the
Securities Act of 1933 and the Investment Company Act of 1940, as
amended) of the variable insurance products issued by Golden
American which as of December 31, 1996 are sold primarily through
two broker/dealer institutions. For the periods August 14, 1996,
through December 31, 1996 and January 1, 1996 through August 13,
1996, Golden American paid commissions to DSI totaling $9,995,000
and $17,070,000, respectively. For the years ended December 31,
1995, and 1994, commissions paid by Golden American to DSI
aggregated $8,440,000 and $17,569,000, respectively.
Golden American charged DSI for various expenses and all other
general and administrative costs, first on the basis of direct
charges when identifiable, with the remainder allocated based on the
estimated amount of time spent by Golden American's employees on
behalf of DSI. For the year ended December 31, 1994 expenses
allocated to DSI were $1,983,000.
Golden American provides certain managerial and supervisory
services to DSI. In 1996 and 1995, this fee was calculated as a
percentage of average assets in the variable separate accounts. For
the periods August 14, 1996 through December 31, 1996 and January 1,
1996 through August 13, 1996 the fee was $877,000 and $1,390,000,
respectively. This fee was $987,000 for 1995.
On August 14, 1996, the Company began purchasing investment
management services from an affiliate. Payments for these services
totaled $72,000 through December 31, 1996. On August 14, 1996, all
employees of Golden American, except wholesalers, became statutory
employees of Equitable Life Insurance Company of Iowa, an affiliate.
Surplus Note: On December 17, 1996, Golden American issued a
surplus note in the amount of $25,000,000 to Equitable. The note
matures on December 17, 2026 and will accrue interest of 8.25% per
88
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
annum until paid. The note and accrued interest thereon shall be
subordinate to payments due to policyholders, claimant and
beneficiary claims, as well as debts owed to all other classes of
debtors of Golden American. Any payment of principal made shall be
subject to the prior approval of the Delaware Insurance
Commissioner. On December 17, 1996, Golden American contributed the
$25,000,000 to First Golden acquiring 200,000 shares of common stock
(100% of outstanding stock) of First Golden.
Line of Credit: Golden American maintains a line of credit
agreement with Equitable to facilitate the handling of unusual
and/or unanticipated short-term cash requirements. Under the current
agreement, which became effective December 1, 1996 and expires on
December 31, 1997, Golden American can borrow up to $25,000,000.
Interest on any borrowings is charged at the rate of Equitable's
monthly average aggregate cost of short-term funds plus 1.00%. For
the period August 14 through December 31, 1996, the Company paid
$85,000 of interest under this agreement. At December 31, 1996, no
amounts were outstanding under this agreement.
Short-term Debt: All short-term debt was repaid as of December
30, 1994. Interest paid during 1994 was $1,962,000. The repayment of
amounts under this loan had been guaranteed by Bankers Trust.
Stockholder's Equity: On September 23, 1996, EIC Variable, Inc.
(formally known as BT Variable, Inc.) contributed $50,000,000 of
Preferred Stock to the Company's additional paid-in capital.
8. COMMITMENTS AND CONTINGENCIES
Contingent Liability: In a transaction that closed on September
30, 1992, Bankers Trust Company ("Bankers Trust") acquired from
Mutual Benefit Life Insurance Company in Rehabilitation ("Mutual
Benefit"), in accordance with the terms of an Exchange Agreement,
all of the issued and outstanding capital stock of Golden American
and DSI and certain related assets for consideration with an
aggregate value of $13,200,000 and contributed them to BT Variable.
The transaction involved settlement of pre-existing claims of
Bankers Trust against Mutual Benefit. The ultimate value of these
claims has not yet been determined by the Superior Court of New
Jersey and, prior to August 13, 1996, was contingently supported by
a $5,000,000 note payable from Golden American and a $6,000,000
letter of credit from Bankers Trust. Bankers Trust had estimated
that the contingent liability due from Golden American amounted to
$439,000 at August 13, 1996 and December 31, 1995. At August 13,
1996 the balance of the escrow account established to fund the
contingent liability was $4,293,000 ($4,150,000 at December 31,
1995).
On August 13, 1996, Bankers Trust made a cash payment to Golden
American in an amount equal to the balance of the escrow account
less the $439,000 contingent liability discussed above. In exchange,
Golden American irrevocably assigned to Bankers Trust all of Golden
American's rights to receive any amounts to be disbursed from the
escrow account in accordance with the terms of the Exchange
Agreement. Bankers Trust also irrevocably agreed to make all
payments becoming due under the Golden American note and to
indemnify Golden American for any liability arising from the note.
Reinsurance: At December 31, 1996, Golden American had
reinsurance treaties with reinsurers covering a significant portion
of the mortality risks under its variable contracts with
unaffiliated reinsurers. Golden American remains liable to the
extent its reinsurers do not meet their obligations under the
reinsurance agreements. Reinsurance in force for life mortality
risks were $58,368,000 and $24,709,000 at December 31, 1996 and
1995. Included in the accompanying financial statements are net
considerations to reinsurers of $875,000, $600,000, $2,800,000 and
$2,400,000 and net policy benefits recoveries of $654,000,
$1,267,000, $3,500,000 and $1,900,000 for the periods August 14,
1996 through December 31, 1996, and January 1, 1996 through August
13, 1996 and the years ended 1995 and 1994, respectively.
89
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
Effective June 1, 1994, Golden American entered into a modified
coinsurance agreement with an unaffiliated reinsurer. The
accompanying financial statements are presented net of the effects
of the treaty which increased income by $10,000 and $56,000 for the
periods August 14, 1996 through December 31, 1996 and January 1,
1996 through December 31, respectively. In 1995 and 1994, net income
was reduced by $109,000 and $27,000, respectively.
Guaranty Fund Assessments: Assessments are levied on the Company
by life and health guaranty associations in most states in which the
Company is licensed to cover losses of policyholders of insolvent or
rehabilitated insurers. In some states, these assessments can be
partially recovered through a reduction in future premium taxes. The
Company cannot predict whether and to what extent legislative
initiatives may affect the right to offset. Based upon information
currently available from the National Organization of Life and
Health Insurance Guaranty Associations (NOLHGA), the Company
believes that it is probable these insolvencies will result in
future assessments which could be material to the Company's
financial statements if the Company's reserve is not sufficient. The
Company regularly reviews its reserve for these insolvencies and
updates its reserve based upon the Company's interpretation of
information from the NOLHGA annual report. The associated cost for a
particular insurance company can vary significantly based upon its
fixed account premium volume by line of business and state premiums
levels as well as its potential for premium tax offset. Accordingly,
the Company accrued and charged to expense an additional $291,000
for the period August 14, 1996 through December 31, 1996 and
$480,000 for the period January 1, 1996 through August 13, 1996. At
December 31, 1996, the Company has an undiscounted reserve of
$771,000 to cover estimated future assessments (net of related
anticipated premium tax credits) and has established an asset
totaling $3,000 for assessments paid which may be recoverable
through future premium tax offsets. The Company believes this
reserve is sufficient to cover expected future insurance guaranty
fund assessments, based upon previous premium levels, and known
insolvencies at this time.
Litigation: In the ordinary course of business, the Company is
engaged in litigation, none of which management believes is
material.
Vulnerability from Concentrations: The Company has various
concentrations in its investment portfolio (see Note 3 for further
information). The Company's asset growth, net investment income and
cash flow are primarily generated from the sale of variable products
and associated future policy benefits and separate account
liabilities. A significant portion of the Company's sales are
generated by two broker/dealers. Substantial changes in tax laws
that would make these products less attractive to consumers, extreme
fluctuations in interest rates or stock market returns which may
result in higher lapse experience than assumed, could cause a severe
impact to the Company's financial condition.
Other Commitments: At December 31, 1996, outstanding commitments
to fund mortgage loans on real estate totaled $14,250,000.
90
<PAGE>
<PAGE>
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91
<PAGE>
<PAGE>
(This page has been intentionally left blank.)
92
<PAGE>
<PAGE>
____________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
____________________________________________________________________
TABLE OF CONTENTS
ITEM PAGE
Introduction . . . . . . . . . . . . . . . . 1
Description of Golden American Life
Insurance Company . . . . . . . . . . . . 1
Safekeeping of Assets . . . . . . . . . . . 1
The Administrator . . . . . . . . . . . . . 1
Independent Auditors . . . . . . . . . . . . 2
Distribution of Contracts . . . . . . . . . 2
Performance Information . . . . . . . . . . 3
IRA Partial Withdrawal Option . . . . . . . 9
Other Information . . . . . . . . . . . . . 9
Unaudited Financial Statements of Separate
Account B . . . . . . . . . . . . . . . . 10
Financial Statements of Separate Account B . 10
Financial Statements of The Managed Global
Account of Separate Account D . . . . . . 10
Appendix - Description of Bond Ratings . . . A-1
STATEMENT OF ADDITIONAL INFORMATION
____________________________________________________________________
Please tear off, complete and return the form below to order a free
statement of additional information for the contracts offered under
the prospectus. Address the form to our customer service center; the
address is shown on the cover.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Please send me a free copy of the Statement of Additional
Information for Separate Account B
PLEASE PRINT OR TYPE:
NAME: _________________________________________
SOCIAL SECURITY NUMBER: _________________________________________
STREET ADDRESS: _________________________________________
CITY, STATE, ZIP: _________________________________________
(IN 3306 DVA PLUS (2/98)
93
<PAGE>
<PAGE>
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<PAGE>
<PAGE>
APPENDIX A
MARKET VALUE ADJUSTMENT EXAMPLES
EXAMPLE #1: FULL SURRENDER -- EXAMPLE OF A NEGATIVE MARKET VALUE
ADJUSTMENT
Assume $100,000 was allocated to a Fixed Allocation with a
Guarantee Period of ten years, a Guaranteed Interest Rate of 7.50%,
an initial Index Rate ("I") of 7.00%; that a full surrender is
requested three years into the Guarantee Period; that the then Index
Rate for a seven year Guarantee Period ("J") is 8.0%; and that no
prior transfers or partial withdrawals affecting this Fixed
Allocation have been made.
CALCULATE THE MARKET VALUE ADJUSTMENT
1. The Accumulation Value of the Fixed Allocation on the date of
surrender is $124,230
( $100,000 X 1.075 ^ 3 )
2. N = 2,555 ( 365 X 7 )
3. Market Value Adjustment = $124,230 X
(( 1.07 / 1.0825 ) ^ ( 2,555 / 365 ) - 1 ) = $9,700
Therefore, the amount paid to you on full surrender is $114,530
( $124,230 - $9,700 ).
EXAMPLE #2: FULL SURRENDER -- EXAMPLE OF A POSITIVE MARKET VALUE
ADJUSTMENT
Assume $100,000 was allocated to a Fixed Allocation with a
Guarantee Period of ten years, a Guaranteed Interest Rate of 7.5%,
an initial Index Rate ("I") of 7.00%; that a full surrender is
requested three years into the Guarantee Period; that the then Index
Rate for a seven year Guarantee Period ("J") is 6.0%; and that no
prior transfers or partial withdrawals affecting this Fixed
Allocation have been made.
CALCULATE THE MARKET VALUE ADJUSTMENT
1. The Accumulation Value of the Fixed Allocation on the date of
surrender is $124,230
( $100,000 X 1.075 ^ 3 )
2. N = 2,555 ( 365 X 7 )
3. Market Value Adjustment = $124,230 X
(( 1.07 / 1.0625 ) ^ ( 2,555 / 365 ) - 1 ) = $6,270
Therefore, the amount paid to you on full surrender is $130,500
( $124,230 + $6,270 ).
EXAMPLE #3: PARTIAL WITHDRAWAL -- EXAMPLE OF A NEGATIVE MARKET VALUE
ADJUSTMENT
Assume $200,000 was allocated to a Fixed Allocation with a
Guarantee Period of ten years, a Guaranteed Interest Rate of 7.5%,
an initial Index Rate ("I") of 7.00%; that a partial withdrawal of
$114,530 is requested three years into the Guarantee period; that
the then Index Rate ("J") for a seven year Guarantee Period is 8.0%;
and that no prior transfers or partial withdrawals affecting this
Fixed Allocation have been made.
First calculate the amount that must be withdrawn from the Fixed
Allocation to provide the amount requested.
1. The Accumulation Value of the Fixed Allocation on the date of
withdrawal is $248,459
( $200,000 X 1.075 ^ 3 )
2. N = 2,555 ( 365 X 7 )
3. Amount that must be withdrawn =
(( $114,530 / ( 1.07 / 1.0825 ) ^ ( 2,555 / 365 )) = $124,230
Then calculate the Market Value Adjustment on that amount
4. Market Value Adjustment = $124,230 X
(( 1.07 / 1.0825 ) ^ ( 2,555 / 365 ) - 1 ) = $9,700
Therefore, the amount of the partial withdrawal paid to you is
$114,530, as requested. The Fixed Allocation will be reduced by the
amount of the partial withdrawal, $114,530, and also reduced by the
Market Value Adjustment of $9,700, for a total reduction in the
Fixed Allocation of $124,230.
A1
<PAGE>
<PAGE>
EXAMPLE #4: PARTIAL WITHDRAWAL -- EXAMPLE OF A POSITIVE MARKET VALUE
ADJUSTMENT
Assume $200,000 was allocated to a Fixed Allocation with a
Guarantee Period of ten years, a Guaranteed Interest Rate of 7.5%,
an initial Index Rate of 7.0%; that a partial withdrawal of $130,500
requested three years into the Guarantee Period; that the then Index
Rate ("J") for a seven year Guarantee Period is 6.0%; and that no
prior transfers or partial withdrawals affecting this Fixed
Allocation have been made.
First calculate the amount that must be withdrawn from the Fixed
Allocation to provide the amount requested.
1. The Accumulation Value of Fixed Allocation on the date of
surrender is $248,459
( $200,000 X 1.075 ^ 3 )
2. N = 2,555 ( 365 X 7 )
3. Amount that must be withdrawn =
(( $130,500 / ( 1.07 / 1.0625 ) ^ ( 2,555 / 365 )) = $124,230
Then calculate the Market Value Adjustment on that amount
4. Market Value Adjustment = $124,230 X
(( 1.07 / 1.0625 ) ^ ( 2,555 / 365 ) - 1 ) = $6,270
Therefore, the amount of the partial withdrawal paid to you is
$130,500, as requested. The Fixed Allocation will be reduced by the
amount of the partial withdrawal, $130,500, but increased by the
Market Value Adjustment of $6,270, for a total reduction in the
Fixed Allocation of $124,230.
A2
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Golden American Life Insurance Company is a
stock company domiciled in Wilmington, Delaware
IN 3306 DVA PLUS 2/98
<PAGE>
<PAGE>
<PAGE>
<PAGE>
PART B
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
GOLDENSELECT DVA PLUS
DEFERRED COMBINATION VARIABLE
AND FIXED ANNUITY CONTRACT
ISSUED BY
SEPARATE ACCOUNT B
("Account B")
(or the "Account")
OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. THE INFORMATION
CONTAINED HEREIN SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE
GOLDEN AMERICAN LIFE INSURANCE COMPANY DEFERRED VARIABLE ANNUITY CONTRACT
WHICH IS REFERRED TO HEREIN.
THE PROSPECTUS SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR OUGHT TO
KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, SEND A WRITTEN REQUEST TO
GOLDEN AMERICAN LIFE INSURANCE COMPANY, CUSTOMER SERVICE CENTER, P.O. BOX 8794,
WILMINGTON, DE 19899-8794 OR TELEPHONE 1-800-366-0066.
DATE OF PROSPECTUS AND
STATEMENT OF ADDITIONAL INFORMATION:
February 12, 1998
<PAGE>
<PAGE>
TABLE OF CONTENTS
ITEM PAGE
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Description of Golden American Life Insurance Company. . . . . . . 1
Safekeeping of Assets. . . . . . . . . . . . . . . . . . . . . . . 1
The Administrator. . . . . . . . . . . . . . . . . . . . . . . . . 1
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . 2
Distribution of Contracts. . . . . . . . . . . . . . . . . . . . . 2
Performance Information. . . . . . . . . . . . . . . . . . . . . . 3
IRA Partial Withdrawal Option. . . . . . . . . . . . . . . . . . . 9
Other Information. . . . . . . . . . . . . . . . . . . . . . . . . 9
Financial Statements of Separate Account B . . . . . . . . . . . . 10
Financial Statements of The Managed Global Account of Separate
Account D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Appendix - Description of Bond Ratings . . . . . . . . . . . . . . A-1
<PAGE>
<PAGE>
INTRODUCTION
This Statement of Additional Information provides background information
regarding Account B.
DESCRIPTION OF GOLDEN AMERICAN LIFE INSURANCE COMPANY
Golden American Life Insurance Company ("Golden American") is a stock
life insurance company organized under the laws of the State of Delaware.
Prior to December 30, 1993, Golden American was a Minnesota corporation.
From January 2, 1973 through December 31, 1987, the name of the company
was St. Paul Life Insurance Company. On December 31, 1987, after all of
St. Paul Life Insurance Company's business was sold, the name was changed
to Golden American. On March 7, 1988, all of the stock of Golden American
was acquired by The Golden Financial Group, Inc. ("GFG"), a financial
services holding company. On October 19, 1990, GFG merged with and into
MBL Variable, Inc. ("MBLV"), a wholly owned direct subsidiary of The
Mutual Benefit Life Insurance Company ("MBL"). On January 1, 1991, MBLV
became a wholly owned indirect subsidiary of MBL and Golden American
became a wholly owned direct subsidiary of MBL. Golden American's name
had been changed to MB Variable Life Insurance Company in the state of
Minnesota but subsequently has been changed back to Golden American.
In a transaction that closed on September 30, 1992, Golden American was
acquired by a subsidiary of Bankers Trust Company. On August 13, 1996,
Equitable of Iowa Companies acquired all of the interest in Golden
American and Directed Services, Inc. On October 24, 1997, Equitable of
Iowa Companies and ING Groep, N.V. ("ING") completed a
merger agreement with Equitable of Iowa becoming a wholly owned
subsidiary of ING. ING, headquartered in the Netherlands, is a
global financial services holding company with over $289 billion in
assets.
As of September 30, 1997, Golden American had approximately $143.6 million in
stockholder's equity and approximately $2.2 billion in total assets, including
approximately $1.5 billion of separate account assets. Golden American is
authorized to do business in all jurisdictions except New York. Golden
American offers variable annuities and variable life insurance. Golden
American has formed a subsidiary, First Golden American Life Insurance
Company of New York ("First Golden"), who currently writes variable
annuity business and will write variable life business in the state of
New York. The initial capitalization of First Golden was $25 million.
SAFEKEEPING OF ASSETS
Golden American acts as its own custodian for Account B.
THE ADMINISTRATOR
Effective January 1, 1994, Bankers Trust (Delaware), a subsidiary of
Bankers Trust New York Corporation, and Golden American became parties
to a service agreement pursuant to which Bankers Trust (Delaware)
agreed to provide certain accounting, actuarial, tax, underwriting,
sales, management and other services to Golden
1
<PAGE>
<PAGE>
American. Expenses
incurred by Bankers Trust (Delaware)in relation to this service agreement
were reimbursed by Golden American on an allocated cost basis. Charges
billed to Golden American by Bankers Trust (Delaware) pursuant to the
service agreement in 1996, 1995 and 1994 were $464,734, $749,741 and
$816,264, respectively.
Prior to 1994, Golden American had arranged with BT Variable, Inc. ("BT
Variable"), an affiliate, to perform services related to the development
and administration of its products. For the year 1993 and the period
from September 30, 1992 to December 31, 1992, fees earned by BT Variable
from Golden American for these services aggregated $2,701,000 and $209,000,
respectively. The agreement was terminated as of January 1, 1994.
In addition, BT Variable provided to Golden American certain of its
personnel to perform management, administrative and clerical services
and the use of certain of its facilities. BT Variable charged Golden
American for such expenses and all other general and administrative costs,
first on the basis of direct charges when identifiable, and second
allocated based on the estimated amount of time spent by BT Variable's
employees on behalf of Golden American. For the year 1993 and the period
from September 30, 1992 to December 31, 1992, BT Variable allocated to
Golden American $1,503,000 and $450,000, respectively. The agreement was
terminated on January 1, 1994.
INDEPENDENT AUDITORS
Ernst & Young LLP, 801 Grand Avenue, Des Moines, Iowa 50309, independent
auditors, will perform annual audits of Golden American and the Account.
DISTRIBUTION OF CONTRACTS
Prior to 1994, Golden American had entered into agreements with DSI to perform
services related to the management of its investments and the distribution
of its products. For the year 1993, Golden American incurred $311,000 for
such services. The agreement was terminated as of January 1, 1994.
DSI acts as the principal underwriter (as defined in the Securities Act of
1933 and the Investment Company Act of 1940, as amended) of the variable
insurance products issued by Golden American which, since December 31, 1994,
are sold primarily through two broker/dealer institutions. For the nine-month
period ended September 30, 1997 and for the years ended 1996, 1995 and 1994
commissions paid by Golden American to DSI aggregated $23,323,000,
$27,065,000, $8,440,000 and $17,569,000, respectively.
Golden American provided to DSI certain of its personnel to perform
management, administrative and clerical services and the use of certain
facilities. Golden American charged DSI for such expenses and all other
general and administrative costs,
2
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<PAGE>
first on the basis of direct charges when identifiable, and the remainder
allocated based on the estimated amount of time spent by Golden American's
employees on behalf of DSI. In the opinion of management, this method of
cost allocation is reasonable. In 1995, the service agreement between DSI
and Golden American was amended to provide for a management fee from DSI to
Golden American for managerial and supervisory services provided by Golden
American. This fee, calculated as a percentage of average assets in the
variable separate accounts, was $2,014,000, $2,267,000 and $987,000 for the
nine-month period ended September 30, 1997 and for the years ended 1996
and 1995, respectively.
PERFORMANCE INFORMATION
Performance information for the divisions of Account B, including the yield
and effective yield of the Liquid Asset Division, the yield of the remaining
divisions, and the total return of all divisions, may appear in reports or
promotional literature to current or prospective owners. Negative values are
denoted by minus signs ("-"). Performance information for measures other
than total return do not reflect sales load which can be a maximum level of
6.5% of premium, and any applicable premium tax that can range from 0% to
3.5%. As described in the prospectus, three death benefit options are
available. The following performance values reflect the election at issue
of the 7% Solution Enhanced Death Benefit Option providing values reflecting
the highest aggregate contract charges. If one of the other death benefit
options had been elected, the historical performance values would be higher
than those represented in the examples.
SEC STANDARD MONEY MARKET DIVISION YIELDS
Current yield for the Liquid Asset Division will be based on the change in
the value of a hypothetical investment (exclusive of capital changes) over a
particular 7-day period, less a pro-rata share of division expenses accrued
over that period (the "base period"), and stated as a percentage of the
investment at the start of the base period (the "base period return"). The
base period return is then annualized by multiplying by 365/7, with the
resulting yield figure carried to at least the nearest hundredth of one
percent. Calculation of "effective yield" begins with the same "base period
return" used in the calculation of yield, which is then annualized to reflect
weekly compounding pursuant to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN) +1) ^ (365/7)] - 1
The current yield and effective yield of the Liquid Asset Division for
the 7-day period September 23, 1997 to September 30, 1997 were 3.53% and
3.59%, respectively.
3
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<PAGE>
SEC STANDARD 30-DAY YIELD FOR NON-MONEY MARKET DIVISIONS
Quotations of yield for the remaining divisions will be based on all investment
income per Unit (accumulation value divided by the index of investment
experience) earned during a particular 30-day period, less expenses accrued
during the period ("net investment income"), and will be computed by dividing
net investment income by the valueof an accumulation unit on the last day of
the period, according to the following formula:
YIELD = 2 [ ( a - b +1)^(6) - 1]
-----
cd
Where:
[a] equals the net investment income earned during the
period by the Series attributable to shares owned by a
division
[b] equals the expenses accrued for the period (net of
reimbursements)
[c] equals the average daily number of Units outstanding
during the period based on the index of investment
experience
[d] equals the value (maximum offering price) per index of
investment experience on the last day of the period
Yield on divisions of Account B is earned from the increase in net asset
value of shares of the Series in which the Division invests and from
dividends declared and paid by the Series, which are automatically
reinvested in shares of the Series.
SEC STANDARD AVERAGE ANNUAL TOTAL RETURN FOR ALL DIVISIONS
Quotations of average annual total return for any division will be expressed
in terms of the average annual compounded rate of return of a hypothetical
investment in a contract over a period of one, five and 10 years (or, if less,
up to the life of the division), calculated pursuant to the formula:
P(1+T)^(n)=erv
Where:
(1) [P] equals a hypothetical initial premium payment of
$1,000
(2) [T] equals an average annual total return
(3) [n] equals the number of years
(4) [ERV] equals the ending redeemable value of a
hypothetical $1,000 initial premium payment made at the
beginning of the period (or fractional portion thereof)
4
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<PAGE>
All total return figures reflect the deduction of the maximum sales load, the
administrative charges, and the mortality and expense risk charges. The
Securities and Exchange Commission (the "SEC")
requires that an assumption be made that the contract owner surrenders the
entire contract at the end of the one, five and 10 year periods (or, if less,
up to the life of the security) for which performance is required to be
calculated. This assumption may not be consistent with the typical contract
owner's intentions in purchasing a contract and may adversely affect returns.
Quotations of total return may simultaneously be shown for other periods, as
well as quotations of total return that do not take into account certain
contractual charges such as sales load.
Average Annualized Total Return for the Divisions presented on a standardized
basis for the period ending September 30, 1997 were as follows:
<TABLE>
<CAPTION>
Average Annualized Total Return for Periods Ending 09/30/97 -- Standardized
- ----------------------------------------------------------------------------
One Year Period Five Year Period Inception to
Division Ending 09/30/97 Ending 09/30/97 09/30/97 Inception Date
- -------- --------------- ---------------- ------------ --------------
<S> <C> <C> <C> <C>
Multiple Allocation 13.20% 8.67%* 8.38%* 1/25/89
Fully Managed 10.94% 9.07%* 7.73%* 1/25/89
Capital Appreciation 24.74% 15.94% 15.03%* 5/4/92
Rising Dividends 21.57% N/A 16.55% 10/4/93
All-Growth 10.23% 4.98%* 4.95%* 1/25/89
Real Estate 34.88% 17.90%* 11.02%* 1/25/89
Hard Assets 25.33% 18.39%* 10.33%* 1/25/89
Value Equity 30.40% N/A 23.82% 1/1/95
Strategic Equity 18.81% N/A 15.38% 10/2/95
Small Cap 8.19% N/A 16.74% 1/2/96
Emerging Markets 0.14% N/A -0.05% 10/4/93
Managed Global ** 14.98% N/A 3.63%* 10/21/92
Limited Maturity Bond -1.74% 2.82%* 5.12%* 1/25/89
Liquid Assets -3.67% 2.05%* 3.48%* 1/25/89
OTC 14.06%* N/A 22.34%* 10/7/94
Total Return 15.50% N/A 14.60%* 10/7/94
Research 19.36% N/A 22.97%* 10/7/94
Growth & Income 28.92% N/A 31.86%* 4/1/96
Value + Growth 33.38% N/A 27.83%* 4/1/96
</TABLE>
- ----------------------
* Total return calculation reflects partial waiver of fees and expenses.
** From its inception date until September 3, 1996, the Managed Global
Account of Separate Account D was a registered management investment
company. On that date it was reorganized into two entities: the
Managed Global Division of Separate Account B and the Managed Global
Series of The GCG Trust. The historical performance of the Managed
Global Division remains unchanged by the reorganization.
5
<PAGE>
<PAGE>
NON-STANDARD AVERAGE ANNUAL TOTAL RETURN FOR ALL DIVISIONS
Quotations of non-standard average annual total return for any division will
be expressed in terms of the average annual compounded rate of return of a
hypothetical investment in a contract over a period of one, five and 10
years (or, if less, up to the life of the division), calculated pursuant to
the formula:
[P(1+T)^(n)]=ERV
Where:
(1) [P] equals a hypothetical initial premium payment of
$1,000
(2) [T] equals an average annual total return
(3) [n] equals the number of years
(4) [ERV] equals the ending redeemable value of a
hypothetical $1,000 initial premium payment made at the
beginning of the period (or fractional portion thereof)
assuming certain loading and charges are zero.
All total return figures reflect the deduction of the mortality and expense
risk charge and the administrative charges, but not the deduction of the
maximum sales load and the annual contract fee.
Average Annualized Total Return for the Divisions presented on a non-
standardized basis for the period ending September 30, 1997 were as follows:
<TABLE>
<CAPTION>
Average Annualized Total Return for Periods Ending 09/30/97 -- Non-Standardized
- -------------------------------------------------------------------------------
One Year Period Five Year Period Inception to
Division Ending 09/30/97 Ending 09/30/97 09/30/97 Inception Date
- -------- --------------- ---------------- ------------ --------------
<S> <C> <C> <C> <C>
Multiple Allocation 20.28% 9.15%* 8.42%* 1/25/89
Fully Managed 18.02% 9.55%* 7.77%* 1/25/89
Capital Appreciation 31.82% 16.31% 15.37%* 5/4/92
Rising Dividends 28.65% N/A 17.54% 10/4/93
All-Growth 17.30% 5.54%* 5.01%* 1/25/89
Real Estate 41.95% 18.25%* 11.05%* 1/25/89
Hard Assets 32.41% 18.73%* 10.36%* 1/25/89
Value Equity 37.48% N/A 25.35% 1/1/95
Strategic Equity 25.89% N/A 18.45% 10/2/95
Small Cap 15.27 N/A 20.32% 1/2/96
Emerging Markets 7.22% N/A 1.50% 10/4/93
Managed Global ** 22.06%* N/A 4.39%* 10/21/92
Limited Maturity Bond 5.34% 3.42%* 5.17%* 1/25/89
Liquid Assets 3.41% 2.67%* 3.54%* 1/25/89
OTC 21.14%* N/A 23.73%* 10/7/94
Total Return 22.58% N/A 16.18%* 10/7/94
Research 26.44% N/A 24.35%* 10/7/94
Growth & Income 36.00% N/A 35.94%* 4/1/96
Value Growth 40.46% N/A 31.98%* 4/1/96
- --------------------------------------------------------------------------------------------
</TABLE>
* Total return calculation reflects partial waiver of fees and expenses.
** From its inception date until September 3, 1996, the Managed Global
Account of Separate Account D was a registered management investment
company. On that date it was reorganized into two entities: the
Managed Global Division of Separate Account B and the Managed Global
Series of The GCG Trust. The historical performance of the Managed
Global Division remains unchanged by the reorganization.
6
<PAGE>
<PAGE>
Performance information for a division may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P
500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market
Institutional Averages, or other indices that measure performance of a
pertinent group of securities so that investors may compare a division's
results with those of a group of securities widely regarded by investors
as representative of the securities markets in general; (ii) other groups
of variable annuity separate accounts or other investment products tracked
by Lipper Analytical Services, a widely used independent research firm which
ranks mutual funds and other investment companies by overall performance,
investment objectives, and assets, or tracked by other services, companies,
publications, or persons who rank such investment companies on overall
performance or other criteria; and (iii) the Consumer Price Index (measure for
inflation) to assess the real rate of return from an investment in the
contract. Unmanaged indices may assume the reinvestment of dividends but
generally do not reflect deductions for administrative and management costs
and expenses.
Performance information for any division reflects only the performance of a
hypothetical contract under which accumulation value is allocated to a
division during a particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the portfolio of the
Series of the Trust in which the Account B divisions invest, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future.
Reports and promotional literature may also contain other information
including the ranking of any division derived from rankings of variable
annuity separate accounts or other investment products tracked by Lipper
Analytical Services or by other rating services, companies, publications, or
other persons who rank separate accounts or other investment products on
overall performance or other criteria.
PUBLISHED RATINGS
From time to time, the rating of Golden American as an insurance company by
A.M. Best may be referred to in advertisements or in reports to contract
owners. Each year the A.M. Best Company reviews the financial status of
thousands of insurers,
7
<PAGE>
<PAGE>
culminating in the assignment of Best's Ratings. These
ratings reflect their current opinion of the relative financial strength and
operating performance of an insurance company in comparison to the norms of
the life/health insurance industry. Best's ratings range from A+ + to F. An
A++ and A+ ratings mean, in the opinion of A.M. Best, that the insurer has
demonstrated the strongest ability to meet its respective policyholder and
other contractual obligations.
INDEX OF INVESTMENT EXPERIENCE
The calculation of the Index of Investment Experience ("IIE") is discussed in
the prospectus for the Contracts under Measurement of Investment Experience.
The following illustrations show a calculation of a new IIE and the purchase
of Units (using hypothetical examples). Note that the examples below are
calculated for a Contract issued with the 7% Solution Enhanced Death Benefit
Option, the death benefit option with the highest mortality and expense risk
charge. The mortality and expense risk charge associated with the Annual
Ratchet Enhanced Death Benefit Option and the Standard Death Benefit are lower
than that used in the examples and would result in higher IIE's or
Accumulation Values.
<TABLE>
<CAPTION>
<S> <C>
1. IIE, beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.00
2. Value of securities, beginning of period. . . . . . . . . . . . . . . . . . $ 10.00
3. Change in value of securities . . . . . . . . . . . . . . . . . . . . . . . $ 0.10
4. Gross investment return (3) divided by (2). . . . . . . . . . . . . . . . . 0.01
5. Less daily mortality and expense charge . . . . . . . . . . . . . . . . . . 0.00003863
6. Less asset based administrative charge. . . . . . . . . . . . . . . . . . . 0.00000411
7. Net investment return (4) minus (5) minus (6) . . . . . . . . . . . . . . . 0.00995726
8. Net investment factor (1.000000) plus (7) . . . . . . . . . . . . . . . . . 1.00995726
9. IIE, end of period (1) multiplied by (8). . . . . . . . . . . . . . . . . . $ 10.09957261
ILLUSTRATION OF PURCHASE OF UNITS (ASSUMING NO STATE PREMIUM TAX)
Example 2.
1. Initial Premium Payment . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000
2. IIE on effective date of purchase (see Example 1) . . . . . . . . . . . . . $ 10.00
3. Number of Units purchased [(1) divided by (2)] . . . . . . . . . . . . . . 100
4. IIE for valuation date following purchase
(see Example 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.09957261
5. Accumulation Value in account for valuation date following
purchase [(3) multiplied by (4)]. . . . . . . . . . . . . . . . . . . . . . $ 1,009.96
</TABLE>
8
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<PAGE>
IRA PARTIAL WITHDRAWAL OPTION
If the contract owner has an IRA contract and will attain age 70 1/2 in the
current calendar year, distributions will be made in accordance with the
requirements of Federal tax law. This option is available to assure that the
required minimum distributions from qualified plans under the Internal Revenue
Code (the "Code") are made. Under the Code, distributions must begin no later
than April 1st of the calendar year following the calendar year in which the
contract owner attains age 70 1/2. If the required minimum distribution is
not withdrawn, there may be a penalty tax in an amount equal to 50% of the
difference between the amount required to be withdrawn and the amount actually
withdrawn. Even if the IRA Partial Withdrawal Option is not elected,
distributions must nonetheless be made in accordance with the requirements of
Federal tax law.
Golden American notifies the contract owner of these regulations with a letter
mailed on January 1st of the calendar year in which the contract owner reaches
age 70 1/2 which explains the IRA Partial Withdrawal Option and supplies an
election form. If electing this option, the owner specifies whether the
withdrawal amount will be based on a life expectancy calculated on a single
life basis (contract owner's life only) or, if the contract owner is married,
on a joint life basis (contract owner's and spouse's lives combined). The
contract owner selects the payment mode on a monthly, quarterly or annual
basis. If the payment mode selected on the election form is more frequent
than annually, the payments in the first calendar year in which the option is
in effect will be based on the amount of payment modes remaining when Golden
American receives the completed election form. Golden American calculates the
IRA Partial Withdrawal amount each year based on the minimum distribution
rules. We do this by dividing the accumulation value by the life expectancy.
In the first year withdrawals begin, we use the accumulation value as of the
date of the first payment. Thereafter, we use the accumulation value on
December 31st of each year. The life expectancy is recalculated each year.
Certain minimum distribution rules govern payouts if the designated beneficiary
is other than the contract owner's spouse and the beneficiary is more than ten
years younger than the contract owner.
OTHER INFORMATION
Registration statements have been filed with the SEC under the Securities
Act of 1933, as amended, with respect to the Contracts discussed in this
Statement of Additional Information. Not all of the information set forth
in the registration statements, amendments and exhibits thereto has been
included in this Statement of Additional Information. Statements contained
in this Statement of Additional Information concerning the content of the
Contracts and other legal instruments are intended to be summaries. For
a complete statement of the terms of these documents, reference should be
made to the instruments filed with the SEC.
9
<PAGE>
<PAGE>
FINANCIAL STATEMENTS OF SEPARATE ACCOUNT B
The unaudited financial statements of Separate Account B are listed below and
are included in this Statement of Additional Information:
Unaudited Financial Statements
Statement of Assets and Liability as of September 30, 1997
Statements of Operations for the period ended
September 30, 1997
Statements of Changes in Net Assets for the Year Ended
December 31, 1996 and for the nine-month period
ended September 30, 1997
Notes to Financial Statements
The audited financial statements of Separate Account B are listed below and
are included in this Statement of Additional Information:
Report of Independent Auditors
Audited Financial Statements
Statement of Assets and Liability as of December 31, 1996
Statements of Operations for the Year ended December 31, 1996
Statements of Changes in Net Assets for the Years Ended
December 31, 1995 and 1996
Notes to Financial Statements
FINANCIAL STATEMENTS OF
THE MANAGED GLOBAL ACCOUNT OF SEPARATE ACCOUNT D
Since the Managed Global Account of Separate Account D is the Accounting
predecessor of the Managed Global Divison of Accuout B, the audited financial
statements of The Managed Global Account of Separate Account D listed below
appear in the Annual Report of The Managed Global Account of Separate Account
D which was filed with the SEC and are included in this Statement of Additional
Information:
Report of Independent Auditors
Financial Statements -- Audited
Statement of Assets and Liability as of December 31, 1995
Statements of Operations for the Year Ended December 31, 1995
Statements of Changes in Net Assets for the Years Ended
December 31, 1995 and 1994
Statement of Investments as of December 31, 1995
Notes to Audited Financial Statements
10
<PAGE>
<PAGE>
Financial Statements
Golden American Life Insurance Company
Separate Account B (Unaudited)
Periods ended September 30, 1997 and December 31, 1996
Golden American Life Insurance Company
Separate Account B
Financial Statements
Periods ended September 30, 1997 and December 31, 1996
CONTENTS
Unaudited Financial Statements
Statement of Assets and Liability
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF ASSETS AND LIABILITY (Unaudited)
SEPTEMBER 30, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
____________
<S> <C>
NET ASSETS
Investments at net asset value:
The GCG Trust:
Liquid Asset Series,
46,785,860 shares (cost - $46,786) $46,786
Limited Maturity Bond Series,
4,625,301 shares (cost - $48,941) 50,000
Hard Assets Series,
2,474,347 shares (cost - $42,279) 52,976
All-Growth Series,
5,058,608 shares (cost - $66,545) 77,296
Real Estate Series,
3,740,333 shares (cost - $50,896) 71,216
Fully Managed Series,
9,228,767 shares (cost - $123,853) 152,274
Multiple Allocation Series,
19,199,214 shares (cost - $235,340) 271,668
Capital Appreciation Series,
9,560,636 shares (cost - $127,704) 181,079
Rising Dividends Series,
9,631,290 shares (cost - $130,992) 187,617
Emerging Markets Series,
3,999,124 shares (cost - $41,322) 43,032
Market Manager Series,
397,710 shares (cost - $4,149) 6,944
Value Equity Series,
3,833,190 shares (cost - $53,515) 68,499
Strategic Equity Series,
3,194,661 shares (cost - $35,789) 44,342
Small Cap Series,
3,535,901 shares (cost - $41,374) 50,174
Managed Global Series,
8,473,864 shares (cost - $92,448) 110,923
Equi-Select Series Trust:
OTC Portfolio,
838,801 shares (cost - $12,139) 14,033
Growth & Income Portfolio,
1,839,743 shares (cost - $24,141) 29,617
Research Portfolio,
1,052,359 shares (cost - $18,216) 19,745
Total Return Portfolio,
787,663 shares (cost - $11,544) 12,152
Value + Growth Portfolio,
840,450 shares (cost - $12,001) 12,904
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF ASSETS AND LIABILITY (Unaudited)
SEPTEMBER 30, 1997
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
____________
<S> <C>
NET ASSETS - CONTINUED
Investments at net asset value:
Smith Barney Series Fund:
Appreciation Portfolio,
5,883 shares (cost - $112) $115
Travelers Series Fund Inc.:
Smith Barney High Income Portfolio,
5,215 shares (cost - $68) 69
Smith Barney Income & Growth Portfolio,
4,470 shares (cost - $82) 83
Smith Barney International Equity Portfolio,
431 shares (cost - $6) 6
Smith Barney Money Market Portfolio,
10,116 shares (cost - $10) 10
____________
TOTAL ASSETS (cost - $1,220,252) 1,503,560
LIABILITY
Payable to Golden American Life Insurance Company 994
____________
TOTAL NET ASSETS $1,502,566
============
NET ASSETS
For Variable Annuity Insurance Contracts $1,483,148
Retained in Separate Account B by Golden American
Life Insurance Company 19,418
____________
TOTAL NET ASSETS $1,502,566
============
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS (Unaudited)
For the period ended September 30, 1997, Except as Noted
(Dollars in thousands)
<TABLE>
<CAPTION>
Limited
Liquid Maturity Hard
Asset Bond Assets
Division Division Division
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $1,630 $565 $528
Capital gains distributions -- -- 618
________________________________
TOTAL INVESTMENT INCOME 1,630 565 1,146
Expenses:
Mortality and expense risk and other charges (373) (419) (384)
Annual administrative charges (15) (14) (17)
Minimum death benefit guarantee charges (5) (1) (3)
Contingent deferred sales charges (243) (30) (34)
Other contract charges (6) -- (5)
Amortization of deferred charges related to:
Deferred sales load (402) (425) (236)
Premium taxes (2) (6) (4)
________________________________
TOTAL EXPENSES BEFORE WAIVER (1,046) (895) (683)
Fees waived by Golden American 5 11 7
________________________________
NET EXPENSES (1,041) (884) (676)
________________________________
NET INVESTMENT INCOME (LOSS) 589 (319) 470
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments -- 32 1,985
Net unrealized appreciation of investments -- 1,824 6,693
________________________________
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $589 $1,537 $9,148
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS (Unaudited)
For the period ended September 30, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
All- Real Fully
Growth Estate Managed
Division Division Division
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $163 $420 $1,094
Capital gains distributions -- 545 1,600
________________________________
TOTAL INVESTMENT INCOME 163 965 2,694
Expenses:
Mortality and expense risk and other charges (601) (499) (1,188)
Annual administrative charges (28) (22) (54)
Minimum death benefit guarantee charges (1) (2) (2)
Contingent deferred sales charges (31) (30) (61)
Other contract charges (1) (3) (4)
Amortization of deferred charges related to:
Deferred sales load (518) (285) (905)
Premium taxes (14) (5) (22)
________________________________
TOTAL EXPENSES BEFORE WAIVER (1,194) (846) (2,236)
Fees waived by Golden American 17 8 28
________________________________
NET EXPENSES (1,177) (838) (2,208)
________________________________
NET INVESTMENT INCOME (LOSS) (1,014) 127 486
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 283 1,660 1,961
Net unrealized appreciation of investments 9,308 9,305 13,596
________________________________
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $8,577 $11,092 $16,043
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS (Unaudited)
For the period ended September 30, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Multiple Capital
Alloca- Apprecia- Rising
tion tion Dividends
Division Division Division
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $3,505 $755 $204
Capital gains distributions 1,963 1,595 188
________________________________
TOTAL INVESTMENT INCOME 5,468 2,350 392
Expenses:
Mortality and expense risk and other charges (2,102) (1,333) (1,389)
Annual administrative charges (104) (61) (65)
Minimum death benefit guarantee charges (10) (1) (3)
Contingent deferred sales charges (55) (67) (115)
Other contract charges (9) (6) (9)
Amortization of deferred charges related to:
Deferred sales load (2,008) (999) (750)
Premium taxes (40) (34) (9)
________________________________
TOTAL EXPENSES BEFORE WAIVER (4,328) (2,501) (2,340)
Fees waived by Golden American 42 35 24
________________________________
NET EXPENSES (4,286) (2,466) (2,316)
________________________________
NET INVESTMENT INCOME (LOSS) 1,182 (116) (1,924)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 4,112 6,386 3,006
Net unrealized appreciation of investments 30,952 30,731 28,876
________________________________
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $36,246 $37,001 $29,958
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS (Unaudited)
For the period ended September 30, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Emerging Market Value
Markets Manager Equity
Division Division Division
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $42 -- $431
Capital gains distributions -- -- 102
________________________________
TOTAL INVESTMENT INCOME 42 -- 533
Expenses:
Mortality and expense risk and other charges (359) -- (511)
Annual administrative charges (16) ($1) (25)
Minimum death benefit guarantee charges (1) -- (1)
Contingent deferred sales charges (25) -- (47)
Other contract charges (2) -- (1)
Amortization of deferred charges related to:
Deferred sales load (274) (32) (197)
Premium taxes (4) -- (2)
________________________________
TOTAL EXPENSES BEFORE WAIVER (681) (33) (784)
Fees waived by Golden American 5 -- 6
________________________________
NET EXPENSES (676) (33) (778)
________________________________
NET INVESTMENT INCOME (LOSS) (634) (33) (245)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments (275) 135 835
Net unrealized appreciation of investments 4,255 1,607 12,513
________________________________
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $3,346 $1,709 $13,103
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS (Unaudited)
For the period ended September 30, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Strategic Small Managed
Equity Cap Global
Division Division Division
_________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $575 -- $1,501
Capital gains distributions 58 -- --
_________________________________
TOTAL INVESTMENT INCOME 633 -- 1,501
Expenses:
Mortality and expense risk and other charges (360) ($383) (834)
Annual administrative charges (13) (19) (36)
Minimum death benefit guarantee charges (1) (1) (1)
Contingent deferred sales charges (116) (35) (50)
Other contract charges (1) (3) (3)
Amortization of deferred charges related to:
Deferred sales load (88) (98) (535)
Premium taxes (1) (1) (12)
_________________________________
TOTAL EXPENSES BEFORE WAIVER (580) (540) (1,471)
Fees waived by Golden American 7 4 13
_________________________________
NET EXPENSES (573) (536) (1,458)
_________________________________
NET INVESTMENT INCOME (LOSS) 60 (536) 43
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 983 (450) 1,693
Net unrealized appreciation of investments 5,878 8,126 14,056
_________________________________
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $6,921 $7,140 $15,792
=================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS (Unaudited)
For the period ended September 30, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Growth & Research
OTC Income Division
Division Division (b)
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $89 $138 $39
Capital gains distributions -- -- 39
________________________________
TOTAL INVESTMENT INCOME 89 138 78
Expenses:
Mortality and expense risk and other charges (86) (179) (67)
Annual administrative charges (6) (12) (10)
Minimum death benefit guarantee charges -- -- --
Contingent deferred sales charges (7) (11) (1)
Other contract charges (1) (1) --
Amortization of deferred charges related to:
Deferred sales load (27) (58) (10)
Premium taxes -- (1) --
________________________________
TOTAL EXPENSES BEFORE WAIVER (127) (262) (88)
Fees waived by Golden American 1 3 --
________________________________
NET EXPENSES (126) (259) (88)
________________________________
NET INVESTMENT INCOME (LOSS) (37) (121) (10)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments (21) 97 (3)
Net unrealized appreciation of investments 2,019 5,207 1,529
________________________________
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,961 $5,183 $1,516
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS (Unaudited)
For the period ended September 30, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Total Value + Appre-
Return Growth ciation
Division Division Division
(a) (b) (c)
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $13 $3 --
Capital gains distributions 10 -- --
________________________________
TOTAL INVESTMENT INCOME 23 3 --
Expenses:
Mortality and expense risk and other charges (41) (40) --
Annual administrative charges (6) (6) --
Minimum death benefit guarantee charges -- (1) --
Contingent deferred sales charges (2) -- --
Other contract charges -- -- --
Amortization of deferred charges related to:
Deferred sales load (11) (16) --
Premium taxes -- -- --
________________________________
TOTAL EXPENSES BEFORE WAIVER (60) (63) --
Fees waived by Golden American -- -- --
________________________________
NET EXPENSES (60) (63) --
________________________________
NET INVESTMENT INCOME (LOSS) (37) (60) --
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 18 394 --
Net unrealized appreciation of investments 608 903 $3
________________________________
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $589 $1,237 $3
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS (Unaudited)
For the period ended September 30, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Inter-
High Income & national
Income Growth Equity
Division Division Division
(c) (c) (d)
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends -- -- --
Capital gains distributions -- -- --
________________________________
TOTAL INVESTMENT INCOME -- -- --
Expenses:
Mortality and expense risk and other charges -- -- --
Annual administrative charges -- -- --
Minimum death benefit guarantee charges -- -- --
Contingent deferred sales charges -- -- --
Other contract charges -- -- --
Amortization of deferred charges related to:
Deferred sales load -- -- --
Premium taxes -- -- --
________________________________
TOTAL EXPENSES BEFORE WAIVER -- -- --
Fees waived by Golden American -- -- --
________________________________
NET EXPENSES -- -- --
________________________________
NET INVESTMENT INCOME (LOSS) -- -- --
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments -- -- --
Net unrealized appreciation of investments $1 $1 --
________________________________
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1 $1 --
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS (Unaudited)
For the period ended September 30, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Money
Market
Division
(e) Combined
______________________
<S> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends -- $11,695
Capital gains distributions -- 6,718
______________________
TOTAL INVESTMENT INCOME -- 18,413
Expenses:
Mortality and expense risk and other charges -- (11,148)
Annual administrative charges -- (530)
Minimum death benefit guarantee charges -- (34)
Contingent deferred sales charges -- (960)
Other contract charges -- (55)
Amortization of deferred charges related to:
Deferred sales load -- (7,874)
Premium taxes -- (157)
______________________
TOTAL EXPENSES BEFORE WAIVER -- (20,758)
Fees waived by Golden American -- 216
______________________
NET EXPENSES -- (20,542)
______________________
NET INVESTMENT INCOME (LOSS) -- (2,129)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments -- 22,831
Net unrealized appreciation of investments -- 187,991
______________________
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS -- $208,693
======================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted
(Dollars in thousands)
<TABLE>
<CAPTION>
Liquid
Asset
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $36,491
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 730
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations 730
Changes from principal transactions:
Purchase payments 14,178
Contract distributions and terminations (15,313)
Transfer payments from (to) Fixed Accounts and other Divisions 1,242
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 148
__________
Increase (decrease) in net assets derived from principal
transactions 255
__________
Total increase (decrease) 985
__________
NET ASSETS AT DECEMBER 31, 1996 37,476
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Liquid
Asset
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $589
Net realized gain (loss) on investments --
Net unrealized appreciation of investments --
__________
Net increase in net assets resulting from operations 589
Changes from principal transactions:
Purchase payments 10,967
Contract distributions and terminations (14,880)
Transfer payments from (to) Fixed Accounts and other Divisions 12,427
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 189
__________
Increase (decrease) in net assets derived from principal
transactions 8,703
__________
Total increase (decrease) 9,292
__________
NET ASSETS AT SEPTEMBER 30, 1997 $46,768
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Limited
Maturity
Bond
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $67,837
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 4,507
Net realized gain (loss) on investments 314
Net unrealized appreciation (depreciation) of investments (3,831)
__________
Net increase (decrease) in net assets resulting from operations 990
Changes from principal transactions:
Purchase payments 5,869
Contract distributions and terminations (9,672)
Transfer payments from (to) Fixed Accounts and other Divisions (10,189)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (501)
__________
Increase (decrease) in net assets derived from principal
transactions (14,493)
__________
Total increase (decrease) (13,503)
__________
NET ASSETS AT DECEMBER 31, 1996 54,334
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Limited
Maturity
Bond
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($319)
Net realized gain (loss) on investments 32
Net unrealized appreciation of investments 1,824
__________
Net increase in net assets resulting from operations 1,537
Changes from principal transactions:
Purchase payments 2,986
Contract distributions and terminations (6,248)
Transfer payments from (to) Fixed Accounts and other Divisions (2,605)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (25)
__________
Increase (decrease) in net assets derived from principal
transactions (5,892)
__________
Total increase (decrease) (4,355)
__________
NET ASSETS AT SEPTEMBER 30, 1997 $49,979
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Hard
Assets
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $26,990
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 3,916
Net realized gain (loss) on investments 2,353
Net unrealized appreciation (depreciation) of investments 2,704
__________
Net increase (decrease) in net assets resulting from operations 8,973
Changes from principal transactions:
Purchase payments 6,154
Contract distributions and terminations (4,962)
Transfer payments from (to) Fixed Accounts and other Divisions 5,904
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 242
__________
Increase (decrease) in net assets derived from principal
transactions 7,338
__________
Total increase (decrease) 16,311
__________
NET ASSETS AT DECEMBER 31, 1996 43,301
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Hard
Assets
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $470
Net realized gain (loss) on investments 1,985
Net unrealized appreciation of investments 6,693
__________
Net increase in net assets resulting from operations 9,148
Changes from principal transactions:
Purchase payments 4,677
Contract distributions and terminations (4,453)
Transfer payments from (to) Fixed Accounts and other Divisions 268
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 10
__________
Increase (decrease) in net assets derived from principal
transactions 502
__________
Total increase (decrease) 9,650
__________
NET ASSETS AT SEPTEMBER 30, 1997 $52,951
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
All-Growth
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $91,956
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (150)
Net realized gain (loss) on investments 2,112
Net unrealized appreciation (depreciation) of investments (4,894)
__________
Net increase (decrease) in net assets resulting from operations (2,932)
Changes from principal transactions:
Purchase payments 10,539
Contract distributions and terminations (12,597)
Transfer payments from (to) Fixed Accounts and other Divisions (9,493)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (631)
__________
Increase (decrease) in net assets derived from principal
transactions (12,182)
__________
Total increase (decrease) (15,114)
__________
NET ASSETS AT DECEMBER 31, 1996 76,842
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
All-Growth
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($1,014)
Net realized gain (loss) on investments 283
Net unrealized appreciation of investments 9,308
__________
Net increase in net assets resulting from operations 8,577
Changes from principal transactions:
Purchase payments 4,309
Contract distributions and terminations (8,198)
Transfer payments from (to) Fixed Accounts and other Divisions (4,211)
Addition to (rellocation from) assets retained in the Account
by Golden American Life Insurance Company (61)
__________
Increase (decrease) in net assets derived from principal
transactions (8,161)
__________
Total increase (decrease) 416
__________
NET ASSETS AT SEPTEMBER 30, 1997 $77,258
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Real
Estate
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $34,813
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 2,214
Net realized gain (loss) on investments 652
Net unrealized appreciation (depreciation) of investments 8,605
__________
Net increase (decrease) in net assets resulting from operations 11,471
Changes from principal transactions:
Purchase payments 5,981
Contract distributions and terminations (4,775)
Transfer payments from (to) Fixed Accounts and other Divisions 3,076
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 115
__________
Increase (decrease) in net assets derived from principal
transactions 4,397
__________
Total increase (decrease) 15,868
__________
NET ASSETS AT DECEMBER 31, 1996 50,681
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Real
Estate
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $127
Net realized gain (loss) on investments 1,660
Net unrealized appreciation of investments 9,305
__________
Net increase in net assets resulting from operations 11,092
Changes from principal transactions:
Purchase payments 9,414
Contract distributions and terminations (3,981)
Transfer payments from (to) Fixed Accounts and other Divisions 3,906
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 76
__________
Increase (decrease) in net assets derived from principal
transactions 9,415
__________
Total increase (decrease) 20,507
__________
NET ASSETS AT SEPTEMBER 30, 1997 $71,188
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Fully
Managed
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $117,327
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 7,463
Net realized gain (loss) on investments 2,245
Net unrealized appreciation (depreciation) of investments 6,614
__________
Net increase (decrease) in net assets resulting from operations 16,322
Changes from principal transactions:
Purchase payments 16,217
Contract distributions and terminations (17,846)
Transfer payments from (to) Fixed Accounts and other Divisions 2,478
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (67)
__________
Increase (decrease) in net assets derived from principal
transactions 782
__________
Total increase (decrease) 17,104
__________
NET ASSETS AT DECEMBER 31, 1996 134,431
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Fully
Managed
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $486
Net realized gain (loss) on investments 1,961
Net unrealized appreciation of investments 13,596
__________
Net increase in net assets resulting from operations 16,043
Changes from principal transactions:
Purchase payments 10,961
Contract distributions and terminations (13,380)
Transfer payments from (to) Fixed Accounts and other Divisions 4,039
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 111
__________
Increase (decrease) in net assets derived from principal
transactions 1,731
__________
Total increase (decrease) 17,774
__________
NET ASSETS AT SEPTEMBER 30, 1997 $152,205
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Multiple
Allocation
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $305,502
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 18,091
Net realized gain (loss) on investments 6,043
Net unrealized appreciation (depreciation) of investments (7,108)
__________
Net increase (decrease) in net assets resulting from operations 17,026
Changes from principal transactions:
Purchase payments 16,631
Contract distributions and terminations (44,014)
Transfer payments from (to) Fixed Accounts and other Divisions (23,461)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (1,257)
__________
Increase (decrease) in net assets derived from principal
transactions (52,101)
__________
Total increase (decrease) (35,075)
__________
NET ASSETS AT DECEMBER 31, 1996 270,427
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Multiple
Allocation
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $1,182
Net realized gain (loss) on investments 4,112
Net unrealized appreciation of investments 30,952
__________
Net increase in net assets resulting from operations 36,246
Changes from principal transactions:
Purchase payments 5,261
Contract distributions and terminations (31,395)
Transfer payments from (to) Fixed Accounts and other Divisions (9,122)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 112
__________
Increase (decrease) in net assets derived from principal
transactions (35,144)
__________
Total increase (decrease) 1,102
__________
NET ASSETS AT SEPTEMBER 30, 1997 $271,529
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Capital
Appreciation
Division
____________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $121,049
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 7,757
Net realized gain (loss) on investments 4,853
Net unrealized appreciation (depreciation) of investments 8,839
____________
Net increase (decrease) in net assets resulting from operations 21,449
Changes from principal transactions:
Purchase payments 16,081
Contract distributions and terminations (16,095)
Transfer payments from (to) Fixed Accounts and other Divisions 3,299
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 206
____________
Increase (decrease) in net assets derived from principal
transactions 3,491
____________
Total increase (decrease) 24,940
____________
NET ASSETS AT DECEMBER 31, 1996 145,989
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Capital
Appreciation
Division
____________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($116)
Net realized gain (loss) on investments 6,386
Net unrealized appreciation of investments 30,731
____________
Net increase in net assets resulting from operations 37,001
Changes from principal transactions:
Purchase payments 10,152
Contract distributions and terminations (15,355)
Transfer payments from (to) Fixed Accounts and other Divisions 2,986
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 229
____________
Increase (decrease) in net assets derived from principal
transactions (1,988)
____________
Total increase (decrease) 35,013
____________
NET ASSETS AT SEPTEMBER 30, 1997 $181,002
============
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Rising
Dividends
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $80,342
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (455)
Net realized gain (loss) on investments 4,125
Net unrealized appreciation (depreciation) of investments 12,317
__________
Net increase (decrease) in net assets resulting from operations 15,987
Changes from principal transactions:
Purchase payments 25,572
Contract distributions and terminations (12,639)
Transfer payments from (to) Fixed Accounts and other Divisions 13,857
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 454
__________
Increase (decrease) in net assets derived from principal
transactions 27,244
__________
Total increase (decrease) 43,231
__________
NET ASSETS AT DECEMBER 31, 1996 123,573
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Rising
Dividends
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($1,924)
Net realized gain (loss) on investments 3,006
Net unrealized appreciation of investments 28,876
__________
Net increase in net assets resulting from operations 29,958
Changes from principal transactions:
Purchase payments 27,280
Contract distributions and terminations (12,873)
Transfer payments from (to) Fixed Accounts and other Divisions 19,331
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 267
__________
Increase (decrease) in net assets derived from principal
transactions 34,005
__________
Total increase (decrease) 63,963
__________
NET ASSETS AT SEPTEMBER 30, 1997 $187,536
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Emerging
Markets
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $36,887
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (998)
Net realized gain (loss) on investments (2,959)
Net unrealized appreciation (depreciation) of investments 5,674
__________
Net increase in net assets resulting from operations 1,717
Changes from principal transactions:
Purchase payments 6,432
Contract distributions and terminations (6,450)
Transfer payments from (to) Fixed Accounts and other Divisions (1,273)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (160)
__________
Increase (decrease) in net assets derived from principal
transactions (1,451)
__________
Total increase (decrease) 266
__________
NET ASSETS AT DECEMBER 31, 1996 37,153
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Emerging
Markets
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($634)
Net realized gain (loss) on investments (275)
Net unrealized appreciation of investments 4,255
__________
Net increase in net assets resulting from operations 3,346
Changes from principal transactions:
Purchase payments 4,548
Contract distributions and terminations (4,285)
Transfer payments from (to) Fixed Accounts and other Divisions 2,268
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (20)
__________
Increase (decrease) in net assets derived from principal
transactions 2,511
__________
Total increase (decrease) 5,857
__________
NET ASSETS AT SEPTEMBER 30, 1997 $43,010
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Market
Manager
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $5,206
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 396
Net realized gain (loss) on investments 327
Net unrealized appreciation (depreciation) of investments 245
__________
Net increase (decrease) in net assets resulting from operations 968
Changes from principal transactions:
Purchase payments (111)
Contract distributions and terminations (383)
Transfer payments from (to) Fixed Accounts and other Divisions (187)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (14)
__________
Increase (decrease) in net assets derived from principal
transactions (695)
__________
Total increase (decrease) 273
__________
NET ASSETS AT DECEMBER 31, 1996 5,479
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Market
Manager
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($33)
Net realized gain (loss) on investments 135
Net unrealized appreciation of investments 1,607
__________
Net increase in net assets resulting from operations 1,709
Changes from principal transactions:
Purchase payments (46)
Contract distributions and terminations (179)
Transfer payments from (to) Fixed Accounts and other Divisions (277)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 10
__________
Increase (decrease) in net assets derived from principal
transactions (492)
__________
Total increase (decrease) 1,217
__________
NET ASSETS AT SEPTEMBER 30, 1997 $6,696
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Value
Equity
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $28,447
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 1,157
Net realized gain (loss) on investments 1,290
Net unrealized appreciation (depreciation) of investments 601
__________
Net increase (decrease) in net assets resulting from operations 3,048
Changes from principal transactions:
Purchase payments 15,780
Contract distributions and terminations (3,990)
Transfer payments from (to) Fixed Accounts and other Divisions (376)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (48)
__________
Increase (decrease) in net assets derived from principal
transactions 11,366
__________
Total increase (decrease) 14,414
__________
NET ASSETS AT DECEMBER 31, 1996 42,861
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Value
Equity
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($245)
Net realized gain (loss) on investments 835
Net unrealized appreciation of investments 12,513
__________
Net increase in net assets resulting from operations 13,103
Changes from principal transactions:
Purchase payments 8,871
Contract distributions and terminations (3,708)
Transfer payments from (to) Fixed Accounts and other Divisions 7,219
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 124
__________
Increase (decrease) in net assets derived from principal
transactions 12,506
__________
Total increase (decrease) 25,609
__________
NET ASSETS AT SEPTEMBER 30, 1997 $68,470
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Strategic
Equity
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $8,031
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 275
Net realized gain (loss) on investments 161
Net unrealized appreciation (depreciation) of investments 2,648
__________
Net increase (decrease) in net assets resulting from operations 3,084
Changes from principal transactions:
Purchase payments 12,046
Contract distributions and terminations (1,671)
Transfer payments from (to) Fixed Accounts and other Divisions 8,149
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 219
__________
Increase (decrease) in net assets derived from principal
transactions 18,743
__________
Total increase (decrease) 21,827
__________
NET ASSETS AT DECEMBER 31, 1996 29,858
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Strategic
Equity
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $60
Net realized gain (loss) on investments 983
Net unrealized appreciation of investments 5,878
__________
Net increase in net assets resulting from operations 6,921
Changes from principal transactions:
Purchase payments 7,122
Contract distributions and terminations (3,186)
Transfer payments from (to) Fixed Accounts and other Divisions 3,539
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 70
__________
Increase (decrease) in net assets derived from principal
transactions 7,545
__________
Total increase (decrease) 14,466
__________
NET ASSETS AT SEPTEMBER 30, 1997 $44,324
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Small Cap
Division
(a)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($369)
Net realized gain (loss) on investments 25
Net unrealized appreciation (depreciation) of investments 674
__________
Net increase (decrease) in net assets resulting from operations 330
Changes from principal transactions:
Purchase payments 17,552
Contract distributions and terminations (1,530)
Transfer payments from (to) Fixed Accounts and other Divisions 16,293
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 411
__________
Increase (decrease) in net assets derived from principal
transactions 32,726
__________
Total increase (decrease) 33,056
__________
NET ASSETS AT DECEMBER 31, 1996 33,056
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Small Cap
Division
(a)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($536)
Net realized gain (loss) on investments (450)
Net unrealized appreciation of investments 8,126
__________
Net increase in net assets resulting from operations 7,140
Changes from principal transactions:
Purchase payments 8,051
Contract distributions and terminations (2,270)
Transfer payments from (to) Fixed Accounts and other Divisions 4,129
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 45
__________
Increase (decrease) in net assets derived from principal
transactions 9,955
__________
Total increase (decrease) 17,095
__________
NET ASSETS AT SEPTEMBER 30, 1997 $50,151
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Managed
Global
Division
(b)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($350)
Net realized gain (loss) on investments 116
Net unrealized appreciation (depreciation) of investments 4,419
__________
Net increase (decrease) in net assets resulting from operations 4,185
Changes from principal transactions:
Purchase payments 3,524
Contract distributions and terminations (3,844)
Transfer payments from (to) Fixed Accounts and other Divisions 80,286
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 2,115
__________
Increase (decrease) in net assets derived from principal
transactions 82,081
__________
Total increase (decrease) 86,266
__________
NET ASSETS AT DECEMBER 31, 1996 86,266
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Managed
Global
Division
(b)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $43
Net realized gain (loss) on investments 1,693
Net unrealized appreciation of investments 14,056
__________
Net increase in net assets resulting from operations 15,792
Changes from principal transactions:
Purchase payments 12,734
Contract distributions and terminations (8,163)
Transfer payments from (to) Fixed Accounts and other Divisions 4,110
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 136
__________
Increase (decrease) in net assets derived from principal
transactions 8,817
__________
Total increase (decrease) 24,609
__________
NET ASSETS AT SEPTEMBER 30, 1997 $110,875
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
OTC
Division
(c)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $204
Net realized gain (loss) on investments 1
Net unrealized appreciation (depreciation) of investments (125)
__________
Net increase (decrease) in net assets resulting from operations 80
Changes from principal transactions:
Purchase payments 1,207
Contract distributions and terminations (36)
Transfer payments from (to) Fixed Accounts and other Divisions 3,248
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 72
__________
Increase (decrease) in net assets derived from principal
transactions 4,491
__________
Total increase (decrease) 4,571
__________
NET ASSETS AT DECEMBER 31, 1996 4,571
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
OTC
Division
(c)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($37)
Net realized gain (loss) on investments (21)
Net unrealized appreciation of investments 2,019
__________
Net increase in net assets resulting from operations 1,961
Changes from principal transactions:
Purchase payments 4,545
Contract distributions and terminations (344)
Transfer payments from (to) Fixed Accounts and other Divisions 3,242
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 36
__________
Increase (decrease) in net assets derived from principal
transactions 7,479
__________
Total increase (decrease) 9,440
__________
NET ASSETS AT SEPTEMBER 30, 1997 $14,011
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Growth &
Income
Division
(c)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments $1
Net unrealized appreciation (depreciation) of investments 269
__________
Net increase (decrease) in net assets resulting from operations 270
Changes from principal transactions:
Purchase payments 2,760
Contract distributions and terminations (43)
Transfer payments from (to) Fixed Accounts and other Divisions 5,164
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 124
__________
Increase (decrease) in net assets derived from principal
transactions 8,005
__________
Total increase (decrease) 8,275
__________
NET ASSETS AT DECEMBER 31, 1996 8,275
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Growth &
Income
Division
(c)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($121)
Net realized gain (loss) on investments 97
Net unrealized appreciation of investments 5,207
__________
Net increase in net assets resulting from operations 5,183
Changes from principal transactions:
Purchase payments 8,846
Contract distributions and terminations (969)
Transfer payments from (to) Fixed Accounts and other Divisions 8,178
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 91
__________
Increase (decrease) in net assets derived from principal
transactions 16,146
__________
Total increase (decrease) 21,329
__________
NET ASSETS AT SEPTEMBER 30, 1997 $29,604
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Research
Division
(e)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Research
Division
(e)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($10)
Net realized gain (loss) on investments (3)
Net unrealized appreciation of investments 1,529
__________
Net increase in net assets resulting from operations 1,516
Changes from principal transactions:
Purchase payments 8,858
Contract distributions and terminations (193)
Transfer payments from (to) Fixed Accounts and other Divisions 9,414
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 106
__________
Increase (decrease) in net assets derived from principal
transactions 18,185
__________
Total increase (decrease) 19,701
__________
NET ASSETS AT SEPTEMBER 30, 1997 $19,701
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Total
Return
Division
(d)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Total
Return
Division
(d)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($37)
Net realized gain (loss) on investments 18
Net unrealized appreciation of investments 608
__________
Net increase in net assets resulting from operations 589
Changes from principal transactions:
Purchase payments 5,748
Contract distributions and terminations (364)
Transfer payments from (to) Fixed Accounts and other Divisions 6,107
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 46
__________
Increase (decrease) in net assets derived from principal
transactions 11,537
__________
Total increase (decrease) 12,126
__________
NET ASSETS AT SEPTEMBER 30, 1997 $12,126
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Value +
Growth
Division
(e)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Value +
Growth
Division
(e)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($60)
Net realized gain (loss) on investments 394
Net unrealized appreciation of investments 903
__________
Net increase in net assets resulting from operations 1,237
Changes from principal transactions:
Purchase payments 4,522
Contract distributions and terminations (154)
Transfer payments from (to) Fixed Accounts and other Divisions 7,203
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 91
__________
Increase (decrease) in net assets derived from principal
transactions 11,662
__________
Total increase (decrease) 12,899
__________
NET ASSETS AT SEPTEMBER 30, 1997 $12,899
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Appre-
ciation
Division
(f)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Appre-
ciation
Division
(f)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation of investments $3
__________
Net increase in net assets resulting from operations 3
Changes from principal transactions:
Purchase payments 114
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions (2)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions 112
__________
Total increase (decrease) 115
__________
NET ASSETS AT SEPTEMBER 30, 1997 $115
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
High
Income
Division
(f)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
High
Income
Division
(f)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation of investments $1
__________
Net increase in net assets resulting from operations 1
Changes from principal transactions:
Purchase payments 68
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions 68
__________
Total increase (decrease) 69
__________
NET ASSETS AT SEPTEMBER 30, 1997 $69
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Income &
Growth
Division
(f)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Income &
Growth
Division
(f)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation of investments $1
__________
Net increase in net assets resulting from operations 1
Changes from principal transactions:
Purchase payments 82
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions 82
__________
Total increase (decrease) 83
__________
NET ASSETS AT SEPTEMBER 30, 1997 $83
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Inter-
national
Equity
Division
(g)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Inter-
national
Equity
Division
(g)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation of investments --
__________
Net increase in net assets resulting from operations --
Changes from principal transactions:
Purchase payments $8
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions (2)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions 6
__________
Total increase (decrease) 6
__________
NET ASSETS AT SEPTEMBER 30, 1997 $6
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Money
Market
Division
(h)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Money
Market
Division
(h)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation of investments --
__________
Net increase in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions $10
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions 10
__________
Total increase (decrease) 10
__________
NET ASSETS AT SEPTEMBER 30, 1997 $10
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
____________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $960,878
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 44,388
Net realized gain (loss) on investments 21,659
Net unrealized appreciation (depreciation) of investments 37,651
____________
Net increase (decrease) in net assets resulting from operations 103,698
Changes from principal transactions:
Purchase payments 176,412
Contract distributions and terminations (155,860)
Transfer payments from (to) Fixed Accounts and other Divisions 98,017
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 1,428
____________
Increase (decrease) in net assets derived from principal
transactions 119,997
____________
Total increase (decrease) 223,695
____________
NET ASSETS AT DECEMBER 31, 1996 1,184,573
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the periods ended December 31, 1996 and September 30, 1997,
Except as Noted (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
____________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (2,129)
Net realized gain (loss) on investments 22,831
Net unrealized appreciation of investments 187,991
____________
Net increase in net assets resulting from operations 208,693
Changes from principal transactions:
Purchase payments 160,078
Contract distributions and terminations (134,578)
Transfer payments from (to) Fixed Accounts and other Divisions 82,157
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 1,643
____________
Increase (decrease) in net assets derived from principal
transactions 109,300
____________
Total increase (decrease) 317,993
____________
NET ASSETS AT SEPTEMBER 30, 1997 $1,502,566
============
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 1997
NOTE 1 - ORGANIZATION
Separate Account B (the "Account") was established on July 14, 1988, by
Golden American Life Insurance Company ("Golden American"), under Minnesota
insurance law to support the operations of variable annuity contracts
("Contracts"). Effective September 30, 1992, Golden American became a wholly-
owned subsidiary of BT Variable, Inc. ("BTV"), an indirect wholly-owned
subsidiary of Bankers Trust Company. Effective December 30, 1993, Golden
American was redomesticated from the State of Minnesota to the State of
Delaware. Effective August 13, 1996, Equitable of Iowa Companies ("Equitable
of Iowa") acquired all of the outstanding capital stock of BTV. As of August
14, 1996, BT Variable, Inc.'s name was changed to EIC Variable, Inc. On April
30, 1997, EIC Variable Inc. was liquidated and its investments in Golden
American were transferred to Equitable of Iowa, while its net assets were
transferred to Golden American. These transactions had no effect on the
accompanying financial statements. Golden American is primarily engaged in
the issuance of variable insurance products and is licensed as a life
insurance company in the District of Columbia and all states except New York.
During the nine months ended September 30, 1997, the following changes were
made to the various investment divisions of the Account: the name of the
Natural Resources division was changed to Hard Assets; the Research, Total
Return and Value + Growth divisions commenced operations during February
1997; and under the Granite PrimElite Contracts, the Appreciation, High
Income, and Income & Growth divisions commenced operations during August 1997
and the International Equity and Money Market divisions commenced operations
during September 1997.
NOTE 2 - BASIS OF PRESENTATION
The accompanying condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions of Article 10 of Regulation S-
X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine months ended September 30,
1997 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1997. For further information, refer to the
financial statements and footnotes thereto for the year ended December 31,
1996 Post-Effective Amendment 7 to the Registration Statement (Form N-4, No.
33-59261).
NOTE 3 - NET ASSETS
Net assets at September 30, 1997 consisted of the following:
<TABLE>
<CAPTION>
Limited
Liquid Maturity Hard All-
Asset Bond Assets Growth
Division Division Division Division
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $41,141 $36,818 $29,567 $59,304
Accumulated net investment
income (loss) 5,627 12,102 12,687 7,203
Net unrealized appreciation
of investments -- 1,059 10,697 10,751
_____________________________________________________
$46,768 $49,979 $52,951 $77,258
=====================================================
</TABLE>
<TABLE>
<CAPTION>
Real Fully Multiple Capital
Estate Managed Allocation Appreciation
Division Division Division Division
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $41,539 $102,151 $148,999 $94,201
Accumulated net investment
income (loss) 9,329 21,633 86,202 33,426
Net unrealized appreciation
of investments 20,320 28,421 36,328 53,375
_____________________________________________________
$71,188 $152,205 $271,529 $181,002
=====================================================
</TABLE>
<TABLE>
<CAPTION>
Rising Emerging Market Value
Dividends Markets Manager Equity
Division Division Division Division
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $125,087 $51,113 $2,835 $49,161
Accumulated net investment
income (loss) 5,824 (9,813) 1,066 4,325
Net unrealized appreciation
of investments 56,625 1,710 2,795 14,984
_____________________________________________________
$187,536 $43,010 $6,696 $68,470
=====================================================
</TABLE>
NOTE 3 - NET ASSETS - (CONTINUED)
<TABLE>
<CAPTION>
Strategic Managed
Equity Small Cap Global OTC
Division Division Division Division
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $34,285 $42,681 $90,898 $11,970
Accumulated net investment
income (loss) 1,486 (1,330) 1,502 147
Net unrealized appreciation
of investments 8,553 8,800 18,475 1,894
_____________________________________________________
$44,324 $50,151 $110,875 $14,011
=====================================================
</TABLE>
<TABLE>
<CAPTION>
Growth & Total Value +
Income Research Return Growth
Division Division Division Division
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $24,151 $18,185 $11,537 $11,662
Accumulated net investment
income (loss) (23) (13) (19) 334
Net unrealized appreciation
of investments 5,476 1,529 608 903
_____________________________________________________
$29,604 $19,701 $12,126 $12,899
=====================================================
</TABLE>
<TABLE>
<CAPTION>
Inter-
Appre- High Income & national
ciation Income Growth Equity
Division Division Division Division
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $112 $68 $82 $6
Accumulated net investment
income (loss) -- -- -- --
Net unrealized appreciation
of investments 3 1 1 --
_____________________________________________________
$115 $69 $83 $6
=====================================================
</TABLE>
NOTE 3 - NET ASSETS - (CONTINUED)
<TABLE>
<CAPTION>
Money
Market
Division Combined
__________________________
(Dollars in thousands)
<S> <C> <C>
Unit transactions $10 $1,027,563
Accumulated net investment
income (loss) -- 191,695
Net unrealized appreciation
of investments -- 283,308
__________________________
$10 $1,502,566
==========================
</TABLE>
NOTE 4 - UNIT VALUES
Accumulation unit value information (which is based on total assets) for
units outstanding by contract type as of September 30, 1997 was as follows:
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
LIQUID ASSET
Currently payable annuity products:
DVA 80 4,309 $14.42 $62
DVA 100 4,009 14.17 57
Contracts in accumulation period:
DVA 80 335,909 14.42 4,845
DVA 100 1,659,835 14.17 23,525
DVA Series 100 50,544 13.74 694
DVA PLUS - Standard 238,637 13.88 3,313
DVA PLUS - Annual Ratchet 163,634 13.70 2,242
DVA PLUS - 7% Solution 890,721 13.53 12,048
______________
46,786
LIMITED MATURITY BOND
Currently payable annuity products:
DVA 80 18,208 16.50 301
DVA 100 20,960 16.22 340
Contracts in accumulation period:
DVA 80 54,795 16.50 905
DVA 100 2,424,421 16.22 39,318
DVA Series 100 23,349 15.73 367
DVA PLUS - Standard 127,738 15.90 2,031
DVA PLUS - Annual Ratchet 64,473 15.69 1,012
DVA PLUS - 7% Solution 369,670 15.49 5,726
______________
50,000
HARD ASSETS
Currently payable annuity products:
DVA 80 2,056 25.10 51
DVA 100 14,753 24.67 364
Contracts in accumulation period:
DVA 80 138,811 25.10 3,485
DVA 100 1,203,754 24.67 29,695
DVA Series 100 42,490 23.92 1,016
DVA PLUS - Standard 153,481 24.16 3,709
DVA PLUS - Annual Ratchet 75,876 23.85 1,810
DVA PLUS - 7% Solution 545,672 23.54 12,846
______________
52,976
</TABLE>
NOTE 4 - UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
ALL-GROWTH
Currently payable annuity products:
DVA 80 3,129 $16.30 $51
DVA 100 24,797 16.01 397
Contracts in accumulation period:
DVA 80 115,976 16.30 1,890
DVA 100 3,362,889 16.01 53,857
DVA Series 100 23,399 15.53 363
DVA PLUS - Standard 203,001 15.69 3,185
DVA PLUS - Annual Ratchet 206,557 15.48 3,198
DVA PLUS - 7% Solution 939,260 15.28 14,355
______________
77,296
REAL ESTATE
Currently payable annuity products:
DVA 80 5,789 26.50 153
DVA 100 30,326 26.04 790
Contracts in accumulation period:
DVA 80 101,689 26.50 2,694
DVA 100 1,573,420 26.04 40,967
DVA Series 100 23,006 25.25 581
DVA PLUS - Standard 156,737 25.50 3,997
DVA PLUS - Annual Ratchet 99,989 25.17 2,517
DVA PLUS - 7% Solution 785,489 24.85 19,517
______________
71,216
FULLY MANAGED
Currently payable annuity products:
DVA 80 8,857 20.43 181
DVA 100 74,955 20.07 1,504
Contracts in accumulation period:
DVA 80 132,939 20.43 2,716
DVA 100 5,200,917 20.07 104,400
DVA Series 100 32,027 19.46 623
DVA PLUS - Standard 389,036 19.66 7,650
DVA PLUS - Annual Ratchet 321,404 19.41 6,238
DVA PLUS - 7% Solution 1,511,903 19.16 28,962
______________
152,274
</TABLE>
NOTE 4 - UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
MULTIPLE ALLOCATION
Currently payable annuity products:
DVA 80 27,604 $21.51 $594
DVA 100 111,647 21.14 2,360
Contracts in accumulation period:
DVA 80 556,462 21.51 11,971
DVA 100 10,222,143 21.14 216,098
DVA Series 100 84,949 20.50 1,741
DVA PLUS - Standard 335,264 20.71 6,942
DVA PLUS - Annual Ratchet 213,719 20.44 4,368
DVA PLUS - 7% Solution 1,367,787 20.17 27,594
______________
271,668
CAPITAL APPRECIATION
Currently payable annuity products:
DVA 80 13,520 22.57 305
DVA 100 58,936 22.33 1,316
Contracts in accumulation period:
DVA 80 102,296 22.57 2,309
DVA 100 5,854,668 22.33 130,720
DVA Series 100 41,472 21.90 908
DVA PLUS - Standard 292,317 22.05 6,446
DVA PLUS - Annual Ratchet 254,370 21.87 5,564
DVA PLUS - 7% Solution 1,544,433 21.70 33,511
______________
181,079
RISING DIVIDENDS
Currently payable annuity products:
DVA 80 8,912 19.62 175
DVA 100 21,432 19.46 417
Contracts in accumulation period:
DVA 80 152,553 19.62 2,993
DVA 100 5,085,161 19.46 98,967
DVA Series 100 82,887 19.19 1,590
DVA PLUS - Standard 690,466 19.29 13,319
DVA PLUS - Annual Ratchet 662,081 19.18 12,696
DVA PLUS - 7% Solution 3,014,136 19.06 57,460
______________
187,617
</TABLE>
NOTE 4 - UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
EMERGING MARKETS
Currently payable annuity products:
DVA 80 1,472 $10.92 $16
DVA 100 20,172 10.83 218
Contracts in accumulation period:
DVA 80 94,460 10.92 1,032
DVA 100 2,384,308 10.83 25,831
DVA Series 100 33,866 10.68 362
DVA PLUS - Standard 226,830 10.74 2,436
DVA PLUS - Annual Ratchet 196,144 10.67 2,094
DVA PLUS - 7% Solution 1,040,626 10.61 11,043
______________
43,032
MARKET MANAGER
Contracts in accumulation period:
DVA 100 353,978 19.19 6,794
DVA PLUS - 7% Solution 7,958 18.87 150
______________
6,944
VALUE EQUITY
Currently payable annuity products:
DVA 80 484 18.94 9
DVA 100 6,481 18.84 122
Contracts in accumulation period:
DVA 80 59,110 18.94 1,119
DVA 100 1,358,272 18.84 25,585
DVA Series 100 22,622 18.66 422
DVA PLUS - Standard 334,268 18.73 6,261
DVA PLUS - Annual Ratchet 377,401 18.66 7,041
DVA PLUS - 7% Solution 1,503,681 18.58 27,940
______________
68,499
STRATEGIC EQUITY
Currently payable annuity products:
DVA 100 34,539 14.16 489
Contracts in accumulation period:
DVA 80 105,145 14.22 1,495
DVA 100 817,739 14.16 11,580
DVA Series 100 34,914 14.06 491
DVA PLUS - Standard 375,317 14.10 5,294
DVA PLUS - Annual Ratchet 501,552 14.06 7,054
DVA PLUS - 7% Solution 1,279,275 14.02 17,939
______________
44,342
</TABLE>
NOTE 4 - UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
SMALL CAP
Currently payable annuity products:
DVA 100 11,664 $13.94 $162
Contracts in accumulation period:
DVA 80 66,508 13.99 930
DVA 100 934,476 13.94 13,030
DVA Series 100 37,868 13.86 525
DVA PLUS - Standard 361,231 13.88 5,015
DVA PLUS - Annual Ratchet 409,080 13.85 5,664
DVA PLUS - 7% Solution 1,799,413 13.81 24,848
______________
50,174
MANAGED GLOBAL
Currently payable annuity products:
DVA 80 5,141 12.84 66
DVA 100 27,496 12.72 350
Contracts in accumulation period:
DVA 80 71,290 12.84 915
DVA 100 5,428,322 12.72 69,035
DVA Series 100 64,138 12.51 802
DVA PLUS - Standard 465,346 12.55 5,841
DVA PLUS - Annual Ratchet 394,987 12.46 4,921
DVA PLUS - 7% Solution 2,344,148 12.37 28,993
______________
110,923
OTC
Contracts in accumulation period:
DVA 80 4,401 19.31 85
DVA 100 224,329 19.19 4,305
DVA Series 100 9,360 18.99 178
DVA PLUS - Standard 56,806 19.05 1,082
DVA PLUS - Annual Ratchet 78,969 18.93 1,495
DVA PLUS - 7% Solution 362,537 18.88 6,843
Granite PrimElite - Annual Ratchet 2,351 18.93 45
______________
14,033
GROWTH & INCOME
Contracts in accumulation period:
DVA 80 34,372 16.02 551
DVA 100 543,363 15.98 8,680
DVA Series 100 7,355 15.89 117
DVA PLUS - Standard 263,520 15.92 4,194
DVA PLUS - Annual Ratchet 189,078 15.88 3,003
DVA PLUS - 7% Solution 825,065 15.84 13,072
______________
29,617
</TABLE>
NOTE 4 - UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
RESEARCH
Contracts in accumulation period:
DVA 80 5,600 $19.59 $110
DVA 100 248,631 19.48 4,843
DVA Series 100 4,690 19.27 90
DVA PLUS - Standard 142,866 19.33 2,762
DVA PLUS - Annual Ratchet 108,287 19.25 2,085
DVA PLUS - 7% Solution 508,674 19.16 9,745
Granite PrimElite - Annual Ratchet 5,726 19.25 110
______________
19,745
TOTAL RETURN
Contracts in accumulation period:
DVA 80 2,060 16.00 33
DVA 100 118,800 15.90 1,889
DVA Series 100 2,805 15.74 44
DVA PLUS - Standard 161,073 15.78 2,543
DVA PLUS - Annual Ratchet 113,638 15.72 1,786
DVA PLUS - 7% Solution 371,701 15.64 5,814
Granite PrimElite - Annual Ratchet 2,721 15.72 43
______________
12,152
VALUE + GROWTH
Contracts in accumulation period:
DVA 80 70,391 15.33 1,079
DVA 100 247,883 15.28 3,788
DVA Series 100 2,137 15.20 32
DVA PLUS - Standard 106,800 15.23 1,626
DVA PLUS - Annual Ratchet 73,648 15.19 1,119
DVA PLUS - 7% Solution 347,027 15.16 5,260
______________
12,904
</TABLE>
NOTE 4 - UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
APPRECIATION
Contracts in accumulation period:
Granite PrimElite - Annual Ratchet 8,385 $13.77 $115
______________
115
HIGH INCOME
Contracts in accumulation period:
Granite PrimElite - Annual Ratchet 5,107 13.54 69
______________
69
INCOME & GROWTH
Contracts in accumulation period:
Granite PrimElite - Annual Ratchet 4,781 17.35 83
______________
83
INTERNATIONAL EQUITY
Contracts in accumulation period:
Granite PrimElite - Annual Ratchet 408 15.09 6
______________
6
MONEY MARKET
Contracts in accumulation period:
Granite PrimElite - Annual Ratchet 931 10.87 10
______________
10
</TABLE>
NOTE 5 - SUBSEQUENT EVENTS
On October 23, 1997, Equitable of Iowa shareholders approved the Agreement
and Plan of Merger ("Merger Agreement") dated as of July 7, 1997, between
Equitable of Iowa, PFHI Holdings, Inc. ("PFHI"), and ING Groep N.V. ("ING").
On October 24, 1997, PFHI, a Delaware corporation, acquired all of the
outstanding capital stock of Equitable of Iowa pursuant to the Merger
Agreement. PFHI is a wholly-owned subsidiary of ING, a global financial
services holding company based in The Netherlands. Equitable of Iowa,
an Iowa corporation, in turn, owns all the outstanding capital stock of
Golden American. As a result of the Merger, Equitable of Iowa was merged
into PFHI which was simultaneously renamed Equitable of Iowa Companies, Inc.
Financial Statements
Golden American Life Insurance Company
Separate Account B
Periods ended December 31, 1996 and 1995
with Report of Independent Auditors
Golden American Life Insurance Company
Separate Account B
Financial Statements
Periods ended December 31, 1996 and 1995
Contents
Report of Independent Auditors
Audited Financial Statements
Statement of Assets and Liability
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Report of Independent Auditors
The Board of Directors
Golden American Life Insurance Company
We have audited the accompanying statement of assets and liability of Separate
Account B as of December 31, 1996, and the related statements of operations for
the year then ended and the changes in net assets for each of the two years in
the period then ended. These financial statements are the responsibility of
the Account's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1996,
by correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Separate Account B at December
31, 1996, and the results of their operations for the year then ended and the
changes in their net assets for each of the two years in the period then ended
in conformity with generally accepted accounting principles.
/S/ Ernst & Young LLP
Des Moines, Iowa
February 11, 1997
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF ASSETS AND LIABILITY
DECEMBER 31, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
____________
<S> <C>
ASSETS
Investments at net asset value:
The GCG Trust Liquid Asset Series,
37,489,519 shares (cost - $37,490) $37,490
The GCG Trust Limited Maturity Bond Series,
5,211,785 shares (cost - $55,124) 54,359
The GCG Trust Natural Resources Series,
2,425,733 shares (cost - $39,320) 43,324
The GCG Trust All-Growth Series,
5,741,919 shares (cost - $75,442) 76,885
The GCG Trust Real Estate Series,
3,172,940 shares (cost - $39,689) 50,704
The GCG Trust Fully Managed Series,
9,081,446 shares (cost - $119,671) 134,496
The GCG Trust Multiple Allocation Series,
21,803,390 shares (cost - $265,203) 270,579
The GCG Trust Capital Appreciation Series,
9,698,486 shares (cost - $123,415) 146,059
The GCG Trust Rising Dividends Series,
7,820,089 shares (cost - $95,887) 123,636
The GCG Trust Emerging Markets Series,
3,824,614 shares (cost - $39,720) 37,175
The GCG Trust Market Manager Series,
422,420 shares (cost - $4,396) 5,584
The GCG Trust Value Equity Series,
3,080,715 shares (cost - $40,413) 42,884
The GCG Trust Strategic Equity Series,
2,557,621 shares (cost - $27,198) 29,873
The GCG Trust Small Cap Series,
2,753,970 shares (cost - $32,401) 33,075
The GCG Trust Managed Global Series,
7,754,689 shares (cost - $81,891) 86,310
Equi-Select Series Trust OTC Portfolio,
315,154 shares (cost - $4,481) 4,356
Equi-Select Series Trust Growth & Income Portfolio,
656,074 shares (cost - $7,989) 8,258
____________
TOTAL INVESTMENTS (cost - $1,089,730) 1,185,047
Accrued investment income 238
____________
TOTAL ASSETS 1,185,285
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF ASSETS AND LIABILITY
DECEMBER 31, 1996
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
____________
<S> <C>
LIABILITY
Payable to Golden American Life Insurance Company $712
____________
TOTAL NET ASSETS $1,184,573
============
NET ASSETS
For Variable Annuity Insurance Contracts $1,161,168
Retained in Separate Account B by Golden American
Life Insurance Company 23,405
____________
TOTAL NET ASSETS $1,184,573
============
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS
For the year ended December 31, 1996, Except as Noted
(Dollars in thousands)
<TABLE>
<CAPTION>
Limited
Liquid Maturity Natural
Asset Bond Resources
Division Division Division
__________ _________ __________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $1,868 $5,950 $146
Capital gains distributions -- -- 4,557
__________ _________ __________
TOTAL INVESTMENT INCOME 1,868 5,950 4,703
Expenses:
Mortality and expense risk and other charges (405) (629) (382)
Annual administrative charges (16) (21) (22)
Minimum death benefit guarantee charges (8) (2) (6)
Contingent deferred sales charges (1) (2) (4)
Other contract charges -- (5) (4)
Amortization of deferred charges related to:
Deferred sales load (708) (785) (370)
Premium taxes (7) (12) (6)
__________ _________ __________
TOTAL EXPENSES BEFORE WAIVER (1,145) (1,456) (794)
Fees waived by Golden American 7 13 7
__________ _________ __________
NET EXPENSES (1,138) (1,443) (787)
__________ _________ __________
NET INVESTMENT INCOME (LOSS) 730 4,507 3,916
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments -- 314 2,353
Net unrealized appreciation (depreciation)
of investments -- (3,831) 2,704
__________ _________ __________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $730 $990 $8,973
========== ========= ==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS
For the year ended December 31, 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
All- Real Fully
Growth Estate Managed
Division Division Division
__________ _________ __________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $1,662 $2,214 $4,716
Capital gains distributions 252 840 5,610
__________ _________ __________
TOTAL INVESTMENT INCOME 1,914 3,054 10,326
Expenses:
Mortality and expense risk and other charges (955) (396) (1,334)
Annual administrative charges (43) (23) (69)
Minimum death benefit guarantee charges (4) (2) (4)
Contingent deferred sales charges (22) (4) (36)
Other contract charges (2) (2) (4)
Amortization of deferred charges related to:
Deferred sales load (1,044) (413) (1,417)
Premium taxes (28) (9) (37)
__________ _________ __________
TOTAL EXPENSES BEFORE WAIVER (2,098) (849) (2,901)
Fees waived by Golden American 34 9 38
__________ _________ __________
NET EXPENSES (2,064) (840) (2,863)
__________ _________ __________
NET INVESTMENT INCOME (LOSS) (150) 2,214 7,463
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 2,112 652 2,245
Net unrealized appreciation (depreciation)
of investments (4,894) 8,605 6,614
__________ _________ __________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ($2,932) $11,471 $16,322
========== ========= ==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS
For the year ended December 31, 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Multiple Capital
Alloca- Apprecia- Rising
tion tion Dividends
Division Division Division
__________ _________ __________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $13,260 $1,532 $970
Capital gains distributions 11,463 9,172 822
__________ _________ __________
TOTAL INVESTMENT INCOME 24,723 10,704 1,792
Expenses:
Mortality and expense risk and other charges (2,989) (1,414) (1,088)
Annual administrative charges (153) (73) (62)
Minimum death benefit guarantee charges (18) (2) (2)
Contingent deferred sales charges (30) (19) (30)
Other contract charges (13) (5) (8)
Amortization of deferred charges related to:
Deferred sales load (3,436) (1,439) (1,069)
Premium taxes (62) (41) (17)
__________ _________ __________
TOTAL EXPENSES BEFORE WAIVER (6,701) (2,993) (2,276)
Fees waived by Golden American 69 46 29
__________ _________ __________
NET EXPENSES (6,632) (2,947) (2,247)
__________ _________ __________
NET INVESTMENT INCOME (LOSS) 18,091 7,757 (455)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 6,043 4,853 4,125
Net unrealized appreciation (depreciation)
of investments (7,108) 8,839 12,317
__________ _________ __________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $17,026 $21,449 $15,987
========== ========= ==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS
For the year ended December 31, 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Emerging Market Value
Markets Manager Equity
Division Division Division
__________ _________ __________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends -- $177 $732
Capital gains distributions -- 272 1,220
__________ _________ __________
TOTAL INVESTMENT INCOME -- 449 1,952
Expenses:
Mortality and expense risk and other charges ($426) -- (441)
Annual administrative charges (22) (1) (21)
Minimum death benefit guarantee charges (2) -- (1)
Contingent deferred sales charges (12) -- (18)
Other contract charges (2) -- (4)
Amortization of deferred charges related to:
Deferred sales load (535) (53) (317)
Premium taxes (7) -- (3)
__________ _________ __________
TOTAL EXPENSES BEFORE WAIVER (1,006) (54) (805)
Fees waived by Golden American 8 1 10
__________ _________ __________
NET EXPENSES (998) (53) (795)
__________ _________ __________
NET INVESTMENT INCOME (LOSS) (998) 396 1,157
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments (2,959) 327 1,290
Net unrealized appreciation (depreciation)
of investments 5,674 245 601
__________ _________ __________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,717 $968 $3,048
========== ========= ==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS
For the year ended December 31, 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Managed
Strategic Small Cap Global
Equity Division Division
Division (a) (b)
__________ __________ __________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $342 -- --
Capital gains distributions 328 -- $396
__________ __________ __________
TOTAL INVESTMENT INCOME 670 -- 396
Expenses:
Mortality and expense risk and other charges (249) ($222) ($302)
Annual administrative charges (15) (21) (49)
Minimum death benefit guarantee charges (2) (1) --
Contingent deferred sales charges (19) (23) (4)
Other contract charges (2) (3) (6)
Amortization of deferred charges related to:
Deferred sales load (112) (101) (386)
Premium taxes (2) (1) (6)
__________ __________ __________
TOTAL EXPENSES BEFORE WAIVER (401) (372) (753)
Fees waived by Golden American 6 3 7
__________ __________ __________
NET EXPENSES (395) (369) (746)
__________ __________ __________
NET INVESTMENT INCOME (LOSS) 275 (369) (350)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 161 25 116
Net unrealized appreciation (depreciation)
of investments 2,648 674 4,419
__________ __________ __________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $3,084 $330 $4,185
========== ========== ==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS
For the year ended December 31, 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Growth &
OTC Income
Division Division
(c) (c) Combined
__________ _________ __________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends -- $10 $33,579
Capital gains distributions $218 10 35,160
__________ _________ __________
TOTAL INVESTMENT INCOME 218 20 68,739
Expenses:
Mortality and expense risk and other charges (6) (12) (11,250)
Annual administrative charges (2) (4) (617)
Minimum death benefit guarantee charges -- -- (54)
Contingent deferred sales charges (1) -- (225)
Other contract charges (1) -- (61)
Amortization of deferred charges related to:
Deferred sales load (4) (4) (12,193)
Premium taxes -- -- (238)
__________ _________ __________
TOTAL EXPENSES BEFORE WAIVER (14) (20) (24,638)
Fees waived by Golden American -- -- 287
__________ _________ __________
NET EXPENSES (14) (20) (24,351)
__________ _________ __________
NET INVESTMENT INCOME (LOSS) 204 -- 44,388
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 1 1 21,659
Net unrealized appreciation (depreciation)
of investments (125) 269 37,651
__________ _________ __________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $80 $270 $103,698
========== ========= ==========
<FN>
(c) Commencement of operations, September 23, 1996
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Dollars in thousands)
<TABLE>
<CAPTION>
Liquid
Asset
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $45,366
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 1,059
Net realized gain (loss) on investments --
Net unrealized appreciation of investments --
__________
Net increase (decrease) in net assets resulting from operations 1,059
Changes from principal transactions:
Purchase payments 10,242
Contract distributions and terminations (11,794)
Transfer payments from (to) Fixed Accounts and other Divisions (8,292)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (90)
__________
Increase (decrease) in net assets derived from principal
transactions (9,934)
__________
Total increase (decrease) (8,875)
__________
NET ASSETS AT DECEMBER 31, 1995 36,491
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Liquid
Asset
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $730
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations 730
Changes from principal transactions:
Purchase payments 14,178
Contract distributions and terminations (15,313)
Transfer payments from (to) Fixed Accounts and other Divisions 1,242
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 148
__________
Increase (decrease) in net assets derived from principal
transactions 255
__________
Total increase (decrease) 985
__________
NET ASSETS AT DECEMBER 31, 1996 $37,476
==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Limited
Maturity
Bond
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $71,573
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (1,721)
Net realized gain (loss) on investments (138)
Net unrealized appreciation of investments 7,902
__________
Net increase (decrease) in net assets resulting from operations 6,043
Changes from principal transactions:
Purchase payments 7,209
Contract distributions and terminations (9,461)
Transfer payments from (to) Fixed Accounts and other Divisions (7,297)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (230)
__________
Increase (decrease) in net assets derived from principal
transactions (9,779)
__________
Total increase (decrease) (3,736)
__________
NET ASSETS AT DECEMBER 31, 1995 67,837
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Limited
Maturity
Bond
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $4,507
Net realized gain (loss) on investments 314
Net unrealized appreciation (depreciation) of investments (3,831)
__________
Net increase (decrease) in net assets resulting from operations 990
Changes from principal transactions:
Purchase payments 5,869
Contract distributions and terminations (9,672)
Transfer payments from (to) Fixed Accounts and other Divisions (10,189)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (501)
__________
Increase (decrease) in net assets derived from principal
transactions (14,493)
__________
Total increase (decrease) (13,503)
__________
NET ASSETS AT DECEMBER 31, 1996 $54,334
==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Natural
Resources
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $32,746
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (112)
Net realized gain (loss) on investments 1,545
Net unrealized appreciation of investments 495
__________
Net increase (decrease) in net assets resulting from operations 1,928
Changes from principal transactions:
Purchase payments 2,021
Contract distributions and terminations (3,402)
Transfer payments from (to) Fixed Accounts and other Divisions (6,045)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (258)
__________
Increase (decrease) in net assets derived from principal
transactions (7,684)
__________
Total increase (decrease) (5,756)
__________
NET ASSETS AT DECEMBER 31, 1995 26,990
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Natural
Resources
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $3,916
Net realized gain (loss) on investments 2,353
Net unrealized appreciation (depreciation) of investments 2,704
__________
Net increase (decrease) in net assets resulting from operations 8,973
Changes from principal transactions:
Purchase payments 6,154
Contract distributions and terminations (4,962)
Transfer payments from (to) Fixed Accounts and other Divisions 5,904
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 242
__________
Increase (decrease) in net assets derived from principal
transactions 7,338
__________
Total increase (decrease) 16,311
__________
NET ASSETS AT DECEMBER 31, 1996 $43,301
==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
All-Growth
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $70,621
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 2,642
Net realized gain (loss) on investments 1,011
Net unrealized appreciation of investments 10,501
__________
Net increase (decrease) in net assets resulting from operations 14,154
Changes from principal transactions:
Purchase payments 11,312
Contract distributions and terminations (10,713)
Transfer payments from (to) Fixed Accounts and other Divisions 5,721
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 861
__________
Increase (decrease) in net assets derived from principal
transactions 7,181
__________
Total increase (decrease) 21,335
__________
NET ASSETS AT DECEMBER 31, 1995 91,956
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
All-Growth
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($150)
Net realized gain (loss) on investments 2,112
Net unrealized appreciation (depreciation) of investments (4,894)
__________
Net increase (decrease) in net assets resulting from operations (2,932)
Changes from principal transactions:
Purchase payments 10,539
Contract distributions and terminations (12,597)
Transfer payments from (to) Fixed Accounts and other Divisions (9,493)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (631)
__________
Increase (decrease) in net assets derived from principal
transactions (12,182)
__________
Total increase (decrease) (15,114)
__________
NET ASSETS AT DECEMBER 31, 1996 $76,842
==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Real
Estate
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $36,934
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 521
Net realized gain (loss) on investments 369
Net unrealized appreciation of investments 3,425
__________
Net increase (decrease) in net assets resulting from operations 4,315
Changes from principal transactions:
Purchase payments 1,833
Contract distributions and terminations (4,799)
Transfer payments from (to) Fixed Accounts and other Divisions (3,325)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (145)
__________
Increase (decrease) in net assets derived from principal
transactions (6,436)
__________
Total increase (decrease) (2,121)
__________
NET ASSETS AT DECEMBER 31, 1995 34,813
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Real
Estate
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $2,214
Net realized gain (loss) on investments 652
Net unrealized appreciation (depreciation) of investments 8,605
__________
Net increase (decrease) in net assets resulting from operations 11,471
Changes from principal transactions:
Purchase payments 5,981
Contract distributions and terminations (4,775)
Transfer payments from (to) Fixed Accounts and other Divisions 3,076
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 115
__________
Increase (decrease) in net assets derived from principal
transactions 4,397
__________
Total increase (decrease) 15,868
__________
NET ASSETS AT DECEMBER 31, 1996 $50,681
==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Fully
Managed
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $98,837
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 179
Net realized gain (loss) on investments 1,311
Net unrealized appreciation of investments 16,314
__________
Net increase (decrease) in net assets resulting from operations 17,804
Changes from principal transactions:
Purchase payments 9,654
Contract distributions and terminations (13,651)
Transfer payments from (to) Fixed Accounts and other Divisions 4,159
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 524
__________
Increase (decrease) in net assets derived from principal
transactions 686
__________
Total increase (decrease) 18,490
__________
NET ASSETS AT DECEMBER 31, 1995 117,327
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Fully
Managed
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $7,463
Net realized gain (loss) on investments 2,245
Net unrealized appreciation (depreciation) of investments 6,614
__________
Net increase (decrease) in net assets resulting from operations 16,322
Changes from principal transactions:
Purchase payments 16,217
Contract distributions and terminations (17,846)
Transfer payments from (to) Fixed Accounts and other Divisions 2,478
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (67)
__________
Increase (decrease) in net assets derived from principal
transactions 782
__________
Total increase (decrease) 17,104
__________
NET ASSETS AT DECEMBER 31, 1996 $134,431
==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Multiple
Allocation
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $297,508
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 14,068
Net realized gain (loss) on investments 4,715
Net unrealized appreciation of investments 26,239
__________
Net increase (decrease) in net assets resulting from operations 45,022
Changes from principal transactions:
Purchase payments 17,072
Contract distributions and terminations (42,733)
Transfer payments from (to) Fixed Accounts and other Divisions (11,292)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (75)
__________
Increase (decrease) in net assets derived from principal
transactions (37,028)
__________
Total increase (decrease) 7,994
__________
NET ASSETS AT DECEMBER 31, 1995 305,502
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Multiple
Allocation
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $18,091
Net realized gain (loss) on investments 6,043
Net unrealized appreciation (depreciation) of investments (7,108)
__________
Net increase (decrease) in net assets resulting from operations 17,026
Changes from principal transactions:
Purchase payments 16,631
Contract distributions and terminations (44,014)
Transfer payments from (to) Fixed Accounts and other Divisions (23,461)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (1,257)
__________
Increase (decrease) in net assets derived from principal
transactions (52,101)
__________
Total increase (decrease) (35,075)
__________
NET ASSETS AT DECEMBER 31, 1996 $270,427
==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Capital
Appreciation
Division
____________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $88,346
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 7,594
Net realized gain (loss) on investments 2,221
Net unrealized appreciation of investments 14,531
____________
Net increase (decrease) in net assets resulting from operations 24,346
Changes from principal transactions:
Purchase payments 8,831
Contract distributions and terminations (13,163)
Transfer payments from (to) Fixed Accounts and other Divisions 11,592
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 1,097
____________
Increase (decrease) in net assets derived from principal
transactions 8,357
____________
Total increase (decrease) 32,703
____________
NET ASSETS AT DECEMBER 31, 1995 121,049
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Capital
Appreciation
Division
____________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $7,757
Net realized gain (loss) on investments 4,853
Net unrealized appreciation (depreciation) of investments 8,839
____________
Net increase (decrease) in net assets resulting from operations 21,449
Changes from principal transactions:
Purchase payments 16,081
Contract distributions and terminations (16,095)
Transfer payments from (to) Fixed Accounts and other Divisions 3,299
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 206
____________
Increase (decrease) in net assets derived from principal
transactions 3,491
____________
Total increase (decrease) 24,940
____________
NET ASSETS AT DECEMBER 31, 1996 $145,989
============
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Rising
Dividends
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $50,385
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (1,130)
Net realized gain (loss) on investments 776
Net unrealized appreciation of investments 16,037
__________
Net increase (decrease) in net assets resulting from operations 15,683
Changes from principal transactions:
Purchase payments 11,422
Contract distributions and terminations (9,800)
Transfer payments from (to) Fixed Accounts and other Divisions 11,423
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 1,229
__________
Increase (decrease) in net assets derived from principal
transactions 14,274
__________
Total increase (decrease) 29,957
__________
NET ASSETS AT DECEMBER 31, 1995 80,342
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Rising
Dividends
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($455)
Net realized gain (loss) on investments 4,125
Net unrealized appreciation (depreciation) of investments 12,317
__________
Net increase (decrease) in net assets resulting from operations 15,987
Changes from principal transactions:
Purchase payments 25,572
Contract distributions and terminations (12,639)
Transfer payments from (to) Fixed Accounts and other Divisions 13,857
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 454
__________
Increase (decrease) in net assets derived from principal
transactions 27,244
__________
Total increase (decrease) 43,231
__________
NET ASSETS AT DECEMBER 31, 1996 $123,573
==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Emerging
Markets
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $59,746
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (1,137)
Net realized gain (loss) on investments (7,448)
Net unrealized appreciation of investments 1,603
__________
Net increase (decrease) in net assets resulting from operations (6,982)
Changes from principal transactions:
Purchase payments 7,739
Contract distributions and terminations (7,740)
Transfer payments from (to) Fixed Accounts and other Divisions (14,939)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (937)
__________
Increase (decrease) in net assets derived from principal
transactions (15,877)
__________
Total increase (decrease) (22,859)
__________
NET ASSETS AT DECEMBER 31, 1995 36,887
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Emerging
Markets
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($998)
Net realized gain (loss) on investments (2,959)
Net unrealized appreciation (depreciation) of investments 5,674
__________
Net increase (decrease) in net assets resulting from operations 1,717
Changes from principal transactions:
Purchase payments 6,432
Contract distributions and terminations (6,450)
Transfer payments from (to) Fixed Accounts and other Divisions (1,273)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (160)
__________
Increase (decrease) in net assets derived from principal
transactions (1,451)
__________
Total increase (decrease) 266
__________
NET ASSETS AT DECEMBER 31, 1996 $37,153
==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Market
Manager
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $2,752
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 144
Net realized gain (loss) on investments 29
Net unrealized appreciation of investments 944
__________
Net increase (decrease) in net assets resulting from operations 1,117
Changes from principal transactions:
Purchase payments 2,140
Contract distributions and terminations (767)
Transfer payments from (to) Fixed Accounts and other Divisions (208)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 172
__________
Increase (decrease) in net assets derived from principal
transactions 1,337
__________
Total increase (decrease) 2,454
__________
NET ASSETS AT DECEMBER 31, 1995 5,206
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Market
Manager
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $396
Net realized gain (loss) on investments 327
Net unrealized appreciation (depreciation) of investments 245
__________
Net increase (decrease) in net assets resulting from operations 968
Changes from principal transactions:
Purchase payments (111)
Contract distributions and terminations (383)
Transfer payments from (to) Fixed Accounts and other Divisions (187)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (14)
__________
Increase (decrease) in net assets derived from principal
transactions (695)
__________
Total increase (decrease) 273
__________
NET ASSETS AT DECEMBER 31, 1996 $5,479
==========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Value
Equity
Division
(a)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $478
Net realized gain (loss) on investments 687
Net unrealized appreciation of investments 1,870
__________
Net increase (decrease) in net assets resulting from operations 3,035
Changes from principal transactions:
Purchase payments 8,619
Contract distributions and terminations (776)
Transfer payments from (to) Fixed Accounts and other Divisions 16,429
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 1,140
__________
Increase (decrease) in net assets derived from principal
transactions 25,412
__________
Total increase (decrease) 28,447
__________
NET ASSETS AT DECEMBER 31, 1995 28,447
<FN>
(a) Commencement of operations, January 10, 1995
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Value
Equity
Division
(a)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $1,157
Net realized gain (loss) on investments 1,290
Net unrealized appreciation (depreciation) of investments 601
__________
Net increase (decrease) in net assets resulting from operations 3,048
Changes from principal transactions:
Purchase payments 15,780
Contract distributions and terminations (3,990)
Transfer payments from (to) Fixed Accounts and other Divisions (376)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (48)
__________
Increase (decrease) in net assets derived from principal
transactions 11,366
__________
Total increase (decrease) 14,414
__________
NET ASSETS AT DECEMBER 31, 1996 $42,861
==========
<FN>
(a) Commencement of operations, January 10, 1995
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Strategic
Equity
Division
(b)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($8)
Net realized gain (loss) on investments (1)
Net unrealized appreciation of investments 28
__________
Net increase (decrease) in net assets resulting from operations 19
Changes from principal transactions:
Purchase payments 3,211
Contract distributions and terminations (172)
Transfer payments from (to) Fixed Accounts and other Divisions 4,796
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 177
__________
Increase (decrease) in net assets derived from principal
transactions 8,012
__________
Total increase (decrease) 8,031
__________
NET ASSETS AT DECEMBER 31, 1995 8,031
<FN>
(b) Commencement of operations, October 3, 1995
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Strategic
Equity
Division
(b)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $275
Net realized gain (loss) on investments 161
Net unrealized appreciation (depreciation) of investments 2,648
__________
Net increase (decrease) in net assets resulting from operations 3,084
Changes from principal transactions:
Purchase payments 12,046
Contract distributions and terminations (1,671)
Transfer payments from (to) Fixed Accounts and other Divisions 8,149
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 219
__________
Increase (decrease) in net assets derived from principal
transactions 18,743
__________
Total increase (decrease) 21,827
__________
NET ASSETS AT DECEMBER 31, 1996 $29,858
==========
<FN>
(b) Commencement of operations, October 3, 1995
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Small Cap
Division
(c)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1995 --
<FN>
(c) Commencement of operations, January 3, 1996
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Small Cap
Division
(c)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($369)
Net realized gain (loss) on investments 25
Net unrealized appreciation (depreciation) of investments 674
__________
Net increase (decrease) in net assets resulting from operations 330
Changes from principal transactions:
Purchase payments 17,552
Contract distributions and terminations (1,530)
Transfer payments from (to) Fixed Accounts and other Divisions 16,293
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 411
__________
Increase (decrease) in net assets derived from principal
transactions 32,726
__________
Total increase (decrease) 33,056
__________
NET ASSETS AT DECEMBER 31, 1996 $33,056
==========
<FN>
(c) Commencement of operations, January 3, 1996
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Managed
Global
Division
(d)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1995 --
<FN>
(d) Commencement of operations, September 3, 1996
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Managed
Global
Division
(d)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($350)
Net realized gain (loss) on investments 116
Net unrealized appreciation (depreciation) of investments 4,419
__________
Net increase (decrease) in net assets resulting from operations 4,185
Changes from principal transactions:
Purchase payments 3,524
Contract distributions and terminations (3,844)
Transfer payments from (to) Fixed Accounts and other Divisions 80,286
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 2,115
__________
Increase (decrease) in net assets derived from principal
transactions 82,081
__________
Total increase (decrease) 86,266
__________
NET ASSETS AT DECEMBER 31, 1996 $86,266
==========
<FN>
(d) Commencement of operations, September 3, 1996
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
OTC
Division
(e)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation of investments --
__________
Net increase (decrease) in net assets resulting from operations --
__________
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1995 --
<FN>
(e) Commencement of operations, September 23, 1996
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
OTC
Division
(e)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $204
Net realized gain (loss) on investments 1
Net unrealized appreciation (depreciation) of investments (125)
__________
Net increase (decrease) in net assets resulting from operations 80
Changes from principal transactions:
Purchase payments 1,207
Contract distributions and terminations (36)
Transfer payments from (to) Fixed Accounts and other Divisions 3,248
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 72
__________
Increase (decrease) in net assets derived from principal
transactions 4,491
__________
Total increase (decrease) 4,571
__________
NET ASSETS AT DECEMBER 31, 1996 $4,571
==========
<FN>
(e) Commencement of operations, September 23, 1996
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Growth &
Income
Division
(e)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1995 --
<FN>
(e) Commencement of operations, September 23, 1996
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Growth &
Income
Division
(e)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments $1
Net unrealized appreciation (depreciation) of investments 269
__________
Net increase (decrease) in net assets resulting from operations 270
Changes from principal transactions:
Purchase payments 2,760
Contract distributions and terminations (43)
Transfer payments from (to) Fixed Accounts and other Divisions 5,164
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 124
__________
Increase (decrease) in net assets derived from principal
transactions 8,005
__________
Total increase (decrease) 8,275
__________
NET ASSETS AT DECEMBER 31, 1996 $8,275
==========
<FN>
(e) Commencement of operations, September 23, 1996
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $854,814
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 22,577
Net realized gain (loss) on investments 5,077
Net unrealized appreciation of investments 99,889
__________
Net increase (decrease) in net assets resulting from operations 127,543
Changes from principal transactions:
Purchase payments 101,305
Contract distributions and terminations (128,971)
Transfer payments from (to) Fixed Accounts and other Divisions 2,722
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 3,465
__________
Increase (decrease) in net assets derived from principal
transactions (21,479)
__________
Total increase (decrease) 106,064
__________
NET ASSETS AT DECEMBER 31, 1995 960,878
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1996, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
___________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $44,388
Net realized gain (loss) on investments 21,659
Net unrealized appreciation (depreciation) of investments 37,651
___________
Net increase (decrease) in net assets resulting from operations 103,698
Changes from principal transactions:
Purchase payments 176,412
Contract distributions and terminations (155,860)
Transfer payments from (to) Fixed Accounts and other Divisions 98,017
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 1,428
___________
Increase (decrease) in net assets derived from principal
transactions 119,997
___________
Total increase (decrease) 223,695
___________
NET ASSETS AT DECEMBER 31, 1996 $1,184,573
===========
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE 1 - ORGANIZATION
Separate Account B (the "Account") was established on June 14, 1988, by Golden
American Life Insurance Company ("Golden American"), under Minnesota insurance
law to support the operations of variable annuity contracts ("Contracts").
Effective September 30, 1992, Golden American became a wholly-owned subsidiary
of BT Variable, Inc. ("BTV"), an indirect wholly-owned subsidiary of Bankers
Trust Company. Effective December 30, 1993, Golden American was redomesticated
from the State of Minnesota to the State of Delaware. Effective August 13,
1996, Equitable of Iowa Companies acquired all of the outstanding capital stock
of BTV. As of August 14, 1996, BT Variable, Inc.'s name was changed to EIC
Variable, Inc. These transactions had no effect on the accompanying financial
statements. Golden American is primarily engaged in the issuance of variable
insurance products and is licensed as a life insurance company in the District
of Columbia and all states except New York.
Operations of the Account commenced on January 25, 1989. The Account is
registered as a unit investment trust with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended. Golden
American provides for variable accumulation and benefits under the contracts by
crediting annuity considerations to one or more divisions within the Account or
to the Golden American Guaranteed Interest Division, the Golden American Fixed
Interest Division and the Fixed Separate Account, which are not part of the
Account, as directed by the Contractowners. The portion of the Account's assets
applicable to Contracts will not be chargeable with liabilities arising out of
any other business Golden American may conduct, but obligations of the Account,
including the promise to make benefit payments, are obligations of Golden
American. The assets and liabilities of the Account are clearly identified and
distinguished from the other assets and liabilities of Golden American.
At December 31, 1996, the Account had, under GoldenSelect Contracts, seventeen
investment divisions: the Liquid Asset, the Limited Maturity Bond, the Natural
Resources, the All-Growth, the Real Estate, the Fully Managed, the Multiple
Allocation, the Capital Appreciation, the Rising Dividends, the Emerging
Markets, the Market Manager, the Value Equity (commenced operations January,
1995), the Strategic Equity (commenced operations October, 1995), the Small Cap
(commenced operations January, 1996), the Managed Global and the OTC (commenced
operations September, 1996) and the Growth & Income (commenced operations
September, 1996) Divisions ("Divisions"). The Managed Global Division was
formerly the Managed Global Account of Golden American's Separate Account D
from October 12, 1992 until September 3, 1996. The assets in each Division are
invested in shares of a designated series ("Series," which may also be referred
to as "Portfolio") of mutual funds of The GCG Trust or the Equi-Select Series
Trust (the "Trusts"). Effective January, 1997, the name of the Natural
Resource Division was changed to the Hard Assets Division. Effective February,
1997, the Research, the Total Return, and the Value + Growth Divisions
commenced operations. The Account also includes The Fund For Life Division,
which is not included in the accompanying financial statements, and which
ceased to accept new Contracts effective December 31, 1994.
The Market Manager Division was open for investment for only a brief period
during 1994 and 1995. This Division is now closed and contractowners are
not permitted to direct their investments into this Division. Contractowners
with investments in the Market Manager Division were permitted to elect to
update their contracts to DVA PLUS contracts.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies of the
Account:
Use of Estimates: The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Investments: Investments are made in shares of a Series or Portfolio of the
Trusts and are valued at the net asset value per share of the respective Series
or Portfolio of the Trusts. Investment transactions in each Series or
Portfolio of the Trusts are recorded on the trade date. Distributions of net
investment income and capital gains of each Series or Portfolio of the Trusts
are recognized on the ex-distribution date. Realized gains and losses on
redemptions of the shares of the Series or Portfolio of the Trusts are
determined on the specific identification basis.
Federal Income Taxes: Operations of the Account form a part of, and are taxed
with, the total operations of Golden American which is taxed as a life
insurance company under the Internal Revenue Code. Earnings and realized
capital gains of the Account attributable to the Contractowners are excluded in
the determination of the federal income tax liability of Golden American.
Reclassification: Certain amounts in the 1995 financial statements have been
reclassified to conform to the 1996 financial statement presentation.
NOTE 3 - CHARGES AND FEES
Contracts currently being sold include the DVA 100, DVA Series 100 and the
DVA PLUS. The DVA PLUS has three different death benefit options referred to
as Standard, Annual Ratchet and 7% Solution. Golden American discontinued
external sales of DVA 80 in May 1991. In December 1995, Golden American also
discontinued external sales of DVA 100, however, they continued to be available
to Golden American employees and agents. Under the terms of the Contracts,
certain charges are allocated to the Contracts to cover Golden American's
expenses in connection with the issuance and administration of the Contracts.
Following is a summary of these charges:
Mortality and Expense Risk and Other Charges
Mortality and Expense Risk Charges: Golden American assumes mortality and
expense risks related to the operations of the Account and, in accordance
with the terms of the Contracts, deducts a daily charge from the assets of
the Account. Daily charges are deducted at annual rates of .80%, .90%,
1.25%, 1.10%, 1.25% and 1.40% of the assets attributable to the DVA 80, DVA
100, DVA Series 100, DVA PLUS-Standard, DVA PLUS-Annual Ratchet and DVA
PLUS-7% Solution, respectively, to cover these risks.
Asset Based Administrative Charges: A daily charge at an annual rate of .10%
is deducted from assets attributable to DVA 100 and DVA Series 100 Contracts.
A daily charge at an annual rate of .15% is deducted from the assets
attributable to DVA PLUS Contracts.
Annual Administrative Charges: An administrative charge of $40 per Contract
year is deducted from the accumulation value of Deferred Annuity Contracts to
cover ongoing administrative expenses. The charge is incurred on the Contract
anniversary date and deducted at the end of the Contract anniversary period.
This charge has been waived for certain offerings of the Contracts.
NOTE 3 - CHARGES AND FEES (Continued)
Minimum Death Benefit Guarantee Charges: For certain Contracts, a minimum
death benefit guarantee charge of up to $1.20 per $1,000 of guaranteed death
benefit per Contract year is deducted from the accumulation value of Deferred
Annuity Contracts on each Contract anniversary date.
Contingent Deferred Sales Charges: Under DVA PLUS Contracts issued subsequent
to September 1995, a contingent deferred sales charge ("Surrender Charge") is
imposed as a percentage of each premium payment if the Contract is surrendered
or an excess partial withdrawal is taken during the seven-year period from the
date a premium payment is received. The Surrender Charge is imposed at a rate
of 7% during the first two complete years after purchase declining to 6%, 5%,
4%, 3% and 1% after the second, third, fourth, fifth and sixth years,
respectively.
Other Contract Charges: Under DVA 80, DVA 100 and DVA Series 100 contracts,
a charge is deducted from the accumulation value for contracts taking more than
one conventional partial withdrawal during a contract year. For DVA 80 and DVA
100 contracts, annual distribution fees are deducted from contract accumulation
values.
Deferred Sales Load: Under contracts offered prior to October 1995, a sales
load of up to 7 1/2% was applicable to each premium payment for sales-related
expenses as specified in the Contracts. For DVA Series 100, the sales load is
deducted in equal annual installments over the period the Contract is in force,
not to exceed 10 years. For DVA 80 and DVA 100 Contracts, although the sales
load is chargeable to each premium when it is received by Golden American, the
amount of such charge is initially advanced by Golden American to
Contractowners and included in the accumulation value and then deducted in
equal installments on each Contract anniversary date over a period of six
years. Upon surrender of the Contract, the unamortized deferred sales load is
deducted from the accumulation value by Golden American. In addition, when
partial withdrawal limits are exceeded, a portion of the unamortized deferred
sales load is deducted.
Premium Taxes: For certain contracts, premium taxes are deducted, where
applicable, from the accumulation value of each Contract. The amount and
timing of the deduction depend on the annuitant's state of residence and
currently ranges up to 3.5% of premiums.
Fees Waived by Golden American: Certain charges and fees for various types of
Contracts are currently waived by Golden American. Golden American reserves
the right to discontinue these waivers at its discretion or to conform with
changes in the law.
NOTE 3 - CHARGES AND FEES (Continued)
The net assets retained in the Account by Golden American in the accompanying
financial statements represent the unamortized deferred sales load and premium
taxes advanced by Golden American, noted above. Net assets retained in the
Account by Golden American are as follows:
<TABLE>
<CAPTION>
Combined
_________________________________
1996 1995
_______________ _______________
(Dollars in thousands)
<S> <C> <C>
Balance at beginning of period $34,408 $44,008
Sales load advanced 380 5,370
Premium tax advanced 11 51
Net transfer (to) from Separate Account
D, Fixed Account and other Divisions 1,037 (1,956)
Amortization of deferred sales load
and premium tax (12,431) (13,065)
_______________ _______________
Balance at end of period $23,405 $34,408
=============== ===============
</TABLE>
NOTE 4 - PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments were as
follows:
<TABLE>
<CAPTION>
Period Ended December 31,
____________________________________________________
1996 1995
_________________________ _________________________
Purchases Sales Purchases Sales
_________________________ _________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
The GCG Trust Liquid
Asset Series $64,148 $63,169 $36,373 $45,249
The GCG Trust Limited
Maturity Bond Series 13,202 23,196 13,148 24,648
The GCG Trust Natural
Resources Series 22,965 11,706 11,278 19,076
The GCG Trust All-Growth
Series 10,482 22,833 21,261 11,424
The GCG Trust Real
Estate Series 12,388 5,777 4,524 10,440
The GCG Trust Fully
Managed Series 22,506 14,263 13,980 13,106
The GCG Trust Multiple
Allocation Series 28,625 62,678 29,322 52,281
The GCG Trust Capital
Appreciation Series 32,609 21,360 28,436 12,469
The GCG Trust Rising
Dividends Series 41,303 14,500 19,522 6,361
The GCG Trust Emerging
Markets Series 11,043 13,496 10,584 27,621
The GCG Trust Market
Manager Series 449 1,388 3,057 832
The GCG Trust Value
Equity Series 20,546 8,015 29,104 3,199
The GCG Trust Strategic
Equity Series 20,731 1,702 8,151 142
The GCG Trust Small
Cap Series 47,577 15,201 -- --
The GCG Trust Managed
Global Series 85,923 4,148 -- --
Equi-Select Series Trust
OTC Portfolio 4,644 164 -- --
Equi-Select Series Trust
Growth & Income Portfolio 8,037 49 -- --
____________ ____________ ____________ ____________
$447,178 $283,645 $228,740 $226,848
============ ============ ============ ============
</TABLE>
NOTE 5 - SUMMARY OF CHANGES FROM UNIT TRANSACTIONS
Contractowners transactions shown in the following table reflect gross inflows
("Purchases") and outflows ("Sales") in units for each Division. The activity
includes contractowners electing to update a DVA 100 or DVA Series 100
contracts to a DVA PLUS contract beginning in October 1995. Updates to DVA
PLUS contracts result in both a sale (surrender of the old contract) and a
purchase (acquisition of the new contract). All of the purchase transactions
for the Market Manager Division resulted from such updates.
Contractowner transactions in units were as follows:
<TABLE>
<CAPTION>
Period Ended December 31,
__________________________________________________
1996 1995
________________________ ________________________
Purchases Sales Purchases Sales
________________________ ________________________
<S> <C> <C> <C> <C>
Liquid Asset Division 5,982,248 6,003,930 3,119,370 3,934,332
Limited Maturity Bond Division 829,366 1,824,946 1,096,937 1,842,599
Natural Resources Division 1,374,569 978,096 835,272 1,412,435
All-Growth Division 1,228,512 2,169,543 1,548,525 1,094,131
Real Estate Division 754,585 552,462 322,375 802,601
Fully Managed Division 1,450,300 1,450,120 1,020,546 1,063,678
Multiple Allocation Division 1,330,139 4,486,173 1,057,363 3,678,129
Capital Appreciation Division 2,032,074 1,900,755 1,740,091 1,248,056
Rising Dividends Division 3,448,184 1,678,751 1,883,516 753,983
Emerging Markets Division 1,573,766 1,768,185 1,386,840 3,143,521
Market Manager Division 7,958 106,893 282,507 142,437
Value Equity Division 1,834,937 1,024,120 2,459,134 333,200
Strategic Equity Division 2,083,197 353,766 848,555 45,767
Small Cap Division 4,912,458 2,122,101 -- --
Managed Global Division 8,792,080 716,753 -- --
OTC Division 316,184 26,607 -- --
Growth & Income Division 697,746 35,755 -- --
</TABLE>
NOTE 6 - NET ASSETS
Net assets at December 31, 1996 consisted of the following:
<TABLE>
<CAPTION>
Limited
Liquid Maturity Natural All-
Asset Bond Resources Growth
Division Division Division Division
____________ _____________ ____________ _____________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $32,438 $42,710 $29,064 $67,465
Accumulated net investment
income (loss) 5,038 12,389 10,233 7,934
Net unrealized appreciation
(depreciation) of
investments -- (765) 4,004 1,443
____________ _____________ ____________ _____________
$37,476 $54,334 $43,301 $76,842
============ ============= ============ =============
</TABLE>
<TABLE>
<CAPTION>
Real Fully Multiple Capital
Estate Managed Allocation Appreciation
Division Division Division Division
____________ _____________ ____________ _____________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $32,124 $100,420 $184,144 $96,189
Accumulated net investment
income (loss) 7,542 19,186 80,907 27,156
Net unrealized appreciation
(depreciation) of
investments 11,015 14,825 5,376 22,644
____________ _____________ ____________ _____________
$50,681 $134,431 $270,427 $145,989
============ ============= ============ =============
</TABLE>
<TABLE>
<CAPTION>
Rising Emerging Market Value
Dividends Markets Manager Equity
Division Division Division Division
____________ _____________ ____________ _____________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $91,082 $48,602 $3,327 $36,655
Accumulated net
investment income (loss) 4,742 (8,904) 964 3,735
Net unrealized appreciation
(depreciation) of
investments 27,749 (2,545) 1,188 2,471
____________ _____________ ____________ _____________
$123,573 $37,153 $5,479 $42,861
============ ============= ============ =============
</TABLE>
NOTE 6 - NET ASSETS - (Continued)
<TABLE>
<CAPTION>
Strategic Managed
Equity Small Cap Global
Division Division Division
____________ _____________ ____________
(Dollars in thousands)
<S> <C> <C> <C>
Unit transactions $26,740 $32,726 $82,081
Accumulated net
investment income (loss) 443 (344) (234)
Net unrealized appreciation
(depreciation) of
investments 2,675 674 4,419
____________ _____________ ____________
$29,858 $33,056 $86,266
============ ============= ============
</TABLE>
<TABLE>
<CAPTION>
Growth &
OTC Income
Division Division Combined
____________ _____________ ____________
(Dollars in thousands)
<S> <C> <C> <C>
Unit transactions $4,491 $8,005 $918,263
Accumulated net
investment income (loss) 205 1 170,993
Net unrealized appreciation
(depreciation) of
investments (125) 269 95,317
____________ _____________ ____________
$4,571 $8,275 $1,184,573
============ ============= ============
</TABLE>
NOTE 7 - UNIT VALUES
Accumulation unit value information (which is based on total assets) for units
outstanding by contract type as of December 31, 1996 was as follows:
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
LIQUID ASSET
Currently payable annuity products:
DVA 80 1,451 $13.984 $20
DVA 100 4,396 13.762 61
Contracts in accumulation period:
DVA 80 463,720 13.984 6,485
DVA 100 1,703,328 13.762 23,441
DVA Series 100 19,543 13.380 262
DVA PLUS - Standard 76,505 13.506 1,033
DVA PLUS - Annual Ratchet 84,960 13.347 1,134
DVA PLUS - 7% Solution 383,231 13.188 5,054
______________
37,490
LIMITED MATURITY BOND
Currently payable annuity products:
DVA 80 22,205 15.839 352
DVA 100 27,295 15.588 425
Contracts in accumulation period:
DVA 80 81,730 15.839 1,295
DVA 100 2,859,817 15.588 44,579
DVA Series 100 32,874 15.156 498
DVA PLUS - Standard 83,927 15.312 1,285
DVA PLUS - Annual Ratchet 46,293 15.130 701
DVA PLUS - 7% Solution 349,417 14.951 5,224
______________
54,359
NATURAL RESOURCES
Currently payable annuity products:
DVA 80 2,262 20.589 46
DVA 100 21,633 20.262 438
Contracts in accumulation period:
DVA 80 209,024 20.589 4,304
DVA 100 1,404,857 20.262 28,466
DVA Series 100 36,118 19.700 712
DVA PLUS - Standard 94,213 19.886 1,873
DVA PLUS - Annual Ratchet 43,232 19.650 850
DVA PLUS - 7% Solution 341,711 19.417 6,635
______________
43,324
</TABLE>
NOTE 7 - UNIT VALUES (Continued)
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
ALL-GROWTH
Currently payable annuity products:
DVA 80 6,691 $14.337 $96
DVA 100 36,473 14.110 515
Contracts in accumulation period:
DVA 80 151,395 14.337 2,170
DVA 100 4,238,780 14.110 59,809
DVA Series 100 23,840 13.718 327
DVA PLUS - Standard 129,648 13.848 1,795
DVA PLUS - Annual Ratchet 146,161 13.684 2,000
DVA PLUS - 7% Solution 752,345 13.521 10,173
______________
76,885
REAL ESTATE
Currently payable annuity products:
DVA 80 7,224 22.048 159
DVA 100 35,685 21.699 774
Contracts in accumulation period:
DVA 80 109,273 22.048 2,409
DVA 100 1,704,684 21.699 36,990
DVA Series 100 14,864 21.097 314
DVA PLUS - Standard 54,229 21.295 1,155
DVA PLUS - Annual Ratchet 42,710 21.043 899
DVA PLUS - 7% Solution 384,928 20.794 8,004
______________
50,704
FULLY MANAGED
Currently payable annuity products:
DVA 80 9,341 18.115 169
DVA 100 90,888 17.828 1,620
Contracts in accumulation period:
DVA 80 159,907 18.115 2,897
DVA 100 5,978,934 17.828 106,595
DVA Series 100 21,625 17.334 375
DVA PLUS - Standard 203,891 17.497 3,568
DVA PLUS - Annual Ratchet 173,475 17.290 2,999
DVA PLUS - 7% Solution 952,517 17.085 16,273
______________
134,496
</TABLE>
NOTE 7 - UNIT VALUES (Continued)
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
MULTIPLE ALLOCATION
Currently payable annuity products:
DVA 80 35,810 $18.595 $666
DVA 100 131,617 18.300 2,409
Contracts in accumulation period:
DVA 80 739,049 18.595 13,742
DVA 100 12,268,326 18.300 224,510
DVA Series 100 99,857 17.792 1,777
DVA PLUS - Standard 289,954 17.960 5,207
DVA PLUS - Annual Ratchet 150,732 17.747 2,675
DVA PLUS - 7% Solution 1,117,238 17.537 19,593
______________
270,579
CAPITAL APPRECIATION
Currently payable annuity products:
DVA 80 14,341 17.816 255
DVA 100 72,413 17.649 1,278
Contracts in accumulation period:
DVA 80 108,583 17.816 1,934
DVA 100 6,632,504 17.649 117,056
DVA Series 100 35,436 17.359 615
DVA PLUS - Standard 162,558 17.463 2,839
DVA PLUS - Annual Ratchet 174,592 17.343 3,028
DVA PLUS - 7% Solution 1,106,359 17.222 19,054
______________
146,059
RISING DIVIDENDS
Currently payable annuity products:
DVA 80 6,467 15.984 103
DVA 100 27,116 15.880 431
Contracts in accumulation period:
DVA 80 122,375 15.984 1,956
DVA 100 5,269,251 15.880 83,674
DVA Series 100 77,854 15.698 1,222
DVA PLUS - Standard 297,973 15.769 4,699
DVA PLUS - Annual Ratchet 355,191 15.694 5,575
DVA PLUS - 7% Solution 1,663,079 15.619 25,976
______________
123,636
</TABLE>
NOTE 7 - UNIT VALUES (Continued)
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
EMERGING MARKETS
Currently payable annuity products:
DVA 80 1,604 $9.915 $16
DVA 100 23,151 9.850 228
Contracts in accumulation period:
DVA 80 125,073 9.915 1,240
DVA 100 2,729,245 9.850 26,884
DVA Series 100 28,101 9.738 274
DVA PLUS - Standard 97,857 9.782 957
DVA PLUS - Annual Ratchet 102,267 9.735 995
DVA PLUS - 7% Solution 679,247 9.688 6,581
______________
37,175
MARKET MANAGER
Contracts in accumulation period:
DVA 100 373,579 14.641 5,469
DVA PLUS - 7% Solution 7,958 14.451 115
______________
5,584
VALUE EQUITY
Currently payable annuity products:
DVA 80 534 14.722 8
DVA 100 8,244 14.664 121
Contracts in accumulation period:
DVA 80 37,810 14.722 557
DVA 100 1,379,397 14.664 20,227
DVA Series 100 27,355 14.562 398
DVA PLUS - Standard 181,354 14.609 2,649
DVA PLUS - Annual Ratchet 249,994 14.567 3,642
DVA PLUS - 7% Solution 1,052,064 14.525 15,282
______________
42,884
STRATEGIC EQUITY
Currently payable annuity products:
DVA 100 37,512 11.830 444
Contracts in accumulation period:
DVA 80 95,398 11.860 1,131
DVA 100 793,292 11.830 9,384
DVA Series 100 35,219 11.778 415
DVA PLUS - Standard 370,536 11.805 4,374
DVA PLUS - Annual Ratchet 231,567 11.785 2,729
DVA PLUS - 7% Solution 968,694 11.764 11,396
______________
29,873
</TABLE>
NOTE 7 - UNIT VALUES (Continued)
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
SMALL CAP
Currently payable annuity products:
DVA 100 13,782 $11.890 $164
Contracts in accumulation period:
DVA 80 85,117 11.914 1,014
DVA 100 908,778 11.890 10,806
DVA Series 100 40,332 11.848 478
DVA PLUS - Standard 198,338 11.860 2,352
DVA PLUS - Annual Ratchet 227,347 11.843 2,692
DVA PLUS - 7% Solution 1,316,663 11.825 15,569
______________
33,075
MANAGED GLOBAL
Currently payable annuity products:
DVA 80 5,665 10.829 61
DVA 100 32,523 10.740 349
Contracts in accumulation period:
DVA 80 89,636 10.829 971
DVA 100 6,049,685 10.740 64,973
DVA Series 100 64,797 10.589 686
DVA PLUS - Standard 226,224 10.620 2,402
DVA PLUS - Annual Ratchet 231,774 10.554 2,446
DVA PLUS - 7% Solution 1,375,023 10.488 14,422
______________
86,310
OTC
Contracts in accumulation period:
DVA 80 2,623 15.932 42
DVA 100 167,020 15.860 2,649
DVA Series 100 5,670 15.735 89
DVA PLUS - Standard 29,878 15.772 471
DVA PLUS - Annual Ratchet 28,223 15.696 443
DVA PLUS - 7% Solution 56,163 15.665 880
______________
4,574
GROWTH & INCOME
Contracts in accumulation period:
DVA 80 8,340 12.542 104
DVA 100 389,432 12.523 4,877
DVA Series 100 2,225 12.489 28
DVA PLUS - Standard 50,199 12.499 627
DVA PLUS - Annual Ratchet 38,037 12.486 475
DVA PLUS - 7% Solution 173,758 12.471 2,167
______________
8,278
</TABLE>
<PAGE>
[GOLDEN AMERICAN LIFE INSURANCE LOGO ]
ANNUAL REPORT
------------------
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
------------------
DECEMBER 31, 1995
GoldenSelect products are issued by Golden American Life Insurance Company and
distributed by
Directed Services, Inc., both subsidiaries of Bankers Trust Company
<PAGE>
Golden American Life Insurance Company
A SUBSIDIARY OF BANKERS TRUST COMPANY
1001 JEFFERSON STREET, SUITE 400, WILMINGTON, DE 19801 TEL: 302-576-3400
FAX: 302-576-3450
February 21, 1996
Dear Contractholder:
I am pleased to provide you with the 1995 Annual Report for The Managed Global
Account of Separate Account D. This portfolio invests in a wide range of equity,
debt securities and money market instruments worldwide. It has been managed by
Warburg, Pincus Counsellors, Inc. since July, 1994 and seeks high total
investment returns consistent with prudent regard for capital preservation.
Included in the Annual Report is a report of Warburg, Pincus Counsellors, Inc.
Warburg, Pincus' comments reflect their views as of the date written, and are
subject to change at any time.
If you have any questions or would like additional information, please call
Golden American customer service: 1-800-366-0066. We would be pleased to assist
you.
Thank you for your continued support of GoldenSelect products. We look forward
to serving you in 1996 and beyond.
Sincerely.
/s/ Terry L. Kendall
Terry L. Kendall
President
D-1
<PAGE>
MANAGED GLOBAL ACCOUNT
The objective of the GoldenSelect Managed Global Account of Separate Account D
is long-term capital appreciation and international diversification.
The year saw fairly wide divergences in performance among foreign markets. Most
European exchanges recorded solid gains, while many of the emerging markets,
particularly in Asia, suffered losses. Japan, after falling sharply in the
year's first six months, staged a powerful recovery at midyear and finished the
year even.
Japan remains the Account's largest commitment to a single country, at 32% of
the portfolio. The Portfolio Manager is encouraged by developments in the
Japanese economy, and is equally optimistic about the stock market's prospects
in 1996.
Emerging markets, collectively, suffered in 1995, and as a result valuations are
now lower than they have been in several years. The Portfolio Manager sees many
attractive opportunities in emerging markets as 1996 begins, particularly in
Asia, which represents the major focus of the Account's emerging-market
exposure.
As 1996 begins, the Portfolio Manager's outlook on international equity markets
is, in general, positive, and believes that the Account is well-positioned with
regard to its regional and country allocations and its specific holdings.
WARBURG, PINCUS COUNSELLORS, INC.
TOP FIVE HOLDINGS AS OF DECEMBER 31, 1995:
<TABLE>
<S> <C>
1. Banco De Santander S.A., ADR................................................... 4.0%
2. Canon Inc...................................................................... 3.7%
3. East Japan Railway Company..................................................... 3.1%
4. Nippon Telegraph & Telephone Corporation....................................... 3.0%
5. VA Technologie AG.............................................................. 3.0%
</TABLE>
ASSET DISTRIBUTION BY COUNTRY
The following table replaces a pie chart showing asset distribution by country
as a precentage of total investments.
Other............................... 36.4%
Argentina........................... 4.0%
Spain............................... 4.0%
Hong Kong........................... 4.1%
New Zealand......................... 6.0%
France.............................. 6.1%
Great Britain....................... 7.4%
Japan............................... 32.0%
D-2
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost $67,478,262) (Notes 1 and 3)........................................................... $ 70,981,052
Cash............................................................................................................... 78,896
Receivables:
Investment securities sold...................................................................................... 1,336,669
Dividends and interest.......................................................................................... 99,399
Premium payments and reallocations.............................................................................. 20,839
Net unrealized appreciation of forward foreign currency exchange contracts......................................... 351,688
Prepaid expenses and other assets.................................................................................. 9,271
-------------
Total Assets.................................................................................................... 72,877,814
LIABILITIES
Payables:
Investment securities purchased................................................................................. 334,419
Surrenders, withdrawals and reallocations....................................................................... 58,577
Golden American for contract related expenses (Note 2).......................................................... 43,558
Accrued management and organization fees (Note 2).................................................................. 1,684
Accrued expenses................................................................................................... 64,469
-------------
Total Liabilities............................................................................................... 502,707
-------------
Total Net Assets................................................................................................ $ 72,375,107
-------------
-------------
NET ASSETS
For variable annuity contracts..................................................................................... $ 69,499,713
Retained in The Managed Global Account of Separate Account D by Golden American (Note 2)........................... 2,875,394
-------------
Total Net Assets................................................................................................ $ 72,375,107
-------------
-------------
</TABLE>
See Notes to Financial Statements.
D-3
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes of $3,203).............................................................. $ 92,139
Dividends (net of foreign withholding taxes of $149,639)........................................................... 1,207,385
------------
Total Investment Income......................................................................................... 1,299,524
------------
EXPENSES:
Mortality and expense risk and asset based administrative charges (Note 2)......................................... 739,881
Management and advisory fees (Note 2).............................................................................. 734,700
Custodian fees (Note 2)............................................................................................ 111,693
Accounting fees.................................................................................................... 51,766
Auditing fees...................................................................................................... 23,639
Printing and mailing............................................................................................... 14,268
Board of governors' fees and expenses (Note 2)..................................................................... 5,987
Legal fees......................................................................................................... 3,818
Other.............................................................................................................. 40,556
------------
Total Expenses.................................................................................................. 1,726,308
Less amounts paid by the investment manager pursuant to expense limitation agreement (Note 2)...................... (63,386)
------------
Net Expenses.................................................................................................... 1,662,922
------------
NET INVESTMENT LOSS.................................................................................................. (363,398)
------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) from:
Security transactions........................................................................................... (6,119,111)
Forward foreign currency exchange contracts..................................................................... 1,952,175
Foreign currency transactions................................................................................... (4,990)
Net change in unrealized appreciation of:
Securities...................................................................................................... 7,765,310
Forward foreign currency exchange contracts..................................................................... 351,688
Other assets and liabilities denominated in foreign currencies.................................................. 3,323
------------
Net realized and unrealized gain on investments.................................................................... 3,948,395
------------
Net increase in net assets resulting from operations............................................................ $ 3,584,997
------------
------------
</TABLE>
See Notes to Financial Statements.
D-4
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
------------- -------------
INCREASE/(DECREASE) IN NET ASSETS
<S> <C> <C>
OPERATIONS:
Net investment loss................................................................................ $ (363,398) $ (259,767)
Net realized loss on securities, forward foreign currency exchange contracts and foreign currency
transactions.................................................................................... (4,171,926) (1,363,558)
Net unrealized appreciation/(depreciation) of securities, forward foreign currency exchange
contracts and other assets and liabilities denominated in foreign currencies.................... 8,120,321 (11,511,952)
------------- -------------
Net increase/(decrease) in net assets resulting from operations.................................... 3,584,997 (13,135,277)
------------- -------------
CONTRACT RELATED TRANSACTIONS:
Premiums........................................................................................... 6,235,725 22,680,207
Benefits, surrenders and other withdrawals......................................................... (9,881,861) (8,496,158)
Net transfers (to) from Separate Account B, Fixed Account and Golden American...................... (12,563,025) (2,244,552)
Contract related charges and fees (Note 2)......................................................... (1,209,284) (1,073,158)
------------- -------------
Net increase/(decrease) in net assets resulting from contract related transactions................. (17,418,445) 10,866,339
------------- -------------
Net decrease in net assets......................................................................... (13,833,448) (2,268,938)
NET ASSETS:
Beginning of year.................................................................................. 86,208,555 88,477,493
------------- -------------
End of year........................................................................................ $ 72,375,107 $ 86,208,555
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements.
D-5
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH YEAR FOR THE DVA 100.
<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
12/31/95 12/31/94** 12/31/93 12/31/92*
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of year................................. $ 9.091 $ 10.518 $ 10.008 $ 10.000
--------- ----------- --------- -----------
INCOME/(LOSS) FROM INVESTMENT OPERATIONS:
Net investment income/(loss) #............................................. (0.044) (0.030) (0.046) 0.022
Net realized and unrealized gain/(loss) on investments..................... 0.612 (1.397) 0.556 (0.014)
--------- ----------- --------- -----------
Total from investment operations........................................... 0.568 (1.427) 0.510 0.008
--------- ----------- --------- -----------
Accumulation unit value, end of year....................................... $ 9.659 $ 9.091 $ 10.518 $ 10.008
--------- ----------- --------- -----------
--------- ----------- --------- -----------
Total return............................................................... 6.25% (13.57)% 5.10% 0.08%++
--------- ----------- --------- -----------
--------- ----------- --------- -----------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)......................................... $ 68,283 $ 83,702 $ 85,702 $ 38,699
Ratio of operating expenses to average net assets.......................... 2.27% 2.31% 2.68% 2.46%+
Decrease reflected in above expense ratio due to expense limitations....... 0.08% 0.09% 0.03% --
Ratio of net investment income/(loss) to average net assets................ (0.50)% (0.31)% (0.44)% 1.78%+
</TABLE>
- ------------------
* These units were available for sale on October 21, 1992.
** On July 1, 1994 Warburg, Pincus Counsellors, Inc. became Portfolio Manager of
the Account. Prior to that date the Account had been advised by another
Portfolio Manager.
+ Annualized
++ Non-annualized
# Per unit numbers have been calculated using the average unit method, which
more appropriately presents the per unit data for the period.
See Notes to Financial Statements.
D-6
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH YEAR FOR THE DVA 80.
<TABLE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
12/31/95 12/31/94** 12/31/93*
----------- ----------- ---------
<S> <C> <C> <C>
Accumulation unit value, beginning of year................................................. $ 9.130 $ 10.541 $ 10.420
----------- ----------- ---------
INCOME/(LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss #...................................................................... (0.027) (0.011) (0.005)
Net realized and unrealized gain/(loss) on investments..................................... 0.617 (1.400) 0.126
----------- ----------- ---------
Total from investment operations........................................................... 0.590 (1.411) 0.121
----------- ----------- ---------
Accumulation unit value, end of year....................................................... $ 9.720 $ 9.130 $ 10.541
----------- ----------- ---------
----------- ----------- ---------
Total return............................................................................... 6.46% (13.39)% 1.16%++
----------- ----------- ---------
----------- ----------- ---------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)......................................................... $ 1,047 $ 1,877 $ 2,087
Ratio of operating expenses to average net assets.......................................... 2.07% 2.11% 2.48%+
Decrease reflected in above expense ratio due to expense limitations....................... 0.08% 0.09% 0.03%+
Ratio of net investment loss to average net assets......................................... (0.30)% (0.11)% (0.24)%+
</TABLE>
- ------------------
* These units were available for sale on October 14, 1993.
** On July 1, 1994 Warburg, Pincus Counsellors, Inc. became Portfolio Manager of
the Account. Prior to that date the Account had been advised by another
Portfolio Manager.
+ Annualized
++ Non-annualized
# Per unit numbers have been calculated using the average unit method, which
more appropriately presents the per unit data for the period.
See Notes to Financial Statements.
D-7
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
<TABLE>
<CAPTION>
FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH YEAR FOR THE DVA SERIES 100.
YEAR YEAR PERIOD
ENDED ENDED ENDED
12/31/95 12/31/94** 12/31/93*
----------- ----------- ---------
<S> <C> <C> <C>
Accumulation unit value, beginning of year................................................. $ 9.027 $ 10.481 $ 10.536
----------- ----------- ---------
INCOME/(LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss #...................................................................... (0.076) (0.066) (0.036)
Net realized and unrealized gain/(loss) on investments..................................... 0.607 (1.388) (0.019)
----------- ----------- ---------
Total from investment operations........................................................... 0.531 (1.454) (0.055)
----------- ----------- ---------
Accumulation unit value, end of year....................................................... $ 9.558 $ 9.027 $ 10.481
----------- ----------- ---------
----------- ----------- ---------
Total return............................................................................... 5.87% (13.87)% (0.52)%++
----------- ----------- ---------
----------- ----------- ---------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)......................................................... $ 545 $ 630 $ 688
Ratio of operating expenses to average net assets.......................................... 2.62% 2.66% 3.02%+
Decrease reflected in above expense ratio due to expense limitations....................... 0.08% 0.09% 0.03%+
Ratio of net investment loss to average net assets......................................... (0.85)% (0.66)% (0.79)%+
</TABLE>
- ------------------
* These units were available for sale on April 27, 1993.
** On July 1, 1994 Warburg, Pincus Counsellors, Inc. became Portfolio Manager of
the Account. Prior to that date the Account had been advised by another
Portfolio Manager.
+ Annualized
++ Non-annualized
# Per unit numbers have been calculated using the average unit method, which
more appropriately presents the per unit data for the period.
See Notes to Financial Statements.
D-8
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
DVA PLUS- DVA PLUS- DVA PLUS-
STANDARD ANNUAL RATCHET 7% SOLUTION
----------- --------------- -------------
PERIOD PERIOD PERIOD
ENDED ENDED ENDED
12/31/95* 12/31/95* 12/31/95*
----------- --------------- -------------
<S> <C> <C> <C>
Accumulation unit value, beginning of period................................... $ 9.323 $ 9.282 $ 9.240
----------- --------------- -------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss #.......................................................... (0.013) (0.013) (0.013)
Net realized and unrealized gain on investments................................ 0.266 0.262 0.259
----------- --------------- -------------
Total from investment operations............................................... 0.253 0.249 0.246
----------- --------------- -------------
Accumulation unit value, end of period......................................... $ 9.576 $ 9.531 $ 9.486
----------- --------------- -------------
----------- --------------- -------------
Total return................................................................... 2.71%++ 2.69%++ 2.66%++
----------- --------------- -------------
----------- --------------- -------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........................................... $ 256 $ 262 $ 1,982
Ratio of operating expenses to average net assets.............................. 2.40%+ 2.55%+ 2.60%+
Decrease reflected in above expense ratio due to expense limitations........... 0.08%+ 0.08%+ 0.08%+
Ratio of net investment loss to average net assets............................. (0.63)%+ (0.78)%+ (0.83)%+
</TABLE>
- ------------------
* These units were available for sale on October 2, 1995.
+ Annualized
++ Non-annualized
# Per unit numbers have been calculated using the average unit method, which
more appropriately presents the per unit data for the period.
See Notes to Financial Statements.
D-9
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- -------------- -----------
COMMON STOCKS -- 93.7%
ARGENTINA -- 3.9%
<S> <C> <C>
2,318 Banco de Galicia Y Buenos Aires
S.A............................. $ 47,809
21,045 Banco Frances del Rio de la Plata
S.A............................. 186,220
19,320 Banco Frances del Rio de la Plata
S.A., ADR....................... 519,225
61,900 Capex S.A., Class A, GDR**........ 897,550
25,600 Telefonica de Argentina S.A.,
ADR............................. 697,600
21,800 Y.P.F. S.A........................ 471,425
-----------
2,819,829
-----------
AUSTRALIA -- 2.6%
71,312 BTR Ltd. Class A.................. 348,227
51,375 Niugini Mining Ltd.+.............. 98,898
274,500 Pasminco Ltd.+.................... 336,637
212,900 Woodside Petroleum Ltd............ 1,088,677
-----------
1,872,439
-----------
AUSTRIA -- 3.0%
17,000 VA Technologie AG+................ 2,159,051
-----------
BRAZIL -- 0.4%
9,000 Panamerican Beverages Inc., Class
A............................... 288,000
-----------
CHINA -- 0.4%
15,000 Jilan Chemical, ADR............... 322,500
-----------
DENMARK -- 0.3%
11,100 International Service Systems AS,
Class B......................... 249,865
-----------
FINLAND -- 1.1%
15,650 Metsa-Serla, Class B.............. 482,070
500 Metra AB, Class B................. 20,688
11,600 Valmet, Class A................... 287,987
-----------
790,745
-----------
FRANCE -- 6.0%
9,507 Bouygues.......................... 956,907
4,000 Cetelem........................... 750,145
47,300 Largardere Groupe................. 868,598
8,351 Scor S.A.......................... 260,703
19,671 Total S.A., Class B............... 1,326,518
4,597 Total S.A., ADS................... 156,298
-----------
4,319,169
-----------
GERMANY -- 2.9%
12,400 Adidas AG......................... 656,318
11,500 Adidas AG, ADR**.................. 302,158
3,400 Deutsche Bank AG.................. 161,156
13,000 SGL Carbon AG..................... 1,006,276
-----------
2,125,908
-----------
GREAT BRITAIN -- 7.2%
173,956 British Airport Authority Ord..... 1,310,242
11,600 Cookson Group PLC................. 55,125
50,000 Govett & Company Ltd., Ord. PLC... 180,148
64,000 Grand Metropolitan PLC Ord........ 460,682
156,223 Prudential Corporation PLC........ 1,005,637
31,232 Reckitt & Colman PLC Ord.......... 345,589
630,000 Singer & Friedlander Group PLC.... 1,061,553
295,400 Takare PLC........................ 825,761
-----------
5,244,737
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- -------------- -----------
<S> <C> <C>
HONG KONG -- 4.1%
359,000 Citic Pacific Ltd................. $ 1,228,005
48,737 HSBC Holdings Ltd................. 737,437
141,201 Jardine Matheson Holdings Ltd..... 967,227
-----------
2,932,669
-----------
INDIA -- 3.1%
33,000 Hindalco Industries Ltd., GDR**... 1,126,290
41,400 India Fund (The) Inc.............. 367,425
51,200 Reliance Industries Ltd., GDS..... 716,800
-----------
2,210,515
-----------
INDONESIA -- 2.3%
34,500 Bank International Indonesia
(Foreign)....................... 114,296
99,000 PT Mulia Industrindo Ord.
(Foreign)....................... 279,270
79,500 PT Semen Gresik (Foreign)......... 222,523
10,500 PT Telekomunikas, ADR............. 265,125
410,000 PT Telekomunikas (Foreign)........ 537,940
19,800 PT Tri Polyta Indonesia, ADR...... 272,250
-----------
1,691,404
-----------
ISRAEL -- 1.8%
75,000 Ampal American Israel Corporation,
Class A......................... 393,750
38,500 ECI Telecom, Ltd.................. 878,281
-----------
1,272,031
-----------
JAPAN -- 29.5%
149,000 Canon Inc......................... 2,698,596
22,000 Circle K Japan Company Ltd........ 969,491
170 DDI Corporation................... 1,317,191
458 East Japan Railway Company........ 2,226,789
89,000 Hitachi Ltd....................... 896,465
2,500 Keyence Corporation............... 288,136
75,000 Kirin Beverage Corporation........ 1,009,685
5,000 Kyocera Corporation............... 371,429
11,000 Murata Manufacturing Company
Ltd............................. 404,843
94,000 NEC Corporation................... 1,147,119
27,000 Nippon Communication Systems
Corporation..................... 285,036
267 Nippon Telegraph & Telephone
Corporation..................... 2,161,215
54 NTT Data Communication Systems
Corporation..................... 1,814,818
40,800 Orix Corporation.................. 1,679,419
6,000 Rohm Company...................... 338,789
20,000 Sony Corporation.................. 1,199,031
33,000 TDK Corporation................... 1,684,358
3,000 UNY Company....................... 56,368
21,600 York-Benimaru Company Ltd......... 826,344
-----------
21,375,122
-----------
KOREA -- 2.5%
6,600 Mando Machinery Corporation,
GDR............................. 173,250
40,300 Mando Machinery Corporation,
GDR**........................... 1,057,875
5,800 Samsung Electric, GDR............. 559,700
-----------
1,790,825
-----------
MALAYSIA -- 0.4%
75,000 Westmont BHD...................... 259,873
-----------
MEXICO -- 0.4%
93,000 Gruma S.A., Series B.............. 261,581
-----------
</TABLE>
See Notes to Financial Statements.
D-10
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS --(CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- -------------- -----------
COMMON STOCKS -- (CONTINUED)
<S> <C> <C>
NEW ZEALAND -- 5.9%
1,313,354 Brierley Investments Ltd.......... $ 1,038,912
266,300 Fletcher Challenge Ltd............ 614,550
502,522 Fletcher Challenge (Forest
Division) Ltd................... 716,182
538,800 Lion Nathan Ltd................... 1,285,678
30,000 Sky City Ltd...................... 622,697
-----------
4,278,019
-----------
NORWAY -- 1.0%
17,100 Norsk Hydro, ADR.................. 716,063
-----------
PAKISTAN -- 0.3%
241,000 Pakistan Telecommunications
Corporation..................... 216,589
-----------
SINGAPORE -- 2.5%
9,000 D.B.S. Land Ltd................... 30,414
119,000 Development Bank of Singapore
Ltd............................. 1,480,665
464,000 I.P.C. Corporation................ 308,349
-----------
1,819,428
-----------
SPAIN -- 4.0%
58,100 Banco de Santander S.A., ADR...... 2,861,425
-----------
SWEDEN -- 3.0%
8,100 Asea AB, Class B.................. 787,983
35,200 Astra AB, Class B................. 1,394,112
-----------
2,182,095
-----------
SWITZERLAND -- 1.5%
615 Brown Boveri & Cie AG, Class A.... 714,744
200 Ciba-Geigy AG..................... 175,195
150 Danza Holding AG.................. 163,920
-----------
1,053,859
-----------
TAIWAN -- 2.5%
1,680,000 GP Taiwan Index Fund.............. 1,325,268
75,511 Tuntex Distinct Corporation,
GDS **.......................... 509,701
-----------
1,834,969
-----------
THAILAND -- 1.1%
146,800 Industrial Finance Corporation of
Thailand (Foreign).............. 498,269
81,400 Thai Military Bank Public Company
Ltd. (Foreign).................. 329,607
-----------
827,876
-----------
Total Common Stocks
(Cost $64,252,583).............. 67,776,586
-----------
WARRANTS -- 0.0%# COST ($20,647)
SWITZERLAND -- 0.0%#
600 Danza Holding AG, Expires
08/02/1996...................... 2,667
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -------------- -----------
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS -- 3.8%
JAPAN -- 1.8%
JPY Matasushita Electric Works Ltd.,
111,000,000 2.700% due 05/31/2002........... $ 1,313,724
-----------
TAIWAN -- 2.0%
$1,070,000 President Enterprises Corporation,
Zero coupon due 07/22/2001...... 1,358,900
70,000 Yang Ming Marine Transport
Corporation,
2.000% due 10/06/2001........... 77,175
-----------
1,436,075
-----------
Total Convertible Corporate Bonds
(Cost $2,753,032)............... 2,749,799
-----------
REPURCHASE AGREEMENT -- 0.6% Cost ($452,000)
452,000 Agreement with PNC Securities
Corporation, 5.600% dated
12/29/1995 to be repurchased at
$452,281 on 01/02/1996,
collateralized by $445,000 U.S.
Treasury Notes, 5.750% due
09/30/1997 (value $455,324)..... 452,000
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
PRINCIPAL AMOUNT (NOTE 1)
- ------------------------------------------ -----------
<S> <C> <C>
TOTAL INVESTMENTS (COST $67,478,262)
(NOTES 1 AND 3).......... 98.1% 70,981,052
OTHER ASSETS AND LIABILITIES (NET)........ 1.9 1,394,055
--------- -----------
NET ASSETS................................ 100.0% $72,375,107
--------- -----------
--------- -----------
</TABLE>
- ----------------------
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration
to qualified institutional buyers.
+ Non-income producing security.
# Amount is less than 0.1%.
<TABLE>
<S> <C> <C>
GLOSSARY OF TERMS
American Depositary
ADR -- Receipt.
American Depositary
ADS -- Share.
Global Depositary
GDR -- Receipt.
GDS -- Global Depositary Share.
JPY -- Japanese Yen.
</TABLE>
See Notes to Financial Statements.
D-11
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS --(CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
DECEMBER 31, 1995
DECEMBER 31, 1995, INDUSTRY CLASSIFICATION OF THE FUND WAS AS FOLLOWS
(UNAUDITED):
<TABLE>
<CAPTION>
% OF NET VALUE
INDUSTRY CLASSIFICATION ASSETS (NOTE 1)
- ------------------------------------- ------------- ------------
<S> <C> <C>
LONG TERM INVESTMENTS:
Electric Machinery
Equipment/Electronics.............. 9.6% $6,970,456
Telecommunications................... 8.4 6,073,941
Investment Companies................. 8.0 5,795,435
Banking/Financials................... 7.7 5,539,247
Financial Services................... 7.5 5,461,877
Durable Goods -- Consumer............ 5.5 3,999,903
Transportation....................... 5.2 3,778,127
Oil/Gas Extraction................... 5.2 3,758,981
Computer Software.................... 2.5 1,814,818
Forest Products/Paper................ 2.5 1,812,802
Industrial........................... 2.4 1,707,127
Technology........................... 2.3 1,684,358
Pharmaceuticals...................... 2.2 1,569,307
Metal/Metal Products................. 2.2 1,561,824
Chemicals/Allied Products............ 1.8 1,311,550
Beverages............................ 1.8 1,297,685
Brewery.............................. 1.8 1,285,678
Insurance............................ 1.8 1,266,339
Automobile Parts..................... 1.7 1,231,125
Industrial/Commercial Machinery...... 1.7 1,199,031
Engineering/Construction............. 1.6 1,179,431
Metals -- Diversified................ 1.4 1,006,276
Convenience Stores................... 1.3 969,492
Shoes/Leather........................ 1.3 958,476
Energy............................... 1.2 897,550
Retail -- Grocery.................... 1.2 882,712
Health Care Services................. 1.1 825,761
Food/Kindred Products................ 1.0 722,263
Electronics -- Semiconductor......... 1.0 710,218
Entertainment........................ 0.9 622,697
Textiles............................. 0.7 509,701
Nondurable Goods -- Consumer......... 0.5 345,589
Computer Industry.................... 0.4 308,349
Communication........................ 0.4 285,036
</TABLE>
<TABLE>
<CAPTION>
% OF NET VALUE
INDUSTRY CLASSIFICATION (CONTINUED) ASSETS (NOTE 1)
- ------------------------------------- ------------- ------------
<S> <C> <C>
Capital Goods........................ 0.4% $279,270
Business Services.................... 0.4 249,865
Other................................ 0.9 656,755
----- ------------
TOTAL LONG TERM INVESTMENTS.......... 97.5 70,529,052
REPURCHASE AGREEMENT................. 0.6 452,000
----- ------------
TOTAL INVESTMENTS.................... 98.1 70,981,052
OTHER ASSETS AND LIABILITIES (NET)... 1.9 1,394,055
----- ------------
NET ASSETS........................... 100.0% $72,375,107
-----
----- ------------
------------
</TABLE>
SCHEDULE OF
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS TO SELL
<S> <C> <C> <C> <C> <C>
CONTRACTS TO DELIVER
- ---------------------------------- IN
EXCHANGE UNREALIZED
EXPIRATION LOCAL FOR U.S. VALUE IN APPRECIATION/
DATE CURRENCY $ U.S. $ (DEPRECIATION)
- ---------- ---------------------- --------- ----------- -------------
03/21/1996 JPY 302,112,500 2,999,915 2,961,061 $ 38,854
03/21/1996 JPY 958,387,500 9,514,420 9,393,333 121,087
03/21/1996 FRF 19,600,000 4,000,000 4,004,659 (4,659)
06/17/1996 JPY 282,690,000 3,000,000 2,803,594 196,406
-------------
Net Unrealized Appreciation of Forward Foreign Currency
Exchange Contracts...................................... $ 351,688
-------------
-------------
</TABLE>
<TABLE>
<S> <C> <C>
GLOSSARY OF TERMS
FRF -- French Franc
JPY -- Japanese Yen
</TABLE>
See Notes to Financial Statements.
D-12
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Managed Global Account of Separate Account D (the 'Account') is registered
with the Securities and Exchange Commission under the Investment Company Act of
1940, as amended, as a non-diversified open-end investment company and meets the
definition of a separate account under federal securities laws. The Account was
established on April 18, 1990, by Golden American Life Insurance Company
('Golden American'), to support the operations of variable annuity contracts
('Contracts'). Golden American, a wholly-owned subsidiary of BT Variable, Inc.
('BTV'), an indirect subsidiary of Bankers Trust Company ('Bankers Trust'), is a
stock life insurance company organized under the laws of the state of Delaware.
Golden American is primarily engaged in the issuance of variable insurance
products and is authorized to do business in the District of Columbia and in all
states except New York.
Operations on the Account commenced on October 21, 1992. Golden American
provides for variable accumulation and benefits under the Contracts by crediting
annuity considerations to the Account at the direction of contractholders. The
assets of the Account are owned by Golden American. The portion of the Account's
assets applicable to Contracts will not be chargeable with liabilities arising
out of any other business Golden American may conduct, but obligations of the
Account, including the promise to make benefit payments, are obligations of
Golden American.
The net assets maintained in the Account provide the basis for the periodic
determination of the amount of benefits under the Contracts. The net assets may
not be less than the reserves and other contract liabilities with respect to the
Account. Golden American has entered into a reinsurance agreement with an
affiliated reinsurer to cover insurance risks under the Contracts. Golden
American remains liable to the extent that the reinsurer does not meet its
obligations under the reinsurance agreement.
The preparation of financial statements in accordance with Generally Accepted
Accounting Principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies consistently followed by the Account in the
preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
(A) VALUATION: Domestic and foreign portfolio securities, except as noted below,
for which market quotations are readily available are stated at market value.
Market value is determined on the basis of the last reported sales price in the
principal market where such securities are traded or, if no sales are reported,
the mean between representative bid and asked quotations obtained from a
quotation reporting system or from established market makers.
Long-term debt securities, including those to be purchased under firm commitment
agreements, are normally valued on the basis of quotes obtained from brokers and
dealers or pricing services, which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. Under certain circumstances, long-term debt securities having a maturity
of sixty days or less may be valued at amortized cost. Short-term debt
securities are valued at their amortized cost which approximates fair value.
Amortized cost involves valuing a portfolio security instrument at its cost,
initially, and thereafter, assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith by, or under the direction of the Board
of Governors.
(B) DERIVATIVE FINANCIAL INSTRUMENTS: The Account may engage in various
portfolio strategies, as described below, to seek to manage its exposure to
equity markets and to manage fluctuations in foreign currency rates. Forward
foreign currency exchange contracts to buy, writing puts and buying calls tend
to increase the Account's exposure to the underlying market or currency. Forward
foreign currency exchange contracts to sell, buying puts and writing calls tend
to decrease the Account's exposure to the underlying market or currency. In some
instances, investments in derivative financial instruments may involve, to
varying degrees, elements of market risk and risks in excess of the amount
recognized in the Statement of Assets and Liabilities. Losses may arise under
these contracts due to the existence of an illiquid secondary market for the
contracts, or if the counterparty does not perform under the contract. An
additional primary risk associated with the use of certain of these contracts
may be caused by an imperfect correlation between movements in the price of the
derivative financial instruments and the price of the underlying securities,
indices or currency.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The Account may enter into forward
foreign currency exchange contracts. The Account will enter in forward foreign
currency exchange contracts to hedge against fluctuations in currency exchange
D-13
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
rates. Forward foreign currency exchange contracts are valued at the applicable
forward rate, and are marked to market daily. The change in market value is
recorded by the Account as an unrealized gain or loss. When a contract is
closed, the Account records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed. Although forward foreign currency exchange contracts limit
the risk of loss due to a decline in the value of the hedged currency, they also
limit any potential gain that might result should the value of the currency
increase. In addition, the Account could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts.
Open contracts at December 31, 1995 and their related unrealized appreciation
(depreciation) are set forth in the Schedule of Forward Foreign Currency
Exchange Contracts which accompanies the Portfolio of Investments. Realized and
unrealized gain/(loss) arriving from forward foreign currency exchange contracts
are included in net realized and unrealized gain/(loss) on forward foreign
currency exchange contracts.
OPTIONS: The Account may engage in option transactions. When the Account writes
an option, an amount equal to the premium received by the Account is reflected
as an asset and an equivalent liability. The amount of the liability is
subsequently marked to market on a daily basis to reflect the current value of
the option written.
When a security is sold through an exercise of an option, the related premium
received (or paid) is deducted from (or added to) the basis of the security
sold. When an option expires (or the Account enters into a closing transaction),
the Account realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the premium paid or received). The Account
did not write options during the year ended December 31, 1995. Realized gains
arising from purchased options are included in the net realized gain/(loss) on
security transactions.
(C) FOREIGN CURRENCY: Assets and liabilities denominated in foreign currencies
and commitments under forward foreign currency exchange contracts are translated
into U.S. dollars at the mean of the quoted bid and asked prices of such
currencies against the U.S. dollar as of the close of business immediately
preceding the time of valuation. Purchases and sales of portfolio securities are
translated at the rates of exchange prevailing when such securities were
acquired or sold. Income and expenses are translated at rates of exchange
prevailing when accrued.
The Account does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain/(loss) from securities.
Reported net realized gains or losses on foreign currency transactions arise
from sales and maturities of short-term securities, sales of foreign currencies,
currency gains or losses realized between the trade and settlement dates on
securities transactions, and the difference between the amounts of dividends,
interest and foreign withholding taxes recorded on the Account's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
gains and losses on other assets and liabilities denominated in foreign
currencies arise from changes in the value of assets and liabilities other than
investments in securities at the end of the reporting period, resulting from
changes in the exchange rate.
(D) REPURCHASE AGREEMENTS: The Account may enter into repurchase agreements in
accordance with guidelines approved by the Board of Governors of the Account.
The Account bears a risk of loss in the event that the other party to a
repurchase agreement defaults on its obligations and the Account is delayed or
prevented from exercising its rights to dispose of the underlying securities
received as collateral including the risk of a possible decline in the value of
the underlying securities during the period while the Account seeks to exercise
its rights. The Account takes possession of the collateral and reviews the value
of the collateral and the creditworthiness of those banks and dealers with which
the Account enters into repurchase agreements to evaluate potential risks. The
market value of the underlying securities received as collateral must be at
least equal to the total amount of the repurchase obligation. In the event of
counterparty default, the Account has the right to use the underlying securities
to offset the loss.
(E) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
recorded on the trade date. Dividend income is recorded on the ex-dividend date.
Interest income (including amortization of premium and discount on securities)
and expenses are accrued daily. Realized gains and losses from investment
transactions are recorded on the identified cost basis which is the same basis
used for federal income tax purposes.
(F) FEDERAL INCOME TAXES: Operations of the Account form a part of, and are
taxed with, the total operations of Golden American, which is taxed as a life
insurance company under the Internal Revenue Code. Earnings and realized capital
gains of the Account attributable to the contractowners are excluded in the
determination of the federal income tax liability of Golden American.
D-14
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
OPERATING EXPENSES: Directed Services, Inc. ('DSI'), a wholly owned subsidiary
of BTV, serves as Manager to the Account pursuant to a Management Agreement.
Under the Management Agreement, DSI has overall responsibility, subject to the
supervision of the Board of Governors, for administrating all operations of the
Account and for monitoring and evaluating the management of the assets of the
Account by the Portfolio Manager. In consideration for these services, the
Account pays DSI a management fee based upon the following annual percentage of
the Account's average daily net assets: 0.40% of the first $500 million and
0.30% of the amount over $500 million. Warburg, Pincus Counsellors, Inc.
('Warburg') serves as the Portfolio Manager of the Account and in that capacity
provides investment advisory services for the Account including asset allocation
and security selection. In consideration for these services, Warburg is paid an
advisory fee by the Account, payable monthly, based on the average daily net
assets of the Account at an annual rate of 0.60% of the first $500 million and
0.50% on the excess thereof. For the year ended December 31, 1995, the Account
incurred management and advisory fees of $293,930 and $440,770, respectively.
The Account bears the expenses of its investment management operations,
including expenses associated with custody of securities, portfolio accounting,
the Board of Governors, legal and auditing services, registration fees and other
related operating expenses. Bankers Trust is the custodian of the assets in the
Account. For the year ended December 31, 1995, the Account incurred $111,693 for
custodian fees. In addition, the Account reimburses Golden American for certain
organization expenses (See Note 4). At December 31, 1995, a total of $1,684 was
payable to DSI and Golden American for management and reimbursement of
organization expenses.
Certain officers and governors of the Account are also officers and/or directors
of the Manager, Golden American, BTV and Bankers Trust.
MORTALITY AND EXPENSE RISK CHARGES: Golden American assumes mortality and
expense risks related to the operations of the Account and, in accordance with
the terms of the Contracts, deducts a daily charge from the assets of the
Account at annual rates of 0.80%, 0.90%, 1.25%, 1.10%, 1.25% and 1.40% of the
assets attributable to DVA 80, DVA 100, DVA Series 100, DVA Plus-Standard, DVA
Plus-Annual Ratchet and DVA Plus-7% Solution, respectively, to cover these
risks. Golden American did not deduct mortality and expense risk charges and
asset based administrative charges from the DVA Plus Contract assets until
November 1995, upon which it received exemptive relief from the Securities and
Exchange Commission.
ASSET BASED ADMINISTRATIVE CHARGE: To compensate Golden American for the
administrative expenses under the Contracts, a daily charge at an annual rate of
0.10% is deducted from assets attributable to the DVA 100 and DVA Series 100
Contracts. A daily charge of 0.15% is deducted from the assets attributable to
DVA Plus Contracts.
OTHER CONTRACT CHARGES: An administrative fee of $40 per Contract year is
deducted from the accumulation value of certain DVA 80 and DVA 100 Contracts.
Under DVA Plus Contracts issued subsequent to September of 1995, an excess
allocation charge of $25 per allocation may be imposed by Golden American after
the twelfth allocation change in a contract year. Under DVA 80, DVA 100 and DVA
Series 100 Contracts ('Previous Contracts'), a partial withdrawal charge of the
lower of 2% of the withdrawal or $25 is deducted from the accumulation for each
additional partial withdrawal in a Contract year. In addition, under the
Previous Contracts, there is an excess allocation charge of $25 for each
allocation change between divisions in excess of the five free changes allowed
per contract year.
DEFERRED SALES LOAD: Under contracts offered prior to October of 1995, a sales
load of up to 6.50% was applicable to each premium payment for sales related
expenses as specified in the Contracts. For DVA Series 100 Contracts, the sales
load is deducted in equal annual installments over the period the Contract is in
force, not to exceed 10 years. For DVA 80 and DVA 100 Contracts, although the
sales load is chargeable to each premium when it is received by Golden American,
the amount of such charge is initially advanced by Golden American to
Contractowners and included in the accumulation value and then deducted in equal
installments on each Contract processing date over a period of six years. For
the year ended December 31, 1995, contract sales loads of $1,124,480 initially
advanced by Golden American to the Account were deducted from contractowners'
accumulation value. Upon surrender of the Contract, the unamortized deferred
sales load is deducted from the accumulation value by Golden American. In
addition, when partial withdrawal limits are exceeded, a portion of the
unamortized deferred sales load is deducted.
CONTINGENT DEFERRED SALES CHARGE: Under DVA Plus Contracts issued subsequent to
September of 1995, a contingent deferred sales charge ('Surrender Charges') is
imposed as a percentage of each premium payment if the Contract is surrendered
or an excess partial withdrawal is taken during the seven year period from the
date a premium payment is received. The Surrender Charges are imposed at a rate
of 7% of the premium payment during the first two complete years after purchase
declining to 6%, 5%, 4%, 3%, and 1% after the second, third, fourth, fifth and
sixth complete years, respectively. For the year ended December 31, 1995, Golden
American collected Surrender Charges in the amount of $15.
D-15
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
The net assets retained in the Account by Golden American in the accompanying
financial statements represent the unamortized deferred sales load, surrender
charges and premium taxes advanced by Golden American reduced to conform with
the Commissioner's Annuity Reserve Valuation Methodology ('CARVM') noted above.
Net Assets Retained in the Account by Golden American are as follows:
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/95 12/31/94
------------ ------------
<S> <C> <C>
Balance at beginning of year........................................................... $ 4,533,964 $ 4,668,658
Sales load advanced and additions to surrender charges................................. 379,811 1,338,526
Premium tax advanced................................................................... 2,628 6,823
Net transfer (to) from Separate Account B, Fixed Account and Golden American........... (899,808) (427,829)
Amortization of deferred sales load, surrender charges and premium tax................. (1,141,201) (1,052,214)
------------ ------------
$ 2,875,394 $ 4,533,964
------------ ------------
------------ ------------
</TABLE>
PREMIUM TAXES: Premium taxes are deducted, where applicable, from the
accumulation value of each Contract. The amount and timing of the deduction
depend on the annuitant's state of residence and currently ranges up to 3.5% of
premiums. Premium taxes are generally incurred on the annuity commencement date
and a charge for such premium taxes is then deducted from the accumulation value
on such date. However, some jurisdictions impose a premium tax at the time the
initial and additional premiums are paid, regardless of the annuity commencement
date. In those states, Golden American advances the amount of the charge for
premium taxes to Contractowners and then deducts it from the accumulation value
in equal installments on each contract processing date over a six year period.
Golden American is currently waiving the deduction of the applicable
installments of the charge for premium taxes previously advanced by Golden
American to Contractowners. Golden American reserves the right to deduct the
total amount of the charge for premium taxes previously waived and unrecovered
on the annuity commencement date or upon surrender of the Contract.
EXPENSE LIMITATION: The Account and DSI entered into an agreement to limit the
ordinary operating expenses of the Account, excluding, among other things,
mortality and expense risk charges, asset based administrative charges, interest
expense, and other contractual charges, through December 31, 1995, so that such
expenses do not exceed on an annual basis 1.25% of the first $500 million of the
average daily net assets and 1.05% of the excess over $500 million. For the year
ended December 31, 1995, $63,386 was reimbursed by DSI to the Account pursuant
to this limitation. Such agreement existed under the same terms for the year
ended December 31, 1994.
DSI, a registered broker/dealer, acts as the distributor and principal
underwriter (as defined in the Securities Act of 1933 and the Investment Company
Act of 1940, as amended) of the Contracts issued through the Account. For the
years ended December 31, 1995 and December 31, 1994, fees paid by Golden
American to DSI in connection with sales of the contracts aggregated
approximately $446,000 and $1,343,000, respectively.
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities, excluding short-term securities,
during the year ended December 31, 1995, were $30,992,571 and $4,817,671,
respectively.
At December 31, 1995, aggregate gross unrealized appreciation for all securities
in which there is an excess of value over tax cost and aggregate gross
unrealized depreciation for all securities in which there is an excess of tax
cost over value were $8,320,461 and $4,817,671, respectively.
For the year ended December 31, 1995, the portfolio turnover rate was 44%.
4. ORGANIZATION COSTS
The initial organizational expenses of the Account of approximately $150,000
were paid by Golden American. The Account reimburses Golden American monthly for
such expenses ratably over a period of sixty months from the date of the
Account's commencement of operations. At December 31, 1995, the unamortized
balance of such expenses was $75,090. It is Golden American's intention not to
seek reimbursement for any unpaid amounts should the account cease operations.
D-16
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
5. INCREASE/(DECREASE) IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
DVA 100
Units purchased...................................................................... 409,418 2,267,150
Units redeemed....................................................................... (2,561,328) (1,161,000)
------------ ------------
Net Increase/(Decrease)......................................................... (2,151,910) 1,106,150
Units at the beginning of the period................................................... 9,225,615 8,119,465
------------ ------------
Units at the end of the period......................................................... 7,073,705 9,225,615
------------ ------------
------------ ------------
DVA 80
Units purchased...................................................................... 66,593 154,827
Units redeemed....................................................................... (164,429) (147,275)
------------ ------------
Net Increase/(Decrease)......................................................... (97,836) 7,552
Units at the beginning of the period................................................... 205,564 198,012
------------ ------------
Units at the end of the period......................................................... 107,728 205,564
------------ ------------
------------ ------------
DVA Series 100
Units purchased...................................................................... 27,026 55,550
Units redeemed....................................................................... (39,838) (51,428)
------------ ------------
Net Increase/(Decrease)......................................................... (12,812) 4,124
Units at the beginning of the period................................................... 69,795 65,671
------------ ------------
Units at the end of the period......................................................... 56,983 69,795
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD
ENDED
12/31/95*
------------
<S> <C> <C>
DVA Plus -- Standard
Units purchased...................................................................... 43,964
Units redeemed....................................................................... (17,239)
------------
Net Increase.................................................................... 26,725
Units at the beginning of the period................................................... 0
------------
Units at the end of the period......................................................... 26,725
------------
------------
DVA Plus -- Annual Ratchet
Units purchased...................................................................... 29,267
Units redeemed....................................................................... (1,811)
------------
Net Increase.................................................................... 27,456
Units at the beginning of the period................................................... 0
------------
Units at the end of the period......................................................... 27,456
------------
------------
DVA Plus -- 7% Solution
Units purchased...................................................................... 209,355
Units redeemed....................................................................... (345)
------------
Net Increase.................................................................... 209,010
Units at the beginning of the period................................................... 0
------------
Units at the end of the period......................................................... 209,010
------------
------------
</TABLE>
- ------------------
* The DVA Plus -- Standard, Annual Ratchet and 7% Solution units were offered
for sale commencing October 2, 1995.
D-17
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
6. SUBSEQUENT EVENT
On August 13, 1996, under the terms of a stock purchase agreement, Equitable
of Iowa Companies acquired all of the interest in BTV from Whitewood Properties
Corp., a subsidiary of Bankers Trust Company. DSI and Golden American are
wholly owned subsidiaries of BTV.
In addition at a special meeting held on August 8, 1996, the contractholders
approved the reorganization of the Account from a separate account of Golden
American register as a management investment company toa newly created division
(the "Division") of Separate Account B, an existing separate account of Golden
American which is registered as a unit investment trust. On the date of
reorganization, which is anticipated to be September 3, 1996, the Account will
transfer all of its assets to the Division. The Division will simultaneously
exchange these assets to the Managed Global Series of the The GCG Trust in
consideration for shares of the Series. The Managed Global Series is a newly
created Series of The GCG Trust. Ths GCG Trust is and existing open-end
management investment company registered under the Investment Company Act of
1940.
If this reorganization, described above, had taken place on December 31, 1995,
the unit values and net assets of the Division would have been the same as
reflected in the Account's financial statements contained herein.
D-18
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Contractowners and Board of Governors
The Managed Global Account of Separate Account D
We have audited the accompanying statement of assets and liabilities of The
Managed Global Account of Separate Account D, including the portfolio of
investments, as of December 31, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended and the financial highlights for each of
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Account's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification by examination of securities
held by the custodian as of December 31, 1995 and confirmation of securities not
held by the custodian by correspondence with others. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of The
Managed Global Account of Separate Account D at December 31, 1995, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights for
each of the indicated periods in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
New York, New York
February 9, 1996
except for Note 6, as to which the date is August 27, 1996
D-19
<PAGE>
<PAGE>
APPENDIX: DESCRIPTION OF BOND RATINGS
Excerpts from Moody's Investors Service, Inc. ("Moody's) description of its bond
ratings:
Aaa: Judged to be the best quality; they carry the smallest degree of
investment risk.
Aa: Judged to be of high quality by all standards; together with the
Aaa group, they comprise what are generally known as high grade bonds.
A: Possess many favorable investment attributes and are to be considered
as "upper medium grade obligations."
Baa: Considered as medium grade obligations, i.e., they are neither highly
protected nor poorly secured; interest payments and principal security
appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of
time.
Ba: Judged to have speculative elements; their future cannot be
considered as well assured.
B: Generally lack characteristics of the desirable investment.
Caa: Are of poor standing; such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca: Speculative in a high degree; often in default.
C: Lowest rate class of bonds; regarded as having extremely poor
prospects.
Moody's also applies numerical indicators 1, 2 and 3 to rating categories.
The modifier 1 indicates that the security is in the higher end of its rating
category; 2 indicates a mid-range ranking; and 3 indicates a ranking toward
the lower end of the category.
Excerpts from Standard & Poor's Rating Group ("Standard & Poor's") description
of its bond ratings:
AAA: Highest grade obligations; capacity to pay interest and repay
principal is extremely strong.
A - 1
<PAGE>
<PAGE>
AA: Also qualify as high grade obligations; a very strong capacity to
pay interest and repay principal and differs from AAA issues only in
small degree.
A: Regarded as upper medium grade; they have a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions
than debt in higher rated categories.
BBB: Regarded as having an adequate capacity to pay interest and repay
principal; whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity than in higher rated categories -- this group
is the lowest which qualifies for commercial bank investment.
BB, B,
CCC,
CC: Predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with terms of the obligation: BB
indicates the lowest degree of speculation and CC the highest.
Standard & Poor's applies indicators "+," no character, and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.
A-2
<PAGE>
<PAGE>
PART C -- OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS
(a) (1) All financial statements are included in either the Prospectuses
or the Statements of Additional Information, as indicated therein.
(2) Schedules I, III, IV follow:
SCHEDULE I
SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES
(Dollars in thousands)
<TABLE>
<CAPTION>
Balance
Sheet
December 31, 1996 Cost 1 Value Amount
_______________________________________________________________________________
<S> <C> <C> <C>
TYPE OF INVESTMENT
Fixed maturities, available for sale:
Bonds:
United States Government and govern-
mental agencies and authorities $73,984 $73,857 $73,857
Public utilities 35,893 36,048 36,048
Investment grade corporate 134,487 134,607 134,607
Below investment grade corporate 25,921 26,114 26,114
Mortgage-backed securities 4,868 4,937 4,937
___________ ___________ ___________
Total fixed maturities, available
for sale 275,153 275,563 275,563
Equity securities:
Common stocks: industrial, miscel-
laneous and all other 36 33 33
Mortgage loans on real estate 31,459 31,459
Policy loans 4,634 4,634
Short-term investments 12,631 12,631
___________ ___________
Total investments $323,913 $324,320
=========== ===========
<FN>
Note 1: Cost is defined as original cost for stocks and other invested assets,
amortized cost for bonds and unpaid principal for policy loans and
mortgage loans on real estate, adjusted for amortization of premiums
and accrual of discounts.
</TABLE>
SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION
(Dollars in thousands)
<TABLE>
<CAPTION>
Column Column Column Column Column Column
A B C D E F
________________________________________________________________________________
Future
Policy Other
De- Benefits, Policy
ferred Losses, Claims Insur-
Policy Claims Un- and ance
Acqui- and earned Bene- Premiums
sition Loss Revenue fits and
Segment Costs Expenses Reserve Payable Charges
________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
POST-ACQUISITION
________________________________________________________________________________
Period August 14, 1996
through December 31, 1996:
Life insurance $11,469 $285,287 $2,063 -- $8,768
PRE-ACQUISITION
________________________________________________________________________________
Period January 1, 1996
through August 13, 1996:
Life insurance 85,265 176,914 8,826 -- 12,259
Year ended December 31, 1995:
Life insurance 67,314 33,673 6,556 -- 18,388
Year ended December 31, 1994:
Life insurance 60,662 1,051 1,759 -- 17,519
</TABLE>
SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION - CONTINUED
(Dollars in thousands)
<TABLE>
<CAPTION>
Column Column Column Column Column Column
A G H I J K
________________________________________________________________________________
Amorti-
Benefits zation
Claims, of
Losses Deferred
Net and Policy Other
Invest- Settle- Acqui- Opera-
ment ment sition ting Premiums
Segment Income Expenses Costs Expenses Written
________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
POST-ACQUISITION
________________________________________________________________________________
Period August 14, 1996
through December 31, 1996:
Life insurance $5,795 $7,003 $244 $8,066 --
PRE-ACQUISITION
________________________________________________________________________________
Period January 1, 1996
through August 13, 1996:
Life insurance 4,990 5,270 2,436 8,847 --
Year ended December 31, 1995:
Life insurance 2,818 3,146 2,710 13,333 --
Year ended December 31, 1994:
Life insurance 560 35 4,608 9,317 --
</TABLE>
SCHEDULE IV
REINSURANCE
GOLDEN AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARY
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
_______________________________________________________________________________
Percentage
Ceded to Assumed of Amount
Gross Other from Other Net Assumed
Amount Companies Companies Amount to Net
_______________________________________________________________________________
<S> <C> <C> <C> <C> <C>
At December 31, 1996:
Life insurance in
force $86,192,000 $58,368,000 -- $27,824,000 --
============ ============ ========= ============ ==========
At December 31, 1995:
Life insurance in
force $38,383,000 $24,709,000 -- $13,674,000 --
============ ============ ========= ============ ==========
At December 31, 1994:
Life insurance in
force $30,227,000 $23,061,000 -- $7,166,000 --
============ ============ ========= ============ ==========
</TABLE>
EXHIBITS
(b) (1) Resolution of the board of directors of Depositor authorizing the
establishment of the Registrant (1)
(2) Form of Custodial Agreement (2)
(3) (a) Form of Distribution Agreement between the Depositor and
Directed Services, Inc. (2)
(b) Form of Dealers Agreement (2)
(c) Organizational Agreement (5)
(d) (i) Addendum to Organizational Agreement (3)
(ii) Expense Reimbursement Agreement (5)
(e) Form of Assignment Agreement for Organizational Agreement (5)
(4) (a) Individual Deferred Combination Variable and Fixed Annuity
Contract (10)
(b) Discretionary Group Deferred Combination Variable and Fixed
Annuity Contract (10)
(c) Individual Deferred Variable Annuity Contract (10)
(d) External Exchange Program Endorsement (9)
(e) DVA Update Program Schedule Page (9)
(f) Individual Retirement Annuity Rider Page (9)
(g) ROTH Individual Retirement Annuity Rider
(5) (a) Individual Deferred Combination Variable and Fixed Annuity
Application (10)
(b) Group Deferred Combination Variable and Fixed Annuity Enrollment
Form (10)
(c) Individual Deferred Variable Annuity Application (10)
(6) (a) (i) Articles of Incorporation of Golden American Life Insurance
Company (1)
(ii) Certificate of Amendment of the Restated Articles of
Incorporation of Golden American Life Insurance Company (4)
(iii) Certificate of Amendment of the Restated Articles of
Incorporation of MB Variable Life Insurance Company (6)
(iv) Certificate of Amendment of the Restated Articles of
Incorporation of Golden American Life Insurance Company
(12/28/93) (7)
(b) (i) By-Laws of Golden American Life Insurance Company (1)
(ii) By-Laws of Golden American Life Insurance Company, as
amended (4)
(iii) Certificate of Amendment of the By-Laws of MB Variable Life
Insurance Company, as amended (6)
(iv) By-Laws of Golden American, as amended (12/21/93) (7)
(c) Resolution of Board of Directors for Powers of Attorney (8)
<PAGE>
<PAGE>
(7) Not applicable
(8) Not applicable
(9) Opinion and Consent of Myles R. Tashman (9)
(10) (a) Consent of Sutherland, Asbill & Brennan LLP
(b) Consent of Ernst & Young LLP, Independent Auditors
(c) Consent of Myles R. Tashman
(11) Not applicable
(12) Not applicable
(13) Schedule of Performance Data (11)
(15) Powers of Attorney
(1) Incorporated herein by reference to an initial registration statement for
Separate Account B filed with the Securities and Exchange Commission on
July 27, 1988 (File No. 33-23351).
(2) Incorporated herein by reference to pre-effective amendment No. 1 to a
registration statement for Separate Account B filed with the Securities
and Exchange Commission on October 6, 1988 (File No. 33-23351).
(3) Incorporated herein by reference to post-effective amendment No. 2 to a
registration statement for The Specialty Managers Separate Account A
filed on Form S-6 with the Securities and Exchange Commission on
September 13, 1989 (file No. 33-23458).
(4) Incorporated herein by reference to post-effective amendment No. 5 to a
registration statement for Separate Account B filed with the Securities
and Exchange Commission on May 2, 1991. (File No. 33-23351).
(5) Incorporated herein by reference to post-effective amendment No. 8 to a
registration statement for Separate Account B filed with the Securities
and Exchange Commission on May 1, 1992. (File No. 33-23351).
(6) Incorporated herein by reference to an initial registration statement on
Form N-3 for Golden American Life Insurance Company Separate Account D
filed with the Securities and Exchange Commission on August 19, 1992
(File No. 33-51028).
(7) Incorporated herein by reference to post-effective amendment No. 17 to a
registration statement for Separate Account B filed with the Securities
and Exchange Commission on May 2, 1994 (File No. 33-23351).
(8) Incorporated herein by reference to post-effective amendment No. 2 to the
registration statement for The Specialty Managers Separate Account A on
Form S-6 filed with the Securities and Exchange Commission on September
13, 1989 (File No. 33-23458).
(9) Incorporated herein by reference to pre-effective amendment No. 1 to the
registration statement for Separate Account B filed with the Securities
and Exchange Commission on September 7, 1995 (File No. 33-59261).
(10)Incorporated herein by reference to post-effective amendment No. 2 to the
registration statement for Separate Account B filed with the Securities
and Exchange Commission on May 1, 1996 (File No. 33-59261).
(11)Incorporated herein by reference to post-effective amendment No. 8 to the
registration statement for Separate Account B filed with the Securities
and Exchange Commission on May 1, 1997 (File No. 33-59261).
<PAGE>
<PAGE>
ITEM 25: DIRECTORS AND OFFICERS OF THE DEPOSITOR
Principal Position(s)
Name Business Address with Depositor
Terry L. Kendall Golden American Life Ins. Co. Director, President and
1001 Jefferson Street Chief Executive Officer
Wilmington, DE 19801
Paul E. Larson Equitable of Iowa Companies Director
909 Locust Street
Des Moines, IA 50309
Beth B. Neppl Equitable of Iowa Companies Director and
909 Locust Street Vice President
Des Moines, IA 50309
Paul R. Schlaack Equitable Investment Director and Chairman
Services, Inc.
909 Locust Street
Des Moines, IA 50309
Susan B. Watson Equitable of Iowa Companies Director, Senior Vice
909 Locust Street President and Chief
Des Moines, IA 50309 Financial Officer
<PAGE>
<PAGE>
Myles R. Tashman Golden American Life Ins. Co. Director, Executive
1001 Jefferson Street Vice President, General
Wilmington, DE 19801 Counsel and Secretary
Barnett Chernow Golden American Life Ins. Co. Executive Vice
1001 Jefferson Street President
Wilmington, DE 19801
James R. McInnis Golden American Life Ins. Co. Executive Vice
1001 Jefferson Street President
Wilmington, DE 19801
Stephen J. Preston Golden American Life Ins. Co. Senior Vice President
1001 Jefferson Street, and Chief Actuary
Wilmington, DE 19801
David L. Jacobson Golden American Life Ins. Co. Senior Vice President
1001 Jefferson Street and Assistant Secretary
Wilmington, DE 19801
William L. Lowe Equitable of Iowa Companies Senior Vice President,
909 Locust Street Sales & Marketing
Des Moines, IA 50309
Edward Syring, Jr. Equitable of Iowa Companies Senior Vice President,
909 Locust Street Sales & Marketing
Des Moines, IA 50309
Dennis D. Hargens Equitable of Iowa Companies Treasurer
909 Locust Street
Des Moines, IA 50309
Lawrence W. Porter, M.D. Equitable of Iowa Companies Medical Director
909 Locust Street
Des Moines, IA 50309
ITEM 26: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Depositor owns 100% of the stock of a newly formed New York company, First
Golden American Life Insurance Company of New York ("First Golden"). The
primary purpose for the formation of First Golden is to offer variable products
in the state of New York.
The following persons control or are under common control with the Depositor:
DIRECTED SERVICES, INC. ("DSI") - This corporation is a general business
corporation organized under the laws of the State of New York, and is wholly
owned by Equitable of Iowa Companies. The primary purpose of DSI is to act as
a broker-dealer in securities. It acts as the principal underwriter and
distributor of variable insurance products including variable annuities as
required by the SEC. The contracts are issued by the Depositor. DSI also has
the power to carry on a general financial, securities, distribution, advisory
or investment advisory business; to act as a general agent or broker for
insurance companies and to render advisory, managerial, research and
consulting services for maintaining and improving managerial efficiency and
operation. DSI is also registered with the SEC as an investment adviser.
<PAGE>
<PAGE>
As of September 30, 1997, the subsidiaries of ING are as follows:
The registrant is a segregated asset account of the Company and is
therefore owned and controlled by the Company. All of the Company's
outstanding stock is owned and controlled by ING. ING is described more
fully in the statement of additional information included in this
registration statement. Various companies and other entities controlled
by ING may therefore be considered to be under common control with the
registrant or the Company. Such other companies and entities, together
with the identity of their controlling persons (where applicable), are
set forth on the following organizational chart.
EXHIBIT 16
ING GROUP - U.S.A. Holding Company System
As of Jannuary 1, 1998
ING Group N.V. (The Netherlands) - No FEIN(non-insurer)
ING Bank N.V. (The Netherlands) - No FEIN(non-insurer)
ING Verzekeringen N.V. (The Netherlands) - No Fein (non-insurer)
ING Insurance International B.V. (The Netherlands) - No FEIN(non-insurer)
Nederlands Reassurantie Groep Holding N.V. (The Netherlands) (non-
insurer)
NRG America Holding Company (Pennsylvania) (non-insurer) (23-2074221)
NRG America Syndicate (New York) (non-insurer) (22-2281839)
NRG America Management Corporation (Pennsylvania) (23-1667532)
Philadelphia Reinsurance Corporation (Pennsylvania) (23-1620930)
Nationale-Nederlanden Intertrust B.V. (The Netherlands) (non-insurer)
NNUS Realty Corporation (Delaware) (non-insurer) (13-3062172)
The Equitable of Iowa Companies, Inc. (Delaware)
Equitable Life Insurance Company of Iowa (Iowa)
USG Annuity & Life Company (Oklahoma)
Equitable American Life Insurance (Iowa)
Equitable of Iowa Securities Network, Inc. (Iowa)
Equitable Investment Services, Inc. (Iowa)
Locust Street Securities, Inc. (Iowa)
Golden American Life Insurance Company (Delaware)
First Golden American Life Insurance Company of
New York (New York)
Directed Services, Inc. (Delaware)
ING America Insurance Holdings, Inc. (Delaware) (non-insurer) (02-
0333654)
ING North America Insurance Corporation (Delaware) (non-insurer)
(52-1317217)
ING U.S. P&C Corporation, Inc. (Delaware)(non-insurance)(51-0290450)
Excelsior Insurance Company (New Hampshire) (15-0302550)
Peerless Insurance Company (New Hampshire) (02-0177030)
America First Insurance Company (Florida) (58-0953149)
Alabama First Insurance Company (Alabama) (63-0830057)
Fidelity Southern Insurance Company (Texas) (74-1276503)
Diversified Settlements, Inc. (New Hampshire) (non-insurer)
(02-0424648)
The Netherlands Insurance Company (New Hampshire) (02-0342937)
Indiana Insurance Company (Indiana) (35-0410010)
Consolidated Insurance Company (Indiana) (35-6018568)
Cooling Grumme Mumford Company, Inc. (Indiana) (non-insurance)
(35-6018566)
ING America Life Corporation (Georgia) (non-insurer) (58- 1360182)
Southland Life Insurance Company (Texas) (75-0572420)
GAC Capital, Inc. (Delaware) (non-insurer) (51-0266924)
Life Insurance Company of Georgia (Georgia) (58-0298930)
Springstreet Associates, Inc. (Georgia) (non-insurer) (58-
1822054)
Security Life of Denver Insurance Company (Colorado) (84-0499703)
ING America Equities, Inc. (Colorado) (non-insurer) (84-0499703)
Midwestern United Life Insurance Company (Indiana) (35-0838945)
First Secured Mortgage Deposit Corporation (Colorado) (non-
insurance) (84-1086427)
First ING of New York (New York) (13-2740556)
Wilderness Associate (Colorado) (non-insurer)
Columbine Life Insurance Company (Colorado) (52-1222820)
Security Life of Denver International, LTD (non-insurer)
SLR Management, LTD (Bermuda) (non-insurer)
Lion Custom Investments LLC (Delaware) (non-insurer)
Orange Investment Enterprises, Inc. (Delaware) (non-insurer)
ING Seguros Sociedad Anonima de Capital Variable (Mexico) Insurer
ING Investment Management LLC (Delaware) (58-1515059)
VESTAX Capital Corporation (Ohio)(non-insurance)
VTX Agency Inc. (Ohio)(non-insurance)
PMG Agency, Inc. (Ohio)(non-insurance)
VESTAX Securities Corporation (Ohio)(non-insurance)
VTX Agency of Michingan (Michigan)(non-insurance)
<PAGE>
<PAGE>
Item 27: Number of Contract Owners
29,538 as of January 30, 1998
ITEM 28: INDEMNIFICATION
Golden American shall indemnify (including therein the prepayment of expenses)
any person who is or was a director, officer or employee, or who is or was
serving at the request of Golden American as a director, officer or employee
of another corporation, partnership, joint venture, trust or other enterprise
for expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him with respect to any
threatened, pending or completed action, suit or proceedings against him by
reason of the fact that he is or was such a director, officer or employee to
the extent and in the manner permitted by law.
<PAGE>
<PAGE>
Golden American may also, to the extent permitted by law, indemnify any other
person who is or was serving Golden American in any capacity. The Board of
Directors shall have the power and authority to determine who may be
indemnified under this paragraph and to what extent (not to exceed the extent
provided in the above paragraph) any such person may be indemnified.
Golden American may purchase and maintain insurance on behalf of any such
person or persons to be indemnified under the provision in the above
paragraphs, against any such liability to the extent permitted by law.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant, as provided above or otherwise, the Registrant has
been advised that in the opinion of the SEC such indemnification by the
Depositor is against public policy, as expressed in the Securities Act of 1933,
and therefore may be unenforceable. In the event that a claim of such
indemnification (except insofar as it provides for the payment by the Depositor
of expenses incurred or paid by a director, officer or controlling person in
the successful defense of any action, suit or proceeding) is asserted against
the Depositor by such director, officer or controlling person and the SEC is
still of the same opinion, the Depositor or Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by the Depositor is against public policy as expressed by the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
<PAGE>
<PAGE>
ITEM 29: PRINCIPAL UNDERWRITER
(a) At present, Directed Services, Inc., the Registrant's Distributor, also
serves as principal underwriter for all contracts issued by Golden American.
DSI is the principal underwriter for Separate Account A, Separate Account B
and Alger Separate Account A of Golden American.
(b) The following information is furnished with respect to the principal
officers and directors of Directed Services, Inc., the Registrant's
Distributor:
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ --------------------- ---------------------
Terry L. Kendall Director Director, President and
Directed Services, Inc. Chief Executive Officer
1001 Jefferson Street
Wilmington, DE 19801
Beth B. Neppl Director Director and Vice
Equitable of Iowa Companies President
909 Locust Street
Des Moines, IA 50309
R. Lawrence Roth Director None
Equitable of Iowa Companies
909 Locust Street
Des Moines, IA 50309
Paul R. Schlaack Director, Chairman Director and Chairman
Equitable Investment and Chief Executive
Services, Inc. Officer
909 Locust Street
Des Moines, IA 50309
Myles R. Tashman Director, Executive Vice Director, Executive Vice
Directed Services, Inc. President, General President, General
1001 Jefferson Street Counsel and Secretary Counsel and Secretary
Wilmington, DE 19801
James R. McInnis President Executive Vice President
Directed Services, Inc.
1001 Jefferson Street
Wilmington, DE 19801
Barnett Chernow Executive Vice President Executive Vice President
Directed Services, Inc.
1001 Jefferson Street
Wilmington, DE 19801
Stephen J. Preston Senior Vice President Senior Vice President
Directed Services, Inc. and Chief Actuary
1001 Jefferson Street
Wilmington, DE 19801
<PAGE>
<PAGE>
David L. Jacobson Senior Vice President Senior Vice President
Directed Services, Inc.
1001 Jefferson Street
Wilmington, DE 19801
Susan K. Wheat Treasurer None
Equitable of Iowa Companies
909 Locust Street
Des Moines, IA 50309
(c)
1997 Net
Name of Underwriting Compensation
Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions Compensation
----------- ----------- ---------- ----------- ------------
DSI $36,350,879 $0 $0 $0
ITEM 30: LOCATION OF ACCOUNTS AND RECORDS
Accounts and records are maintained by Golden American Life Insurance Company
at 1001 Jefferson Street, Suite 400, Wilmington, DE 19801 and 909 Locust
Street, Des Moines, IA 50309.
ITEM 31: MANAGEMENT SERVICES
None.
<PAGE>
<PAGE>
ITEM 32: UNDERTAKINGS
(a) N/A;
(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
post card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of Additional
Information; and,
(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.
REPRESENTATION
1. The account meets definition of a "separate account" under federal
securities laws.
2. Golden American Life Insurance 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.
<PAGE>
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant certifies that it meets the requirements of Securities
Act Rule 485(b) for effectiveness of this Registration Statement and has
caused this Registration Statement to be signed on its behalf in the City
of Wilmington, and State of Delaware, on the 11th day of February, 1998.
SEPARATE ACCOUNT B
(Registrant)
By: GOLDEN AMERICAN LIFE
INSURANCE COMPANY
(Depositor)
By:
--------------------
Terry L. Kendall*
President and
Chief Executive Officer
Attest: /s/ Marilyn Talman
------------------------
Marilyn Talman
Vice President, Associate General Counsel
and Assistant Secretary of Depositor
As required by the Securities Act of 1933, this Registration Statement has
been signed below by the following persons in the capacities indicated on
February 11, 1998.
Signature Title
President, Director
- -------------------- and Chief Executive
Terry L. Kendall* Officer of Depositor
Senior Vice President,
- -------------------- Director and Chief
Susan B. Watson* Financial Officer
DIRECTORS OF DEPOSITOR
- ---------------------- -----------------------
Paul E. Larson* Beth B. Neppl*
- ---------------------- -----------------------
Myles R. Tashman* Paul R. Schlaack*
By: /s/ Marilyn Talman Attorney-in-Fact
-----------------------
Marilyn Talman
_______________________
*Executed by Marilyn Talman on behalf of those indicated pursuant
to Power of Attorney.
<PAGE>
<PAGE>
EXHIBIT INDEX
ITEM EXHIBIT PAGE #
4(g) ROTH Individual Retirement Annuity Rider EX-99.B4G
10(a) Consent of Sutherland, Asbill & Brennan LLP EX-99.B10A
10(b) Consent of Ernst & Young LLP, Independent Auditors EX-99.B10B
10(c) Consent of Myles R. Tashman, Esq. EX-99.B10C
15 Powers of Attorney EX-99.B15
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
1001 JEFFERSON STREET, SUITE 400, WILMINGTON, DE 19801
ROTH
INDIVIDUAL RETIREMENT ANNUITY RIDER
The following language amends and takes precedence over
contrary language in the Contract to which it is attached.
All references in this rider to:
IRC or Code means the Internal Revenue Code of 1986 as
amended and all rules and regulations thereunder.
Contract means the policy, certificate or contract to which
this rider is attached.
Owner means the person ("insured" or "annuitant") covered by
the contract.
1. This Contract may not be transferred, sold, assigned,
discounted or pledged as collateral:
(a)for a loan;
(b)as security for the performance of an obligation; or
(c)for any other purpose;
to any person other than to us under surrender or settlement.
2. The premiums applicable to this Contract will be applied
to accumulate a retirement saving fund for the
annuitant/Owner.
3. All contributions shall be in cash and the total of all
contributions shall not exceed $2,000 for any taxable year,
except in the case of a rollover contribution which meets
the requirements of IRC Section 408(d)(3) and which is:
(a)from another ROTH IRA [as defined in IRC Section 408A(b)];
(b)from an individual retirement account [as defined in IRC
Section 408(a)]; or
(c)from an individual retirement annuity [as defined in IRC
Section 408(b)];
Any refund of premiums (other than those attributable to
excess contributions) will be applied before the close of the
calendar year following the year of the refund. Any such
refund will be applied towards the payment of future
premiums or the purchase of additional benefits.
4. Conversion of an individual retirement account or an
individual retirement annuity to a ROTH IRA shall be treated
as a distribution from an individual retirement plan (other
than a ROTH IRA) maintained for the benefit of an individual
which is contributed to a ROTH IRA maintained for the benefit
of such individual in a rollover contribution qualifying
under IRC Section 408(d)(3).
5. All distributions made under this Contract, after the
Owner's death, shall be made in accordance with the
requirements of IRC Section 401(a)(9) including any
regulations under that Section. The above Section and
regulations are incorporated by reference.
6. No provision of this Contract or any supplementary
contract issued upon the death of the Owner in exchange for
this Contract will apply where it permits or provides for
settlement of such amount in any manner other than a
complete distribution of the Owner's entire interest by
December 31 of the calendar year containing the fifth
anniversary of the Owner's death, except to the extent that:
GA-RA-1038-10/97
<PAGE>
<PAGE>
6. Continued
(a) If the Owner's interest is payable to a designated
beneficiary, then the entire interest of the Owner may be
distributed over the life of such beneficiary, or over a
period not extending beyond the life expectancy of such
designated beneficiary, provided that distributions start
by December 31st of the year following the year of the
Owner's death. If the beneficiary is the Owner's
surviving spouse, distribution is not required to
begin before December 31st of the year in which the Owner
would have turned 70 1/2.
(b) If the designated beneficiary is the Owner's
surviving spouse, the spouse may treat the Contract as his
or her own individual retirement arrangement (IRA). This
election will be deemed to have been made if the spouse:
(i) makes a regular IRA contribution to the Contract;
(ii) makes a rollover to or from such Contract;
(iii) fails to elect either of the provisions in Sections
6 or 6(a) above.
7. Life expectancy is computed by use of the expected return
multiples in Section 1.72-9 of the Treasury Regulations.
For purposes of distributions beginning after the Owner's
death, unless otherwise elected by the surviving spouse
by the time distributions are required to begin, life
expectancies shall be recalculated annually. An election
not to recalculate shall be irrevocable by the surviving
spouse and shall apply to all subsequent years.
The life expectancy of a non-spouse beneficiary shall be
calculated using the attained age of such beneficiary
during the calendar year in which distributions are
required to begin pursuant to this section, and payments
for any subsequent calendar year shall be calculated based
on such life expectancy reduced by one for each calendar
year which has elapsed since the calendar year life
expectancy was first calculated.
8. This Contract will be for the exclusive benefit of the
Owner or his or her beneficiary. The entire interest of
the Owner in this Contract will be nonforfeitable.
9. We will furnish annual calendar year reports concerning the
status of this Contract, including information related to
any distribution from the Contract.
10.We may amend this Contract to conform to the provisions of
the IRC, Internal Revenue Regulations or published
Internal Revenue Rulings.
President: /s/ Terry L. Kendall Secretary: /s/ Myles R. Tashman
GA-RA-1038-10/97
<PAGE>
<PAGE>
10(a) Consent of Sutherland, Asbill & Brennan LLP
SUTHERLAND, ASBILL & BRENNAN LLP
1275 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20004-2404
STEPHEN E. ROTH
DIRECT LINE: (202) 383-0158
Internet: [email protected]
February 5, 1998
VIA EDGAR
- ---------
Board of Directors
Golden American Life Insurance Company
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
Ladies and Gentlemen:
We hereby consent to the reference to our name under the caption
"Legal Matters" in the Statement of Additional Information filed as part of
Post-Effective Amendment No. 8 to the registration statement on Form N-4 for
the Separate Account B (File No. 33-59261). In giving this consent, we do not
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN LLP
By:/s/Stephen E. Roth
----------------------------
Stephen E. Roth
<PAGE>
<PAGE>
Exhibit 10(b) Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the captions "Independent
Auditors," "Experts" and "Financial Statements" and to the use of our reports
dated February 11, 1997, with respect to the financial statements of Golden
American Life Insurance Company, February 11, 1997,with respect to the
financial statements of Separate Account B, and February 9, 1996 (except
Note 6, as to which the date is August 27, 1996) with respect to the financial
statements of The Managed Global Account of Separate Account D included in
Post-Effective Amendment No. 8 to the Registration Statement (Form N-4 No.
33-59261)and related Prospectus of Separate Account B.
Our audit also included the financial statement schedules of Golden American
Life Insurance Company included in Item 24(a)(2). These schedules are the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audit. In our opinion, the financial statement
schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
/s/ Ernst & Young LLP
Des Moines, Iowa
February 4, 1998
<PAGE>
<PAGE>
10(c) Consent of Myles R. Tashman
GOLDEN AMERICAN LIFE INSURANCE COMPANY Exhibit 10(c)
1001 Jefferson Street, Wilmington, DE 19801 Tel: (302) 576-3400
Fax: (302) 576-3540
February 4, 1998
Members of the Board of Directors
Golden American Life Insurance Company
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
Ladies and Gentlemen:
I consent to the reference to my name under the heading "Legal Matters" in the
prospectus. In giving this consent I do not thereby admit that I come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the Rules and Regulations of the Securities and
Exchange Commission thereunder.
Sincerely,
/s/Myles R. Tashman
- ----------------------
Myles R. Tashman
Executive Vice President and Secretary
<PAGE>
<PAGE>
EXHIBIT 15
GOLDEN AMERICAN LIFE INSURANCE COMPANY
1001 Jefferson Street, Suite 400, Wilmington, DE 19801
Phone: (302) 576-3400
Fax: (302) 576-3520
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned,
being duly elected Directors and officers of Golden American Life
Insurance Company ("Golden American"), constitute and appoint
Myles R. Tashman, and Marilyn Talman, and each of them, his or
her true and lawful attorneys-in-fact and agents with full power
of substitution and resubstitution for him or her in his or her
name, place and stead, in any and all capacities, to sign Golden
American's registration statements and applications for exemptive
relief, and any and all amendments thereto, and to file the same,
with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority
to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as
s/he might or could do in person, hereby ratifying and affirming
all that said attorneys-in-fact and agents, or any of them, or
his or her substitute or substitutes, may lawfully do or cause to
be done by virtue thereof.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Terry L. Kendall Director, President and February 4, 1998
- ----------------------- Chief Executive --------------------
Terry L. Kendall Officer
/s/ Myles R. Tashman Director, Executive Vice February 4, 1998
- ----------------------- President, General --------------------
Myles R. Tashman Counsel and Secretary
/s/ Susan B. Watson Director, Senior Vice February 4, 1998
- -------------------- President and Chief --------------------
Susan B. Watson Financial Officer
/s/ Beth B. Neppl Director and Vice February 4, 1998
- ----------------------- President --------------------
Beth B. Neppl
/s/ Paul E. Larson Director February 4, 1998
- ----------------------- --------------------
Paul E. Larson
/s/ Paul R. Schlaack Director February 4, 1998
- ----------------------- --------------------
Paul R. Schlaack
<PAGE>
<PAGE>
