WRL SERIES ANNUITY ACCOUNT
WRL FREEDOM BELLWETHER/REGISTERED TRADEMARK/
Flexible Payment Variable
Deferred Annuity Contract
Issued by
Western Reserve Life Assurance Co. of Ohio
201 Highland Avenue
Largo, Florida 33770
Telephone: (800) 851-9777
(813) 585-6565
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a Prospectus and should be
read in conjunction with the WRL Freedom Bellwether/registered trademark/
Prospectus, dated May 1, 1996, as supplemented January 1, 1997, which is
available without charge by contacting Western Reserve Life Assurance Co. of
Ohio ("Western Reserve") at P.O. Box 9051, Clearwater, Florida 34618-9051 or
at the telephone number above.
May 1, 1996
As Supplemented
January 1, 1997
WRL00029-01/97
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Custodian ............................................. 3
Independent Accountants ............................... 3
Legal Matters ......................................... 3
Calculation of Performance Related Information ....... 3
Addition, Deletion, and Substitution of Investments .. 5
Calculation of Variable Annuity Payments .............. 6
Financial Statements .................................. 7
</TABLE>
2
<PAGE>
CUSTODIAN
The assets of WRL Series Annuity Account (the "Series Account") are held
by Western Reserve. The assets of the Series Account are kept physically
segregated and held apart from the general account and any other separate
accounts of Western Reserve. Western Reserve maintains records of all
purchases and redemptions of shares of the WRL Series Fund, Inc. (the
"Fund"). Additional protection for the assets of the Series Account is
provided by a blanket bond issued to AEGON U.S. Holding Corporation ("AEGON
U.S.") in the amount of $5 million (subject to a $1 million deductible),
covering all of the employees of AEGON U.S. and its affiliates, including
Western Reserve. A Stockbrokers Blanket Bond, issued to AEGON U.S.A.
Securities, Inc. provides additional fidelity coverage to a limit of $12
million, subject to a $50,000 deductible.
INDEPENDENT ACCOUNTANTS
The accounting firm of Price Waterhouse LLP, independent accountants,
provided audit services to the Series Account for the year ended December 31,
1995. The principal business address of Price Waterhouse LLP is 1055
Broadway, Kansas City, Missouri 64105. The accounting firm of Ernst & Young
LLP, independent auditors, provided audit services to Western Reserve for the
year ended December 31, 1995. The principal business address of Ernst & Young
LLP is 801 Grand Avenue, Suite 3400, Des Moines, Iowa 50309-2764.
LEGAL MATTERS
Sutherland, Asbill & Brennan, L.L.P., Washington, D.C., has provided
advice on certain legal matters concerning Federal securities laws in
connection with the Contracts. All matters of Ohio law pertaining to the
Contracts, including the validity of the Contracts and Western Reserve's
right to issue the Contracts under Ohio insurance law, have been passed upon
by Thomas E. Pierpan, Esq., Vice President and Counsel of Western Reserve.
CALCULATION OF PERFORMANCE RELATED INFORMATION
A. YIELD AND EFFECTIVE YIELD QUOTATIONS FOR THE MONEY MARKET SUB-ACCOUNT
Yield - The yield quotation set forth in the Prospectus for the Money
Market Sub-Account is for the seven days ended on the date of the most recent
balance sheet of the Series Account included in the registration statement,
and is computed by determining the net change, exclusive of capital changes,
in the value of a hypothetical preexisting account having a balance of one
unit in the Money Market Sub-Account at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from Owner accounts,
and dividing the difference by the value of the account at the beginning of
the base period to obtain the base period return, and multiplying the base
period return by (365/7) with the resulting figure carried to at least the
nearest hundredth of one percent.
Effective Yield - The effective yield quotation for this Money Market
Sub-Account set forth in the Prospectus is for the seven days ended on the
date of the most recent balance sheet of the Series Account included in the
registration statement. The effective yield is computed by determining the
net change, exclusive of capital changes, in the value of a hypothetical
pre-existing Sub-Account having a balance of one unit in the Money Market
Sub-Account at the beginning of the period. A hypothetical charge, reflecting
deductions from Owner accounts, is subtracted from the balance. The
difference is divided by the value of the Sub-Account at the beginning of the
base period to obtain the base period return, which is then compounded by
adding 1. Next, the sum is raised to a power equal to 365 divided by 7, and 1
is subtracted from the result. The following formula describes the
computation:
EFFECTIVE YIELD = ({BASE} PERIOD RETURN + 1}(365/7) - 1
The effective yield is shown at least to the nearest hundredth of one
percent.
3
<PAGE>
HYPOTHETICAL CHARGE - For purposes of the yield and effective yield
computations, the hypothetical charge reflects all fees and charges that are
charged to all Owner accounts in proportion to the length of the base period.
Such fees and charges include the $30 Annual Contract Charge, calculated on
the basis of an average Series Account Value per Contract of $56,897, which
converts that charge to an annual rate of 0.05% of the Series Account Value.
The yield and effective yield quotations do not reflect any deduction for
premium taxes or transfer charges that may be applicable to a particular
Contract. No fees or sales charges are assessed upon annuitization under the
Contracts, except premium taxes. Realized gains and losses from the sale of
securities, and unrealized appreciation and depreciation of assets held by
the Money Market Sub-Account and the Fund are excluded from the calculation
of yield.
B. TOTAL RETURN AND YIELD QUOTATIONS FOR THE AGGRESSIVE GROWTH, EMERGING
GROWTH, GROWTH, GLOBAL, BALANCED, EQUITY-INCOME, BOND,
SHORT-TO-INTERMEDIATE GOVERNMENT, UTILITY, TACTICAL ASSET ALLOCATION,
VALUE EQUITY, C.A.S.E. GROWTH, GLOBAL SECTOR, INTERNATIONAL EQUITY AND
U.S. EQUITY SUB-ACCOUNTS
The total return quotations set forth in the Prospectus for all of these
Sub-Accounts holding assets for the Contracts during the Accumulation Period
are average annual total return quotations for the one, five, and ten-year
periods (or, while a Sub-Account has been in existence for a period of less
than one, five or ten years, for such lesser period) ended on the date of the
most recent balance sheet of the Series Account and for the period from the
date the Sub-Accounts commenced operations until the aforesaid date. The
quotations are computed by determining the average annual compounded rates of
return over the relevant periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P(1 + T)(n) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the particular period of
a hypothetical $1,000 payment made at the beginning of the
particular period.
For purposes of the total return quotations for all of these Sub-Accounts,
the calculations take into account all fees that are charged to all Owner
accounts during the Accumulation Period. Such fees include the $30 Annual
Contract Charge, calculated on the basis of an average Series Account Value
per Contract of $56,897, which converts that charge to an annual rate of
0.05% of the Series Account Value. The calculations also assume a complete
redemption as of the end of the particular period. The calculations do not
reflect any deduction for premium taxes or any transfer charges that may be
applicable to a particular Contract.
The yield quotations for all of these Sub-Accounts except the Money Market
Sub-Account representing the accumulation period set forth in the Prospectus
is based on the thirty-day period ended on the date of the most recent
balance sheet of the Series Account and are computed by dividing the net
investment income per unit earned during the period by the maximum offering
price per unit on the last date of the period, according to the following
formula:
YIELD = 2[( a-bcd + 1)(6) - 1]
Where: a = net investment income earned during the period by the
corresponding Portfolio of the Fund attributable to shares owned
by the Sub-Account.
b = expenses accrued for the period (net of reimbursement).
c = the average daily number of units outstanding during the period.
d = the maximum offering price per unit on the last day of the period.
4
<PAGE>
For purposes of the yield quotations for all of the Sub-Accounts except the
Money Market Sub-Account, the calculations take into account all fees that
are charged to all Owner accounts during the Accumulation Period. Such fees
include the $30 Annual Contract Charge, calculated on the basis of an average
Series Account Value per Contract of $56,897, which converts that charge to
an annual rate of 0.05% of the Series Account Value. The calculations do not
take into account any premium taxes or any Transfer Charges.
Premium taxes currently range from 0% to 3.5% of Purchase Payments
depending upon the jurisdiction in which the Contract is delivered.
C. OTHER PERFORMANCE DATA
Western Reserve may from time to time disclose average annual total return
in non-standard formats and cumulative total return for Contracts funded by
these Sub-Accounts.
Western Reserve may from time to time also disclose in advertisements and
sales literature yields and non-standard total returns for the Sub-Accounts
(some of which do not include Contract and Series Account fees and charges)
including such disclosure for the Sub-Accounts for periods prior to the date
the Sub-Accounts commenced operations.
For periods prior to the date each Sub-Account commenced operations,
performance information will be calculated based on the performance of the
Fund's corresponding Portfolios that commenced operations prior to each
Sub-Account, and the assumption that each Sub-Account was in existence for
the same periods as those indicated for each respective Portfolio, with a
level of fees and charges approximately equal to those currently assessed
against each Sub-Account and the Contract. Non-standard performance data will
only be disclosed if the standard performance data for the required periods
is also disclosed.
D. ADVERTISING AND SALES LITERATURE
From time to time Western Reserve may refer to the diversifying process of
asset allocation based on the Modern Portfolio Theory developed by Nobel
Prize winning economist Harry Markowitz. The basic assumptions of Modern
Portfolio Theory are the selection of individual investments has little
impact on portfolio performance, market timing strategies seldom work,
markets are efficient, and portfolio selection should be made among asset
classes. Modern Portfolio Theory allows an investor to determine an efficient
portfolio selection that will provide a higher return with the same risk or
the same return with lower risk.
When presenting the asset allocation process Western Reserve may outline
the process of personal and investment risk analysis including determining
individual risk tolerances and a discussion of the different types of
investment risk. Western Reserve may classify investors into four categories
based on their risk tolerance and will quote various industry experts on
which types of investments are best suited to each of the four risk
categories. The industry experts quoted may include lbbotson Associates, CDA
Investment Technologies, Lipper Analytical Services and any other expert
which has been deemed by the Company to be appropriate. Western Reserve may
also provide a historical overview of the performance of a variety of
investment market indices, the performance of these indices over time, and
the performance of different asset classes, such as stocks, bonds, cash
equivalents, etc. Western Reserve may also discuss investment volatility
including the range of returns for different asset classes and over different
time horizons, and the correlation between the returns of different asset
classes. Western Reserve may also discuss the basis of portfolio optimization
including the required inputs and the construction of efficient portfolios
using sophisticated computer-based techniques. Finally, Western Reserve may
describe various investment strategies and methods of implementation, the
periodic rebalancing of diversified portfolios, the use of dollar cost
averaging techniques, a comparison of the tax impact of purchase payments
made on a "before tax" basis through a tax-qualified plan with those made on
an "after tax" basis outside of a tax-qualified plan, and a comparison of
tax-deferred versus non tax-deferred accumulation of purchase payments.
ADDITION, DELETION, AND SUBSTITUTION OF INVESTMENTS
Western Reserve reserves the right, subject to compliance with applicable
law, to make additions to, deletions from or substitutions for the shares
that are held by the Series Account or that the Series Account
5
<PAGE>
may purchase. Western Reserve reserves the right to eliminate the shares of
any of the Portfolios of the Fund and to substitute shares of another
Portfolio of the Fund or of another open-end registered investment company,
if the shares of a Portfolio are no longer available for investment, or if in
Western Reserve's judgment further investment in any Portfolio should become
inappropriate in view of the purposes of the Series Account. Western Reserve
will not, however, substitute any shares attributable to an Owner's interest
in a Sub-Account without notice to and prior approval of the Securities and
Exchange Commission, to the extent required by the Investment Company Act of
1940, as amended (the " 1940 Act") or other applicable law.
Western Reserve also reserves the right to establish additional
Sub-Accounts, each of which would invest in a new Portfolio of the Fund, or
in shares of another investment company, with a specified investment
objective. New Sub-Accounts may be established when, in the sole discretion
of Western Reserve, marketing, tax or investment conditions warrant, and any
new Sub-Accounts will be made available to existing Owners on a basis to be
determined by Western Reserve. Western Reserve may also eliminate one or more
Sub-Accounts if, in its sole discretion, marketing, tax or investment
conditions warrant.
In the event of any such substitution or change, Western Reserve may by
appropriate endorsement make such changes in the Contracts and other annuity
contracts as may be necessary or appropriate to reflect such substitution or
change. If deemed by Western Reserve to be in the best interests of persons
having voting rights under the Contracts, the Series Account may be operated
as a management company under the 1940 Act, or, subject to any required
approval, it may be deregistered under that Act in the event such
registration is no longer required.
Western Reserve reserves the right to change the investment objective of
any Sub-Account. Additionally, if required by law or regulation, Western
Reserve will not materially change an investment objective of the Series
Account or of a Portfolio designated for a Sub-Account unless a statement of
the change is filed with and approved by the appropriate insurance official
of the state of Western Reserve's domicile or deemed approved in accordance
with such law or regulation.
CALCULATION OF VARIABLE ANNUITY PAYMENTS
Under a Series Account annuity option, the Owner applies his or her
Annuity Proceeds (or a portion thereof) on the Maturity Date to one or more
of the sixteen Sub-Accounts designated to support annuity payments by
purchasing units issued in connection with each Sub-Account selected by the
Owner. The Annuity Unit Value of any Sub-Account will increase or decrease in
accordance with the investment experience of that Sub-Account. The Annuity
Unit Value of any Sub-Account at the end of a Valuation Period is equal to
the product of (a) the Annuity Unit Value for that Sub-Account at the end of
the immediately preceding Valuation Period, multiplied by (b) the net
investment factor for that Sub-Account for the Valuation Period, multiplied
by (c) the "assumed investment return adjustment factor" for the Valuation
Period.
The "assumed investment return adjustment factor" for a Valuation Period
is the product of discount factors of .99986634 per day, and is designed to
recognize the 5% effective annual assumed investment return.
The net investment factor used to calculate the Annuity Unit Value in each
Sub-Account for the Valuation Period is equal to (a) the net result of (1)
the net asset value of a Fund share held in that Sub-Account determined as of
the end of the current Valuation Period; plus (2) the per share amount of any
dividend or capital gain distributions made by the Fund for shares held in
that Sub-Account if the ex-dividend date occurs during the Valuation Period;
plus or minus (3) a per share charge or credit for any taxes reserved for,
which Western Reserve determines to have resulted from the investment
operations of the Sub-Account; divided by (b) the net asset value of a Fund
share held in the Sub-Account determined as of the end of the immediately
preceding Valuation Period; minus (c) a factor representing the mortality and
expense risk charge and administrative charge. This factor is equal, on an
annual basis, to 1.40% of the daily net asset value of a Fund share held in
the Series Account for the Sub-Account.
6
<PAGE>
DETERMINATION OF THE FIRST VARIABLE PAYMENT. The amount of the first
variable payment is determined by multiplying the Annuity Proceeds times the
appropriate rate for the variable option selected. The rates are based on the
Society of Actuaries 1983 Individual Mortality Table A with projection and a
5% effective annual assumed investment return and assuming a Maturity Date in
the year 2000. Gender based mortality tables will be used unless prohibited
by law.
The amount of the first payment depends upon the adjusted age of the
Annuitant. The adjusted age is the Annuitant's actual age nearest birthday at
the Maturity Date, adjusted as follows:
<TABLE>
<CAPTION>
MATURITY DATE ADJUSTED AGE
------------- ------------
<S> <C>
Before 2001 Actual Age
2001 -2010 Actual Age minus 1
2011 -2020 Actual Age minus 2
2021 -2030 Actual Age minus 3
2031 -2040 Actual Age minus 4
</TABLE>
After the year 2040 as determined by Western Reserve.
DETERMINATION OF SUBSEQUENT VARIABLE PAYMENTS. The amount of variable
annuity payments after the first will increase or decrease according to the
Annuity Unit Value which reflects the investment experience of the selected
Sub-Account(s). Each variable annuity payment after the first will be equal
to the number of units attributable to the Contract in each selected
Sub-Account multiplied by the Annuity Unit Value of that Sub-Account on the
date the payment is processed. The number of such units is determined by
dividing the first payment allocated to that Sub-Account by the Annuity Unit
Value of that Sub-Account on the date the first annuity payment is processed.
FINANCIAL STATEMENTS
The financial statements of Western Reserve which are included in this
Statement of Additional Information should be considered only as bearing on
the ability of Western Reserve to meet its obligations under the Contracts.
They should not be considered as bearing on the investment performance of the
assets held in the Series Account.
Financial Statements for Western Reserve for the years ended December 31,
1995, 1994 and 1993 have been prepared on the basis of statutory accounting
principles, rather than generally accepted accounting principles ("GAAP").
7
<PAGE>
INDEX TO FINANCIAL STATEMENTS
WRL SERIES ANNUITY ACCOUNT (BELLWETHER AND CONQUEROR VARIABLE ANNUITIES):
Report of Independent Accountants dated January 31, 1996
Statements of assets, liabilities and equity accounts at December 31, 1995
Statements of operations for the year ended December 31, 1995 and
statements of changes in equity accounts for the years ended December 31,
1995 and 1994
Notes to financial statements
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO:
Report of Independent Auditors dated February 23, 1996
Statutory-Basis balance sheets at December 31, 1995 and 1994
Statutory-Basis statements of operations for the years ended December 31,
1995, 1994 and 1993
Statutory-Basis statements of capital and surplus for the years ended
December 31, 1995, 1994 and 1993
Statutory-Basis statements of cash flows for the years ended December 31,
1995, 1994 and 1993
Notes to Statutory-Basis financial statements
Statutory-Basis financial statement schedules
8
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Western Reserve Life Assurance Co. of Ohio and
Contract Owners of the WRL Series Annuity Account -- WRL Freedom Bellwether and
WRL Freedom Conqueror Contracts
In our opinion, the accompanying statements of assets, liabilities and
equity accounts and the related statements of operations and of changes in
equity accounts and the selected per unit data and ratios present fairly, in all
material respects, the financial position of the Money Market, Bond, Growth,
Short-to-Intermediate Government, Global, Equity-Income, Emerging Growth,
Aggressive Growth, Balanced, Utility and Tactical Asset Allocation Sub-Accounts
of the WRL Freedom Bellwether and WRL Freedom Conqueror Contracts of the WRL
Series Annuity Account (a separate account of Western Reserve Life Assurance Co.
of Ohio, hereafter referred to as the "Annuity Account") at December 31, 1995,
the results of each of their operations, the changes in each of their equity
accounts and the selected per unit data and ratios for each of the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and selected per unit data and ratios (hereafter referred
to as "financial statements") are the responsibility of the Annuity Account's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Kansas City, Missouri
January 31, 1996
- -------------------------------------------------------------------------------
3
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
MONEY MARKET SUB-ACCOUNT
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments, at net asset value:
WRL Series Fund, Inc.:
Money Market Portfolio
(28,030,825.490 shares;
cost $ 28,030,825) ................................ $28,030,825
Accrued transfers from (to)
depositor - net ..................................... 492,914
-----------
Total assets ...................................... 28,523,739
-----------
LIABILITIES: ............................................ 0
-----------
Total net assets .................................. $28,523,729
===========
EQUITY ACCOUNTS:
Contract Owners' equity:
Money Market sub-account
(2,658,930.855662 units;
$ 10.727522 unit value) ........................... $28,523,729
-----------
Total equity ...................................... $28,523,729
===========
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Dividend income .......................................... $1,785,101
Capital gain distributions ............................... 0
----------
1,785,101
EXPENSES:
Mortality and expense risk charges ....................... 471,597
----------
Net investment income (loss) ........................... 1,313,504
----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from securities
transactions ........................................... 0
Change in unrealized appreciation
(depreciation) ......................................... 0
----------
Net gain (loss) on investments ......................... 0
----------
Net increase (decrease) in equity
accounts resulting from
operations ......................................... $1,313,504
==========
</TABLE>
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ............................................... $ 1,313,504 $ 459,257
Net gain (loss) on investments ............................................. 0 0
------------ ------------
Net increase (decrease) in equity accounts
resulting from operations ................................................ 1,313,504 459,257
------------ ------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ........................................ 3,849,894 23,523,915
------------ ------------
Less cost of units redeemed:
Administrative charges ................................................... 15,085 6,710
Policy loans ............................................................. 30,025 8,799
Surrender benefits ....................................................... 4,807,455 4,098,786
Death benefits ........................................................... 324,411 15,941
------------ ------------
5,176,976 4,130,236
------------ ------------
Increase (decrease) in equity accounts from
capital unit transactions .............................................. (1,327,082) 19,393,679
------------ ------------
Net increase (decrease) in equity accounts ............................... (13,578) 19,852,936
Depositor's equity contribution (redemption) ............................... 0 (101,154)
EQUITY ACCOUNTS:
Beginning of period ........................................................ 28,537,317 8,785,535
------------ ------------
End of period .............................................................. $ 28,523,739 $ 28,537,317
============ ============
</TABLE>
The notes to the financial statements are an integral part of this report.
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28
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
MONEY MARKET SUB-ACCOUNT
- -------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------------------------
1995 1994 1993 1992\dagger\
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of period.... $ 10.32 $ 10.11 $ 10.01 $ 10.00
Income from operations:
Net investment income (loss)................ .41 .21 .10 .01
Net realized and unrealized
gain (loss) on investment................. .00 .00 .00 .00
-------- -------- ------- -------
Total income (loss) from operations....... .41 .21 .10 .01
-------- -------- ------- -------
Accumulation unit value, end of period.......... $ 10.73 $ 10.32 $ 10.11 $ 10.01
======== ======== ======= =======
Total return.................................... 3.96% 2.07% 1.01% .09%
Ratios and supplemental data:
Net assets at end of period (in thousands).... $ 28,524 $ 28,537 $ 8,786 $ 100
Ratio of net investment income (loss)
to average net assets....................... 3.89% 2.26% 1.03% .09%
</TABLE>
* The above table illustrates the change for a unit outstanding computed using
average units outstanding throughout each period.
\dagger\ The inception date of this sub-account was December 3, 1992. The total
return and ratio of net investment income to average net assets are not
annualized.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
29
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
BOND SUB-ACCOUNT
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments, at net asset value:
WRL Series Fund, Inc.:
Bond Portfolio
(2,896,630.562 shares;
cost $ 31,815,193) ............................... $ 32,862,871
Accrued transfers from (to)
depositor - net .................................... (91,340)
------------
Total assets ..................................... 32,771,531
------------
LIABILITIES: ........................................... 0
------------
Total net assets ................................. $ 32,771,531
============
EQUITY ACCOUNTS:
Contract Owners' equity:
Bond sub-account
(2,598,178.000140 units;
$ 12.613274 unit value) .......................... $ 32,771,531
------------
Total equity ..................................... $ 32,771,531
============
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Dividend income ........................................ $ 1,677,332
Capital gain distributions ............................. 0
-----------
1,677,332
EXPENSES:
Mortality and expense risk charges ..................... 342,765
-----------
Net investment income (loss) ......................... 1,334,567
-----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from securities
transactions ......................................... (730,842)
Change in unrealized appreciation
(depreciation) ....................................... 3,995,845
-----------
Net gain (loss) on investments ....................... 3,265,003
-----------
Net increase (decrease) in equity
accounts resulting from
operations ....................................... $ 4,599,570
===========
</TABLE>
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) .............................................. $ 1,334,567 $ 916,610
Net gain (loss) on investments ............................................ 3,265,003 (2,612,594)
------------ ------------
Net increase (decrease) in equity accounts
resulting from operations ............................................... 4,599,570 (1,695,984)
------------ ------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ....................................... 12,376,956 3,605,645
------------ ------------
Less cost of units redeemed:
Administrative charges .................................................. 20,247 13,632
Policy loans ............................................................ 0 20,454
Surrender benefits ...................................................... 1,650,718 1,327,499
Death benefits .......................................................... 147,684 99,837
------------ ------------
1,818,649 1,461,422
------------ ------------
Increase (decrease) in equity accounts from
capital unit transactions ............................................. 10,558,307 2,144,223
------------ ------------
Net increase (decrease) in equity accounts .............................. 15,157,877 448,239
Depositor's equity contribution (redemption) .............................. 0 (114,957)
EQUITY ACCOUNTS:
Beginning of period ....................................................... 17,613,654 17,280,372
------------ ------------
End of period ............................................................. $ 32,771,531 $ 17,613,654
============ ============
</TABLE>
The notes to the financial statements are an integral part of this report.
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30
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
BOND SUB-ACCOUNT
- -------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------------------------------------
1995 1994 1993 1992\dagger\
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of period.... $ 10.40 $ 11.33 $ 10.14 $ 10.00
Income from operations:
Net investment income (loss)................ .64 .52 2.69 .64
Net realized and unrealized
gain (loss) on investment................. 1.57 (1.45) (1.50) (.50)
-------- -------- -------- -------
Total income (loss) from operations....... 2.21 (.93) 1.19 .14
-------- -------- -------- -------
Accumulation unit value, end of period.......... $ 12.61 $ 10.40 $ 11.33 $ 10.14
======== ======== ======== =======
Total return.................................... 21.28% (8.23)% 11.81% 1.36%
Ratios and supplemental data:
Net assets at end of period (in thousands).... $ 32,772 $ 17,614 $ 17,280 $ 101
Ratio of net investment income (loss)
to average net assets....................... 5.45% 4.91% 24.79% 6.30%
</TABLE>
* The above table illustrates the change for a unit outstanding computed using
average units outstanding throughout each period.
\dagger\ The inception date of this sub-account was December 3, 1992. The total
return and ratio of net investment income to average net assets are not
annualized.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
31
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
GROWTH SUB-ACCOUNT
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments, at net asset value:
WRL Series Fund, Inc.:
Growth Portfolio
(6,230,854.928 shares;
cost $ 168,790,057) ............................... $197,273,481
Accrued transfers from (to)
depositor - net ..................................... 865,103
------------
Total assets ...................................... 198,138,584
------------
LIABILITIES: ............................................ 0
------------
Total net assets .................................. $198,138,584
============
EQUITY ACCOUNTS:
Contract Owners' equity:
Growth sub-account
(14,387,637.262853 units;
$ 13.771447 unit value) ........................... $198,138,584
------------
Total equity ...................................... $198,138,584
============
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Dividend income ......................................... $ 870,370
Capital gain distributions .............................. 18,013,240
-----------
18,883,610
EXPENSES:
Mortality and expense risk charges ...................... 2,119,146
-----------
Net investment income (loss) .......................... 16,764,464
-----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from securities
transactions .......................................... 1,525,607
Change in unrealized appreciation
(depreciation) ........................................ 36,791,275
-----------
Net gain (loss) on investments ........................ 38,316,882
-----------
Net increase (decrease) in equity
accounts resulting from
operations ........................................ $55,081,346
===========
</TABLE>
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) .............................................. $ 16,764,464 $ (259,963)
Net gain (loss) on investments ............................................ 38,316,882 (9,453,848)
------------- -------------
Net increase (decrease) in equity accounts
resulting from operations ............................................... 55,081,346 (9,713,811)
------------- -------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ....................................... 40,690,699 41,203,631
------------- -------------
Less cost of units redeemed:
Administrative charges .................................................. 173,999 115,349
Policy loans ............................................................ 36,385 28,887
Surrender benefits ...................................................... 9,406,104 5,780,272
Death benefits .......................................................... 399,627 490,389
------------- -------------
10,016,115 6,414,897
------------- -------------
Increase (decrease) in equity accounts from
capital unit transactions ............................................. 30,674,584 34,788,734
------------- -------------
Net increase (decrease) in equity accounts .............................. 85,755,930 25,074,923
Depositor's equity contribution (redemption) .............................. 0 (107,288)
EQUITY ACCOUNTS:
Beginning of period ....................................................... 112,382,654 87,415,019
------------- -------------
End of period ............................................................. $ 198,138,584 $ 112,382,654
============= =============
</TABLE>
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
32
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
GROWTH SUB-ACCOUNT
- -------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------------------------------------
1995 1994 1993 1992\dagger\
--------- --------- -------- -------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of period.... $ 9.49 $ 10.50 $ 10.24 $ 10.00
Income from operations:
Net investment income (loss)................ 1.30 (.03) .31 .39
Net realized and unrealized
gain (loss) on investment................. 2.98 (.98) (.05) (.15)
--------- --------- -------- -------
Total income (loss) from operations....... 4.28 (1.01) .26 .24
--------- --------- -------- -------
Accumulation unit value, end of period.......... $ 13.77 $ 9.49 $ 10.50 $ 10.24
========= ========= ======== =======
Total return.................................... 45.08% (9.58)% 2.55% 2.38%
Ratios and supplemental data:
Net assets at end of period (in thousands).... $ 198,139 $ 112,383 $ 87,415 $ 102
Ratio of net investment income (loss)
to average net assets....................... 11.07% (.26)% 3.14% 3.82%
</TABLE>
* The above table illustrates the change for a unit outstanding computed using
average units outstanding throughout each period.
\dagger\ The inception date of this sub-account was December 3, 1992. The total
return and ratio of net investment income to average net assets are not
annualized.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
33
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
SHORT-TO-INTERMEDIATE GOVERNMENT SUB-ACCOUNT
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments, at net asset value:
WRL Series Fund, Inc.:
Short-to-Intermediate Government
Portfolio
(1,246,554.162 shares;
cost $ 12,607,061) .................................. $12,984,245
Accrued transfers from (to)
depositor - net ....................................... 1,297
-----------
Total assets ........................................ 12,985,542
-----------
LIABILITIES: .............................................. 0
-----------
Total net assets .................................... $12,985,542
===========
EQUITY ACCOUNTS:
Contract Owners' equity:
Short-to-Intermediate Government
sub-account
(1,141,492.807778 units;
$ 11.375930 unit value) ............................. $12,985,542
-----------
Total equity ........................................ $12,985,542
===========
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Dividend income ........................................ $ 672,129
Capital gain distributions ............................. 0
-----------
672,129
EXPENSES:
Mortality and expense risk charges ..................... 162,554
-----------
Net investment income (loss) ......................... 509,575
-----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from
securities transactions .............................. (190,002)
Change in unrealized appreciation
(depreciation) ....................................... 991,022
-----------
Net gain (loss) on investments ....................... 801,020
-----------
Net increase (decrease) in equity
accounts resulting from
operations ....................................... $ 1,310,595
===========
</TABLE>
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) .............................................. $ 509,575 $ 451,637
Net gain (loss) on investments ............................................ 801,020 (688,949)
------------ ------------
Net increase (decrease) in equity accounts
resulting from operations ............................................... 1,310,595 (237,312)
------------ ------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ....................................... 1,293,887 21,957
------------ ------------
Less cost of units redeemed:
Administrative charges .................................................. 7,052 5,707
Policy loans ............................................................ 31,238 34,109
Surrender benefits ...................................................... 1,086,564 728,811
Death benefits .......................................................... 143,519 57,574
------------ ------------
1,268,373 826,201
------------ ------------
Increase (decrease) in equity accounts from
capital unit transactions ............................................. 25,514 (804,244)
------------ ------------
Net increase (decrease) in equity accounts .............................. 1,336,109 (1,041,556)
Depositor's equity contribution (redemption) .............................. 0 (873,292)
EQUITY ACCOUNTS:
Beginning of period ....................................................... 11,649,433 13,564,281
------------ ------------
End of period ............................................................. $ 12,985,542 $ 11,649,433
============ ============
</TABLE>
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
34
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
SHORT-TO-INTERMEDIATE GOVERNMENT SUB-ACCOUNT
- -------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------------------------------------
1995 1994 1993 1992\dagger\
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of period.... $ 10.16 $ 10.35 $ 10.03 $ 10.00
Income from operations:
Net investment income (loss)................ .48 .37 .30 .01
Net realized and unrealized
gain (loss) on investments................ .74 (.56) .02 .02
-------- -------- -------- -------
Total income (loss) from operations....... 1.22 (.19) .32 .03
-------- -------- -------- -------
Accumulation unit value, end of period.......... $ 11.38 $ 10.16 $ 10.35 $ 10.03
======== ======== ======== =======
Total return.................................... 11.96% (1.81)% 3.12% .35%
Ratios and supplemental data:
Net assets at end of period (in thousands).... $ 12,986 $ 11,649 $ 13,564 $ 853
Ratio of net investment income (loss)
to average net assets....................... 4.39% 3.68% 2.98% .13%
</TABLE>
* The above table illustrates the change for a unit outstanding computed using
average units outstanding throughout each period.
\dagger\ The inception date of this sub-account was December 3, 1992. The total
return and ratio of net investment income to average net assets are not
annualized.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
35
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
GLOBAL SUB-ACCOUNT
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments, at net asset value:
WRL Series Fund, Inc.:
Global Portfolio
(7,156,669.202 shares;
cost $ 98,775,431) ................................ $111,040,456
Accrued transfers from (to)
depositor - net ..................................... 917,976
------------
Total assets ...................................... 111,958,432
------------
LIABILITIES: ............................................ 0
------------
Total net assets .................................. $111,958,432
============
EQUITY ACCOUNTS:
Contract Owners' equity:
Global sub-account
(6,903,572.974135 units;
$ 16.217462 unit value) ........................... $111,958,432
------------
Total equity ...................................... $111,958,432
============
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
INVESTMENT INCOME:
<S> <C>
Dividend income ......................................... $ 125,670
Capital gain distributions .............................. 4,197,903
-----------
4,323,573
EXPENSES:
Mortality and expense risk charges ...................... 1,386,678
-----------
Net investment income (loss) .......................... 2,936,895
-----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from securities
transactions .......................................... 4,357,331
Change in unrealized appreciation
(depreciation) ........................................ 12,210,581
-----------
Net gain (loss) on investments ........................ 16,567,912
-----------
Net increase (decrease) in equity
accounts resulting from
operations ........................................ $19,504,807
===========
</TABLE>
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ............................................. $ 2,936,895 $ 2,765,212
Net gain (loss) on investments ........................................... 16,567,912 (3,980,604)
------------- -------------
Net increase (decrease) in equity accounts
resulting from operations .............................................. 19,504,807 (1,215,392)
------------- -------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ...................................... 3,172,478 71,394,070
------------- -------------
Less cost of units redeemed:
Administrative charges ................................................. 106,341 44,761
Policy loans ........................................................... 5,024 9,824
Surrender benefits ..................................................... 5,972,420 3,590,878
Death benefits ......................................................... 464,451 266,183
------------- -------------
6,548,236 3,911,646
------------- -------------
Increase (decrease) in equity accounts from
capital unit transactions ............................................ (3,375,758) 67,482,424
------------- -------------
Net increase (decrease) in equity accounts ............................. 16,129,049 66,267,032
Depositor's equity contribution (redemption) ............................. 0 (342,963)
EQUITY ACCOUNTS:
Beginning of period ...................................................... 95,829,383 29,905,314
------------- -------------
End of period ............................................................ $ 111,958,432 $ 95,829,383
============= =============
</TABLE>
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
36
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
GLOBAL SUB-ACCOUNT
- -------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------------------------------
1995 1994 1993 1992\dagger\
--------- -------- -------- -------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of period.... $ 13.36 $ 13.52 $ 10.15 $ 10.00
Income from operations:
Net investment income (loss)................ .43 .53 .11 (.01)
Net realized and unrealized
gain (loss) on investment................. 2.43 (.69) 3.26 .16
--------- -------- -------- -------
Total income (loss) from operations....... 2.86 (.16) 3.37 .15
--------- -------- -------- -------
Accumulation unit value, end of period.......... $ 16.22 $ 13.36 $ 13.52 $ 10.15
========= ======== ======== =======
Total return.................................... 21.35% (1.14)% 33.17% 1.51%
Ratios and supplemental data:
Net assets at end of period (in thousands).... $ 111,958 $ 95,829 $ 29,905 $ 254
Ratio of net investment income (loss)
to average net assets....................... 2.96% 3.95% .99% (.11)%
</TABLE>
* The above table illustrates the change for a unit outstanding computed using
average units outstanding throughout each period.
\dagger\ The inception date of this sub-account was December 3, 1992. The total
return and ratio of net investment income to average net assets are not
annualized.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
37
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
EQUITY-INCOME SUB-ACCOUNT
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments, at net asset value:
WRL Series Fund, Inc.:
Equity-Income Portfolio
(7,836,733.175 shares;
cost $ 89,819,964) ................................ $100,815,159
Accrued transfers from (to)
depositor - net ..................................... 835,949
------------
Total assets ...................................... 101,651,108
------------
LIABILITIES: ............................................ 0
------------
Total net assets .................................. $101,651,108
============
EQUITY ACCOUNTS:
Contract Owners' equity:
Equity-Income sub-account
(7,498,915.593967 units;
$ 13.555441 unit value) ........................... $101,651,108
------------
Total equity ...................................... $101,651,108
============
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Dividend income .................................................. $ 2,624,380
Capital gain distributions ....................................... 2,631,227
-----------
5,255,607
EXPENSES:
Mortality and expense risk charges ............................... 1,194,121
-----------
Net investment income (loss) ................................... 4,061,486
-----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from securities
transactions ................................................... 1,477,909
Change in unrealized appreciation
(depreciation) ................................................. 11,986,591
-----------
Net gain (loss) on investments ................................. 13,464,500
-----------
Net increase (decrease) in equity
accounts resulting from
operations ................................................. $17,525,986
===========
</TABLE>
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) .............................................. $ 4,061,486 $ 802,343
Net gain (loss) on investments ............................................ 13,464,500 (1,600,649)
------------ ------------
Net increase (decrease) in equity accounts
resulting from operations ............................................... 17,525,986 (798,306)
------------ ------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ....................................... 17,763,181 47,358,710
------------ ------------
Less cost of units redeemed:
Administrative charges .................................................. 71,983 30,989
Policy loans ............................................................ 0 22,759
Surrender benefits ...................................................... 4,611,616 2,510,372
Death benefits .......................................................... 687,018 175,728
------------ ------------
5,370,617 2,739,848
------------ ------------
Increase (decrease) in equity accounts from
capital unit transactions ............................................. 12,392,564 44,618,862
------------ ------------
Net increase (decrease) in equity accounts .............................. 29,918,550 43,820,556
Depositor's equity contribution (redemption) .............................. 0 (399,714)
EQUITY ACCOUNTS:
Beginning of period ....................................................... 71,732,558 28,311,716
------------ ------------
End of period ............................................................. $101,651,108 $ 71,732,558
============ ============
</TABLE>
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
38
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
EQUITY-INCOME SUB-ACCOUNT
- -------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------------------
1995 1994 1993\dagger\
---------- -------- --------
<S> <C> <C> <C>
Accumulation unit value, beginning of period.... $ 11.03 $ 11.24 $ 10.00
Income from operations:
Net investment income (loss)................ .59 .16 .20
Net realized and unrealized
gain (loss) on investment................. 1.94 (.37) 1.04
---------- -------- --------
Total income (loss) from operations....... 2.53 (.21) 1.24
---------- -------- --------
Accumulation unit value, end of period.......... $ 13.56 $ 11.03 $ 11.24
========== ======== ========
Total return.................................... 22.93% (1.92)% 12.43%
Ratios and supplemental data:
Net assets at end of period (in thousands).... $ 101,651 $ 71,733 $ 28,312
Ratio of net investment income (loss)
to average net assets....................... 4.76% 1.49% 1.87%
</TABLE>
* The above table illustrates the change for a unit outstanding computed using
average units outstanding throughout each period.
\dagger\ The inception date of this sub-account was March 1, 1993. The total
return and ratio of net investment income to average net assets are not
annualized.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
39
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
EMERGING GROWTH SUB-ACCOUNT
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments, at net asset value:
WRL Series Fund, Inc.:
Emerging Growth Portfolio
(6,452,411.758 shares;
cost $ 82,403,820) ................................ $104,817,068
Accrued transfers from (to)
depositor - net ..................................... 297,742
------------
Total assets ...................................... 105,114,810
------------
LIABILITIES: ............................................ 0
------------
Total net assets .................................. $105,114,810
============
EQUITY ACCOUNTS:
Contract Owners' equity:
Emerging Growth sub-account
(6,434,050.653589 units;
$ 16.337268 unit value) ........................... $105,114,810
------------
Total equity ...................................... $105,114,810
============
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Dividend income ......................................... $ 18,082
Capital gain distributions .............................. 4,331,176
-----------
4,349,258
EXPENSES:
Mortality and expense risk charges ...................... 1,160,134
-----------
Net investment income (loss) .......................... 3,189,124
-----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from securities
transactions .......................................... 2,726,445
Change in unrealized appreciation
(depreciation) ........................................ 24,715,163
-----------
Net gain (loss) on investments ........................ 27,441,608
-----------
Net increase (decrease) in equity
accounts resulting from
operations ........................................ $30,630,732
===========
</TABLE>
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) .............................................. $ 3,189,124 $ (644,417)
Net gain (loss) on investments ............................................ 27,441,608 (3,294,972)
------------ ------------
Net increase (decrease) in equity accounts
resulting from operations ............................................... 30,630,732 (3,939,389)
------------ ------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ....................................... 16,786,688 43,904,600
------------ ------------
Less cost of units redeemed:
Administrative charges .................................................. 85,948 34,882
Policy loans ............................................................ 13,781 13,553
Surrender benefits ...................................................... 4,544,091 2,178,811
Death benefits .......................................................... 273,410 113,827
------------ ------------
4,917,230 2,341,073
------------ ------------
Increase (decrease) in equity accounts from
capital unit transactions ............................................. 11,869,458 41,563,527
------------ ------------
Net increase (decrease) in equity accounts .............................. 42,500,190 37,624,138
Depositor's equity contribution (redemption) .............................. 0 (453,363)
EQUITY ACCOUNTS:
Beginning of period ....................................................... 62,614,620 25,443,845
------------ ------------
End of period ............................................................. $105,114,810 $ 62,614,620
============ ============
</TABLE>
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
40
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
EMERGING GROWTH SUB-ACCOUNT
- -------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------------------
1995 1994 1993\dagger\
--------- -------- --------
<S> <C> <C> <C>
Accumulation unit value, beginning of period.... $ 11.29 $ 12.35 $ 10.00
Income from operations:
Net investment income (loss)................ .54 (.15) (.14)
Net realized and unrealized
gain (loss) on investments................ 4.51 (.91) 2.49
--------- -------- --------
Total income (loss) from operations....... 5.05 (1.06) 2.35
--------- -------- --------
Accumulation unit value, end of period.......... $ 16.34 $ 11.29 $ 12.35
========= ======== ========
Total return.................................... 44.75% (8.65)% 23.54%
Ratios and supplemental data:
Net assets at end of period (in thousands).... $ 105,115 $ 62,615 $ 25,444
Ratio of net investment income (loss)
to average net assets....................... 3.85% (1.33)% (1.20)%
</TABLE>
* The above table illustrates the change for a unit outstanding computed using
average units outstanding throughout each period.
\dagger\ The inception date of this sub-account was March 1, 1993. The total
return and ratio of net investment income to average net assets are not
annualized.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
41
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
AGGRESSIVE GROWTH SUB-ACCOUNT
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments, at net asset value:
WRL Series Fund, Inc.:
Aggressive Growth Portfolio
(4,500,269.637 shares;
cost $ 55,918,903) .................................. $59,630,183
Accrued transfers from (to)
depositor - net ....................................... 789,360
-----------
Total assets ........................................ 60,419,543
-----------
LIABILITIES: .............................................. 0
-----------
Total net assets .................................... $60,419,543
===========
EQUITY ACCOUNTS:
Contract Owners' equity:
Aggressive Growth sub-account
(4,538,243.619699 units;
$ 13.313420 unit value) ............................. $60,419,543
-----------
Total equity ........................................ $60,419,543
===========
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Dividend income .......................................... $ 167
Capital gain distributions ............................... 1,574,535
----------
1,574,702
EXPENSES:
Mortality and expense risk charges ....................... 496,029
----------
Net investment income (loss) ........................... 1,078,673
----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from securities
transactions ........................................... 2,166,499
Change in unrealized appreciation
(depreciation) ......................................... 3,287,005
----------
Net gain (loss) on investments ......................... 5,453,504
----------
Net increase (decrease) in equity
accounts resulting from
operations ......................................... $6,532,177
==========
</TABLE>
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994*
<S> <C> <C>
OPERATIONS:
Net investment income (loss)............................................... $ 1,078,673 $ (50,309)
Net gain (loss) on investments ............................................ 5,453,504 423,609
------------ ------------
Net increase (decrease) in equity accounts
resulting from operations ............................................... 6,532,177 373,300
------------ ------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ....................................... 44,671,168 10,915,809
------------ ------------
Less cost of units redeemed:
Administrative charges .................................................. 26,869 2,281
Policy loans ............................................................ 8,808 4,781
Surrender benefits ...................................................... 1,799,668 139,102
Death benefits .......................................................... 78,444 0
------------ ------------
1,913,789 146,164
------------ ------------
Increase (decrease) in equity accounts from
capital unit transactions ............................................. 42,757,379 10,769,645
------------ ------------
Net increase (decrease) in equity accounts .............................. 49,289,556 11,142,945
Depositor's equity contribution (redemption) .............................. (272,958) 260,000
EQUITY ACCOUNTS:
Beginning of period ....................................................... 11,402,945 0
------------ ------------
End of period ............................................................. $ 60,419,543 $ 11,402,945
============ ============
</TABLE>
* The inception date of this sub-account was March 1, 1994.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
42
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
AGGRESSIVE GROWTH SUB-ACCOUNT
- -------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1995 1994\dagger\
-------- --------
<S> <C> <C>
Accumulation unit value, beginning of period.... $ 9.78 $ 10.00
Income from operations:
Net investment income (loss)................ .40 (.10)
Net realized and unrealized
gain (loss) on investments................ 3.13 (.12)
-------- --------
Total income (loss) from operations....... 3.53 (.22)
-------- --------
Accumulation unit value, end of period.......... $ 13.31 $ 9.78
======== ========
Total return.................................... 36.10% (2.18)%
Ratios and supplemental data:
Net assets at end of period (in thousands).... $ 60,420 $ 11,403
Ratio of net investment income (loss)
to average net assets....................... 3.04% (.99)%
</TABLE>
* The above table illustrates the change for a unit outstanding computed using
average units outstanding throughout each period.
\dagger\ The inception date of this sub-account was March 1, 1994. The total
return and ratio of net investment income to average net assets are not
annualized.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
43
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
BALANCED SUB-ACCOUNT
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments, at net asset value:
WRL Series Fund, Inc.:
Balanced Portfolio
(1,502,723.671 shares; cost
$ 14,649,370) ..................................... $15,980,734
Accrued transfers from (to)
depositor - net ..................................... 88,060
-----------
Total assets ...................................... 16,068,794
-----------
LIABILITIES: ............................................ 0
-----------
Total net assets .................................. $16,068,794
===========
EQUITY ACCOUNTS:
Contract Owners' equity:
Balanced sub-account
(1,436,511.861084 units;
$ 11.032381 unit value)............. $15,848,146
Depositors' equity:
Balanced sub-account
(20,000.000000 units;
$ 11.032381 unit value)............. 220,648
-----------
Total equity........................ $16,068,794
===========
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
INVESTMENT INCOME:
<S> <C>
Dividend income .......................................... $ 553,159
Capital gain distributions ............................... 0
----------
553,159
EXPENSES:
Mortality and expense risk charges ....................... 169,887
----------
Net investment income (loss) ........................... 383,272
----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from securities
transactions ........................................... 12,691
Change in unrealized appreciation
(depreciation) ......................................... 1,685,289
----------
Net gain (loss) on investments ......................... 1,697,980
----------
Net increase (decrease) in equity
accounts resulting from
operations ......................................... $2,081,252
==========
</TABLE>
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994*
<S> <C> <C>
OPERATIONS:
Net investment income (loss) .................................................. $ 383,272 $ 101,544
Net gain (loss) on investments ................................................ 1,697,980 (358,976)
----------- -----------
Net increase (decrease) in equity accounts
resulting from operations ................................................... 2,081,252 (257,432)
----------- -----------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ........................................... 6,741,534 8,140,529
----------- -----------
Less cost of units redeemed:
Administrative charges ...................................................... 8,055 589
Policy loans ................................................................ 0 21,306
Surrender benefits .......................................................... 543,786 125,576
Death benefits .............................................................. 137,777 0
----------- -----------
689,618 147,471
----------- -----------
Increase (decrease) in equity accounts from
capital unit transactions ................................................. 6,051,916 7,993,058
----------- -----------
Net increase (decrease) in equity accounts .................................. 8,133,168 7,735,626
Depositor's equity contribution (redemption) .................................. 0 200,000
EQUITY ACCOUNTS:
Beginning of period ........................................................... 7,935,626 0
----------- -----------
End of period ................................................................. $16,068,794 $ 7,935,626
=========== ===========
</TABLE>
* The inception date of this sub-account was March 1, 1994
The notes to the financial statements are an integral part of this report
- -------------------------------------------------------------------------------
44
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
BALANCED SUB-ACCOUNT
- -------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------
1995 1994\dagger\
-------- -----------
<S> <C> <C>
Accumulation unit value, beginning of period.... $ 9.34 $ 10.00
Income from operations:
Net investment income (loss)................ .32 .27
Net realized and unrealized
gain (loss) on investments................ 1.37 (.93)
-------- ---------
Total income (loss) from operations....... 1.69 (.66)
-------- ---------
Accumulation unit value, end of period.......... $ 11.03 $ 9.34
======== =========
Total return.................................... 18.13% (6.61)%
Ratios and supplemental data:
Net assets at end of period (in thousands).... $ 16,069 $ 7,936
Ratio of net investment income (loss)
to average net assets....................... 3.16% 2.90%
</TABLE>
* The above table illustrates the change for a unit outstanding computed using
average units outstanding throughout each period.
\dagger\ The inception date of this sub-account was March 1, 1994. The total
return and ratio of net investment income to average net assets are not
annualized.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
45
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
UTILITY SUB-ACCOUNT
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments, at net asset value:
WRL Series Fund, Inc.:
Utility Portfolio
(906,462.911 shares;
cost $ 9,284,067) ................................. $10,083,189
Accrued transfers from (to)
depositor - net ..................................... 2,453
-----------
Total assets ...................................... 10,085,642
-----------
LIABILITIES: ............................................ 0
-----------
Total net assets .................................. $10,085,642
===========
EQUITY ACCOUNTS:
Contract Owners' equity:
Utility sub-account
(843,789.458936 units;
$ 11.676042 unit value) ........................... $ 9,852,121
Depositors' equity:
Utility sub-account
(20,000.000000 units;
$ 11.676042 unit value) ........................... 233,521
-----------
Total equity ...................................... $10,085,642
===========
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Dividend income .......................................... $ 313,797
Capital gain distributions ............................... 75,695
----------
389,492
EXPENSES:
Mortality and expense risk charges ....................... 92,303
----------
Net investment income (loss) ........................... 297,189
----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from securities
transactions ........................................... 220,387
Change in unrealized appreciation
(depreciation) ......................................... 937,376
----------
Net gain (loss) on investments ......................... 1,157,763
----------
Net increase (decrease) in equity
accounts resulting from
operations ......................................... $1,454,952
==========
</TABLE>
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994*
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ................................................ $ 297,189 $ 62,720
Net gain (loss) on investments .............................................. 1,157,763 (154,434)
----------- -----------
Net increase (decrease) in equity accounts
resulting from operations ................................................. 1,454,952 (91,714)
----------- -----------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ......................................... 5,146,911 3,839,826
----------- -----------
Less cost of units redeemed:
Administrative charges .................................................... 4,161 276
Policy loans .............................................................. 193 16,969
Surrender benefits ........................................................ 210,465 144,466
Death benefits ............................................................ 87,803 0
----------- -----------
302,622 161,711
----------- -----------
Increase (decrease) in equity accounts from
capital unit transactions ............................................... 4,844,289 3,678,115
----------- -----------
Net increase (decrease) in equity accounts ................................ 6,299,241 3,586,401
Depositor's equity contribution (redemption) ................................ 0 200,000
EQUITY ACCOUNTS:
Beginning of period ......................................................... 3,786,401 0
----------- -----------
End of period ............................................................... $10,085,642 $ 3,786,401
=========== ===========
</TABLE>
* The inception date of this sub-account was March 1, 1994.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
46
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
UTILITY SUB-ACCOUNT
- -------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------------
1995 1994\dagger\
------------- --------------
<S> <C> <C>
Accumulation unit value, beginning of period.... $ 9.45 $ 10.00
Income from operations:
Net investment income (loss)................ .47 .33
Net realized and unrealized
gain (loss) on investments................ 1.76 (.88)
--------- -------
Total income (loss) from operations....... 2.23 (.55)
--------- -------
Accumulation unit value, end of period.......... $ 11.68 $ 9.45
========= =======
Total return.................................... 23.52% (5.47)%
Ratios and supplemental data:
Net assets at end of period (in
thousands)................................ $ 10,086 $ 3,786
Ratio of net investment income (loss)
to average net assets..................... 4.50% 3.48%
</TABLE>
* The above table illustrates the change for a unit outstanding computed using
average units outstanding throughout each period.
\dagger\ The inception date of this sub-account was March 1, 1994. The total
return and ratio of net investment income to average net assets are not
annualized.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
47
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
TACTICAL ASSET ALLOCATION SUB-ACCOUNT
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments, at net asset value:
WRL Series Fund, Inc.:
Tactical Asset Allocation Portfolio
(6,619,630.020 shares;
cost $ 74,153,257) ............................... $ 76,074,774
Accrued transfers from (to)
depositor - net .................................... (3,775,165)
------------
Total assets ..................................... 72,299,609
------------
LIABILITIES: ........................................... 0
------------
Total net assets ................................. $ 72,299,609
============
EQUITY ACCOUNTS:
Contract Owners' equity:
Tactical Asset Allocation
sub-account
(6,104,684.950590 units;
$ 11.843299 unit value) .......................... $ 72,299,609
------------
Total equity ..................................... $ 72,299,609
============
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD ENDED
INVESTMENT INCOME: DECEMBER 31, 1995*
<S> <C>
Dividend income ......................................... $1,141,213
Capital gain distributions .............................. 1,381,088
----------
2,522,301
EXPENSES:
Mortality and expense risk charges ...................... 406,309
----------
Net investment income (loss) .......................... 2,115,992
----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from
securities transactions ............................... 1,248,103
Change in unrealized appreciation
(depreciation) ........................................ 1,921,517
----------
Net gain (loss) on investments ........................ 3,169,620
----------
Net increase (decrease) in equity
accounts resulting from
operations ........................................ $5,285,612
==========
</TABLE>
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31, 1995*
<S> <C>
OPERATIONS:
Net investment income (loss) ..................................................................... $ 2,115,992
Net gain (loss) on investments ................................................................... 3,169,620
------------
Net increase (decrease) in equity accounts
resulting from operations ...................................................................... 5,285,612
------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) .............................................................. 70,478,164
------------
Less cost of units redeemed:
Administrative charges ......................................................................... 7,030
Policy loans ................................................................................... 8,139
Surrender benefits ............................................................................. 3,423,825
Death benefits ................................................................................. 18,074
------------
3,457,068
------------
Increase (decrease) in equity accounts from
capital unit transactions .................................................................... 67,021,096
------------
Net increase (decrease) in equity accounts ..................................................... 72,306,708
Depositor's equity contributions (redemption) .................................................. (7,099)
EQUITY ACCOUNTS:
Beginning of period .............................................................................. 0
------------
End of period .................................................................................... $ 72,299,609
============
</TABLE>
* The inception date of this sub-account was January 3, 1995.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
48
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
TACTICAL ASSET ALLOCATION SUB-ACCOUNT
- -------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
-----------
1995\dagger\
-----------
<S> <C>
Accumulation unit value, beginning of period.... $ 10.00
Income from operations:
Net investment income (loss)................ .82
Net realized and unrealized
gain (loss) on investments................ 1.02
---------
Total income (loss) from operations....... 1.84
---------
Accumulation unit value, end of period.......... $ 11.84
=========
Total return.................................... 18.43%
Ratios and supplemental data:
Net assets at end of period (in thousands).... $ 72,300
Ratio of net investment income (loss)
to average net assets....................... 7.29%
</TABLE>
* The above table illustrates the change for a unit outstanding computed using
average units outstanding throughout each period.
\dagger\ The inception date of this sub-account was January 3, 1995. The total
return and ratio of net investment income to average net assets are not
annualized.
The notes to the financial statements are an integral part of this report.
- -------------------------------------------------------------------------------
49
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
DECEMBER 31, 1995
NOTE 1 - ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
The WRL Series Annuity Account (the "Annuity Account") was established as a
variable accumulation deferred annuity separate account of Western Reserve Life
Assurance Co. of Ohio ("WRL") and is registered as a unit investment trust
("Trust") under the Investment Company Act of 1940, as amended. The Annuity
Account encompasses various contract types: the WRL Freedom Variable Annuity and
the WRL Freedom Attainer ("Annuity #1"); the WRL Freedom Bellwether and the WRL
Freedom Conqueror ("Annuity #2"). Each contains eleven investment options
referred to as sub-accounts. Each sub-account invests in the corresponding
portfolio of the WRL Series Fund, Inc. (the "Fund"), a registered management
investment company under the Investment Company Act of 1940, as amended. These
portfolios and their respective investment management organizations are as
follows:
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT MANAGER
- ------------------------- -----------------------------
<S> <C>
Money Market Janus Capital Corporation
("JCC")
Bond JCC
Growth JCC
Short-to Intermediate AEGON USA Investment
Government Management, Inc. ("AEGON
Management")
Global JCC
Equity-Income Luther King Capital
Management Corporation
Emerging Growth Van Kampen American Capital
Asset Management, Inc.
Aggressive Growth Fred Alger Management, Inc.
Balanced AEGON Management
Utility Federated Investment
Counseling
Tactical Asset Dean Investment Associates
Allocation
</TABLE>
WRL and AEGON Management are indirectly wholly-owned subsidiaries of AEGON
USA, Inc., which is an indirect wholly-owned subsidiary of AEGON nv, a
Netherlands corporation.
On January 3, 1995, WRL made an initial contribution of $150,000 to the
Annuity Account, Tactical Asset Allocation sub-account, for which WRL received
15,000.000000 units. On April 20, 1995, WRL redeemed the initial contribution in
the Annuity Account, Tactical Asset Allocation sub-account, for $157,099.
The Annuity #2 sub-accounts were established on December 3, 1992 to hold
assets that support the benefits under certain flexible payment variable
accumulation deferred annuity contracts (the "Contracts") issued by WRL. The
Annuity Account equity transactions are accounted for using the appropriate
effective date at the corresponding accumulation unit value.
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 significant accounting policies, which are in conformity with
generally accepted accounting principles for unit investment trusts, have been
consistently used in preparation of the Trust's financial statements.
A. VALUATION OF INVESTMENTS
The investments in the Fund's shares are stated at the closing net asset
value ("NAV") per share as determined by the Fund on December 31, 1995.
Investment transactions are accounted for on the trade date, using the Fund
NAV next determined after receipt of sale or redemption order without sales
charges. Dividend income and capital gain distributions are recorded on the
ex-dividend date. The cost of investments sold is determined on a first-in,
first-out basis.
B. FEDERAL INCOME TAXES
The operations of the Annuity Account are a part of and are taxed with the
total operations of WRL, which is taxed as a life insurance company under
the Internal Revenue Code. Under current law, the investment income of the
Annuity Account, including realized and unrealized capital gains, is not
taxable to WRL. Accordingly, no provision for Federal income taxes has been
made.
- -------------------------------------------------------------------------------
50
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
NOTE 2 - CHARGES AND DEDUCTIONS
Charges are assessed by WRL in connection with issuance and administration
of the Contracts.
A. CONTRACT CHARGES
No deduction for sales expenses are made from the purchase payments. A
contingent deferred sales charge may, however, be assessed against contract
values when withdrawn or surrendered.
On each anniversary through maturity date, WRL will deduct an annual
contract charge as partial compensation for providing administrative
services under the Contracts.
B. ANNUITY #2 SUB-ACCOUNTS CHARGES
A daily charge equal to an annual rate of 1.40% of average daily net assets
is assessed to compensate WRL for assumption of mortality and expense risks
and administrative services in connection with issuance and administration
of the Contracts. This charge (not assessed at the individual contract
level) effectively reduces the value of a unit outstanding during the year.
NOTE 3 - DIVIDENDS AND DISTRIBUTIONS
Dividends of the Fund's Money Market Portfolio are declared daily and
reinvested monthly. Dividends of the remaining portfolios are declared and
reinvested semiannually, while capital gain distributions are declared and
reinvested annually. Dividends and distributions of the Fund are generally paid
to and reinvested by the Annuity Account the next business day after
declaration.
NOTE 4 - OTHER MATTERS
As of December 31, 1995 the equity accounts include net unrealized
appreciation (depreciation) on investments as follows:
<TABLE>
<CAPTION>
SUB-ACCOUNT
- -----------
<S> <C>
Money Market........................... $ n/a
Bond................................... 1,047,678
Growth................................. 28,483,424
Short-to-Intermediate Government....... 377,184
Global................................. 12,265,025
Equity-Income.......................... 10,995,195
Emerging Growth........................ 22,413,248
Aggressive Growth...................... 3,711,280
Balanced............................... 1,331,364
Utility................................ 799,122
Tactical Asset Allocation.............. 1,921,517
</TABLE>
- -------------------------------------------------------------------------------
51
<PAGE>
Report of Independent Auditors
The Board of Directors
Western Reserve Life Assurance Co. of Ohio
We have audited the accompanying statutory-basis balance sheets of Western
Reserve Life Assurance Co. of Ohio as of December 31, 1995 and 1994, and the
related statutory-basis statements of operations, changes in capital and
surplus, and cash flows for each of the three years in the period ended December
31, 1995. Our audits also included the statutory-basis financial statement
schedules required by Regulation S-X, Article 7. These financial statements and
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audits. We
did not audit the "Separate Account Assets" and "Separate Account Liabilities"
in the balance sheet of the Company. The Separate Account financial statements
were audited by other auditors whose reports have been furnished to us, and our
opinion, insofar as it relates to the data included for the Separate Account, is
based solely upon the reports of the other auditors.
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 and the reports of other auditors provide a
reasonable basis for our opinion.
The Company presents its financial statements in conformity with the accounting
practices prescribed or permitted by the Insurance Department of the State of
Ohio. The variances between such practices and generally accepted accounting
principles are described in Note 1. The effects of these variances are not
reasonably determinable but we believe they are material.
In our opinion, because of the materiality of the effects of the variances
between generally accepted accounting principles and the accounting practices
referred to in the preceding paragraph, the financial statements referred to
above are not intended to and do not present fairly, in conformity with
generally accepted accounting principles, the financial position of Western
Reserve Life Assurance Co. of Ohio at December 31, 1995 and 1994, or the results
of its operations or its cash flows for each of the three years in the period
ended December 31, 1995.
<PAGE>
In addition, in our opinion, based on our audits and the reports of other
auditors, the financial statements referred to above present fairly, in all
material respects, the financial position of Western Reserve Life Assurance Co.
of Ohio at December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995 in
conformity with accounting practices prescribed or permitted by the Insurance
Department of the State of Ohio. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic statutory-basis
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
ERNST & YOUNG LLP
Des Moines, Iowa
February 23, 1996
<PAGE>
<TABLE>
<CAPTION>
Western Reserve Life Assurance Co. of Ohio
Balance Sheets - Statutory Basis
(Dollars in thousands, except per share data)
DECEMBER 31
1995 1994
----------------------------
<S> <C> <C>
ADMITTED ASSETS
Cash and invested assets:
Cash and short-term investments $ 4,999 $ 46,722
Bonds 452,474 423,758
Stocks:
Preferred, at market (cost: $78 in 1994) - 14
Common, at market (cost: $473 in 1995 and
$1,944 in 1994) 834 2,541
Mortgage loans on real estate 6,181 9,539
Home office properties, at cost less accumulated
depreciation ($1,505 in 1995 and $1,358 in 1994 5,121 4,818
Policy loans 37,125 27,520
----------------------------
Total cash and invested assets 506,734 514,912
Premiums deferred and uncollected 1,787 1,763
Accrued investment income 7,565 7,505
Receivable from affiliates 4,337 481
Other assets 4,264 3,504
Separate account assets 2,419,205 1,596,736
----------------------------
Total admitted assets $ 2,943,892 $2,124,901
============================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
DECEMBER 31
1995 1994
-----------------------------
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Aggregate reserves for policies and contracts:
Life $ 73,163 $ 84,689
Annuity 319,353 314,124
Policy and contract claim reserves 6,612 5,119
Other policyholders' funds 2,384 2,495
Remittances and items not allocated 5,136 4,613
Federal income taxes payable 1,417 96
Asset valuation reserve 5,590 8,491
Interest maintenance reserve 6,392 6,720
Payable to affiliate - 674
Other liabilities 10,102 8,239
Separate account liabilities 2,415,804 1,594,621
-----------------------------
Total liabilities 2,845,953 2,029,881
Commitments and contingencies
Capital and surplus:
Common stock, $1.00 par value, 1,500 shares
authorized, issued and outstanding 1,500 1,500
Paid-in surplus 68,015 68,015
Unassigned surplus 28,424 25,505
-----------------------------
Total capital and surplus 97,939 95,020
-----------------------------
Total liabilities and capital and surplus $2,943,892 $2,124,901
=============================
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
<CAPTION>
Western Reserve Life Assurance Co. of Ohio
Statements of Operations - Statutory Basis
(Dollars in thousands)
YEAR ENDED DECEMBER 31
1995 1994 1993
----------------------------------------
<S> <C> <C> <C>
Revenues:
Premiums and other considerations, net of
reinsurance:
Life $ 191,508 $150,991 $107,008
Annuity 378,390 449,141 449,361
Net investment income 40,891 40,139 46,197
Amortization of interest maintenance reserve 882 726 618
Commissions and expense allowances on
reinsurance ceded 11 12 14
Other income 8,237 6,354 4,322
---------------------------------------
619,919 647,363 607,520
Benefits and expenses:
Benefits paid or provided for:
Death, surrender and other life insurance and
annuity benefits 243,658 230,511 111,785
Increase (decrease) in aggregate reserves for
policies and contracts:
Life (15,023) (11,332) (4,259)
Annuity 5,229 (78,590) (12,486)
---------------------------------------
233,864 140,589 95,040
Insurance expenses:
Net transfers to separate accounts 242,427 386,174 414,357
Commissions 82,903 78,168 60,975
General insurance expenses 37,246 33,100 24,701
Taxes, licenses and fees 8,919 5,931 5,682
---------------------------------------
371,495 503,373 505,715
---------------------------------------
605,359 643,962 600,755
---------------------------------------
Gain from operations before federal income
taxes and realized capital gains (losses) on
investments 14,560 3,401 6,765
Federal income tax expense 8,917 3,406 4,206
---------------------------------------
Gain (loss) from operations before realized capital
gains (losses) on investments 5,643 (5) 2,559
Netrealized capital gains (losses) on investments
(net of related federal income taxes and
amounts transferred to interest maintenance
reserve) (1,678) (1,133) 2,348
---------------------------------------
Net income (loss) $ 3,965 $ (1,138) $ 4,907
=======================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
<CAPTION>
Western Reserve Life Assurance Co. of Ohio
Statements of Changes in Capital and Surplus - Statutory Basis
(Dollars in thousands)
Additional Total
Common Paid-In Unassigned Capital and
Stock Capital Surplus Surplus
---------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at January 1, 1993 $1,500 $23,015 $19,109 $43,624
Net income for 1993 - - 4,907 4,907
Net unrealized capital gains - - 1,503 1,503
Decrease in non-admitted assets - - 5,535 5,535
Increase in asset valuation reserves - - (1,706) (1,706)
Increase in surplus in separate accounts - - 633 633
Dividend to stockholder - - (5,600) (5,600)
Other adjustments - - 513 513
--------------------------------------------------------
Balance at December 31, 1993 1,500 23,015 24,894 49,409
Capital contribution - 45,000 - 45,000
Net loss for 1994 - - (1,138) (1,138)
Net unrealized capital losses - - (9) (9)
Decrease in non-admitted assets - - 368 368
Decrease in asset valuation reserves - - 4,321 4,321
Decrease in surplus in separate accounts - - (748) (748)
Other adjustments - - (2,183) (2,183)
--------------------------------------------------------
Balance at December 31, 1994 1,500 68,015 25,505 95,020
Net income for 1995 - - 3,965 3,965
Net unrealized capital losses - - (500) (500)
Decrease in non-admitted assets - - 903 903
Decrease in asset valuation reserve - - 2,901 2,901
Decrease in surplus in separate accounts - - 541 541
Change in reserve valuation - - (3,496) (3,496)
Other adjustments - - (1,395) (1,395)
--------------------------------------------------------
Balance at December 31, 1995 $1,500 $68,015 $28,424 $97,939
========================================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
<CAPTION>
Western Reserve Life Assurance Co. of Ohio
Statements of Cash Flows - Statutory Basis
(Dollars in thousands)
YEAR ENDED DECEMBER 31
1995 1994 1993
-----------------------------------
<S> <C> <C> <C>
SOURCES OF CASH
Premiums and other considerations, net of reinsurance $ 569,934 $ 600,405 $ 556,353
Net investment income 42,359 41,977 47,424
Other income 8,052 6,311 4,245
-----------------------------------
620,345 648,693 608,022
Life claims (16,759) (14,660) (12,820)
Surrender benefits and other fund withdrawals (206,250) (196,169) (81,902)
Other benefits to policyholders (19,041) (18,251) (17,385)
Commissions, other expenses and taxes (128,314) (119,755) (92,572)
Dividends to policyholders (26) (22) (44)
Federal income taxes (7,531) (3,378) (3,573)
Net increase in policy loans (9,605) (4,496) (4,686)
Net transfers to separate accounts (242,427) (386,174) (414,357)
-----------------------------------
Net cash used by operations (9,608) (94,212) (19,317)
Proceeds from investments sold, matured or repaid:
Bonds and redeemable preferred stock 108,554 99,241 203,547
Common stocks 2,108 80,066 81,391
Mortgage loans on real estate 1,954 132 764
Real estate -- -- 109
Miscellaneous -- (28) --
-----------------------------------
Total cash from investments 112,616 179,411 285,811
Capital contribution -- 45,000 --
Other sources 2,830 6,135 5,899
-----------------------------------
Total sources of cash 105,838 136,334 272,393
APPLICATIONS OF CASH
Cost of investments acquired:
Bonds and redeemable preferred stock 139,402 47,214 165,967
Common stocks 589 65,911 82,767
Mortgage loans on real estate 6 1,004 290
Real estate 449 37 478
-----------------------------------
Total investments acquired 140,446 114,166 249,502
Dividend to stockholder -- -- 5,600
Other applications, net 7,115 6,086 1,959
-----------------------------------
Total applications of cash 147,561 120,252 257,061
-----------------------------------
Net change in cash and short-term investments (41,723) 16,082 15,332
Cash and short-term investments at beginning of year 46,722 30,640 15,308
-----------------------------------
Cash and short-term investments at end of year $ 4,999 $ 46,722 $ 30,640
===================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis
(Dollars in thousands)
December 31, 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Western Reserve Life Assurance Co. of Ohio ("the Company") is a stock life
insurance company and is a wholly-owned subsidiary of First AUSA Life Insurance
Company which, in turn, is a wholly-owned subsidiary of AEGON USA, Inc.
("AEGON"). AEGON is a wholly-owned subsidiary of AEGON nv, a holding company
organized under the laws of the Netherlands.
NATURE OF BUSINESS
The Company operates predominantly in the variable universal life and variable
annuity areas of the life insurance business. The Company is licensed in 49
states and the District of Columbia. Sales of the Company's products are through
financial planners, independent representatives, financial institutions and
stockbrokers. The majority of the Company's new life insurance written and a
substantial portion of new annuities written is done through one marketing
organization; the Company expects to maintain this relationship for the
foreseeable future.
BASIS OF PRESENTATION
The preparation of financial statements of insurance companies requires
management to make estimates and assumptions that affect amounts reported in the
financial statements and accompanying notes. Such estimates and assumptions
could change in the future as more information becomes known, which could impact
the amounts reported and disclosed herein.
The accompanying financial statements have been prepared on the basis of
accounting practices prescribed or permitted by the Insurance Department of the
State of Ohio, which practices differ in some respects from generally accepted
accounting principles. The more significant of these differences are as follows:
(a) bonds are generally carried at amortized cost rather than segregating the
portfolio into held-to-maturity (carried at amortized cost), available-for-sale
(carried at fair value), and trading (carried at fair value) classifications;
(b) acquisition costs of acquiring new business are charged to current
operations as incurred rather than deferred and amortized over the life of the
policies; (c) policy reserves on traditional life products are based on
statutory mortality rates and interest which may differ from reserves based on
reasonable assumptions of expected mortality, interest, and withdrawals which
include a provision for possible unfavorable deviation from such assumptions;
(d) policy reserves on certain investment products use discounting methodologies
utilizing statutory interest rates rather than full account values; (e)
reinsurance amounts are netted against the corresponding receivable or payable
rather than shown as gross amounts on the balance sheet; (f) deferred income
taxes are not provided for the difference between the financial statement and
income tax bases of assets and liabilities; (g) net realized gains or losses
attributed to changes in the
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
level of interest rates in the market are deferred and amortized over the
remaining life of the bond or mortgage loan, rather than recognized as gains or
losses in the statement of operations when the sale is completed; (h) declines
in the estimated realizable value of investments are provided for through the
establishment of a formula-determined statutory investment reserve (carried as a
liability) changes to which are charged directly to surplus, rather than through
recognition in the statement of operations for declines in value, when such
declines are judged to be other than temporary; (i) certain assets designated as
"non-admitted assets" have been charged to surplus rather than being reported as
assets; (j) revenues for universal life and investment products consist of
premiums received rather than policy charges for the cost of insurance, policy
administration charges, amortization of policy initiation fees and surrender
charges assessed; and (k) pension expense is recorded as amounts are paid. The
effects of these variances have not been determined by the Company.
The National Association of Insurance Commissioners (NAIC) currently is in the
process of recodifying statutory accounting practices, the result of which is
expected to constitute the only source of "prescribed" statutory accounting
practices. Accordingly, that project, which is expected to be completed in 1996,
will likely change, to some extent, prescribed statutory accounting practices
and may result in changes to the accounting practices that the Company uses to
prepare its statutory-basis financial statements.
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, the Company considers all highly
liquid investments with remaining maturities of one year or less when purchased
to be cash equivalents. This amount includes $6,500 of short-term intercompany
notes receivable at December 31, 1995.
INVESTMENTS
Investments in bonds (except those to which the Securities Valuation Office of
the NAIC has ascribed a value), mortgage loans on real estate and short-term
investments are reported at cost adjusted for amortization of premiums and
accrual of discounts. Amortization is computed using methods which result in a
level yield over the expected life of the security. The Company reviews its
prepayment assumptions on mortgage and other asset backed securities at regular
intervals and adjusts amortization rates prospectively when such assumptions are
changed due to experience and/or expected future patterns. Investments in
preferred stocks in good standing are reported at cost. Investments in preferred
stocks not in good standing are reported at the lower of cost or market. Common
stocks are carried at market and include shares of mutual funds (money market
and other). Real estate is reported at cost less allowances for depreciation.
Depreciation is computed principally by the straight-line method. Policy loans
are reported at unpaid principal. Other "admitted assets" are valued,
principally at cost, as required or permitted by Ohio Insurance Laws.
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Realized capital gains and losses are determined on the basis of specific
identification and are recorded net of related federal income taxes. The Asset
Valuation Reserve (AVR) is established by the Company to provide for anticipated
losses in the event of default by issuers of certain invested assets. These
amounts are determined using a formula prescribed by the NAIC and are reported
as a liability. The formula for the AVR provides for a corresponding adjustment
for realized gains and losses, net of amounts attributed to changes in the
general level of interest rates. Under a formula prescribed by the NAIC, the
Company defers, in the Interest Maintenance Reserve (IMR), the portion of
realized gains and losses on sales of fixed income investments, principally
bonds and mortgage loans, attributable to changes in the general level of
interest rates and amortizes those deferrals over the remaining period to
maturity of the security.
During 1995, 1994 and 1993, net realized capital gains of $554, $436 and $4,270,
respectively, were credited to the IMR rather than being immediately recognized
in the statements of operations. Amortization of these net gains aggregated
$882, $726 and $618 for the years ended December 31, 1995, 1994 and 1993,
respectively.
Interest income is recognized on an accrual basis. The Company does not accrue
income on bonds in default, mortgage loans on real estate in default and/or
foreclosure or which are delinquent more than twelve months, or real estate
where rent is in arrears for more than three months. Further, income is not
accrued when collection is uncertain. At December 31, 1995, 1994 and 1993, the
Company excluded investment income due and accrued of $1, $237 and $0,
respectively, with respect to such practices.
AGGREGATE RESERVES FOR POLICIES
Life and annuity reserves are developed by actuarial methods and are determined
based on published tables using statutorily specified interest rates and
valuation methods that will provide, in the aggregate, reserves that are greater
than or equal to the minimum required by law.
The aggregate policy reserves for traditional life insurance policies are based
principally upon the 1941, 1958, and 1980 Commissioners' Standard Ordinary
Mortality Tables. The reserves are calculated using interest rates ranging from
2.25% to 5.50% and are computed principally on the Net Level Valuation and the
Commissioner's Reserve Valuation Method (CRVM). Reserves for universal life
policies are based on account balances adjusted for the CRVM.
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Deferred annuity reserves are calculated according to the Commissioners' Annuity
Reserve Valuation Method plus excess interest reserves to cover situations where
the future interest guarantees plus the decrease in surrender charges are in
excess of the maximum valuation rates of interest. Reserves for immediate
annuities and supplementary contracts with and without life contingencies are
equal to the present value of future payments assuming interest rates ranging
from 7.00% to 9.25% and mortality rates, where appropriate, from a variety of
tables.
POLICY AND CONTRACT CLAIM RESERVES
Claim reserves represent the estimated accrued liability for claims reported to
the Company and claims incurred but not yet reported through the statement date.
These reserves are estimated using either individual case-basis valuations or
statistical analysis techniques. Because estimates are subject to the effects of
trends in claim severity and frequency, the estimates are continually reviewed
and adjusted as necessary as experience develops or new information becomes
available.
SEPARATE ACCOUNT
Assets held in trust for purchases of variable universal life and variable
annuity contracts and the Company's corresponding obligation to the contract
owners are shown separately in the balance sheets. The assets in the separate
accounts are valued at market. Income and gains and losses with respect to the
assets in the separate accounts accrue to the benefit of the policyholders. The
Company received variable contract premiums of $467,142, $533,536 and $489,243
in 1995, 1994 and 1993, respectively. All variable account contracts are subject
to discretionary withdrawal by the policyholder at the market value of the
underlying assets less the current surrender charge.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1994 and 1993 financial
statements to conform to the 1995 presentation.
2. FAIR VALUES OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments", requires disclosure of fair value information
about financial instruments, whether or not recognized in the statutory-basis
balance sheet, for which it is practicable to estimate that value. In cases
where quoted market prices are not available, fair values are based on estimates
using present value or other valuation techniques. Those techniques are
significantly affected by the assumptions used, including the
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
discount rate and estimates of future cash flows. In that regard, the derived
fair value estimates cannot be substantiated by comparisons to independent
markets and, in many cases, could not be realized in immediate settlement of the
instrument. Statement of Financial Accounting Standards No. 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements and allows companies to forego the disclosures when those estimates
can only be made at excessive cost. Accordingly, the aggregate fair value
amounts presented do not represent the underlying value of the Company.
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
CASH, CASH EQUIVALENTS, AND SHORT-TERM INVESTMENTS: The carrying amounts
reported in the statutory-basis balance sheet for these instruments
approximate their fair values.
INVESTMENT SECURITIES: Fair values for fixed maturity securities (including
redeemable preferred stocks) are based on quoted market prices, where
available. For fixed maturity securities not actively traded, fair values are
estimated using values obtained from independent pricing services or (in the
case of private placements) are estimated by discounting expected future cash
flows using a current market rate applicable to the yield, credit quality,
and maturity of the investments. The fair values for equity securities are
based on quoted market prices and are recognized in the statutory-basis
balance sheet.
MORTGAGE LOANS AND POLICY LOANS: The fair values for mortgage loans are
estimated utilizing discounted cash flow analyses, using interest rates
reflective of current market conditions and the risk characteristics of the
loans. The fair value of policy loans are assumed to equal their carrying
value.
INVESTMENT CONTRACTS: Fair values for the Company's liabilities under
investment-type insurance contracts are estimated using discounted cash flow
calculations, based on interest rates currently being offered for similar
contracts with maturities consistent with those remaining for the contracts
being valued.
Fair values for the Company's insurance contracts other than investment
contracts are not required to be disclosed. However, the fair values of
liabilities under all insurance contracts are taken into consideration in the
Company's overall management of interest rate risk, which minimizes exposure to
changing interest rates through the matching of investment maturities with
amounts due under insurance contracts.
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
The following sets forth a comparison of the fair values and carrying values of
the Company's financial instruments subject to the provisions of Statement of
Financial Accounting Standards No. 107:
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
---------------------------- ---------------------------
CARRYING CARRYING
VALUE FAIR VALUE VALUE FAIR VALUE
-----------------------------------------------------------
<S> <C> <C> <C> <C>
ADMITTED ASSETS
Bonds $ 452,474 $ 479,656 $ 423,758 $ 414,541
Stocks 834 834 2,555 2,555
Mortgage loans on real estate 6,181 6,536 9,539 7,915
Policy loans 37,125 37,125 27,520 27,520
Cash and short-term investments 4,999 4,999 46,722 46,722
Separate account assets 2,419,205 2,419,205 1,596,736 1,596,736
LIABILITIES
Investment contract liabilities 309,556 279,347 302,890 245,161
Separate account annuities 1,930,590 1,930,590 1,316,237 1,316,237
</TABLE>
3. INVESTMENTS
The carrying value and estimated fair value of investments in debt securities
are as follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
---------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1995
Bonds:
United States Government and
agencies $ 11,611 $ 64 $129 $ 11,546
State, municipal and other
government 15,079 940 - 16,019
Public utilities 16,143 1,425 - 17,568
Industrial and miscellaneous 219,764 17,444 550 236,658
Mortgage-backed securities 189,877 8,228 240 197,865
---------------------------------------------------------
Total bonds $ 452,474 $28,101 $919 $479,656
=========================================================
</TABLE>
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
3. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
---------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1994
Bonds:
United States Government and
agencies $ 11,277 $ 17 $ 1,048 $ 10,246
State, municipal and other
government 13,117 - 423 12,694
Public utilities 13,296 75 432 12,939
Industrial and miscellaneous 238,389 3,668 7,543 234,514
Mortgage-backed securities 147,679 1,597 5,128 144,148
---------------------------------------------------------
Total bonds 423,758 5,357 14,574 414,541
Preferred stock 14 - - 14
---------------------------------------------------------
$ 423,772 $ 5,357 $14,574 $414,555
=========================================================
</TABLE>
Preferred stock required writedowns for the securities not in good standing to
fair values of $64 in 1994.
The carrying value and fair value of bonds at December 31, 1995 by contractual
maturity are shown below. Expected maturities may differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without penalties.
ESTIMATED
CARRYING FAIR
VALUE VALUE
--------------------------
Due in one year or less $ 23,820 $ 23,842
Due one through five years 109,362 114,336
Due five through ten years 91,534 101,034
Due after ten years 37,881 42,579
--------------------------
262,597 281,791
Mortgage and other asset backed securities 189,877 197,865
--------------------------
$ 452,474 $479,656
==========================
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
3. INVESTMENTS (CONTINUED)
A detail of net investment income is presented below:
YEAR ENDED DECEMBER 31
1995 1994 1993
----------------------------------
Interest on bonds $38,047 $37,318 $43,744
Dividends on equity investments 30 700 1,533
Interest on mortgage loans 573 616 832
Interest on policy loans 2,353 1,830 1,465
Other investment income 1,919 1,802 1,010
----------------------------------
Gross investment income 42,922 42,266 48,584
Investment expenses (2,031) (2,127) (2,387)
----------------------------------
Net investment income $40,891 $40,139 $46,197
==================================
Proceeds from sales and maturities of debt securities and related gross realized
gains and losses were as follows:
YEAR ENDED DECEMBER 31
1995 1994 1993
-------------------------------------
Proceeds $108,554 $99,241 $203,547
=====================================
Gross realized gains $ 1,631 $ 2,019 $ 7,584
Gross realized losses 1,346 1,362 703
-------------------------------------
Net realized gains $ 285 $ 657 $ 6,881
=====================================
At December 31, 1995, bonds with an aggregate carrying value of $4,483 were on
deposit with certain state regulatory authorities or were restrictively held in
bank custodial accounts for benefit of such state regulatory authorities, as
required by statute.
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
3. INVESTMENTS (CONTINUED)
Realized investment gains (losses) and changes in unrealized gains (losses) for
investments are summarized below:
<TABLE>
<CAPTION>
REALIZED
------------------------------------------
YEAR ENDED DECEMBER 31
1995 1994 1993
------------------------------------------
<S> <C> <C> <C>
Debt securities $ 285 $ 657 $6,881
Equity securities - (1,579) -
Mortgage loans (1,409) - -
Real estate - - (37)
------------------------------------------
(1,124) (922) 6,844
Tax effect - 225 (226)
Transfer to interest maintenance reserve (554) (436) (4,270)
------------------------------------------
Net realized gains (losses) $(1,678) $(1,133) $2,348
==========================================
</TABLE>
<TABLE>
<CAPTION>
UNREALIZED
------------------------------------
YEAR ENDED DECEMBER 31
1995 1994 1993
------------------------------------
<S> <C> <C> <C>
Debt securities $36,399 $(43,354) $5,598
Common stock (236) 1,009 1,581
------------------------------------
Change in unrealized appreciation (depreciation) $36,163 $(42,345) $7,179
====================================
</TABLE>
Gross unrealized gains (losses) on common stocks were as follows:
UNREALIZED
---------------------------------
YEAR ENDED DECEMBER 31
1995 1994 1993
---------------------------------
Unrealized gains $361 $597 $1,045
Unrealized losses - - 1,457
---------------------------------
Net unrealized gains (losses) $361 $597 $ (412)
=================================
The Company issued no mortgage loans during 1995. The maximum percentage of any
one mortgage loan to the value of the underlying real estate at origination was
73%. The Company requires all mortgagees to carry fire insurance equal to the
value of the underlying property.
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
3. INVESTMENTS (CONTINUED)
During 1995, 1994 and 1993, no mortgage loans were foreclosed and transferred to
real estate. During 1994, a mortgage loan loss reserve of $1,033 was
established. This reserve was released in 1995 coincident with the loss
recognition of $1,409 on a loan payoff.
At December 31, 1995, the Company had no investments (excluding U. S. Government
guaranteed or insured issues) which individually represented more than ten
percent of capital and surplus and the asset valuation reserve.
4. REINSURANCE
The Company reinsures portions of certain insurance policies which exceed its
established limits, thereby providing a greater diversification of risk and
minimizing exposure on larger risks. The Company remains contingently liable
with respect to any insurance ceded, and this would become an actual liability
in the event that the assuming insurance company became unable to meet its
obligations under the reinsurance treaty.
1995 1994 1993
--------------------------------------------
Direct premiums $570,413 $600,608 $556,641
Reinsurance assumed 1,569 1,232 1,015
Reinsurance ceded (2,084) (1,708) (1,287)
--------------------------------------------
Net premiums earned $569,898 $600,132 $556,369
============================================
The Company received reinsurance recoveries in the amount of $512, $1,146 and
$1,135 during 1995, 1994 and 1993, respectively. At December 31, 1995 and 1994,
estimated amounts recoverable from reinsurers that have been deducted from
policy and contract claim reserves totaled $2 and $85, respectively. The
aggregate reserves for policies and contracts were reduced for reserve credits
for reinsurance ceded at December 31, 1995 and 1994 of $848 and $807,
respectively.
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
5. INCOME TAXES
Federal income tax expense differs from the amount computed by applying the
statutory federal income tax rate to gain from operations before taxes and
realized capital gains (losses) for the following reasons:
<TABLE>
<CAPTION>
1995 1994 1993
----------------------------------
<S> <C> <C> <C>
Computed tax at federal statutory rate (35%) $5,096 $1,190 $2,368
Purchase accounting tax adjustments - - (424)
Deferred acquisition costs - tax basis 4,241 4,043 3,395
Tax reserve valuation (49) (1,353) (817)
Investment income differences 85 (109) (192)
Amortization of IMR (309) (254) (216)
Other, net (147) (111) 92
----------------------------------
Federal income tax expense $8,917 $3,406 $4,206
==================================
</TABLE>
Prior to 1984, as provided for under the Life Insurance Company Tax Act of 1959,
a portion of statutory income was not subject to current taxation, but was
accumulated for income tax purposes in a memorandum account referred to as the
policyholders' surplus account. No federal income taxes have been provided for
in the financial statements on income deferred in the policyholders' surplus
account ($293 at December 31, 1995). To the extent dividends are paid from the
amount accumulated in the policyholders' surplus account, net earnings would be
reduced by the amount of tax required to be paid. Should the entire amount in
the policyholders' surplus account become taxable, the tax thereon computed at
current rates would amount to approximately $103.
In 1995, the Company reached a final settlement with the Internal Revenue
Service for 1987 through 1993 resulting in taxes of $1,275 and interest of $120
(net of $65 tax effect). The assessment was charged to surplus as a prior period
adjustment.
During 1994, the Company settled tax years 1980 through 1986 with the Internal
Revenue Service. The agreed upon settlement totaled $2.26 million in taxes and
interest. The Company's former parent company, Kansas City Southern Industries,
is principally liable for reimbursing this amount to the Company under the terms
of an indemnification agreement made coincident with the sale of the Company. A
charge to surplus of $1.8 million was made as a prior period adjustment related
to this assessment.
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
6. POLICY AND CONTRACT ATTRIBUTES
Participating life insurance policies are issued by the Company which entitle
policyholders to a share in the earnings of the participating policies, provided
that a dividend distribution, which is determined annually based on mortality
and persistency experience of the participating policies, is authorized by the
Company. Participating insurance constituted approximately 7.7% and 8.2% of life
insurance in force at December 31, 1995 and 1994, respectively.
A portion of the Company's policy reserves and other policyholders' funds relate
to liabilities established on a variety of the Company's products that are not
subject to significant mortality or morbidity risk; however, there may be
certain restrictions placed upon the amount of funds that can be withdrawn
without penalty. The amount of reserves on these products, by withdrawal
characteristics are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
-------------------- -------------------
PERCENT PERCENT
AMOUNT OF TOTAL AMOUNT OF TOTAL
-------------------- --------------------
<S> <C> <C> <C> <C>
Subject to discretionary withdrawal with
market value adjustment $ 13,422 1% $ 12,345 1%
Subject to discretionary withdrawal at
book value less surrender charge 60,970 3 73,733 4
Subject to discretionary withdrawal at
market value 1,930,590 85 1,316,237 81
Subject to discretionary withdrawal at
book value (minimal or no charges or
adjustments) 227,549 10 207,779 13
Not subject to discretionary withdrawal
provision 20,034 1 22,788 1
-------------------- -------------------
2,252,565 100% 1,632,882 100%
========= ========
Less reinsurance ceded - -
---------- -----------
Total policy reserves on annuities and
deposit fund liabilities $2,252,565 $1,632,882
========== ==========
</TABLE>
Reserves on the Company's traditional life products are computed using mean
reserving methodologies. These methodologies result in the establishment of
assets for the amount of the net valuation premiums that are anticipated to be
received between the policy's paid-through date to the policy's next anniversary
date. At December 31, 1995 and 1994, these assets (which are reported as
premiums deferred and uncollected) and the amounts of the related gross premiums
and loadings, are as follows:
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
6. POLICY AND CONTRACT ATTRIBUTES (CONTINUED)
GROSS LOADING NET
----------------------------------
DECEMBER 31, 1995
Ordinary direct first year business $ 47 $ 17 $ 30
Ordinary direct renewal business 1,707 229 1,478
Group life direct business 379 - 379
Reinsurance ceded (100) - (100)
----------------------------------
$2,033 $246 $1,787
==================================
DECEMBER 31, 1994
Ordinary direct first year business $ 46 $ 17 $ 29
Ordinary direct renewal business 1,649 252 1,397
Group life direct business 362 - 362
Reinsurance ceded (25) - (25)
----------------------------------
$2,032 $269 $1,763
==================================
At December 31, 1995 and 1994, the Company had insurance in force aggregating
$2,374 and $3,403, respectively, in which the gross premiums are less than the
net premiums required by the standard valuation standards established by the
Insurance Department of the State of Ohio. The Company established policy
reserves of $32 and $40 to cover these deficiencies at December 31, 1995 and
1994, respectively.
In 1994, the NAIC enacted a guideline to clarify reserving methodologies for
contracts that require immediate payment of claims upon proof of death of the
insured. Companies were allowed to grade the effects of the change in reserving
methodologies over five years. A direct charge to surplus of $3,496 and $450 was
made for the years ended December 31, 1995 and 1994, respectively, related to
the change in reserve methodology.
7. DIVIDEND RESTRICTIONS
Generally, an insurance company's ability to pay dividends is limited to the
amount that their net assets, as determined in accordance with statutory
accounting practices, exceed minimum statutory capital requirements. However,
payment of such amounts as dividends may be subject to approval by regulatory
authorities. The maximum dividend payout which may be made without prior
approval in 1996 is approximately $9,644.
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
8. RETIREMENT AND COMPENSATION PLANS
The Company's employees participate in a qualified benefit plan sponsored by
AEGON. The Company has no legal obligation for the plan. The Company recognizes
pension expense equal to its allocation from AEGON. The pension expense is
allocated among the participating companies based on the FASB Statement No. 87
expense as a percent of salaries. The benefits are based on years of service and
the employee's compensation during the highest five consecutive years of
employment. Pension expense aggregated $505, $397 and $249 for the years ended
December 31, 1995, 1994 and 1993, respectively. The plan is subject to the
reporting and disclosure requirements of the Employee Retirement and Income
Security Act of 1974.
The Company's employees also participate in a contributory defined contribution
plan sponsored by AEGON which is qualified under Section 401(k) of the Internal
Revenue Service Code. Employees of the Company who customarily work at least
1,000 hours during each calendar year and meet the other eligibility
requirements, are participants of the plan. Participants may elect to contribute
up to fifteen percent of their salary to the plan. The Company will match an
amount up to three percent of the participant's salary. Participants may direct
all of their contributions and plan balances to be invested in a variety of
investment options. The plan is subject to the reporting and disclosure
requirements of the Employee Retirement and Income Security Act of 1974. Pension
expense related to this plan was $305, $250 and $176 for the years ended
December 31, 1995, 1994 and 1993, respectively.
AEGON sponsors supplemental retirement plans to provide the Company's senior
management with benefits in excess of normal pension benefits. The plans are
noncontributory and benefits are based on years of service and the employee's
compensation level. The plans are unfunded and nonqualified under the Internal
Revenue Code. In addition, AEGON has established incentive deferred compensation
plans for certain key employees of the Company. AEGON also sponsors an employee
stock option plan for individuals employed at least three years and a stock
purchase plan for its producers, with the participating affiliated companies
establishing their own eligibility criteria, producer contribution limits and
company matching formula. These plans have been accrued or funded as deemed
appropriate by management of AEGON and the Company.
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
8. RETIREMENT AND COMPENSATION PLANS (CONTINUED)
In addition to pension benefits, the Company participates in plans sponsored by
AEGON that provide postretirement medical, dental and life insurance benefits to
employees meeting certain eligibility requirements. Portions of the medical and
dental plans are contributory. The expenses of the postretirement plans
calculated on the pay-as-you-go basis are charged to affiliates in accordance
with an intercompany cost sharing arrangement. The Company expensed $86, $70 and
$0 for the years ended December 31, 1995, 1994 and 1993, respectively.
9. RELATED PARTY TRANSACTIONS
The Company shares certain officers, employees and general expenses with
affiliated companies.
The Company receives investment advisory and management services from certain
affiliates. During 1995, 1994 and 1993, the Company paid $8,825, $7,497 and
$4,583, respectively, for such services, which approximates their costs to the
affiliates. The Company provides office space, marketing and administrative
services to certain affiliates. During 1995, 1994 and 1993, the Company received
$4,545, $3,261 and $1,900, respectively, for such services, which approximates
their cost. The Company had a receivable (payable) with affiliates of $3,625 and
$(674) at December 31, 1995 and 1994, respectively.
The Company paid a cash dividend to its immediate parent, First AUSA Life
Insurance Company, of $5,600 in 1993, and during 1994 received capital
contributions of $45,000.
The Company has an agreement with an affiliate through which net agents debit
balances are sold for cash. The net non-admitted assets sold during 1995, 1994
and 1993 aggregated $5,887, $3,553 and $4,555, respectively.
At December 31, 1995, the Company has a $6,500 short-term note receivable from
an affiliate. Interest on this note accrues at 5.82%.
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory-Basis (continued)
(Dollars in thousands)
10. COMMITMENTS AND CONTINGENCIES
The Company is a party to legal proceedings incidental to its business. Although
such litigation sometimes includes substantial demands for compensatory and
punitive damages in addition to contract liability, it is management's opinion,
after consultation with counsel and a review of available facts, that damages
arising from such demands will not be material to the Company's financial
position.
The Company is subject to insurance guaranty laws in the states in which it
writes business. These laws provide for assessments against insurance companies
for the benefit of policyholders and claimants in the event of insolvency of
other insurance companies. Assessments are charged to operations when received
by the Company except where right of offset against other taxes paid is allowed
by law; amounts available for future offsets are recorded as an asset on the
Company's balance sheet. The future obligation has been based on the most recent
information available from the National Organization of Life and Health
Insurance Guaranty Association. Potential future obligations for unknown
insolvencies are not determinable by the Company. The Company has established a
reserve of $4,445 at December 31, 1995 for its estimated share of future
guaranty fund assessments related to several post major insurer insolvencies. An
asset of $1,319 at December 31, 1995 has been recorded relating to anticipated
offsets available for certain state premium taxes to be utilized in future
periods. The guaranty fund expense was $1,950, $618 and $329 at December 31,
1995, 1994 and 1993, respectively.
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Summary of Investments Other Than
Investments in Related Parties
(Dollars in thousands)
December 31, 1995
<TABLE>
<CAPTION>
SCHEDULE I
AMOUNT AT WHICH
SHOWN IN THE
TYPE OF INVESTMENT COST (1) VALUE BALANCE SHEET
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIXED MATURITIES
Bonds:
United States Government and govern-
ment agencies and authorities $108,398 $112,590 $108,213
Foreign governments 15,196 16,019 15,079
Public utilities 16,179 17,568 16,143
All other corporate bonds 315,676 333,479 313,039
------------------------------------------------
Total fixed maturities 455,449 479,656 452,474
EQUITY SECURITIES
Common stocks:
Industrial, miscellaneous and all other 473 834 834
------------------------------------------------
Total equity securities 473 834 834
Mortgage loans on real estate 6,181 6,536 6,181
Real estate 5,121 5,121 5,121
Policy loans 37,125 37,125 37,125
Cash and short-term investments 4,999 4,999 4,999
------------------------------------------------
Total investments $509,348 $534,271 $506,734
================================================
</TABLE>
(1) Original cost of equity securities and, as to fixed maturities, original
cost reduced by repayments and adjusted for amortization of premiums or
accrual of discounts. Real estate is net of accumulated depreciation.
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Supplementary Insurance Information
(Dollars in thousands)
SCHEDULE III
FUTURE POLICY POLICY AND
BENEFITS AND UNEARNED CONTRACT
EXPENSES PREMIUMS LIABILITIES
---------------------------------------------
YEAR ENDED DECEMBER 31, 1995
Individual life $ 65,259 $41 $5,811
Group life and health 7,904 - 701
Annuity 319,353 - 100
-------------------------------------------
$392,516 $41 $6,612
===========================================
YEAR ENDED DECEMBER 31, 1994
Individual life $ 77,366 $52 $4,501
Group life 7,323 - 481
Annuity 314,124 - 137
-------------------------------------------
$ 398,813 $52 $5,119
===========================================
YEAR ENDED DECEMBER 31, 1993
Individual life $ 78,371 $56 $2,757
Group life 17,380 - 488
Annuity 392,714 - 763
-------------------------------------------
$ 488,465 $56 $4,008
===========================================
<PAGE>
<TABLE>
<CAPTION>
NET BENEFITS OTHER
PREMIUM INVESTMENT AND CLAIMS OPERATING PREMIUMS
REVENUE INCOME EXPENSES EXPENSES WRITTEN
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$188,143 $ 9,470 $ 36,066 $ 83,675 $ 99,115
3,365 1,054 2,217 946 780
378,390 30,367 205,375 44,447 342,949
- ----------------------------------------------------------------------------------------------
$569,898 $40,891 $243,658 $129,068 $442,844
==============================================================================================
$147,282 $10,146 $ 29,272 $ 71,807 $ 89,467
3,709 372 1,754 1,329 1,846
449,141 29,621 199,485 44,063 421,176
- ----------------------------------------------------------------------------------------------
$600,132 $40,139 $230,511 $117,199 $512,489
==============================================================================================
$101,621 $10,943 $ 24,086 $ 52,514 $ 62,600
5,387 201 1,293 1,104 4,063
449,361 35,053 86,406 37,740 419,037
- ----------------------------------------------------------------------------------------------
$556,369 $46,197 $111,785 $ 91,358 $485,700
==============================================================================================
</TABLE>
<PAGE>
Western Reserve Life Assurance Co. of Ohio
Reinsurance
(Dollars in thousands)
SCHEDULE IV
<TABLE>
<CAPTION>
ASSUMED PERCENTAGE
CEDED TO FROM OF AMOUNT
GROSS OTHER OTHER NET ASSUMED
AMOUNT COMPANIES COMPANIES AMOUNT TO NET
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
Life insurance in force $21,057,581 $1,365,119 $ - $19,692,462 0.0%
=============================================================================
Premiums:
Individual life $ 189,870 $ 1,727 $ - $ 188,143 0.0%
Group life and health 2,153 357 1,569 3,365 46.6
Annuity 378,390 - - 378,390 0.0
-----------------------------------------------------------------------------
$ 570,413 $ 2,084 $ 1,569 $ 569,898 0.2%
=============================================================================
YEAR ENDED DECEMBER 31, 1994
Life insurance in force $14,321,386 $1,090,845 $1,271,402 $14,501,943 8.8%
=============================================================================
Premiums:
Individual life $ 148,766 $ 1,484 $ - $ 147,282 0.0%
Group life 2,701 224 1,232 3,709 33.0
Annuity 449,141 - - 449,141 0.0
-----------------------------------------------------------------------------
$ 600,608 $ 1,708 $ 1,232 $ 600,132 0.4%
=============================================================================
YEAR ENDED DECEMBER 31, 1993
Life insurance in force $ 9,881,904 $ 851,042 $1,009,201 $10,040,063 10.1%
=============================================================================
Premiums:
Individual life $ 102,817 $ 1,196 $ - $ 101,621 0.0%
Group life 4,463 91 1,015 5,387 18.8
Annuity 449,361 - - 449,361 0.0
-----------------------------------------------------------------------------
$ 556,641 $ 1,287 $ 1,015 $ 556,369 0.2%
=============================================================================
</TABLE>
