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NATIONWIDE(R)
VL SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VL SEPARATE ACCOUNT-1)
ANNUAL REPORT
TO
CONTRACT OWNERS
DECEMBER 31, 1995
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
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NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216
[PHOTO]
PRESIDENT'S MESSAGE
Nationwide Life and Annuity Insurance Company is pleased to bring you the 1995
annual report of the Nationwide VL Separate Account-A.
Both equity and fixed income investments turned in a stellar performance during
1995. The major market indices ended the year fully one-third or more higher
than their levels at the beginning of the year. These results equate directly to
the returns enjoyed by our variable annuity participants and contract owners.
Low interest rates and modest inflation should provide a continued favorable
environment for stocks and fixed income investments during 1996. Slowing levels
of economic activity and uncertainty about corporate profits may, however,
dampen a repeat of the strong 1995 market performance. The diverse offering of
investment options within your contract should enable you to take advantage of
changing market conditions.
The year 1995 was a record-setting sales year for our variable investment
products. For this we thank you, our valued customer, for your confidence in the
Nationwide Insurance Enterprise and in our products. Please do not hesitate to
let us know how we can better serve your financial planning and retirement
needs.
/s/ Peter F. Frenzer
Peter F. Frenzer, President
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NATIONWIDE VL SEPARATE ACCOUNT-A
(formerly Financial Horizons VL Separate Account-1)
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
Fidelity VIP - Growth Portfolio (FidGro)
1,203 shares (cost $27,185) $ 35,127
Nationwide SAT - Capital Appreciation Fund (NWCapApp)
85 shares (cost $930) 1,145
Nationwide SAT - Government Bond Fund (NWGvtBd)
1,282 shares (cost $13,566) 14,562
Nationwide SAT - Money Market Fund (NWMyMkt)
1,941 shares (cost $1,941) 1,941
Nationwide SAT - Total Return Fund (NWTotRet)
960 shares (cost $9,900) 11,079
Neuberger & Berman - Balanced Portfolio (NBBal)
682 shares (cost $10,265) 11,942
TCI Portfolios - TCI Advantage (TCIAdv)
56,330 shares (cost $285,447) 348,683
--------
Total investments 424,479
Accounts receivable 294
--------
Total assets 424,773
========
CONTRACT OWNERS' EQUITY $424,773
========
</TABLE>
<TABLE>
<CAPTION>
Contract owners' equity represented by: UNITS UNIT VALUE
Multiple Payment Contracts and Flexible Premium ----- ----------
Contracts:
<S> <C> <C> <C>
Fidelity VIP - Growth Portfolio 2,002 $17.583952 $ 35,203
Nationwide SAT - Capital Appreciation Fund 78 14.713230 1,148
Nationwide SAT - Government Bond Fund 971 14.984933 14,550
Nationwide SAT - Money Market Fund 164 11.714295 1,921
Nationwide SAT - Total Return Fund 608 18.192762 11,061
Neuberger & Berman - Balanced Portfolio 820 14.878481 12,200
TCI Portfolios - TCI Advantage 276 13.112917 3,619
TCI Portfolios - TCI Advantage
Initial Funding by Depositor (note 1a) 25,000 13.802855 345,071
====== ========= =======
$424,773
========
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE VL SEPARATE ACCOUNT-A
(formerly Financial Horizons VL Separate Account-1)
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
--------- ------- -------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested capital gains and dividends $ 13,451 12,249 7,192
--------- ------- -------
Gain (loss) on investments:
Proceeds from redemptions of mutual fund shares 36,212 134,821 99,921
Cost of mutual fund shares sold (35,326) (138,965) (99,869)
--------- ------- -------
Realized gain (loss) on investments 886 (4,144) 52
Change in unrealized gain (loss) on investments 53,488 (7,482) 13,210
--------- ------- -------
Net gain (loss) on investments 54,374 (11,626) 13,262
--------- ------- -------
Net investment activity 67,825 623 20,454
--------- ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from contract owners 36,589 - 91,893
Surrenders (note 2d) (164) (9,107) (8,020)
Policy loans (net of repayments) (note 4) (23,321) - -
--------- ------- -------
Net equity transactions 13,104 (9,107) 83,873
--------- ------- -------
EXPENSES:
Deductions for surrender charges (note 2d) - - (2,559)
Redemptions to pay cost of insurance charges and
administrative charges (notes 2b and 2c) (12,670) (20,999) (6,826)
Deductions for asset charges (note 3) (621) (1,049) (298)
--------- ------- -------
Total expenses (13,291) (22,048) (9,683)
--------- ------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY 67,638 (30,532) 94,644
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 357,135 387,667 293,023
--------- ------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD $ 424,773 357,135 387,667
========= ======= =======
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE VL SEPARATE ACCOUNT-A
(formerly Financial Horizons VL Separate Account-1)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995, 1994 and 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide VL Separate Account-A (formerly Financial Horizons VL
Separate Account-1) (the Account) was established pursuant to a resolution of
the Board of Directors of Nationwide Life and Annuity Insurance Company
(formerly Financial Horizons Life Insurance Company) (the Company) on August 8,
1984. The Account has been registered as a unit investment trust under the
Investment Company Act of 1940. On August 21, 1991, the Company (Depositor)
transferred to the Account, 50,000 shares of the TCI Portfolios, Inc.-TCI
Advantage fund for which the Account was credited with 25,000 accumulation
units. The value of the accumulation units purchased by the Company on August
21, 1991 was $250,000.
The Company offers Modified Single Premium and Flexible Premium Variable
Life Insurance Policies through the Account. The primary distribution for the
contracts is through banks and other financial institutions; however, other
distributors may be utilized.
(b) The Contracts
Only contracts with a front-end sales charge, a contingent deferred sales
charge and certain other fees, have been purchased. Additionally, contracts
without a front-end sales charge, but with a contingent deferred sales charge
and certain other fees, have been purchased. See note 2 for a discussion of
policy charges and note 3 for asset charges.
Contract owners may invest in the following:
Portfolio of the Fidelity Variable Insurance Products Fund (Fidelity VIP);
Fidelity VIP - Growth Portfolio (FidGro)
Funds of the Nationwide Separate Account Trust (Nationwide SAT) (managed
for a fee by an affiliated investment advisor);
Nationwide SAT - Capital Appreciation Fund (NWCapApp)
Nationwide SAT - Government Bond Fund (NWGvtBd)
Nationwide SAT - Money Market Fund (NWMyMkt)
Nationwide SAT - Total Return Fund (NWTotRet)
Portfolio of the Neuberger & Berman Advisers Management Trust (Neuberger &
Berman);
Neuberger & Berman - Balanced Portfolio (NBBal)
Portfolio of the TCI Portfolios, Inc. (TCI Portfolios);
TCI Portfolios - TCI Advantage (TCIAdv)
At December 31, 1995, contract owners have invested in all of the above
funds. The contract owners' equity is affected by the investment results of each
fund, equity transactions by contract owners and certain policy charges (see
notes 2 and 3). The accompanying financial statements include only contract
owners' purchase payments pertaining to the variable portions of their contracts
and exclude any purchase payments for fixed dollar investment options, the
latter being included in the accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing net
asset value per share at December 31, 1995. The cost of investments sold is
determined on a specific identification basis. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed) and
dividend income is recorded on the ex-dividend date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with, the
operations of the Company, which is taxed as a life insurance company under the
provisions of the Internal Revenue Code.
The Company does not provide for income taxes within the Account. Taxes are
the responsibility of the contract owner upon termination or withdrawal.
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(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities, if any, at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
(2) POLICY CHARGES
(a) Deductions from Premiums
On multiple payment contracts and flexible premium contracts, the Company
deducts a charge for state premium taxes equal to 2.5% of all premiums received
to cover the payment of these premium taxes. The Company also deducts a sales
load from each premium payment received not to exceed 3.5% of each premium
payment. The Company may at its sole discretion reduce this sales loading.
(b) Cost of Insurance
A cost of insurance charge is assessed monthly against each contract by
liquidating units. The amount of the charge is based upon age, sex, rate class
and net amount at risk (death benefit less total contract value).
(c) Administrative Charges
For multiple payment contracts, the Company currently deducts a monthly
administrative charge of $5 (may deduct up to $7.50, maximum) to recover policy
maintenance, accounting, record keeping and other administrative expenses.
For flexible premium contracts, the Company currently deducts a monthly
administrative charge of $25 during the first policy year and $5 per month
thereafter (may deduct up to $7.50, maximum) to recover policy maintenance,
accounting, record keeping and other administrative expenses. Additionally, the
Company deducts an increase charge of $2.04 per year per $1,000 applied to any
increase in the specified amount during the first 12 months after the increase
becomes effective.
For single premium contracts, the Company deducts an annual administrative
charge which is determined as follows:
Purchase payments totalling less than $25,000 - $90/year
Purchase payments totalling $25,000 or more - $50/year
The above charges are assessed against each contract by liquidating units.
No charges were deducted from the initial funding, or from the earnings
thereon.
(d) Surrenders
Policy surrenders result in a redemption of the contract value from the
Account and payment of the surrender proceeds to the contract owner or designee.
The surrender proceeds consist of the contract value, less any outstanding
policy loans, and less a surrender charge, if applicable. The charge is
determined according to contract type.
For multiple payment contracts and flexible premium contracts, the amount
charged is determined based upon a specified percentage of the initial surrender
charge, which varies by issue age, sex and rate class. The charge is 100% of the
initial surrender charge in the first year, declining to 0% after the ninth
year.
For single premium contracts, the charge is determined based upon a
specified percentage of the original purchase payment. The charge is 8.5% in the
first year, and declines to 0% after the ninth year.
(3) ASSET CHARGES
For multiple payment contracts and flexible premium contracts, the Company
deducts charges from the contract to cover mortality and expense risk charges
related to operations, and to recover policy maintenance charges. The charge is
equal to an annual rate of .80%, with certain exceptions.
For single premium contracts, the Company deducts a charge from the
contract to cover mortality and expense risk charges related to operations, and
to recover policy maintenance and premium tax charges. The charge is equal to an
annual rate of 1.30% during the first ten policy years, and 1.00% thereafter.
The above charges are assessed through the daily unit value calculation. No
charges are deducted from the initial funding, or from earnings thereon.
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(4) POLICY LOANS (NET OF REPAYMENTS)
Contract provisions allow contract owners to borrow up to 90% of a policy's
cash surrender value. On each policy anniversary following the initial loan, 6%
interest is due and payable to the Company.
At the time the loan is granted, the amount of the loan is transferred from
the Account to the Company's general account as collateral for the outstanding
loan. Collateral amounts in the general account are credited with the stated
rate of interest in effect at the time the loan is made, subject to a guaranteed
minimum rate. Loan repayments result in a transfer of collateral, including
interest, back to the Account.
(5) SCHEDULE I
Schedule I presents the components of the change in the unit values, which
are the basis for determining contract owners' equity. This schedule is
presented for each sub-account in the following format:
- - Beginning unit value - Jan. 1
- - Reinvested capital gains and dividends
(This amount reflects the increase in the unit value due to
capital gains and dividend distributions from the underlying mutual
funds.)
- - Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the
underlying mutual funds.)
- - Asset charges
(This amount reflects the decrease in the unit value due to the
charges discussed in note 3.)
- - Ending unit value - Dec. 31
- - Percentage increase (decrease) in unit value.
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Schedule I
NATIONWIDE VL SEPARATE ACCOUNT-A
(formerly Financial Horizons VL Separate Account-1)
MULTIPLE PAYMENT CONTRACTS AND FLEXIBLE PREMIUM CONTRACTS
SCHEDULES OF CHANGES IN UNIT VALUE
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
FidGro NWCapApp NWGvtBd NWMyMkt
------ -------- ------- -------
1995
<S> <C> <C> <C> <C>
Beginning unit value - Jan. 1 $13.094007 11.465403 12.720514 11.176411
- ---------------------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends .072389 .653781 .903001 .629782
- ---------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 4.544905 2.696528 1.472503 .000000
- ---------------------------------------------------------------------------------------------------------------------
Asset charges (.127349) (.102482) (.111085) (.091898)
- ---------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $17.583952 14.713230 14.984933 11.714295
- ---------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in unit value* 34% 28% 18% 5%
=====================================================================================================================
1994
Beginning unit value - Jan. 1 $13.201441 11.662121 13.250482 10.845265
- ---------------------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends .794469 .184927 .833925 .419275
- ---------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.799798) (.289863) (1.261429) .000000
- ---------------------------------------------------------------------------------------------------------------------
Asset charges (.102105) (.091782) (.102464) (.088129)
- ---------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $13.094007 11.465403 12.720514 11.176411
- ---------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in unit value* (1)% (2)% (4)% 3%
=====================================================================================================================
1993
Beginning unit value - Jan. 1 $11.148182 10.725293 12.196370 10.639809
- ---------------------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends .248048 .261975 .781559 .291848
- ---------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.903014 .761628 .376228 .000000
- ---------------------------------------------------------------------------------------------------------------------
Asset charges (.097803) (.086775) (.103675) (.086392)
- ---------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $13.201441 11.662121 13.250482 10.845265
- ---------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in unit value* 18% 9% 9% 2%
=====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
NWTotRet NBBal TCIAdv TCIAdv+
-------- ----- ------ -------
1995
<S> <C> <C> <C> <C>
Beginning unit value - Jan. 1 14.205723 12.118394 11.321934 11.822996
- -------------------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 1.413734 .308616 .411556 .431938
- -------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 2.703396 2.562255 1.477165 1.547921
- -------------------------------------------------------------------------------------------------------------------
Asset charges (.130091) (.110784) (.097738) .000000
- -------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 18.192762 14.878481 13.112917 13.802855
- -------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in unit value* 28% 23% 16% 17%
===================================================================================================================
1994
Beginning unit value - Jan. 1 14.167308 12.640011 11.295721 11.701906
- -------------------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends .717782 .493181 .297670 .309969
- -------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.565055) (.916591) (.181209) (.188879)
- -------------------------------------------------------------------------------------------------------------------
Asset charges (.114312) (.098207) (.090248) .000000
- -------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 14.205723 12.118394 11.321934 11.822996
- -------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in unit value* 0% (4)% 0% 1%
===================================================================================================================
1993
Beginning unit value - Jan. 1 12.875439 11.969093 10.657984 10.953160
- -------------------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends .527331 .184591 .223352 .230690
- -------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .873117 .583624 .502395 .518056
- -------------------------------------------------------------------------------------------------------------------
Asset charges (.108579) (.097297) (.088010) .000000
- -------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 14.167308 12.640011 11.295721 11.701906
- -------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in unit value* 10% 6% 6% 7%
===================================================================================================================
</TABLE>
*An annualized rate of return cannot be determined as asset charges do not
include the policy charges described in note 2.
+ For Depositor, see note 1a.
See note 5.
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Independent Auditors' Report
The Board of Directors and Contract Owners of
Nationwide VL Separate Account-A (formerly Financial Horizons VL Separate
Account-1)
Nationwide Life and Annuity Insurance Company (formerly Financial Horizons
Life Insurance Company)
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide VL Separate Account-A (formerly Financial
Horizons VL Separate Account-1) as of December 31, 1995, and the related
statements of operations and changes in contract owners' equity and schedules of
changes in unit value for each of the years in the three year period then ended.
These financial statements and schedules of changes in unit value are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedules of changes in unit value
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedules of
changes in unit value are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian and the
transfer agents of the underlying mutual funds. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and schedules of changes in unit
value referred to above present fairly, in all material respects, the financial
position of Nationwide VL Separate Account-A (formerly Financial Horizons VL
Separate Account-1) as of December 31, 1995, and the results of its operations
and its changes in contract owners' equity and the schedules of changes in unit
value for each of the years in the three year period then ended in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 6, 1996
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NATIONWIDE LIFE INSURANCE COMPANY Bulk Rate
HOME OFFICE: ONE NATIONWIDE PLAZA - COLUMBUS, OHIO 43215-2220 U.S. Postage
P A I D
Columbus, Ohio
Permit No. 521
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company.
