<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1996.
REGISTRATION NO. 33-36073
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 6 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 7 [X]
PROVIDIAN LIFE & HEALTH INSURANCE COMPANY SEPARATE ACCOUNT IV
(Exact Name of Registrant)
Providian Life & Health Insurance Company
(Name of Depositor)
20 Moores Road Frazer, Pennsylvania 19355
(Address of Depositor's Principal Executive Office)
Depositor's Telephone Number: (800) 523-7900
Providian Life & Health Insurance Company Kimberly A. Scouller, Esquire
Providian Center
P.O. Box 32830
400 West Market Street
Louisville, KY 40232
(Name and Address of Agent for Service)
Copy to: Michael Berenson, Esquire Jorden Burt Berenson & Johnson LLP 1025
Thomas Jefferson St. N.W. Suite 400 E Washington, DC 20007-0805
It is proposed that this filing will become effective (check appropriate box):
[X] Immediately upon filing pursuant to paragraph (b) of Rule 485.
[_] On ______ pursuant to paragraph (b)(1)(v) of Rule 485.
[_] 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
[_] On ______ pursuant to paragraph (a)(1) of Rule 485.
[_] 75 days after filing pursuant to paragraph (a)(2) of Rule 485.
[_] On ______ pursuant to paragraph (a)(2) of Rule 485.
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the Registrant
registered an indefinite amount of Securities being offered. Registrant filed
the 24f-2 notice for the fiscal year ended December 31, 1995, on February 27,
1996.
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<PAGE>
PURSUANT TO RULE 481
SHOWING LOCATION IN PART A (PROSPECTUS) AND PART B
(STATEMENT OF ADDITIONAL INFORMATION) OF REGISTRATION
STATEMENT OF INFORMATION REQUIRED BY FORM N-4
PART A
<TABLE>
<CAPTION>
ITEM OF
FORM N-4 PROSPECTUS CAPTION
<C> <S> <C>
1. Cover Page........................ Cover Page
2. Definitions....................... Glossary
3. Synopsis.......................... Highlights; Fee Table
4. Condensed Financial Information... Condensed Financial Information
5. General Description of Registrant,
Depositor, and Portfolio Providian Life & Health Insurance
Companies......................... Company; Providian Life & Health
Insurance Company Separate
Account IV; The Vanguard Variable
Insurance Fund; Voting Rights
6. Deductions and Expenses........... Charges and Deductions; Taxes;
Vanguard Variable Insurance Fund;
Expenses
7. General Description of Variable
Annuity Contracts................. Contract Features; Distribution
at Death Rules; Voting Rights;
Allocation of Purchase Payments;
Exchanges Among the Portfolios;
Additions, Deletions, or
Substitutions of Investments
8. Annuity Period.................... Annuity Payment Options
9. Death Benefit..................... Death of Annuitant Prior to
Annuity Date
10. Purchases and Contract Value...... Contract Application and Purchase
Payments; Accumulated Value
11. Redemptions....................... Full and Partial Withdrawals;
Annuity Payment Options; Free
Look Period
12. Taxes............................. Federal Tax Considerations
13. Legal Proceedings................. Part B: Legal Proceedings
14. Table of Contents for the
Statement of Additional Table of Contents for the
Information....................... Vanguard Variable Annuity Plan
Contract Statement of Additional
Information
PART B
<CAPTION>
ITEM OF STATEMENT OF ADDITIONAL
FORM N-4 INFORMATION CAPTION
<C> <S> <C>
15. Cover Page........................ Cover Page
16. Table of Contents................. Table of Contents
17. General Information and History... The Company
18. Services.......................... Part A: Auditors; Safekeeping of
Account Assets; Distribution of
the Contract
19. Purchase of Securities Being
Offered........................... Distribution of the Contract
20. Underwriters...................... Distribution of the Contract
21. Calculation of Performance Data... Performance Information
22. Annuity Payments.................. Computations of Variable Annuity
Income Payments
23. Financial Statements.............. Financial Statements
</TABLE>
<PAGE>
PROVIDIAN LIFE & HEALTH INSURANCE COMPANY
SEPARATE ACCOUNT IV
PROSPECTUS
FOR THE
VANGUARD VARIABLE ANNUITY PLAN CONTRACT
OFFERED BY
PROVIDIAN LIFE & HEALTH INSURANCE COMPANY
(A MISSOURI STOCK COMPANY)
APRIL 30, 1996
The Vanguard Variable Annuity Plan Contract (the "Contract"), offered through
Providian Life & Health Insurance Company (the "Company"), provides a vehicle
for investing on a tax-deferred basis in nine Portfolios offered by The
Vanguard Group, Inc. The Contract is intended for retirement savings or other
long-term investment purposes.
The minimum Initial Purchase Payment for the Contract is $5,000; there are no
sales loads. The Contract is a flexible-premium deferred variable annuity that
provides a Free Look Period for a minimum of 10 days (30 days or more in some
instances), during which you may cancel your investment in the Contract.
Your Purchase Payments for the Contract may be allocated among nine
Subaccounts of Providian Life & Health Insurance Company Separate Account IV
(the "Separate Account"). Assets of each Subaccount are invested in
corresponding Portfolios of Vanguard Variable Insurance Fund, Inc. (the
"Fund"), an open-end, diversified investment company offered by The Vanguard
Group, Inc. The Fund currently offers nine Portfolios: the Money Market
Portfolio, the High-Grade Bond Portfolio, the Balanced Portfolio, the Equity
Index Portfolio, the Equity Income Portfolio, the Growth Portfolio, the
International Portfolio, the High Yield Bond Portfolio, and the Small Company
Growth Portfolio. Net Purchase Payments are automatically allocated to the
Money Market Portfolio until the end of your Free Look Period, and are
subsequently allocated according to your instructions.
The Contract's Accumulated Value varies with the investment performance of
the Portfolios you select. You bear all investment risk and investment results
for the Portfolios are not guaranteed.
The Contract offers a number of ways of withdrawing monies at a future date,
including a lump-sum payment and several Annuity Payment Options. Full or
partial withdrawals from the Contract may be made at any time before the
Annuity Date, although in many instances withdrawals made prior to age 59 1/2
are subject to a 10% penalty tax (and a portion may be subject to ordinary
income taxes). If you elect an Annuity Payment Option, Annuity Payments may be
received on a fixed or variable basis. You also have significant flexibility in
choosing the Annuity Date on which Annuity Payments begin.
This Prospectus sets forth the information you should know before investing
in the Contract; it must be accompanied by the current Prospectus for Vanguard
Variable Insurance Fund. Please read both Prospectuses carefully and retain
them for future reference. A Statement of Additional Information for the
Contract Prospectus, which has the same date as this Prospectus, has also been
filed with the Securities and Exchange Commission, is incorporated herein by
reference and is available free by writing to Vanguard Variable Annuity Plan,
P.O. Box 2600, Valley Forge, PA 19482. The Table of Contents of the Statement
of Additional Information is included at the end of this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
1
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
HIGHLIGHTS.......... 3
Fee Table........... 6
Glossary............ 8
Condensed Financial
Information........ 11
Financial State-
ments.............. 11
Yield and Total
Return ............ 11
The Company and the
Separate Account... 12
Vanguard Variable
Insurance Fund..... 12
<CAPTION>
Page
<S> <C>
CONTRACT FEATURES... 14
Free Look Period.... 14
Contract Application
and
Purchase Payments.. 14
Allocation of
Purchase
Payments........... 16
Charges and Deduc-
tions.............. 16
Accumulated Value... 19
Dividends and
Capital Gains
Treatment.......... 19
Exchanges Among the
Portfolios......... 19
<CAPTION>
Page
<S> <C>
Full and Partial
Withdrawals........ 20
IRS-Required Distri-
butions............ 21
Minimum Balance
Requirements....... 22
Designation of a
Beneficiary........ 22
Death of Annuitant
Prior to Annuity
Date............... 23
Annuity Date........ 23
Annuity Payment Op-
tions.............. 24
FEDERAL TAX
CONSIDERATIONS..... 26
General Information. 30
</TABLE>
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The Contract is not available in all States.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
2
<PAGE>
HIGHLIGHTS
REFER TO THE GLOSSARY (PAGE 8) FOR A DEFINITION OF ALL CAPITALIZED TERMS.
VANGUARD
VARIABLE ANNUITY The Contract provides a vehicle for investing on a tax-de-
PLAN CONTRACT ferred basis in nine Portfolios offered by The Vanguard
Group, Inc. Monies may be subsequently withdrawn from the
Contract either as a lump sum or as an annuity income. Be-
cause Accumulated Values and, to the extent Variable Annu-
ity Payments are selected, Annuity Payments depend on the
investment experience of the selected Portfolios, you bear
all investment risk for monies invested under the Contract.
The investment performance of the Portfolios is not guaran-
teed.
- --------------------------------------------------------------------------------
WHO SHOULD The Contract is designed for investors seeking long-term,
INVEST tax-deferred accumulation of funds, generally for retire-
ment but also for other long-term investment purposes. The
tax-deferred feature of the Contract is most attractive to
investors in high federal and state marginal tax brackets
who have exhausted other avenues of tax deferral, such as
"pre-tax" contributions to employer-sponsored retirement or
savings plans. The Contract is intended for long-term in-
vestors.
- --------------------------------------------------------------------------------
INVESTMENT
CHOICES Your investment in the Contract may be allocated among sev-
eral Subaccounts of the Separate Account. The Subaccounts
in turn invest exclusively in the nine Portfolios of Van-
guard Variable Insurance Fund. The Fund, a member of The
Vanguard Group of Investment Companies, offers nine Portfo-
lios: the Money Market Portfolio, the High-Grade Bond Port-
folio, the Balanced Portfolio, the Equity Index Portfolio,
the Equity Income Portfolio, the Growth Portfolio, the In-
ternational Portfolio, the High Yield Bond Portfolio, and
the Small Company Growth Portfolio. The assets of each
Portfolio are separate, and each Portfolio has distinct in-
vestment objectives and policies as described in the accom-
panying Fund Prospectus. PAGE 12
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FREE LOOK PERIOD The Contract provides a Free Look Period for a minimum of
10 days (30 or more days in some instances as specified in
your Contract) during which you may cancel your investment
in the Contract. To cancel your investment, please return
your Contract to us. When we receive the Contract, you will
be reimbursed for all Purchase Payments and any correspond-
ing appreciation credited to your account. PAGE 14
- --------------------------------------------------------------------------------
HOW TO INVEST To invest in the Contract, please complete the accompanying
application form. The minimum Initial Purchase Payment is
$5,000; the minimum Portfolio balance is $1,000; and subse-
quent Purchase Payments must be at least $250. You may make
subsequent Purchase Payments at any time before the Con-
tract's Annuity Date, as long as the Annuitant or Joint An-
nuitant specified in the Contract is living. Please note
that when purchasing a Contract, the Annuitant you name,
and the Joint Annuitant if applicable, must be 75 years of
age or less. PAGE 14
- --------------------------------------------------------------------------------
3
<PAGE>
ALLOCATION OF
PURCHASE Your Net Purchase Payments are initially allocated to the
PAYMENTS Money Market Portfolio when your Contract is issued. At the
end of the Free Look Period, and a 5-day grace period, the
then-current Accumulated Value of your Contract is allo-
cated among the Portfolios of the Fund in accordance with
your application instructions. Requests to change the allo-
cation of subsequent Net Purchase Payments may be made in
writing, or by telephone if you have completed the Authori-
zation Form. PAGE 16
- --------------------------------------------------------------------------------
CHARGES AND The Contract imposes no sales charges. The costs of the
DEDUCTIONS UNDER Contract include mortality and expense risk charges, main-
THE CONTRACT tenance and administrative charges which cover the cost of
administering the Contract, and management, advisory and
other fees, which reflect the costs of Vanguard Variable
Insurance Fund. There are no charges under the Contract for
withdrawals, although withdrawals made prior to age 59 1/2
may be subject to a 10% penalty tax. PAGE 16
- --------------------------------------------------------------------------------
EXCHANGES You may make exchanges among the Fund's Portfolios subject
to certain restrictions on excess exchange activity. These
restrictions do not apply, however, to non-substantive ex-
changes or to the Money Market Portfolio. No fee is imposed
for exchanges. Exchanges must be for at least $250, or, if
less, for the entire value of the Portfolio from which the
exchange is made. PAGE 19
- --------------------------------------------------------------------------------
FULL AND PARTIAL You may withdraw all or part of the Accumulated Value of
WITHDRAWALS the Contract before the earlier of the Annuity Date or the
Annuitant's death (or the Joint Annuitant's death, if lat-
er). You may establish systematic withdrawals from your
Contract, and receive distributions at regular intervals.
Withdrawals made prior to age 59 1/2 may be subject to a
10% penalty tax. PAGE 20
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DEATH BENEFIT
If the Annuitant specified in your Contract dies prior to
the Annuity Date, the Annuitant's named Beneficiary will
receive the death benefit under the Contract. The death
benefit is the greater of the then-current Accumulated
Value of the Contract or the sum of all Purchase Payments
(less any partial withdrawals and premium taxes). Your Ben-
eficiary may elect to receive these proceeds as a lump sum
or as Annuity Payments. PAGE 23
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ANNUITY PAYMENT
OPTIONS Beginning on the Annuity Date, you may withdraw monies from
the Contract in the form of an annuity income. As the Con-
tract Owner you may elect one of several Annuity Payment
Options. The Options provide a wide range of flexibility in
choosing an annuity payment schedule that meets your par-
ticular needs. Annuity Payments may be received for a des-
ignated period or for life (for either a single or joint
life), with or without a guaranteed number of payments. An-
nuity Payments can be fixed, or can vary with the invest-
ment performance of a Portfolio of the Fund. You may elect
a lump-sum payment prior to the Annuity Date in lieu of An-
nuity Payments. PAGE 24
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4
<PAGE>
CONTRACT AND If you have questions about your Contract, please telephone
POLICYHOLDER the Vanguard Variable Annuity Center (1-800-462-2391).
INFORMATION Please have ready the Contract number and the Contract Own-
er's name when you call. As Contract Owner, you will re-
ceive periodic statements confirming any transactions that
take place, as well as quarterly statements and an Annual
Report.
- --------------------------------------------------------------------------------
5
<PAGE>
FEE TABLE
The following table illustrates all expenses that you would
incur as a Contract Owner, except for Premium Taxes that
may be assessed by your state (see "Charges and Deduc-
tions"). The expenses and fees shown are for the Fund's and
the Separate Account's 1995 fiscal years. The expenses and
fees shown for the High Yield Bond Portfolio and the Small
Company Growth Portfolio are based on estimates for their
respective first fiscal year of operation. The purpose of
this table is to assist you in understanding the various
costs and expenses that you would bear directly or indi-
rectly as a purchaser of the Contract. The fee table re-
flects ALL expenses for both the Separate Account and the
Fund. For a complete discussion of contract costs and ex-
penses, see "Charges and Deductions."
<TABLE>
<CAPTION>
SEPARATE
OWNER TRANSACTION EXPENSES ACCOUNT
-------------------------------------------------------------------
<S> <C>
Sales Load Imposed on Purchases........................... None
Redemption Fees........................................... None
Exchange Fees............................................. None
-------------------------------------------------------------
Annual Contract Maintenance Fee*.......................... $25
* Applies to Contracts valued at less than $25,000 at the
time of initial purchase and on the last Business Day of
each year.
<CAPTION>
SEPARATE
ANNUAL SEPARATE ACCOUNT EXPENSES ACCOUNT
---------------------------------------------------------------
<S> <C>
Mortality and Expense Risk Charge**......................... .38%
Administrative Expense Charge............................... .10%
---
TOTAL ANNUAL SEPARATE ACCOUNT EXPENSES.................... .48%
===
</TABLE>
** This charge is reduced to 0.30% for average daily net
assets attributable to the Separate Account (and Sepa-
rate Account B of First Providian Life & Health Insur-
ance Company) in excess of $1.5 billion. See "Mortality
and Expense Risk Charge."
<TABLE>
<CAPTION>
SMALL HIGH
MONEY HIGH-GRADE EQUITY EQUITY COMPANY YIELD
ANNUAL FUND OPERATING MARKET BOND BALANCED INDEX INCOME GROWTH INTERNATIONAL GROWTH BOND
EXPENSES PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management &
Administrative
Expenses.............. .16% .20% .22% .23% .22% .26% .28% .22% .22%
Investment
Advisory Fees......... .01 .01 .10 .01 .10 .15 .15 .15 .06
12b-1 Distribution
Fees.................. None None None None None None None None None
Other Expenses
Distribution Costs.... .03 .02 .02 .02 .02 .02 .02 .02 .02
Miscellaneous
Expenses............. .03 .06 .02 .02 .05 .04 .09 .02 .02
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Other Expenses... .06 .08 .04 .04 .07 .06 .11 .04 .04
---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL FUND OPERATING
EXPENSES............. .23% .29% .36% .28% .39% .47% .54% .41% .32%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SMALL HIGH
MONEY HIGH-GRADE EQUITY EQUITY COMPANY YIELD
MARKET BOND BALANCED INDEX INCOME GROWTH INTERNATIONAL GROWTH BOND
TOTAL EXPENSES PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Separate Account
Expenses.............. .48% .48% .48% .48% .48% .48% .48% .48% .48%
Total Fund Operating
Expenses.............. .23 .29 .36 .28 .39 .47 .54 .41 .32
--- --- --- --- --- --- ---- --- ---
GRAND TOTAL, SEPARATE
ACCOUNT AND FUND
OPERATING EXPENSES... .71% .77% .84% .76% .87% .95% 1.02% .89% .80%
=== === === === === === ==== === ===
</TABLE>
The following example illustrates the expenses that you
would incur on a $1,000 purchase payment over various
periods, assuming (1) a 5% annual rate of return and (2)
redemption at the end of each period. As noted in the table
above, the Contract imposes no redemption fees of any kind.
Your expenses are identical whether you continue the
Contract or withdraw the entire value of your Contract at
the end of the applicable period as a lump sum or under one
of the Contract's Annuity Payment Options.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Portfolio............. $ 7 $23 $40 $90
High-Grade Bond Portfolio.......... 8 25 44 97
Balanced Portfolio................. 9 27 48 105
Equity Index Portfolio............. 8 25 43 96
Equity Income Portfolio............ 9 28 49 109
Growth Portfolio................... 10 31 53 118
International Portfolio............ 11 33 57 127
High-Yield Bond Portfolio.......... 8 26 45 101
Small Company Growth Portfolio..... 9 29 50 111
</TABLE>
The Annual Contract Maintenance Fee is reflected in these
examples as a percentage equal to the total amount of fees
collected during a year divided by the total average net
assets of the Portfolios during the same year. The fee is
assumed to remain the same in each year of the above peri-
ods. The fee is prorated to reflect only the remaining por-
tion of the calendar year of purchase. Thereafter, the fee
is deducted on the last business day of the year for the
following year, on a pro rata basis, from each of the Port-
folios you have chosen. For a complete discussion of Con-
tract costs and expenses, see "Charges and Deductions."
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY
BE HIGHER OR LOWER THAN THOSE SHOWN, SUBJECT TO THE GUARAN-
TEES IN THE CONTRACT.
------------------------------------------------------------
AUTOMATED QUOTES
The Vanguard Tele-Account Service provides access to accu-
mulated unit values (to two decimal places) for all
subaccounts, and yield information for the Money Market and
High-Grade Bond Portfolios of the Vanguard Variable Annuity
Plan. Contract Owners may utilize this service for 24-hour
access to Plan Portfolio information. To access the service
you may call Tele-Account at 1-800-662-6273 (ON-BOARD) and
follow the step-by-step instructions, or speak with a Van-
guard associate at 1-800-522-5555 to request a brochure
that explains how to use the service.
- --------------------------------------------------------------------------------
7
<PAGE>
GLOSSARY ACCUMULATION UNIT--A measure of your ownership interest in
the Contract prior to the Annuity Date. Analogous, though
not identical, to a share owned in a mutual fund account.
ACCUMULATION UNIT VALUE--The value of each Accumulation
Unit which is calculated each Valuation Period. Analogous,
though not identical, to the share price (net asset value)
of a mutual fund.
ACCUMULATED VALUE--The value of all amounts accumulated un-
der the Contract prior to the Annuity Date, equivalent to
the Accumulation Units multiplied by the Accumulation Unit
Value. Analogous to the current market value of a mutual
fund account.
ANNUITANT--The person or persons whose life is used to de-
termine the duration of any Annuity Payments and, subject
to the provision dealing with Joint Annuitants, upon whose
death, prior to the Annuity Date, benefits under the Con-
tract are paid.
ANNUITY DATE--The date on which Annuity Payments begin. The
Annuity Date is always the first day of the month you spec-
ify.
ANNUITY PAYMENT--One of a series of payments made under an
Annuity Payment Option.
ANNUITY PAYMENT OPTION--One of several ways in which a se-
ries of payments are made after the Annuity Date. Under a
FIXED ANNUITY OPTION, the dollar amount of each Annuity
Payment does not change over time. Annuity Payments are
based on the Contract's Accumulated Value as of the Annuity
Date. Under a VARIABLE ANNUITY OPTION, the dollar amount of
each Annuity Payment may change over time, depending upon
the investment experience of the Portfolio or Portfolios
you choose.
ANNUITY UNIT--Unit of measure used to calculate Variable
Annuity Payments.
BENEFICIARY--The person to whom any benefits are due upon
the Annuitant's death.
BUSINESS DAY--A day when the New York Stock Exchange is
open for trading.
COMPANY ("We", "Us", "Our")--Providian Life & Health Insur-
ance Company, a Missouri stock company.
CONTRACT ANNIVERSARY--Any anniversary of the Contract Date.
CONTRACT DATE--The date of issue of this Contract.
CONTRACT OWNER ("You", "Your")--The person or persons des-
ignated as the Contract Owner in the Contract application.
The term shall also include any person named as Joint Own-
er. A Joint Owner shares ownership in all respects with the
Owner. The Owner has the right to assign ownership to a
person or party other than himself.
CONTRACT YEAR--A period of 12 months starting with the Con-
tract Date or any Contract Anniversary.
8
<PAGE>
FREE LOOK PERIOD--The period during which the Contract can
be cancelled and treated as void from the Contract Date.
FUND--Vanguard Variable Insurance Fund, Inc., an open-end,
diversified investment company, offered by The Vanguard
Group, Inc., in which the Separate Account invests.
JOINT ANNUITANT--The person other than the Annuitant who
may be designated by the Contract Owner and on whose life
Annuity Payments may also be based.
NET PURCHASE PAYMENT--Any Purchase Payment less the appli-
cable Premium Tax, if any.
NON-QUALIFIED CONTRACT--A Contract other than a Qualified
Contract. Contributions to such a Contract are made with
after-tax dollars.
OWNER'S DESIGNATED BENEFICIARY--The person designated to
receive the Contract Owner's interest in the Contract if
the Contract Owner dies before the entire interest in the
Contract is distributed, as explained in the "IRS-Required
Distribution" section.
PAYEE--The Contract Owner, Annuitant, Beneficiary, or any
other person, estate, or legal entity to whom benefits are
to be paid.
PORTFOLIO--The separate investment Portfolios of the Van-
guard Variable Insurance Fund. The Fund currently offers
nine Portfolios: the Money Market Portfolio, the High-Grade
Bond Portfolio, the Balanced Portfolio, the Equity Index
Portfolio, the Equity Income Portfolio, the Growth Portfo-
lio, the International Portfolio, the High Yield Bond Port-
folio, and the Small Company Growth Portfolio. In this Pro-
spectus, Portfolio will also be used to refer to the
Subaccount that invests in the corresponding Portfolio.
PREMIUM TAX--A regulatory tax that may be assessed by your
state on the Purchase Payments made into your Contract. The
amount which we must pay as Premium Tax will be deducted
from each Purchase Payment or from your Accumulated Value
as it is incurred by us.
PROOF OF DEATH--(a) A certified death certificate; (b) a
certified decree of a court of competent jurisdiction as to
the finding of death; (c) a written statement by a medical
doctor who attended the deceased; or (d) any other proof
satisfactory to the Company.
PURCHASE PAYMENT--Any premium payment--any amount you in-
vest in the Contract. The minimum Initial Purchase Payment
is $5,000; each Additional Purchase Payment must be at
least $250. Purchase Payments may be made at any time prior
to the Annuity Date as long as the Annuitant is living.
QUALIFIED CONTRACT--A Contract that qualifies as an indi-
vidual retirement annuity under Section 408(b) of the In-
ternal Revenue Code of 1986, as amended.
SEPARATE ACCOUNT--Providian Life & Health Insurance Company
Separate Account IV. The Separate Account consists of as-
sets that are segregated by Providian Life & Health Insur-
ance Company and invested in the Vanguard
9
<PAGE>
Variable Insurance Fund. The Separate Account is indepen-
dent of the general assets of the Company.
SUBACCOUNT--That portion of the Separate Account that in-
vests in shares of the Fund's Portfolios. Each Subaccount
will only invest in a single Portfolio. The investment per-
formance of each Subaccount is linked directly to the in-
vestment performance of one of the nine Portfolios of the
Fund.
VALUATION PERIOD--A period between two successive Business
Days commencing at the close of business of the first Busi-
ness Day and ending at the close of business of the follow-
ing Business Day.
- --------------------------------------------------------------------------------
10
<PAGE>
CONDENSED FINAN-
CIAL INFORMATION The Accumulation Unit Values and the number of Accumulation
Units outstanding for each Subaccount in 1991 through 1995
are as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD APRIL 29, 1991 THROUGH DECEMBER 31, 1995*
--------------------------------------------------------------------------------------------------------
SMALL
MONEY HIGH-GRADE EQUITY EQUITY HIGH YIELD COMPANY
MARKET BOND BALANCED INDEX INCOME GROWTH INTERNATIONAL BOND GROWTH
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit value
as of:
Start Date*............. 1.000 10.000 10.000 10.000 10.000 10.000 10.000 10.000 10.000
12/31/91................ 1.032 11.027 10.802 11.275 . . . . .
12/31/92................ 1.064 11.656 11.514 12.039 . . . . .
12/31/93................ 1.091 12.695 12.961 13.144 10.488 10.569 . . .
12/31/94................ 1.130 12.290 12.815 13.224 10.304 10.964 10.128 . .
12/31/95................ 1.191 14.437 16.885 18.073 14.239 15.089 11.678 . .
Number of units
outstanding as of:
12/31/91................ 32,495 2,122 3,395 2,311 . . . . .
12/31/92................ 75,564 4,417 8,682 9,645 . . . . .
12/31/93................ 109,190 6,592 16,164 12,971 6,411 4,879 . . .
12/31/94................ 154,415 6,589 16,429 13,676 6,089 8,004 6,818 . .
12/31/95................ 183,867 8,684 17,021 16,292 7,355 11,857 8,146 . .
<CAPTION>
(UNITS ARE SHOWN IN THOUSANDS)
</TABLE>
* Date of commencement of operations for the High-Grade Bond and Equity Index
Subaccounts was 4/29/91, for the Money Market Subaccount was 5/2/91, for the
Balanced Subaccount was 5/23/91, for the Equity Income and Growth Subaccounts
was 6/7/93, for the International Subaccount was 6/3/94, and for the High
Yield Bond and Small Company Growth Subaccounts will be 6/3/96.
- --------------------------------------------------------------------------------
FINANCIAL The audited statutory-basis financial statements of the
STATEMENTS Company and the financial statements of the Separate Ac-
count (as well as the Independent Auditors' Reports there-
on) are contained in the Statement of Additional Informa-
tion.
- --------------------------------------------------------------------------------
YIELD AND TOTAL From time to time a Portfolio of the Fund may advertise its
RETURN yield and total return investment performance. Advertised
yields and total returns include all charges and expenses
attributable to the Contract. Including these fees has the
effect of decreasing the advertised performance of a Port-
folio, so that a Portfolio's investment performance will
not be directly comparable to that of an ordinary mutual
fund.
Please refer to the Statement of Additional Information for
a description of the method used to calculate a Portfolio's
yield and total return, and a list of the indexes and other
benchmarks used in evaluating a Portfolio's performance.
- --------------------------------------------------------------------------------
11
<PAGE>
THE COMPANY AND
THE SEPARATE The Company is a stock life insurance company incorporated
ACCOUNT under the laws of Missouri on August 6, 1920, with adminis-
trative offices at 20 Moores Road, Frazer, Pennsylvania
PROVIDIAN LIFE & 19355. The Company is principally engaged in offering life
HEALTH INSURANCE insurance, annuity contracts, and accident and health in-
COMPANY surance and is admitted to do business in 49 states, the
District of Columbia and Puerto Rico. The Company is ulti-
mately wholly owned by Providian Corporation, a publicly-
held diversified consumer financial services company whose
shares are traded on the New York Stock Exchange with as-
sets of $26.8 billion as of December 31, 1995.
------------------------------------------------------------
PROVIDIAN LIFE & The Separate Account was established by the Company as a
HEALTH INSURANCE separate account under the laws of the State of Missouri on
COMPANY SEPARATE July 16, 1990, pursuant to a resolution of the Company's
ACCOUNT IV Board of Directors. The Separate Account is a unit invest-
ment trust registered with the Securities and Exchange Com-
mission (the "SEC") under the Investment Company Act of
1940 (the "1940 Act"). Such registration does not signify
that the SEC supervises the management or the investment
practices or policies of the Separate Account.
The assets of the Separate Account are owned by the Company
and the obligations under the Contract are obligations of
the Company. These assets are held separately from the
other assets of the Company and are not chargeable with li-
abilities incurred in any other business operation of the
Company (except to the extent that assets in the Separate
Account exceed the reserves and other liabilities of the
Separate Account). The Company will always keep assets in
the Separate Account with a value at least equal to the to-
tal Accumulated Value under the Contracts. Income, gains
and losses incurred on the assets in the Separate Account,
whether or not realized, are credited to or charged against
the Separate Account without regard to other income, gains
or losses of the Company. Therefore, the investment perfor-
mance of the Separate Account is entirely independent of
the investment performance of the Company's general account
assets or any other separate account maintained by the Com-
pany.
The Separate Account has nine Subaccounts, each of which
invests solely in a corresponding Portfolio of the Fund.
Additional Subaccounts may be established at the discretion
of the Company. The Separate Account meets the definition
of a "separate account" under Rule O-1(e)(1) of the Invest-
ment Company Act of 1940.
- --------------------------------------------------------------------------------
VANGUARD Vanguard Variable Insurance Fund is an open-end diversified
VARIABLE investment company intended exclusively as an investment
INSURANCE FUND vehicle for variable annuity or variable life insurance
contracts offered by insurance companies.
The Fund is a member of The Vanguard Group of Investment
Companies, a family of more than 30 investment companies
with more than 90 distinct portfolios and assets in excess
of $190 billion. Through their jointly-owned subsidiary,
The Vanguard Group, Inc. ("Vanguard"), the Fund and the
other Funds in the Group obtain at cost virtually all of
their corporate management, administrative, shareholder ac-
counting and distribution services.
12
<PAGE>
The Fund offers nine Portfolios--a money market portfolio,
a bond portfolio, a balanced portfolio, an equity index
portfolio, an equity income portfolio, a growth portfolio,
an international portfolio, a high-yield bond portfolio and
a small company growth portfolio--each with distinct in-
vestment objectives and policies.
THE MONEY MARKET PORTFOLIO seeks to provide current income
consistent with the preservation of capital and liquidity.
The Portfolio also seeks to maintain a stable net asset
value of $1.00 per share. The Portfolio invests primarily
in high-quality money market instruments issued by finan-
cial institutions, non-financial corporations, the U.S.
Government, state and municipal governments and their agen-
cies or instrumentalities, as well as repurchase agreements
collateralized by such securities. The Portfolio also in-
vests in Eurodollar obligations (dollar-denominated obliga-
tions issued outside the U.S. by foreign banks or foreign
branches of domestic banks) and Yankee obligations (dollar-
denominated obligations issued in the U.S. by foreign
banks). Vanguard's Fixed Income Group serves as this Port-
folio's investment adviser.
THE HIGH-GRADE BOND PORTFOLIO seeks to parallel the invest-
ment results of the Lehman Brothers Aggregate Bond Index.
The Portfolio invests primarily in a diversified portfolio
of U.S. Government and corporate bonds, and mortgage-backed
securities. Vanguard's Fixed Income Group serves as this
Portfolio's investment adviser.
THE BALANCED PORTFOLIO seeks the conservation of principal,
a reasonable income return and profits without undue risk.
The Portfolio invests in a diversified portfolio of common
stocks and bonds, with common stocks expected to represent
60% to 70% of the Portfolio's total assets and bonds to
represent 30% to 40%. Wellington Management Company serves
as this Portfolio's investment adviser.
THE EQUITY INDEX PORTFOLIO seeks to parallel the investment
results of the Standard & Poor's 500 Composite Stock Price
Index (S&P 500). The Portfolio invests in common stocks in-
cluded in the S&P 500. Vanguard's Core Management Group
serves as this Portfolio's investment adviser.
THE EQUITY INCOME PORTFOLIO seeks to provide a high level
of current income by investing principally in dividend-pay-
ing equity securities. Newell Associates serves as this
Portfolio's investment adviser.
THE GROWTH PORTFOLIO seeks to provide long-term capital ap-
preciation by investing primarily in equity securities of
seasoned U.S. companies with above-average prospects for
growth. Lincoln Capital Management Company serves as this
Portfolio's investment adviser.
THE INTERNATIONAL PORTFOLIO seeks to provide long-term cap-
ital appreciation. The Portfolio invests primarily in eq-
uity securities of companies based outside the United
States. Schroder Capital Management International, Inc.
serves as this Portfolio's investment adviser.
THE HIGH YIELD BOND PORTFOLIO seeks to provide a high level
of current income by investing in lower-rated debt securi-
ties, which may be regarded as having speculative charac-
teristics and are commonly referred to as "junk bonds." Un-
der normal circumstances, at least 80% of the Portfolio's
assets
13
<PAGE>
will be invested in high-yield corporate debt obligations
rated at least B by Moody's Investors Service, Inc. or
Standard & Poor's Corporation or, if unrated, of comparable
quality as determined by the Portfolio's adviser,
Wellington Management Company.
THE SMALL COMPANY GROWTH PORTFOLIO seeks to provide long
term growth in capital by investing primarily in equity se-
curities of small companies deemed to have favorable pros-
pects for growth. These securities are primarily common
stocks but may also include securities convertible into
common stock. Granahan Investment Management serves as this
Portfolio's investment adviser.
There is no assurance that a Portfolio will achieve its
stated objective.
Additional information concerning the investment objectives
and policies of the Portfolios and the investment advisory
services, total expenses and charges can be found in the
current prospectus for the Fund, which accompanies this
Prospectus. The Fund Prospectus should be read carefully
before any decision is made concerning the allocation of
Purchase Payments to a Portfolio.
The Portfolios may be made available to registered separate
accounts offering variable annuity and variable life prod-
ucts of the Company as well as other insurance companies.
Although we believe it is unlikely, a material conflict
could arise between the interests of the Separate Account
and one or more of the other participating separate ac-
counts. In the event of a material conflict, the affected
insurance companies agree to take any necessary steps, in-
cluding removing their separate account from the Fund if
required by law, to resolve the matter. See the Fund's Pro-
spectus for more information.
- --------------------------------------------------------------------------------
CONTRACT FEATURES
The rights and benefits under the Contract are described
below and in the Contract. The Company reserves the right
to make any modification to conform the Contract to, or
give the Contract Owner the benefit of, any federal or
state statute or any rule or regulation of the United
States Treasury Department.
------------------------------------------------------------
FREE LOOK PERIOD A Free Look Period exists for a minimum of 10 days after
the Contract Owner receives the Contract (30 or more days
in some instances as set forth in your Contract). The Con-
tract permits the Contract Owner to cancel the Contract
during the Free Look Period by returning the Contract to
Vanguard Variable Annuity Center, P.O. Box 13285, Kansas
City, MO 64199. Upon cancellation, the Contract is treated
as void from the Contract Date and the Contract Owner will
receive the greater of the Purchase Payments made under the
Contract or the Accumulated Value of the Contract as of the
day the Contract is received by the Company.
- --------------------------------------------------------------------------------
CONTRACT Individuals wishing to purchase a Non-Qualified Contract
APPLICATION AND should send a completed application and your Initial Pur-
PURCHASE chase Payment to the Vanguard Variable Annuity Center. Your
PAYMENTS Initial Purchase Payment must be equal to or greater than
the $5,000 minimum investment requirement. Furthermore, the
named Annuitant and Joint Annuitant must be 75 years of age
or less.
14
<PAGE>
The Contract will be issued and the Initial Net Purchase
Payment will be credited within two Business Days after ac-
ceptance of the application and the Initial Purchase Pay-
ment. Acceptance is subject to the application being re-
ceived in good order, and the Company reserves the right to
reject any application or Initial Purchase Payment.
If the Initial Purchase Payment cannot be credited because
the application is incomplete, the Company will contact the
applicant in writing, explain the reason for the delay and
will refund the Initial Purchase Payment within five Busi-
ness Days. As soon as the necessary requirements are ful-
filled the Purchase Payment will be credited.
Additional Purchase Payments may be made at any time prior
to the Annuity Date, as long as the Annuitant or Joint An-
nuitant, if applicable, is living. Additional Purchase Pay-
ments must be for at least $250. Additional Purchase Pay-
ments received prior to the close of the New York Stock Ex-
change (generally 4:00 p.m. Eastern time) are credited to
the Accumulated Value of the Contract as of the close of
business that same day.
In order to prevent lengthy processing delays caused by the
clearing of foreign checks, we will only accept a foreign
check which has been drawn in U.S. dollars and has been is-
sued by a foreign bank with a U.S. correspondent bank.
The Contracts are available on a non-qualified basis and as
individual retirement annuities (IRAs) that qualify for
special federal income tax treatment. Generally, Qualified
Contracts may be purchased only in connection with a
"rollover" of funds from another qualified plan or IRA and
contain certain other restrictive provisions limiting the
timing and amount of payments to and distributions from the
Qualified Contract.
Total Purchase Payments may not exceed $300,000 without
prior approval of the Company.
PURCHASING BY
WIRE
INVESTORS FIDUCIARY TRUST COMPANY
MONEY SHOULD BE ABA 101003621
WIRED TO: DEPOSIT ACCOUNT NUMBER 8907513496
PLEASE CALL: PROVIDIAN LIFE & HEALTH INSURANCE COMPANY
1-800-462-2391
BEFORE WIRING CONTRACT NUMBER
CONTRACT REGISTRATION
To assure proper receipt, please be sure your bank includes
the contract number Vanguard has assigned you. For an Ini-
tial Purchase Payment, please complete the Vanguard Vari-
able Annuity Plan Application and mail it to the Vanguard
Variable Annuity Center, P.O. Box 13285, Kansas City, MO
64199 after completing wire arrangements. Note: Federal
funds wire purchase orders will be accepted only when the
New York Stock Exchange and Custodian Bank are open for
business.
------------------------------------------------------------
SECTION 1035 You may exchange your Accumulated Value under an existing
EXCHANGES annuity contract to the Vanguard Variable Annuity Plan.
Section 1035 of the IRS Code of 1986, as amended (the
"Code"), provides, in general, that no gain or loss shall
be
15
<PAGE>
recognized on the exchange of one annuity contract for an-
other. To complete a "1035 Exchange" simply provide all the
requested information on the 1035 Exchange Form and mail
it, along with the application and your current contract,
to the Variable Annuity Center. Special rules and proce-
dures apply to Code Section 1035 transactions, particularly
if the Contract being exchanged was issued prior to August
14, 1982. Prospective Contract Owners wishing to take ad-
vantage of Code Section 1035 should consult their tax ad-
visers.
Please note, that an outstanding loan on the Contract that
you wish to transfer may create a tax consequence. There-
fore, you are encouraged to settle any outstanding loans
with your current insurance company prior to initiating a
1035 Exchange into the Plan.
- --------------------------------------------------------------------------------
ALLOCATION OF The Contract Owner specifies on the Contract Application
PURCHASE how Purchase Payments will be allocated. The Contract Owner
PAYMENTS may allocate each Purchase Payment to one or more of the
Portfolios as long as such portions are whole number per-
centages and any allocation made is at least 10% and at
least $1,000.
Allocation instructions for future Purchase Payments may be
changed by the Contract Owner by sending a written notice
to the Vanguard Variable Annuity Center. You may complete a
Telephone Allocation Authorization Form to establish an op-
tion that allows you to provide allocation instructions by
telephone. This option includes the ability to change your
investment by eliminating a Contract Portfolio from your
allocations or by adding a new Contract Portfolio to your
list. Please note that you must maintain a minimum of
$1,000 in each Portfolio to which you have allocated as-
sets.
During the Free Look Period (which is assumed for this pur-
pose to be 10 to 30 days (or more in some instances as
specified in your contract) after the issuance of the Con-
tract), the Initial Net Purchase Payment will be allocated
to the Money Market Portfolio. Upon expiration of the Free
Look Period, the Accumulated Value will remain in the Money
Market Portfolio for an additional 5-day grace period to
allow for mail delivery. Upon the expiration of the Free
Look Period and the 5-day grace period (15 to 35 days), the
Accumulated Value will then be allocated among the Portfo-
lios in accordance with the Contract Owner's instructions.
- --------------------------------------------------------------------------------
CHARGES AND
DEDUCTIONS The projected expenses for the Contract are substantially
below the costs of other variable annuity contracts. For
example, based on a $25,000 contract the average expense
ratio of other variable annuity contracts was 2.04% as of
December 31, 1995, compared to 0.82% for the Vanguard Vari-
able Annuity Plan (source for competitors' data: Morning-
star, Inc.)
No sales load is deducted from the Initial Purchase Payment
or any Additional Purchase Payments. In addition, there are
no sales charges imposed upon withdrawals.
------------------------------------------------------------
16
<PAGE>
MORTALITY AND The Company imposes a charge as compensation for bearing
EXPENSE RISK certain mortality and expense risks under the Contracts.
CHARGE The annual charge is assessed daily based on the combined
net assets of the Separate Account and Separate Account B
of First Providian Life & Health Insurance Company in the
Fund according to the following schedule:
<TABLE>
<CAPTION>
NET ASSETS RATE
------------------ ------
<S> <C>
First $1.5 Billion 0.375%
Over $1.5 Billion 0.300%
</TABLE>
The Company guarantees that these mortality and expense
risk breakpoints will never increase. If this charge is in-
sufficient to cover actual costs and assumed risks, the
loss will fall on the Company. Conversely, if the charge
proves more than sufficient, any excess will be added to
the Company surplus.
The mortality risk borne by the Company under the Con-
tracts, where one of the life Annuity Payment Options was
selected, is to make monthly annuity payments (determined
in accordance with the annuity tables and other provisions
contained in the Contract) regardless of how long all
Annuitants may live. We also assume mortality risk as a re-
sult of our guarantee of a minimum payment in the event the
Annuitant dies prior to the Annuity Date.
The expense risk borne by the Company under the Contracts
is the risk that the charges for administrative expenses
which are guaranteed for the life of the Contract may be
insufficient to cover the actual costs of issuing and ad-
ministering the Contract.
------------------------------------------------------------
ADMINISTRATIVE
CHARGE & An annual administrative charge of .10% of the net asset
MAINTENANCE FEE value of the Separate Account is assessed daily along with
an annual maintenance fee of $25 for Contracts valued at
less than $25,000 at the time of initial purchase and on
the last Business Day of each year. The annual maintenance
fee is deducted proportionately from each Contract's Accu-
mulated Value; therefore, the $25 fee is assessed per Con-
tract, not per Portfolio chosen. Your Initial Purchase Pay-
ment of less than $25,000 is reduced by an initial mainte-
nance fee which is pro- rated to reflect only the remaining
portion of the calendar year of purchase. Thereafter, the
fee is deducted on the last Business Day of the year for
the following year, on a pro rata basis from each of the
Portfolios you have chosen. These deductions represent re-
imbursement for the costs expected to be incurred over the
life of the Contract for issuing and maintaining each Con-
tract and the Separate Account. Please note that Contracts
valued at $25,000 or more as of the last Business Day of
the year will not be assessed the $25 maintenance fee for
the following year.
------------------------------------------------------------
TAXES The Contract Owner will, where such taxes are imposed by
state law, pay Premium Taxes that currently range up to
3.5%. These taxes will be deducted from the Accumulated
Value or Purchase Payments as incurred by the Company.
17
<PAGE>
As of the date of this Prospectus, the following state as-
sesses a Premium Tax on all Initial and subsequent Purchase
Payments:
<TABLE>
<CAPTION>
NON-
QUALIFIED QUALIFIED
-------------------------------------------------------------
<S> <C> <C>
South Dakota................................... 0% 1.25%
As of the date of this Prospectus, the following states as-
sess a Premium Tax against the Accumulated Value if the
Owner chooses an Annuity Payment Option instead of receiv-
ing a lump sum distribution:
<CAPTION>
NON-
QUALIFIED QUALIFIED
-------------------------------------------------------------
<S> <C> <C>
Alabama........................................ 1.00% 1.00%
California..................................... .50% 2.35%
District of Columbia........................... 2.25% 2.25%
Kansas......................................... 0% 2.00%
Kentucky....................................... 2.00% 2.00%
Maine.......................................... 0% 2.00%
Nevada......................................... 0% 3.50%
West Virginia.................................. 1.00% 1.00%
Wyoming........................................ 0% 1.00%
</TABLE>
Under present laws, the Company will incur state or local
taxes (in addition to the Premium Taxes described above) in
several states. At present, the Company does not charge the
Contract Owner for these other taxes. If there is a change
in state or local tax laws, charges for such taxes may be
made. The Company does not expect to incur any federal in-
come tax liability attributable to investment income or
capital gains retained as part of the reserves under the
Contracts. (See "Federal Tax Considerations," page 26.)
Based upon these expectations, no charge is currently being
made to the Separate Account for corporate federal income
taxes that may be attributable to the Separate Account.
The Company will periodically review the question of a
charge to the Separate Account for corporate federal income
taxes related to the Separate Account. Such a charge may be
made in future years for any federal income taxes incurred
by the Company. This might become necessary if the tax
treatment of the Company is ultimately determined to be
other than what the Company currently believes it to be, if
there are changes made in the federal income tax treatment
of annuities at the corporate level, or if there is a
change in the Company's tax status. In the event that the
Company should incur federal income taxes attributable to
investment income or capital gains retained as part of the
reserves under the Contracts, the Accumulated Value of the
Contract would be correspondingly adjusted by any provision
or charge for such taxes.
------------------------------------------------------------
VANGUARD The value of the assets in the Separate Account will re-
VARIABLE flect the fees and expenses paid by the Fund. A complete
INSURANCE FUND description of these expenses is found in the "Fee Table"
EXPENSES section of this Prospectus and in the "Management of the
Fund" Section of the Fund's Prospectus and in the Fund's
Statement of Additional Information.
- --------------------------------------------------------------------------------
18
<PAGE>
ACCUMULATED At the commencement of the Contract, the Accumulated Value
VALUE equals the Initial Net Purchase Payment. Thereafter, on any
Business Day the Accumulated Value equals the Accumulated
Value from the previous Business Day increased by: i) any
Additional Net Purchase Payments received by the Company
and ii) any increase in the Accumulated Value due to in-
vestment results of the selected Portfolio(s) that occur
during the Valuation Period; and reduced by: i) any de-
crease in the Accumulated Value due to investment results
of the selected Portfolio(s), ii) a daily charge to cover
the mortality and expense risks assumed by the Company,
iii) any charge to cover the cost of administering the Con-
tract, iv) any partial withdrawals, and v) Premium Taxes,
if any, that occur during the Valuation Period.
The Accumulated Value is expected to change from Valuation
Period to Valuation Period, reflecting the investment expe-
rience of the selected Portfolios of the Fund as well as
the daily deduction of charges. When your Net Purchase Pay-
ments are allocated to a selected Portfolio, they result in
a particular number of Accumulation Units being credited to
your Contract. The number of Accumulation Units credited is
determined by dividing the dollar amount allocated to each
Portfolio by the Accumulation Unit Value for that Portfolio
as of the end of the Valuation Period in which the payment
is received. The Accumulation Unit Value varies each Valua-
tion Period (i.e., each day that there is trading on the
New York Stock Exchange) with the net rate of return of the
Portfolio. The net rate of return reflects the investment
performance of the Portfolio for the Valuation Period and
is net of asset charges to the Portfolio.
- --------------------------------------------------------------------------------
DIVIDENDS AND All dividends and capital gains earned will be reinvested
CAPITAL GAINS and reflected in the Accumulation Unit Value. Only in this
TREATMENT way can these earnings remain tax deferred.
- --------------------------------------------------------------------------------
EXCHANGES AMONG Should your investment goals change, you may exchange the
THE PORTFOLIOS Accumulated Value among the Portfolios of the Fund. Re-
quests for exchanges received by mail or by telephone prior
to the close of the New York Stock Exchange (generally 4:00
p.m. Eastern time) are processed at the close of business
that same day. Requests received after the close of the Ex-
change are processed the next Business Day.
The Contract's exchange privilege is not intended to afford
Contract Owners a way to speculate on short-term movements
in the market. Accordingly, in order to prevent excessive
use of the exchange privilege that may potentially disrupt
the management of the Fund and increase transaction costs,
the Separate Account has established a policy of limiting
excessive exchange activity.
You may make two substantive exchanges from each Portfolio
(at least 30 days apart) during any calendar year. A sub-
stantive exchange is an exchange from a Portfolio for the
lesser of: i) 51% of the Accumulated Value in the Portfo-
lio, or ii) $100,000. This restriction does not limit non-
substantive exchanges and does not apply to exchanges from
the Money Market Portfolio. All exchanges must be for at
least $250, or, if less, the Accumulated Value in the Port-
folio. However, the Company and the Fund reserve the right
to revise or terminate the exchange privilege, limit the
amount of or reject any exchange, as deemed necessary, at
any time.
------------------------------------------------------------
19
<PAGE>
AUTOMATIC EX- The Automatic Exchange Service allows you to move money au-
CHANGES tomatically among the Portfolios of the Fund. You may ex-
change fixed amounts or percentages of your Portfolio bal-
ance either monthly, quarterly, semiannually or annually
into existing (the $1,000 minimum balance requirement has
been met) Portfolios. Exchanges at regular intervals or
"dollar-cost averaging" can be used, for example, to move
money from a money market portfolio into a stock or bond
portfolio. The minimum exchange amount is $250, and the
maximum exchange amount is $50,000. The Automatic Exchange
Service may be established by completing a Vanguard Vari-
able Annuity Plan Automatic Exchange Service Application
Form or writing a letter of instruction. You may change the
transfer amount or cancel this service in writing or by
telephone, if you have established telephone authorization
on your Contract. Please note that the Automatic Exchange
Service cannot be used to establish a new Portfolio, and
will not be activated until the Free Look Period has ex-
pired.
------------------------------------------------------------
TELEPHONE EX- To establish the telephone exchange privilege on your Con-
CHANGES tract, please complete the appropriate section of the Plan
Application. The Company, the Fund, and Vanguard shall not
be responsible for the authenticity of exchange instruc-
tions received by telephone. Reasonable procedures will be
undertaken to confirm that instructions communicated by
telephone are genuine. Prior to the acceptance of any re-
quest, the caller will be asked by a customer service rep-
resentative for his or her contract number and social secu-
rity number. All calls will be recorded, and this informa-
tion will be verified with the Contract Owner's records
prior to processing a transaction. Furthermore, all trans-
actions performed by a service representative will be veri-
fied with the Contract Owner through a written confirmation
statement. The Company, the Fund, and Vanguard shall not be
liable for any loss, cost or expense for action on tele-
phone instructions that are believed to be genuine in ac-
cordance with these procedures. Every effort will be made
to maintain the exchange privilege. However, the Company
and the Fund reserve the right to revise or terminate its
provisions, limit the amount of or reject any exchange, as
deemed necessary, at any time.
- --------------------------------------------------------------------------------
FULL AND PARTIAL At any time before the Annuity Date and while the Annuitant
WITHDRAWALS or Joint Annuitant is living, the Contract Owner may make a
partial or full withdrawal of the Contract to receive all
or part of the Accumulated Value by sending a written re-
quest to the Vanguard Variable Annuity Center. Full or par-
tial withdrawals may only be made before the Annuity Date
and all partial withdrawal requests must be for at least
$250.
You can make a withdrawal by writing to the Vanguard Vari-
able Annuity Center. Your written request should include
your Contract number, social security number, withdrawal
amount, and the signature of all owners. Your proceeds will
normally be distributed within two Business Days after the
receipt of the request but in no event will it be later
than seven calendar days, subject to postponement in cer-
tain circumstances (see "Deferment of Payment" page 25).
------------------------------------------------------------
20
<PAGE>
SYSTEMATIC WITH- You may establish an automatic withdrawal of a specific
DRAWALS amount, a percentage of the balance, or accumulated earn-
ings from your Contract, and receive distributions on a
monthly, quarterly, semiannual, or annual schedule. Once
established, a check will be sent to your Contract address,
bank account or as you direct. Please note that each sys-
tematic withdrawal is subject to federal income taxes on
the earnings, and may be subject to a 10% tax imposed by
the IRS on withdrawals made prior to age 59 1/2.
A minimum Contract balance of $10,000, and Portfolio bal-
ance of $1,000 are required to establish a systematic with-
drawal program for your Contract. The minimum automatic
withdrawal amount is $250, and the maximum is $50,000.
Changes to the withdrawal amount, percentage, or the fre-
quency of distributions may be made by telephone. Any other
changes, including a change in the destination of the
check, must be requested in writing, and should include
signatures of all Contract owners. To cancel the systematic
withdrawal program, the Contract owner(s) needs to submit a
letter of instruction with the appropriate signatures.
To establish a systematic withdrawal program for your Con-
tract, simply complete the Vanguard Variable Annuity Plan
Systematic Withdrawal Program Application Form. Please note
that the completed form must be signed by all Contract own-
ers, and must be signature guaranteed if you are directing
the withdrawal checks to an address other than the Contract
address.
Payments under the Contract of any amounts derived from
premiums paid by check may be delayed until such time as
the check has cleared your bank. If, at the time the Con-
tract Owner requests a full or partial withdrawal, he or
she has not provided the Company with a written election
not to have federal income taxes withheld, the Company must
by law withhold such taxes from the taxable portion of any
full or partial withdrawal and remit that amount to the
federal government. Moreover, the Internal Revenue Code
provides that a 10% penalty tax will be imposed on certain
early withdrawals. (See "Federal Tax Considerations," page
26.)
Since the Contract Owner assumes the investment risk with
respect to amounts allocated to the Separate Account, the
total amount paid upon withdrawal of the Contract (taking
into account any prior withdrawals) may be more or less
than the total Purchase Payments made.
- --------------------------------------------------------------------------------
IRS-REQUIRED If the Contract Owner or, if applicable a Joint Owner, dies
DISTRIBUTIONS before the entire interest in the Contract is distributed,
the value of the Contract must be distributed to the Own-
er's Designated Beneficiary as described in this section so
that the Contract qualifies as an annuity under the Inter-
nal Revenue Code.
If the death occurs on or after the Annuity Date, the re-
maining portion of such interest will be distributed at
least as rapidly as under the method of distribution being
used as of the date of death. If the death occurs before
the Annuity Date, the entire interest in the Contract will
be distributed within five years after date of death or be
paid under an annuity option under which payments will be-
gin within one year of the Contract Owner's death and will
be made for the life of the "Owner's Designated Beneficia-
ry" or for a period not extending
21
<PAGE>
beyond the life expectancy of that beneficiary. The Owner's
Designated Beneficiary is the person to whom Ownership of
the Contract passes by reason of death.
If any portion of the Contract Owner's interest is payable
to (or for the benefit of) the surviving spouse of the Con-
tract Owner, the Contract may be continued with the surviv-
ing spouse as the new Contract Owner.
- --------------------------------------------------------------------------------
MINIMUM BALANCE
REQUIREMENTS Due to the relatively high cost of maintaining smaller ac-
counts, the Company reserves the right to transfer the bal-
ance in any Portfolio account that falls below $1,000, due
to a partial withdrawal or exchange, to the remaining Port-
folios held under that Contract, on a pro rata basis. In
the event that the entire value of the Contract falls below
$1,000, you may be notified that the Accumulated Value of
your account is below the Contract's minimum requirement.
You would then be allowed 60 days to make an additional in-
vestment before the account is liquidated. Proceeds would
be promptly paid to the Contract Owner. The full proceeds
would be taxable as a withdrawal. A full withdrawal will
result in an automatic termination of the Contract.
- --------------------------------------------------------------------------------
DESIGNATION OF A The Contract Owner may select one or more Beneficiaries,
BENEFICIARY who would receive benefits upon the death of the Annuitant,
and name them in the application. The Beneficiary(ies), as
named on the application, will serve as the beneficiary
designation. Thereafter, while the Annuitant or Joint Annu-
itant is living, the Contract Owner may change the Benefi-
ciary by written notice. Such change will take effect on
the date the notice is signed by the Contract Owner but
will not affect any payment made or other action taken be-
fore the Company acknowledges the notice. The Contract
Owner may also make the designation of Beneficiary irrevo-
cable by sending written notice to, and obtaining approval
from, the Company. Changes in the Beneficiary may then be
made only with the consent of the designated irrevocable
Beneficiary.
If the Annuitant dies prior to the Annuity Date, the fol-
lowing will apply unless the Contract Owner has made other
provisions:
(a) If there is more than one Beneficiary, each will share
in the Death Benefits equally;
(b) If one or two or more Beneficiaries has already died,
that share of the Death Benefit will be paid equally to
the survivor(s);
(c) If no Beneficiary is living, the proceeds will be paid
to the Contract Owner;
(d) If a Beneficiary dies at the same time as the Annui-
tant, the proceeds will be paid as though the Benefi-
ciary had died first. If a Beneficiary dies within 15
days after the Annuitant's death and before the Company
receives due proof of the Annuitant's death, proceeds
will be paid as though the Beneficiary had died first.
If a Beneficiary who is receiving Annuity Payments dies,
any remaining Payments Certain will be paid to that
Beneficiary's named Beneficiary(ies) when due. If no Bene-
ficiary survives the Annuitant, the right to any amount
payable
22
<PAGE>
will pass to the Contract Owner. If the Contract Owner is
the Annuitant, this right will pass to his or her estate.
If a Life Annuity with Period Certain Option was elected,
and if the Annuitant dies on or after the Annuity Date, any
unpaid Payments Certain will be paid to the Beneficiary.
- --------------------------------------------------------------------------------
DEATH OF Subject to the provisions dealing with Joint Annuitants, if
ANNUITANT PRIOR the Annuitant dies prior to the Annuity Date, an amount
TO ANNUITY DATE will be paid as proceeds to the Beneficiary. If the Annui-
tant or Joint Annuitant dies prior to the Annuity Date, the
survivor shall become the sole Annuitant. The Death Benefit
is calculated and is payable upon receipt of due Proof of
Death of the Annuitant as well as proof that the Annuitant
died prior to the Annuity Date. Upon receipt of this proof,
the Death Benefit will be paid within seven days, or as
soon thereafter as the Company has sufficient information
about the Beneficiary to make the payment. The Beneficiary
may receive the amount payable in a lump sum cash benefit
or under one of the Annuity Payment Options.
A lump sum cash benefit will equal the greater of: (a) the
Accumulated Value as of the date of due Proof of Death and
proof that the Annuitant died prior to the Annuity Date or
(b) the sum of Purchase Payments less the sum of all par-
tial withdrawals and premium taxes. An Annuity Payment will
be based on the greater of: (a) the Accumulated Value ten
Business Days prior to the Annuity Date elected by the Ben-
eficiary and approved by the Company or (b) the sum of Pur-
chase Payments less the sum of all partial withdrawals and
Premium Taxes. The Contract Owner may elect an Annuity Pay-
ment Option for the Beneficiary or, if no such election was
made by the Contract Owner and a cash benefit has not been
paid, the Beneficiary may make this election after the
Annuitant's death.
- --------------------------------------------------------------------------------
ANNUITY DATE The Contract Owner may specify an Annuity Date in the ap-
plication, which can be no later than the first day of the
month after the Annuitant's 85th birthday. If no Annuity
Date is specified in the application, the Annuitant will
begin receiving Annuity Payments on the first day of the
month after ten full years from the date of this Contract,
or the first day of the month which follows the Annuitant's
65th birthday, whichever is later. The Annuity Date is the
date that Annuity Payments are scheduled to commence under
the Contract, unless the Contract has been surrendered or
an amount has been paid as proceeds to the designated Bene-
ficiary prior to that date.
The Contract Owner may advance or defer the Annuity Date.
However, the Annuity Date may not be advanced to a date
prior to 30 days after the date of receipt of a written re-
quest or, without the Company's prior approval, deferred to
a date beyond the Annuitant's 85th birthday. An Annuity
Date may only be changed by written request during the
Annuitant's or Joint Annuitant's lifetime and must be made
at least 30 days before the then-scheduled Annuity Date.
The Annuity Date and Annuity Payment Options available for
Qualified Contracts may also be controlled by endorsements,
the plan or applicable law.
- --------------------------------------------------------------------------------
23
<PAGE>
ANNUITY PAYMENT All Annuity Payment Options (except the Designated Period
OPTIONS Annuity Option) are offered as "Variable Annuity Options."
This means that Annuity Payments, after the initial pay-
ment, will reflect the investment experience of the Portfo-
lio or Portfolios chosen by the Contract Owner. All Annuity
Payment Options are offered as "Fixed Annuity Options."
This means that the amount of each payment will be set on
the Annuity Date and will not change. If you choose a Fixed
Option, your investment will be moved out of the underlying
Vanguard Portfolios and into the general account of
Providian Life & Health Insurance Company. If you do not
wish to receive your payments on an annuity basis, you may
take a lump sum payment at anytime before the annuity date.
The lump sum value is equal to the Accumulation Value. The
following Annuity Payment Options are available under the
Contract:
LIFE ANNUITY--Available as either a Fixed or Variable Op-
tion. Monthly Annuity Payments are paid for the life of an
Annuitant, ceasing with the last Annuity Payment due prior
to the Annuitant's death.
JOINT AND LAST SURVIVOR ANNUITY--Available as either a
Fixed or Variable Option. Monthly Annuity Payments are paid
for the life of two Annuitants and thereafter for the life
of the survivor, ceasing with the last Annuity Payment due
prior to the survivor's death.
LIFE ANNUITY WITH PERIOD CERTAIN--Available as either a
Fixed or Variable Option. Monthly Annuity Payments are paid
for the life of an Annuitant, with a Period Certain of not
less than 120, 180, or 240 months, as elected.
INSTALLMENT OR UNIT REFUND LIFE ANNUITY--Available as ei-
ther a Fixed (Installment Refund) or Variable (Unit Refund)
Option. Monthly Annuity Payments are paid for the life of
an Annuitant, with a Period Certain determined by dividing
the Accumulated Value by the First Annuity Payment.
DESIGNATED PERIOD ANNUITY--Only available as a Fixed Op-
tion. Monthly Annuity Payments are paid for a Period Cer-
tain as elected, which may be from 10 to 30 years.
In the event that an Annuity Payment Option is not select-
ed, the Company will make monthly Annuity Payments that
will go on for as long as the Annuitant lives (120 payments
guaranteed) in accordance with the Life Annuity with Period
Certain Option and the annuity benefit sections of the Con-
tract. That portion of the Accumulated Value that has been
held in a Portfolio prior to the Annuity Date will be ap-
plied under a Variable Annuity Option based on the perfor-
mance of that Portfolio. Subject to approval by the Compa-
ny, the Contract Owner may select any other Annuity Payment
Option then being offered by the Company. Annuity Payments
are guaranteed to be not less than as provided by the Annu-
ity Tables for the first payment under a Variable Option
and each payment under a Fixed Option. The minimum monthly
payment, however, is $100 ($20 for Massachusetts Contract
Owners). If the Accumulated Value is less than $5,000, or
less than $2,000 for Texas and Massachusetts Contract Own-
ers, the Company has the right to pay that amount in a lump
sum. From time-to-time, the Company may require proof that
the Annuitant, Joint Annuitant, or Contract Owner is liv-
ing. Annuity Payment Options
24
<PAGE>
are not available to: (1) an assignee; or (2) any other
than a natural person, except with the consent of the Com-
pany.
The Company may, at the time of election of an Annuity Pay-
ment Option, offer more favorable rates in lieu of the
guaranteed rates specified in the Annuity Tables found in
the Contract.
The value of Variable Annuity Payments will reflect the in-
vestment experience of the chosen Portfolio. On or after
the Annuity Date, the Annuity Payment Option is irrevoca-
ble. Only one Annuity Option may be chosen from among those
made available by the Company per each Portfolio. The annu-
ity tables, which are contained in the Contract and are
used to calculate the value of Variable Annuity Payments,
are based on an assumed interest rate of 4%. If the actual
net investment experience exactly equals the assumed inter-
est rate, then the Variable Annuity Payments will remain
the same (equal to the first Annuity Payment). However, if
actual investment experience exceeds the assumed interest
rate, the Variable Annuity Payments will increase; con-
versely, they will decrease if the actual experience is
lower.
If an Annuity Payment Option is chosen that depends on the
continuation of the life of the Annuitant or of a Joint An-
nuitant, proof of birth date may be required before Annuity
Payments begin. For Annuity Payment Options involving life
income, the actual age of the Annuitant or of a Joint Annu-
itant will affect the amount of each payment. Since pay-
ments to older Annuitants are expected to be fewer in num-
ber, the amount of each Annuity Payment shall be greater.
If at the time of any Annuity Payment the Contract Owner
has not provided the Company with a written election not to
have federal income taxes withheld, the Company must by law
withhold such taxes from the taxable portion of such Annu-
ity Payment and remit that amount to the federal govern-
ment.
The value of all payments, both fixed and variable, will be
greater for shorter guaranteed periods than for longer
guaranteed periods, and greater for life annuities than for
joint and survivor annuities, because they are expected to
be made for a shorter period.
After the Annuity Date, the Contract Owner may change the
Portfolio funding the Variable Annuity Payments, either by
written request or by calling the Vanguard Variable Annuity
Center (1-800-462-2391). The method of computation of Vari-
able Annuity Payments is described in more detail in the
Statement of Additional Information.
------------------------------------------------------------
DEFERMENT OF PAYMENT
Payment of any cash withdrawal or lump-sum death benefit
due from the Separate Account will occur within seven days
from the date the election becomes effective, except that
the Company may be permitted to defer such payment if: (1)
the New York Stock Exchange is closed for other than usual
weekends or holidays, or trading on the Exchange is other-
wise restricted; or (2) an emergency exists as defined by
the SEC, or the SEC requires that trading be restricted; or
(3) the SEC permits a delay for the protection of Contract
Owners.
- --------------------------------------------------------------------------------
25
<PAGE>
FEDERAL TAX CONSIDERATIONS
INTRODUCTION The ultimate effect of federal income taxes on the amounts
paid for the Contract, on the investment returns on assets
held under a Contract, on Annuity Payments, and on the eco-
nomic benefits to the Contract Owner, Annuitant or Benefi-
ciary, depends on the Company's tax status and upon the tax
status of the individuals concerned. The following discus-
sion is general in nature and is not intended as tax ad-
vice. You should consult a tax adviser regarding the tax
consequences of purchasing a Contract. No attempt is made
to consider any applicable state or other tax laws. More-
over, the discussion is based upon the Company's under-
standing of the federal income tax laws as they are cur-
rently interpreted. No representation is made regarding the
likelihood of continuation of the federal income tax laws,
the Treasury Regulations, or the current interpretations by
the Internal Revenue Service. We reserve the right to make
uniform changes on the Contract to the extent necessary to
continue to qualify the Contract as an annuity. For a dis-
cussion of federal income taxes as they relate to the Fund,
please see the accompanying Prospectus for the Fund.
------------------------------------------------------------
TAXATION OF
ANNUITIES IN Section 72 of the Code governs taxation of annuities. In
GENERAL general, a Contract Owner is not taxed on increases in
value under a Contract until some form of withdrawal or
distribution is made under it. However, under certain cir-
cumstances, the increase in value may be subject to current
federal income tax. (See "Contracts Owned by Non-Natural
Persons" and "Diversification Standards", pages 28 and 29.)
Section 72 provides that the proceeds of a full or partial
withdrawal from a Contract prior to the Annuity Date will
be treated as taxable income to the extent the amounts held
under the Contract exceed the "investment in the Contract",
as that term is defined in the Code. The "investment in the
Contract" can generally be described as the cost of the
Contract, and generally constitutes all purchase payments
paid for the Contract less any amounts received under the
Contract that are excluded from the individual's gross in-
come. The taxable portion is taxed at ordinary income tax
rates. For purposes of this rule, a pledge or assignment of
a Contract is treated as a payment received on account of a
partial withdrawal of a Contract.
Upon receipt of a full or partial withdrawal or an Annuity
Payment under the Contract, you will be taxed if the value
of the Contract exceeds the investment in the Contract. Or-
dinarily, the taxable portion of such payments will be
taxed at ordinary income tax rates.
For Fixed Annuity Payments, in general, the taxable portion
of each payment is determined by using a formula known as
the "exclusion ratio", which establishes the ratio that the
investment in the Contract bears to the total expected
amount of Annuity Payments for the term of the Contract.
That ratio is then applied to each payment to determine the
non-taxable portion of the payment. The remaining portion
of each payment is taxed at ordinary income tax rates. For
Variable Annuity Payments, in general, the taxable portion
is determined by a formula that establishes a specific dol-
lar amount of each payment that is not taxed. The dollar
amount is determined by dividing the investment
26
<PAGE>
in the Contract by the total number of expected periodic
payments. The remaining portion of each payment is taxed at
ordinary income tax rates. Once the excludible portion of
Annuity Payments to date equals the investment in the Con-
tracts, the balance of the Annuity Payments will be fully
taxable.
Withholding of federal income taxes on all distributions
may be required unless the recipient elects not to have any
amounts withheld and properly notifies the Company of that
election.
With respect to amounts withdrawn or distributed before the
taxpayer reaches age 59 1/2, a penalty tax is imposed equal
to 10% of the taxable portion of amounts withdrawn or dis-
tributed. However, the penalty tax will not apply to with-
drawals: (i) made on or after the death of the Contract
Owner (or where the Contract Owner is not an individual,
the death of the primary Annuitant, who is defined as the
individual the events in whose life are of primary impor-
tance in affecting the timing and payment under the Con-
tract); (ii) attributable to the taxpayer's becoming disa-
bled within the meaning of Code Section 72(m)(7); (iii)
that are part of a series of substantially equal periodic
payments made at least annually for the life (or life ex-
pectancy) of the taxpayer, or joint lives (or joint life
expectancies) of the taxpayer and his Beneficiary; (iv)
from a qualified plan; (v) allocable to investment in the
Contract before August 14, 1982; (vi) under a qualified
funding asset (as defined in Code Section 130(d)); (vii)
under an immediate annuity contract as defined in Sec-
tion 72(u)(4); or (viii) that are purchased by an employer
on termination of certain types of qualified plans and that
are held by the employer until the employee separates from
service. Other tax penalties may apply to certain distribu-
tions as well as to certain contributions and other trans-
actions under a qualified contract.
If the penalty tax does not apply to a withdrawal as a re-
sult of the application of item (iii) above, and the series
of payments are subsequently modified (other than by reason
of death or disability), the tax for the year in which the
modification occurs will be increased by an amount (as de-
termined under Treasury Regulations) equal to the tax that
would have been imposed but for item (iii) above, plus in-
terest for the deferral period. The foregoing rule applies
if the modification takes place (a) before the close of the
period that is five years from the date of the first pay-
ment and after the taxpayer attains age 59 1/2, or (b) be-
fore the taxpayer reaches age 59 1/2.
------------------------------------------------------------
THE COMPANY'S The Company is taxed as a life insurance company under Part
TAX STATUS I of Subchapter L of the Code. Since the Separate Account
is not a separate entity from the Company and its opera-
tions form a part of the Company, it will not be taxed sep-
arately as a "regulated investment company" under
Subchapter M of the Code. Investment income and realized
capital gains on the assets of the Separate Account are re-
invested and taken into account in determining the Accumu-
lation Value. Under existing federal income tax law, the
Separate Account's investment income, including realized
net capital gains, is not taxed to the Company. The Company
reserves the right to make a deduction for taxes should
they be imposed with respect to such items in the future.
------------------------------------------------------------
27
<PAGE>
DISTRIBUTION-AT- In order to be treated as an annuity contract, a contract
DEATH RULES must, generally, provide the following two distribution
rules: (a) if any Contract Owner dies on or after the Annu-
ity Date and before the entire interest in the Contract has
been distributed, the remaining portion of such interest
must be distributed at least as quickly as the method in
effect on the Contract Owner's death; and (b) if any Con-
tract Owner dies before the Annuity Date, the entire inter-
est must generally be distributed within five years after
the date of death. To the extent such interest is payable
to a Designated Beneficiary, however, such interest may be
annuitized over the life of that Designated Beneficiary or
over a period not extending beyond the life expectancy of
that Beneficiary, so long as distributions commence within
one year after the Contract Owner's death. If the Desig-
nated Beneficiary is the spouse of the Contract Owner, the
Contract (together with the deferred tax on the accrued and
future income thereunder) may be continued unchanged in the
name of the spouse as Contract Owner. The term Designated
Beneficiary means the natural person named by the Contract
Owner as a beneficiary and to whom ownership of the Con-
tract passes by reason of the Contract Owner's death.
If the Contract Owner is not an individual, the "primary
Annuitant" (as defined under the Code) is considered the
Contract Owner. The primary Annuitant is the individual who
is of primary importance in affecting the timing or the
amount of payout under a Contract. In addition, when the
Contract Owner is not an individual, a change in the pri-
mary Annuitant is treated as the death of the Contract Own-
er.
Finally, in the case of Joint Contract Owners, the distri-
bution will be required at the death of the first of the
Contract Owners.
------------------------------------------------------------
TRANSFERS OF Any transfer of a non-qualified annuity Contract prior to
ANNUITY the Annuity Date for less than full and adequate considera-
CONTRACTS tion will generally trigger tax on the gain in the Contract
to the Contract Owner at the time of such transfer. The in-
vestment in the Contract of the transferee will be in-
creased by any amount included in the Contract Owner's in-
come. This provision, however, does not apply to those
transfers between spouses or incident to a divorce which
are governed by Code Section 1041(a).
------------------------------------------------------------
CONTRACTS OWNED Where the Contract is held by a non-natural person (for ex-
BY NON-NATURAL ample, a corporation), the Contract is generally not
PERSONS treated as an annuity contract for federal income tax pur-
poses, and the income on that Contract (generally the in-
crease in the net Accumulated Value less the payments) is
includible in taxable income each year. The rule does not
apply where the non-natural person is only a nominal owner
such as a trust or other entity acting as an agent for a
natural person. If an employer is the nominal owner of a
Contract, and the beneficial owners are employees, then the
Contract is not treated as being held by a non-natural per-
son. The rule also does not apply where the Contract is ac-
quired by the estate of a decedent, where the Contract is a
qualified funding asset for structured settlements, where
the Contract is purchased on behalf of an employee upon
termination of a qualified plan, and in the case of an im-
mediate annuity.
------------------------------------------------------------
28
<PAGE>
ASSIGNMENTS A transfer of ownership of a Contract, a collateral assign-
ment or the designation of an Annuitant or other Benefi-
ciary who is not also the Contract Owner may result in tax
consequences to the Contract Owner, Annuitant or Benefi-
ciary that are not discussed herein. A Contract Owner con-
templating such a transfer or assignment of a Contract
should contact a tax adviser with respect to the potential
tax effects of such a transaction.
------------------------------------------------------------
MULTIPLE All non-qualified annuity contracts issued by the same com-
CONTRACTS RULE pany (or affiliate) to the same Contract Owner during any
calendar year are to be aggregated and treated as one con-
tract for purposes of determining the amount includible in
the taxpayer's gross income. Thus, any amount received un-
der any Contract prior to the Contract's Annuity Date, such
as a partial withdrawal, will be taxable (and possibly sub-
ject to the 10% penalty tax) to the extent of the combined
income in all such contracts. The Treasury Department has
specific authority to issue regulations that prevent the
avoidance of Code Section 72(e) through the serial purchase
of annuity Contracts or otherwise. In addition, there may
be other situations in which the Treasury may conclude that
it would be appropriate to aggregate two or more Contracts
purchased by the same Contract Owner. Accordingly, a Con-
tract Owner should consult a tax adviser before purchasing
more than one Contract or other annuity contracts.
------------------------------------------------------------
DIVERSIFICATION To comply with certain diversification regulations (the
STANDARDS "Regulations"), which were issued in final form on March 2,
1989, under Code Section 817(h), after a start up period,
the Separate Account will be required to diversify its in-
vestments. The Regulations generally require that on the
last day of each quarter of a calendar year, no more than
55% of the value of the Separate Account is represented by
any one investment, no more than 70% is represented by any
two investments, no more than 80% is represented by any
three investments, and no more than 90% is represented by
any four investments. A "look-through" rule applies that
suggests that each Subaccount of the Separate Account will
be tested for compliance with the percentage limitations by
looking through to the assets of the Portfolio of the Fund
in which each such division invests. All securities of the
same issuer are treated as a single investment. As a result
of the 1988 Act, each government agency or instrumentality
will be treated as a separate issuer for purposes of those
limitations.
In connection with the issuance of temporary diversifica-
tion regulations in 1986, the Treasury announced that such
regulations did not provide guidance concerning the extent
to which Contract Owners may direct their investments to
particular divisions of a separate account. It is possible
that regulations or revenue rulings may be issued in this
area at some time in the future. It is not clear, at this
time, what these regulations or rulings would provide. It
is possible that when the regulations or rulings are is-
sued, the Contracts may need to be modified in order to re-
main in compliance. For these reasons, the Company reserves
the right to modify the Contracts, as necessary, to prevent
the Contract Owner from being considered the owner of as-
sets of the Separate Account.
29
<PAGE>
We intend to comply with the Regulations to assure that the
Contracts continue to be treated as annuity contracts for
federal income tax purposes.
------------------------------------------------------------
QUALIFIED Qualified Contracts to provide for retirement may generally
INDIVIDUAL be purchased only in connection with a "rollover" of funds
RETIREMENT from another individual retirement annuity (IRA) or quali-
ANNUITIES fied plan. IRA Contracts must contain special provisions
and are subject to limitations on contributions and the
timing of when distributions can be made. Tax penalties may
apply to contributions in excess of specified limits, loans
or reassignments, distributions that do not meet specified
requirements, or in other circumstances. Anyone desiring to
purchase a Qualified Contract should consult a personal tax
adviser.
- --------------------------------------------------------------------------------
GENERAL The Company retains the right, subject to any applicable
INFORMATION law, to make certain changes. The Company reserves the
right to eliminate the shares of any of the Portfolios and
ADDITIONS, to substitute shares of another Portfolio of the Fund, or
DELETIONS, OR of another registered open-end management investment compa-
SUBSTITUTIONS OF ny, if the shares of the Portfolios are no longer available
INVESTMENTS for investment, or, if in the Company's judgment, invest-
ment in any Portfolio would be inappropriate in view of the
purposes of the Separate Account. To the extent required by
the 1940 Act, substitutions of shares attributable to a
Contract Owner's interest in a Portfolio will not be made
until SEC approval has been obtained and the Contract Owner
has been notified of the change.
New Portfolios may be established when marketing, tax, in-
vestment, or other conditions so warrant. Any new Portfo-
lios will be made available to existing Contract Owners on
a basis to be determined by the Company. The Company may
also eliminate one or more Portfolios if marketing, tax,
investment or other conditions so warrant.
In the event of any such substitution or change, the Com-
pany may, by appropriate endorsement, make such changes in
the Contracts as may be necessary or appropriate to reflect
such substitution or change. Furthermore, if deemed to be
in the best interests of persons having voting rights under
the Contracts, the Separate Account may be operated as a
management company under the 1940 Act or any other form
permitted by law, may be deregistered under such Act in the
event such registration is no longer required, or may be
combined with one or more other separate accounts.
------------------------------------------------------------
DISTRIBUTOR OF
THE CONTRACTS The Vanguard Group, Inc., through its wholly-owned subsidi-
ary, Vanguard Marketing Corp., is the principal distributor
of the Contract. For these services, the Fund paid a fee of
less than .02% of the Fund's average net assets for the
1995 fiscal year. This fee is guaranteed not to exceed .20%
of the Fund's average month-end net assets. A complete de-
scription of these services is found in the "Management of
the Fund" section of the Fund's Prospectus and in the
Fund's Statement of Additional Information.
------------------------------------------------------------
30
<PAGE>
VOTING RIGHTS The Fund does not hold regular meetings of shareholders.
The Directors of the Fund may call special meetings of
shareholders as may be required by the 1940 Act or other
applicable law. To the extent required by law, the Portfo-
lio shares held in the Separate Account will be voted by
the Company at shareholder meetings of the Fund in accor-
dance with instructions received from persons having voting
interests in the corresponding Portfolio. Fund shares as to
which no timely instructions are received or shares held by
the Company as to which Contract Owners have no beneficial
interest will be voted in proportion to the voting instruc-
tions that are received with respect to all Contracts par-
ticipating in that Portfolio. Voting instructions to ab-
stain on any item to be voted upon will be applied on a pro
rata basis to reduce the votes eligible to be cast.
The number of votes that are available to a Contract Owner
will be calculated separately for each Portfolio of the
Separate Account. That number will be determined by apply-
ing his or her percentage interest, if any, in a particular
Portfolio to the total number of votes attributable to the
Portfolio.
Prior to the Annuity Date, the Contract Owner holds a vot-
ing interest in each Portfolio to which the Accumulated
Value is allocated. The number of votes which are available
to a Contract Owner will be determined by dividing the Ac-
cumulated Value attributable to a Portfolio by the net as-
set value per share of the applicable Portfolio. After the
Annuity Date, the person receiving Annuity Payments under
any variable annuity option has the voting interest. The
number of votes after the Annuity Date will be determined
by dividing the reserve for such Contract allocated to the
Portfolio by the net asset value per share of the corre-
sponding Portfolio. After the Annuity Date, the votes at-
tributable to a Contract decrease as the reserves allocated
to the Portfolio decrease. In determining the number of
votes, fractional shares will be recognized.
The number of votes of the Portfolio that are available
will be determined as of the date coincident with the date
established by that Portfolio for determining shareholders
eligible to vote at the meeting of the Fund. Voting in-
structions will be solicited by written communication prior
to such meeting in accordance with procedures established
by the Fund.
------------------------------------------------------------
AUDITORS Ernst & Young LLP serves as independent auditors for the
Separate Account and the Company and will audit their fi-
nancial statements annually.
------------------------------------------------------------
LEGAL MATTERS Jorden Burt Berenson & Johnson LLP of Washington, DC, has
provided legal advice relating to the federal securities
laws applicable to the issue and sale of the Contracts. All
matters of Missouri law pertaining to the validity of the
Contract and the Company's right to issue such Contracts
have been passed upon by Kimberly A. Scouller, Esquire, on
behalf of the Company.
- --------------------------------------------------------------------------------
31
<PAGE>
TABLE OF CONTENTS FOR THE VANGUARD VARIABLE ANNUITY PLAN CONTRACT STATEMENT OF
ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE CONTRACT............................................................. 2
Computation of Variable Annuity Income Payments......................... 2
Exchanges............................................................... 3
Joint Annuitant......................................................... 3
GENERAL MATTERS.......................................................... 3
Non-Participating....................................................... 3
Misstatement of Age or Sex.............................................. 3
Assignment.............................................................. 4
Annuity Data............................................................ 4
Annual Report........................................................... 4
Incontestability........................................................ 4
Ownership............................................................... 4
DISTRIBUTION OF THE CONTRACT............................................. 4
PERFORMANCE INFORMATION.................................................. 4
Money Market Subaccount Yields.......................................... 5
30-Day Yield for Non-Money Market Subaccounts........................... 5
Average Annual Total Return for Non-Money Market Subaccounts............ 5
SAFEKEEPING OF ACCOUNT ASSETS............................................ 7
THE COMPANY.............................................................. 7
STATE REGULATION......................................................... 7
RECORDS AND REPORTS...................................................... 7
LEGAL PROCEEDINGS........................................................ 8
OTHER INFORMATION........................................................ 8
FINANCIAL STATEMENTS..................................................... 8
Audited Financial Statements............................................ 8
</TABLE>
32
<PAGE>
PROVIDIAN LIFE & HEALTH INSURANCE COMPANY
SEPARATE ACCOUNT IV
STATEMENT OF ADDITIONAL INFORMATION
FOR THE
VANGUARD VARIABLE ANNUITY PLAN CONTRACT
OFFERED BY
PROVIDIAN LIFE & HEALTH INSURANCE COMPANY
(A MISSOURI STOCK COMPANY)
ADMINISTRATIVE OFFICES
20 MOORES ROAD
FRAZER, PENNSYLVANIA 19355
----------------
This Statement of Additional Information expands upon subjects discussed in
the current Prospectus for the Vanguard Variable Annuity Plan Contract (the
"Contract") offered by Providian Life & Health Insurance Company (the "Compa-
ny"). You may obtain a copy of the Prospectus dated April 30, 1996; by calling
1-800-522-5555, or writing to Vanguard Variable Annuity Plan, P.O. Box 2600,
Valley Forge, Pa 19482. Terms used in the current Prospectus for the Contract
are incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACT.
APRIL 30, 1996
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
----------------- ----
<S> <C>
THE CONTRACT............................................................. B-2
Computation of Variable Annuity Income Payments......................... B-2
Exchanges............................................................... B-3
Joint Annuitant......................................................... B-3
GENERAL MATTERS.......................................................... B-3
Non-Participating....................................................... B-3
Misstatement of Age or Sex.............................................. B-3
Assignment.............................................................. B-4
Annuity Data............................................................ B-4
Annual Report........................................................... B-4
Incontestability........................................................ B-4
Ownership............................................................... B-4
DISTRIBUTION OF THE CONTRACT............................................. B-4
PERFORMANCE INFORMATION.................................................. B-4
Money Market Subaccount Yields.......................................... B-5
30-Day Yield for Non-Money Market Subaccounts........................... B-5
Average Annual Total Return for Non-Money Market Subaccounts............ B-5
SAFEKEEPING OF ACCOUNT ASSETS............................................ B-7
THE COMPANY.............................................................. B-7
STATE REGULATION......................................................... B-7
RECORDS AND REPORTS...................................................... B-7
LEGAL PROCEEDINGS........................................................ B-8
OTHER INFORMATION........................................................ B-8
FINANCIAL STATEMENTS..................................................... B-8
Audited Financial Statements............................................ B-8
</TABLE>
B-1
<PAGE>
THE CONTRACT
In order to supplement the description in the Prospectus, the following pro-
vides additional information about the Contract which may be of interest to
Contract Owners.
COMPUTATION OF VARIABLE ANNUITY INCOME PAYMENTS
Variable Annuity Income Payments are computed as follows. First, the Accumu-
lated Value (or the portion of the Accumulated Value used to provide variable
payments) is applied under the Annuity Table contained in the Contract corre-
sponding to the Annuity Option elected by the Contract Owner and based on an
assumed interest rate of 4%. This will produce a dollar amount which is the
first monthly payment. The Company may, at the time Annuity Income Payments
are computed, offer more favorable rates in lieu of the guaranteed rates spec-
ified in the Annuity Table.
The amount of each Annuity Payment after the first is determined by means of
Annuity Units. The number of Annuity Units is determined by dividing the first
Annuity Payment by the Annuity Unit value for the selected Subaccount ten
Business Days prior to the Annuity Date. The number of Annuity Units for the
Subaccount then remains fixed, unless an exchange of Annuity Units (as set
forth below) is made. After the first Annuity Payment, the dollar amount of
each subsequent Annuity Payment is equal to the number of Annuity Units multi-
plied by the Annuity Unit value for the Subaccount ten Business Days before
the due date of the Annuity Payment.
The Annuity Unit value for each Subaccount was initially established at
$10.00 on the day money was first deposited in that Subaccount. The Annuity
Unit value for any subsequent Business Day is equal to (a) times (b) times
(c), where:
(a) the Annuity Unit value for the immediately preceding Business Day;
(b) the Net Investment Factor for the day;
(c) the investment result adjustment factor (.99989255 per day), which recog-
nizes an assumed interest rate of 4% per year used in determining the An-
nuity Payment amounts.
The Net Investment Factor is a factor applied to a Subaccount that reflects
daily changes in the value of the Subaccount due to:
(a) any increase or decrease in the value of the Subaccount due to investment
results;
(b) a daily charge for the mortality and expense risks assumed by the Company
corresponding to an annual rate according to the following schedule:
<TABLE>
<CAPTION>
NET ASSETS* RATE
----------- ------
<S> <C>
First $1.5 Billion................................................... 0.375%
Over $1.5 Billion.................................................... 0.300%
</TABLE>
* Based on the combined net assets of the Separate Account and Separate Ac-
count B of First Providian Life & Health Insurance Company.
(c) a daily charge for the cost of administering the Contract corresponding
to an annual charge of .10%.
(d) an annual charge of $25 for maintenance of Contracts valued at less than
$25,000 at time of initial purchase and on the last business day of each
year.
The Annuity Tables contained in the Contract are based on the 1983 Table "A"
Mortality Table projected for mortality improvement to the year 2000 using
Projection Scale G and an interest rate of 4% a year; except that in Massachu-
setts and Montana, the Annuity Tables contained in
B-2
<PAGE>
the Contract are based on a 60% female/40% male blending of the above, for all
annuitants of either gender.
EXCHANGES
After the Annuity Date, if a Variable Annuity Option has been chosen, the
Contract Owner may, by making a written request or by calling the Variable An-
nuity Center, exchange the current value of the existing Subaccount to Annuity
Units of any other Subaccount then available. The request for the exchange
must be received, however, at least 10 Business Days prior to the first pay-
ment date on which the exchange is to take effect. This exchange shall result
in the same dollar amount of Annuity Payment on the date of exchange. The Con-
tract Owner is limited to two substantive exchanges (at least 30 days apart)
in any Contract Year, and the value of the Annuity Units exchanged must pro-
vide a monthly Annuity Payment of at least $100 at the time of the exchange.
Exchanges will be made using the Annuity Unit value for the Subaccounts on
the date the request for exchange is received by the Administrator. On the ex-
change date, the Company will: establish a value for the current Subaccount by
multiplying the Annuity Unit value by the number of Annuity Units in the ex-
isting Subaccount, and compute the number of Annuity Units for the new
Subaccount by dividing the Annuity Unit value of the new Subaccount into the
value previously calculated for the existing Subaccount.
JOINT ANNUITANT
The Contract Owner may, in the Contract Application or by written request at
least 30 days prior to the Annuity Date, name a Joint Annuitant. Such Joint
Annuitant must meet the Company's underwriting requirements. If approved by
the Company, the Joint Annuitant shall be named on the Contract Schedule or
added by endorsement. An Annuitant or Joint Annuitant may not be replaced.
The Annuity Date shall be determined based on the date of birth of the Annui-
tant. If the Annuitant or Joint Annuitant dies prior to the Annuity Date, the
survivor shall be the sole Annuitant. Another Joint Annuitant may not be des-
ignated. Payment to a Beneficiary shall not be made until the death of the
surviving Annuitant.
GENERAL MATTERS
NON-PARTICIPATING
The Contracts are non-participating. No dividends are payable and the Con-
tracts will not share in the profits or surplus earnings of the Company.
MISSTATEMENT OF AGE OR SEX
The Company may require proof of age and sex before making Annuity Payments.
If the Annuitant's stated age, sex or both in the Contract are incorrect, the
Company will change the Annuity Benefits payable to those which the Purchase
Payments would have purchased for the correct age and sex. In the case of cor-
rection of the stated age or sex after payments have commenced, the Company
will: (1) in the case of underpayment, pay the full amount due with the next
payment; or (2) in the case of overpayment, deduct the amount due from one or
more future payments.
B-3
<PAGE>
ASSIGNMENT
Any Nonqualified Contract may be assigned by the Contract Owner prior to the
Annuity Date and during the Annuitant's lifetime. The Company is not responsi-
ble for the validity of any assignment. No assignment will be recognized until
the Company receives written notice thereof. The interest of any Beneficiary
which the assignor has the right to change shall be subordinate to the inter-
est of an assignee. Any amount paid to the assignee shall be paid in one sum,
notwithstanding any settlement agreement in effect at the time assignment was
executed. The Company shall not be liable as to any payment or other settle-
ment made by the Company before receipt of written notice.
ANNUITY DATA
The Company will not be liable for obligations which depend on receiving in-
formation from a Payee until such information is received in a form satisfac-
tory to the Company.
ANNUAL REPORT
Once each Contract Year, the Company will send the Contract Owner an annual
report of the current Accumulated Value allocated to each Subaccount; and any
Purchase Payments, charges, exchanges or withdrawals during the year. This re-
port will also give the Contract Owner any other information required by law
or regulation. The Contract Owner may ask for a report like this at any time.
INCONTESTABILITY
This Contract is incontestable from the Contract Date, subject to the "Mis-
statement of Age or Sex" provision.
OWNERSHIP
The Owner of the Contract on the Contract Date is the Annuitant, unless oth-
erwise specified in the application. The Owner may specify a new Owner by
written notice at any time thereafter. The term Owner also includes any person
named as a Joint Owner. A Joint Owner shares ownership in all respects with
the Owner. During the Annuitant's lifetime all rights and privileges under
this Contract may be exercised solely by the Owner. Upon the death of the Own-
er(s), Ownership is retained by the surviving Joint Owner or passes to the
Owner's Designated Beneficiary, if one has been designated by the Owner. If no
Owner's Designated Beneficiary is designated or if no Owner's Designated Bene-
ficiary is living, the Owner's Designated Beneficiary is the Owner's estate.
From time to time the Company may require proof that the Owner is still liv-
ing.
DISTRIBUTION OF THE CONTRACT
The Vanguard Group, Inc. through its wholly-owned subsidiary, Vanguard Mar-
keting Corporation, will be the principal distributor of the Contracts. For
these services, the Fund paid a fee .02% of the Funds' average net assets for
its 1995 fiscal year. This fee is guaranteed not to exceed .20% of the Fund's
average month-end net assets. A complete description of these services is
found in the "Management of the Fund" section of the Fund's Prospectus and in
the Fund's Statement of Additional Information.
PERFORMANCE INFORMATION
Performance information for the Subaccounts including the yield and effective
yield of the Money Market Subaccount, the yield of the remaining Subaccounts,
and the total return of all Subaccounts, may appear in reports or promotional
literature to current or prospective Contract Owners.
B-4
<PAGE>
MONEY MARKET SUBACCOUNT YIELDS
Current yield for the Money Market Subaccount will be based on the change in
the value of a hypothetical investment (exclusive of capital changes) over a
particular 7-day period, less a pro-rata share of Subaccount expenses accrued
over that period (the "base-period"), and stated as a percentage of the in-
vestment at the start of the base period (the "base period return"). The base
period return is then annualized by multiplying by 365/7, with the resulting
yield figure carried to at least the nearest hundredth of one percent. Calcu-
lation of "effective yield" begins with the same "base period return" used in
the calculation of yield, which is then annualized to reflect weekly com-
pounding pursuant to the following formula:
Effective Yield = [((Base Period Return) +1) /3//6//5///7/]-1
The yield of the Money Market Subaccount for the 7-day period ended December
29, 1995, was 5.02%.
30-DAY YIELD FOR NON-MONEY MARKET SUBACCOUNTS
Quotations of yield for the remaining Subaccounts will be based on all in-
vestment income per Unit earned during a particular 30-day period, less ex-
penses accrued during the period ("net investment income"), and will be com-
puted by dividing net investment income by the value of a Unit on the last day
of the period, according to the following formula:
YIELD = 2[(a-b + 1)/6/ - 1]
____
cXd
Where:
[a] equals the net investment income earned during the period by the Series
attributable to shares owned by a Subaccount
[b] equals the expenses accrued for the period (net of reimbursements)
[c] equals the average daily number of Units outstanding during the period
[d] equals the maximum offering price per Accumulation Unit on the last day
of the period
Yield on the Subaccount is earned from the increase in net asset value of
shares of the Series in which the Subaccount invests and from dividends de-
clared and paid by the Series, which are automatically reinvested in shares of
the Series.
The yield of each Subaccount for the 30-day period ended December 29, 1995,
is set forth below. Yields are calculated daily for each Subaccount. Premiums
and discounts on asset-backed securities are not amortized. The High Yield
Bond and Small Company Growth Subaccounts had no operations during the period.
<TABLE>
<S> <C>
High-Grade Bond Subaccount............................................. 5.40%
Balanced Subaccount.................................................... 3.27%
Equity Index Subaccount................................................ 1.60%
Equity Income Subaccount............................................... 3.06%
Growth Subaccount...................................................... 0.81%
International Subaccount............................................... --
High Yield Bond Subaccount............................................. N/A
Small Company Growth Subaccount........................................ N/A
</TABLE>
AVERAGE ANNUAL TOTAL RETURN FOR NON-MONEY MARKET SUBACCOUNTS
Quotations of average annual total return for any Subaccount will be ex-
pressed in terms of the average annual compounded rate of return of a hypo-
thetical investment in a Contract over a period of one, five and 10 years (or,
if less, up to the life of the Subaccount), calculated pursuant to the formu-
la:
P(1 + T)n = ERV
B-5
<PAGE>
Where:
(1) [P] equals a hypothetical Initial Purchase Payment of $1,000
(2) [T] equal an average annual total return
(3) [n] equals the number of years
(4) [ERV] equals the ending redeemable value of a hypothetical $1,000 Pur-
chase Payment made at the beginning of the period (or fractional portion
thereof)
The average annual total return of each for one year and the period since in-
ception, is set forth below:
<TABLE>
<CAPTION>
YEAR ENDED SINCE
12/29/95 INCEPTION*
---------- ----------
<S> <C> <C>
High-Grade Bond Subaccount............................. 17.47% 8.17%
Balanced Subaccount.................................... 31.76% 12.03%
Equity Index Subaccount................................ 36.67% 13.49%
Equity Income Subaccount............................... 36.19% 14.76%
Growth Subaccount...................................... 37.62% 17.38%
International Subaccount............................... 15.31% 10.33%
High Yield Bond Subaccount............................. -- --
Small Company Growth Subaccount........................ -- --
</TABLE>
- --------
* Since Inception:
Equity Index Subaccount and High-Grade Bond Subaccount--April 29, 1991
Balanced Subaccount--May 23, 1991
Equity Income Subaccount and Growth Subaccount--June 7, 1993
International Subaccount--June 3, 1994
High Yield Bond Subaccount and Small Company Growth Subaccount--June 3,
1996
All total return figures reflect the deduction of the administrative charge,
and the mortality and expense risk charge. The SEC requires that an assumption
be made that the Contract Owner surrenders the entire Contract at the end of
the 1, 5 and 10 year periods (or, if less, up to the life of the Subaccount)
for which performance is required to be calculated.
Performance information for a Subaccount may be compared, in reports and pro-
motional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P
500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market Institu-
tional Averages, or other indices that measure performance of a pertinent
group of securities so that investors may compare a Subaccount's results with
those of a group of securities widely regarded by investors as representative
of the securities markets in general; (ii) other groups of variable annuity
separate accounts or other investment products tracked by Lipper Analytical
Services, a widely-used independent research firm which ranks mutual funds and
other investment companies by overall performance, investment objectives, and
assets, or tracked by other services, companies, publications, or persons who
rank such investment companies on overall performance or other criteria; and
(iii) the Consumer Price Index (measure for inflation) to assess the real rate
of return from an investment in the Contract. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect deductions for adminis-
trative and management costs and expenses.
Performance information for any Subaccount reflects only the performance of a
hypothetical Contract under which Accumulation Value is allocated to a
Subaccount during a particular time period on which the calculations are
based. Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the portfolio of the
Fund in which the Subaccount invests, and the market conditions during the
given time period, and should not be considered as a representation of what
may be achieved in the future.
B-6
<PAGE>
Reports and marketing materials may, from time to time, include information
concerning the rating of Providian Life & Health Insurance Company as deter-
mined by A.M. Best, Moody's, Standard & Poor's or other recognized rating
services. Reports and promotional literature may also contain other informa-
tion including (i) the ranking of any Subaccount derived from rankings of
variable annuity separate accounts or other investment products tracked by
Lipper Analytical Services or by other rating services, companies, publica-
tions, or other persons who rank separate accounts or other investment prod-
ucts on overall performance or other criteria, and (ii) the effect of tax-de-
ferred compounding on a Subaccount's investment returns, or returns in gener-
al, which may be illustrated by graphs, charts, or otherwise, and which may
include a comparison, at various points in time, of the return from an invest-
ment in a Contract (or returns in general) on a tax-deferred basis (assuming
one or more tax rates) with the return on a taxable basis.
SAFEKEEPING OF ACCOUNT ASSETS
Title to assets of the Separate Account is held by the Company. The assets
are kept physically segregated and held separate and apart from the Company's
general account assets. Records are maintained of all purchases and redemp-
tions of eligible Portfolio shares held by each of the Subaccounts.
THE COMPANY
Effective July 1, 1995, National Home Life Assurance Company changed it name
to Providian Life and Health Insurance Company. Providian Corporation owns a
4% interest, Commonwealth Life Insurance Company owns a 61% interest, Peoples
Security Life Insurance Company owns a 15% interest and Capital Liberty, L.P.
owns a 20% interest in the Company. A 5% interest in Capital Liberty, L.P. is
owned by Providian Corporation, which is the general partner, and 76% and 19%
interests, respectively, are held by two limited partners, Commonwealth Life
Insurance Company and Peoples Security Life Insurance Company, which are both
wholly owned by Providian Corporation.
STATE REGULATION
The Company is a stock life insurance company organized under the laws of
Missouri, and is subject to regulation by the Missouri State Department of In-
surance. An annual statement is filed with the Missouri Commissioner of Insur-
ance on or before March 1 of each year covering the operations and reporting
on the financial condition of the Company as of December 31 of the preceding
calendar year. Periodically, the Missouri Commissioner of Insurance examines
the financial condition of the Company, including the liabilities and reserves
of the Separate Account.
In addition, the Company is subject to the insurance laws and regulations of
all the states where it is licensed to operate. The availability of certain
contract rights and provisions depends on state approval and/or filing and re-
view processes. Where required by state law or regulation, the Contracts will
be modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the Separate Account will be maintained
by the Company or by its Administrator. As presently required by the Invest-
ment Company Act of 1940 and
B-7
<PAGE>
regulations promulgated thereunder, the Company will mail to all Contract Own-
ers at their last known address of record, at least semiannually, reports con-
taining such information as may be required under that Act or by any other ap-
plicable law or regulation.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. The Company is not in-
volved in any litigation that is of material importance in relation to its to-
tal assets or that relates to the Separate Account.
OTHER INFORMATION
A Registration Statement has been filed with the Securities and Exchange Com-
mission, under the Securities Act of 1933 as amended, with respect to the Con-
tracts discussed in this Statement of Additional Information. Not all of the
information set forth in the Registration Statement, amendments and exhibits
thereto has been included in this Statement of Additional Information. State-
ments contained in this Statement of Additional Information concerning the
content of the Contracts and other legal instruments are intended to be summa-
ries. For a complete statement of the terms of these documents, reference
should be made to the instruments filed with the Securities and Exchange Com-
mission.
FINANCIAL STATEMENTS
The audited financial statements of the Separate Account for the years ended
December 31, 1995 and December 31, 1994, respectively, including the Report of
Independent Auditors thereon, are included in this Statement of Additional In-
formation. The audited statutory-basis financial statements of the Company for
the years ended December 31, 1995 and December 31, 1994, respectively, includ-
ing the Report of Independent Auditors thereon, which are also included in
this Statement of Additional Information, should be distinguished from the fi-
nancial statements of the Separate Account and should be considered only as
bearing on the ability of the Company to meet its obligations under the Con-
tracts. They should not be considered as bearing on the investment performance
of the assets held in the Separate Account.
B-8
<PAGE>
Financial Statements
Providian Life and Health Insurance
Company Separate Account IV
Years ended December 31, 1995 and 1994
with Report of Independent Auditors
<PAGE>
Providian Life and Health Insurance Company Separate Account IV
Financial Statements
Years ended December 31, 1995 and 1994
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors.............................. 1
Audited Financial Statements
Statements of Assets and Liabilities........................ 2
Statements of Operations.................................... 4
Statements of Changes in Net Assets......................... 6
Notes to Financial Statements............................... 8
</TABLE>
<PAGE>
Report of Independent Auditors
Contract Holders
Providian Life and Health Insurance Company Separate Account IV
We have audited the accompanying statements of assets and liabilities of
Providian Life and Health Insurance Company Separate Account IV (comprising the
Money Market, High-Grade Bond, Balanced, Equity Index, Growth, Equity Income,
and International Subaccounts) as of December 31, 1995 and 1994, and the related
statements of operations and changes in net assets for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995 and 1994, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
subaccounts constituting the Providian Life and Health Insurance Company
Separate Account IV at December 31, 1995 and 1994, and the results of their
operations and changes in their net assets for the years then ended in
conformity with generally accepted accounting principles.
/s/ Ernst & Young
Louisville, Kentucky
April 23, 1996
1
<PAGE>
Providian Life and Health Insurance Company Separate Account IV
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
------------------------------------
<S> <C> <C>
ASSETS
Investments in Vanguard Variable Insurance Fund:
Money Market Portfolio (1995 and 1994, respectively:
217,738,607.700 and 174,443,889.560 shares at net asset
value of $1.00 per share; cost $217,738,608 and $174,443,890) $ 217,738,608 $174,443,890
High-Grade Bond Portfolio (1995 and 1994, respectively:
11,656,837.206 and 8,343,973.030 shares at net asset value
of $10.75 and $9.71 per share; cost $120,647,973 and
$86,549,508) 125,311,000 81,019,978
Balanced Portfolio (1995 and 1994, respectively:
20,618,768.217 and 19,187,012.921 shares at net asset
value of $13.95 and $10.98 per share; cost $234,102,665
and $212,478,544) 287,631,817 210,673,402
Equity Index Portfolio (1995 and 1994, respectively:
18,078,521.279 and 14,786,913.150 shares at net asset
value of $16.30 and $12.24 per share; cost $229,332,072
and $174,389,382) 294,679,897 180,991,817
Growth Portfolio (1995 and 1994 respectively:
12,199,317.112 and 8,079,582.533 shares at net asset value
of $14.67 and $10.87 per share; cost $142,004,170 and
$84,341,426) 178,963,982 87,825,062
Equity Income Portfolio (1995 and 1994 respectively:
8,098,632.631 and 6,445,509.476 shares at net asset value
of $12.91 and $9.74 per share; cost $85,429,290 and
$65,094,926) 104,553,347 62,779,262
International Portfolio (1995 and 1994 respectively:
8,245,565.227 and 6,839,329.026 shares at net asset value
of $11.54 and $10.10 per share; cost $86,425,822 and
$69,746,847) 95,153,823 69,077,223
-------------------------------------
1,304,032,474 866,810,634
Amounts due from Providian Life and Health Insurance Company 1,305,118 --
-------------------------------------
TOTAL ASSETS 1,305,337,592 866,810,634
LIABILITIES
Amounts due to Providian Life and Health Insurance Company 406,906 298,317
Amounts due to the Vanguard Group, Inc. -- 51,584
NET ASSETS $1,304,930,686 $866,460,733
=====================================
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
----------------------------------
<S> <C> <C>
NET ASSETS ATTRIBUTABLE TO VARIABLE ANNUITY CONTRACT OWNERS
Money Market Subaccount (1995 and 1994, respectively: accumulation
units outstanding 183,867,044.733 and 154,414,727.137; unit
value $1.190771 and $1.130419) $ 218,943,545 $174,553,341
High-Grade Bond Subaccount (1995 and 1994, respectively:
accumulation units outstanding 8,684,285.622 and
6,589,365.136; unit value $14.436898 and $12.289960) 125,374,146 80,983,034
Balanced Subaccount (1995 and 1994, respectively:
accumulation units outstanding 17,020,904.719 and
16,428,575.298; unit value $16.884656 and $12.814549) 287,392,121 210,524,783
Equity Index Subaccount (1995 and 1994, respectively:
accumulation units outstanding 16,292,023.678 and
13,676,091.207; unit value $18.073261 and $13.223746) 294,449,996 180,849,156
Growth Subaccount (1995 and 1994, respectively:
accumulation units outstanding 11,856,793.774 and
8,004,469.507; unit value $15.089461 and $10.964223) 178,912,627 87,762,789
Equity Income Subaccount (1995 and 1994, respectively:
accumulation units outstanding 7,354,576.945 and
6,088,771.702; unit value $14.239424 and $10.303993) 104,724,939 62,738,661
International Subaccount (1995 and 1994, respectively:
accumulation units outstanding 8,146,285.194 and
6,817,666.179; unit value $11.678122 and $10.127948) 95,133,312 69,048,969
------------------------------------
NET ASSETS ATTRIBUTABLE TO VARIABLE ANNUITY CONTRACT OWNERS $1,304,930,686 $866,460,733
====================================
</TABLE>
See accompanying notes.
3
<PAGE>
PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY SEPARATE ACCOUNT IV
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Money High-Grade Equity Equity
Market Bond Balanced Index Growth Income International Total
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $11,204,406 $ 6,609,782 $ 9,915,934 $ 7,603,005 $ 3,903,520 $ 3,632,740 $1,219,138 $ 44,088,525
Expenses:
Mortality and expense
risk and administrative
charges 1,015,942 451,324 1,463,934 1,363,951 701,788 222,931 425,400 5,645,270
--------------------------------------------------------------------------------------------------------
Net investment income 10,188,464 6,158,458 8,452,000 6,239,054 3,201,732 3,409,809 793,738 38,443,255
Realized and unrealized
gain on investments:
Net realized gain
from investment
transactions:
Proceeds from sales 229,967,188 30,654,842 45,657,519 39,754,640 23,901,774 16,524,319 27,209,957 413,670,239
Cost of investments
sold 229,967,188 30,645,358 41,884,579 33,545,855 20,112,614 15,351,255 26,350,573 397,857,422
---------------------------------------------------------------------------------------------------------
- 9,484 3,772,940 6,208,785 3,789,160 1,173,064 859,384 15,812,817
Net unrealized
appreciation
(depreciation) of
investments:
At end of year - 4,663,027 53,529,152 65,347,825 36,959,812 19,124,057 8,728,001 188,351,874
At beginning of year - (5,529,530) (1,805,142) 6,602,435 3,483,636 (2,315,664) (669,624) (233,889)
---------------------------------------------------------------------------------------------------------
- 10,192,557 55,334,294 58,745,390 33,476,176 21,439,721 9,397,625 188,585,763
---------------------------------------------------------------------------------------------------------
Net gain on investments - 10,202,041 59,107,234 64,954,175 37,265,336 22,612,785 10,257,009 204,398,580
---------------------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations $ 10,188,464 $16,360,499 $67,559,234 $71,193,229 $40,467,068 $26,022,594 $11,050,747 $242,841,835
=========================================================================================================
</TABLE>
See accompanying notes.
4
<PAGE>
PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY SEPARATE ACCOUNT IV
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Money High-Grade Equity Equity Inter-
Market Bond Balanced Index Growth Income national Total
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ 6,372,462 $ 4,983,498 $ 8,784,643 $ 4,591,959 $ 817,598 $ 2,749,839 $ 378,739 $ 28,678,738
Expenses:
Mortality and expense
risk and administrative
charges 795,232 426,594 1,154,099 975,934 384,784 355,114 163,898 4,255,655
--------------------------------------------------------------------------------------------------------
Net investment income 5,577,230 4,556,904 7,630,544 3,616,025 432,814 2,394,725 214,841 24,423,083
Realized and unrealized
gain (loss) on
investments:
Net realized gain
(loss) from investment
transactions:
Proceeds from sales 246,154,610 36,731,381 66,971,292 49,514,134 23,890,958 39,758,697 8,870,355 471,891,427
Cost of investments
sold 246,154,610 38,193,870 66,729,340 46,835,556 23,586,273 41,086,553 8,761,952 471,348,154
--------------------------------------------------------------------------------------------------------
- (1,462,489) 241,952 2,678,578 304,685 (1,327,856) 108,403 543,273
Net unrealized
appreciation
(depreciation) of
investments:
At end of year - (5,529,530) (1,805,142) 6,602,435 3,483,636 (2,315,664) (669,624) (233,889)
At beginning of year - 252,641 8,935,075 11,935,571 1,462,740 35,122 - 22,621,149
--------------------------------------------------------------------------------------------------------
(5,782,171) (10,740,217) (5,333,136) 2,020,896 (2,350,786) (669,624) (22,855,038)
--------------------------------------------------------------------------------------------------------
Net gain (loss) on
investments - (7,244,660) (10,498,265) (2,654,558) 2,325,581 (3,678,642) (561,221) (22,311,765)
--------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations $ 5,577,230 $(2,687,756) $(2,867,721) $ 961,467 $2,758,395 $(1,283,917) $ (346,380) $ 2,111,318
========================================================================================================
</TABLE>
See accompanying notes.
5
<PAGE>
Providian Life and Health Insurance Company Separate Account IV
Statement of Changes in Net Assets
Year ended December 31, 1995
<TABLE>
<CAPTION>
Money High-Grade Equity Equity
Market Bond Balanced Index Growth Income
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1995 $174,553,341 $80,983,034 $210,524,783 $180,849,156 $ 87,762,789 $ 62,738,661
Increase in net assets resulting
from operations:
Net investment income 10,188,464 6,158,458 8,452,000 6,239,054 3,201,732 3,409,809
Net realized gain on
investments - 9,484 3,772,940 6,208,785 3,789,160 1,173,064
Net unrealized appreciation
of investments - 10,192,557 55,334,294 58,745,390 33,476,176 21,439,721
-------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 10,188,464 16,360,499 67,559,234 71,193,229 40,467,068 26,022,594
Changes from variable annuity
contract transactions:
Transfers of net premiums 150,223,807 12,786,625 22,610,492 31,694,775 21,330,346 9,642,644
Transfers for terminations (29,847,722) (3,246,738) (12,646,934) (8,166,636) (3,512,645) (3,275,910)
Transfers for annuity benefits (125,802) (62,961) (130,018) (169,490) (2,020) (3,984)
Net transfers within
Separate Account IV (86,048,543) 18,553,687 (525,436) 19,048,962 32,867,089 9,600,934
-------------------------------------------------------------------------------------------
Net increase in net assets
derived from variable annuity
contract transactions 34,201,740 28,030,613 9,308,104 42,407,611 50,682,770 15,963,684
-------------------------------------------------------------------------------------------
Net increase in net assets 44,390,204 44,391,112 76,867,338 113,600,840 91,149,838 41,986,278
-------------------------------------------------------------------------------------------
Balances at December 31, 1995 $218,943,545 $125,374,146 $287,392,121 $294,449,996 $178,912,627 $104,724,939
===========================================================================================
<CAPTION>
International Total
-------------------------------
<S> <C> <C>
Balances at January 1, 1995 $69,048,969 $ 866,460,733
Increase in net assets resulting
from operations:
Net investment income 793,738 38,443,255
Net realized gain on
investments 859,384 15,812,817
Net unrealized appreciation
of investments 9,397,625 188,585,763
-----------------------------
Net increase in net assets
resulting from operations 11,050,747 242,841,835
Changes from variable annuity
contract transactions:
Transfers of net premiums 11,827,884 260,116,573
Transfers for terminations (3,126,828) (63,823,413)
Transfers for annuity benefits (170,767) (665,042)
Net transfers within
Separate Account IV 6,503,307 -
-----------------------------
Net increase in net assets
derived from variable annuity
contract transactions 15,033,596 195,628,118
-----------------------------
Net increase in net assets 26,084,343 438,469,953
-----------------------------
Balances at December 31, 1995 $95,133,312 $1,304,930,686
=============================
</TABLE>
See accompanying notes.
6
<PAGE>
Providian Life and Health Insurance Company Separate Account IV
Statement of Changes in Net Assets
Year ended December 31, 1994
<TABLE>
<CAPTION>
Money High-Grade Equity Equity
Market Bond Balanced Index Growth Income
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1994 $119,074,153 $83,681,334 $209,495,261 $170,484,429 $ 51,566,881 $ 67,238,585
Increase (decrease) in net assets
resulting from operations:
Net investment income 5,577,230 4,556,904 7,630,544 3,616,025 432,814 2,394,725
Net realized gain (loss) on
investments - (1,462,489) 241,952 2,678,578 304,685 (1,327,856)
Net unrealized appreciation
(depreciation) of investments - (5,782,171) (10,740,217) (5,333,136) 2,020,896 (2,350,786)
-------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 5,577,230 (2,687,756) (2,867,721) 961,467 2,758,395 (1,283,917)
Changes from variable annuity
contract transactions:
Transfers of net premiums 152,185,888 5,659,693 15,014,692 13,617,463 11,369,429 7,827,484
Transfers for terminations (21,180,234) (3,627,352) (10,014,202) (8,365,172) (3,346,107) (4,933,892)
Transfers for annuity benefits (82,309) (7,197) (1,933) (3,828) - (7,353)
Net transfers within
Separate Account IV (81,021,387) (2,035,688) (1,101,314) 4,154,797 25,414,191 (6,102,246)
-------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets derived from variable
annuity contract transactions 49,901,958 (10,544) 3,897,243 9,403,260 33,437,513 (3,216,007)
-------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets 55,479,188 (2,698,300) 1,029,522 10,364,727 36,195,908 (4,499,924)
-------------------------------------------------------------------------------------------
Balances at December 31, 1994 $174,553,341 $80,983,034 $210,524,783 $180,849,156 $87,762,789 $62,738,661
===========================================================================================
<CAPTION>
International Total
-------------------------------
<S> <C> <C>
Balances at January 1, 1994 - $701,540,643
Increase (decrease) in net assets
resulting from operations:
Net investment income 214,841 24,423,083
Net realized gain (loss) on
investments 108,403 543,273
Net unrealized appreciation
(depreciation) of investments (669,624) (22,855,038)
-----------------------------
Net increase (decrease) in net
assets resulting from operations (346,380) 2,111,318
Changes from variable annuity
contract transactions:
Transfers of net premiums 9,392,494 215,067,143
Transfers for terminations (688,792) (52,155,751)
Transfers for annuity benefits - (102,620)
Net transfers within
Separate Account IV 60,691,647 -
-----------------------------
Net increase (decrease) in net
assets derived from variable
annuity contract transactions 69,395,349 162,808,772
-----------------------------
Net increase (decrease) in net 69,048,969 164,920,090
assets -----------------------------
$69,048,969 $866,460,733
Balances at December 31, 1994 =============================
</TABLE>
See accompanying notes.
7
<PAGE>
Providian Life and Health Insurance Company Separate Account IV
Notes to Financial Statements
December 31, 1995
1. ACCOUNTING POLICIES
ORGANIZATION OF THE ACCOUNT
Providian Life and Health Insurance Company Separate Account IV (the "Separate
Account") is a separate account of Providian Life and Health Insurance Company
("PLH"), formerly National Home Life Assurance Company, a wholly owned
subsidiary of Providian Corporation, and is registered as a unit investment
trust under the Investment Company Act of 1940, as amended. The Separate Account
was established for the purpose of funding variable annuity contracts issued by
PLH.
As of December 31, 1995, the Separate Account has seven subaccounts. The
contract owner's initial premium is automatically allocated to the Money Market
Subaccount until the end of the free look period (typically ten days or, in
certain instances, 30 days or more). Subsequent to the free look period and a
five day grace period, a contract owner may allocate all or a portion of the
initial premium and additional premiums, if any, to one or more subaccounts of
the Separate Account.
INVESTMENTS
Each subaccount invests exclusively in shares of a corresponding portfolio of
the Vanguard Variable Insurance Fund (the "Fund"), an open-end diversified
investment company offered by The Vanguard Group, Inc. ("Vanguard"). The
investment objectives of the Fund's portfolios are as follows:
The Money Market Portfolio seeks to provide current income consistent
--------------------------
with the preservation of capital and liquidity. The portfolio also seeks
to maintain a stable net asset value of $1.00 per share. The portfolio
invests primarily in high-quality money market instruments issued by
financial institutions, non-financial corporations, the U.S. Government,
state and municipal governments and their agencies or instrumentalities,
as well as repurchase agreements collateralized by such securities. The
portfolio also invests in Eurodollar obligations (dollar-denominated
obligations issued outside the U.S. by foreign banks or foreign branches
of domestic banks) and Yankee obligations (dollar-denominated
obligations issued in the U.S. by foreign banks). Vanguard's Fixed
Income Group serves as the portfolio's investment adviser.
8
<PAGE>
Providian Life and Health Insurance Company Separate Account IV
Notes to Financial Statements (continued)
1. ACCOUNTING POLICIES (CONTINUED)
The High-Grade Bond Portfolio seeks to parallel the investment results
-----------------------------
of the Lehman Brothers Aggregate Bond Index. The portfolio invests
primarily in a diversified portfolio of U.S. Government and corporate
bonds, and mortgage-backed securities. Vanguard's Fixed Income Group
serves as the portfolio's investment adviser.
The Balanced Portfolio seeks the conservation of principal, a reasonable
----------------------
income return and profits without undue risk. The portfolio invests in a
diversified portfolio of common stocks and bonds with common stocks
expected to represent 60% to 70% of the portfolio's total assets and
bonds to represent 30% to 40%. Wellington Management Company serves as
the portfolio's investment adviser.
The Equity Index Portfolio seeks to parallel the investment results of
--------------------------
the Standard & Poor's 500 Composite Stock Price Index ("S&P 500"). The
portfolio invests primarily in common stocks included in the S&P 500.
Vanguard's Core Management Group serves as the portfolio's investment
adviser.
The Growth Portfolio seeks to provide long-term capital appreciation by
--------------------
investing primarily in equity securities of seasoned U.S. companies with
above-average prospects for growth. Lincoln Capital Management Company
serves as the portfolio's investment adviser.
The Equity Income Portfolio seeks to provide a high level of current
---------------------------
income by investing principally in dividend-paying equity securities.
Newell Associates serves as the portfolio's investment adviser.
The International Portfolio seeks to provide long-term capital
---------------------------
appreciation by investing primarily in equity securities of seasoned
companies located outside the United States. The portfolio was added in
1994. Schroder Capital Management International, Inc. serves as the
portfolio's investment adviser.
9
<PAGE>
Providian Life and Health Insurance Company Separate Account IV
Notes to Financial Statements (continued)
1. ACCOUNTING POLICIES (CONTINUED)
Effective June 3, 1996, two new subaccounts will be added to the Separate
Account. The investment objectives of the new subaccounts' corresponding
portfolios are as follows:
The High-Yield Bond Portfolio seeks to provide a high level of current
-----------------------------
income by investing in lower-rated debt securities, which may be
regarded as having speculative characteristics and are commonly referred
to as "junk bonds." Under normal circumstances, at least 80% of the
portfolio's assets will be invested in high-yield corporate debt
obligations rated at least B by Moody's Investors Service, Inc. or
Standard & Poor's Corporation or, if unrated, of comparable quality as
determined by the portfolio's adviser, Wellington Management Company.
The Small Company Growth Portfolio seeks to provide long-term growth in
----------------------------------
capital by investing primarily in equity securities of small companies
deemed to have favorable prospects for growth. These securities are
primarily common stocks but may also include securities convertible into
common stock. Granahan Investments serves as this portfolio's investment
adviser.
There is no assurance that a portfolio will achieve its stated investment
objective.
The Separate Account purchases shares of the Fund at net asset value in
connection with premium payments allocated to the subaccounts in accordance with
contract owners' directions and redeems shares of the Fund to process transfers
and to meet policy contract obligations. Gains and losses resulting from the
redemption of shares are computed on the basis of average cost. Investment
transactions are recorded on the trade dates.
10
<PAGE>
Providian Life and Health Insurance Company Separate Account IV
Notes to Financial Statements (continued)
1. ACCOUNTING POLICIES (CONTINUED)
The aggregate cost of shares purchased during the years ended December 31, 1995
and 1994 for each of the respective portfolios is as follows:
<TABLE>
<CAPTION>
1995 1994
-----------------------------
<S> <C> <C>
Money Market Portfolio $273,261,907 $301,966,662
High-Grade Bond Portfolio 64,743,821 41,294,787
Balanced Portfolio 63,508,701 78,549,615
Equity Index Portfolio 88,488,544 62,593,520
Growth Portfolio 77,775,358 57,801,840
Equity Income Portfolio 35,685,619 38,944,187
International Portfolio 43,029,548 78,508,799
-----------------------------
$646,493,498 $659,659,410
=============================
</TABLE>
All dividends and capital gains earned on the portfolios are reinvested in the
portfolios and are reflected in the unit values of the subaccounts of the
Separate Account.
Investments in the Fund portfolios are valued at market which is calculated
daily on each day the New York Stock Exchange is open for trading. Income and
both realized and unrealized gains or losses from assets of each subaccount will
be credited to or charged against that subaccount without regard to income,
gains or losses from any other subaccount of the Separate Account or arising out
of any other business PLH may conduct.
The contract's accumulated value varies with the investment performance of the
corresponding portfolios. Investment results are not guaranteed by the Separate
Account or PLH.
Although the assets in the Separate Account are the property of PLH, the assets
in the Separate Account attributable to the contracts cannot be used to
discharge the liabilities arising out of any other business which PLH may
conduct. The assets of the Separate Account are available to cover the general
liabilities of PLH only to the extent that the Separate Account's assets exceed
its liabilities under the contracts.
Certain 1994 amounts have been reclassified to conform with the 1995
presentation.
11
<PAGE>
Providian Life and Health Insurance Company Separate Account IV
Notes to Financial Statements (continued)
2. FEDERAL INCOME TAXES
Operations of the Separate Account are included in the federal income tax return
of PLH, which is taxed as a life insurance company under the Internal Revenue
Code. The Separate Account will not be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code. Under current federal income
tax law, no federal income taxes are payable with respect to the Separate
Account.
3. ADVISORY AND SERVICE FEES
Vanguard furnishes corporate management, administrative, marketing and
distribution services. Additionally, Vanguard furnishes investment advisory
services to certain Fund portfolios. The net asset value of the portfolios is
net of the advisory and service fees.
4. EXPENSES
An annual charge is deducted from the unit values of the subaccounts of the
Separate Account for PLH's assumption of certain mortality and expense risks
incurred in connection with the contract and for the cost of administering the
contract. It is assessed daily based on the Fund's net assets attributable to
the Separate Account and Separate Account B of First Providian Life and Health
Insurance Company ("FPLH"), an affiliate of PLH. The annual rate on the first
$500 million of combined net assets in the Fund is .45% and is .40% on the next
$250 million of combined net assets in the Fund. This charge is reduced in
various increments to .30% on combined net assets in the Fund in excess of $1.5
billion. For the years ended December 31, 1995 and 1994, the effective annual
rate for this charge was .41% and .43%, respectively, and the total charge was
$4,391,683 and $3,398,112, respectively.
Effective April 30, 1996, the Separate Account's annual rate for the mortality
and expense charge will change to .375% on the first $1.5 billion of combined
net assets in the Fund. This charge will be reduced to .30% of combined net
assets in the Fund in excess of $1.5 billion.
In addition, an annual administrative charge of .10% is deducted from the unit
values of the subaccounts of the Separate Account. This charge is assessed daily
by Vanguard, based on the net assets attributable to the Separate Account and
Separate Account B of FPLH. Additionally, an annual maintenance fee of $25 per
contract is charged for contracts valued at less than $25,000 at the time of
initial purchase and on the last
12
<PAGE>
Providian Life and Health Insurance Company Separate Account IV
Notes to Financial Statements (continued)
4. EXPENSES (CONTINUED)
business day of each year. The maintenance fee is deducted proportionately from
the contract's accumulated value. These deductions represent reimbursement to
Vanguard for the costs expected to be incurred for issuing and maintaining each
contract and the Separate Account. The total of these costs for the years ended
December 31, 1995 and 1994 was $1,253,587 and $857,543, respectively.
5. CONTRACT OWNER TRANSACTIONS
Transactions with contract owners during the years ended December 31, 1995 and
1994 for each of the respective subaccounts were as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------ ----------------------
UNITS AMOUNT UNITS AMOUNT
------------------------ ----------------------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
MONEY MARKET SUBACCOUNT
Issuance of units 227,264 $ 263,112 267,142 $ 295,279
Increase from operations - 10,188 - 5,577
Redemption of units (197,812) (228,910) (221,917) (245,377)
------------------------ ----------------------
Net increase 29,452 $ 44,390 45,225 $ 55,479
======================== ======================
HIGH-GRADE BOND SUBACCOUNT
Issuance of units 4,337 $ 58,134 2,929 $ 36,311
Increase (decrease) from
operations - 16,360 - (2,688)
Redemption of units (2,242) (30,103) (2,931) (36,321)
------------------------ ----------------------
Net increase (decrease) 2,095 $ 44,391 (2) $ (2,698)
======================== ======================
BALANCED SUBACCOUNT
Issuance of units 3,640 $ 53,593 5,402 $ 69,765
Increase (decrease) from
operations - 67,559 - (2,868)
Redemption of units (3,048) (44,285) (5,137) (65,867)
------------------------ ----------------------
Net increase 592 $ 76,867 265 $ 1,030
======================== ======================
EQUITY INDEX SUBACCOUNT
Issuance of units 5,104 $ 80,886 4,426 $ 58,002
Increase from operations - 71,193 - 961
Redemption of units (2,488) (38,478) (3,721) (48,598)
------------------------ ----------------------
Net increase 2,616 $113,601 705 $ 10,365
======================== ======================
</TABLE>
13
<PAGE>
Providian Life and Health Insurance Company Separate Account IV
Notes to Financial Statements (continued)
5. CONTRACT OWNER TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
1995 1994
-------------------------------------------
UNITS AMOUNT UNITS AMOUNT
-------------------------------------------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
GROWTH SUBACCOUNT
Issuance of units 5,612 $ 73,872 5,342 $ 56,984
Increase from operations - 40,467 - 2,758
Redemption of units (1,760) (23,189) (2,217) (23,546)
-------------------------------------------
Net increase 3,852 $ 91,150 3,125 $ 36,196
===========================================
EQUITY INCOME SUBACCOUNT
Issuance of units 2,603 $ 32,052 3,518 $ 36,194
Increase (decrease) from
operations - 26,023 - (1,284)
Redemption of units (1,337) (16,089) (3,840) (39,410)
-------------------------------------------
Net increase (decrease) 1,266 $ 41,986 (322) $ (4,500)
===========================================
INTERNATIONAL SUBACCOUNT
Issuance of units 3,877 $ 41,810 7,678 $ 78,130
Increase (decrease) from
operations - 11,051 - (346)
Redemption of units (2,548) (26,777) (860) (8,735)
-------------------------------------------
Net increase 1,329 $ 26,084 6,818 $ 69,049
===========================================
</TABLE>
14
<PAGE>
Providian Life and Health Insurance Company Separate Account IV
Notes to Financial Statements (continued)
6. NET ASSETS
Net assets at December 31, 1995 are summarized in the following tables:
<TABLE>
<CAPTION>
MONEY HIGH-GRADE EQUITY
MARKET BOND BALANCED INDEX
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Contract owner transactions $198,476,711 $102,321,282 $198,417,312 $ 199,725,934
Accumulated net investment
income 20,466,834 18,621,565 29,271,167 16,135,645
Accumulated net realized
gain (loss) on investments - (231,728) 6,174,490 13,240,592
Net unrealized appreciation
on investments - 4,663,027 53,529,152 65,347,825
-----------------------------------------------------------------
$218,943,545 $125,374,146 $287,392,121 $ 294,449,996
=================================================================
EQUITY
GROWTH INDEX INTERNATIONAL TOTAL
-----------------------------------------------------------------
Contract owner transactions $133,882,806 $ 78,762,408 $ 84,428,945 $ 996,015,398
Accumulated net investment
income 3,826,763 6,836,368 1,008,579 96,166,921
Accumulated net realized
gain on investments 4,243,246 2,106 967,787 24,396,493
Net unrealized appreciation
on investments 36,959,812 19,124,057 8,728,001 188,351,874
-----------------------------------------------------------------
$178,912,627 $104,724,939 $ 95,133,312 $1,304,930,686
=================================================================
15
</TABLE>
<PAGE>
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
Part A None
Part B Audited Financial Statements
Providian Life & Health Insurance Company Separate Account IV
Years ended December 31, 1995 and 1994 with Report
of Independent Auditors
Audited Financial Statements--Statutory-Basis
Providian Life & Health Insurance Company
Years ended December 31, 1995 and 1994 with Report
of Independent Auditors
Part C None
(B) EXHIBITS
(1) Resolution of the Board of Directors of National Home Life Assurance
Company ("National Home") authorizing establishment of the Separate Ac-
count./5/
(2) Not Applicable.
(3) Not Applicable.
(4) Form of variable annuity contract/6/
(5) Form of application/6/
(6) (a) Articles of Incorporation of National Home/2/
(b) Amendment to Articles of Incorporation of National Home/3/
(c) Amended and Restated Articles of Incorporation of National Home/4/
(7) Not applicable.
(8) (a) Participation Agreement for the Vanguard Variable Insurance Fund/7/
(b) First Amendment to Participation, Market Consulting and Administra-
tion Agreement/1/
(c) Administration Agreement/6/
(9) (a) Opinion and Consent of Counsel/1/
(b) Consent of Counsel/1/
(10) Consent of Independent Auditors/1/
(11) No financial statements are omitted from item 23.
(12) Not applicable.
(13) Performance computation/1/
(14) Not applicable.
- --------
/1/ Filed herewith.
/2/ Incorporated by reference from the initial Registration Statement of the
Providian Life & Health Insurance Company Separate Account II, File No. 33-
7033.
/3/ Incorporated/by reference from Post-Effective Amendment No. 3 to the Regis-
tration Statement of Providian Life & Health Insurance Company Separate Ac-
count II, File No. 33-7033.
/4/ Incorporated by reference from Post-Effective Amendment No. 5 to the Regis-
tration Statement of the Providian Life & Health Insurance Company Separate
Account II, File No. 33-7033.
/5/ Incorporated by reference from the initial Registration Statement of the
Providian Life & Health Insurance Company Separate Account IV, File No. 33-
36073.
/6/ Incorporated by reference from Pre-Effective Amendment No. 1 to the Regis-
tration Statement of the Providian Life & Health Insurance Company Separate
Account IV, File No. 33-36073.
/7/ Incorporated by reference from Post-Effective Amendment No.1 to the Regis-
tration Statement of Providian Life & Health Insurance Company Separate Ac-
count IV, File No. 33-36073.
C-1
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS* WITH DEPOSITOR
------------------ ---------------------
<S> <C>
Shailesh J. Mehta.............. Chairman of the Board and Chief Executive
Officer
David J. Miller................ President
Stephen J. Leaman.............. Chief Operating Officer
Jean A. Young.................. Vice President and Controller
Robert A. Long................. Senior Vice President
Paul Yakulis................... Senior Vice President
John H. Rogers................. Senior Vice President/Human Resources &
Corporate Communications
Martin Renninger............... Senior Vice President
David R. Aplington............. Vice President, Secretary and General Counsel
G. Douglas Mangum, Jr. ........ Vice President
John C. Prestwood, Jr. ........ Vice President and Actuary
Richard A. Babyak.............. Vice President
Stephen F. Eulie............... Vice President
Thomas Nesspor................. Vice President
Carolyn M. Kerstein............ Vice President
Brian Alford................... Vice President
Kevin P. McGlynn............... Vice President
William Strickland............. Vice President
Douglas A. Sarcia.............. Vice President
Nancy B. Schuckert............. Vice President
Edward A. Biemer............... Vice President
Joseph D. Strenk............... Vice President
Julie S. Congdon............... Vice President and Associate General Counsel
Dennis E. Brady................ Vice President, Treasurer and CFO
Charles N. Coatsworth.......... Vice President
James P. Greaton............... Assistant Vice President
William J. Kline............... Vice President/Underwriting
Michael F. Lane................ Vice President
Anita Gambos................... Vice President
Susan Martin................... Vice President
Douglas S. Menges.............. Vice President
G. Eric O'Brien................ Vice President
Harold W. Peterson, Jr. ....... Vice President
John R. Pegues................. Vice President
Frank J. Rosa.................. Vice President
Oris Stuart, III............... Vice President
Anita Tilley................... Vice President
William C. Tomlin.............. Vice President
Joan G. Chandler............... Assistant Vice President
Geralyn Barbato................ Assistant Vice President
Janice Boehmler................ Assistant Vice President
Mary Ellen Fahringer........... Assistant Vice President
Harvey Waite................... Assistant Vice President
John A. Mazzuca................ Assistant Vice President and Assistant Treasurer
Elaine J. Robinson............. Assistant Treasurer
Joseph C. Noone................ Assistant Controller
Karen Fleming.................. Vice President
Rita Biesiot................... Vice President
Cindy L. Chanley............... Second Vice President
Curt Burns..................... Second Vice President/Investments
Caroline A. Johnson............ Second Vice President/Investments
Michael K. Mingus.............. Second Vice President
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS* WITH DEPOSITOR
------------------ ---------------------
<S> <C>
Terri L. Allen.................... Second Vice President/Investments
Tom Bauer......................... Second Vice President/Investments
Lisa M. Longino................... Second Vice President/Investments
Kirk W. Buese..................... Second Vice President/Investments
William S. Cook................... Second Vice President/Investments
Deborah A. Dias................... Second Vice President/Investments
Eric B. Goodman................... Second Vice President/Investments
James Grant....................... Second Vice President/Investments
Theodore M. Haag.................. Second Vice President/Investments
Frederick B. Howard............... Second Vice President/Investments
Diane J. Hulls.................... Second Vice President/Investments
William H. Jenkins................ Second Vice President/Investments
Frederick C. Kessell.............. Second Vice President/Investments
Tim Kuussalo...................... Second Vice President/Investments
Mark E. Lamb...................... Second Vice President/Investments
Monika Machon..................... Second Vice President/Investments
James D. MacKinnon................ Second Vice President/Investments
Jack McCabe....................... Second Vice President/Investments
James G. Nickerson................ Second Vice President/Investments
Wayne R. Nelis.................... Second Vice President/Investments
Douglas H. Owen, Jr. ............. Second Vice President/Investments
Brad H. Seibel.................... Second Vice President/Investments
Jon L. Skaggs..................... Second Vice President/Investments
James A. Skufca................... Second Vice President/Investments
Robert A. Smedley................. Second Vice President/Investments
Bradley L. Stofferahn............. Second Vice President/Investments
Randall K. Waddell................ Second Vice President/Investments
Tammy C. Wetterer................. Second Vice President/Investments
Debra K. Pellman.................. Second Vice President/Investments
Robert Saunders................... Second Vice President/Investments
Michael B. Simpson................ Second Vice President/Investments
Gregory Lee Chapman............... Second Vice President/Special Markets
John B. Cobb, III................. Second Vice President/Special Markets
Gregory M. Curry.................. Second Vice President/Special Markets
Julie Ford........................ Second Vice President/Special Markets
Kim A. Bivins..................... Second Vice President/Special Markets
Lauren M.S. Kaltman............... Second Vice President/Special Markets
Paul Farley Olschwanger........... Second Vice President/Special Markets
Lisa L. Patterson................. Second Vice President/Special Markets
Rhonda L. Pritchett............... Second Vice President/Special Markets
Prentice J. Siegel................ Second Vice President/Special Markets
Kris A. Robbins................... Second Vice President/Special Markets
Harvey Willis..................... Second Vice President/Special Markets
Rosa Marie Mathison............... Second Vice President/Special Markets
Thomas E. Walsh................... Second Vice President/Special Markets
Edward P. Reiter.................. Second Vice President and Assistant Secretary
Kimberly A. Scouller.............. Assistant Secretary
L. Jude Clark..................... Assistant Secretary
Colleen S. Lyons.................. Assistant Secretary
John E. Reesor.................... Assistant Secretary
Mary Ann Malinyak................. Assistant Secretary
R. Michael Slaven................. Assistant Secretary
Carolyn Wetterer.................. Assistant Secretary
James T. Bradley.................. Product Compliance Officer
Nancy E. Partington............... Advertising Compliance Officer
</TABLE>
C-3
<PAGE>
DIRECTORS:
David R. Aplington John H. Rogers
Dennis E. Brady Stephen J. Leaman
Robert A. Long David J. Miller
Shailesh J. Mehta Thomas B. Nesspor
- --------
* The business address of each director and officer of Providian Life & Health
Insurance Company is 20 Moores Road, Frazer, Pennsylvania 19355 or 400 West
Market Street, Louisville, Kentucky 40202.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT.
The Depositor, Providian Life & Health Insurance Company, is directly and in-
directly wholly owned by Providian Corporation. The Registrant is a segregated
asset account of Providian Life & Health Insurance Company.
The following chart indicates the persons controlled by or under common con-
trol with Providian Life & Health Insurance Company.
<TABLE>
<CAPTION>
PERCENT OF
JURISDICTION OF VOTING SECURITIES
NAME INCORPORATION OWNED
---- --------------- -----------------
<S> <C> <C>
Providian Corporation Delaware 100% Publicly Owned
Providian Agency Group, Inc. Kentucky 100% Providian Corporation
College Resource Group, Inc. Kentucky 100% Providian Corporation
Knight Insurance Agency, Massachusetts 100% College Resource Group,
Inc. Inc.
Knight Tuition Payment Massachusetts 100% Knight Insurance Agency,
Plans, Inc. Inc.
Knight Insurance Agency (New New Hampshire 100% Knight Insurance Agency,
Hampshire), Inc. Inc.
Capital General Development Delaware 100% Providian Corporation
Corporation
Commonwealth Life Insurance Kentucky 100% Capital General
Company Development Corporation
Agency Holding I, Inc. Delaware 100% Commonwealth Life
Insurance Company
Agency Investments I, Inc. Delaware 100% Agency Holding I, Inc.
Commonwealth Agency, Inc. Kentucky 100% Commonwealth Life
Insurance Company
Peoples Security Life Insur- North Carolina 100% Capital General
ance Company Development Corporation
Agency Holding II, Inc. Delaware 100% Peoples Security Life
Insurance Company
Agency Investments II, Inc. Delaware 100% Agency Holding II, Inc.
Agency Holding III, Inc. Delaware 100% Peoples Security Life
Insurance Company
Agency Investments III, Inc. Delaware 100% Agency Holding III, Inc.
Ammest Realty Corporation Texas 100% Peoples Security Life
Insurance Company
Providian Assignment Corpo- Kentucky 100% Providian Corporation
ration
Providian Capital Manage- Delaware 100% Providian Corporation
ment, Inc.
Providian Capital Management Delaware 100% Providian Capital
Real Estate Services, Inc. Management, Inc.
Capital Real Estate Delaware 100% Providian Corporation
Development Corporation
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
JURISDICTION OF VOTING SECURITIES
NAME INCORPORATION OWNED
---- --------------- -----------------
<S> <C> <C>
Capital 200 Block Corpora- Delaware 100% Providian Corporation
tion
Providian Services, Inc. Pennsylvania 100% Veterans Life Insurance
Co.
Capital Values Financial Pennsylvania 100% Providian Corporation
Services, Inc.
Providian Securities Cor- Pennsylvania 100% Capital Values Financial
poration Services, Inc.
Wannalancit Corporation Massachusetts 100% Providian Corporation
KB Currency Advisors, Inc. Delaware 33 1/3% Capital Real Estate
Development Corporation
33 1/3% Jonathan M. Berg
33 1/3% Andrew J. Krieger
Capital Broadway Corpora- Kentucky 100% Providian Corporation
tion
Providian Investment Delaware 100% Providian Corporation
Advisors, Inc.
Capital Security Life North Carolina 100% Providian Corporation
Insurance Company
Security Trust Life Kentucky 100% Capital Security Life
Insurance Company Insurance Company
Independence Automobile Florida 100% Capital Security Life
Association, Inc. Insurance Company
Independence Automobile Georgia 100% Capital Security Life
Club, Inc. Insurance Company
Southlife, Inc. Tennessee 100% Providian Corporation
Providian Bancorp, Inc.. Delaware 100% Providian Corporation
First Deposit Service Cor- California 100% Providian Bancorp, Inc.
poration
First Deposit Life Insur- Arkansas 100% Providian Bancorp, Inc.
ance Company
First Deposit National United States 100% Providian Bancorp, Inc.
Bank
Winnisquam Community De- New Hampshire 96% First Deposit National Bank
velopment Corporation 4% First New Hampshire Bank
Providian National Bank United States 100% Providian Bancorp, Inc.
Providian National Bancorp California 100% Providian Bancorp, Inc.
Providian Credit Corpora- Delaware 100% Providian Bancorp, Inc.
tion
Commonwealth Premium Fi- California 100% Providian National Bancorp
nance
Providian Credit Services, Utah 100% Providian Bancorp, Inc.
Inc.
National Liberty Corpora- Pennsylvania 100% Providian Corporation
tion
National Home Life Pennsylvania 100% National Liberty
Corporation Corporation
Compass Rose Development Pennsylvania 100% National Liberty
Corporation Corporation
Association Consultants, Illinois 100% National Liberty
Inc. Corporation
Valley Forge Associates, Pennsylvania 100% National Liberty
Inc. Corporation
Veterans Benefits Plans, Pennsylvania 100% National Liberty
Inc. Corporation
Veterans Insurance Servic- Delaware 100% National Liberty
es, Inc. Corporation
Financial Planning Servic- Washington, D.C. 100% National Liberty
es, Inc. Corporation
Providian Auto and Home Missouri 100% Providian Corporation
Insurance Company
Academy Insurance Group, Delaware 100% Providian Auto and Home
Inc. Insurance Company
Academy Life Insurance Missouri 100% Academy Insurance Group,
Company Inc.
Pension Life Insurance New Jersey 100% Academy Insurance Group,
Company of America Inc.
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
JURISDICTION OF VOTING SECURITIES
NAME INCORPORATION OWNED
---- --------------- -----------------
<S> <C> <C>
Academy Services, Inc. Delaware 100% Academy Insurance Group,
Inc.
Ammest Development Kansas 100% Academy Insurance Group,
Corporation, Inc. Inc.
Ammest Insurance Agency, California 100% Academy Insurance Group,
Inc. Inc.
Ammest Massachusetts Massachusetts 100% Academy Insurance Group,
Insurance Agency, Inc. Inc.
Ammest Realty, Inc. Pennsylvania 100% Academy Insurance Group,
Inc.
AMPAC, Inc. Texas 100% Academy Insurance Group,
Inc.
AMPAC Insurance Agency, Pennsylvania 100% Academy Insurance Group,
Inc. Inc.
Data/Mark Services, Inc. Delaware 100% Academy Insurance Group,
Inc.
Force Financial Group, Delaware 100% Academy Insurance Group,
Inc. Inc.
Force Financial Services, Massachusetts 100% Force Financial Group,
Inc. Inc.
Military Associates, Inc. Pennsylvania 100% Academy Insurance Group,
Inc.
NCOAA Management Company Texas 100% Academy Insurance Group,
Inc.
NCOA Motor Club, Inc. Georgia 100% Academy Insurance Group,
Inc.
Unicom Administrative Pennsylvania 100% Academy Insurance Group,
Services, Inc. Inc.
Unicom Administrative Germany 100% Unicom Administrative
Services GmbH Services Inc.
Providian Property and Ca- Kentucky 100% Providian Auto and Home
sualty Insurance Company Insurance Company
Capital Landmark Insurance Kentucky 100% Providian Property and
Company Casualty Insurance Company
Capital Liberty, L.P. Delaware 5% Providian Corporation
(Limited Partnership) (General Partnership Interest)
76% Commonwealth Life Insurance
Company (Limited Partnership
Interest)
19% Peoples Security Life
Insurance Company (Limited
Partnership Interest)
Providian Life & Health Missouri 4% Providian Corporation
Insurance Company
61% Commonwealth Life Insurance
Company
15% Peoples Security Life
Insurance Company
20% Capital Liberty, L.P.
Veterans Life Insurance Illinois 100% Providian Life & Health
Company Insurance Company
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
JURISDICTION OF VOTING SECURITIES
NAME INCORPORATION OWNED
---- --------------- -----------------
<S> <C> <C>
First Providian Life & Health New York 100% Veterans Life Insurance
Insurance Company Co.
Benefit Plans, Inc. Delaware 100% Providian Corporation
DurCo Agency, Inc. Virginia 100% Benefit Plans, Inc.
</TABLE>
All subsidiaries are included in the consolidated financial statements for
Providian Corporation.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of February 29, 1996 there were 24,865 owners of Contracts.
ITEM 28. INDEMNIFICATION
Item 28 is incorporated by reference from the Post-Effective Amendment No. 6
to the Registration Statement of the National Home Life Assurance Company Sep-
arate Account II, File No. 33-7037.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) None.
(b) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The books, accounts and other documents required by Section 31(a) under the
Investment Company Act and the rules promulgated thereunder will be maintained
in the physical possession of Vantage Computer Systems, Inc., Kansas City,
Missouri.
ITEM 31. MANAGEMENT SERVICES
All management contracts are discussed in Part A or Part B.
ITEM 32. UNDERTAKINGS
(a) The Registrant hereby undertakes to file a post-effective amendment to
this registration statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are never more than
16 months old for so long as payments under the variable annuity contracts may
be accepted;
(b) The Registrant hereby undertakes to include either (1) as part of any ap-
plication to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the pro-
spectus that the applicant can remove to send for a Statement of Additional
Information;
(c) The Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
(d) The Registrant hereby represents that no Director has resigned due to a
disagreement with the Registrant or any matter relating to the Separate Ac-
count's operations, policies or practices.
C-7
<PAGE>
SIGNATURES
AS REQUIRED BY THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF
1940, THE REGISTRANT, PROVIDIAN LIFE & HEALTH INSURANCE COMPANY SEPARATE AC-
COUNT IV, CERTIFIES THAT IT MEETS THE REQUIREMENTS OF SECURITIES ACT RULE
486(B) FOR EFFECTIVENESS HEREOF AND HAS DULY CAUSED THIS AMENDED REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF IN THE TOWN OF VALLEY FORGE AND COMMON-
WEALTH OF PENNSYLVANIA ON THE 25TH DAY OF APRIL, 1996.
Providian Life & Health Insurance
Company Separate Account IV
(Registrant)
By: Providian Life & Health
Insurance Company
/s/ David J. Miller
By: __________________________________
DAVID J. MILLER, PRESIDENT
Providian Life & Health Insurance
Company (Depositor)
/s/ David J. Miller
By: __________________________________
DAVID J. MILLER, PRESIDENT
C-8
<PAGE>
AS REQUIRED BY THE SECURITIES ACT OF 1933, THIS AMENDED REGISTRATION STATEMENT
HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES IN-
DICATED.
SIGNATURE TITLE DATE
/s/ Shailesh J. Mehta Director, Chairman April 25, 1996
- ------------------------------------- of the Board and
SHAILESH J. MEHTA Chief Executive
Officer
/s/ David J. Miller Director and April 25, 1996
- ------------------------------------- President
DAVID J. MILLER
/s/ Dennis E. Brady Director, Vice April 25, 1996
- ------------------------------------- President, and
Chief Financial
DENNIS E. BRADY Officer
/s/ Robert A. Long Director and Senior April 25, 1996
- ------------------------------------- Vice President
ROBERT A. LONG
/s/ John H. Rogers Director and Senior April 25, 1996
- ------------------------------------- Vice President
JOHN H. ROGERS
/s/ David R. Aplington Director, Vice April 25, 1996
- ------------------------------------- President, General
Counsel and
DAVID R. APLINGTON Secretary
/s/ Stephen J. Leaman Director and Chief April 25, 1996
- ------------------------------------- Operating Officer
STEPHEN J. LEAMAN
/s/ Thomas B. Nesspor Director and Vice April 25, 1996
- ------------------------------------- President
THOMAS B. NESSPOR
/s/ Jean A. Young Vice President and April 25, 1996
- ------------------------------------- Controller (Chief
JEAN A. YOUNG Accounting
Officer)
C-9
<PAGE>
EXHIBIT 8(B)
FIRST AMENDMENT TO PARTICIPATION, MARKET CONSULTING
AND ADMINISTRATION AGREEMENT AMONG
VANGUARD VARIABLE INSURANCE FUND, INC. AND
THE VANGUARD GROUP, INC. AND
PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
(FORMERLY KNOWN AS NATIONAL HOME LIFE ASSURANCE COMPANY)
This First Amendment is entered into as of the 30th day of April, 1996, among
Vanguard Variable Insurance Fund, Inc. ("Fund"), The Vanguard Group, Inc.
("Sponsor") and Providian Life and Health Insurance Company ("Company") for the
purpose of further amending the Participation, Marketing Consulting and Admin-
istration Agreement, dated as of April 23, 1991, by and among Fund, Sponsor and
the Company, as amended by an Addendum effective November 16, 1992, (the
"Agreement").
Fund, Sponsor and Company, intending to be legally bound, hereby agree to
amend the Agreement as follows:
1. For purposes of the Agreement, as amended hereby, the term "Company" is
defined to mean Providian Life and Health Insurance Company (successor by
name change to National Home Life Assurance Company).
2. For purposes of the Agreement, as amended hereby, the term "Account" is
defined to mean the Company's Separate Account IV and any other segregated
asset account of the Company established in connection with the Contracts
offered under the Agreement. Except as otherwise defined in this First
Amendment, the defined words and phrases in the Agreement shall have the
same meanings when used herein.
3. The first sentence of Section 1.1 of the Agreement is deleted in its en-
tirety and the following new first sentence is substituted in place thereof:
Company, Sponsor and Fund hereby agree to perform the duties and assume
the responsibilities set forth herein in connection with the offering of
certain mutually agreed upon variable annuity contracts ("Contracts")
listed on Schedule 1.1 attached hereto.
4. Schedule 1.1 attached to the Agreement is deleted in its entirety and
the Schedule 1.1 attached to this First Amendment is substituted in place
thereof.
5. The first sentence of Section 1.5 of the Agreement is deleted in its en-
tirety and the following new first sentence is substituted in place thereof:
Sponsor agrees that during the term of this Agreement it will not by di-
rect marketing offer, or participate directly or indirectly in the offer-
ing of, variable annuity contacts (which are not intended to include sin-
gle premium life insurance contracts or single premium deferred (fixed)
contracts), other than the Contract; provided that the Sponsor may par-
ticipate directly or indirectly in the offering and issuance of variable
annuity contracts to pension funds, employer-employee plans or employer-
employee trusts and, provided further, that Sponsor may offer any finan-
cial product by direct marketing except as limited by this section.
6. The second sentence of Section 1.5 is deleted in its entirety.
7. The caption for Section 7 is amended to read Fixed Annuitization Fee and
Mortality and Expense and Administration Charges and the following new para-
graph is added at the end of such section:
The mortality and expense and administration charges with respect to the
Contracts shall be as set forth on Schedule 7 attached hereto.
<PAGE>
8. A new Schedule 7 is added to the Agreement in the form of Schedule 7 at-
tached hereto.
9. Section 9.1 is deleted in its entirety and the following new Section 9.1
is substituted in place thereof:
9.1 The initial term of this Agreement shall be from April 23, 1991
through April 30, 2001. This Agreement shall thereafter automatically re-
new for an additional period of two years and after such additional pe-
riod for additional periods of two years; provided that either Party may
terminate this Agreement at the end of the first additional period or any
additional period thereafter without cause upon notice given at least two
years prior to the end of the first additional period or any extension
thereof.
10. Section 9.2 is deleted in its entirety.
11. Notice to the Company, as provided in Section 10 shall be changed as
follows:
Jeff Lammers
Providian Capital Management
400 West Market Street
Louisville, Kentucky 40202
12. The following new Sections 11.10, 11.11, 11.12 and 11.13 are added:
11.10 Sponsor agrees that, during the term of this Agreement and for a
period of one year following termination of this Agreement, neither it
nor any of its affiliates will, directly or indirectly, solicit for em-
ployment or hire any employee of the Company or any of its affiliates en-
gaged in the development, distribution or administration of the Con-
tracts. Company agrees that during the term of this Agreement, and for a
period of one year following termination of this Agreement, neither it
nor any of its affiliates will, directly or indirectly, solicit for em-
ployment or hire any employee of the Sponsor or any of its affiliates en-
gaged in the development, distribution or administration of the Con-
tracts.
11.11 The "Work Product" shall be the sole and exclusive property of
Sponsor and all rights, title and interest therein shall vest in Sponsor;
provided that Company may disclose Work Product if required by law, regu-
lation, subpoena, court order or other lawful authority. For purpose of
this Section 11.11, Work Product means all concepts, designs, files, re-
ports, programs, manuals, listings, databases and any other material de-
veloped or prepared, whether in hard copy or electronic media, by Company
for Sponsor which is unique to Sponsor or Fund, but does not include any
such material if it applies, or may be applied, generally to variable an-
nuities (such as, among other things, insurance features, separate ac-
count charges, annuitization options, software programs). Sponsor shall
have the right to obtain from Company and to hold in its own name copy-
rights, trademark registrations, patents or whatever protection Sponsor
may deem appropriate for the Work Product. Company agrees to give Spon-
sor, at Sponsor's expense, all assistance reasonably required to protect
the rights set forth in this Section 11.11. The parties intend the Work
Product to be deemed "works made for hire" as defined in the United
States Copyright Act. In the event and to the extent that they are deemed
not to constitute works made for hire, Company assigns to Sponsor the
copyright to the Work Product in perpetuity.
11.12 This Agreement, including all reference to exhibits hereto, con-
stitutes the entire agreement between the parties on this subject matter
and may not be modified or amended except in a writing signed by both
parties; all prior agreements, representations, statements, negotiations
and understandings between the parties are superseded hereby. The Company
acknowledges the Sponsor does not guarantee any level of business.
11.13 In the event that any dispute, controversy or claim arising out of
this Agreement cannot be resolved in the normal course of discussion be-
tween the parties, then within ten (10) days of
<PAGE>
request by either party, the issue will be submitted to a committee com-
prised of representatives of Sponsor's Legal and Corporate Planning De-
partments and Company. If agreement cannot be reached by such committee
within ten (10) days thereafter, the dispute shall be settled by arbitra-
tion in accordance with the rules then in effect of the American Arbitra-
tion Association. The arbitration shall be held in the City of Philadel-
phia, Commonwealth of Pennsylvania, unless Company and Sponsor agree to
hold the arbitration in a different location. Any judgment upon the award
rendered may be entered in any court having jurisdiction and shall be fi-
nal and unappealable. Without limiting the foregoing, Company consents to
the jurisdiction of the Court of Common Pleas of Philadelphia County and
the United States District Court for the Eastern District of Pennsylvania
if arbitration is unavailable for any reason. Company and Sponsor also
consent to service of process by first class mail.
13. This Agreement and all terms and provisions thereof, as amended hereby,
are hereby ratified and affirmed and shall be and remain in full force and
effect.
IN WITNESS WHEREOF, each of the Parties hereto has caused this First Amendment
to be duly executed as of the date first set forth above.
Company:
PROVIDIAN LIFE AND HEALTH ASSURANCE
COMPANY
/s/ Robert S. Saunders
________________________________________
Fund:
VANGUARD VARIABLE INSURANCE FUND, INC.
/s/ John J. Brennan
________________________________________
Sponsor:
THE VANGUARD GROUP, INC.
/s/ Jonn J. Brennan
________________________________________
<PAGE>
SCHEDULE 7
SCHEDULE OF
MORTALITY AND EXPENSE AND ADMINISTRATIVE CHARGES
I. VANGUARD VARIABLE ANNUITY PLAN--DEFERRED CONTRACTS
M&E Charge Payable to Company
An annual charge shall be assessed daily based on the combined net assets of
the Company's Separate Accounts IV and B (excluding assets deposited with re-
spect to payouts or immediate contracts described in paragraph II) as follows:
<TABLE>
<CAPTION>
NET ASSETS RATE
---------- ------
<S> <C>
First $1.5 billion.............................. 0.375%
Over $1.5 billion............................... 0.30%
</TABLE>
Administrative Charge Payable to Sponsor
An Annual administrative charge shall be assessed daily equal to .10% of the
net asset value of the Company's Separate Accounts IV and B (excluding assets
deposited with respect to payouts or immediate contracts described in paragraph
II).
II. NEW PAYOUT OPTIONS WITHIN THE DEFERRED ANNUITY CONTRACT AND IN THE NEW
VARIABLE IMMEDIATE ANNUITY CONTRACT
M&E Charge Payable to Company
An annual charge of .45% shall be assessed daily based on the combined net as-
sets of the Company's Separate Accounts IV and B (excluding assets deposited
with respect to deferred contracts described in paragraph I).
Administrative Fee Payable to Sponsor
An annual administrative charge shall be assessed daily equal to an amount to
be agreed upon between the parties, such amount to be a percentage of the net
asset value of the Company's Separate Accounts IV and B (excluding assets de-
posited with respect to deferred contracts described in paragraph I).
<PAGE>
SCHEDULE 1.1
The Vanguard Variable Annuity Plan, a flexible premium multi-funded variable
annuity contract, offering nine Vanguard portfolio options as such may be modi-
fied or amended from time to time.
A new variable immediate annuity contract, product name to be determined,
which will offer the same Vanguard portfolio options as those currently avail-
able in the Vanguard Variable Annuity Plan as such may be modified or amended
from time to time.
<PAGE>
EXHIBIT 9(a)
April 25, 1996
PROVIDIAN LIFE & HEALTH INSURANCE COMPANY ADMINISTRATIVE OFFICES 20 MOORES ROAD
FRAZER, PENNSYLVANIA 19355
RE: PROVIDIAN LIFE & HEALTH INSURANCE COMPANY SEPARATE ACCOUNT IV--OPINION AND
CONSENT
To Whom It May Concern:
This opinion and consent is furnished in connection with the filing of Post-
Effective Amendment No. 6 (the "Amendment") to the Registration Statement on
Form N-4, File No. 33-36073 (the "Registration Statement") under the Securities
Act of 1933, as amended (the "Act"), of Providian Life & Health Insurance Com-
pany Separate Account IV ("Separate Account IV"). Separate Account IV receives
and invests premiums allocated to it under a flexible premium multi-funded an-
nuity contract (the "Annuity Contract"). The Annuity Contract is offered in the
manner described in the prospectus contained in the Registration Statement (the
"Prospectus").
In my capacity as legal adviser to Providian Life & Health Insurance Company,
I hereby confirm the establishment of Separate Account IV pursuant to a resolu-
tion adopted by the Board of Directors of Providian Life & Health Insurance
Company for a separate account for assets applicable to the Annuity Contract,
pursuant to the provisions of Section 376.309 of the Missouri Insurance Stat-
utes. In addition, I have made such examination of the law in addition to con-
sultation with outside counsel and have examined such corporate records and
such other documents as I consider appropriate as a basis for the opinion here-
inafter expressed. On the basis of such examination, it is my professional
opinion that:
1. Providian Life & Health Insurance Company is a corporation duly orga-
nized and validly existing under the laws of the State of Missouri.
2. Separate Account IV is an account established and maintained by
Providian Life & Health Insurance Company pursuant to the laws of the State
of Missouri, under which income, capital gains and capital losses incurred
on the assets of Separate Account IV are credited to or charged against the
assets of Separate Account IV, without regard to the income, capital gains
or capital losses arising out of any other business which Providian Life &
Health Insurance Company may conduct.
3. Assets allocated to Separate Account IV will be owned by Providian Life
& Health Insurance Company. The assets in Separate Account IV attributable
to the Annuity Contract generally are not chargeable with liabilities aris-
ing out of any other business which Providian Life & Health Insurance Com-
pany may conduct. The assets of Separate Account IV are available to cover
the general liabilities of Providian Life & Health Insurance Company only to
the extent that the assets of Separate Account IV exceed the liabilities
arising under the Annuity Contracts.
4. The Annuity Contracts have been duly authorized by Providian Life &
Health Insurance Company and, when sold in jurisdictions authorizing such
sales, in accordance with the Registration Statement, will constitute val-
idly issued and binding obligations of Providian Life & Health Insurance
Company in accordance with their terms.
<PAGE>
Providian Life and Health Insurance Company
Separate Account IV
April 25, 1996
5. Owners of the Annuity Contracts as such, will not be subject to any de-
ductions, charges or assessments imposed by Providian Life and Health Insur-
ance Company other than those provided in the Annuity Contract.
I hereby consent to the use of this opinion as an exhibit to the Amendment and
to the reference to my name under the heading "Legal Matters" in the Prospec-
tus.
Very truly yours,
/s/ Kimberly A. Scouller
Assistant General Counsel
<PAGE>
EXHIBIT 9(b)
JORDEN BURT BERENSON & JOHNSON LLP
1025 THOMAS JEFFERSON STREET, N.W.
SUITE 400-EAST
WASHINGTON, D.C. 20007-0805
(202) 965-8100
TELECOPIER (202) 965-8104
April 25, 1996
PROVIDIAN LIFE & HEALTH INSURANCE COMPANY 20 MOORES ROAD FRAZER, PENNSYLVANIA
19355
Ladies and Gentlemen:
We hereby consent to the reference to our name under the caption "Legal Mat-
ters" in the Prospectus contained in Post-Effective Amendment No. 6 to the Reg-
istration Statement on Form N-4 (file No. 33-36073) filed by Providian Life &
Health Insurance Company and Providian Life & Health Insurance Company Separate
Account IV with the Securities and Exchange Commission under the Securities Act
of 1933 and the Investment Company Act of 1940.
Very truly yours,
/s/ Jorden Burt Berenson & Johnson LLP
Jorden Burt Berenson & Johnson LLP
<PAGE>
Exhibit No. (10)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Auditors" and to the
use of our reports dated April 23, 1996, with respect to the financial
statements of Providian Life and Health Insurance Company Separate Account IV
and the statutory-basis financial statements of Providian Life and Health
Insurance Company in Post-Effective Amendment No. 6 to the Registration
Statement (Form N-4 No. 33-36073) and related Prospectus of Providian Life
and Health Insurance Company Separate Account IV.
/s/ Ernst & Young
Louisville, Kentucky
April 23, 1996
<PAGE>
EXHIBIT 13
PERFORMANCE CALCULATION EXAMPLE
SEPARATE ACCOUNT IV
VANGUARD VARIABLE ANNUITY Fund is VVAP Equity Index
The Vanguard Variable Annuity has only one class of units
AUV 12/31/94 13.223746
AUV 12/31/95 18.073261
1 year nonstandard actual total return and actual average annual total return
is:
18.073261
--------- -1 = .3667278* 100% rounded to 2 decimal places = 36.67%
13.223746
