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VARIABLE
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ANNUITY
1995
ANNUAL
REPORT
[SBLIC LOGO]
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A LETTER FROM THE PRESIDENT
The key to Security Benefit's record-setting year was our ability to focus
on building value for our policyholders and customers by offering an array of
competitive and innovative products backed by service that we believe is
second-to-none.
We have grown into a diverse financial services organization with $5.7
billion in assets under management and statutory equity exceeding $200 million.
Security Benefit is a leader in the variable annuity and 403(b) market, and
is ranked among the top 25 variable annuity providers in the country, according
to Variable Annuity Research and Data Services (September 30, 1995).
SERVICE, STRENGTH and STABILITY are fundamental to our success, and
distinguish us from our competitors in the financial field.
SERVICE. We use the power of advanced technology to provide our associates
with the necessary tools to deliver fast, accurate, personalized service to our
customers.
STRENGTH. Security Benefit's financial strength is reflected in the
consistently strong ratings we receive from the financial analysts who study our
industry.
STABILITY. Investment strategies have risen and fallen. Products have come
into vogue and gone out just as fast. But we haven't varied from our original
purpose -- to care for and protect others.
In the coming year our focus will continue to be on equity-oriented
products -- variable annuities, mutual funds and variable life insurance. As we
go forward, we will continue to build financial strength and provide service
that exceeds the expectations of our customers.
HOWARD R. FRICKE
Howard R. Fricke
Chairman of the Board,
President and Chief Executive Officer
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BOARD OF DIRECTORS
HOWARD R. FRICKE WILLIAM W. HANNA
Chairman of the Board, President & Chief
President & Chief Operating Officer
Executive Officer Koch Industries
The Security Benefit Wichita, Kansas
Group of Companies
Topeka, Kansas JOHN E. HAYES, JR.
Chairman of the Board,
THOMAS R. CLEVENGER President & Chief
Wichita, Kansas Executive Officer
Western Resources, Inc.
SISTER LORETTO MARIE COLWELL Topeka, Kansas
President
St. Francis Hospital and LAIRD G. NOLLER
Medical Center President
Topeka, Kansas Noller Enterprises
Topeka, Kansas
JOHN C. DICUS
Chairman of the Board FRANK C. SABATINI
Capitol Federal Savings Chairman of the Board
& Loan Association and President
Topeka, Kansas Capital City Bank
Topeka, Kansas
MELANIE S. FANNIN
President ROBERT C. WHEELER
Kansas - Southwestern President
Bell Telephone Hill's Pet Nutrition, Inc.
Topeka, Kansas Topeka, Kansas
NOTICE OF POLICYOWNERS' MEETING
We encourage you to attend the annual meeting of policyowners to be held on
Tuesday, June 4, 1996 at Security Benefit Life, 700 SW Harrison St., Topeka,
Kansas at 2:00 p.m. Each policyowner is entitled to vote, either in person or by
proxy, on all matters coming before the meeting. Proxies are available from the
corporate secretary and must be returned at least 30 days prior to the annual
meeting.
This report is submitted only for the general information of Security Benefit
Life Variable Annuity contractowners and participants and is not authorized for
distribution to the public.
For More Information Call
1-800-888-2461
[SBLIC LOGO]
700 SW Harrison St., Topeka, Kansas 66636-0001
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Report of Independent Auditors
The Contractowners of SBL Variable Annuity Account
and The Board of Directors
Security Benefit Life Insurance Company
We have audited the accompanying balance sheet of SBL Variable Annuity Account
(the Company) as of December 31, 1995, and the related statement of operations
and changes in net assets for the year 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 audit.
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 investments owned as of December 31, 1995, 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 audit provides 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 SBL Variable Annuity Account at
December 31, 1995, and the results of its operations and changes in its net
assets for the year then ended in conformity with generally accepted accounting
principles.
Ernst & Young LLP
February 2, 1996
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SBL VARIABLE ANNUITY ACCOUNT
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BALANCE SHEET DECEMBER 31, 1995
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ASSETS (DOLLARS IN THOUSANDS)
Investments:
Security Equity Fund (Series E) - 13,221,228 shares at
net asset value of $6.43 per share (cost, $74,053) $ 85,012
Security Growth and Income Fund (Series I) - 3,530,689 shares
at net asset value of $7.94 per share (cost, $25,096) 28,034
Security Income Fund (Series B) - 751,031 shares at net
asset value of $7.39 per share (cost, $5,550) 5,550
Security Ultra Fund (Series U) - 31,525 shares at net
asset value of $6.95 per share (cost, $233) 219
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Total assets $118,815
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LIABILITIES AND NET ASSETS
Mortality guarantee payable $ 39
Actuarial risk fees payable 10
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Total liabilities 49
Net assets are represented by (NOTE 3):
Series E:
Accumulation units - 12,704,713 units at $6.43 per unit $ 81,691
Annuity reserves - 518,512 units at $6.43 per unit 3,334 85,025
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Series I:
Accumulation units - 3,327,823 units at $7.94 per unit 26,423
Annuity reserves - 194,807 units at $7.94 per unit 1,547 27,970
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Series B:
Accumulation units - 727,460 units at $7.39 per unit 5,376
Annuity reserves - 23,869 units at $7.39 per unit 176 5,552
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Series U:
Accumulation units - 31,198 units at $6.95 per unit 217
Annuity reserves - 322 units at $6.95 per unit 2 219
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Total liabilities and net assets $118,815
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SEE ACCOMPANYING NOTES.
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SBL VARIABLE ANNUITY ACCOUNT
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STATEMENT OF OPERATIONS AND
CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 1995
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(IN THOUSANDS)
SERIES E SERIES I SERIES B SERIES U
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Dividend distributions $ 736 $ 561 $ 366 $ -
Mortality and expense risk fee (NOTE 2) (594) (204) (44) (2)
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Net investment income (loss) 142 357 322 (2)
Capital gains distributions 5,913 938 - 28
Realized gain (loss) on investments 1,269 (499) (99) -
Unrealized appreciation on investments 16,528 5,497 653 9
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Net realized and unrealized gain
on investments 23,710 5,936 554 37
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Net increase in net assets
resulting from operations 23,852 6,293 876 35
Net assets at beginning of year 65,483 25,189 5,306 193
Variable annuity deposits
(NOTES 2 AND 3) 5,259 854 636 -
Terminations and withdrawals
(NOTES 2 AND 3) (8,877) (4,019) (1,238) (9)
Annuity payments (NOTES 2 AND 3) (499) (288) (27) -
Net mortality guarantee transfer (193) (59) (1) -
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Net assets at end of year $85,025 $27,970 $5,552 $219
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SEE ACCOMPANYING NOTES.
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[BLANK PAGE]
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SBL VARIABLE ANNUITY ACCOUNT
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NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - SBL Variable Annuity Account (the Account) is a separate account
of Security Benefit Life Insurance Company (SBL). The Account is registered as a
unit investment trust under the Investment Company Act of 1940, as amended. All
deposits received by the Account have been invested, as directed by the owners,
in either Security Equity Fund (Series E), Security Growth and Income Fund
(Series I), the Corporate Bond Series of Security Income Fund (Series B) or
Security Ultra Fund (Series U).
Under the terms of the investment advisory contracts, portfolio investments of
the underlying mutual funds are made by Security Management Company, a
wholly-owned subsidiary of Security Benefit Group, Inc., a wholly-owned
subsidiary of SBL.
INVESTMENT VALUATION - Investment in mutual fund shares are carried in the
balance sheet at market value (net asset value of the underlying mutual fund).
The first-in, first-out cost method is used to determine gains and losses.
Security transactions are accounted for on the trade date.
The cost of investments purchased and proceeds from investments sold were as
follows:
COST OF PROCEEDS
PURCHASES FROM SALES
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(IN THOUSANDS)
Security Equity Fund $12,883 $11,150
Security Growth and Income Fund 2,725 4,877
Security Income Fund 1,140 1,449
Security Ultra Fund 29 12
ANNUITY RESERVES - Annuity reserves relate to contracts which have matured and
are in the payout stage. Such reserves are computed on the basis of published
mortality tables, using assumed interest rates that will provide reserves as
prescribed by law. In cases where the payout option selected is life contingent,
SBL periodically recalculates the required annuity reserves, and any resulting
adjustment is either charged or credited to SBL and not to the Account.
REINVESTMENT OF DIVIDENDS - Dividend and capital gains distributions paid by the
mutual funds to the Account are reinvested in additional shares of each
respective Series. Dividend income and capital gains distributions are recorded
as income on the ex-dividend date.
FEDERAL INCOME TAXES - Under current law, no federal income taxes are payable
with respect to the Account.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
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SBL VARIABLE ANNUITY ACCOUNT
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NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
2. VARIABLE ANNUITY CONTRACT CHARGES
Mortality and expense risks assumed by SBL are compensated for by a fee
equivalent to an annual rate of 0.795% of the asset value of each contract, of
which 0.675% is for assuming mortality risks and the remainder is for assuming
expense risks.
When applicable, an amount for state premium taxes is deducted as provided by
pertinent state law, either from purchase payments or from the amount applied to
effect an annuity at the time annuity payments commence.
Contract charges retained by SBL from the proceeds of sales of annuity contracts
were $38,510 during 1995.
3. SUMMARY OF UNIT TRANSACTIONS
UNITS
(IN THOUSANDS)
Series E:
Variable annuity deposits 908
Terminations, withdrawals and annuity payments 1,630
Dividends and capital gains distributions, net of expenses paid 953
Series I:
Variable annuity deposits 123
Terminations, withdrawals and annuity payments 603
Dividends and capital gains distributions, net of expenses paid 169
Series B:
Variable annuity deposits 93
Terminations, withdrawals and annuity payments 182
Dividends and capital gains distributions, net of expenses paid 46
Series U:
Terminations, withdrawals and annuity payments 1
Dividends and capital gains distributions, net of expenses paid 4
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[THE SECURITY BENEFIT GROUP OF COMPANIES LOGO] BULK RATE
700 SW Harrison St., Topeka, Kansas 66636-0001 U.S. POSTAGE PAID
TOPEKA, KS
PERMIT NO. 428
