<PAGE>
[SBG LOGO]
- --------------------------------------------------------------------------------
Security Benefit Life Insurance Company 700 SW Harrison St.
Security Benefit Group, Inc. Topeka, Kansas 66636-0001
Security Distributors, Inc. (785) 431-3000
Security Management Company, LLC
A MESSAGE FROM SECURITY BENEFIT
In 1999, Security Benefit Life Insurance Company had another year of outstanding
financial results. The driving forces behind our tremendous financial
performance were consumers' demand for individual retirement products and the
extension of our money management and customer service competencies.
As consumers focus on their future, they look to Security Benefit as a partner
for developing personal retirement strategies. Our core competencies--money
management and customer service--are very solid and the cornerstone of our
stronghold in the market segments.
SBG IS A CLEAR CHOICE
There are many qualities that make partnering with Security Benefit a clear
choice:
* variety of retirement products
* cutting edge service
* pool of flexible and responsive employees
* rich heritage of innovation and creativity
* a rock solid financial foundation
* a strong risk management philosophy
However, if we were asked to capture what makes partnering with Security Benefit
a clear choice in one sentence, here's what we'd say--Security Benefit knows
Wall Street and Main Street.
Wall Street and Main Street are among the most famous streets in America, but
they're known better for their characteristics rather than their location.
Everyone knows that Wall Street is in New York, but Wall Street is more of an
adjective today than it is a noun. What are the characteristics of something
that's Wall Street-like? It's fast paced, risky and high stress.
Likewise, Main Street has become an adjective. The characteristics of something
that's Main Street-like are being friendly, courteous, relaxed, and having a
real interest and concern for your neighbor.
Knowledge of both streets is one of our competitive advantages and it's why we
are positioned for strong growth in the future.
SBG KNOWS WALL STREET
Even though Security Benefit operates out of America's Heartland in Topeka,
Kansas--the exact opposite of the Wall Street-like atmosphere--we know Wall
Street because of our experience, technology and people.
EXPERIENCE. We've been in the equities business for a long time. Security
Benefit was one of the first in the industry to introduce a variable annuity and
we were on the front end of the mutual fund explosion.* We're as interested in
the return of customers' investments as we are in the return on customers'
investments.
TECHNOLOGY. In today's computer age, we receive financial news and information
at the same time as any other Wall Street professional. When that one important
announcement comes across the wire, we receive the information in real time and
our money managers can react appropriately.
PEOPLE. There's an abundance of investment talent and expertise grown in
America's breadbasket and Security Benefit attracts its fair share. Here, our
talent is moderately insulated from the steady stream of Wall Street noise, so
they can focus on what they do best--manage money.
SECURITY BENEFIT KNOWS MAIN STREET
In order to survive in the financial services industry today, you need to be
good at providing three things:
* products with good performance
* competitive product pricing
* good customer service
But, in order to thrive in the industry, you need to be great at one of those
things.
At Security Benefit, we've got good products with good performance and
competitively priced. But, we've made a conscious decision to be great at
customer service. In 1999, Dalbar, Inc. recognized Security Benefit for its
great customer service--again.
Where does our ability to provide outstanding service stem from? It stems from
everyone at Security Benefit having a deep knowledge of Main Street. Main Street
is part of Americana. Our goal is to provide customers the high-touch,
personalized service you receive when you enter an establishment on Main Street,
USA.
In the year 2000 and beyond, we will invest in initiatives that enhance the
value we offer to customers and make partnering with Security Benefit an even
clearer choice. Thanks for choosing Security Benefit in 1999.
*Variable annuities and mutual funds distributed by Security Distributors, Inc.
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
HOWARD R. FRICKE
CHAIRMAN OF THE BOARD AND CEO
Security Benefit Life Insurance Company
Topeka, Kansas
KRIS A. ROBBINS
PRESIDENT AND COO
Security Benefit Life Insurance Company
Topeka, Kansas
SISTER LORETTO MARIE COLWELL
PRESIDENT AND CEO
St. Francis Hospital and Medical Center
Topeka, Kansas
JOHN C. DICUS
CHAIRMAN OF THE BOARD
Capitol Federal Savings & Loan Association
Topeka, Kansas
STEVEN J. DOUGLASS
CHAIRMAN AND CEO
Payless ShoeSource
Topeka, Kansas
WILLIAM W. HANNA
VICE CHAIRPERSON
Koch Industries
Wichita, Kansas
JOHN E. HAYES, JR.
CHAIRMAN OF THE BOARD AND CEO (Ret.)
Western Resources, Inc.
Topeka, Kansas
FRANK SABATINI
CHAIRMAN OF THE BOARD AND CEO
Capital City Bank
Topeka, Kansas
ROBERT C. WHEELER
CHAIRMAN AND CEO
Hill's Pet Nutrition, Inc.
Topeka, Kansas
NOTICE OF MEETING OF MEMBERS
The annual meeting of members of Security Benefit Mutual Holding Company (the
"Mutual Holding Company") will be held on Tuesday, June 6, 2000 at 700 SW
Harrison St., Topeka, Kansas at 1:00 p.m. Each owner of an insurance policy
issued by Security Benefit Life Insurance Company is a member of the Mutual
Holding Company and 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 no later than May 31, 2000.
For More Information Call 1-800-888-2461
This report is submitted only for the general information of Varilife insurance
policyowners and is not authorized for distribution to the public.
Enclosed are December 1999 financial reports for the variable life insurance
separate account.
www.securitybenefit.com
<PAGE>
FINANCIAL STATEMENTS
SECURITY VARILIFE SEPARATE ACCOUNT
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
Security Varilife Separate Account
Financial Statements
Years ended December 31, 1999, 1998 and 1997
CONTENTS
PAGE
Report of Independent Auditors.............................................. 1
Audited Financial Statements
Balance Sheets.............................................................. 2
Statements of Operations and Changes in Net Assets.......................... 4
Notes to Financial Statements............................................... 7
<PAGE>
Report of Independent Auditors
The Contract Owners
Security Varilife Separate Account
and
The Board of Directors
Security Benefit Life Insurance Company
We have audited the accompanying individual and combined balance sheets of
Security Varilife Separate Account (comprised of the individual series indicated
therein) as of December 31, 1999, and the related statements of operations and
changes in net assets for each of the three years in the period then ended.
These financial statements are the responsibility of Security Benefit Life
Insurance Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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, 1999,
by correspondence with the transfer agent. 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 individual and combined financial position of the
individual series of Security Varilife Separate Account at December 31, 1999,
and the individual and combined results of their operations and changes in their
net assets for each of the three years in the period then ended in conformity
with accounting principles generally accepted in the United States.
Ernst & Young LLP
February 4, 2000
<PAGE>
Security Varilife Separate Account
Balance Sheets
December 31, 1999
(DOLLARS IN THOUSANDS - EXCEPT PER SHARE AND UNIT VALUES)
ASSETS
Investments:
SBL Fund:
Series A (Growth Series) - 62,985 shares at net
asset value of $35.51 per share (cost, $1,961).................. $2,237
Series B (Growth-Income Series) - 13,016 shares at
net asset value of $24.39 per share (cost, $377)................ 317
Series C (Money Market Series) - 22,366 shares at
net asset value of $12.04 per share (cost, $274)................ 269
Series D (Worldwide Equity Series) - 54,044 shares
at net asset value of $9.08 per share (cost, $370).............. 491
Series E (High Grade Income Series) - 9,738 shares
at net asset value of $10.55 per share (cost, $116)............. 103
Series J (Mid Cap Series) - 18,920 shares at net
asset value of $30.15 per share (cost, $427).................... 570
Series K (Global Strategic Income Series) - 4,609 shares
at net asset value of $9.61 per share (cost, $46)............... 44
Series M (Global Total Return Series) - 7,516 shares
at net asset value of $13.09 per share (cost, $92).............. 98
Series N (Managed Asset Allocation Series) - 3,602 shares
at net asset value of $16.94 per share (cost, $53).............. 61
Series O (Equity Income Series) - 22,332 shares at
net asset value of $17.27 per share (cost, $378)................ 386
Series S (Social Awareness Series) - 1,892 shares
at net asset value of $31.71 per share (cost, $49).............. 60
-----
Combined assets........................................................ $4,636
=====
<PAGE>
NUMBER UNIT
NET ASSETS OF UNITS VALUE
-------------------
Net assets are represented by (NOTE 3):
Growth Series:
Accumulation units.................... 84,314 $26.53 $2,237
Growth-Income Series:
Accumulation units.................... 16,428 19.32 317
Money Market Series:
Accumulation units.................... 22,166 12.15 269
Worldwide Equity Series:
Accumulation units.................... 21,552 22.77 491
High Grade Income Series:
Accumulation units.................... 8,119 12.65 103
Mid Cap Series:
Accumulation units.................... 18,916 30.15 570
Global Strategic Income Series:
Accumulation units.................... 3,365 13.16 44
Global Total Return Series:
Accumulation units.................... 6,251 15.74 98
Managed Asset Allocation Series:
Accumulation units.................... 3,471 17.58 61
Equity Income Series:
Accumulation units.................... 20,152 19.14 386
Social Awareness Series:
Accumulation units.................... 2,257 26.58 60
-----
Combined net assets........................ $4,636
=====
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
Security Varilife Separate Account
Statements of Operations and Changes in Net Assets
Year ended December 31, 1999
(IN THOUSANDS)
<CAPTION>
GROWTH GROWTH- MONEY WORLDWIDE HIGH GRADE MID CAP
SERIES INCOME SERIES MARKET SERIES EQUITY SERIES INCOME SERIES SERIES
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dividend distributions............. $ 17 $ 7 $ 8 $--- $ 12 $---
Expenses (NOTE 2):
Mortality and expense risk fee.. (20) (3) (1) (3) (1) (3)
Administrative fee and
insurance costs............... (185) (48) (16) (33) (9) (35)
--------------------------------------------------------------------------------------------
Net investment gain (loss)......... (188) (44) (9) (36) 2 (38)
Capital gain distributions......... 69 123 --- 51 --- 54
Realized gain (loss) on investments 159 (73) 1 21 (1) 24
Unrealized appreciation
(depreciation) on investments... (72) (53) (4) 107 (15) 113
--------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments...... 156 (3) (3) 179 (16) 191
--------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations (32) (47) (12) 143 (14) 153
Net assets at beginning of year.... 2,077 341 71 315 105 278
Variable account deposits
(NOTES 2 AND 3)................. 533 100 421 103 18 211
Terminations and withdrawals
(NOTES 2 AND 3)................. (341) (77) (211) (70) (6) (72)
--------------------------------------------------------------------------------------------
Net assets at end of year.......... $2,237 $317 $ 269 $491 $103 $570
============================================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
<CAPTION>
GLOBAL MANAGED ASSET SOCIAL
STRATEGIC GLOBAL TOTAL ALLOCATION EQUITY AWARENESS
INCOME SERIES RETURN SERIES SERIES INCOME SERIES SERIES COMBINED
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dividend distributions............. $--- $ 4 $ 2 $ 13 $--- $ 63
Expenses (NOTE 2):
Mortality and expense risk fee.. --- (1) (1) (3) --- (36)
Administrative fee and
insurance costs............... (1) (5) (6) (18) (4) (360)
----------------------------------------------------------------------------------------------
Net investment gain (loss)......... (1) (2) (5) (8) (4) (333)
Capital gain distributions......... --- 7 --- 22 1 327
Realized gain (loss) on investments --- 2 5 26 2 166
Unrealized appreciation
(depreciation) on investments... --- (1) (2) (50) 4 27
----------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments...... --- 8 3 (2) 7 520
----------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations (1) 6 (2) (10) 3 187
Net assets at beginning of year.... 35 82 39 371 29 3,743
Variable account deposits
(NOTES 2 AND 3)................. 10 21 29 89 28 1,563
Terminations and withdrawals
(NOTES 2 AND 3)................. --- (11) (5) (64) --- (857)
----------------------------------------------------------------------------------------------
Net assets at end of year.......... $ 44 $ 98 $ 61 $386 $ 60 $4,636
==============================================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
Security Varilife Separate Account
Statements of Operations and Changes in Net Assets
Year ended December 31, 1998
(IN THOUSANDS)
<CAPTION>
GROWTH GROWTH- MONEY WORLDWIDE HIGH GRADE MID CAP
SERIES INCOME SERIES MARKET SERIES EQUITY SERIES INCOME SERIES SERIES
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dividend distributions............. $ 8 $ 5 $ 1 $ 4 $ 5 $ 2
Expenses (NOTE 2):
Mortality and expense risk fee.. (15) (3) (1) (3) (1) (2)
Administrative fee and
insurance costs............... (132) (38) (11) (48) (5) (47)
--------------------------------------------------------------------------------------------
Net investment gain (loss)......... (139) (36) (11) (47) (1) (47)
Capital gain distributions......... 104 30 --- 21 1 24
Realized gain on investments....... 59 7 2 1 --- 8
Unrealized appreciation
(depreciation) on investments... 215 (23) --- 24 1 6
--------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments...... 378 14 2 46 2 38
--------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 239 (22) (9) (1) 1 (9)
Net assets at beginning of year.... 1,320 278 46 227 86 222
Variable account deposits
(NOTES 2 AND 3)................. 547 101 199 102 20 83
Terminations and withdrawals
(NOTES 2 AND 3)................. (29) (16) (165) (13) (2) (18)
--------------------------------------------------------------------------------------------
Net assets at end of year.......... $2,077 $341 $ 71 $315 $105 $278
============================================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
<CAPTION>
GLOBAL MANAGED ASSET SOCIAL
STRATEGIC GLOBAL TOTAL ALLOCATION EQUITY AWARENESS
INCOME SERIES RETURN SERIES SERIES INCOME SERIES SERIES COMBINED
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dividend distributions............. $ 3 $ 2 $ 1 $ 5 $--- $ 36
Expenses (NOTE 2):
Mortality and expense risk fee.. --- (1) --- (3) --- (29)
Administrative fee and
insurance costs............... (1) (4) (2) (18) (1) (307)
-----------------------------------------------------------------------------------------------
Net investment gain (loss)......... 2 (3) (1) (16) (1) (300)
Capital gain distributions......... 1 4 --- 12 1 198
Realized gain on investments....... --- --- 1 17 1 96
Unrealized appreciation
(depreciation) on investments... (2) 4 4 (2) 5 232
-----------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments...... (1) 8 5 27 7 526
-----------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 1 5 4 11 6 226
Net assets at beginning of year.... 24 57 31 302 24 2,617
Variable account deposits
(NOTES 2 AND 3)................. 12 20 4 91 3 1,182
Terminations and withdrawals
(NOTES 2 AND 3)................. (2) --- --- (33) (4) (282)
-----------------------------------------------------------------------------------------------
Net assets at end of year.......... $ 35 $ 82 $ 39 $371 $ 29 $3,743
===============================================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
Security Varilife Separate Account
Statements of Operations and Changes in Net Assets
Year ended December 31, 1997
(IN THOUSANDS)
<CAPTION>
GROWTH GROWTH- MONEY WORLDWIDE HIGH GRADE MID CAP
SERIES INCOME SERIES MARKET SERIES EQUITY SERIES INCOME SERIES SERIES
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dividend distributions ............ $ 5 $ 5 $ 3 $ 4 $ 5 $ 1
Expenses (NOTE 2):
Mortality and expense risk fee . (7) (2) --- (2) (1) (2)
Administrative fee and
insurance costs .............. (77) (21) (10) (28) (5) (31)
--------------------------------------------------------------------------------------------
Net investment gain (loss) ........ (79) (18) (7) (26) (1) (32)
Capital gain distributions ........ 49 13 --- 10 --- 5
Realized gain (loss) on investments 43 11 (1) 8 --- 15
Unrealized appreciation
(depreciation) on investments .. 89 10 --- (13) 2 16
--------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments .......... 181 34 (1) 5 2 36
--------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 102 16 (8) (21) 1 4
Net assets at beginning of year ... 502 113 31 150 69 157
Variable account deposits
(NOTES 2 AND 3) .................. 752 153 426 124 18 108
Terminations and withdrawals
(NOTES 2 AND 3) ................ (36) (4) (403) (26) (2) (47)
--------------------------------------------------------------------------------------------
Net assets at end of year ......... $1,320 $278 $ 46 $227 $ 86 $222
============================================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
<CAPTION>
GLOBAL MANAGED ASSET SOCIAL
STRATEGIC GLOBAL TOTAL ALLOCATION EQUITY AWARENESS
INCOME SERIES RETURN SERIES SERIES INCOME SERIES SERIES COMBINED
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dividend distributions............. $ 2 $ 1 $--- $ 2 $--- $ 28
Expenses (NOTE 2):
Mortality and expense risk fee.. --- --- --- (2) --- (16)
Administrative fee and
insurance costs............... (1) (3) (1) (13) (1) (191)
-----------------------------------------------------------------------------------------------
Net investment gain (loss)......... 1 (2) (1) (13) (1) (179)
Capital gain distributions......... 1 1 --- 3 1 83
Realized gain on investments....... --- --- --- 4 --- 80
Unrealized appreciation
(depreciation) on investments... (1) 1 4 46 2 156
-----------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments...... --- 2 4 53 3 319
-----------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 1 --- 3 40 2 140
Net assets at beginning of year.... 13 36 23 141 12 1,247
Variable account deposits
(NOTES 2 AND 3)................. 10 21 5 121 13 1,751
Terminations and withdrawals
(NOTES 2 AND 3)................. --- --- --- --- (3) (521)
-----------------------------------------------------------------------------------------------
Net assets at end of year.......... $ 24 $ 57 $ 31 $302 $ 24 $2,617
===============================================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
Security Varilife Separate Account
Notes to Financial Statements
December 31, 1999, 1998 and 1997
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Security Varilife Separate 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
activity in the account relates to Security Elite Benefit, a variable life
product sold by SBL. Deposits received by the Account are invested in the SBL
Fund, a mutual fund not otherwise available to the public. As directed by the
owners, amounts deposited may be invested in shares of Series A (Growth Series -
emphasis on capital appreciation), Series B (Growth-Income Series - emphasis on
capital appreciation with secondary emphasis on income), Series C (Money Market
Series - emphasis on capital preservation while generating interest income),
Series D (Worldwide Equity Series - emphasis on long-term capital growth through
investment in foreign and domestic common stocks and equivalents), Series E
(High Grade Income Series - emphasis on current income with security of
principal), Series J (Mid Cap Series - emphasis on capital appreciation), Series
K (Global Strategic Income Series - emphasis on high current income with
secondary emphasis on capital appreciation), Series M (Global Total Return
Series - emphasis on high total return consisting of capital appreciation and
current income), Series N (Managed Asset Allocation Series - emphasis on high
level of total return), Series O (Equity Income Series - emphasis on substantial
dividend income and capital appreciation) and Series S (Social Awareness Series
- - emphasis on capital appreciation). During 1999, the former Emerging Growth
Series, Global Aggressive Bond Series and Specialized Asset Allocation Series
were renamed Mid Cap Series, Global Strategic Income Series and Global Total
Return Series, respectively.
Under the terms of the investment advisory contracts, portfolio investments of
the underlying mutual fund are made by Security Management Company, LLC (SMC), a
limited liability company controlled by its members, SBL and Security Benefit
Group, Inc., a wholly-owned subsidiary of SBL.
SMC has engaged T. Rowe Price Associates, Inc. to provide sub-advisory services
for the Managed Asset Allocation Series and the Equity Income Series and
Oppenheimer Funds, Inc. to provide sub-advisory services for the Worldwide
Equity Series. Meridian Investment Management Corporation (Meridian) served as
sub-advisor for the Global Strategic Income Series and the Global Total Return
Series until May 15, 1999 when Meridian was replaced by Wellington Management.
INVESTMENT VALUATION
Investments 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 realized gains and losses. Security
transactions are accounted for on the trade date.
The cost of investments purchased and proceeds from investments sold during the
years ended December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------ ------------------------ ------------------------
COST OF PROCEEDS COST OF PROCEEDS COST OF PROCEEDS
PURCHASES FROM SALES PURCHASES FROM SALES PURCHASES FROM SALES
------------------------ ------------------------ ------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Growth Series...................... $745 $672 $694 $211 $847 $161
Growth-Income Series............... 255 153 155 76 186 42
Money Market Series................ 468 267 263 240 436 420
Worldwide Equity Series............ 210 162 131 68 156 74
High Grade Income Series........... 44 30 25 7 24 9
Mid Cap Series..................... 326 171 147 105 127 93
Global Strategic Income Series..... 11 2 15 2 14 2
Global Total Return Series......... 39 24 26 5 24 4
Managed Asset Allocation Series.... 32 13 5 2 5 1
Equity Income Series............... 134 95 109 55 128 17
Social Awareness Series............ 30 5 4 5 17 7
</TABLE>
REINVESTMENT OF DIVIDENDS
Dividend and capital gain distributions paid by the mutual fund to the Account
are reinvested in additional shares of each respective series. Dividend income
and capital gain distributions are recorded as income on the ex-dividend date.
FEDERAL INCOME TAXES
The operations of the account are part of the operations of SBL. Under current
law, no federal income taxes are allocated by SBL to the operations of the
Account.
RECLASSIFICATIONS
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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.
2. SECURITY VARILIFE SEPARATE ACCOUNT CONTRACT CHARGES
SBL deducts a daily administrative charge equal to an annual rate of .35% of the
average daily net assets of each account. Mortality and expense risks assumed by
SBL are compensated for by a fee equivalent to an annual rate of 0.9% of the
average daily net assets of each account.
A deduction for cost of insurance and cost of any riders also is made monthly
and is equal to a current cost of insurance rate multiplied by the net amount at
risk under a policy at the beginning of the policy month. The net amount at risk
for these purposes is equal to the amount of death benefit payable at the
beginning of the policy month divided by 1.0032737 less the accumulated value at
the beginning of the month. These charges amounted to $347,000, $297,000 and
$185,000 during 1999, 1998 and 1997, respectively.
When applicable, an amount for state and local premium taxes is deducted from
each premium payment as provided by pertinent state law.
3. SUMMARY OF UNIT TRANSACTIONS
UNITS
----------------------
YEAR ENDED DECEMBER 31
1999 1998 1997
----------------------
(IN THOUSANDS)
Growth Series:
Account deposits.................................... 21 25 40
Terminations, withdrawals and expenses.............. 21 7 6
Growth-Income Series:
Account deposits.................................... 5 5 10
Terminations, withdrawals and expenses.............. 6 3 2
Money Market Series:
Account deposits.................................... 35 17 38
Terminations, withdrawals and expenses.............. 19 15 37
Worldwide Equity Series:
Account deposits.................................... 6 7 10
Terminations, withdrawals and expenses.............. 5 4 4
High Grade Income Series:
Account deposits.................................... 1 2 2
Terminations, withdrawals and expenses.............. 1 1 1
Mid Cap Series:
Account deposits.................................... 9 5 7
Terminations, withdrawals and expenses.............. 4 4 5
Global Strategic Income Series:
Account deposits.................................... 1 1 1
Terminations, withdrawals and expenses.............. --- --- ---
Global Total Return Series:
Account deposits.................................... 1 2 2
Terminations, withdrawals and expenses.............. 1 --- ---
Managed Asset Allocation Series:
Account deposits.................................... 2 --- ---
Terminations, withdrawals and expenses.............. 1 --- ---
Equity Income Series:
Account deposits.................................... 5 5 8
Terminations, withdrawals and expenses.............. 4 3 1
Social Awareness Series:
Account deposits.................................... 1 --- 1
Terminations, withdrawals and expenses.............. --- --- ---
