<PAGE> 1
File No. 33-81784
811-8642
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 10 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 7 /X/
---------------------------------
(Exact Name of Registrant)
OHIO NATIONAL VARIABLE ACCOUNT D
(Name of Depositor)
THE OHIO NATIONAL LIFE INSURANCE COMPANY
(Address of Depositor's Principal Executive Offices)
One Financial Way
Cincinnati, Ohio 45242
(Depositor's Telephone Number)
(513) 794-6100
---------------------------------
(Name and Address of Agent for Service)
Ronald L. Benedict, Corporate Vice President, Counsel
and Secretary
The Ohio National Life Insurance Company
P.O. Box 237
Cincinnati, Ohio 45201
Notice to:
W. Randolph Thompson, Esq.
Of Counsel
Jones & Blouch L.L.P.
Suite 405 West
1025 Thomas Jefferson Street, N.W.
Washington, D.C. 20007
---------------------------------
Approximate Date of Proposed Public Offering: As soon after the effective date
of this amendment as is practicable.
It is proposed that this filing will become effective (check appropriate space):
immediately upon filing pursuant to paragraph (b)
---
X on May 1, 2000, pursuant to paragraph (b)(1)(ix)
---
60 days after filing pursuant to paragraph (a)(i)
---
on (date) pursuant to paragraph (a)(i) of Rule 485.
---
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
--- a previously filed post-effective amendment.
<PAGE> 2
OHIO NATIONAL VARIABLE ACCOUNT D
<TABLE>
<CAPTION>
N-4 Item Caption in Prospectus
- -------- ---------------------
<S> <C>
1 Cover Page
2 Glossary of Special Terms
3 Not applicable
4 Accumulation Unit Values
5 The Ohio National Companies
6 Deductions and Expenses
7 Description of the Contracts
8 Annuity Benefits
9 Death Benefit
10 Accumulation
11 Surrender and Withdrawal
12 Federal Tax Status
13 Not applicable
14 Table of Contents
Caption in Statement of Additional Information
----------------------------------------------
15 Cover Page
16 Table of Contents
17 Not applicable
18 Custodian
Independent Certified Public Accountants
19 See Prospectus (Distribution of the Contracts)
20 Underwriter
21 Calculation of Money Market Subaccount Yield
Total Return
22 See Prospectus (Annuity Benefits)
23 Financial Statements
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Caption in Part C
-----------------
<S> <C>
24 Financial Statements and Exhibits
25 Directors and Officers of the Depositor
26 Persons Controlled by or Under Common Control
with the Depositor or Registrant
27 Number of Contractowners
28 Indemnification
29 Principal Underwriter
30 Location of Accounts and Records
31 Not applicable
32 Undertakings and Representations
</TABLE>
<PAGE> 4
PART A
PROSPECTUS
<PAGE> 5
PROSPECTUS
OHIO NATIONAL VARIABLE ACCOUNT D
OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY
One Financial Way
Montgomery, Ohio 45242
Telephone (800) 366-6654
for
GROUP VARIABLE ANNUITY CONTRACTS
This prospectus offers a group variable annuity contract allowing you to
accumulate values and paying you benefits on a variable and/or fixed basis.
Variable annuities provide contract values and lifetime annuity payments that
vary with the investment results of the Funds you choose. You cannot be sure
that account values or annuity payments will equal or exceed your contributions.
The contracts are designed for:
- - annuity purchase plans adopted by public school systems and certain tax-exempt
organizations described in Section 501(c)(3) of the Internal Revenue Code (the
"Code"), qualifying for tax-deferred treatment pursuant to Section 403(b) of
the Code,
- - other employee pension or profit-sharing trusts or plans qualifying for
tax-deferred treatment under Section 401(a), 401(k) or 403(a) of the Code,
- - state and municipal deferred compensation plans, and
- - non-tax-qualified plans.
The minimum contribution amount is $25 per participant. You may make additional
contributions at any time, but not more often than biweekly. Generally, your
plan governs the maximum amounts that may be contributed.
You may direct the allocation of contributions to one or more (but not more than
10 variable) subaccounts of Ohio National Variable Account D ("VAD"). VAD is a
separate account of The Ohio National Life Insurance Company. The assets of VAD
are invested in shares of the Funds. The Funds are portfolios of Ohio National
Fund, Inc., The Dow Target Variable Fund LLC, Goldman Sachs Variable Insurance
Trust, Janus Aspen Series Retirement Shares, Lazard Retirement Series, Inc.,
Strong Variable Insurance Funds, Inc. and the Variable Insurance Products Fund
(Fidelity). See page 2 for the list of available Funds. See also the
accompanying prospectuses of the Funds which might also contain information
about other funds that are not available for these contracts.
You may withdraw all or part of the contract value to provide plan benefits at
no charge. Amounts withdrawn may be subject to federal income tax penalties. We
may charge a withdrawal charge up to 7% of amounts withdrawn other than for plan
benefits (up to a maximum of 9% of all contributions). Your exercise of contract
rights may be subject to the terms of the qualified employee trust or annuity
plan. This prospectus contains no information about your trust or plan. The
prospectus does not provide details of all our administrative policies and
procedures.
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE. IT SETS FORTH THE INFORMATION ABOUT
VAD AND THE VARIABLE ANNUITY CONTRACT THAT YOU SHOULD KNOW BEFORE INVESTING.
ADDITIONAL INFORMATION ABOUT VAD HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IN A STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 2000. WE HAVE
INCORPORATED THE STATEMENT OF ADDITIONAL INFORMATION BY REFERENCE. IT IS
AVAILABLE UPON REQUEST AND WITHOUT CHARGE BY WRITING OR CALLING US AT THE ABOVE
ADDRESS. THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION IS ON
THE BACK PAGE OF THIS PROSPECTUS.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS SHOULD BE
ACCOMPANIED BY THE CURRENT FUND PROSPECTUS.
Form V-4827 MAY 1, 2000
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Funds.......................... 2
Fee Table................................ 3
Accumulation Unit Values................. 8
Financial Statements................... 10
The Ohio National Companies.............. 11
Ohio National Life..................... 11
Ohio National Variable Account D....... 11
The Funds.............................. 11
Mixed and Shared Funding............... 11
Voting Rights.......................... 12
Distribution of the Contracts............ 12
Deductions and Expenses.................. 12
Withdrawal Charge...................... 12
Deduction for Administrative
Expenses............................ 13
Deduction for Risk Undertakings........ 13
Limitations on Deductions.............. 13
Transfer Fee........................... 14
Deduction for State Premium Tax........ 14
Fund Expenses.......................... 14
Description of the Contracts............. 14
Accumulation............................. 14
Contribution Provisions................ 14
Accumulation Units..................... 14
Crediting Accumulation Units........... 14
Allocation of Contributions............ 14
Accumulation Unit Value and Contract
Value............................... 15
Net Investment Factor.................. 15
Surrender and Withdrawal............... 15
Transfers among Subaccounts............ 15
TeleAccess............................... 16
Payment of Plan Benefits............... 16
Texas State Optional Retirement
Program............................. 16
Guaranteed Account....................... 16
Annuity Benefits......................... 18
Purchasing an Annuity.................. 18
Annuity Options........................ 18
Determination of Amount of the First
Variable Annuity Payment............ 19
Annuity Units and Variable Payments.... 19
Transfers after Annuity Purchase....... 19
Other Contract Provisions................ 19
Assignment............................. 19
Periodic Reports....................... 20
Substitution for Fund Shares........... 20
Contract Owner Inquires................ 20
Performance Data......................... 20
Federal Tax Status....................... 20
Tax-Deferred Annuities................. 22
Qualified Pension or Profit-Sharing
Plans.................................. 22
Withholding on Distributions............. 23
Statement of Additional Information
Contents............................... 24
</TABLE>
AVAILABLE FUNDS
<TABLE>
<S> <C>
ADVISER (SUBADVISER)
OHIO NATIONAL FUND, INC. (Legg Mason Fund Adviser, Inc.)
Equity Portfolio Ohio National Investments, Inc.
Money Market Portfolio Ohio National Investments, Inc.
Bond Portfolio Ohio National Investments, Inc.
Omni Portfolio (a flexible portfolio (Federated Global Investment Management
fund) Corp.)
International Portfolio (Federated Global Investment Management
International Small Company Portfolio Corp.)
Capital Appreciation Portfolio (Jennison Associates LLC)
Small Cap Portfolio (Founders Asset Management LLC)
Aggressive Growth Portfolio (Janus Capital Corporation)
Core Growth Portfolio (Pilgrim Baxter & Associates, Ltd.)
Growth & Income Portfolio (RS Investment Management Co. LLC)
Capital Growth Portfolio (RS Investment Management Co. LLC)
S&P 500 Index Portfolio Ohio National Investments, Inc.
Social Awareness Portfolio Ohio National Investments, Inc.
High Income Bond Portfolio (Federated Investment Counseling)
Equity Income Portfolio (Federated Investment Counseling)
Blue Chip Portfolio (Federated Investment Counseling)
Nasdaq 100 Index Portfolio Ohio National Investments, Inc.
</TABLE>
Form V-4827
2
<PAGE> 7
<TABLE>
<S> <C>
THE DOW(SM) TARGET VARIABLE FUND LLC
The Dow(SM) Target 10 Portfolios (First Trust Advisors L.P.)
The Dow(SM) Target 5 Portfolios (First Trust Advisors L.P.)
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Goldman Sachs Growth and Income Fund Goldman Sachs Asset Management
Goldman Sachs CORE U.S. Equity Fund Goldman Sachs Asset Management
Goldman Sachs Capital Growth Fund Goldman Sachs Asset Management
JANUS ASPEN SERIES RETIREMENT SHARES*
Growth Portfolio* Janus Capital Corporation
Worldwide Growth Portfolio* Janus Capital Corporation
Balanced Portfolio* Janus Capital Corporation
LAZARD RETIREMENT SERIES, INC.
Small Cap Portfolio Lazard Asset Management
Emerging Markets Portfolio Lazard Asset Management
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Mid Cap Growth Fund II Strong Capital Management, Inc.
Strong Opportunity Fund II
(a mid cap/small cap fund) Strong Capital Management, Inc.
Strong Schafer Value Fund II Strong Capital Management, Inc.
VARIABLE INSURANCE PRODUCTS FUND SERVICE
CLASS 2 (FIDELITY)
VIP Contrafund(R) Portfolio Fidelity Management & Research Company
VIP Mid Cap Portfolio Fidelity Management & Research Company
VIP Growth Portfolio Fidelity Management & Research Company
</TABLE>
*Not available on non-tax-qualified plans.
FEE TABLE
<TABLE>
<CAPTION>
CONTRACT YEAR
OF SURRENDER PERCENTAGE
CONTRACTOWNER TRANSACTION EXPENSES OR WITHDRAWAL CHARGED
---------------------------------- ------------- ----------
<S> <C> <C>
Deferred Sales Load (as a percentage of amount withdrawn)
(Percentage varies by number of years from the establishment
of each participant's account.) (No charge for withdrawals
for plan payments.) 1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8 and later 0%
Exchange (transfer) Fee $5 (the fee is presently being waived)
</TABLE>
<TABLE>
<S> <C>
VAD ANNUAL EXPENSES (as a percentage of average
account value)
Mortality and Expense Risk Fees 1.00%
Account Fees and Expenses 0.35%
----
Total VAD Annual Expenses 1.35%
</TABLE>
Neither the table nor the examples reflect any premium taxes that may be
applicable to a contract. These currently range from 0% to 2.25%. For further
details, see Deductions and Expenses.
Form V-4827
3
<PAGE> 8
FUND ANNUAL EXPENSES (AS A PERCENTAGE OF THE FUND AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
TOTAL FUND
EXPENSES
WITHOUT TOTAL TOTAL FUND
WAIVERS WAIVERS EXPENSES
MANAGEMENT OTHER OR AND WITH WAIVERS
FEES EXPENSES REDUCTIONS REDUCTIONS* OR REDUCTIONS
---------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
OHIO NATIONAL FUND, INC.:
Money Market* 0.30% 0.11% 0.41% 0.05% 0.36%
Equity 0.80% 0.12% 0.92% 0.00% 0.92%
Bond 0.60% 0.17% 0.77% 0.00% 0.77%
Omni 0.54% 0.13% 0.67% 0.00% 0.67%
S&P 500 Index 0.38% 0.11% 0.49% 0.00% 0.49%
International* 0.90% 0.36% 1.26% 0.05% 0.21%
International Small Company 1.00% 1.06% 2.06% 0.00% 2.06%
Capital Appreciation 0.80% 0.15% 0.95% 0.00% 0.95%
Small Cap 0.80% 0.09% 0.89% 0.00% 0.89%
Aggressive Growth 0.80% 0.15% 0.95% 0.00% 0.95%
Core Growth 0.95% 0.11% 1.06% 0.00% 1.06%
Growth & Income 0.85% 0.10% 0.95% 0.00% 0.95%
Capital Growth 0.90% 0.19% 1.09% 0.00% 1.09%
Social Awareness 0.60% 0.33% 0.93% 0.00% 0.93%
High Income Bond 0.75% 0.38% 1.13% 0.00% 1.13%
Equity Income 0.75% 0.53% 1.28% 0.00% 1.28%
Blue Chip 0.90% 0.45% 1.35% 0.00% 1.35%
Nasdaq 100 Index** 0.75% 0.20% 0.95% 0.00% 0.95%
DOW TARGET VARIABLE FUND LLC:
Dow Target 10* 0.60% 0.64% 1.24% 0.21% 1.03%
Dow Target 5* 0.60% 2.54% 3.14% 2.27% 0.87%
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Growth and Income* 0.75% 0.47% 1.22% 0.22% 1.00%
Goldman Sachs CORE U.S. Equity 0.70% 0.20% 0.90% 0.00% 0.90%
Goldman Sachs Capital Growth* 0.75% 0.94% 1.69% 0.69% 1.00%
JANUS ASPEN SERIES RETIREMENT SHARES:
Growth 0.65% 0.52% 1.17% 0.00% 1.17%
Worldwide Growth 0.65% 0.55% 1.20% 0.00% 1.20%
Balanced 0.65% 0.52% 1.17% 0.00% 1.17%
LAZARD RETIREMENT SERIES, INC.:
Small Cap* 0.75% 6.56% 7.31% 6.06% 1.25%
Emerging Markets* 1.00% 8.59% 9.59% 7.99% 1.60%
STRONG VARIABLE INSURANCE FUNDS, INC.:
Strong Mid Cap Growth II* 1.00% 0.17% 1.17% 0.02% 1.15%
Strong Opportunity II 1.00% 0.14% 1.14% 0.00% 1.14%
Strong Schafer Value II* 1.00% 0.57% 1.57% 0.37% 1.20%
VARIABLE INSURANCE PRODUCTS FUND (FIDELITY):
VIP Contrafund 0.58% 0.37% 0.95% 0.00% 0.95%
VIP Mid Cap 0.57% 0.68% 1.25% 0.00% 1.25%
VIP Growth 0.58% 0.35% 0.93% 0.00% 0.93%
</TABLE>
Form V-4827
4
<PAGE> 9
EXAMPLE - If you surrendered your contract at the end of the applicable time
period, you would pay the following aggregate expenses on a $1,000 investment in
each Fund, assuming 5% annual return:
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
OHIO NATIONAL FUND, INC.:
Money Market* $ 90 $109 $128 $202
Equity 95 125 156 261
Bond 94 121 148 245
Omni 93 118 144 235
S&P 500 Index 91 113 135 216
International* 98 133 170 290
International Small Company 105 157 210 369
Capital Appreciation 95 126 157 264
Small Cap 95 124 154 257
Aggressive Growth 95 126 157 264
Core Growth 96 129 163 275
Social Awareness 95 125 156 262
Growth & Income 95 126 157 264
Capital Growth 97 130 164 278
High Income Bond 97 131 166 282
Equity Income 98 135 173 296
Blue Chip 99 137 177 303
Nasdaq 100 Index** 95 126 157 264
DOW TARGET VARIABLE FUND LLC:
Dow Target 10* 96 128 161 272
Dow Target 5* 94 124 153 255
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Growth and Income* 96 127 160 267
Goldman Sachs CORE U.S. Equity 95 125 155 258
Goldman Sachs Capital Growth* 96 127 160 269
JANUS ASPEN SERIES RETIREMENT SHARES:
Growth 97 132 168 286
Worldwide Growth 98 133 169 289
Balanced 97 132 168 286
LAZARD RETIREMENT SERIES, INC.:
Small Cap* 98 135 172 293
Emerging Markets* 101 144 188 327
STRONG VARIABLE INSURANCE FUNDS, INC.:
Strong Mid Cap Growth II* 97 132 167 284
Strong Opportunity II 97 131 167 283
Strong Schafer Value II* 98 133 169 289
VARIABLE INSURANCE PRODUCTS FUND (FIDELITY):
VIP Contrafund 95 126 157 264
VIP Mid Cap 98 135 172 293
VIP Growth 95 125 156 262
</TABLE>
Form V-4827
5
<PAGE> 10
EXAMPLE - If you do not surrender your contract or if you annuitize at the end
of the applicable time period, you would pay the following aggregate expenses on
the same investment:
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
OHIO NATIONAL FUND, INC.:
Money Market* $17 $ 54 $ 93 $202
Equity 23 71 122 261
Bond 22 66 114 245
Omni 21 63 109 235
S&P 500 Index 19 58 100 216
International* 26 80 136 290
International Small Company 34 105 177 369
Capital Appreciation 23 72 123 264
Small Cap 23 70 120 257
Aggressive Growth 23 72 123 264
Core Growth 24 75 129 275
Social Awareness 23 71 122 262
Growth & Income 23 72 123 264
Capital Growth 25 76 130 278
High Income Bond 25 77 132 282
Equity Income 27 82 140 296
Blue Chip 27 84 143 303
Nasdaq 100 Index** 23 72 123 264
DOW TARGET VARIABLE FUND LLC:
Dow Target 10* 24 74 127 272
Dow Target 5* 23 69 119 255
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Growth and Income* 24 73 126 269
Goldman Sachs CORE U.S. Equity 23 70 120 258
Goldman Sachs Capital Growth* 24 73 126 269
JANUS ASPEN SERIES RETIREMENT SHARES:
Growth 26 78 134 286
Worldwide Growth 26 79 136 289
Balanced 26 78 134 286
LAZARD RETIREMENT SERIES, INC.:
Small Cap* 26 81 138 293
Emerging Markets* 30 91 155 327
STRONG VARIABLE INSURANCE FUNDS, INC.:
Strong Mid Cap Growth II* 25 78 133 284
Strong Opportunity II 25 78 133 283
Strong Schafer Value II* 26 79 136 289
VARIABLE INSURANCE PRODUCTS FUND (FIDELITY):
VIP Contrafund 23 72 123 264
VIP Mid Cap 26 81 138 293
VIP Growth 23 71 122 262
</TABLE>
*The investment advisers of certain Funds are voluntarily waiving part or all of
their management fees and/or reimbursing certain Funds in order to reduce total
Fund expenses.
Form V-4827
6
<PAGE> 11
EXAMPLE - Without the voluntary fee waivers or reimbursements by investment
advisers, if you surrendered your contract at the end of the applicable time
period, you would pay the following aggregate expenses on a $1,000 investment in
each of the following Funds, assuming 5% annual return:
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
OHIO NATIONAL FUND, INC.:
Money Market $ 90 $110 $131 $207
International 98 135 172 294
DOW TARGET VARIABLE FUND LLC:
Dow Target 10 98 134 171 292
Dow Target 5 115 187 258 461
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Growth and Income 98 134 170 290
Goldman Sachs Capital Growth 102 147 193 336
LAZARD RETIREMENT SERIES, INC.:
Small Cap 152 291 420 723
Emerging Markets 172 342 493 818
STRONG VARIABLE INSURANCE FUNDS, INC.:
Strong Mid Cap Growth II 97 132 168 286
Strong Schafer Value II 101 144 187 324
</TABLE>
EXAMPLE - Without the voluntary fee waivers or reimbursements by investment
advisers, if you do not surrender your contract or if you annuitize at the end
of the applicable time period, you would pay the following aggregate expenses on
the same investment:
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
OHIO NATIONAL FUND, INC.:
Money Market $ 18 $ 55 $ 95 $207
International 26 81 139 294
DOW TARGET VARIABLE FUND LLC:
Dow Target 10 26 81 138 292
Dow Target 5 45 136 227 461
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Growth and Income 26 80 137 290
Goldman Sachs Capital Growth 31 94 160 336
LAZARD RETIREMENT SERIES, INC.:
Small Cap $ 85 $246 $395 $723
Emerging Markets 106 300 471 818
STRONG VARIABLE INSURANCE FUNDS, INC:
Strong Mid Cap Growth II 26 78 134 286
Strong Schafer Value II 30 90 154 324
</TABLE>
**The "Other Expenses" (and accordingly, the Total Fund Expenses) for these
Funds are based on estimates.
The purpose of the above table is to help you to understand the costs and
expenses that you will bear directly or indirectly. THESE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSE. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN. For some funds, the "Other Expenses" include a
12b-1 fee. These fees do not exceed 0.25%. Note that the expense amounts shown
in the examples are aggregate amounts for the total number of years indicated.
In the examples, the annual fee is treated as if it were deducted as a
percentage of assets, based upon the average account value for all contracts,
including ones from which a portion of the contract fee may
Form V-4827
7
<PAGE> 12
be paid from amounts invested in the Guaranteed Account. The above table and
examples reflect only the charges for contracts currently offered by this
prospectus and not other contracts that we may offer.
ACCUMULATION UNIT VALUES
This series of group variable annuity contracts began on January 25, 1995. The
International Small Company and Aggressive Growth funds began on March 31, 1995.
The Core Growth, Growth & Income, S&P 500 Index and Social Awareness funds began
on January 3, 1997. The Ohio National Fund Capital Growth, High Income Bond,
Equity Income and Blue Chip funds, the Dow Target Variable funds, the Goldman
Sachs funds, the Janus Aspen funds, the Lazard Retirement funds and the Strong
Variable Insurance funds were added on November 1, 1999. The Ohio National Fund
Nasdaq 100 Index fund and Variable Insurance Products funds were added on May 1,
2000.
EQUITY
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1995 $ 10.000000 $ 12.198167 13,287
1996 12.198167 14.243704 32,583
1997 14.243704 16.607094 74,941
1998 16.607094 17.323587 107,618
1999 17.323587 20.488690 123,655
</TABLE>
MONEY MARKET
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1995 $ 10.000000 $ 10.346422 1,732
1996 10.346422 10.735959 7,977
1997 10.735959 11.161886 32,475
1998 11.161886 11.606378 48,567
1999 11.606378 12.027104 72,108
</TABLE>
BOND
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1995 $ 10.000000 $ 11.207694 1,139
1996 11.207694 11.468004 6,512
1997 11.468004 12.365430 12,237
1998 12.365430 12.837064 16,940
1999 12.837064 12.739294 41,686
</TABLE>
OMNI
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1995 $ 10.000000 $ 11.742940 13,547
1996 11.742940 13.386856 45,160
1997 13.386856 15.605553 98,309
1998 15.605553 16.095248 146,331
1999 16.095248 17.684265 143,525
</TABLE>
Form V-4827
8
<PAGE> 13
INTERNATIONAL
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1995 $ 10.000000 $ 11.256284 20,393
1996 11.256284 12.714297 42,439
1997 12.714297 12.810197 100,959
1998 12.810197 13.130325 110,066
1999 13.130325 21.687535 96,945
</TABLE>
INTERNATIONAL SMALL COMPANY
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1995 $ 10.000000 $ 10.780072 8,523
1996 10.780072 11.922317 13,394
1997 11.922317 13.135923 16,765
1998 13.135923 13.418205 12,900
1999 13.418205 27.606603 14,362
</TABLE>
CAPITAL APPRECIATION
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1995 $ 10.000000 $ 11.663489 39,782
1996 11.663489 13.320406 54,003
1997 13.320406 15.139212 78,535
1998 15.139212 15.820771 72,571
1999 15.820771 16.618131 77,142
</TABLE>
SMALL CAP
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1995 $ 10.000000 $ 12.909669 24,533
1996 12.909669 14.992559 39,188
1997 14.992559 16.045605 78,648
1998 16.045605 17.505914 91,751
1999 17.505914 35.661694 109,169
</TABLE>
AGGRESSIVE GROWTH
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1995 $ 10.000000 $ 12.568155 3,057
1996 12.568155 12.494380 9,915
1997 12.494380 13.872097 21,702
1998 13.872097 14.760465 38,333
1999 14.760465 15.402459 36,760
</TABLE>
CORE GROWTH
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1997 $ 10.000000 $ 9.562924 12,433
1998 9.562924 10.267604 23,776
1999 10.267604 20.763312 27,196
</TABLE>
Form V-4827
9
<PAGE> 14
GROWTH & INCOME
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1997 $ 10.000000 $ 13.476367 11,608
1998 13.476367 14.239205 71,864
1999 14.239205 22.795195 113,670
</TABLE>
S&P 500 INDEX
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1997 $ 10.000000 $ 12.999822 26,903
1998 12.999822 16.675212 112,232
1999 16.675212 20.669795 177,053
</TABLE>
SOCIAL AWARENESS
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1997 $ 10.000000 $ 12.396349 3,506
1998 12.396349 9.490457 20,572
1999 9.490457 11.020767 19,408
</TABLE>
GOLDMAN SACHS CAPITAL GROWTH
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1999 $ 10.000000 $ 11.173846 4
</TABLE>
JANUS GROWTH
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1999 $ 10.000000 $ 11.639885 87
</TABLE>
JANUS WORLDWIDE GROWTH
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1999 $ 10.000000 $ 13.211585 39
</TABLE>
JANUS BALANCED
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1999 $ 10.000000 $ 11.011548 2,432
</TABLE>
LAZARD SMALL CAP
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1999 $ 10.000000 $ 10.533744 3
</TABLE>
STRONG MID CAP GROWTH II
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
- ----------- ----------------- ------------- ---------------
<S> <C> <C> <C>
1999 $ 10.000000 $ 12.911573 3
</TABLE>
FINANCIAL STATEMENTS
The complete financial statements of VAD and Ohio National Life, including the
Independent Auditors' Reports for them, may be found in the Statement of
Additional Information.
Form V-4827
10
<PAGE> 15
THE OHIO NATIONAL COMPANIES
OHIO NATIONAL LIFE
Ohio National Life was organized under the laws of Ohio on September 9, 1909 as
a stock life insurance company. We are now ultimately owned by a mutual holding
company (Ohio National Mutual Holdings, Inc.) with the majority ownership being
by our policyholders. We write life, accident and health insurance and annuities
in 47 states, the District of Columbia and Puerto Rico. Currently, we have
assets in excess of $7.6 billion and equity in excess of $725 million. Our home
office is located at One Financial Way, Montgomery, Ohio 45242.
OHIO NATIONAL VARIABLE ACCOUNT D
We established VAD on August 1, 1969 as a separate account under Ohio law for
the purpose of funding variable annuity contracts. (Until 1993, VAD was used to
fund group variable annuity contracts unrelated to the contracts offered in this
prospectus. Those unrelated group variable annuity contracts are now funded
through another separate account.) Contributions for the contracts are allocated
to one or more subaccounts of VAD. However, a participant's account values may
not be allocated to more than 10 variable subaccounts at any one time. Income,
gains and losses, whether or not realized, from assets allocated to VAD are,
credited to or charged against VAD without regard to our other income, gains or
losses. The assets maintained in VAD will not be charged with any liabilities
arising out of any of our other business. Nevertheless, all obligations arising
under the contracts, including the commitment to make annuity payments, are our
general corporate obligations. Accordingly, all of our assets are available to
our meet obligations under the contracts. VAD is registered as a unit investment
trust under the Investment Company Act of 1940.
The assets of each subaccount of VAD are invested at net asset value in Fund
shares.
THE FUNDS
The Funds are mutual funds registered under the Investment Company Act of 1940.
Fund shares are sold only to insurance company separate accounts to fund
variable annuity contracts and variable life insurance policies and, in some
cases, to qualified plans. The value of each Fund's investments fluctuates daily
and is subject to the risk that Fund management may not anticipate or make
changes necessary in the investments to meet changes in economic conditions.
The Funds receive investment advice from their investment advisers. The Funds
pay each of the investment advisers a fee as shown in the fee table beginning on
page 4. In some cases, the investment adviser pays part of its fee to a
subadviser.
Affiliates of certain Funds may compensate us based upon a percentage of the
Fund's average daily net assets that are allocated to VAD. These percentages
vary by Fund. This is intended to compensate us for administrative and other
services we provide to the Funds and their affiliates.
For additional information concerning the Funds, including their investment
objectives, see the Fund prospectuses. Read them carefully before investing.
They may contain information about other funds that are not available as
investment options for these contracts. You cannot be sure that any Fund will
achieve its stated objectives and policies.
The investment policies, objectives and/or names of some of the Funds may be
similar to those of other investment companies managed by the same investment
adviser or subadviser. However, similar funds often do not have comparable
investment performance. The investment results of the Funds may be higher or
lower than those of the other funds.
MIXED AND SHARED FUNDING
In addition to being offered to VAD, certain Fund shares are offered to our
other separate accounts for variable annuity contracts and a separate account of
Ohio National Life Assurance Corporation for variable life insurance
Form V-4827
11
<PAGE> 16
contracts. Fund shares may also be offered to other insurance company separate
accounts and qualified plans. It is conceivable that in the future it may become
disadvantageous for one or more of variable life and variable annuity separate
accounts, or separate accounts of other life insurance companies, and qualified
plans, to invest in Fund shares. Although neither we nor any of the Funds
currently foresee any such disadvantage, the Board of Directors or Trustees of
each Fund will monitor events to identify any material conflict among different
types of owners and to determine if any action should be taken. That could
possibly include the withdrawal of VAD's participation in a Fund. Material
conflicts could result from such things as:
- - changes in state insurance law;
- - changes in federal income tax law;
- - changes in the investment management of any Fund; or
- - differences in voting instructions given by different types of owners.
VOTING RIGHTS
We will vote Fund shares held in VAD at Fund shareholders meetings in accordance
with voting instructions received from contract owners. We will determine the
number of Fund shares for which you are entitled to give instructions as
described below. This determination will be within 90 days before the
shareholders meeting. Fund proxy material and forms for giving voting
instructions will be distributed to each owner. We will vote Fund shares held in
VAD, for which no timely instructions are received, in proportion to the
instructions that we do receive for VAD.
The number of Fund shares for which you may instruct us is determined by
dividing your contract value in each Fund by the net asset value of a share of
that Fund as of the same date. For variable annuities purchased for
participants, the number of Fund shares for which you may instruct us is
determined by dividing the actuarial liability for those variable annuities by
the net asset value of a Fund share as of the same date. Generally, the number
of votes tends to decrease as annuity payments progress.
DISTRIBUTION OF THE CONTRACTS
The contracts are sold by our insurance agents who are also registered
representatives of (a) The O. N. Equity Sales Company ("ONESCO"), a wholly-owned
subsidiary of ours, or (b) other broker-dealers that have entered into
distribution agreements with Ohio National Equities, Inc. ("ONEQ") another
wholly-owned subsidiary of ours. ONEQ is the principal underwriter of the
contracts. Each of ONEQ, ONESCO and the other broker-dealers is registered under
the Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc. We pay ONEQ compensation equal to no more than 5% of
contributions. ONEQ then pays part of that amount to ONESCO and the other
broker-dealers. ONESCO and the other broker-dealers pay their registered
representatives from their own funds. Contributions on which nothing is paid to
registered representatives may not be included in amounts on which we pay the
fee to ONEQ. If our withdrawal charge is not sufficient to recover the fee paid
to ONEQ any deficiency will be made up from general assets. These include, among
other things, any profit from the mortality and expense risk charges. ONEQ's
address is One Financial Way, Montgomery, Ohio 45242.
DEDUCTIONS AND EXPENSES
WITHDRAWAL CHARGE
There is no deduction from contributions to pay sales expense. We may assess a
withdrawal charge if you surrender the contract or withdraw part of its value
(except to make plan payments). The purpose of this charge is to defray expenses
relating to the sale of the contract, including compensation to sales personnel,
cost of sales literature and prospectuses, and other expenses related to sales
activity. The withdrawal charge equals a percent of the contract value
Form V-4827
12
<PAGE> 17
withdrawn. This percent varies by the number of years from the date the
participant's account was established under the contract until the day the
withdrawal occurs as follows:
<TABLE>
<CAPTION>
YEAR OF
WITHDRAWAL PERCENTAGE
- ---------- ----------
<S> <C>
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8 and later 0%
</TABLE>
The total of all withdrawal charges together with any distribution expense risk
charges made against any participant account will never exceed 9% of the total
contributions made to that participant account. (See Deduction for Risk
Undertakings, below.) If the trustee of a retirement plan qualifying under
Section 401, 403(b), or 457 of the Code uses values of at least $250,000 from an
Ohio National Life individual or group annuity to provide the first purchase
payment for a contract offered under this prospectus, this contract will be
treated (for purposes of determining the withdrawal charge) as if each existing
participant's account funded with any portion of that first purchase payment had
been established at the same time as the original annuity (or the same time the
individual annuity was issued to the participant) and as if the purchase
payments made for the fixed annuity had been made for this contract. This does
not apply to participants added after this contract is issued.
DEDUCTION FOR ADMINISTRATIVE EXPENSES
At the end of each valuation period, we deduct an amount presently equal to
0.35% on an annual basis, of the contract value. This deduction reimburses us
for administrative expenses. Examples of these expenses are expenses are
accounting, auditing, legal, contract owner services, reports to regulatory
authorities and contract owners, contract issue, etc.
DEDUCTION FOR RISK UNDERTAKINGS
We guarantee that the contract value will not be affected by any excess of sales
and administrative expenses over the deductions for them. We also guarantee that
variable annuity payments will not be affected by adverse mortality experience
or expenses.
For assuming these risks, when we determine the accumulation unit values and the
annuity unit values for each subaccount, we make a deduction from the applicable
investment results equal to 1% of the contract value on an annual basis. The
risk charge is an indivisible whole of the amount currently being deducted.
However, we believe that a reasonable allocation would be 0.40% for mortality
risk, and 0.60% for expense risk. We hope to realize a profit from this charge.
However, there will be a loss if the deduction fails to cover the actual risks
involved.
The contracts also provide for a distribution expense risk charge of no more
than 0.40%. We are not presently deducting that charge.
LIMITATIONS ON DEDUCTIONS
The contracts provide that we may reduce the deductions for administrative
expense, mortality and expense risks, and distribution expense risk at any time.
Each of these deductions may be increased, not more often than annually, and the
total of all these deductions may never exceed 2% per year.
Form V-4827
13
<PAGE> 18
TRANSFER FEE
We may charge a transfer fee of $5 for each transfer of a participant's account
values from one subaccount to another. The fee is charged against the subaccount
from which the transfer is made. We are not currently charging this fee.
DEDUCTION FOR STATE PREMIUM TAX
Most states do not presently charge a premium tax for these contracts. Where a
tax applies, the rates are presently 0.5% in California, 1.0% in Puerto Rico and
West Virginia, 2.0% in Kentucky and 2.25% in the District of Columbia. The
deduction for premium taxes will be made when incurred. Normally, that is not
until annuity payments begin.
FUND EXPENSES
There are deductions from, and expenses paid out of, the assets of the Funds.
These are described in the Fund prospectus.
DESCRIPTION OF THE CONTRACTS
ACCUMULATION
CONTRIBUTION PROVISIONS
The contracts provide for minimum contributions of $25 per participant. Your
plan defines the maximum contributions allowed. You may make contributions at
any time but not more often than biweekly. We may agree to modify any of these
limits.
ACCUMULATION UNITS
The contract value is measured by accumulation units. These units are credited
to the contract when you make each contribution. (See Crediting Accumulation
Units, below). The number of units remains constant between contributions, but
their dollar value varies depending upon the investment results of each Fund to
which contributions are allocated.
CREDITING ACCUMULATION UNITS
Your representative will send application forms or orders, together with the
first contribution, to our home office for acceptance. Upon acceptance, we issue
a contract and we credit the first contribution to the contract in the form of
accumulation units. If all information necessary for processing the contribution
is complete, your first contribution will be credited within two business days
after receipt. If this cannot be done within five business days, we will return
the contribution immediately unless you specifically consent to having us retain
the contribution until the necessary information is completed. After that, we
will credit the contribution within two business days. You must send any
additional contributions directly to our home office. They will then be applied
to provide that number of accumulation units (for each subaccount) determined by
dividing the amount of the contribution by the unit value next computed after we
receive the payment at our home office.
ALLOCATION OF CONTRIBUTIONS
You may allocate contributions among up to 10 variable Funds and the Guaranteed
Account. The amount allocated to any Fund or the Guaranteed Account must equal a
whole percent. You may change your allocation of future contributions at any
time by sending written notice to our home office.
Form V-4827
14
<PAGE> 19
ACCUMULATION UNIT VALUE AND CONTRACT VALUE
We set the accumulation unit value of each subaccount of VAD at $10 when we
allocated the first contributions for these contracts. We determine the unit
value for any later valuation period by multiplying the unit value for the
immediately preceding valuation period by the net investment factor (described
below) for such later valuation period. We determine a contract's value by
multiplying the total number of units (for each subaccount) credited to the
contract by the unit value (for such subaccount) for the current valuation
period.
NET INVESTMENT FACTOR
The net investment factor measures the investment results of each subaccount.
The net investment factor for each subaccount for any valuation period is
determined by dividing (a) by (b), then subtracting (c) from the result, where:
(a) is
(1) the net asset value of the corresponding Fund share at the end of a
valuation period, plus
(2) the per share amount of any dividends or other distributions declared
for that Fund if the "ex-dividend" date occurs during the valuation
period, plus or minus
(3) a per share charge or credit for any taxes paid or reserved for, the
maintenance or operation of that subaccount, (no federal income taxes
apply under present law.);
(b) is the net asset value of the corresponding Fund share at the end of the
preceding valuation period; and
(c) is the deduction for administrative expenses and risk undertakings.
SURRENDER AND WITHDRAWAL
You may surrender (totally withdraw the value of) the contract or you may make
withdrawals from it. The withdrawal charge may apply to these transactions. The
withdrawal will be made from your values in each Fund. The amount you may
withdraw is the contract value less any withdrawal charge. We will pay you
within seven days after we receive your request. However, we may defer payments
as described below. Withdrawals are limited or not permitted in connection with
certain retirement plans. For tax consequences of a withdrawal, see Federal Tax
Status.
If you request a withdrawal that includes contract values derived from
contributions that have not yet cleared the banking system, we may delay mailing
that portion which relates to such contributions until the check for the
contribution has cleared.
The right to withdraw may be suspended or the date of payment postponed:
- - for any period during which the New York Stock Exchange is closed (other than
customary weekend and holiday closings) or during which the Securities and
Exchange Commission has restricted trading on the Exchange;
- - for any period during which an emergency, as determined by the Commission,
exists as a result of which disposal of securities held in a Fund is not
reasonably practical, or it is not reasonably practical to determine the value
of a Fund's net assets; or
- - such other periods as the Commission may order to protect security holders.
TRANSFERS AMONG SUBACCOUNTS
You may transfer contract values at any time from one Fund to another. The
amount of any such transfer within a participant's account must be at least $500
(or the entire value of the participant's interest in a subaccount, if less). We
may limit the number, frequency, method or amount of transfers. We may limit
transfers from any Fund on any one day to 1% of the previous day's total net
assets of that Fund if we or the Fund, in our discretion, believe that the Fund
might otherwise be damaged. In this case, some requested transfers will not
occur. In determining which
Form V-4827
15
<PAGE> 20
requests to honor, scheduled transfers (under a dollar cost averaging program)
will be made first, followed by mailed written requests in the order postmarked
and, lastly, telephone and facsimile requests in the order received. We will
notify you if your requested transfer is not made. Current SEC rules preclude us
from processing at a later date those requests that were not made. Accordingly,
you would need to submit a new transfer request in order to make a transfer that
was not made because of these limitations.
Certain third parties may offer you asset allocation or timing services for your
contract. We may choose to honor transfer requests from these third parties if
you give us a written power of attorney to do so. Fees you pay for such asset
allocation or timing services are in addition to any contract charges. WE DO NOT
ENDORSE, APPROVE OR RECOMMEND THESE SERVICES.
After purchasing an annuity, a participant may transfer annuity values among
subaccounts only once each calendar quarter. Such transfers may then be made
without a transfer fee. (See Transfer Fee, and Transfers After Annuity
Purchase).
TELEACCESS
If you give us a pre-authorization form, contract and unit values and interest
rates can be checked and transfers may be made by telephoning us between 7:00
a.m. and 7:00 p.m. (Eastern time) on days we are open for business, at
1-800-366-6654, #8. You may only make one telephone transfer per day. We will
honor pre-authorized telephone transfer instructions from anyone who provides
the personal identifying information requested via TeleAccess. We will not honor
telephone transfer requests after the annuitant's death. For added security, we
send the contract owner a written confirmation of all telephone transfers on the
next business day. However, if we cannot complete a transfer as requested, our
customer service representative will contact the contract owner in writing sent
within 48 hours of the TeleAccess request. YOU MAY THINK THAT YOU HAVE LIMITED
THIS ACCESS TO YOURSELF, OR TO YOURSELF AND YOUR REPRESENTATIVE. HOWEVER, ANYONE
GIVING US THE NECESSARY IDENTIFYING INFORMATION CAN USE TELEACCESS ONCE YOU
AUTHORIZE ITS USE.
PAYMENT OF PLAN BENEFITS
At the contract owner's request, and upon receipt of due proof of a
participant's death, disability, retirement or termination of employment, we
will apply that participant's account value to provide a benefit prescribed by
the plan. No withdrawal charge will be made in connection with the payment of
these plan benefits.
TEXAS STATE OPTIONAL RETIREMENT PROGRAM
Under the Texas State Optional Retirement Program (the "Program"), contributions
may be excluded from the gross income of state employees for federal tax
purposes to the extent that such contributions do not exceed the exclusion
allowance provided by the Code. The Attorney General of Texas has interpreted
the Program as prohibiting any participating state employee from receiving the
surrender value of a contract funding benefits under the Program prior to
termination of employment or the state employee's retirement, death or total
disability. Therefore, a participant in the Program may not make a withdrawal
until the first of these events occurs.
GUARANTEED ACCOUNT
The Guaranteed Account guarantees a fixed return for a specified period of time
and guarantees the principal against loss. The Guaranteed Account is not
registered as an investment company. Interests in it are not subject to the
provisions or restrictions of federal securities laws. The staff of the
Securities and Exchange Commission has not reviewed the disclosures regarding
it.
The Guaranteed Account consists of all of our general assets other than those
allocated to a separate account. You may allocate contributions and contract
values between the Guaranteed Account and the Funds.
Form V-4827
16
<PAGE> 21
We will invest our general assets in our discretion as allowed by Ohio law. We
allocate the investment income from our general assets to those contracts having
guaranteed values.
The amount of investment income allocated to the contracts varies from year to
year in our sole discretion. However, we guarantee that we will credit interest
at a rate of not less than 3% per year, compounded annually, to contract values
allocated to the Guaranteed Account. We may credit interest at a rate in excess
of 3%, but any such excess interest credit will be in our sole discretion.
We guarantee that the guaranteed value of a contract will never be less than:
- - the amount of deposits allocated to, and transfers into, the Guaranteed
Account, plus
- - interest credited at the rate of 3% per year compounded annually, plus
- - any additional excess interest we may credit to guaranteed values, minus
- - any withdrawals and transfers from the guaranteed values, minus
- - any withdrawal charges, state premium taxes and transfer fees.
No deductions are made from the Guaranteed Account for administrative expenses
or risk undertakings. (See Deductions and Expenses, page 12.) However, in
addition to any applicable withdrawal charge, we may assess a liquidation charge
as described below.
Contract values credited to the Guaranteed Account are allocated to an
investment cell. A cell is a partition of the Guaranteed Account by the time
period in which the contract value is credited to the Guaranteed Account (either
from a contribution or a transfer into the Guaranteed Account). Earlier cells
may be aggregated into a single cell. We credit interest to each cell at a rate
declared by us. This rate will not be reduced more than once a year. Amounts
withdrawn from or charged against a participant's account decrease the balances
in the cells within that participant's account on a last-in first-out basis.
Only when the most recently established cell's balance is zero will the next
previously established cell's balance be reduced.
We assess a liquidation charge for withdrawals made from a participant's portion
of the Guaranteed Account. This is a percent of the balance withdrawn from a
cell. The percentage equals ten times x minus y (but never less than 0%), where:
x is the annual effective interest rate we declare for the cell for new
contract contributions as of the date of withdrawal, and
y is the annual effective interest rate for the cell from which a
withdrawal is being made at the time of withdrawal.
The liquidation charge never exceeds the difference between the amount of the
participant's contract value allocated to the Guaranteed Account and the
participant's minimum Guaranteed Account value. The participant's minimum
Guaranteed Account value equals the participant's net purchase payments and
transfers allocated to the Guaranteed Account, less withdrawals and transfers
from the Guaranteed Account, accumulated at an annual effective interest rate of
3%.
The liquidation charge does not apply when the contract is discontinued because
of plan termination. The liquidation charge is not assessed when you discontinue
the contract if you elect to receive the balance in the Guaranteed Account in
six payments over a five year period. The first payment is made within 30 days
of discontinuance, equal to 1/6 of the balance. Later payments are made at the
end of each of the next five years equal to 1/6 of the original balance plus
interest credited to the date of payment.
Not more than 20% of a participant's Guaranteed Account value, as of the
beginning of any contract year, may be transferred to one or more variable Funds
during that contract year. As provided by state law, we can defer the
Form V-4827
17
<PAGE> 22
payment of amounts withdrawn from the Guaranteed Account for up to six months
from the date we receive your written request for withdrawal.
ANNUITY BENEFITS
PURCHASING AN ANNUITY
At the contract owner's written request, we will apply a participant's account
value to purchase an annuity. You must specify the purpose, effective date,
option, amount and frequency of payments, and the payees (including the
annuitant and any contingent annuitant and beneficiary), and give evidence of
the annuitant's age. Payments will be made to the annuitant during the
annuitant's lifetime. The contracts include our guarantee (except for option
(e), below) that we will pay annuity payments for the lifetime of the annuitant
(and any joint annuitant) in accordance with the contract's annuity rates no
matter how long the annuitant (and any joint annuitant) may live.
Other than in connection with annuity Option (e) described below, once an
annuity is purchased, the annuity cannot be surrendered for cash except that,
upon the death of the annuitant, the beneficiary may surrender the annuity for
the commuted value of any remaining period-certain payments. Surrenders and
withdrawals may be made from Option (e) at any time.
ANNUITY OPTIONS
You may elect one or more of the following annuity options upon the purchase of
an annuity for a participant (annuitant):
Option (a): Life Annuity with installment payments for the lifetime of the
annuitant (the annuity has no more value after the annuitant's
death).
Option (b): Life Annuity with installment payments guaranteed for five or ten
years and then continuing during the remaining lifetime of the
annuitant.
Option (c): Joint & Survivor Life Annuity with installment payments during the
lifetime of an annuitant and all or a portion (e.g., 1/2 or 2/3)
of the payments continuing during the lifetime of a contingent
annuitant.
Option (d): Installment Refund Life Annuity with payments guaranteed for a
period certain and then continuing during the remaining lifetime of
the annuitant. The number of period-certain payments is equal to
the amount applied under this option divided by the amount of the
first payment.
Option (e): Installment Refund Annuity with payments guaranteed for a fixed
number (up to thirty) of years. This option is available for
variable annuity payments only. (Although the deduction for risk
undertakings is taken from annuity unit values, we have no
mortality risk during the annuity payout period under this
option.)
We may agree to other settlement options.
Unless you direct otherwise, when an annuity is purchased, we will apply the
participant's account values to provide annuity payments pro-rata from each Fund
in the same proportion as the participant's account values immediately before
the purchase of the annuity.
The Internal Revenue Service has not ruled on the tax treatment of a commutable
variable annuity. If you select Option (e), it is possible that the IRS could
determine that the entire value of the annuity is fully taxable at the time you
elect Option (e) or that variable annuity payments under this option should not
be taxed under the annuity rules (see Federal Tax Status, page 20). This could
result in your payments being fully taxable to you. Should the IRS so rule, we
may have to tax report up to the full value of the annuity as your taxable
income.
Form V-4827
18
<PAGE> 23
DETERMINATION OF AMOUNT OF THE FIRST VARIABLE ANNUITY PAYMENT
To determine the first payment under a variable annuity, we apply the
participant's account value for each Fund in accordance with the contract's
purchase rate tables. The rates in those tables depend upon the annuitant's (and
any contingent annuitant's) age and sex and the option selected. The annuitant's
sex is not a factor in contracts issued to plans sponsored by employers subject
to Title VII of the Civil Rights Act of 1964 or similar state statutes. We
determine the accumulation value to be applied at the end of a valuation period
(selected by us and uniformly applied) not more than a month and a day before
participant's first annuity payment.
If the amount that would be applied under an option is less than $5,000, we will
pay the participant's account value in a single sum. If the first periodic
payment under any option would be less than $50, we may change the frequency of
payments so that the first payment is at least $50.
ANNUITY UNITS AND VARIABLE PAYMENTS
After a participant's first annuity payment, later variable annuity payments
will vary to reflect the investment performance of the selected Funds. The
amount of each payment depends on the participant's number of annuity units. To
determine the number of annuity units for each Fund, divide the dollar amount of
the first annuity payment from each Fund by the value of that Fund's annuity
unit. This number of annuity units remains constant for any annuity unless the
annuitant transfers among Funds.
The annuity unit value for each subaccount was set at $10 for the valuation
period when the first variable annuity was calculated for each subaccount. The
annuity unit value for each later valuation period equals the annuity unit value
for the immediately preceding valuation period multiplied by the net investment
factor for such later valuation period and by a factor (0.9998925 for a one-day
valuation period) to neutralize the assumed interest rate discussed below.
The dollar amount of each later subsequent variable annuity payment equals your
constant number of annuity units for each Fund multiplied by the value of the
annuity unit for the valuation period.
The annuity purchase rate tables contained in the contract are based on a
blended 1983(a) Annuity Mortality Table with compound interest at the effective
rate of 4% per year. A higher interest assumption would mean a higher initial
annuity payment but a more slowly rising series of subsequent annuity payments
if annuity unit values were increasing (or a more rapidly falling series of
subsequent annuity payments if annuity unit values were decreasing). A lower
interest assumption would have the opposite effect. If the actual net investment
rate were equal to the assumed interest rate, annuity payments would stay level.
TRANSFERS AFTER ANNUITY PURCHASE
After annuity payments have been made for at least 12 months, the annuitant can,
once each 12 months, change the Funds on which variable annuity payments are
based. On at least 60 days written notice to our home office, we will change
that portion of the periodic variable annuity payment as you direct to reflect
the investment results of different Funds. The annuity payment immediately after
a change will be the amount that would have been paid without the change. Later
payments will reflect the new mix of Funds.
OTHER CONTRACT PROVISIONS
ASSIGNMENT
Amounts payable in settlement of a contract may not be commuted, anticipated,
assigned or otherwise encumbered, or pledged as loan collateral to anyone other
than us. To the extent permitted by law, such amounts are not subject to any
legal process to pay any claims against an annuitant before annuity payments
begin. The owner of a tax-qualified
Form V-4827
19
<PAGE> 24
contract may not, but the owner of a non-tax-qualified contract may,
collaterally assign the contract before the annuity payout date. Ownership of a
tax-qualified contract may not be transferred except to:
- - the annuitant,
- - a trustee or successor trustee of a pension or profit-sharing trust which is
qualified under Section 401 of the Code,
- - the employer of the annuitant provided that the contract after transfer is
maintained under the terms of a retirement plan qualified under Section 403(a)
of the Code for the benefit of the annuitant, or
- - as otherwise permitted by laws and regulations governing plans for which the
contract may be issued.
PERIODIC REPORTS
Each six months we will send you a statement showing the number of accumulation
units credited to the contract by Fund and the value of each unit as of the end
of the last half year. In addition, as long as the contract remains in effect,
we will forward any periodic Fund reports.
SUBSTITUTION FOR FUND SHARES
If investment in a Fund is no longer possible or we believe it is inappropriate
to the purposes of the contract, we may substitute one or more other funds.
Substitution may be made as to both existing investments and the investment of
future contributions. However, no substitution will be made until we receive any
necessary approval of the Securities and Exchange Commission. We may also add
other Funds as eligible investments of VAD.
CONTRACT OWNER INQUIRIES
Direct any questions to Ohio National Life, Group Annuity Administration, P.O.
Box 2669, Cincinnati, Ohio 45201; telephone 1-800-366-6654 (8:30 a.m. to 4:30
p.m. Eastern time).
PERFORMANCE DATA
We may advertise performance data for the various Funds showing the percentage
change in unit values based on the performance of the applicable Fund over a
period of time (usually a calendar year). We determine the percentage change by
dividing the increase (or decrease) in value for the unit by the unit value at
the beginning of the period. This percent reflects the deduction of any
asset-based contract charges but does not reflect the deduction of any
applicable withdrawal charge. The deduction of a withdrawal charge would reduce
any percentage increase or make greater any percentage decrease.
Advertising may also include average annual total return figures calculated as
shown in the Statement of Additional Information. The average annual total
return figures reflect the deduction of applicable withdrawal charges as well as
applicable asset-based charges.
We may also distribute sales literature comparing separate account performance
to the Consumer Price Index or to such established market indexes as the Dow
Jones Industrial Average, the Standard & Poor's 500 Stock Index, IBC's Money
Fund Reports, Lehman Brothers Bond Indices, Morgan Stanley Europe Australia Far
East Index, Morgan Stanley World Index, Russell 2000 Index, or other variable
annuity separate accounts or mutual funds with investment objectives similar to
those of the Funds.
FEDERAL TAX STATUS
The following discussion of federal income tax treatment of amounts received
under a variable annuity contract does not cover all situations or issues. It is
not intended as tax advice. Consult a qualified tax adviser for application of
law to your circumstances. Tax laws can change, even for contracts that have
already been issued. Tax law revisions, with
Form V-4827
20
<PAGE> 25
unfavorable consequences, could have retroactive effect on previously issued
contracts or on later voluntary transactions in previously issued contracts.
We are taxed as a life insurance company under Subchapter L of the Internal
Revenue Code (the "Code"). Since the operations of VAD are a part of, and are
taxed with, our operations, VAD is not separately taxed as a "regulated
investment company" under Subchapter M of the Code.
As to tax-qualified contracts, the law does not now provide for payment of
federal income tax on dividend income or capital gains distributions from Fund
shares held in VAD or upon capital gains realized by VAD on redemption of Fund
shares. When a non-tax-qualified contract is issued in connection with a
deferred compensation plan or arrangement, all rights, discretions and powers
relative to the contract are vested in the contract owner and participants must
look only to the contract owner for the payment of deferred compensation
benefits. Generally, in that case, an annuitant will have no "investment in the
contract" and amounts received by participants from the contract owner under a
deferred compensation arrangement will be taxable in full as ordinary income in
the years participants receive the payments.
The contracts are considered annuity contracts under Section 72 of the Code,
which generally provides for taxation of annuities. Under existing provisions of
the Code, any increase in the contract value is not taxable to you as the owner
or annuitant until you receive it, either in the form of annuity payments, as
contemplated by the contract, or in some other form of distribution. The owner
of a non-tax-qualified contract must be a natural person for this purpose. With
certain exceptions, where the owner of a non-tax-qualified contract is a
non-natural person (corporation, partnership or trust) any increase in the
accumulation value of the contract attributable to purchase payments made after
February 28, 1986 will be treated as ordinary income received or accrued by the
contract owner during the current tax year.
When annuity payments begin each payment is taxable under Section 72 of the Code
as ordinary income in the year of receipt if you have neither paid any portion
of the contributions nor previously been taxed on any portion of the
contributions. If any portion of the contributions has been paid from or
included in the annuitant's taxable income, this aggregate amount will be
considered the annuitant's "investment in the contract." The annuitant will be
entitled to exclude from taxable income a portion of each annuity payment equal
to the annuitant's "investment in the contract" divided by the period of
expected annuity payments, determined by the annuitant's life expectancy and the
form of annuity benefit. Once the annuitant's "investment in the contract" is
recovered, all further annuity payments will be included in that annuitant's
taxable income.
If a participant elects to receive his or her value in a single sum in lieu of
annuity payments, any amount received or withdrawn in excess of the
participant's "investment in the contract" will normally be taxed as ordinary
income in the year received. A withdrawal of a participant's account values is
taxable as income to the extent that the participant's accumulated account value
immediately before the payment exceeds the "investment in the contract." Such a
withdrawal is treated as a distribution of earnings first and only second as a
recovery of the participant's "investment in the contract." Any part of the
value of the contract that is assigned or pledged to secure a loan will be taxed
as if it had been a partial withdrawal and may be subject to a penalty tax.
There is a penalty tax equal to 10% of any amount that must be included in gross
income for tax purposes. The penalty will not apply to a redemption that is:
- - received on or after the taxpayer reaches age 59 1/2;
- - made to a beneficiary on or after the death of the annuitant;
- - attributable to the taxpayer's becoming disabled;
- - made as a series of substantially equal periodic payments for the life of the
annuitant (or joint lives of the annuitant and beneficiary);
Form V-4827
21
<PAGE> 26
- - from a contract that is a qualified funding asset for purposes of a structured
settlement;
- - made under an annuity contract that is purchased with a single premium and
with annuity payments that commence not later than a year from the purchase of
the annuity; or
- - incident to divorce.
If an election is made not to have withholding apply to the early withdrawal or
if an insufficient amount is withheld, the participant may be responsible for
payment of estimated tax. The participant may also incur penalties under the
estimated tax rules if the withholding and estimated tax payments are not
sufficient. A participant's failure to provide his or her taxpayer
identification number will automatically subject any payments under the contract
to withholding.
TAX-DEFERRED ANNUITIES
Under the provisions of Section 403(b) of the Code, employees may exclude from
their gross income contributions made for annuity contracts purchased for them
by public educational institutions and certain tax-exempt organizations which
are described in Section 501(c)(3) of the Code. They may make this exclusion to
the extent that the aggregate contributions plus any other amounts contributed
to purchase a contract and toward benefits under qualified retirement plans do
not exceed their exclusion allowance as determined in Sections 403(b) and 415 of
the Code. Employee contributions are, however, subject to social security (FICA)
tax withholding. All amounts received by an employee under a contract, either in
the form of annuity payments or cash withdrawal, will be taxed under Section 72
of the Code as ordinary income for the year received, except for exclusion of
any amounts representing "investment in the contract." Under certain
circumstances, amounts received may be used to make a "tax-free rollover" into
one of the types of individual retirement arrangements permitted under the Code.
Amounts received that are eligible for "tax-free rollover" will be subject to an
automatic 20% withholding unless such amounts are directly rolled over from the
tax-deferred annuity to the individual retirement arrangement.
With respect to earnings accrued and contributions made after December 31, 1988,
for a salary reduction agreement under Section 403(b) of the Code, distributions
may be paid only when the employee:
- - attains age 59 1/2,
- - separates from the employer's service,
- - dies,
- - becomes disabled as defined in the Code, or
- - incurs a financial hardship as defined in the Code.
In the case of hardship, cash distributions may not exceed the amount of
contributions. These restrictions do not affect rights to transfer investments
among the Funds and do not limit the availability of exchanges.
QUALIFIED PENSION OR PROFIT-SHARING PLANS
Under present law, contributions made by an employer or trustee, for a plan or
trust qualified under Section 401(a) or 403(a) of the Code, are generally
excludable from the employee's gross income. Any contributions made by the
employee, or which are considered taxable income to the employee in the year
such payments are made, constitute an "investment in the contract" under Section
72 of the Code for the employee's annuity benefits. Employer or employee
payments to a profit sharing plan qualifying under Section 401(k) of the Code
are generally excludable from gross income of the employee.
Distributions must begin no later than April 1 of the calendar year following
the year in which the participant reaches age 70 1/2. Premature distribution of
benefits (prior to age 59 1/2) or contributions in excess of those permitted by
the Code may result in certain penalties under the Code.
Form V-4827
22
<PAGE> 27
If an employee, or one or more of the beneficiaries, receives the total amounts
payable with respect to an employee within one taxable year after age 59 1/2 on
account of the employee's death or separation from service of the employer, any
amount received in excess of the employee's "investment in the contract" may be
taxed under special 5-year forward averaging rules. Five-year averaging will no
longer be available after 1999 except for certain grandfathered individuals. You
can elect to have that portion of a lump-sum distribution attributable to years
of participation prior to January 1, 1974 given capital gains treatment. The
percentage of pre-1974 distribution subject to capital gains treatment decreases
as follows: 100%, 1987; 95%, 1988; 75%, 1989; 50%, 1990; and 25%, 1991. For tax
years 1992 and later no capital gains treatment is available (except that
taxpayers who were age 50 before 1986 may still elect capital gains treatment).
The employee receiving such a distribution may be able to make a "tax-free
rollover" of the distribution less the employee's "investment in the contract"
into another employee's qualified plan or into one of the types of individual
retirement arrangements permitted under the Code. Amounts received that are
eligible for "tax-free rollover" will be subject to an automatic 20% withholding
unless such amounts are directly rolled over to another qualified plan or
individual retirement arrangement.
WITHHOLDING ON DISTRIBUTIONS
Distributions from tax-deferred annuities or qualified pension or profit sharing
plans that are eligible for "tax-free rollover" will be subject to an automatic
20% withholding unless such amounts are directly rolled over to an individual
retirement arrangement or another qualified plan. Federal income tax withholding
is required on annuity payments. However, recipients of annuity payments may
elect not to have the tax withheld. This election may be revoked at any time and
withholding would begin after that. If you do not give us your taxpayer
identification number any payments under the contract will automatically be
subject to withholding.
Form V-4827
23
<PAGE> 28
STATEMENT OF ADDITIONAL INFORMATION CONTENTS
Custodian
Independent Certified Public Accountants
Underwriter
Calculation of Money Market Yield
Total Return
Financial Statements for VAD and Ohio National Life
Form V-4827
24
<PAGE> 29
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 30
OHIO NATIONAL VARIABLE ACCOUNT D
OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY
One Financial Way
Montgomery, Ohio 45242
Telephone (513) 794-6514
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
This Statement of Additional Information is not a prospectus. Read it along with
the prospectus for Ohio National Variable Account D ("VAD") group variable
annuity contracts dated May 1, 2000. To get a free copy of the VAD prospectus,
write or call us at the above address.
Table of Contents
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Independent Certified Public Accountants . . . . . . . . . . . 2
Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . 2
Calculation of Money Market Yield . . . . . . . . . . . . . . 3
Total Return . . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Statements . . . . . . . . . . . . . . . . . . . . . 5
GROUP RETIREMENT ADVANTAGE
<PAGE> 31
CUSTODIAN
We have a custody agreement with Firstar Bank, N.A., Cincinnati, Ohio, under
which Firstar holds custody of VAD's assets. The agreement provides for Firstar
to purchase Fund shares at their net asset value determined as of the end of the
valuation period during which we receive the deposit. At our instruction,
Firstar redeems the Fund shares held by VAD at their net asset value determined
as of the end of the valuation period during which we receive or make a
redemption request. In addition, Firstar keeps appropriate records of all of
VAD's transactions in Fund shares.
The custody agreement requires Firstar to always have aggregate capital, surplus
and undivided profit of not less than $2 million. It does not allow Firstar to
resign until (a) a successor custodian bank having the above qualifications has
agreed to serve as custodian, or (b) VAD has been completely liquidated and the
liquidation proceeds properly distributed. Subject to these conditions, the
custody agreement may be terminated by either us or Firstar upon sixty days
written notice. We pay Firstar a fee for its services as custodian.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The financial statements of VAD as of December 31, 1999 and for the periods
indicated and our consolidated financial statements as of December 31, 1999 and
1998 and for the periods indicated have been included in reliance upon the
reports of KPMG LLP, independent certified public accountants, also appearing
herein, and upon that firm's authority as experts in accounting and auditing.
UNDERWRITER
We offer the contracts continuously. Before May 1, 1997, The O. N. Equity Sales
Company ("ONESCO"), a wholly-owned subsidiary of ours, was the principal
underwriter of the contracts. Since May 1, 1997, the principal underwriter has
been Ohio National Equities, Inc. ("ONEQ"), another wholly-owned subsidiary of
ours. The aggregate amount of commissions paid to ONESCO and ONEQ with respect
to contracts issued by VAD, and the amounts retained by ONESCO and ONEQ, for
each of the last three years have been:
<TABLE>
<CAPTION>
ONESCO ONEQ
Aggregate Aggregate Retained
Year Commissions Commissions Commissions
---- ----------- ----------- -----------
<S> <C> <C> <C>
1999 None $257,215 None
1998 None $195,038 None
1997 $93,634 91,301 None
</TABLE>
2
<PAGE> 32
CALCULATION OF MONEY MARKET YIELD
The annualized current yield of the Money Market subaccount for the seven days
ended on December 31, 1999, was 4.37%. This was calculated by determining the
net change, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one Money Market accumulation unit at
the beginning of the seven-day period, dividing the net change in value by the
beginning value to obtain the seven-day return, and multiplying the difference
by 365/7. The result is rounded to the nearest hundredth of one percent.
TOTAL RETURN
The average annual compounded rate of return for a contract for each subaccount
over a given period is found by equating the initial amount invested to the
ending redeemable value using the following formula:
P(1 + T)(n) = ERV
where: P = a hypothetical initial payment of $1,000,
T = the average annual total return,
n = the number of years, and
ERV = the ending redeemable value of a hypothetical $1,000
beginning-of-period payment at the end of the period (or
fractional portion thereof).
We will up-date standardized total return data based upon Fund performance in
the subaccounts within 30 days after each calendar quarter.
In addition, we may present non-standardized total return data, using the above
formula but based upon Fund performance before the date we first offered this
series of contracts (January 25, 1995). This will be presented as if the same
charges and deductions applying to these contracts had been in effect from the
inception of each Fund.
The average annual total returns for the contracts from the inception of each
Fund and for the one-, five- and ten-year periods ending on December 31, 1999
(assuming surrender of the contract then) are as follows:
<TABLE>
Fund
One Five Ten From Fund Returns Inception
Year Years Years Inception in VAD* Date
------ ----- ----- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ohio National Fund:
Money Market 3.62% 3.91% 3.58% 5.66% 3.91% 3-20-80
Equity 18.27% 16.09% 10.85% 9.69% 10.85% 1-14-71
Bond (0.76%) 5.92% 5.69% 6.57% 5.69% 11-2-82
Omni 9.87% 12.77% 9.61% 10.01% 12.77% 9-10-84
S&P 500 Index 23.95% N/A N/A 27.43% 27.43% 1-3-97
International 65.17% 16.34% N/A 16.79% 16.34% 4-30-93
International Small Company 105.74% N/A N/A 23.83% 23.83% 3-31-95
Capital Appreciation 5.04% 11.51% N/A 10.75% 11.51% 5-1-94
Small Cap 103.71% 29.38% N/A 29.62% 29.38% 5-1-94
Aggressive Growth 4.35% N/A N/A 9.50% 9.50% 3-31-95
Core Growth 102.22% N/A N/A 27.63% 27.63% 1-3-97
Growth & Income 60.09% N/A N/A 31.67% 31.67% 1-3-97
Capital Growth 198.35% N/A N/A 104.15% 104.15% 5-1-98
Social Awareness 16.12% N/A N/A 3.29% 3.29% 1-3-97
High Income Bond 0.59% N/A N/A (0.32%) (0.32%) 5-1-98
Equity Income 17.00% N/A N/A 13.87% 13.87% 5-1-98
Blue Chip 4.45% N/A N/A 3.72% 3.72% 5-1-98
Dow Target Variable:
Dow Target 10 N/A N/A N/A N/A N/A 1-4-99
Dow Target 5 N/A N/A N/A N/A N/A 9-1-99
Goldman Sachs Variable:
G.S. Growth & Income 4.01% N/A N/A 4.13% (3.56%) 1-2-98
G.S. CORE U.S. Equity 22.65% N/A N/A 19.20% 15.85% 1-2-98
G.S. Capital Growth 25.44% N/A N/A 22.86% 24.61% 1-2-98
Janus Aspen Series:
Growth 42.07% 28.16% N/A 22.63% 36.51% 9-13-93
Worldwide Growth 62.26% 31.82% N/A 27.99% 39.60% 9-13-93
Balanced 25.07% 23.02% N/A 19.02% 26.91% 9-13-93
Lazard Retirement Series:
Small Cap 3.44% N/A N/A (1.33%) 3.72% 11-4-97
Emerging Markets 47.25% N/A N/A 2.89% 41.46% 11-4-97
Strong Variable Insurance:
Mid Cap Growth II 87.35% N/A N/A 44.29% 60.89% 12-31-96
Opportunity II 33.11% 21.47% N/A 18.73% 17.01% 5-8-92
Schafer Value II (4.16%) N/A N/A (2.03%) (4.82%) 10-10-97
</TABLE>
*The "Returns in VAD" are the standardized total returns from the time these
Funds were added to VAD through December 31, 1999. The Ohio National Fund
Capital Growth, High Income Bond, Equity Income and Blue Chip portfolios, The
Dow Target Variable, Goldman Sachs Variable, Janus Aspen Series, Lazard
Retirement Series, and Strong Variable Insurance Funds were added November 1,
1999. The Nasdaq 100 Index portfolio was added May 1, 2000.
3
<PAGE> 33
<PAGE> 1
THE OHIO NATIONAL LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of
Ohio National Financial Services, Inc.)
Consolidated Financial Statements
December 31, 1999 and 1998
With Independent Auditors' Report Thereon
<PAGE> 2
INDEPENDENT AUDITORS' REPORT
The Board of Directors
The Ohio National Life Insurance Company:
We have audited the accompanying consolidated balance sheets of The Ohio
National Life Insurance Company (a wholly owned subsidiary of Ohio National
Financial Services, Inc.) and subsidiaries (the Company) as of December 31,
1999 and 1998, and the related consolidated statements of income, equity
and cash flows for each of the years in the three-year period ended
December 31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The
Ohio National Life Insurance Company and subsidiaries as of December 31,
1999 and 1998, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1999, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
Cincinnati, Ohio
January 28, 2000
<PAGE> 3
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Consolidated Balance Sheets
December 31, 1999 and 1998
(in thousands, except share amounts)
<TABLE>
<CAPTION>
ASSETS 1999 1998
---------- ---------
<S> <C> <C>
Investments (notes 5, 9 and 10):
Securities available-for-sale, at fair value:
Fixed maturities $2,644,846 2,834,274
Equity securities 71,640 90,207
Fixed maturities held-to-maturity, at amortized cost 829,214 749,528
Mortgage loans on real estate, net 1,274,156 1,245,180
Real estate, net 9,472 8,724
Policy loans 162,078 157,555
Other long-term investments 56,832 41,697
Short-term investments 139,341 106,627
---------- ---------
Total investments 5,187,579 5,233,792
Cash 9,411 11,300
Accrued investment income 66,323 64,396
Deferred policy acquisition costs 374,359 275,119
Reinsurance recoverable 95,291 78,265
Other assets 43,802 44,074
Assets held in Separate Accounts 1,741,620 1,154,576
---------- ---------
Total assets $7,518,385 6,861,522
========== =========
LIABILITIES AND EQUITY
Future policy benefits and claims (note 6) $4,806,594 4,643,507
Policyholders' dividend accumulations 60,827 73,782
Other policyholder funds 18,030 17,260
Note payable (net of unamortized discount of $679 in 1999
and $722 in 1998) (note 7) 84,321 84,278
Federal income taxes (note 8):
Current 12,834 21,383
Deferred 12,105 67,828
Other liabilities 148,245 137,827
Liabilities related to Separate Accounts 1,718,864 1,107,049
---------- ---------
Total liabilities $6,861,820 6,152,914
---------- ---------
Equity (notes 3 and 12):
Class A Common stock, $1 par value. 10,000,000 authorized,
issued and outstanding 10,000 10,000
Accumulated other comprehensive income 6,245 107,444
Retained earnings 640,320 591,164
---------- ---------
Total equity 656,565 708,608
Commitments and contingencies (notes 10 and 14)
---------- ---------
Total liabilities and equity $7,518,385 6,861,522
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Consolidated Statements of Income
Years ended December 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Traditional life insurance premiums $131,279 121,900 117,960
Accident and health insurance premiums 25,530 25,183 23,921
Annuity premiums and charges 36,931 32,280 34,187
Universal life policy charges 66,189 59,743 50,991
Net investment income (note 5) 414,147 394,825 386,693
Net realized gains on investments (note 5) 26,484 1,903 12,500
Other income 14,527 13,160 12,804
-------- -------- --------
715,087 648,994 639,056
-------- -------- --------
Benefits and expenses:
Benefits and claims 415,907 400,662 391,906
Provision for policyholders' dividends on
participating policies (note 12) 27,582 27,659 25,332
Amortization of deferred policy acquisition costs 29,124 23,240 22,122
Other operating costs and expenses 92,096 91,522 94,870
-------- -------- --------
564,709 543,083 534,230
-------- -------- --------
Income before Federal income taxes 150,378 105,911 104,826
-------- -------- --------
Federal income taxes (note 8):
Current expense 43,334 40,337 41,564
Deferred expense (benefit) 7,888 (2,301) (3,825)
-------- -------- --------
51,222 38,036 37,739
-------- -------- --------
Net income $ 99,156 67,875 67,087
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Consolidated Statements of Equity
Years ended December 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON COMPREHENSIVE RETAINED TOTAL
STOCK INCOME EARNINGS EQUITY
-------- ---------- -------- ---------
<S> <C> <C> <C> <C>
1997:
Balance, beginning of year $ -- 46,807 468,202 515,009
Comprehensive income:
Net income -- -- 67,087 67,087
Other comprehensive income (note 4) -- 56,149 -- 56,149
--------
Total comprehensive income 123,236
-------- -------- -------- --------
Balance, end of year $ -- 102,956 535,289 638,245
======== ======== ======== ========
1998:
Balance, beginning of year $ -- 102,956 535,289 638,245
Stock issuance 10,000 -- (10,000) --
Dividends paid -- -- (2,000) (2,000)
Comprehensive income:
Net income -- -- 67,875 67,875
Other comprehensive income (note 4) -- 4,488 -- 4,488
--------
Total comprehensive income 72,363
-------- -------- --------- --------
Balance, end of year $ 10,000 107,444 591,164 708,608
======== ======== ========= ========
1999:
Balance, beginning of year $ 10,000 107,444 591,164 698,608
Dividends paid -- -- (50,000) (50,000)
Comprehensive income:
Net income -- -- 99,156 99,156
Other comprehensive loss (note 4) -- (101,199) -- (101,199)
---------
Total comprehensive loss (2,043)
-------- -------- --------- --------
Balance, end of year $ 10,000 6,245 640,320 656,565
======== ======== ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 6
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Consolidated Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
1999 1998 1997
----------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 99,156 67,875 67,087
Adjustments to reconcile net income to net cash
provided by operating activities:
Capitalization of deferred policy acquisition costs (63,521) (55,200) (48,507)
Amortization of deferred policy acquisition costs 29,124 23,240 22,122
Amortization and depreciation (75) (289) 4,342
Realized gains on invested assets, net (26,484) (1,903) (12,500)
Deferred Federal income tax expense (benefit) 7,888 (2,301) (3,825)
Increase in accrued investment income (1,927) (317) (1,740)
Increase in other assets (22,392) (19,113) (15,401)
Net (decrease) increase in separate accounts 24,770 (18,279) (16,011)
Increase in policyholder account balances 56,409 50,834 40,843
(Decrease) increase in policyholders' dividend
accumulations and other funds (12,185) 11,550 (243)
(Decrease) increase in current Federal income tax payable (8,549) 8,662 (2,149)
Increase in other liabilities 14,965 18,855 6,484
Other, net (3,875) (14,355) 4,656
----------- ---------- ----------
Net cash provided by operating activities 93,304 69,259 45,158
----------- ---------- ----------
Cash flows from investing activities:
Proceeds from maturity of fixed maturities available-for-sale 18,206 11,167 298,686
Proceeds from sale of fixed maturities available-for-sale 295,806 202,694 51,770
Proceeds from sale of equity securities 30,312 9,603 4,996
Proceeds from maturity of fixed maturities held-to-maturity 86,335 115,577 75,530
Proceeds from repayment of mortgage loans on real estate 183,514 198,464 180,745
Proceeds from sale of real estate 962 15,906 19,078
Cost of fixed maturities available-for-sale acquired (354,722) (345,266) (367,027)
Cost of equity securities acquired (5,001) (8,197) (7,205)
Cost of fixed maturities held-to-maturity acquired (162,049) (134,965) (110,982)
Cost of mortgage loans on real estate acquired (207,587) (212,924) (321,914)
Cost of real estate acquired (550) (846) (1,310)
Change in policy loans, net (4,523) (4,207) (620)
Change in other assets, net 140 5,253 312
----------- ---------- ----------
Net cash used in investing activities (119,157) (147,741) (177,941)
----------- ---------- ----------
Cash flows from financing activities:
Universal life and investment product account deposits 1,221,353 1,076,011 1,000,919
Universal life and investment product account withdrawals (1,114,675) (928,812) (884,395)
Dividends to shareholder (50,000) (2,000) --
Other, net -- (3,361) 80
----------- ---------- ----------
Net cash provided by financing activities 56,678 141,838 116,604
----------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 30,825 63,356 (16,179)
Cash and cash equivalents, beginning of year 117,927 54,571 70,750
----------- ---------- ----------
Cash and cash equivalents, end of year $ 148,752 117,927 54,571
=========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 7
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(1) ORGANIZATION, CONSOLIDATION POLICY AND BUSINESS DESCRIPTION
The Ohio National Life Insurance Company (ONLIC) is a stock life
insurance company. Ohio National Life Assurance Corporation (ONLAC) is a
wholly owned stock life insurance subsidiary included in the
consolidated financial statements. ONLIC and its subsidiaries are
collectively referred to as the "Company". All significant intercompany
accounts and transactions have been eliminated in consolidation.
On February 12, 1998, ONLIC's Board of Directors approved a plan of
reorganization for the Company under the provision of Sections 3913.25
to 3913.38 of the Ohio Revised Code relating to mutual insurance holding
companies. The plan of reorganization was approved by the Company's
policyholders and by the Ohio Department of Insurance and became
effective on August 1, 1998 (Effective Date). As part of the
reorganization (see footnote (1)(k)), ONLIC became a stock company 100%
owned by Ohio National Financial Services, Inc. (ONFS). ONFS is 100%
owned by Ohio National Mutual Holdings, Inc. (ONMH), an Ohio mutual
holding company.
ONLIC and ONLAC are life and health insurers licensed in 47 states, the
District of Columbia and Puerto Rico. The Company offers a full range of
life, health and annuity products through exclusive agents and other
distribution channels and is subject to competition from other insurers
throughout the United States. The Company is subject to regulation by
the Insurance Departments of states in which it is licensed and
undergoes periodic examinations by those departments.
The following is a description of the most significant risks facing life
and health insurers and how the Company mitigates those risks:
LEGAL/REGULATORY RISK is the risk that changes in the legal or
regulatory environment in which an insurer operates will create
additional expenses not anticipated by the insurer in pricing its
products. That is, regulatory initiatives designed to reduce
insurer profits, new legal theories or insurance company
insolvencies through guaranty fund assessments may create costs
for the insurer beyond those recorded in the consolidated
financial statements. The Company mitigates this risk by offering
a wide range of products and by operating throughout the United
States, thus reducing its exposure to any single product or
jurisdiction, and also by employing underwriting practices which
identify and minimize the adverse impact of this risk.
CREDIT RISK is the risk that issuers of securities owned by the
Company or mortgagors on mortgage loans on real estate owned by
the Company will default or that other parties, including
reinsurers, which owe the Company money, will not pay. The Company
minimizes this risk by adhering to a conservative investment
strategy, by maintaining sound reinsurance and credit and
collection policies and by providing for any amounts deemed
uncollectible.
6
<PAGE> 8
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
INTEREST RATE RISK is the risk that interest rates will change and
cause a decrease in the value of an insurer's investments. This
change in rates may cause certain interest-sensitive products to
become uncompetitive or may cause disintermediation. The Company
mitigates this risk by charging fees for non-conformance with
certain policy provisions, by offering products that transfer this
risk to the purchaser, and/or by attempting to match the maturity
schedule of its assets with the expected payouts of its
liabilities. To the extent that liabilities come due more quickly
than assets mature, an insurer would have to borrow funds or sell
assets prior to maturity and potentially recognize a gain or loss.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) which
differ from statutory accounting practices prescribed or permitted by
regulatory authorities (see Note 3).
(a) VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES
Fixed maturity securities are classified as held-to-maturity when
the Company has the positive intent and ability to hold the
securities to maturity and are stated at amortized cost. Fixed
maturity securities not classified as held-to-maturity and all
equity securities are classified as available-for-sale and are
stated at fair value, with the unrealized gains and losses, net of
adjustments to deferred policy acquisition costs and deferred
Federal income tax, reported as a separate component of equity
that would have been required as a charge or credit to operations
had such unrealized amounts been realized. The Company has no
securities classified as trading.
Mortgage loans on real estate are carried at the unpaid principal
balance less valuation allowances. The Company provides valuation
allowances for impairments of mortgage loans on real estate based
on a review by portfolio managers. The measurement of impaired
loans is based on the present value of expected future cash flows
discounted at the loan's effective interest rate or, at the fair
value of the collateral, if the loan is collateral dependent.
Loans in foreclosure and loans considered to be impaired as of the
balance sheet date are placed on non-accrual status and written
down to the fair value of the existing property to derive a new
cost basis. Cash receipts on non-accrual status mortgage loans on
real estate are included in interest income in the period
received.
Real estate is carried at cost less accumulated depreciation and
valuation allowances. Other long-term investments are carried on
the equity basis, adjusted for valuation allowances.
Realized gains and losses on the sale of investments are
determined on the basis of specific security identification, net
of associated deferred acquisition costs and capital gains
expenses. Any capital gains occurring in the Closed Block
portfolio are offset by increases in the deferred policyholder
obligation for that group of policies. Estimates for valuation
allowances and other than temporary declines are included in
realized gains and losses on investments.
7
<PAGE> 9
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(c) REVENUES AND BENEFITS
Traditional life insurance products include those products with
fixed and guaranteed premiums and benefits and consist primarily
of whole life, limited-payment life, term life and certain
annuities with life contingencies. Premiums for traditional life
insurance products are recognized as revenue when due and
collected. Benefits and expenses are associated with earned
premiums so as to result in recognition of profits over the life
of the contract. This association is accomplished by the provision
for future policy benefits and the deferral and amortization of
policy acquisition costs.
Universal life products include universal life, variable universal
life and other interest-sensitive life insurance policies.
Investment products consist primarily of individual and group
deferred annuities, annuities without life contingencies and
guaranteed investment contracts. Revenues for universal life and
investment products consist of net investment income and cost of
insurance, policy administration and surrender charges that have
been earned and assessed against policy account balances during
the period. Policy benefits and claims that are charged to expense
include benefits and claims incurred in the period in excess of
related policy account balances, maintenance costs and interest
credited to policy account balances.
Accident and health insurance premiums are recognized as revenue
in accordance with the terms of the policies. Policy claims are
charged to expense in the period that the claims are incurred.
(c) DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally commissions,
certain expenses of the policy issue and underwriting department
and certain variable agency expenses have been deferred. For
traditional non-participating life insurance products, these
deferred acquisition costs are predominantly being amortized with
interest over the premium paying period of the related policies in
proportion to premium revenue. Such anticipated premium revenue
was estimated using the same assumptions as were used for
computing liabilities for future policy benefits. For
participating life insurance products, deferred policy acquisition
costs are being amortized in proportion to gross margins of the
related policies. Gross margins are determined for each issue year
and are equal to premiums plus investment income less death
claims, surrender benefits, administrative costs, expected
policyholder dividends, and the increase in reserve for future
policy benefits. For universal life and investment products,
deferred policy acquisition costs are being amortized with
interest over the lives of the policies in relation to the present
value of the estimated future gross profits from projected
interest margins, cost of insurance, policy administration and
surrender charges. Deferred policy acquisition costs for
participating life and universal life business are adjusted to
reflect the impact of unrealized gains and losses on fixed
maturity securities available-for-sale (see note 2(a)).
8
<PAGE> 10
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(d) SEPARATE ACCOUNTS
Separate Account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific
investment objectives. The investment income and gains or losses
of these accounts accrue directly to the contractholders. The
activity of the Separate Accounts is not reflected in the
consolidated statements of income and cash flows except for the
fees the Company receives for administrative services and risks
assumed. Amounts provided by the Company to establish Separate
Account investment portfolios, seed money, are not included in
Separate Account liabilities.
(e) FUTURE POLICY BENEFITS
Future policy benefits for traditional life have been calculated
using a net level premium method based on estimates of mortality,
morbidity, investment yields and withdrawals which were used or
which were being experienced at the time the policies were issued,
rather than the assumptions prescribed by state regulatory
authorities (see note 6).
Future policy benefits for annuity policies in the accumulation
phase, universal life and variable universal life policies have
been calculated based on participants' aggregate account values.
(f) PARTICIPATING BUSINESS
Participating business represents approximately 39% of the
Company's ordinary life insurance in force in 1999. In 1998 and
1997, participating business represented approximately 41% and
42%, respectively, of the Company's ordinary life insurance in
force. The provision for policyholder dividends is based on
current dividend scales. Future dividends are provided for in
future policy benefits based on dividend scales in effect as of
December 31, 1999.
(g) REINSURANCE CEDED
Reinsurance premiums ceded and reinsurance recoveries on benefits
and claims incurred are deducted from the respective income and
expense accounts. Assets and liabilities related to reinsurance
ceded are reported on a gross basis.
(h) FEDERAL INCOME TAX
The Company is included as part of the consolidated Federal income
tax return of its ultimate parent, OHMH. The Company uses the
asset and liability method of accounting for income tax. Under the
asset and liability method, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under this
method, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date. Valuation allowances are established
when necessary to reduce the deferred tax assets to the amounts
expected to be realized.
9
<PAGE> 11
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(i) CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the
Company considers all short-term investments with original
maturities of three months or less to be cash equivalents.
(j) USE OF ESTIMATES
In preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities as of the date of the
consolidated financial statements and revenues and expenses for
the reporting period. Actual results could differ significantly
from those estimates.
The estimates susceptible to significant change are those used in
determining deferred policy acquisition costs, the liability for
future policy benefits and claims, contingencies, and those used
in determining valuation allowances for mortgage loans on real
estate and real estate. Although some variability is inherent in
these estimates, management believes the amounts provided are
adequate.
(k) CLOSED BLOCK
The Reorganization contained an arrangement, known as a closed
block (the Closed Block), to provide for dividends on policies
that were in force on the Effective Date and were within classes
of individual policies for which the Company had a dividend scale
in effect at the time of the Reorganization. The Closed Block was
designed to give reasonable assurance to owners of affected
policies that assets will be available to support such policies,
including maintaining dividend scales in effect at the time of the
Reorganization, if the experience underlying such scales
continues. The assets, including revenue therefrom, allocated to
the Closed Block will accrue solely to the benefit of the owners
of policies included in the Closed Block until the Closed Block is
no longer in effect. The Company will not be required to support
the payment of dividends on Closed Block policies from its general
funds.
The financial information of the Closed Block, while prepared on a
GAAP basis, reflects its contractual provisions and not its actual
results of operations and financial position. Many expenses
related to the Closed Block operations are charges to operations
outside of the Closed Block; accordingly, the contribution from
the Closed Block does not represent the actual profitability of
the Closed Block operations. Operating costs and expenses outside
of the Closed Block are, therefore, disproportionate to the
business outside of the Closed Block.
10
<PAGE> 12
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
Summarized financial information of the Closed Block as of and for the year
ended December 31, 1999 is as follow:
<TABLE>
<S> <C>
Closed Block assets:
Fixed maturity securities available-for-sale,
at fair value (amortized cost of $238,405) $234,150
Fixed maturity securities held-to-maturity,
at amortized cost 72,826
Short-term investments, at fair value 10,583
Mortgage loans on real estate, net 93,698
Policy loans 115,932
Accrued investment income 6,101
Other assets 3,054
Reinsurance recoverable 1,979
Deferred policy acquisition costs 90,455
--------
$628,778
========
Closed Block liabilities:
Future policy benefits and claims $695,540
Other policyowner funds 3,768
Policyholders' dividend accumulations 16,345
--------
$715,653
========
Closed Block revenues and expenses:
Traditional life insurance premiums $ 74,269
Net investment income 44,230
Net realized gains on investments 33
Other expense (74)
Benefits and claims (71,806)
Amortization of deferred acquisition costs (4,433)
Other operating costs and expenses (5,100)
Provision for policyholders' dividends on participating policies (26,608)
--------
Income before Federal income taxes(1) $ 10,511
========
(1) Represents contribution from the Closed Block.
</TABLE>
11
<PAGE> 13
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(l) COMPREHENSIVE INCOME
Comprehensive income is the total of net income and all non-owner
changes in equity.
(m) EMERGING ACCOUNTING ISSUES
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" (SFAS 133).
SFAS 133 establishes accounting and reporting standards for
derivative instruments and for hedging activities. Contracts that
contain embedded derivatives, such as certain insurance contracts,
are also addressed by the Statement. SFAS 133 requires that an
entity recognize all derivatives as either assets or liabilities
in the statement of financial position and that those assets or
liabilities be measured at fair value. SFAS 133 is effective for
all fiscal quarters of fiscal years beginning after January 1,
2001, with earlier application permitted. The Company is currently
reviewing the requirements of this Statement and evaluating what,
if any, impact it will have on consolidated results of operations
and financial condition.
(n) RECLASSIFICATIONS
Certain amounts in the 1998 and 1997 consolidated financial
statements have been reclassified to conform with 1999
presentation.
(3) BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with GAAP which differs from statutory accounting practices
prescribed or permitted by regulatory authorities. Annual Statements for
ONLIC and ONLAC, insurance subsidiaries, filed with the Department of
Insurance of the State of Ohio, are prepared on a basis of accounting
practices prescribed or permitted by such regulatory authority.
Prescribed statutory accounting practices include a variety of
publications of the National Association of Insurance Commissioners
(NAIC), as well as state laws, regulations and general administrative
rules. Permitted statutory accounting practices encompass all accounting
practices not so prescribed. ONLIC and ONLAC have no material permitted
statutory accounting practices.
The statutory basis net income and capital and surplus of ONLIC and
ONLAC after intercompany eliminations included in the accompanying
consolidated financial statements was $91,163, $51,900 and $53,696 for
the years ended December 31, 1999, 1998 and 1997, respectively and
$430,869 and $408,928 as of December 31, 1999 and 1998, respectively.
12
<PAGE> 14
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(4) COMPREHENSIVE INCOME
The components of other comprehensive income, including the related
Federal tax amounts, were as follows for the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
--------- ------- -------
<S> <C> <C> <C>
Unrealized gains (losses) on securities
available-for-sale arising during the period:
Net of adjustment to deferred policy acquisition costs $(127,982) 11,418 86,670
Related Federal tax benefit (expense) 46,151 (4,003) (30,335)
--------- ------- -------
Net (81,831) 7,415 56,335
--------- ------- -------
Less:
Reclassification adjustment for net (gains) losses on securities
available-for-sale realized during the period:
Gross 29,798 4,504 287
Related Federal tax benefit (10,430) (1,577) (101)
--------- ------- -------
Net 19,368 2,927 186
--------- ------- -------
Total other comprehensive (loss) income $(101,199) 4,488 56,149
========= ======= =======
</TABLE>
13
<PAGE> 15
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(5) INVESTMENTS
An analysis of investment income and realized gains/(losses) by
investment type follows for the years ended December 31:
<TABLE>
<CAPTION>
REALIZED GAINS (LOSSES)
INVESTMENT INCOME ON INVESTMENTS
------------------------------------ -------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- ------------ ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 215,996 211,002 207,377 (1,184) (1,624) 3,041
Equity securities 3,495 3,530 2,441 16,830 178 38
Fixed maturities held-to-maturity 66,735 62,516 62,348 2,760 5,325 2,539
Mortgage loans on real estate 109,256 109,850 103,566 314 371 1,863
Real estate 1,371 2,334 6,123 (252) 2,416 4,418
Policy loans 10,988 10,298 9,834 -- -- --
Short-term 4,133 4,610 5,087 -- -- --
Other 17,782 6,553 6,612 9,481 (4,558) (387)
---------- ---------- ---------- ---------- -------- ---------
Total 429,756 410,693 403,388 27,949 2,108 11,512
Investment expenses (15,609) (15,868) (16,695)
Gains attributable to Closed Block (1,191) -- --
DAC amortization due to realized gains (218) (298) (985)
Change in valuation allowances:
Mortgage loans on real estate (56) 93 (63)
Real estate and other -- -- 2,036
---------- ---------- ---------- ---------- -------- ---------
(1,465) (205) 988
---------- -------- ---------
Net investment income 414,147 394,825 386,693
========== ========== ==========
Net realized gains on
investments $ 26,484 1,903 12,500
========== ======== =========
</TABLE>
14
<PAGE> 16
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
The amortized cost and estimated fair value of securities available-for-sale and
fixed maturities held-to-maturity were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Securities available-for-sale:
Fixed maturities:
U.S. Treasury securities and
obligations of U.S. government
operations and agencies $ 108,292 1,267 (1,908) 107,651
Obligations of states and political
subdivisions 79,236 571 (920) 78,887
Debt securities issued by foreign
governments 8,078 1,004 (850) 8,232
Corporate securities 1,666,057 29,519 (63,430) 1,632,146
Mortgage-backed securities 823,882 7,412 (13,364) 817,930
---------- ------- -------- ---------
Total fixed maturities $2,685,545 39,773 (80,472) 2,644,846
========== ======= ======== =========
Equity securities $ 35,635 39,212 (3,207) 71,640
========== ======= ======== =========
Fixed maturity securities held-to-maturity:
Obligations of states and political
subdivisions $ 13,596 355 (418) 13,533
Corporate securities 783,378 23,237 (16,426) 790,189
Mortgage-backed securities 32,240 746 (3,209) 29,777
---------- ------- -------- ---------
$ 829,214 24,338 (20,053) 833,499
========== ======= ======== =========
</TABLE>
15
<PAGE> 17
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-----------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Securities available-for-sale:
Fixed maturities:
U.S. Treasury securities and
obligations of U.S. government
operations and agencies $ 132,932 15,672 -- 148,604
Obligations of states and political
subdivisions 89,399 9,953 (47) 99,305
Debt securities issued by foreign
governments 8,078 2,057 -- 10,135
Corporate securities 1,720,789 137,373 (16,033) 1,842,129
Mortgage-backed securities 695,365 39,682 (946) 734,101
---------- -------- -------- ---------
Total fixed maturities $2,646,563 204,737 (17,026) 2,834,274
========== ======== ======== =========
Equity securities $ 41,795 51,454 (3,042) 90,207
========== ======== ======== =========
Fixed maturity securities held-to-maturity:
Obligations of states and political
subdivisions $ 10,265 825 (179) 10,911
Corporate securities 724,447 78,581 (529) 802,499
Mortgage-backed securities 14,816 1,233 -- 16,049
---------- -------- -------- ---------
$ 749,528 80,639 (708) 829,459
========== ======== ======== =========
</TABLE>
The components of unrealized gains on securities available-for-sale, net, were
as follows for the years ended December 31:
1999 1998
-------- --------
Gross unrealized (loss) gain $ (4,694) 236,123
Adjustment to deferred dividend liability -- (18,578)
Adjustment to deferred policy acquisition costs 16,226 (48,834)
Deferred Federal income tax (5,287) (61,267)
-------- --------
$ 6,245 107,444
======== ========
16
<PAGE> 18
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
The net unrealized gain on securities available-for-sale include a net
unrealized gain on equity securities of $23,403 in 1999 ($31,468 in 1998) and a
net unrealized loss on fixed maturities of $16,215 in 1999 ($76,621 in 1998).
An analysis of the change in gross unrealized gains (losses) on securities
available-for-sale and fixed maturities held-to-maturity follows for the years
ended December 31:
1999 1998 1997
--------- ------ ------
Securities available-for-sale:
Fixed maturities $(228,410) 25,125 91,601
Equity securities (12,407) 10,632 15,972
Fixed maturities held-to-maturity (75,646) 11,840 14,217
The amortized cost and estimated fair value of fixed maturity securities
available-for-sale and fixed maturity securities held-to-maturity as of December
31, 1999, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
FIXED MATURITY SECURITIES
----------------------------------------------------------------
AVAILABLE-FOR-SALE HELD-TO-MATURITY
----------------------------- ---------------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
---------- --------- --------- ----------
<S> <C> <C> <C> <C>
Due in one year or less $ 67,057 68,013 22,817 23,011
Due after one year through five years 436,560 438,455 139,022 139,781
Due after five years through ten years 804,945 787,425 250,797 252,947
Due after ten years 1,376,983 1,350,953 416,578 417,760
---------- --------- ------- -------
$2,685,545 2,644,846 829,214 833,499
========== ========= ======= =======
</TABLE>
Proceeds from the sale of securities available-for-sale (excludes calls) during
1999, 1998 and 1997 were $158,661, $3,186, and $51,770, respectively. Gross
gains of $293 ($0 in 1998 and $203 in 1997) and gross losses of $4,131 ($38 in
1998 and $283 in 1997) were realized on those sales.
Investments with an amortized cost of $12,807 and $11,750 as of December 31,
1999 and 1998, respectively, were on deposit with various regulatory agencies as
required by law.
Real estate is presented at cost less accumulated depreciation of $1,855 in 1999
($1,730 in 1998) and valuation allowances of $0 in 1999 and 1998.
The Company generally initiates foreclosure proceedings on all mortgage loans on
real estate delinquent sixty days. There was one foreclosure of a mortgage loan
on real estate in 1999 and no mortgage loan, on real estate in process of
foreclosure as of December 31, 1999.
17
<PAGE> 19
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(6) FUTURE POLICY BENEFITS AND CLAIMS
The liability for future policy benefits for universal life insurance
policies and investment contracts (approximately 79% of the total
liability for future policy benefits as of December 31, 1999 and 1998)
has been established based on accumulated contract values without
reduction for surrender penalty provisions. The average interest rate
credited on investment product policies was 6.4%, 6.8% and 6.8% for the
years ended December 31, 1999, 1998 and 1997, respectively.
The liability for future policy benefits for traditional life policies
has been established based upon the net level premium method using the
following assumptions:
Interest rates: Interest rates vary as follows:
YEAR OF ISSUE INTEREST RATE
------------- -------------
1999, 1998 and 1997 4 - 5.5%
1996 and prior 2.25 - 6.0%
Withdrawals: Rates, which vary by issue age, type of coverage and
policy duration, are based on Company experience
Mortality: Mortality and morbidity rates are based on published tables,
guaranteed in insurance contracts.
(7) NOTES PAYABLE
On July 11, 1994, the Company issued $50,000, 8.875% surplus notes, due
July 15, 2004. On May 21, 1996, the Company issued $50,000, 8.5% surplus
notes, due May 15, 2026. Concurrent with the issue of the new notes,
$15,000 of the notes issued on July 11, 1994 were retired. Total
interest paid was $7,356 for each year during the years ended December
31, 1999, 1998 and 1997, respectively.
The notes have been issued in accordance with Section 3941.13 of the
Ohio Revised Code. Interest payments, scheduled semi-annually, must be
approved for payment by the Director of the Department of Insurance of
the State of Ohio. All issuance costs have been capitalized and are
being amortized over the terms of the notes.
18
<PAGE> 20
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(8) FEDERAL INCOME TAX
Prior to 1984, the Life Insurance Company Income Tax Act of 1959, as
amended by the Deficit Reduction Act of 1984 (DRA), permitted the
deferral from taxation of a portion of statutory income under certain
circumstances. In these situations, the deferred income was accumulated
in the Policyholders' Surplus Account (PSA). Management considers the
likelihood of distributions from the PSA to be remote; therefore, no
Federal income tax has been provided for such distributions in the
financial statements. The DRA eliminated any additional deferrals to the
PSA. Any distributions from the PSA, however, will continue to be
taxable at the then current tax rate. The pre-tax balance of the PSA is
approximately $5,257 as of December 31, 1999.
Total income taxes for the years ended December 31, 1999, 1998 and 1997
were allocated as follows:
1999 1998 1997
-------- ------ ------
Operations $ 51,222 38,036 37,739
Unrealized gains (loss) on securities
available for sale (56,581) 2,426 30,234
-------- ------ ------
$ (5,359) 40,462 67,973
======== ====== ======
Total Federal income tax expense for the years ended December 31, 1999,
1998 and 1997 differs from the amount computed by applying the U.S.
Federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------ ---------------------- ------------------
AMOUNT % AMOUNT % AMOUNT %
--------- ------ ---------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Computed (expected)
tax expense $ 52,632 35.0 37,069 35.0 36,689 35.0
Differential earnings (3,896) (2.6) 1,232 1.1 3,720 3.5
Dividends received
deduction and tax
exempt interest (1,492) (1.0) (1,279) (1.1) (1,406) (1.3)
Other, net $ 3,978 2.6 1,014 1.0 (1,264) (1.2)
========= ====== ========= ======= ========= ======
Total expense and
effective rate $ 51,222 34.0 38,036 37.1 37,739 37.3
========= ====== ========= ======= ========= ======
</TABLE>
Included in other, net in 1999 are non-deductible expenses related to
the reorganization to a mutual holding company structure.
Total Federal income tax paid was $51,773, $32,251 and $43,522 (net of
refunds of $66, $6,661 and $0) during the years ended December 31, 1999,
1998 and 1997, respectively.
19
<PAGE> 21
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
The tax effects of temporary differences between the financial statement
carrying amounts and tax basis of assets and liabilities that give rise
to significant components of the net deferred tax liability as of
December 31, 1999 and 1998 relate to the following:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <S> <C>
Deferred tax assets:
Fixed maturity securities available-for-sale $ 14,262 --
Future policy benefits 59,251 59,651
Mortgage loans on real estate 2,529 2,529
Other assets and liabilities 34,830 24,161
---------- ----------
Total gross deferred tax assets 110,872 86,341
---------- ----------
Deferred tax liabilities:
Fixed maturity securities available-for-sale -- 65,618
Deferred policy acquisition costs 76,781 70,312
Other fixed maturities, equity securities and other
long-term investments 7,951 15,062
Other 38,245 3,177
---------- ----------
Total gross deferred tax liabilities 122,977 154,169
---------- ----------
Net deferred tax liability $ (12,105) (67,828)
========== ==========
</TABLE>
The Company has determined that a deferred tax asset valuation allowance
was not needed as of December 31, 1999 and 1998. In assessing the
realization of deferred tax assets, management considers whether it is
more likely than not that the deferred tax assets will be realized. The
ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers primarily
the scheduled reversal of deferred tax liabilities and tax planning
strategies in making this assessment and believes it is more likely than
not the Company will realize the benefits of the deductible differences
remaining as of December 31, 1999.
20
<PAGE> 22
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(in thousands)
(9) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, Disclosures about
Fair Value of Financial Instruments (SFAS 107) requires disclosure of
fair value information about existing on and off-balance sheet financial
instruments. SFAS 107 excludes certain assets and liabilities, including
insurance contracts, other than policies such as annuities that are
classified as investment contracts, from its disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent
the underlying value of the Company. The tax ramifications of the
related unrealized gains and losses can have a significant effect on
fair value estimates and have not been considered in the estimates.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures:
CASH, SHORT-TERM INVESTMENTS AND POLICY LOANS - The carrying
amount reported in the balance sheets for these instruments
approximate their fair value.
INVESTMENT SECURITIES - Fair value for equity securities and
fixed maturity securities are the same as market value. Market
value generally represents quoted market prices traded in the
public market place. For fixed maturity securities not actively
traded, or in the case of private placements, fair value is
estimated by discounting expected future cash flows using a
current market rate applicable to the yield, credit quality and
duration of investments.
SEPARATE ACCOUNT ASSETS AND LIABILITIES - The fair value of
assets held in Separate Accounts is based on quoted market
prices. The fair value of liabilities related to Separate
Accounts is the accumulated contract values in the Separate
Account portfolios.
MORTGAGE LOANS ON REAL ESTATE - The fair value for mortgage loans
on real estate is estimated using discounted cash flow analyses,
using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations.
DEFERRED AND IMMEDIATE ANNUITY AND INVESTMENT CONTRACTS - Fair
value for the Company's liabilities under investment type
contracts is disclosed using two methods. For investment
contracts without defined maturities, fair value is the amount
payable on demand. For investment contracts with known or
determined maturities, fair value is estimated using discounted
cash flow analysis. Interest rates used are similar to currently
offered contracts with maturities consistent with those remaining
for the contracts being valued.
NOTE PAYABLE - The fair value for the note payable was determined
by discounting the scheduled cash flows of the note using a
market rate applicable to the yield, credit quality and maturity
of a similar debt instrument.
POLICYHOLDERS' DIVIDEND ACCUMULATION AND OTHER POLICYHOLDER FUNDS
- The carrying amount reported in the consolidated balance sheets
for these instruments approximates their fair value.
21
<PAGE> 23
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
The carrying amount and estimated fair value of financial instruments
subject to SFAS 107 were as follows as of December 31:
<TABLE>
<CAPTION>
1999 1998
-------------------------------------------------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Securities available-for-sale:
Fixed maturities $2,644,846 2,644,846 2,834,274 2,834,274
Equity securities 71,640 71,640 90,107 90,107
Fixed maturities held-to-maturity 829,214 833,499 749,528 829,459
Mortgage loans on real estate 1,274,156 1,243,246 1,245,180 1,245,180
Policy loans 162,078 162,078 157,555 157,555
Short-term investments 139,341 139,341 106,627 106,627
Cash 9,411 9,411 11,300 11,300
Assets held in Separate Accounts 1,741,620 1,741,620 1,154,576 1,154,576
LIABILITIES
Guaranteed investment contracts $1,197,382 1,164,411 1,094,242 1,096,184
Individual contracts 1,061,053 1,040,355 1,076,504 1,063,799
Other annuity contracts 859,536 848,976 898,781 945,694
Note payable 84,321 80,142 84,278 92,732
Dividend accumulations and
other policyholder funds 78,857 78,857 91,042 91,042
Liability accounts 1,718,864 1,718,864 1,107,049 1,107,049
</TABLE>
(10) ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE
(a) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company is a party to financial instruments with
off-balance-sheet risk in a normal course of business through
management of its investment portfolio. The Company had
outstanding commitments to fund mortgage loans, bonds and venture
capital partnerships of approximately $74,000 and $229,000 as of
December 31, 1999 and 1998, respectively. These commitments
involve varying degrees, elements of credit and market risk in
excess of amounts recognized in the financial statements. The
credit risk of all financial instruments, whether on- or
off-balance sheet, is controlled through credit approvals, limits,
and monitoring procedures.
22
<PAGE> 24
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
(b) SIGNIFICANT CONCENTRATIONS OF CREDIT RISK
Mortgage loans are collateralized by the underlying properties.
Collateral must meet or exceed 125% of the loan at the time the
loan is made. The Company grants mainly commercial mortgage loans
to customers throughout the United States. The Company has a
diversified loan portfolio, and total loans in any state do not
exceed 10% of the total loan portfolio as of December 31, 1999.
The summary below depicts loan exposure of remaining principal
balances by type as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---------- -----------
<S> <C> <C>
Mortgage assets by type:
Retail $ 393,543 381,044
Office 320,988 312,092
Apartment 304,106 285,643
Industrial 157,854 162,278
Other 107,372 113,725
----------- -----------
1,283,863 1,254,782
Less valuation allowances 9,707 9,602
----------- -----------
Total mortgage loans on real estate, net $1,274,156 1,245,180
=========== ===========
</TABLE>
(11) PENSIONS AND OTHER POSTRETIREMENT BENEFITS
The Company sponsors a funded pension plan covering all home office
employees. Retirement benefits are based on years of service and the
highest average earnings in five of the last ten years. The Company also
sponsors unfunded pension plans covering home office employees where
benefits exceed Code 401(a)(17) and Code 415 limits and covering general
agents. The general agents plan provides benefits based on years of
service and average compensation during the final five and ten years of
service
The Company currently offers eligible retirees the opportunity to
participate in a health plan. The Company has two health plans, one is
offered to home office employees, the other is offered to career agents.
HOME OFFICE EMPLOYEE HEALTH PLAN
The Company provides a declining service schedule. Only home office
employees hired prior to January 1, 1996, may become eligible for
these benefits provided that the employee meets the age and years of
service requirements. The plan states that an employee becomes
eligible as follows: age 55 with 20 years of credited service at
retirement, age 56 with 18 years of service, age 57 with 16 years of
service grading to age 64 with 2 years of service. The health plan is
contributory with retirees contributing approximately 15% of premium
for coverage.
23
<PAGE> 25
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
CAREER AGENTS HEALTH PLAN
Only career agents with contracts effective prior to January 1, 1996,
may become eligible for these benefits provided that the agent is at
least age 55 and has 15 years of credited service at retirement. The
health plan is contributory, with retirees contributing approximately
47% of medical costs.
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
----------------------- -----------------------
1999 1998 1999 1998
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ 46,777 45,583 14,238 14,572
Service cost 2,634 2,520 300 258
Interest cost 3,282 3,131 399 333
Actuarial (loss) gain (4,341) 738 (619) (643)
Benefits paid (2,810) (5,195) (234) (282)
------------ ---------- ---------- ----------
Benefit obligation at end of year $ 45,542 46,777 14,084 14,238
============ ========== ========== ==========
CHANGE IN PLAN ASSETS
Fair value of assets at beginning of year $ 23,797 24,854
Actual return on plan assets 12,142 1,335
Employer contribution 1,410 701
Benefits paid (1,820) (3,093)
------------ ---------- ---------- ----------
Fair value of assets at end of year 35,529 23,797 -- --
============ ========== ========== ==========
CALCULATION OF FUNDED STATUS
Funded status $ (9,923) (22,980) (14,084) (14,238)
Unrecognized actuarial (gain) loss (6,222) 9,625 -- --
Unrecognized prior service cost (678) (745) -- --
------------ ---------- ---------- ----------
Net amount recognized $ (16,823) (14,100) (14,084) (14,238)
============ ========== ========== ==========
</TABLE>
24
<PAGE> 26
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
The following table shows the portions of the above values, in
aggregate, attributable to the pension plans whose Accumulated Benefit
Obligation exceeds Plan Assets.
PENSION BENEFITS
--------------------------------
1999 1998 1997
--------- -------- --------
Projected Benefit Obligation $ 19,941 18,708 18,299
Accumulated Benefit Obligation 15,981 13,864 14,307
Assets -- -- 257
Minimum Liability 15,981 13,864 14,050
Accrued Pension Cost (15,584) (10,829) (9,620)
Unrecognized Transition Obligation 2,329 2,620 2,911
WEIGHTED AVERAGE ASSUMPTIONS AS OF DECEMBER 31
PENSION BENEFITS OTHER BENEFITS
------------------ -----------------
1999 1998 1999 1998
--------- ------- ------- -------
Discount rate $ 6.90% 5.80% 7.65% 6.94%
Expected return on plan assets 10.50% 9.00% -- --
Rate of compensation increase 5.70% 5.70% -- --
For measurement purposes, a nine percent annual rate of increase in the
per capita cost of covered health care benefits was assumed for 2000. The
rate was assumed to decrease gradually to five percent for 2001 and
remain at that level thereafter.
COMPONENTS OF NET PERIODIC BENEFIT COST
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
-------------------------------------- -----------------------------------
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 2,634 2,520 2,221 300 258 301
Interest cost 3,411 3,131 3,072 399 333 468
Expected return on plan assets (2,404) (2,087) (2,037) -- -- --
Amortization of prior service cost (67) (67) (67) (504) (504) (367)
Recognized actuarial loss 549 564 300 (115) (139) (107)
------- ------ ------ ---- ---- ----
Net periodic benefit cost $ 4,123 4,061 3,489 80 (52) 295
======= ====== ====== ==== ==== ====
</TABLE>
25
<PAGE> 27
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
The health care cost trend rate assumption has a significant effect on
the amounts reported for the health care plan. A one percentage point
increase in the assumed health care cost trend rate would increase the
accumulated postretirement benefit obligation as of December 31, 1999 and
1998 by $274 and $236, respectively, and the net periodic postretirement
benefit cost for the years ended December 31, 1999 and 1998 by $17.
The Company also maintains a qualified contributory defined contribution
profit sharing plan covering substantially all employees. Company
contributions to the Profit Sharing Plan are based on the net earnings of
the Company and are payable at the sole discretion of management. The
expense reported for contributions to the plan for 1999, 1998, and 1997
were $1,917, $1,829 and $1,825, respectively.
The Company has other deferred compensation and supplemental pension
plans. The expenses for these plans in 1999, 1998 and 1997 were $8,962,
$6,277 and $5,245, respectively.
(12) REGULATORY RISK-BASED CAPITAL, RETAINED EARNINGS AND DIVIDEND
RESTRICTIONS
ONLIC and ONLAC exceed the minimum risk-based capital requirements as
established by the NAIC as of December 31, 1999.
The Company has designated a portion of retained earnings for separate
account contingencies and investment guarantees totaling $1,648 as of
December 31, 1999 and 1998.
The payment of dividends by the Company to its parent, ONFS, is limited
by Ohio law. As of December 31, 1999, $25,791 of retained earnings, as
presented in the accompanying financial statements, is restricted as to
dividend payments in 2000.
(13) BANK LINES OF CREDIT
As of December 31, 1999 and 1998, ONLIC had a $10,000 unsecured line of
credit which was not utilized during 1999 and 1998.
(14) CONTINGENCIES
The Company and its subsidiaries are defendants in various legal actions
arising in the normal course of business. While the outcome of such
matters cannot be predicted with certainty, management believes such
matters will be resolved without material adverse impact on the
financial condition of the Company.
26
<PAGE> 28
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
(15) REINSURANCE
The Company routinely enters into reinsurance transactions with other
insurance companies. This reinsurance involves either ceding certain
risks to or assuming risks from other insurance companies. The primary
purpose of ceded reinsurance is to protect the Company from potential
losses in excess of levels that it is prepared to accept. Reinsurance
does not discharge the Company from its primary liability to
policyholders and to the extent that a reinsurer should be unable to
meet its obligations, the Company would be liable to policyholders. The
Company has reinsurance recoverables of $95,291 and $78,265 at December
31, 1999 and 1998, respectively. Ceded premiums approximated 12% and 9%
of gross earned life and accident and health premiums during 1999 and
1998, respectively.
(16) SEGMENT INFORMATION
The Company conducts its business in three operating segments:
individual life insurance, pension and annuities, and other insurance.
Individual life insurance includes whole life, universal life, variable
universal life and term life. All products within this segment share
similar distribution systems and some degree of mortality (loss of life)
risk. Pension and annuities include fixed and variable deferred and
immediate annuities issued to individuals as well as guaranteed
investment and accumulated deposit contracts issued to groups. The
products in this segment are primarily designed for asset accumulation
and generation of investment returns. Other insurance includes
individual disability insurance along with group life and disability
insurance. These lines are viewed as "complementary" lines that allow us
to provide a broad portfolio of products to enhance sales in our two
primary operating segments. In addition to our operating segments,
certain assets not specifically allocated to support any product line,
along with various corporate expenses and liabilities, are assigned to
the corporate segment. All revenue, expense, asset and liability amounts
are allocated to one of the four segments. As such, the sum of the
financial information from these segments equals the information for the
Company as a whole.
27
<PAGE> 29
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OR
AS OF DECEMBER 31, 1999
----------------------------------------------------------------------------
INDIVIDUAL PENSION
LIFE AND OTHER
INSURANCE ANNUITIES INSURANCE CORPORATE TOTAL
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Traditional life insurance premiums $ 101,019 $ -- $ 30,260 $ -- $ 131,279
Accident and health insurance premiums -- -- 25,530 -- 25,530
Annuity premiums and charges -- 36,931 -- -- 36,931
Universal life policy charges 66,189 -- -- -- 66,189
Net investment income 118,147 265,808 8,756 21,436 414,147
Net realized gains on investments -- -- -- 26,484 26,484
Other income 172 14,355 -- -- 14,527
----------------------------------------------------------------------------
285,527 317,094 64,546 47,920 715,087
Benefits and expenses:
Benefits and claims 160,284 206,575 49,048 -- 415,907
Provision for policyholder dividends 27,563 19 -- -- 27,582
Operating expenses 46,148 46,743 14,102 14,227 121,220
----------------------------------------------------------------------------
233,995 253,337 63,150 14,227 564,709
Income before federal income taxes $ 51,532 $ 63,757 $ 1,396 $ 33,693 $ 150,378
============================================================================
Total assets as of December 31, 1999 $2,145,787 $4,913,534 $159,131 $299,933 $7,518,385
============================================================================
</TABLE>
(1) Premiums, policy charges and investment income for life and other
insurance includes the net contribution from Closed Block for the
year ended December 31, 1999.
28
<PAGE> 30
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OR
AS OF DECEMBER 31, 1998
----------------------------------------------------------------------------------
INDIVIDUAL PENSION
LIFE AND OTHER
INSURANCE ANNUITIES INSURANCE CORPORATE TOTAL
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Traditional life insurance premiums $ 91,565 $ -- $ 30,335 $ -- $ 121,900
Accident and health insurance premiums -- -- 25,183 -- 25,183
Annuity premiums and charges -- 32,280 -- -- 32,280
Universal life policy charges 59,743 -- -- -- 59,743
Net investment income 111,723 267,560 7,721 7,821 394,825
Net realized gains on investments -- -- -- 1,903 1,903
Other income (29) 13,189 -- -- 13,160
------------------------------------------------------------------------------
263,002 313,029 63,239 9,724 648,994
Benefits and expenses:
Benefits and claims 146,503 212,512 41,647 -- 400,662
Provision for policyholder dividends 27,635 24 -- -- 27,659
Operating expenses 41,814 39,963 16,440 16,545 114,762
------------------------------------------------------------------------------
215,952 252,499 58,087 16,545 543,083
Income before federal income taxes $ 47,050 $ 60,530 $ 5,152 $ (6,821) $ 105,911
==============================================================================
Total assets as of December 31, 1998 $1,994,834 $4,263,703 $161,577 $441,408 $6,861,522
==============================================================================
</TABLE>
(1) Premiums, policy charges and investment income for life and other
insurance includes the net contribution from Closed Block for the
year ended December 31, 1998.
29
<PAGE> 31
THE OHIO NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Ohio National Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(in thousands)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OR
AS OF DECEMBER 31, 1998
--------------------------------------------------------------------------------
INDIVIDUAL PENSION
LIFE AND OTHER
INSURANCE ANNUITIES INSURANCE CORPORATE TOTAL
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Traditional life insurance premiums $ 91,758 $ -- $ 26,202 $ -- $ 117,960
Accident and health insurance premiums -- -- 23,921 -- 23,921
Annuity premiums and charges -- 34,187 -- -- 34,187
Universal life policy charges 50,991 -- -- -- 50,991
Net investment income 102,107 272,153 8,084 4,349 386,693
Net realized gains on investments -- -- -- 12,500 12,500
Other income (26) 12,830 -- -- 12,804
--------------------------------------------------------------------------------
244,830 319,170 58,207 16,849 639,056
Benefits and expenses:
Benefits and claims 133,850 222,283 35,773 -- 391,906
Provision for policyholder dividends 25,309 23 -- -- 25,332
Operating expenses 39,001 37,930 17,204 22,857 116,992
--------------------------------------------------------------------------------
198,160 260,236 52,977 22,857 534,230
Income before federal income taxes $ 46,670 $ 58,934 $ 5,230 $ (6,008) $ 104,826
================================================================================
Total assets as of December 31, 1997 $1,722,594 $4,033,860 $156,600 $417,508 $6,330,562
================================================================================
</TABLE>
30
<PAGE> 34
OHIO NATIONAL VARIABLE ACCOUNT D
STATEMENTS OF ASSETS AND CONTRACT OWNERS' EQUITY
December 31, 1999
<TABLE>
<CAPTION>
MONEY
EQUITY MARKET BOND OMNI INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Assets -- Investments at market value (note 2).......... $2,533,520 $867,255 $531,045 $2,538,131 $2,102,497
========== ======== ======== ========== ==========
Contract owners' equity
Contracts in accumulation period (note 3)............. $2,533,520 $867,255 $531,045 $2,538,131 $2,102,497
========== ======== ======== ========== ==========
<CAPTION>
CAPITAL
APPRECIATION SMALL CAP
SUBACCOUNT SUBACCOUNT
------------ ----------
<S> <C> <C>
Assets -- Investments at market value (note 2).......... $1,281,955 $3,893,167
========== ==========
Contract owners' equity
Contracts in accumulation period (note 3)............. $1,281,955 $3,893,167
========== ==========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL AGGRESSIVE CORE GROWTH &
COMPANY GROWTH GROWTH INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Assets -- Investments at market value (note 2).......... $396,487 $566,190 $564,687 $2,597,968
======== ======== ======== ==========
Contract owners' equity
Contracts in accumulation period (note 3)............. $396,487 $566,190 $564,687 $2,597,968
======== ======== ======== ==========
<CAPTION>
S&P 500 SOCIAL
INDEX AWARENESS
SUBACCOUNT SUBACCOUNT
------------- ------------
<S> <C> <C>
Assets -- Investments at market value (note 2).......... $3,659,644 $213,892
========== ========
Contract owners' equity
Contracts in accumulation period (note 3)............. $3,659,644 $213,892
========== ========
</TABLE>
<TABLE>
<CAPTION>
STRONG
VARIABLE
JANUS ASPEN SERIES RETIREMENT SHARES FUNDS GOLDMAN SACHS
---------------------------------------- ---------- -------------
WORLDWIDE MID-CAP VIT CAPITAL
GROWTH GROWTH BALANCED GROWTH GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Assets -- Investments at market value (note 2).......... $ 1,007 $ 517 $ 26,781 $ 40 $ 40
======== ====== ======== ====== ======
Contract owners' equity
Contracts in accumulation period (note 3)............. $ 1,007 $ 517 $ 26,781 $ 40 $ 40
======== ====== ======== ====== ======
<CAPTION>
LAZARD
RETIREMENT
----------
SMALL
CAP
SUBACCOUNT
----------
<S> <C>
Assets -- Investments at market value (note 2).......... $ 30
======
Contract owners' equity
Contracts in accumulation period (note 3)............. $ 30
======
</TABLE>
The accompanying notes are an integral part of these financial statements.
121
<PAGE> 35
OHIO NATIONAL VARIABLE ACCOUNT D
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
EQUITY MONEY MARKET BOND OMNI
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------------------- -------------------- -------------------- ---------------------
1999 1998 1999 1998 1999 1998 1999 1998
--------- -------- -------- ------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends.... $ 7,117 $ 20,366 $ 42,532 $26,037 $ 25,120 $12,413 $ 51,510 $ 57,327
Risk & administrative
expense (note 4)..... (29,489) (20,791) (11,534) (6,677) (4,756) (2,586) (31,959) (27,258)
--------- -------- -------- ------- -------- ------- -------- --------
Net investment
activity........ (22,372) (425) 30,998 19,360 20,364 9,827 19,551 30,069
--------- -------- -------- ------- -------- ------- -------- --------
Realized & Unrealized
gain (loss) on
investments:
Reinvested capital
gains.............. 977,651 34,593 0 0 0 0 86,343 298
Realized gain
(loss)............. 36,789 15,938 2,917 (1,054) (364) 311 33,132 19,855
Unrealized gain
(loss)............. (608,097) 3,874 0 0 (21,686) (3,138) 91,630 (8,832)
--------- -------- -------- ------- -------- ------- -------- --------
Net gain (loss) on
investments..... 406,343 54,405 2,917 (1,054) (22,050) (2,827) 211,105 11,321
--------- -------- -------- ------- -------- ------- -------- --------
Net increase
(decrease) in
contract
owners' equity
from
operations.... $ 383,971 $ 53,980 $ 33,915 $18,306 $ (1,686) $ 7,000 $230,656 $ 41,390
========= ======== ======== ======= ======== ======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL CAPITAL APPRECIATION SMALL CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------------------- ---------------------- -----------------------
1999 1998 1999 1998 1999 1998
--------- -------- -------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends...................... $ 0 $ 48,742 $ 37,798 $ 25,755 $ 0 $ 0
Risk & administrative expense (note 4).... (19,099) (17,616) (16,999) (13,635) (30,818) (16,965)
--------- -------- -------- --------- ---------- --------
Net investment activity.............. (19,099) 31,126 20,799 12,120 (30,818) (16,965)
--------- -------- -------- --------- ---------- --------
Realized & Unrealized gain (loss) on
investments:
Reinvested capital gains............... 0 59,572 117,018 87,510 988,856 19
Realized gain (loss)................... (24,274) (38,354) 7,481 54,817 150,493 36,021
Unrealized gain (loss)................. 866,587 (28,547) (82,602) (113,854) 797,404 113,125
--------- -------- -------- --------- ---------- --------
Net gain (loss) on investments....... 842,313 (7,329) 41,897 28,473 1,936,753 149,165
--------- -------- -------- --------- ---------- --------
Net increase in contract owners'
equity from operations.......... $ 823,214 $ 23,797 $ 62,696 $ 40,593 $1,905,935 $132,200
========= ======== ======== ========= ========== ========
<CAPTION>
INTERNATIONAL SMALL CO.
SUBACCOUNT
-----------------------
1999 1998
--------- ---------
<S> <C> <C>
Investment activity:
Reinvested dividends...................... $ 0 $ 4,936
Risk & administrative expense (note 4).... (3,077) (2,288)
-------- --------
Net investment activity.............. (3,077) 2,648
-------- --------
Realized & Unrealized gain (loss) on
investments:
Reinvested capital gains............... 37,428 15,176
Realized gain (loss)................... 4,989 7,718
Unrealized gain (loss)................. 155,538 (22,408)
-------- --------
Net gain (loss) on investments....... 197,955 486
-------- --------
Net increase in contract owners'
equity from operations.......... $194,878 $ 3,134
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
122
<PAGE> 36
OHIO NATIONAL VARIABLE ACCOUNT D
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH CORE GROWTH GROWTH & INCOME S&P 500 INDEX
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------------------- -------------------- -------------------- ---------------------
1999 1998 1999 1998 1999 1998 1999 1998
--------- -------- -------- ------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends.... $ 0 $ 0 $ 0 $ 0 $ 3,391 $ 7,249 $ 70,145 $ 30,596
Risk & administrative
expense (note 4)..... (6,620) (5,490) (4,138) (2,463) (21,474) (8,371) (37,240) (14,658)
--------- -------- -------- ------- -------- ------- -------- --------
Net investment
activity........ (6,620) (5,490) (4,138) (2,463) (18,083) (1,122) 32,905 15,938
--------- -------- -------- ------- -------- ------- -------- --------
Realized & Unrealized
gain (loss) on
investments:
Reinvested capital
gains.............. 0 37,859 117,600 0 372,452 0 268,697 79,531
Realized gain
(loss)............. (11,903) 5,664 22,257 781 55,422 7,362 77,990 19,295
Unrealized gain
(loss)............. 42,118 (5,886) 130,565 13,366 485,984 17,420 262,801 165,421
--------- -------- -------- ------- -------- ------- -------- --------
Net gain on
investments..... 30,215 37,637 270,422 14,147 913,858 24,782 609,488 264,247
--------- -------- -------- ------- -------- ------- -------- --------
Net increase in
contract
owners' equity
from
operations.... $ 23,595 $ 32,147 $266,284 $11,684 $895,775 $23,660 $642,393 $280,185
========= ======== ======== ======= ======== ======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN SERIES RETIREMENT SHARES
----------------------------------------
WORLDWIDE
SOCIAL AWARENESS GROWTH GROWTH BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------- ---------- ---------- ----------
1999 1998 1999(a) 1999(a) 1999(a)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends........................... $ 932 $ 853 $ 0 $ 0 $ 189
Risk & administrative expense (note 4)......... (2,726) (1,776) (1) 0 (20)
-------- -------- --- --- ------
Net investment activity................... (1,794) (923) (1) 0 169
-------- -------- --- --- ------
Realized & Unrealized gain (loss) on
investments:
Reinvested capital gains.................... 0 0 0 0 0
Realized gain (loss)........................ (14,817) (8,311) 0 0 394
Unrealized gain (loss)...................... 45,891 (47,570) 60 46 549
-------- -------- --- --- ------
Net gain (loss) on investments............ 31,074 (55,881) 60 46 943
-------- -------- --- --- ------
Net increase (decrease) in contract
owners' equity from operations....... $ 29,280 $(56,804) $59 $46 $1,112
======== ======== === === ======
<CAPTION>
GOLDMAN LAZARD
SACHS RETIREMENT
----------- ----------
VIT CAPITAL SMALL
GROWTH CAP
SUBACCOUNT SUBACCOUNT
----------- ----------
1999(a) 1999(a)
----------- ----------
<S> <C> <C>
Investment activity:
Reinvested dividends........................... $0 $ 0
Risk & administrative expense (note 4)......... 0 0
-- ---
Net investment activity................... 0 0
-- ---
Realized & Unrealized gain (loss) on
investments:
Reinvested capital gains.................... 1 2
Realized gain (loss)........................ 0 (5)
Unrealized gain (loss)...................... 1 0
-- ---
Net gain (loss) on investments............ 2 (3)
-- ---
Net increase (decrease) in contract
owners' equity from operations....... $2 $(3)
== ===
</TABLE>
- ---------------
(a) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
123
<PAGE> 37
OHIO NATIONAL VARIABLE ACCOUNT D
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
EQUITY MONEY MARKET BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------- ----------------------- ---------------------
1999 1998 1999 1998 1999 1998
---------- ---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in contract owners'
equity from operations:
Net investment activity........... $ (22,372) $ (425) $ 30,998 $ 19,360 $ 20,364 $ 9,827
Reinvested capital gains.......... 977,651 34,593 0 0 0 0
Realized gain (loss).............. 36,789 15,938 2,917 (1,054) (364) 311
Unrealized gain (loss)............ (608,097) 3,874 0 0 (21,686) (3,138)
---------- ---------- ---------- -------- -------- --------
Net increase (decrease) in
contract owners' equity from
operations................... 383,971 53,980 33,915 18,306 (1,686) 7,000
---------- ---------- ---------- -------- -------- --------
Equity transactions:
Sales:
Contract purchase payments........ 707,208 807,963 893,404 575,213 342,351 101,397
Transfers from fixed & other
subaccounts..................... 86,990 85,873 471,010 192,800 339 1,115
---------- ---------- ---------- -------- -------- --------
794,198 893,836 1,364,414 768,013 342,690 102,512
---------- ---------- ---------- -------- -------- --------
Redemptions:
Withdrawals & surrenders.......... 359,764 115,547 707,800 212,582 18,429 35,684
Transfers to fixed & other
subaccounts..................... 149,206 212,493 386,958 372,530 8,984 7,692
---------- ---------- ---------- -------- -------- --------
508,970 328,040 1,094,758 585,112 27,413 43,376
---------- ---------- ---------- -------- -------- --------
Net equity transactions......... 285,228 565,796 269,656 182,901 315,277 59,136
---------- ---------- ---------- -------- -------- --------
Net change in contract
owners' equity............. 669,199 619,776 303,571 201,207 313,591 66,136
Contract owners' equity:
Beginning of period.................. 1,864,321 1,244,545 563,684 362,477 217,454 151,318
---------- ---------- ---------- -------- -------- --------
End of period........................ $2,533,520 $1,864,321 $ 867,255 $563,684 $531,045 $217,454
========== ========== ========== ======== ======== ========
<CAPTION>
OMNI
SUBACCOUNT
-------------------------
1999 1998
---------- ----------
<S> <C> <C>
Increase (decrease) in contract owners'
equity from operations:
Net investment activity........... $ 19,551 $ 30,069
Reinvested capital gains.......... 86,343 298
Realized gain (loss).............. 33,132 19,855
Unrealized gain (loss)............ 91,630 (8,832)
---------- ----------
Net increase (decrease) in
contract owners' equity from
operations................... 230,656 41,390
---------- ----------
Equity transactions:
Sales:
Contract purchase payments........ 645,978 911,422
Transfers from fixed & other
subaccounts..................... 52,394 221,738
---------- ----------
698,372 1,133,160
---------- ----------
Redemptions:
Withdrawals & surrenders.......... 250,557 201,705
Transfers to fixed & other
subaccounts..................... 495,581 151,763
---------- ----------
746,138 353,468
---------- ----------
Net equity transactions......... (47,766) 779,692
---------- ----------
Net change in contract
owners' equity............. 182,890 821,082
Contract owners' equity:
Beginning of period.................. 2,355,241 1,534,159
---------- ----------
End of period........................ $2,538,131 $2,355,241
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
124
<PAGE> 38
OHIO NATIONAL VARIABLE ACCOUNT D
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
INTERNATIONAL CAPITAL APPRECIATION SMALL CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------- ----------------------- -------------------------
1999 1998 1999 1998 1999 1998
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase in contract owners' equity
from operations:
Net investment activity........... $ (19,099) $ 31,126 $ 20,799 $ 12,120 $ (30,818) $ (16,965)
Reinvested capital gains.......... 0 59,572 117,018 87,510 988,856 19
Realized gain (loss).............. (24,274) (38,354) 7,481 54,817 150,493 36,021
Unrealized gain (loss)............ 866,587 (28,547) (82,602) (113,854) 797,404 113,125
---------- ---------- ---------- ---------- ---------- ----------
Net increase in contract owners'
equity from operations....... 823,214 23,797 62,696 40,593 1,905,935 132,200
---------- ---------- ---------- ---------- ---------- ----------
Equity transactions:
Sales:
Contract purchase payments........ 331,772 516,650 272,049 438,636 590,920 520,139
Transfers from fixed & other
subaccounts..................... 21,830 42,661 30,437 61,105 327,660 125,570
---------- ---------- ---------- ---------- ---------- ----------
353,602 559,311 302,486 499,741 918,580 645,709
---------- ---------- ---------- ---------- ---------- ----------
Redemptions:
Withdrawals & surrenders.......... 201,081 217,519 129,261 427,626 315,635 249,787
Transfers to fixed & other
subaccounts..................... 318,435 213,697 102,093 153,543 221,903 183,891
---------- ---------- ---------- ---------- ---------- ----------
519,516 431,216 231,354 581,169 537,538 433,678
---------- ---------- ---------- ---------- ---------- ----------
Net equity transactions......... (165,914) 128,095 71,132 (81,428) 381,042 212,031
---------- ---------- ---------- ---------- ---------- ----------
Net change in contract
owners' equity............. 657,300 151,892 133,828 (40,835) 2,286,977 344,231
Contract owners' equity:
Beginning of period.................. 1,445,197 1,293,305 1,148,127 1,188,962 1,606,190 1,261,959
---------- ---------- ---------- ---------- ---------- ----------
End of period........................ $2,102,497 $1,445,197 $1,281,955 $1,148,127 $3,893,167 $1,606,190
========== ========== ========== ========== ========== ==========
<CAPTION>
INTERNATIONAL SMALL CO.
SUBACCOUNT
-----------------------
1999 1998
--------- ---------
<S> <C> <C>
Increase in contract owners' equity
from operations:
Net investment activity........... $ (3,077) $ 2,648
Reinvested capital gains.......... 37,428 15,176
Realized gain (loss).............. 4,989 7,718
Unrealized gain (loss)............ 155,538 (22,408)
-------- --------
Net increase in contract owners'
equity from operations....... 194,878 3,134
-------- --------
Equity transactions:
Sales:
Contract purchase payments........ 57,806 78,986
Transfers from fixed & other
subaccounts..................... 23,569 11,878
-------- --------
81,375 90,864
-------- --------
Redemptions:
Withdrawals & surrenders.......... 28,859 91,429
Transfers to fixed & other
subaccounts..................... 23,997 49,705
-------- --------
52,856 141,134
-------- --------
Net equity transactions......... 28,519 (50,270)
-------- --------
Net change in contract
owners' equity............. 223,397 (47,136)
Contract owners' equity:
Beginning of period.................. 173,090 220,226
-------- --------
End of period........................ $396,487 $173,090
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
125
<PAGE> 39
OHIO NATIONAL VARIABLE ACCOUNT D
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH CORE GROWTH GROWTH & INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT
--------------------- ------------------- -------------------------
1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase in contract owners' equity from
operations:
Net investment activity.............. $ (6,620) $ (5,490) $ (4,138) $ (2,463) $ (18,083) $ (1,122)
Reinvested capital gains............. 0 37,859 117,600 0 372,452 0
Realized gain (loss)................. (11,903) 5,664 22,257 781 55,422 7,362
Unrealized gain (loss)............... 42,118 (5,886) 130,565 13,366 485,984 17,420
-------- -------- -------- -------- ---------- ----------
Net increase in contract owners'
equity from operations.......... 23,595 32,147 266,284 11,684 895,775 23,660
-------- -------- -------- -------- ---------- ----------
Equity transactions:
Sales:
Contract purchase payments........... 179,263 278,126 80,398 108,763 708,912 548,376
Transfers from fixed & other
subaccounts........................ 17,764 26,304 92,218 16,912 429,854 372,867
-------- -------- -------- -------- ---------- ----------
197,027 304,430 172,616 125,675 1,138,766 921,243
-------- -------- -------- -------- ---------- ----------
Redemptions:
Withdrawals & surrenders............. 47,185 49,483 46,933 9,025 309,214 6,157
Transfers to fixed & other
subaccounts........................ 173,062 22,332 71,405 3,108 150,650 71,895
-------- -------- -------- -------- ---------- ----------
220,247 71,815 118,338 12,133 459,864 78,052
-------- -------- -------- -------- ---------- ----------
Net equity transactions............ (23,220) 232,615 54,278 113,542 678,902 843,191
-------- -------- -------- -------- ---------- ----------
Net change in contract owners'
equity........................ 375 264,762 320,562 125,226 1,574,677 866,851
Contract owners' equity:
Beginning of period..................... 565,815 301,053 244,125 118,899 1,023,291 156,440
-------- -------- -------- -------- ---------- ----------
End of period........................... $566,190 $565,815 $564,687 $244,125 $2,597,968 $1,023,291
======== ======== ======== ======== ========== ==========
<CAPTION>
S&P 500 INDEX
SUBACCOUNT
-------------------------
1999 1998
---------- ----------
<S> <C> <C>
Increase in contract owners' equity from
operations:
Net investment activity.............. $ 32,905 $ 15,938
Reinvested capital gains............. 268,697 79,531
Realized gain (loss)................. 77,990 19,295
Unrealized gain (loss)............... 262,801 165,421
---------- ----------
Net increase in contract owners'
equity from operations.......... 642,393 280,185
---------- ----------
Equity transactions:
Sales:
Contract purchase payments........... 1,238,293 786,354
Transfers from fixed & other
subaccounts........................ 759,014 568,582
---------- ----------
1,997,307 1,354,936
---------- ----------
Redemptions:
Withdrawals & surrenders............. 536,251 45,959
Transfers to fixed & other
subaccounts........................ 315,292 67,408
---------- ----------
851,543 113,367
---------- ----------
Net equity transactions............ 1,145,764 1,241,569
---------- ----------
Net change in contract owners'
equity........................ 1,788,157 1,521,754
Contract owners' equity:
Beginning of period..................... 1,871,487 349,733
---------- ----------
End of period........................... $3,659,644 $1,871,487
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
126
<PAGE> 40
OHIO NATIONAL VARIABLE ACCOUNT D
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
STRONG
JANUS ASPEN SERIES RETIREMENT SHARES VARIABLE
------------------------------------- ----------
WORLDWIDE MID-CAP
SOCIAL AWARENESS GROWTH GROWTH BALANCED GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------------- ---------- ---------- ---------- ----------
1999 1998 1999(a) 1999(a) 1999(a) 1999(a)
-------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in contract owners' equity from
operations:
Net investment activity....................... $ (1,794) $ (923) $ (1) $ 0 $ 169 $ 0
Reinvested capital gains...................... 0 0 0 0 0 0
Realized gain (loss).......................... (14,817) (8,311) 0 0 394 0
Unrealized gain (loss)........................ 45,891 (47,570) 60 46 549 0
-------- -------- ------ ---- ------- ---
Net increase (decrease) in contract owners'
equity from operations................... 29,280 (56,804) 59 46 1,112 0
-------- -------- ------ ---- ------- ---
Equity transactions:
Sales:
Contract purchase payments.................... 67,415 149,225 76 20 26 40
Transfers from fixed & other subaccounts...... 9,600 80,532 872 451 25,727 0
-------- -------- ------ ---- ------- ---
77,015 229,757 948 471 25,753 40
-------- -------- ------ ---- ------- ---
Redemptions:
Withdrawals & surrenders...................... 53,152 5,103 0 0 0 0
Transfers to fixed & other subaccounts........ 34,486 16,081 0 0 84 0
-------- -------- ------ ---- ------- ---
87,638 21,184 0 0 84 0
-------- -------- ------ ---- ------- ---
Net equity transactions..................... (10,623) 208,573 948 471 25,669 40
-------- -------- ------ ---- ------- ---
Net change in contract owners' equity.... 18,657 151,769 1,007 517 26,781 40
Contract owners' equity:
Beginning of period.............................. 195,235 43,466 0 0 0 0
-------- -------- ------ ---- ------- ---
End of period.................................... $213,892 $195,235 $1,007 $517 $26,781 $40
======== ======== ====== ==== ======= ===
<CAPTION>
GOLDMAN LAZARD
SACHS RETIREMENT
----------- ----------
VIT CAPITAL SMALL
GROWTH CAP
SUBACCOUNT SUBACCOUNT
----------- ----------
1999(a) 1999(a)
----------- ----------
<S> <C> <C>
Increase (decrease) in contract owners' equity from
operations:
Net investment activity....................... $ 0 $ 0
Reinvested capital gains...................... 1 2
Realized gain (loss).......................... 0 (5)
Unrealized gain (loss)........................ 1 0
--- ----
Net increase (decrease) in contract owners'
equity from operations................... 2 (3)
--- ----
Equity transactions:
Sales:
Contract purchase payments.................... 38 9
Transfers from fixed & other subaccounts...... 0 227
--- ----
38 236
--- ----
Redemptions:
Withdrawals & surrenders...................... 0 0
Transfers to fixed & other subaccounts........ 0 203
--- ----
0 203
--- ----
Net equity transactions..................... 38 33
--- ----
Net change in contract owners' equity.... 40 30
Contract owners' equity:
Beginning of period.............................. 0 0
--- ----
End of period.................................... $40 $ 30
=== ====
</TABLE>
- ---------------
(a) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
127
<PAGE> 41
OHIO NATIONAL VARIABLE ACCOUNT D
NOTES TO FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ohio National Variable Account D (the Account) is a separate account of The
Ohio National Life Insurance Company (ONLIC) and all obligations arising
under variable annuity contracts are general corporate obligations of ONLIC.
The account has been registered as a unit investment trust under the
Investment Company Act of 1940.
Assets of the Account are invested in portfolio shares of Ohio National
Fund, Inc., Janus Aspen Series, Strong Variable Insurance Funds, Goldman
Sachs Variable Insurance Trust and Lazard Retirement Funds (collectively the
Funds). The Funds are diversified open-end management investment company.
The Fund's investments are subject to varying degrees of market, interest
and financial risks; the issuers' abilities to meet certain obligations may
be affected by economic developments in their respective industries.
Investments are valued at the net asset value of fund shares held at
December 31, 1999. Share transactions are recorded on the trade date. Income
and capital gain distributions are recorded on the ex-dividend date. Net
realized capital gains and losses are determined on the basis of average
cost.
ONLIC performs investment advisory services on behalf of the Ohio National
Fund, Inc. in which the Account invests. For these services, the Company
receives fees from the mutual funds. These fees are paid to an affiliate of
the Company.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(2) INVESTMENTS
At December 31, 1999 the aggregate cost and number of shares of Ohio
National Fund, Inc. owned by the respective subaccounts were:
<TABLE>
<CAPTION>
MONEY CAPITAL
EQUITY MARKET BOND OMNI INTERNATIONAL APPRECIATION SMALL CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ----------- ----------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Cost............... $3,048,956 $867,255 $554,467 $2,359,676 $1,413,661 $1,366,349 $2,860,707
Number of Shares............. 95,688 86,725 53,441 112,576 97,713 105,885 123,139
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL AGGRESSIVE CORE GROWTH & S&P 500 SOCIAL
COMPANY GROWTH GROWTH INCOME INDEX AWARENESS
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Cost................ $ 252,827 $515,163 $415,857 $2,091,600 $3,246,100 $ 212,272
Number of Shares.............. 19,583 48,019 33,258 138,359 226,379 20,750
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN STRONG
JANUS ASPEN RETIREMENT JANUS ASPEN VARIABLE GOLDMAN
RETIREMENT SHARES RETIREMENT FUND SACHS VIT LAZARD
SHARES WORLDWIDE SHARES MID-CAP CAPITAL RETIREMENT
GROWTH GROWTH BALANCED GROWTH GROWTH SMALL CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Cost.................. $ 947 $ 471 $ 26,232 $ 40 $ 38 $ 30
Number of Shares................ 30 11 955 1 3 3
</TABLE>
(3) CONTRACTS IN ACCUMULATION PERIOD
At December 31, 1999 the accumulation units and value per unit of the
respective subaccounts and products were:
<TABLE>
<CAPTION>
ACCUMULATION UNITS VALUE PER UNIT VALUE
------------------ -------------- ------------
<S> <C> <C> <C>
EQUITY SUBACCOUNT........................................... 123,654.5754 20.488690 $ 2,533,520
MONEY MARKET SUBACCOUNT..................................... 72,108.3689 12.027104 $ 867,255
BOND SUBACCOUNT............................................. 41,685.6296 12.739294 $ 531,045
OMNI SUBACCOUNT............................................. 143,524.8493 17.684265 $ 2,538,131
</TABLE>
(continued)
128
<PAGE> 42
OHIO NATIONAL VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION UNITS VALUE PER UNIT VALUE
------------------ -------------- ------------
<S> <C> <C> <C>
INTERNATIONAL SUBACCOUNT.................................... 96,944.9645 21.687535 $ 2,102,497
CAPITAL APPRECIATION SUBACCOUNT............................. 77,141.9297 16.618131 $ 1,281,955
SMALL CAP SUBACCOUNT........................................ 109,169.4362 35.661694 $ 3,893,167
INTERNATIONAL SMALL COMPANY SUBACCOUNT...................... 14,362.0469 27.606603 $ 396,487
AGGRESSIVE GROWTH SUBACCOUNT................................ 36,759.7160 15.402459 $ 566,190
CORE GROWTH SUBACCOUNT...................................... 27,196.3943 20.763312 $ 564,687
GROWTH & INCOME SUBACCOUNT.................................. 113,969.9893 22.795195 $ 2,597,968
S&P 500 INDEX SUBACCOUNT.................................... 177,052.7569 20.669795 $ 3,659,644
SOCIAL AWARENESS SUBACCOUNT................................. 19,408.0632 11.020767 $ 213,892
JANUS ASPEN RETIREMENT SHARES GROWTH SUBACCOUNT............. 86.5231 11.639885 $ 1,007
JANUS ASPEN RETIREMENT SHARES WORLDWIDE GROWTH SUBACCOUNT... 39.1099 13.211585 $ 517
JANUS ASPEN RETIREMENT SHARES BALANCED SUBACCOUNT........... 2,432.0922 11.011548 $ 26,781
STRONG MID-CAP GROWTH SUBACCOUNT............................ 3.0980 12.911573 $ 40
GOLDMAN SACHS VIT CAPITAL GROWTH SUBACCOUNT................. 3.5443 11.173846 $ 40
LAZARD SMALL CAP SUBACCOUNT................................. 2.8321 10.533744 $ 30
</TABLE>
(4) RISK AND ADMINISTRATIVE EXPENSE
ONLIC charges the Account's assets at the end of each valuation period,
equal to 0.35% on an annual basis, of the contract value for administrative
expenses, based on premiums established at the time the contracts are
issued.
Although variable annuity payments differ according to the investment
performance of the Accounts, they are not affected by mortality or expense
experience because ONLIC assumes the expense risk and the mortality risk
under the contracts. ONLIC charges the Accounts' assets for assuming those
risks, based on the contract value at a rate of 1.00% for mortality and
expense risk.
The expense risk assumed by ONLIC is the risk that the deductions for sales
and administrative expenses provided for in the variable annuity contracts
may prove insufficient to cover the cost of those terms.
The mortality risk results from a provision in the contract in which ONLIC
agrees to make annuity payments regardless of how long a particular
annuitant or other payee lives and how long all annuitants or other payees
as a class live if payment options involving life contingencies are chosen.
Those annuity payments are determined in accordance with annuity purchase
rate provisions established at the time the contracts are issued.
(5) CONTRACT CHARGES
No deduction for a sales charge is made from purchase payments. A withdrawal
charge ranging from 0% to 7% may be assessed by ONLIC when a contract is
surrendered or a partial withdrawal of a participant's account value is made
for any other reason than to make a plan payment to a participant.
A transfer fee is charged for each transfer from one subaccount to another.
The fee is charged against the contract owner's equity in the subaccount
from which the transfer is effected.
State premium taxes presently range from 0% to 2 1/2% for these contracts.
In those jurisdictions permitting, such taxes will be deducted when annuity
payments begin. Elsewhere, they will be deducted from purchase payments.
(6) FEDERAL INCOME TAXES
Operations of the Account form a part of, and are taxed with, operations of
ONLIC which is taxed as a life insurance company under the Internal Revenue
Code. Taxes are the responsibility of the contract owner upon termination or
withdrawal. No Federal income taxes are payable under the present law on
dividend income or capital gains distribution from the Fund shares held in
the Account or on capital gains realized by the Account on redemption of the
Fund shares.
129
<PAGE> 43
OHIO NATIONAL VARIABLE ACCOUNT D
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
The Ohio National Life Insurance Company
and Contract Owners of Ohio National
Variable Account D:
We have audited the accompanying statements of assets and contract owners'
equity of Ohio National Variable Account D (comprised of the Equity, Money
Market, Bond, Omni, International, Capital Appreciation (formerly Small Cap
Growth), Small Cap, International Small Company (formerly Global Contrarian),
Aggressive Growth, Core Growth, Growth & Income, S&P 500 Index, Social
Awareness, Janus Aspen Series Retirement Shares -- Growth, Janus Aspen Series
Retirement Shares -- Worldwide Growth, Janus Aspen Series Retirement
Shares -- Balanced, Strong Variable Funds -- Mid-Cap Growth, Goldman Sachs VIT
Capital Growth, and Lazard Retirement Small Cap subaccounts) (collectively, the
Account) as of December 31, 1999 and the related statements of operations and
changes in contract owners' equity for each of the periods indicated herein.
These financial statements are the responsibility of the Account's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements 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, 1999, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ohio National Variable Account
D as of December 31, 1999, and the results of its operations and its changes in
contract owners' equity for each of the periods indicated herein in conformity
with generally accepted accounting principles.
KPMG LLP
Cincinnati, Ohio
February 18, 2000
130
<PAGE> 44
OHIO NATIONAL VARIABLE ACCOUNTS
FORM N-4
PART C
OTHER INFORMATION
<PAGE> 45
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements of the Registrant are included in Part B of
this Registration Statement:
Independent Auditors' Report of KPMG LLP dated February 18, 2000
Statement of Assets and Contract Owners' Equity dated December 31, 1999
Statement of Operations and Changes in Contract Owners' Equity for the
Year Ended December 31, 1999
Notes to Financial Statements dated December 31, 1999
Schedule of Changes in Unit Values for the Year Ended December 31, 1999
The following consolidated financial statements of The Depositor and its
subsidiaries are also included in Part B of this Registration Statement:
Independent Auditors' Report of KPMG LLP dated January 29, 2000
Consolidated Balance Sheets dated December 31, 1999 and 1998
Consolidated Statements of Income for the Years Ended December 31, 1999,
1998 and 1997
Consolidated Statements of Equity for the Years Ended December 31, 1999,
1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997
Notes to Consolidated Financial Statements dated December 31, 1999, 1998
and 1997
The following financial information is included in Part A of this Registration
Statement:
Accumulation Unit Values
Consents of the Following Persons:
KPMG LLP
Exhibits:
All relevant exhibits, which have previously been filed with the Commission and
are incorporated herein by reference, are as follows:
(1) Resolution of Board of Directors of the Depositor authorizing
establishment of the Registrant was filed as Exhibit A(1) of the
registration statement of Ohio National Variable Account A ("VAA")
on Form S-6 on August 3, 1982 (File no. 2-78652).
13
<PAGE> 46
(3)(a) Principal Underwriting Agreement for Variable Annuities between the
Depositor and Ohio National Equities, Inc. was filed as Exhibit
(3)(a) of Form N-4, Post-effective Amendment no. 21 of Ohio
National Variable A (File no. 2-91213) on April 25, 1997.
(3)(b) Registered Representative's Sales Contract with Variable Annuity
Supplement was filed as Exhibit (3)(b) of VAA's Form N-4,
Post-effective Amendment no. 9 on February 27, 1991 (File no.
2-91213).
(3)(c) Variable Annuity Sales Commission Schedule was filed as Exhibit
A(3)(c) of VAA's registration statement on Form S-6 on May 18, 1984
(File no. 2-91213).
(4) Group Annuity, Form GA-93-VF-1, was filed as Exhibit (4) of the
Registrant's registration statement on Form N-4 on July 20, 1994.
(4)(a) Group Annuity Certificate, Form GA-93-VF-1C, was filed as Exhibit
(4)(a) of the Registrant's registration statement on July 20, 1994.
(5) Group Annuity Application, Form 3762-R, was filed as Exhibit (5) of
the Registrant's registration statement on July 20, 1994.
(6)(a) Articles of Incorporation of the Depositor were filed as Exhibit
A(6)(a) of Ohio National Variable Interest Account registration
statement on Form N-8B-2 on July 11, 1980 (File no. 811- 3060).
(6)(b) Code of Regulations (by-laws) of the Depositor were filed as
Exhibit A(6)(b) of Ohio National Variable Interest Account
registration statement on Form N-8B-2 on July 11, 1980 (File no.
811- 3060).
(8) Powers of Attorney by certain Directors of the Depositor were filed
as Exhibit (8) of Post-effective Amendment no. 22 of Ohio
National Variable Account A registration statement on Form N-4 on
March 2, 1998 (File no. 2-91213) and Exhibit (8)(a) of
Post-effective Amendment no. 2 of Ohio National Variable Account A
registration statement on Form N-4 on March 2, 1999 (File no.
333-43511).
(13) Computation of Performance Data was filed as Exhibit (13) of
Form N-4, Pre-effective Amendment no. 1, of Ohio National
Variable Account A (File no. 333-43511) on April 10, 1998.
14
<PAGE> 47
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
- ---------------- --------------
<S> <C>
Trudy K. Backus* Vice President, Individual Insurance Services
Thomas A. Barefield* Senior Vice President, Institutional Sales
Howard C. Becker* Senior Vice President, Individual Insurance
& Corporate Services
Ronald L. Benedict* Corporate Vice President, Counsel and
Secretary
Michael A. Boedeker* Vice President, Senior Investment Officer
Robert A. Bowen* Senior Vice President, Information Systems
Roylene M. Broadwell* Vice President & Treasurer
Dale P. Brown Director
36 East Seventh Street
Cincinnati, Ohio 45202
Jack E. Brown Director
50 E. Rivercenter Blvd.
Covington, Kentucky 41011
William R. Burleigh Director
One West Fourth Street
Suite 1100
Cincinnati, Ohio 45202
Victoria B. Buyniski Gluckman Director
2343 Auburn Avenue
Cincinnati, Ohio 45219
Christopher A. Carlson* Vice President, Senior Investment Officer
Raymond R. Clark Director
201 East Fourth Street
Cincinnati, Ohio 45202
David W. Cook* Senior Vice President and Actuary
Ronald J. Dolan* Director and Senior Vice President and Chief
Financial Officer
Michael J. Ferry* Vice President, Information Systems
Michael F. Haverkamp* Vice President and Counsel
John W. Hayden Director
7000 Midland Boulevard
Batavia, Ohio 45103
John A. Houser III* Vice President, Claims
</TABLE>
15
<PAGE> 48
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
- ---------------- --------------
<S> <C>
Charles S. Mechem, Jr. Director
One East Fourth Street
Cincinnati, Ohio 45202
James I. Miller, II* Vice President, Marketing Support
Thomas O. Olson* Vice President, Underwriting
David B. O'Maley* Director, Chairman, President and Chief
Executive Officer
James F. Orr Director
201 East Fourth Street
Cincinnati, Ohio 45202
John J. Palmer* Director and Senior Vice President, Strategic
Initiatives
George B. Pearson, Jr.* Vice President, PGA Marketing
J. Donald Richardson* Senior Regional Vice President
D. Gates Smith* Director and Senior Vice President, Sales
Michael D. Stohler* Vice President, Mortgages and Real Estate
Stuart G. Summers* Director and Senior Vice President and General
Counsel
Dennis C. Twarogowski* Vice President, Career Marketing
Oliver W. Waddell Director
425 Walnut Street
Cincinnati, Ohio 45202
Dr. David S. Williams* Vice President and Medical Director
</TABLE>
*The principal business address for these individuals is One Financial Way,
Montgomery, Ohio 45242.
16
<PAGE> 49
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
THE OHIO NATIONAL LIFE INSURANCE COMPANY/CINCINNATI
A MUTUAL LIFE INSURANCE COMPANY INCORPORATED UNDER THE LAWS OF OHIO
- --------------------------------------------------------------------------------
<S> <C>
- ------------------------------- --------------------------------------
ENTERPRISE PARK, INC. OHIO NATIONAL EQUITIES INC.
A GEORGIA CORPORATION A BROKER/DEALER
REAL ESTATE DEVELOPMENT COMPANY CAPITALIZED BY ONLI @ $30,000
CAPITALIZED BY ONLI $50,000
- ------------------------------- --------------------------------------
Pres. & Dir. M. Stohler Chm. & Dir. D. O'Maley
V.P. & Dir. R. Dolan Pres. & Dir. J. Palmer
Secy. & Dir. J. Fischer VP & Dir. T. Backus
Treas. & Dir. J. Sander VP & Dir. J. Miller
Vice Pres. C. Carlson Sr. VP T. Barefield
Secretary & Dir. R. Benedict
Treasurer &
Compliance Officer B. Turner
Asst. Secy. M. Haverkamp
Asst. Tress. L. Weiler
- ------------------------------- --------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
THE OHIO NATIONAL LIFE INSURANCE COMPANY/CINCINNATI
A MUTUAL LIFE INSURANCE COMPANY INCORPORATED UNDER THE LAWS OF OHIO
- -------------------------------------------------------------------------------------------------------------------
S E P A R A T E A C C O U N T S
--------------------------------
A B C D E F
--------------------------------
<S> <C> <C>
- ------------------------------- ------------------------------ -------------------------------------
OHIO NATIONAL INVESTMENTS, INC. THE O.N. EQUITY SALES COMPANY OHIO NATIONAL LIFE
ASSURANCE CORPORATION
AN INVESTMENT ADVISER AN OHIO CORPORATION AN OHIO CORPORATION
CAPITALIZED BY ONLI @ $10,000 A BROKER/DEALER A STOCK LIFE INSURANCE COMPANY
CAPITALIZED BY ONLI @ $790,000 CAPITALIZED BY ONLI @ $32,000,000
INCORPORATED UNDER THE LAWS OF OHIO
- ------------------------------- ----------------------------------- ------------------------------------
Chm. & Dir. D. O'Maley Chm./Pres/.CEO & Dir. D. O'Maley
Pres. & Dir. C. Carlson Sr. VP & Dir. R. Dolan
Pres. & Dir. J. Palmer Sr. VP & Dir. J. Palmer
VP & Dir. M. Boedeker Sr. VP & Dir. S. Summers
V.P. & Dir. D. Twarogowski Sr. VP T. Barefield
VP & Dir. M. Stohler Sr. Vice Pres. A. Bowen
Secy. & Dir. M. Haverkamp Sr. Vice Pres. D. Cook
Dir. D. O'Maley Sr. Vice Pres. G. Smith
Treasurer & Vice Pres. & Treas. R. Broadwell
Dir. J. Palmer Compliance Director B. Turner Vice President M. Boedeker
Vice President T. Backus
Treasurer D. Taney Vice President G. Pearson
Vice President M. Stohler
Secretary R. Benedict Vice Pres. J. Houser
Vice President D. Twarogowski
VP S. Komroka VP & Secy. R. Benedict
Asst. Secy. J. Fischer
VP J. Martin Asst. Actuary K. Flischel
- ------------------------------- ------------------------------ -----------------------------------
SEPARATE ACCOUNT
-----------------------------------
R
---
<CAPTION>
<= Advisor to Advisor to =>
--------------------------------------------------------
<S> <C> <C>
- ------------------ -------------------------------- --------------------------------
ONE FUND, INC. O.N. INVESTMENT MANAGEMENT CO. OHIO NATIONAL FUND
A MARYLAND CORPORATION AN OHIO CORPORATION A MARYLAND CORPORATION
AN OPEN END DIVISIFIED A FINANCIAL ADVISORY SERVICE AN OPEN END DIVERSIFIED
MANAGEMENT INVESTMENT COMPANY CAPITALIZED BY ONESCO @ $145,000 MANAGEMENT INVESTMENT COMPANY
- ----------------------------- -------------------------------- --------------------------------
Pres. & Dir. J. Palmer Pres. & Dir. J. Palmer Pres. & Dir. J. Palmer
Vice. Pres. M. Boedeker ----- Vice President M. Boedeker
VP & Dir. G. Smith Vice President T. Barfield
Vice Pres. T. Barefield
Vice Pres. S. Williams VP & Dir. D. Twarogowski Treasurer D. Taney
Treasurer D. Taney --------Secy. & Dir. R. Benedict
Secy. & Dir. R. Benedict Treasurer B. Turner Director R. Love
Director R. Love Director J. Bushman
Director J. Bushman Secretary & Dir. M. Haverkamp Director G. Vredeveld
Director G. Vredeveld Sr. VP T. Barefield
- --------------------------------- -------------------------------- ---------------------------------
</TABLE>
17
<PAGE> 50
*The principal business address for these individuals is One Financial Way,
Montgomery, Ohio 45242.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Organization Chart showing the relationships among the Depositor, the
Registrant and their affiliated entities is on page 4A hereof.
ITEM 27. NUMBER OF CONTRACTOWNERS
As of March 20, 2000, the Registrant's contracts were owned by 147 owners.
ITEM 28. INDEMNIFICATION
The sixth article of the Depositor's Articles of Incorporation, as amended,
provides as follows:
Each former, present and future Director, Officer or Employee of the
Corporation (and his heirs, executors or administrators), or any such
person (and his heirs, executors or administrators) who serves at the
Corporation's request as a director, officer, partner, member or employee
of another corporation, partnership or business organization or
association of any type whatsoever shall be indemnified by the Corporation
against reasonable expenses, including attorneys' fees, judgments, fine
and amounts paid in settlement actually and reasonably incurred by him in
connection with the defense of any contemplated, pending or threatened
action, suit or proceeding, civil, criminal, administrative or
investigative, other than an action by or in the right of the corporation,
to which he is or may be made a party by reason of being or having been
such Director, Officer, or Employee of the Corporation or having served at
the Corporation's request as such director, officer, partner, member or
employee of any other business organization or association, or in
connection with any appeal therein, provided a
18
<PAGE> 51
determination is made by majority vote of a disinterested quorum of the
Board of Directors (a) that such a person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and (b) that, in any matter the subject of
criminal action, suit or proceeding, such person had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself create a
presumption that the person did not act in good faith in any manner which
he reasonably believed to be in or not opposed to the best interests of
the Corporation, and with respect to any criminal action or proceeding, he
had reasonable cause to believe that his conduct was unlawful. Such right
of indemnification shall not be deemed exclusive of any other rights to
which such person may be entitled. The manner by which the right to
indemnification shall be determined in the absence of a disinterested
quorum of the Board of Directors shall be set forth in the Code of
Regulations or in such other manner as permitted by law. Each former,
present, and future Director, Officer or Employee of the Corporation (and
his heirs, executors or administrators) who serves at the Corporation's
request as a director, officer, partner, member or employee of another
corporation, partnership or business organization or association of any
type whatsoever shall be indemnified by the Corporation against reasonable
expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense or settlement of any contemplated,
pending or threatened action, suit or proceeding, by or in the right of
the Corporation to procure a judgment in its favor, to which he is or may
be a party by reason of being or having been such Director, Officer or
Employee of the Corporation or having served at the Corporation's request
as such director, officer, partner, member or employee of any other
business organization or association, or in connection with any appeal
therein, provided a determination is made by majority vote of a
disinterested quorum of the Board of Directors (a) that such person was
not, and has not been adjudicated to have been negligent or guilty of
misconduct in the performance of his duty to the Corporation or to such
other business organization or association, and (b) that such person acted
in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation. Such right of
indemnification shall not be deemed exclusive of any other rights to which
such person may be entitled. The manner by which the right of
indemnification shall be determined in the absence of a disinterested
quorum of the Board of Directors shall be as set forth in the Code of
Regulations or in such other manner as permitted by law.
In addition, Article XII of the Depositor's Code of Regulations states as
follows:
If any director, officer or employee of the Corporation may be entitled to
indemnification by reason of Article Sixth of the Amended Articles of
Corporation, indemnification shall be made upon either (a) a determination
in writing of the majority of disinterested directors present, at a
meeting of the Board at which all disinterested directors present
constitute a quorum, that the director, officer or employee in question
was acting in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of this Corporation or of such other
business organization or association in which he served at the
Corporation's request, and that, in any matter which is the subject of a
criminal action, suit or proceeding, he had no reasonable cause to believe
that his conduct was unlawful and in an action by or in the right of the
Corporation to procure a judgment in its favor that such person was not
and has not been adjudicated to have been negligent or guilty of
misconduct in the performance of his duty to the Corporation or to such
other business organization or association; or (b) if the number of all
disinterested directors would not be sufficient at any time to constitute
a quorum, or if the number of disinterested directors present at two
consecutive meetings of the Board has not been sufficient to constitute a
quorum, a determination to the same effect as set forth in the foregoing
clause (a) shall be made in a written opinion by independent legal counsel
other than an attorney, or a firm having association with it an attorney,
who has been retained by or who has performed services for this
Corporation, or any person to be indemnified within the past five years,
or by the majority vote of the policyholders, or by the Court of Common
Pleas or the court in which such action, suit or proceeding was brought.
Prior to making any such
19
<PAGE> 52
determination, the Board of Directors shall first have received the
written opinion of General Counsel that a number of directors sufficient
to constitute a quorum, as named therein, are disinterested directors. Any
director who is a party to or threatened with the action, suit or
proceeding in question, or any related action, suit or proceeding, or has
had or has an interest therein adverse to that of the Corporation, or who
for any other reason has been or would be affected thereby, shall not be
deemed a disinterested director and shall not be qualified to vote on the
question of indemnification. Anything in this Article to the contrary
notwithstanding, if a judicial or administrative body determines as part
of the settlement of any action, suit or proceeding that the Corporation
should indemnify a director, officer or employee for the amount of the
settlement, the Corporation shall so indemnify such person in accordance
with such determination. Expenses incurred with respect to any action,
suit or proceeding which may qualify for indemnification may be advanced
by the Corporation prior to final disposition thereof upon receipt of an
undertaking by or on behalf of the director, officer or employee to repay
such amount if it is ultimately determined hereunder that he is not
entitled to indemnification or to the extent that the amount so advanced
exceeds the indemnification to which he is ultimately determined to be
entitled.
ITEM 29. PRINCIPAL UNDERWRITERS
The principal underwriter of the Registrant's securities is Ohio National
Equities, Inc. ("ONEQ"). ONEQ is a wholly-owned subsidiary of the
Depositor. ONEQ also serves as the principal underwriter of securities issued
by Ohio National Variable Accounts A and B, other separate accounts of the
Depositor which are registered as unit investment trusts; and Ohio National
Variable Account R, a separate account of the Depositor's subsidiary, Ohio
National Life Assurance Corporation, which separate account is also registered
as a unit investment trust; and ONE Fund, Inc., an open-end investment company
of the management type.
The directors and officers of ONEQ are:
<TABLE>
<CAPTION>
Name Position with ONEQ
---- -----------------------
<S> <C>
David B. O'Maley Chairman and Director
John J. Palmer President & Chief Executive Officer and Director
Thomas A. Barefield Senior Vice President
Trudy K. Backus Vice President and Director
Ronald L. Benedict Secretary and Director
Barbara A. Turner Operations Vice President, Treasurer and Compliance Officer
James I. Miller II Vice President and Director
</TABLE>
20
<PAGE> 53
The principal business address of each of the foregoing is One Financial Way,
Cincinnati, Ohio 45242.
During the last fiscal year, ONEQ received the following commissions and other
compensation, directly or indirectly, from the Registrant:
<TABLE>
<CAPTION>
Net Underwriting Compensation
Discounts and on Redemption Brokerage
Commissions or Annuitization Commissions Compensation
- ----------- ---------------- ----------- ------------
<S> <C> <C> <C>
$257,215 None None None
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The books and records of the Registrant which are required under Section 31(a)
of the 1940 Act and Rules thereunder are maintained in the possession of the
following persons:
(1) Journals and other records of original entry:
The Ohio National Life Insurance Company ("Depositor")
One Financial Way
Montgomery, Ohio 45242
Firstar Bank, N.A. ("Custodian")
425 Walnut Street
Cincinnati, Ohio 45202
(2) General and auxiliary ledgers:
Depositor and Custodian
(3) Securities records for portfolio securities:
Custodian
(4) Corporate charter, by-laws and minute books:
Registrant has no such documents.
(5) Records of brokerage orders:
Not applicable.
(6) Records of other portfolio transactions:
Custodian
(7) Records of options:
Not applicable
(8) Records of trial balances:
Custodian
21
<PAGE> 54
(9) Quarterly records of allocation of brokerage orders and commissions:
Not applicable
(10) Records identifying persons or group authorizing portfolio
transactions:
Depositor
(11) Files of advisory materials:
Not applicable
(12) Other records
Custodian and Depositor
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS AND REPRESENTATIONS
Representation pursuant to Section 26(e)(2)(A) of the Investment Company Act of
1940, as amended, was furnished in the Registrant's Form N-4, Post-effective
Amendment No. 5, on April 25, 1997.
22
<PAGE> 55
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the registrant, Ohio National Variable Account D, certifies that it meets
the requirements of Securities Act Rule 485(b) for effectiveness of this
registration statement and has caused this post-effective amendment to the
registration statement to be signed on its behalf in the City of Montgomery and
the State of Ohio on this 25th day of April, 2000.
OHIO NATIONAL VARIABLE ACCOUNT D
(Registrant)
By THE OHIO NATIONAL LIFE INSURANCE COMPANY
(Depositor)
By /s/ John J. Palmer
--------------------------------------
John J. Palmer, Senior Vice President,
Strategic Initiatives
Attest:
/s/Ronald L. Benedict
- ------------------------------------
Ronald L. Benedict
Corporate Vice President, Counsel
and Secretary
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the depositor, The Ohio National Life Insurance Company, has caused this
post-effective amendment to the registration statement to be signed on its
behalf in the City of Cincinnati and the State of Ohio on the 25th day of
April, 2000.
THE OHIO NATIONAL LIFE INSURANCE COMPANY
(Depositor)
By /s/ John J. Palmer
----------------------------------------
John J. Palmer, Senior Vice President,
Strategic Initiatives
Attest:
/s/Ronald L. Benedict
- ---------------------------------
Ronald L. Benedict
Corporate Vice President, Counsel
and Secretary
23
<PAGE> 56
As required by the Securities Act of 1933, this post-effective amendment to the
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ David B. O'Maley Chairman, President, April 25, 2000
- ---------------------- Chief Executive Officer
David B. O'Maley and Director
*s/ Dale P. Brown Director April 25, 2000
- ----------------------
Dale P. Brown
*s/ Jack E. Brown Director April 25, 2000
- ----------------------
Jack E. Brown
*s/ William R. Burleigh Director April 25, 2000
- -----------------------
William R. Burleigh
*s/ Victoria B. Buyniski Gluckman Director April 25, 2000
- ---------------------------------
Victoria B. Buyniski Gluckman
*s/ Raymond R. Clark Director April 25, 2000
- ----------------------
Raymond R. Clark
s/ Ronald J. Dolan Director April 25, 2000
- ----------------------
Ronald J. Dolan
Director
- ----------------------
John W. Hayden
*s/ Charles S. Mechem, Jr. Director April 25, 2000
- --------------------------
Charles S. Mechem, Jr.
*s/ James F. Orr Director April 25, 2000
- ----------------------
James F. Orr
s/ John J. Palmer Director April 25, 2000
- ----------------------
John J. Palmer
s/ D. Gates Smith Director April 25, 2000
- ----------------------
D. Gates Smith
s/ Stuart G. Summers Director April 25, 2000
- ----------------------
Stuart G. Summers
*s/ Oliver W. Waddell Director April 25, 2000
- ----------------------
Oliver W. Waddell
</TABLE>
24
<PAGE> 57
<TABLE>
<CAPTION>
<S> <C> <C>
<FN>
*By s/ John J. Palmer
----------------------------
John J. Palmer, Attorney in Fact pursuant to Powers of Attorney, copies
of which are filed as exhibits to the Registrant's registration statement.
</TABLE>
25
<PAGE> 58
INDEX OF CONSENTS AND EXHIBITS
<TABLE>
<CAPTION>
Page Number in
Exhibit Sequential
Number Description Numbering System
- ------ ----------- ----------------
<S> <C>
Consent of KPMG LLP
</TABLE>
26
<PAGE> 59
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of
The Ohio National Life Insurance Company and
Contract Owners of
Ohio National Variable Account D:
We consent to use of our reports dated February 18, 2000 for the Ohio National
Variable Account D and January 28, 2000 for The Ohio National Life Insurance
Company and subsidiaries as included herein and to the reference to our firm
under the heading "Independent Certified Public Accountants" in the Statement of
Additional Information.
Cincinnati, Ohio KPMG LLP
April 25, 2000
