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1999 Annual Report
T. Rowe Price Variable Annuity
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T. ROWE PRICE
VARIABLE ANNUITY ACCOUNT
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
CONTENTS
Report of Independent Auditors .............................................. 2
Audited Financial Statements
Balance Sheets ......................................................... 3
Statements of Operations and Changes in Net Assets ..................... 4
Notes to Financial Statements ............................................... 5
This report is submitted for the information of T. Rowe Price No-Load Variable
Annuity contract owners. The T. Rowe Price No-Load Variable Annuity (V6021) and
the T. Rowe Price No-Load Immediate Variable Annuity (V6027) are issued by
Security Benefit Life Insurance Company.
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REPORT OF INDEPENDENT AUDITORS
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The Contract Owners of T. Rowe Price Variable
Annuity Account and The Board of Directors of
Security Benefit Life Insurance Company
We have audited the accompanying individual and combined balance sheets of T.
Rowe Price Variable Annuity Account (comprised of the individual series as
indicated therein) as of December 31, 1999, and the related statements of
operations and changes in net assets for the year then ended. These financial
statements are the responsibility of Security Benefit Life Insurance Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of investments owned as of December 31, 1999 by
correspondence with the transfer agent. An audit also includes assessing the
accounting principles used and significant estimates made by management as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the individual and combined financial position of the
individual series of T. Rowe Price Variable Annuity Account at December 31, 1999
and the individual and combined results of their operations and changes in their
net assets for the year then ended in conformity with accounting principles
generally accepted in the United States.
Ernst & Young LLP
February 4, 2000
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BALANCE SHEETS
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T. Rowe Price Variable Annuity Account
December 31, 1999 (DOLLARS IN THOUSANDS - EXCEPT PER SHARE AND UNIT VALUES)
ASSETS
Investments:
T. Rowe Price Portfolios:
New America Growth Portfolio - 2,023,486 shares at net
asset value of $26.18 per share (cost, $45,054)................ $ 52,974
International Stock Portfolio - 1,642,889 shares at
net asset value of $19.04 per share (cost, $23,241)............ 31,281
Equity Income Portfolio - 3,570,581 shares at net
asset value of $18.73 per share (cost, $67,476) ............... 66,877
Personal Strategy Balanced Portfolio - 1,471,786 shares
at net asset value of $16.00 per share (cost, $23,173) ........ 23,549
Limited-Term Bond Portfolio - 1,869,014 shares at
net asset value of $4.79 per share (cost, $9,339) ............. 8,953
Mid-Cap Growth Portfolio - 1,756,029 shares at net
asset value of $17.46 per share (cost, $24,725) ............... 30,660
Prime Reserve Portfolio - 18,501,741 shares at net
asset value of $1.00 per share (cost, $18,502) ................ 18,502
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Combined assets...................................................... $232,796
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LIABILITIES AND NET ASSETS
Mortality guarantee payable.......................................... $ 2
NET ASSETS
Net assets are represented by (NOTE 3):
NUMBER UNIT
OF UNITS VALUE AMOUNT
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New America Growth Subaccount:
Accumulation units................ 2,069,472 $24.91 $51,552
Annuity reserves.................. 56,976 24.91 1,419 52,971
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International Stock Subaccount:
Accumulation units................ 1,556,280 19.83 30,859
Annuity reserves.................. 21,317 19.83 423 31,282
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Equity Income Subaccount:
Accumulation units................ 3,159,785 21.07 66,592
Annuity reserves.................. 13,535 21.07 285 66,877
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Personal Strategy Balanced Subaccount:
Accumulation units................ 1,207,707 19.44 23,481
Annuity reserves.................. 3,474 19.44 68 23,549
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Limited-Term Bond Subaccount:
Accumulation units................ 718,369 12.28 8,821
Annuity reserves.................. 10,746 12.28 132 8,953
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Mid-Cap Growth Subaccount:
Accumulation units................ 1,730,183 17.47 30,221
Annuity reserves.................. 25,112 17.47 439 30,660
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Prime Reserve Subaccount:
Accumulation units................ 1,614,807 11.44 18,477
Annuity reserves.................. 2,251 11.44 25 18,502
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Combined net assets.................................................. 232,794
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Combined liabilities and net assets.................................. $232,796
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SEE ACCOMPANYING NOTES.
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STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
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T. Rowe Price Variable Annuity Account
Year Ended December 31, 1999 (IN THOUSANDS)
<CAPTION>
NEW AMERICA INTERNATIONAL EQUITY INCOME PERSONAL STRATEGY
GROWTH SUBACCOUNT STOCK SUBACCOUNT SUBACCOUNT BALANCED SUBACCOUNT
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<S> <C> <C> <C> <C>
Dividend distributions................................. $ --- $ 112 $ 1,326 $ 706
Expenses (NOTE 2):
Mortality and expense risk fee...................... (277) (136) (389) (130)
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Net investment income (loss)........................... (277) (24) 937 576
Capital gain distributions............................. 3,052 354 2,950 1,361
Realized gain (loss) on investments.................... 4,537 1,203 3,804 978
Unrealized appreciation (depreciation) on investments.. (1,476) 6,053 (5,591) (1,146)
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Net realized and unrealized gain (loss) on investments. 6,113 7,610 1,163 1,193
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Net increase in net assets resulting from operations... 5,836 7,586 2,100 1,769
Net assets at beginning of year........................ 51,590 23,475 70,234 22,714
Variable annuity deposits (NOTES 2 AND 3).............. 9,207 5,823 12,166 4,966
Terminations and withdrawals (NOTES 2 AND 3)........... (13,598) (5,592) (17,507) (5,897)
Annuity payments (NOTES 2 AND 3)....................... (61) (11) (119) (3)
Net mortality guarantee transfer....................... (3) 1 3 ---
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Net assets at end of year.............................. $ 52,971 $31,282 $ 66,877 $23,549
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<TABLE>
<CAPTION>
LIMITED-TERM MID-CAP PRIME RESERVE
BOND SUBACCOUNT GROWTH SUBACCOUNT SUBACCOUNT COMBINED
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<S> <C> <C> <C> <C>
Dividend distributions................................. $ 554 $ --- $ 784 $ 3,482
Expenses (NOTE 2):
Mortality and expense risk fee...................... (55) (136) (90) (1,213)
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Net investment income (loss)........................... 499 (136) 694 2,269
Capital gain distributions............................. --- 312 --- 8,029
Realized gain (loss) on investments.................... (50) 1,985 --- 12,457
Unrealized appreciation (depreciation) on investments.. (429) 3,383 --- 794
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Net realized and unrealized gain (loss) on investments. (479) 5,680 --- 21,280
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Net increase in net assets resulting from operations... 20 5,544 694 23,549
Net assets at beginning of year........................ 11,485 21,643 15,024 216,165
Variable annuity deposits (NOTES 2 AND 3).............. 2,385 11,227 16,127 61,901
Terminations and withdrawals (NOTES 2 AND 3)........... (4,936) (7,749) (13,341) (68,620)
Annuity payments (NOTES 2 AND 3)....................... (2) (5) (3) (204)
Net mortality guarantee transfer....................... 1 --- 1 3
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Net assets at end of year.............................. $ 8,953 $30,660 $ 18,502 $232,794
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</TABLE>
See accompanying notes.
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NOTES TO FINANCIAL STATEMENTS
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T. Rowe Price Variable Annuity Account
December 31, 1999
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
T. Rowe Price Variable Annuity Account (the Account) is a separate account of
Security Benefit Life Insurance Company (SBL). The Account is registered as a
unit investment trust under the Investment Company Act of 1940, as amended. The
Account currently is divided into seven subaccounts. Each subaccount invests
exclusively in shares of a single corresponding mutual fund or series thereof.
Purchase payments received by the Account are invested in one of the portfolios
of T. Rowe Price Equity Series, Inc., T. Rowe Price Fixed Income Series, Inc. or
T. Rowe Price International Series, Inc. mutual funds not otherwise available to
the public. As directed by the owners, purchase payments are invested in shares
of New America Growth Portfolio - emphasis on long-term capital growth through
investments in common stocks of domestic companies, International Stock
Portfolio - emphasis on long-term capital growth through investments in common
stocks of established foreign companies, Equity Income Portfolio - emphasis on
substantial dividend income and capital appreciation by investing primarily in
dividend-paying common stocks, Personal Strategy Balanced Portfolio - emphasis
on both capital appreciation and income, Limited-Term Bond Portfolio - emphasis
on income with moderate price fluctuation by investing in short- and
intermediate-term investment-grade debt securities, Mid-Cap Growth Portfolio -
emphasis on long-term capital appreciation through investments in common stocks
of medium-sized growth companies and Prime Reserve Portfolio - emphasis on
preservation of capital and liquidity while generating current income by
investing primarily in high-quality money market securities.
T. Rowe Price Associates, Inc. (T. Rowe Price) serves as the investment adviser
to each portfolio except the International Stock Portfolio, which is managed by
Rowe Price-Fleming International, Inc., an affiliate of T. Rowe Price. The
investment advisers are responsible for managing the Portfolio's assets in
accordance with the terms of the investment advisory contracts.
INVESTMENT VALUATION
Investments in mutual fund shares are carried in the balance sheet at market
value (net asset value of the underlying mutual fund). The first-in, first-out
cost method is used to determine gains and losses. Security transactions are
accounted for on the trade date.
The cost of investments purchased and proceeds from investments sold for the
year ended December 31 were as follows:
COST OF PROCEEDS
PURCHASES FROM SALES
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(IN THOUSANDS)
New America Growth Portfolio............ $13,148 $14,825
International Stock Portfolio........... 6,787 6,237
Equity Income Portfolio................. 17,827 19,400
Personal Strategy Balanced Portfolio.... 7,587 6,584
Limited-Term Bond Portfolio............. 3,066 5,119
Mid-Cap Growth Portfolio................ 12,607 8,958
Prime Reserve Portfolio................. 17,623 14,145
ANNUITY RESERVES
Annuity reserves relate to contracts which have matured and are in the payout
stage. Such reserves are computed on the basis of published mortality tables
using assumed interest rates that will provide reserves as prescribed by law. In
cases where the payout option selected is life contingent, SBL periodically
recalculates the required annuity reserves, and any resulting adjustment is
either charged or credited to SBL and not to the Account.
REINVESTMENT OF DIVIDENDS
Dividend and capital gains distributions paid by the mutual fund to the Account
are reinvested in additional shares of each respective Portfolio. Dividend
income and capital gain distributions are recorded as income on the ex-dividend
date.
FEDERAL INCOME TAXES
The operations of the Account are a part of the operations of SBL. Under current
law, no federal income taxes are allocated by SBL to the operations of the
Account.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
2. VARIABLE ANNUITY CONTRACT CHARGES
Mortality and expense risks assumed by SBL are compensated for by a fee
equivalent to an annual rate of 0.55% of the average daily net assets of each
account.
When applicable, an amount for state premium taxes is deducted as provided by
pertinent state law either from the purchase payments or from the amount applied
to effect an annuity at the time annuity payments commence.
3. SUMMARY OF UNIT TRANSACTIONS
(IN THOUSANDS)
New America Growth Subaccount:
Variable annuity deposits..................................... 453
Terminations, withdrawals and annuity payments................ 598
International Stock Subaccount:
Variable annuity deposits..................................... 372
Terminations, withdrawals and annuity payments................ 351
Equity Income Subaccount:
Variable annuity deposits..................................... 569
Terminations, withdrawals and annuity payments................ 835
Personal Strategy Balanced Subaccount:
Variable annuity deposits..................................... 270
Terminations, withdrawals and annuity payments................ 318
Limited-Term Bond Subaccount:
Variable annuity deposits..................................... 202
Terminations, withdrawals and annuity payments................ 400
Mid-Cap Growth Subaccount:
Variable annuity deposits..................................... 763
Terminations, withdrawals and annuity payments................ 516
Prime Reserve Subaccount:
Variable annuity deposits..................................... 1,442
Terminations, withdrawals and annuity payments................ 1,195
