PROSPECTUS THE ACACIA GROUP LOGO
Acacia National Life
Insurance Company
Regent 2000 -- A Survivorship Flexible Premium Variable Universal Life
7315 Wisconsin Avenue
Insurance Policy issued by Acacia National Life Insurance Company
Bethesda, MD 20814
_______________________________________________________________________
Regent 2000 is a survivorship flexible premium variable universal life insurance
Policy ("Policy"), issued by Acacia National Life Insurance Company ("ANLIC"),
that pays a Death Benefit upon the Second Death. There is no benefit payable on
the death of the first Insured. Like traditional life insurance policies, a
Regent 2000 Policy provides Death Benefits to Beneficiaries and gives you, the
Policy Owner, the opportunity to increase the Policy's value. Unlike traditional
policies, Regent 2000 lets you vary the frequency and amount of premium
payments, rather than follow a fixed premium payment schedule. It also lets you
change the level of Death Benefits as often as once each year.
A Regent 2000 Policy is different from traditional life insurance policies in
another important way: you select how Policy premiums will be invested. Although
each Policy Owner is guaranteed a minimum Death Benefit, the value of the
Policy, as well as the actual Death Benefit, will vary with the performance of
investments you select.
The Investment Options available through Regent 2000 include investment
portfolios from The Alger American Fund, Calvert Variable Series, Inc., Dreyfus
Stock Index Fund, Neuberger Berman Advisers Management Trust, Oppenheimer
Variable Account Funds, Strong Variable Insurance Funds, Inc., and Van Eck
Worldwide Insurance Trust. Each of these portfolios has its own investment
objective and policies. These are described in the prospectuses for each
investment portfolio which must accompany this Regent 2000 prospectus. You may
also choose to allocate premium payments to the Fixed Account managed by ANLIC.
A Regent 2000 Policy will be issued after ANLIC accepts a prospective Policy
Owner's application. Generally, an application must specify a Death Benefit no
less than $100,000. Regent 2000 Policies are available to cover individuals
between the ages of 20 and 90 at the time of purchase, although at least one of
the individuals must be no older than 85. A Regent 2000 Policy, once purchased,
may generally be canceled within 10 days after you receive it.
This Regent 2000 prospectus is designed to assist you in understanding the
opportunity and risks associated with the purchase of a Regent 2000 Policy.
Prospective Policy Owners are urged to read the prospectus carefully and retain
it for future reference.
This prospectus includes a summary of the most important features of the Regent
2000 Policy, information about ANLIC, a list of the investment portfolios to
which you may allocate premium payments, and a detailed description of the
Regent 2000 Policy. The appendix to the prospectus includes tables designed to
illustrate how values and Death Benefits may change with the investment
experience of the Investment Options.
This prospectus must be accompanied by a prospectus for each of the investment
portfolios available through Regent 2000.
Although the Regent 2000 Policy is designed to provide life insurance, a Regent
2000 Policy is considered to be a security. It is not a deposit with, an
obligation of, or guaranteed or endorsed by any banking institution, nor is it
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other agency. The purchase of a Regent 2000 Policy involves investment
risk, including the possible loss of principal. For this reason, Regent 2000 may
not be suitable for all individuals. It may not be advantageous to purchase a
Regent 2000 Policy as a replacement for another type of life insurance or as a
way to obtain additional insurance protection if the purchaser already owns
another survivorship flexible premium variable universal life insurance policy.
The Securities and Exchange Commission maintains a web site (http://www.sec.gov)
that contains other information regarding registrants that file electronically
with the Securities and Exchange Commission.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORY AUTHORITY HAS APPROVED THESE SECURITIES, OR DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
August 6, 1999
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Table of Contents Page
DEFINITIONS................................................................ 3
SUMMARY.................................................................... 6
YEAR 2000 ................................................................. 10
ANLIC, THE SEPARATE ACCOUNT AND THE FUNDS.................................. 10
Acacia National Life Insurance Company.............................. 10
The Separate Account................................................ 11
Performance Information............................................. 11
The Funds........................................................... 11
Investment Objectives and Policies Of The Funds' Portfolios......... 12
Addition, Deletion or Substitution of Investments................... 15
Fixed Account....................................................... 15
POLICY BENEFITS............................................................ 16
Purposes of the Policy.............................................. 16
Death Benefit Proceeds.............................................. 16
Death Benefit Options............................................... 17
Methods of Affecting Insurance Protection........................... 18
Duration of Policy.................................................. 18
Accumulation Value.................................................. 19
Payment of Policy Benefits.......................................... 19
POLICY RIGHTS.............................................................. 20
Loan Benefits....................................................... 20
Surrenders.......................................................... 21
Partial Withdrawals................................................. 21
Transfers........................................................... 22
Systematic Programs................................................. 22
Free Look Privilege................................................. 23
PAYMENT AND ALLOCATION OF PREMIUMS......................................... 23
Issuance of a Policy................................................ 23
Premiums............................................................ 23
Allocation of Premiums and Accumulation Value....................... 24
Policy Lapse and Reinstatement...................................... 25
CHARGES AND DEDUCTIONS..................................................... 26
Deductions From Premium Payments.................................... 26
Charges from Accumulation Value..................................... 26
Surrender Charge.................................................... 27
Daily Charges Against the Separate Account.......................... 27
Fund Expense Summary................................................ 28
GENERAL PROVISIONS......................................................... 29
DISTRIBUTION OF THE POLICIES............................................... 31
ADMINISTRATION............................................................. 32
FEDERAL TAX MATTERS........................................................ 32
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS............................... 34
THIRD PARTY SERVICES....................................................... 35
VOTING RIGHTS.............................................................. 35
STATE REGULATION OF ANLIC.................................................. 35
EXECUTIVE OFFICERS AND DIRECTORS OF ANLIC.................................. 35
EXPERTS.................................................................... 36
LEGAL MATTERS.............................................................. 37
LEGAL PROCEEDINGS.......................................................... 37
ADDITIONAL INFORMATION..................................................... 37
FINANCIAL STATEMENTS....................................................... 37
ACACIA NATIONAL LIFE INSURANCE COMPANY
ACACIA NATIONAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT I
APPENDICES................................................................. A-1
The Policy, certain Funds, and/or certain riders are not available in all
states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESPERSON, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
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DEFINITIONS
ACCRUED EXPENSE CHARGES - Any Monthly Deductions that are due and unpaid.
ACCUMULATION VALUE - The total amount that the Policy provides for investment at
any time. It is equal to the total of the Accumulation Value held in Separate
Account I, the Fixed Account, and any Accumulation Value held in the General
Account which secures Outstanding Policy Debt.
ADMINISTRATIVE EXPENSE CHARGE - A charge which is part of the monthly deduction
to cover the cost of administering the Policy.
ASSET-BASED ADMINISTRATIVE EXPENSE CHARGE - A daily charge that is deducted from
the overall assets of Separate Account I to provide for expenses of ongoing
administrative services to the Policy owners as a group.
ATTAINED AGE - The Issue Age of the younger Insured plus the number of complete
Policy Years that the Policy has been in force.
ANLIC ("WE, US, OUR") - Acacia National Life Insurance Company, a Virginia stock
company. ANLIC's Home Office is located at 7315 Wisconsin Avenue, Bethesda, MD
20814.
BENEFICIARY - The person or persons to whom the Death Benefit Proceeds are
payable upon the Second Death. (See the sections on Beneficiary and Change of
Beneficiary.)
COST OF INSURANCE - A charge deducted monthly from the Accumulation Value to
provide the life insurance protection. The Cost of Insurance is calculated with
reference to an annual "Cost of Insurance Rate." This rate is based on the Issue
Age, sex, and risk class of each Insured and the policy duration. The Cost of
Insurance is part of the Monthly Deduction.
DEATH BENEFIT - The amount of insurance coverage provided under the selected
Death Benefit option of the Policy.
DEATH BENEFIT PROCEEDS - The proceeds payable to the Beneficiary upon receipt by
ANLIC of Satisfactory Proof of Death of both Insureds while the Policy is in
force. It is equal to: (l) the Death Benefit; (2) plus additional life insurance
proceeds provided by any riders; (3) minus any Outstanding Policy Debt; (4)
minus any Accrued Expense Charges, including the Monthly Deduction for the month
of the Second Death.
FIXED ACCOUNT - An account that is a part of ANLIC's General Account to which
all or a portion of Net Premiums and transfers may be allocated for accumulation
at fixed rates of interest.
GENERAL ACCOUNT - The General Account of ANLIC includes all of ANLIC's assets
except those assets segregated into separate accounts such as the Separate
Account I.
GRACE PERIOD - A 61 day period from the date written notice of lapse is mailed
to the Policy owner's last known address. If the Policy owner makes the payment
specified in the notification of lapse, the policy will not lapse.
GUARANTEED DEATH BENEFIT (IN MARYLAND, "GUARANTEED DEATH BENEFIT TO PREVENT
LAPSE") PERIOD - The number of years the "Guaranteed Death Benefit" provision
will apply. The period extends to Attained Age 85 but in no event is less than
10 years, and may be restricted as a result of state law. Not available in
Massachusetts. This benefit is provided without an additional Policy charge.
GUARANTEED DEATH BENEFIT PREMIUM - A specified premium which, if paid in advance
on a monthly prorated basis, will keep the Policy in force during the Guaranteed
Death Benefit Period so long as other Policy provisions are met, even if the Net
Cash Surrender Value is zero or less.
INSUREDS - The two persons whose lives are insured under the Policy.
INVESTMENT OPTIONS - Refers to the Subaccounts and/or the Fixed Account offered
under this Policy.
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ISSUE AGE - The actual age of each Insured on the Policy Date.
ISSUE DATE - The date that all financial, contractual and administrative
requirements have been met and processed for the Policy.
MINIMUM PREMIUM - A specified premium which, if paid in advance on a monthly
prorated basis, will keep the Policy in force during the first sixty Policy
months ("Minimum Benefit" Period) so long as other Policy provisions are met,
even if the Net Cash Surrender Value is zero or less.
MONTHLY ACTIVITY DATE - The same date in each succeeding month as the Policy
Date except should such Monthly Activity Date fall on a date other than a
Valuation Date, the Monthly Activity Date will be the next Valuation Date.
MONTHLY DEDUCTION - The deductions taken from the Accumulation Value on the
Monthly Activity Date. These deductions are equal to: (1) the current Cost of
Insurance; (2) the Administrative Expense Charge; and (3) rider charges, if any.
MORTALITY AND EXPENSE RISK CHARGE - A daily charge that is deducted from the
overall assets of Separate Account I to provide for the risk that mortality and
expense costs may be greater than expected.
NET AMOUNT AT RISK - The amount by which the Death Benefit as calculated on a
Monthly Activity Date exceeds the Accumulation Value on that date.
NET CASH SURRENDER VALUE - The Accumulation Value of the Policy on any Valuation
Date (including for this purpose, the date of Surrender), less any Surrender
Charges and any Outstanding Policy Debt.
NET POLICY FUNDING - Net Policy Funding is the sum of all premiums paid, less
any partial withdrawals and less any Outstanding Policy Debt.
NET PREMIUM - Premium paid less the Percent of Premium Charge for Taxes.
OUTSTANDING POLICY DEBT - The sum of all unpaid Policy loans and accrued
interest on Policy loans.
PERCENT OF PREMIUM CHARGE FOR TAXES - The amount deducted from each premium
received to cover certain expenses, expressed as a percentage of the premium.
PLANNED PERIODIC PREMIUMS - A selected schedule of equal premiums payable at
fixed intervals. The Policy Owner is not required to follow this schedule, nor
does following this schedule ensure that the Policy will remain in force unless
the payments meet the requirements of the Minimum Benefit or the Guaranteed
Death Benefit.
POLICY - The survivorship flexible premium variable universal life insurance
Policy offered by ANLIC and described in this prospectus.
POLICY YEAR - The period from one Policy Anniversary Date until the next Policy
Anniversary Date. A "Policy Month" is measured from the same date in each
succeeding month as the Policy Date.
POLICY OWNER - ("you, your") The owner of the Policy, as designated in the
application or as subsequently changed. If a Policy has been absolutely
assigned, the assignee is the Policy Owner. A collateral assignee is not the
Policy Owner.
POLICY ANNIVERSARY DATE - The same day as the Policy Date for each year the
Policy remains in force.
POLICY DATE - The effective date for all coverage provided in the application.
The Policy Date is used to determine Policy Anniversary Dates, Policy Years and
Monthly Activity Dates. Policy Anniversaries are measured from the Policy Date.
The Policy Date and the Issue Date will be the same unless: (1) an earlier
Policy Date is specifically requested, or (2) unless there are additional
premiums or application amendments at time of delivery. (See the section on
Issuance of a Policy.)
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SATISFACTORY PROOF OF DEATH - Satisfactory Proof of Death must be provided to us
at the time of death of each Insured. Satisfactory Proof of Death means all of
the following must be submitted:
(1) A certified copy of both death certificates;
(2) A Claimant Statement;
(3) The Policy; and
(4) Any other information that ANLIC may reasonably require to establish the
validity of the claim.
SECOND DEATH - The later of the dates of death of the Insureds.
SEPARATE ACCOUNT I- This term refers to Separate Account I, a separate
investment account established by ANLIC to receive and invest the Net Premiums
paid under the Policy and allocated by the Policy owner to Separate Account I.
Separate Account I is segregated from the General Account and all other assets
of ANLIC.
SPECIFIED AMOUNT - The minimum Death Benefit under the Policy, as selected by
the Policy owner.
SUBACCOUNT - A subdivision of the Separate Account I. Each Subaccount invests
exclusively in the shares of a specified portfolio of the Funds.
SURRENDER - The termination of the Policy for the Net Cash Surrender Value while
at least one Insured is alive.
SURRENDER CHARGE - This charge is assessed against the Accumulation Value of the
Policy if the Policy is Surrendered on or before the 14th Policy Anniversary
Date or, in the case of an increase in the Specified Amount, on or before the
14th anniversary of the increase.
VALUATION DATE - Any day on which the New York Stock Exchange is open for
trading.
VALUATION PERIOD - The period between two successive Valuation Dates, commencing
at the close of the New York Stock Exchange ("NYSE") on one Valuation Date and
ending at the close of the NYSE on the next succeeding Valuation Date.
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SUMMARY
The following summary of prospectus information and diagram of the Policy should
be read along with the detailed information found elsewhere in this prospectus.
Unless stated otherwise, this prospectus assumes that the Policy is in force and
that there is no Outstanding Policy Debt.
DIAGRAM OF POLICY
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PREMIUM PAYMENTS
You can vary amount and frequency.
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DEDUCTIONS FROM PREMIUMS
Percent of Premium Charge for Taxes - currently 2.25% (maximum 3.0%)
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NET PREMIUM
The net premium may be invested in the Fixed Account or in Separate Account I
which offers 19 different Subaccounts. The nineteen Subaccounts invest in the
corresponding portfolios of The Alger American Fund, Calvert Variable Series,
Inc., Dreyfus Stock Index Fund, Neuberger Berman Advisers Management Trust,
Oppenheimer Variable Account Funds, Strong Variable Insurance Funds, Inc., and
Van Eck Worldwide Insurance Trust Funds.
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DEDUCTIONS FROM ASSETS
Monthly charge for Cost of Insurance and cost of any riders.
Monthly charge for administrative expenses (maximum charge $16.00/month plus a
charge per month per $1000 of Specified Amount that varies by the younger
Insured's Issue Age).
Current Monthly Charge Plus Current Monthly Charge
For Specified Amounts: By Issue Age(/1000/month):
Up to $1,000,000 up $5,000,000
$1,000,000 to $5,000,000 or more 20-44 45-64 65+
---------- ------------- ------- ----- ----- ----
Policy Year:
1-5 $16.00 $8.00 $0.00 $.10 $.08 $.05
6+ $ 8.00 $4.00 $0.00 $.00 $.00 $.00
Maximum
Monthly Charge:$16.00 $16.00 $16.00 Plus $.10 $.08 $.05
<S> <C> <C>
Daily charge from the Subaccounts (not deducted from the Fixed Account):
Policy Years 1-15 Policy Years 16+
Mortality and Expense Risk Charge 0.75% 0.30%
Asset-Based Administrative Expense Charge 0.15% 0.15%
----- -----
Combined annual rate of Subaccount
daily charges 0.90% 0.45%
</TABLE>
Fund expense charges, which ranged from .26% to 1.65% at the most recent fiscal
year end, are also deducted.
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LIVING BENEFITS RETIREMENT INCOME DEATH BENEFITS
<S> <C> <C>
You may make partial withdrawals, subject to Loans may be available on a Generally, Death
certain restrictions. The Death Benefit will be more favorable interest rate Benefit income is tax
reduced by the amount of the partial withdrawal. basis after the tenth Policy Year. free to the Beneficiary.
ANLIC guarantees up to 15 free transfers Should the Policy lapse while The Beneficiary may be
between the Investment Options each Policy Year. loans are outstanding, the paid a lump sum or may
Under current practice, unlimited free transfers portion of the loan attributable select any of the five
are permitted. to earnings will become taxable payment methods
You may Surrender the Policy at any time for its distributions. (See page 21.) available as retirement
Net Cash Surrender Value. benefits.
Some expenses that ANLIC incurs immediately You may Surrender the Policy
upon the issuance of the Policy are recovered over or make a partial withdrawal and
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a period of years. Therefore, a Policy take values as payments under
Surrender on or before the 14th anniversary date one or more of five different
will be assessed a Surrender Charge. payment options.
The charge decreases each year until no Surrender
Charge is applied after the 14th Policy Year.
Increases in coverage after issue will also have
a Surrender Charge associated with them.
(See pages 21 and 27.) Accelerated payment of
up to 50% of the lowest scheduled Death
Benefit is available under certain conditions
if the surviving Insured is suffering from
terminal illness.
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SUMMARY
The following summary is intended to highlight the most important features of a
Regent 2000 Policy that you, as a prospective Policy owner, should consider. You
will find more detailed information in the main portion of the prospectus;
cross-references are provided for your convenience. As you review this Summary,
take note of the terms that appear in italics. Each italicized term is defined
in the Definitions section that begins on page 3 of this prospectus. This
summary and all other parts of this prospectus are qualified in their entirety
by the terms of the Regent 2000 Policy, which is available upon request from
ANLIC.
WHO IS THE ISSUER OF A REGENT 2000 POLICY?
ANLIC is the issuer of each Regent 2000 Policy. ANLIC enjoys a rating of A
(Excellent) from A.M. Best Company, a firm that analyzes insurance carriers. A
stock life insurance company organized in Virginia, ANLIC is a wholly owned
subsidiary of Acacia Life Insurance Company which is, in turn, a second tier
subsidiary of Ameritas Acacia Mutual Insurance Holding Company. (See the section
on Acacia National Life Insurance Company.)
WHY SHOULD I CONSIDER PURCHASING A REGENT 2000 POLICY?
The primary purpose of a Regent 2000 Policy is to provide life insurance
protection on the two Insureds named in the Policy. This means that, so long as
the Policy is in force, it will provide for:
o payment of a Death Benefit, which will never be less than the Specified
Amount the Policy owner selects. (See the section on Death Benefit Options.)
o Policy loan, Surrender and withdrawal features. (See the section on Policy
Rights.)
A Regent 2000 Policy also includes an investment component. This means that, so
long as the Policy is in force, you will be responsible for selecting the manner
in which Net Premiums will be invested. Thus, the value of a Regent 2000 Policy
will reflect your investment choices over the life of the Policy.
HOW DOES THE INVESTMENT COMPONENT OF MY REGENT 2000 POLICY WORK?
ANLIC has established Separate Account I, which is separate from all other
assets of ANLIC, as a vehicle to receive and invest premiums received from
Regent 2000 Policy owners and owners of certain other variable universal life
products offered by ANLIC. Separate Account I is divided into separate
Subaccounts. Each Subaccount invests exclusively in shares of one of the
investment portfolios available through Regent 2000. Each Policy owner may
allocate Net Premiums to one or more Subaccounts, or to ANLIC's Fixed Account in
the initial application. These allocations may be changed, without charge, by
notifying ANLIC's Home Office. The aggregate value of your interests in the
Subaccounts, the Fixed Account and any amount held in the General Account to
secure Policy debt will represent the Accumulation Value of your Regent 2000
Policy. (See the Section on Accumulation Value.)
WHAT INVESTMENT OPTIONS ARE AVAILABLE THROUGH THE REGENT 2000 POLICY?
The Investment Options available through Regent 2000 include 19 investment
portfolios, each of which is a separate series of a mutual fund from: The Alger
American Fund; Calvert Variable Series, Inc.; Dreyfus Stock Index Fund;
Neuberger Berman Advisers Management Trust; Oppenheimer Variable Account Funds;
Strong Variable Insurance Funds, Inc.; and Van Eck Worldwide Insurance Trust.
These portfolios are:
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Alger American Growth Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization Portfolio
Calvert Social Money Market Portfolio
Calvert Social Small Cap Growth Portfolio
Calvert Social Mid Cap Growth Portfolio
Calvert Social International Equity Portfolio
Calvert Social Balanced Portfolio
Dreyfus Stock Index Fund
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio
Neuberger Berman Advisers Management Trust Growth Portfolio
Oppenheimer Aggressive Growth Fund/VA
Oppenheimer Capital Appreciation Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
Oppenheimer High Income Fund/VA
Oppenheimer Strategic Bond Fund/VA
Strong International Stock Fund II
Strong Discovery Fund II
Van Eck Worldwide Hard Assets Fund
Details about the investment objectives and policies of each of the available
investment portfolios, and management fees and expenses, appear in the sections
on Investment Objectives and Policies of the Funds' Portfolios and Fund Expense
Summary. In addition to the listed portfolios, Policy Owners may also elect to
allocate Net Premiums to ANLIC's Fixed Account. (See the section on the Fixed
Account.)
HOW DOES THE LIFE INSURANCE COMPONENT OF A REGENT 2000 POLICY WORK?
A Regent 2000 Policy provides for the payment of a minimum Death Benefit upon
the Second Death. There is no benefit payable on the death of the first Insured.
The amount of the minimum death benefit -- sometimes referred to as the
Specified Amount of your Regent 2000 Policy -- is chosen by you at the time your
Regent 2000 Policy is established. However, Death Benefit Proceeds -- the actual
amount that will be paid after ANLIC receives Satisfactory Proof of Death -- may
vary over the life of your Regent 2000 Policy, depending on which of the two
available coverage options you select.
If you choose Option A, the Death Benefit payable under your Regent 2000 Policy
will be the Specified Amount of your Regent 2000 Policy OR the applicable
percentage of its Accumulation Value, whichever is greater. If you choose Option
B, the Death Benefit payable under your Regent 2000 Policy will be the Specified
Amount of your Regent 2000 Policy PLUS the Accumulation Value of your Regent
2000 Policy, or if it is higher, the applicable percentage of the Accumulation
Value on the Second Death. In either case, the applicable percentage is
established based on the Attained Age at the Second Death. (See the section on
Death Benefit Options.)
ARE THERE ANY RISKS INVOLVED IN OWNING A REGENT 2000 POLICY?
Yes. Over the life of your Regent 2000 Policy, the Subaccounts to which you
allocate your premiums will fluctuate with changes in the stock market and
overall economic factors. These fluctuations will be reflected in the
Accumulation Value of your Regent 2000 Policy and may result in loss of
principal. For this reason, the purchase of a Regent 2000 Policy may not be
suitable for all individuals. It may not be advantageous to purchase a Regent
2000 Policy to replace or augment your existing insurance arrangements. Appendix
A includes tables illustrating the impact that hypothetical market returns would
have on Accumulation Values under a Regent 2000 Policy (page A-1).
WHAT IS THE PREMIUM THAT MUST BE PAID TO KEEP A REGENT 2000 POLICY IN FORCE?
Like traditional life insurance policies, a Regent 2000 Policy requires the
payment of periodic premiums in order to keep the Policy in force. You will be
asked to establish a payment schedule before your Regent 2000 Policy becomes
effective.
The distinction between traditional life policies and a Regent 2000 Policy is
that a Regent 2000 Policy will not lapse simply because premium payments are not
made according to that payment schedule. However, a Regent 2000 Policy will
lapse, even if scheduled premium payments are made, if the Net Cash Surrender
Value of your Regent 2000 Policy falls below zero or premiums paid do not, in
the aggregate, equal the premium necessary to satisfy the Minimum Benefit or the
Guaranteed Death Benefit requirements. (See the section on Premiums.)
REGENT 2000
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HOW ARE PREMIUMS PAID, PROCESSED AND CREDITED TO ME?
Your Regent 2000 Policy will be issued after a completed application is
accepted, and the initial premium payment is received, by ANLIC at its
Administrative Office. ANLIC's Administrative Office is located at 5900 "O"
Street, P.O. Box 82550, Lincoln, NE 68501. Your initial Net Premium will be
allocated on the Issue Date to the Subaccount and/or the Fixed Account according
to the selections you made in your application. If state or other applicable law
or regulation requires return of at least your premium payments should you
return the Policy pursuant to the Free-Look Privilege, your initial Net Premium
will be allocated to the Money Market Subaccount. Thirteen days after the Issue
Date, the Accumulation Value of the Policy will be allocated among the
Subaccounts and/or the Fixed Account according to the instructions in your
application. You have the right to examine your Regent 2000 Policy and return it
for a refund for a limited time, even after the Issue Date. (See the section on
Issuance of a Policy.)
You may make subsequent premium payments according to your Planned Periodic
Premium schedule, although you are not required to do so. ANLIC will send
premium payment notices to you according to any schedule you select. When ANLIC
receives your premium payment at its Administrative Office, we will deduct any
applicable Percent ofPremium Charge for Taxes and the Net Premium will be
allocated to the Subaccounts and/or the Fixed Account according to your
selections. ( See the sections on Premiums and Allocations of Premiums and
Accumulation Value.)
As already noted, Regent 2000 provides you considerable flexibility in
determining the frequency and amount of premium payments. This flexibility is
not, however, unlimited. You should keep certain factors in mind in determining
the payment schedule that is best suited to your needs. These include the amount
of the Minimum Premium, Guaranteed Death Benefit Premium and/or Net Policy
Funding requirement needed to keep your Regent 2000 Policy in force; maximum
premium limitations established under the Federal tax laws; and the impact that
reduced premium payments may have on the Net Cash Surrender Value of your Regent
2000 Policy. (See the Section on Premiums.)
IS THE ACCUMULATION VALUE OF MY REGENT 2000 POLICY AVAILABLE WITHOUT SURRENDER?
Yes. You may access the value of your Regent 2000 Policy in one of two ways.
First, you may obtain a loan, secured by the Accumulation Value of your Regent
2000 Policy. The maximum interest rate on any such loan is 6% annually; the
current rate is 5.5% annually. After the tenth Policy Anniversary, you may
borrow against a limited amount of the Net Cash Surrender Value of your Regent
2000 Policy at a maximum annual interest rate of 4%; the current rate for such
loans is 3.5% annually. (See the section on Loan Benefits.)
You may also access the value of your Regent 2000 Policy by making a partial
withdrawal. A partial withdrawal is not subject to Surrender Charges, but is
subject to a maximum charge not to exceed the lesser of $50 or 2% of the amount
withdrawn (currently, the partial withdrawal charge is the lesser of $25 or 2%).
(See the section on Partial Withdrawals.)
ARE THERE ANY OTHER CHARGES ASSOCIATED WITH OWNERSHIP OF A REGENT 2000 POLICY?
Certain states impose premium and other taxes in connection with insurance
policies such as Regent 2000. ANLIC may deduct up to 3% of each premium as a
Percent of Premium Charge for Taxes. Currently, 2.25% is deducted for this
purpose.
Charges are deducted against the Accumulation Value to cover the Cost of
Insurance under the Policy and to compensate ANLIC for administering each
individual Regent 2000 Policy. These charges, which are part of the Monthly
Deduction, are calculated and paid on each Monthly Activity Date. The Cost of
Insurance is calculated based on risk factors relating to the Insureds as
reflected in relevant actuarial tables. The Administrative Expense Charges are
based on your Specified Amount and the Policy duration. Currently, the level per
Policy charge for Specified Amounts between $100,000 and $999,999 is $16 per
month in Policy Years 1-5 and $8 per month thereafter; for Specified Amounts
between $1,000,000 and $4,999,999, the charge is currently $8 per month in
Policy Years 1-5 and $4 per month thereafter; and there is currently no charge
for Specified Amounts $5,000,000 or greater. In addition, for all Specified
Amounts there currently is a charge per month per $1000 of Specified Amount, as
follows: for Issue Ages 20-44, the rate is $.10, for Issue Ages 45-64, the rate
is $.08, and for Issue Ages 65 and over, the rate is $.05. At the current time
we anticipate the charge per $1000 of Specified Amount will reduce to $0 in year
6. The Administrative Expense Charge is levied throughout the life of the Policy
and is guaranteed not to increase above $16 per month plus $.10 per month per
$1000 of Specified Amount.
For its services in administering Separate Account I and Subaccounts and as
compensation for bearing certain mortality and expense risks, ANLIC is also
entitled to receive fees. These fees are calculated daily during the first 15
years of each Regent 2000 Policy, at a combined annual rate of 0.90% of the
value of the net assets of the Separate Account I. After the 15th Policy
Anniversary Date, the combined annual rate will decrease to .45% of the daily
net assets of Separate Account I. These charges will not be deducted from the
amounts in the Fixed Account. (See the section on Daily Charges Against the
Separate Account.)
REGENT 2000
9
<PAGE>
Finally, because ANLIC incurs expenses immediately upon the issuance of a Regent
2000 Policy that are recovered over a period of years, a Regent 2000 Policy that
is Surrendered on or before its 14th Policy Anniversary Date is subject to a
Surrender Charge. Additional Surrender Charges may apply if you increase the
Specified Amount of your Regent 2000 Policy. Because the Surrender Charge may be
significant upon early Surrender, you should purchase a Regent 2000 Policy only
if you intend to maintain your Regent 2000 Policy for a substantial period. (See
the section on Surrender Charge.)
Policy Owners who choose to allocate Net Premiums to one or more of the
Subaccounts will also bear a pro rata share of the management fees and expenses
paid by each of the investment portfolios in which the various Subaccounts
invest. No such management fees are assessed against Net Premiums allocated to
the Fixed Account. (See the section on Fund Expense Summary.)
WHEN DOES MY REGENT 2000 POLICY TERMINATE?
You may terminate your Regent 2000 Policy by surrendering the Policy while at
least one Insured is alive for its Net Cash Surrender Value. As noted above,
your Regent 2000 Policy will terminate if you fail to pay required premiums or
maintain sufficient Net Cash Surrender Value to cover Policy charges. (See the
sections on Surrender and Premiums.)
YEAR 2000
Like other insurance companies and their separate accounts, ANLIC and the
Separate Account I could be adversely affected if the computer systems they rely
upon do not properly process date-related information and data involving the
years 2000 and after. This issue arose because both mainframe and PC-based
computer hardware and software have traditionally used two digits to identify
the year. For example, the year 1998 is input, stored and calculated as "98."
Similarly, the year 2000 would be input, stored and calculated as "00." If
computers assume this means 1900, it could cause errors in calculations,
comparisons, and other computing functions.
Like all insurance companies, ANLIC makes extensive use of dates and date
calculations. We began a corporate-wide Year 2000(Y2K) project in mid-1997. Our
goal is to ensure that our computer systems continue to operate smoothly with no
service disruptions before, during or after the year 2000.
As of December 31, 1998, ANLIC continues to make progress on the plan to make
its computer applications and operating systems Y2K compliant. Continuous
testing and monitoring throughout 1999 will help ANLIC continue to meet our
contractual and service obligations to our customers. We expect to be fully
compliant by July 31, 1999. In addition to our internal efforts, ANLIC is
working closely with vendors and other business partners to confirm that they
too are addressing Y2K issues on a timely basis. In the event we or our service
providers, vendors, financial institutions or others with which we conduct
business, fail to be Y2K - compliant, there would be a materially adverse effect
on us.
Certain vendors and/or business partners, due to their exposure to foreign
markets, may face additional Y2K issues. Please see the Funds' prospectuses for
information on the Funds' preparedness for Y2K.
ANLIC, THE SEPARATE ACCOUNT AND THE FUNDS
ACACIA NATIONAL LIFE INSURANCE COMPANY
Acacia National Life Insurance Company ("ANLIC") is a stock life insurance
company organized in the Commonwealth of Virginia. ANLIC was incorporated on
December 9, 1974. ANLIC is currently licensed to sell life insurance in 46
states, and the District of Columbia.
ANLIC is a wholly owned subsidiary of Acacia Life Insurance Company ("Acacia"),
a District of Columbia stock company. Acacia is in turn a second tier subsidiary
of Ameritas Acacia Mutual Holding Company, a Nebraska mutual insurance holding
company. The Administrative Offices of both ANLIC and Acacia Life are at 5900
"O" Street, P.O. Box 81889, Lincoln, Nebraska 68501.
On January 1, 1999, Ameritas Mutual Insurance Holding Company ("Ameritas
Mutual"), a Nebraska mutual insurance holding company and Acacia Mutual Holding
Corporation ("Acacia Mutual"), a District of Columbia mutual holding corporation
merged and became Ameritas Acacia Mutual Holding Company ("Ameritas Acacia") a
Nebraska mutual insurance holding company. Both Ameritas Acacia and Ameritas
Holding Company, an intermediate holding company, are organized under the
Nebraska Mutual Insurance Holding Company Act. Acacia Life Insurance Company, a
subsidiary of Ameritas Holding Company is regulated by the District of Columbia
Insurance Department. Ameritas Mutual and its subsidiaries had total assets at
December 31, 1998 of over $4.1 billion and Acacia Life and its subsidiaries had
total assets as of December 31, 1998 of $2.4 billion. The combined group has
total assets of over $6.5 billion.
REGENT 2000
10
<PAGE>
THE SEPARATE ACCOUNT
Acacia National Life Insurance Company Separate Account I ("Separate Account I")
was established under Virginia law on January 31, 1995. The assets of Separate
Account I are held by ANLIC segregated from all of ANLIC's other assets, are not
chargeable with liabilities arising out of any other business which ANLIC may
conduct, and income, gains, or losses of ANLIC. Although the assets maintained
in Separate Account I will not be charged with any liabilities arising out of
ANLIC's other business, all obligations arising under the Policies are
liabilities of ANLIC who will maintain assets in Separate Account I of a total
market value at least equal to the reserve and other contract liabilities of
Separate Account I. The Separate Account I will at all times contain assets
equal to or greater than Accumulation Values invested in Separate Account I.
Nevertheless, to the extent assets in Separate Account I exceed ANLIC's
liabilities in Separate Account I, the assets are available to cover the
liabilities of ANLIC's General Account. ANLIC may, from time to time, withdraw
assets available to cover the General Account obligations.
Separate Account I is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940 ("1940 Act") as a unit
investment trust, which is a type of investment company. This does not involve
any SEC supervision of the management or investment policies or practices of
Separate Account I. For state law purposes, Separate Account I is treated as a
Division of ANLIC.
PERFORMANCE INFORMATION
Performance information for the Subaccounts of Separate Account I and the Funds
available for investment by Separate Account I may appear in advertisements,
sales literature, or reports to Policy owners or prospective purchasers. ANLIC
may also provide a hypothetical illustration of Accumulation Value, Net Cash
Surrender Value and Death Benefit based on historical investment returns of the
Funds for a sample Policy based on assumptions as to age, sex, and risk class of
each Insured, and other Policy specific assumptions.
ANLIC may also provide individualized hypothetical illustrations of Accumulation
Value, Net Cash Surrender Value and Death Benefit based on historical investment
returns of the Funds. These illustrations will reflect deductions for Fund
expenses and Policy and Separate Account I charges, including the Monthly
Deduction, Percent of Premium Charge for Taxes, and the Surrender Charge. These
hypothetical illustrations will be based on the actual historical experience of
the Funds as if the Subaccounts had been in existence and a Policy issued for
the same periods as those indicated for the Funds.
THE FUNDS
There are currently nineteen Subaccounts within the Separate Account I available
to Policy owners for new allocations. The assets of each Subaccount are invested
in shares of a corresponding portfolio of one of the following mutual funds
(collectively, the "Funds"): The Alger American Fund; Calvert Variable Series,
Inc.; Dreyfus Stock Index Fund; Neuberger Berman Advisers Management Trust;
Oppenheimer Variable Account Fund; Strong Variable Insurance Funds, Inc.; and
Van Eck Worldwide Insurance Trust. Each Fund is registered with the SEC under
the Investment Company Act of 1940 as an open-end management investment company.
The assets of each portfolio of the Funds are held separate from the assets of
the other portfolios. Thus, each portfolio operates as a separate investment
portfolio, and the income or losses of one portfolio generally have no effect on
the investment performance of any other portfolio.
The investment objectives and policies of each portfolio are summarized below.
There is no assurance that any of the portfolios will achieve their stated
objectives. More detailed information, including a description of investment
objectives, policies, restrictions, expenses and risks, is in the prospectuses
for each of the Funds, which must accompany or precede this Prospectus. All
underlying fund information, including Fund prospectuses, has been provided to
ANLIC by the underlying Funds. ANLIC has not independently verified this
information. One or more of the Portfolios may employ investment techniques that
involve certain risks, including investing in non-investment grade, high risk
debt securities, entering into repurchase agreements and reverse repurchase
agreements, lending portfolio securities, hedging instruments, interest rate
swaps, engaging in "short sales against the box," investing in instruments
issued by foreign banks, entering into firm commitment agreements and investing
in warrants and restricted securities. For example, the Calvert Social Balanced
Portfolio may invest up to 20% of its assets in non-investment grade
obligations, commonly referred to as "junk bonds". Oppenheimer High Income
Fund/VA may also invest in "junk bonds". In addition, certain of the portfolios
may invest in securities of foreign issuers, such as the Calvert Variable
Series, Inc. MidCap Portfolio which may invest up to 25% of its funds in foreign
securities.
REGENT 2000
11
<PAGE>
Other portfolios invest primarily in the securities markets of developing
nations. Investments of this type involve different risks than investments in
more established economies, and will be affected by greater volatility of
currency exchange rates and overall economic and political factors. Such
portfolios include the Calvert Variable Series, Inc. Social International Equity
Portfolio, Strong International Stock Fund II Portfolio and Van Eck Worldwide
Hard Assets Fund Portfolio. The Van Eck Worldwide Hard Assets Fund will also
invest at least 25% of its total assets in "Hard Assets" including precious
metals, ferrous and non-ferrous metals, gas, petroleum, petrochemicals or other
hydrocarbons, forest products, real estate and other basic non-agricultural
commodities. It may invest up to 50% of its assets in any one of these sectors.
Therefore it may be subject to greater risks and market fluctuations than other
investment companies with more diversified portfolios. Further information about
the risks associated with investments in each of the Funds and their respective
portfolios is contained in the prospectus relating to that Fund. These
prospectuses, together with this prospectus, should be read carefully and
retained.
The investments in the Funds may be managed by Fund managers which manage one or
more other mutual funds that have similar names, investment objectives, and
investment styles as the Funds. You should be aware that the Funds are likely to
differ from the other mutual funds in size, cash flow pattern, and tax matters.
Thus, the holdings and performance of the Funds can be expected to vary from
those of the other mutual funds.
Each Policy owner should periodically consider the allocation among the
Subaccounts in light of current market conditions and the investment risks
attendant to investing in the Funds' various portfolios.
Separate Account I will purchase and redeem shares from the Portfolios at the
net asset value. Shares will be redeemed to the extent necessary for ANLIC to
collect charges, pay the Surrender Values, partial withdrawals, and make policy
loans or to transfer assets among Investment Options as you requested. Any
dividend or capital gain distribution received is automatically reinvested in
the corresponding Subaccount.
Since each of the Funds is designed to provide investment vehicles for variable
annuity and variable life insurance contracts of various insurance companies and
will be sold to separate accounts of other insurance companies as investment
vehicles for various types of variable life insurance policies and variable
annuity contracts, there is a possibility that a material conflict may arise
between the interests of Separate Account I and one or more of the Separate
Account is of another participating insurance company. In the event of a
material conflict, the affected insurance companies agree to take any necessary
steps, including removing its Separate Account is from the Funds, to resolve the
matter. The risks of such mixed and shared funding are described further in the
prospectuses of the Funds.
<TABLE>
<CAPTION>
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS' PORTFOLIOS
- ---------------------- -------------------------------------------------- ---------------------------
ALGER AMERICAN FUNDS
- ---------------------- -------------------------------------------------- ---------------------------
<S> <C> <C>
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- ---------------------- -------------------------------------------------- ---------------------------
Alger American Invests in equity securities, such as common or Seeks to provide
Growth Portfolio preferred stocks, or securities convertible into long-term capital
or exchangeable for equity securities, including appreciation.
warrants and rights, primarily of companies with
total market capitalization of $1 billion or
greater.
- ---------------------- -------------------------------------------------- ---------------------------
Alger American Invests in equity securities, such as common or Seeks to provide
MidCap Growth preferred stocks, or securities convertible into long-term capital
Portfolio or exchangeable for equity securities, including appreciation.
warrants and rights. Except during temporary
defensive period, the Portfolio invests at least
65% of its total assets in equity securities, of
companies that, at the time of purchase of the
securities, have total market capitalization
within the range of companies included in the
S & P MidCap 400 index.
- ---------------------- -------------------------------------------------- ---------------------------
</TABLE>
REGENT 2000
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------- -------------------------------------------------- ---------------------------
Alger American Invests in equity securities, such as common or Seeks to provide
Small Capitalization preferred stocks, or securities convertible into long-term capital
Portfolio or exchangeable for equity securities, appreciation.
including warrants and rights. Except during
temporary defensive period, the Portfolio
invests at least 65% of its total assets in
equity securities, of companies that, at the
time of purchase of the securities, have
total market capitalization within the range
of companies included in the Russell 2000
Growth Index.
- ---------------------- -------------------------------------------------- ---------------------------
CALVERT
VARIABLE
SERIES
- ---------------------- -------------------------------------------------- ---------------------------
Calvert Social Money Invests in money market instruments, including Seeks to provide the
Market Portfolio repurchase agreements with recognized securities highest level of current
dealers and banks secured by such instruments, income, consistent with
selected in accordance with portfolio's liquidity, safety and
investment and social criteria. security of capital.
- ---------------------- -------------------------------------------------- ---------------------------
Calvert Social Small Equity securities of small capitalized growth Seeks, with a concern for
Cap Growth Portfolio companies that have historically exhibited social impact, to achieve
exceptional growth characteristics and that in long-term capital
the investors advisors opinion have strong appreciation by investing
earnings potential relative to the U.S. market primarily in the equity
as a whole. securities of small
companies publicly traded
in the United States.
- ---------------------- -------------------------------------------------- ---------------------------
Calvert Social Mid A portfolio of non-diversified equity securities Seeks to provide long-term
Cap Growth Portfolio of small to mid-sized companies that are capital appreciation.
undervalued but demonstrate a potential for
growth.
- ---------------------- -------------------------------------------------- ---------------------------
Calvert Social Normally will invest at least 65% of its assets Seeks to provide a high
International Equity in the securities of issuers in no less than return by investing in a
Portfolio three countries other than the United States. globally diversified
Investments in securities of U.S. issuers will portfolio of equity
be limited to 5% of net assets. securities.
- ---------------------- -------------------------------------------------- ---------------------------
Calvert Social An actively managed portfolio of stocks, bonds Seeks to achieve a total
Balanced Portfolio and money market instruments (including return above the rate of
repurchase agreements secured by such inflation.
instruments) selected with a concern for the
investment and social impact of each investment.
- ---------------------- -------------------------------------------------- ---------------------------
DREYFUS STOCK
INDEX FUND
- ---------------------- -------------------------------------------------- ---------------------------
Dreyfus Stock Fully invested in stocks which compose the S&P To provide investment
Index Fund 500 Index, and in any event at least 80% of net results that correspond
assets will be so invested. to the price and yield
performance of publicly
traded stocks in the
aggregate, as represented
by the Standard & Poor's
500 composite Price Index.
- ---------------------- -------------------------------------------------- ---------------------------
</TABLE>
REGENT 2000
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------- -------------------------------------------------- ---------------------------
NEUBERGER BERMAN
ADVISERS MANAGEMENT
TRUST
- ---------------------- -------------------------------------------------- ---------------------------
Limited Maturity The Portfolio will invest in a diversified Seeks to provide the
Bond Fund portfolio of fixed and variable debt securities highest current income
and seeks to increase income and preserve or consistent with low risk
enhance total return by actively managing to principal and
average portfolio maturity in light of liquidity.
market conditions and trends.
- ---------------------- -------------------------------------------------- ---------------------------
The Portfolio invests in securities believed to Seeks capital appreciation
Growth Portfolio have the maximum potential for long term capital without regard to income.
appreciation. It does not seek to invest in
securities that pay dividends or interest, and
such income is incidental.
- ---------------------- -------------------------------------------------- ---------------------------
OPPENHEIMER VARIABLE
ACCOUNT FUNDS
- ---------------------- -------------------------------------------------- ---------------------------
Oppenheimer The Portfolio will invest in securities of Seeks to achieve capital
Aggressive Growth companies believed to have relatively favorable appreciation, by investing
Fund/VA long-term prospects for increasing demand for in "growth-type" companies.
their goods or services, or to be developing new
products, services or markets, and normally
retain a relatively larger portion of their
earnings for research, development and investment
in capital assets.
- ---------------------- -------------------------------------------------- ---------------------------
Oppenheimer Capital The Portfolio will emphasize investments in Seeks capital appreciation by
Appreciation Fund/VA securities of well-known and established investing in securities
companies. Such securities generally have a of well known
history of earnings and dividends and are issued established companies.
by seasoned companies.
- ---------------------- -------------------------------------------------- ---------------------------
Oppenheimer Main Its equity investments will include common Seeks a high total return
Street Growth & stocks, preferred stocks, convertible securities (which includes growth in
Income Fund/VA and warrants. Its debt securities will include the value of its shares
bonds, participation interests, asset-backed as well as current
securities, private label mortgage backed income) from equity and
securities and collateralized mortgage debt securities.
obligations, zero coupon securities and U.S.
obligations.
- ---------------------- -------------------------------------------------- ---------------------------
Oppenheimer High Investments in high yield fixed-income Seeks a high level of
Income Fund/VA securities (including long-term debt and current income.
preferred stock issues, including convertible
securities) believed by the Manager not to
involve undue risk. Fund will assume certain
risks in seeking high yield including securities
in the lower ratings categories, commonly known
as "junk bonds".
- ---------------------- -------------------------------------------------- ---------------------------
Oppenheimer Income is principally derived from interest on Seeks a high level of
Strategic Bond debt securities and the Fund seeks to enhance current income by
Fund/VA such income by writing covered call options on investing primarily in a
debt securities. The Fund intends to invest diversified portfolio of
primarily in (i) foreign government and high yield fixed-income
corporate debt securities (ii) U.S. Government securities.
Securities, and (iii) lower-rated high yield
domestic debt securities, commonly known as junk
bonds.
- ---------------------- -------------------------------------------------- ---------------------------
</TABLE>
REGENT 2000
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------- -------------------------------------------------- ---------------------------
STRONG VARIABLE
INSURANCE FUNDS
- ---------------------- -------------------------------------------------- ---------------------------
Strong International Invests primarily in the equity securities of Seeks growth of capital.
Stock Fund II issuers located outside the United States. The
portfolio will invest at least 65% of its total
assets in foreign equity securities, including
common stocks, preferred stocks, and securities
that are convertible into common or preferred
stocks, such as warrants and convertible bonds,
that are issued by companies whose principal
headquarters are located outside the United
States.
- ---------------------- -------------------------------------------------- ---------------------------
Strong Discovery The Portfolio invests in securities believed to Seeks to provide growth
Fund II represent long-term prospects for growth. The of capital.
Portfolio normally emphasizes equity securities,
although it has the flexibility to invest in any
type of security that the Advisor believes has
the potential for capital appreciation. The
Portfolio may invest up to 100% of its total assets
in equity securities, including common
stocks, preferred stocks, and securities that are
convertible into common or preferred stocks, such as
warrants and convertible bonds. The Portfolio may also
invest 100% of its total assets in debt obligations,
including intermediate to long-term corporate or U.S.
government debt securities.
- ---------------------- -------------------------------------------------- ---------------------------
VAN ECK
WORLDWIDE INSURANCE
TRUST
- ---------------------- -------------------------------------------------- ---------------------------
Worldwide Hard The Worldwide Hard Assets Fund must invest at Seeks long-term capital
Assets Fund least 25% of its total assets in "Hard Assets" appreciation by investing
including precious metals, ferrous and globally, primarily in
non-ferrous metals, gas, petroleum, "Hard Assets" securities.
petrochemicals or other hydrocarbons, forest Income is a secondary
products, real estate and other basic consideration.
non-agricultural commodities. An additional but
not fundamental policy, it may invest up to 50%
of its assets in any one of these sectors.
- ---------------------- -------------------------------------------------- ---------------------------
</TABLE>
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
ANLIC reserves the right, subject to applicable law, to add, delete, combine or
substitute investments in Separate Account I if, in our judgment, marketing
needs, tax considerations, or investment conditions warrant. This may happen due
to a change in law or a change in a Fund's objectives or restrictions, or for
some other reason. ANLIC may operate Separate Account I as a management company
under the 1940 Act, it may be deregistered under that Act if registration is no
longer required, or it may be combined with other ANLIC separate accounts. ANLIC
may also transfer the assets of Separate Account I to another separate account.
If necessary, we will notify the SEC and/or state insurance authorities and will
obtain any required approvals before making these changes.
If any changes are made, ANLIC may, by appropriate endorsement, change the
policy to reflect the changes. In addition, ANLIC may, when permitted by law,
restrict or eliminate any voting rights of Policy Owners or other persons who
have voting rights as to Separate Account I. ANLIC will determine the basis for
making any new Subaccounts available to existing Policy Owners.
You will be notified of any material change in the investment policy of any Fund
in which you have an interest.
FIXED ACCOUNT
You may elect to allocate all or a portion of your Net Premium payments to the
Fixed Account, and you may also transfer monies between Separate Account I and
the Fixed Account. (See the section on Transfers.)
REGENT 2000
15
<PAGE>
Payments allocated to the Fixed Account and transferred from Separate Account I
to the Fixed Account are placed in ANLIC's General Account. The General Account
includes all of ANLIC's assets, except those assets segregated in ANLIC's
Separate Accounts. ANLIC has the sole discretion to invest the assets of the
General Account, subject to applicable law. ANLIC bears an investment risk for
all amounts allocated or transferred to the Fixed Account, plus interest
credited thereto, less any deduction for charges and expenses. The Policy owner
bears the investment risk that the declared rate, described below, will fall to
a lower rate after the expiration of a declared rate period. Because of
exemptions and exclusionary provisions, interests in the General Account have
not been registered under the Securities Act of 1933 (the "1933 Act"), nor is
the General Account registered as an investment company under the Investment
Company Act of 1940. Accordingly, neither the General Account nor any interest
in it is generally subject to the provisions of the 1933 or 1940 Act. We
understand that the staff of the SEC has not reviewed the disclosures in this
prospectus relating to the Fixed Account portion of the Policy; however, these
disclosures may be subject to generally applicable provisions of the federal
securities laws regarding the accuracy and completeness of statements made in
prospectuses.
ANLIC guarantees that it will credit interest at a declared rate of at least
3.5%. ANLIC may, at its discretion, set a higher declared rate(s ). Each month
ANLIC will establish the declared rate for the Policies with a Policy Date or
Policy Anniversary Date in that month. Each month is assumed to have 30 days,
and each year to have 360 days for purposes of crediting interest on the Fixed
Account. The Policy Owner will earn interest on the amounts transferred or
allocated to the Fixed Account at the declared rate effective for the month in
which the Policy was issued, which rate is guaranteed for the remainder of the
first Policy Year. During later Policy Years, all amounts in the Fixed Account
will earn interest at the declared rate in effect in the month of the last
Policy Anniversary. Declared interest rates may increase or decrease from
previous periods, but will not fall below 3.5%. ANLIC reserves the right to
change the declaration practice, and the period for which a declared rate will
apply.
POLICY BENEFITS
The rights and benefits under the Policy are summarized in this prospectus;
however prospectus disclosure regarding the Policy is qualified in its entirety
by the Policy itself, a copy of which is available upon request from ANLIC.
PURPOSES OF THE POLICY
The Policy is designed to provide the Policy owner with both lifetime insurance
protection and flexibility in the amount and frequency of premium payments and
with the level of life insurance proceeds payable under the Policy.
You are not required to pay scheduled premiums to keep the Policy in force, but
you may, subject to certain limitations, vary the frequency and amount of
premium payments. You also may adjust the level of Death Benefits payable under
the Policy without having to purchase a new Policy by increasing (with evidence
of insurability) or decreasing the Specified Amount. An increase in the
Specified Amount will increase both the Minimum Premium and the Guaranteed Death
Benefit Premium required. If the Specified Amount is decreased, however, the
Minimum Premium and Guaranteed Death Benefit Premium will not decrease. Thus, as
insurance needs or financial conditions change, you have the flexibility to
adjust life insurance benefits and vary premium payments.
The Death Benefit may, and the Accumulation Value will, vary with the investment
experience of the chosen Subaccounts of Separate Account I. Thus the Policy
owner benefits from any appreciation in value of the underlying assets, but
bears the investment risk of any depreciation in value. As a result, whether or
not a Policy continues in force may depend in part upon the investment
experience of the chosen Subaccounts. The failure to pay a Planned Periodic
Premium will not necessarily cause the Policy to lapse, but the Policy could
lapse even if Planned Periodic Premiums have been paid, depending upon the
investment experience of Separate Account I. If the Minimum Premium or
Guaranteed Death Benefit Premium is satisfied by Net Policy Funding, ANLIC will
keep the Policy in force during the appropriate period and provide a Death
Benefit. In certain instances, this Net Policy Funding will not, after the
payment of Monthly Deductions, generate positive Net Cash Surrender Values.
DEATH BENEFIT PROCEEDS
As long as the Policy remains in force, ANLIC will pay the Death Benefit
Proceeds of the Policy upon Satisfactory Proof of Death, according to the Death
Benefit option in effect at the time of the Second Death. The amount of the
Death Benefits payable will be determined at the end of the Valuation Period
during which the Second Death occurs. The Death Benefit Proceeds may be paid in
a lump sum or under one or more of the payment options set forth in the Policy.
(See the section on Payment Options.) There is no benefit payable on the death
of the first Insured.
Death Benefit Proceeds will be paid to the surviving Beneficiary or
Beneficiaries you specified in the application or as subsequently changed. If
you do not choose a Beneficiary, the proceeds will be paid to you, as the Policy
owner, or to your estate.
REGENT 2000
16
<PAGE>
DEATH BENEFIT OPTIONS
The Policy provides two Death Benefit options. The Policy owner selects one of
the options in the application. The Death Benefit under either option will never
be less than the current Specified Amount of the Policy as long as the Policy
remains in force. (See the section on Policy Lapse and Reinstatement.) The
minimum initial Specified Amount is $100,000. The Net Amount at Risk for Option
A will generally be less than the Net Amount at Risk for Option B. If you choose
Option A, your Cost of Insurance deduction will generally be lower than if you
choose Option B. (See the section on Charges and Deductions.) The following
graphs illustrate the differences in the two Death Benefit options.
OPTION A.
OMITTED GRAPH ILLUSTRATES PAYOUT UNDER DEATH BENEFIT OPTION A, SPECIFICALLY BY
SHOWING THE RELATIONSHIPS OVER TIME, BETWEEN THE SPECIFIED AMOUNT AND THE
ACCUMULATION VALUE.
Death Benefit Option A. Pays a Death Benefit equal to the Specified Amount
or the Accumulation Value multiplied by the Death Benefit percentage (as
illustrated at Point A) whichever is greater.
Under Option A, the Death Benefit is the current Specified Amount of the Policy
or, if greater, the applicable percentage of Accumulation Value at the Second
Death. The applicable percentage is 250% for Attained Ages 40 or younger on the
Policy Anniversary Date prior to the Second Death. For Attained Ages over 40 on
that Policy Anniversary Date, the percentage declines. For example, the
percentage at Attained Age 40 is 250%, at Attained Age 50 is 185%, at Attained
Age 60 is 130%, at Attained Age 70 is 115%, at Attained Age 80 is 105%, and at
Attained Age 90 is 105%. The applicable percentage will never be less than 101%.
Accordingly, under Option A the Death Benefit will remain level at the Specified
Amount unless the applicable percentage of Accumulation Value exceeds the
current Specified Amount, in which case the amount of the Death Benefit will
vary as the Accumulation Value varies. Policy owners who prefer to have
favorable investment performance, if any, reflected in higher Accumulation
Value, rather than increased insurance coverage, generally should select Option
A.
OPTION B.
OMITTED GRAPH ILLUSTRATES PAYOUT UNDER DEATH BENEFIT OPTION B, SPECIFICALLY BY
SHOWING THE RELATIONSHIPS OVER TIME, BETWEEN THE SPECIFIED AMOUNT AND THE
ACCUMULATION VALUE.
Death Benefit Option B. Pays a Death Benefit equal to the Specified Amount
plus the Policy's Accumulation Value or the Accumulation Value multiplied
by the Death Benefit percentage, whichever is greater.
Under Option B, the Death Benefit is equal to the current Specified Amount plus
the Accumulation Value of the Policy or, if greater, the applicable percentage
of the Accumulation Value at the Second Death. The applicable percentage is the
same as under Option A: 250% for Attained Ages 40 or younger on the Policy
Anniversary Date prior to the Second Death. For Attained Ages over 40 on that
Policy Anniversary Date the percentage declines. Accordingly, under Option B the
amount of the Death Benefit will always vary as the Accumulation Value varies
(but will never be less than the Specified Amount.). Policy owners who prefer to
have favorable investment performance, if any, reflected in increased insurance
coverage, rather than higher Accumulation Values, generally should select Option
B.
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CHANGE IN DEATH BENEFIT OPTION. The Death Benefit option may be changed once per
year after the first Policy Year by sending ANLIC a written request. The
effective date of such a change will be the Monthly Activity Date on or
following the date the change is approved by ANLIC. A change may have federal
tax consequences.
If the Death Benefit option is changed from Option A to Option B, the Specified
Amount after the change will equal the Specified Amount before the change less
the Accumulation Value as of the date of the change. If the Death Benefit option
is changed from Option B to Option A, the Specified Amount under Option A after
the change will equal the Death Benefit under Option B on the effective date of
change.
No charges will be imposed upon a change in Death Benefit option, nor will such
a change in and of itself result in an immediate change in the amount of a
Policy's Accumulation Value. However, a change in the Death Benefit option may
affect the Cost of Insurance because this charge varies depending on the Net
Amount at Risk. Changing from Option B to Option A generally will decrease the
Net Amount at Risk in the future, and will therefore decrease the Cost of
Insurance. Changing from Option A to Option B generally will result in an
increase in the Cost of Insurance over time because the Cost of Insurance rate
will increase with the ages of the Insureds, even though the Net Amount at Risk
will generally remain level. (See the sections on Charges and Deductions and
Federal Tax Matters.)
CHANGE IN SPECIFIED AMOUNT. Subject to certain limitations, after the first
Policy Year, a Policy owner may increase or decrease the Specified Amount of a
Policy. A change in Specified Amount affects the Net Amount at Risk, which
affects the Cost of Insurance and may have federal tax consequences. (See the
sections on Charges and Deductions and Federal Tax Matters.)
Any increase or decrease in the Specified Amount will become effective on the
Monthly Activity Date on or following the date a written request is approved by
ANLIC. The Specified Amount of a Policy may be changed only once per year and
ANLIC may limit the size of a change in a Policy Year. The Specified Amount
remaining in force after any requested decrease may not be less than $100,000.
In addition, if a decrease in the Specified Amount makes the Policy not comply
with the maximum premium limits required by federal tax law, the decrease may be
limited or the Accumulation Value may be returned to you, at your election, to
the extent necessary to meet the requirements. (See the section on Premiums.)
Increases in the Specified Amount will be allowed after the first Policy Year.
For an increase in the Specified Amount, you must submit a written supplemental
application. ANLIC may also require additional evidence of insurability.
Although an increase need not necessarily be accompanied by an additional
premium, in certain cases an additional premium will be required to put the
requested increase in effect. (See the section on Premiums upon Increases in
Specified Amount.) The minimum amount of any increase is $50,000, and an
increase cannot be made if either Insured was over age 85 on the previous Policy
Anniversary Date. An increase in the Specified Amount will also increase
Surrender Charges. An increase in the Specified Amount during the time either
the Minimum Benefit or the Guaranteed Death Benefit provision is in effect will
increase the respective premium requirements. (See the section on Charges and
Deductions.)
METHODS OF AFFECTING INSURANCE PROTECTION
You may increase or decrease the pure insurance protection provided by a Policy
- - the difference between the Death Benefit and the Accumulation Value - in
several ways as your insurance needs change. These ways include increasing or
decreasing the Specified Amount of insurance, changing the level of premium
payments, and making a partial withdrawal of the Policy's Accumulation Value.
Certain of these changes may have federal tax consequences. The consequences of
each of these methods will depend upon the individual circumstances.
DURATION OF THE POLICY
The duration of the Policy generally depends upon the Accumulation Value. The
Policy will remain in force so long as the Net Cash Surrender Value is
sufficient to pay the Monthly Deduction or if the Minimum Benefit or Guaranteed
Death Benefit provision is in effect. (See the section on Charges from
Accumulation Value.) However, when the Net Cash Surrender Value is insufficient
to pay the Monthly Deduction and the Grace Period expires without an adequate
payment by the Policy owner, the Policy will lapse and terminate without value.
(See the section on Policy Lapse and Reinstatement.)
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ACCUMULATION VALUE
The Accumulation Value will reflect the investment performance of the chosen
Investment Options, the Net Premiums paid, any partial withdrawals, and the
charges assessed in connection with the Policy. A Policy owner may Surrender the
Policy at any time and receive the Policy's Net Cash Surrender Value. (See the
section on Surrenders.) There is no guaranteed minimum Accumulation Value.
Accumulation Value is determined on each Valuation Date. On the Issue Date, the
Accumulation Value will equal the portion of any Net Premium allocated to the
Investment Options, reduced by the portion of the first Monthly Deduction
allocated to the Investment Options. (See the section on Allocation of Premiums
and Accumulation Value.) Thereafter, on each Valuation Date, the Accumulation
Value of the Policy will equal:
(1) The aggregate values belonging to the Policy in each of the
Subaccounts on the Valuation Date, determined by multiplying each
Subaccount's unit value by the number of Subaccount units you have
allocated to the Policy; plus
(2) The value of allocations to the Fixed Account; plus
(3) Any Accumulation Value impaired by Outstanding Policy Debt held in the
General Account; plus
(4) Any Net Premiums received on that Valuation Date; less
(5) Any partial withdrawal, and its charge, made on that Valuation Date;
less
(6) Any Monthly Deduction to be made on that Valuation Date; less
(7) Any federal or state income taxes charged against the Accumulation
Value
In computing the Policy's Accumulation Value on the Valuation Date, the number
of Subaccount units allocated to the Policy is determined after any transfers
among Investment Options (and deduction of transfer charges), but before any
other Policy transactions, such as receipt of Net Premiums and partial
withdrawals. Because the Accumulation Value depends on a number of variables, a
Policy's Accumulation Value cannot be predetermined.
THE UNIT VALUE. The unit value of each Subaccount reflects the investment
performance of that Subaccount. The unit value of each Subaccount is calculated
by:
(1) multiplying the net asset value per share of each Fund portfolio on
the Valuation Date times the number of shares held by that Subaccount,
before the purchase or redemption of any shares on that Valuation
Date; minus
(2) a charge for mortality and expense risk at an annual rate of .75% in
Policy Years 1-15, decreasing to .30% thereafter; minus
(3) a charge for administrative service expenses at an annual rate of
.15%; and
(4) dividing the result by the total number of units held in the
Subaccount on the Valuation Date, before the purchase or redemption of
any units on that Valuation Date.
(See the section on Daily Charges Against the Separate Account I.)
VALUATION DATE AND VALUATION PERIOD. A Valuation Date is each day on which the
New York Stock Exchange ("NYSE") is open for trading. The Net Asset Value for
each Fund Portfolio is determined as of the close of regular trading on the
NYSE. The net investment return for each Subaccount and all transactions and
calculations with respect to the Policies as of any Valuation Date are
determined as of that time. A Valuation Period is the period between two
successive Valuation Dates, commencing at the close of the NYSE on each
Valuation Date and ending at the close of the NYSE on the next succeeding
Valuation Date.
PAYMENT OF POLICY BENEFITS
Death Benefit Proceeds under the Policy will usually be paid within seven days
after ANLIC receives Satisfactory Proof of Death. Payments may be postponed in
certain circumstances. (See the section on Postponement of Payments.) The Policy
owner may decide the form in which Death Benefit Proceeds will be paid. While at
least one Insured is alive, the Policy owner may arrange for the Death Benefit
Proceeds to be paid in a lump sum or under one or more of the optional methods
of payment described below. Changes must be in writing and will revoke all prior
elections. If no election is made, ANLIC will pay Death Benefit Proceeds or
Accumulation Value Benefits in a lump sum. When Death Benefit Proceeds are
payable in a lump sum and no election for an optional method of
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payment is in force at the Second Death the Beneficiary may select one or more
of the optional methods of payment. Further, if the Policy is assigned, any
amounts due to the assignee will first be paid in one sum. The balance, if any,
may be applied under any payment option. Once payments have begun, the payment
option may not be changed.
PAYMENT OPTIONS FOR DEATH BENEFIT PROCEEDS. The minimum amount of each payment
is $100. If a payment would be less than $100, ANLIC has the right to make
payments less often so that the amount of each payment is at least $100. Once a
payment option is in effect, Death Benefit Proceeds will be transferred to
ANLIC's General Account. ANLIC may make other payment options available in the
future. For additional information concerning these options, see the Policy
itself. The following payment options are currently available:
OPTION AI--INTEREST PAYMENT OPTION. ANLIC will hold any amount applied
under this option. Interest on the unpaid balance will be paid or credited
each month at a rate determined by ANLIC.
OPTION AII--FIXED AMOUNT PAYABLE OPTION. Each payment will be for an agreed
fixed amount. Payments continue until the amount ANLIC holds runs out.
OPTION B--FIXED PERIOD PAYMENT OPTION. Equal payments will be made for any
period selected up to 20 years.
OPTION C--LIFETIME PAYMENT OPTION. Equal monthly payments are based on the
life of a named person. Payments will continue for the lifetime of that
person. Variations provide for guaranteed payments for a period of time.
OPTION D--JOINT LIFETIME PAYMENT OPTION. Equal monthly payments are based
on the lives of two named persons. While both are living, one payment will
be made each month. When one dies, the same payment will continue for the
lifetime of the other.
As an alternative to the above payment options, Death Benefits Proceeds may be
paid in any other manner approved by ANLIC. Further, one of ANLIC's affiliates
may make payments under the above payment options. If an affiliate makes the
payment, it will do so according to the request of the Policy owner, using the
rules set out above.
POLICY RIGHTS
LOAN BENEFITS
LOAN PRIVILEGES. The Policy owner may borrow an amount up to the current Net
Cash Surrender Value less twelve times the most recent Monthly Deduction, at
regular or reduced loan rates (described below). Loans usually are funded within
seven days after receipt of a written request. The loan may be repaid at any
time while at least one Insured is living. Policy owners in certain states may
borrow 100% of the Net Cash Surrender Value after deducting Monthly Deductions
and any interest on Policy loans that will be due for the remainder of the
Policy Year. Loans may have tax consequences. (See the section on Federal Tax
Matters).
LOAN INTEREST. ANLIC charges interest to Policy owners at regular and reduced
rates. Regular loans will accrue interest on a daily basis at a rate of up to 6%
per year; currently the interest rate on regular Policy loans is 5.5%. Each year
after the tenth Policy Anniversary Date, the Policy owner may borrow a limited
amount of the Net Cash Surrender Value at a reduced interest rate. For those
loans, interest will accrue on a daily basis at a rate of up to 4% per year; the
current reduced loan rate is 3.5%. The amount available at the reduced loan rate
is (1) the Accumulation Value, minus (2) total premiums paid minus any partial
withdrawals previously taken , and minus (3) the portion of any Outstanding
Policy Debt held at a reduced loan rate. However, this amount may not exceed the
maximum loan amount described above. (See the section on Loan Privileges.) If
unpaid when due, interest will be added to the amount of the loan and bear
interest at the same rate. The Policy owner earns 3.5% interest on the
Accumulation Values held in the General Account securing the loans.
EFFECT OF POLICY LOANS. When a loan is made, Accumulation Value equal to the
amount of the loan will be transferred from the Investment Options to the
General Account as security for the loan. The Accumulation Value transferred
will be allocated from the Investment Options according to the instructions you
give when you request the loan. The minimum amount which can remain in a
Subaccount or the Fixed Account as a result of a loan is $100. If no
instructions are given, the amounts will be withdrawn in proportion to the
various Accumulation Values
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in the Investment Options. In any Policy Year that loan interest is not paid
when due, ANLIC will add the interest due to the principal amount of the Policy
loan on the next Policy Anniversary. This loan interest due will be transferred
from the Investment Options as set out above. No charge will be made for these
transfers. A Policy loan will permanently affect the Accumulation Value and may
permanently affect the amount of the Death Benefits, even if the loan is repaid.
Policy loans will also affect Net Policy Funding for determining whether the
Minimum Benefit and Guaranteed Death Benefit provisions are met.
Interest earned on amounts held in the General Account will be allocated to the
Investment Options on each Policy Anniversary in the same proportion that Net
Premiums are being allocated to those Investment Options at the time. Upon
repayment of loan amounts, the portion of the repayment allocated in accordance
with the repayment of loan provision (see below) will be transferred to increase
the Accumulation Value in that Investment Option.
OUTSTANDING POLICY DEBT. The Outstanding Policy Debt equals the total of all
Policy loans and accrued interest on Policy loans. If the Outstanding Policy
Debt exceeds the Accumulation Value less any Surrender Charge and any Accrued
Expense Charges, the Policy owner must pay the excess. ANLIC will send a notice
of the amount which must be paid. If you do not make the required payment within
the 61 days after ANLIC sends the notice, the Policy will terminate without
value ("lapse".) Should the Policy lapse while Policy loans are outstanding, the
portion of the loans attributable to earnings will become taxable. You may lower
the risk of a Policy lapsing while loans are outstanding as a result of a
reduction in the market value of investments in the Subaccounts by investing in
a diversified group of lower risk investment portfolios and/or transferring the
funds to the Fixed Account and receiving a guaranteed rate of return. Should you
experience a substantial reduction, you may need to lower anticipated
withdrawals and loans, repay loans, make additional premium payments, or take
other action to avoid Policy lapse. A lapsed Policy may later be reinstated.
(See the section on Policy Lapse and Reinstatement.)
REPAYMENT OF LOAN. Unscheduled premiums paid while a Policy loan is outstanding
are treated as repayment of the debt only if the Policy owner so requests. As a
loan is repaid, the Accumulation Value in the General Account securing the
repaid loan will be allocated among the Subaccounts and the Fixed Account in the
same proportion that Net Premiums are being allocated at the time of repayment.
SURRENDERS
At any time while at least one Insured is alive, the Policy owner may withdraw a
portion of the Accumulation Value or Surrender the Policy by sending a written
request to ANLIC. The amount available for Surrender is the Net Cash Surrender
Value at the end of the Valuation Period when the Surrender request is received
at ANLIC's Home Office. Surrenders will generally be paid within seven days of
receipt of the written request. (See the section on Postponement of Payments.)
SURRENDERS MAY HAVE TAX CONSEQUENCES. Surrenders may be subject to Surrender
Charges. (See the section on Surrender Charge.) Once a Policy is Surrendered, it
may not be reinstated. (See the section on Tax Treatment of Policy Proceeds.)
If the Policy is being Surrendered in its entirety, the Policy itself must be
returned to ANLIC along with the request. ANLIC will pay the Net Cash Surrender
Value. Coverage under the Policy will terminate as of the date of a total
Surrender. A Policy owner may elect to have the amount paid in a lump sum or
under a payment option. (See the section on Payment Options.)
PARTIAL WITHDRAWALS
Partial withdrawals are irrevocable. The amount of a partial withdrawal may not
be less than $500. The Net Cash Surrender Value after a partial withdrawal must
be at least $1,000 or an amount sufficient to maintain the Policy in force for
the remainder of the Policy Year.
The amount paid will be deducted from the Investment Options according to your
instructions when you request the withdrawal. However, the minimum amount
remaining in a Subaccount as a result of the allocation is $100. If no
instructions are given, the amounts will be withdrawn in proportion to the
various Accumulation Values in the Investment Options.
The Death Benefit will be reduced by the amount of any partial withdrawal and
may affect the way the Cost of Insurance is calculated and the amount of pure
insurance protection under the Policy. (See the sections on Monthly Deduction -
Cost of Insurance and Death Benefit Options--Methods of Affecting Insurance
Protection.) If Death Benefit option B is in effect, the Specified Amount will
not change, but the Accumulation Value will be reduced.
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A fee which does not exceed the lesser of $50 or 2% of the amount withdrawn is
deducted from the Accumulation Value. Currently, the charge is the lesser of $25
or 2% of the amount withdrawn. (See the section on Partial Withdrawal Charge.)
Partial withdrawals will also affect Net Policy Funding for determining whether
the Minimum Benefit and Guaranteed Death Benefit provisions are met.
TRANSFERS
Accumulation Value may be transferred among the Subaccounts of Separate Account
I and to the Fixed Account as often as desired. However, you may make only one
transfer out of the Fixed Account per Policy Year. We may limit the transfer
period to the 30 days following the Policy Anniversary Date. The transfers may
be ordered in person, by mail or by telephone. The total amount transferred each
time must be at least $250, or the balance of the Subaccount, if less. The
minimum amount that may remain in a Subaccount or the Fixed Account after a
transfer is $100. The first 15 transfers per Policy Year will be permitted free
of charge. After that, a transfer charge of $10 may be imposed each additional
time amounts are transferred. Currently, no charge is imposed for additional
transfers. This charge will be deducted pro rata from each Subaccount (and, if
applicable, the Fixed Account) in which the Policy Owner is invested. (See the
section on Transfer Charge.) Additional restrictions on transfers may be imposed
at the Fund level. Specifically, Fund managers may have the right to refuse
sales, or suspend or terminate the offering of portfolio shares, if they
determine that such action is necessary in the best interests of the portfolio's
shareholders. If a Fund manager refuses a transfer for any reason, the transfer
will not be allowed. ANLIC will not be able to process the transfer if the Fund
manager refuses. Transfers resulting from Policy loans or exercise of the
exchange privilege will not be subject to a transfer charge and will not be
counted towards the guaranteed 15 free transfers per Policy Year. ANLIC may at
any time revoke or modify the transfer privilege, including the minimum amount
transferable.
Transfers out of the Fixed Account, unless part of the dollar cost averaging
systematic program described below, are limited to one per Policy Year. We may
limit the transfer period to the 30 days following the Policy Anniversary Date,
as noted below. Transfers out of the Fixed Account are limited to the greater of
(1) 25% of the Fixed Account attributable to the Policy; (2) the largest
transfer made by the Policy owner out of the Fixed Account during the last 13
months; or (3) $1,000. This provision is not available while dollar cost
averaging from the Fixed Account.
The privilege to initiate transactions by telephone will be made available to
Policy owners automatically. The registered representative designated on the
application will have the authority to initiate telephone transfers. Policy
owners who do not wish to authorize ANLIC to accept telephone transactions from
their registered representative must so specify on the application. ANLIC will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, and if it does not, ANLIC may be liable for any losses
due to unauthorized or fraudulent instructions. The procedures ANLIC follows for
transactions initiated by telephone include, but are not limited to, requiring
the Policy owner to provide the Policy number at the time of giving transfer
instructions; ANLIC's tape recording of all telephone transfer instructions; and
ANLIC providing written confirmation of telephone transactions.
SYSTEMATIC PROGRAMS
ANLIC may offer systematic programs as discussed below. These programs will be
subject to administrative guidelines ANLIC may establish from time to time.
Transfers of Accumulation Value made pursuant to these programs will be counted
in determining whether any transfer fee may apply. Lower minimum amounts may be
allowed to transfer as part of a systematic program. No other separate fee is
assessed when one of these options is chosen. All other normal transfer
restrictions, as described above, also apply.
You can request participation in the available programs when purchasing the
Policy or at a later date. You can change the allocation percentage or
discontinue any program by sending written notice or calling the Home Office.
Other scheduled programs may be made available. ANLIC reserves the right to
modify, suspend or terminate such programs at any time. Use of systematic
programs may be advantageous, and does not guarantee success.
PORTFOLIO REBALANCING. Under the Portfolio Rebalancing program, you can instruct
ANLIC to reallocate the Accumulation Value among the Subaccounts (but not the
Fixed Account) on a systematic basis according to Your specified allocation
instructions.
DOLLAR COST AVERAGING. Under the Dollar Cost Averaging program, you can instruct
ANLIC to automatically transfer, on a systematic basis, a predetermined amount
or specified percentage from the Fixed Account or the
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Money Market Subaccount to any other Subaccount(s). Dollar cost averaging is
permitted from the Fixed Account if each monthly transfer is no more than 1/36th
of the value of the Fixed Account at the time dollar cost averaging is
established.
EARNINGS SWEEP. This program permits systematic redistribution of earnings among
Investment Options.
FREE-LOOK PRIVILEGE
You may cancel the Policy within 10 days after you receive it, within 10 days
after ANLIC delivers a notice of your right of cancellation, or within 45 days
of completing Part I of the application, whichever is later. When allowed by
state law, the amount of the refund is the net premiums allocated to the
Investment Options, adjusted by investment gains and losses, plus the sum of all
charges deducted from premiums paid. Otherwise, the amount of the refund will
equal the gross premiums paid. To cancel the Policy, you should mail or deliver
it to the selling agent, or to ANLIC at its Administrative Office. A refund of
premiums paid by check may be delayed until the check has cleared your bank.
(See the section on Postponement of Payments.)
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF A POLICY
Individuals wishing to purchase a Policy must complete an application and submit
it to ANLIC's Administrative Office ( 5900 "O" Street, P.O. Box 82550, Lincoln,
Nebraska 68501). A Policy will generally be issued only to individuals between
the ages of 20 and 90 at the time of purchase, although at least one of the
individuals must be no older than 85, and both of whom supply satisfactory
evidence of insurability to ANLIC. Acceptance is subject to ANLIC's underwriting
rules, and ANLIC reserves the right to reject an application for any reason.
The Policy Date is the effective date for all coverage in the original
application. The Policy Date is used to determine Policy Anniversary Dates,
Policy Years and Policy Months. The Issue Date is the date that all financial,
contractual and administrative requirements have been met and processed for the
Policy. The Policy Date and the Issue Date will be the same unless: (1) an
earlier Policy Date is specifically requested, or (2) additional premiums or
application amendments are needed. When there are additional requirements before
issue (see below) the Policy Date will be the date the Policy is sent for
delivery and the Issue Date will be the date the requirements are met.
When all required premiums and application amendments have been received by
ANLIC in its administrative Office, the Issue Date will be the date the Policy
is mailed to you or sent to the agent for delivery to you. When application
amendments or additional premiums need to be obtained upon delivery of the
Policy, the Issue Date will be when the Policy receipt and federal funds (monies
of member banks within the Federal Reserve System which are held on deposit at a
Federal Reserve Bank) are received and available to ANLIC, and the application
amendments are received and reviewed in ANLIC's Administrative Office. Your
initial Net Premium will be allocated on the Issue Date to the Subaccounts
and/or the Fixed Account according to the selections you made in your
application. When state or other applicable law or regulation requires return of
at least your premium payments if you return the Policy under the free-look
privilege, your initial Net Premium will be allocated to the Money Market
Subaccount. Then, thirteen days after the Issue Date, the Accumulation Value of
the Policy will be allocated among the Subaccounts and/or Fixed Account
according to the instructions in your application.
Subject to approval, a Policy may be backdated, but the Policy Date may not be
more than six months prior to the date of the application. Backdating can be
advantageous if a lower Issue Age for either Insured results in lower Cost of
Insurance Rates. If a Policy is backdated, the minimum initial premium required
will include sufficient premium to cover the backdating period. Monthly
deductions will be made for the period the Policy Date is backdated.
Interim conditional insurance coverage may be issued prior to the Policy Date,
provided that certain conditions are met, upon the completion of an application
and the payment of the required premium at the time of the application. The
amount of the interim coverage is limited to the smaller of (1) the amount of
insurance applied for, or (2) $250,000. Premium will not be accepted with
applications for coverage in amounts of $1,000,000 or more.
PREMIUMS
No insurance will take effect before the initial premium payment is received by
ANLIC in federal funds. The initial premium payment must be at least equal to
the monthly Minimum Premium times one more than the number of months between the
Policy Date and the Issue Date. Subsequent premiums are payable at ANLIC's Home
Office.
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A Policy owner has flexibility in determining the frequency and amount of
premiums. However, unless you have paid sufficient premiums to pay the Monthly
Deduction and Percent of Premium Charge for Taxes, the Policy may have a zero
Net Cash Surrender Value and lapse. Net Policy Funding, if adequate, may satisfy
Minimum Premium and/or Guaranteed Death Benefit Premium requirements. (See the
section on Policy Benefits, Purposes of the Policy.)
PLANNED PERIODIC PREMIUMS. At the time the Policy is issued you may determine a
Planned Periodic Premium schedule that provides for the payment of level
premiums at selected intervals. You may want to consider setting the Planned
Periodic Premium no lower than the Guaranteed Death Benefit Premium to assure
proper funding of the Guaranteed Death Benefit. You are not required to pay
premiums according to this schedule. You have considerable flexibility to alter
the amount and frequency of premiums paid. ANLIC reserves the right to limit the
number and amount of additional or unscheduled premium payments.
You may also change the frequency and amount of Planned Periodic Premiums by
sending a written request to the Home Office, although ANLIC reserves the right
to limit any increase. Premium payment notices will be sent annually,
semi-annually or quarterly, depending upon the frequency of the Planned Periodic
Premiums. Payment of the Planned Periodic Premiums does not guarantee that the
Policy remains in force unless the Minimum Benefit or Guaranteed Death Benefit
provision is in effect. Instead, the duration of the Policy depends upon the
Policy's Net Cash Surrender Value. (See the section on Duration of the Policy.)
Unless the Minimum Benefit or Guaranteed Death Benefit provision is in effect,
even if Planned Periodic Premiums are paid, the Policy will lapse any time the
Net Cash Surrender Value is insufficient to pay the Monthly Deduction, and the
Grace Period expires without a sufficient payment. (See the section on Policy
Lapse and Reinstatement.)
PREMIUM LIMITS. ANLIC's current minimum premium limit is $45, $15 if paid by
automatic bank draft. ANLIC currently has no maximum premium limit, other than
the current maximum premium limits established by federal tax laws. ANLIC
reserves the right to change any premium limit. In no event may the total of all
premiums paid, both planned and unscheduled, exceed the current maximum premium
limits established by federal tax laws. (See the section on Tax Status of the
Policy.)
If at any time a premium is paid which would result in total premiums exceeding
the current maximum premium limits, ANLIC will only accept that portion of the
premium which will make total premiums equal the maximum. Any part of the
premium in excess of that amount will be returned or applied as otherwise agreed
and no further premiums will be accepted until allowed by the current maximum
premium limits allowed by law. ANLIC may require additional evidence of
insurability if any premium payment would result in an increase in the Policy's
Net Amount at Risk on the date the premium is received.
PREMIUMS UPON INCREASES IN SPECIFIED AMOUNT. Depending upon the Accumulation
Value of the Policy at the time of an increase in the Specified Amount of the
Policy and the amount of the increase requested by the Policy owner, an
additional premium payment may be required. ANLIC will notify you of any premium
required to fund the increase, which premium must be made in a single payment.
The Accumulation Value of the Policy will be immediately increased by the amount
of the payment, less the applicable Percent of Premium Charge for Taxes.
ALLOCATION OF PREMIUMS AND ACCUMULATION VALUE
ALLOCATION OF NET PREMIUMS. In the application for a Policy, the Policy owner
allocates Net Premiums to one or more Subaccounts and/or to the Fixed Account.
Allocations must be whole number percentages and must total 100%. The allocation
of future Net Premiums may be changed without charge by providing proper
notification to the Home Office in writing or by telephone. If there is any
Outstanding Policy Debt at the time of a payment, ANLIC will treat the payment
as a premium payment unless you instruct otherwise by proper written notice.
On the Issue Date, the initial Net Premium will be allocated to the Investment
Options you selected. When state or other applicable law or regulation requires
return of at least your premium payments if you return the Policy under the
free-look privilege, the initial Net Premium will be allocated to the Money
Market Subaccount for 13 days. Thereafter, the Accumulation Value will be
reallocated to the Investment Options you selected. Premium payments received by
ANLIC prior to the Issue Date are held in the General Account until the Issue
Date and are credited with interest at a rate determined by ANLIC for the period
from the date the payment has been converted into federal funds and is available
to ANLIC. In no event will interest be credited prior to the Policy Date.
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<PAGE>
The Accumulation Value of the Subaccounts will vary with the investment
performance of these Subaccounts and you, as the Policy owner, will bear the
entire investment risk. This will affect the Policy's Accumulation Value, and
may affect the Death Benefit as well. You should periodically review your
allocations of premiums and values in light of market conditions and overall
financial planning requirements.
POLICY LAPSE AND REINSTATEMENT
LAPSE. Unlike conventional life insurance policies, the failure to make a
Planned Periodic Premium payment will not itself cause the Policy to lapse.
Lapse will occur when the Net Cash Surrender Value is insufficient to cover the
Monthly Deduction and a Grace Period expires without a sufficient payment,
unless the Minimum Benefit or Guaranteed Death Benefit provision is in effect.
The Grace Period is 61 days from the date ANLIC mails a notice that the Grace
Period has begun. ANLIC will notify you at the beginning of the Grace Period by
mail addressed to your last known address on file with ANLIC.
The notice will specify the premium required to keep the Policy in force. The
required premium will equal the lesser of (1) Monthly Deductions plus Percent of
Premium Charge for Taxes for the three Policy Months after commencement of the
Grace Period, plus projected loan interest that would accrue over that period,
or (2) the premium required under the Minimum Benefit or Guaranteed Death
Benefit provisions, if applicable, to keep the Policy in effect for three months
from the commencement of the Grace Period. Failure to pay the required premium
within the Grace Period will result in lapse of the Policy. If the Second Death
occurs during the Grace Period, any overdue Monthly Deductions and Outstanding
Policy Debt will be deducted from the Death Benefit Proceeds. (See the section
on Charges and Deductions.)
REINSTATEMENT. A lapsed Policy may be reinstated any time within three years
(five years in Missouri) after the beginning of the Grace Period, provided both
Insureds are living. We will reinstate your Policy based on the rating classes
of the Insureds at the time of the reinstatement.
Reinstatement is subject to the following:
(1) Evidence of insurability of both Insureds satisfactory to ANLIC
(including evidence of insurability of any person covered by a rider
to reinstate the rider);
(2) Any Outstanding Policy Debt on the date of lapse will be reinstated
with interest due and accrued;
(3) The Policy cannot be reinstated if it has been Surrendered for its
full Net Cash Surrender Value;
(4) The minimum premium required at reinstatement is the greater of:
(a) the amount necessary to raise the Net Cash Surrender Value as of
the date of reinstatement to equal to or greater than zero; or
(b) three times the current Monthly Deduction.
The amount of Accumulation Value on the date of reinstatement will equal:
(1) the amount of the Net Cash Surrender Value on the date of lapse,
increased by
(2) the premium paid at reinstatement, less
(3) the Percent of Premium Charge for Taxes , plus
(4) that part of the Surrender Charge that would apply if the Policy were
Surrendered on the date of reinstatement.
The last addition to the Accumulation Value is designed to avoid duplicate
Surrender Charges. The original Policy Date, and the dates of increases in the
Specified Amount (if applicable), will be used for purposes of calculating the
Surrender Charge. If any Outstanding Policy Debt is reinstated, that debt will
be held in ANLIC's General Account. Accumulation Value calculations will then
proceed as described under the section on Accumulation Value.
The effective date of reinstatement will be the first Monthly Activity Date on
or next following the date of approval by ANLIC of the application for
reinstatement.
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<PAGE>
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate ANLIC for:
(1) providing the insurance benefits set forth in the Policy and any optional
insurance benefits added by rider; (2) administering the Policy and payment of
applicable taxes; (3) assuming certain risks in connection with the Policy; and
(4) incurring expenses in distributing the Policy. The nature and amount of
these charges are described more fully below.
DEDUCTIONS FROM PREMIUM PAYMENTS
PERCENT OF PREMIUM CHARGE FOR TAXES. A deduction of up to 3% of the premium is
made from each premium payment; currently the charge is 2.25%. The deduction is
intended to partially offset the premium taxes imposed by the states and their
subdivisions, and to help defray the tax cost due to capitalizing certain policy
acquisition expenses as required under applicable federal tax laws. (See the
section on Federal Tax Matters .) ANLIC does not expect to derive a profit from
the Percent of Premium Charge for Taxes.
CHARGES FROM ACCUMULATION VALUE
MONTHLY DEDUCTION. Charges will be deducted as of the Policy Date and on each
Monthly Activity Date thereafter from the Accumulation Value of the Policy to
compensate ANLIC for administrative expenses and insurance provided. These
charges will be allocated from the Investment Options in accordance with your
instructions. If no instructions are given the charges will be allocated prorata
among the Investment Options. Each of these charges is described in more detail
below.
ADMINISTRATIVE EXPENSE CHARGE. To compensate ANLIC for the ordinary
administrative expenses expected to be incurred in connection with a Policy, the
Monthly Deduction includes a level per policy charge plus a charge per $1000 of
Specified Amount. For Specified Amounts between $100,000 and $999,999, the
charge is currently $16 per month in Policy Years 1-5 and $8 per month
thereafter; for Specified Amounts between $1,000,000 and $4,999,999, the charge
is currently $8 per month in Policy Years 1-5 and $4 per month thereafter;
currently there is no charge for Specified Amounts $5,000,000 or greater. In
addition, for all Specified Amounts there currently is a charge of up to $.10
per month per $1000 of Specified Amount, depending on the younger Insured's
Issue Age. For Issue Ages 20-44, the rate is $.10, for Issue Ages 45-64, the
rate is $.08, and for Issue Ages 65 and over, the rate is $.05. At the current
time we anticipate that the charge per $1,000 of Specified Amount will reduce to
$0 in year 6. The Administrative Expense Charge is levied throughout the life of
the Policy and is guaranteed not to increase above $16 per month plus $.05 per
month per $1000 of Specified Amount. ANLIC does not expect to make any profit
from the Administrative Expense Charge.
COST OF INSURANCE. Because the Cost of Insurance depends upon several variables,
the cost for each Policy Month can vary from month to month. ANLIC will
determine the monthly Cost of Insurance by multiplying the applicable Cost of
Insurance Rate by the Net Amount at Risk for each Policy Month.
COST OF INSURANCE RATE. The Annual Cost of Insurance Rates are based on the
Issue Age, sex and risk class of each Insured and the Policy duration. The rates
will vary depending upon tobacco use and other risk factors. The rates will be
based on ANLIC's expectations of future experience with regard to mortality,
interest, persistency, and expenses, but will not exceed the Schedule of
Guaranteed Annual Cost of Insurance Rates shown in the Policy. The guaranteed
rates for standard rating classes are calculated from the 1980 Commissioners
Standard Ordinary Smoker and Non-Smoker, Male and Female Mortality Tables. The
guaranteed rates for the table-rated substandard Insureds are based on a
multiple (shown in the schedule pages of the Policy) of the above rates. We may
add flat extra ratings to one or both Insureds to reflect higher mortality risk.
Because the Death Benefit is payable at the Second Death only, one-half of each
applicable flat extra rating will be added to adjust the Cost of Insurance Rate.
Any change in the Cost of Insurance Rates will apply to all Insureds of the same
age, sex, risk class and whose Policies have been in effect for the same length
of time The Cost of Insurance Rates, Surrender Charges, and payment options for
Policies issued in Montana, and perhaps other states or in connection with
certain employee benefit arrangements, are issued on a sex-neutral (unisex)
basis. The unisex rates will be higher than those applicable to females and
lower than those applicable to males.
The actual charges made during the Policy year will be shown in the annual
report delivered to Policy owners.
RATING CLASS. The rating class of each Insured will affect the Cost of Insurance
Rate. ANLIC currently places Insureds into both standard rating classes and
substandard rating classes that involve a higher mortality risk. In an otherwise
identical Policy, Insureds in the standard rating class will have a lower Cost
of Insurance Rate than when either or both Insureds are in a rating class with
higher mortality risks.
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<PAGE>
SURRENDER CHARGE
If a Policy is Surrendered on or before the 14th Policy Anniversary Date, ANLIC
will assess a Surrender Charge as shown in the schedule pages of the Policy. The
initial Surrender Charge is calculated based on the Issue Age, sex and risk
class of each Insured, and the Specified Amount of the Policy. The Surrender
Charge, if applicable, will be applied according to the following schedule.
Because the Surrender Charge may be significant upon early Surrender,
prospective Policy owners should purchase a Policy only if they do not intend to
Surrender the Policy for a substantial period.
The maximum Surrender Charge on a Policy we issue is $60 per $1,000 of Specified
Amount.
- ------------------ ---------------------- --------------- ----------------------
Policy Year Percent of Initial Policy Year Percent of Initial
Surrender Charge Surrender Charge that
that will apply will apply during
during Policy Year Policy Year
- ------------------ ---------------------- --------------- ----------------------
1-5 100% 11 40%
- ------------------ ---------------------- --------------- ----------------------
6 90% 12 30%
- ------------------ ---------------------- --------------- ----------------------
7 80% 13 20%
- ------------------ ---------------------- --------------- ----------------------
8 70% 14 10%
- ------------------ ---------------------- --------------- ----------------------
9 60% 15+ 0%
- ------------------ ---------------------- --------------- ----------------------
10 50%
- ------------------ ---------------------- --------------- ----------------------
No Surrender Charge will be assessed on decreases in the Specified Amount of the
Policy or partial withdrawals of Accumulation Value. ANLIC will, however,
require additional Surrender Charges due to increases in Specified Amount. The
initial Surrender Charge applicable to the increase in the Specified Amount will
equal the initial Surrender Charge for the original Specified Amount, multiplied
by the ratio of the increase in Specified Amount to the original Specified
Amount. Surrender Charges on increases in Specified Amount will be applied with
respect to Surrenders within 14 years of the date of the increase according to
the same grading schedule as for the original Specified Amount.
TRANSFER CHARGE. Currently there is no charge for transfers among the investment
options in excess of fifteen per Policy Year. A charge of $10 (guaranteed not to
increase) for each transfer in excess of 15 may be imposed to compensate ANLIC
for the costs of processing the transfer. Since the charge reimburses ANLIC only
for the cost of processing the transfer, ANLIC does not expect to make any
profit from the transfer charge. This charge will be deducted pro rata from each
Subaccount (and, if applicable, the Fixed Account) in which the Policy owner is
invested. The transfer charge will not be imposed on transfers that occur as a
result of Policy loans or the exercise of exchange rights.
PARTIAL WITHDRAWAL CHARGE. A charge will be imposed for each partial withdrawal.
This charge will compensate ANLIC for the administrative costs of processing the
requested payment and in making necessary calculations for any reductions in
Specified Amount which may be required because of the partial withdrawal. This
charge is currently the lesser of $25 or 2% of the amount withdrawn (guaranteed
not to be greater than the lesser of $50 or 2% of the amount withdrawn). No
Surrender Charge is assessed on a partial withdrawal and a partial withdrawal
charge is not assessed when a Policy is Surrendered.
DAILY CHARGES AGAINST THE SEPARATE ACCOUNT
A daily Mortality and Expense Risk Charge will be deducted from the value of the
net assets of Separate Account I to compensate ANLIC for mortality and expense
risks assumed in connection with the Policy. This daily charge from Separate
Account I is at the rate of 0.002050% (equivalent to an annual rate of .75%) for
Policy Years 1-15 and .000820% (equivalent to an annual rate of .30%)
thereafter. The daily charge will be deducted from the net asset value of
Separate Account I, and therefore the Subaccounts, on each Valuation Date. Where
the previous day or days was not a Valuation Date, the deduction on the
Valuation Date will be the applicable daily rate multiplied by
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<PAGE>
the number of days since the last Valuation Date. No Mortality and Expense Risk
Charges will be deducted from the amounts in the Fixed Account.
ANLIC believes that this level of charge is within the range of industry
practice for comparable survivorship flexible premium variable universal life
policies. The mortality risk assumed by ANLIC is that Insureds may live for a
shorter time than calculated, and that the aggregate amount of Death Benefits
paid will be greater than initially estimated. The expense risk assumed is that
expenses incurred in issuing and administering the Policies will exceed the
administrative charges provided in the Policies.
An Asset-Based Administrative Expense Charge will also be deducted from the
value of the net assets of Separate Account I on a daily basis. This charge is
applied at a rate of 0.000409% (equivalent to .15% annually). No Asset-Based
Administrative Expense Charge will be deducted from the amounts in the Fixed
Account.
FUND EXPENSE SUMMARY
In addition to the charges against Separate Account I described just above,
management fees and expenses will be assessed by Alger, Calvert, Dreyfus,
Neuberger Berman, Oppenheimer, Strong and Van Eck against the amounts invested
in the various portfolios. No portfolio fees will be assessed against amounts
placed in the Fixed Account.
The information shown below relating to the Funds was provided to ANLIC by the
Funds and ANLIC has not independently verified such information. Each of the
Funds is managed by an investment advisory organization that is not affiliated
with ANLIC. Each such organization is entitled to receive a fee for its services
based on the value of the relevant portfolio's net assets. The amount of
expenses, including the asset based advisory fee referred to above, borne by
each portfolio for the fiscal year ended December 31, 1998, was as follows:
PORTFOLIO ANNUAL EXPENSES
(EXPRESSED AS A PERCENTAGE OF NET ASSETS OF EACH PORTFOLIO)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TOTAL
WAIVED, (REFLECTING
OTHER TOTAL REIMBURSED WAIVERS,
PORTFOLIO MANAGEMENT EXPENSES PORTFOLIO AND/OR REIMBURSEMENTS,
FEES ANNUAL PAID AND/OR
EXPENSES INDIRECTLY INDIRECT
PAYMENTS,
IF ANY)
- -------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 0.75% 0.04% 0.79% - 0.79%
Alger American MidCap Growth
Portfolio 0.80% 0.04% 0.84% - 0.84%
Alger American Small Capitalization
Portfolio 0.85% 0.04% 0.89% - 0.89%
Calvert Social Money Market Portfolio 0.50% 0.16% 0.66% 0.03% 0.63%
Calvert Social Small Cap Growth
Portfolio 1.00% 0.33% 1.33% 0.21% 1.12%
Calvert Social Mid Cap Growth
Portfolio 0.90% 0.16% 1.06% 0.05% 1.01%1
Calvert Social International Equity
Portfolio 1.10% 0.70% 1.80% 0.24% 1.56%2
Calvert Social Balanced Portfolio 0.70% 0.18% 0.88% 0.02% 0.86%1
Dreyfus Stock Index Fund 0.25% 0.01% 0.26% - 0.26%
Neuberger Berman Advisers
Management Trust Limited Maturity
Bond Portfolio 0.65% 0.11% 0.76% - 0.76%
Neuberger Berman Advisers
Management Trust Growth Portfolio 0.83% 0.09% 0.92% - 0.92%
Oppenheimer Aggressive Growth
Fund/VA 0.69% 0.02% 0.71% - 0.71%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Oppenheimer Capital Appreciation
Fund/VA 0.72% 0.03% 0.75% - 0.75%
Oppenheimer Main Street Growth &
Income Fund/VA 0.74% 0.05% 0.79% - 0.79%
Oppenheimer High Income Fund/VA 0.74% 0.04% 0.78% - 0.78%
Oppenheimer Strategic Bond Fund/VA 0.74% 0.06% 0.80% - 0.80%
Strong International Stock Fund II 1.00% 0.62% 1.62% - 1.62%
Strong Discovery Fund II 1.00% 0.23% 1.23% - 1.23%
Van Eck Worldwide Hard Assets Fund 1.00% 0.20% 1.20% 0.04%3 1.16%
</TABLE>
- --------
1 Expenses have been restated to reflect expenses expected to be incurred
in 1999.
2 Net expenses include a voluntary reimbursement made by the Advisor of
0.15% for administrative service fees.
3 Expense is reduced to 1.16% by the directed brokerage and custodian fee
arrangement.
ANLIC may receive administrative fees from the investment advisers of certain
Funds. ANLIC currently does not assess a separate charge against the Separate
Account I or the Fixed Account for any federal, state or local income taxes.
ANLIC may, however, make such a charge in the future if income or gains within
the Separate Account I will incur any federal, or any significant state or local
income tax liability, or if the federal, state or local tax treatment of ANLIC
changes.
GENERAL PROVISIONS
THE CONTRACT. The Policy, the application, any supplemental applications, and
any riders, amendments or endorsements make up the entire contract. Only the
President, Vice President, Secretary or Assistant Secretary can modify the
Policy. Any changes must be made in writing, and approved by ANLIC. No agent has
the authority to alter or modify any of the terms, conditions or agreements of
the Policy or to waive any of its provisions. The rights and benefits under the
Policy are summarized in this prospectus; however prospectus disclosure
regarding the Policy is qualified in its entirety by the Policy itself, a copy
of which is available upon request from ANLIC.
CONTROL OF POLICY. The Policy owner is as shown in the application or subsequent
written endorsement. Subject to the rights of any irrevocable Beneficiary and
any assignee of record, all rights, options, and privileges belong to the Policy
owner, if living; otherwise to any successor-owner or owners, if living;
otherwise to the estate of the last Policy owner to die.
BENEFICIARY. Policy owners may name both primary and contingent Beneficiaries in
the application. Payments will be shared equally among Beneficiaries of the same
class unless otherwise stated. If a Beneficiary dies before the Second Death,
payments will be made to any surviving Beneficiaries of the same class;
otherwise to any Beneficiaries of the next class; otherwise to the Policy owner;
otherwise to the estate of the Policy owner.
CHANGE OF BENEFICIARY The Policy owner may change the Beneficiary by written
request at any time while at least one Insured is alive unless otherwise
provided in the previous designation of Beneficiary. The change will take effect
as of the date the change is recorded at the Home Office. ANLIC will not be
liable for any payment made or action taken before the change is recorded.
CHANGE OF POLICY OWNER OR ASSIGNMENT. In order to change the Policy owner of the
Policy or assign Policy rights, an assignment of the Policy must be made in
writing and filed with ANLIC at its Home Office. Any such assignment is subject
to Outstanding Policy Debt. The change will take effect as of the date the
change is recorded at the Home Office, and ANLIC will not be liable for any
payment made or action taken before the change is recorded. Payment of Death
Benefit Proceeds is subject to the rights of any assignee of record. A
collateral assignment is not a change of ownership.
PAYMENT OF PROCEEDS. The Death Benefit Proceeds are subject first to any debt to
ANLIC and then to the interest of any assignee of record. The balance of any
Death Benefit Proceeds shall be paid in one sum to the designated beneficiary
unless an Optional Method of Payment is selected. If no Beneficiary survives the
Second Death, the Death Benefit Proceeds shall be paid in one sum to the Policy
owner, if living; otherwise to any successor-owner, if living; otherwise to the
Policy owner's estate. Any proceeds payable upon Surrender shall be paid in one
sum unless an Optional Method of Payment is elected.
REGENT 2000
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<PAGE>
INCONTESTABILITY. ANLIC cannot contest the Policy or reinstated Policy while at
least one Insured is alive after it has been in force for two years from the
Policy Date (or reinstatement effective date). After the Policy Date, ANLIC
cannot contest an increase in the Specified Amount or addition of a rider while
at least one Insured is alive, after such increase or addition has been in force
for two years from its effective date. However, this two year provision shall
not apply to riders with their own contestability provision. We may require
proof prior to the end of the appropriate contestability period that both
Insureds are living.
MISSTATEMENT OF AGE AND SEX. If the age or sex of either Insured or any person
insured by rider has been misstated, the amount of the Death Benefit and any
added riders provided will be those that would be purchased by the most recent
deduction for the Cost of Insurance and the cost of any additional riders at the
correct age and sex of the Insureds. The Death Benefit Proceeds will be adjusted
correspondingly.
SUICIDE. The Policy does not cover suicide within two years of the Policy Date
unless otherwise provided by a state's Insurance law. If either Insured, while
sane or insane, commits suicide within two years after the Policy Date, ANLIC
will pay only the premiums received less any partial withdrawals, the cost for
riders and any outstanding Policy debt. If either Insured, while sane or insane,
commits suicide within two years after the effective date of any increase in the
Specified Amount, ANLIC's liability with respect to such increase will only be
its total cost of insurance applicable to the increase. The laws of Missouri
provide that death by suicide at any time is covered by the Policy, and further
that suicide by an insane person may be considered an accidental death.
POSTPONEMENT OF PAYMENTS. Payment of any amount upon Surrender, partial
withdrawal, Policy loans, benefits payable at the Second Death, and transfers
may be postponed whenever: (1) the New York Stock Exchange ("NYSE") is closed
other than customary weekend and holiday closings, or trading on the NYSE is
restricted as determined by the SEC; (2) the SEC by order permits postponement
for the protection of Policy owners; (3) an emergency exists, as determined by
the SEC, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to determine the value of the
Separate Account I's net assets; or (4) Surrenders, loans or partial withdrawals
from the Fixed Account may be deferred for up to 6 months from the date of
written request. Payments under the Policy of any amounts derived from premiums
paid by check may be delayed until such time as the check has cleared the Policy
owner's bank.
REPORTS AND RECORDS. ANLIC will maintain all records relating to the Separate
Account I and will mail to the Policy owner, at the last known address of
record, within 30 days after each Policy Anniversary, an annual report which
shows the current Accumulation Value, Net Cash Surrender Value, Death Benefit,
premiums paid, Outstanding Policy Debt and other information. Quarterly
statements are also mailed detailing Policy activity during the calendar
quarter. Instead of receiving an immediate confirmation of transactions made
pursuant to some types of periodic payment plan (such as a dollar cost averaging
program, or payment made by automatic bank draft or salary reduction
arrangement), the Policy owner may receive confirmation of such transactions in
their quarterly statements. The Policy owner should review the information in
these statements carefully. All errors or corrections must be reported to ANLIC
immediately to assure proper crediting to the Policy. ANLIC will assume all
transactions are accurately reported on quarterly statements unless ANLIC is
notified otherwise within 30 days after receipt of the statement. The Policy
owner will also be sent a periodic report for the Funds and a list of the
portfolio securities held in each portfolio of the Funds.
ADDITIONAL INSURANCE BENEFITS (RIDERS.) Subject to certain requirements, one or
more of the following additional insurance benefits may be added to a Policy by
rider. All riders are not available in all states. The cost, if any, of
additional insurance benefits will be deducted as part of the Monthly Deduction.
ACCELERATED BENEFIT RIDER FOR TERMINAL ILLNESS (LIVING BENEFIT RIDER.)
Upon satisfactory Proof of Death of one Insured, and satisfactory proof
of terminal illness of the last surviving Insured after the two-year
contestable period, (no waiting period in certain states) ANLIC will
accelerate the payment of up to 50% of the lowest scheduled Death
Benefit as provided by eligible coverages, less an amount up to two
guideline level premiums.
Future premium allocations after the payment of the benefit must be
allocated to the Fixed Account. Payment will not be made for amounts
less than $4,000 or more than $250,000 on all policies issued by ANLIC
or its affiliates that provide coverage on the surviving Insured. ANLIC
may charge the lesser of 2% of the benefit or $50 as an expense charge
to cover the costs of administration.
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<PAGE>
Satisfactory proof of terminal illness of the last surviving Insured
must include a written statement from a licensed physician who is not
related to the Insured or the Policy owner stating that the Insured has
a non-correctable medical condition that, with a reasonable degree of
medical certainty, will result in the death of the Insured in less
than 12 months (6 months in certain states) from the date of the
physician's statement. Further, the condition must first be diagnosed
while the Policy is in force.
The accelerated benefit first will be used to repay any Outstanding
Policy Debt, and will also affect future loans, partial withdrawals, and
Surrenders. The accelerated benefit will be treated as a lien against
the Policy Death Benefit and will thus reduce the Death Benefit
Proceeds. Interest on the lien will be charged at the Policy loan
interest rate. There is no extra premium for this rider.
ESTATE PROTECTION RIDER. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death
of both Insureds during the first four Policy Years.
FIRST-TO-DIE TERM RIDER. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of
Death of either of the two Insureds.
SECOND-TO-DIE TERM RIDER. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of
Death of both Insureds.
TERM RIDER FOR COVERED INSURED. This rider provides a specified amount
of insurance to the Beneficiary upon receipt of Satisfactory Proof of
Death of the rider Insured, as identified. The rider may be purchased on
either Insured or an individual other than the Insureds.
TOTAL DISABILITY RIDER. This rider provides for the payment by ANLIC of
a disability benefit in the form of premiums while the Insured is
disabled. The benefit amount may be chosen by the Policy owner at the
issue of the rider. In addition, while the Insured is totally disabled,
the Cost of Insurance for the rider will not be deducted from
Accumulation Value. The rider may be purchased on either or both
Insureds.
POLICY SPLIT OPTION. This rider allows the Policy to be split into two
individual policies, subject to evidence of insurability on both
Insureds.
DISTRIBUTION OF THE POLICIES
The principal underwriter for the Policies is The Advisors Group, Inc ("TAG"). a
second tier wholly owned subsidiary of Acacia Life Insurance Company and an
affiliate of ANLIC. TAG is registered as a broker-dealer with the SEC and is a
member of the National Association of Securities Dealers ("NASD"). ANLIC pays
TAG for acting as the principal underwriter under an Underwriting Agreement.
TAG offers its clients a wide variety of financial products and services and has
the ability to execute stock and bond transactions on a number of national
exchanges. TAG also serves as principal underwriter for ANLIC's variable
annuities and variable life contracts. It also has executed selling agreements
with a variety of mutual funds, issuers of unit investment trusts, and direct
participation programs.
The Policies are sold through Registered Representatives of TAG or other
broker-dealers which have entered into selling agreements with ANLIC or TAG.
These Registered Representatives are also licensed by state insurance officials
to sell ANLIC's variable life policies. Each of the broker-dealers with a
selling agreement is registered with the SEC and is a member of the NASD. In
1998, TAG received gross variable universal life compensation of $17,177,000 and
retained $11,250 in underwriting fees, and $3,113,000 in brokerage commissions
on ANLIC's variable universal life policies.
Under these selling agreements, ANLIC pays commission to the broker-dealers,
which in turn pay commissions to the Registered Representative who sells this
Policy. During the first Policy Year, the commission may equal an amount up to
95% of the first year target premium paid plus the first year cost of any riders
and 2% for premiums paid in excess of the first year target premium. For Policy
Years two through four, the commission may equal an amount up to 2% of premiums
paid. Broker-dealers may also receive a service fee up to an annualized rate of
.25% of the Accumulation
REGENT 2000
31
<PAGE>
Value beginning in the fifth Policy Year. Compensation arrangements may vary
among broker-dealers. In addition, ANLIC may also pay override payments, expense
allowances, bonuses, wholesaler fees, and training allowances.
Registered Representatives who meet certain production standards may receive
additional compensation. ANLIC may reduce or waive the sales charge and/or other
charges on any Policy sold to directors, officers or employees of ANLIC or any
of its affiliates, employees and registered representatives of any broker dealer
that has entered into a sales agreement with ANLIC or TAG and the spouses or
children of the above persons. In no event will any such reduction or waiver be
permitted where it would be unfairly discriminatory to any person.
ADMINISTRATION
ANLIC has contracted with Ameritas Life Insurance Corp. ("Ameritas"), having its
principal place of business at 5900 "O" Street, Lincoln, Nebraska 68501 for it
to provide ANLIC with certain administrative services for the Survivorship
flexible premium variable life policies. Ameritas is an affiliate of ANLIC and a
Member of the Ameritas Acacia Family of Companies. Pursuant to the terms of a
Service Agreement, Ameritas will act as record keeping Service Agent for the
policies and riders for an initial term of three years and any subsequent
renewals thereof. Ameritas under the direction of ANLIC will perform
Administrative functions including issuance of policies for reinstatement, term
conversion, plan changes and guaranteed insurability options, generation of
billing and posting of premium, computation of valuations, calculation of
benefits payable, maintenance of administrative controls over all activities,
correspondence, and data, and providing management reports to ANLIC.
FEDERAL TAX MATTERS
The following discussion provides a general description of the federal income
tax considerations associated with the Policy and does not purport to be
complete or cover all situations. This discussion is not intended as tax advice.
No attempt has been made to consider in detail any applicable state or other tax
laws. (See discussion in the section on Deductions From Premium Payments -
Percent of Premium Charge for Taxes.) This discussion is based upon ANLIC's
understanding of the relevant laws at the time of filing. Counsel and other
competent tax advisors should be consulted for more complete information before
a Policy is purchased. ANLIC makes no representation as to the likelihood of the
continuation of present federal income tax laws nor of the interpretations by
the Internal Revenue Service. Federal tax laws are subject to change and thus
tax consequences to the Insureds, Policy owner or Beneficiary may be altered.
(1) TAXATION OF ANLIC. ANLIC is taxed as a life insurance company under Part I
of Subchapter L of the Internal Revenue Code of 1986, (the "Code"). At this
time, since Separate Account I is not a separate entity from ANLIC, and its
operations form a part of ANLIC, it will not be taxed separately as a
"regulated investment company" under Subchapter M of the Code. Net
investment income and realized net capital gains on the assets of Separate
Account I are reinvested and automatically retained as a part of the
reserves of the Policy and are taken into account in determining the Death
Benefit and Accumulation Value of the Policy. ANLIC believes that Separate
Account I net investment income and realized net capital gains will not be
taxable to the extent that such income and gains are retained as reserves
under the Policy.
ANLIC does not currently expect to incur any federal income tax liability
attributable to Separate Account I with respect to the sale of the Policies.
Accordingly, no charge is being made currently to Separate Account I for
federal income taxes. If, however, ANLIC determines that it may incur such
taxes attributable to Separate Account I, it may assess a charge for such
taxes against the Separate Account I.
ANLIC may also incur state and local taxes (in addition to premium taxes for
which a deduction from premiums is currently made). At present, they are not
charges against Separate Account I. If there is a material change in state
or local tax laws, charges for such taxes attributable to Separate Account
I, if any, may be assessed against Separate Account I.
(2) TAX STATUS OF THE POLICY. The Code (Section 7702) includes a definition of a
life insurance contract for federal tax purposes which places limitations on
the amount of premiums that may be paid for the Policy and the relationship
of the Accumulation Value to the Death Benefit. While ANLIC believes that
the Policy meets the statutory definition of a life insurance contract under
Internal Revenue Code Section 7702 and should receive federal income tax
treatment consistent with that of a fixed-benefit life insurance policy, the
area of tax law relating to the definition of life insurance does not
explicitly address all relevant issues (including, for example, certain tax
requirements relating to survivorship variable universal life policies).
ANLIC reserves the right to make changes to the Policy if deemed
REGENT 2000
32
<PAGE>
appropriate by ANLIC to attempt to assure qualification of the Policy
as a life insurance contract. If the Policy were determined not to qualify
as life insurance under Code Section 7702, the Policy would not provide
the tax advantages normally provided by life insurance. If the Death Benefit
of a Policy is changed, the applicable defined limits may change.
The Code (Section 7702A) also defines a "modified endowment contract" for
federal tax purposes. If a life insurance policy is classified as a modified
endowment contract, distributions from it (including loans) are taxed as
ordinary income to the extent of any gain. This Policy will become a
"modified endowment contract" if the premiums paid into the Policy fail to
meet a 7-pay premium test as outlined in Section 7702A of the Code.
Certain benefits the Policy owner may elect under this Policy may be
material changes affecting the 7-pay premium test. These include, but are
not limited to, changes in Death Benefits and changes in the Specified
Amount. One may avoid a Policy becoming a modified endowment contract by,
among other things, not making excessive payments or reducing benefits.
Should you deposit excessive premiums during a Policy Year, that portion
that is returned by ANLIC within 60 days after the Policy Anniversary Date
will reduce the premiums paid to prevent the
Policy from becoming a modified endowment contract. All modified endowment
policies issued by ANLIC to the same Policyholder in any 12 month period
are treated as one modified endowment contract for purposes of determining
taxable gain under Section 72(e) of the Internal Revenue Code. Any life
insurance policy received in exchange for a modified endowment contract
will also be treated as a modified endowment contract. You should contact a
competent tax professional before paying additional premiums or making
other changes to the Policy to determine whether such payments or changes
would cause the Policy to become a modified endowment contract.
The Code (Section 817(h)) also authorizes the Secretary of the Treasury (the
"Treasury") to set standards by regulation or otherwise for the investments
of Separate Account I to be "adequately diversified" in order for the Policy
to be treated as a life insurance contract for federal tax purposes.
Separate Account I, through the Funds, intends to comply with the
diversification requirements prescribed by the Treasury in regulations
published in the Federal Register on March 2, 1989, which affect how the
Fund's assets may be invested.
ANLIC does not have control over the Funds or their investments. However,
ANLIC believes that the Funds will be operated in compliance with the
diversification requirements of the Internal Revenue Code. Thus, ANLIC
believes that the Policy will be treated as a life insurance contract for
federal tax purposes.
In connection with the issuance of regulations relating to the
diversification requirements, the Treasury announced that such regulations
do not provide guidance concerning the extent to which policy owners may
direct their investments to particular divisions of a Separate Account I.
Regulations in this regard may be issued in the future. It is not clear what
these regulations will provide nor whether they will be prospective only. It
is possible that when regulations are issued, the Policy may need to be
modified to comply with such regulations. For these reasons, ANLIC reserves
the right to modify the Policy as necessary to prevent the Policy owner from
being considered the owner of the assets of the Separate Account I or
otherwise to qualify the Policy for favorable tax treatment.
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal tax purposes.
(3) TAX TREATMENT OF POLICY PROCEEDS. ANLIC believes that the Policy will be
treated in a manner consistent with a fixed benefit life insurance policy
for federal income tax purposes. Thus, ANLIC believes that the Death Benefit
will generally be excludable from the gross income of the Beneficiary under
Section 101(a)(1) of the Code and the Policy owner will not be deemed to be
in constructive receipt of the Accumulation Value under the Policy until its
actual Surrender.
Distributions From Policies That Are Not "Modified Endowment Contracts".
----------------------------------------------------------------------------
Distributions (while one or both Insureds are still alive) from a Policy
that is not a modified endowment contract are generally treated as first a
recovery of the investment in the Policy and then only after the return of
all such investment, as disbursing taxable `income. However, in the case of
a decrease in the Death Benefit, a partial withdrawal, a change in Death
Benefit option, or any other such change that reduces future benefits under
the Policy during the first 15 years after a Policy is issued and that
results in a cash distribution to the Policy owner in order for the Policy
to continue complying with the Section 7702 defined limits on premiums and
Accumulation Values, such distributions will be taxable as ordinary income
to the Policy owner (to the extent of any gain in the Policy) as prescribed
in Section 7702. In addition, upon
REGENT 2000
33
<PAGE>
a complete surrender or lapse of a Policy that is not a "modified endowment
contract", if the amount received plus the amount of any outstanding Policy
debt exceeds the total investment in the Policy, the excess will generally
be treated as ordinary income for tax purposes. Investment in the Policy
means (1) the total amount of any premiums paid for the Policy plus the
amount of any loan received under the policy to the extent the loan is
included in gross income of the Policy owner minus (2) the total amount
received under the Policy by the Policy owner that was excludable from gross
income, excluding any non-taxable loan received under the Policy.
ANLIC also believes that loans received under a Policy that is not a
"modified endowment contract" will be treated as debt of the Policy owner
and that no part of any loan under a Policy will constitute income to the
Policy owner so long as the Policy remains in force, unless the Policy
becomes a "modified endowment contract." See discussion of modified
endowment contract distributions in the section on Tax Status of the Policy.
Should the Policy lapse while Policy loans are outstanding the portion of
the loans attributable to earnings will become taxable. Generally, interest
paid on any loan under a Policy owned by an individual will not be
tax-deductible.
Except for Policies with respect to a limited number of key persons of an
employer (both as defined in the Internal Revenue Code), and subject to
applicable interest rate caps, the Health Insurance Portability and
Accountability Act of 1996 (the "Health Insurance Act") generally repeals
the deduction for interest paid or accrued after October 13, 1995 on loans
from corporate owned life insurance policies on the lives of officers,
employees or persons financially interested in the taxpayer's trade or
business. Certain transitional rules for existing debt are included in the
Health Insurance Act. The transitional rules include a phase-out of the
deduction for debt incurred (1) before January 1, 1996, or (2) before
January 1, 1997, for policies entered into in 1994 or 1995. The phase-out of
the interest expense deduction occurs over a transition period between
October 13, 1995 and January 1, 1999. There is also a special rule for
pre-June 21, 1986 policies. The Taxpayer Relief Act of 1997 ("TRA `97"),
further expanded the interest deduction disallowance for businesses by
providing, with respect to policies issued after June 8, 1997, that no
deduction is allowed for interest paid or accrued on any debt with respect
to life insurance covering the life of any individual (except as noted above
under pre-'97 law with respect to key persons and pre-June 21, 1986
policies). TRA `97 also provides that no deduction is permissible for
premiums paid on a life insurance policy if the taxpayer is directly or
indirectly a beneficiary under the policy. Also under TRA `97 and subject to
certain exceptions, for policies issued after June 8, 1997, no deduction is
allowed for that portion of a taxpayer's interest expense that is allocable
to unborrowed policy cash values. This disallowance generally does not apply
to policies owned by natural persons. Policy Owners should consult a
competent tax advisor concerning the tax implications of these changes for
their Policies.
Distribution From Policies That Are "Modified Endowment Contracts". Should
-------------------------------------------------------------------
the Policy become a "modified endowment contract", partial withdrawals, full
surrenders, assignments, pledges, and loans (including loans to pay loan
interest) under the Policy will be taxable to the extent of the gain under
the Policy. A 10% penalty tax also applies to the taxable portion of any
distribution made prior to the taxpayer's age 59 1/2. The 10% penalty tax
does not apply if the distribution is made because the taxpayer is disabled
as defined under the Code or if the distribution is paid out in the form of
a life annuity on the life of the taxpayer or the joint lives of the
taxpayer and Beneficiary.
The right to exchange the Policy for a survivorship flexible premium
adjustable life insurance policy (See the section on Exchange Privilege.),
the right to change Policy owners (See the section on General Provisions.),
and the provision for partial withdrawals (See the section on Surrenders.)
may have tax consequences depending on the circumstances of such exchange,
change, or withdrawal. Upon complete Surrender, if the amount received plus
any Outstanding Policy Debt exceeds the total premiums paid (the "basis"),
that are not treated as previously withdrawn by the Policy owner, the excess
generally will be taxed as ordinary income.
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Death Benefit Proceeds depend on
applicable law and the circumstances of each Policy owner or Beneficiary. In
addition, if the Policy is used in connection with tax-qualified retirement
plans, certain limitations prescribed by the Internal Revenue Service on,
and rules with respect to the taxation of, life insurance protection
provided through such plans may apply. The advice of competent tax counsel
should be sought in connection with use of life insurance in a qualified
plan.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
ANLIC holds the assets of Separate Account I. The assets are kept physically
segregated and held separately and apart from the General Account assets, except
for the Fixed Account. ANLIC maintains records of all purchases and redemptions
of Funds' shares by each of the Subaccounts.
REGENT 2000
34
<PAGE>
THIRD PARTY SERVICES
ANLIC is aware that certain third parties are offering investment advisory,
asset allocation, money management and timing services in connection with the
Policies. ANLIC does not engage any such third parties to offer such services of
any type. In certain cases, ANLIC has agreed to honor transfer instructions from
such services where it has received powers of attorney, in a form acceptable to
it, from the Policy owners participating in the service. Firms or persons
offering such services do so independently from any agency relationship they may
have with ANLIC for the sale of Policies. ANLIC takes no responsibility for the
investment allocations and transfers transacted on a Policy owner's behalf by
such third parties or any investment allocation recommendations made by such
parties. Policy owners should be aware that fees paid for such services are
separate and in addition to fees paid under the Policies.
VOTING RIGHTS
ANLIC is the legal holder of the shares held in the Subaccounts of Separate
Account I and as such has the right to vote the shares, to elect Directors of
the Funds, and to vote on matters that are required by the Investment Company
Act of 1940 and upon any other matter that may be voted upon at a shareholder
meeting. To the extent required by law, ANLIC will vote all shares of each of
the Funds held in Separate Account I at regular and special shareholder meetings
of the Funds according to instructions received from Policy owners based on the
number of shares held as of the record date for such meeting.
The number of Fund shares in a Subaccount for which instructions may be given by
a Policy owner is determined by dividing the Accumulation Value held in that
Subaccount by the net asset value of one share in the corresponding portfolio of
the Fund. Fractional shares will be counted. Fund shares held in each Subaccount
for which no timely instructions from Policy owners are received and Fund shares
held in each Subaccount which do not support Policy owner interests will be
voted by ANLIC in the same proportion as those shares in that Subaccount for
which timely instructions are received. Voting instructions to abstain on any
item to be voted will be applied on a pro rata basis to reduce the votes
eligible to be cast. Should applicable federal securities laws or regulations
permit, ANLIC may elect to vote shares of the Fund in its own right.
DISREGARD OF VOTING INSTRUCTION. ANLIC may, if required by state insurance
officials, disregard voting instructions if those instructions would require
shares to be voted to cause a change in the subclassification or investment
objectives or policies of one or more of the Funds' portfolios, or to approve or
disapprove an investment adviser or principal underwriter for the Funds. In
addition, ANLIC itself may disregard voting instructions that would require
changes in the investment objectives or policies of any portfolio or in an
investment adviser or principal underwriter for the Funds, if ANLIC reasonably
disapproves those changes in accordance with applicable federal regulations. If
ANLIC does disregard voting instructions, it will advise Policy owners of that
action and its reasons for the action in the next annual report or proxy
statement to Policy owners.
STATE REGULATION OF ANLIC
ANLIC, a stock life insurance company organized under the laws of Virginia, is
subject to regulation by the Virginia Department of Insurance. On or before
March 1 of each year an NAIC convention blank covering the operations and
reporting on the financial condition of ANLIC and Separate Account I as of
December 31 of the preceding year must be filed with the Virginia Department of
Insurance. Periodically, the Virginia Department of Insurance examines the
liabilities and reserves of ANLIC and Separate Account I.
In addition, ANLIC is subject to the insurance laws and regulations of other
states within which it is licensed or may become licensed to operate. The
Policies offered by the prospectus are available in the various states as
approved. Generally, the Insurance Department of any other state applies the
laws of the state of domicile in determining permissible investments.
EXECUTIVE OFFICERS AND DIRECTORS OF ANLIC
Shows name and position(s) with ANLIC followed by the principal occupations for
the last five years.(1)
Name and Position(s) Principal Occupation
With Acacia National Last Five Years
- -------------------- -----------------------------
Charles T. Nason Chairman of the Board and
Chairman of the Board, Chief Executive Officer since Nov. 1, 1998
and Chief Executive Officer Director, Ameritas Life Insurance Corp. since
and Director February 1999
Chairman, President and Chief Executive Officer
until Nov. 1, 1998 Acacia Life Insurance Company.
REGENT 2000
35
<PAGE>
Robert W. Clyde President and Chief Operating Officer since
President, Nov. 1, 1998
Chief Operating Director, Ameritas Life Insurance Corp. since
Officer February 1999
Executive Vice President, Marketing and Sales since
September 1994 until Dec. 1997; Vice President,
Retail Long-Term Care September 1993 until August
1994, Vice President, General Agency July 1991
until August 1993, John Hancock Mutual Life.
Robert-John H. Sands Senior Vice President and General Counsel
Senior Vice President, since 1991 Acacia Life Insurance Company.
General Counsel, Corporate
Secretary and Director
Paul L. Schneider Senior Vice President, Chief Financial Officer
Senior Vice President, since March 1989 and Chief Investment Officer since
Chief Financial Officer, April 1997; Acacia Life Insurance Company.
Chief Investment Officer,
and Director
Haluk Ariturk Senior Vice President, Operations and Chief Actuary
Senior Vice President, since June 1989, Acacia Life Insurance Company.
Operations and Chief Executive Vice President, Ameritas Acacia Shared
Actuary and Director Service Center since January 1999.
Janet L. Schmidt Senior Vice President, Human Resources since 1994
Senior Vice President, Acacia Life Insurance Company.
Human Resources
Brian J. Owens Jan. 1999 - Senior Vice President, Career
Senior Vice President, Distribution Acacia Life Insurance Company;
Career Distribution Vice President, Acacia Financial Centers
1997 - Jan. 1999 Acacia Life Insurance Company;
Regional Vice President Feb. 1995 - Jan. 1997
Acacia Life Insurance Company; Agency Manager from
1981 to Feb. 1995 Prudential Insurance Company of
America.
R. Larry Mauzy Senior Vice President, Chief Information Officer
Senior Vice President 1998- Acacia Life Insurance Company;
and Chief Information Vice President, Chief Information Officer 1991-1997
Officer Acacia Life Insurance Company.
(1) The principal business address of each person listed is Acacia National Life
Insurance Company, 7315 Wisconsin Avenue, Bethesda, MD 20814
EXPERTS
The financial statements of Separate Account I as December 31, 1998 and each of
the periods indicated therein and the statutory basis financial statements of
ANLIC as of and for the years ended December 31, 1998 and 1997, as found in this
prospectus have been included herein in reliance upon the reports of
PricewaterhouseCoopers LLP, independent accountants, appearing elsewhere herein,
given on the authority of that firm as experts in accounting and auditing.
Actuarial matters included in the Prospectus have been examined by Peter E.
Whipple, Assistant Vice President and Associate Actuary of Ameritas Life
Insurance Corp., as stated in the opinion filed as an exhibit to the
Registration Statement.
REGENT 2000
36
<PAGE>
LEGAL MATTERS
Matters of the State of Virginia law pertaining to the Policies, including
ANLIC's right to issue the Policies and its qualification to do so under
applicable laws and regulations issued thereunder, have been passed upon by
Robert-John H. Sands, Senior Vice President and General Counsel of ANLIC.
LEGAL PROCEEDINGS
There are no legal proceedings to which Separate Account I is a party or to
which the assets of the Separate Account I are subject. ANLIC is not involved in
any litigation that is of material importance in relation to its total assets or
that relates to Separate Account I.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This Prospectus does not contain all the information set
forth in the registration statement and the amendments and exhibits to the
registration statement, to all of which reference is made for further
information concerning Separate Account I, ANLIC and the Policy offered hereby.
Statements contained in this Prospectus as to the contents of the Policy and
other legal instruments are summaries. For a complete statement of the terms
thereof reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of ANLIC which are included in this Prospectus should
be considered only as bearing on the ability of ANLIC to meet its obligations
under the Policies. They should not be considered as bearing on the investment
performance of the assets held in Separate Account I.
REGENT 2000
37
<PAGE>
- ------------------------------------------------------------------------------
AUDITED FINANCIAL STATEMENTS (STATUTORY BASIS)
ACACIA NATIONAL LIFE INSURANCE COMPANY
DECEMBER 31, 1998 AND 1997
Report of Independent Accountants...........................................1
Statements of Financial Condition...........................................2
Statements of Operations and Changes
in Capital and Surplus...................................................3
Statements of Cash Flow.....................................................4
Notes to Financial Statements............................................5-16
<PAGE>
PRICEWATERHOUSECOOPERS
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Acacia National Life Insurance Company
We have audited the accompanying statutory statements of financial condition of
Acacia National Life Insurance Company (the Company) as of December 31, 1998 and
1997, and the related statutory statements of operations and changes in capital
and surplus, and cash flow, for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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.
As described more fully in Note 2 to the financial statements, these financial
statements were prepared in conformity with accounting practices prescribed or
permitted by the Bureau of Insurance, State Corporation Commission of the
Commonwealth of Virginia, which practices differ from generally accepted
accounting principles. The effects on the financial statements of the variances
between the statutory basis of accounting and generally accepted accounting
principles are material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of the Company as of December 31, 1998 and 1997 or the results of its operations
or its cash flow for the years then ended.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the admitted assets, liabilities, and surplus of the
Company as of December 31, 1998 and 1997, and the results of its operations and
its cash flow for the years then ended, on the basis of accounting described in
Note 2.
/s/ PricewaterhouseCoopers LLP
Washington, D.C.
March 31, 1999
1
<PAGE>
ACACIA NATIONAL LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL CONDITION (STATUTORY BASIS)
December 31,
1998 1997
--------- -------
---------------------------------
(In thousands)
ASSETS
Debt securities $ 556,127 $ 570,348
Equity securities 2,323 2,373
Mortgage loans --- 5,031
Policy loans 7,579 8,100
Cash and cash equivalents 13,678 6,737
Accrued investment income 9,775 9,992
Separate account assets 73,334 31,095
Other assets 3,252 2,820
-------------- --------------
TOTAL ASSETS $ 666,068 $ 636,496
============== ==============
LIABILITIES
Insurance and annuity reserves $ 483,126 $ 508,884
Deposit administration contracts and other
deposit reserves 25,949 26,459
Other policyowner funds 36,116 28,666
Policy claims 2,113 3,143
Interest maintenance reserve 3,202 2,587
Asset valuation reserve 5,513 5,188
Separate account liabilities 73,334 31,095
Other liabilities 5,025 (2,032)
-------------- --------------
TOTAL LIABILITIES 634,378 603,990
CAPITAL AND SURPLUS
Preferred stock, 8% non-voting,
non-cumulative, $1,000 par value,
10,000 shares authorized; 6,000
shares issued and outstanding 6,000 6,000
Common stock, $170 par value;
15,000 shares authorized
issued and oustanding 2,550 2,550
Gross paid-in surplus 13,450 13,450
Surplus 9,690 10,506
-------------- --------------
TOTAL CAPITAL AND SURPLUS 31,690 32,506
-------------- --------------
TOTAL LIABILITIES AND
CAPITAL AND SURPLUS $ 666,068 $ 636,496
============== ==============
SEE NOTES TO FINANCIAL STATEMENTS.
2
<PAGE>
ACACIA NATIONAL LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND CHANGES IN CAPITAL AND SURPLUS (STATUTORY BASIS)
FOR THE YEARS ENDED
DECEMBER 31,
1998 1997
--------- --------------
-----------------------------
(IN THOUSANDS)
INCOME
Premiums and annuity considerations $ 63,318 $ 59,646
Net investment income 46,305 47,774
Supplementary contracts 6,221 16,809
Other income 1,412 1,042
------------- -----------
117,256 125,271
BENEFITS AND EXPENSES
Benefits for policyholders and beneficiaries:
Benefit payments, surrenders, and withdrawals 83,190 108,148
Decrease in insurance and annuity reserves (18,427) (21,269)
Change in deposit administration funds (510) 800
------------- -----------
64,253 87,679
Commissions to managing directors
and account managers 7,353 5,202
Net transfers to separate accounts 30,725 20,387
Operating expenses allocated from Acacia Life 16,343 12,724
Other operating expenses and taxes 1,201 1,247
------------- -----------
119,875 127,239
------------- -----------
NET (LOSS) FROM OPERATIONS BEFORE FEDERAL
INCOME TAXES AND REALIZED CAPITAL LOSSES (2,619) (1,968)
Federal income tax benefit 1,822 2,511
------------- -----------
NET GAIN (LOSS) FROM OPERATIONS BEFORE
REALIZED CAPITAL GAINS (LOSSES) (797) 543
REALIZED CAPITAL GAINS (LOSSES)
Net realized capital gains 1,516 1,183
Capital gains taxes (760) (521)
Transferred to interest maintenance reserve (965) (516)
------------- -----------
NET REALIZED CAPITAL GAINS (LOSSES) (209) 146
------------- -----------
NET INCOME (LOSS) (1,006) 689
Capital and surplus, beginning of year 32,506 29,641
Change in valuation basis of reserves (120) (119)
Change in asset valuation reserve (325) 524
Change in net unrealized capital gains (49) 495
Change in non-admitted assets 684 1,276
========== ---------
CAPITAL AND SURPLUS, END OF YEAR $ 31,690 $ 32,506
========== ==========
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
ACACIA NATIONAL LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOW (STATUTORY BASIS)
FOR THE YEARS ENDED
DECEMBER 31,
1998 1997
----------- ----------
OPERATING ACTIVITIES (IN THOUSANDS)
Premiums and annuity considerations $ 63,318 $ 59,646
Other premiums, considerations and deposits 8,176 18,976
Net investment income received 44,953 47,368
Benefits paid to policyholders (13,297) (10,980)
Commissions and other expenses paid (23,804) (20,698)
Surrender benefits and other fund withdrawals paid (71,062) (96,822)
Net transfers to separate accounts (34,192) (22,815)
Federal and state income taxes received (paid)
(excluding tax on capital gains) 2,596 (1,093)
--------- --------
NET CASH (USED IN) OPERATING ACTIVITIES (23,312) (26,418)
INVESTING ACTIVITIES
Proceeds from investments sold, matured or repaid:
Bonds 178,064 68,392
Equities --- 756
Mortgage loans 5,031 16
Partnership and other interests 77 240
Tax payments on net capital gains (760) ---
Cost of investments acquired:
Bonds (161,139) (40,619)
Mortgage loans --- (5,000)
Partnership and other interests (30) (1,158)
Net change in policy loans and premium notes 522 (9)
--------- --------
NET CASH PROVIDED BY INVESTING ACTIVITIES 21,765 22,618
FINANCING ACTIVITIES
Cash provided (used):
Net other provisions (uses) 8,488 (1,862)
--------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 8,488 (1,862)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,941 (5,662)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 6,737 12,399
--------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 13,678 $ 6,737
========= ========
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - ORGANIZATION AND DESCRIPTION OF OPERATIONS
Acacia National Life Insurance Company (the Company) is a wholly-owned
subsidiary of Acacia Life Insurance Company (Acacia Life), known prior to June
30, 1997 as Acacia Mutual Life Insurance Company. Acacia Life is a wholly-owned
subsidiary of Acacia Financial Group, Ltd (AFG) which is wholly owned by Acacia
Mutual Holding Corporation (AMHC). AMHC and AFG were formed in 1997 pursuant to
a plan of reorganization whereby Acacia Life became a stock life insurance
company. AMHC and its wholly-owned subsidiaries are collectively known as The
Acacia Group (the Group). Other members of the Group include Acacia Financial
Corporation and its subsidiaries, Acacia Federal Savings Bank, Calvert Group,
Ltd. and The Advisors Group, Inc.
The Company underwrites and markets deferred and immediate annuities and life
insurance products within the United States and is licensed to operate in 46
states and the District of Columbia. On December 1, 1995 and September 9, 1996,
respectively, operations began for the Acacia National Variable Life Insurance
Separate Account I and Acacia National Variable Annuity Separate Account II
which are separate investment accounts within the Company.
NOTE 2 - SIGNIFICANT ACCOUNTING PRACTICES
The Company, domiciled in Virginia, prepares its statutory financial statements
in accordance with statutory accounting practices (SAP) prescribed or permitted
by the Bureau of Insurance, State Corporation Commission of the Commonwealth of
Virginia. 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. Such practices vary, in some respects, from generally accepted
accounting principles (GAAP). The significant statutory basis accounting
practices followed by the Company are described below.
The preparation of the financial statements in conformity with statutory
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.
5
<PAGE>
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
In general, the SAP basis of accounting varies in certain respects from GAAP in
that:
X Acquisition costs incurred at policy issuance, such as commissions and
other costs incurred in connection with acquiring new business, are charged
to expense in the year in which they are incurred, rather than being
deferred and amortized over the periods benefited.
X Certain assets designated as "non-admitted" are excluded from the balance
sheets by a direct charge to unassigned surplus.
X The asset valuation reserve and interest maintenance reserve are not
recorded for GAAP purposes.
X Federal income taxes are computed in accordance with those sections of the
Internal Revenue Code applicable to life insurance companies and are based
solely on currently taxable income. Under GAAP, the recognition of deferred
tax liabilities and assets is required for the expected future tax
consequences of temporary differences between the carrying amounts for
financial statement purposes and the tax basis of other assets and
liabilities.
X The liability for policy reserves is based on statutory assumptions for
interest and mortality without considerations of withdrawals, rather than
assumptions for interest, mortality and withdrawals based on actual
experience.
X Premiums for universal life, single premium non-life contingent immediate
annuity and single premium deferred annuity contracts are reported as
premium income or fund deposits rather than additions to liabilities.
X Reinsurance ceded to other companies is reported on a net basis for premium
revenue, benefits and underwriting, acquisition and insurance expenses, and
policy reserves and accruals. Under GAAP, policy reserves and claim
liabilities ceded are reported separately in the balance sheet as a
reinsurance recoverable asset.
X Debt securities are generally carried at amortized cost, whereas, under
GAAP, investments in debt securities are stated at amortized cost or
current market values depending on the classification pursuant to FASB
Statement No. 115, Accounting for Certain Investments in Debt and Equity
Securities. Any difference between cost and current market values of debt
securities classified as available-for-sale, net of deferred income
6
<PAGE>
taxes or benefit and related deferred acquisition cost effects, is reported
as other comprehensive income. Trading securities consist of debt
securities purchased with the intent to resell in the near term and are
reported at fair value. Unrealized gains and losses on trading securities
are credited or charged to net investment income.
The impact of the differences between SAP and GAAP basis reporting on Net Income
and Capital and Surplus is as follows:
1998 1997
-------------------- -------------------
($ IN THOUSANDS NET CAPITAL NET CAPITAL
INCOME AND SURPLUS INCOME AND SURPLUS
--------- ----------- -------- ----------
AS REPORTED UNDER SAP $ (1,006) $ 31,690 $ 689 $ 32,506
Adjustments:
Deferred policy acquisition costs 2,874 58,017 (66) 53,937
AVR and IMR 615 8,715 357 7,775
Deferred Federal income tax (732) (20,077) (2,372) (19,561)
Net policyholder liabilities (1,601) (11,291) 731 (9,813)
Investments (59) 20,013 -- 22,521
Other (500) (946) 1,289 (456)
------- --------- ----- -------
AMOUNTS UNDER GAAP $ (409) $ 86,121 $ 628 $ 86,909
======= ========= ===== ========
VALUATION OF ASSETS
Debt and equity securities are valued in accordance with rules prescribed by the
NAIC. Debt securities are generally stated at amortized cost, preferred stocks
at cost and common stocks at market value. Collateralized mortgage obligations
are valued using the prospective method and currently anticipated prepayment
assumptions, based on data from current actual experience. Mortgage loans and
policy loans are recorded at their unpaid balance. Discount or premium on debt
securities is amortized using the interest method. Unrealized capital gains and
losses are reflected directly in surplus and are not included in net income.
Realized gains and losses are determined on a first-in, first-out basis and are
presented in the statements of operations, net of taxes and excluding amounts
transferred to the Interest Maintenance Reserve.
As prescribed by the NAIC, the Company maintains an Asset Valuation Reserve
(AVR). The AVR is computed in accordance with a prescribed formula. The purpose
of the AVR is to stabilize surplus against fluctuations in the value of stocks
and credit-related declines in the value of bonds, mortgage loans and other
invested assets. Changes to the AVR are charged or credited directly to surplus.
7
<PAGE>
As also prescribed by the NAIC, the Company maintains an Interest Maintenance
Reserve, which represents the net accumulated unamortized realized capital gains
and losses attributable to changes in the general level of interest rates on
sales of fixed income investments, principally bonds and mortgage loans. Such
gains or losses are amortized into income using schedules prescribed by the NAIC
over the remaining period to expected maturity of the individual securities
sold.
CASH EQUIVALENTS
The Company considers overnight reverse repurchase agreements, money market
funds and short-term investments with original maturities of less than three
months at the time of acquisition to be cash equivalents. Cash equivalents are
carried at cost.
SEPARATE ACCOUNTS
Separate Accounts are assets and liabilities associated with certain life
insurance and annuity contracts, for which the investment risk lies solely with
the holder of the contract rather than the Company. Consequently, the insurer's
liability for these Separate Accounts equals the value of the Separate Account
assets. Investment income and realized gains (losses) related to Separate
Accounts are excluded from the statements of operations and cash flows. Assets
held in Separate Accounts are primarily shares in mutual funds, which are
carried at fair value, based on the quoted net asset value per share.
NON-ADMITTED ASSETS
Certain assets, primarily goodwill, are designated as "non-admitted" under SAP.
The cost of these assets is charged directly to surplus. Non-admitted balances
totaled $2,978,000 and $3,662,000 at December 31, 1998 and 1997, respectively.
POLICY RESERVES
Life policy reserves are computed by using the Commissioners Reserve Valuation
Method and the Commissioners Standard Ordinary Mortality table. Annuity reserves
are calculated using the Commissioners Annuity Reserve Valuation Method and the
maximum valuation interest rate; for annuities with life contingencies, the
prescribed valuation mortality table is used. Policy claims in process of
settlement include provision for reported claims and claims incurred but not
reported. The valuation rates for fixed immediate and deferred annuities range
between 6.0% and 11.25% as of December 31, 1998.
FEDERAL INCOME TAXES
The Company files a consolidated tax return with the Group. Under statutory
accounting practices, no provision is made for deferred federal income taxes
related to temporary differences between statutory and taxable income. Such
temporary differences arise primarily from Internal Revenue Code requirements
regarding the capitalization and amortization of
8
<PAGE>
deferred policy acquisition costs, calculation of life insurance reserves and
recognition of realized gains or losses on sales of debt securities.
PREMIUMS AND RELATED EXPENSE
Premiums are recognized as income over the premium paying period of the
policies. Annuity considerations and fund deposits are included in revenue as
received. Commissions and other policy acquisition costs are expensed as
incurred.
REINSURANCE
The Company cedes reinsurance to provide for greater diversification of
business, additional capacity for growth as well as a way for management to
control exposure to potential losses arising from large risks. A significant
portion of reinsurance is ceded to Acacia Life.
The excess of the amount of liabilities assumed over the amount of assets
received upon execution of an assumption reinsurance agreement is recorded as
goodwill, a non-admitted asset, and charged directly to surplus. Goodwill is
being amortized over a period of ten years using the interest method.
RECLASSIFICATIONS
Certain reclassifications of 1997 amounts were made to conform with the 1998
financial statement presentation.
NOTE 3 - INVESTMENTS AND OTHER FINANCIAL INSTRUMENTS
FAIR VALUES OF FINANCIAL INSTRUMENTS
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------- -----------------
($ IN THOUSANDS CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- ------- -------- --------
FINANCIAL ASSETS:
Debt securities $556,127 $591,776 $570,348 $610,928
Equity securities 2,323 2,696 2,373 2,713
Mortgage loans --- --- 5,031 5,084
Cash and cash equivalents 13,678 13,678 6,767 6,767
FINANCIAL LIABILITIES:
Investment-type insurance contracts 376,589 376,589 $407,643 $407,643
9
<PAGE>
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
INVESTMENT SECURITIES: Fair values for fixed maturity securities (including
redeemable preferred stocks and mortgage backed securities) are based on quoted
market prices, where available. For fixed maturity securities not actively
traded and for private placements, fair values are estimated using values
obtained from independent pricing services. The fair values for equity
securities are based on quoted market prices.
MORTGAGE LOANS: The fair values for mortgage loans are estimated using
discounted cash flow analysis, based on interest rates currently being offered
for similar loans to borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations.
CASH AND CASH EQUIVALENTS: The carrying amount approximates fair values because
of the short maturity of these instruments.
POLICY LOANS: Policy loans are an integral component of insurance contracts and
have no maturity dates. Future cash flows are uncertain and difficult to
predict. Therefore, management has concluded that it is not practical to
estimate their fair value.
INVESTMENT CONTRACTS: Fair values for the Company's liabilities under
investment-type insurance contracts are estimated using discounted cash flow
calculations, based on interest rates currently being offered for similar
contracts with maturities consistent with those remaining for the contracts
being valued. The carrying values for the deposit administration contracts and
supplementary contracts without life contingencies approximate their fair
values.
10
<PAGE>
INVESTMENTS
Major categories of investment income for the years ended December 31 are
summarized as follows:
($ IN THOUSANDS)
1998 1997
----- ----
Fixed maturity securities $ 45,499 $ 47,086
Common stock -- --
Preferred stock 56 60
Mortgage loans 334 110
Policy loans 447 502
Other 906 1,001
------- ------
Gross investment income 47,242 48,759
Investment expenses (1,287) (1,143)
Interest maintenance reserve amortization 350 158
------- ------
Net investment income $ 46,305 $ 47,774
======== ========
Realized gains (losses) on investments for the years ended December 31 are
summarized as follows:
($ IN THOUSANDS)
1998 1997
----- ----
Fixed maturity securities
Gross realized gains $ 1,631 $ 963
Gross realized losses (145) (11)
Equity securities
Gross realized gains -- 230
Gross realized losses -- ---
Other invested assets 30 1
------- ------
$ 1,516 $ 1,183
======== =======
The statement values and estimated fair values of the Company's investments in
debt securities are as follows:
($ IN THOUSANDS)
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
AT DECEMBER 31, 1998 ---------- ---------- ----------- ----------
U.S. government and agencies $72,543 $9,705 $ -- $82,248
Other government 23,004 624 (728) 22,900
Mortgage backed securities 166,042 4,928 (708) 170,262
Corporate 294,538 24,557 (2,729) 316,366
----------- -------- ------- -------
$ 556,127 $ 39,814 $ (4,165) $ 591,776
=========== ========== ========= =========
11
<PAGE>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
AT DECEMBER 31, 1997 ---------- ---------- ----------- ----------
U.S. government and agencies $87,514 $ 8,228 $ -- $ 95,742
Other government 30,943 856 (73) 31,726
Mortgage backed securities 150,831 5,592 (402) 156,021
Corporate 301,060 26,994 (615) 327,439
--------- ------- ----- -------
$ 570,348 $ 41,670 $ (1,090) $ 610,928
======= ======== ======== =========
The amortized cost and estimated fair value of debt securities, by contractual
maturity at December 31, 1998 are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without prepayment penalties.
($ IN THOUSANDS)
STATEMENT FAIR
VALUE VALUE
--------- ---------
Maturities in 1999 $ 12,704 $ 12,601
In 2000 to 2003 140,232 148,163
In 2004 to 2008 130,680 138,730
After 2008 106,469 122,020
Mortgaged-backed securities 166,042 170,262
-------- --------
$ 556,127 $ 591,776
========= =========
INVESTMENT PORTFOLIO CREDIT RISK
The Company's bond investment portfolio is predominately comprised of investment
grade securities. At December 31, 1998 and 1997, approximately $8.9 million and
$3.9 million, respectively, in debt security investments (1.6% and 0.7%,
respectively, of the total debt security portfolio) are considered "below
investment grade." Securities are classified as "below investment grade" by
utilizing rating criteria established by the NAIC.
NOTE 4 - REINSURANCE
The Company reinsures all life insurance risks over its retention limit of $10
thousand per policy under yearly renewable term insurance agreements with Acacia
Life and several other non-affiliated companies. The Company remains obligated
for amounts ceded in the event that reinsurers do not meet their obligations.
Since the reinsurance treaties are of such a nature as to pass economic risk to
the reinsurer, appropriate reductions are made from income, claims, expense and
liability items in accounting for the reinsurance ceded.
12
<PAGE>
Premiums and benefits have been reduced by amounts reinsured as follows (in
thousands):
1998 1997
----- ----
Premiums ceded:
Acacia Life $ 3,971 $ 3,384
Others 630 533
----- -----
Total premium ceded $ 4,601 $ 3,917
====== ======
Death benefits reimbursed:
Acacia Life $ 3,610 $ 2,989
Others 233 277
----- -----
Total benefits reimbursed $ 3,843 $ 3,236
====== =======
Amounts recoverable on paid and unpaid losses:
Acacia Life $ 543 $ 643
Others 139 --
----- -----
Total amounts recoverable on paid
and unpaid losses $ 682 $ 643
==== =====
Policy reserves ceded:
Acacia Life $ 2,108 $ 1,897
Others 392 350
----- -----
Total policy reserves ceded $ 2,500 $ 2,247
====== =======
Life insurance in force ceded:
Acacia Life $ 1,692,820 $ 1,206,052
Others 104,285 90,471
--------- -----------
Total life insurance in force ceded $ 1,797,105 $ 1,296,523
========= ==========
During 1997, the Company terminated a reinsurance agreement whereby disability
benefits were ceded to Acacia Life. Termination of the agreement resulted in net
expense to the Company of $372,000.
ASSUMPTION REINSURANCE AGREEMENT
Effective May 31, 1996 under an assumption reinsurance agreement, the Company
assumed certain assets and liabilities relating to annuities previously
underwritten by the National American Life Insurance Company (NALICO), which had
been in rehabilitation. Under the agreement, the Company assumed fixed annuity
13
<PAGE>
policies with statutory liabilities of $127.9 million. The Company received from
NALICO assets with a fair value of approximately $122.7, consisting principally
of investment grade bonds and short-term investments. The difference between
assets acquired and liabilities assumed of $5.2 million was capitalized as
goodwill and treated as a non-admitted asset. Based on adjustments in 1997,
additional assets of $0.4 million were received and reduced the goodwill.
Approximately $0.7 million and $1.1 million was amortized through operations
during 1998 and 1997, respectively, as an offset to miscellaneous income. At
December 31, 1998 and 1997, the balance of goodwill was $3.0 million and $3.7
million, respectively.
NOTE 5 - ANNUITY RESERVES AND DEPOSIT LIABILITIES
Annuity reserves and deposit liabilities have the following withdrawal
characteristics:
($ in thousands)
December 31,
1998 1997
Subject to discretionary withdrawal with adjust- ------------ -------------
ment, at book value less surrender charge $219,324 43% $228,262 46%
Subject to discretionary withdrawal without adjust-
ment, at book value (minimal or no charge) 236,303 47 226,606 45
Not subject to discretionary withdrawal provision 51,618 10 46,550 9
-------- ---- ------- ---
Total annuity actuarial reserves and deposit
fund liabilities $507,245 100% $501,418 100%
======== === ======== ====
NOTE 6 - FEDERAL INCOME TAXES
Under a tax sharing agreement between the Company and other members of the
Group, Acacia Life reimburses or receives from the Company an amount
representing the taxes that would have been paid or refunded had the Company
filed a separate income tax return.
Under the statutes in effect before the Deficit Reduction Act of 1984, a portion
of "net income" was not subject to current income taxation for stock life
insurance companies, but was accumulated for tax purposes in a memorandum tax
account. The 1984 Act prohibited any additions to the memorandum tax account
after 1983. The balance in this account for the Company was $6.6 million at
December 31, 1998 and 1997. In the event that either cash distributions from the
Company to Acacia Life or the balance in the memorandum tax account exceeds
certain stated minimums, such amounts distributed would become subject to
federal income taxes at rates then in effect.
14
<PAGE>
NOTE 7 - OTHER RELATED PARTY TRANSACTIONS
The Company has entered into an agreement whereby Acacia Life provides such
services and facilities as are necessary for the operation of the Company.
Expenses allocated to the Company were based on a consistent method for 1998 and
1997. Net amounts payable to Acacia Life at December 31, 1998 and 1997 are $7.6
million and $1.5 million, respectively, and are included in other liabilities.
During 1997, the Company purchased participations of $5.0 million in two
commercial mortgage loans from Acacia Life. The participations were purchased at
the unpaid principal balance.
The assets of the defined contribution plan under Internal Revenue Code Section
401(k) for the employees of Acacia Life include an investment in a deposit
administration contract with Acacia National of $18.7 million and $18.1 million
at December 31, 1998 and 1997, respectively.
NOTE 8 - CONTINGENT LIABILITIES
The Company is involved in various lawsuits that have arisen in the ordinary
course of business. Management believes that its defenses are meritorious and
the eventual outcome of these lawsuits will not have a material effect on the
Company's financial position.
NOTE 9 - CAPITAL AND DIVIDEND RESTRICTIONS
The maximum amount of annual dividends and other distributions which may be
remitted by the Company to its shareholder without prior approval of the
appropriate state insurance commissioner is subject to restrictions relating to
statutory capital and surplus and statutory gains from operations. Due to a
statutory loss from operations in 1998, the Company may not pay any dividend in
1999 without prior approval.
Regulatory risk-based capital rules require a specified level of capital
depending on the types and quality of investments held, the types of business
written and the types of liabilities maintained. Depending on the ratio of an
insurer's adjusted surplus to its risk-based capital, the insurer could be
subject to various regulatory actions ranging from increased scrutiny to
conservatorship. The Company's risk-based capital ratios for 1998 and 1997 are
significantly above the regulatory action levels.
15
<PAGE>
NOTE 10 - CAPITAL AND SURPLUS
During 1997, the Company changed the valuation interest rates for certain
supplementary contracts, resulting in an increase in the liability of
approximately $700,000. Based on an agreement with the Bureau of Insurance, the
increase is being recognized evenly over three years, with $119,000 charged
directly against surplus and the remainder charged through operations.
NOTE 11 - SUBSEQUENT EVENT
Effective January 1, 1999, the Company's ultimate parent, Acacia Mutual Holding
Corporation merged with the Ameritas Mutual Insurance Holding Company to create
Ameritas Acacia Mutual Holding Company.
16
<PAGE>
- --------------------------------------------------------------------------------
ACACIA NATIONAL LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL CONDITION (Statutory Basis)
(Columnar amounts in thousands)
(Unaudited)
March 31, December 31,
1999 1998
ASSETS ---------- -----------
Debt securities $ 555,013 $ 556,127
Equity securities 1,654 2,323
Policy loans 7,557 7,579
Cash and cash equivalents 11,344 13,678
Accrued investment income 9,360 9,775
Separate account assets 88,309 73,334
Other assets 1,813 3,252
-------- --------
Total assets $ 675,050 $ 666,068
======== ========
LIABILITIES
Insurance and annuity reserves $ 478,441 $ 483,126
Deposit administration contracts and other
deposit reserves 26,918 25,949
Other policyowner funds 37,488 36,116
Policy claims 2,323 2,113
Interest maintenance reserve 3,199 3,202
Asset valuation reserve 2,184 5,513
Separate account liabilities 88,309 73,334
Other liabilities 5,642 5,025
-------- --------
Total Liabilities 644,504 634,378
-------- --------
CAPITAL AND SURPLUS
Preferred stock 8% non-voting non-cumulative,
$1,000 par value, 10,000 shares authorized;
6,000 shares issued and outstanding 6,000 6,000
Common stock $170 par value; 15,000 shares
authorized, issued and outstanding 2,550 2,550
Gross paid-in surplus 13,450 13,450
Surplus 8,546 9,690
-------- --------
Total Capital and Surplus 30,546 31,690
-------- --------
Total Liabilities and Capital and Surplus $ 675,050 $ 666,068
======== ========
See notes to financial statements
F-II(U)-1
<PAGE>
ACACIA NATIONAL LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND CHANGES IN CAPITAL AND SURPLUS (Statutory Basis)
FOR THE THREE MONTHS ENDED MARCH 31,
(in thousands)
(Unaudited)
1999 1998
------ ------
INCOME
Premiums and annuity considerations $ 19,713 $ 15,688
Net investment income 10,939 11,646
Supplementary contracts 1,692 2,141
Other income 868 309
------- --------
33,212 29,784
------- --------
BENEFITS AND EXPENSES
Benefits for policyholders and beneficiaries,
and withdrawals 17,955 22,335
Change in insurance and annuity reserves (2,823) (6,827)
Change in deposit administration funds 969 (148)
------- --------
16,101 15,360
------- --------
Commissions to managing directors and account managers 1,764 1,711
Net transfers to separate accounts 11,454 8,552
Operating expenses and taxes 4,228 3,672
------- --------
33,547 29,295
------- --------
NET GAIN(LOSS) FROM OPERATIONS BEFORE FEDERAL
INCOME TAXES AND REALIZED CAPITAL GAIN(LOSSES) (335) 489
Federal income tax benefit 223 89
------- --------
NET GAIN(LOSS) FROM OPERATIONS BEFORE REALIZED
CAPITAL GAINS(LOSSES) (112) 578
Net realized capital gains (losses) (28) (31)
------- --------
NET INCOME(LOSS) $ (140) $ 547
======= ========
Capital and surplus, beginning of period $ 31,690 $ 32,506
Net income (loss) (140) 547
Change in valuation basis of reserves (30) (120)
Change in asset valuation reserve 3,329 (271)
Change in net unrealized capital gains (4,396) 269
Change in non-admitted assets 93 84
------- --------
CAPITAL AND SURPLUS, END OF PERIOD $ 30,546 $ 33,015
======= ========
See notes to financial statements
F-II(U)-2
<PAGE>
ACACIA NATIONAL LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOW (Statutory Basis)
FOR THE THREE MONTHS ENDED MARCH 31,
(in thousands)
(Unaudited)
1999 1998
------ ------
OPERATING ACTIVITIES
Premiums and annuity considerations $ 19,442 $ 15,551
Other premiums, considerations and deposits 2,516 2,533
Net investment income received 11,645 12,253
Benefits paid to policyholders (2,150) (3,549)
Commissions and other expenses paid (6,398) (6,766)
Surrender benefits and other fund withdrawals paid (15,773) (18,581)
Net transfers to separate accounts (11,454) (8,552)
Federal and state income taxes received (excluding tax on
capital gains) 412 96
-------- -------
Net Cash Provided by (Used in) Operating Activities 1,760 (7,015)
-------- -------
INVESTING ACTIVITIES
Proceeds from investments sold, matured
or repaid:
Bonds 94,157 12,670
Equities 303 -
Mortgage loans - 23
Partnership and other interests 1,225 37
Tax payments on net capital gains (55) -
Cost of investments acquired:
Bonds (96,743) (3,123)
Partnership and other interests (275) (21)
Net change in policy loans and premium notes 22 179
-------- -------
Net Cash (Used in) Provided by Investing Activities (1,366) 9,765
-------- -------
FINANCING ACTIVITIES
Cash provided:
Net other provisions 792 928
-------- -------
Net Cash Provided By Financing Activities 792 928
-------- -------
Increase (Decrease) in Cash and Cash Equivalents (2,334) 3,678
Cash and Cash Equivalents, Beginning of Year 13,678 13,090
-------- -------
Cash and Cash Equivalents, End of Period $ 11,344 $ 16,768
========= =======
See notes to financial statements
F-II(U)-3
<PAGE>
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENT
MARCH 31, 1999
(UNAUDITED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company, domiciled in Virginia, prepares its statutory financial statement
in accordance with statutory accounting practices (SAP) prescribed or permitted
by the Bureau of Insurance, State Corporation Commission of the Commonwealth of
Virginia. 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. Such practices vary, in some respects, from generally accepted
accounting principles (GAAP). The significant statutory basis accounting
practices followed by the Company are described below.
The preparation of the financial statement in conformity with statutory
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 statement and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2. BASIS OF PRESENTATION OF UNAUDITED INTERIM FINANCIAL STATEMENTS
Management believes that all adjustments, consisting of only normal recurring
accruals, considered necessary for a fair presentation of the unaudited interim
financial statement have been included. The results of operations for any
interim period are not necessarily indicative of results for the full year. The
unaudited interim financial statement should be read in conjunction with the
audited financial statement and notes thereto for the years ended December 31,
1998 and 1997.
F-II(U)-4
<PAGE>
- --------------------------------------------------------------------------------
Audited Financial Statements
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
As of December 31, 1998 and the Years Ended
December 31, 1998 and 1997
Report of Independent Accountants..............................................1
Statement of Assets and Liabilities............................................2
Statements of Operations and Changes in Net Assets.......................... 3-4
Notes to the Financial Statements............................................5-8
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Acacia National Life Insurance Company and
Contract Owners of Acacia National Variable Life Insurance Separate Account I
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and changes in net assets present fairly, in
all material respects, the financial position of each of the following
sub-accounts comprising the Acacia National Variable Life Insurance Separate
Account I (the Account): the Social Money Market; Social Balanced; Social
Strategic Growth; Social Managed Growth; Social Global; Large Cap Growth; Mid
Cap Growth; Small Cap Growth; S&P 500 Index; Income; Growth; International
Growth; Aggressive Growth; Hard Assets/Metals; High Income; Aggressive Growth;
Large Cap Growth; Balanced; and Managed Income sub-accounts at December 31,
1998, and the results of their operations and the changes in their net assets
for each of the periods presented, in conformity with generally accepted
accounting principles. 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 of these
financial statements in accordance with generally accepted auditing standards
which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with the
mutual funds, provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers
Washington, D.C.
April 30, 1999
1
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1998
Calvert Alger Dreyfus
----------------------------------------------------- ------------------------------- --------
Social Social Social S & P
Money Social Strategic Managed Social Large Cap Mid Cap Small Cap 500
Market Balanced Growth Growth Global Growth Growth Growth Index
-------- -------- -------- -------- -------- -------- -------- -------- --------
ASSETS
Investments,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
identified costs $693,215 $45,901 $91,089 $125,494 $212,991 $1,993,317 $733,899 $1,909,027 $5,762,900
======== ======== ======== ======== ======== ======== ======== ======== ========
Investments, at market $696,215 $47,148 $87,407 $123,866 $205,166 $2,401,762 $851,023 $2,045,681 $6,667,859
======== ======== ======== ======== ======== ======== ======== ======== ========
Number of shares 696,215 22,061 7,860 4,071 9,859 45,129 29,478 46,524 205,039
======== ======== ======== ======== ======== ======== ======== ======== ========
Total and net assets $696,215 $47,148 $87,407 $123,866 $205,166 $2,401,762 $851,023 $2,045,681 $6,667,859
======== ======== ======== ======== ======== ======== ======== ======== ========
ACCUMULATION UNITS
Number of units 598,035 2,990 7,476 7,670 15,712 113,872 50,595 153,159 320,865
======== ======== ======== ======== ======== ======== ======== ======== ========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1998 $1.16 $15.77 $11.69 $16.15 $13.06 $21.09 $16.82 $13.36 $20.78
======== ======== ======== ======== ======== ======== ======== ======== ========
Neuberger & Berman Strong Van Eck Oppenheimer
------------------- ---------------------------------- ---------------------------------------------
International Aggressive Hard Hi Aggressive Large Cap Managed
Income Growth Growth Growth Assets/Metal Income Growth Growth Balanced Income
-------- ------- -------- -------- -------- -------- -------- -------- -------- ------
ASSETS
Investments,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
identified costs $2,015,570 $1,456,684 $2,581,573 $313,390 $736,929 $381,742 $1,227,608 $2,008,040 $639,056 $276,229
======== ======= ======== ======== ======== ======== ======== ======== ======== ========
Investments, at market$2,032,827 $1,548,079 $2,412,905 $336,358 $582,277 $371,401 $1,347,548 $2,253,827 $637,896 $275,293
======== ======= ======== ======== ======== ======== ======== ======== ======== ========
Number of shares 147,093 58,885 274,818 26,443 63,291 33,702 30,059 61,462 31,147 53,768
======== ======= ======== ======== ======== ======== ======== ======== ======== ========
Total and net assets $2,032,827 $1,548,079 $2,412,905 $336,358 $582,277 $371,401 $1,347,548 $2,253,827 $637,896 $275,293
======== ======= ======== ======== ======== ======== ======== ======== ======== ========
ACCUMULATION UNITS
Number of units 173,713 97,419 262,868 28,197 73,721 33,313 95,687 150,216 47,458 24,847
======== ======= ======== ======== ======== ======== ======== ======== ======== ========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1998 $11.70 $15.89 $9.18 $11.93 $7.90 $11.15 $14.08 $15.00 $13.44 $11.08
======== ======= ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
See notes to financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
For the Year Ended December 31, 1998
Calvert Alger Dreyfus
---------------------------------------------------- ----------------------------- -------
Social Social Social S & P
------ Social Strategic Managed Social Large Cap Mid Cap Small Cap 500
Money
Market Balanced Growth Growth Global Growth Growth Growth Index
------- ------- ------- -------- -------- ------- -------- -------- -------
OPERATIONS:
Investment Income
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends $21,621 $3,409 $1,105 $13,549 $15,115 $232,531 $40,068 $173,190 $130,875
Mortality and expense charge (4,679) (308) (588) (594) (990) (14,481) (5,140) (12,562) (38,276)
------- ------- ------- -------- -------- ------- -------- -------- -------
Net Investment Income (Loss) 16,942 3,101 517 12,955 14,125 218,050 34,928 160,628 92,599
Realized and Unrealized Gains
(Losses) on Investments:
Realized gains (losses)
from redemption of
fund shares 99 611 (2,513) 2,455 1,263 98,690 13,059 4,107 184,713
Unrealized appreciation
(depreciation)
of investments 3,000 1,900 (1,616) (1,025) (5,285) 297,960 98,503 62,991 729,209
------- ------- ------- -------- -------- ------- -------- -------- -------
Net Gain (Loss) on Investments 3,099 2,511 (4,129) 1,430 (4,022) 396,650 111,562 67,098 913,922
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS 20,041 5,612 (3,612) 14,385 10,103 614,700 146,490 227,726 1,006,521
CAPITAL TRANSACTIONS:
Transfer of premium 2,435,827 21,378 40,406 61,132 135,824 1,142,994 399,907 1,136,190 3,962,541
Contract terminations (5,692) (514) (1,233) (726) (748) (44,181) (5,973) (32,025) (70,756)
Policy account value charges (178,288) (7,551) (11,924) (9,570) (15,917) (253,488) (81,605) (229,321) (728,295)
Sub-account transfers (1,942,516) 5,464 17,624 47,443 56,197 53,346 75,357 134,680 469,451
------- ------- ------- -------- -------- ------- -------- -------- -------
NET INCREASE IN NET
ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 309,331 18,777 44,873 98,279 175,356 898,671 387,686 1,009,524 3,632,941
------- ------- ------- -------- -------- ------- -------- -------- -------
TOTAL INCREASE IN NET ASSETS 329,372 24,389 41,261 112,664 185,459 1,513,371 534,176 1,237,250 4,639,462
NET ASSETS, beginning
of the year 366,843 22,759 46,146 11,202 19,707 888,391 316,847 808,431 2,028,397
------- ------- ------- -------- -------- ------- -------- -------- -------
NET ASSETS, at end of the year $696,215 $47,148 $87,407 $123,866 $205,166 $2,401,762$851,023 $2,045,681 $6,667,859
======= ======= ======= ======== ======== ======= ======== ======== =======
UNITS ISSUED AND REDEEMED
Beginning balance 330,489 1,678 3,703 900 1,788 62,387 24,543 69,933 125,133
Units issued 2,498,903 2,971 5,008 7,984 17,004 78,302 32,437 103,745 230,164
Units redeemed 2,231,357 1,659 1,235 1,214 3,080 26,817 6,385 20,519 34,432
------- ------- ------- -------- -------- ------- -------- -------- -------
Ending balance 598,035 2,990 7,476 7,670 15,712 113,872 50,595 153,159 320,865
======= ======= ======= ======== ======== ======= ======== ======== =======
Neuberger & Berman Strong Van Eck Oppenheimer
------------------- ------------------------------ ------------------------------------------
Internationl Aggressive Hard High Aggressive Large Cap Managed
Income Growth Growth Growth Assets/MetalsIncome Growth Growth Balanced Income
-------- -------- ------- ------- ------- ------- -------- ------- -------- ------
OPERATIONS:
Investment Income
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends $58,873 $188,569 $61,955 $3,760 $41,873 $6,494 $13,351 $82,136 $10,963 $14,163
Mortality and expense
charge (12,750) (9,585) (16,284) (2,398) (3,681) (1,942) (7,499) (12,581) (3,138) (1,297)
-------- -------- ------- ------- ------- ------- -------- ------- -------- -------
46,123 178,984 45,671 1,362 38,192 4,552 5,852 69,555 7,825 12,866
Realized and Unrealized Gains
(Losses) on Investments:
Realized gains (losses)
from redemption of
fund shares 1,107 (18,723) (206,240) 5,905 (41,446) (1,436) 10,354 24,932 1,441 (5,635)
Unrealized appreciation
(depreciation)
of investments (2,543) 22,943 59,071 8,186 (148,313) (10,716) 118,634 224,336 (4,187) (740)
-------- -------- ------- ------- ------- ------- -------- ------- -------- -------
(1,436) 4,220 (147,169) 14,091 (189,759) (12,152) 128,988 249,268 (2,746) (6,375)
44,687 183,204 (101,498) 15,453 (151,567) (7,600) 134,840 318,823 5,079 6,491
CAPITAL TRANSACTIONS:
Transfer of premium 1,329,369 871,047 1,486,174 165,896 420,900 259,644 882,616 1,523,932 521,119 611,261
Contract terminations (25,171) (37,647) (59,984) (20,002) (9,964) (4,239) (18,523) (31,751) (7,456) (1,730)
Policy account value charges(242,262) (168,569) (300,970) (33,574) (80,244) (36,935) (147,580) (263,176) (75,651) (34,114)
Sub-account transfers 62,371 70,373 102,465 171 149,208 90,767 140,063 101,389 119,867 325,973)
-------- -------- ------- ------- ------- ------- -------- ------- -------- -------
NET INCREASE IN NET
ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 1,124,307 735,204 1,227,685 112,491 479,900 309,237 856,576 1,330,394 557,879 249,444
-------- -------- ------- ------- ------- ------- -------- ------- -------- -------
TOTAL INCREASE IN NET ASSETS 1,168,994 918,408 1,126,187 127,944 328,333 301,637 991,416 1,649,217 562,958 255,935
NET ASSETS, beginning
of the year 863,833 629,671 1,286,718 208,414 253,944 $69,764 $356,132 $604,610 $74,938 $19,358
-------- -------- ------- ------- ------- ------- -------- ------- -------- -------
NET ASSETS, at end of the year$2,032,827 $1,548,079 $2,412,905 $336,358 $582,277 $371,401 $1,347,548$2,253,827 $637,896 $275,293
======== ======== ======= ======= ======= ======= ======== ======= ======== =======
UNITS ISSUED AND REDEEMED
Beginning balance 77,059 45,761 137,912 18,742 22,198 6,274 28,422 49,967 5,836 1,797
Units issued 136,118 65,880 201,600 14,670 59,926 33,123 77,765 119,856 48,498 77,960
Units redeemed 39,464 14,222 76,644 5,215 8,403 6,084 10,500 19,607 6,876 54,910
-------- -------- ------- ------- ------- ------- -------- ------- -------- ------
Ending balance 173,713 97,419 262,868 28,197 73,721 33,313 95,687 150,216 47,458 24,847
======== ======== ======= ======= ======= ======= ======== ======= ======== ======
</TABLE>
See Notes to financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
For the Year Ended December 31, 1997
Calvert Alger Dreyfus
------------------------------------------------ ---------------------------- ---------
Social Social Social S & P
Money Social Strategic Managed Social Large Cap Mid Cap Small Cap 500
Market Balanced Growth Growth * Global * Growth Growth Growth Index
------- ------- ------- ------- ------- ------- ------ ------- ------
OPERATIONS:
Investment Income
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends $7,942 $1,565 $4,107 $1,160 $1,968 $5,840 $2,687 $27,461 $43,942
Mortality and expense
charge (4,111) (72) (355) (28) (50) (5,914) (1,692) (6,075) (11,588)
------- ------- ------- ------- ------- ------- ------ ------- ------
Net Investment Income (Loss) 3,831 1,493 3,752 1,132 1,918 (74) 995 21,386 32,354
Realized and Unrealized
Gains (Losses) on
Investments:
Realized gains (losses)
from redemption of
fund shares --- 204 (1,773) 100 4 39,995 11,425 9,397 112,714
Unrealized appreciation
(depreciation)
of investments 440 (515) (2,228) (603) (2,540) 95,625 15,140 70,132 146,383
------- ------- ------- ------- ------- ------- ------ ------- ------
Net Gain (Loss) on Investments 440 (311) (4,001) (503) (2,536) 135,620 26,565 79,529 259,097
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS 4,271 1,182 (249) 629 (618) 135,546 27,560 100,915 291,451
CAPITAL TRANSACTIONS:
Transfer of premium 1,288,575 8,418 31,319 7,751 11,238 658,928 209,184 639,497 1,457,795
Contract terminations (30,731) (2) (754) --- (15) (6,652) (1,677) (5,444) (9,634)
Policy account value
charge (107,268) (1,871) (9,269) (723) (1,311) (154,294) (44,137) (158,511) (302,335)
Sub-account transfers (934,230) 12,200 4,603 3,545 10,413 (66,291) 35,378 (171,620) 39,694
------- ------- ------- ------- ------- ------- ------ ------- ------
NET INCREASE IN NET
ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 216,346 18,745 25,899 10,573 20,325 431,691 198,748 303,922 1,185,520
------- ------- ------- ------- ------- ------- ------ ------- ------
TOTAL INCREASE IN NET ASSETS 220,617 19,927 25,650 11,202 19,707 567,237 226,308 404,837 1,476,971
NET ASSETS,
beginning of year 146,226 2,832 20,496 --- --- 321,154 90,539 403,594 551,426
------- ------- ------- ------- ------- ------- ------ ------- ------
NET ASSETS, at end
of the year $366,843 $22,759 $46,146 $11,202 $19,707 $888,391 $316,847 $808,431 $2,028,397
======= ======= ======= ======= ======= ======= ====== ======= ======
UNITS ISSUED AND REDEEMED
Beginning balance 138,906 251 1,482 --- --- 28,351 8,066 38,887 45,236
Units issued 1,439,931 1,655 4,603 994 1,939 64,768 26,097 83,058 141,619
Units redeemed 1,248,348 228 2,382 94 151 30,732 9,620 52,012 61,722
------- ------- ------- ------- ------- ------- ------ ------- ------
------------- 330,489 1,678 3,703 900 1,788 62,387 24,543 69,933 125,133
Ending balance
======= ======= ======= ======= ======= ======= ====== ======= ======
Neuberger & Berman Strong Van Eck
----------------- --------------------------------------------------
Internationl Aggressive Hard
Income Growth Income ** Balance ** Growth Growth Assets/Metal
------- ------- ------- ------- ------- ------ -------
OPERATIONS:
Investment Income
<S> <C> <C> <C> <C> <C> <C>
Dividends $20,653 $23,873 $359 $6,377 $8,037 --- $5,120
Mortality and expense
charge (4,295) (3,395) (49) (516) (8,011) ($1,084) (1,655)
-------- ------- ------- ------- ------- ------ -------
Net Investment Income (Loss) 16,358 20,478 310 5,861 26 (1,084) 3,465
Realized and Unrealized Gains
(Losses) on Investments:
Realized gains (losses)
from redemption of
fund shares 1,905 16,065 (38) 11,629 (3,230) 5,524 2,494
Unrealized appreciation
(depreciation)
of investments 15,273 59,454 52 2,621 (230,017) 12,920 (10,841)
-------- ------- ------- ------- ------- ------ ------- -
Net Gain (Loss) on
Investments 17,178 75,519 14 14,250 (233,247) 18,444 (8,347)
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS 33,536 95,997 324 20,111 (233,221) 17,360 (4,882)
CAPITAL TRANSACTIONS:
Transfer of premium 573,088 436,222 3,119 57,796 999,117 133,826 187,675
Contract terminations (6,482) (4,506) (75) (70) (9,908) (1,071) (2,030)
Policy account value charges (112,059) (88,567) (1,282) (13,450) (209,009) (28,281) (43,175)
Sub-account transfers 170,258 9,415 (11,996) (151,467) 296,376 9,619 28,359
------- ------- ------- ------- ------- ------ -------
NET INCREASE IN NET
ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 624,805 352,564 (10,234) (107,191) 1,076,576 114,093 170,829
---------- ------- ------- ------- ------- ------ -------
TOTAL INCREASE IN
NET ASSETS 658,341 448,561 (9,910) (87,080) 843,355 131,453 165,947
NET ASSETS,
beginning of year 205,492 181,110 9,910 87,080 443,363 76,961 87,997
--------- ------- ------- ------- ------- ------ -------
NET ASSETS, at end
of the year $863,833 $629,671 $0 $0 $1,286,718 $208,414 $253,944
======= ======= ======= ======= ======= ====== =======
UNITS ISSUED AND REDEEMED
Beginning balance 19,571 16,990 984 7,816 39,763 7,708 7,560
Units issued 84,591 46,395 677 11,884 132,459 17,417 22,271
Units redeemed 27,103 17,624 1,661 19,700 34,310 6,383 7,633
------- ------- ------- ------- ------- ------ -------
Ending balance 77,059 45,761 0 0 137,912 18,742 22,198
Oppenheimer
------------------------------------------------------
High Aggressive Large Cap Managed
Income * Growth * Growth * Balanced * Income *
------- ------- ------- ------- -------
OPERATIONS:
Investment Income
<S> <C> <C> <C> <C> <C>
Dividends $2,165 --- --- $267 $765
Mortality and expense
charge (248) ($1,370) ($2,354) (272) ($45)
------- ------- ------- ----- -------
Net Investment Income (Loss 1,917 (1,370) (2,354) (5) 720
Realized and Unrealized Gain
(Losses) on Investments:
Realized gains (losses)
from redemption of
fund shares 270 4,036 2,729 1,288 4
Unrealized appreciation
(depreciation)
of investments 375 1,306 21,451 3,027 (196)
------- ------ ------- ------- -------
Net Gain (Loss) on
Investments 645 5,342 24,180 4,315 (192)
NET INCREASE (DECREASE) I
NET ASSETS RESULTING FROM
OPERATIONS 2,562 3,972 21,826 4,310 528
CAPITAL TRANSACTIONS:
Transfer of premium 33,885 173,578 292,342 44,808 15,617
Contract terminations (49) (2,392) (4,210) (10) (5)
Policy account value charges(6,479) (35,746) (61,426) (7,100) (1,165)
Sub-account transfers 39,845 216,720 356,078 32,930 4,383
------- ------- ------- ------- -------
NET INCREASE IN NET
ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 67,202 352,160 582,784 70,628 18,830
------- ------- ------- ------- -------
TOTAL INCREASE IN
NET ASSETS 69,764 356,132 604,610 74,938 19,358
NET ASSETS,
beginning of year --- --- --- --- ---
------- ------- ------- ------- -------
NET ASSETS, at end
of the year $69,764 $356,132 $604,610 $74,938 $19,358
======= ======= ======= ======= =======
UNITS ISSUED AND REDEEMED
Beginning balance --- --- --- --- ---
Units issued 7,955 36,728 59,904 7,354 2,265
Units redeemed 1,681 8,306 9,937 1,518 468
------- ------- ------- ------- -------
Ending balance 6,274 28,422 49,967 5,836 1,797
* From Sub-account inception, May, 1997.
** Sub-account closed November, 1997.
See Notes to financial statements.
</TABLE>
4
<PAGE>
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE 1 - ORGANIZATION AND DESCRIPTION OF OPERATIONS
The Acacia National Variable Life Insurance Separate Account I (the Account)
began operations on December 1, 1995 as a separate investment account within
Acacia National Life Insurance Company (the Company) to receive and invest net
premiums paid under a flexible premium variable life insurance policy (the
Policy). The Policy allows for flexible premium deposits, as payments may be
made with varying amounts and frequency within stated limitations. The primary
purpose of the policy is to provide life insurance protection in the event of
the insured's death.
The Company is a member of the Acacia Group which includes Acacia Life Insurance
Company (known prior to June 30, 1997 as Acacia Mutual Life Insurance Company)
and its other wholly-owned subsidiaries: Acacia Financial Corporation (AFCO) and
its subsidiaries, Acacia Federal Savings Bank F.S.B., Calvert Group, Ltd. and
The Advisors Group, Inc. Effective January 1, 1999, the Company's ultimate
parent, Acacia Mutual Holding Corporation, merged with Ameritas Mutual Holding
Company to create Ameritas Acacia Mutual Holding Company.
Assets of the Account are the property of the Company. However, those assets
attributable to the policies are not chargeable with liabilities arising out of
any other business which the Company may conduct. The Account operates and is
registered as a unit investment trust under the Investment Company Act of 1940.
The net assets maintained in the Account attributable to the policies provide
the base for the periodic determination of the increased or decreased benefits
under the policies.
NOTE 2 - SEPARATE ACCOUNT ASSETS
As of December 31, 1998, the Account has nineteen separate sub-accounts which
are invested as directed by the contract owner. The Account purchases shares of
each of the sub-accounts subject to the terms of the Participation Agreements
between the Company and the sub-accounts. Shares of each sub-account are offered
at a price equal to their respective net asset values per share, without sales
charge, which represents their fair value. Calvert Asset Management Company,
Inc., an indirectly wholly-owned subsidiary of AFCO, serves as an investment
advisor to the Calvert Variable Series Inc. Calvert Social Money Market, Calvert
Social Small Cap, Calvert Social Mid Cap and Calvert Social International Equity
Portfolios. The Advisors Group, Inc. acts as a principal underwriter of the
policies pursuant to an underwriting agreement with the Company.
In addition to the nineteen separate sub-accounts, a contract owner may also
allocate net premiums to the General Account, which is part of the Company.
Because of exclusionary provisions, interests in the General Account have not
been registered as securities under the Securities Act of 1933 and the General
Account has not been registered as an investment company under the Investment
Company Act of 1940.
5
<PAGE>
The sub-accounts and the respective portfolios in effect during 1998 and 1997
were as follows:
Sub-Account Portfolio Invested
Calvert Variable Series, Inc.:
Social Money Market - Calvert Social Money Market
Social Balanced - Calvert Social Balanced
Social Strategic Growth - Calvert Small Cap Growth
Social Managed Growth - Calvert Mid Cap Growth
Social Global - Calvert Social International Equity
Alger American:
Large Cap Growth - Growth
Mid Cap Growth - Mid Cap Growth
Small Cap Growth - Small Capitalization
S & P 500 Index Dreyfus Stock Index
The Neuberger & Berman Advisers
Management Trust:
Income - Limited Maturity Bond
Growth - Growth
Strong:
Income (closed November, 1997) - Advantage Fund II
Balance (closed November 1997) - Asset Allocation Fund II
International Growth - International Stock Fund II
Aggressive Growth - Discovery Fund II
Hard Assets / Metals Van Eck Worldwide Hard Assets Fund
Oppenheimer Variable Account Funds:
High Income - High Income Fund
Aggressive Growth - Aggressive Growth Fund
Large Cap Growth - Growth Fund
Balanced - Growth & Income Fund
Managed Income - Strategic Bond Fund
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Account in the preparation of the financial statements in
conformity with generally accepted accounting principles.
6
<PAGE>
USE OF ESTIMATES
The preparation of the 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.
INVESTMENTS VALUATION
Investments are stated at market value based on the net asset value of the
underlying investment in each of the respective funds. Net asset values are
based upon market quotations of the securities held in each of the corresponding
portfolios of the sub-accounts.
ACCOUNTING FOR INVESTMENTS
Investment transactions are accounted for on the trade date. Dividend income is
recorded on the ex-dividend date. However, dividends of $30,157 for the S&P 500
Index sub-account and $21,938 for the International Growth sub-account were
received in 1997 and recorded in 1998. All affected policyholder accounts were
adjusted. Identified cost is the basis followed in determining the cost of
investments sold for financial statement purposes.
FEDERAL INCOME TAXES
The operations of the Account are taxed as part of the total operations of the
Company. The Company is taxed as a life insurance company under the Internal
Revenue Code. Under existing law, no taxes are payable on investment income or
realized capital gains of the Account.
NOTE 4 - RELATED PARTY TRANSACTIONS
The following charges are deducted by the Company from the Account's net assets
attributed to each policy:
Premium Expense Charge: Premiums are reduced by a charge equal to 2.25%
of each premium to compensate the Company for expenses associated with
state premium taxes of the policy.
Policy Account Value Charges: The policy account value will be reduced
by a monthly deduction equal to the sum of the cost of insurance charge,
the cost of any optional insurance benefits added by a rider and a
monthly administrative charge equal to $27 per month for the first
policy year and $8 each month thereafter. The cost of insurance will
vary based upon a number of factors including the face amount of the
policy, issue age, attained age and rate class of the insured.
7
<PAGE>
Surrender Charges: A surrender charge will be assessed at 30% of
premiums received up to target premium, as defined in the prospectus,
for years 1-7 decreasing to 10% per year until reaching zero in year 10.
Partial Surrender Charges: During the surrender charge period for the
policy, there will be a charge for a partial surrender equal to 8% of
the amount withdrawn or $25, whichever is greater.
Mortality and Expense Charge: A charge not to exceed an annual rate of
0.90% for years 1-15, decreasing 0.05% per year for years 16 and
thereafter until the annual rate reaches 0.45%, of the average daily net
asset value of the Account applicable to policies issued when each rate
was in effect. These charges are deducted by the Company in return for
its assumption of expenses arising from adverse mortality experience and
excess administrative expenses in connection with the policies issued.
In addition, contract owners bear the investment management fees and
other expense incurred by the Portfolios.
NOTE 5 - PURCHASES AND SALES
The cost of purchases and proceeds from sales for the two years ended December
31,1998 and 1997 for the sub-accounts are as follows:
<TABLE>
<CAPTION>
1998 1997
Cost of Proceeds Cost of Proceeds
Portfolio Purchases from Sales Purchases from Sales
<S> <C> <C> <C> <C>
Social Money Market $4,185,204 $3,896,304 $1,576,665 $1,356,488
Social Balanced 51,740 33,038 23,228 2,786
Social Strategic Growth 78,508 33,784 56,820 28,943
Social Managed Growth 127,123 29,458 12,865 1,060
Social Global 240,225 65,864 1,653
23,900
Large Cap Growth 1,864,992 982,710 850,686 379,075
Mid Cap Growth 584,631 203,243 323,556 112,388
Small Cap Growth 1,631,408 627,108 903,714 569,009
S & P 500 Index 5,617,144 2,023,527 2,121,116 790,528
Income 2,037,878 924,304 938,144 295,076
Growth 1,234,849 508,941 600,065 210,959
Income (closed November, 1997) --- --- 7,191 17,186
Balance (closed November, 1997) --- --- 147,277 236,665
International Growth 2,493,460 1,278,861 1,446,217 372,845
Aggressive Growth 217,294 107,216 184,328 65,795
Hard Assets / Metals 697,333 220,301 267,866 91,078
High Income 438,229 130,891 87,229 17,840
Aggressive Growth 1,253,149 403,757 456,233 101,407
Large Cap Growth 2,059,836 741,995 700,305 117,146
Balanced 759,594 206,440 89,341 17,430
Managed Income 943,259 695,512 24,834 5,280
</TABLE>
8
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT 1
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
(Unaudited)
Calvert Alger
----------------------------------------------- ---------------------
Social Social Social
Money Social Strategic Managed Social Large Cap Mid Cap
Market Balanced Growth Growth Global Growth Growth
------ -------- ------ ------ ------ --------- --------
ASSETS
Investments, identified
<S> <C> <C> <C> <C> <C> <C> <C>
costs $837,078 $178,244 $97,282 $136,102 $353,196 $2,521,566 $852,449
-------- -------- ------- -------- -------- ---------- --------
Investments, at market $840,078 $183,792 $80,160 $138,803 $355,134 $3,147,824 $979,493
-------- -------- ------- -------- -------- ---------- --------
Number of shares 840,078 82,603 8,456 4,686 16,618 53,299 32,401
------- ------ ----- ----- ------ ------ ------
Total and net assets $840,078 $183,792 $80,160 $138,803 $355,134 $3,147,824 $979,493
-------- -------- ------- -------- -------- ---------- --------
ACCUMULATION UNITS
Number of units 713,538 11,196 8,042 8,830 26,484 134,487 55,614
------- ------ ----- ----- ------ ------- ------
NET ASSET VALUE PER
ACCUMULATION UNIT
March 31, 1999 $1.18 $16.42 $9.97 $15.72 $13.41 $23.41 $17.61
----- ------ ----- ------ ------ ------ ------
</TABLE>
See notes to financial statement
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT 1
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
(Unaudited)
Alger Dreyfus Neuberger Berman Strong Van Eck
----- -------- --------------------- ------------------- ---------
Small S&P Inter- Hard
Cap 500 national Aggressive Assets/
Growth Index Income Growth Growth Growth Metals
------- ------ ------- ------- --------- --------- --------
ASSETS
Investments,
<S> <C> <C> <C> <C> <C> <C> <C>
identified costs $2,202,998 $7,334,647 $2,561,968 $1,702,331 $2,695,478 $372,751 $870,657
---------- ---------- ---------- ---------- ---------- -------- --------
Investments,
at market $2,352,110 $8,429,042 $2,458,375 $1,658,408 $2,766,485 $313,740 $751,486
--------- --------- --------- --------- --------- ------- -------
Number of shares 53,119 248,938 187,806 69,187 297,792 32,245 80,030
------ ------- ------- ------ ------- ------ ------
Total and net assets$2,352,110 $8,429,042 $2,458,375 $1,658,408 $2,766,485 $313,740 $751,486
--------- --------- --------- --------- --------- ------- -------
ACCUMULATION UNITS
Number of units 174,869 386,810 209,391 107,894 283,697 29,272 91,777
------- ------- ------- ------- ------- ------ ------
NET ASSET VALUE PER
ACCUMULATION UNIT
March 31, 1999 $13.45 $21.79 $11.74 $15.37 $9.75 $10.72 $8.19
------ ------ ------ ------ ----- ------ -----
</TABLE>
See notes to financial statement
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT 1
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
(Unaudited)
Oppenheimer
-------------------------------------------------------
High Aggressive Large Cap Managed
Income Growth Growth Balanced Income
------- ---------- -------- -------- --------
ASSETS
<S> <C> <C> <C> <C> <C>
Investments, identified costs $508,005 $1,352,993 $2,467,443 $762,671 $677,922
-------- ---------- ---------- -------- --------
Investments, at market $485,256 $1,594,795 $2,745,046 $787,996 $642,621
------- --------- --------- ------- -------
Number of shares 45,607 32,428 73,221 37,488 132,773
------ ------ ------ ------ -------
Total and net assets $485,256 $1,594,795 $2,745,046 $787,996 $642,621
-------- ---------- ---------- -------- --------
ACCUMULATION UNITS
Number of units 42,049 103,227 171,701 56,442 57,922
------ ------- ------- ------ ------
NET ASSET VALUE PER
ACCUMULATION UNIT
March 31, 1999 $11.54 $15.45 $15.99 $13.96 $11.09
------ ------ ------ ------ ------
</TABLE>
See notes to financial statement
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
STATEMENT OF OPERATIONS AND CHANGE IN NET ASSETS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(in thousands)
(Unaudited)
Calvert
------------------------------------------------------------------
Social Social Social
Money Social Strategic Managed Social
Market Balanced Growth Growth Global
OPERATIONS -------- -------- -------- ---------- ---------
Investment Income
<S> <C> <C> <C> <C> <C>
Dividends $7,711 $0 $0 $0 $0
Mortality and expense charge (1,749) (263) (191) (299) (638)
------- ----- ----- ----- -----
Net Investment Income (loss) 5,962 (263) (191) (299) (638)
Realized and Unrealized Gains
(Losses) on Investments:
Realized gains (losses) from
Redemption of fund shares 1,141 294 (717) (11,595) (2,325)
Unrealized appreciation
(Depreciation) of investments 0 4,301 (13,440) 4,329 9,763
------ ----- -------- ----- -----
Net Gain (loss) on
investments Investments 1,141 4,595 (14,157) (7,266) 7,438
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS 7,103 4,332 (14,348) (7,565) 6,800
CAPITAL TRANSACTIONS:
Transfer of premium 552,552 72,066 12,904 17,419 39,899
Contract terminations (371) (129) (225) (5,225) (4)
Policy account value charges (37,254) (4,334) (2,938) (4,853) (9,475)
Sub-account transfers (378,167) 64,709 (2,640) 15,161 112,748
--------- ------ ------- ------ -------
NET INCREASE IN NET
ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 136,760 132,312 7,101 22,502 143,168
------- ------- ----- ------ -------
TOTAL INCREASE IN
NET ASSETS 143,863 136,644 (7,247) 14,937 149,968
NET ASSETS, beginning of
the period 696,215 47,148 87,407 123,866 205,166
------- ------ ------ ------- -------
NET ASSETS, at end of
the period $840,078 $183,792 $80,160 $138,803 $355,134
-------- -------- ------- -------- --------
UNITS ISSUED AND REDEEMED
REDEEMED
Beginning balance 598,035 2,990 7,476 7,670 15,712
Units Issued 1,516,423 8,598 1,847 8,383 12,111
United redeemed 1,400,920 392 1,281 7,223 1,339
--------- --- ----- ----- -----
Ending balance 713,538 11,196 8,042 8,830 26,484
------- ------ ----- ----- ------
</TABLE>
See notes to financial statement
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
STATEMENT OF OPERATIONS AND CHANGE IN NET ASSETS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(in thousands)
(Unaudited)
Neuberger
Alger Dreyfus Berman
------------------------------------- ---------- -----------
S & P
Large Cap Mid Cap Small Cap 500
Growth Growth Growth Index Income
OPERATIONS ------- -------- --------- ------ ----------
Investment Income
<S> <C> <C> <C> <C> <C>
Dividends $0 $0 $0 $58,903 $132,944
Mortality and expense charge (6,320) (2,085) (5,008) (17,192) (5,114)
------- ------- ------- -------- -------
Net Investment Income (loss) (6,320) (2,085) (5,008) 41,711 127,830
Realized and Unrealized Gains
(Losses) on Investments:
Realized gains (losses) from
Redemption of fund shares 59,805 33,138 9,147 79,753 (6,128)
Unrealized appreciation
(Depreciation) of investments 217,813 9,920 12,458 189,436 (120,850)
------- ----- ------ ------- ---------
Net Gain (loss) on
Investments Iinvestments 277,618 43,058 21,605 269,189 (126,978)
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS 271,298 40,973 16,597 310,900 852
CAPITAL TRANSACTIONS:
Transfer of premium 620,287 119,955 377,389 1,522,101 478,637
Contract terminations (15,863) (6,349) (12,410) (49,708) (12,531)
Policy account value charges (89,166) (29,355) (71,636) (292,219) (79,057)
Sub-account transfers (40,494) 3,246 (3,511) 270,109 37,647
-------- ----- ------- ------- ------
NET INCREASE IN NET
ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 474,764 87,497 289,832 1,450,283 424,696
------- ------ ------- --------- -------
TOTAL INCREASE IN
NET ASSETS 746,062 128,470 306,429 1,761,183 425,548
NET ASSETS, beginning of
the period 2,401,762 851,023 2,045,681 6,667,859 2,032,827
--------- ------- --------- --------- ---------
NET ASSETS, at end of
the period $ 3,147,824 $ 979,493 $2,352,110 $8,429,042 $2,458,375
----------- --------- ---------- ---------- ----------
UNITS ISSUED AND REDEEMED
REDEEMED
Beginning balance 113,872 50,595 153,159 320,865 173,713
Units Issued 40,225 15,922 41,326 103,968 64,924
United redeemed 19,610 10,903 19,616 38,023 29,246
------ ------ ------ ------ ------
Ending balance 134,487 55,614 174,869 386,810 209,391
------- ------ ------- ------- -------
</TABLE>
See notes to financial statement
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
STATEMENT OF OPERATIONS AND CHANGE IN NET ASSETS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(in thousands)
(Unaudited)
Neuberger
Berman Strong International Van Eck Oppenheimer
------------- ---------------------- ----------- --------------
Inter- Hard
national Aggressive Assets/ High
Growth Growth Growth Metals Income
OPERATIONS ------- -------- ---------- -------- ------------
Investment Income
<S> <C> <C> <C> <C> <C>
Dividends $88,404 $11,187 $44,830 $9,610 $30,951
Mortality and expense charge (3,651) (5,898) (740) (1,519) (976)
------- ------- ----- ------- -----
Net Investment Income (loss)
Realized and Unrealize 84,753 5,289 44,090 8,091 29,975
Realized and Unrealized Gains
(Losses) on Investments:
Realized gains (losses) from
Redemption of fund shares (5,920) (90,074) 3,381 (18,548) (2,538)
Unrealized appreciation
(Depreciation) of investments (135,318) 239,675 (81,979) 35,481 (12,408)
--------- ------- -------- ------ --------
Net Gain (loss) on
investments investment (141,238) 149,601 (78,598) 16,933 (14,946)
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS (56,485) 154,890 (34,508) 25,024 15,029
CAPITAL TRANSACTIONS:
Transfer of premium 280,679 446,641 34,027 142,529 129,536
Contract terminations (8,790) (27,507) (1,803) (5,304) (580)
Policy account value charges (50,688) (88,282) (7,511) (23,916) (13,509)
Sub-account transfers (54,387) (132,162) (12,823) 30,876 (16,621)
-------- --------- -------- ------ --------
NET INCREASE IN NET
ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 166,814 198,690 11,890 144,185 98,826
------- ------- ------ ------- ------
TOTAL INCREASE IN
NET ASSETS 110,329 353,580 (22,618) 169,209 113,855
NET ASSETS, beginning of
the period 1,548,079 2,412,905 336,358 582,277 371,401
--------- --------- ------- ------- -------
NET ASSETS, at end of
the period $1,658,408 $ 2,766,485 $313,740 $751,486 $485,256
---------- ----------- -------- -------- --------
UNITS ISSUED AND REDEEMED
REDEEMED
Beginning balance 97,419 262,868 28,197 73,721 33,313
Units Issued 25,153 131,487 4,780 30,042 18,391
United redeemed 14,678 110,658 3,705 11,986 9,655
------ ------- ----- ------ -----
Ending balance 107,894 283,697 29,272 91,777 42,049
------- ------- ------ ------ ------
</TABLE>
See notes to financial statement
<PAGE>
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
STATEMENT OF OPERATIONS AND CHANGE IN NET ASSETS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(in thousands)
(Unaudited)
Oppenheimer
------------------------------------------------
Aggressive Large Cap Managed
Growth Growth Balanced Income
OPERATIONS ----------- ---------- -------- --------
Investment Income
Dividends $(2) $108,577 $9,233 $37,569
Mortality and expense charge (3,351) (5,693) (1,624) (1,045)
------- ------- ------- -------
Net Investment Income (loss) (3,353) 102,884 7,609 36,524
Realized and Unrealized Gains
(Losses) on Investments:
Realized gains (losses) from
Redemption of fund shares 14,096 7,893 (15,946) (2,839)
Unrealized appreciation
(Depreciation) of 121,862 31,816 26,485 (34,365)
------- ------ ------ --------
investments
Net Gain (loss) on 135,958 39,709 10,539 (37,204)
Investments Iinvestments
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS 132,605 142,593 18,148 (680)
CAPITAL TRANSACTIONS:
Transfer of premium 293,997 482,410 148,009 396,767
Contract terminations (12,068) (24,796) (15,873) (123)
Policy account value (51,373) (88,064) (31,643) (10,379)
charges
Sub-account transfers (115,914) (20,924) 31,459 (18,257)
--------- -------- ------ --------
NET INCREASE IN NET
ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 114,642 348,626 131,952 368,008
------- ------- ------- -------
TOTAL INCREASE IN
NET ASSETS 247,247 491,219 150,100 367,328
NET ASSETS, beginning of
the period 1,347,548 2,253,827 637,896 275,293
--------- --------- ------- -------
NET ASSETS, at end of
the period $1,594,795 $2,745,046 $787,996 $642,621
---------- ---------- -------- --------
UNITS ISSUED AND REDEEMED
REDEEMED
Beginning balance 95,687 150,216 47,458 24,847
Units Issued 26,004 41,999 22,996 43,398
United redeemed 18,464 20,514 14,012 10,323
------ ------ ------ ------
Ending balance 103,227 171,701 56,442 57,922
------- ------- ------ ------
See notes to financial statement
<PAGE>
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENT
MARCH 31, 1999
(UNAUDITED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of the financial statement 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 statement and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
INVESTMENTS VALUATION
Investments are stated at market value based on the net asset value of the
underlying investment in each of the respective funds. Net asset values are
based upon market quotations of the securities held in each of the corresponding
portfolios of the subaccounts.
ACCOUNTING FOR INVESTMENTS
Investment transactions are accounted for on the trade date. Dividend income is
recorded on the ex-dividend date. Identified cost is the basis followed in
determining the cost of investments sold for financial statement purposes.
2. BASIS OF PRESENTATION OF UNAUDITED INTERIM FINANCIAL STATEMENTS
Management believes that all adjustments, consisting of only normal recurring
accruals, considered necessary for a fair presentation of the unaudited interim
financial statement have been included. The results of operations for any
interim period are not necessarily indicative of results for the full year. The
unaudited interim financial statement should be read in conjunction with the
audited financial statement and notes thereto for the years ended December 31,
1998 and 1997.
<PAGE>
- --------------------------------------------------------------------------------
Appendix A
Illustrations of Death Benefits and Cash Values
The following tables illustrate how the Accumulation Values and Death Benefits
of a Policy may change with the investment experience of the Fund. The tables
show how the Accumulation Values and Death Benefits of a Policy issued at a
given premium on Insureds of given ages and specified underwriting risk
classifications would vary over time if the investment return on the assets held
in each portfolio of the Funds were a uniform, gross, after-tax annual rate of
12%, 6%, or 0%. The tables on pages A-2 through A-7 illustrate a Policy issued
to a male, age 65 under a Preferred rate non-tobacco underwriting risk
classification and a female age 65, also under a Preferred rate non-tobacco
underwriting risk classification. This Policy provides for standard tobacco use
and non-tobacco use, and preferred non-tobacco classifications. The Accumulation
Values and Death Benefits would be different from those shown if the gross
annual investment rates of return averaged 12%, 6%, and 0% over a period of
years, but fluctuated above and below those averages for individual Policy
Years, or if the Insureds were assigned to different underwriting risk
classifications.
The first two columns of the tables show the Policy Years and End of Year Age.
The next two columns show Annual Premium Outlay and the Net Annual Rate of
Return (ROR). The following columns show the Total Accumulated Value, Total
Surrender Value and Total Death Benefit. The columns headed Current Charges
assume that, throughout the life of the Policy, the monthly Cost of Insurance is
based on the current Cost of Insurance Rates and that current expense deductions
and the current percent of premium load are applied. This reflects the basis on
which ANLIC currently sells its Policies. The columns headed Guaranteed Charges
assume that, throughout the life of the Policy, the monthly Cost of Insurance is
based on the maximum Cost of Insurance Rate permitted under the Policy and that
the maximum allowable expense deductions and percent of premium loads are
applied. The maximum allowable Cost of Insurance Rates under the Policy are
based upon the 1980 Commissioner's Standard Ordinary Smoker and Non-Smoker, Male
and Female Mortality Tables (Smoker is referenced for tobacco use rates;
Non-Smoker is referenced for non-tobacco use rates). Since these are recent
tables and are split to reflect tobacco use and sex, the current Cost of
Insurance Rates used by ANLIC are at this time equal to the maximum Cost of
Insurance Rates for many ages. ANLIC anticipates reflecting future improvements
in actual mortality experience through adjustments in the current cost of
insurance rates actually applied. ANLIC also anticipates reflecting any future
improvements in expenses incurred by applying lower percent of premiums of loads
and other expense deductions. The tables on pages A-2 through A-4 are based on a
level Death Benefit Option (Option A) and the tables on pages A-5 through A-7
are based on an increasing Death Benefit Option (Option B).
The amounts shown for the Accumulation Values, Surrender values and Death
Benefits reflect the fact that the net investment return of the Subaccounts is
lower than the gross, after-tax return of the assets held in the Funds as a
result of expenses paid by the Fund and charges levied against the Subaccounts.
The values shown take into account an average of the expenses paid by each
portfolio available for investment at an equivalent annual rate of .95% (which
is in excess of the current equivalent annual rate of .92% of the aggregate
average daily net assets of the Funds). Certain of the Funds entered into
arrangements for reimbursements and waivers for portions of expenses. Without
these arrangements, expenses would have been higher, as follows: 0.88% for CVS
Balanced, 1.06% for CVS Mid Cap, 0.66% for CVS Money Market, 1.80% for CVS
International Equity, 1.33% for CVS Small Cap, and 1.20% for Van Eck Worldwide
Hard Assets Fund. These agreements are expected to continue in future years but
may be terminated at any time. As long as the expense limitations continue for a
portfolio, if a reimbursement occurs, it has the effect of lowering the
portfolio's expense ratio and increasing its total return. The illustrated gross
annual investment rates of return of 12%, 6%, and 0% were computed after
deducting Fund expenses and correspond to approximate net annual rates of
10.15%, 4.15%, and -1.85%, respectively, for years 1-15 and 10.60%, 4.60%, and
- -1.40%, respectively, for the years thereafter.
The hypothetical values shown in the tables do not reflect any charges for
federal income tax burden attributable to Separate Account I, since ANLIC is not
currently making such charges. However, such charges may be made in the future
and, in that event, the gross annual investment rate of return would have to
exceed 12 percent, 6 percent, or 0 percent by an amount sufficient to cover the
tax charges in order to produce the death benefits and values illustrated. (See
the section on Federal Tax Matters.)
The tables illustrate the Policy values that would result based upon the
hypothetical investment rates of return if premiums are paid as indicated, if
all net premiums are allocated to Separate Account I, and if no Policy loans
have been made. The tables are also based on the assumptions that the Policy
Owner has not requested an increase or decrease in the initial Specified Amount,
that no partial withdrawals have been made, and that no more than fifteen
transfers have been made in any Policy Year so that no transfer charges have
been incurred. Illustrated values would be different if the proposed Insureds
were both male or both female, tobacco users, in substandard risk
classifications, or were other ages, or if a higher or lower premium was
illustrated.
Upon request, ANLIC will provide comparable illustrations based upon the
proposed Insureds' ages, sexes and underwriting classifications, the Specified
Amount, the Death Benefit option, and planned periodic premium schedule
requested, and any available riders requested. In addition, upon client request,
illustrations may be furnished reflecting allocation of premiums to specified
Subaccounts. Such illustrations will reflect the expenses of the portfolio in
which the Subaccount invests.
REGENT 2000
A-1
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Acacia National Life Insurance Company
Regent 2000 Survivorship Flexible Premium Variable Life
Insurance Illustration (Form 8065)
- -----------------------------------------------------------------------------------------------
Insured Name Client / Client Spouse Annual Premium 19,660
Sex Male / Female Specified Amount 1,000,000
Age 65 / 65 Death Benefit Option Level
Insured Class Preferred / Preferred Riders None
- -----------------------------------------------------------------------------------------------
12% Hypothetical Gross Annual Rate of Return (ROR)
---------------------------------------------------
Current Charges Guaranteed Charges
--------------- -------------------
End of End of Annual Net Total Total Total Total Total
Policy Year Premium Annual Accumulation Surrender Death Surrender Death
Year Age Outlay ROR Value Value Benefit Value Benefit
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 66 / 66 19,660 10.15% 20,274 614 1,000,000 513 1,000,000
2 67 / 67 19,660 10.15% 42,252 22,592 1,000,000 21,864 1,000,000
3 68 / 68 19,660 10.15% 66,057 46,397 1,000,000 44,507 1,000,000
4 69 / 69 19,660 10.15% 91,842 72,182 1,000,000 68,440 1,000,000
5 70 / 70 19,660 10.15% 119,792 100,132 1,000,000 93,644 1,000,000
------
Total 98,300
6 71 / 71 19,660 10.15% 150,780 133,090 1,000,000 122,040 1,000,000
7 72 / 72 19,660 10.15% 184,447 168,727 1,000,000 151,563 1,000,000
8 73 / 73 19,660 10.15% 221,047 207,287 1,000,000 182,042 1,000,000
9 74 / 74 19,660 10.15% 260,927 249,137 1,000,000 213,289 1,000,000
10 75 / 75 19,660 10.15% 304,421 294,591 1,000,000 245,064 1,000,000
-------
Total 196,600
11 76 / 76 19,660 10.15% 351,992 344,132 1,000,000 277,180 1,000,000
12 77 / 77 19,660 10.15% 404,065 398,175 1,000,000 309,464 1,000,000
13 78 / 78 19,660 10.15% 461,232 457,302 1,000,000 341,789 1,000,000
14 79 / 79 19,660 10.15% 524,079 522,119 1,000,000 374,082 1,000,000
15 80 / 80 19,660 10.15% 593,333 593,333 1,000,000 406,203 1,000,000
-------
Total 294,900
16 81 / 81 19,660 10.60% 672,239 672,239 1,000,000 437,910 1,000,000
17 82 / 82 19,660 10.60% 759,506 759,506 1,000,000 469,512 1,000,000
18 83 / 83 19,660 10.60% 856,759 856,759 1,000,000 500,861 1,000,000
19 84 / 84 19,660 10.60% 966,246 966,246 1,014,558 531,908 1,000,000
20 85 / 85 19,660 10.60% 1,087,990 1,087,990 1,142,390 562,783 1,000,000
-------
Total 393,200
25 90 / 90 19,660 10.60% 1,903,794 1,903,794 1,998,983 739,686 1,000,000
30 95 / 95 19,660 10.60% 3,233,630 3,233,630 3,265,966 1,190,578 1,202,484
35 100 /100 19,660 10.60% 5,446,983 5,446,983 5,501,453 2,052,835 2,073,363
-------
Total 688,100
</TABLE>
THIS ILLUSTRATION IS NOT AUTHORIZED FOR USE UNLESS PRECEDED OR ACCOMPANIED BY A
PROSPECTUS, AND PRESENTED BY A REGISTERED REPRESENTATIVE. THIS ILLUSTRATION IS
INTENDED TO SHOW POLICY VALUES AND BENEFITS BASED ON THE HYPOTHETICAL
PERFORMANCE OF THE UNDERLYING INVESTMENT ACCOUNTS AND MAY NOT BE USED TO PREDICT
INVESTMENT RESULTS.
REGENT 2000
A-2
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Acacia National Life Insurance Company
Regent 2000 Survivorship Flexible Premium Variable Life Insurance Illustration
(Form 8065)
- -----------------------------------------------------------------------------------------------
Insured Name Client / Client Spouse Annual Premium 19,660
Sex Male / Female Specified Amount 1,000,000
Age 65 / 65 Death Benefit Option Level
Insured Class Preferred / Preferred Riders None
- -----------------------------------------------------------------------------------------------
6% Hypothetical Gross Annual Rate of Return (ROR)
-----------------------------------------------
Current Charges Guaranteed Charges
--------------- -------------------
End of End of Annual Net Total Total Total Total Total
Policy Year Premium Annual Accumulation Surrender Death Surrender Death
Year Age Outlay ROR Value Value Benefit Value Benefit
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 66 / 66 19,660 4.15% 19,148 0 1,000,000 0 1,000,000
2 67 / 67 19,660 4.15% 38,746 19,086 1,000,000 18,389 1,000,000
3 68 / 68 19,660 4.15% 58,763 39,103 1,000,000 37,321 1,000,000
4 69 / 69 19,660 4.15% 79,177 59,517 1,000,000 56,042 1,000,000
5 70 / 70 19,660 4.15% 99,984 80,324 1,000,000 74,378 1,000,000
-------
Total 98,300
6 71 / 71 19,660 4.15% 121,817 104,127 1,000,000 94,080 1,000,000
7 72 / 72 19,660 4.15% 144,057 128,337 1,000,000 112,886 1,000,000
8 73 / 73 19,660 4.15% 166,674 152,914 1,000,000 130,404 1,000,000
9 74 / 74 19,660 4.15% 189,700 177,910 1,000,000 146,180 1,000,000
10 75 / 75 19,660 4.15% 213,102 203,272 1,000,000 159,657 1,000,000
-------
Total 196,600
11 76 / 76 19,660 4.15% 236,938 229,078 1,000,000 170,258 1,000,000
12 77 / 77 19,660 4.15% 261,146 255,256 1,000,000 177,322 1,000,000
13 78 / 78 19,660 4.15% 285,777 281,847 1,000,000 180,109 1,000,000
14 79 / 79 19,660 4.15% 310,766 308,806 1,000,000 177,756 1,000,000
15 80 / 80 19,660 4.15% 336,080 336,080 1,000,000 169,084 1,000,000
-------
Total 294,900
16 81 / 81 19,660 4.60% 362,619 362,619 1,000,000 151,320 1,000,000
17 82 / 82 19,660 4.60% 388,161 388,161 1,000,000 123,493 1,000,000
18 83 / 83 19,660 4.60% 412,267 412,267 1,000,000 82,623 1,000,000
19 84 / 84 19,660 4.60% 434,373 434,373 1,000,000 24,764 1,000,000
20 85 / 85 19,660 4.60% 453,933 453,933 1,000,000 0 1,000,000
-------
Total 393,200
25 90 / 90 19,660 4.60% 505,184 505,184 1,000,000 0 0
30 95 / 95 19,660 4.60% 397,587 397,587 1,000,000 0 0
35 100 / 100 19,660 4.60% 0 0 0 0 0
-------
Total 688,100
THIS ILLUSTRATION IS NOT AUTHORIZED FOR USE UNLESS PRECEDED OR ACCOMPANIED BY A
PROSPECTUS, AND PRESENTED BY A REGISTERED REPRESENTATIVE. THIS ILLUSTRATION IS
INTENDED TO SHOW POLICY VALUES AND BENEFITS BASED ON THE HYPOTHETICAL
PERFORMANCE OF THE UNDERLYING INVESTMENT ACCOUNTS AND MAY NOT BE USED TO PREDICT
INVESTMENT RESULTS.
</TABLE>
REGENT 2000
A-3
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Acacia National Life Insurance Company
Regent 2000 Survivorship Flexible Premium Variable Life Insurance Illustration
(Form 8065)
- -----------------------------------------------------------------------------------------------
Insured Name Client / Client Spouse Annual Premium 19,660
Sex Male / Female Specified Amount 1,000,000
Age 65 / 65 Death Benefit Option Level
Insured Class Preferred / Preferred Riders None
- -----------------------------------------------------------------------------------------------
0% Hypothetical Gross Annual Rate of Return (ROR)
-------------------------------------------------------
Current Charges Guaranteed Charges
--------------- ------------------
End of End of Annual Net Total Total Total Total Total
Policy Year Premium Annual Accumulation Surrender Death Surrender Death
Year Age Outlay ROR Value Value Benefit Value Benefit
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 66 / 66 19,660 -1.85% 18,022 0 1,000,000 0 1,000,000
2 67 / 67 19,660 -1.85% 35,377 15,717 1,000,000 15,050 1,000,000
3 68 / 68 19,660 -1.85% 52,024 32,364 1,000,000 30,688 1,000,000
4 69 / 69 19,660 -1.85% 67,937 48,277 1,000,000 45,055 1,000,000
5 70 / 70 19,660 -1.85% 83,100 63,440 1,000,000 58,001 1,000,000
-------
Total 98,300
6 71 / 71 19,660 -1.85% 98,117 80,427 1,000,000 71,300 1,000,000
7 72 / 72 19,660 -1.85% 112,336 96,616 1,000,000 82,719 1,000,000
8 73 / 73 19,660 -1.85% 125,712 111,952 1,000,000 91,897 1,000,000
9 74 / 74 19,660 -1.85% 138,254 126,464 1,000,000 98,417 1,000,000
10 75 / 75 19,660 -1.85% 149,906 140,076 1,000,000 101,757 1,000,000
-------
Total 196,600
11 76 / 76 19,660 -1.85% 160,693 152,833 1,000,000 101,385 1,000,000
12 77 / 77 19,660 -1.85% 170,514 164,624 1,000,000 96,686 1,000,000
13 78 / 78 19,660 -1.85% 179,379 175,449 1,000,000 86,976 1,000,000
14 79 / 79 19,660 -1.85% 187,158 185,198 1,000,000 71,457 1,000,000
15 80 / 80 19,660 -1.85% 193,746 193,746 1,000,000 49,025 1,000,000
-------
Total 294,900
16 81 / 81 19,660 -1.40% 199,177 199,177 1,000,000 16,422 1,000,000
17 82 / 82 19,660 -1.40% 201,370 201,370 1,000,000 0 1,000,000
18 83 / 83 19,660 -1.40% 199,568 199,568 1,000,000 0 1,000,000
19 84 / 84 19,660 -1.40% 192,741 192,741 1,000,000 0 1,000,000
20 85 / 85 19,660 -1.40% 179,756 179,756 1,000,000 0 1,000,000
-------
Total 393,200
25 90 / 90 19,660 -1.40% 0 0 0 0 0
30 95 / 95 19,660 -1.40% 0 0 0 0 0
35 100 / 100 19,660 -1.40% 0 0 0 0 0
-------
Total 688,100
</TABLE>
THIS ILLUSTRATION IS NOT AUTHORIZED FOR USE UNLESS PRECEDED OR ACCOMPANIED BY A
PROSPECTUS, AND PRESENTED BY A REGISTERED REPRESENTATIVE. THIS ILLUSTRATION IS
INTENDED TO SHOW POLICY VALUES AND BENEFITS BASED ON THE HYPOTHETICAL
PERFORMANCE OF THE UNDERLYING INVESTMENT ACCOUNTS AND MAY NOT BE USED TO PREDICT
INVESTMENT RESULTS.
REGENT 2000
A-4
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Acacia National Life Insurance Company
Regent 2000 Survivorship Flexible Premium Variable Life Insurance Illustration
(Form 8065)
- -----------------------------------------------------------------------------------------------
Insured Name Client / Client Spouse Annual Premium 566,796
Sex Male / Female Specified Amount 5,000,000
Age 65 / 65 Death Benefit Option Increasing
Insured Class Preferred / Preferred Riders None
- -----------------------------------------------------------------------------------------------
12% Hypothetical Gross Annual Rate of Return (ROR)
---------------------------------------------------------
Current Charges Guaranteed Charges
--------------- ------------------
End of End of Annual Net Total Total Total Total Total
Policy Year Premium Annual Accumulation Surrender Death Surrender Death
Year Age Outlay ROR Value Value Benefit Value Benefit
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 66 / 66 566,796 10.15% 606,298 508,298 5,606,298 508,096 5,606,096
2 67 / 67 566,796 10.15% 1,272,273 1,174,273 6,272,273 1,167,327 6,265,327
3 68 / 68 566,796 10.15% 2,003,629 1,905,629 7,003,629 1,888,710 6,986,710
4 69 / 69 566,796 10.15% 2,806,694 2,708,694 7,806,694 2,677,572 7,775,572
5 70 / 70 566,796 10.15% 3,688,503 3,590,503 8,688,503 3,539,601 8,637,601
---------
Total 2,833,980
6 71 / 71 566,796 10.15% 4,659,818 4,571,618 9,659,818 4,490,576 9,578,776
7 72 / 72 566,796 10.15% 5,726,386 5,647,986 10,726,386 5,526,852 10,605,252
8 73 / 73 566,796 10.15% 6,897,418 6,828,818 11,897,418 6,654,666 11,723,266
9 74 / 74 566,796 10.15% 8,183,398 8,124,598 13,183,398 7,880,391 12,939,191
10 75 / 75 566,796 10.15% 9,595,443 9,546,443 14,595,443 9,210,737 14,259,737
---------
Total 5,667,960
11 76 / 76 566,796 10.15% 11,146,334 11,107,134 16,146,334 10,652,951 15,692,151
12 77 / 77 566,796 10.15% 12,849,329 12,819,929 17,849,329 12,215,024 17,244,424
13 78 / 78 566,796 10.15% 14,719,751 14,700,151 19,719,751 13,905,790 18,925,390
14 79 / 79 566,796 10.15% 16,773,579 16,763,779 21,773,579 15,734,805 20,744,605
15 80 / 80 566,796 10.15% 19,028,568 19,028,568 24,028,568 17,711,963 22,711,963
---------
Total 8,501,940
16 81 / 81 566,796 10.60% 21,586,986 21,586,986 26,586,986 19,918,959 24,918,959
17 82 / 82 566,796 10.60% 24,395,296 24,395,296 29,395,296 22,312,084 27,312,084
18 83 / 83 566,796 10.60% 27,475,033 27,475,033 32,475,033 24,903,965 29,903,965
19 84 / 84 566,796 10.60% 30,848,714 30,848,714 35,848,714 27,708,523 32,708,523
20 85 / 85 566,796 10.60% 34,541,422 34,541,422 39,541,422 30,741,810 35,741,810
---------
Total 11,335,920
25 90 / 90 566,796 10.60% 59,020,801 59,020,801 64,020,801 50,103,315 55,103,315
30 95 / 95 566,796 10.60% 97,804,706 97,804,706 102,804,706 79,197,778 84,197,778
35 100 /100 566,796 10.60% 160,175,829 160,175,829 165,175,829 117,674,237 122,674,237
---------
Total 19,837,860
</TABLE>
THIS ILLUSTRATION IS NOT AUTHORIZED FOR USE UNLESS PRECEDED OR ACCOMPANIED BY A
PROSPECTUS, AND PRESENTED BY A REGISTERED REPRESENTATIVE. THIS ILLUSTRATION IS
INTENDED TO SHOW POLICY VALUES AND BENEFITS BASED ON THE HYPOTHETICAL
PERFORMANCE OF THE UNDERLYING INVESTMENT ACCOUNTS AND MAY NOT BE USED TO PREDICT
INVESTMENT RESULTS.
REGENT 2000
A-5
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Acacia National Life Insurance Company
Regent 2000 Survivorship Flexible Premium Variable Life Insurance Illustration
(Form 8065)
- -----------------------------------------------------------------------------------------------
Insured Name Client / Client Spouse Annual Premium 566,796
Sex Male / Female Specified Amount 5,000,000
Age 65 / 65 Death Benefit Option Increasing
Insured Class Preferred / Preferred Riders None
- -----------------------------------------------------------------------------------------------
6% Hypothetical Gross Annual Rate of Return (ROR)
--------------------------------------------------------
Current Charges Guaranteed Charges
--------------- -----------------------
End of End of Annual Net Total Total Total Total Total
Policy Year Premium Annual Accumulation Surrender Death Surrender Death
Year Age Outlay ROR Value Value Benefit Value Benefit
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 66 / 66 566,796 4.15% 573,176 475,176 5,573,176 474,979 5,572,979
2 67 / 67 566,796 4.15% 1,168,332 1,070,332 6,168,332 1,063,721 6,161,721
3 68 / 68 566,796 4.15% 1,786,038 1,688,038 6,786,038 1,672,278 6,770,278
4 69 / 69 566,796 4.15% 2,426,932 2,328,932 7,426,932 2,300,520 7,398,520
5 70 / 70 566,796 4.15% 3,091,737 2,993,737 8,091,737 2,948,139 8,046,139
---------
Total 2,833,980
6 71 / 71 566,796 4.15% 3,784,130 3,695,930 8,784,130 3,624,327 8,712,527
7 72 / 72 566,796 4.15% 4,502,019 4,423,619 9,502,019 4,318,242 9,396,642
8 73 / 73 566,796 4.15% 5,246,017 5,177,417 10,246,017 5,028,260 10,096,860
9 74 / 74 566,796 4.15% 6,017,086 5,958,286 11,017,086 5,752,211 10,811,011
10 75 / 75 566,796 4.15% 6,815,815 6,766,815 11,815,815 6,487,526 11,536,526
---------
Total 5,667,960
11 76 / 76 566,796 4.15% 7,643,331 7,604,131 12,643,331 7,231,382 12,270,582
12 77 / 77 566,796 4.15% 8,500,011 8,470,611 13,500,011 7,980,841 13,010,241
13 78 / 78 566,796 4.15% 9,386,946 9,367,346 14,386,946 8,732,863 13,752,463
14 79 / 79 566,796 4.15% 10,304,394 10,294,594 15,304,394 9,484,099 14,493,899
15 80 / 80 566,796 4.15% 11,252,771 11,252,771 16,252,771 10,230,435 15,230,435
---------
Total 8,501,940
16 81 / 81 566,796 4.60% 12,280,353 12,280,353 17,280,353 11,004,698 16,004,698
17 82 / 82 566,796 4.60% 13,334,358 13,334,358 18,334,358 11,767,707 16,767,707
18 83 / 83 566,796 4.60% 14,411,107 14,411,107 19,411,107 12,511,882 17,511,882
19 84 / 84 566,796 4.60% 15,505,452 15,505,452 20,505,452 13,229,205 18,229,205
20 85 / 85 566,796 4.60% 16,612,145 16,612,145 21,612,145 13,911,876 18,911,876
----------
Total 11,335,920
25 90 / 90 566,796 4.60% 22,262,254 22,262,254 27,262,254 16,568,989 21,568,989
30 95 / 95 566,796 4.60% 27,772,571 27,772,571 32,772,571 17,215,411 22,215,411
35 100 / 100 566,796 4.60% 32,930,077 32,930,077 37,930,077 8,739,217 13,739,217
----------
Total 19,837,860
</TABLE>
THIS ILLUSTRATION IS NOT AUTHORIZED FOR USE UNLESS PRECEDED OR ACCOMPANIED BY A
PROSPECTUS, AND PRESENTED BY A BASED ON THE HYPOTHETICAL PERFORMANCE OF THE
UNDERLYING INVESTMENT ACCOUNTS AND MAY NOT BE USED TO PREDICT INVESTMENT
RESULTS.
REGENT 2000
A-6
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Acacia National Life Insurance Company
Regent 2000 Survivorship Flexible Premium Variable Life Insurance Illustration
(Form 8065)
- -----------------------------------------------------------------------------------------------
Insured Name Client / Client Spouse Annual Premium 566,796
Sex Male / Female Specified Amount 5,000,000
Age 65 / 65 Death Benefit Option Increasing
Insured Class Preferred / Preferred Riders None
- -----------------------------------------------------------------------------------------------
0% Hypothetical Gross Annual Rate of Return (ROR)
--------------------------------------------------------
Current Charges Guaranteed Charges
--------------- ------------------
End of End of Annual Net Total Total Total Total Total
Policy Year Premium Annual Accumulation Surrender Death Surrender Death
Year Age Outlay ROR Value Value Benefit Value Benefit
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 66 / 66 566,796 -1.85% 540,055 442,055 5,540,055 441,865 5,539,865
2 67 / 67 566,796 -1.85% 1,068,370 970,370 6,068,370 964,095 6,062,095
3 68 / 68 566,796 -1.85% 1,584,831 1,486,831 6,584,831 1,472,193 6,570,193
4 69 / 69 566,796 -1.85% 2,089,366 1,991,366 7,089,366 1,965,495 7,063,495
5 70 / 70 566,796 -1.85% 2,581,965 2,483,965 7,581,965 2,443,185 7,541,185
---------
Total 2,833,980
6 71 / 71 566,796 -1.85% 3,065,449 2,977,249 8,065,449 2,913,983 8,002,183
7 72 / 72 566,796 -1.85% 3,536,849 3,458,449 8,536,849 3,366,630 8,445,030
8 73 / 73 566,796 -1.85% 3,995,956 3,927,356 8,995,956 3,799,175 8,867,775
9 74 / 74 566,796 -1.85% 4,442,879 4,384,079 9,442,879 4,209,230 9,268,030
10 75 / 75 566,796 -1.85% 4,877,323 4,828,323 9,877,323 4,594,157 9,643,157
---------
Total 5,667,960
11 76 / 76 566,796 -1.85% 5,299,497 5,260,297 10,299,497 4,951,217 9,990,417
12 77 / 77 566,796 -1.85% 5,708,832 5,679,432 10,708,832 5,277,722 10,307,122
13 78 / 78 566,796 -1.85% 6,105,446 6,085,846 11,105,446 5,571,048 10,590,648
14 79 / 79 566,796 -1.85% 6,488,603 6,478,803 11,488,603 5,828,440 10,838,240
15 80 / 80 566,796 -1.85% 6,857,721 6,857,721 11,857,721 6,046,578 11,046,578
---------
Total 8,501,940
16 81 / 81 566,796 -1.40% 7,240,438 7,240,438 12,240,438 6,240,502 11,240,502
17 82 / 82 566,796 -1.40% 7,597,520 7,597,520 12,597,520 6,386,096 11,386,096
18 83 / 83 566,796 -1.40% 7,924,552 7,924,552 12,924,552 6,477,139 11,477,139
19 84 / 84 566,796 -1.40% 8,215,905 8,215,905 13,215,905 6,507,395 11,507,395
20 85 / 85 566,796 -1.40% 8,466,154 8,466,154 13,466,154 6,471,276 11,471,276
----------
Total 11,335,920
25 90 / 90 566,796 -1.40% 9,035,214 9,035,214 14,035,214 5,162,127 10,162,127
30 95 / 95 566,796 -1.40% 8,197,627 8,197,627 13,197,627 1,591,083 6,591,083
35 100 /100 566,796 -1.40% 5,885,467 5,885,467 10,885,467 0 0
----------
Total 19,837,860
</TABLE>
THIS ILLUSTRATION IS NOT AUTHORIZED FOR USE UNLESS PRECEDED OR ACCOMPANIED BY A
PROSPECTUS, AND PRESENTED BY A REGISTERED REPRESENTATIVE. THIS ILLUSTRATION IS
INTENDED TO SHOW POLICY VALUES AND BENEFITS BASED ON THE HYPOTHETICAL
PERFORMANCE OF THE UNDERLYING INVESTMENT ACCOUNTS AND MAY NOT BE USED TO PREDICT
INVESTMENT RESULTS.
REGENT 2000
A-7
