<PAGE> 1
As filed with the Securities and Exchange Commission on
April 28, 2000
Registration No. 333-81057
======================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Post-Effective Amendment No. 2
to
Form S-6
---------------
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
----------------
Acacia National Variable Life Insurance
Separate Account I
(Exact Name of Registrant)
----------------
Acacia National Life Insurance Company
(Depositor)
7315 Wisconsin Avenue Bethesda, MD 20814
----------------
Robert-John H. Sands Senior Vice President, Corporate Secretary
and General Counsel
Acacia National Life Insurance Company
7315 Wisconsin Avenue
Bethesda, MD 20855
-----------------
Title of Securities Being Registered: Securities of Unit Investment Trust
Approximate Date Of Proposed Public offering: As soon as practicable
after effective date.
It is proposed that this filing will become effective:
___ Immediately upon filing pursuant to paragraph (b).
_X_ On May 1, 2000 pursuant to paragraph (b).
___ 60 days after filing pursuant to paragraph (a)(1).
___ On ___________ pursuant to paragraph (a)(1) of Rule 485.
<PAGE> 2
RECONCILIATION AND TIE BETWEEN ITEMS IN FORM N-8B-2 AND THE PROSPECTUS
<TABLE>
<CAPTION>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
<S> <C>
1 Cover Page
2 Cover Page
3 Not Applicable
4 Distribution of the Policies
5 Acacia National Variable Life Insurance Separate
Account I
6 Acacia National Variable Life Insurance Separate
Account I
7 Not Required
8 Not Required
9 Legal Proceedings
10 Summary; Addition, Deletion of Substitution of Investments;
Policy Benefits; Policy Rights; Payment and Allocation of
Premiums; General Provisions; Voting Rights
11 Summary; The Funds
12 Summary; The Funds
13 Summary; The Funds - Charges and Deductions
14 Summary; Payment and Allocation of Premiums
15 Summary; Payment and Allocation of Premiums
16 Summary; The Alger American Fund, Calvert Variable Series,
Inc, Deutsche Asset Management VIT Funds, Variable Insurance
Products Fund, Variable Insurance Products Fund II, Franklin
Templeton Variable Insurance Products Trust, Neuberger Berman
Advisers Management Trust, Oppenheimer Variable Account
Funds., and Van Eck Worldwide Insurance Trust
17 Summary, Policy Rights
18 The Alger American Fund, Calvert Variable Series, Inc,
Deutsche Asset Management VIT Funds, Variable Insurance
Products Fund, Variable Insurance Products Fund II, Franklin
Templeton Variable Insurance Products Trust, Neuberger Berman
Advisers Management Trust, Oppenheimer Variable Account
Funds, and Van Eck Worldwide Insurance Trust
19 General Provisions; Voting Rights
20 Not Applicable
21 Summary; Policy Rights, Loan Benefits; General Provisions
22 Not Applicable
23 Safekeeping of the Separate Account's Assets
24 General Provisions
25 Acacia National Life Insurance Company
26 Not Applicable
27 Acacia National Life Insurance Company
28 Executive Officers and Directors of ANLIC; Acacia National
Life Insurance Company
29 Acacia National Life Insurance Company
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Not Applicable
36 Not Required
37 Not Applicable
38 Distribution of the Policies
39 Distribution of the Policies
40 Distribution of the Policies
41 Distribution of the Policies
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
<S> <C>
42 Not Applicable
43 Not Applicable
44 Cash Value, Payment and Allocation of Premium
45 Not Applicable
46 The Funds; Cash Value
47 The Funds
48 State Regulation of ANLIC
49 Not Applicable
50 The Separate Account
51 Cover Page; Summary; Policy Benefits; Payment
and Allocation of Premiums, Charges and
Deductions
52 Addition, Deletion or Substitution of
Investments
53 Summary; Federal Tax Matters
54 Not Applicable
55 Not Applicable
56 Not Required
57 Not Required
58 Not Required
59 Financial Statements
</TABLE>
<PAGE> 4
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., Deutsche
Asset Management VIT Funds, Variable Insurance Products Fund, Variable Insurance
Products Fund II, Franklin Templeton Variable Insurance Products Trust,
Neuberger Berman Advisers Management Trust, Oppenheimer Variable Account Funds,
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.
May 1, 2000
REGENT 2000
1
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DEFINITIONS................................................. 3
SUMMARY..................................................... 6
YEAR 2000................................................... 13
ANLIC, THE SEPARATE ACCOUNT AND THE FUNDS................... 13
Acacia National Life Insurance Company............... 13
The Separate Account................................. 13
Performance Information.............................. 14
The Funds............................................ 14
Investment Objectives and Policies Of The Funds'
Portfolios.......................................... 16
Addition, Deletion or Substitution of Investments.... 18
Fixed Account........................................ 19
POLICY BENEFITS............................................. 19
Purposes of the Policy............................... 19
Death Benefit Proceeds............................... 20
Death Benefit Options................................ 20
Methods of Affecting Insurance Protection............ 22
Duration of Policy................................... 22
Accumulation Value................................... 22
Payment of Policy Benefits........................... 23
POLICY RIGHTS............................................... 24
Loan Benefits........................................ 24
Surrenders........................................... 25
Partial Withdrawals.................................. 25
Transfers............................................ 25
Systematic Programs.................................. 26
Free Look Privilege.................................. 27
PAYMENT AND ALLOCATION OF PREMIUMS.......................... 27
Issuance of a Policy................................. 27
Premiums............................................. 27
Allocation of Premiums and Accumulation Value........ 28
Policy Lapse and Reinstatement....................... 29
CHARGES AND DEDUCTIONS...................................... 30
Deductions From Premium Payments..................... 30
Charges from Accumulation Value...................... 30
Surrender Charge..................................... 31
Daily Charges Against the Separate Account........... 32
GENERAL PROVISIONS.......................................... 32
DISTRIBUTION OF THE POLICIES................................ 35
ADMINISTRATION.............................................. 35
FEDERAL TAX MATTERS......................................... 35
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS................ 39
THIRD PARTY SERVICES........................................ 39
VOTING RIGHTS............................................... 39
STATE REGULATION OF ANLIC................................... 39
EXECUTIVE OFFICERS AND DIRECTORS OF ANLIC................... 40
EXPERTS..................................................... 41
LEGAL MATTERS............................................... 41
LEGAL PROCEEDINGS........................................... 41
ADDITIONAL INFORMATION...................................... 41
FINANCIAL STATEMENTS........................................ 42
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE
ACCOUNT I
ACACIA NATIONAL LIFE INSURANCE COMPANY
APPENDICES.................................................. A-1
</TABLE>
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.
REGENT 2000
2
<PAGE> 6
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.
ISSUE AGE - The actual age of each Insured on the Policy Date.
REGENT 2000
3
<PAGE> 7
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.)
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
REGENT 2000
4
<PAGE> 8
(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.
REGENT 2000
5
<PAGE> 9
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
- ---------------------------------------------------
PREMIUM PAYMENTS
You can vary amount and frequency.
- ---------------------------------------------------
- --------------------------------------------------------------------------------
DEDUCTIONS FROM PREMIUMS
Percent of Premium Charge for Taxes -- currently 2.25% (maximum 3.0%)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET PREMIUM
The net premium may be invested in the Fixed Account or in Separate Account I
which offers 25 different Subaccounts. The Subaccounts invest in the
corresponding portfolios of The Alger American Fund, Calvert Variable Series,
Inc., Deutsche Asset Management VIT Funds, Variable Insurance Products Fund,
Variable Insurance Products Fund II, Franklin Templeton Variable Insurance
Products Trust, Neuberger Berman Advisers Management Trust, Oppenheimer
Variable Account Funds, and Van Eck Worldwide Insurance Trust Funds.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DEDUCTIONS FROM ASSETS
Monthly charge for Cost of Insurance and cost of any riders. The charge varies
by the Policy duration and the Issue Age, gender, and risk class of the
Insured. (See the Policy Schedule for rates.)
Monthly charge for administrative expenses of the Policy (maximum charge
$16.00/month plus a charge per month per $1000 of Specified Amount that varies
by the younger Insured's Issue Age).
<TABLE>
<CAPTION>
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+
---------- ------------- ---------- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
Daily charge from the Subaccounts (not deducted from the Fixed Account):
<TABLE>
<CAPTION>
POLICY YEARS 1-15 POLICY YEARS 16+
----------------- ----------------
<S> <C> <C>
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 .30% to 1.50% at the most recent
fiscal year end, are also deducted.
- --------------------------------------------------------------------------------
LIVING BENEFITS
You may make partial withdrawals, subject to certain restrictions. The Death
Benefit will be reduced by the amount of the partial withdrawal. Partial
withdrawals are subject to a maximum charge of the lesser of $50 (currently $25)
or 2% of the amount withdrawn. ANLIC guarantees up to 15 free transfers between
the Investment Options each Policy Year. After that, a $10 charge may be made
for each transfer. Under current practice, unlimited free transfers are
permitted.
You may Surrender the Policy at any time for its Net Cash Surrender Value.
Some expenses that ANLIC incurs immediately upon the issuance of the Policy are
recovered over a period of years. Therefore, a Policy Surrender on or before the
14th anniversary date will be assessed a Surrender Charge. 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 25 and 31.)
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.
RETIREMENT INCOME
Loans may be available on a more favorable interest rate basis after the tenth
Policy Year. Should the Policy lapse while loans are outstanding, the portion of
the loan attributable to earnings will become taxable distributions. (See page
25.) You may Surrender the Policy or make a partial withdrawal and take values
as payments under one or more of five different payment options.
DEATH BENEFITS
Generally, Death Benefit income is income tax free to the Beneficiary. The
Beneficiary may be paid a lump sum or may select any of the five payment methods
available as retirement benefits.
REGENT 2000
6
<PAGE> 10
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 that each capitalized 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:
- - 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.)
- - 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.
WHAT ARE THE 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.)
Also, 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
REGENT 2000
7
<PAGE> 11
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.)
FUND EXPENSE SUMMARY. In addition to the charges against Separate Account I
described just above, management fees and expenses will be assessed by the fund
managers 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 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 entitled to receive a fee for its
services based on the value of the relevant portfolio's net assets. Each Fund,
other than the Calvert Social portfolios, is managed by an organization that is
not affiliated with ANLIC. The Calvert Social portfolios are managed by Calvert
Asset Management Company, Inc., an ANLIC affiliate. Other Calvert companies
provide administrative services to certain of the portfolios. Unless otherwise
noted, the amount of expenses, including the asset based advisory fee referred
to above, borne by each portfolio for the fiscal year ended December 31, 1999,
was as follows:
<TABLE>
<CAPTION>
TOTAL
(Reflecting
INVESTMENT WAIVERS WAIVERS AND/OR
ADVISORY & 12B-1 OTHER AND/OR REIMBURSEMENTS,
PORTFOLIO MANAGEMENT EXPENSE EXPENSES TOTAL REIMBURSEMENTS IF ANY)
--------- ---------- ------- -------- ----- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ALGER AMERICAN(1)
Alger American Growth 0.75% -- 0.04% 0.79% -- 0.79%
Alger American MidCap Growth 0.80% -- 0.05% 0.85% -- 0.85%
Alger American Small
Capitalization 0.85% -- 0.05% 0.90% -- 0.90%
CALVERT SOCIAL(2)
Calvert Social Money Market 0.50% -- 0.17%(3) 0.67% -- 0.67%
Calvert Social Small Cap
Growth 1.00% -- 0.58%(3) 1.58% -- 1.58%
Calvert Social Mid Cap
Growth 0.90% -- 0.21%(3) 1.11% -- 1.11%
Calvert Social International
Equity 1.10% -- 0.50%(3) 1.60%(4) -- 1.60%
Calvert Social Balanced 0.70% -- 0.19%(3) 0.89% -- 0.89%
DEUTSCHE VIT(5)
Deutsche VIT Equity 500
Index 0.20% -- 0.23% 0.43% 0.13% 0.30%
Deutsche VIT Small Cap Index 0.35% -- 0.83% 1.18% 0.73% 0.45%
Deutsche VIT EAFE Equity
Index 0.45% -- 0.69% 1.15% 0.50% 0.65%
FIDELITY PORTFOLIOS(6)
VIP Equity-Income: Service
Class 2 0.48% 0.25% 0.10% 0.83% -- 0.83%(7)
VIP High Income: Service
Class 2 0.58% 0.25% 0.12% 0.95% -- 0.95%
VIP II Contrafund: Service
Class 2 0.58% 0.25% 0.12% 0.95% -- 0.95%(7)
FTVIP(8)
Templeton Asset Strategy
Fund(9) -- Class 2 0.60% 0.25%(10) 0.14% 0.99% -- 0.99%
Templeton International
Securities
Fund(11) -- Class 2 0.65% 0.25%(10) 0.20% 1.10% -- 1.10%
</TABLE>
REGENT 2000
8
<PAGE> 12
<TABLE>
<CAPTION>
TOTAL
(Reflecting
INVESTMENT WAIVERS WAIVERS AND/OR
ADVISORY & 12B-1 OTHER AND/OR REIMBURSEMENTS,
PORTFOLIO MANAGEMENT EXPENSE EXPENSES TOTAL REIMBURSEMENTS IF ANY)
--------- ---------- ------- -------- ----- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
NEUBERGER BERMAN AMT(12)
Neuberger Berman AMT Limited
Maturity Bond 0.65% -- 0.11% 0.76% -- 0.76%
Neuberger Berman AMT Growth 0.84% -- 0.08% 0.92% -- 0.92%
Neuberger Berman AMT
Partners 0.80% -- 0.07% 0.87% -- 0.87%
OPPENHEIMER VARIABLE ACCOUNT
FUNDS(13)
Oppenheimer Aggressive
Growth Fund/VA 0.66% -- 0.01% 0.67% -- 0.67%
Oppenheimer Capital
Appreciation Fund/VA 0.68% -- 0.02% 0.70% -- 0.70%
Oppenheimer Main Street
Growth & Income Fund/VA 0.73% -- 0.05% 0.78% -- 0.78%
Oppenheimer High Income
Fund/VA 0.74% -- 0.01% 0.75% -- 0.75%
Oppenheimer Strategic Bond
Fund/VA 0.74% -- 0.04% 0.78% -- 0.78%
VAN ECK(14)
Worldwide Hard Assets Fund 1.00% -- 0.26% 1.26% -- 1.26%
</TABLE>
- -------------------------
(1) Fred Alger Management, Inc. is manager to the Alger American portfolios.
(2) Calvert Asset Management Company, Inc., an affiliate of ANLIC, is
investment advisor of the Calvert Social Portfolios.
(3) "Other Expenses" reflect an indirect fee. Net fund operating expenses after
reductions for fees paid indirectly would be as follows:
<TABLE>
<S> <C>
Calvert Social Money Market 0.64%
Calvert Social Small Cap Growth 1.15%
Calvert Social Mid Cap Growth 1.02%
Calvert Social International Equity 1.50%
Calvert Social Balanced 0.86%
</TABLE>
(4) Total expenses have been restated to reflect expenses expected to be
incurred in 2000, resulting from a change in 1999 to the administrative
agreement, as approved by the shareholders.
(5) Bankers Trust Company is the investment advisor to Deutsche VIT. For its
services, the investment advisor receives a fee that is a percentage of
each fund's average daily net assets. The investment advisor has entered
into agreements to waive and/or reimburse operating expenses, including its
fees, that exceed certain percentages of the funds' aggregate average daily
net assets. Any differences in amounts are due to rounding.
(6) Fidelity Management & Research Company is manager of VIP and VIP II
(Fidelity Portfolios). Service Class 2 expenses are based on estimated
expenses for the first year.
(7) A portion of the brokerage commissions certain portfolios pay was used to
reduce portfolio expenses. In addition, through arrangements with the
portfolios' custodian, credits realized as a result of uninvested cash
balances were used to reduce a portion of the portfolios' expenses. After
these reductions, the total operating expenses presented in the table for
these portfolios would have been as follows:
<TABLE>
<S> <C>
VIP Equity Income: Service Class 2 0.82%
VIP II Contrafund: Service Class 2 0.92%
</TABLE>
REGENT 2000
9
<PAGE> 13
(8) Templeton Investment Counsel, Inc. is investment adviser to the FTVIP
funds.
(9) (Previously the Templeton Asset Allocation Fund) On 2/8/00, shareholders
approved a merger and reorganization that combined the fund with the
Templeton Global Asset Allocation Fund. The shareholders of that fund
approved new management fees, which apply to the combined fund effective
5/1/00. The table shows restated total expenses for the fund based on the
new fund fees and the combined assets of the two funds as of 12/31/99, even
though the merger and new fees did not become effective until 5/1/00.
(10) The fund's class 2 distribution plan or "rule 12b-1 plan" is described in
the fund's prospectus. While the maximum amount payable under the fund's
12b-1 plan is 0.35% per year of the fund's average daily net assets, the
Board of Trustees of FTVIP has set the current rate at 0.25%.
(11) (Previously the Templeton International Fund) On 2/8/00, shareholders
approved a merger and reorganization that combined the fund with the
Templeton International Equity Fund. The shareholders of that fund approved
new management fees, which apply to the combined fund effective 5/1/00. The
table shows restated total expenses for the fund based on the new fund fees
and the combined assets of the two funds as of 12/31/99, even though the
merger and new fees did not become effective until 5/1/00.
(12) Neuberger Berman Management Inc. ("NBMI") provides investment management
services to each Neuberger Berman AMT portfolio that include, among other
things, making and implementing investment decisions and providing
facilities and personnel necessary to operate the portfolio. NBMI provides
administrative services to each portfolio that include furnishing similar
facilities and personnel to the portfolio. With the portfolio's consent,
NBMI is authorized to subcontract some of its responsibilities under its
administration agreement with the portfolio to third parties. Each
portfolio bears all expenses of its operations other than those borne by
NBMI as administrator of the portfolio and as distributor of its shares.
Each portfolio bears all expenses of its operations other than those borne
by NBMI as investment manager of the series. These expenses include, but
are not limited to, for the portfolios and the series, legal and accounting
fees and compensation for trustees who are not affiliated with NBMI; for
the portfolios, transfer agent fees and the cost of printing and sending
reports and proxy materials to shareholders; and for the series, custodial
fees for securities. Any expenses which are not directly attributable to a
specific series are allocated on the basis of the net assets of the
respective series.
(13) OppenheimerFunds, Inc. serves as manager to the Oppenheimer portfolios.
(14) Van Eck Associates Corporation serves as investment adviser to the Van Eck
Worldwide Hard Assets Fund.
Expense reimbursement 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.
ANLIC may receive administrative fees from the investment advisers of
certain Funds. ANLIC currently does not assess a separate charge against
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 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.
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 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.)
REGENT 2000
10
<PAGE> 14
WHAT INVESTMENT OPTIONS ARE AVAILABLE THROUGH THE REGENT 2000 POLICY?
The Investment Options available through Regent 2000 include 25 investment
portfolios, each of which is a separate series of a mutual fund from: The Alger
American Fund ("Alger American"); Calvert Variable Series, Inc. ("Calvert
Social"); Deutsche Asset Management VIT Funds ("Deutsche VIT"); Variable
Insurance Products Fund ("VIP") and Variable Insurance Products Fund II ("VIP
II") (collectively "Fidelity"); Franklin Templeton Variable Insurance Products
Trust ("FTVIP"); Neuberger Berman Advisers Management Trust ("AMT"); Oppenheimer
Variable Account Funds ("Oppenheimer Funds"); and Van Eck Worldwide Insurance
Trust ("Van Eck"). These portfolios are listed in the Fund Expense Summary
above.
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.)
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
REGENT 2000
11
<PAGE> 15
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 of Premium 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.)
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 Summary section for the 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.)
REGENT 2000
12
<PAGE> 16
YEAR 2000
Like other insurance companies and their separate accounts, ANLIC and
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 April 15, 2000, ANLIC has experienced no known Y2K problems. All of
our computer application and operating systems had been updated for the year
2000 by July 31, 1999. Continuous testing and monitoring throughout the
remainder of 1999 helped ANLIC continue to meet our contractual and service
obligations to our customers. 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 Life"), 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.
ANLIC's telephone number is 888-837-6791 and its website address is
www.acaciagroup.com.
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 Acacia and its subsidiaries had total assets at
December 31, 1999 of over $6.3 billion and Acacia Life and its subsidiaries had
total statutory assets as of December 31, 1999 of $1.7 billion.
THE SEPARATE ACCOUNT
Acacia National Variable Life Insurance 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
REGENT 2000
13
<PAGE> 17
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 25 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.; Deutsche Asset Management VIT Funds; Variable Insurance Products Fund;
Variable Insurance Products Fund II; Franklin Templeton Variable Insurance
Products Trust; Neuberger Berman Advisers Management Trust; Oppenheimer Variable
Account Funds; 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.
Alger American, which is managed by Fred Alger Management, Inc. ("Alger"),
offers the following portfolios: Alger American Growth, Alger American MidCap
Growth, and Alger American Small Capitalization. Calvert Social, which is
managed by Calvert Asset Management Company, Inc. ("CAMCO"), offers the
following portfolios: Calvert Social Money Market, Calvert Social Small Cap
Growth, Calvert Social Mid Cap Growth, Calvert Social International Equity, and
Calvert Social Balanced. Bankers Trust Company ("Bankers") is the investment
adviser for Deutsche VIT, which offers the following portfolios: Equity 500
Index Fund, Small Cap Index Fund, and EAFE Equity Index Fund. VIP, which is
managed by Fidelity Research & Management Company ("Fidelity"), offers the
following portfolios: VIP Equity-Income: Service Class 2 and VIP High Income:
Service Class 2. VIP II, also managed by Fidelity, offers the VIP II Contrafund:
Service Class 2. Templeton Investment Counsel, Inc. is the investment adviser
for FTVIP, which offers the following portfolios: Templeton Asset Strategy
Fund -- Class 2 and Templeton International Securities Fund -- Class 2. AMT
offers the following portfolios: Limited Maturity Bond, Growth, and Partners.
The investment adviser for these AMT portfolios is Neuberger Berman Management
Inc. ("NBMI"). NBMI retains Neuberger Berman, L.P., without cost to AMT, as
subadviser. Oppenheimer Funds, which are managed by Oppenheimer Funds, Inc.
("Oppenheimer"), offers the following portfolios: Aggressive Growth Fund/VA,
Capital Appreciation Fund/VA, Main Street Growth & Income Fund/VA, High Income
Fund/VA, and Strategic Bond Fund/ VA. Van Eck Associates Corporation ("Van Eck")
is the investment adviser for Van Eck Funds, which offers the following
portfolio: Worldwide Hard Assets Fund.
REGENT 2000
14
<PAGE> 18
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.
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, 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.
REGENT 2000
15
<PAGE> 19
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS' PORTFOLIOS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
THE ALGER AMERICAN FUND
- -------------------------------------------------------------------------------------------------------------------
Alger American Focuses on growing companies that generally Seeks to provide long-term capital
Growth Portfolio have broad product lines, markets, appreciation.
financial resources and depth of
management. Under normal circumstances, the
portfolio invests primarily in the equity
securities of large companies. The
portfolio considers a large company to have
a market capitalization of $1 billion or
greater.
- -------------------------------------------------------------------------------------------------------------------
Alger American Focuses on midsize companies with promising Seeks to provide long-term capital
MidCap Growth growth potential. Under normal appreciation.
Portfolio circumstances, the portfolio invests
primarily in the equity securities of
companies having a market capitalization
within the range of companies in the S&P
MidCap 400 Index.
- -------------------------------------------------------------------------------------------------------------------
Alger American Small Focuses on small, fast-growing companies Seeks to provide long-term capital
Capitalization that offer innovative products, services or appreciation.
Portfolio technologies to a rapidly expanding
marketplace. Under normal circumstances,
the portfolio invests primarily in the
equity securities of small capitalization
companies. A small capitalization company
is one that has a market capitalization
within the range of the Russell 2000 Growth
Index or the S&P SmallCap 600 Index.
- -------------------------------------------------------------------------------------------------------------------
CALVERT VARIABLE SERIES, INC.
- -------------------------------------------------------------------------------------------------------------------
Social Money Market Invests in high quality, money market Seeks to provide current income by
Portfolio instruments, such as commercial paper, investing in enterprises that make a
variable rate demand notes, corporate, significant contribution to society
agency and taxable municipal obligations. through their products and services and
All investments must comply with the SEC through the way they do business.
money market fund requirements.*
- -------------------------------------------------------------------------------------------------------------------
Social Small Cap Invests at least 65% of assets in the Seeks to provide long-term capital
Growth Portfolio common stocks of small-cap companies. appreciation by investing primarily in
Returns in the portfolio will be mostly equity securities of companies that have
from the changes in the price of the small market capitalizations.
portfolio's holdings (capital
appreciation). The portfolio currently
defines small-cap companies as those with
market capitalization of $1 billion or less
at the time the portfolio initially
invests.*
- -------------------------------------------------------------------------------------------------------------------
Social Mid Cap Invests primarily in the common stocks of Seeks to provide long-term capital
Growth Portfolio mid- size companies. Returns in the appreciation by investing primarily in a
portfolio will be mostly from the changes nondiversified portfolio of the equity
in the price of the portfolio's holdings securities of mid-sized companies that are
(capital appreciation.) The portfolio undervalued but demonstrate a potential
currently defines mid-cap companies as for growth.
those within the range of market
capitalizations of the S&P's Mid-Cap 400
Index. Most companies in the Index have a
capitalization of $500 million to $10
billion.*
- -------------------------------------------------------------------------------------------------------------------
Social International Invests primarily in the common stocks of Seeks to provide a high total return
Equity Portfolio mid- to large-cap companies using a value consistent with reasonable risk by
approach. The portfolio identifies those investing primarily in a globally
countries with markets and economies that diversified portfolio for equity
it believes currently provide the most securities.
favorable climate for investing. The
portfolio invests primarily in more
developed economies and markets. No more
that 5% of Portfolio assets are invested in
the U.S.*
- -------------------------------------------------------------------------------------------------------------------
Social Balanced Typically invests about 60% of its assets Seeks to achieve a competitive total
Portfolio in stocks and 40% in bonds or other return through an actively managed
fixed-income investments. Stock investments portfolio of stocks, bonds and money
are primarily common stock in large-cap market instruments which offer income and
companies, while the fixed-income capital growth opportunity and which
investments are primarily a wide variety of satisfy the investment and social
investment grade bonds.* criteria.
- -------------------------------------------------------------------------------------------------------------------
*The portfolio invests with the philosophy
that long-term rewards to investors will
come from those organizations whose
products, services, and methods enhance the
human condition and the traditional
American values of individual initiative,
equality of opportunity and cooperative
effort. Investments are selected on the
basis of their ability to contribute to the
dual objectives of financial soundness and
social criteria.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
REGENT 2000
16
<PAGE> 20
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DEUTSCHE ASSET MANAGEMENT VIT FUNDS
- -------------------------------------------------------------------------------------------------------------------
Equity 500 Index The Fund will invest primarily in common Seeks to match, before expenses, the risk
Fund stocks of companies that comprise the and return characteristics of the S&P 500
Standard & Poor's 500 Composite Stock Price Index.
Index ("S&P 500 Index(R)"), which
emphasizes stocks of large U.S. companies.
The Fund may also use stock index futures
and options.
- -------------------------------------------------------------------------------------------------------------------
Small Cap Index Fund The Fund will invest primarily in common Seeks to match, before expenses, the risk
stocks of companies that comprise the and return characteristics of the Russell
Russell 2000 Small Stock Index ("Russell 2000 Index.
2000 Index(R)"), which emphasizes stocks of
small U.S. companies. The Fund may also use
stock index futures and options.
- -------------------------------------------------------------------------------------------------------------------
EAFE Equity Index The Fund will invest primarily in common Seeks to match, before expenses, the risk
Fund stocks of companies that comprise the and return characteristics of the EAFE(R)
Morgan Stanley Capital International EAFE Index.
Index(R) ("EAFE Index(R)"), which
emphasizes stocks of companies in major
markets in Europe, Australia and the Far
East. The Fund may also use stock index
futures and options.
- -------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
- -------------------------------------------------------------------------------------------------------------------
VIP Equity-Income Investing at least 65% in income-producing Seeks reasonable income. Will also
Service Class 2 equity securities, which tends to lead to consider the potential for capital
investments in large cap "value" stocks. appreciation. Seeks a yield which exceeds
the composite yield on the securities
comprising the Standard & Poor's 500.
- -------------------------------------------------------------------------------------------------------------------
VIP High Income: Investing at least 65% of total assets in Seeks a high level of current income while
Service Class 2 income- producing debt securities, also considering growth of capital.
preferred stocks and convertible
securities, with an emphasis on lower-
quality debt securities.
- -------------------------------------------------------------------------------------------------------------------
VIP II Contrafund: Investing primarily in common stocks. Seeks long-term capital appreciation.
Service Class 2 Investing in securities of companies whose
value it believes is not fully recognized
by the public.
- -------------------------------------------------------------------------------------------------------------------
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
- -------------------------------------------------------------------------------------------------------------------
Templeton Asset The fund will invest in equity securities High total return.
Strategy of companies of any nation, debt securities
of companies and governments of any nation,
and in money market instruments.
- -------------------------------------------------------------------------------------------------------------------
Templeton The fund will invest in the equity Long-term capital growth.
International securities of companies located outside the
Securities U.S., including emerging markets.
- -------------------------------------------------------------------------------------------------------------------
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
- -------------------------------------------------------------------------------------------------------------------
Limited Maturity The portfolio will invest in a diversified Seeks to provide the highest current
Bond Fund portfolio of fixed and variable debt income consistent with low risk to
securities and seeks to increase income and principal and liquidity.
preserve or enhance total return by
actively managing average portfolio
maturity in light of market conditions and
trends.
- -------------------------------------------------------------------------------------------------------------------
Growth Portfolio The portfolio invests mainly in common Seeks growth of capital.
stocks of mid-cap companies. It does not
seek to invest in securities that pay
dividends or interest, and such income is
incidental.
- -------------------------------------------------------------------------------------------------------------------
Partners Portfolio Principal series investments are common Seeks capital growth.
stock of mid-to large-cap companies.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
REGENT 2000
17
<PAGE> 21
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
- -------------------------------------------------------------------------------------------------------------------
Oppenheimer The portfolio will invest in securities of Seeks to achieve capital appreciation, by
Aggressive Growth companies believed to have relatively investing in "growth-type" companies.
Fund/VA favorable long-term prospects for
increasing demand for 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 investing in
Appreciation securities of well-known and established securities of well known established
Fund/VA companies. Such securities generally have a companies.
history of earnings and dividends and are
issued by seasoned companies.
- -------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Its equity investments may include common Seeks a high total return (which includes
Street Growth & stocks, preferred stocks, convertible growth in the value of its shares as well
Income Fund/VA securities and warrants. Its debt as current income) from equity and debt
securities may include U.S. government securities.
securities, foreign securities, and foreign
and domestic corporate bonds, notes, and
debentures.
- -------------------------------------------------------------------------------------------------------------------
Oppenheimer High Investments in high yield fixed-income Seeks a high level of current income.
Fund/VA securities (including long-term debt and
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 Seeks a high level of current income by
Strategic Bond on debt securities and the Fund seeks to investing primarily in a diversified
Fund/VA enhance such income by writing covered call portfolio of high yield fixed-income
options on debt securities. The Fund securities.
intends to invest primarily in (i) foreign
government and corporate debt securities
(ii) U.S. government securities, and (iii)
lower-rated high yield domestic debt
securities, commonly known as junk bonds.
- -------------------------------------------------------------------------------------------------------------------
VAN ECK WORLDWIDE INSURANCE TRUST
- -------------------------------------------------------------------------------------------------------------------
Worldwide Hard The Worldwide Hard Assets Fund will invest Seeks long-term capital appreciation by
Assets Fund at least 65% of its assets in "hard asset investing globally, primarily in "hard
securities," defined as securities of assets" securities. Income is a secondary
companies that derive at least 50% of gross consideration.
revenue or profit from exploration,
development, production or distribution of
precious metals, natural resources, real
estate or commodities. The fund may
concentrate as much as 50% of its assets in
any single "hard asset" sector.
- -------------------------------------------------------------------------------------------------------------------
</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.
REGENT 2000
18
<PAGE> 22
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.)
Payments allocated to the Fixed Account and transferred from Separate
Account V 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
REGENT 2000
19
<PAGE> 23
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.
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.
[GRAPH]
(OMITTED GRAPHIC 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.
REGENT 2000
20
<PAGE> 24
OPTION B.
[GRAPH]
(OMITTED GRAPHIC ILLUSTRATES PAYOUT UNDER DEATH BENEFIT OPTION A, SPECIFICALLY
BY SHOWING THE RELATIONSHIPS OVER TIME, BETWEEN THE SPECIFIC 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.
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.)
REGENT 2000
21
<PAGE> 25
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.)
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
REGENT 2000
22
<PAGE> 26
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 0.75% in
Policy Years 1-15, decreasing to 0.30% thereafter; minus
(3) a charge for administrative service expenses at an annual rate of
0.15%; 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
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:
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.
FIXED AMOUNT PAYABLE OPTION. Each payment will be for an agreed fixed
amount. Payments continue until the amount ANLIC holds runs out.
FIXED PERIOD PAYMENT OPTION. Equal payments will be made for any period
selected up to 20 years.
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.
REGENT 2000
23
<PAGE> 27
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 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
REGENT 2000
24
<PAGE> 28
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 the greater of $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.
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, by telephone or, when available,
through our website. 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
REGENT 2000
25
<PAGE> 29
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 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 or through our website,
when available, 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.
When available procedures for making transfers through our website can be
accessed at the Internet address stated in the Acacia National Life Insurance
Company section of this prospectus.
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 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.
For more information on asset allocation programs, see Appendix B.
REGENT 2000
26
<PAGE> 30
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
REGENT 2000
27
<PAGE> 31
payable at ANLIC's Home Office. 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
REGENT 2000
28
<PAGE> 32
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.
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
REGENT 2000
29
<PAGE> 33
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.
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 $.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 $.10 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,
REGENT 2000
30
<PAGE> 34
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.
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.
<TABLE>
<CAPTION>
PERCENT OF INITIAL
SURRENDER CHARGE THAT WILL
POLICY YEAR APPLY DURING POLICY YEAR
- ----------- --------------------------
<S> <C>
1-5 100%
6 90%
7 80%
8 70%
9 60%
10 50%
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF INITIAL
SURRENDER CHARGE THAT WILL
POLICY YEAR APPLY DURING POLICY YEAR
- ----------- --------------------------
<S> <C>
11 40%
12 30%
13 20%
14 10%
15+ 0%
</TABLE>
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.
REGENT 2000
31
<PAGE> 35
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 0.002049% (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 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.
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 Summary section for the Fund Expense Summary.)
Expense reimbursement 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.
ANLIC may receive administrative fees from the investment advisers of
certain Funds. ANLIC currently does not assess a separate charge against
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 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.
REGENT 2000
32
<PAGE> 36
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.
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
REGENT 2000
33
<PAGE> 37
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.
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.
REGENT 2000
34
<PAGE> 38
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
1999, TAG received gross variable universal life compensation of $3,480,522 and
retained $7,200 in underwriting fees, and $0 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 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 except premium taxes. (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
REGENT 2000
35
<PAGE> 39
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 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.
REGENT 2000
36
<PAGE> 40
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. If the Policy is not treated as life
insurance because it fails the diversification requirements, the Policy
Owner is then subject to federal income tax on gain in the Policy as it
is earned. 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. However, there are
certain exceptions to the general rule that death benefit proceeds are
non-taxable. Federal, state and local tax consequences of ownership of
or receipt of proceeds under a Policy depends on the circumstances of
each Policy Owner and Beneficiary.
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 may be taxable in whole or in
part as ordinary income to the Policy owner (to the extent of any gain
in the Policy) as prescribed in Section 7702. In addition, upon 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.
Should the Policy lapse while Policy loans are outstanding the portion
of the loans attributable to earnings
REGENT 2000
37
<PAGE> 41
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 repealed 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 included 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 occurred 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). Any material change in a policy (including
a material increase in the death benefit) may cause the policy to be
treated as a new policy for purposes of the rule. 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.
Further, the tax consequences of using the Policy in nonqualified plan
arrangements may vary depending on the particular facts and
circumstances of the arrangement. The advice of competent counsel
should be sought in connection with use of life insurance in a
qualified or nonqualified plan.
YOU SHOULD CONSULT QUALIFIED TAX AND/OR LEGAL ADVISORS TO OBTAIN COMPLETE
INFORMATION ON FEDERAL, STATE AND LOCAL TAX CONSIDERATIONS APPLICABLE TO YOUR
PARTICULAR SITUATION.
REGENT 2000
38
<PAGE> 42
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.
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 Bureau of Insurance, State Corporation
Commission of the Commonwealth of Virginia ("Virginia Bureau 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 Bureau of
Insurance. Periodically, the Virginia Bureau 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
REGENT 2000
39
<PAGE> 43
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
This list shows name and position(s) with ANLIC followed by the principal
occupations for the last five years. Where an individual has held more than one
position with an organization during the last 5-year period, the last position
held has been given.
CHARLES T. NASON, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER*
Vice Chairman of Board and President, Director: Ameritas Acacia Mutual Holding
Company
Vice Chairman of Board and President, Director: Ameritas Holding Company
Chairman of the Board and Chief Executive Officer: Acacia Life Insurance Company
Also serves as a Director of direct and indirect subsidiaries of Acacia Life
Insurance Company.
ROBERT W. CLYDE, PRESIDENT AND CHIEF OPERATING OFFICER*
Executive Vice President, Director: Ameritas Acacia Mutual Holding Company
Executive Vice President, Director: Ameritas Holding Company
President and Chief Operating Officer: Acacia Life Insurance Company
Also serves as a Director of direct and indirect subsidiaries of Acacia Life
Insurance Company.
HALUK ARITURK, SENIOR VICE PRESIDENT, PRODUCT MANAGEMENT AND ADMINISTRATION**
Senior Vice President, Product Management and Administration: Acacia Life
Insurance Company
Executive Vice President, Ameritas Acacia Shared Services Center: Ameritas Life
Insurance Corp.
Formerly: Senior Vice President, Operations and Chief Actuary: Acacia Life
Insurance Company.
JOANN M. MARTIN, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, DIRECTOR**
Senior Vice President, Chief Financial Officer and Corporate Treasurer: Ameritas
Acacia Mutual Holding Company and Ameritas Holding Company
Senior Vice President and Chief Financial Officer: Acacia Life Insurance Company
Senior Vice President and Chief Financial Officer: Ameritas Life Insurance Corp.
Also serves as officer and/or director of subsidiaries and/or affiliates of
Ameritas Life Insurance Corp.
BRIAN J. OWENS, SENIOR VICE PRESIDENT, CAREER DISTRIBUTION*
Senior Vice President, Career Distribution: Acacia Life Insurance Company;
Director: The Advisors Group, Inc.
BARRY C. RITTER, SENIOR VICE PRESIDENT AND CHIEF INFORMATION OFFICER**
Senior Vice President and Chief Information Officer, Acacia Life Insurance
Company
Senior Vice President -- Information Services: Ameritas Life Insurance Corp.
ROBERT-JOHN H. SANDS, SENIOR VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE
SECRETARY*
Senior Vice President and General Counsel: Ameritas Acacia Mutual Holding
Company
Senior Vice President and General Counsel: Ameritas Holding Company
Senior Vice President, General Counsel and Corporate Secretary: Acacia Life
Insurance Company
Also serves as a Director of direct and indirect subsidiaries of Acacia Life
Insurance Company.
JANET L. SCHMIDT, SENIOR VICE PRESIDENT, HUMAN RESOURCES*
Senior Vice President and Director of Human Resources: Ameritas Acacia Mutual
Holding Company
Senior Vice President and Director of Human Resources: Ameritas Holding Company
Senior Vice President, Human Resources: Acacia Life Insurance Company
RICHARD W. VAUTRAVERS, SENIOR VICE PRESIDENT AND CORPORATE ACTUARY**
Senior Vice President and Corporate Actuary: Ameritas Life Insurance Corp.
Senior Vice President and Corporate Actuary: Acacia Life Insurance Company
REGENT 2000
40
<PAGE> 44
WILLIAM W. LESTER, VICE PRESIDENT AND TREASURER**
Treasurer: Ameritas Life Insurance Corp.
Also serves as officer of subsidiaries of Ameritas Life Insurance Corp.
Vice President and Treasurer, Acacia Life Insurance Company
RENO J. MARTINI, DIRECTOR***
Senior Vice President, Calvert Group, Ltd.
- ---------------
* The principal business address of each person is Acacia National Life
Insurance Company, 7315 Wisconsin Avenue, Bethesda, Maryland 20814.
** The principal business address of each person is Ameritas Life Insurance
Corp., 5900 "O" Street, Lincoln, Nebraska 68510.
*** The principal business address of each person is Calvert Group, Ltd., 4550
Montgomery Avenue, Bethesda, Maryland 20814.
EXPERTS
The statutory basis financial statements of ANLIC as of December 31, 1999
and for the year then ended, and the financial statements of the subaccounts of
Separate Account I as of December 31, 1999 and for the year then ended, included
in this prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing herein, and are included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
The statutory basis financial statements of ANLIC as of December 31, 1998
and for the year then ended, and the financial statements of the subaccounts of
Separate Account I for each of the two years in the period ended December 31,
1998, included in this prospectus have been audited by PricewaterhouseCoopers
LLP, independent accountants, as stated in their reports appearing herein, and
are included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
Actuarial matters included in the Prospectus have been examined by Russell
J. Wiltgen, Vice President -- Individual Product Management of Ameritas Life
Insurance Corp., as stated in the opinion filed as an exhibit to the
Registration Statement.
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.
REGENT 2000
41
<PAGE> 45
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
42
<PAGE> 46
INDEPENDENT AUDITORS' REPORT
Board of Directors
Acacia National Life Insurance Company
Bethesda, Maryland
We have audited the accompanying statement of net assets of each of the
subaccounts of Acacia National Variable Life Insurance Separate Account I
(comprising, respectively, the Social Money Market Portfolio, Social Balanced
Portfolio, Social Small Cap Growth Portfolio, Social Mid Cap Growth Portfolio,
and Social International Equity Portfolio of the Calvert Variable Series, Inc.;
the Growth Portfolio, MidCap Growth Portfolio, and Small Capitalization
Portfolio of the Alger American Fund; the Stock Index Portfolio of the Dreyfus
Stock Index Fund; the Limited Maturity Bond Portfolio, and the Growth Portfolio
of the Neuberger & Berman Advisers Management Trust; the International Stock
Fund II Portfolio, and Discovery Fund II Portfolio of the Strong Variable
Insurance Funds, Inc.; the Worldwide Hard Assets Portfolio of the Van Eck
Worldwide Insurance Trust; and the Capital Appreciation Portfolio, Aggressive
Growth Portfolio, Growth and Income Portfolio, High Income Portfolio, and
Strategic Bond Portfolio of the Oppenheimer Variable Accounts Fund) as of
December 31, 1999, and the related statements of operations and changes in net
assets for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1999. 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 our audit provides a reasonable basis for our opinion.
In our opinion, such 1999 financial statements present fairly, in all material
respects, the financial position of each of the subaccounts constituting Acacia
National Variable Life Insurance Separate Account I as of December 31, 1999, and
the results of its operations and changes in net assets for the year then ended,
in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Lincoln, Nebraska
April 7, 2000
F-I- 1
<PAGE> 47
[PRICEWATERHOUSECOOPERS LOGO]
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 operations and changes in net
assets present fairly, in all material respects, the results of their operations
and changes in their net assets of each of the following sub-accounts comprising
the Acacia National Variable Life Insurance Separate Account I (the Account):
the Social Money Market Portfolio, Social Balanced Portfolio, Social Small Cap
Growth Portfolio, Social Mid Cap Growth Portfolio, and Social International
Equity Portfolio of the Calvert Variable Series, Inc.; the Growth Portfolio,
MidCap Growth Portfolio, and Small Capitalization Portfolio of The Alger
American Fund; the Stock Index Portfolio of the Dreyfus Stock Index Fund; the
Limited Maturity Bond Portfolio, and Growth Portfolio of the Neuberger & Berman
Advisers Management Trust; the Advantage Fund II, Asset Allocation Fund II,
International Stock Fund II Portfolio, and Discovery Fund II Portfolio of the
Strong Variable Insurance Funds, Inc.; the Worldwide Hard Assets Portfolio of
the Van Eck Worldwide Insurance Trust; and the Capital Appreciation Portfolio,
Aggressive Growth Portfolio, Growth and Income Portfolio, High Income Portfolio,
and Strategic Bond Portfolio of the Oppenheimer Variable Accounts Fund for each
of the periods presented in the years ended December 31, 1998 and 1997, in
conformity with accounting principles generally accepted in the United States.
The 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 auditing standards generally accepted in the United States which require
that we plan and perform the audit to obtain reasonable assurance about whether
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 provide a reasonable basis
for the opinion expressed above.
[/s/ PRICEWATERHOUSECOOPERS LLP]
Washington, D.C.
April 30, 1999
F-I- 2
<PAGE> 48
ACACIA NATIONAL VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT I
STATEMENT OF NET ASSETS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
INVESTMENT DUE (TO)/FROM
AT NET ASSET GENERAL
VALUE ACCOUNT TOTAL
------------ ------------- -----------
<S> <C> <C> <C>
ASSETS
CALVERT VARIABLE SERIES, INC.
Social Money Market Portfolio -- 1,593,462.820 shares at
$1.00 per share (cost $1,593,463)....................... $1,593,463 $11,356 $ 1,604,819
Social Balanced Portfolio -- 150,081.351 shares at $2.169
per share (cost $322,380)............................... 325,527 5,122 330,649
Social Small Cap Growth Portfolio -- 10,561.351 shares at
$13.27 per share (cost $119,854)........................ 140,149 36 140,185
Social Mid Cap Growth Portfolio -- 9,034.095 shares at
$30.03 per share (cost $269,942)........................ 271,294 47 271,341
Social International Equity Portfolio -- 29,100.595 shares
at $25.66 per share (cost $641,008)..................... 746,721 3,890 750,611
THE ALGER AMERICAN FUND:
Growth Portfolio -- 82,340.183 shares at $64.38 per share
(cost $4,009,881)....................................... 5,301,060 4,776 5,305,836
MidCap Growth Portfolio -- 55,027.791 shares at $32.23 per
share (cost $1,399,016)................................. 1,773,545 (1,860) 1,771,685
Small Capitalization Portfolio -- 73,412.631 shares at
$55.15 per share (cost $3,008,216)...................... 4,048,707 5,921 4,054,628
DREYFUS STOCK INDEX FUND:
Stock Index Portfolio -- 346,564.572 shares at $38.45 per
share (cost $10,584,530)................................ 13,325,408 24,551 13,349,959
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio -- 235,622.603 shares at
$13.24 per share (cost $3,133,285)...................... 3,119,644 21,108 3,140,752
Growth Portfolio -- 72,247.130 shares at $37.27 per share
(cost $1,744,031)....................................... 2,692,651 29,495 2,722,146
STRONG VARIABLE INSURANCE FUNDS, INC.:
International Stock Fund II Portfolio -- 310,700.181
shares at $16.37 per share (cost $2,859,587)............ 5,086,161 13,561 5,099,722
Discovery Fund II Portfolio -- 36,560.925 shares at $11.38
per share (cost $408,153)............................... 416,063 2,048 418,111
VAN ECK WORLDWIDE INSURANCE TRUST:
Worldwide Hard Assets Portfolio -- 94,197.681 shares at
$10.96 per share (cost $1,022,812)...................... 1,032,407 1,746 1,034,153
OPPENHEIMER VARIABLE ACCOUNTS FUND:
Capital Appreciation Portfolio -- 86,724.242 shares at
$49.84 per share (cost $3,441,580)...................... 4,322,337 -- 4,322,337
Aggressive Growth Portfolio -- 39,022.477 shares at $82.31
per share (cost $1,768,125)............................. 3,211,939 24,156 3,236,095
Growth and Income Portfolio -- 54,758.167 shares at $24.63
per share (cost $1,152,379)............................. 1,348,694 3,110 1,351,804
High Income Portfolio -- 65,811.897 shares at $10.72 per
share (cost $708,959)................................... 705,503 3,845 709,348
Strategic Bond Portfolio -- 101,576.323 shares at $4.97
per share (cost $525,198)............................... 504,835 (112) 504,723
-----------
NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS.............. $50,118,904
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I- 3
<PAGE> 49
ACACIA NATIONAL VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
CALVERT VARIABLE SERIES, INC.
--------------------------------------
SOCIAL
SOCIAL SOCIAL SMALL CAP
MONEY MARKET BALANCED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
------------ --------- ---------
<S> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received........................... $43,128 $ 7,030 $ 52
Mortality and expense risk charge......................... 7,218 1,511 839
------- ------- -------
NET INVESTMENT INCOME (LOSS)................................ 35,910 5,519 (787)
------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain distributions........................... -- 24,085 --
Net change in unrealized appreciation (depreciation)...... 12,253 1,900 23,977
------- ------- -------
NET GAIN (LOSS) ON INVESTMENTS.............................. 12,253 25,985 23,977
------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $48,163 $31,504 $23,190
======= ======= =======
1998
INVESTMENT INCOME:
Dividend and capital gains distributions received......... $21,621 $ 3,409 $ 1,105
Mortality and expense risk charge......................... 4,679 308 588
------- ------- -------
NET INVESTMENT INCOME (LOSS)................................ 16,942 3,101 517
------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from redemptions of fund
shares................................................. 99 611 (2,513)
Net change in unrealized appreciation (depreciation)...... 3,000 1,900 (1,616)
------- ------- -------
NET GAIN (LOSS) ON INVESTMENTS.............................. 3,099 2,511 (4,129)
------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $20,041 $ 5,612 $(3,612)
======= ======= =======
1997
INVESTMENT INCOME:
Dividend and capital gains distributions received......... $ 7,942 $ 1,565 $ 4,107
Mortality and expense risk charge......................... 4,111 72 355
------- ------- -------
NET INVESTMENT INCOME (LOSS)................................ 3,831 1,493 3,752
------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from redemptions of fund
shares................................................. -- 204 (1,773)
Net change in unrealized appreciation (depreciation)...... 440 (515) (2,228)
------- ------- -------
NET GAIN (LOSS) ON INVESTMENTS.............................. 440 (311) (4,001)
------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $ 4,271 $ 1,182 $ (249)
======= ======= =======
</TABLE>
- ---------------
(1) Commenced business May, 1997
The accompanying notes are an integral part of these financial statements.
F-I- 4
<PAGE> 50
<TABLE>
<CAPTION>
DREYFUS STOCK
CALVERT VARIABLE SERIES, INC. THE ALGER AMERICAN FUND INDEX FUND
------------------------------ --------------------------------------- -------------
SOCIAL
SOCIAL INTERNATIONAL MIDCAP SMALL
MID CAP GROWTH EQUITY GROWTH GROWTH CAPITALIZATION STOCK INDEX
PORTFOLIO(1) PORTFOLIO(1) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------- ---------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ -- $ 380 $ 4,285 $ -- $ -- $ 111,343
1,517 3,400 28,150 9,224 21,737 75,772
------- -------- ---------- -------- ---------- ----------
(1,517) (3,020) (23,865) (9,224) (21,737) 35,571
------- -------- ---------- -------- ---------- ----------
20,944 52,658 292,559 152,575 303,027 98,876
2,980 113,538 882,734 257,406 903,837 1,835,918
------- -------- ---------- -------- ---------- ----------
23,924 166,196 1,175,293 409,981 1,206,864 1,934,794
------- -------- ---------- -------- ---------- ----------
$22,407 $163,176 $1,151,428 $400,757 $1,185,127 $1,970,365
======= ======== ========== ======== ========== ==========
$13,549 $ 15,115 $ 232,531 $ 40,068 $ 173,190 $ 130,875
594 990 14,481 5,140 12,562 38,276
------- -------- ---------- -------- ---------- ----------
12,955 14,125 218,050 34,928 160,628 92,599
------- -------- ---------- -------- ---------- ----------
2,455 1,263 98,690 13,059 4,107 184,713
(1,025) (5,285) 297,960 98,503 62,991 729,209
------- -------- ---------- -------- ---------- ----------
1,430 (4,022) 396,650 111,562 67,098 913,922
------- -------- ---------- -------- ---------- ----------
$14,385 $ 10,103 $ 614,700 $146,490 $ 227,726 $1,006,521
======= ======== ========== ======== ========== ==========
$ 1,160 $ 1,968 $ 5,840 $ 2,687 $ 27,461 $ 43,942
28 50 5,914 1,692 6,075 11,588
------- -------- ---------- -------- ---------- ----------
1,132 1,918 (74) 995 21,386 32,354
------- -------- ---------- -------- ---------- ----------
100 4 39,995 11,425 9,397 112,714
(603) (2,540) 95,625 15,140 70,132 146,383
------- -------- ---------- -------- ---------- ----------
(503) (2,536) 135,620 26,565 79,529 259,097
------- -------- ---------- -------- ---------- ----------
$ 629 $ (618) $ 135,546 $ 27,560 $ 100,915 $ 291,451
======= ======== ========== ======== ========== ==========
</TABLE>
F-I- 5
<PAGE> 51
ACACIA NATIONAL VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
NEUBERGER & BERMAN STRONG VARIABLE
ADVISERS MANAGEMENT TRUST INSURANCE FUNDS, INC.
--------------------------- ------------------------
LIMITED ASSET
MATURITY BOND GROWTH ADVANTAGE ALLOCATION
PORTFOLIO PORTFOLIO FUND II(2) FUND II(2)
-------------- --------- ---------- ----------
<S> <C> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received................ $132,944 $ -- $ -- $ --
Mortality and expense risk charge.............. 20,050 14,860 -- --
-------- -------- ---- -------
NET INVESTMENT INCOME (LOSS)..................... 112,894 (14,860) -- --
-------- -------- ---- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on distributions............. -- 88,404 -- --
Net change in unrealized appreciation
(depreciation).............................. (30,899) 857,225 -- --
-------- -------- ---- -------
NET GAIN (LOSS) ON INVESTMENTS................... (30,899) 945,629 -- --
-------- -------- ---- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ $ 81,995 $930,769 $ -- $ --
======== ======== ==== =======
1998
INVESTMENT INCOME:
Dividend and capital gains distributions
received.................................... $ 58,873 $188,569 $ -- $ --
Mortality and expense risk charge.............. 12,750 9,585 -- --
-------- -------- ---- -------
NET INVESTMENT INCOME (LOSS)..................... 46,123 178,984 -- --
-------- -------- ---- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) from redemptions of
fund shares................................. 1,107 (18,723) -- --
Net change in unrealized appreciation
(depreciation).............................. (2,543) 22,943 -- --
-------- -------- ---- -------
NET GAIN (LOSS) ON INVESTMENTS................... (1,436) 4,220 -- --
-------- -------- ---- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ $ 44,687 $183,204 $ -- $ --
======== ======== ==== =======
1997
INVESTMENT INCOME:
Dividend and capital gains distributions
received.................................... $ 20,653 $ 23,873 $359 $ 6,377
Mortality and expense risk charge.............. 4,295 3,395 49 516
-------- -------- ---- -------
NET INVESTMENT INCOME (LOSS)..................... 16,358 20,478 310 5,861
-------- -------- ---- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) from redemptions of
fund shares................................. 1,905 16,065 (38) 11,629
Net change in unrealized appreciation
(depreciation).............................. 15,273 59,454 52 2,621
-------- -------- ---- -------
NET GAIN (LOSS) ON INVESTMENTS................... 17,178 75,519 14 14,250
-------- -------- ---- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ $ 33,536 $ 95,997 $324 $20,111
======== ======== ==== =======
</TABLE>
- ---------------
(1) Commenced business May, 1997
(2) Subaccount closed November, 1997.
The accompanying notes are an integral part of these financial statements.
F-I- 6
<PAGE> 52
<TABLE>
<CAPTION>
VAN ECK
STRONG VARIABLE WORLDWIDE
INSURANCE FUNDS, INC. INSURANCE TRUST OPPENHEIMER VARIABLE ACCOUNTS FUND
------------------------- --------------- ------------------------------------------
INTERNATIONAL DISCOVERY WORLDWIDE CAPITAL AGGRESSIVE GROWTH AND
STOCK FUND II FUND II HARD ASSETS APPRECIATION GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO(1) PORTFOLIO(1) PORTFOLIO(1)
------------- --------- --------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$ 11,187 $ -- $ 9,610 $ 9,060 $ -- $ 3,439
25,477 2,621 6,153 20,639 17,873 7,399
---------- ------- --------- -------- ---------- --------
(14,290) (2,621) 3,457 (11,579) (17,873) (3,960)
---------- ------- --------- -------- ---------- --------
-- 44,830 -- 99,521 -- 5,794
2,395,242 (15,057) 164,247 634,969 1,323,874 197,475
---------- ------- --------- -------- ---------- --------
2,395,242 29,773 164,247 734,490 1,323,874 203,269
---------- ------- --------- -------- ---------- --------
$2,380,952 $27,152 $ 167,704 $722,911 $1,306,001 $199,309
========== ======= ========= ======== ========== ========
$ 61,955 $ 3,760 $ 41,873 $ 82,136 $ 13,351 $ 10,963
16,284 2,398 3,681 12,581 7,499 3,138
---------- ------- --------- -------- ---------- --------
45,671 1,362 38,192 69,555 5,852 7,825
---------- ------- --------- -------- ---------- --------
(206,240) 5,905 (41,446) 24,932 10,354 1,441
59,071 8,186 (148,313) 224,336 118,634 (4,187)
---------- ------- --------- -------- ---------- --------
(147,169) 14,091 (189,759) 249,268 128,988 (2,746)
---------- ------- --------- -------- ---------- --------
$ (101,498) $15,453 $(151,567) $318,823 $ 134,840 $ 5,079
========== ======= ========= ======== ========== ========
$ 8,037 $ -- $ 5,120 $ -- $ -- $ 267
8,011 1,084 1,655 2,354 1,370 272
---------- ------- --------- -------- ---------- --------
26 (1,084) 3,465 (2,354) (1,370) (5)
---------- ------- --------- -------- ---------- --------
(3,230) 5,524 2,494 2,729 4,036 1,288
(230,017) 12,920 (10,841) 21,451 1,306 3,027
---------- ------- --------- -------- ---------- --------
(233,247) 18,444 (8,347) 24,180 5,342 4,315
---------- ------- --------- -------- ---------- --------
$ (233,221) $17,360 $ (4,882) $ 21,826 $ 3,972 $ 4,310
========== ======= ========= ======== ========== ========
</TABLE>
F-I- 7
<PAGE> 53
ACACIA NATIONAL VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE
ACCOUNTS FUND
----------------------------
STRATEGIC
HIGH INCOME BOND
PORTFOLIO(1) PORTFOLIO(1)
1999 ------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividend distributions received........................... $ 30,951 $ 37,569
Mortality and expense risk charge......................... 4,163 3,598
-------- --------
NET INVESTMENT INCOME (LOSS)................................ 26,788 33,971
-------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain distributions........................... -- --
Net change in unrealized appreciation (depreciation)...... 6,886 (19,428)
-------- --------
NET GAIN (LOSS) ON INVESTMENTS.............................. 6,886 (19,428)
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $ 33,674 $ 14,543
======== ========
1998
INVESTMENT INCOME:
Dividend and capital gains distributions received......... $ 6,494 $ 14,163
Mortality and expense risk charge......................... 1,942 1,297
-------- --------
NET INVESTMENT INCOME (LOSS)................................ 4,552 12,866
-------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from redemptions of fund
shares................................................. (1,436) (5,635)
Net change in unrealized appreciation (depreciation)...... (10,716) (740)
-------- --------
NET GAIN (LOSS) ON INVESTMENTS.............................. (12,152) (6,375)
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $ (7,600) $ 6,491
======== ========
1997
INVESTMENT INCOME:
Dividend and capital gains distributions received......... $ 2,165 $ 765
Mortality and expense risk charge......................... 248 45
-------- --------
NET INVESTMENT INCOME (LOSS)................................ 1,917 720
-------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from redemptions of fund
shares................................................. 270 4
Net change in unrealized appreciation (depreciation)...... 375 (196)
-------- --------
NET GAIN (LOSS) ON INVESTMENTS.............................. 645 (192)
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $ 2,562 $ 528
======== ========
</TABLE>
- ---------------
(1) Commenced business May, 1997
The accompanying notes are an integral part of these financial statements.
F-I- 8
<PAGE> 54
[This page intentionally left blank.]
F-I- 9
<PAGE> 55
ACACIA NATIONAL VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT I
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
CALVERT VARIABLE SERIES, INC.
--------------------------------------
SOCIAL
SOCIAL SOCIAL SMALL CAP
MONEY MARKET BALANCED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
------------ --------- ---------
<S> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)............................. $ 35,910 $ 5,519 $ (787)
Net realized gain distributions.......................... -- 24,085 --
Net change in unrealized appreciation (depreciation)..... 12,253 1,900 23,977
---------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... 48,163 31,504 23,190
NET INCREASE (DECREASE) FROM POLICYOWNER TRANSACTIONS...... 860,441 251,997 29,588
---------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................... 908,604 283,501 52,778
---------- -------- --------
NET ASSETS AT JANUARY 1, 1999.............................. $ 696,215 $ 47,148 $ 87,407
---------- -------- --------
NET ASSETS AT DECEMBER 31, 1999............................ $1,604,819 $330,649 $140,185
========== ======== ========
1998
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)............................. $ 16,942 $ 3,101 $ 517
Net realized gain (loss) from redemption of fund
shares................................................ 99 611 (2,513)
Net change in unrealized appreciation (depreciation)..... 3,000 1,900 (1,616)
---------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... 20,041 5,612 (3,612)
NET INCREASE (DECREASE) FROM POLICYOWNER TRANSACTIONS...... 309,331 18,777 44,873
---------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................... 329,372 24,389 41,261
---------- -------- --------
NET ASSETS AT JANUARY 1, 1998.............................. $ 366,843 $ 22,759 $ 46,146
---------- -------- --------
NET ASSETS AT DECEMBER 31, 1998............................ $ 696,215 $ 47,148 $ 87,407
========== ======== ========
1997
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)............................. $ 3,831 $ 1,493 $ 3,752
Net realized gain (loss) from redemption of fund
shares................................................ -- 204 (1,773)
Net change in unrealized appreciation (depreciation)..... 440 (515) (2,228)
---------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... 4,271 1,182 (249)
NET INCREASE (DECREASE) FROM POLICYOWNER TRANSACTIONS...... 216,346 18,745 25,899
---------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................... 220,617 19,927 25,650
---------- -------- --------
NET ASSETS AT JANUARY 1, 1997.............................. $ 146,226 $ 2,832 $ 20,496
---------- -------- --------
NET ASSETS AT DECEMBER 31, 1997............................ $ 366,843 $ 22,759 $ 46,146
========== ======== ========
</TABLE>
- ---------------
(1) Commenced business May, 1997
The accompanying notes are an integral part of these financial statements.
F-I- 10
<PAGE> 56
<TABLE>
<CAPTION>
DREYFUS STOCK
CALVERT VARIABLE SERIES, INC. THE ALGER AMERICAN FUND INDEX FUND
------------------------------ ---------------------------------------- -------------
SOCIAL
SOCIAL INTERNATIONAL MID CAP SMALL
MID CAP GROWTH EQUITY GROWTH GROWTH CAPITALIZATION STOCK INDEX
PORTFOLIO(1) PORTFOLIO(1) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ (1,517) $ (3,020) $ (23,865) $ (9,224) $ (21,737) $ 35,571
20,944 52,658 292,559 152,575 303,027 98,876
2,980 113,538 882,734 257,406 903,837 1,835,918
-------- -------- ---------- ---------- ---------- -------------
22,407 163,176 1,151,428 400,757 1,185,127 1,970,365
125,068 383,269 1,752,646 519,905 823,820 4,711,735
-------- -------- ---------- ---------- ---------- -------------
147,475 545,445 2,904,074 920,662 2,008,947 6,682,100
-------- -------- ---------- ---------- ---------- -------------
$123,866 $205,166 $2,401,762 $ 851,023 $2,045,681 $ 6,667,859
-------- -------- ---------- ---------- ---------- -------------
$271,341 $750,611 $5,305,836 $1,771,685 $4,054,628 $ 13,349,959
======== ======== ========== ========== ========== =============
$ 12,955 $ 14,125 $ 218,050 $ 34,928 $ 160,628 $ 92,599
2,455 1,263 98,690 13,059 4,107 184,713
(1,025) (5,285) 297,960 98,503 62,991 729,209
-------- -------- ---------- ---------- ---------- -------------
14,385 10,103 614,700 146,490 227,726 1,006,521
98,279 175,356 898,671 387,686 1,009,524 3,632,941
-------- -------- ---------- ---------- ---------- -------------
112,664 185,459 1,513,371 534,176 1,237,250 4,639,462
-------- -------- ---------- ---------- ---------- -------------
$ 11,202 $ 19,707 $ 888,391 $ 316,847 $ 808,431 $ 2,028,397
-------- -------- ---------- ---------- ---------- -------------
$123,866 $205,166 $2,401,762 $ 851,023 $2,045,681 $ 6,667,859
======== ======== ========== ========== ========== =============
$ 1,132 $ 1,918 $ (74) $ 995 $ 21,386 $ 32,354
100 4 39,995 11,425 9,397 112,714
(603) (2,540) 95,625 15,140 70,132 146,383
-------- -------- ---------- ---------- ---------- -------------
629 (618) 135,546 27,560 100,915 291,451
10,573 20,325 431,691 198,748 303,922 1,185,520
-------- -------- ---------- ---------- ---------- -------------
11,202 19,707 567,237 226,308 404,837 1,476,971
-------- -------- ---------- ---------- ---------- -------------
$ -- $ -- $ 321,154 $ 90,539 $ 403,594 $ 551,426
-------- -------- ---------- ---------- ---------- -------------
$ 11,202 $ 19,707 $ 888,391 $ 316,847 $ 808,431 $ 2,028,397
======== ======== ========== ========== ========== =============
</TABLE>
F-I- 11
<PAGE> 57
ACACIA NATIONAL VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT I
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
NEUBERGER & BERMAN STRONG VARIABLE
ADVISERS MANAGEMENT TRUST INSURANCE FUNDS, INC.
-------------------------- ------------------------
LIMITED
MATURITY ASSET
BOND GROWTH ADVANTAGE ALLOCATION
PORTFOLIO PORTFOLIO FUND II(2) FUND II(2)
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)....................... $ 112,894 $ (14,860) $ -- $ --
Net realized gain distributions.................... -- 88,404 -- --
Net change in unrealized appreciation
(depreciation)................................... (30,899) 857,225 -- --
---------- ---------- -------- ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS......................................... 81,995 930,769 -- --
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS....................................... 1,025,930 243,298 -- --
---------- ---------- -------- ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS.............. 1,107,925 1,174,067 -- --
---------- ---------- -------- ---------
NET ASSETS AT JANUARY 1, 1999........................ $2,032,827 $1,548,079 $ -- $ --
---------- ---------- -------- ---------
NET ASSETS AT DECEMBER 31, 1999...................... $3,140,752 $2,722,146 $ -- $ --
========== ========== ======== =========
1998
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)....................... $ 46,123 $ 178,984 $ -- $ --
Net realized gain (loss) from redemption of fund
shares........................................... 1,107 (18,723) -- --
Net change in unrealized appreciation
(depreciation)................................... (2,543) 22,943 -- --
---------- ---------- -------- ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS......................................... 44,687 183,204 -- --
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS....................................... 1,124,307 735,204 -- --
---------- ---------- -------- ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS.............. 1,168,994 918,408 -- --
---------- ---------- -------- ---------
NET ASSETS AT JANUARY 1, 1998........................ $ 863,833 $ 629,671 $ -- $ --
---------- ---------- -------- ---------
NET ASSETS AT DECEMBER 31, 1998...................... $2,032,827 $1,548,079 $ -- $ --
========== ========== ======== =========
1997
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)....................... $ 16,358 $ 20,478 $ 310 $ 5,861
Net realized gain (loss) from redemption of fund
shares........................................... 1,905 16,065 (38) 11,629
Net change in unrealized appreciation
(depreciation)................................... 15,273 59,454 52 2,621
---------- ---------- -------- ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS......................................... 33,536 95,997 324 20,111
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS....................................... 624,805 352,564 (10,234) (107,191)
---------- ---------- -------- ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS.............. 658,341 448,561 (9,910) (87,080)
---------- ---------- -------- ---------
NET ASSETS AT JANUARY 1, 1997........................ $ 205,492 $ 181,110 $ 9,910 $ 87,080
---------- ---------- -------- ---------
NET ASSETS AT DECEMBER 31, 1997...................... $ 863,833 $ 629,671 $ 0 $ 0
========== ========== ======== =========
</TABLE>
- ---------------
(1) Commenced business May, 1997
(2) Subaccount closed November, 1997
F-I- 12
<PAGE> 58
<TABLE>
<CAPTION>
STRONG VARIABLE VAN ECK WORLDWIDE
INSURANCE FUNDS, INC. INSURANCE TRUST OPPENHEIMER VARIABLE ACCOUNTS FUND
------------------------- ----------------- ------------------------------------------
INTERNATIONAL DISCOVERY WORLDWIDE CAPITAL AGGRESSIVE GROWTH &
STOCK FUND II FUND II HARD ASSETS APPRECIATION GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO(1) PORTFOLIO(1) PORTFOLIO(1)
------------- --------- ----------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$ (14,290) $ (2,621) $ 3,457 $ (11,579) $ (17,873) $ (3,960)
-- 44,830 -- 99,521 -- 5,794
2,395,242 (15,057) 164,247 634,969 1,323,874 197,475
---------- -------- ---------- ---------- ---------- ----------
2,380,952 27,152 167,704 722,911 1,306,001 199,309
305,865 54,601 284,172 1,345,599 582,546 514,599
---------- -------- ---------- ---------- ---------- ----------
2,686,817 81,753 451,876 2,068,510 1,888,547 713,908
---------- -------- ---------- ---------- ---------- ----------
$2,412,905 $336,358 $ 582,277 $2,253,827 $1,347,548 $ 637,896
---------- -------- ---------- ---------- ---------- ----------
$5,099,722 $418,111 $1,034,153 $4,322,337 $3,236,095 $1,351,804
========== ======== ========== ========== ========== ==========
$ 45,671 $ 1,362 $ 38,192 $ 69,555 $ 5,852 $ 7,825
(206,240) 5,905 (41,446) 24,932 10,354 1,441
59,071 8,186 (148,313) 224,336 118,634 (4,187)
---------- -------- ---------- ---------- ---------- ----------
(101,498) 15,453 (151,567) 318,823 134,840 5,079
1,227,685 112,491 479,900 1,330,394 856,576 557,879
---------- -------- ---------- ---------- ---------- ----------
1,126,187 127,944 328,333 1,649,217 991,416 562,958
---------- -------- ---------- ---------- ---------- ----------
$1,286,718 $208,414 $ 253,944 $ 604,610 $ 356,132 $ 74,938
---------- -------- ---------- ---------- ---------- ----------
$2,412,905 $336,358 $ 582,277 $2,253,827 $1,347,548 $ 637,896
========== ======== ========== ========== ========== ==========
$ 26 $ (1,084) $ 3,465 $ (2,354) $ (1,370) $ (5)
(3,230) 5,524 2,494 2,729 4,036 1,288
(230,017) 12,920 (10,841) 21,451 1,306 3,027
---------- -------- ---------- ---------- ---------- ----------
(233,221) 17,360 (4,882) 21,826 3,972 4,310
1,076,576 114,093 170,829 582,784 352,160 70,628
---------- -------- ---------- ---------- ---------- ----------
843,355 131,453 165,947 604,610 356,132 74,938
---------- -------- ---------- ---------- ---------- ----------
$ 443,363 $ 76,961 $ 87,997 $ -- $ -- $ --
---------- -------- ---------- ---------- ---------- ----------
$1,286,718 $208,414 $ 253,944 $ 604,610 $ 356,132 $ 74,938
========== ======== ========== ========== ========== ==========
</TABLE>
F-I- 13
<PAGE> 59
ACACIA NATIONAL VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT I
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE
ACCOUNTS FUND
------------------------------
HIGH INCOME STRATEGIC BOND
PORTFOLIO(1) PORTFOLIO(1)
1999 ------------ --------------
<S> <C> <C>
INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income(loss)............................... $ 26,788 $ 33,971
Net realized gain distributions........................... -- --
Net change in unrealized appreciation(depreciation)....... 6,886 (19,428)
-------- --------
NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ 33,674 14,543
NET INCREASE(DECREASE) FROM POLICYOWNER TRANSACTIONS........ 304,273 214,887
-------- --------
TOTAL INCREASE(DECREASE) IN NET ASSETS...................... 337,947 229,430
-------- --------
NET ASSETS AT JANUARY 1, 1999............................... 371,401 275,293
-------- --------
NET ASSETS AT DECEMBER 31, 1999............................. $709,348 $504,723
======== ========
1998
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income(loss)............................... $ 4,552 $ 12,866
Net realized gain(loss) from redemption of fund shares.... (1,436) (5,635)
Net change in unrealized appreciation(depreciation)....... (10,716) (740)
-------- --------
NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ (7,600) 6,491
NET INCREASE(DECREASE) FROM POLICYOWNER TRANSACTIONS........ 309,237 249,444
-------- --------
TOTAL INCREASE(DECREASE) IN NET ASSETS...................... 301,637 255,935
-------- --------
NET ASSETS AT JANUARY 1, 1998............................... 69,764 19,358
-------- --------
NET ASSETS AT DECEMBER 31, 1998............................. $371,401 $275,293
======== ========
1997
INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income(loss)............................... $ 1,917 $ 720
Net realized gain(loss) from redemption of fund shares.... 270 4
Net change in unrealized appreciation(depreciation)....... 375 (196)
-------- --------
NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ 2,562 528
NET INCREASE(DECREASE) FROM POLICYOWNER TRANSACTIONS........ 67,202 18,830
-------- --------
TOTAL INCREASE(DECREASE) IN NET ASSETS...................... 69,764 19,358
-------- --------
NET ASSETS AT JANUARY 1, 1997............................... -- --
-------- --------
NET ASSETS AT DECEMBER 31, 1997............................. $ 69,764 $ 19,358
======== ========
</TABLE>
- ---------------
(1) Commenced business May, 1997
The accompanying notes are an integral part of these financial statements.
F-I- 14
<PAGE> 60
ACACIA NATIONAL VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
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), a wholly owned subsidiary
of Acacia Life Insurance Company. The assets of the Account are held by the
Company and are segregated from all of the Company's other assets.
The Account is registered under the Investment Company Act of 1940, as amended,
as a unit investment trust. At December 31, 1999 there are nineteen subaccounts
within the Account. Five of the subaccounts invest only in a corresponding
Portfolio of the Calvert Variable Series, Inc. which is a diversified open-end
management investment company managed by the Calvert Asset Management Company,
Inc. (see note 3). Three of the subaccounts invest only in a corresponding
Portfolio of The Alger American Fund which is a diversified open-end management
investment company managed by Fred Alger Management, Inc. (Alger Management).
One subaccount invests only in a corresponding Portfolio of Dreyfus Stock Index
Fund which is a non-diversified open-end management investment company managed
by Dreyfus Service Corporation. Two of the subaccounts invest only in a
corresponding Portfolio of the Neuberger & Berman Advisers Management Trust
which is a diversified open-end management investment company managed by
Neuberger & Berman Management Incorporated. Two of the subaccounts invest only
in a corresponding Portfolio of the Strong Variable Insurance Fund, Inc. which
is a diversified open-end management investment company managed by Strong
Capital Management, Inc. One of the subaccounts invest only in a corresponding
Portfolio of the Van Eck Worldwide Insurance Trust which is a non-diversified
open-end management investment company managed by Van Eck Associates
Corporation. Five of the subaccounts invest only in a corresponding Portfolio of
the Oppenheimer Variable Accounts Fund which is a diversified open-end
management investment company managed by Oppenheimer Funds, Inc. Each Portfolio
pays the manager a monthly fee for managing its investments and business
affairs.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the 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.
CONSISTENCY
Due to changes in the processing environment during 1999, certain information is
presented differently between years. In 1999, net realized gains/losses on
redemption of fund shares is included in net change in unrealized
appreciation/depreciation. Capital gain distributions received are reflected in
net realized gain distributions.
In 1998 and 1997, net realized gains and losses on redemption of fund shares are
separately presented. Capital gain distributions received from funds are
included in dividend distributions received.
VALUATION OF INVESTMENTS
The assets of the account are carried at the net asset value of the underlying
Portfolios. The value of the policyowners' units corresponds to the Account's
investment in the underlying subaccounts. The availability of investment
portfolio and subaccount options may vary between products. Share transactions
and security transactions are accounted for on a trade date basis. However,
dividends of $30,157 for the Stock Index Portfolio and $21,938 for the
International Stock Fund II Portfolio were received in 1997 and recorded in
1998. All affected policyholder accounts were adjusted.
F-I- 15
<PAGE> 61
ACACIA NATIONAL VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
FEDERAL AND STATE TAXES
The operations of the Account are included in the federal income tax return of
the Company, which is taxed as a life insurance company under the Internal
Revenue Code. The Company has the right to charge the Account any federal income
taxes, or provision for federal income taxes, attributable to the operations of
the Account or to the policies funded in the Account. Currently, the Company
does not make a charge for income or other taxes. Charges for state and local
taxes, if any, attributable to the Account may also be made.
2. POLICYOWNER CHARGES
The Company charges the Account for mortality and expense risks assumed. A daily
charge is made on the average daily value of the net assets representing equity
of policyowners held in each subaccount per each product's current policy
provisions. Additional charges are made at intervals and in amounts per each
product's current policy provisions. These charges are prorated against the
balance in each investment option of the policyowner, including the Fixed
Account option which is not reflected in this separate account.
3. RELATED PARTIES
Calvert Asset Management Company, Inc., an affiliate of the Company, serves as
an investment advisor to the Calvert Variable Series, Inc. Social Money Market,
Social Balanced, Social Small Cap Growth, Social Mid Cap Growth and Social
International Equity Portfolios. The Advisors Group, Inc., an affiliate of the
Company, acts as a principal underwriter of the policies pursuant to an
underwriting agreement with the Company.
F-I- 16
<PAGE> 62
[This page intentionally left blank.]
F-I- 17
<PAGE> 63
ACACIA NATIONAL VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. UNITS OWNED
Units owned in the Account are as follows:
<TABLE>
<CAPTION>
CALVERT VARIABLE SERIES, INC.
-------------------------------------------------------------------------
SOCIAL SOCIAL
SOCIAL SOCIAL SMALL CAP SOCIAL INTERNATIONAL
MONEY MARKET BALANCED GROWTH MID CAP GROWTH EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ --------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Units owned at January 1, 1999..... 598,035 2,990 7,476 7,670 15,712
Units acquired..................... 5,307,754 17,585 7,132 26,315 33,694
Units disposed..................... 4,539,913 2,073 4,511 18,191 6,276
--------- ------ ------ ------ ------
Units owned at December 31, 1999... 1,365,876 18,502 10,097 15,794 43,130
========= ====== ====== ====== ======
Units owned at January 1, 1998..... 330,489 1,678 3,703 900 1,788
Units acquired..................... 2,498,903 2,971 5,008 7,984 17,004
Units disposed..................... 2,231,357 1,659 1,235 1,214 3,080
--------- ------ ------ ------ ------
Units owned at December 31, 1998... 598,035 2,990 7,476 7,670 15,712
========= ====== ====== ====== ======
Units owned at January 1, 1997..... 138,906 251 1,482 -- --
Units acquired..................... 1,439,931 1,655 4,603 994 1,939
Units disposed..................... 1,248,348 228 2,382 94 151
--------- ------ ------ ------ ------
Units owned at December 31, 1997... 330,489 1,678 3,703 900 1,788
========= ====== ====== ====== ======
</TABLE>
F-I- 18
<PAGE> 64
<TABLE>
<CAPTION>
DREYFUS NEUBERGER & BERMAN
STOCK ADVISERS STRONG VARIABLE
THE ALGER AMERICAN FUND INDEX FUND MANAGEMENT TRUST INSURANCE FUNDS, INC.
- -------------------------------------- ----------- --------------------- ----------------------------
LIMITED
MIDCAP SMALL MATURITY
GROWTH GROWTH CAPITALIZATION STOCK INDEX BOND GROWTH ADVANTAGE ASSET ALLOCATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND II FUND II
- --------- --------- -------------- ----------- --------- --------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
113,872 50,595 153,159 320,865 173,713 97,419 -- --
146,269 79,523 151,870 357,435 200,479 48,449 -- --
71,718 49,811 92,843 144,982 111,058 33,014 -- --
------- ------ ------- ------- ------- ------- ----- ------
188,423 80,307 212,186 533,318 263,134 112,854 -- --
======= ====== ======= ======= ======= ======= ===== ======
62,387 24,543 69,933 125,133 77,059 45,761 -- --
78,302 32,437 103,745 230,164 136,118 65,880 -- --
26,817 6,385 20,519 34,432 39,464 14,222 -- --
------- ------ ------- ------- ------- ------- ----- ------
113,872 50,595 153,159 320,865 173,713 97,419 -- --
======= ====== ======= ======= ======= ======= ===== ======
28,351 8,066 38,887 45,236 19,571 16,990 984 7,816
64,768 26,097 83,058 141,619 84,591 46,395 677 11,884
30,732 9,620 52,012 61,722 27,103 17,624 1,661 19,700
------- ------ ------- ------- ------- ------- ----- ------
62,387 24,543 69,933 125,133 77,059 45,761 -- --
======= ====== ======= ======= ======= ======= ===== ======
</TABLE>
F-I- 19
<PAGE> 65
ACACIA NATIONAL VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. UNITS OWNED -- (CONTINUED)
Units owned in the Account are as follows:
<TABLE>
<CAPTION>
VAN ECK
STRONG VARIABLE WORLDWIDE
INSURANCE FUNDS, INC. INSURANCE TRUST
-------------------------- ---------------
INTERNATIONAL DISCOVERY WORLDWIDE
STOCK FUND II FUND II HARD ASSETS
PORTFOLIO PORTFOLIO PORTFOLIO
------------- --------- ---------------
<S> <C> <C> <C>
Units owned at January 1, 1999........................... 262,868 28,197 73,721
Units acquired........................................... 258,376 91,292 105,757
Units disposed........................................... 223,453 86,116 71,150
------- ------ -------
Units owned at December 31, 1999......................... 297,791 33,373 108,328
======= ====== =======
Units owned at January 1, 1998........................... 137,912 18,742 22,198
Units acquired........................................... 201,600 14,670 59,926
Units disposed........................................... 76,644 5,215 8,403
------- ------ -------
Units owned at December 31, 1998......................... 262,868 28,197 73,721
======= ====== =======
Units owned at January 1, 1997........................... 39,763 7,708 7,560
Units acquired........................................... 132,459 17,417 22,271
Units disposed........................................... 34,310 6,383 7,633
------- ------ -------
Units owned at December 31, 1997......................... 137,912 18,742 22,198
======= ====== =======
</TABLE>
F-I- 20
<PAGE> 66
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNTS FUND
----------------------------------------------------------------
CAPITAL AGGRESSIVE GROWTH AND STRATEGIC
APPRECIATION GROWTH INCOME HIGH INCOME BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
150,216 95,687 47,458 33,313.. 24,847
135,346 159,858 93,705 60,039.. 54,441
82,628 131,625 58,251 32,216.. 34,723
------- ------- ------ ------ ------
202,934 123,920 82,912 61,136.. 44,565
======= ======= ====== ====== ======
49,967 28,422 5,836 6,274... 1,797
119,856 77,765 48,498 33,123.. 77,960
19,607 10,500 6,876 6,084... 54,910
------- ------- ------ ------ ------
150,216 95,687 47,458 33,313.. 24,847
======= ======= ====== ====== ======
-- -- -- -- --
59,904 36,728 7,354 7,955... 2,265
9,937 8,306 1,518 1,681... 468
------- ------- ------ ------ ------
49,967 28,422 5,836 6,274... 1,797
======= ======= ====== ====== ======
</TABLE>
F-I- 21
<PAGE> 67
INDEPENDENT AUDITORS' REPORT
Board of Directors
Acacia National Life Insurance Company
Bethesda, Maryland
We have audited the accompanying statement of admitted assets, liabilities, and
surplus -- statutory basis of Acacia National Life Insurance Company (a wholly
owned subsidiary of Acacia Life Insurance Company) as of December 31, 1999, and
the related statements of operations -- statutory basis, changes in
surplus -- statutory basis, and cash flows -- statutory basis for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As described more fully in Note 1 to the financial statements, the Company
prepared these financial statements using 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, although not reasonably determinable, are presumed to be material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the 1999 financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of Acacia National Life Insurance Company as of December 31,
1999, or the results of its operations or its cash flows for the year then
ended.
In our opinion, the 1999 financial statements referred to above present fairly,
in all material respects, the admitted assets, liabilities, and surplus of
Acacia National Life Insurance Company as of December 31, 1999, and the results
of its operations and its cash flows for the year then ended, on the basis of
accounting described in Note 1.
/s/ DELOITTE & TOUCHE LLP
Lincoln, Nebraska
April 7, 2000
F-II- 1
<PAGE> 68
[PRICEWATERHOUSECOOPERS LOGO]
INDEPENDENT AUDITORS' REPORT
Board of Directors
Acacia National Life Insurance Company
We have audited the accompanying statement of admitted assets, liabilities, and
surplus -- statutory basis of Acacia National Life Insurance Company (the
Company) as of December 31, 1998, and the related statutory statements of
operations and changes in surplus, and cash flow, for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provide a reasonable basis for our
opinion.
As described more fully in Note 1 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 accounting principles
generally accepted in the United states. The effects on the financial statements
of the variances between the statutory basis of accounting and accounting
principles generally accepted in the United States 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 accounting principles generally accepted in the United States,
the financial position of the Company as of December 31, 1998 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 the results of its operations and its cash
flow for the year then ended, on the basis of accounting described in Note 1.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Washington, D.C.
March 31, 1999
F-II- 2
<PAGE> 69
ACACIA NATIONAL LIFE INSURANCE COMPANY
STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND SURPLUS -- STATUTORY BASIS
(COLUMNAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
ADMITTED ASSETS
Investments
Bonds..................................................... $522,328 $556,127
Mortgage loans............................................ 894 --
Preferred stocks.......................................... 70 546
Common stocks............................................. 385 1,778
Short-term investments.................................... 5,685 13,614
Other investments......................................... 495 682
Loans on insurance policies............................... 7,955 7,579
-------- --------
Total investments...................................... 537,812 580,326
Cash........................................................ 5,195 64
Accrued investment income................................... 9,157 9,775
Reinsurance recoverable -- affiliate........................ 1,162 --
Income taxes receivable -- affiliate........................ 1,203 400
Other assets................................................ 370 2,169
Separate accounts........................................... 140,638 73,334
-------- --------
$695,537 $666,068
======== ========
LIABILITIES AND SURPLUS
LIABILITIES
Life and annuity reserves................................. $464,615 $483,126
Funds left on deposit..................................... 65,002 62,065
Reserve for unpaid claims................................. 1,461 2,113
Interest maintenance reserve.............................. 1,684 3,202
Accrued separate account transfers........................ (7,702) (6,297)
Accounts payable -- affiliates............................ 999 7,586
Other liabilities......................................... 2,927 3,736
Asset valuation reserve................................... 1,805 5,513
Separate accounts......................................... 140,638 73,334
-------- --------
671,429 634,378
-------- --------
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
Additional paid-in capital................................ 13,450 13,450
Retained earnings......................................... 2,108 9,690
-------- --------
24,108 31,690
-------- --------
$695,537 $666,068
======== ========
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-II- 3
<PAGE> 70
ACACIA NATIONAL LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- STATUTORY BASIS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
INCOME
Premium income............................................ $ 79,057 $ 67,919
Less net reinsurance:
Yearly renewable term.................................. (5,318) (4,601)
-------- --------
Net premium income................................... 73,739 63,318
Funds left on deposit..................................... 8,257 8,292
Net investment income..................................... 41,553 46,305
Miscellaneous insurance income............................ 1,481 25
-------- --------
125,030 117,940
-------- --------
EXPENSES
Benefits to policyowners.................................. 86,472 83,190
Decrease in reserves...................................... (15,569) (18,937)
Commissions............................................... 7,256 7,353
General insurance expenses................................ 13,562 16,377
Taxes, licenses and fees.................................. 2,154 1,167
Amortization of goodwill.................................. 382 684
Net premium transferred to separate accounts.............. 34,764 30,725
-------- --------
129,021 120,559
-------- --------
Loss before federal income taxes and realized capital
losses................................................. (3,991) (2,619)
Income taxes (benefit).................................... (439) (1,822)
-------- --------
Loss before realized capital losses....................... (3,552) (797)
Realized capital losses (net of tax of ($972) and $760 and
transfers to interest maintenance reserve of ($1,111)
and $965 for 1999 and 1998, respectively).............. (6,244) (209)
-------- --------
Net loss.................................................. $ (9,796) $ (1,006)
======== ========
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-II- 4
<PAGE> 71
ACACIA NATIONAL LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN SURPLUS -- STATUTORY BASIS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
---------------- ---------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL
------ ------ ------ ------ ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1998............... 6,000 $6,000 15,000 $2,550 $13,450 $10,506 $32,506
Change in non-admitted assets........ -- -- -- -- -- 684 684
Change in net unrealized capital
gains.............................. -- -- -- -- -- (49) (49)
Change in valuation basis of
reserves........................... -- -- -- -- -- (120) (120)
Transfer to asset valuation
reserve............................ -- -- -- -- -- (325) (325)
Net loss............................. -- -- -- -- -- (1,006) (1,006)
----- ------ ------ ------ ------- ------- -------
BALANCE, December 31, 1998............. 6,000 6,000 15,000 2,550 13,450 9,690 31,690
Change in non-admitted assets........ -- -- -- -- -- (3) (3)
Change in net unrealized capital
gains.............................. -- -- -- -- -- (1,491) (1,491)
Transfer from asset valuation
reserve............................ -- -- -- -- -- 3,708 3,708
Net loss............................. -- -- -- -- -- (9,796) (9,796)
----- ------ ------ ------ ------- ------- -------
BALANCE, December 31, 1999............. 6,000 $6,000 15,000 $2,550 $13,450 $ 2,108 $24,108
===== ====== ====== ====== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-II- 5
<PAGE> 72
ACACIA NATIONAL LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS -- STATUTORY BASIS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net premium income received............................... $ 74,462 $ 63,318
Miscellaneous insurance income............................ 8,904 8,176
Net investment income received............................ 43,690 44,953
Net premium transferred to separate accounts.............. (37,511) (34,192)
Benefits paid to policyowners............................. (89,096) (84,359)
Commissions, expenses and taxes, other than federal income
tax.................................................... (21,394) (23,804)
Federal income tax received............................... 608 2,596
Other operating income and disbursements.................. (7,174) 8,488
--------- ---------
Net cash used in operating activities..................... (27,511) (14,824)
--------- ---------
INVESTING ACTIVITIES:
Proceeds from investments sold, matured or repaid......... 337,366 182,412
Purchase of investments................................... (312,277) (161,169)
Net decrease (increase) in loans on insurance policies.... (376) 522
--------- ---------
Net cash provided by investing activities................. 24,713 21,765
--------- ---------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM
INVESTMENTS............................................... (2,798) 6,941
CASH AND SHORT-TERM INVESTMENTS -- BEGINNING OF PERIOD...... 13,678 6,737
--------- ---------
CASH AND SHORT-TERM INVESTMENTS -- END OF PERIOD............ $ 10,880 $ 13,678
========= =========
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-II- 6
<PAGE> 73
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF OPERATIONS
Acacia National Life Insurance Company (the Company) is a wholly owned
subsidiary of Acacia Life Insurance Company (Acacia Life). Acacia Life is a
wholly owned subsidiary of Ameritas Holding Company (AHC) which is a wholly
owned subsidiary of Ameritas Acacia Mutual Holding Company (AAMHC).
The Board of Directors of Ameritas Mutual Insurance Holding Company (AMIHC) and
Acacia Mutual Holding Corporation (AMHC) approved and adopted a plan of merger
under which the two would merge to form AAMHC. In addition their two wholly
owned subsidiaries, AHC and Acacia Financial Group, Ltd. (AFG), would merge to
form Ameritas Holding Company. Public informational hearings on the proposed
merger were held on November 20, 1998 with the Nebraska Insurance Director and
on December 17, 1998 with the D.C. Insurance Commissioner. Following the
commissioner's approval a special meeting with the eligible members of AMHC was
held on December 22, 1998 and with the members of AMIHC on December 29, 1998.
With the members approval the merger became effective January 1, 1999. The
business combination was accounted for as a pooling of interests.
AMHC was formed in 1997 in conjunction with a plan of reorganization
(Reorganization) of the former Acacia Life, Acacia Mutual Life Insurance Company
(Acacia). Pursuant to the Reorganization which was approved by the Department of
Insurance and Securities Regulation of the District of Columbia and the eligible
members of Acacia and became effective June 30, 1997, Acacia was converted to a
mutual insurance holding company structure whereby AMHC and AFG were formed and
Acacia was converted to a stock life insurance company wholly owned by AFG. As
of the effective date of the reorganization, the membership interests and the
contractual rights of the policyowners of Acacia were separated -- the
membership interests automatically became, by operation of law, membership
interests in AMHC and the contractual rights remained in Acacia. Each person who
becomes the owner of a designated policy issued by Acacia after the effective
date of the Reorganization became a member of AMHC, now AAMHC.
The Company, domiciled in Virginia, 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.
Non-insurance products and services are offered by an affiliate of the Company,
Acacia Financial Corporation (AFC), a wholly owned subsidiary of Acacia Life,
which is a holding company of several financial service companies. Principal
subsidiaries include: Calvert Group Ltd. (Calvert), a provider of investment
advisory, management and administrative services to The Calvert Group of mutual
funds; Acacia Federal Savings Bank (AFSB), a federally chartered savings bank;
and The Advisors Group, Inc., a broker/dealer.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared, except as to form, on
the basis of accounting practices prescribed or permitted by the Bureau of
Insurance, State Corporate Commission of the Commonwealth of Virginia (statutory
basis or SAP), which are designed primarily to demonstrate ability to meet
claims of policyowners. These practices differ in certain respects, which in
some cases may be material, from generally accepted accounting principles (GAAP)
applied in the presentation of financial condition and results of operations on
the "going concern" basis commonly followed by other types of enterprises.
In March of 1998, the National Association of Insurance Commissioners adopted
the Codification of Statutory Accounting Principles (Codification). The
Codification, which is intended to standardize
F-II- 7
<PAGE> 74
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
BASIS OF PRESENTATION -- (CONTINUED)
regulatory accounting and reporting for the insurance industry, is proposed to
be effective January 1, 2001. However, statutory accounting principles will
continue to be established by individual state laws and permitted practices and
it is uncertain when, or if, the state of Virginia will require adoption of
Codification for the preparation of statutory financial statements. The Company
has not finalized the quantification of the effects of Codification on its
statutory financial statements.
The accompanying statutory financial statements vary in some respects from
generally accepted accounting principles. The most significant differences
include: (a) bonds are generally carried at amortized cost rather than being
valued at either amortized cost or fair value based on their classification
according to the Company's ability and intent to hold or trade the securities;
(b) costs related to acquiring new business are charged to operations as
incurred and not deferred, whereas premiums are taken into income on a pro rata
basis over the respective term of the policies; (c) policy reserves are carried
at amounts which approximate surrender values rather than accumulation values
and statutory investment reserves are established; (d) a provision has not been
made for federal income taxes resulting from all of the cumulative differences
in assets and liabilities determined on a tax return and financial statement
basis; and (e) changes in certain assets designated as "non-admitted" assets
have been charged to surplus.
In 1998, the Company's financial information was included in the determination
of consolidated GAAP amounts for Acacia Mutual Holding Corporation. The Acacia
National Life Insurance Company GAAP amounts were derived from this consolidated
financial information. The Company does not prepare separate financial
statements on a GAAP basis.
The impact of the estimated differences between SAP and GAAP in 1998 were as
follows:
<TABLE>
<CAPTION>
CAPITAL
NET LOSS AND SURPLUS
-------- -----------
<S> <C> <C>
AS REPORTED UNDER SAP....................................... $(1,006) $ 31,690
Adjustments:
Deferred policy acquisition costs......................... 2,874 58,017
AVR and IMR............................................... 615 8,715
Deferred Federal income tax............................... (732) (20,077)
Net policyholder liabilities.............................. (1,601) (11,291)
Investments............................................... (59) 20,013
Other..................................................... (500) (946)
------- --------
AMOUNTS UNDER GAAP.......................................... $ (409) $ 86,121
======= ========
</TABLE>
For 1999, it is not practicable to determine the above information.
USE OF ESTIMATES
The preparation of financial statements in conformity with statutory accounting
practices 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.
F-II- 8
<PAGE> 75
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 -- (CONTINUED)
(IN THOUSANDS)
USE OF ESTIMATES -- (CONTINUED)
The principal accounting and reporting practices followed are:
INVESTMENTS
Investments are reported according to valuation procedures prescribed by the
National Association of Insurance Commissioners (NAIC), and generally: bonds and
mortgage loans are valued at amortized cost; preferred stock at cost; common
stock at fair value; other investments on the equity method; and separate
account assets are carried at fair value.
Realized capital gains and losses, including valuation allowances on specific
investments, are recorded in the Statement of Operations and unrealized gains
and losses are credited or charged to retained earnings.
SEPARATE ACCOUNTS
The Company operates separate accounts on which the earnings or losses accrue
exclusively to contract holders. The assets (mutual fund investments) and
liabilities of each account are clearly identifiable and distinguishable from
other assets and liabilities of the Company. Amounts are reported at fair value.
NON-ADMITTED ASSETS
Certain assets (primarily goodwill) are designated as "non-admitted" under
statutory accounting requirements. These assets are excluded from the statements
of admitted assets, liabilities and surplus by adjustments to retained earnings.
Total "non-admitted assets" were $2,981 and $2,978 in 1999 and 1998,
respectively.
RESERVES
Life policy reserves are computed by using the Commissioners Reserve Valuation
Method (CRVM) and the Commissioners Standard Ordinary Mortality table. Annuity
reserves are calculated using the Commissioners Annuity Reserve Valuation Method
(CARVM) and the maximum valuation interest rate; for annuities with life
contingencies, the prescribed valuation mortality table is used. Reserves for
unpaid claims include claims reported and unpaid and claims not yet reported,
the latter estimated on the basis of historical experience. As such amounts are
necessarily estimates, the ultimate liability will differ from the amount
recorded and will be reflected in operations when additional information becomes
known.
Accrued separate account transfers primarily consists of the amount of
policyholder account values over modified reserves used in the separate account,
such as the use of CARVM and CRVM.
The interest maintenance reserve (IMR) is calculated based on the prescribed
methods developed by the NAIC. Realized gains and losses, net of tax, resulting
from interest rate changes on fixed income investments are deferred and credited
to this reserve. These gains and losses are then amortized into investment
income over what would have been the remaining years to maturity of the
underlying investment. Amortization included in net investment income was $407
and $350 for 1999 and 1998, respectively.
The asset valuation reserve (AVR) is a required appropriation of surplus to
provide for possible losses that may occur on certain investments held by the
Company. The reserve is computed based on holdings of bonds, stocks, and
short-term investments and realized and unrealized gains and losses, other than
those resulting from interest rate changes. Changes in the reserve are charged
or credited to retained earnings.
INCOME TAXES
The Company, beginning in 1999, will file a consolidated tax return with Acacia
Life Insurance Company. Prior to 1999, Acacia National filed a consolidated
return with Acacia Mutual Holding Corporation and its
F-II- 9
<PAGE> 76
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 -- (CONTINUED)
(IN THOUSANDS)
USE OF ESTIMATES -- (CONTINUED)
INCOME TAXES -- (CONTINUED)
subsidiaries. An agreement among the members of the consolidated group,
generally, provides for distribution of consolidated tax results as if filed on
a separate return basis.
The Company's federal income tax returns have been examined by and settled with
the Internal Revenue Service through 1995.
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 capitalization and
amortization of deferred policy acquisition costs, certain reserve calculations
and recognition of realized gains or losses on sales of bonds.
Federal income tax regulations allowed certain special deductions for 1983 and
prior years which are accumulated in a memorandum tax account designated as
"policyholders' surplus". Generally, this policyholders' surplus account (PSA)
will become subject to tax at the then current rates only if the accumulated PSA
exceeds certain maximum limitations or if certain cash distributions are deemed
to be paid out of the account. At December 31, 1999 and 1998, the Company has
$6.6 million in their policyholders' surplus accounts which is not reflected in
the financial statements.
RECOGNITION OF PREMIUM INCOME AND RELATED EXPENSES
Premiums are reported as income when collected over the premium paying periods
of the policies. Annuity and fund deposits are included as income when received.
Policy acquisition costs, such as commissions and other marketing and issuance
expenses incurred in connection with acquiring new business, are charged to
operations as incurred. Premium income consists of:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
------------------
1999 1998
------- -------
<S> <C> <C>
Life........................................................ $27,747 $23,552
Annuity..................................................... 51,310 44,367
------- -------
$79,057 $67,919
======= =======
</TABLE>
RECLASSIFICATIONS
Certain items on the prior year financial statements have been reclassified to
conform to current year presentation.
2. FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instrument for which it is practicable to estimate a
value:
BONDS -- For publicly traded securities, fair value is determined
using an independent pricing source. For securities without a readily
ascertainable fair value, fair value has been determined using an interest
rate spread matrix based upon quality, weighted average maturity and
Treasury yields.
MORTGAGE LOANS -- Mortgage loans in good standing are valued on the
basis of discounted cash flow. The interest rate that is assumed is based
upon the weighted average term of the mortgage and appropriate spread over
Treasuries. There were no mortgage loans in default at December 31, 1999.
PREFERRED STOCKS -- For publicly traded securities, fair value is
determined using an independent pricing source.
F-II- 10
<PAGE> 77
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 -- (CONTINUED)
(IN THOUSANDS)
2. FINANCIAL INSTRUMENTS -- (CONTINUED)
COMMON STOCKS -- For publicly traded securities, fair value is
determined using an independent pricing source.
SHORT-TERM INVESTMENTS -- The carrying amount approximates fair value
because of the short maturity of these instruments.
OTHER INVESTMENTS -- Fair value for venture capital partnerships is
estimated based on values as last reported by the partnership and
discounted for their lack of marketability.
LOANS ON INSURANCE POLICIES -- Fair values for loans on insurance
policies are estimated using a discounted cash flow analysis at interest
rates currently offered for similar loans. Loans on insurance policies with
similar characteristics are aggregated for purposes of the calculations.
CASH -- The carrying amount equals fair value.
ACCRUED INVESTMENT INCOME -- Fair value of accrued investment income
equals book value.
INVESTMENT-TYPE CONTRACTS -- Reserves held on investment-type
insurance contracts, i.e. contracts which do not contain significant
morbidity risks, are carried at amounts which approximate fair value.
FUNDS LEFT ON DEPOSIT -- Funds on deposit which do not have fixed
maturities are carried at the amount payable on demand at the reporting
date.
The estimated fair values of the Company's financial instruments are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------
1999 1998
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Financial assets:
Bonds............................................. $522,328 $517,993 $556,127 $591,776
Preferred stocks.................................. 70 106 546 798
Common stocks..................................... 385 385 1,778 1,778
Mortgage loans.................................... 894 861 -- --
Short-term investments............................ 5,685 5,685 13,614 13,614
Other investments................................. 495 495 682 682
Loans on insurance policies....................... 7,955 6,816 7,579 6,996
Cash.............................................. 5,195 5,195 64 64
Accrued investment income......................... 9,157 9,157 9,775 9,775
Financial Liabilities:
Investment-type contracts......................... $357,515 $357,515 $380,641 $380,641
Funds left on deposit............................. 65,002 65,002 62,065 62,065
</TABLE>
These values do not necessarily represent the value for which the financial
instrument could be sold.
F-II- 11
<PAGE> 78
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 -- (CONTINUED)
(IN THOUSANDS)
3. INVESTMENTS
The table below provides additional information relating to bonds and stocks
held by the Company as of December 31, 1999:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
----------------------------------------------------
GROSS UNREALIZED
AMORTIZED --------------------- FAIR
COST GAINS LOSSES VALUE
--------- ------- ------- --------
<S> <C> <C> <C> <C>
U.S. Corporate................................. $292,892 $ 6,818 $ 8,603 $291,107
Mortgage-backed................................ 102,157 803 2,465 100,495
U.S. Treasury securities and obligations of
U.S. government agencies..................... 68,397 3,284 314 71,367
Foreign........................................ 15,237 15 603 14,649
Asset backed................................... 43,645 9 3,279 40,375
-------- ------- ------- --------
Total bonds.................................. $522,328 $10,929 $15,264 $517,993
-------- ------- ------- --------
Preferred stocks............................... $ 70 $ 36 $ -- $ 106
-------- ------- ------- --------
Common stocks.................................. $ 1,137 $ -- $ 752 $ 385
-------- ------- ------- --------
</TABLE>
The comparative data as of December 31, 1998 is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------------------------------------
GROSS UNREALIZED
AMORTIZED --------------------- FAIR
COST GAINS LOSSES VALUE
--------- ------- ------ --------
<S> <C> <C> <C> <C>
U.S. Corporate................................. $294,538 $24,557 $2,729 $316,366
Mortgage-backed................................ 166,042 4,928 708 170,262
U.S. Treasury securities and obligations of
U.S. government agencies..................... 72,543 9,705 -- 82,248
Foreign........................................ 23,004 624 728 22,900
-------- ------- ------ --------
Total bonds.................................. $556,127 $39,814 $4,165 $591,776
-------- ------- ------ --------
Preferred stocks............................... $ 546 $ 252 $ -- $ 798
-------- ------- ------ --------
Common stocks.................................. $ 1,870 $ 118 $ 210 $ 1,778
-------- ------- ------ --------
</TABLE>
The amortized cost and fair value of bonds at December 31, 1999 are shown below.
Expected maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- --------
<S> <C> <C>
Due in one year or less..................................... $ 18,671 $ 18,764
Due after one year through five years....................... 148,661 149,293
Due after five years through ten years...................... 106,308 105,839
Due after ten years......................................... 102,886 103,227
Mortgage-backed securities.................................. 102,157 100,495
Asset backed................................................ 43,645 40,375
-------- --------
Total..................................................... $522,328 $517,993
======== ========
</TABLE>
At December 31, 1999, the Company had bonds with a book value of $6,870 and a
fair value of $7,818 on deposit with various State Insurance Departments.
F-II- 12
<PAGE> 79
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 -- (CONTINUED)
(IN THOUSANDS)
3. INVESTMENTS -- (CONTINUED)
Sales of bond investments in 1999 and 1998 resulted in proceeds of $294,291 and
$112,603, respectively. Gains of $1,489 and $505 and losses of $3,316 and $50
were realized on those sales in 1999 and 1998, respectively.
The Company's bond investment portfolio is predominantly comprised of investment
grade securities. At December 31, 1999 and 1998, approximately $16,276 and
$8,865, respectively, in bonds (3.1% and 1.6%, respectively, of the total bond
portfolio) are considered "below investment grade". Securities are classified as
"below investment grade" by utilizing rating criteria established by the NAIC.
During 1999, the Company took other than temporary write downs on bonds of
$6,759.
4. RELATED PARTY TRANSACTIONS
The Company has no employees, affiliates (primarily Acacia Life and Ameritas
entities) provide technical, financial, legal, marketing and investment advisory
support to the Company under various administrative service agreements. The cost
of these services to the Company for years ended December 31, 1999 and 1998 was
$15,929 and $17,695, respectively.
The Company entered into reinsurance agreements (yearly renewable term) with
affiliates. Under these agreements, these affiliates assume life insurance risk
in excess of the Company's retention limit. These reinsurance contracts do not
relieve the Company of its obligations to its policyowners, (see footnote 5).
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 the Company of $18,305 and $18,665 at December 31,
1999 and 1998, respectively.
5. REINSURANCE
The Company reinsures all life insurance risks over its retention limit of ten
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.
Premiums and benefits have been reduced by amounts reinsured as follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Premiums ceded:
Acacia Life............................................... $4,634 $3,971
Others.................................................... 684 630
------ ------
Total premium ceded......................................... $5,318 $4,601
====== ======
Death benefits reimbursed:
Acacia Life............................................... $3,186 $3,610
Others.................................................... 1,082 233
------ ------
Total benefits reimbursed................................... $4,268 $3,843
====== ======
Life and annuity reserves ceded:
Acacia Life............................................... $2,501 $2,108
Others.................................................... 497 392
------ ------
Total life and annuity reserves ceded....................... $2,998 $2,500
====== ======
</TABLE>
F-II- 13
<PAGE> 80
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 -- (CONTINUED)
(IN THOUSANDS)
5. REINSURANCE -- (CONTINUED)
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. Approximately $382 and $684 of goodwill was amortized
through operations during 1999 and 1998. At December 31, 1999 and 1998, the
balance of goodwill treated as a non-admitted asset was $2,596 and $2,978,
respectively.
6. SEPARATE ACCOUNTS
The Company is currently marketing variable life and variable annuity products
which have separate accounts as an investment option. Separate Account I
(Account I) was formed to receive and invest premium receipts from variable life
insurance policies issued by the Company. Separate Account II (Account II) was
formed to receive and invest premium receipts from variable annuity policies
issued by the Company. Both Separate Accounts are registered under the
Investment Company Act of 1940, as amended, as unit investment trusts. Account I
and II's assets and liabilities are segregated from the other assets and
liabilities of the Company.
Amounts in the Separate Accounts are:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1999 1998
-------- -------
<S> <C> <C>
Separate Account I.......................................... $ 50,119 $24,925
Separate Account II......................................... 90,519 48,409
-------- -------
$140,638 $73,334
======== =======
</TABLE>
Included as investment options in the variable accounts are funds which are
managed by an affiliate, Calvert. Separate account assets in these funds totaled
$13,710 and $6,308 at December 31, 1999 and 1998, respectively.
7. DIVIDEND LIMITATION
The Company is subject to regulation by the insurance departments of the states
in which it operates, primarily its state of domicile, Virginia. Insurance
department regulations in these states restrict the advance of funds to parent
and affiliated companies as well as the amount of dividends that may be paid
without prior approval.
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.
9. SUBSEQUENT EVENT
On March 1, 2000 Acacia Life contributed $5,000 to the capital of the Company.
F-II- 14
<PAGE> 81
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS AND ACCUMULATION 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-3 through A-8 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-3 through A-5 are based on a
level Death Benefit Option (Option A) and the tables on pages A-6 through A-8
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 0.90% (which
is in excess of the current equivalent annual rate of 0.86% of the aggregate
average daily net assets of the Funds). The investment adviser or other
affiliates of various Funds have agreed to reimburse the portfolios to the
extent that the aggregate operating expenses (certain portfolios may exclude
certain items) were in excess of an annual rate of average daily net assets.
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 10.20%, 4.20%, and -1.80%,
respectively, for years 1-15 and 10.65%, 4.65%, and -1.35%, 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%, 6%, or 0% 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.)
REGENT 2000
A- 1
<PAGE> 82
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- 2
<PAGE> 83
ACACIA NATIONAL LIFE INSURANCE COMPANY
REGENT 2000 SURVIVORSHIP FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE ILLUSTRATION (FORM 8065)
<TABLE>
<S> <C>
Insured Name Client/Client Spouse
Sex Male/Female
Age 65/65
Insured Class: Preferred/Preferred
Annual Premium 19,600
Specified Amount 1,000,000
Death Benefit Level
Riders None
</TABLE>
<TABLE>
<CAPTION>
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 10.20% 20,284 634 1,000,000 634 1,000,000
2 67/67 19,660 10.20% 42,282 22,632 1,000,000 22,015 1,000,000
3 68/68 19,660 10.20% 66,121 46,471 1,000,000 44,703 1,000,000
4 69/69 19,660 10.20% 91,954 72,304 1,000,000 68,696 1,000,000
5 70/70 19,660 10.20% 119,971 100,321 1,000,000 93,978 1,000,000
6 71/71 19,660 10.20% 151,046 133,361 1,000,000 122,470 1,000,000
7 72/72 19,660 10.20% 184,826 169,106 1,000,000 152,112 1,000,000
8 73/73 19,660 10.20% 221,567 207,812 1,000,000 182,750 1,000,000
9 74/74 19,660 10.20% 261,622 249,832 1,000,000 214,179 1,000,000
10 75/75 19,660 10.20% 305,331 295,506 1,000,000 246,185 1,000,000
11 76/76 19,660 10.20% 353,162 345,302 1,000,000 278,571 1,000,000
12 77/77 19,660 10.20% 405,549 399,654 1,000,000 311,181 1,000,000
13 78/78 19,660 10.20% 463,093 459,163 1,000,000 343,911 1,000,000
14 79/79 19,660 10.20% 526,390 524,425 1,000,000 376,684 1,000,000
15 80/80 19,660 10.20% 596,179 596,179 1,000,000 409,401 1,000,000
16 81/81 19,660 10.65% 675,739 675,739 1,000,000 441,850 1,000,000
17 82/82 19,660 10.65% 763,795 763,795 1,000,000 474,376 1,000,000
18 83/83 19,660 10.65% 862,007 862,007 1,000,000 506,891 1,000,000
19 84/84 19,660 10.65% 972,641 972,641 1,021,273 539,427 1,000,000
20 85/85 19,660 10.65% 1,095,546 1,095,546 1,150,324 572,234 1,000,000
25 90/90 19,660 10.65% 1,920,344 1,920,344 2,016,361 774,820 1,000,000
30 95/95 19,660 10.65% 3,267,882 3,267,882 3,300,561 1,299,526 1,312,522
35 100/100 19,660 10.65% 5,515,643 5,515,643 5,570,800 2,234,354 2,256,697
</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- 3
<PAGE> 84
ACACIA NATIONAL LIFE INSURANCE COMPANY
REGENT 2000 SURVIVORSHIP FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE ILLUSTRATION (FORM 8065)
<TABLE>
<S> <C>
Insured Name Client/Client Spouse
Sex Male/Female
Age 65/65
Insured Class: Preferred/Preferred
Annual Premium 19,600
Specified Amount 1,000,000
Death Benefit Level
Riders None
</TABLE>
<TABLE>
<CAPTION>
6% HYPOTHETICAL GROSS ANNUAL RATE OF RETURN (ROR)
-------------------------------------------------------
CURRENT CHARGES GUARANTEED CHARGES
------------------------------- ---------------------
END OF ANNUAL NET TOTAL TOTAL TOTAL TOTAL TOTAL
POLICY PREMIUM ANNUAL ACCOUNT 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 4.20% 19,157 -- 1,000,000 -- 1,000,000
2 67/67 19,660 4.20% 38,775 19,125 1,000,000 18,530 1,000,000
3 68/68 19,660 4.20% 58,821 39,171 1,000,000 37,496 1,000,000
4 69/69 19,660 4.20% 79,277 59,627 1,000,000 56,261 1,000,000
5 70/70 19,660 4.20% 100,136 80,486 1,000,000 74,653 1,000,000
6 71/71 19,660 4.20% 122,036 104,351 1,000,000 94,418 1,000,000
7 72/72 19,660 4.20% 144,355 128,635 1,000,000 113,299 1,000,000
8 73/73 19,660 4.20% 167,066 153,311 1,000,000 130,915 1,000,000
9 74/74 19,660 4.20% 190,203 178,413 1,000,000 146,794 1,000,000
10 75/75 19,660 4.20% 213,733 203,908 1,000,000 160,398 1,000,000
11 76/76 19,660 4.20% 237,715 229,855 1,000,000 171,131 1,000,000
12 77/77 19,660 4.20% 262,088 256,193 1,000,000 178,345 1,000,000
13 78/78 19,660 4.20% 286,907 282,977 1,000,000 181,309 1,000,000
14 79/79 19,660 4.20% 312,106 310,141 1,000,000 179,145 1,000,000
15 80/80 19,660 4.20% 337,655 337,655 1,000,000 170,694 1,000,000
16 81/81 19,660 4.65% 364,467 364,467 1,000,000 153,180 1,000,000
17 82/82 19,660 4.65% 390,319 390,319 1,000,000 125,638 1,000,000
18 83/83 19,660 4.65% 414,780 414,780 1,000,000 85,092 1,000,000
19 84/84 19,660 4.65% 437,294 437,294 1,000,000 27,607 1,000,000
20 85/85 19,660 4.65% 457,330 457,330 1,000,000 -- 1,000,000
25 90/90 19,660 4.65% 512,608 512,608 1,000,000 -- --
30 95/95 19,660 4.65% 416,346 416,346 1,000,000 -- --
35 100/100 19,660 4.65% -- -- -- -- --
</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> 85
ACACIA NATIONAL LIFE INSURANCE COMPANY
REGENT 2000 SURVIVORSHIP FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE ILLUSTRATION (FORM 8065)
<TABLE>
<S> <C>
Insured Name Client/Client Spouse
Sex Male/Female
Age 65/65
Insured Class: Preferred/Preferred
Annual Premium 19,600
Specified Amount 1,000,000
Death Benefit Level
Riders None
</TABLE>
<TABLE>
<CAPTION>
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 ACCOUNT 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 -1.80% 18,032 -- 1,000,000 -- 1,000,000
2 67/67 19,660 -1.80% 35,404 15,754 1,000,000 15,181 1,000,000
3 68/68 19,660 -1.80% 52,078 32,428 1,000,000 30,843 1,000,000
4 69/69 19,660 -1.80% 68,025 48,375 1,000,000 45,242 1,000,000
5 70/70 19,660 -1.80% 83,230 63,580 1,000,000 58,226 1,000,000
6 71/71 19,660 -1.80% 98,295 80,610 1,000,000 71,564 1,000,000
7 72/72 19,660 -1.80% 112,570 96,850 1,000,000 83,027 1,000,000
8 73/73 19,660 -1.80% 126,007 112,252 1,000,000 92,264 1,000,000
9 74/74 19,660 -1.80% 138,617 126,827 1,000,000 98,837 1,000,000
10 75/75 19,660 -1.80% 150,342 140,517 1,000,000 102,243 1,000,000
11 76/76 19,660 -1.80% 161,207 153,347 1,000,000 101,927 1,000,000
12 77/77 19,660 -1.80% 171,111 165,216 1,000,000 97,285 1,000,000
13 78/78 19,660 -1.80% 180,064 176,134 1,000,000 87,642 1,000,000
14 79/79 19,660 -1.80% 187,934 185,969 1,000,000 72,179 1,000,000
15 80/80 19,660 -1.80% 194,618 194,618 1,000,000 49,806 1,000,000
16 81/81 19,660 -1.35% 200,153 200,153 1,000,000 17,256 1,000,000
17 82/82 19,660 -1.35% 202,457 202,457 1,000,000 -- 1,000,000
18 83/83 19,660 -1.35% 200,771 200,771 1,000,000 -- 1,000,000
19 84/84 19,660 -1.35% 194,068 194,068 1,000,000 -- 1,000,000
20 85/85 19,660 -1.35% 181,214 181,214 1,000,000 -- 1,000,000
25 90/90 19,660 -1.35% -- -- -- -- --
30 95/95 19,660 -- -- -- -- -- --
</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> 86
ACACIA NATIONAL LIFE INSURANCE COMPANY
REGENT 2000 SURVIVORSHIP FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE ILLUSTRATION (FORM 8065)
<TABLE>
<S> <C>
Insured Name Client/Client Spouse
Sex Male/Female
Age 65/65
Insured Class: Preferred/Preferred
Annual Premium 566,796
Specified Amount 5,000,000
Death Benefit Increasing
Riders None
</TABLE>
<TABLE>
<CAPTION>
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 10.20% 606,298 508,348 5,606,298 508,348 5,606,298
2 67/67 566,796 10.20% 1,272,274 1,174,324 6,272,274 1,167,600 6,265,550
3 68/68 566,796 10.20% 2,003,630 1,905,680 7,003,630 1,889,007 6,986,957
4 69/69 566,796 10.20% 2,806,696 2,708,746 7,806,696 2,677,894 7,775,844
5 70/70 566,796 10.20% 3,688,506 3,590,556 8,688,506 3,539,952 8,637,902
6 71/71 566,796 10.20% 4,659,821 4,571,666 9,659,821 4,490,952 9,579,107
7 72/72 566,796 10.20% 5,726,389 5,648,029 10,726,389 5,527,257 10,605,617
8 73/73 566,796 10.20% 6,897,423 6,828,858 11,897,423 6,655,103 11,723,668
9 74/74 566,796 10.20% 8,183,403 8,124,633 13,183,403 7,880,864 12,939,634
10 75/75 566,796 10.20% 9,595,449 9,546,474 14,595,449 9,211,251 14,260,226
11 76/76 566,796 10.20% 11,146,341 11,107,161 16,146,341 10,653,510 15,692,690
12 77/77 566,796 10.20% 12,849,336 12,819,951 17,849,336 12,215,633 17,245,018
13 78/78 566,796 10.20% 14,719,760 14,700,170 19,719,760 13,906,455 18,926,045
14 79/79 566,796 10.20% 16,773,589 16,763,794 21,773,589 15,735,532 20,745,327
15 80/80 566,796 10.20% 19,028,580 19,028,580 24,028,580 17,712,759 22,712,759
16 81/81 566,796 10.65% 21,586,999 21,586,999 26,586,999 19,919,839 24,919,839
17 82/82 566,796 10.65% 24,395,311 24,395,311 29,395,311 22,313,058 27,313,058
18 83/83 566,796 10.65% 27,475,050 27,475,050 32,475,050 24,905,043 29,905,043
19 84/84 566,796 10.65% 30,848,733 30,848,733 35,848,733 27,709,716 32,709,716
20 85/85 566,796 10.65% 34,541,443 34,541,443 39,541,443 30,743,130 35,743,130
25 90/90 566,796 10.65% 59,020,839 59,020,839 64,020,839 50,105,506 55,105,506
30 95/95 566,796 10.65% 97,804,770 97,804,770 102,804,770 79,201,419 84,201,419
35 100/100 566,796 10.65% 160,175,938 160,175,938 165,175,938 117,680,315 122,680,315
</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- 6
<PAGE> 87
ACACIA NATIONAL LIFE INSURANCE COMPANY
REGENT 2000 SURVIVORSHIP FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE ILLUSTRATION (FORM 8065)
<TABLE>
<S> <C>
Insured Name Client/Client Spouse
Sex Male/Female
Age 65/65
Insured Class: Preferred/Preferred
Annual Premium 566,796
Specified Amount 5,000,000
Death Benefit Increasing
Riders None
</TABLE>
<TABLE>
<CAPTION>
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 4.20% 573,176 475,226 5,573,176 475,226 5,573,176
2 67/67 566,796 4.20% 1,168,332 1,070,382 6,168,332 1,063,976 6,161,926
3 68/68 566,796 4.20% 1,786,039 1,688,089 6,786,039 1,672,542 6,770,492
4 69/69 566,796 4.20% 2,426,933 2,328,983 7,426,933 2,300,794 7,398,744
5 70/70 566,796 4.20% 3,091,738 2,993,788 8,091,738 2,948,421 8,046,371
6 71/71 566,796 4.20% 3,784,133 3,695,978 8,784,133 3,624,615 8,712,770
7 72/72 566,796 4.20% 4,502,022 4,423,662 9,502,022 4,318,535 9,396,895
8 73/73 566,796 4.20% 5,246,020 5,177,455 10,246,020 5,028,559 10,097,124
9 74/74 566,796 4.20% 6,017,090 5,958,320 11,017,090 5,752,516 10,811,286
10 75/75 566,796 4.20% 6,815,819 6,766,844 11,815,819 6,487,838 11,536,813
11 76/76 566,796 4.20% 7,643,335 7,604,155 12,643,335 7,231,701 12,270,881
12 77/77 566,796 4.20% 8,500,016 8,470,631 13,500,016 7,981,168 13,010,553
13 78/78 566,796 4.20% 9,386,952 9,367,362 14,386,952 8,733,198 13,752,788
14 79/79 566,796 4.20% 10,304,400 10,294,605 15,304,400 9,484,444 14,494,239
15 80/80 566,796 4.20% 11,252,778 11,252,778 16,252,778 10,230,788 15,230,788
16 81/81 566,796 4.65% 12,280,361 12,280,361 17,280,361 11,005,069 16,005,069
17 82/82 566,796 4.65% 13,334,366 13,334,366 18,334,366 11,768,095 16,768,095
18 83/83 566,796 4.65% 14,411,116 14,411,116 19,411,116 12,512,288 17,512,288
19 84/84 566,796 4.65% 15,505,462 15,505,462 20,505,462 13,229,630 18,229,630
20 85/85 566,796 4.65% 16,612,155 16,612,155 21,612,155 13,912,321 18,912,321
25 90/90 566,796 4.65% 22,262,269 22,262,269 27,262,269 16,569,550 21,569,550
30 95/95 566,796 4.65% 27,772,592 27,772,592 32,772,592 17,216,117 22,216,117
35 100/100 566,796 4.65% 32,930,105 32,930,105 37,930,105 8,740,110 13,740,110
</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
<PAGE> 88
ACACIA NATIONAL LIFE INSURANCE COMPANY
REGENT 2000 SURVIVORSHIP FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE ILLUSTRATION (FORM 8065)
<TABLE>
<S> <C>
Insured Name Client/Client Spouse
Sex Male/Female
Age 65/65
Insured Class: Preferred/Preferred
Annual Premium 566,796
Specified Amount 5,000,000
Death Benefit Increasing
Riders None
</TABLE>
<TABLE>
<CAPTION>
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 -1.80% 540,056 442,106 5,540,056 442,106 5,540,056
2 67/67 566,796 -1.80% 1,068,371 970,421 6,068,371 964,332 6,062,282
3 68/68 566,796 -1.80% 1,584,832 1,486,882 6,584,832 1,472,427 6,570,377
4 69/69 566,796 -1.80% 2,089,367 1,991,417 7,089,367 1,965,726 7,063,676
5 70/70 566,796 -1.80% 2,581,967 2,484,017 7,581,967 2,443,413 7,541,363
6 71/71 566,796 -1.80% 3,065,451 2,977,296 8,065,451 2,914,203 8,002,358
7 72/72 566,796 -1.80% 3,536,851 3,458,491 8,536,851 3,366,843 8,445,203
8 73/73 566,796 -1.80% 3,995,958 3,927,393 8,995,958 3,799,379 8,867,944
9 74/74 566,796 -1.80% 4,442,882 4,384,112 9,442,882 4,209,427 9,268,197
10 75/75 566,796 -1.80% 4,877,326 4,828,351 9,877,326 4,594,346 9,643,321
11 76/76 566,796 -1.80% 5,299,500 5,260,320 10,299,500 4,951,398 9,990,578
12 77/77 566,796 -1.80% 5,708,835 5,679,450 10,708,835 5,277,895 10,307,280
13 78/78 566,796 -1.80% 6,105,450 6,085,860 11,105,450 5,571,214 10,590,804
14 79/79 566,796 -1.80% 6,488,606 6,478,811 11,488,606 5,828,598 10,838,393
15 80/80 566,796 -1.80% 6,857,725 6,857,725 11,857,725 6,046,729 11,046,729
16 81/81 566,796 -1.35% 7,240,442 7,240,442 12,240,442 6,240,650 11,240,650
17 82/82 566,796 -1.35% 7,597,525 7,597,525 12,597,525 6,386,243 11,386,243
18 83/83 566,796 -1.35% 7,924,557 7,924,557 12,924,557 6,477,284 11,477,284
19 84/84 566,796 -1.35% 8,215,911 8,215,911 13,215,911 6,507,539 11,507,539
20 85/85 566,796 -1.35% 8,466,159 8,466,159 13,466,159 6,471,418 11,471,418
25 90/90 566,796 -1.35% 9,035,221 9,035,221 14,035,221 5,162,261 10,162,261
30 95/95 566,796 -1.35% 8,197,635 8,197,635 13,197,635 1,591,210 6,591,210
35 100/100 566,796 -1.35% 5,885,476 5,885,476 10,885,476 -- --
</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- 8
<PAGE> 89
APPENDIX B
AUTOMATIC REBALANCING, MODEL ASSET ALLOCATION, DOLLAR COST AVERAGING AND
EARNINGS SWEEP PROGRAMS
To assist the Owner in making a premium allocation decision among
Subaccounts, ANLIC offers automatic transfer programs. These programs are
designed to meet individual needs of the Owner and are not guaranteed to improve
performance of the Policy.
The Owner may elect the Automatic Rebalancing Program which will adjust
values in the Subaccounts to align with a specific percentage of total value in
the Variable Account. By placing a written allocation election form on file with
ANLIC, the Owner may have amounts automatically transferred from the Subaccounts
on either a quarterly, semi-annual or annual basis. The Owner chooses the
percentages to be used under the Automatic Rebalancing Program.
Model Asset Allocation is offered through The Advisors Group, Inc. (TAG) in
conjunction with the services of Ibbotson Associates who were among the first to
develop the modern science of asset allocation. TAG representatives offer a
service created by Ibbotson Associates to match the Owner's risk tolerance and
investment objectives with a model Subaccount percentage allocation formula. To
use this service, the Owner first completes a questionnaire about risk tolerance
and Policy performance objectives. The TAG representative uses the completed
responses to match the Owner's needs to one of ten different model percentage
allocation formulas designed by Ibbotson. The Owner may then elect to follow the
recommended percentage allocation formula, or select a different formula.
Ibbotson Associates provides a valuable service to an Owner who seeks to
follow the science of asset allocation. Some research studies have shown that
the asset allocation decision is the single largest determinant of Portfolio
performance. Asset allocation combines the concepts of asset-liability
management, mean-variance optimization, simulation and economic forecasting. Its
objectives are to match asset classes and strategies to achieve better returns,
to reduce volatility and to attain specific goals such as avoidance of interest
rate or market risk.
As an alternative, ANLIC also offers the Owner the option to elect the
Dollar Cost Averaging Program. Dollar cost averaging is a long term investment
method that uses periodic premium allocations from the Money Market Subaccount
to other Subaccounts. Under the theory of dollar cost averaging, the Owner may
pursue a strategy of regular and systematic purchases to take advantage of
market value fluctuations. More Subaccount accumulation units will be purchased
when Subaccount unit values are low and fewer units will be purchased when unit
values are high. There is no guarantee that the Dollar Cost Averaging Program
will protect against market loss or improve performance of the Policy.
The Dollar Cost Averaging Program provides a valuable service to an Owner
who is able to sustain a long term transfer schedule and who seeks to avoid the
volatility often associated with equity investments.
The Earnings Sweep Program allows an Owner to systematically reallocate
interest earnings from the Fixed Account to one or more of the Subaccounts on a
monthly, quarterly, semi-annual, or annual basis to meet your investment
allocation percentages.
REGENT 2000
B- 1
<PAGE> 90
INCORPORATION BY REFERENCE
The Registrant, Separate Account I, purchases or will purchase units from the
portfolios of these Funds at the direction of its Policy Owners. The
prospectuses of these Funds will be distributed with this prospectus and are
hereby incorporated by reference. The prospectuses incorporated by reference are
as follows:
The Alger American Fund
SEC File No. 33-21722
Calvert Variable Series, Inc.
SEC File No. 2-80154
Deutsche Asset Management VIT Funds
SEC File No. 333-00479
Variable Insurance Products Fund
SEC File No. 2-75010
Variable Insurance Products Fund II
SEC File No. 33-20773
Franklin Templeton Variable Insurance Products Trust
SEC File No. 33-23493
Neuberger Berman Advisers Management Trust
SEC File No. 2-88566
Oppenheimer Variable Account Funds
SEC File No. 2-931-77
Van Eck Worldwide Insurance Trust
SEC File No. 33-13019
<PAGE> 91
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore, or hereafter duly adopted pursuant to authority conferred
in that section.
Registrant makes the following representation pursuant to the National
Securities Markets Improvements Act of 1996:
Acacia National Life Insurance Company represents that the fees and charges
deducted under the contract, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by the insurance company.
RULE 484 UNDERTAKING
ANLIC'S By-laws provide as follows:
In the event any action, suit or proceeding is brought against a present or
former Director, elected officer, appointed officer or other employee because of
any action taken by such person as a Director, officer or other employee of the
Company or which he omitted to take as a Director, officer or employee of the
Company, the Company shall reimburse or indemnify him for all loss reasonably
incurred by him in connection with such action to the fullest extent permitted
by ss 13.1-696 through ss 13.1-704 of the Code of Virginia, as is now or
hereafter amended, except in relation to matters as to which such person shall
have been finally adjudged to be liable by reason of having been guilty of gross
negligence or willful misconduct in the performance of duties as such Director,
officer or employee. In case any such suit, action or proceeding shall result in
a settlement prior to final judgment and if, in the judgment of the Board of
Directors, such person in taking the action or failing to take the action
complained of was not grossly negligent or guilty of wilful misconduct in the
performance of his duty, the Company shall reimburse or indemnify him for the
amount of such settlement and for all expenses reasonably incurred in connection
with such action and its settlement. This right of indemnification shall not be
exclusive of any other rights to which such person may be entitled.
REPRESENTATION PURSUANT TO RULE 6E-3(T)
This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940.
<PAGE> 92
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
The prospectus consisting of 85 pages. The undertaking to file reports. The
undertaking pursuant to Rule 484. Representations pursuant to Rule 6e-3(T).
The signatures.
Written consents of the following:
(a) Russell J. Wiltgen
(b) Robert-John H. Sands
(c) Deloitte & Touche LLP
(d) PricewaterhouseCoopers LLP
The Following Exhibits:
1. The Following exhibits correspond to those required by paragraph IX A of the
instructions as to exhibits in Form N-8B-2.
(A)(1) Board Resolution Establishing Separate Account I(1)
(A)(2) Not applicable
(A)(3)(a) Underwriting Agreement between The Advisors Group, Inc. and Acacia
National Life Insurance Company(2)
(A)(3)(b) Proposed Form of Selling Agreement(5)
(A)(3)(c) Form of Commission Schedule(5)
(A)(4) Not Applicable
(A)(5)(a) Form of Policy(4)
(A)(5)(b) Form of Policy Riders(4)
(A)(6) Certificate of Organization of Acacia National Life Insurance Company(3)
(A)(6) Bylaws of Acacia National Life Insurance Company(3)
(A)(7) Not applicable
(A)(8)(a) Participation Agreement - The Alger American Fund(1)
(A)(8)(b) Participation Agreement - Calvert Variable Series, Inc.(1)
(A)(8)(d) Participation Agreement - Neuberger Berman Advisers Management
Trust(1)
(A)(8)(e) Participation Agreement - Oppenheimer Variable Account Funds(3)
(A)(8)(g) Participation Agreement - Van Eck Worldwide Hard Assets Fund(1)
(A)(8)(h) Participation Agreement - BT Insurance Funds Trust(6)
(A)(8)(i) Participation Agreement - Variable Insurance Products Fund(7)
(A)(8)(j) Participation Agreement - Variable Insurance Products Fund II(7)
(A)(8)(k) Participation Agreement - Franklin Templeton Variable Insurance
Products Trust(6)
(A)(9) Not Applicable
(A)(10) Form of Application for Policy(5)
2. (a)(b) Opinion and Consent of Robert-John H. Sands Senior Vice President and
General Counsel.
3. No financial statements will be omitted from the final Prospectus pursuant to
Instruction 1(b) or (c) or Part I.
4. Not applicable.
5. Not applicable.
7. (a)(b) Opinion and Consent of Russell J. Wiltgen.
8. Consents of Independent Auditors.
9. Not applicable.
(1) Incorporated by reference to the Pre-Effective Amendment No. 3 to the
Registration Statement on Form S-6 for Acacia National Variable Life Insurance
Separate Account I (File No. 33-90208), filed on October 11, 1995.
(2) Incorporated by reference to the initial Registration Statement for Acacia
National Variable Annuity Separate Account II on Form N-4 (File No
333-03963), filed August 26, 1996.
(3) Incorporated by Reference to the Post-Effective Amendment No. 3 to the
Registration Statement on Form S-6 for Acacia National Variable Life Insurance
Separate Account I (File No. 33-90208), filed on May 1, 1997.
(4) Incorporated by reference to the initial Registration Statement for Acacia
National Variable Life Insurance Separate Account I on Form S-6 (File No
333-81057), filed June 18, 1999.
(5) Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement for Acacia National Variable Life Insurance Separate
Account I on Form S-6 (File No 333-81057), filed July 30, 1999.
(6) Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement for Acacia National Variable Life Insurance
Separate Account I on Form S-6 (File No 333-81057), filed February 25, 2000.
(7) Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement for Acacia National Variable Life Insurance Separate
Account I on Form S-6 (File No 333-95593), filed April 27, 2000.
<PAGE> 93
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Acacia National Variable Life Insurance Separate Account I, certifies
that it meets all the requirements for effectiveness of this Post-Effective
Amendment No. 2 to the Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Bethesda, County of Montgomery, State of Maryland on
this 26th day of April, 2000.
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I, Registrant
ACACIA NATIONAL LIFE INSURANCE COMPANY, Depositor
Attest: /s/ Robert-John H. Sands By: /s/ Charles T. Nason
-------------------------- ------------------------------
Secretary Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the Directors and Principal Officers of Acacia
National Life Insurance Company on the dates indicated.
SIGNATURE TITLE DATE
/s/ Charles T. Nason Chairman of the Board April 26, 2000
- ------------------------ and Chief Executive Officer
Charles T. Nason and Director
/s/ Robert W. Clyde President and Chief April 26, 2000
- ------------------------ Operating Officer and
Charles T. Nason Director
/s/ Robert-John H. Sands Senior Vice President, April 26, 2000
- ------------------------ General Counsel, Corporate
Robert-John H. Sands Secretary and Director
/s/ Haluk Ariturk Senior Vice President, April 26, 2000
- ------------------------ Product Management and
Haluk Ariturk Administration and Director
/s/ JoAnn M. Martin Senior Vice President, April 26, 2000
- ------------------------ Chief Financial Officer
JoAnn M. Martin and Director
/s/ Reno J. Martini Director April 26, 2000
- ------------------------
Reno J. Martini
<PAGE> 94
/s/ Brian J. Owens Senior Vice President, April 26, 2000
- ------------------------- Career Distribution
Brian J. Owens
/s/ Janet L. Schmidt Senior Vice President April 26, 2000
- ------------------------- Human Resources
Janet L. Schmidt
/s/ Barry C. Ritter Senior Vice President April 26, 2000
- ------------------------- and Chief Information Officer
Barry C. Ritter
/s/ Richard W. Vautravers Senior Vice President April 26, 2000
- ------------------------- and Corporate Actuary
Richard W. Vautravers
<PAGE> 1
EXHIBIT 2. (a)(b)
Opinion and Consent of Robert-John H. Sands
<PAGE> 2
April 27, 2000
Acacia National Life Insurance Company
7315 Wisconsin Avenue
Bethesda, MD 20814
Gentlemen:
With reference to the Post-Effective Amendment No. 2 to Registration Statement
333-81057 on Form S-6 filed by Acacia National Life Insurance Company and Acacia
National Variable Life Insurance Separate Account I with the Securities and
Exchange Commission covering flexible premium life insurance policies,
I have examined such documents and such laws as I considered necessary and
appropriate, and on the basis of such examination, it is my opinion that:
1. Acacia National Life Insurance Company is duly organized and validly
existing under the laws of the Commonwealth of Virginia and has
been duly authorized to issue individual flexible premium variable life
policies by the Bureau of Insurance, State Corporation Commission of
the Commonwealth of Virginia.
2. Acacia National Variable Life Insurance Separate Account I is a duly
authorized and existing separate account established pursuant to the
provisions of Virginia, ss.38.2-3113.
3. The survivorship flexible premium variable universal life policies,
when issued as contemplated by said Form S-6 Registration Statement,
will constitute legal, validly issued and binding obligations of Acacia
National Life Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to the
Post-Effective Amendment No. 2 to said Form S-6 Registration Statement and to
the use of my name under the caption "Legal Matters" in the Prospectus contained
in the Registration Statement.
Sincerely,
/s/ Robert-John H. Sands
Robert-John H. Sands
Senior Vice President, Corporate Secretary and General Counsel
<PAGE> 1
EXHIBIT 7. (a)(b)
Opinion and Consent of Russell J. Wiltgen
<PAGE> 2
April 27, 2000
Acacia National Life Insurance Company
7315 Wisconsin Avenue
Bethesda, MD 20814
Gentlemen:
This opinion is furnished in connection with the registration by Acacia National
Life Insurance Company, of a survivorship flexible premium variable universal
life insurance policy ("Contract") under the Securities Act of 1933. The
prospectus included in Post-Effective Amendment No. 2 to Registration Statement
No. 333-81057 on Form S-6 describes the Contract. The form of Contract was
prepared under my direction and I am familiar with the Registration Statement
and Exhibits thereto. This contract was developed and filed under Securities and
Exchange Commission Rule 6E-3(T), as interpreted at this time by the SEC staff.
In my opinion:
The illustrations of death benefits and accumulation values included in the
section entitled "Illustrations of Death Benefits and Accumulation Values" in
the Appendices of the prospectus, based on the assumptions stated in the
illustrations, are consistent with the provisions of the Contract. The rate
structure of the Contract has not been designed so as to make the
relationship between premiums and benefits, as shown in the illustrations,
appear more favorable to prospective purchasers of the Contract for a male
age 65 and a female age 65, than to prospective purchasers of the Contract
for other ages or for two males or two females.
I hereby consent to the use of this opinion as an exhibit to the Post-Effective
Amendment No. 2 to the Registration Statement and to the reference to my name
under the heading "Experts" in the prospectus.
Sincerely,
/s/ Russell J. Wiltgen
- ----------------------
Russell J. Wiltgen
Vice President - Individual Product Management
<PAGE> 1
EXHIBIT 8. (a)
Consent of Deloitte & Touche LLP
<PAGE> 2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 2 to Registration
Statement No. 333-81057 of Acacia National Variable Life Insurance Separate
Account I of our reports dated April 7, 2000, on the statutory basis financial
statements of Acacia National Life Insurance Company and the financial
statements of the subaccounts of Acacia National Variable Life Insurance
Separate Account I appearing in the Prospectus, which is a part of such
Registration Statement, and to the reference to us under the heading "Experts"
in such Prospectus.
/s/ Deloitte & Touche LLP
Lincoln, Nebraska
April 21, 2000
<PAGE> 1
EXHIBIT 8. (b)
Consent of PricewaterhouseCoopers LLP
<PAGE> 2
PRICEWATERHOUSECOOPERS [LOGO]
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-6
(Registration No. 333-81057) of our report dated March 31, 1999, on the
financial statements (statutory basis) of Acacia National Life Insurance
Company and our report dated April 30,1999 on the financial statements of
Acacia National Variable Life Insurance Separate Account I, which appear in
such Registration Statements. We also consent to the reference to us under the
caption "Experts".
/s/ PRICEWATERHOUSECOOPERS LLP
PriceWaterHouseCoopers LLP
Washington, D.C.
April 21, 2000
