File Nos.33-95778
811-9026
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. _5_ [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. _14_ [X]
(Check appropriate box or boxes.)
United Life & Annuity Separate Account One
__________________________________________
(Exact Name of Registrant)
United Life & Annuity Insurance Company
_____________________________________________
(Name of Depositor)
717 North Harwood Street, Dallas, TX 75201
____________________________________________________________ __________
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (800) 825-7568
Name and Address of Agent for Service
___________________________________________
Joel S. Kaplan
United Life & Annuity Insurance Company
717 North Harwood Street
Dallas, TX 75201
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
It is proposed that this filing will become effective:
__X__ immediately upon filing pursuant to paragraph (b) of Rule 485
_____ on (date) pursuant to paragraph (b)of Rule 485
_____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
_____ on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
_____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Registered:
Individual and Group Variable Annuity Contracts and Certificates
CROSS REFERENCE SHEET
(Required by Rule 495)
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Item No. Location
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PART A
Item 1. Cover Page Cover Page
Item 2. Definitions Glossary of Terms
Item 3. Synopsis Summary
Item 4. Condensed Financial Information Appendix A - Condensed
Financial Information
Item 5. General Description of Registrant, Depositor,
and Portfolio Companies ULA; Investment
Options
Item 6. Deductions and Expenses Expenses
Item 7. General Description of Variable Annuity
Contracts The SpectraSelect
Fixed and Variable Annuity Contracts
Item 8. Annuity Period Annuity Provisions
Item 9. Death Benefit Death Benefit
Item 10. Purchases and Contract Value How to Purchase A
Contract
Item 11. Redemptions Withdrawals
Item 12. Taxes Taxes
Item 13. Legal Proceedings. Not Applicable
Item 14. Table of Contents of the Statement of
Additional Information Table of Contents of
the Statement of
Additional Information
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CROSS REFERENCE SHEET (CONT'D)
(Required by Rule 495)
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Item No. Location
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PART B
Item 15. Cover Page Cover Page
Item 16. Table of Contents. Table of Contents
Item 17. General Information and History The Company
Item 18. Services Not Applicable
Item 19. Purchase of Securities Being Offered Not Applicable
Item 20. Underwriters Distributor
Item 21. Calculation of Performance Data Performance
Information
Item 22. Annuity Payments. Annuity Provisions
Item 23. Financial Statements Financial Statements
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PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered, in Part C to this Registration Statement.
THE SPECTRASELECT FIXED AND VARIABLE ANNUITY CONTRACT
issued by
UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE
and
UNITED LIFE & ANNUITY INSURANCE COMPANY
APRIL 30, 1999
This prospectus describes the SpectraSelect Fixed and Variable Annuity
Contract offered by United Life & Annuity Insurance Company (ULA, us or we).
The annuity has 35 investment options -- the Portfolios listed below, a one
year Fixed Account option of ULA and the Interest Adjustment Account.
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AIM VARIABLE INSURANCE FUNDS, INC. MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
AIM V.I. Capital Appreciation Fund Emerging Markets Debt Portfolio
AIM V.I. Diversified Income Fund Equity Growth Portfolio
AIM V.I. Growth Fund Global Equity Portfolio
AIM V.I. Growth and Income Fund High-Yield Portfolio
AIM V.I. International Equity Fund Value Portfolio
THE ALGER AMERICAN FUND NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Alger American Growth Portfolio AMT Guardian Portfolio
DREYFUS STOCK INDEX FUND AMT Limited Maturity Bond Portfolio
DREYFUS VARIABLE INVESTMENT FUND AMT Mid-Cap Growth Portfolio
Growth and Income Portfolio AMT Partners Portfolio
FEDERATED INSURANCE SERIES SCUDDER VARIABLE LIFE INVESTMENT FUND
Federated American Leaders Fund II Money Market Portfolio
Federated High Income Bond Fund II International Portfolio, Class A
Federated Prime Money Fund II VAN ECK WORLDWIDE INSURANCE TRUST
Federated Utility Fund II Worldwide Hard Assets Fund
Federated Fund for U.S. Government WARBURG PINCUS TRUST
Securities II International Equity Portfolio
MFS(R) VARIABLE INSURANCE TRUST(SM) Post-Venture Capital Portfolio
MFS Emerging Growth Series WARBURG PINCUS TRUST II
MFS Growth With Income Series Fixed Income Portfolio
MFS Research Series
MFS Total Return Series
MFS Utilities Series
</TABLE>
Please read this prospectus before investing and keep it for future
reference. It contains important information about the SpectraSelect Fixed and
Variable Annuity Contract.
To learn more about the annuity offered by this prospectus, you can obtain
a copy of the Statement of Additional Information (SAI) dated April 30, 1999.
The SAI has been filed with the Securities and Exchange Commission (SEC) and is
incorporated by reference into this prospectus. The Table of Contents of the SAI
is found on the last page of this prospectus. For a free copy of the SAI, call
us at (800) 825-7568 or write us at: 851 SW Sixth Avenue, Suite 800, Portland,
Oregon 97204-1346. The SEC maintains a Web site (http://www. sec.gov) that
contains the SAI, material incorporated by reference, and other information
regarding companies that file electronically with the SEC.
Inquiries. If you have any questions about your Contract or need more
information, please contact us at: United Life & Annuity Insurance Company,
Variable Annuity Service Center, 851 SW Sixth Avenue, Suite 800, Portland,
Oregon 97204-1346.
The Contracts:
* are not bank deposits
* are not federally insured
* are not endorsed by any bank or government agency
* are not guaranteed and may be subject to loss of principal
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
TABLE OF CONTENTS
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PAGE
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GLOSSARY OF TERMS...........................................
SUMMARY.....................................................
FEE TABLE...................................................
THE SPECTRASELECT FIXED AND VARIABLE ANNUITY CONTRACT.......
Owner.....................................................
Joint Owner...............................................
Annuitant.................................................
Beneficiary...............................................
Assignment................................................
ANNUITY PAYMENTS (THE INCOME PHASE).........................
Annuity Options...........................................
HOW TO PURCHASE A CONTRACT..................................
Purchase Payments.........................................
Allocation of Purchase Payments...........................
Right to Examine Contract.................................
Accumulation Units........................................
INVESTMENT OPTIONS..........................................
Voting Rights.............................................
Substitution..............................................
Transfers.................................................
Dollar Cost Averaging Program.............................
Rebalancing Program.......................................
Asset Allocation Programs.................................
PERFORMANCE.................................................
EXPENSES....................................................
Insurance Charges.........................................
Mortality and Expense Risk Charge.......................
Administrative Charge...................................
Contingent Deferred Sales Charge..........................
Reduction or Elimination of the Contingent Deferred Sales
Charge..................................................
Transfer Fee..............................................
Premium Taxes.............................................
Income Taxes..............................................
Portfolio Expenses........................................
TAXES.......................................................
Annuity Contracts in General..............................
Qualified and Non-Qualified Contracts.....................
Withdrawals -- Non-Qualified Contracts....................
Withdrawals -- Qualified Contracts........................
Withdrawals -- Tax-Sheltered Annuities....................
Diversification...........................................
WITHDRAWALS.................................................
Systematic Withdrawal Program.............................
Suspension of Payments or Transfers.......................
DEATH BENEFIT...............................................
Upon Your Death...........................................
Death Benefit.............................................
Death of Annuitant........................................
OTHER INFORMATION...........................................
ULA.......................................................
Year 2000 Matters.........................................
The Separate Account......................................
Distribution..............................................
Financial Statements......................................
APPENDIX A..................................................
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL
INFORMATION...............................................
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GLOSSARY OF TERMS
We have tried to make this prospectus as understandable for you as
possible. We have capitalized some of the technical terms used in this
prospectus. To help you understand these terms, we have defined them below.
ACCOUNTS: The Portfolios, the Fixed Account and each Guarantee Period of
the Interest Adjustment Account.
ACCUMULATION PHASE: Until you decide to begin receiving Annuity Payments,
your annuity is in the Accumulation Phase.
ACCUMULATION UNIT: The unit of measurement we use to keep track of the
value of your Contract during the Accumulation Phase.
ANNUITANT: The natural person on whose life we base Annuity Payments.
ANNUITY OPTIONS: You can choose among income plans for your Annuity
Payments. These are referred to as Annuity Options.
ANNUITY PAYMENTS: You can receive regular income payments from your
Contract. These are referred to as Annuity Payments.
BENEFICIARY: The person or entity you name to receive any death benefits.
CONTRACT: An individual contract and the certificate issued to participants
under a group contract.
FIXED ACCOUNT: An investment option within our general account.
GUARANTEE PERIODS: The periods for which interest rates are credited in the
Interest Adjustment Account or the Fixed Account.
INCOME DATE: You can choose the month and year in which Annuity Payments
will begin. This is referred to as the Income Date.
INCOME PHASE: The period during which we make Annuity Payments to you or
someone you name to receive them.
INTEREST ADJUSTMENT ACCOUNT: An investment option within our general
account where we guarantee the rate of interest for a specified period (a
Guarantee Period).
JOINT OWNER: The Contract can be owned by you and your spouse (the Joint
Owner).
OWNER: The person or entity entitled to ownership rights under a Contract.
NON-QUALIFIED: If you do not purchase the Contract under a qualified plan,
your Contract is referred to as a Non-Qualified Contract.
PORTFOLIO: The variable investment options available under the Contract.
Each Portfolio has its own investment objective.
PURCHASE PAYMENT: The money you give us to buy the Contract.
QUALIFIED: If you purchase the Contract under a qualified plan, it is
referred to as a Qualified Contract (examples: individual retirement annuities,
tax-sheltered annuities, and pension and profit-sharing plans).
TAX DEFERRAL: Tax deferral means that you are not taxed on any earnings or
appreciation on the assets in your Contract until you take money out of your
Contract.
SUMMARY
The following information is a summary of some of the more important
features of your annuity Contract. More detailed information is contained in the
corresponding sections of this prospectus.
The SpectraSelect Fixed and Variable Annuity Contract. This prospectus
describes individual and group fixed and variable deferred annuity contracts and
certificates (together referred to as the "Contract"). The Contract offered by
ULA is a contract between you, the owner, and United Life & Annuity Insurance
Company, an insurance company. The Contract provides a means for investing on a
Tax-Deferred basis in the Portfolios, the Fixed Account and the Interest
Adjustment Account.
The SpectraSelect Fixed and Variable Annuity Contract is designed for
people seeking long-term Tax Deferred accumulation of assets, generally
for retirement or other long-term purposes. The Tax Deferred feature is most
attractive to people in high federal and state income tax brackets. You should
not buy this Contract if you are looking for a short-term investment or if
you cannot accept the risk of getting back less money than you put in.
You may invest in the Fixed Account, the Interest Adjustment Account or the
following Portfolios:
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Diversified Income Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
THE ALGER AMERICAN FUND
Alger American Growth Portfolio
DREYFUS STOCK INDEX FUND
DREYFUS VARIABLE INVESTMENT FUND
Growth and Income Portfolio
FEDERATED INSURANCE SERIES
Federated American Leaders Fund II
Federated High Income Bond Fund II
Federated Prime Money Fund II
Federated Utility Fund II
Federated Fund for U.S. Government Securities II
MFS(R) VARIABLE INSURANCE TRUST(SM)
MFS Emerging Growth Series
MFS Growth With Income Series
MFS Research Series
MFS Total Return Series
MFS Utilities Series
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
Emerging Markets Debt Portfolio
Equity Growth Portfolio
Global Equity Portfolio
High-Yield Portfolio
Value Portfolio
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
AMT Guardian Portfolio
AMT Limited Maturity Bond Portfolio
AMT Mid-Cap Growth Portfolio
AMT Partners Portfolio
SCUDDER VARIABLE LIFE INVESTMENT FUND
Money Market Portfolio
International Portfolio, Class A
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund
WARBURG PINCUS TRUST
International Equity Portfolio
Post-Venture Capital Portfolio
WARBURG PINCUS TRUST II
Fixed Income Portfolio
The Portfolios are fully described in the attached Portfolio prospectuses.
You can make or lose money in the Portfolios depending upon market conditions
and the performance of the Portfolio(s) you select.
The Fixed Account offers an interest rate that is guaranteed by us. You can
also invest in the Interest Adjustment Account, which is an option within our
general account where we guarantee a specific rate of interest for certain
Guarantee Periods. There are currently three Guarantee Periods available -- 3, 5
and 7 years. If you withdraw or transfer money from the Interest Adjustment
Account prior to the end of the selected Guarantee Period, it may be subject to
an interest adjustment.
CURRENTLY, THERE ARE THIRTY-FIVE INVESTMENT OPTIONS (WHICH INCLUDE EACH
PORTFOLIO, THE FIXED ACCOUNT AND EACH GUARANTEE PERIOD OF THE INTEREST
ADJUSTMENT ACCOUNT). YOU MAY SELECT TO PUT YOUR MONEY IN UP TO TEN (10) OF THESE
OPTIONS AT ANY TIME.
Annuity Payments (The Income Phase). You can receive monthly Annuity
Payments from your Contract by selecting an Annuity Option. During the Income
Phase, payments will come from the Fixed Account.
How To Purchase A Contract. You can buy a Non-Qualified Contract with a
minimum payment of $5,000 and a Qualified Contract with $2,000, except for
certain Qualified plans. You can add $500 (or $100 if you use the automatic
premium check option) or more any time you like during the Accumulation Phase.
Your registered representative can help you fill out the proper forms.
Expenses. The Contract has insurance features and investment features, and
there are costs related to each.
* If you select Death Benefit Option 1 (Enhanced Death Benefit Rider), the
annual insurance charges total 1.60% of the average daily value of your Contract
allocated to the Portfolios. If you select Death Benefit Option 2 (Standard
Death Benefit), the annual insurance charges total 1.40% of the average daily
vale of your Contract allocated to the Portfolios.
* There are also annual Portfolio charges which range from .26% to 1.52%
of the average daily value of the Portfolio, depending upon the Portfolio(s) you
invest in.
* You can transfer between Accounts up to 12 times a year without charge.
After 12 transfers, the charge is $25 or 2% of the amount transferred, whichever
is less.
* If you make a withdrawal from the Contract, ULA may assess a contingent
deferred sales charge (withdrawal charge) which ranges from 7% to 0% depending
upon how long ULA has your payment. Under certain circumstances, you can make
a partial withdrawal without incurring a contingent deferred sales charge.
* ULA may assess a state premium tax charge which ranges from 0% - 4.0%
(depending upon the state).
Taxes. Your earnings are not taxed until you take them out. In most cases,
if you take money out, earnings come out first and are taxed as income. If you
are younger than 59 1/2 when you take money out, you may be charged a 10%
federal tax penalty on the taxable amounts withdrawn. Payments during the Income
Phase are considered partly a return of your original investment. That part of
each payment is not taxable as income. If the Contract is tax-qualified, the
entire payment may be taxable. There are limits to the amount you can withdraw
from a Qualified plan known as a 403(b) plan (or tax-sheltered annuity).
Withdrawals. You may make a withdrawal at any time during the Accumulation
Phase. Any partial withdrawal must be for at least $500 (unless it is made under
the Systematic Withdrawal Program). You may request a withdrawal or elect the
Systematic Withdrawal Program. Of course, you may also have to pay income tax
and a tax penalty on any money you take out.
Death Benefit. If you die during the Accumulation Phase, the person you
have selected as your Beneficiary will receive a death benefit. The death
benefit that the Beneficiary will receive will be the death benefit you
selected (Option 1 or Option 2).
Other Information
Free Look/Right to Examine. If you cancel the Contract within 10 days after
receiving it (or whatever period is required in your state), we will send your
money back without assessing a contingent deferred sales charge. You will
receive whatever your Contract is worth on the day we receive your request. This
may be more or less than your original payment. (Some states require that we
return your Purchase Payment.)
No Probate. In most cases, when you die, your Beneficiary will receive the
death benefit without going through probate.
Additional Features. The Contract offers additional features which you
might be interested in. These include:
Dollar Cost Averaging Program -- You can arrange to have a regular amount
of money automatically transferred from the Scudder Money Market Portfolio or
the one year Fixed Account to one or more selected Portfolios monthly, quarterly
or semi-annually, theoretically giving you a lower average cost per unit over
time than a single one time purchase. However, there are no guarantees that this
will take place.
Rebalancing Program -- ULA will automatically readjust your money among the
Portfolios to maintain your specified allocation mix. This can be done
quarterly, semi-annually or annually if the value of your Contract is at least
$5,000.
Systematic Withdrawal Program -- You can elect to receive periodic payments
from your Contract. Of course, you may have to pay taxes and a tax penalty on
the money you receive.
FEE TABLE (See Note 1 below)
OWNER TRANSACTION EXPENSES
Contingent Deferred Sales Charge (see Note 2 below)
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NUMBER OF COMPLETE
YEARS SINCE RECEIPT
OF PURCHASE PAYMENT CHARGE
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0...................................................... 7.0%
1...................................................... 6.0%
2...................................................... 5.0%
3...................................................... 4.0%
4...................................................... 3.0%
5...................................................... 2.0%
6...................................................... 1.0%
7 years or more........................................ 0.0%
Transfer Fee (see Note 3 below) No charge for first 12 transfers in a
Contract year. After that, the fee is
the lesser of $25 or 2% of the amount
transferred.
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SEPARATE ACCOUNT ANNUAL EXPENSES FOR CONTRACTS WITH DEATH BENEFIT OPTION 1
(ENHANCED DEATH BENEFIT RIDER) (as a percentage of average daily net asset
value)
Mortality and Expense Risk Charge........................... 1.45%
Administrative Charge....................................... .15%
----
Total Separate Account Annual Expenses...................... 1.60%
SEPARATE ACCOUNT ANNUAL EXPENSES FOR CONTRACTS WITH DEATH BENEFIT OPTION 2
(STANDARD DEATH BENEFIT)(as a percentage of average daily net asset value)
Mortality and Expense Risk Charge........................... 1.25%
Administrative Charge....................................... .15%
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Total Separate Account Annual Expenses...................... 1.40%
NOTES TO FEE TABLE
Note 1. The purpose of the Fee Table is to show you the various expenses
you will incur directly or indirectly with the Contract. The Fee Table reflects
expenses of the Separate Account as well as the Portfolios.
Note 2. Under certain circumstances, you can make a withdrawal without
incurring the contingent deferred sales charge.
Note 3. ULA will not charge you the transfer fee even if there are more
than 12 transfers in a year if the transfer is part of the Dollar Cost Averaging
or Rebalancing Programs.
ANNUAL EXPENSES OF THE PORTFOLIOS
(as a percentage of the average daily net assets of a Portfolio)
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TOTAL ANNUAL
OTHER EXPENSES EXPENSES
MANAGEMENT (AFTER EXPENSE (AFTER EXPENSE
FEES REIMBURSEMENT) REIMBURSEMENT)
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AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund............... .62% .05% .67%
AIM V.I. Diversified Income Fund................. .60% .17% .77%
AIM V.I. Growth Fund............................. .64% .08% .72%
AIM V.I. Growth and Income Fund.................. .61% .04% .65%
AIM V.I. International Equity Fund............... .75% .16% .91%
THE ALGER AMERICAN FUND
Alger American Growth Portfolio.................. .75% .04% .79%
DREYFUS STOCK INDEX FUND........................... .25% .01% .26%
DREYFUS VARIABLE INVESTMENT FUND
Growth and Income Portfolio...................... .75% .03% .78%
FEDERATED INSURANCE SERIES
Federated American Leaders Fund II(a)............ .74% .14% .88%
Federated High Income Bond Fund II .............. .60% .18% .78%
Federated Prime Money Fund II(b)................. .49% .31% .80%
Federated Utility Fund II(c) .................... .68% .25% .93%
Federated Fund for U.S. Government
Securities II(d).............................. .52% .33% .85%
MFS(R) Variable Insurance Trust(SM)(e)
MFS Emerging Growth Series....................... .75% .10% .85%
MFS Growth With Income Series ................... .75% .13% .88%
MFS Research Series.............................. .75% .11% .86%
MFS Total Return Series.......................... .75% .16% .91%
MFS Utilities Series ............................ .75% .26% 1.01%
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
Emerging Markets Debt Portfolio (f).............. .27% 1.25% 1.52%
Equity Growth Portfolio (f)...................... .09% .76% .85%
Global Equity Portfolio (f)...................... .32% .83% 1.15%
High-Yield Portfolio (f)......................... .15% .65% .80%
Value Portfolio (f).............................. .08% .77% .85%
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST(g)
AMT Guardian Portfolio (h)....................... .85% .15% 1.00%
AMT Limited Maturity Bond Portfolio.............. .65% .11% .76%
AMT Mid-Cap Growth Portfolio (h)................. .85% .15% 1.00%
AMT Partners Portfolio........................... .78% .06% .84%
SCUDDER VARIABLE LIFE INVESTMENT FUND
Money Market Portfolio........................... .37% .07% .44%
International Portfolio, Class A ................ .87% .18% 1.05%
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund(i).................... 1.00% .20% 1.20%
WARBURG PINCUS TRUST
International Equity Portfolio (j)............... 1.00% .33% 1.33%
Post-Venture Capital Portfolio (j)............... 1.08% .32% 1.40%
WARBURG PINCUS TRUST II
Fixed Income Portfolio (j)....................... .20% .79% .99%
</TABLE>
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(a) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
.75%. The total operating expenses were .89% absent the voluntary waiver of
a portion of the management fee.
(b) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
.50%. The total operating expenses were .81% absent the voluntary waiver of
a portion of the management fee.
(c) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
.75%. The total operating expenses were 1.00% absent the voluntary waiver
of a portion of the management fee.
(d) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time
at its sole discretion. The maximum management fee is .60%. The total
operating expenses were 0.93% absent the voluntary waiver of the management
fee and the voluntary reimbursement of certain other operating expenses.
(e) Each Series has an expense offset arrangement which reduces the Series'
custodian fee based upon the amount of cash maintained by the Series with
its custodian and dividend disbursing agent. Each series may enter into
other such arrangements and directed brokerage arrangements (which would
also have the effect of reducing the Series' expenses). Expenses do not
take into account these expense reductions, and are therefore higher than
the actual expenses of the Series.
(f) The management fee has been reduced to reflect the voluntary waiver of a
portion or all of the management fee and the reimbursement by the
portfolio's adviser to the extent "Total Annual Expenses" exceed: Emerging
Markets Debt Portfolio 1.30%; Equity Growth Portfolio 0.85%; Global Equity
Portfolio 1.15%; High Yield Portfolio 0.80%; and Value Portfolio 0.85%. The
adviser may terminate this voluntary waiver at any time at its sole
discretion. Absent such reductions, "Management Fees", "Other Expenses" and
"Total Annual Expenses", respectively, would be as follows: Emerging
Markets Debt Portfolio - 0.80%, 1.25%, 2.05%; Equity Growth Portfolio -
0.55%, .76%, 1.31%; Global Equity Portfolio - 0.80%, .83%, 1.63%;
High-Yield Portfolio - 0.50%, .65%, 1.15%; and Value Portfolio - 0.55%,
.77%, 1.32%. Additionally, in determining the actual amount of voluntary
management fee waiver and/or expense reimbursement for a Portfolio, if any,
the adviser excludes from total annual operating expenses certain
investment related expenses, such as foreign country tax expense and
interest expense on borrowing. Included in "Other Expenses" of the Emerging
Markets Debt Portfolio are 0.22% of such investment related expenses.
(g) Neuberger Berman Advisers Management Trust is divided into portfolios
("Portfolios") each of which invests all of its net investable assets in a
corresponding series ("Series") of Advisers Managers Trust. The figures
reported under "Management Fees" include the aggregate of the
administration fees paid by the Portfolio and the management fees paid by
its corresponding Series. Similarly, "Other Expenses" includes all other
expenses of the Portfolio and corresponding Series.
(h) Expenses reflect expense reimbursement. Neuberger Berman Management Inc.
("NBMI")has undertaken to reimburse certain operating expenses, including
the compensation of NBMI and excluding taxes, interest, extra- ordinary
expenses, brokerage commissions and transaction costs, that exceed, in the
aggregate, 1% of the Guardian and Mid-Cap Growth Portfolios' average daily
net asset value. Absent such reimbursement, the Total Annual Expenses for
the year ended December 31, 1998 would have been 1.43% for the Mid-Cap
Growth Portfolio and 1.14% for the Guardian Portfolio. These expenses
reimbursement agreements are subject to termination upon 60 days written
notice with respect to the Guardian and Mid-Cap Growth Portfolios, and
there can be no assurance that these policies will be continued thereafter.
(i) The expenses are reduced to 1.16% by the directed brokerage and custodian
fee arrangement.
(j) Management Fees, Other Expenses and Total Annual Expenses for the Fixed
Income, International Equity, and Post-Venture Capital Portfolios are based
on actual expenses for the fiscal year ended December 31, 1998, net of any
fee waivers and/or expense reimbursements. Without such waivers and/or
reimbursements, Management Fees would be .50%, 1.00% and 1.25%, Other
Expenses would be 4.82%, .33%, and .45%, and Total Annual Expenses would be
5.32%, 1.33% and 1.70%, respectively. Fee waivers and expense
reimbursements or credits may be discontinued at any time.
EXAMPLES - There are two sets of examples below:
* One set is for Contracts with Death Benefit Option 1 (Enhanced Death
Benefit Rider),
* The other set is for Contracts with Death Benefit Option 2 (Standard Death
Benefit).
DEATH BENEFIT OPTION 1 (Enhanced Death Benefit Rider)
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if:
(a) you surrender your Contract at the end of each time period, and
(b) if your Contract is not surrendered or if you apply the Contract value
to an Annuity Option:
<TABLE>
<CAPTION>
TIME PERIODS
----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund............... a) $ 93 a) $123 a)$159 a)$293
b) $ 23 b) $ 73 b)$129 b)$293
AIM V.I. Diversified Income Fund................. a) $ 94 a) $127 a)$164 a)$306
b) $ 24 b) $ 77 b)$134 b)$306
AIM V.I. Growth Fund............................. a) $ 94 a) $125 a)$161 a)$299
b) $ 24 b) $ 75 b)$131 b)$299
AIM V.I. Growth and Income Fund.................. a) $ 93 a) $123 a)$157 a)$290
b) $ 23 b) $ 73 b)$127 b)$290
AIM V.I. International Equity Fund............... a) $ 96 a) $131 a)$172 a)$324
b) $ 26 b) $ 81 b)$142 b)$324
THE ALGER AMERICAN FUND
Alger American Growth Portfolio.................. a) $ 94 a) $127 a) $165 a) $308
b) $ 24 b) $ 77 b) $135 b) $308
DREYFUS STOCK INDEX FUND........................... a) $ 89 a) $110 a) $135 a) $240
b) $ 19 b) $ 60 b) $105 b) $240
DREYFUS VARIABLE INVESTMENT FUND
Growth and Income Portfolio...................... a) $ 94 a) $127 a) $165 a) $307
b) $ 24 b) $ 77 b) $135 b) $307
FEDERATED INSURANCE SERIES
Federated American Leaders Fund II............... a) $ 95 a) $130 a) $170 a) $320
b) $ 25 b) $ 80 b) $140 b) $320
Federated High Income Bond Fund II............... a) $ 94 a) $127 a) $165 a) $307
b) $ 24 b) $ 77 b) $135 b) $307
Federated Prime Money Fund II.................... a) $ 95 a) $128 a) $166 a) $309
b) $ 25 b) $ 78 b) $136 b) $309
Federated Utility Fund II........................ a) $ 96 a) $132 a) $173 a) $326
b) $ 26 b) $ 82 b) $143 b) $326
Federated Fund for U.S. Government Securities
II............................................ a) $ 95 a) $129 a) $169 a) $316
b) $ 25 b) $ 79 b) $139 b) $316
MFS(R) VARIABLE INSURANCE TRUST(SM)
MFS Emerging Growth Series....................... a) $ 95 a) $130 a) $169 a) $316
b) $ 25 b) $ 80 b) $139 b) $316
MFS Growth With Income Series.................... a) $ 95 a) $129 a) $170 a) $320
b) $ 25 b) $ 79 b) $140 b) $320
MFS Research Series.............................. a) $ 95 a) $129 a) $169 a) $317
b) $ 25 b) $ 79 b) $139 b) $317
MFS Total Return Series........................... a) $ 96 a) $131 a) $172 a) $324
b) $ 26 b) $ 81 b) $142 b) $324
MFS Utilities Series.............................. a) $ 97 a) $134 a) $178 a) $336
b) $ 27 b) $ 84 b) $148 b) $336
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
Emerging Markets Debt Portfolio................... a) $102 a) $151 a) $207 a) $402
b) $ 32 b) $101 b) $177 b) $402
Equity Growth Portfolio........................... a) $ 95 a) $129 a) $169 a) $316
b) $ 25 b) $ 79 b) $139 b) $316
Global Equity Portfolio........................... a) $ 98 a) $139 a) $186 a) $355
b) $ 28 b) $ 89 b) $156 b) $355
High-Yield Portfolio.............................. a) $ 95 a) $128 a) $166 a) $309
b) $ 25 b) $ 78 b) $136 b) $309
Value Portfolio................................... a) $ 95 a) $129 a) $169 a) $316
b) $ 25 b) $ 79 b) $139 b) $316
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
ATM Guardian Portfolio............................ a) $ 97 a) $134 a) $177 a) $335
b) $ 27 b) $ 84 b) $147 b) $335
AMT Limited Maturity Bond Portfolio............... a) $ 94 a) $126 a) $164 a) $304
b) $ 24 b) $ 76 b) $134 b) $304
AMT Mid-Cap Growth Portfolio...................... a) $ 97 a) $134 a) $177 a) $335
b) $ 27 b) $ 84 b) $147 b) $335
AMT Partners Portfolio............................ a) $ 95 a) $129 a) $168 a) $315
b) $ 25 b) $ 79 b) $138 b) $315
SCUDDER VARIABLE LIFE INVESTMENT FUND
Money Market Portfolio............................ a) $ 91 a) $116 a) $146 a) $263
b) $ 21 b) $ 66 b) $116 b) $263
International Portfolio, Class A.................. a) $ 97 a) $136 a) $180 a) $342
b) $ 27 b) $ 86 b) $150 b) $342
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund........................ a) $ 99 a) $140 a) $189 a) $361
b) $ 29 b) $ 90 b) $159 b) $361
WARBURG PINCUS TRUST
International Equity Portfolio.................... a) $100 a) $145 a) $196 a) $378
b) $ 30 b) $ 95 b) $166 b) $378
Post-Venture Capital Portfolio.................... a) $101 a) $147 a) $200 a) $387
b) $ 31 b) $ 97 b) $170 b) $387
WARBURG PINCUS TRUST II
Fixed Income Portfolio............................ a) $ 97 a) $134 a) $177 a) $334
b) $ 27 b) $ 84 b) $147 b) $334
</TABLE>
DEATH BENEFIT OPTION 2 (Standard Death Benefit)
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if:
(a) you surrender your Contract at the end of each time period, and
(b) if your Contract is not surrendered or if you apply the Contract value to
an Annuity Option:
<TABLE>
<CAPTION>
TIME PERIODS
----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund............... a) $ 91 a) $117 a) $147 a) $267
b) $ 21 b) $ 67 b) $117 b) $267
AIM V.I. Diversified Income Fund................. a) $ 92 a) $120 a) $153 a) $280
b) $ 22 b) $ 70 b) $123 b) $280
AIM V.I. Growth Fund............................. a) $ 92 a) $119 a) $150 a) $273
b) $ 22 b) $ 69 b) $120 b) $273
AIM V.I. Growth and Income Fund.................. a) $ 91 a) $116 a) $146 a) $264
b) $ 21 b) $ 66 b) $116 b) $264
AIM V.I. International Equity Fund............... a) $ 94 a) $125 a) $161 a) $298
b) $ 24 b) $ 75 b) $131 b) $298
THE ALGER AMERICAN FUND
Alger American Growth Portfolio.................. a) $ 92 a) $121 a) $154 a) $282
b) $ 22 b) $ 71 b) $124 b) $282
DREYFUS STOCK INDEX FUND........................... a) $ 87 a) $104 a) $124 a) $214
b) $ 17 b) $ 54 b) $ 94 b) $214
DREYFUS VARIABLE INVESTMENT FUND
Growth and Income Portfolio....................... a) $ 92 a) $120 a) $153 a) $281
b) $ 22 b) $ 70 b) $123 b) $281
FEDERATED INSURANCE SERIES
Federated American Leaders Fund II................ a) $ 93 a) $124 a) $159 a) $294
b) $ 23 b) $ 74 b) $129 b) $294
Federated High Income Bond Fund II................ a) $ 92 a) $120 a) $153 a) $281
b) $ 22 b) $ 70 b) $123 b) $281
Federated Prime Money Fund II..................... a) $ 93 a) $121 a) $155 a) $284
b) $ 23 b) $ 71 b) $125 b) $284
Federated Utility Fund II......................... a) $ 94 a) $125 a) $162 a) $300
b) $ 24 b) $ 75 b) $132 b) $300
Federated Fund for U.S. Government Securities II.. a) $ 93 a) $123 a) $157 a) $290
b) $ 23 b) $ 73 b) $127 b) $290
MFS(R) VARIABLE INSURANCE TRUST(SM)
MFS Emerging Growth Series........................ a) $ 93 a) $123 a) $157 a) $290
b) $ 23 b) $ 73 b) $127 b) $290
MFS Growth With Income Series..................... a) $ 93 a) $124 a) $159 a) $294
b) $ 23 b) $ 74 b) $129 b) $294
MFS Research Series............................... a) $ 93 a) $123 a) $158 a) $291
b) $ 23 b) $ 73 b) $128 b) $291
MFS Total Return Series........................... a) $ 94 a) $125 a) $161 a) $298
b) $ 24 b) $ 75 b) $131 b) $298
MFS Utilities Series.............................. a) $ 95 a) $128 a) $166 a) $311
b) $ 25 b) $ 78 b) $136 b) $311
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
Emerging Markets Debt Portfolio................... a) $100 a) $144 a) $195 a) $376
b) $ 30 b) $ 94 b) $165 b) $376
Equity Growth Portfolio........................... a) $ 93 a) $123 a) $157 a) $290
b) $ 23 b) $ 73 b) $127 b) $290
Global Equity Portfolio........................... a) $ 96 a) $132 a) $174 a) $329
b) $ 26 b) $ 82 b) $144 b) $329
High-Yield Portfolio.............................. a) $ 93 a) $121 a) $155 a) $284
b) $ 23 b) $ 71 b) $125 b) $284
Value Portfolio................................... a) $ 93 a) $123 a) $157 a) $290
b) $ 23 b) $ 73 b) $127 b) $290
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
AMT Guardian Portfolio............................ a) $ 95 a) $128 a) $166 a) $309
b) $ 25 b) $ 78 b) $136 b) $309
AMT Limited Maturity Bond Portfolio............... a) $ 92 a) $120 a) $152 a) $278
b) $ 22 b) $ 70 b) $122 b) $278
AMT Mid-Cap Growth Portfolio...................... a) $ 95 a) $128 a) $166 a) $309
b) $ 25 b) $ 78 b) $136 b) $309
AMT Partners Portfolio............................ a) $ 93 a) $122 a) $157 a) $289
b) $ 23 b) $ 72 b) $127 b) $289
SCUDDER VARIABLE LIFE INVESTMENT FUND
Money Market Portfolio............................ a) $ 89 a) $109 a) $134 a) $237
b) $ 19 b) $ 59 b) $104 b) $237
International Portfolio, Class A.................. a) $ 95 a) $129 a) $169 a) $316
b) $ 25 b) $ 79 b) $139 b) $316
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund........................ a) $ 97 a) $134 a) $177 a) $335
b) $ 27 b) $ 84 b) $147 b) $335
WARBURG PINCUS TRUST
International Equity Portfolio.................... a) $ 98 a) $138 a) $185 a) $352
b) $ 28 b) $ 88 b) $155 b) $352
Post-Venture Capital Portfolio.................... a) $ 99 a) $140 a) $189 a) $361
b) $ 29 b) $ 90 b) $159 b) $361
WARBURG PINCUS TRUST II
Fixed Income Portfolio............................ a) $ 94 a) $127 a) $165 a) $308
b) $ 24 b) $ 77 b) $135 b) $308
</TABLE>
THE ANNUAL EXPENSES OF THE PORTFOLIOS AND THE EXAMPLES ARE BASED ON DATA
PROVIDED BY THE RESPECTIVE FUND GROUPS FOR THE 1998 FISCAL YEAR. FUTURE EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN. WE HAVE NOT INDEPENDENTLY VERIFIED SUCH
DATA.
* Premium taxes are not reflected. They may apply.
* THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
See the Appendix for Accumulation Unit Values (condensed Financial Information).
THE SPECTRASELECT FIXED AND VARIABLE ANNUITY CONTRACT
This prospectus describes individual and group fixed and variable deferred
annuity contracts and certificates (together referred to as the "Contracts")
offered by ULA.
An annuity is a contract between you, the owner, and an insurance company
(in this case ULA), where the insurance company promises to pay you (or someone
else you choose) an income, in the form of Annuity Payments, beginning on a
designated date that is at least three years in the future.
Like all deferred annuity contracts, your Contract has two phases: the
Accumulation Phase and the Income Phase. Until you begin receiving Annuity
Payments, your annuity is in the Accumulation Phase. During the Accumulation
Phase, your earnings accumulate on a Tax-Deferred basis and are based on the
investment performance of the Portfolio(s) you selected and/or the interest rate
earned on the money you have in the Fixed Account and the Interest Adjustment
Account. During the Accumulation Phase, the earnings are taxed as income only
when you make a withdrawal. The Income Phase occurs when you begin receiving
regular payments from your Contract. The amount of the payments you may receive
during the Income Phase depends, in part, upon the amount of money you are
able to accumulate in your Contract during the Accumulation Phase.
The Contract benefits from Tax Deferral. Tax Deferral means that you are
not taxed on earnings or appreciation on the assets in your Contract until you
take money out of your Contract.
The Contract is called a variable annuity because you can choose among the
available Portfolios and, depending upon market conditions, you can make or lose
money in any of these Portfolios. If you select the variable annuity portion of
the Contract, the amount of money you are able to accumulate in your Contract
during the Accumulation Phase depends upon the investment performance of the
Portfolio(s) you select. The Annuity Payments you will receive during the
Income Phase will come from the Fixed Account.
The Contract contains a Fixed Account. The Fixed Account offers an interest
rate that is guaranteed by ULA. There is a one year Guarantee Period available
for the Fixed Account. ULA guarantees that the interest credited to the Fixed
Account will not be less than 3% per year. If you select the Fixed Account, your
money will be placed with our other general assets. If you select the Fixed
Account, the amount of money you are able to accumulate in your Contract during
the Accumulation Phase depends upon the total interest credited to your
Contract.
The Contract also has an Interest Adjustment Account with three Guarantee
Periods currently available: 3 years, 5 years and 7 years. Each allocation to a
Guarantee Period locks in a fixed annual interest rate declared by ULA. If you
make a withdrawal, transfer or apply your Contract value to an Annuity Option of
amounts you have allocated a Guarantee Period prior to the end of that Guarantee
Period, it may be subject to an interest adjustment.
We may make changes to your Contract in order to comply with applicable
law.
Owner. The SpectraSelect Fixed and Variable Annuity is a group deferred
annuity contract. A group contract is issued to a contractholder, for the
benefit of the participants in the group. You are a participant in the group and
will receive a certificate evidencing your ownership. You, as the Owner of a
certificate, are entitled to all the rights and privileges of ownership. In some
states an individual fixed and variable deferred annuity contract is issued
instead, which is identical to the group contract described in this prospectus
except that it is issued directly to the Owner. As used in this prospectus, the
term Contract refers to your certificate or individual contract. The Owner is as
designated at the time the Contract is issued, unless changed.
You may change Owners at any time prior to the Income Date. This may be a
taxable event. You should consult with your tax adviser before doing this.
Joint Owner. The Contract can be owned by Joint Owners. Any Joint Owner
must be the spouse of the other Owner. Upon the death of either Joint Owner, the
surviving spouse will be the primary Beneficiary. Any other Beneficiary
designation will be treated as a contingent Beneficiary unless otherwise
indicated. Unless otherwise specified, if there are Joint Owners, both
signatures will be required for all transactions except telephone transfers.
Annuitant. The Annuitant is the person whose life we look to when we make
Annuity Payments. You choose the Annuitant at the time the Contract is issued.
You may change the Annuitant at any time before the Income Date unless the
Contract is owned by a non-individual (for example, a corporation). Any change
of Annuitant is subject to our underwriting rules then in effect. On or after
the Income Date, the Annuitant will include any Joint Annuitant.
Beneficiary. The Beneficiary is the person(s) or entity you name to receive
any death benefit. The Beneficiary is named at the time the Contract is issued
unless changed at a later date. Unless an irrevocable Beneficiary has been
named, you can change the Beneficiary or contingent Beneficiary.
Assignment. You can assign the Contract at any time during your lifetime.
ULA will not be bound by the assignment until it receives the written notice of
the assignment. ULA will not be liable for any payment or other action we take
in accordance with the Contract before we receive notice of the assignment. Any
assignment made after the death benefit has become payable can only be done with
our consent. AN ASSIGNMENT MAY BE A TAXABLE EVENT.
If the Contract is issued pursuant to a Qualified plan, there may be
limitations on your ability to assign the Contract.
ANNUITY PAYMENTS (THE INCOME PHASE)
INCOME DATE
You can receive regular monthly income payments under your Contract. You
can choose the month and year in which those payments begin. We call that date
the Income Date. Your Income Date must be at least three years after you buy the
Contract. The Income Date may not be later than when the Annuitant reaches age
85 or 10 years after the Contract is issued for Annuitants older than 75.
We ask you to choose your Income Date when you purchase the Contract. You
can change it at any time before the Income Date with thirty (30) days notice to
us.
ANNUITY PAYMENTS
* You (or someone you designate) will receive the Annuity Payments.
* Annuity Payments are paid in monthly installments.
* Annuity Payments will be made on a fixed basis only (which means they
will come from the Fixed Account and will not be based on the investment
performance of the Portfolios).
* If the value of your Contract to be applied to an Annuity Option is less
than $2,000, we reserve the right to pay you a lump sum amount instead of
Annuity Payments. Also, if the Annuity Payments would be or become less than
$200, we reserve the right to reduce the frequency of payments so that they will
be at least $200.
ANNUITY OPTIONS
You can also choose among income plans. We call those Annuity Options. You
can choose one of the following Annuity Options or any other Annuity Option you
want and that ULA agrees to provide. If you do not choose an Annuity Option
prior to the Income Date, we will assume that you selected Option B which
provides a life annuity with 120 monthly payments guaranteed. Prior to the
Income Date, you can change the Annuity Option. Any change must be requested at
least thirty (30) days prior to the Income Date. After Annuity Payments begin,
you cannot change the Annuity Option.
Option A. Life Annuity. Under this option, we will make monthly Annuity
Payments so long as the Annuitant is alive. After the Annuitant dies, we stop
making Annuity Payments.
Option B. Life Annuity With 60, 120, 180 or 240 Monthly Payments
Guaranteed. Under this option, we will make monthly Annuity Payments so long as
the Annuitant is alive. However, if, when the Annuitant dies, we have made
Annuity Payments for less than the selected guaranteed period, we will continue
to make Annuity Payments to you for the rest of the guaranteed period. If you do
not want to receive Annuity Payments, you can ask us for a single lump sum.
Option C. Joint And Survivor Annuity. Under this option, we will make
monthly Annuity Payments during the joint lifetime of the Annuitant and the
joint Annuitant. When the Annuitant dies, if the joint Annuitant is still alive,
we will continue to make Annuity Payments, so long as the joint Annuitant
continues to live. The monthly Annuity Payments will end when the last surviving
Annuitant dies.
HOW TO PURCHASE A CONTRACT
PURCHASE PAYMENTS
A Purchase Payment is the money you give us to buy the Contract.
The following are the Purchase Payment requirements:
* The minimum payment ULA will accept is $5,000 when the Contract is
bought as a Non-Qualified Contract.
* If the Contract is bought as a Qualified Contract, the minimum payment we
will accept is $2,000. This requirement may be waived if you buy this Contract
as part of an IRA (Individual Retirement Annuity) or 403(b) plan.
* We may also waive the minimum Purchase Payment requirements if you select
the automatic premium check option.
* The maximum amount we will accept without our prior approval is $500,000.
* You can make additional Purchase Payments of $500 (or as low as $100 if
you have selected the automatic premium check option) or more to either type of
Contract.
* We reserve the right to reject any Purchase Payment or application.
At the time you buy the Contract, you and the Annuitant cannot be older
than 85 years old for a Non-Qualified Contract and 75 years old for a Qualified
Contract.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a Contract, we will allocate your Purchase Payment to the
Fixed Account, one or more Guarantee Periods of the Interest Adjustment Account
and/or one or more of the Portfolios you have selected. We ask that you allocate
your money in whole percentages with a minimum allocation of 5% of each Purchase
Payment or transfer or $500 (whichever is greater). You can instruct us how to
allocate additional Purchase Payments you make. If you do not instruct us, we
will allocate them in the same way as your previous instructions to us. Under
certain circumstances, we will allocate your initial Purchase Payment to the
Money Market Portfolio until the end of the right to examine contract period
(see below). CURRENTLY, YOU CAN SELECT UP TO TEN OF THE THIRTY-FIVE INVESTMENT
OPTIONS (WHICH INCLUDE EACH PORTFOLIO, THE FIXED ACCOUNT AND EACH GUARANTEE
PERIOD OF THE INTEREST ADJUSTMENT ACCOUNT).
Once we receive your Purchase Payment and the necessary information, we
will issue your Contract and allocate your first Purchase Payment within 2
business days. If you do not give us all of the information we need, we will
contact you to get it. If for some reason we are unable to complete this process
within 5 business days, we will either send back your money or get your
permission to keep it until we get all of the necessary information. If you
make additional Purchase Payments, we will credit these amounts to your
Contract within one business day. Our business day closes when the New York
Stock Exchange closes, which is usually at 4:00 p.m. Eastern time.
RIGHT TO EXAMINE CONTRACT
If you change your mind about owning the Contract, you can cancel it within
10 days after receiving it (or the period required in your state). When you
cancel the Contract within this time period, ULA will not assess a contingent
deferred sales charge. You will receive back whatever your Contract is worth on
the day we receive your request. In certain states or if you have purchased the
Contract as an IRA, we may be required to refund your Purchase Payment if you
decide to cancel your Contract within 10 days after receiving it (or
whatever period is required in your state). If that is the case, we will
allocate your Purchase Payment(s) received during the right to examine period to
the Money Market Portfolio (except for any portion of your Purchase Payment(s)
which you selected to be allocated to the Fixed Account and/or the Interest
Adjustment Account) for 15 days and refund the greater of the value of your
Contract or your Purchase Payment(s). (In some states, the period may be
longer.) At the end of the period, we will re-allocate your Purchase
Payment as you selected.
ACCUMULATION UNITS
The value of the portion of your Contract allocated to the Portfolios will
go up or down depending upon the investment performance of the Portfolio(s) you
choose. The value of your Contract will also depend on the expenses of the
Contract. In order to keep track of the value of your Contract, we use a
measurement called an Accumulation Unit (which is like a share of a mutual
fund).
Every business day we determine the value of an Accumulation Unit by
multiplying the Accumulation Unit value for the previous period by a factor for
the current period. The factor is determined by:
1. dividing the value of a Portfolio share at the end of the current period
by the value of a Portfolio share for the previous period; and
2. subtracting from that amount any insurance charges.
The value of an Accumulation Unit may go up or down from day to day.
When you make a Purchase Payment, we credit your Contract with Accumulation
Units. We determine the number of Accumulation Units to credit to your Contract
by dividing the amount of the Purchase Payment allocated to a Portfolio by the
value of the Accumulation Unit for that Portfolio.
We calculate the value of an Accumulation Unit for each Portfolio after the
New York Stock Exchange closes each day and then credit your Contract
accordingly.
EXAMPLE:
On Tuesday we receive an additional Purchase Payment of $4,000 from you.
You have told us you want this to go to the Alger American Growth Portfolio.
When the New York Stock Exchange closes on that Tuesday, we determine that the
value of an Accumulation Unit for investment in the Alger American Growth
Portfolio is $11.25. We then divide $4,000 by $11.25 and credit your Contract on
Tuesday night with 355.56 Accumulation Units for the Alger American Growth
Portfolio.
INVESTMENT OPTIONS
When you buy the Contract you have the opportunity to allocate your money
to:
(1) the Fixed Account;
(2) the Interest Adjustment Account; and
(3) the Portfolios set forth below. Additional Portfolios may be available
in the future. In certain states, certain Portfolios may not be available until
approved by the Insurance Department (check with your registered representative
regarding availability).
YOU SHOULD READ THE PROSPECTUSES FOR THE PORTFOLIOS CAREFULLY BEFORE
INVESTING. THE PROSPECTUSES FOR THE PORTFOLIOS ACCOMPANY THIS PROSPECTUS.
AIM VARIABLE INSURANCE FUNDS, INC.
A I M Advisors, Inc. serves as the Fund's investment adviser. The Fund is
comprised of thirteen funds, the following five of which are available under the
Contract:
AIM V.I. Capital Appreciation Fund
AIM V.I. Diversified Income Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
THE ALGER AMERICAN FUND
Fred Alger Management, Inc. is the investment manager. The Trust is
comprised of six Portfolios, the following one of which is available under the
Contract:
Alger American Growth Portfolio
DREYFUS STOCK INDEX FUND
The Dreyfus Corporation serves as the Fund's manager and Mellon Equity
Associates serves as the Fund's index fund manager.
DREYFUS VARIABLE INVESTMENT FUND
The Dreyfus Corporation serves as the investment adviser. The Fund is
comprised of thirteen Portfolios, the following one of which is available under
the Contract:
Growth and Income Portfolio
FEDERATED INSURANCE SERIES
Federated Investment Management Company (formerly, Federated Advisers) is
the investment adviser to each Fund. The Trust has multiple separate Funds,
the following five of which are available under the Contract:
Federated American Leaders Fund II (a capital growth portfolio)
Federated High Income Bond Fund II
Federated Prime Money Fund II
Federated Utility Fund II
Federated Fund for U.S. Government Securities II
MFS(R) VARIABLE INSURANCE TRUST(SM)
Massachusetts Financial Services Company is the investment adviser to each
Series. The Trust is comprised of twelve Series, the following five of which are
available under the Contract:
MFS Emerging Growth Series
MFS Growth With Income Series
MFS Research Series
MFS Total Return Series
MFS Utilities Series
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC. (formerly known as Morgan
Stanley Universal Funds, Inc.)
Morgan Stanley Dean Witter Investment Management Inc. (formerly known as
Morgan Stanley Asset Management Inc.) serves as the investment adviser for the
Emerging Markets Debt, Equity Growth, and Global Equity Portfolios. Miller
Anderson & Sherrerd, LLP serves as the investment adviser for the High-Yield and
Value Portfolios. The Fund is comprised of eighteen portfolios, the following
five of which are available under the Contract:
Emerging Markets Debt Portfolio
Equity Growth Portfolio
Global Equity Portfolio
High-Yield Portfolio
Value Portfolio (an equity value portfolio)
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Each portfolio of Neuberger Berman Advisers Management Trust invests in a
corresponding series of Advisers Managers Trust. All series of Advisers
Managers Trust are managed by Neuberger Berman Management Inc. The following
are available under the Contract:
AMT Guardian Portfolio (a capital appreciation and secondarily, current
income portfolio)
AMT Limited Maturity Bond Portfolio
AMT Mid-Cap Growth Portfolio
AMT Partners Portfolio (a capital growth portfolio)
SCUDDER VARIABLE LIFE INVESTMENT FUND
Scudder, Stevens & Clark, Inc. is the investment adviser to the Fund. The
Trust is comprised of seven portfolios, the following two of which are available
under the Contract:
Money Market Portfolio
International Portfolio, Class A
VAN ECK WORLDWIDE INSURANCE TRUST
Van Eck Associates Corporation is the investment adviser to the Fund. The
Trust is comprised of five funds, the following one of which is available under
the Contract:
Worldwide Hard Assets Fund
WARBURG PINCUS TRUST
Warburg Pincus Asset Management, Inc. serves as the investment adviser to
the Trust. The Trust is comprised of seven portfolios, the following two of
which are available under the Contract:
International Equity Portfolio
Post-Venture Capital Portfolio (a long-term capital growth portfolio)
WARBURG PINCUS TRUST II
Warburg Pincus Asset Management, Inc. serves as the investment adviser to the
Trust. The Trust is comprised of multiple portfolios, the following one of
which is available under the Contract:
Fixed Income Portfolio
Shares of the Portfolios may be offered in connection with certain variable
annuity contracts and variable life insurance policies of various life
insurance companies which may or may not be affiliated with ULA. Certain
Portfolios may also be sold directly to qualified plans. The Portfolios
believe that offering their shares in this manner will not be disadvantageous
to you.
ULA may enter into certain arrangements under which it is reimbursed by the
Portfolios' advisers, distributors and/or affiliates for the adminstrative
services which it provides to the Portfolios.
VOTING RIGHTS
ULA is the legal owner of the Portfolio shares. However, ULA believes that
when a Portfolio solicits proxies in conjunction with a shareholder vote, it is
required to obtain from you and other affected Contract owners instructions as
to how to vote those shares. When we receive those instructions, we will vote
all of the shares we own in proportion to those instructions. This will also
include any shares that ULA owns on its own behalf. Should ULA determine
that it is no longer required to comply with the above, we will vote the
shares in our own right.
SUBSTITUTION
ULA may be required to substitute one of the Portfolios you have selected
with another Portfolio. We would not do this without the prior approval of the
Securities and Exchange Commission. We will give you notice of our intention to
do this.
TRANSFERS
During the Accumulation Phase, you can transfer money among the Portfolios,
the Fixed Account and the Interest Adjustment Account, after the right to
examine contract period is over. During the Accumulation Phase, ULA currently
allows you to make as many transfers as you want to each year. However, this
product is not designed for professional market timing organizations or other
individuals using programmed and frequent transfers. Such activity may be
disruptive to a Portfolio. We reserve the right to stop or prohibit these types
of transfers if we determine that they could harm a Portfolio.
If you make more than 12 transfers in a year, there is a transfer fee
deducted. The fee is the lesser of $25 per transfer or 2% of the amount
transferred. The following applies to any transfer:
1. The minimum amount which you can transfer is $250 from an Account or
your entire value in the Account. This requirement is waived if the transfer is
in connection with the Dollar Cost Averaging Program (which is described below).
2. You cannot make transfers during the right to examine contract period.
3. The minimum amount which must remain in an Account after a transfer is
$500, or $0 if the entire amount in the Account is transferred.
4. The maximum amount which can be transferred from the Fixed Account to
the Portfolios is 25% of the value of your Contract in the Fixed Account in any
one Contract year. This requirement is waived if the transfer is made pursuant
to the Dollar Cost Averaging or Rebalancing Programs.
5. The maximum amount which can be transferred from each Guarantee Period
in the Interest Adjustment Account to the Portfolios, the Fixed Account or
another Guarantee Period of the Interest Adjustment Account is 25% of the value
of your Contract in the Interest Adjustment Account as of the beginning of the
current Contract year. If there was no Contract value in the Interest Adjustment
Account at the beginning of the year, then the transfer is limited to 25% of the
Purchase Payment allocated to the Interest Adjustment Account.
6. We reserve the right, at any time, to terminate, suspend or modify the
transfer privileges described above.
7. You cannot make transfers during the Income Phase.
Telephone Transfers
You can make transfers by telephone during the Accumulation Phase. We may
allow you to authorize someone else to make transfers by telephone on your
behalf. If you own the Contract with a Joint Owner, unless ULA is instructed
otherwise, ULA will accept telephone instructions from either one of you. ULA
will use reasonable procedures to confirm that instructions given us by
telephone are genuine. If we do not use such procedures, we may be liable for
any losses due to unauthorized or fraudulent instructions. We may tape record
all telephone instructions. The telephone privilege may be discontinued at any
time.
DOLLAR COST AVERAGING PROGRAM
The Dollar Cost Averaging Program allows you to systematically transfer a
set amount of money on a monthly, quarterly or semi-annual basis from a Money
Market Portfolio or the Fixed Account to one or more Portfolios. Transfers to
the Fixed Account or Interest Adjustment Account are not permitted under Dollar
Cost Averaging. By allocating amounts on a regularly scheduled basis, as opposed
to allocating the total amount at one particular time, you may be less
susceptible to the impact of market fluctuations. You may only participate in
this program during the Accumulation Phase. The minimum amount which may be
transferred is $50 (per Portfolio). We will notify you for instructions if at
any time the value of the Money Market Portfolio or the Fixed Account is not
sufficient to make the requested transfer.
All Dollar Cost Averaging transfers will be made at any time prior to the
25th of a calendar month. If you choose this Program, you must participate in it
for at least one year.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the Program are not taken into account in determining any transfer fee.
You may not participate in the Dollar Cost Averaging Program and the Rebalancing
Program at the same time.
We reserve the right to terminate, suspend or modify the Dollar Cost
Averaging Program.
REBALANCING PROGRAM
Once your money has been invested, the performance of the Portfolios and
the earnings from the Fixed Account and Guarantee Periods of the Interest
Adjustment Account may cause your allocation to shift. The Rebalancing Program
is designed to help you maintain your specified allocation mix among the
different Portfolios. You can direct us to readjust your money quarterly,
semi-annually or annually to return to your particular percentage allocations.
The value of your Contract must be at least $5,000 to have transfers made under
this Program. You may not rebalance your money in the Fixed Account or the
Interest Adjustment Account.
If you participate in the Rebalancing Program, the transfers made under the
Program are not taken into account in determining any transfer fee. You may not
participate in the Rebalancing Program and the Dollar Cost Averaging Program at
the same time.
ASSET ALLOCATION PROGRAMS
ULA understands the importance of having available on a continuous basis
advice from a financial adviser regarding your investments in the Contract
(asset allocation program). Certain investment advisers have made arrangements
with us to make their services available to you. ULA has not made any
independent investigation of these advisers and is not endorsing such programs.
You may be required to enter into an advisory agreement with your investment
adviser. You are responsible for the compensation of the adviser you choose.
Under certain asset allocation programs, if you are under age 59 1/2, you
will be billed for the services of the investment adviser. If you are 59 1/2 or
older, ULA will, pursuant to an agreement with you, make a partial withdrawal
from the value of your Contract to pay for the services of the investment
adviser. If the Contract is Non-Qualified, the withdrawal will be treated like
any other distribution and will be includible in gross income for federal tax
purposes and, under certain circumstances, may be subject to a tax penalty.
PERFORMANCE
ULA may periodically advertise performance of the various Portfolios. ULA
will calculate performance by determining the percentage change in the value of
an Accumulation Unit by dividing the increase (decrease) for that unit by the
value of the Accumulation Unit at the beginning of the period. This performance
number reflects the deduction of the insurance charges and the expenses of the
Portfolio. It does not reflect the deduction of any applicable contingent
deferred sales charge. The deduction of any applicable contingent deferred sales
charge would reduce the percentage increase or make greater any percentage
decrease. Any advertisement will also include average annual total return
figures which reflect the deduction of the insurance charges, contingent
deferred sales charges and the expenses of the Portfolios.
Certain Portfolios have been in existence for some time and have investment
performance history. However, the Contracts are relatively new. In order to
demonstrate how the actual investment experience of the Portfolios may affect
your Accumulation Unit values, ULA prepares performance information. The
performance is based on the performance of the Portfolios, modified to reflect
the charges and expenses of your Contract as if it had been in existence for the
time periods shown. ULA will also provide standardized total return performance
figures for the Accumulation Unit values for the applicable time periods, where
available. The information is based upon the historical experience of the
Portfolios and does not necessarily represent what your investment would earn in
those Portfolios.
From time to time, we may advertise the Money Market Portfolio's yield and
effective yield. ULA may also in the future advertise yield information for one
or more of the other Portfolios. If it does, it will provide you with
information regarding how yield is calculated. More detailed information
regarding how performance is calculated is found in the SAI.
Any performance advertised will be based on historical data and does not
guarantee future results of the Portfolios.
EXPENSES
There are charges and other expenses associated with the Contract that will
reduce your investment return. These charges and expenses are:
INSURANCE CHARGES
We deduct insurance charges each day. We do this as part of the calculation
of the value of the Accumulation Units. The insurance charges are:
1) the mortality and expense risk charge, and
2) the administrative charge.
Mortality and Expense Risk Charge.
Death Benefit Option 1 (Enhanced Death Benefit Rider). The Mortality and
Expense Risk Charge for Contracts with the Enhanced Death Benefit Rider is
equal, on an annual basis, to 1.45% of the average daily value of the Contract
invested in a Portfolio, after the deduction of expenses.
Death Benefit Option 2 (Standard Death Benefit). The Mortality and Expense
Risk charge for Contracts with the Standard Death Benefit is equal, on an annual
basis, to 1.25% of the average daily value of the Contract invested in a
Portfolio, after the deduction of expenses.
This charge compensates us for all the insurance benefits provided by your
Contract (for example, the guarantee of annuity rates in your Contract, the
death benefits, certain expenses related to the Contract, and for assuming the
risk (expense risk) that the current charges will be insufficient in the future
to cover the cost of administering the Contract).
Administrative Charge. This charge is equal, on an annual basis, to .15% of
the average daily value of the Contract invested in a Portfolio, after the
deduction of expenses. This charge is for all the expenses associated with the
administration of the Contract. Some of these expenses include: preparation of
the Contract, confirmations, annual statements, maintenance of Contract
records, personnel costs, legal and accounting fees, filing fees, and computer
and systems costs.
CONTINGENT DEFERRED SALES CHARGE
Withdrawals may be subject to a contingent deferred sales charge. During
the Accumulation Phase, you can make withdrawals from your Contract (see the
"Withdrawals" section). ULA keeps track of each Purchase Payment you make. The
amount of the contingent deferred sales charge depends upon how long ULA has had
your payment. The charge is calculated at the time of each withdrawal and will
be deducted from the value remaining in your Contract. The charge is:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of complete years from
receipt of Purchase Payment: 0 1 2 3 4 5 6 7 years or more
Contingent Deferred Sales Charge: 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
However, after ULA has had a Purchase Payment for 7 years, there is no
charge when you withdraw that Purchase Payment. For purposes of the contingent
deferred sales charge, ULA treats withdrawals as coming from the oldest Purchase
Payments first. ULA does not assess the contingent deferred sales charge on any
payments paid out as Annuity Payments or as death benefits.
NOTE: For tax purposes, withdrawals are considered to have come from the
last money you put into the Contract. Thus, for tax purposes, earnings are
considered to come out first.
Free Withdrawal Amount -- You can make a partial withdrawal without
incurring a contingent deferred sales charge of the "free withdrawal amount."
The free withdrawal amount is equal to the greater of: (a) earnings, or (b) 10%
of remaining Purchase Payments at the beginning of the current year. If your
withdrawal is not on a Contract anniversary, the free withdrawal amount is equal
to the free withdrawal amount at the beginning of the Contract year less amounts
withdrawn without the contingent deferred sales charge during the current
Contract year. If you make a complete withdrawal, the free withdrawal amount is
not available. Any amounts withdrawn as the free withdrawal amount will not be
subject to an Interest Adjustment.
In addition, in certain states, you can make a total or partial withdrawal
and ULA will not deduct the contingent deferred sales charge if you are confined
to a skilled nursing home facility for 90 consecutive days after the first
Contract year.
REDUCTION OR ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE
ULA may reduce or eliminate the amount of the contingent deferred sales
charge when the Contract is sold under circumstances which reduce its sales
expenses. Some examples are: if there is a large group of individuals that will
be purchasing the Contract or a prospective purchaser already had a relationship
with ULA. ULA will not deduct a contingent deferred sales charge under a
Contract issued to an officer, director or employee of ULA or any of its
affiliates. Any circumstances resulting in the reduction or elimination of the
contingent deferred sales charge requires our prior approval.
TRANSFER FEE
You can make 12 free transfers every year. We measure a year from the day
we issue your Contract. If you make more than 12 transfers a year, we will
deduct a transfer fee of $25 or 2% of the amount that is transferred, whichever
is less, for each additional transfer.
If the transfer is part of the Dollar Cost Averaging or Rebalancing
Programs, it will not count in determining the transfer fee.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. ULA is responsible for the payment of these
taxes and will make a deduction from the value of your Contract for them. Some
of these taxes are due when the Contract is issued, others are due when Annuity
Payments begin. It is ULA's current practice to pay any premium taxes when they
become payable to the states. Premium taxes generally range from 0% to 4.0%,
depending on the state.
INCOME TAXES
ULA will deduct from the Contract any income taxes which it may incur
because of the Contract. Currently, ULA is not making any such deductions.
PORTFOLIO EXPENSES
There are deductions from and expenses paid out of the assets of the
various Portfolios which are described in the prospectuses for the Portfolios.
TAXES
NOTE: ULA has prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice. You should consult
your own tax adviser about your own circumstances. ULA has included additional
information regarding taxes in the Statement of Additional Information.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs --
usually retirement. Congress recognized how important saving for retirement was
and provided special rules in the Internal Revenue Code (Code) for annuities.
Basically, these rules provide that you will not be taxed on the earnings
on the money held in your annuity Contract until you take the money out. This is
referred to as Tax Deferral. There are different rules regarding how you will be
taxed depending upon how you take the money out and the type of Contract --
Qualified or Non-Qualified (see following sections).
You, as the Owner, will not be taxed on increases in the value of your
Contract until a distribution occurs -- either as a withdrawal or as Annuity
Payments. When you make a withdrawal you are taxed on the amount of the
withdrawal that is earnings. For Annuity Payments, different rules apply. A
portion of each Annuity Payment you receive will be treated as a partial return
of your Purchase Payments and will not be taxed. The remaining portion of the
Annuity Payment will be treated as ordinary income. How the Annuity Payment is
divided between taxable and non-taxable portions depends upon the period over
which the Annuity Payments are expected to be made. Annuity Payments received
after you have received all of your Purchase Payments are fully includible in
income.
When a Non-Qualified Contract is owned by a non-natural person (e.g., a
corporation or certain other entities other than a trust holding the Contract
as an agent for a natural person), the Contract will generally not be treated
as an annuity for tax purposes. This means that the Contract may not receive
the benefits of Tax Deferral. Income may be taxed as ordinary income every year.
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the Contract under a Qualified plan, your Contract is
referred to as a Qualified Contract. Examples of Qualified plans are: Individual
Retirement Annuities (IRAs), Tax-Sheltered Annuities (sometimes referred to as
403(b) Contracts), pension and profit-sharing plans, which include 401(k)
plans and H.R. 10 Plans and Section 457 Deferred Compensation Plans.
If you do not purchase the Contract under a Qualified plan, your Contract
is referred to as a Non-Qualified Contract.
WITHDRAWALS -- NON-QUALIFIED CONTRACTS
If you make a withdrawal from your Contract, the Code treats such a
withdrawal as first coming from earnings and then from your Purchase Payments.
In most cases, such withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract
which is included in income may be subject to a tax penalty. The amount of the
penalty is equal to 10% of the amount that is includible in income. Some
withdrawals will be exempt from the penalty. They include any amounts:
(1) paid on or after the taxpayer reaches age 59 1/2;
(2) paid after you die;
(3) paid if the taxpayer becomes totally disabled (as that term is defined
in the Code);
(4) paid in a series of substantially equal payments made annually
(or more frequently) for the life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which come from purchase payments made prior to August 14, 1982.
WITHDRAWALS -- QUALIFIED CONTRACTS
The above information describing the taxation of Non-Qualified Contracts
does not apply to Qualified Contracts. There are special rules that govern
Qualified Contracts. A more complete discussion of withdrawals from Qualified
Contracts is contained in the Statement of Additional Information.
WITHDRAWALS -- TAX-SHELTERED ANNUITIES
The Code limits the withdrawal of amounts attributable to purchase
payments made pursuant to a salary reduction agreement by owners from Tax-
Sheltered Annuities. Withdrawals can only be made when an owner:
(1) reaches age 59 1/2;
(2) leaves his/her job;
(3) dies;
(4) becomes disabled (as that term is defined in the Code); or
(5) in the case of hardship. However, in the case of hardship, the owner
can only withdraw the purchase payments and not any earnings.
DIVERSIFICATION
The Code provides that the underlying investments for a variable annuity
must satisfy certain diversification requirements in order to be treated as an
annuity contract. ULA believes that the Portfolios are being managed so as to
comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to
date provide guidance as to the circumstances under which you, because of the
degree of control you exercise over the underlying investments, and not ULA
would be considered the owner of the shares of the Portfolios. If you are
considered the owner of the shares, it will result in the loss of the favorable
tax treatment for the Contract. It is unknown to what extent under federal tax
law Contract Owners are permitted to select Portfolios, to make transfers among
the Portfolios or the number and type of Portfolios Owners may select from
without being considered the owner of the shares. If any guidance is provided
which is considered a new position, then the guidance would generally be
applied prospectively. However, if such guidance is considered not to be a new
position, it may be applied retroactively. This would mean that you, as the
Owner of the Contract, could be treated as the owner of the Portfolios.
Due to the uncertainty in this area, ULA reserves the right to modify the
Contract in an attempt to maintain favorable tax treatment.
WITHDRAWALS
You can have access to the money in your Contract:
(1) by making a withdrawal (either a partial or a total withdrawal);
(2) by receiving Annuity Payments; or
(3) when a death benefit is paid to your Beneficiary.
Withdrawals can only be made during the Accumulation Phase.
When you make a complete withdrawal you will receive the value of the
Contract on the day you made the withdrawal:
* less any applicable contingent deferred sales charge, and
* less any premium tax.
(See "Expenses" for a discussion of the charges.) A withdrawal from the
Interest Adjustment Account may be subject to an adjustment.
PARTIAL WITHDRAWALS
* Any partial withdrawal must be for at least $500 (unless it is made under
the Systematic Withdrawal Program, see below).
* Unless you tell us otherwise, partial withdrawals will be made pro-rata
from the Portfolios. ULA requires that after you make a partial withdrawal the
value of your Contract must be at least $2,000 and the value of any Account must
be at least $500.
* A partial withdrawal from the Fixed Account or the Interest Adjustment
Account is made first from the one year Fixed Account Guarantee Period and then
next from the Guarantee Period of the shortest remaining duration and then
from the Guarantee Period with the earliest effective date where the Guarantee
Periods are of the same duration.
* A partial withdrawal is taken first from the value of the Contract for
which the free withdrawal provision applies and then from the value for which
there is no waiver.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY
WITHDRAWAL YOU MAKE.
There are limits to the amount you can withdraw from a Qualified plan
referred to as a 403(b) plan. For a more complete explanation see -- Taxes and
the discussion in the SAI.
SYSTEMATIC WITHDRAWAL PROGRAM
If the value of your Contract is at least $12,000, ULA offers a Program
which provides automatic periodic payments to you each year. Systematic
withdrawals can be made at any time, including during the first year. You can
instruct us how much you want to withdraw under the Program as long as each
payment is at least $100. You may terminate systematic withdrawals by giving us
thirty (30) days prior written notice. We do not currently charge for systematic
withdrawals but reserve the right to charge for them in the future. The
contingent deferred sales charge may apply to systematic withdrawals (see
"Expenses"). Systematic withdrawals are available for Qualified and
Non-Qualified Contracts.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO
SYSTEMATIC WITHDRAWALS.
SUSPENSION OF PAYMENTS OR TRANSFERS
ULA may be required to suspend or postpone payments for withdrawals or
transfers for any period when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of the Portfolio
shares is not reasonably practicable or ULA cannot reasonably value the
Portfolio shares;
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of owners.
ULA has reserved the right to defer payment for a withdrawal or transfer
from the Fixed Account or the Interest Adjustment Account for the period
permitted by law but not for more than six months.
DEATH BENEFIT
Upon Your Death
If you die during the Accumulation Phase, ULA will pay a death benefit to
your Beneficiary (see below). No death benefit is paid during the Income Phase.
If you have a Joint Owner, and the Joint Owner dies, the surviving Owner will be
considered the primary Beneficiary. Any other Beneficiary designation on record
at the time of death will be treated as a contingent Beneficiary. Joint Owners
must be spouses.
Death Benefit
You can select Death Benefit Option 1 (Enhanced Death Benefit Rider) or
Death Benefit Option 2 (Standard Death Benefit). If you bought your Contract
before May 1, 1998, your Contract had Death Benefit Option 1 (Enhanced Death
Benefit Rider). On your next Contract anniversary after May 1, 1998, you were
given a chance to make a one time only election to choose Death Benefit Option
2 (Standard Death Benefit). In certain states, only Death Benefit Option 1 is
available until approved by the Insurance Department in your state (check with
your registered representative regarding availability).
Death Benefit Option 1 - Enhanced Death Benefit Rider
If you select Death Benefit Option 1, the death benefit will be the value
of your Contract in the Fixed Account and the Interest Adjustment Account plus
the greatest of:
(a) the value of your Contract invested in the Portfolios as of the date
ULA receives proof of death and an election for the method of payment; or
(b) the Purchase Payments you have made which are invested in the
Portfolios, less any money taken out and transfers from the Portfolios (and
related contingent deferred sales charges and transfer fees), increased by 4%
per year up to the first Contract anniversary after your 75th birthday; or
(c) the highest reset value up to the date of death. The reset value is the
value of your Contract invested in the Portfolios on each Contract anniversary
prior to your 80th birthday, plus Purchase Payments you have made after such
Contract anniversary and invested in the Portfolios, less any money taken out
and transfers from the Portfolios after such anniversary and any related
contingent deferred sales charges and transfer fees.
Death Benefit Option 2 - Standard Death Benefit
If you select Death Benefit Option 2, the Death Benefit will be the greater
of:
(a) the Purchase Payments you have made, less any money you have taken out
and related contingent deferred sales charges; or
(b) the value of your Contract on the date we receive both proof of death
and an election for the payment method.
A Beneficiary may request that the death benefit be paid in one of the
following ways:
(1) lump sum payment of the death benefit;
(2) payment of the entire death benefit within 5 years of the date of death;
or
(3) payment of the death benefit under an Annuity Option.
The death benefit payable under an Annuity Option must be paid over the
Beneficiary's lifetime or for a period not extending beyond the Beneficiary's
life expectancy. Payment must begin within one year of the date of death. Any
portion of the death benefit not applied under (3) above within one year of
the date of the Owner's death must be distributed within five years of the
date of death.
If the Beneficiary is the spouse of the Owner, he/she can choose to
continue the Contract in his/her own name at the then current value, elect a
lump sum payment of the death benefit or apply the death benefit to an Annuity
Option. Payment to the Beneficiary, other than in a lump sum, may only be
elected during the sixty-day period beginning with the date we receive proof of
death. If a lump sum payment is elected and all the necessary requirements are
met, we will make the payment within seven days.
If you (or any Joint Owner) die on or after the Income Date and you are
not the Annuitant, any payments which are remaining under the Annuity Option
selected will continue at least as rapidly as they were being paid at your
death. If you die during the Income Phase, the Beneficiary becomes the Owner.
Death of Annuitant
If the Annuitant, who is not an Owner or Joint Owner, dies during the
Accumulation Phase, you can name a new Annuitant. If a new Annuitant is not
named within 30 days of the death of the Annuitant, you will become the
Annuitant. However, if the Owner is a non-natural person (e.g., a corporation),
then the death of the Annuitant will be treated as the death of the Owner, and a
new Annuitant may not be named.
If the Annuitant dies on or after the Income Date, the remaining amounts
payable, if any, will be as provided for in the Annuity Option selected. The
remaining amounts payable will be paid to the Owner at least as rapidly as
they were being paid at the Annuitant's death.
OTHER INFORMATION
ULA
United Life & Annuity Insurance Company (ULA) is a stock life insurance
company organized in 1955. ULA was originally domiciled in Louisiana. On
December 18, 1998, ULA was re-domesticated to Texas. ULA is authorized to
conduct business in 47 states, the District of Columbia and Puerto Rico. On
July 24, 1996, Pacific Life and Accident Insurance Company (PLAIC) acquired
one hundred percent ownership of ULA. PLAIC is a wholly-owned subsidiary
of PennCorp Financial Group, Inc. (PennCorp). PennCorp is a
publicly-traded insurance holding company, the principal subsidiaries of
which are insurance companies.
On February 21, 1999, PLAIC signed a definitive agreement to sell ULA
and its wholly-owned subsidiary, United Variable Services, Inc. to ING
America Insurance Holdings Inc. ("ING"). ING's ultimate parent is ING Group,
headquartered in the Netherlands. ING Group is one of the largest financial
services organizations in the world. ULA anticipates that the sale will be
completed on or about April 30, 1999.
Year 2000 Matters
ULA has initiated comprehensive reviews and plans to determine the readiness of
its computer systems. These plans include a process which ensures that when
a particular system, or software application, is determined to be "non-
compliant" the proper steps are in place to remedy the "non-compliance" or
cease using the particular system or software.
These plans specifically provide for an inventory of all critical computer
systems, testing of such systems and resolution of Year 2000 issues. ULA
has identified and made available what it believes are the appropriate
resources, hardware, personnel and funds to ensure Year 2000 compliance.
It is anticipated that all compliance issues will be resolved on or before
December 31, 1999.
ULA will not conclusively know the success of its plan until the Year 2000.
Even with appropriate and diligent pursuit of a well-conceived response plan,
including testing procedures, there is no certainty that any company will
achieve complete success.
THE SEPARATE ACCOUNT
ULA established a separate account, United Life & Annuity Separate Account
One (Separate Account), to hold the assets that underlie the Contracts. Prior to
May 1, 1997, the Separate Account was known as United Companies Separate Account
One. Our Board of Directors adopted a resolution to establish the Separate
Account under Louisiana insurance law on November 2, 1994. ULA has registered
the Separate Account with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940. The Separate Account
is divided into sub-accounts. Each sub-account invests in a portfolio.
The assets of the Separate Account are held in ULA's name on behalf of the
Separate Account and legally belong to ULA. However, those assets that underlie
the Contracts, are not chargeable with liabilities arising out of any other
business we may conduct. All the income, gains and losses (realized or
unrealized) resulting from these assets are credited to or charged against the
Contracts and not against any other Contracts we may issue.
DISTRIBUTION
United Variable Services, Inc. (UVS), 851 S.W. Sixth Avenue, Suite 800,
Portland, OR 97204, acts as the distributor of the Contracts. UVS is a wholly-
owned subsidiary of ULA. Commissions will be paid to broker-dealers who
sell the Contracts.
FINANCIAL STATEMENTS
The financial statements of ULA and the Separate Account have been included
in the Statement of Additional Information.
APPENDIX - CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
The following schedule includes Accumulation Unit values for the periods
indicated. This data has been taken from the Separate Account's financial
statements. This information should be read in conjunction with the Separate
Account's financial statements and related notes thereto which appear in the
Statement of Additional Information. Chart 1 reflects Contracts with Death
Benefit Option 1. Chart 2 reflects Contracts with Death Benefit Option 2.
<TABLE>
<CAPTION>
CHART 1
PERIOD FROM
COMMENCEMENT OF
DATE OF OPERATIONS OR
COMMENCEMENT YEAR ENDED YEAR ENDED FOR YEAR ENDED
OF OPERATIONS 12-31-98 12-31-97 12-31-96
------------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Unit value at beginning of period......................... 7/9/98 $ 8.84 N/A N/A
Unit value at end of period............................... 10.38
Number of units outstanding at end of period.............. 196,604
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Unit value at beginning of period......................... 7/31/98 $ 9.72 N/A N/A
Unit value at end of period............................... 9.91
Number of units outstanding at end of period.............. 51,420
AIM V.I. GROWTH SUB-ACCOUNT
Unit value at beginning of period......................... 7/15/98 $ 8.72 N/A N/A
Unit value at end of period............................... 11.51
Number of units outstanding at end of period.............. 102,814
AIM V.I. GROWTH AND INCOME SUB-ACCOUNT
Unit value at beginning of period......................... 7/31/98 $ 8.99 N/A N/A
Unit value at end of period............................... 11.29
Number of units outstanding at end of period.............. 122,167
AIM V.I. INTERNATIONAL EQUITY SUB-ACCOUNT
Unit value at beginning of period......................... 6/12/98 $ 8.66 N/A N/A
Unit value at end of period............................... 9.84
Number of units outstanding at end of period.............. 114,030
ALGER AMERICAN GROWTH SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $13.88 $11.21 $ 10.05
Unit value at end of period............................... 20.22 $13.88 $ 11.21
Number of units outstanding at end of period.............. 871,098 58,256 42,143
AMT GUARDIAN SUB-ACCOUNT
Unit value at beginning of period......................... 8/14/98 $ 7.21 N/A N/A
Unit value at end of period............................... 9.35
Number of units outstanding at end of period.............. 41,940
AMT LIMITED MATURITY BOND SUB-ACCOUNT
Unit value at beginning of period......................... 8/24/98 $ 9.87 N/A N/A
Unit value at end of period............................... 10.14
Number of units outstanding at end of period.............. 2,059
AMT MID-CAP GROWTH SUB-ACCOUNT
Unit value at beginning of period......................... 8/24/98 $ 8.26 N/A N/A
Unit value at end of period............................... 11.32
Number of units outstanding at end of period.............. 33,595
AMT PARTNERS SUB-ACCOUNT
Unit value at beginning of period......................... 8/6/98 $ 9.09 N/A N/A
Unit value at end of period............................... 9.32
Number of units outstanding at end of period.............. 35,832
DREYFUS STOCK INDEX SUB-ACCOUNT
Unit value at beginning of period......................... 3/4/96 $16.02 $12.25 $ 10.15
Unit value at end of period............................... 20.22 $16.02 $ 12.25
Number of units outstanding at end of period.............. 1,057,803 45,285 20,958
DREYFUS GROWTH AND INCOME SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $14.23 $12.45 $ 10.48
Unit value at end of period............................... 15.67 $14.23 $ 12.45
Number of units outstanding at end of period.............. 605,589 30,751 11,261
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II SUB-ACCOUNT
Unit value at beginning of period......................... 3/15/96 $11.11 $10.39 $ 10.14
Unit value at end of period............................... 11.77 $11.11 $ 10.39
Number of units outstanding at end of period.............. 237,976 27,911 3,447
FEDERATED HIGH INCOME BOND FUND II SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $12.81 $11.43 $ 10.16
Unit value at end of period............................... 12.94 $12.81 $ 11.43
Number of units outstanding at end of period.............. 520,480 37,974 30,495
FEDERATED AMERICAN LEADERS FUND II SUB-ACCOUNT
Unit value at beginning of period......................... 8/17/98 $ 8.76 N/A N/A
Unit value at end of period............................... 10.14
Number of units outstanding at end of period.............. 95,071
FEDERATED PRIME MONEY FUND II SUB-ACCOUNT
Unit value at beginning of period......................... 8/14/98 $ 9.84 N/A N/A
Unit value at end of period............................... 10.20
Number of units outstanding at end of period.............. 329,821
FEDERATED UTILITY FUND II SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $14.10 $11.31 $ 10.30
Unit value at end of period............................... 15.81 $14.10 $ 11.31
Number of units outstanding at end of period.............. 193,281 20,103 8,368
MFS EMERGING GROWTH SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $14.08 $11.74 $ 10.19
Unit value at end of period............................... 18.60 $14.08 $ 11.74
Number of units outstanding at end of period.............. 1,098,386 69,658 43,337
MFS GROWTH WITH INCOME SUB-ACCOUNT
Unit value at beginning of period......................... 7/14/98 $ 8.78 N/A N/A
Unit value at end of period............................... 10.57
Number of units outstanding at end of period.............. 92,389
MFS RESEARCH SUB-ACCOUNT
Unit value at beginning of period......................... 10/9/98 $ 8.81 N/A N/A
Unit value at end of period............................... 10.46
Number of units outstanding at end of period.............. 127,109
MFS TOTAL RETURN SUB-ACCOUNT
Unit value at beginning of period......................... 9/12/96 $13.77 $11.53 $ 10.25
Unit value at end of period............................... 15.22 $13.77 $ 11.53
Number of units outstanding at end of period.............. 952,508 52,392 24,528
MFS UTILITIES SUB-ACCOUNT
Unit value at beginning of period......................... 8/24/98 $ 9.05 N/A N/A
Unit value at end of period............................... 10.52
Number of units outstanding at end of period.............. 83,695
MORGAN STANLEY DEAN WITTER EMERGING MARKETS DEBT SUB-ACCOUNT
Unit value at beginning of period......................... N/A N/A N/A N/A
Unit value at end of period...............................
Number of units outstanding at end of period..............
MORGAN STANLEY DEAN WITTER EQUITY GROWTH SUB-ACCOUNT
Unit value at beginning of period......................... N/A N/A N/A N/A
Unit value at end of period...............................
Number of units outstanding at end of period..............
MORGAN STANLEY DEAN WITTER GLOBAL EQUITY SUB-ACCOUNT
Unit value at beginning of period......................... 10/19/98 $ 8.81 N/A N/A
Unit value at end of period............................... 9.83
Number of units outstanding at end of period.............. 121,267
MORGAN STANLEY DEAN WITTER HIGH-YIELD SUB-ACCOUNT
Unit value at beginning of period......................... 8/10/98 $ 9.65 N/A N/A
Unit value at end of period............................... 9.95
Number of units outstanding at end of period.............. 138,827
MORGAN STANLEY DEAN WITTER VALUE SUB-ACCOUNT
Unit value at beginning of period......................... 6/23/98 $ 9.19 N/A N/A
Unit value at end of period............................... 8.86
Number of units outstanding at end of period.............. 64,497
SCUDDER INTERNATIONAL, CLASS A SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $12.26 $11.42 $ 10.11
Unit value at end of period............................... 14.30 $12.26 $ 11.42
Number of units outstanding at end of period.............. 422,522 27,011 18,553
SCUDDER MONEY MARKET SUB-ACCOUNT
Unit value at beginning of period......................... 1/12/96 $10.75 $10.38 $ 10.04
Unit value at end of period............................... 11.13 $10.75 $ 10.38
Number of units outstanding at end of period.............. 606,111 44,108 17,583
VAN ECK WORLDWIDE HARD ASSETS SUB-ACCOUNT
Unit value at beginning of period......................... 1/29/97 $11.40 $11.78 N/A
Unit value at end of period............................... 7.74 $11.40
Number of units outstanding at end of period.............. 24,187 1,652
WARBURG PINCUS FIXED INCOME SUB-ACCOUNT
Unit value at beginning of period......................... 8/10/98 $ 9.87 N/A N/A
Unit value at end of period............................... 10.50
Number of units outstanding at end of period.............. 207,482
WARBURG PINCUS INTERNATIONAL EQUITY SUB-ACCOUNT
Unit value at beginning of period......................... N/A N/A N/A N/A
Unit value at end of period...............................
Number of units outstanding at end of period..............
WARBURG PINCUS POST-VENTURE CAPITAL SUB-ACCOUNT
Unit value at beginning of period......................... N/A N/A N/A N/A
Unit value at end of period...............................
Number of units outstanding at end of period..............
</TABLE>
<TABLE>
<CAPTION>
CHART 2
DATE OF
COMMENCEMENT YEAR ENDED
OF OPERATIONS 12-31-98
------------- -----------
<S> <C> <C>
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Unit value at beginning of period......................... 8/4/98 $ 8.84
Unit value at end of period............................... $10.40
Number of units outstanding at end of period.............. 196,604
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Unit value at beginning of period......................... 9/1/98 $ 9.71
Unit value at end of period............................... $ 9.92
Number of units outstanding at end of period.............. 51,420
AIM V.I. GROWTH SUB-ACCOUNT
Unit value at beginning of period......................... 7/23/98 $ 8.71
Unit value at end of period............................... $11.53
Number of units outstanding at end of period.............. 102,814
AIM V.I. GROWTH AND INCOME SUB-ACCOUNT
Unit value at beginning of period......................... 7/23/98 $ 8.98
Unit value at end of period............................... $11.31
Number of units outstanding at end of period.............. 122,167
AIM V.I. INTERNATIONAL EQUITY SUB-ACCOUNT
Unit value at beginning of period......................... 9/1/98 $ 8.65
Unit value at end of period............................... $ 9.85
Number of units outstanding at end of period.............. 114,030
ALGER AMERICAN GROWTH SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $ 8.61
Unit value at end of period............................... $12.49
Number of units outstanding at end of period.............. 871,098
AMT GUARDIAN SUB-ACCOUNT
Unit value at beginning of period......................... N/A N/A
Unit value at end of period...............................
Number of units outstanding at end of period..............
AMT LIMITED MATURITY BOND SUB-ACCOUNT
Unit value at beginning of period......................... N/A $ 9.87
Unit value at end of period............................... $10.16
Number of units outstanding at end of period.............. 2,059
AMT MID-CAP GROWTH SUB-ACCOUNT
Unit value at beginning of period......................... N/A $ 8.26
Unit value at end of period............................... $11.34
Number of units outstanding at end of period.............. 33,595
AMT PARTNERS SUB-ACCOUNT
Unit value at beginning of period......................... N/A $ 9.08
Unit value at end of period............................... $ 9.33
Number of units outstanding at end of period.............. 35,832
DREYFUS STOCK INDEX SUB-ACCOUNT
Unit value at beginning of period......................... 3/4/96 $ 8.74
Unit value at end of period............................... $11.05
Number of units outstanding at end of period.............. 1,057,803
DREYFUS GROWTH AND INCOME SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $ 8.97
Unit value at end of period............................... $ 9.90
Number of units outstanding at end of period.............. 605,589
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II SUB-ACCOUNT
Unit value at beginning of period......................... 3/15/96 $ 9.84
Unit value at end of period............................... $10.45
Number of units outstanding at end of period.............. 237,976
FEDERATED HIGH INCOME BOND FUND II SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $ 9.69
Unit value at end of period............................... $ 9.82
Number of units outstanding at end of period.............. 520,480
FEDERATED AMERICAN LEADERS FUND II SUB-ACCOUNT
Unit value at beginning of period......................... N/A N/A
Unit value at end of period...............................
Number of units outstanding at end of period..............
FEDERATED PRIME MONEY FUND II SUB-ACCOUNT
Unit value at beginning of period......................... 8/31/98 $ 9.84
Unit value at end of period............................... $10.22
Number of units outstanding at end of period.............. 329,821
FEDERATED UTILITY FUND II SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $ 9.69
Unit value at end of period............................... $10.89
Number of units outstanding at end of period.............. 193,281
MFS EMERGING GROWTH SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $ 8.43
Unit value at end of period............................... $11.15
Number of units outstanding at end of period.............. 1,098,386
MFS GROWTH WITH INCOME SUB-ACCOUNT
Unit value at beginning of period......................... 10/5/98 $ 8.78
Unit value at end of period............................... $10.59
Number of units outstanding at end of period.............. 92,389
MFS RESEARCH SUB-ACCOUNT
Unit value at beginning of period......................... 8/4/98 $ 8.80
Unit value at end of period............................... $10.47
Number of units outstanding at end of period.............. 127,109
MFS TOTAL RETURN SUB-ACCOUNT
Unit value at beginning of period......................... 9/12/96 $ 9.34
Unit value at end of period............................... $10.35
Number of units outstanding at end of period.............. 952,508
MFS UTILITIES SUB-ACCOUNT
Unit value at beginning of period......................... N/A N/A
Unit value at end of period...............................
Number of units outstanding at end of period..............
MORGAN STANLEY DEAN WITTER EMERGING MARKETS DEBT SUB-ACCOUNT
Unit value at beginning of period......................... 7/14/98 $ 9.58
Unit value at end of period............................... $ 6.77
Number of units outstanding at end of period.............. 10,208
MORGAN STANLEY DEAN WITTER EQUITY GROWTH SUB-ACCOUNT
Unit value at beginning of period......................... 8/4/98 $ 8.83
Unit value at end of period............................... $10.36
Number of units outstanding at end of period.............. 40,838
MORGAN STANLEY DEAN WITTER GLOBAL EQUITY SUB-ACCOUNT
Unit value at beginning of period......................... 9/4/98 $ 8.81
Unit value at end of period............................... $ 9.84
Number of units outstanding at end of period.............. 121,267
MORGAN STANLEY DEAN WITTER HIGH-YIELD SUB-ACCOUNT
Unit value at beginning of period......................... 7/14/98 $ 9.65
Unit value at end of period............................... $ 9.97
Number of units outstanding at end of period.............. 138,827
MORGAN STANLEY DEAN WITTER VALUE SUB-ACCOUNT
Unit value at beginning of period......................... N/A N/A
Unit value at end of period...............................
Number of units outstanding at end of period..............
SCUDDER INTERNATIONAL, CLASS A SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $ 8.62
Unit value at end of period............................... $10.07
Number of units outstanding at end of period.............. 422,522
SCUDDER MONEY MARKET SUB-ACCOUNT
Unit value at beginning of period......................... 1/12/96 $ 9.88
Unit value at end of period............................... $10.24
Number of units outstanding at end of period.............. 606,111
VAN ECK WORLDWIDE HARD ASSETS SUB-ACCOUNT
Unit value at beginning of period......................... 1/29/97 $10.01
Unit value at end of period............................... $ 6.85
Number of units outstanding at end of period.............. 24,187
WARBURG PINCUS FIXED INCOME SUB-ACCOUNT
Unit value at beginning of period......................... 8/27/98 $ 9.87
Unit value at end of period............................... $10.52
Number of units outstanding at end of period.............. 207,482
WARBURG PINCUS INTERNATIONAL EQUITY SUB-ACCOUNT
Unit value at beginning of period......................... 7/14/98 $ 8.60
Unit value at end of period............................... $ 8.93
Number of units outstanding at end of period.............. 8,207
WARBURG PINCUS POST-VENTURE CAPITAL SUB-ACCOUNT
Unit value at beginning of period......................... N/A N/A
Unit value at end of period...............................
Number of units outstanding at end of period..............
</TABLE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Company.....................................................
Independent Auditors........................................
Legal Opinions..............................................
Distributor.................................................
Reduction or Elimination of the Contingent Deferred Sales
Charge....................................................
Yield Calculation For Money Market Portfolio................
Calculation of Performance Information......................
Federal Tax Status..........................................
Annuity Provisions..........................................
Financial Statements........................................
Please send me, at no charge, the Statement of Additional Information dated
April 30, 1999 for the SpectraSelect Fixed and Variable Annuity Contract issued
by United Life & Annuity Insurance Company.
(Please print or type and fill in all information)
----------------------------------------------------------------------
Name
----------------------------------------------------------------------
Address
----------------------------------------------------------------------
City State Zip Code
ULV-AD-4009SD (5/99)
<TABLE>
<S> <C>
- -------------------------------------- -------------------
- -------------------------------------- Put stamp here
- -------------------------------------- The Post Office will
not deliver mail
without postage.
-------------------
</TABLE>
United Life & Annuity Insurance Company
Variable Annuity Service Center
851 SW Sixth Avenue, Suite 800
Portland, OR 97204-1346
This prospectus is not an offering of the securities in any state, country,
or jurisdiction in which we are not authorized to sell the Contracts. You
should rely only on the information contained in this prospectus or that
we have referred you to. We have not authorized anyone to provide you with
information that is different.
ISSUED BY:
UNITED LIFE & ANNUITY
INSURANCE COMPANY
DISTRIBUTED BY UNITED VARIABLE SERVICES, INC., MEMBER NASD
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL AND GROUP FIXED AND VARIABLE DEFERRED
ANNUITY CONTRACTS
ISSUED BY
UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE
AND
UNITED LIFE & ANNUITY INSURANCE COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD
BE READ IN CONJUNCTION WITH THE PROSPECTUS DATED April 30, 1999, FOR THE
INDIVIDUAL AND GROUP FIXED AND VARIABLE DEFERRED ANNUITY CONTRACTS WHICH ARE
REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL OR WRITE THE
COMPANY AT: UNITED LIFE & ANNUITY INSURANCE COMPANY, 851 SW SIXTH AVENUE,
SUITE 800, PORTLAND, OR 97204-1346.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED APRIL 30, 1999.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Company.....................................................
Independent Auditors........................................
Legal Opinions..............................................
Distributor.................................................
Reduction or Elimination of the Contingent Deferred Sales
Charge....................................................
Yield Calculation For Money Market Portfolio................
Calculation of Performance Information......................
Federal Tax Status..........................................
Annuity Provisions..........................................
Financial Statements........................................
</TABLE>
COMPANY
United Life & Annuity Insurance Company ("ULA" or the "Company") is a stock
life insurance company organized in 1955. ULA was originally domiciled in
Louisiana and was re-domesticated to Texas on December 18, 1998. ULA is
licensed to do business in 47 states, the District of Columbia and Puerto Rico.
On or about May 1, 1997, ULA changed its name from United Companies Life
Insurance Company to its present name.
On July 24, 1996, Pacific Life and Accident Insurance Company ("PLAIC")
acquired one hundred percent ownership of the Company from United Companies
Financial Corporation, including its wholly-owned subsidiary United Variable
Services, Inc., a registered broker-dealer which acts as the principal
underwriter of the Contracts issued by the Company. PLAIC is a wholly-owned life
insurance subsidiary of PennCorp Financial Group, Inc. ("PennCorp")
On February 21, 1999, PLAIC signed a definitive agreement to sell ULA
and its wholly-owned subsidiary, United Variable Services, Inc. to ING
America Insurance Holdings Inc. ("ING"). ING's ultimate parent is ING Group,
headquartered in the Netherlands. ING Group is one of the largest financial
services organizations in the world. ULA anticipates that the sale will be
completed on or about April 30, 1999.
INDEPENDENT AUDITORS
The consolidated financial statements and financial statement schedules of
United Life & Annuity Insurance Company and subsidiary as of December 31,
1998 and 1997 and for the years ended December 31, 1998, and 1997 and the
periods from July 24, 1996 to December 31, 1996 (Successor period) and
January 1, 1996 to July 23, 1996 (Predecessor period) and the financial
statements of United Life & Annuity Separate Account One as of December 31, 1998
and for the year then ended have been audited by KPMG Peat Marwick LLP,
independent auditors, as stated in their reports appearing herein.
LEGAL OPINIONS
Blazzard, Grodd & Hasenauer, P.C., Westport, Connecticut has provided
advice on certain matters relating to the federal securities and income tax laws
in connection with the Contracts.
DISTRIBUTOR
United Variable Services, Inc., a wholly-owned subsidiary of the Company,
acts as the distributor. The offering is on a continuous basis.
REDUCTION OR ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE
The amount of the Contingent Deferred Sales Charge on the Contracts may be
reduced or eliminated when sales of the Contracts are made to individuals or to
a group of individuals in a manner that results in savings of sales expenses.
The entitlement to a reduction of the Contingent Deferred Sales Charge will be
determined by the Company after examination of the following factors: 1) the
size of the group; 2) the total amount of purchase payments expected to be
received from the group; 3) the nature of the group for which the Contracts are
purchased, and the persistency expected in that group; 4) the purpose for which
the Contracts are purchased and whether that purpose makes it likely that
expenses will be reduced; and 5) any other circumstances which the Company
believes to be relevant to determining whether reduced sales or administrative
expenses may be expected. None of the reductions in charges for sales is
contractually guaranteed.
The Contingent Deferred Sales Charge will be eliminated when the Contracts
are issued to an officer, director or employee of the Company or any of its
affiliates. In no event will any reduction or elimination of the Contingent
Deferred Sales Charge be permitted where the reduction or elimination will be
unfairly discriminatory to any person.
YIELD CALCULATION FOR MONEY MARKET PORTFOLIO
The Money Market Portfolio will calculate its current yield based upon the
seven days ended on the date of calculation. For the seven calendar days ended
December 31, 1998, the annualized yield of the Money Market Portfolio was 3.69%
for Contracts with Death Benefit Option 1 and 3.89% for Contracts with Death
Benefit Option 2.
The current yield of the Money Market Portfolio is computed by determining
the net change (exclusive of capital changes) in the value of a hypothetical
pre-existing Owner account having a balance of one Accumulation Unit of the
Portfolio at the beginning of the period, subtracting the Mortality and Expense
Risk Charge and the Administrative Charge, dividing the difference by the value
of the account at the beginning of the same period to obtain the base period
return and multiplying the result by (365/7).
The Money Market Portfolio computes its effective compound yield according
to the method prescribed by the Securities and Exchange Commission. The
effective yield reflects the reinvestment of net income earned daily on Money
Market Portfolio assets. For the seven calendar days ended December 31, 1998,
the effective yield of the Money Market Portfolio was 3.15% for Contracts with
Death Benefit Option 1 and 3.35% for Contracts with Death Benefit Option 2.
Net investment income for yield quotation purposes will not include either
realized capital gains and losses or unrealized appreciation and depreciation,
whether reinvested or not.
The yields quoted should not be considered a representation of the yield of
the Money Market Portfolio in the future since the yield is not fixed. Actual
yields will depend not only on the type, quality and maturities of the
investments held by the Money Market Portfolio and changes in the interest rates
on such investments, but also on changes in the Money Market Portfolio's
expenses during the period.
Yield information may be useful in reviewing the performance of the Money
Market Portfolio and for providing a basis for comparison with other investment
alternatives. However, the Money Market Portfolio's yield fluctuates, unlike
bank deposits or other investments which typically pay a fixed yield for a
stated period of time.
CALCULATION OF PERFORMANCE INFORMATION
From time to time, the Company may advertise performance data as described
in the Prospectus. Any such advertisement will include total return figures for
the time periods indicated in the advertisement. There will be different
presentations of total return figures. One set will reflect the deduction of a
1.45% Mortality and Expense Risk Charge, a .15% Administrative Charge and the
expenses for the underlying Portfolio being advertised. Another set will reflect
the deduction of a 1.25% Mortality and Expense Risk Charge, a .15%
Administrative Charge and the expenses of the underlying Portfolio. Any such
advertisement will also include average annual total return for the time periods
indicated in the advertisement and will reflect the deduction of the Mortality
and Expense Risk Charge, the Administrative Charge, the Contingent Deferred
Sales Charge and the expenses for the underlying Portfolio being advertised.
The hypothetical value of a Contract purchased for the time periods
described in the advertisement will be determined by using the actual
Accumulation Unit values for an initial $1,000 purchase payment to arrive at the
ending hypothetical value. The average annual total return is then determined by
computing the fixed interest rate that a $1,000 purchase payment would have to
earn annually, compounded annually, to grow to the hypothetical value at the end
of the time periods described. The formula used in these calculations is:
n
P (1 + T) = ERV
<TABLE>
<S> <C> <C> <C>
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods used
(or fractional portion thereof) of a hypothetical $1,000
payment made at the beginning of the time periods used.
</TABLE>
In addition to total return data, the Company may include yield information
in its advertisements. For each Portfolio (other than the Money Market
Portfolio) for which the Company will advertise yield, it will show a yield
quotation based on a 30 day (or one month) period ended on the date of the most
recent balance sheet of the Separate Account included in the registration
statement, computed by dividing the net investment income per Accumulation Unit
earned during the period by the maximum offering price per Unit on the last day
of the period, according to the following formula:
Yield = 2 [(a - b + 1) 6 -1]
-----
cd
Where:
a = Net investment income earned during the period by the
Portfolio attributable to shares owned by the Sub-Account.
b = Expenses accrued for the period (net of reimbursements).
c = The average daily number of Accumulation Units outstanding
during the period.
d = The maximum offering price per Accumulation Unit on the last
day of the period.
The Company may also advertise performance data which will be computed on a
different basis.
PERFORMANCE INFORMATION
The Sub-Accounts of the Separate Account are relatively new and therefore
have little or no meaningful investment performance history. However, certain
corresponding Portfolios have been in existence for some time and consequently
have investment performance history. In order to demonstrate how the actual
investment experience of the Portfolios affects Accumulation Unit values, the
following performance information was developed. The information is based upon
the historical experience of the Portfolios and is for the periods shown. There
is also standardized performance shown based on the historical performance of
the Portfolios for the periods commencing from the date on which a Sub-Account
first invested in the Portfolio (Charts 5 and 6 below).
Actual performance will vary and the results shown are not necessarily
representative of future results. Performance for periods ending after those
shown may vary substantially from the examples shown below. The charts below
show the performance of the Accumulation Units calculated for a specified period
of time assuming an initial Purchase Payment of $1,000 allocated to each
Portfolio and a deduction of charges and deductions (see "Expenses" in the
Prospectus for more information). The percentage increases are determined by
subtracting the initial Purchase Payment from the ending value and dividing the
remainder by the beginning value.
There are six charts of performance below. Charts 1-4 reflect performance
based on the historical experience of the Portfolios. Charts 5 and 6 reflect
standardized performance from the date on which a Sub-Account first invested in
the Portfolio.
* Chart 1 reflects the deduction of all fees and expenses for Contracts with
Death Benefit Option 1.
* Chart 2 reflects the deduction of all fees and expenses for Contracts with
Death Benefit Option 2.
* Chart 3 reflects the deduction of all fees and expenses except the CDSC, for
Contracts with Death Benefit Option 1.
* Chart 4 reflects deduction of all fees and expenses, except the CDSC, for
Contracts with Death Benefit Option 2.
* Chart 5 reflects the average annual total return for periods ending December
31, 1998 for Contracts with Death Benefit Option 1.
* Chart 6 reflects the average annual total return for the periods ending
December 31 1998 for Contracts with Death Benefit Option 2.
For the Periods Ended 12/31/98:
CHART 1
(reflects the deduction of all fees and expenses for Contracts
with Death Benefit Option 1)
<TABLE>
<CAPTION>
SINCE PORTFOLIO
PORTFOLIO INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION DATE
------ ------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund........ 11.44% 13.46% 14.87% 16.47% 5/5/93
AIM V.I. Diversified Income Fund.......... -4.06% 4.76% 5.10% 5.40% 5/5/93
AIM V.I. Growth Fund...................... 25.99% 23.27% 19.29% 18.78% 5/5/93
AIM V.I. Growth and Income Fund........... 19.66% 21.52% 20.21% 5/2/94
AIM V.I. International Equity Fund........ 7.66% 11.15% 9.28% 11.35% 5/5/93
Alger American Growth..................... 39.73% 25.34% 18.93% 18.61% 1/9/89
AMT Guardian.............................. 23.69% 25.50% 11/3/97
AMT Limited Maturity Bond................. -3.27% 2.21% 3.16% 5.09% 6.19% 9/10/84
AMT Mid-Cap Growth........................ 31.08% 45.39% 11/3/97
AMT Partners.............................. -3.44% 18.14% 17.48% 3/22/94
Dreyfus VIF Growth and Income............. 4.04% 13.20% 18.51% 5/2/94
Dreyfus Stock Index....................... 20.18% 24.61% 16.32% 10.35% 9/29/89
Federated American Leaders Fund II........ 9.68% 20.32% 17.32% 2/10/94
Federated High Income Bond II............. -4.93% 7.22% 3.74% 3/1/94
Federated Fund for U.S. Government
Securities II........................... -0.05% 3.88% 2.76% 3/28/94
Federated Prime Money Fund II............. -2.33% 3.32% 4.24% 11/18/94
Federated Utility II...................... 6.14% 13.98% 10.28% 2/10/94
MFS Emerging Growth....................... 26.03% 21.33% 23.37% 7/24/95
MFS Growth With Income.................... 14.39% 22.61% 23.20% 10/9/95
MFS Research.............................. 12.74% 19.44% 20.11% 7/26/95
MFS Total Return.......................... 4.55% 12.97% 16.12% 1/3/95
MFS Utilities............................. 10.19% 19.73% 22.87% 1/3/95
Morgan Stanley Dean Witter Emerging
Markets Debt............................ -35.53% -24.86% 6/16/97
Morgan Stanley Dean Witter Equity Growth.. 11.18% 21.54% 1/2/97
Morgan Stanley Dean Witter Global Equity.. 5.50% 12.17% 1/2/97
Morgan Stanley Dean Witter High-Yield..... -2.86% 4.53% 1/2/97
Morgan Stanley Dean Witter Value.......... -9.60% 4.31% 1/2/97
Scudder International..................... 10.61% 10.88% 8.00% 9.18% 7.87% 5/1/87
Scudder Money Market...................... -2.31% -0.39% 1.40% 3.72% 7/16/85
Van Eck Worldwide Hard Assets............. -38.07% -10.95% -5.78% -0.16% 9/1/89
Warburg Pincus Fixed Income............... 0.36% 4.77% 3/31/97
Warburg Pincus International Equity....... -4.48% -0.56% 2.35% 6/30/95
Warburg Pincus Post-Venture Capital....... -6.73 0.21% 9/30/96
</TABLE>
CHART 2
(reflects the deduction of all fees and expenses for
Contracts with Death Benefit Option 2)
<TABLE>
<CAPTION>
SINCE PORTFOLIO
PORTFOLIO INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION DATE
------ ------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund........ 11.67% 13.69% 15.11% 16.71% 5/5/93
AIM V.I. Diversified Income Fund.......... -3.86% 4.97% 5.31% 5.62% 5/5/93
AIM V.I. Growth Fund...................... 26.26% 23.53% 19.53% 19.02% 5/5/93
AIM V.I. Growth and Income Fund........... 19.91% 21.77% 20.45% 5/2/94
AIM V.I. International Equity Fund........ 7.88% 11.38% 9.50% 11.58% 5/5/93
Alger American Growth..................... 40.02% 25.60% 19.17% 18.85% 1/9/89
AMT Guardian.............................. 23.95% 25.76% 11/3/97
AMT Limited Maturity Bond................. -3.06% 2.42% 3.37% 6.30% 6.40% 9/10/84
AMT Mid-Cap Growth........................ 31.35% 45.69% 11/3/97
AMT Partners.............................. -3.24% 18.38% 17.72% 3/22/94
Dreyfus VIF Growth and Income............. 4.26% 13.44% 18.75% 5/2/94
Dreyfus Stock Index....................... 20.43% 24.87% 16.56% 10.57% 9/29/89
Federated American Leaders Fund II........ 9.92% 20.57% 17.56% 2/10/94
Federated High Income Bond II............. -4.73% 7.44% 3.96% 3/1/94
Federated Fund for U.S. Government
Securities II........................... 0.16% 4.10% 2.98% 3/28/94
Federated Prime Money Fund II............. -2.18% 3.39% 4.30% 11/18/94
Federated Utility II...................... 6.37% 14.21% 10.51% 2/10/94
MFS Emerging Growth....................... 26.30% 21.58% 23.63% 7/24/95
MFS Growth With Income.................... 14.63% 22.86% 23.45% 10/9/95
MFS Research.............................. 12.97% 19.68% 20.35% 7/26/95
MFS Total Return.......................... 4.77% 13.21% 16.36% 1/3/95
MFS Utilities............................. 10.42% 19.97% 23.12% 1/3/95
Morgan Stanley Dean Witter Emerging
Markets Debt............................ -35.39% -24.69% 6/16/97
Morgan Stanley Dean Witter Equity Growth.. 11.41% 21.79% 1/2/97
Morgan Stanley Dean Witter Global Equity.. 5.72% 12.41% 1/2/97
Morgan Stanley Dean Witter High-Yield..... -2.65% 4.76% 1/2/97
Morgan Stanley Dean Witter Value.......... -9.41% 4.54% 1/2/97
Scudder International..................... 10.84% 11.11% 8.22% 9.40% 8.09% 5/1/87
Scudder Money Market...................... -2.11% -0.19% 1.60% 3.92% 7/16/85
Van Eck Worldwide Hard Assets............. -37.93% -10.76% -5.58% 0.04% 9/1/89
Warburg Pincus Fixed Income............... 0.58% 4.99% 3/31/97
Warburg Pincus International Equity....... -2.12% 1.50% 3.21% 6/30/95
Warburg Pincus Post-Venture Capital....... -0.97% 3.97% 9/30/96
</TABLE>
CHART 3
(reflects the deduction of all fees and expenses, except the
CDSC, for Contracts with Death Benefit Option 1)
<TABLE>
<CAPTION>
SINCE PORTFOLIO
PORTFOLIO INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION DATE
------ ------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund........ 17.44% 14.48% 15.10% 16.64% 5/5/93
AIM V.I. Diversified Income Fund.......... 1.94% 5.96% 5.42% 5.68% 5/5/93
AIM V.I. Growth Fund...................... 31.99% 24.14% 19.48% 18.93% 5/5/93
AIM V.I. Growth and Income Fund........... 25.66% 22.42% 20.54% 5/2/94
AIM V.I. International Equity Fund........ 13.66% 12.22% 9.56% 11.57% 5/5/93
Alger American Growth..................... 45.73% 26.19% 19.12% 18.61% 1/9/89
AMT Guardian.............................. 29.69% 30.48% 11/3/97
AMT Limited Maturity Bond................. 2.73% 3.47% 3.51% 5.09% 6.19% 9/10/84
AMT Mid-Cap Growth........................ 37.08% 50.26% 11/3/97
AMT Partners.............................. 2.56% 19.09% 17.82% 3/22/94
Dreyfus VIF Growth and Income............. 10.04% 14.24% 18.85% 5/2/94
Dreyfus Stock Index....................... 26.18% 25.47% 16.54% 10.35% 9/29/89
Federated American Leaders Fund II ....... 15.68% 21.23% 17.65% 2/10/94
Federated High Income Bond II............. 1.07% 8.36% 4.28% 3/1/94
Federated Fund for U.S. Government
Securities II........................... 5.95% 5.10% 3.33% 3/28/94
Federated Prime Money Fund II............. 3.67% 4.56% 4.88% 11/18/94
Federated Utility II...................... 12.14% 15.00% 10.70% 2/10/94
MFS Emerging Growth....................... 32.03% 22.23% 24.07% 7/24/95
MFS Growth With Income.................... 20.39% 23.49% 23.97% 10/9/95
MFS Research.............................. 18.74% 20.36% 20.85% 7/26/95
MFS Total Return.......................... 10.55% 14.01% 16.75% 1/3/95
MFS Utilities............................. 16.19% 20.65% 23.41% 1/3/95
Morgan Stanley Dean Witter Emerging
Markets Debt............................ -29.53% -20.39% 6/16/97
Morgan Stanley Dean Witter Equity Growth.. 17.18% 23.99% 1/2/97
Morgan Stanley Dean Witter Global Equity.. 11.50% 14.83% 1/2/97
Morgan Stanley Dean Witter High-Yield..... 3.14% 7.38% 1/2/97
Morgan Stanley Dean Witter Value.......... -3.60% 7.16% 1/2/97
Scudder International..................... 16.61% 11.95% 8.29% 9.18% 7.87% 5/1/87
Scudder Money Market...................... 3.69% 3.61% 3.40% 3.72% 7/16/85
Van Eck Worldwide Hard Assets............. -32.07% -9.30% -5.28% -0.16% 9/1/89
Warburg Pincus Fixed Income............... 6.36% 8.04% 3/31/97
Warburg Pincus International Equity....... 1.52% 1.88% 3.42% 6/30/95
Warburg Pincus Post-Venture Capital....... -2.73% 2.39% 9/30/96
</TABLE>
CHART 4
(reflects the deduction of all fees and expenses, except the CDSC,
for Contracts with Death Benefit Option 2)
<TABLE>
<CAPTION>
SINCE PORTFOLIO
PORTFOLIO INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION DATE
------ ------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund........ 17.67% 14.71% 15.33% 16.88% 5/5/93
AIM V.I. Diversified Income Fund.......... 2.14% 6.17% 5.64% 5.89% 5/5/93
AIM V.I. Growth Fund...................... 32.26% 24.39% 19.72% 19.17% 5/5/93
AIM V.I. Growth and Income Fund........... 25.91% 22.66% 20.78% 5/2/94
AIM V.I. International Equity Fund........ 13.88% 12.44% 9.78% 11.79% 5/5/93
Alger American Growth..................... 46.02% 26.44% 19.36% 18.85% 1/9/89
AMT Guardian.............................. 29.95% 30.74% 11/3/97
AMT Limited Maturity Bond................. 2.94% 3.67% 3.72% 5.30% 6.40% 9/10/84
AMT Mid-Cap Growth........................ 37.35% 50.56% 11/3/97
AMT Partners.............................. 2.76% 19.33% 18.06% 3/22/94
Dreyfus VIF Growth and Income............. 10.26% 14.46% 19.09% 5/2/94
Dreyfus Stock Index....................... 26.43% 25.72% 16.77% 10.57% 9/29/89
Federated American Leaders Fund II ....... 15.92% 21.48% 17.89% 2/10/94
Federated High Income Bond II............. 1.27% 8.58% 4.49% 3/1/94
Federated Fund for U.S. Government
Securities II........................... 6.16% 5.31% 3.53% 3/28/94
Federated Prime Money Fund II............. 3.82% 4.62% 4.93% 11/18/94
Federated Utility II...................... 12.37% 15.23% 10.92% 2/10/94
MFS Emerging Growth....................... 32.30% 22.47% 24.31% 7/24/95
MFS Growth With Income.................... 20.63% 23.74% 24.22% 10/9/95
MFS Research.............................. 18.97% 20.61% 21.09% 7/26/95
MFS Total Return.......................... 10.77% 14.24% 16.99% 1/3/95
MFS Utilities............................. 16.42% 20.89% 23.66% 1/3/95
Morgan Stanley Dean Witter Emerging
Markets Debt............................ -29.39% -20.23% 6/16/97
Morgan Stanley Dean Witter Equity Growth.. 17.41% 24.24% 1/2/97
Morgan Stanley Dean Witter Global Equity.. 11.72% 15.05% 1/2/97
Morgan Stanley Dean Witter High-Yield..... 3.35% 7.59% 1/2/97
Morgan Stanley Dean Witter Value.......... -3.41% 7.38% 1/2/97
Scudder International..................... 16.84% 12.18% 8.51% 9.40% 8.09% 5/1/87
Scudder Money Market...................... 3.89% 3.81% 3.60% 3.92% 7/16/85
Van Eck Worldwide Hard Assets............. -31.93% -9.12% -5.09% 0.04% 9/1/89
Warburg Pincus Fixed Income............... 6.58% 8.25% 3/31/97
Warburg Pincus International Equity....... 3.88% 2.78% 4.25% 6/30/95
Warburg Pincus Post-Venture Capital....... 5.03% 6.06% 9/30/96
</TABLE>
CHART 5
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDING 12/31/98 FOR CONTRACTS WITH DEATH
BENEFIT OPTION 1:
<TABLE>
<CAPTION>
SINCE SEPARATE
SEPARATE ACCOUNT
ACCOUNT INCEPTION
1 YEAR 3 YEARS INCEPTION DATE IN PORTFOLIO
------ ------- ---------- ------------------
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund........ 2.59% 7/9/98
AIM V.I. Diversified Income Fund.......... -1.39% 7/31/98
AIM V.I. Growth Fund...................... 6.80% 7/15/98
AIM V.I. Growth and Income Fund........... 10.75% 7/31/98
AIM V.I. International Equity Fund........ -1.36% 6/12/98
Alger American Growth..................... 21.57% 36.37% 35.05% 1/19/96
AMT Guardian.............................. 5.66% 8/14/98
AMT Limited Maturity Bond................. 0.45% 8/24/98
AMT Mid-Cap Growth........................ 18.59% 8/24/98
AMT Partners.............................. 4.43% 8/6/98
Dreyfus VIF Growth and Income............. 21.59% 17.13% 17.00% 1/19/96
Dreyfus Stock Index....................... 21.79% 30.23% 29.42% 3/4/96
Federated American Leaders Fund II........ 9.68% 8/17/98
Federated High Income Bond II............. 11.56% 8.76% 8.60% 1/19/96
Federated Fund for U.S. Government
Securities II........................... 3.94% 5.80% 5.96% 3/15/96
Federated Prime Money Fund II............. 1.18% 8/14/98
Federated Utility Fund II................. 11.00% 16.71% 17.35% 1/19/96
MFS Emerging Growth....................... 25.08% 32.70% 29.45% 1/19/96
MFS Growth With Income.................... 0.91% 7/14/98
MFS Research.............................. 29.83% 10/9/98
MFS Total Return.......................... 21.75% 13.63% 9/12/96
MFS Utilities............................. 10.23% 8/24/98
Morgan Stanley Dean Witter Emerging
Markets Debt............................ 0.25% 12/7/98
Morgan Stanley Dean Witter Equity Growth.. -1.53% 7/14/98
Morgan Stanley Dean Witter Global Equity.. 10.28% 10/19/98
Morgan Stanley Dean Witter High-Yield..... -0.01% 8/10/98
Morgan Stanley Dean Witter Value.......... -7.13% 6/23/98
Scudder International..................... 11.71% 14.36% 13.28% 1/19/96
Scudder Money Market...................... 3.39% 3.62% 3.58% 1/12/96
Van Eck Worldwide Hard Assets............. -6.66% -16.97% 1/29/97
Warburg Pincus Fixed Income............... 3.46% 8/10/98
Warburg Pincus International Equity....... 0.00% N/A
Warburg Pincus Post-Venture Capital....... 0.00% N/A
</TABLE>
CHART 6
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDING 12/31/98 FOR CONTRACTS WITH DEATH
BENEFIT OPTION 2
<TABLE>
<CAPTION>
SINCE SEPARATE
SEPARATE ACCOUNT
ACCOUNT INCEPTION
INCEPTION DATE IN PORTFOLIO
--------- ------------------
<S> <C> <C>
AIM V.I. Capital Appreciation Fund........ 13.91% 8/4/98
AIM V.I. Diversified Income Fund.......... 1.40% 9/1/98
AIM V.I. Growth Fund...................... 10.37% 7/23/98
AIM V.I. Growth and Income Fund........... 8.70% 7/23/98
AIM V.I. International Equity Fund........ 10.57% 9/1/98
Alger American Growth..................... 8.17% 7/14/98
AMT Guardian.............................. N/A N/A
AMT Limited Maturity Bond................. N/A N/A
AMT Mid-Cap Growth........................ N/A N/A
AMT Partners.............................. N/A N/A
Dreyfus VIF Growth and Income............. 21.47% 10/1/98
Dreyfus Stock Index....................... 14.64% 8/4/98
Federated American Leaders Fund II........ N/A N/A
Federated High Income Bond II............. -3.16% 7/29/98
Federated Fund for U.S. Government
Securities II........................... 0.86% 11/2/98
Federated Prime Money Fund II............. 1.09% 8/31/98
Federated Utility Fund II................. 3.06% 12/1/98
MFS Emerging Growth....................... 9.43% 7/23/98
MFS Growth With Income.................... 20.45% 10/5/98
MFS Research.............................. 10.32% 8/4/98
MFS Total Return.......................... 3.89% 7/31/98
MFS Utilities............................. 4.15% 12/16/98
Morgan Stanley Dean Witter Emerging
Markets Debt............................ -28.86% 7/14/98
Morgan Stanley Dean Witter Equity Growth.. 9.75% 8/4/98
Morgan Stanley Dean Witter Global Equity.. 15.03% 9/4/98
Morgan Stanley Dean Witter High-Yield..... -0.58% 7/14/98
Morgan Stanley Dean Witter Value.......... N/A N/A
Scudder International..................... 18.54% 10/1/98
Scudder Money Market...................... 1.53% 8/3/98
Van Eck Worldwide Hard Assets............. -19.54% 7/14/98
Warburg Pincus Fixed Income............... 2.23% 8/27/98
Warburg Pincus International Equity....... -10.96% 7/14/98
Warburg Pincus Post-Venture Capital....... N/A N/A
</TABLE>
You should note that the investment results of each Portfolio will
fluctuate over time, and any presentation of the Portfolio's total return or
yield for any period should not be considered as a representation of what an
investment may earn or what your total return or yield may be in any future
period.
FEDERAL TAX STATUS
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING
OF CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE
COMPANY CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE
MADE. PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE
POSSIBILITY OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF
THE CONTRACTS. PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE
TREATED AS "ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE
FURTHER UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT
SPECIAL RULES NOT DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS.
MOREOVER, NO ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX
LAWS.
GENERAL
Section 72 of the Code governs taxation of annuities in general. An Owner
is not taxed on increases in the value of a Contract until distribution occurs,
either in the form of a lump sum payment or as annuity payments under the
Annuity Option elected. For a lump sum payment received as a total surrender
(total redemption) or death benefit, the recipient is taxed on the portion of
the payment that exceeds the cost basis of the Contract. For Non-Qualified
Contracts, this cost basis is generally the purchase payments, while for
Qualified Contracts there may be no cost basis. The taxable portion of the lump
sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion
amount is includible in taxable income. The exclusion amount for payments based
on a fixed annuity option is determined by multiplying the payment by the ratio
that the cost basis of the Contract (adjusted for any period certain or refund
feature) bears to the expected return under the Contract. Payments received
after the investment in the Contract has been recovered (i.e. when the total of
the excludible amounts equals the investment in the Contract) are fully taxable.
The taxable portion is taxed at ordinary income rates. For certain types of
Qualified Plans there may be no cost basis in the Contract within the meaning of
Section 72 of the Code. Owners, Annuitants and Beneficiaries under the Contracts
should seek competent financial advice about the tax consequences of any
distributions.
The Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the Separate Account is not a separate entity from
the Company, and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contracts meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all Portfolios underlying the Contracts will be
managed by the investment advisers for the Portfolios in such a manner as to
comply with these diversification requirements.
The Treasury Department has indicated that the diversification Regulations
do not provide guidance regarding the circumstances in which Owner control of
the investments of the Separate Account will cause the Owner to be treated as
the owner of the assets of the Separate Account, thereby resulting in the loss
of favorable tax treatment for the Contract. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered as the owner of the assets of the Separate
Account resulting in the imposition of federal income tax to the Owner with
respect to earnings allocable to the Contract prior to receipt of payments under
the Contract.
In the event any forthcoming guidance or ruling is considered to set forth
a new position, such guidance or ruling will generally be applied only
prospectively. However, if such ruling or guidance was not considered to set
forth a new position, it may be applied retroactively resulting in the Owner
being retroactively determined to be the owner of the assets of the Separate
Account.
Due to the uncertainty in this area, the Company reserves the right to
modify the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts which are
issued within a calendar year period to the same contract owner by one company
or its affiliates are treated as one annuity contract for purposes of
determining the tax consequences of any distribution. Such treatment may result
in adverse tax consequences, including more rapid taxation of the distributed
amounts from such combination of contracts. For purposes of this rule, contracts
received in a Section 1035 exchange will be considered issued in the year of the
exchange. Owners should consult a tax adviser prior to purchasing more than one
non-qualified annuity contract in any calendar year period.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on purchase
payments for the Contracts will be taxed currently to the Owner if the Owner is
a non-natural person, e.g., a corporation or certain other entities. Such
Contracts generally will not be treated as annuities for federal income tax
purposes. However, this treatment is not applied to Contracts held by a trust or
other entity as an agent for a natural person nor to Contracts held by qualified
plans. Purchasers should consult their own tax counsel or other tax adviser
before purchasing a Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their Contracts.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross
income of the Owner are subject to federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at the
rate of 10% from non-periodic payments. However, the Owner, in most cases, may
elect not to have taxes withheld or to have withholding done at a different
rate.
Effective January 1, 1993, certain distributions from retirement plans
qualified under Section 401 or Section 403(b) of the Code, which are not
directly rolled over to another eligible retirement plan or individual
retirement account or individual retirement annuity, are subject to a mandatory
20% withholding for federal income tax. The 20% withholding requirement
generally does not apply to: a) a series of substantially equal payments made at
least annually for the life or life expectancy of the participant or joint and
last survivor expectancy of the participant and a designated beneficiary, or for
a specified period of 10 years or more; b) distributions which are required
minimum distributions; (c) the portion of the distributions not includible in
gross income (i.e. returns of after-tax contributions); or d) hardship
withdrawals. Participants should consult their own tax counsel or other
tax adviser regarding withholding requirements.
TAX TREATMENT OF WITHDRAWALS -- NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the contract value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any distribution. However, the penalty is not imposed on amounts received: (a)
after the taxpayer reaches age 59 1/2; (b) after the death of the Owner; (c) if
the taxpayer is totally disabled (for this purpose disability is as defined in
Section 72(m)(7) of the Code); (d) in a series of substantially equal periodic
payments made not less frequently than annually for the life (or life
expectancy) of the taxpayer or for the joint lives (or joint life expectancies)
of the taxpayer and his Beneficiary; (e) under an immediate annuity; or (f)
which are allocable to purchase payments made prior to August 14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
The above information does not apply to Qualified Contracts. However,
separate tax withdrawal penalties and restrictions may apply to such Qualified
Contracts. (See "Tax Treatment of Withdrawals -- Qualified Contracts.")
QUALIFIED PLANS
The Contracts offered by the Prospectus are designed to be suitable for use
under various types of Qualified Plans. Because of the minimum purchase payment
requirements, these Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified Plan varies with
the type of plan and terms and conditions of each specific plan. Owners,
Annuitants and Beneficiaries are cautioned that benefits under a Qualified Plan
may be subject to the terms and conditions of the plan regardless of the terms
and conditions of the Contracts issued pursuant to the plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into the Company's administrative procedures. Owners, participants
and Beneficiaries are responsible for determining that contributions,
distributions and other transactions with respect to the Contracts comply with
applicable law. Following are general descriptions of the types of Qualified
Plans with which the Contracts may be used. Such descriptions are not exhaustive
and are for general informational purposes only. The tax rules regarding
Qualified Plans are very complex and will have differing applications, depending
on individual facts and circumstances. Each purchaser should obtain competent
tax advice prior to purchasing a Contract issued under a Qualified Plan.
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee
v. Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection with
Qualified Plans will utilize annuity tables which do not differentiate on the
basis of sex. Such annuity tables will also be available for use in connection
with certain non-qualified deferred compensation plans.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
this Statement of Additional Information. Generally, Contracts issued pursuant
to Qualified Plans are not transferable except upon surrender or annuitization.
Various penalty and excise taxes may apply to contributions or distributions
made in violation of applicable limitations. Furthermore, certain withdrawal
penalties and restrictions may apply to surrenders from Qualified Contracts.
(See "Tax Treatment of Withdrawals -- Qualified Contracts.")
a. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public schools and certain charitable, educational and scientific
organizations described in Section 501(c)(3) of the Code. These qualifying
employers may make contributions to the Contracts for the benefit of their
employees. Such contributions are not includible in the gross income of the
employee until the employee receives distributions from the Contract. The amount
of contributions to the tax-sheltered annuity is limited to certain maximums
imposed by the Code. Furthermore, the Code sets forth additional restrictions
governing such items as transferability, distributions, nondiscrimination and
withdrawals. (See "Tax Treatment of Withdrawals -- Qualified Contracts" and
"Tax-Sheltered Annuities -- Withdrawal Limitations.") Employee loans are not
allowed under these Contracts. Any employee should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
b. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which may be deductible from the individual's taxable income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals -- Qualified Contracts.")
Under certain conditions, distributions from other IRAs and other Qualified
Plans may be rolled over or transferred on a tax-deferred basis into an IRA.
Sales of Contracts for use with IRAs are subject to special requirements imposed
by the Code, including the requirement that certain informational disclosure be
given to persons desiring to establish an IRA. Purchasers of Contracts to be
qualified as Individual Retirement Annuities should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
c. Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit employers, including
self-employed employers, to establish various types of retirement plans for
employees. These retirement plans may permit the purchase of the Contracts
to provide benefits under the Plan. Contributions to the Plan for the
benefit of employees will not be includible in the gross income of the
employee until distributed from the Plan. The tax consequences to
participants may vary, depending upon the particular Plan design. However,
the Code places limitations and restrictions on all Plans, including on such
items as: amount of allowable contributions; form, manner and timing of
distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. Participant loans are not allowed under the Contracts purchased in
connection with these Plans. (See "Tax Treatment of Withdrawals -- Qualified
Contracts.") Purchasers of Contracts for use with Pension or
Profit-Sharing Plans should obtain competent tax advice as to the tax treatment
and suitability of such an investment.
TAX TREATMENT OF WITHDRAWALS -- QUALIFIED CONTRACTS
In the case of a withdrawal under a Qualified Contract, a ratable portion
of the amount received is taxable, generally based on the ratio of the
individual's cost basis to the individual's total accrued benefit under the
retirement plan. Special tax rules may be available for certain distributions
from a Qualified Contract. Section 72(t) of the Code imposes a 10% penalty tax
on the taxable portion of any distribution from qualified retirement plans,
including Contracts issued and qualified under Code Sections 401 (Pension and
Profit-Sharing Plans), 403(b) (Tax-Sheltered Annuities) and 408 (Individual
Retirement Annuities). To the extent amounts are not includible in gross income
because they have been properly rolled over to an IRA or to another eligible
Qualified Plan, no tax penalty will be imposed. The tax penalty will not apply
to the following distributions: (a) if distribution is made on or after the date
on which the Owner or Annuitant (as applicable) reaches age 59 1/2; (b)
distributions following the death or disability of the Owner or Annuitant (as
applicable) (for this purpose disability is as defined in Section 72(m)(7) of
the Code); (c) after separation from service, distributions that are part of
substantially equal periodic payments made not less frequently than annually for
the life (or life expectancy) of the Owner or Annuitant (as applicable) or the
joint lives (or joint life expectancies) of such Owner or Annuitant (as
applicable) and his designated beneficiary; (d) distributions to an Owner or
Annuitant (as applicable) who has separated from service after he has attained
age 55; (e) distributions made to the Owner or Annuitant (as applicable) to the
extent such distributions do not exceed the amount allowable as a deduction
under Code Section 213 to the Owner or Annuitant (as applicable) for amounts
paid during the taxable year for medical care; (f) distributions made to an
alternate payee pursuant to a qualified domestic relations order; (g)
distributions from an Individual Retirement Annuity for the purchase of medical
insurance (as described in Section 213(d)(1)(D) of the Code) for the Owner or
Annuitant (as applicable) and his or her spouse and dependents if the Owner or
Annuitant (as applicable) has received unemployment compensation for at least 12
weeks (this exception will no longer apply after the Owner or Annuitant (as
applicable) has been re-employed for at least 60 days); (h) distributions from
an Individual Retirement Annuity made to the Owner or Annuitant (as applicable)
to the extent such distributions do not exceed the qualified higher education
expenses (as defined in Section 72(t)(7) of the Code) of the Owner or Annuitant
(as applicable) for the taxable year; and (i) distributions from an Individual
Retirement Annuity made to the Owner or Annuitant (as applicable) which are
qualified first-time home buyer distributions (as defined in Section 72(t)(8) of
the Code). The exceptions stated in items (d) and (f) above do not apply in the
case of an Individual Retirement Annuity. The exception stated in item (c)
applies to an Individual Retirement Annuity without the requirement that there
be a separation from service.
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
Generally, distributions from a Qualified Plan must commence no later than
April 1 of the calendar year following the later of: (a) the year in which the
employee attains age 70 1/2, or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
TAX-SHELTERED ANNUITIES -- WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions
made pursuant to a salary reduction agreement (as defined in Section 403(b)(11)
of the Code) to circumstances only when the Owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Owner's Contract
value which represents contributions by the Owner and does not include any
investment results. The limitations on withdrawals became effective on January
1, 1989 and apply only to salary reduction contributions made after December 31,
1988, and to income attributable to such contributions and to income
attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect rollovers and transfers between certain Qualified
Plans. Owners should consult their own tax counsel or other tax adviser
regarding any distributions.
SECTION 457 -- DEFERRED COMPENSATION PLANS
Under Section 457 of the Code, governmental and certain other tax-exempt
employers may establish deferred compensation plans for the benefit of their
employees which may invest in annuity contracts. The Code, as in the case of
qualified plans, establishes limitations and restrictions on eligibility,
contributions and distributions. Under these Plans, contributions made for the
benefit of the employees will not be includible in the employees' gross income
until distributed from the Plan. Under a Section 457 Plan, the plan assets
remain solely the property of the employer, subject only to the claims of the
employer's general creditors, until such time as made available to the
participant or beneficiary. However, for Plans established after August 20,
1996, it is required that plan assets must be held in trust for the benefit of
plan participants and are not subject to the claims of the general creditors of
the employer. Furthermore, this requirement must be met for all Plans no later
than January 1, 1999. IN CERTAIN STATES, THE CONTRACTS MAY NOT BE AVAILABLE FOR
USE IN CONNECTION WITH SECTION 457 PLANS.
ANNUITY PROVISIONS
Currently, the Company makes available payment plans on a fixed basis only.
(See the Prospectus for a description of the Annuity Options.)
FINANCIAL STATEMENTS
The financial statements of the Company included herein should be
considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts.
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Financial Statements
December 31, 1998
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
The Board of Directors
United Life & Annuity Insurance Company and
Contractowners of United Life & Annuity
Separate Account One:
We have audited the accompanying statement of assets and liabilities of the
sub-accounts of United Life & Annuity Separate Account One as of December 31,
1998 and the related statement of operations for the year then ended, and the
statement of changes in net assets for the years ended December 31, 1998 and
1997. These financial statements are the responsibility of the Separate
Account's management. Our responsibility is to express an opinion of these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets and liabilities of the sub-accounts of United
Life & Annuity Account One as of December 31, 1998, and the results of their
operations for the year then ended and the changes in their net assets for the
years ended December 31, 1998 and 1997 in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
Portland, Oregon
February 22, 1999
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
Alger Federated
------------- ---------------------------------------------------------------
U.S.
American Prime High Income Government
Growth Leaders Money Bond Bond Utility
------------- ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in mutual funds at market value:
The Alger American Fund (Alger):
Alger American Growth Portfolio - 314,693
shares (cost $14,150,245) $ 16,747,980 $ -- $ -- $ -- $ -- $ --
Federated Investors (Federated):
American Leaders Fund - 44,457 shares
(cost $884,959) -- 963,818 -- -- -- --
Prime Money Fund - 3,367,951 shares
(cost $3,367,951) -- -- 3,367,951 -- -- --
High Income Bond Fund II - 595,812 shares
(cost $6,354,550) -- -- -- 6,506,271 -- --
Fund for U.S. Government Securities II -
249,591 shares (cost $2,674,380) -- -- -- -- 2,782,939 --
Utility Fund II - 190,047 shares
(cost $2,595,678) -- -- -- -- -- 2,902,018
------------- ------------ ------------ ------------ ----------- -----------
Total assets $ 16,747,980 $ 963,818 $ 3,367,951 $ 6,506,271 $ 2,782,939 $ 2,902,018
============= ============ ============ ============ =========== ===========
Liabilities -- -- -- -- -- --
------------- ------------ ------------ ------------ ----------- -----------
Net assets $ 16,747,980 $ 963,818 $ 3,367,951 $ 6,506,271 $ 2,782,939 $ 2,902,018
============= ============ ============ ============ =========== ===========
Units outstanding 871,098 95,071 329,821 520,480 237,976 193,281
============= ============ ============ ============ =========== ===========
Average unit value 19.23 10.14 10.21 12.50 11.69 15.01
============= ============ ============ ============ =========== ===========
SpectraDirect unit value 20.18 10.13 10.20 12.91 11.74 15.77
============= ============ ============ ============ =========== ===========
SpectraSelect unit value 20.22 10.14 10.20 12.94 11.77 15.81
============= ============ ============ ============ =========== ===========
Spectra SDB unit value 12.49 10.15 10.22 9.82 10.45 10.89
============= ============ ============ ============ =========== ===========
</TABLE>
See accompanying notes to financial statements.
2 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
Van Eck Dreyfus Scudder
-------------- ------------------------------ ------------------------------
Worldwide Growth and Money
Hard Assets Stock Index Income Market International
-------------- --------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in mutual funds at market value:
Van Eck Worldwide Insurance Trust (Van Eck):
Van Eck Worldwide Hard Assets - 20,077
shares (cost $272,911) $ 184,710 $ -- $ -- $ -- $ --
The Dreyfus Variable Investment Fund (Dreyfus):
Stock Index Portfolio - 604,330 shares
(cost $16,772,066) -- 19,652,813 -- -- --
Growth and Income Fund - 410,836 shares
(cost $8,793,656) -- -- 9,297,214 -- --
Scudder Variable Life Investment Fund (Scudder):
Money Market Portfolio - 6,628,217 shares
(cost $6,628,217) -- -- -- 6,628,217 --
International Portfolio - 411,953 shares
(cost $5,902,490) -- -- -- -- 5,998,029
-------------- --------------- -------------- -------------- ---------------
Total assets $ 184,710 $ 19,652,813 $ 9,297,214 $ 6,628,217 $ 5,998,029
============== =============== ============== ============== ===============
Liabilities -- -- -- -- --
-------------- --------------- -------------- -------------- ---------------
Net assets $ 184,710 $ 19,652,813 $ 9,297,214 $ 6,628,217 $ 5,998,029
============== =============== ============== ============== ===============
Units outstanding 24,187 1,057,803 605,589 606,111 422,522
============== =============== ============== ============== ===============
Average unit value 7.64 18.58 15.35 10.94 14.20
============== =============== ============== ============== ===============
SpectraDirect unit value 7.73 20.17 15.63 11.10 14.27
============== =============== ============== ============== ===============
SpectraSelect unit value 7.74 20.22 15.67 11.13 14.30
============== =============== ============== ============== ===============
Spectra SDB unit value 6.85 11.05 9.90 10.24 10.07
============== =============== ============== ============== ===============
</TABLE>
See accompanying notes to financial statements.
3 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
MFS
-------------------------------------------------------------------------
Emerging Total Growth with
Growth Return Income Research Utilities
-------------- -------------- -------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in mutual funds at market value:
MFS Variable Insurance Trust (MFS):
Emerging Growth Series - 893,035 shares
(cost $15,354,263) $ 19,173,453 $ -- $ -- $ -- $ --
Total Return Series - 764,529 shares
(cost $12,721,085) -- 13,853,262 -- -- --
Growth with Income Series - 48,561 shares
(cost $893,341) -- -- 976,562 -- --
Research Series - 69,790 shares (cost $1,217,638) -- -- -- 1,329,496 --
Utilities Series - 44,448 shares (cost $831,523) -- -- -- -- 880,954
-------------- -------------- -------------- ------------ -----------
Total assets $ 19,173,453 $ 13,853,262 $ 976,562 $ 1,329,496 $ 880,954
============== ============== ============== ============ ===========
Liabilities -- -- -- -- --
-------------- -------------- -------------- ------------ -----------
Net assets $ 19,173,453 $ 13,853,262 $ 976,562 $ 1,329,496 $ 880,954
============== ============== ============== ============ ===========
Units outstanding 1,098,386 952,508 92,389 127,109 83,695
============== ============== ============== ============ ===========
Average unit value 17.46 14.54 10.57 10.46 10.53
============== ============== ============== ============ ===========
SpectraDirect unit value 18.56 15.19 10.57 10.45 10.51
============== ============== ============== ============ ===========
SpectraSelect unit value 18.60 15.22 10.57 10.46 10.52
============== ============== ============== ============ ===========
Spectra SDB unit value 11.15 10.35 10.59 10.47 10.53
============== ============== ============== ============ ===========
</TABLE>
See accompanying notes to financial statements.
4 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
Warburg Pincus AIM
------------------------------------- -----------------------------------
Fixed International Post Venture Capital Diversified
Income Equity Capital Appreciation Income Growth
----------- ------------ ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in mutual funds at market value:
Warburg Pincus Funds (Warburg Pincus):
Warburg Pincus II - Fixed Income Portfolio
211,109 shares (cost $2,247,419) $ 2,178,645 $ -- $ -- $ -- $ -- $ --
Warburg Pincus Trust International Equity Portfolio
6,666 shares (cost $70,106) -- 73,261 -- -- -- --
Warburg Pincus Trust Post Venture Capital Portfolio
5,330 shares (cost $60,920) -- -- 62,790 -- -- --
AIM Funds (AIM):
Capital Appreciation Fund - 81,001 shares
(cost $1,811,521) -- -- -- 2,041,222 -- --
Diversified Income Fund - 46,579 shares
(cost $536,932) -- -- -- -- 509,574 --
Growth Fund - 48,297 shares (cost $1,065,146) -- -- -- -- -- 1,197,773
----------- ------------ ------------ ------------ ---------- -----------
Total assets $ 2,178,645 $ 73,261 $ 62,790 $ 2,041,222 $ 509,574 $ 1,197,773
=========== ============ ============ ============ ========== ===========
Liabilities -- -- -- -- -- --
----------- ------------ ------------ ------------ ---------- -----------
Net assets $ 2,178,645 $ 73,261 $ 62,790 $ 2,041,222 $ 509,574 $ 1,197,773
=========== ============ ============ ============ ========== ===========
Units outstanding 207,482 8,207 6,957 196,604 51,420 102,814
=========== ============ ============ ============ ========== ===========
Average unit value 10.50 8.93 9.03 10.38 9.91 11.65
=========== ============ ============ ============ ========== ===========
SpectraDirect unit value 10.50 8.91 9.02 10.38 9.90 11.50
=========== ============ ============ ============ ========== ===========
SpectraSelect unit value 10.50 8.73 8.38 10.38 9.91 11.51
=========== ============ ============ ============ ========== ===========
Spectra SDB unit value 10.52 8.93 9.04 10.40 9.92 11.53
=========== ============ ============ ============ ========== ===========
</TABLE>
See accompanying notes to financial statements.
5 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
AIM NB
--------------------------- ----------------------------------------------
Growth International Limited Mid Cap
and Income Equity Guardian Maturity Growth Partners
------------- ------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in mutual funds at market value:
AIM Funds (AIM):
Growth and Income Fund - 58,544 shares
(cost $1,240,550) $ 1,390,431 $ -- $ -- $ -- $ -- $ --
International Equity Fund - 55,995 shares
(cost $1,029,230) -- 1,098,622 -- -- -- --
Neuberger Berman Funds (NB):
AMT Guardian - 28,328 shares (cost $344,968) -- -- 392,065 -- -- --
Limited Maturity Bond Fund - 1,512 shares
(cost $20,816) -- -- -- 20,900 -- --
AMT Mid Cap Growth - 23,462 shares
(cost $312,247) -- -- -- -- 380,552 --
Partners Fund - 17,644 shares (cost $311,296) -- -- -- -- -- 334,006
------------- ------------ ----------- ---------- ----------- -----------
Total assets $ 1,390,431 $ 1,098,622 $ 392,065 $ 20,900 $ 380,552 $ 334,006
============= ============ =========== ========== =========== ===========
Liabilities -- -- -- -- -- --
------------- ------------ ----------- ---------- ----------- -----------
Net assets $ 1,390,431 $ 1,098,622 $ 392,065 $ 20,900 $ 380,552 $ 334,006
============= ============ =========== ========== =========== ===========
Units outstanding 122,167 114,030 41,940 2,059 33,595 35,832
============= ============ =========== ========== =========== ===========
Average unit value 11.38 9.63 9.35 10.15 11.33 9.32
============= ============ =========== ========== =========== ===========
SpectraDirect unit value 11.29 9.84 9.34 10.14 11.32 9.31
============= ============ =========== ========== =========== ===========
SpectraSelect unit value 11.29 9.84 9.35 10.14 11.32 9.32
============= ============ =========== ========== =========== ===========
Spectra SDB unit value 11.31 9.85 9.36 10.16 11.34 9.33
============= ============ =========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
6 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
MS
------------------------------------------------------------
Emerging Equity Global High Total
Markets Debt Growth Equity Yield Value all Funds
------------- ---------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in mutual funds at market value:
Morgan Stanley Funds (MS):
Emerging Markets Debt Fund - 11,411 shares
(cost $74,636) $ 69,606 $ -- $ -- $ -- $ -- $
Equity Growth Fund - 28,017 shares
(cost $379,706) -- 423,062 -- -- --
Global Equity Fund - 90,682 shares
(cost $1,164,324) -- -- 1,191,563 -- --
High Yield Fund - 133,526 shares
(cost $1,420,871) -- -- -- 1,381,990 --
Value Fund - 51,399 shares (cost $553,101) -- -- -- -- 570,529
------------- ---------- ----------- ----------- ----------- ------------
Total assets $ 69,606 $ 423,062 $ 1,191,563 $ 1,381,990 $ 570,529 $124,562,278
============= ========== =========== =========== =========== ============
Liabilities -- -- -- -- -- --
------------- ---------- ----------- ----------- ----------- ------------
Net assets $ 69,606 $ 423,062 $ 1,191,563 $ 1,381,990 $ 570,529 $124,562,278
============= ========== =========== =========== =========== ============
Units outstanding 10,208 40,838 121,267 138,827 64,497 8,616,769
============= ========== =========== =========== =========== ============
Average unit value 6.82 10.36 9.83 9.95 8.85
============= ========== =========== =========== =========== ============
SpectraDirect unit value 6.75 10.34 9.82 9.95 8.85
============= ========== =========== =========== =========== ============
SpectraSelect unit value 6.76 10.35 9.83 9.95 8.86
============= ========== =========== =========== =========== ============
Spectra SDB unit value 6.77 10.36 9.84 9.97 8.87
============= ========== =========== =========== =========== ============
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Operations
Year ended December 31, 1998
<TABLE>
<CAPTION>
Alger Federated
------------ ---------------------------------------------------------------
U.S.
American Prime High Income Government
Growth Leaders Money Bond Bond Utility
------------ ---------- ------------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Income:
Dividends $ 27,562 $ -- $ 66,000 $ 144,942 $ 39,026 $ 46,112
Expenses:
Mortality and expense risks charges
and administrative fees (189,346) (5,527) (22,180) (89,467) (48,050) (39,153)
------------ ---------- ------------- ------------ ----------- ---------
Net investment income (loss) (161,784) (5,527) 43,820 55,475 (9,024) 6,959
------------ ---------- ------------- ------------ ----------- ---------
Realized gain (loss) on investments:
Proceeds from sales 5,865,428 598,583 13,465,253 8,287,419 2,331,098 958,770
Cost of securities (4,705,659) (638,360) (13,465,253) (8,247,330) (2,214,580) (779,858)
------------ ---------- ------------- ------------ ----------- ---------
Net gain (loss) 1,159,769 (39,777) -- 40,089 116,518 178,912
Capital gain distributions received 1,684,268 -- -- 12,286 1,546 86,463
------------ ---------- ------------- ------------ ----------- ---------
Net realized gain (loss) 2,844,037 (39,777) -- 52,375 118,064 265,375
------------ ---------- ------------- ------------ ----------- ---------
Unrealized gain (loss) on investments:
Beginning of year 954,645 -- -- 213,157 55,834 277,927
End of year 2,597,735 78,859 -- 151,721 108,559 306,340
------------ ---------- ------------- ------------ ----------- ---------
Net unrealized gain (loss) 1,643,090 78,859 -- (61,436) 52,725 28,413
------------ ---------- ------------- ------------ ----------- ---------
Net increase (decrease) in net
assets resulting from operations $ 4,325,343 $ 33,555 $ 43,820 $ 46,414 $ 161,765 $ 300,747
============ ========== ============= ============ =========== =========
</TABLE>
See accompanying notes to financial statements.
8 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Operations
Year ended December 31, 1998
<TABLE>
<CAPTION>
Van Eck Dreyfus Scudder
------------ --------------------------- ---------------------------
Worldwide Growth Money
Hard Assets Stock Index and Income Market International
------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Income:
Dividends $ 42,206 $ 194,655 $ 170,463 $ 402,646 $ 660,728
Expenses:
Mortality and expense risks charges
and administrative fees (4,144) (217,556) (124,022) (129,228) (95,997)
------------ ------------ ------------- ------------ -------------
Net investment income (loss) 38,062 (22,901) 46,441 273,418 564,731
------------ ------------ ------------- ------------ -------------
Realized gain (loss) on investments:
Proceeds from sales 152,840 3,929,570 1,365,352 38,911,957 7,642,191
Cost of securities (212,131) (2,743,674) (1,340,806) (38,911,957) (7,534,730)
------------ ------------ ------------- ------------ -------------
Net gain (loss) (59,291) 1,185,896 24,546 -- 107,461
Capital gain distributions received -- 24,491 19,976 -- --
------------ ------------ ------------- ------------ -------------
Net realized gain (loss) (59,291) 1,210,387 44,522 -- 107,461
------------ ------------ ------------- ------------ -------------
Unrealized gain (loss) on investments:
Beginning of year (12,410) 891,753 (24,988) -- 69,639
End of year (88,201) 2,880,747 503,558 -- 95,539
------------ ------------ ------------- ------------ -------------
Net unrealized gain (loss) (75,791) 1,988,994 528,546 -- 25,900
------------ ------------ ------------- ------------ -------------
Net increase (decrease) in net
assets resulting from operations $ (97,020) $ 3,176,480 $ 619,509 $ 273,418 $ 698,092
============ ============ ============= ============ =============
</TABLE>
See accompanying notes to financial statements.
9 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Operations
Year ended December 31, 1998
<TABLE>
<CAPTION>
MFS
------------------------------------------------------------------------
Emerging Growth with
Growth Total Return Income Research Utilities
------------- -------------- -------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Investment Income:
Income:
Dividends $ 106,849 $ 298,496 $ -- $ -- $ --
Expenses:
Mortality and expense risks charges
and administrative fees (221,219) (178,004) (3,872) (4,711) (3,071)
------------- -------------- -------------- ----------- ----------
Net investment income (loss) (114,370) 120,492 (3,872) (4,711) (3,071)
------------- -------------- -------------- ----------- ----------
Realized gain (loss) on investments:
Proceeds from sales 4,937,910 2,343,128 441,876 60,706 41,239
Cost of securities (3,606,093) (1,862,244) (437,213) (63,674) (40,650)
------------- -------------- -------------- ----------- ----------
Net gain (loss) 1,331,817 480,884 4,663 (2,968) 589
Capital gain distributions received -- -- -- -- --
------------- -------------- -------------- ----------- ----------
Net realized gain (loss) 1,331,817 480,884 4,663 (2,968) 589
------------- -------------- -------------- ----------- ----------
Unrealized gain (loss) on investments:
Beginning of year 1,026,161 697,656 -- -- --
End of year 3,819,190 1,132,177 83,221 111,858 49,431
------------- -------------- -------------- ----------- ----------
Net unrealized gain (loss) 2,793,029 434,521 83,221 111,858 49,431
------------- -------------- -------------- ----------- ----------
Net increase (decrease) in net assets
resulting from operations $ 4,010,476 $ 1,035,897 $ 84,012 $ 104,179 $ 46,949
============= ============== ============== =========== ==========
</TABLE>
See accompanying notes to financial statements.
10 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Operations
Year ended December 31, 1998
<TABLE>
<CAPTION>
Warburg Pincus AIM
---------------------------------------- ------------------------------------
Fixed International Post Venture Capital Diversified
Income Equity Capital Appreciation Income Growth
----------- ------------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Income:
Dividends $ 91,285 $ 383 $ -- $ 2,850 $ 23,863 $ 3,773
Expenses:
Mortality and expense risks charges
and administrative fees (11,820) (486) (336) (8,137) (1,894) (6,067)
----------- ------------- ------------ ------------ ---------- ----------
Net investment income (loss) 79,465 (103) (336) (5,287) 21,969 (2,294)
----------- ------------- ------------ ------------ ---------- ----------
Realized gain (loss) on investments:
Proceeds from sales 1,841,071 25,284 12,371 462,994 134,868 460,940
Cost of securities (1,808,216) (27,653) (14,799) (488,710) (135,783) (461,857)
----------- ------------- ------------ ------------ ---------- ----------
Net gain (loss) 32,855 (2,369) (2,428) (25,716) (915) (917)
Capital gain distributions received -- -- -- 50,498 7,614 70,741
----------- ------------- ------------ ------------ ---------- ----------
Net realized gain (loss) 32,855 (2,369) (2,428) 24,782 6,699 69,824
----------- ------------- ------------ ------------ ---------- ----------
Unrealized gain (loss) on investments:
Beginning of year -- -- -- -- -- --
End of year (68,774) 3,155 1,870 229,701 (27,358) 132,627
----------- ------------- ------------ ------------ ---------- ----------
Net unrealized gain (loss) (68,774) 3,155 1,870 229,701 (27,358) 132,627
----------- ------------- ------------ ------------ ---------- ----------
Net increase (decrease) in net assets
resulting from operations $ 43,546 $ 683 $ (894) $ 249,196 $ 1,310 $ 200,157
=========== ============= ============ ============ ========== ==========
</TABLE>
See accompanying notes to financial statements.
11 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Operations
Year ended December 31, 1998
<TABLE>
<CAPTION>
AIM NB
--------------------------- --------------------------------------------------
Growth International Limited Mid Cap
and Income Equity Guardian Maturity Growth Partners
------------ ------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Income:
Dividends $ 4,659 $ 8,191 $ 187 $ -- $ -- $ --
Expenses:
Mortality and expense risks charges
and administrative fees (4,618) (4,116) (1,854) (60) (2,050) (1,373)
------------ ------------- ----------- ---------- ----------- -----------
Net investment income (loss) 41 4,075 (1,667) (60) (2,050) (1,373)
------------ ------------- ----------- ---------- ----------- -----------
Realized gain (loss) on investments:
Proceeds from sales 146,773 596,226 215,209 2,133 132,987 12,760
Cost of securities (157,110) (605,311) (218,642) (2,126) (129,759) (13,624)
------------ ------------- ----------- ---------- ----------- -----------
Net gain (loss) (10,337) (9,085) (3,433) 7 3,228 (864)
Capital gain distributions received 11,499 -- -- -- -- --
------------ ------------- ----------- ---------- ----------- -----------
Net realized gain (loss) 1,162 (9,085) (3,433) 7 3,228 (864)
------------ ------------- ----------- ---------- ----------- -----------
Unrealized gain (loss) on investments:
Beginning of year -- -- -- -- -- --
End of year 149,881 69,392 47,097 84 68,305 22,710
------------ ------------- ----------- ---------- ----------- -----------
Net unrealized gain (loss) 149,881 69,392 47,097 84 68,305 22,710
------------ ------------- ----------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations $ 151,084 $ 64,382 $ 41,997 $ 31 $ 69,483 $ 20,473
============ ============= =========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
12 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Operations
Year ended December 31, 1998
<TABLE>
<CAPTION>
MS
-------------------------------------------------------------------
Emerging Equity Global High Total
Markets Debt Growth Equity Yield Value all Funds
------------- ---------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Income:
Dividends $ 8,120 $ -- $ 4,979 $ 76,234 $ 7,942 $ 2,432,151
Expenses:
Mortality and expense risks charges
and administrative fees (304) (1,338) (2,664) (4,358) (3,905) (1,430,927)
------------ ----------- ------------ ------------ ------------ ------------
Net investment income (loss) 7,816 (1,338) 2,315 71,876 4,037 1,001,224
------------ ----------- ------------ ------------ ------------ ------------
Realized gain (loss) on investments:
Proceeds from sales 928 109,932 475,463 227,077 528,219 96,718,555
Cost of securities (1,099) (117,455) (454,350) (237,697) (600,667) (92,279,070)
------------ ----------- ------------ ------------ ------------ ------------
Net gain (loss) (171) (7,523) 21,113 (10,620) (72,448) 4,439,485
Capital gain distributions received -- 573 2,346 12,672 12,922 1,997,895
------------ ----------- ------------ ------------ ------------ ------------
Net realized gain (loss) (171) (6,950) 23,459 2,052 (59,526) 6,437,380
------------ ----------- ------------ ------------ ------------ ------------
Unrealized gain (loss) on investments:
Beginning of year -- -- -- -- -- 4,149,374
End of year (5,030) 43,356 27,239 (38,881) 17,428 12,503,536
------------ ----------- ------------ ------------ ------------ ------------
Net unrealized gain (loss) (5,030) 43,356 27,239 (38,881) 17,428 8,354,162
------------ ----------- ------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from operations $ 2,615 $ 35,068 $ 53,013 $ 35,047 $ (38,061) $ 15,792,766
============ =========== ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Changes in Net Assets
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Alger Federated
----------------------------- --------------------------------------------
Growth American Leaders Prime Money
----------------------------- ------------------- -----------------------
1998 1997 1998 1997 1998 1997
-------------- ------------- ----------- ------ --------------- ------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ (161,784) $ (70,474) $ (5,527) $ -- $ 43,820 $ --
Net realized gain (loss) 2,844,037 172,076 (39,777) -- -- --
Net unrealized gain (loss) on investments 1,643,090 838,150 78,859 -- -- --
-------------- ------------- ----------- ------ --------------- ------
Net increase in net assets
resulting from operations 4,325,343 939,752 33,555 -- 43,820 --
-------------- ------------- ----------- ------ --------------- ------
Contract transactions:
Transfer of annuity fund deposits 1,211,540 633,101 28,126 -- 19,443,103 --
Net transfers between sub-accounts 4,624,224 3,020,107 922,825 -- (16,107,045) --
Death benefits (92,985) (9,359) -- -- -- --
Surrenders (625,485) (250,808) (20,688) -- (11,927) --
-------------- ------------- ----------- ------ --------------- ------
Net increase in net assets result-
ing from contract transactions 5,117,294 3,393,041 930,263 -- 3,324,131 --
-------------- ------------- ----------- ------ --------------- ------
Total increase in net assets 9,442,637 4,332,793 963,818 -- 3,367,951 --
Net assets:
Beginning of year 7,305,343 2,972,550 -- -- -- --
-------------- ------------- ----------- ------ --------------- ------
End of year $ 16,747,980 $ 7,305,343 $ 963,818 $ -- $ 3,367,951 $ --
============== ============= =========== ====== =============== ======
</TABLE>
See accompanying notes to financial statements.
14 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Changes in Net Assets
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Federated
-------------------------------------------------------------------------------
High Income Bond U.S. Government Bond Utility
-------------------------- -------------------------- -------------------------
1998 1997 1998 1997 1998 1997
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ 55,475 $ 116,196 $ (9,024) $ 9,701 $ 6,959 $ 9,531
Net realized gain (loss) 52,375 42,909 118,064 7,262 265,375 41,913
Net unrealized gain (loss) on investments (61,436) 157,147 52,725 54,388 28,413 245,216
------------ ------------ ------------ ------------ ------------ -----------
Net increase in net assets resulting
from operations 46,414 316,252 161,765 71,351 300,747 296,660
------------ ------------ ------------ ------------ ------------ -----------
Contract transactions:
Transfer of annuity fund deposits 432,244 190,348 339,710 304,693 177,211 216,933
Net transfers between sub-accounts 2,754,469 1,094,026 779,548 1,107,179 818,692 711,466
Death benefits (81,340) -- (53,972) -- (16,908) (4,755)
Surrenders (349,476) (111,293) (162,179) (33,436) (92,705) (18,500)
------------ ------------ ------------ ------------ ------------ -----------
Net increase in net assets resulting
from contract transactions 2,755,897 1,173,081 903,107 1,378,436 886,290 905,144
------------ ------------ ------------ ------------ ------------ -----------
Total increase in net assets 2,802,311 1,489,333 1,064,872 1,449,787 1,187,037 1,201,804
Net assets:
Beginning of year 3,703,960 2,214,627 1,718,067 268,280 1,714,981 513,177
------------ ------------ ------------ ------------ ------------ -----------
End of year $ 6,506,271 $ 3,703,960 $ 2,782,939 $ 1,718,067 $ 2,902,018 $ 1,714,981
============ ============ ============ ============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
15 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Changes in Net Assets
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Van Eck Dreyfus
------------------------- ------------------------------------------------------
Worldwide Hard Assets Stock Index Growth and Income
------------------------- -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
------------ ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ 38,062 $ 721 $ (22,901) $ 27,612 $ 46,441 $ 292,223
Net realized gain (loss) (59,291) 3,592 1,210,387 326,587 44,522 13,929
Net unrealized gain (loss) on investments (75,791) (15,618) 1,988,994 753,893 528,546 80,276
------------ ----------- ------------ ------------ ------------ ------------
Net increase in net assets resulting
from operations (97,020) (11,305) 3,176,480 1,108,092 619,509 386,428
------------ ----------- ------------ ------------ ------------ ------------
Contract transactions:
Transfer of annuity fund deposits 9,016 31,683 2,027,643 766,485 803,245 518,285
Net transfers between sub-accounts (8,452) 191,362 7,218,363 4,098,748 3,679,277 2,521,967
Death benefits -- -- (77,961) (15,141) (173,350) (42,170)
Surrenders (8,991) (5,428) (651,701) (225,015) (367,887) (148,497)
------------ ----------- ------------ ------------ ------------ ------------
Net increase in net assets resulting
from contract transactions (8,427) 217,617 8,516,344 4,625,077 3,941,285 2,849,585
------------ ----------- ------------ ------------ ------------ ------------
Total increase in net assets (105,447) 206,312 11,692,824 5,733,169 4,560,794 3,236,013
Net assets:
Beginning of year 290,157 83,845 7,959,989 2,226,820 4,736,420 1,500,407
------------ ----------- ------------ ------------ ------------ ------------
End of year $ 184,710 $ 290,157 $ 19,652,813 $ 7,959,989 $ 9,297,214 $ 4,736,420
============ =========== ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
16 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Changes in Net Assets
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Scudder MFS
----------------------------------------------------- -------------------------
Money Market International Emerging Growth
--------------------------- ------------------------ -------------------------
1998 1997 1998 1997 1998 1997
------------- ------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ 273,418 $ 137,843 $ 564,731 $ (3,593) $ (114,370) $ (101,145)
Net realized gain (loss) -- -- 107,461 79,372 1,331,817 124,395
Net unrealized gain (loss) on investments -- -- 25,900 6,812 2,793,029 1,023,482
------------- ------------ ----------- ----------- ------------ -----------
Net increase in net assets resulting
from operations 273,418 137,843 698,092 82,591 4,010,476 1,046,732
------------- ------------ ----------- ----------- ------------ -----------
Contract transactions:
Transfer of annuity fund deposits 43,149,414 27,008,328 615,750 309,848 990,005 841,749
Net transfers between sub-accounts (41,017,091) (24,402,932) 1,438,599 1,847,991 5,915,927 4,544,948
Death benefits (24,167) -- (52,696) (21,789) (73,768) (31,649)
Surrenders (708,223) (157,922) (208,972) (77,246) (679,764) (240,566)
------------- ------------ ----------- ----------- ------------ -----------
Net increase in net assets resulting
from contract transactions 1,399,933 2,447,474 1,792,681 2,058,804 6,152,400 5,114,482
------------- ------------ ----------- ----------- ------------ -----------
Total increase in net assets 1,673,351 2,585,317 2,490,773 2,141,395 10,162,876 6,161,214
Net assets:
Beginning of year 4,954,866 2,369,549 3,507,256 1,365,861 9,010,577 2,849,363
------------- ------------ ----------- ----------- ------------ -----------
End of year $ 6,628,217 $ 4,954,866 $ 5,998,029 $ 3,507,256 $ 19,173,453 $ 9,010,577
============= ============ =========== =========== ============ ===========
</TABLE>
See accompanying notes to financial statements.
17 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Changes in Net Assets
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
MFS
-------------------------------------------------------------------------
Total Return Growth with Income Research
----------------------------- ------------------- ---------------------
1998 1997 1998 1997 1998 1997
-------------- ------------- ----------- ------ ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ 120,492 $ (67,407) $ (3,872) $ -- $ (4,711) $ --
Net realized gain (loss) 480,884 91,551 4,663 -- (2,968) --
Net unrealized gain (loss) on investments 434,521 634,884 83,221 -- 111,858 --
-------------- ------------- ----------- ------ ------------- ------
Net increase in net assets resulting
from operations 1,035,897 659,028 84,012 -- 104,179 --
-------------- ------------- ----------- ------ ------------- ------
Contract transactions:
Transfer of annuity fund deposits 1,028,178 820,813 40,816 -- 23,727 --
Net transfers between sub-accounts 5,678,697 4,038,530 863,937 -- 1,217,125 --
Death benefits (169,731) (11,022) -- -- -- --
Surrenders (719,246) (195,836) (12,203) -- (15,535) --
-------------- ------------- ----------- ------ ------------- ------
Net increase in net assets resulting
from contract transactions 5,817,898 4,652,485 892,550 -- 1,225,317 --
-------------- ------------- ----------- ------ ------------- ------
Total increase in net assets 6,853,795 5,311,513 976,562 -- 1,329,496 --
Net assets:
Beginning of year 6,999,467 1,687,954 -- -- -- --
-------------- ------------- ----------- ------ ------------- ------
End of year $ 13,853,262 $ 6,999,467 $ 976,562 $ -- $ 1,329,496 $ --
============== ============= =========== ====== ============= ======
</TABLE>
See accompanying notes to financial statements.
18 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Changes in Net Assets
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
MFS Warburg Pincus
---------------------------------------------------------------
Utilities Fixed Income International Equity
-------------------- --------------------- ------------------
1998 1997 1998 1997 1998 1997
----------- ------- ------------ ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ (3,071) $ -- $ 79,465 $ -- $ (103) $ --
Net realized gain (loss) 589 -- 32,855 -- (2,369) --
Net unrealized gain (loss) on investments 49,431 -- (68,774) -- 3,155 --
----------- ------- ------------ ------ ---------- ------
Net increase in net assets resulting
from operations 46,949 -- 43,546 -- 683 --
----------- ------- ------------ ------ ---------- ------
Contract transactions:
Transfer of annuity fund deposits 56,609 -- 146,883 -- 7,050 --
Net transfers between sub-accounts 781,790 -- 1,999,870 -- 65,528 --
Death benefits -- -- -- -- -- --
Surrenders (4,394) -- (11,654) -- -- --
----------- ------- ------------ ------ ---------- ------
Net increase in net assets resulting
from contract transactions 834,005 -- 2,135,099 -- 72,578 --
----------- ------- ------------ ------ ---------- ------
Total increase in net assets 880,954 -- 2,178,645 -- 73,261 --
Net assets:
Beginning of year -- -- -- -- -- --
----------- ------- ------------ ------ ---------- ------
End of year $ 880,954 $ -- $ 2,178,645 $ -- $ 73,261 $ --
=========== ======= ============ ====== ========== ======
</TABLE>
See accompanying notes to financial statements.
19 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Changes in Net Assets
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Warburg Pincus AIM
---------------------------------------------------------------
Post Venture Capital Capital Appreciation Diversified Income
------------------- --------------------- -------------------
1998 1997 1998 1997 1998 1997
---------- ------- ------------ ------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ (336) $ -- $ (5,287) $ -- $ 21,969 $ --
Net realized gain (loss) (2,428) -- 24,782 -- 6,699 --
Net unrealized gain (loss) on investments 1,870 -- 229,701 -- (27,358) --
---------- ------- ------------ ------- ----------- ------
Net increase in net assets resulting
from operations (894) -- 249,196 -- 1,310 --
---------- ------- ------------ ------- ----------- ------
Contract transactions:
Transfer of annuity fund deposits 795 -- 146,124 -- 66,742 --
Net transfers between sub-accounts 63,335 -- 1,666,016 -- 446,194 --
Death benefits -- -- -- -- -- --
Surrenders (446) -- (20,114) -- (4,672) --
---------- ------- ------------ ------- ----------- ------
Net increase in net assets resulting
from contract transactions 63,684 -- 1,792,026 -- 508,264 --
---------- ------- ------------ ------- ----------- ------
Total increase in net assets 62,790 -- 2,041,222 -- 509,574 --
Net assets:
Beginning of year -- -- -- -- -- --
---------- ------- ------------ ------- ----------- ------
End of year $ 62,790 $ -- $ 2,041,222 $ -- $ 509,574 $ --
========== ======= ============ ======= =========== ======
</TABLE>
See accompanying notes to financial statements.
20 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Changes in Net Assets
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
AIM
--------------------------------------------------------------------
Growth Growth and Income International Equity
--------------------- -------------------- ---------------------
1998 1997 1998 1997 1998 1997
------------- ------ ------------ ------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ (2,294) $ -- $ 41 $ -- $ 4,075 $ --
Net realized gain (loss) 69,824 -- 1,162 -- (9,085) --
Net unrealized gain (loss) on investments 132,627 -- 149,881 -- 69,392 --
------------- ------ ------------ ------ ------------ -------
Net increase in net assets resulting
from operations 200,157 -- 151,084 -- 64,382 --
------------- ------ ------------ ------ ------------ -------
Contract transactions:
Transfer of annuity fund deposits 145,638 -- 164,418 -- 7,519 --
Net transfers between sub-accounts 867,353 -- 1,080,630 -- 1,030,701 --
Death benefits -- -- -- -- -- --
Surrenders (15,375) -- (5,701) -- (3,980) --
------------- ------ ------------ ------ ------------ -------
Net increase in net assets resulting
from contract transactions 997,616 -- 1,239,347 -- 1,034,240 --
------------- ------ ------------ ------ ------------ -------
Total increase in net assets 1,197,773 -- 1,390,431 -- 1,098,622 --
Net assets:
Beginning of year -- -- -- -- -- --
------------- ------ ------------ ------ ------------ -------
End of year $ 1,197,773 $ -- $ 1,390,431 $ -- $ 1,098,622 $ --
============= ====== ============ ====== ============ =======
</TABLE>
See accompanying notes to financial statements.
21 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Changes in Net Assets
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
NB
--------------------------------------------------------------
Guardian Limited Maturity Mid Cap Growth
-------------------- ------------------ --------------------
1998 1997 1998 1997 1998 1997
----------- ------- ---------- ------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ (1,667) $ -- $ (60) $ -- $ (2,050) $ --
Net realized gain (loss) (3,433) -- 7 -- 3,228 --
Net unrealized gain (loss) on investments 47,097 -- 84 -- 68,305 --
----------- ------- ---------- ------ ----------- -------
Net increase in net assets resulting
from operations 41,997 -- 31 -- 69,483 --
----------- ------- ---------- ------ ----------- -------
Contract transactions:
Transfer of annuity fund deposits 19,096 -- -- -- 59,064 --
Net transfers between sub-accounts 336,700 -- 21,150 -- 255,764 --
Death benefits -- -- -- -- -- --
Surrenders (5,728) -- (281) -- (3,759) --
----------- ------- ---------- ------ ----------- -------
Net increase in net assets resulting
from contract transactions 350,068 -- 20,869 -- 311,069 --
----------- ------- ---------- ------ ----------- -------
Total increase in net assets 392,065 -- 20,900 -- 380,552 --
Net assets:
Beginning of year -- -- -- -- -- --
----------- ------- ---------- ------ ----------- -------
End of year $ 392,065 $ -- $ 20,900 $ -- $ 380,552 $ --
=========== ======= ========== ====== =========== =======
</TABLE>
See accompanying notes to financial statements.
22 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Changes in Net Assets
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
NB MS
--------------------------------------------------------------
Partners Emerging Markets Debt Equity Growth
-------------------- ------------------ --------------------
1998 1997 1998 1997 1998 1997
----------- ------- ---------- ------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ (1,373) $ -- $ 7,816 $ -- $ (1,338) $ --
Net realized gain (loss) (864) -- (171) -- (6,950) --
Net unrealized gain (loss) on investments 22,710 -- (5,030) -- 43,356 --
----------- ------- ---------- ------ ----------- -------
Net increase in net assets resulting
from operations 20,473 -- 2,615 -- 35,068 --
----------- ------- ---------- ------ ----------- -------
Contract transactions:
Transfer of annuity fund deposits 22,449 -- 939 -- 51,539 --
Net transfers between sub-accounts 294,631 -- 66,052 -- 336,984 --
Death benefits -- -- -- -- -- --
Surrenders (3,547) -- -- -- (529) --
----------- ------- ---------- ------ ----------- -------
Net increase in net assets resulting
from contract transactions 313,533 -- 66,991 -- 387,994 --
----------- ------- ---------- ------ ----------- -------
Total increase in net assets 334,006 -- 69,606 -- 423,062 --
Net assets:
Beginning of year -- -- -- -- -- --
----------- ------- ---------- ------ ----------- -------
End of year $ 334,006 $ -- $ 69,606 $ -- $ 423,062 $ --
=========== ======= ========== ====== =========== =======
</TABLE>
See accompanying notes to financial statements.
23 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Statement of Changes in Net Assets
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
MS
------------------------------------------------------
Global High Yield Value Total all Funds
------------------ ------------------ ---------------- ----------------------------
1998 1997 1998 1997 1998 1997 1998 1997
----------- ----- ----------- ----- --------- ----- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ 2,315 $ -- $ 71,876 $ -- $ 4,037 $ -- 1,001,224 351,208
Net realized gain (loss) 23,459 -- 2,052 -- (59,526) -- 6,437,380 903,586
Net unrealized gain (loss) on
investment 27,239 -- (38,881) -- 17,428 -- 8,354,162 3,778,630
----------- ----- ----------- ----- --------- ----- ------------- -------------
Net increase in net assets
resulting from operations 53,013 -- 35,047 -- (38,061) -- 15,792,766 5,033,424
----------- ----- ----------- ----- --------- ----- ------------- -------------
Contract transactions:
Transfer of annuity fund deposits 15,255 -- 38,608 -- 25,690 -- 71,294,146 31,642,266
Net transfers between sub-accounts 1,133,975 -- 1,314,337 -- 598,223 -- (8,861,672) (1,226,608)
Death benefits -- -- -- -- -- -- (816,878) (135,885)
Surrenders (10,680) -- (6,002) -- (15,323) -- (4,747,167) (1,464,547)
----------- ----- ----------- ----- --------- ----- ------------- -------------
Net increase in net assets
resulting from contract
transactions 1,138,550 -- 1,346,943 -- 608,590 -- 56,868,429 28,815,226
----------- ----- ----------- ----- --------- ----- ------------- -------------
Total increase in net assets 1,191,563 -- 1,381,990 -- 570,529 -- 72,661,195 33,848,650
Net assets:
Beginning of year -- -- -- -- -- -- 51,901,083 18,052,433
----------- ----- ----------- ----- --------- ----- ------------- -------------
End of year $ 1,191,563 $ -- $ 1,381,990 $ -- $ 570,529 $ -- 124,562,278 51,901,083
=========== ===== =========== ===== ========= ===== ============= =============
</TABLE>
See accompanying notes to financial statements.
24 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1998
(1) Organization and Business
United Life & Annuity Separate Account One (the Separate Account) is a
separate investment account of United Life & Annuity Insurance Company
(ULA). The Separate Account is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as a unit
investment trust. ULA administers its SpectraSelect, SpectraDirect and
Spectra SDB products (the Products) through the Separate Account. The
Products range from seven to ten years. ULA is a stock life insurance
company domiciled in Texas and organized in 1955. ULA is currently
authorized to conduct business in 47 states, the District of Columbia and
Puerto Rico. ULA is a wholly-owned subsidiary of Pacific Life and
Accident Insurance Company, a wholly-owned subsidiary of PennCorp
Financial Group, Inc., an insurance holding company.
Generally the Separate Account consists of thirty-three sub-accounts.
Each of the thirty-three sub-accounts invests only in a single
corresponding portfolio of either The Alger American Fund (Fred Alger
Management, Advisor), the Dreyfus Variable Investment Fund and the
Dreyfus Stock Index Fund (The Dreyfus Corporation, Advisor), Federated
Insurance Series (Federated Advisors, Advisor), MFS Variable Insurance
Trust (Massachusettes Financial Services Corp., Advisor), Scudder
Variable Life Investment Fund (Scudder Kemper Investments, Inc.,
Advisor), the Van Eck Worldwide Insurance Trust (Van Eck Associates
Corporation, Advisor), AIM (AIM Advisors, Inc., Advisor), Emerging
Markets Debt (Morgan Stanley Asset Managements, Inc., Advisor), High
Yield and Value (Miller, Anderson and Sherrerd, LLP, Advisor), Neuberger
and Berman (N&B Management, Advisor) or Warburg Pincus (Warburg Pincus
Asset Management, Inc., Advisor).
(2) Investments
Investments of the Separate Account are valued daily at market value
using net asset values provided by the respective sub-account advisors.
Transactions are accounted for on the trade date and dividend income is
recognized on the ex-dividend date. Realized gains and losses are
determined on a first-in first-out basis. Generally, investment income
and realized capital gains are reinvested.
25 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1998
(3) Contract Charges
A mortality and expense risk charge is deducted from the Separate
Account, on a daily basis equal, on an annual basis, to 1.52% for
SpectraDirect, to 1.45% for SpectraSelect and to 1.25% for Spectra SDB,
of the average daily net asset value of each sub-account of the Separate
Account. This charge compensates ULA for assuming the mortality and
expense risks under the contracts and certificates. In addition, an
administrative charge is deducted from the Separate Account on an annual
basis equal to .15% of the average daily net asset value of each
sub-account of the Separate Account. This charge compensates ULA for
costs associated with the administration of the contracts, certificates
and the Separate Account. Under certain circumstances, a transfer fee may
be assessed when an owner or certificate holder transfers contract values
or certificate holder's account values between sub-accounts or to or from
ULA's fixed accounts. A contingent deferred sales charge is assessed
against full or partial surrenders in accordance with contract terms.
There is no contingent deferred sales charge if all premiums were
received generally for at least seven to ten years prior to the date of
the full or partial surrenders. An annual contract or certificate
maintenance fee of $30 is charged on SpectraDirect and Spectra SDB
contracts based upon a minimum contract value. Some states and other
jurisdictions assess premium taxes at the time purchase payments are
made; others assess premium taxes at the time annuity payments begin.
Premium taxes are deducted when they are due.
(4) Income Taxes
The operations of the Separate Account are included in the federal income
tax return of ULA, which is taxed as a Life Insurance Company under the
provisions of the Internal Revenue Code. ULA does not expect to incur any
federal income tax liability on earnings, or realized capital gains
attributable to the Separate Account, therefore, no charges for federal
income taxes are currently deducted from the Separate Account. If ULA
incurs income taxes attributable to the Separate Account, or determines
that such taxes will be incurred, it may make a charge for such taxes
against the Separate Account.
(5) Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements
in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
26 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1998
(6) Changes in the Units Outstanding
<TABLE>
<CAPTION>
Alger Federated
----------------------------- ----------------------------------------------------------
Growth American Leaders Prime Money
----------------------------- ----------------------------------------------------------
1998 1997 1998 1997 1998 1997
-------------- -------------- -------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding beginning
of the year 527,092 265,242 -- -- -- --
Units purchased 76,659 49,810 2,904 -- 1,935,625 --
Units transferred between
sub-accounts 312,222 232,123 94,311 -- (1,583,519) --
Units surrendered (44,875) (20,083) (2,144) -- (22,285) --
-------------- -------------- -------------- -------------- -------------- -------------
Units outstanding end of the year 871,098 527,092 95,071 -- 329,821 --
============== ============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
Federated
----------------------------------------------------------------------------------------
High Income Bond U.S. Government Bond Utility
----------------------------- ----------------------------------------------------------
1998 1997 1998 1997 1998 1997
-------------- -------------- -------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding beginning
of the year 289,681 193,943 154,877 25,831 121,807 45,403
Units purchased 33,678 15,721 29,878 28,420 15,331 18,348
Units transferred between
sub-accounts 231,697 89,252 72,142 103,695 66,947 59,915
Units surrendered (34,576) (9,235) (18,921) (3,069) (10,804) (1,859)
-------------- -------------- -------------- -------------- -------------- -------------
Units outstanding end of the year 520,480 289,681 237,976 154,877 193,281 121,807
============== ============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
Van Eck Dreyfus
----------------------------- ----------------------------------------------------------
Worldwide Hard Assets Stock Index Growth and Income
----------------------------- ----------------------------------------------------------
1998 1997 1998 1997 1998 1997
-------------- -------------- -------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding beginning
of the year 25,487 7,122 497,429 181,969 333,084 120,598
Units purchased 1,253 2,678 127,114 52,851 57,645 38,724
Units transferred between
sub-accounts (1,145) 16,142 477,654 279,089 254,596 187,968
Units surrendered (1,408) (455) (44,394) (16,480) (39,736) (14,206)
-------------- -------------- -------------- -------------- -------------- -------------
Units outstanding end of the year 24,187 25,487 1,507,803 497,429 605,589 333,084
============== ============== ============== ============== ============== =============
</TABLE>
27 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1998
(6) Changes in the Units Outstanding, Continued
<TABLE>
<CAPTION>
Scudder MFS
----------------------------------------------------------------------------------------
Money Market International Emerging Growth
----------------------------- ----------------------------------------------------------
1998 1997 1998 1997 1998 1997
-------------- -------------- -------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding beginning
of the year 461,537 228,486 286,406 119,631 640,544 242,852
Units purchased 4,037,207 2,555,841 46,649 25,371 68,611 66,048
Units transferred between
sub-accounts (3,809,793) (2,307,894) 108,633 149,475 439,767 352,324
Units surrendered (82,841) (14,896) (19,166) (8,071) (50,536) (20,680)
-------------- -------------- -------------- -------------- -------------- -------------
Units outstanding end of the year 606,111 461,537 422,522 286,406 1,098,386 640,544
============== ============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
MFS
----------------------------------------------------------------------------------------
Total Return Growth with Income Research
----------------------------- ----------------------------------------------------------
1998 1997 1998 1997 1998 1997
-------------- -------------- -------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding beginning
of the year 509,069 146,453 -- -- -- --
Units purchased 78,142 63,721 4,218 -- 2,599 --
Units transferred between
sub-accounts 434,730 315,014 89,370 -- 126,198 --
Units surrendered (69,433) (16,119) (1,199) -- (1,688) --
-------------- -------------- -------------- -------------- -------------- -------------
Units outstanding end of the year 952,508 509,069 92,389 -- 127,109 --
============== ============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
MFS Warburg Pincus
----------------------------- ----------------------------------------------------------
Utilities Fixed Income International Equity
----------------------------- ----------------------------------------------------------
1998 1997 1998 1997 1998 1997
-------------- -------------- -------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding beginning
of the year -- -- -- -- -- --
Units purchased 5,677 -- 14,718 -- 753 --
Units transferred between
sub-accounts 78,467 -- 194,274 -- 7,454 --
Units surrendered (449) -- (1,510) -- -- --
-------------- -------------- -------------- -------------- -------------- -------------
Units outstanding end of the year 83,695 -- 207,482 -- 8,207 --
============== ============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
Warburg Pincus AIM
----------------------------- ----------------------------------------------------------
Post Venture Capital Capital Appreciation Diversified Income
----------------------------- ----------------------------------------------------------
1998 1997 1998 1997 1998 1997
-------------- -------------- -------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding beginning
of the year -- -- -- -- -- --
Units purchased 92 -- 15,791 -- 6,681 --
Units transferred between
sub-accounts 6,923 -- 183,299 -- 45,217 --
Units surrendered (58) -- (2,486) -- (478) --
-------------- -------------- -------------- -------------- -------------- -------------
Units outstanding end of the year 6,957 -- 196,604 -- 51,420 --
============== ============== ============== ============== ============== =============
</TABLE>
28 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1998
(6) Changes in the Units Outstanding, Continued
<TABLE>
<CAPTION>
AIM
----------------------------------------------------------------------------------------
Growth Growth and Income International Equity
----------------------------- ----------------------------------------------------------
1998 1997 1998 1997 1998 1997
-------------- -------------- -------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding beginning
of the year -- -- -- -- -- --
Units purchased 15,156 -- 16,414 -- 759 --
Units transferred between
sub-accounts 89,394 -- 106,346 -- 113,704 --
Units surrendered (1,736) -- (593) -- (433) --
-------------- -------------- -------------- -------------- -------------- -------------
Units outstanding end of the year 102,814 -- 122,167 -- 114,030 --
============== ============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
NB
----------------------------------------------------------------------------------------
Guardian Limited Maturity Mid Cap Growth
----------------------------- ----------------------------------------------------------
1998 1997 1998 1997 1998 1997
-------------- -------------- -------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding beginning
of the year -- -- -- -- -- --
Units purchased 2,068 -- -- -- 6,060 --
Units transferred between
sub-accounts 40,522 -- 2,087 -- 27,925 --
Units surrendered (650) -- (28) -- (390) --
-------------- -------------- -------------- -------------- -------------- -------------
Units outstanding end of the year 41,940 -- 2,059 -- 33,595 --
============== ============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
NB MS
----------------------------- ----------------------------------------------------------
Partners Emerging Markets Debt Equity Growth
----------------------------- ----------------------------------------------------------
1998 1997 1998 1997 1998 1997
-------------- -------------- -------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding beginning
of the year -- -- -- -- -- --
Units purchased 2,461 -- 231 -- 5,427 --
Units transferred between
sub-accounts 33,846 -- 10,046 -- 35,464 --
Units surrendered (475) -- (69) -- (53) --
-------------- -------------- -------------- -------------- -------------- -------------
Units outstanding end of the year 35,832 -- 10,208 -- 40,838 --
============== ============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
MS
----------------------------------------------------------------------------------------
Global Equity High Yield Value
----------------------------- ----------------------------------------------------------
1998 1997 1998 1997 1998 1997
-------------- -------------- -------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding beginning
of the year -- -- -- -- -- --
Units purchased 1,583 -- 3,905 -- 2,901 --
Units transferred between
sub-accounts 120,797 -- 135,538 -- 63,356 --
Units surrendered (1,113) -- (616) -- (1,760) --
-------------- -------------- -------------- -------------- -------------- -------------
Units outstanding end of the year 121,267 -- 138,827 -- 64,497 --
============== ============== ============== ============== ============== =============
</TABLE>
29 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1998
(7) Unit Values
A summary of unit values and units outstanding for variable annuity
contracts and the expense ratios, including expenses of the underlying
funds for each of the two years in the period ended December 31, 1998
follows:
<TABLE>
<CAPTION>
Annualized
ratio of
expenses
Average to average
Units unit value Net assets net assets
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio
December 31:
1998 871,098 $ 19.23 $16,747,980 1.57%
1997 527,092 13.88 7,305,343 1.66
Federated American Leaders
December 31:
1998 95,071 10.14 963,818 1.15
1997 -- -- -- --
Federated Prime Money
December 31:
1998 329,821 10.21 3,367,951 1.32
1997 -- -- -- --
Federated High Income Bond Fund II
December 31:
1998 520,480 12.50 6,506,271 1.75
1997 289,681 12.79 3,703,960 1.61
Federated Fund for U.S. Government Securities
II December 31:
1998 237,976 11.69 2,782,939 2.14
1997 154,877 11.09 1,718,067 1.50
Federated Utility Fund II
December 31:
1998 193,281 15.01 2,902,018 1.70
1997 121,807 14.08 1,714,981 1.69
</TABLE>
30 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1998
(7) Unit Values, Continued
<TABLE>
<CAPTION>
Annualized
ratio of
expenses
Average to average
Units unit value Net assets net assets
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Van Eck Worldwide Hard Assets
December 31:
1998 24,187 $ 7.64 $ 184,710 1.75%
1997 25,487 11.38 290,157 1.77
Dreyfus Stock Index
December 31:
1998 1,057,803 18.58 19,652,813 1.58
1997 497,429 16.00 7,959,989 1.55
Dreyfus Growth and Income
December 31:
1998 605,589 15.35 9,297,214 1.77
1997 333,084 14.22 4,736,420 1.61
Scudder Money Market
December 31:
1998 606,111 10.94 6,628,217 2.23
1997 461,537 10.74 4,954,866 1.78
Scudder International
December 31:
1998 422,522 14.20 5,998,029 2.02
1997 286,406 12.25 3,507,256 1.73
MFS Emerging Growth
December 31:
1998 1,098,386 17.46 19,173,453 1.57
1997 640,544 14.07 9,010,577 1.71
MFS Total Return
December 31:
1998 952,508 14.54 13,853,262 1.71
1997 509,069 13.75 6,999,467 1.55
</TABLE>
31 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1998
(7) Unit Values, Continued
<TABLE>
<CAPTION>
Annualized
ratio of
expenses
Average to average
Units unit value Net assets net assets
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
MFS Growth with Income December 31:
1998 92,389 $ 10.57 $ 976,562 0.79%
1997 -- -- -- --
MFS Research
December 31:
1998 127,109 10.46 1,329,496 0.71
1997 -- -- -- --
MFS Utilities
December 31:
1998 83,695 10.53 880,954 0.70
1997 -- -- -- --
Warburg Pincus Fixed Income
December 31:
1998 207,482 10.50 2,178,645 1.09
1997 -- -- -- --
Warburg Pincus International Equity
December 31:
1998 8,207 8.93 73,261 1.33
1997 -- -- -- --
Warburg Pincus Post Venture Capital
December 31:
1998 6,957 9.03 62,790 1.07
1997 -- -- -- --
</TABLE>
32 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1998
(7) Unit Values, Continued
<TABLE>
<CAPTION>
Annualized
ratio of
expenses
Average to average
Units unit value Net assets net assets
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
AIM Capital Appreciation
December 31:
1998 196,604 $ 10.38 $2,041,222 0.80%
1997 -- -- -- --
AIM Diversified Income
December 31:
1998 51,420 9.91 509,574 0.74
1997 -- -- -- --
AIM Growth
December 31:
1998 102,814 11.65 1,197,773 1.01
1997 -- -- -- --
AIM Growth and Income December 31:
1998 122,167 11.38 1,390,431 0.66
1997 -- -- -- --
AIM International Equity
December 31:
1998 114,030 9.63 1,098,622 0.75
1997 -- -- -- --
NB Guardian
December 31:
1998 41,940 9.35 392,065 0.95
1997 -- -- -- --
NB Limited Maturity
December 31:
1998 2,059 10.15 20,900 0.57
1997 -- -- -- --
</TABLE>
33 (Continued)
<PAGE>
UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE
Notes to Financial Statements
December 31, 1998
(7) Unit Values, Continued
<TABLE>
<CAPTION>
Annualized
ratio of
expenses
Average to average
Units unit value Net assets net assets
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
NB Mid Cap Growth
December 31:
1998 33,595 $ 11.33 $ 380,552 1.08%
1997 -- -- -- --
NB Partners
December 31:
1998 35,832 9.32 334,006 0.82
1997 -- -- -- --
MS Emerging Markets
December 31:
1998 10,208 6.82 69,606 0.87
1997 -- -- -- --
MS Equity Growth
December 31:
1998 40,838 10.36 423,062 0.63
1997 -- -- -- --
MS Global
December 31:
1998 121,267 9.83 1,191,563 0.45
1997 -- -- -- --
MS High Yield
December 31:
1998 138,827 9.95 1,381,990 0.63
1997 -- -- -- --
MS Value
December 31:
1998 64,497 8.85 570,529 1.37
1997 -- -- -- --
</TABLE>
3
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholder
United Life & Annuity Insurance Company:
We have audited the accompanying consolidated balance sheets of United Life &
Annuity Insurance Company and subsidiaries (the Company) as of December 31, 1998
and 1997, and the related consolidated statements of income and comprehensive
income (loss), shareholders' equity, and cash flows for the years ended December
31, 1998 and 1997 and for the periods from July 24, 1996 to December 31, 1996
(Successor period) and January 1, 1996 to July 23, 1996 (Predecessor period).
Our audit also included the related financial statement schedules III, IV and V.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the aforementioned consolidated financial statements present
fairly, in all material respects, the financial position of United Life &
Annuity Insurance Company and subsidiaries as of December 31, 1998 and 1997, and
the results of their operations and their cash flows for the years ended
December 31, 1998 and 1997 and the periods from July 24, 1996 to December 31,
1996 (Successor period) and January 1, 1996 to July 23, 1996 (Predecessor
period), in conformity with generally accepted accounting principles. Also in
our opinion, the related financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
/S/ KPMG LLP
Dallas, Texas
March 31, 1999
1
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
as of December 31, 1998 and 1997
(In thousands, except share information)
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities available for sale, at fair value (cost $933,296 and $1,069,459) $ 955,449 $ 1,106,961
Equity securities available for sale, at fair value (cost $392 and $--)......... 362 5
Mortgage loans on real estate, net of allowance of $8,851 in 1998 and
$3,923 in 1997................................................................ 212,503 227,755
Policy loans.................................................................... 22,168 22,585
Short-term investments.......................................................... 21,342 22,804
Investments in limited partnerships............................................. 14,081 16,026
Real estate..................................................................... 458 932
Other investments............................................................... -- 145
------------ -------------
Total investments............................................................. 1,226,363 1,397,213
Due from reinsurers................................................................ 36,215 33,379
Accrued investment income.......................................................... 16,619 17,482
Investment in securities of affiliates............................................. 13,746 5,509
Accounts and notes receivable...................................................... 5,340 3,309
Present value of insurance in force................................................ 25,988 27,769
Deferred policy acquisition costs.................................................. 26,438 13,671
Deferred income taxes, net......................................................... 4,636 3,529
Other assets....................................................................... 2,620 2,140
Costs in excess of net assets acquired............................................. 25,226 27,324
Assets held in separate accounts................................................... 124,562 51,901
------------ -------------
Total assets.................................................................. $ 1,507,753 $ 1,583,226
============ =============
LIABILITIES
Policy liabilities and accruals.................................................... $ 1,190,973 $ 1,312,876
Accrued expenses and other liabilities............................................. 12,271 18,195
Due to affiliates.................................................................. 3,112 453
Liabilities related to separate accounts........................................... 124,562 51,901
------------ -------------
Total liabilities............................................................. 1,330,918 1,383,425
------------ -------------
SHAREHOLDERS' EQUITY
Common stock, $2.00 par value; 4,200,528 shares authorized issued and outstanding.. 8,401 8,401
Additional paid in capital......................................................... 163,675 174,447
Other comprehensive income, net of tax of $3,075 and $5,211........................ 5,710 9,678
Retained earnings (deficit)........................................................ (951) 7,275
------------ -------------
Total shareholders' equity.................................................... 176,835 199,801
------------ -------------
Total liabilities and shareholders' equity.................................... $ 1,507,753 $ 1,583,226
============ =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
2
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
for the Years Ended December 31, 1998, 1997 and 1996
(In thousands)
<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
-------------------------------------------- -------------
Period Period
from from
July 24 to January 1,
December 31, to July 23,
1998 1997 1996 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Premiums........................................ $ 4,177 $ 5,731 $ 3,483 $ 3,732
Interest sensitive policy product charges....... 3,342 2,821 1,048 1,421
Net investment income........................... 100,018 111,536 50,666 66,421
Net realized gains (losses) from sale of
investments................................... 2,321 5,932 (157) (1,592)
Other income.................................... 15,942 16,459 20,274 52
------------- ------------- ------------- -------------
Total revenues.............................. 125,800 142,479 75,314 70,034
------------- ------------- ------------- -------------
Benefits and expenses:
Policyholder benefits incurred.................. 11,521 6,980 3,332 5,215
Interest on annuity policies.................... 60,128 67,354 32,022 42,434
Change in liability for future policy benefits
and other policy benefits..................... (3,120) 169 504 752
Amortization of present value of insurance
in force and deferred policy acquisition costs 14,717 15,588 5,068 9,699
Amortization of costs in excess of net
assets acquired............................... 1,476 1,434 583 --
Underwriting and other administrative expenses.. 29,944 28,209 25,162 9,753
------------- ------------- ------------- -------------
Total benefits and expenses................. 114,666 119,734 66,671 67,853
------------- ------------- ------------- -------------
Income before income taxes......................... 11,134 22,745 8,643 2,181
Income taxes.................................. 4,812 9,122 3,155 769
------------- ------------- ------------- -------------
Net income......................................... $ 6,322 $ 13,623 $ 5,488 $ 1,412
============= ============= ============= =============
Comprehensive Income Information:
Net income...................................... $ 6,322 $ 13,623 $ 5,488 $ 1,412
Change in unrealized holding gains (losses)
on securities available for sale, net of
taxes (benefits) of ($2,136), $3,048,
$2,163 and ($17,051).......................... 2,893 10,320 3,860 (32,534)
Reclassification adjustments for (gains) losses
included in net income........................ (6,861) (4,659) 157 869
------------- ------------- ------------- -------------
Total comprehensive income (loss)........... $ 2,354 $ 19,284 $ 9,505 $ (30,253)
============= ============= ============= =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
for the Years Ended December 31, 1998 and 1997
(In thousands)
<TABLE>
<CAPTION>
Additional Other Retained Total
Common Paid-in Comprehensive Earnings Shareholder's
Stock Capital Income (Deficit) Equity
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Historical basis of accounting:
Balance at December 31, 1995............. $ 8,401 $ 28,980 $ 29,477 $ 119,667 $ 186,525
Net income............................... -- -- -- 1,412 1,412
Change in unrealized holding losses
on securities available for sale,
net of taxes........................... -- -- (32,534) -- (32,534)
Reclassification adjustments for
losses included in net income.......... -- -- 869 -- 869
Dividends................................ -- -- -- (58,334) (58,334)
---------- ---------- ---------- ---------- ----------
Balance at July 23, 1996................. $ 8,401 $ 28,980 $ (2,188) $ 62,745 $ 97,938
========== ========== ========== ========== ==========
Purchase basis of accounting:
Balance, July 24, 1996................... $ 8,401 $ 101,655 $ -- $ -- $ 110,056
Pooling of interest with affiliate under
common control......................... -- 15,534 -- (1,709) 13,825
Net income............................... -- -- -- 5,488 5,488
Capital contribution..................... -- 57,258 -- -- 57,258
Change in unrealized holding gains
on securities available for sale,
net of taxes........................... -- -- 3,860 -- 3,860
Reclassification adjustments for
losses included in net income.......... -- -- 157 -- 157
---------- ---------- ---------- ---------- ----------
Balance, December 31,1996 (restated)..... 8,401 174,447 4,017 3,779 190,644
Net income............................... -- -- -- 13,623 13,623
Change in unrealized holding gains
on securities available for sale,
net of taxes........................... -- -- 10,320 -- 10,320
Reclassification adjustments for gains
included in net income................. -- -- (4,659) -- (4,659)
Dividends................................ -- -- -- (10,127) (10,127)
---------- ---------- ---------- ---------- ----------
Balance, December 31, 1997............... 8,401 174,447 9,678 7,275 199,801
Net income............................... -- -- -- 6,322 6,322
Change in unrealized holding gains
on securities available for sale,
net of taxes........................... -- -- 2,893 -- 2,893
Reclassification adjustments for gains
included in net income................. -- -- (6,861) -- (6,861)
Dividends................................ -- -- -- (14,548) (14,548)
Deemed contributions from transactions
with affiliates:
Acquisition of subsidiary.............. -- 321 -- -- 321
Acquisition of promissory note
from affiliate....................... -- 214 -- -- 214
Deemed distribution to affiliate in
connection with acquisition of
Marketing One.......................... -- (11,307) -- -- (11,307)
---------- ---------- ---------- ---------- ----------
Balance, December 31, 1998............... $ 8,401 $ 163,675 $ 5,710 $ (951) $ 176,835
========== ========== ========== ========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the Years Ended December 31, 1998 and 1997
(In thousands)
<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
---------------------------- ----------
Period Period
From From
July 24 to January 1
December, to July 23
1998 1997 1996 1996
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income...................................................... $ 6,322 $ 13,623 $ 5,488 $ 1,412
Adjustments to reconcile net income to net cash used by
operating activities:
Adjustments relating to universal life and investment products:
Interest credited to account balances....................... 60,128 67,354 32,022 42,434
Charges for mortality and administration.................... (3,342) (2,821) (1,048) (1,421)
Capitalization of deferred policy acquisition costs........... (16,423) (10,465) (5,172) (4,797)
Amortization of intangibles, depreciation and accretion, net.. 13,968 15,311 4,601 10,502
Decrease in policy liabilities, accruals and other
policyholder funds.......................................... (5,700) 3,823 (18,283) 18,947
Other, net.................................................... (5,492) (4,243) 10,187 (6,986)
--------- -------- -------- --------
Net cash provided by operating activities................... 49,461 82,582 27,795 60,091
--------- -------- -------- --------
Cash flows from investing activities:
Cash expended in acquisition of business under common control,
net of cash acquired of $3,278 in 1998........................ (7,708) -- -- --
Sales of fixed maturities available for sale.................... 189,267 500,058 18,233 34,065
Maturities and other redemptions of fixed maturities
available for sale............................................ 102,413 107,177 2,000 2,650
Sales of mortgages, real estate and other investments........... 2,502 7,692 151,921 733,271
Principal collected on mortgage loans and collateral loans...... 47,289 52,591 21,657 44,264
Change in short-term investments, net........................... 1,462 (22,337) 50,063 (27,726)
Acquisition or originations of mortgage loans................... (36,965) (44,375) (112,473) (749,953)
Purchases of fixed maturities available for sale................ (146,148) (493,929) (94,025) (158)
Purchases of limited partnerships and other investments......... (9,530) (10,023) -- --
Other, net...................................................... -- 313 7,137 2,486
--------- -------- -------- --------
Net cash provided by investing activities..................... 142,582 97,167 44,513 38,899
--------- -------- -------- --------
Cash flows from financing activities:
Receipts from interest sensitive products credited to
policyholders' account balances............................... 91,370 86,194 48,770 51,464
Return of policyholders' account balances on interest
sensitive products............................................ (268,865) (277,033) (104,528) (155,464)
Increase(decrease) in repurchase agreements..................... -- -- (52,839) 11,982
Contributed capital............................................. -- -- 57,259 --
Other, net...................................................... -- -- 247 --
Dividends....................................................... (14,548) (10,127) -- (10,000)
--------- -------- -------- --------
Net cash used by financing activities......................... (192,043) (200,966) (51,091) (102,018)
--------- -------- -------- --------
Net increase (decrease) in cash.................................... -- (21,217) 21,217 (3,028)
Cash at beginning of period (cash overdrafts of $1,863, $--,
$2,354 and $-- were reclassified to other liabilities).......... -- 21,217 -- 3,028
--------- -------- -------- --------
Cash at end of period (cash overdrafts of $2,430, $1,863, $--
and $2,354 were reclassified to other liabilities).............. $ -- $ -- $ 21,217 $ --
========= ======== ======== ========
Supplemental disclosures:
Income taxes paid............................................... $ 6,342 $ 7,119 $ 128 $ 2,797
Interest paid................................................... -- 171 439 2,392
</TABLE>
See accompanying Notes to Consolidated Financial Statement.
5
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
(In thousands)
1. Basis of Presentation
United Life & Annuity Insurance Company (the "Company" or "ULA") is a
wholly-owned subsidiary of Pacific Life and Accident Insurance Company
("PLAIC"), a wholly-owned subsidiary of PennCorp Financial Group, Inc.
("PennCorp"). (See Note 3 to Notes to Consolidated Financial Statements.)
PennCorp is an insurance holding company which offers, through its wholly-owned
subsidiaries, a broad range of life insurance, annuity and accident and sickness
products.
The Company, a life insurance company originally domiciled in Louisiana,
redomiciled to Texas in 1998 and organized in 1955, is currently authorized to
conduct business in 47 states, the District of Columbia and Puerto Rico. The
primary products of the Company are tax deferred annuity contracts marketed to
individuals principally through independent marketing organizations and
independent agents.
The consolidated financial statements include the Company and its wholly-owned
subsidiaries, United Variable Services, Inc., Cyberlink Development, Inc. and
Marketing One Financial Corporation ("Marketing One"), which was acquired from
other PennCorp subsidiaries effective March 24, 1998. Marketing One is a third
party marketing firm supplying investment products and programs to the banking
industry. All significant intercompany accounts and transactions have been
eliminated.
All dollar amounts presented hereafter are stated in thousands.
As required by generally accepted accounting principles ("GAAP"), the
acquisition of Marketing One has been reflected as an "as-if
pooling-of-interest" as a result of Marketing One previously being owned by
affiliated entities. The accompanying financial statements have been restated to
reflect such pooling of interest as if it had occurred at the date ULA was
acquired by PLAIC. The impact was to increase total revenues by $16,056 and
$19,992 for the year ended December 31, 1997 and the period from July 24, 1996
to December 31, 1996, respectively, and to reduce net income by $2,334 and $215
for the year ended December 31, 1997 and the period from July 24, 1996 to
December 31, 1996, respectively.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities as well as revenues and expenses. Accounts that the
Company deems to be acutely sensitive to changes in estimates include deferred
policy acquisition costs, policy liabilities and accruals, present value of
insurance in force, costs in excess of net assets acquired and deferred taxes.
In addition, the Company must determine requirements for disclosure of
contingent assets and liabilities as of the date of the financial statements
based upon estimates. As additional information becomes available, or actual
amounts are determinable, the recorded estimates may be revised and reflected in
operating results. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate. In all instances, actual
results could differ from estimates.
2. Summary of Significant Accounting Policies
(a) Investments
Fixed maturity and equity securities classified as available for sale
are recorded at fair value, as they may be sold in response to changes
in interest rates, prepayment risk, liquidity needs, the need or desire
to increase income, capital or other economic factors. Changes in
unrealized gains and losses related to securities available for sale
are recorded as accumulated other comprehensive income, a separate
component of shareholders' equity, net of applicable income taxes and
amounts attributable to deferred policy acquisition costs and present
value of insurance in force related to universal life and accumulation
products. Mortgage-backed securities are amortized using the interest
method including anticipated prepayments at the date of purchase.
Significant changes in estimated cash flows from original assumptions
are reflected in the period of such change. Mortgage loans on real
estate are recorded at cost, adjusted for amortization of premium or
discount and provision for loan losses, if necessary. Mortgage loans in
default are carried at the lower of cost or fair value. Policy loans,
short-term investments and other assets are recorded at amortized cost.
As a result of the Company's decision to exit the private placement
bond sector, the Company transferred all of its remaining assets in the
fixed maturities held for investment portfolio aggregating $20,800 to
its fixed maturities available for sale portfolio as of April 1, 1997.
In accordance with Statement of Financial Accounting Standards
6
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of Significant Accounting Policies (Continued)
("SFAS") No. 115, the Company marked all assets subject to the
transfer to fair value resulting in a net increase in shareholders'
equity, net of applicable income taxes, of $1,900.
Real estate, substantially all of which was acquired through
foreclosure, is recorded at the lower of fair value, minus estimated
costs to sell, or cost. If the fair value of the foreclosed real estate
minus estimated costs to sell is less than cost, a valuation allowance
is provided for the deficiency. Increases in the valuation allowance
are charged to income.
Investments in limited partnerships are carried on an equity basis.
The Company regularly evaluates the carrying value of its investments
based on current economic conditions, past credit loss experience and
other circumstances. A decline in net realizable value that is other
than temporary is recognized as a realized investment loss and a
reduction in the cost basis of the investment. The Company discounts
expected cash flows in the computation of net realizable value of its
investments, other than certain mortgage-backed securities. In those
circumstances where the expected cash flows of residual interest and
interest-only mortgage-backed securities, discounted at a risk-free
rate of return, result in an amount less than the carrying value, a
realized loss is reflected in an amount sufficient to adjust the
carrying value of a given security to its fair value.
Realized investment gains and losses and declines in value which are
other than temporary, determined on the basis of specific
identification, are included in the determination of net income.
(b) Accounts and Notes Receivable
Accounts and notes receivable consist primarily of agents' balances and
premiums receivable from agents and policyholders. Agents' balances are
partially secured by commissions due to agents in the future and
premiums receivable are secured by policy liabilities. An allowance for
doubtful accounts is established, based upon specific identification,
for amounts which the Company estimates will not ultimately be
collected.
(c) Intangible Assets
During 1996, the Company implemented SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and Assets to be Disposed of." This
accounting standard modified the methodology companies utilize to
evaluate the carrying value of certain assets by requiring, among other
things, companies evaluate assets at the lowest level at which
identifiable cash flows can be determined.
The Company continually monitors the recoverability of the carrying
value of intangible assets using the methodology prescribed in SFAS No.
121. The Company also reviews long-lived assets and the related
intangible assets for impairment whenever events or changes in
circumstances indicate the carrying amounts of these assets may not be
recoverable. Recoverability of these assets is determined by comparing
the forecast undiscounted net cash flows of the operation to which the
assets relate, to the carrying amount, including associated intangible
assets, of such operation. If the operation is determined to be unable
to recover the carrying amount of its assets, intangible assets are
written down initially, followed by the other long-lived assets of the
operation, to fair value. Fair value is determined based upon
discounted cash flows or appraised values, depending on the nature of
the associated assets.
(d) Deferred Policy Acquisition Costs
Estimated costs of acquiring new business which vary with, and are
primarily related to, the production of new business, have been
deferred to the extent that such costs are deemed recoverable from
future revenues. Such estimated costs include commissions and certain
costs of policy issuance, underwriting, certain variable agency and
7
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of Significant Accounting Policies (Continued)
marketing expenses and other costs directly associated with these
functions to the extent such costs are determined to vary with and are
primarily related to the production of new business. Costs deferred on
accident and health and traditional life policies are amortized, with
interest, over the anticipated premium-paying period of the related
policies in proportion to the ratio of annual premium revenue to
expected total premium revenue to be received over the life of the
policies. Expected premium revenue is estimated by using the same
mortality, morbidity and withdrawal assumptions used in computing
liabilities for future policy benefits. For interest sensitive products
and limited pay life products, policy acquisition costs are amortized
in relation to the emergence of anticipated gross profits over the life
of the policies.
(e) Present Value of Insurance In Force
The present value of insurance in force represents the anticipated
gross profits to be realized from future revenues on insurance in force
at the date such insurance was purchased, discounted to provide an
appropriate rate of return and amortized, with interest, based on
credited rate, over the years that such profits are anticipated to be
received in proportion to the estimated gross profits. Accumulated
amortization was $33,034 and $20,332 of December 31, 1998 and 1997,
respectively.
(f) Costs in Excess of Net Assets Acquired
Costs in excess of the fair value of net assets acquired are primarily
amortized on a straight-line basis over 20 years. Accumulated
amortization totaled $3,749 and $2,273 at December 31, 1998 and 1997,
respectively.
For each of the years presented, the Company has made certain valuation
determinations with respect to pre-acquisition contingencies or
allocations. For the year ended December 31, 1998, the Company reduced
tax liabilities and associated costs in excess of net assets acquired
by $622 as a result of the resolving certain acquisition date
contingencies.
(g) Policy Liabilities and Accruals
Policy benefit reserves for traditional life insurance policies
generally have been computed on the net level premium method, based on
estimated future investment yield, mortality, morbidity and
withdrawals. Estimates used are based on experience adjusted to provide
for possible adverse deviation. These estimates are periodically
reviewed and compared with actual experience. Future policy benefits
for interest sensitive products include the balance that accrues to the
benefits of the policyholders and amounts that have been assessed to
compensate the life insurance subsidiaries for services to be provided
in the future.
Reserves for annuity policies and interest sensitive life policies
represent the policy account balance, or accumulated fund value, before
applicable surrender charges. Benefits incurred in excess of related
policy account balances and interest credited during the period to
policy account balances are charged to expense.
Reserves for separate account policies are carried at account value.
Policy and contract claims represent estimates of both reported claims
and claims incurred but not reported and are based on the Company's
experience.
(h) Insurance Revenue Recognition
Accident and sickness insurance premiums are recognized as revenue
ratably over the time period to which premiums relate. Revenues from
traditional life insurance policies represent premiums which are
recognized as earned when due. Benefits and expenses are associated
with earned premiums so as to result in recognition of
8
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of Significant Accounting Policies (Continued)
profits over the lives of the policies. This association is
accomplished by means of the provision for liabilities for future
policy benefits and the deferral and amortization of policy acquisition
costs.
Revenues for interest sensitive products such as universal life and
annuity contracts represent charges assessed against the policyholders'
account balance for the cost of insurance, surrenders and policy
administration. Benefits charged to expenses include benefit claims
incurred during the period in excess of policy account balances and
interest credited to policy account balances.
(i) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax bases as well as operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date.
In assessing the realization of deferred taxes, management considers
whether it is more likely than not that some portion or all of the
deferred tax assets will be realized. The ultimate realization of
deferred tax assets is dependent on the generation of future taxable
income during the periods in which those temporary differences become
deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income and tax planning
strategies in making this assessment.
(j) Reinsurance
Financial reinsurance that does not transfer insurance risk is
accounted for as deposits. The cost of reinsurance related to
long-duration contracts is accounted for over the life of the
underlying reinsured policies. Balances due to, or from, reinsurers
have been reflected as assets and liabilities rather than being netted
against the related account balances. Realized gains on retroactive
reinsurance arrangements are deferred and amortized into net income
over the estimated duration of the reinsured business.
(k) Participating Policies
Direct participating business, primarily related to the Company's
pre-need funeral policies, represented 75% and 74.7% of the amount of
life insurance in force and 50.5% and 47.2% of the life insurance
policies in force as of December 31, 1998 and 1997, respectively. The
amount of dividends paid on participating policies is based on
published dividend scales and totaled $854, $1,501 and $1,198 for the
years ended December 31, 1998, 1997 and 1996, respectively.
(l) Accounting Pronouncements Not Yet Adopted
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 defines derivative
instruments and provides comprehensive accounting and reporting
standards for the recognition and measurement of derivative and hedging
activities (including certain instruments embedded in other contracts).
It requires derivatives to be recorded in the Consolidated Balance
Sheet at fair value and establishes criteria for hedges of changes in
the fair value of assets, liabilities or firm commitments, hedges of
variable cash flows of forecasted transactions, and hedges of foreign
currency exposures of net investments in foreign operations. Changes in
the fair value of derivatives not meeting specific hedge accounting
criteria would be recognized in the Consolidated Statement of
Operations. SFAS No. 133 is effective for all fiscal quarters of all
9
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of Significant Accounting Policies (Continued)
years beginning after June 15, 1999. The Company is evaluating SFAS
No.133 and has not determined its effect on the consolidated financial
statements.
In December 1997, the American Institute of Certified Public
Accountants ("AICPA") issued Statement of Position ("SOP") 97-3. SOP
97-3 provides (1) guidance for determining when an entity should
recognize a liability for guaranty-fund and other insurance-related
assessments, (2) guidance on how to measure the liability, (3) guidance
on when an asset may be recognized for a portion or all of the
assessment liability or paid assessment that can be recovered through
premium tax offsets or policy surcharges, and (4) requirements for
disclosure of certain information. This SOP is effective for financial
statements for fiscal years beginning after December 15, 1998. It is
expected that adoption of this SOP will not have a material effect on
the consolidated financial statements.
In March 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." This SOP
provides guidance for determining whether costs of software developed
or obtained for internal use should be capitalized or expensed as
incurred. In the past, the Company has expensed such costs as they were
incurred. This SOP is also effective for fiscal years beginning after
December 15, 1998. The Company is currently completing its evaluation
of the financial impact as well as the changes to its related
disclosures.
3. Ownership of the Company
On July 24, 1996, PLAIC consummated the acquisition of the Company from United
Companies Financial Corporation ("UC Financial"). Pursuant to an Amended and
Restated Stock Purchase Agreement (the "Agreement") dated as of July 24, 1996,
PLAIC acquired 100% of the outstanding capital stock of the Company for $110,056
in cash including expenses incurred of $9,706 as part of the acquisition.
Immediately following the acquisition of the Company, PLAIC contributed $57,258
in cash to the Company, which represented the market value of certain real
estate and other assets distributed to UC Financial immediately prior to the
consummation of the acquisition.
The Company's acquisition has been accounted for using the purchase method of
accounting. The total purchase price of the acquisition was allocated to the
tangible and intangible assets and liabilities acquired based upon their
respective fair values as of the date of acquisition. Based upon such respective
fair values, the value of the net assets acquired was $82,580, resulting in
costs in excess of net assets acquired at the date of acquisition of $27,476.
4. Investments
The amortized cost and fair value of investments in fixed maturities available
for sale at December 31, 1998 and 1997 by categories of securities are as
follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
December 31, 1998:
Mortgage-backed securities........................... $ 467,283 $ 16,777 $ (3,502) $ 480,558
U.S. Treasury securities and obligations of
U.S. Government corporations and agencies.......... 57,692 130 (242) 57,580
Debt securities issued by states of the United States
and political subdivisions of the states.......... 3,245 140 -- 3,385
Debt securities issued by foreign governments........ 3,255 30 -- 3,285
Corporate debt securities............................ 401,821 13,517 (4,697) 410,641
----------- ----------- ----------- -----------
Total fixed maturities available for sale.......... $ 933,296 $ 30,594 $ (8,441) $ 955,449
=========== =========== =========== ===========
</TABLE>
10
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. Investments (Continued)
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
December 31, 1997:
Mortgage-backed securities........................... $ 619,152 $ 21,421 $ (30) $ 640,543
U.S. Treasury securities and obligations of
U.S. Government corporations and agencies.......... 8,883 118 -- 9,001
Debt securities issued by states of the United States
and political subdivisions of the states.......... 3,371 155 -- 3,526
Debt securities issued by foreign governments........ 5,541 165 -- 5,706
Corporate debt securities............................ 432,512 16,051 (378) 448,185
----------- ----------- ----------- -----------
Total fixed maturities available for sale.......... $ 1,069,459 $ 37,910 $ (408) $ 1,106,961
=========== =========== =========== ===========
</TABLE>
The amortized cost and fair value of fixed maturities at December 31, 1998, by
contractual maturity, are shown below:
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
------------ ------------
<S> <C> <C>
Available for sale:
Due in one year or less........................................... $ 13,190 $ 13,221
Due after one year through five years............................. 213,719 218,771
Due after five years through ten years............................ 187,365 190,037
Due after ten years............................................... 51,739 52,862
------------ ------------
466,013 474,891
Mortgage-backed securities........................................ 467,283 480,558
------------ ------------
$ 933,296 $ 955,449
============ ============
</TABLE>
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without prepayment
penalties.
Investments with a fair value of $25,963 and $14,622 were on deposit with
certain regulatory authorities at December 31, 1998 and 1997, respectively.
Included in fixed maturities available for sale at December 31, 1998 and 1997,
are below investment-grade securities with amortized costs of $79,869 and
$75,065, respectively, and fair values of $74,276 and $78,467, respectively.
Included in fixed maturities available for sale as of December 31, 1998 and
1997, are unrated securities with an amortized cost of $8,000 and $10,235 and a
fair value of $8,000 and $10,252, respectively.
In 1990, the Company securitized pools of commercial real estate loans owned in
two transactions and in connection therewith sold pass-through certificates
("Series 90-1" and "Series 90-2") for which an election under the real estate
mortgage investment conduit provisions ("REMIC") of the Internal Revenue Code of
1986, as amended were made. The Company retained as an investment subordinated
junior certificates in both issues, as well as a senior certificate interest in
Series 90-2. In the first quarter of 1997, the Company closed the Series 90-2
REMIC and reacquired the underlying mortgages. The two primary purposes of
closing the REMIC were the elimination of the administration and servicing fees
and the resulting improvement to the Company's Statutory Risk Based Capital.
Fixed maturity securities available for sale at December 31, 1998 and 1997
included REMIC investments of $6,391 and $9,606, respectively.
11
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. Investments (Continued)
A summary of the Company's investment at December 31, 1998 and 1997, in the
REMIC's are as follows:
<TABLE>
<CAPTION>
Remaining
Principal Carrying Interest
Date of Issue Balance Value Rate Maturity Date
------------- ------- ----- ---- -------------
<S> <C> <C> <C> <C> <C>
December 31, 1998:
United Companies Life REMIC
Series 90-1, Class B-1........ March 29, 1990 $ 6,314 $ 6,391 10.05% September 25, 2009
=========== ===========
December 31, 1997:
United Companies Life REMIC
Series 90-1, Class B-1........ March 29, 1990 $ 10,351 $ 9,606 10.05% September 25, 2009
=========== ===========
</TABLE>
The following schedule summarizes the composition of mortgage loans on real
estate as of December 31, 1998 and 1997.
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Residential....................................................... $ 23,729 $ 34,372
Unearned loan charges............................................. (214) (232)
Allowance for loan losses......................................... (5,000) --
------------- -------------
Residential, net.................................................. 18,515 34,140
------------- -------------
Commercial........................................................ 197,839 197,538
Allowance for loan losses......................................... (3,851) (3,923)
------------- -------------
Commercial, net................................................... 193,988 193,615
------------- -------------
Total......................................................... $ 212,503 $ 227,755
============= =============
</TABLE>
The Company has an arrangement with UC Lending, Inc. ("UC Lending"), a
subsidiary of UC Financial, in which UC Lending is obligated to repurchase home
equity loans originated or purchased and underwritten by UC Lending that are
subject to foreclose (see Note 11 of Notes to Consolidated Financial
Statements). As a result of the voluntary filing for bankruptcy of UC Financial
and certain of its subsidiaries and affiliates, including UC Lending (see Note
15 of Notes to Consolidated Financial Statements), the Company established an
allowance for loan losses of $5,000 on this portfolio based on expected future
cash flows. In addition, the Company owns subordinated debentures of UC Lending
with a book value of $6,752 and a fair value of $5,600 as of December 31, 1998.
Included in the loans owned at December 31, 1998 and 1997 were loans with
delinquencies in excess of 180 days of $49 and $100, respectively.
12
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. Investments (Continued)
The Company provides an estimate for future credit losses in an allowance for
loan losses. A summary analysis of the changes in the Company's allowance for
loan losses on its residential and commercial loans is as follows:
<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
-------------------------------------------- -------------
Period Period
from from
Year ended Year ended July 24 to January 1,
December 31, December 31, December 31, to July 23,
1998 1997 1996 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance at beginning of period..................... $ 3,923 $ 4,211 $ 4,211 $ 2,117
Losses charged to allowance........................ (72) (276) -- (771)
Loan loss provision................................ 5,000 (12) -- 478
------------- ------------- ------------- -------------
Balance at end of period........................... $ 8,851 $ 3,923 $ 4,211 $ 1,824
============= ============= ============= =============
Specific reserves.................................. $ 341 $ 418 $ 706 $ 824
Unallocated reserves............................... 8,510 3,505 3,505 1,000
------------- ------------- ------------- -------------
Total reserves.................................. $ 8,851 $ 3,923 $ 4,211 $ 1,824
============= ============= ============= =============
</TABLE>
As of December 31, 1998, commercial and residential mortgage loan investments
were concentrated in the following states:
<TABLE>
<CAPTION>
Percentage
of Total
Carrying Carrying
Value Value
------------ ---
<S> <C> <C>
Georgia............................................................. $ 43,790 21%
Florida............................................................. 30,771 14
Colorado............................................................ 35,604 17
Virginia............................................................ 21,261 10
Texas............................................................... 15,811 7
Arizona............................................................. 13,496 6
Tennessee........................................................... 9,632 5
All other (less than 4% individually)............................... 42,138 20
------------ ---
$ 212,503 100%
============ ===
</TABLE>
Immediately prior to the closing of the sale of the Company in 1996, the Company
distributed all of its real estate to its former parent. The investment real
estate was acquired subsequently through foreclosure.
13
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. Investments (Continued)
The limited partnerships were formed for the purpose of participating in
privately placed equity or mezzanine investments. These investments, acquired in
leveraged investment transactions, generally include private equity securities
and/or higher risk subordinated debt. Immediately prior to the closing of the
sale of the Company in 1996, the Company distributed a limited partnership
investment to its former parent aggregating approximately $17,800. Following is
an analysis of the Company's investment in limited partnerships.
<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
-------------------------------------------- -------------
Period Period
from from
Year ended Year ended July 24 to January 1,
December 31, December 31, December 31, to July 23,
1998 1997 1996 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance at beginning of period..................... $ 16,026 $ 5,704 $ 6,041 $ 25,594
Contributions and capitalized costs................ 1,366 13,473 43 620
Net partnership income............................. (445) 1,765 948 1,061
Distributions...................................... (3,505) (6,251) (1,328) (21,234)
Realized gains..................................... 639 1,335 -- --
------------- ------------- ------------- -------------
Balance at end of period........................ $ 14,081 $ 16,026 $ 5,704 $ 6,041
============= ============= ============= =============
</TABLE>
Major categories of investment income consist of the following:
<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
-------------------------------------------- -------------
Period Period
from from
Year ended Year ended July 24 to January 1,
December 31, December 31, December 31, to July 23,
1998 1997 1996 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Fixed maturity securities.......................... $ 75,984 $ 85,626 $ 37,140 $ 47,606
Mortgage loans on real estate...................... 22,461 24,614 11,192 20,331
Other investments.................................. 4,875 5,288 4,214 4,067
------------- ------------- ------------- -------------
Gross investment income......................... 103,320 115,528 52,546 72,004
Less: Investment expenses.......................... 3,302 3,992 1,880 5,583
------------- ------------- ------------- -------------
Net investment income........................... $ 100,018 $ 111,536 $ 50,666 $ 66,421
============= ============= ============= =============
</TABLE>
14
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. Investments (Continued)
Following are changes in net realized gains (losses) from sale of investments:
<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
-------------------------------------------- -------------
Period Period
from from
Year ended Year ended July 24 to January 1,
December 31, December 31, December 31, to July 23,
1998 1997 1996 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Fixed maturity securities:
Gross gains..................................... $ 8,684 $ 5,923 $ -- $ 42
Gross losses.................................... (1,823) (1,181) (157) (1,388)
Loss provision.................................. -- (83) -- 477
------------- ------------- ------------- -------------
Net gains (losses) on fixed maturity securities 6,861 4,659 (157) (869)
Mortgage loans on real estate...................... (5,000) 12 -- (478)
Investment real estate............................. (131) (1) -- (245)
Limited partnerships............................... 639 1,336 -- --
Other invested assets.............................. (48) (74) -- --
------------- ------------- ------------- -------------
Realized investment gains (losses).......... $ 2,321 $ 5,932 $ (157) $ (1,592)
============= ============= ============= =============
Trading portfolio gains (losses) included in other income were as follows:
Net gains (losses) from sales................. $ -- $ 59 $ (20) $ 37
Net change in unrealized gains (losses)....... -- (135) 135 (26)
------------- ------------- ------------- -------------
Total trading gains (losses)................ $ -- $ (76) $ 115 $ 11
============= ============== ============= =============
</TABLE>
Following are changes in unrealized gains (losses) on investments:
<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
-------------------------------------------- -------------
Period Period
from from
Year ended Year ended July 24 to January 1,
December 31, December 31, December 31, to July 23,
1998 1997 1996 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investments carried at fair value:
Fixed maturities................................ $ (15,349) $ 21,187 $ 16,315 $ (48,716)
Equity securities............................... (35) 77 (72) --
------------- ------------- ------------- -------------
(15,384) 21,264 16,243 (48,716)
Less effect on other balance sheet accounts:
Value of business acquired and deferred
acquisition costs............................. 9,280 (12,555) (10,063) --
Deferred income (taxes) benefits................ 2,136 (3,048) (2,163) 17,051
------------- ------------- ------------- -------------
Change in unrealized gains (losses)................ $ (3,968) $ 5,661 $ 4,017 $ (31,665)
============= ============= ============= =============
</TABLE>
At December 31, 1998, net unrealized capital losses of equity securities
available for sale of $30 consisted of gross unrealized gains of $12, less gross
unrealized loss of $42. At December 31, 1997, net unrealized capital gains of
equity securities held for sale of $5 consisted of gross unrealized capital
gains of $5.
15
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. Investments (Continued)
The Company had non-income producing investments at December 31, 1998 with an
amortized costs and fair value as follows:
<TABLE>
<CAPTION>
Book Fair
Value Value
----------- -----------
<S> <C> <C>
Common stock, unaffiliated........................... $ 392 $ 362
Real estate.......................................... 458 458
Other invested assets................................ 10,114 10,114
----------- -----------
$ 10,964 $ 10,934
=========== ===========
</TABLE>
The following investments, other than obligations of the U.S. Government or
agencies thereof, individually exceeded 10% of total stockholders' equity.
<TABLE>
<CAPTION>
December 31, 1998
------------------------
Amortized Fair
Investment Cost Value
---------- ----------- -----------
<S> <C> <C>
Collateralized Mortgage Obligation Trust,
Series 64, Class Z................................. $ 20,810 $ 20,380
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997
------------------------
Amortized Fair
Investment Cost Value
---------- ----------- -----------
<S> <C> <C>
Collateralized Mortgage Obligation Trust,
Series 64, Class Z................................. $ 20,640 $ 20,672
</TABLE>
5. Deferred Policy Acquisition Costs and Present Value of Insurance in Force
Deferred policy acquisition costs represent commissions and certain costs of
policy issuance and underwriting. Information relating to these costs is as
follows:
<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
-------------------------------------------- -------------
Period Period
from from
Year ended Year ended July 24 to January 1,
December 31, December 31, December 31, to July 23,
1998 1997 1996 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Unamortized deferred policy acquisition
costs at beginning of period.................... $ 13,671 $ 4,187 $ -- $ 90,703
Policy acquisition costs deferred:
Commissions..................................... 12,221 8,326 4,298 4,531
Underwriting and issue costs.................... 4,202 2,139 874 266
Policy acquisition costs amortized................. (2,015) (316) (8) (9,699)
Impact of unrealized investment gains.............. (1,641) (665) (977) --
------------- ------------- ------------- -------------
Unamortized deferred policy
acquisition costs at end of period............ $ 26,438 $ 13,671 $ 4,187 $ 85,801
============= ============= ============= =============
</TABLE>
16
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Deferred Policy Acquisition Costs and Present Value of Insurance in Force
(Continued)
As a part of the purchase accounting for the Company's acquisition, a present
value of insurance in force is established which represents the value of the
right to receive future cash flows from insurance contracts existing at the date
of acquisition. Such value is the actuarially determined present value of the
projected cash flows from the acquired policies, discounted at an appropriate
risk rate of return.
The methods used by the Company to value the fixed benefit, life, and
accumulation products purchased are consistent with the valuation methods used
most commonly to value blocks of insurance business. It is also consistent with
the basic methodology generally used to value insurance assets. The method used
by the Company includes identifying the future cash flows from the acquired
business, the risks inherent in realizing those cash flows, the rate of return
the Company believes it must earn in order to accept the risks inherent in
realizing the cash flows, and determining the value of the insurance asset by
discounting the expected future cash flows by the discount rate the Company
requires.
The discount rate used to determine such values is the rate of return required
in order to invest in the business being acquired. In selecting the rate of
return, the Company considered the magnitude of the risks associated with the
type of business acquired and the actuarial factors described in the following
paragraph, cost of capital available to the Company to fund the acquisition, the
compatibility with other Company activities that may favorably affect future
profits, and the complexity of the acquired Company.
Expected future cash flows used in determining such values are based on
actuarial determination of future premium collection, mortality, morbidity,
surrenders, operating expenses and yields on assets held to back policy
liabilities as well as other factors. Variances from original projections,
whether positive or negative, are included in income as they occur and will
affect the present value of insurance in force amortization rates for insurance
products accounted for under SFAS No. 97, "Accounting and Reporting by Insurance
Enterprises for Certain Long-Duration Contracts and for Realized Gains and
Losses from Sales of Investments." To the extent that these variances indicate
that future cash flows will differ from those included in the original scheduled
amortization of the value of the insurance in force, current and future
amortization may be adjusted. Recoverability of the value of insurance in force
is evaluated annually and appropriate adjustments are then determined and
reflected in the financial statements for the applicable period.
Information related to the present value of insurance in force is as follows:
<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
-------------------------------------------- ------------
Period Period
from from
Year ended Year ended July 24 to January 1,
December 31, December 31, December 31, to July 23,
1998 1997 1996 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance at the beginning of the period............. $ 27,769 $ 54,931 $ -- $ --
Addition due to acquisition........................ -- -- 69,077 --
Accretion of interest.............................. 4,693 3,438 1,633 --
Amortization....................................... (17,395) (18,710) (6,693) --
Impact of unrealized investment losses (gains)..... 10,921 (11,890) (9,086) --
------------- ------------- ------------- -------------
Balance at end of period........................... $ 25,988 $ 27,769 $ 54,931 $ --
============= ============= ============= =============
</TABLE>
17
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Deferred Policy Acquisition Costs and Present Value of Insurance in Force
(Continued)
Expected amortization, based upon current assumptions and accretion of interest
at a policy liability or contract rate ranging from 5.36% to 5.43% for the next
five years of the present value of insurance in force is as follows:
<TABLE>
<CAPTION>
Beginning Gross Accretion Net
Balance Amortization of Interest Amortization
------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
1999.................................. $ 25,988 $ 7,486 $ 1,980 $ 5,506
2000.................................. 20,482 8,360 1,730 6,630
2001.................................. 13,852 6,345 1,366 4,979
2002.................................. 8,873 4,807 1,072 3,735
2003.................................. 5,138 3,898 842 3,056
</TABLE>
6. Policy Liabilities and Accruals
Policy liabilities and accruals consists of reserves for life and accumulation
products. For interest sensitive life and annuity products, the liability for
future policy benefits is equal to the accumulated fund value. Fund values are
equal to the premium received and interest credited to the fund value less
deductions for mortality costs and expense charges. Current declared interest
rates credited range from 3 to 9.6 percent. Mortality costs and expense charges
are established by the Company based upon its experience and cost structure and
in accordance with policy terms.
For traditional life products, the liability for future policy benefits is based
primarily upon Commissioners' Standard Ordinary Tables with interest rates
ranging from 3 to 7 percent. The liability for future policy benefits is
determined using Company experience as to mortality, morbidity and lapses with a
provision for adverse deviation. The Company varies assumptions by year of
policy issue.
Total policy liabilities and accruals are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------
1998 1997
----------- -----------
<S> <C> <C>
Policy benefits on traditional products:
Traditional life insurance contracts............... $ 101,473 $ 107,297
Health............................................. 223 250
----------- -----------
101,696 107,547
Interest sensitive products:
Annuities.......................................... 1,087,269 1,203,549
----------- -----------
1,087,269 1,203,549
Policy and contract claims:
Health............................................. 1,151 1,159
Life and other..................................... 857 621
----------- -----------
2,008 1,780
----------- -----------
$ 1,190,973 $ 1,312,876
=========== ===========
</TABLE>
18
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Income Taxes
The provision for income taxes attributable to operations is as follows:
<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
-------------------------------------------- -------------
Period Period
from from
Year ended Year ended July 24 to January 1,
December 31, December 31, December 31, to July 23,
1998 1997 1996 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Current............................................ $ 3,783 $ 7,398 $ 2,205 $ 1,139
Deferred........................................... 1,029 1,724 950 (370)
------------- ------------- ------------- -------------
Total........................................... $ 4,812 $ 9,122 $ 3,155 $ 769
============= ============= ============= =============
</TABLE>
ULA files a consolidated federal income tax return with PLAIC and its other
insurance subsidiaries. The method of allocating federal income taxes between
the companies is subject to written agreement approved by the Board of Directors
and insurance regulatory authorities. The allocation is based upon separate
return calculations. Marketing One files its own tax return.
Reported income tax expense attributable to operations differs from the amount
computed by applying the statutory federal income tax rate of 35% to income from
operations before income taxes for the following reasons:
<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
-------------------------------------------- -------------
Period Period
from from
Year ended Year ended July 24 to January 1,
December 31, December 31, December 31, to July 23,
1998 1997 1996 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Federal income tax provision at statutory rate..... $ 3,896 $ 7,961 $ 3,025 $ 763
Differences resulting from:
Amortization of costs in excess of
net assets acquired......................... 517 502 236 --
Increase in valuation allowance............... 556 985 -- --
Other......................................... (157) (326) (106) 6
------------- ------------- ------------- -------------
Reported income tax provision...................... $ 4,812 $ 9,122 $ 3,155 $ 769
============= ============= ============= =============
</TABLE>
19
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Income Taxes (Continued)
Temporary differences between the financial statement carrying amounts and tax
bases of assets and liabilities that give rise to the deferred tax assets and
liabilities at December 31, 1998 and 1997 relate to the following:
<TABLE>
<CAPTION>
1998 1997
----------------------------- ----------------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Mortgage loans on real estate and
other investments............................... $ -- $ 1,554 $ -- $ 2,238
Deferred policy acquisition costs.................. -- 8,874 -- 4,435
Present value of insurance in force................ 1,973 -- 1,014 --
Net operating losses............................... 1,021 -- 611 --
Unrealized gain on investment securities........... -- 3,075 -- 5,211
Policy reserves.................................... 15,630 -- 15,956 --
Other ............................................ 1,123 -- 441 1,557
------------- ------------- ------------- -------------
Reported income tax provision benefit.............. 19,747 13,503 18,022 13,441
Valuation allowance................................ (1,608) -- (1,052) --
------------- ------------- ------------- -------------
$ 18,139 $ 13,503 $ 16,970 $ 13,441
============= ============= ============= =============
</TABLE>
The valuation allowance for deferred tax assets as of December 31, 1998 and 1997
was $1,608 and $1,052, respectively. The net change in the total valuation
allowance for the years ended December 31, 1998 and 1997, was an increase of
$556 and $985, respectively. The increase in the valuation allowance for 1998
and 1997 is largely attributable to deferred tax assets resulting from federal
and state net operating losses generated by Marketing One and its subsidiaries
for which the Company believes it will not fully utilize.
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will be realized. The ultimate realization of deferred tax assets is
dependent on the generation of future taxable income during the periods in which
those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income
and tax planning strategies in making this assessment. Based upon those
considerations, management believes it is more likely than not that the Company
will realize the benefits of these deductible differences, net of the existing
valuation allowance at December 31, 1998.
At December 31, 1998, the Company has federal and state net operating loss
carryforwards of approximately $2,140 and $8,454, respectively, which relate to
Marketing One and its subsidiaries and, if not utilized, will expire in tax
years 2012 and 2018.
8. Statutory Accounting and Dividend Restrictions
Accounting records of the Company are maintained in accordance with practices
prescribed or permitted by the Texas Department of Insurance for 1998 and the
Louisiana Department of Insurance for 1997 and 1996. Prescribed statutory
accounting principles include a variety of publications of the National
Association of Insurance Commissioners, as well as state laws, regulations, and
general administrative rules. Permitted statutory accounting practices encompass
all accounting practices not so prescribed. The Company's capital and surplus
pursuant to the statutory accounting basis as of December 31, 1998, 1997 and
1996 was $100,116, $105,405 and $103,092, respectively. On a statutory
accounting basis, net gain from operations for the years ended December 31,
1998, 1997 and 1996 was $10,227, $14,548 and $10,127, respectively. Net income
on a statutory accounting basis, which includes realized capital gains and
losses, was $9,854, $13,287 and $6,760 for the years ended December 31, 1998,
1997 and 1996, respectively.
The Company paid cash dividends of $14,548 and $10,127 to PLAIC during 1998 and
1997, respectively, pursuant to the statutory dividend restrictions in
Louisiana. During 1996, extraordinary dividends, with a statutory value of
$62,591,
20
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. Statutory Accounting and Dividend Restrictions (Continued)
consisting of real estate, an investment in limited partnerships and $10,000
cash, were distributed to the Company's former parent immediately prior to the
closing of the sale of the Company. Immediately after the closing, PLAIC
contributed $57,258 cash to the Company as a replacement for the distributed
assets. (See Note 3 to Notes to Consolidated Financial Statements.) As part of
its July 1996 approval of PLAIC's acquisition of the Company, the Louisiana
Insurance Commissioner approved a dividend plan for the Company pursuant to
which the Company may pay a specified amount of dividends for each of the five
years following the acquisition, beginning in 1997, amounting to the lesser of
the pro forma dividend amounts in such plan or the actual earnings of the
Company, and conditioned on the Company's maintaining a risk- based capital of
at least 300% of the Authorized Control Level. Effective December 18, 1998, the
Company redomesticated to Texas from Louisiana. Statutes in Texas restrict the
payment of dividends by insurance companies to the available surplus funds
derived from their net profits. The maximum amount of cash dividends that may be
declared without regulatory approval in any twelve-month period is the greater
of ten percent (10%) of the insurer's statutory surplus, as shown by its last
annual statement on file with the Texas Department of Insurance, or one hundred
percent (100%) of statutory net gain from operations for the preceding year.
Based upon the Company's net gain from operations for the year ended December
31, 1998, approximately $10,227 of dividends could be paid to its parent without
prior regulatory approval.
The Company historically received written approval from the Louisiana Department
of Insurance to invest in first lien residential mortgage loans originated by UC
Lending on a short-term basis without recording the assignment of the mortgage
loans to the Company, which differs from prescribed statutory accounting
practices. Statutory accounting practices prescribed by the Louisiana Department
of Insurance require that investment in mortgage loans be secured by
unrestricted first liens on the underlying property. As of December 31, 1998,
statutory surplus was not affected as a result of this permitted practice.
In 1998, the Company received approval from the Texas Department of Insurance to
record the unamortized portion of ceded reinsurance premiums as an offset to
reserves to be recognized over the life of the reinsured policies. As of
December 31, 1998, the effect of the permitted practice was an offset of $3,668
to policy reserves which resulted in a corresponding increase to unassigned
surplus.
On March 16, 1998, the NAIC approved the codification of statutory accounting
practices. The codification will constitute the only source of "prescribed"
statutory accounting practices and is subject to adoption by the Texas
Department of Insurance. The Statements of Statutory Accounting Principles
established under the codification are generally effective January 1, 2001. The
Company has not determined the impact the adoption of the codification will have
on unassigned surplus.
9. Reinsurance
In the normal course of business, the Company reinsures portions of certain
polices that it underwrites to limit disproportionate risks. The Company
generally reinsures the portion of any one risk which exceeds $100 except for
certain types of policies where the limit is $25 and certain other types of
policies where the limit is $500. Amounts not retained are ceded to other
insurance enterprises or reinsurers on an automatic or facultative basis.
Reinsurance contracts do not relieve the Company from its obligations to
policyholders. Therefore, the Company is contingently liable for recoverable
unpaid claims and policyholder liabilities ceded to reinsurers in the unlikely
event that assuming reinsurers are unable to meet their obligations. The Company
evaluates the financial condition of its reinsurers to minimize its exposure to
significant losses from reinsurer insolvencies.
Amounts due from reinsurers related to policy reserves ceded under reinsurance
agreements totaled approximately $36,215 and $32,300 at December 31, 1998 and
1997, respectively.
The Company has a receivable at December 31, 1998 and 1997 of approximately
$29,983 and $31,500 from one reinsurer; however, the funds supporting the
receivable are escrowed in a separate trust account for the benefit of the
Company by
21
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. Reinsurance (Continued)
the reinsurer. The following table reflects the effect of reinsurance agreements
on premiums and the amounts earned for the periods indicated.
<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
-------------------------------------------- -------------
Period Period
from from
Year ended Year ended July 24 to January 1,
December 31 December 31, December 31, to July 23,
1998 1997 1996 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Direct premiums................................. $ 4,274 $ 5,022 $ 2,704 $ 3,148
Reinsurance assumed............................. 1,308 1,927 1,214 1,461
Reinsurance ceded............................... (1,405) (1,218) (435) (877)
------------- ------------- ------------- -------------
Net insurance premiums........................ $ 4,177 $ 5,731 $ 3,483 $ 3,732
============= ============= ============= =============
Policyholder benefits ceded..................... $ 3,372 $ 3,656 $ 819 $ 1,039
============= ============= ============= =============
</TABLE>
10. Retirement and Profit Sharing Plans
Eligible employees may elect to participate in PennCorp's defined contribution
401(k) retirement plan ("PennCorp Plan"). Employees are eligible to participate
in the plan after six months of employment in which they are credited with 500
hours of service. Participants may contribute from 1 to 15% of pre-tax
compensation and/or from 1 to 10% of after tax compensation. The Company matches
each pay-period, 50% of participants' pre-tax contributions up to 6% of the
participants' compensation. If approved by the board of directors, the Company
may make a discretionary profit sharing contribution annually on behalf of
employees eligible to participate in the plan based on their compensation for
the prior plan year. Employee contributions are fully vested at all times. The
employer matching contributions made for employees who participated in the
PennCorp Plan prior to January 1, 1998 vest at the rate of 50% per calendar year
of service. The employer matching contributions made for all other participants
and the employer discretionary contribution vests at the rate of 20% per year of
service. All participants are fully vested at death, disability or attainment of
age 65. The assets of each account are invested at the direction of the
participant. Eleven funds with various investment objectives are available to
the participants. Distributions are normally made in a lump sum. Participants of
the PennCorp Plan prior to January 1, 1998 may elect to receive an annuity in
various forms of payment. The Company's portion of expenses related to this plan
for the years ended December 31, 1998 and 1997 and the period from July 24, 1996
to December 31, 1996, were $300, $382 and $254, respectively, compared to costs
associated with employee benefit plans of the Company's former parent of $185
for the period from January 1, 1996 to July 23, 1996.
11. Related Party Transactions
In conjunction with the acquisition of the Company by PLAIC during 1996, KB
Management, LLC ("KB Management"), an affiliate, accrued transaction fees of
$2,500 during 1996.
Immediately after the closing of the sale, the Company received $57,258 in cash
from PLAIC as replacement for assets distributed to its former parent in
conjunction with the sale of the Company. (See note 3 to Notes to Consolidated
Financial Statements.)
The Company has an Advisory and Management Service Agreement with KB Management
which was amended effective January 2, 1998. The Company incurred fees totaling
$1,291 and $1,000 during 1998 and 1997. For the period from July 24, 1996
through December 31, 1996, the accompanying financial statements include $400
for such fees.
22
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. Related Party Transactions (Continued)
KB Management also provides investment management consulting services to the
Company for a fee based upon the average dollar amount of the related
investments. For the years ended December 31, 1998 and 1997 and the period from
July 24, 1996 to December 31, 1996, the Company incurred $2,136, $2,300 and
$600, respectively, related to such services.
Beginning in 1998, the Company is party to a management and services agreement
with Southwestern Financial Services Corporation ("SFSC"), an affiliate. SFSC
provides administrative, management, investment, personnel, data processing,
facilities and certain other services for the Company and other affiliates and
certain other unrelated parties. Under the management and service agreement with
SFSC, the Company paid fees for personnel, data processing, and other services
equal to the cost of such services to SFSC. The Company incurred $3,235 in fees
in accordance with the agreement in 1998.
Effective March 24, 1998, the Company acquired all of the common stock of
Marketing One from affiliates who are also indirect wholly-owned subsidiaries of
PennCorp. The Company acquired Marketing One for cash and securities with a book
value of $10,986 and fair value of $11,307. The difference between the book
value of Marketing One and the book value of the consideration of $321 is
recorded as a deemed capital contribution.
The Company, through Marketing One, provides certain services to SFSC, for which
Marketing One is reimbursed. Marketing One received $89 for such services during
1998.
UC Mortgage Corporation ("UC Mortgage"), an affiliate, services commercial loans
for the Company for a fee of three-eights of one percent of the principal
balances. For the years ended December 31, 1998 and 1997 and the period from
July 24, 1996 to December 31, 1996, the Company paid UC Mortgage $792, $830 and
400, respectively, for mortgage servicing fees. In addition, the Company
provides employees to UC Mortgage and is reimbursed for salary and salary
related expenses for those employees. The total amount of reimbursed employee
expenses for the years ended December 31, 1998 and 1997 and the period from July
24, 1996 to December 31, 1996, were $612, $646 and $300, respectively. As of
December 31, 1998 and 1997, UC Lending serviced loans owned by the Company
having aggregate unpaid principal balances of approximately $23,809 and $34,600,
respectively. The Company paid servicing fees relative to these loans of
approximately $-- and $500 for the periods from July 24, 1996 to December 31,
1996 and January 1, 1996 to July 23, 1996.
In connection with the sale of ULA to PLAIC in 1996, ULA entered into an
agreement with UC Lending to purchase up to $300,000 of qualifying residential
home equity mortgage loans originated or purchased and underwritten by UC
Lending (see note 4 of Notes to Consolidated Financial Statements.) These loans
are usually held three to six months until resold to UC Lending for sale by UC
Lending in loan securitizations. The agreement also had a sublimit of $150,000
for loans that are not eligible for securitization by UC Lending. In addition,
under an agreement UC Lending is obligated to repurchase these home equity loans
previously sold to the Company at the time of foreclosure. At December 31, 1998
and 1997, $23,173 and $33,600, respectively, of home equity loans originated by
UC Lending were owned by the Company. During the periods from July 24, 1996 to
December 31, 1996 and January 1, 1996 to July 23, 1996, the Company purchased
home equity loans for approximately $75,200 and $656,000, respectively, from UC
Lending. Sales of these home equity loans to UC Lending by the Company were $--,
$6,600, $51,400 and $679,200 for the years ended December 31, 1998 and 1997 and
the period from July 24, 1996 to December 31, 1996 and January 1, 1996 to July
24, 1996, respectively. No gain or loss was recorded by the Company in these
transactions. In March 1999, UC Financial and UC Lending filed voluntary
petitions for relief under the Chapter 11 of the United States Bankruptcy Code
(see Note 15 of Notes to Consolidated Financial Statements). Under the terms of
the sale agreement, a material adverse change in the financial position of UC
Financial relieves the Company of its obligation to purchase loans. Currently,
the Company has no intent to fund additional amounts.
The Company formerly leased home office space to UC Financial and other former
affiliates. Rent income attributable to these affiliates was approximately
$1,000 for the period from January 1, 1996 to July 23, 1996. The Company was
allocated certain costs from UC Financial and its affiliates under a cost
sharing agreement during the period from January 1, 1996 to July 23, 1996
totaling $2,100.
United Companies Realty & Development Co., Inc. ("UCRD"), a former affiliate,
managed the home office buildings leased by the Company to UC Financial and
other third party tenants under a real estate management contract for the period
from
23
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. Related Party Transactions (Continued)
January 1, 1996 to July 23, 1996. The Company paid approximately $200 to UCRD in
management fees for the period January 1, 1996 to July 23, 1996.
The Company, through Marketing One, owns preferred stock issued by an affiliate,
Southwestern Financial Corporation. Such stock had a value of $6,081, $5,509 and
$4,991 at December 31, 1998, 1997 and 1996, respectively, after reflecting
dividend accretion of $572, $518 and $491 during 1998, 1997 and 1996,
respectively.
During 1998, the Company acquired from an affiliate a promissory note issued by
American Amicable Holdings, an affiliate, with a principal value of $7,665. The
principal of the affiliated note acquired exceeded the book value of the cash
and securities paid to acquire the note by $214. The excess was recorded as a
deemed capital contribution. The Company recognized investment income of $639 on
this note during 1998.
12. Other Commitments and Contingencies
The Company and its subsidiaries are obligated under operating leases. Rent
expense under operating leases was $1,019, $500 and $600 in 1998, 1997 and 1996,
respectively. During 1998, ULA relocated its operations from Louisiana to Texas
and canceled most of its leases. Future minimum lease payments under
noncancelable operating leases of Marketing One and the remaining leases of ULA
as of December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999............................................ $ 830
2000............................................ 707
2001............................................ 903
2002............................................ 20
-----------
$ 2,460
===========
</TABLE>
Certain lawsuits have been brought against the Company in the normal course of
business involving the settlement of various matters and seeking compensatory
and in some cases punitive damages. Management believes that the ultimate
settlement of all such litigation will not have a material adverse effect on the
Company's consolidated financial position or results of operation.
Life insurance companies are required to be members of various state insurance
guaranty associations in order to conduct business in those states. These
associations have the authority to assess member companies in the event that an
insurance company conducting business in that state is unable to meet its
policyholder obligations. In some states, these assessments can be partially
recovered through a reduction in future premium taxes. The Company paid
assessments in 1998, 1997 and 1996 of $314 and $1,200 and $1,000, respectively.
Based on information currently available, the insurance subsidiaries have
accrued $1,705 at December 31, 1998 for future assessments, net of future
premium tax reductions.
Many computer and software programs were designed to accommodate only two digit
fields to represent a given year (e.g. "98" represents 1998). It is highly
likely that such systems will not be able to accurately process data containing
date information for the year 2000 and beyond. The Company is highly reliant
upon computer systems and software as are many of the businesses with which the
Company interacts. The Company's ability to service its policyholders and agents
is dependent upon accurate and timely transaction processing. Transaction
processing in turn is dependent upon the Company's highly complex interdependent
computer hardware, software, telecommunications and desktop applications. The
inability of the Company or any of its integral business partners to complete
year 2000 remediation efforts associated with these highly complex and
interdependent systems could lead to a significant business interruption. Such
an interruption could result in a decline in current and long-term profitability
and business franchise value.
Although the Company believes that they will be sufficiently compliant and that
the year 2000 issue should not cause a material disruption in the Company's
business, there can be no assurance that there will not be material disruptions
to the Company's business or an increase in the cost of the Company doing
business. Although the Company believes that the year
24
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. Other Commitments and Contingencies (Continued)
2000 issues should not cause a material disruption in the Company's business,
the Company has developed various contingency plans associated with remediation
tasks which the Company believes are at a higher risk for potential failure.
13. Financial Instruments
The following is a summary of the carrying value and fair value of the Company's
financial instruments at December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
------------------------ ------------------------
Carrying Fair Carrying Fair
Value Value Value Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Assets:
Short-term investments................................... $ 21,342 $ 21,342 $ 22,804 $ 22,804
Fixed maturities......................................... 955,449 955,449 1,106,961 1,106,961
Equity securities........................................ 362 362 5 5
Mortgage loans........................................... 212,503 225,812 227,755 234,927
Policy loans............................................. 22,168 22,168 22,585 22,585
Investment in limited partnerships....................... 14,081 14,081 16,026 16,026
Other investments........................................ -- -- 145 145
Liabilities:
Annuity reserves......................................... 1,087,269 1,015,732 1,203,549 1,153,765
Bank overdrafts.......................................... 2,430 2,430 1,863 1,863
</TABLE>
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
Cash, Bank Overdrafts and Short-term Investments: The carrying value of
these investments approximates their fair value due to the short-term
maturity of these instruments.
Fixed Maturities Available for Sale: Fair values for fixed maturities
available for sale are based on quoted market prices, where available.
For fixed maturities not actively traded, fair values are estimated
using values obtained from independent pricing services or are
estimated based on expected future cash flows using a current market
rate applicable to the yield, credit quality, and maturity of the
investments. The fair values for equity securities are based on quoted
market prices.
Mortgage Loans: The fair values for mortgage loans are estimated using
discounted cash flow analyses, based on interest rates currently being
offered for similar loans to borrowers with similar credit ratings.
Loans with similar characteristics are aggregated for purposes of the
calculations.
Policy Loans: Policy loans are an integral part of life insurance
policies which the Company has in force and, in the Company's opinion,
cannot be valued separately. These loans typically carry an interest
rate that is tied to the crediting rate applied to the related policy
and contract reserves.
Investment in Limited Partnerships: Carrying value of investment in
limited partnerships represents the underlying equity of the limited
partnerships or joint ventures at their cost which approximates fair
value.
Other Investments: Fair value of other investments approximated their
fair value. These are evaluated periodically.
Annuity Reserves: The Company's annuity contracts generally do not have
a defined maturity and are considered as deposits under SFAS No. 97.
SFAS No. 107 states that the fair value to be disclosed for deposit
liabilities with no
25
<PAGE>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. Financial Instruments (Continued)
defined maturities is the amount payable on demand at the reporting
date. Accordingly, the Company has estimated the fair value of its
annuity reserves as the cash surrender value of these contracts.
14. Quarterly Financial Data
Summarized quarterly financial data is as follows (unaudited):
<TABLE>
<CAPTION>
Purchase basis of accounting
Three Months Ended
December 31 September 30 June 30 March 31
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
1998:
Total revenues............................ $ 26,873 $ 33,672 $ 32,574 $ 32,681
Income (loss) before income taxes......... (3,270) 3,898 6,057 4,449
Net income (loss)......................... (2,538) 2,302 3,758 2,800
</TABLE>
The Company's fourth quarter 1998 reported loss primarily resulted from a
reserve of $5,000 established on a non-performing residential mortgage
portfolio.
<TABLE>
<CAPTION>
Purchase basis of accounting
Three Months Ended
December 31 September 30 June 30 March 31
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
1997:
Total revenues........................... $ 35,090 $ 35,180 $ 35,340 $ 36,869
Income before income taxes............... 7,835 4,596 5,703 4,611
Net income............................... 4,006 2,912 3,750 2,955
</TABLE>
15. Subsequent Events
On February 21, 1999, PennCorp and PLAIC signed a definitive agreement to sell
ULA, United Variable Services, Inc, Cyberlink Development, Inc. and certain
assets of Marketing One to ING America Insurance Holding, Inc. ("ING"). The sale
agreement provides that certain assets would be sold or transferred to PLAIC as
dividends prior to closing including the common stocks of Marketing One and
United Variable Services, Inc. totaling $10,086, investment in affiliated bonds
of $7,665, cash of $2,052 and certain residential mortgages of approximately
$9,600. Consummation of the sale to ING and related transactions are subject to
regulatory approvals and other material closing conditions. No adjustments have
been made to these financial statements with respect to the sales agreement.
Effective March 25, 1999, the Company reacquired the underlying mortgages of
REMIC Series 90-1. This transaction did not result in a realized gain or loss.
26
<PAGE>
SCHEDULE III
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
Supplementary Insurance Information
(In thousands)
<TABLE>
<CAPTION>
Deferred Policy
Acquisition
Cost
Deferred Amortization
Policy Future Net Benefits, and Other
Acquisition Policy Unearned Premium Investment Claims Operating
Costs Benefits(1) Premiums Revenues(2) Income Losses, Etc. Expenses
----- ----------- -------- ----------- ------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchase basis of
accounting:
Year ended December 31,
1998.............. $ 26,438 $ 1,190,973 $ 110 $ 4,177 $ 100,018 $ 8,401 $ 31,959
Year ended December 31,
1997.............. 13,671 1,312,876 132 5,731 111,536 7,149 28,525
Period from July 24
through December 31,
1996.............. 4,187 1,443,964 275 3,483 50,666 3,836 25,170
Historical basis of
accounting:
Period from January 1
through July 23, 1996 85,801 1,465,012 1,074 3,732 66,421 5,967 19,452
</TABLE>
NOTES:
(1) Includes accumulated fund values on annuity and interest sensitive products.
(2) Excludes premiums on annuity and interest sensitive products which are
accounted for as deposits.
27
<PAGE>
SCHEDULE IV
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
Reinsurance
(In thousands)
<TABLE>
<CAPTION>
Percentage
Ceded to Assumed of Amount
Direct Other From Other Net Assumed to
Amount Companies Companies Amount Net Amount
------ --------- --------- ------ ----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1998
Life insurance in force at end of period........ $ 367,132 $ 108,302 $ 642,836 $ 901,668 71.3%
=========== =========== =========== ===========
Premiums
Life insurance............................... 4,027 1,405 1,308 3,930 33.3%
Accident and health insurance................ 247 -- -- 247 --
----------- ----------- ----------- -----------
Total premiums............................. $ 4,274 $ 1,405 $ 1,308 $ 4,177 31.3%
=========== =========== =========== ===========
Year ended December 31, 1997
Life insurance in force at end of period........ $ 410,606 $ 116,672 $ 732,253 $ 1,026,187 71.4%
=========== =========== =========== ===========
Premiums
Life insurance............................... 4,624 1,195 1,927 5,356 36.0
Accident and health insurance................ 398 23 -- 375 --
----------- ----------- ----------- -----------
Total premiums............................. $ 5,022 $ 1,218 $ 1,927 $ 5,731 33.6
=========== =========== =========== ===========
Period from July 24, 1996 to December 31, 1996
Life insurance in force Premiums
Life insurance............................... 2,496 481 1,214 3,229 37.6
Accident and health insurance................ 208 (46) -- 254 --
----------- ----------- ----------- -----------
Total premiums............................. $ 2,704 $ 435 $ 1,214 $ 3,483 34.9
=========== =========== =========== ===========
Period from January 1, 1996 to July 23, 1996
Life insurance in force at end of period........ $ 499,292 $ 141,816 $ 992,672 $ 1,350,148 73.5
=========== =========== =========== ===========
Premiums
Life insurance............................... 2,719 925 1,461 3,255 26.9
Accident and health insurance................ 429 (48) -- 477 --
----------- ----------- ----------- -----------
Total premiums............................. $ 3,148 $ 877 $ 1,461 $ 3,732 23.5
=========== =========== =========== ===========
</TABLE>
28
<PAGE>
SCHEDULE V
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In thousands)
<TABLE>
<CAPTION>
Balance at Charged to Charged to Balance
Beginning Costs and Other at end
of Period Expenses Accounts(1) Deductions(2) of Period(3)
--------- -------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Purchase basis of accounting:
Year ended December 31, 1998
Allowance for loan losses....................... $ 3,923 $ 5,000 $ -- $ 72 $ 8,851
Allowance for real estate losses................ -- -- -- -- --
Allowance for bond losses....................... -- -- -- -- --
Unearned loan charges........................... 1,569 -- -- 5 1,564
----------- ----------- ----------- ----------- -----------
Total........................................ $ 5,492 $ 5,000 $ -- $ 77 $ 10,415
=========== =========== =========== =========== ===========
Year ended December 31, 1997
Allowance for loan losses....................... $ 4,211 $ (12) $ -- $ 276 $ 3,923
Allowance for real estate losses................ -- -- -- -- --
Allowance for bond losses....................... 189 -- -- 189 --
Unearned loan charges........................... 2,072 -- -- 503 1,569
----------- ----------- ----------- ----------- -----------
Total........................................ $ 6,472 $ (12) $ -- $ 968 $ 5,492
=========== =========== =========== =========== ===========
Period from July 24, 1996 to
December 31, 1996 (Restated)
Allowance for loan losses....................... $ 4,211 $ -- $ -- $ -- $ 4,211
Allowance for real estate losses................ -- -- -- -- --
Allowance for bond losses....................... 189 -- -- -- 189
Unearned loan charges........................... 2,021 -- -- (51) 2,072
----------- ----------- ----------- ----------- -----------
Total........................................ $ 6,421 $ -- $ -- $ (51) $ 6,472
=========== =========== =========== =========== ===========
Historical basis of accounting:
Period from January 1, 1996 to July 23, 1996
Allowance for loan losses....................... $ 2,117 $ 478 $ -- $ 771 $ 1,824
Allowance for real estate losses................ 3,987 (1,098) -- 2,889 --
Allowance for bond losses....................... 666 884 -- 1,361 189
Unearned loan charges........................... 301 -- -- 17 284
----------- ----------- ----------- ----------- -----------
Total........................................ $ 7,071 $ 264 $ -- $ 5,038 $ 2,297
=========== =========== =========== =========== ===========
</TABLE>
NOTES:
(1) Represents the approximate amount of unearned loan charges on installment
loans originated during the period.
(2) Represents loans and bonds charged off and loan charges earned during the
period.
(3) All of the above are deducted in the balance sheet from the asset to which
they apply.
29
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
A. FINANCIAL STATEMENTS
The financial statements of the Separate Account and the Company are
included in Part B hereof.
B. EXHIBITS
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Separate Account.*
2. Not Applicable.
3. Form of Principal Underwriters Agreement.*
4. (i) Individual Fixed and Variable Deferred Annuity Contract.*
(ii) Allocated Fixed and Variable Group Annuity Contract.*
(iii) Allocated Fixed and Variable Group Annuity Certificate.*
(iv) Death Benefit Endorsement.*
5. Application Form.*
6. (i) Copy of Articles of Incorporation of the Company.*
(ii) Copy of the Bylaws of the Company.*
7. Not Applicable.
8. Form of Fund Participation Agreements.**
9. Opinion and Consent of Counsel.
10. Consents of Independent Auditors.
11. Not Applicable.
12. Not Applicable.
13. Calculation of Performance Information.
14. Not Applicable.
15. Company Organizational Chart.*
27. Not Applicable.
* Incorporated by reference to Post-Effective Amendment No. 2 as
electronically filed on April 30, 1997.
** Incorporated by reference to Post-Effective Amendment No. 4 as
electronically filed on May 1, 1998.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Executive Officers and Directors of the Company:
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Position and Offices
Business Address* with Depositor
- -------------------------- ----------------------------------------------
Joel S. Kaplan President and Director
John C. Bower Chief Executive Officer, Chairman of the Board and
Director
David B. Montgomery Executive Vice President, Chief Actuary and Director
William P. Martina Executive Vice President and National Sales Director
Peter R. Nipoli Senior Vice President - Portland Operations
W. Hubert Mathis Senior Vice President - Human Resources and
Corporate Services
David B. Little Senior Vice President and Chief Information Officer
David A Leonard Senior Vice President, General Counsel and
Secretary
Jennie L. Ayers Senior Vice President-Client Services
Boyd K. Herndon Vice President, Associate General Counsel and
Assistant Secretary
Betty M. Jobson Vice President - Investments and Treasurer
Richard P. Pimsner Vice President and Assistant Treasurer
David A. Commons Vice President - Financial Reporting and
Assistant Treasurer
Stephen A. Aman Vice President - Planning and Budgeting
David D. Boone Vice President - Corporate Tax
Mary M. Wilson Vice President - Product Development
David Tovson Vice President - Financial Actuary
Brian R. Lauria Vice President - Regional Sales Director
John R. McBride Vice President - Corporate Planning and
New Market Development
Kimberly J. Spathas Vice President - National Marketing Director
James P. McDermott Director
Scott D. Silverman Director
<FN>
* The Principal business address for all officers and directors listed above
is 717 North Harwood Street, Dallas, TX 75201.
</FN>
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR
OR REGISTRANT
The Company organizational chart was included as Exhibit 15 in Post-Effective
Amendment No. 2 and is incorporated herein by reference.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of February 8, 1999, there were 1,221 Non-Qualified Contract Owners and 1,448
Qualified Contract Owners.
ITEM 28. INDEMNIFICATION
The Bylaws (Article VII) of the Company provide, in part, that:
This company may indemnify any person who was or is a party or is threatened to
be made a party to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (including any action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the company, or is or was serving at the request of the
company as a director, officer, employee or agent of another business, foreign
or non-profit corporation, partnership, joint venture or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with the defense or
settlement of such action and no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless, and only to the extent, that the court shall determine upon
application that, despite the adjudication of liability that in view of all the
circumstances of the case, he is fairly and reasonably entitled to indemnity
plus such expenses which the court shall deem proper. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner in which
he reasonably believed to be in or not opposed to the best interest of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Not Applicable.
(b) United Variable Services, Inc. is the principal underwriter for the
Contracts. The following persons are the officers and directors of United
Variable Services, Inc. The principal business address for each officer and
director of United Variable Services, Inc. is 851 S.W. Sixth Avenue, Suite
800, Portland, OR 97204.
<TABLE>
<CAPTION>
<S> <C> <C>
(b) Name and Principal Positions and Offices
Business Address with Underwriter
-------------------- --------------------------------------
Joel S. Kaplan President, Chief Executive Officer and Director
Peter E. Nipoti Executive Vice President, Chief Operating
Officer and Director
Leslie E. Andre Vice President and Director of Compliance
James R. Hilliker Vice President, Operations
Doulgas M. Temple Vice President, Accounting, Treasury, Secretary
</TABLE>
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Richard P. Pimsner, whose address is 717 N. Harwood Street, Dallas, TX 75201-
6538, maintains physical possession of the accounts, books or documents
of the Separate Account required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the rules promulgated thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under this
Form promptly upon written or oral request.
d. United Life & Annuity Insurance Company ("Company") hereby represents
that the fees and charges deducted under the Contracts described in the
Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
REPRESENTATIONS
The Company hereby represents that it is relying upon a No-Action Letter
issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by Section
403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment alternatives
available under the employer's Section 403(b) arrangement to which the
participant may elect to transfer his contract value.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this Registration Statement and has caused this
Registration Statement to be signed on its behalf, in the City of Portland,
and State of Oregon on this 19th day of April, 1999.
<TABLE>
<CAPTION>
<S> <C>
UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE
-------------------------------------------
Registrant
By: UNITED LIFE & ANNUITY INSURANCE COMPANY
---------------------------------------
By: /S/ JOEL S. KAPLAN
---------------------------------------
Joel S. Kaplan, President
By: UNITED LIFE & ANNUITY INSURANCE COMPANY
---------------------------------------
Depositor
By: /S/ JOEL S. KAPLAN
---------------------------------------
Joel S. Kaplan, President
</TABLE>
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C>
SIGNATURE DATE
/S/ JOHN C. BOWER Chief Executive Officer, Chairman of the 4/20/99
- ------------------------- Board and Director -----------
John C. Bower
/S/ JOEL S. KAPLAN 4/19/99
- ------------------------ President and Director -----------
Joel S. Kaplan
/S/ JAMES P. MCDERMOTT 4/21/99
- ------------------------ Director -----------
James P. McDermott
/S/ DAVID B. MONTGOMERY 4/23/99
- ------------------------ Executive Vice President, Chief Actuary and -----------
David. B. Montgomery Director
/S/ SCOTT D. SILVERMAN 4/20/99
- ------------------------ Director -----------
Scott D. Silverman
/S/ RICHARD P. PIMSNER Vice President and Assistant Treasurer 4/22/99
- ------------------------ ------------
Richard P. Pimsner
</TABLE>
INDEX TO EXHIBITS
EX-99.B9. Opinion and Consent of Counsel.
EX-99.B10. Consent of Independent Auditors.
EX-99.B13. Calculation of Performance Information.
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
(203) 226-7866
April 30, 1999
Board of Directors
United Life & Annuity
Insurance Company
717 North Harwood Street
Dallas, TX 75201
RE: Opinion of Counsel - United Life & Annuity Separate Account One
Gentlemen:
You have requested our Opinion of Counsel in connection with the filing with
the Securities and Exchange Commission of a Post-Effective Amendment to a
Registration Statement on Form N-4 for the Individual and Group Fixed and
Variable Deferred Annuity Contracts and Certificates (collectively,
the "Contracts") to be issued by United Life & Annuity Insurance Company
and its separate account, United Life & Annuity Separate Account One.
We have made such examination of the law and have examined such records and
documents as in our judgment are necessary or appropriate to enable us to
render the opinions expressed below.
We are of the following opinions:
1. United Life & Annuity Separate Account One is a unit investment
trust as that term is defined in Section 4(2) of the Investment Company Act
of 1940 (the "Act"), and is currently registered with the Securities and
Exchange Commission, pursuant to Section 8(a) of the Act.
2. Upon the acceptance of purchase payments made by an Owner or
Certificate Holder pursuant to a Contract issued in accordance with the
Prospectus contained in the Registration Statement and upon compliance with
applicable law, such an Owner or Certificate Holder will have a
legally-issued, fully paid, non-assessable contractual interest under such
Contract.
You may use this opinion letter, or a copy thereof, as an exhibit to the
Registration Statement.
We consent to the reference to our Firm under the caption "Legal Opinions"
contained in the Statement of Additional Information which forms a part of
the Registration Statement.
Sincerely,
BLAZZARD, GRODD & HASENAUER, P.C.
By: /S/ LYNN KORMAN STONE
_____________________________________
Lynn Korman Stone
[KPMG Peat Marwick LLP Letterhead]
Consent of Independent Auditors
The Board of Directors and Stockholder
United Life & Annuity Insurance Company:
We consent to the inclusion in the Registration Statements (Nos.
33-91362 and 33-95778) on Form N-4, as amended and filed by United
Life & Annuity Insurance Company, of our report dated February 22,
1999, relating to the statement of assets and liabilities of the
sub-accounts of United Life & Annuity Separate Account One as of
December 31, 1998 and the related statement of operations for the
year then ended and the changes in their net assets for the years
ended December 31, 1998 and 1997. We also consent to the reference
to our firm under the heading "Independent Auditors" in the
registration statement.
/S/ KPMG PEAT MARWICK LLP
Portland, Oregon
April 29, 1999
[ KPMG LLP Letterhead]
Consent of Independent Auditors
The Board of Directors
United Life & Annuity Insurance Company:
We consent to the inclusion in the Registration Statements (Nos.
33-91362 and 33-95778) on Form N-4, as amended and filed by United Life
& Annuity Insurance Company, of our report dated March 31, 1999,
relating to the consolidated balance sheets of United Life & Annuity
Insurance Company and subsidiary as of December 31, 1998 and 1997, and
the related consolidated statements of income and comprehensive income
(loss), cash flows, and shareholders' equity for the years ended December
31, 1998 and 1997, and the periods from July 24, 1996 to December 31, 1996
(Successor period) and January 1, 1996 to July 23, 1996 (Predecessor period),
and the related financial statement schedules III, IV and V. We also consent
to the reference to our firm under the heading "Independent Auditors" in the
registration statement.
/S/ KPMG LLP
Dallas, Texas
April 29, 1999
SPECTRA SELECT EXHIBIT 13 FROM MAY 1, 1999
UNITED LIFE & ANNUITY INSURANCE COMPANY
AVERAGE ANNUAL TOTAL RETURN
CALCULATION METHOD
The average annual compounded rate of return (denoted by T below) is the
rate that would equate the initial amount invested to the ending redeemable
value according to the formula:
P(1=T)^n=ERV
Where:
P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1000
payment made at the beginning of the 1, 5, or 10 year periods
at the end of the 1, 5, or 10 year periods (or fractional
portion thereof)
^ is the symbol for exponentiation
<TABLE>
<CAPTION>
United Life and Annuity Insurance Company
SpectraSelect Enhanced Death Benefit Variable Annuity
SEC Average Annual Total Return
P(1+T)^N = ERV
Valuation Date 12/31/98
1-Year
Purchase Years Total Value of Avg. Annual Total
Fund Amount Invested Units Held Total Return Return
- ---- ------ -------- ---------- ------------ ------
<S> <C> <C> <C> <C> <C>
Scudder Money Market $1,000.00 1 $975.15 -2.48% -2.48%
Scudder International $1,000.00 1 $1,106.07 10.61% 10.61%
MFS Emerging Growth $1,000.00 1 $1,260.33 26.03% 26.03%
MFS Total Return $1,000.00 1 $1,045.52 4.55% 4.55%
MFS Growth With Income $1,000.00 1 $1,143.87 14.39% 14.39%
MFS Research $1,000.00 1 $1,127.36 12.74% 12.74%
MFS Utilities $1,000.00 1 $1,101.92 10.19% 10.19%
Dreyfus Growth & Income $1,000.00 1 $1,040.40 4.04% 4.04%
Dreyfus Index $1,000.00 1 $1,201.79 20.18% 20.18%
Federated Utilities $1,000.00 1 $1,061.42 6.14% 6.14%
Federated High Income $1,000.00 1 $950.69 -4.93% -4.93%
Federated Government $1,000.00 1 $999.50 -0.05% -0.05%
Federated American Leaders $1,000.00 1 $1,096.85 9.68% 9.68%
Federated Prime Money $1,000.00 1 $976.70 -2.33% -2.33%
Van Eck Worldwide Hard Asset $1,000.00 1 $619.34 -38.07% -38.07%
Warburg Pincus Fixed Income $1,000.00 1 $1,003.65 0.36% 0.36%
Warburg Pincus Intl. Equity $1,000.00 1 $980.42 -1.96% -1.96%
Warburg Pincus Post-Venture Cap. $1,000.00 1 $991.90 -0.81% -0.81%
Alger American Growth $1,000.00 1 $1,397.26 39.73% 39.73%
AIM V.I. Capital Appreciation $1,000.00 1 $1,114.36 11.44% 11.44%
AIM V.I. Diversified Income $1,000.00 1 $959.39 -4.06% -4.06%
AIM V.I. Growth $1,000.00 1 $1,259.93 25.99% 25.99%
AIM V.I. Growth and Income $1,000.00 1 $1,196.61 19.66% 19.66%
AIM V.I. International Equity $1,000.00 1 $1,076.56 7.66% 7.66%
Morgan Stanley Emerging Mkt Debt $1,000.00 1 $644.71 -35.53% -35.53%
Morgan Stanley Equity Growth $1,000.00 1 $1,111.76 11.18% 11.18%
Morgan Stanley Global Equity $1,000.00 1 $1,054.99 5.50% 5.50%
Morgan Stanley High-Yield $1,000.00 1 $971.39 -2.86% -2.86%
Morgan Stanley Value $1,000.00 1 $903.13 -9.69% -9.69%
Neuberger & Berman AMT Guardian $1,000.00 1 $1,236.92 23.69% 23.69%
Neuberger & Berman AMT Ltd. Mat. $1,000.00 1 $967.34 -3.27% -3.27%
Neuberger & Berman AMT Mid-Cap $1,000.00 1 $1,310.76 31.08% 31.08%
Neuberger & Berman AMT Partners $1,000.00 1 $965.56 -3.44% -3.44%
5-Years
Purchase Years Total Value of Avg. Annual Total
Fund Amount Invested Units Held Total Return Return
- ---- ------ -------- ---------- ------------ ------
Scudder Money Market $1,000.00 3.23 $1,072.67 2.20% 7.27%
Scudder International $1,000.00 5 $1,469.18 8.00% 46.92%
MFS Emerging Growth $1,000.00 3.44 $2,059.14 23.36% 105.91%
MFS Total Return $1,000.00 3.99 $1,815.82 16.13% 81.58%
MFS Growth With Income $1,000.00 3.23 $1,961.05 23.18% 96.11%
MFS Research $1,000.00 3.43 $1,875.89 20.13% 87.59%
MFS Utilities $1,000.00 3.99 $2,275.50 22.88% 127.55%
Dreyfus Growth & Income $1,000.00 4.67 $2,208.09 18.49% 120.81%
Dreyfus Index $1,000.00 5 $2,129.60 16.32% 112.96%
Federated Utilities $1,000.00 4.89 $1,613.43 10.28% 61.34%
Federated High Income $1,000.00 4.84 $1,194.53 3.74% 19.45%
Federated Government $1,000.00 4.76 $1,137.44 2.74% 13.74%
Federated American Leaders $1,000.00 4.89 $2,183.00 17.31% 118.30%
Federated Prime Money $1,000.00 4.12 $1,186.58 4.24% 18.66%
Van Eck Worldwide Hard Asset $1,000.00 5 $742.57 -5.78% -25.74%
Warburg Pincus Fixed Income $1,000.00 1.75 $1,085.04 4.77% 8.50%
Warburg Pincus Intl. Equity $1,000.00 3.5 $1,112.91 3.10% 11.29%
Warburg Pincus Post-Venture Cap. $1,000.00 2.25 $1,090.50 3.93% 9.05%
Alger American Growth $1,000.00 5 $2,378.91 18.93% 137.89%
AIM V.I. Capital Appreciation $1,000.00 5 $2,000.35 14.87% 100.03%
AIM V.I. Diversified Income $1,000.00 5 $1,282.25 5.10% 28.23%
AIM V.I. Growth $1,000.00 5 $2,415.18 19.29% 141.52%
AIM V.I. Growth and Income $1,000.00 4.67 $2,360.28 20.19% 136.03%
AIM V.I. International Equity $1,000.00 5 $1,558.42 9.28% 55.84%
Morgan Stanley Emerging Mkt Debt $1,000.00 1.54 $643.71 -24.88% -35.63%
Morgan Stanley Equity Growth $1,000.00 1.99 $1,475.19 21.58% 47.52%
Morgan Stanley Global Equity $1,000.00 1.99 $1,257.23 12.19% 25.72%
Morgan Stanley High-Yield $1,000.00 1.99 $1,092.42 4.54% 9.24%
Morgan Stanley Value $1,000.00 1.99 $1,086.81 4.27% 8.68%
Neuberger & Berman AMT Guardian $1,000.00 1.16 $1,300.90 25.45% 30.09%
Neuberger & Berman AMT Ltd. Mat. $1,000.00 5 $1,168.36 3.16% 16.84%
Neuberger & Berman AMT Mid-Cap $1,000.00 1.16 $1,542.48 45.30% 54.25%
Neuberger & Berman AMT Partners $1,000.00 4.78 $2,159.00 17.47% 115.90%
10-Years
Purchase Years Total Value of Avg. Annual Total
Fund Amount Invested Units Held Total Return Return
- ---- ------ -------- ---------- ------------ ------
Scudder Money Market $1,000.00 3.23 $1,072.67 2.20% 7.27%
Scudder International $1,000.00 10 $2,405.89 9.18% 140.59%
MFS Emerging Growth $1,000.00 3.44 $2,059.14 23.36% 105.91%
MFS Total Return $1,000.00 3.99 $1,815.82 16.13% 81.58%
MFS Growth With Income $1,000.00 3.23 $1,961.05 23.18% 96.11%
MFS Research $1,000.00 3.43 $1,875.89 20.13% 87.59%
MFS Utilities $1,000.00 3.99 $2,275.50 22.88% 127.55%
Dreyfus Growth & Income $1,000.00 4.67 $2,208.09 18.49% 120.81%
Dreyfus Index $1,000.00 9.25 $2,488.41 10.36% 148.84%
Federated Utilities $1,000.00 4.89 $1,613.43 10.28% 61.34%
Federated High Income $1,000.00 4.84 $1,194.53 3.74% 19.45%
Federated Government $1,000.00 4.76 $1,137.44 2.74% 13.74%
Federated American Leaders $1,000.00 4.89 $2,183.00 17.31% 118.30%
Federated Prime Money $1,000.00 4.12 $1,186.58 4.24% 18.66%
Van Eck Worldwide Hard Asset $1,000.00 9.33 $985.39 -0.16% -1.46%
Warburg Pincus Fixed Income $1,000.00 1.75 $1,085.04 4.77% 8.50%
Warburg Pincus Intl. Equity $1,000.00 3.5 $1,112.91 3.10% 11.29%
Warburg Pincus Post-Venture Cap. $1,000.00 2.25 $1,090.50 3.93% 9.05%
Alger American Growth $1,000.00 9.98 $5,464.46 18.55% 446.45%
AIM V.I. Capital Appreciation $1,000.00 5.66 $2,368.86 16.46% 136.89%
AIM V.I. Diversified Income $1,000.00 5.66 $1,346.56 5.40% 34.66%
AIM V.I. Growth $1,000.00 5.66 $2,646.62 18.76% 164.66%
AIM V.I. Growth and Income $1,000.00 4.67 $2,360.28 20.19% 136.03%
AIM V.I. International Equity $1,000.00 5.66 $1,837.12 11.34% 83.71%
Morgan Stanley Emerging Mkt Debt $1,000.00 1.54 $643.71 -24.88% -35.63%
Morgan Stanley Equity Growth $1,000.00 1.99 $1,475.19 21.58% 47.52%
Morgan Stanley Global Equity $1,000.00 1.99 $1,257.23 12.19% 25.72%
Morgan Stanley High-Yield $1,000.00 1.99 $1,092.42 4.54% 9.24%
Morgan Stanley Value $1,000.00 1.99 $1,086.81 4.27% 8.68%
Neuberger & Berman AMT Guardian $1,000.00 1.16 $1,300.90 25.45% 30.09%
Neuberger & Berman AMT Ltd. Mat. $1,000.00 10 $1,643.58 5.09% 64.36%
Neuberger & Berman AMT Mid-Cap $1,000.00 1.16 $1,542.48 45.30% 54.25%
Neuberger & Berman AMT Partners $1,000.00 4.78 $2,159.00 17.47% 115.90%
Since Inception
Purchase Years Total Value of Avg. Annual Total
Fund Amount Invested Units Held Total Return Return
- ---- ------ -------- ---------- ------------ ------
Scudder Money Market $1,000.00 3.23 $1,072.67 2.20% 7.27%
Scudder International $1,000.00 11.67 $2,420.14 7.87% 142.01%
MFS Emerging Growth $1,000.00 3.44 $2,059.14 23.36% 105.91%
MFS Total Return $1,000.00 3.99 $1,815.82 16.13% 81.58%
MFS Growth With Income $1,000.00 3.23 $1,961.05 23.18% 96.11%
MFS Research $1,000.00 3.43 $1,875.89 20.13% 87.59%
MFS Utilities $1,000.00 3.99 $2,275.50 22.88% 127.55%
Dreyfus Growth & Income $1,000.00 4.67 $2,208.09 18.49% 120.81%
Dreyfus Index $1,000.00 9.25 $2,488.41 10.36% 148.84%
Federated Utilities $1,000.00 4.89 $1,613.43 10.28% 61.34%
Federated High Income $1,000.00 4.84 $1,194.53 3.74% 19.45%
Federated Government $1,000.00 4.76 $1,137.44 2.74% 13.74%
Federated American Leaders $1,000.00 4.89 $2,183.00 17.31% 118.30%
Federated Prime Money $1,000.00 4.12 $1,186.58 4.24% 18.66%
Van Eck Worldwide Hard Asset $1,000.00 9.33 $985.39 -0.16% -1.46%
Warburg Pincus Fixed Income $1,000.00 1.75 $1,085.04 4.77% 8.50%
Warburg Pincus Intl. Equity $1,000.00 3.5 $1,112.91 3.10% 11.29%
Warburg Pincus Post-Venture Cap. $1,000.00 2.25 $1,090.50 3.93% 9.05%
Alger American Growth $1,000.00 9.98 $5,464.46 18.55% 446.45%
AIM V.I. Capital Appreciation $1,000.00 5.66 $2,368.86 16.46% 136.89%
AIM V.I. Diversified Income $1,000.00 5.66 $1,346.56 5.40% 34.66%
AIM V.I. Growth $1,000.00 5.66 $2,646.62 18.76% 164.66%
AIM V.I. Growth and Income $1,000.00 4.67 $2,360.28 20.19% 136.03%
AIM V.I. International Equity $1,000.00 5.66 $1,837.12 11.34% 83.71%
Morgan Stanley Emerging Mkt Debt $1,000.00 1.54 $643.71 -24.88% -35.63%
Morgan Stanley Equity Growth $1,000.00 1.99 $1,475.19 21.58% 47.52%
Morgan Stanley Global Equity $1,000.00 1.99 $1,257.23 12.19% 25.72%
Morgan Stanley High-Yield $1,000.00 1.99 $1,092.42 4.54% 9.24%
Morgan Stanley Value $1,000.00 1.99 $1,086.81 4.27% 8.68%
Neuberger & Berman AMT Guardian $1,000.00 1.16 $1,300.90 25.45% 30.09%
Neuberger & Berman AMT Ltd. Mat. $1,000.00 14.31 $2,361.62 6.19% 136.16%
Neuberger & Berman AMT Mid-Cap $1,000.00 1.16 $1,542.48 45.30% 54.25%
Neuberger & Berman AMT Partners $1,000.00 4.78 $2,159.00 17.47% 115.90%
</TABLE>
<TABLE>
<CAPTION>
United Life and Annuity Insurance Company
SpectraSelect Enhanced Death Benefit Variable Annuity
One Year
Scudder Money Market
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/97 Purchase 1,000.00 10.748825 93.033 93.033 1,000.00
12/31/98 Value before SC 11.126668 93.033 1,035.15
12/31/98 Surrender Charge 6.00% (60.00) 11.126668 (5.392) 87.641 975.15
12/31/98 Ending Redeemable Value 11.126668 0.000 87.641 975.15
Avg Annual Total Return: -2.48%
Scudder International
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
12/31/97 Purchase 1,000.00 12.262406 81.550 81.550 1,000.00
12/31/98 Value before SC 14.298837 81.550 1,166.07
12/31/98 Surrender Charge 6.00% (60.00) 14.298837 (4.196) 77.354 1,106.07
12/31/98 Ending Redeemable Value 14.298837 0.000 77.354 1,106.07
Avg Annual Total Return: 10.61%
MFS Emerging Growth
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 14.085036 70.997 70.997 1,000.00
12/31/98 Value before SC 18.596956 70.997 1,320.33
12/31/98 Surrender Charge 6.00% (60.00) 18.596956 (3.226) 67.771 1,260.33
12/31/98 Ending Redeemable Value 18.596956 0.000 67.771 1,260.33
Avg Annual Total Return: 26.03%
MFS Total Return
- ----------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 13.766968 72.638 72.638 1,000.00
12/31/98 Value before SC 15.219683 72.638 1,105.52
12/31/98 Surrender Charge 6.00% (60.00) 15.219683 (3.942) 68.695 1,045.52
12/31/98 Ending Redeemable Value 15.219683 0.000 68.695 1,045.52
Avg Annual Total Return: 4.55%
MFS Growth With Income
- ----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.781181 113.880 113.880 1,000.00
12/31/98 Value before SC 10.571367 113.880 1,203.87
12/31/98 Surrender Charge 6.00% (60.00) 10.571367 (5.676) 108.204 1,143.87
12/31/98 Ending Redeemable Value 10.571367 0.000 108.204 1,143.87
Avg Annual Total Return: 14.39%
MFS Research
- ------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
12/31/97 Purchase 1,000.00 8.808407 113.528 113.528 1,000.00
12/31/98 Value before SC 10.458713 113.528 1,187.36
12/31/98 Surrender Charge 6.00% (60.00) 10.458713 (5.737) 107.791 1,127.36
12/31/98 Ending Redeemable Value 10.458713 0.000 107.791 1,127.36
Avg Annual Total Return: 12.74%
MFS Utilities
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.053569 110.454 110.454 1,000.00
12/31/98 Value before SC 10.519527 110.454 1,161.92
12/31/98 Surrender Charge 6.00% (60.00) 10.519527 (5.704) 104.750 1,101.92
12/31/98 Ending Redeemable Value 10.519527 0.000 104.750 1,101.92
Avg Annual Total Return: 10.19%
Dreyfus Growth & Income
- -----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 14.238739 70.231 70.231 1,000.00
12/31/98 Value before SC 15.668280 70.231 1,100.40
12/31/98 Surrender Charge 6.00% (60.00) 15.668280 (3.829) 66.402 1,040.40
12/31/98 Ending Redeemable Value 15.668280 0.000 66.402 1,040.40
Avg Annual Total Return: 4.04%
Dreyfus Index
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 16.022845 62.411 62.411 1,000.00
12/31/98 Value before SC 20.217448 62.411 1,261.79
12/31/98 Surrender Charge 6.00% (60.00) 20.217448 (2.968) 59.443 1,201.79
12/31/98 Ending Redeemable Value 20.217448 0.000 59.443 1,201.79
Avg Annual Total Return: 20.18%
Federated Utilities
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 14.095154 70.946 70.946 1,000.00
12/31/98 Value before SC 15.806520 70.946 1,121.42
12/31/98 Surrender Charge 6.00% (60.00) 15.806520 (3.796) 67.150 1,061.42
12/31/98 Ending Redeemable Value 15.806520 0.000 67.150 1,061.42
Avg Annual Total Return: 6.14%
Federated High Income
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 12.805491 78.091 78.091 1,000.00
12/31/98 Value before SC 12.942427 78.091 1,010.69
12/31/98 Surrender Charge 6.00% (60.00) 12.942427 (4.636) 73.456 950.69
12/31/98 Ending Redeemable Value 12.942427 0.000 73.456 950.69
Avg Annual Total Return: -4.93%
Federated Government
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 11.106355 90.039 90.039 1,000.00
12/31/98 Value before SC 11.767193 90.039 1,059.50
12/31/98 Surrender Charge 6.00% (60.00) 11.767193 (5.099) 84.940 999.50
12/31/98 Ending Redeemable Value 11.767193 0.000 84.940 999.50
Avg Annual Total Return: -0.05%
Federated American Leaders
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.762050 114.129 114.129 1,000.00
12/31/98 Value before SC 10.136338 114.129 1,156.85
12/31/98 Surrender Charge 6.00% (60.00) 10.136338 (5.919) 108.209 1,096.85
12/31/98 Ending Redeemable Value 10.136338 0.000 108.209 1,096.85
Avg Annual Total Return: 9.68%
Federated Prime Money
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.843453 101.590 101.590 1,000.00
12/31/98 Value before SC 10.204716 101.590 1,036.70
12/31/98 Surrender Charge 6.00% (60.00) 10.204716 (5.880) 95.711 976.70
12/31/98 Ending Redeemable Value 10.204716 0.000 95.711 976.70
Avg Annual Total Return: -2.33%
Van Eck Worldwide Hard Asset
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 11.400042 87.719 87.719 1,000.00
12/31/98 Value before SC 7.744548 87.719 679.34
12/31/98 Surrender Charge 6.00% (60.00) 7.744548 (7.747) 79.972 619.34
12/31/98 Ending Redeemable Value 7.744548 0.000 79.972 619.34
Avg Annual Total Return: -38.07%
Warburg Pincus Fixed Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.874457 101.271 101.271 1,000.00
12/31/98 Value before SC 10.502919 101.271 1,063.65
12/31/98 Surrender Charge 6.00% (60.00) 10.502919 (5.713) 95.559 1,003.65
12/31/98 Ending Redeemable Value 10.502919 0.000 95.559 1,003.65
Avg Annual Total Return: 0.36%
Warburg Pincus Intl. Equity
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.601303 116.261 116.261 1,000.00
12/31/98 Value before SC 8.948958 116.261 1,040.42
12/31/98 Surrender Charge 6.00% (60.00) 8.948958 (6.705) 109.557 980.42
12/31/98 Ending Redeemable Value 8.948958 0.000 109.557 980.42
Avg Annual Total Return: -1.96%
Warburg Pincus Post-Venture Cap.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.612133 116.115 116.115 1,000.00
12/31/98 Value before SC 9.059077 116.115 1,051.90
12/31/98 Surrender Charge 6.00% (60.00) 9.059077 (6.623) 109.492 991.90
12/31/98 Ending Redeemable Value 9.059077 0.000 109.492 991.90
Avg Annual Total Return: -0.81%
Alger American Growth
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 13.877779 72.058 72.058 1,000.00
12/31/98 Value before SC 20.223505 72.058 1,457.26
12/31/98 Surrender Charge 6.00% (60.00) 20.223505 (2.967) 69.091 1,397.26
12/31/98 Ending Redeemable Value 20.223505 0.000 69.091 1,397.26
Avg Annual Total Return: 39.73%
AIM V.I. Capital Appreciation
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.842941 113.085 113.085 1,000.00
12/31/98 Value before SC 10.384834 113.085 1,174.36
12/31/98 Surrender Charge 6.00% (60.00) 10.384834 (5.778) 107.307 1,114.36
12/31/98 Ending Redeemable Value 10.384834 0.000 107.307 1,114.36
Avg Annual Total Return: 11.44%
AIM V.I. Diversified Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.717056 102.912 102.912 1,000.00
12/31/98 Value before SC 9.905502 102.912 1,019.39
12/31/98 Surrender Charge 6.00% (60.00) 9.905502 (6.057) 96.855 959.39
12/31/98 Ending Redeemable Value 9.905502 0.000 96.855 959.39
Avg Annual Total Return: -4.06%
AIM V.I. Growth
- ---------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.720234 114.676 114.676 1,000.00
12/31/98 Value before SC 11.510141 114.676 1,319.93
12/31/98 Surrender Charge 6.00% (60.00) 11.510141 (5.213) 109.463 1,259.93
12/31/98 Ending Redeemable Value 11.510141 0.000 109.463 1,259.93
Avg Annual Total Return: 25.99%
AIM V.I. Growth and Income
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.985985 111.284 111.284 1,000.00
12/31/98 Value before SC 11.291881 111.284 1,256.61
12/31/98 Surrender Charge 6.00% (60.00) 11.291881 (5.314) 105.971 1,196.61
12/31/98 Ending Redeemable Value 11.291881 0.000 105.971 1,196.61
Avg Annual Total Return: 19.66%
AIM V.I. International Equity
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.657732 115.504 115.504 1,000.00
12/31/98 Value before SC 9.840036 115.504 1,136.56
12/31/98 Surrender Charge 6.00% (60.00) 9.840036 (6.098) 109.406 1,076.56
12/31/98 Ending Redeemable Value 9.840036 0.000 109.406 1,076.56
Avg Annual Total Return: 7.66%
Morgan Stanley Emerging Mkt Debt
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.586760 104.311 104.311 1,000.00
12/31/98 Value before SC 6.755909 104.311 704.71
12/31/98 Surrender Charge 6.00% (60.00) 6.755909 (8.881) 95.429 644.71
12/31/98 Ending Redeemable Value 6.755909 0.000 95.429 644.71
Avg Annual Total Return: -35.53%
Morgan Stanley Equity Growth
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.832493 113.218 113.218 1,000.00
12/31/98 Value before SC 10.349565 113.218 1,171.76
12/31/98 Surrender Charge 6.00% (60.00) 10.349565 (5.797) 107.421 1,111.76
12/31/98 Ending Redeemable Value 10.349565 0.000 107.421 1,111.76
Avg Annual Total Return: 11.18%
Morgan Stanley Global Equity
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.813904 113.457 113.457 1,000.00
12/31/98 Value before SC 9.827441 113.457 1,114.99
12/31/98 Surrender Charge 6.00% (60.00) 9.827441 (6.105) 107.352 1,054.99
12/31/98 Ending Redeemable Value 9.827441 0.000 107.352 1,054.99
Avg Annual Total Return: 5.50%
Morgan Stanley High-Yield
- -------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.651703 103.609 103.609 1,000.00
12/31/98 Value before SC 9.954669 103.609 1,031.39
12/31/98 Surrender Charge 6.00% (60.00) 9.954669 (6.027) 97.581 971.39
12/31/98 Ending Redeemable Value 9.954669 0.000 97.581 971.39
Avg Annual Total Return: -2.86%
Morgan Stanley Value
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.187013 108.849 108.849 1,000.00
12/31/98 Value before SC 8.848250 108.849 963.13
12/31/98 Surrender Charge 6.00% (60.00) 8.848250 (6.781) 102.068 903.13
12/31/98 Ending Redeemable Value 8.848250 0.000 102.068 903.13
Avg Annual Total Return: -9.69%
Neuberger & Berman AMT Guardian
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 7.207746 138.740 138.740 1,000.00
12/31/98 Value before SC 9.347893 138.740 1,296.92
12/31/98 Surrender Charge 6.00% (60.00) 9.347893 (6.419) 132.321 1,236.92
12/31/98 Ending Redeemable Value 9.347893 0.000 132.321 1,236.92
Avg Annual Total Return: 23.69%
Neuberger & Berman AMT Ltd. Mat.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.872803 101.288 101.288 1,000.00
12/31/98 Value before SC 10.142755 101.288 1,027.34
12/31/98 Surrender Charge 6.00% (60.00) 10.142755 (5.916) 95.373 967.34
12/31/98 Ending Redeemable Value 10.142755 0.000 95.373 967.34
Avg Annual Total Return: -3.27%
Neuberger & Berman AMT Mid-Cap
- ------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.261533 121.043 121.043 1,000.00
12/31/98 Value before SC 11.324558 121.043 1,370.76
12/31/98 Surrender Charge 6.00% (60.00) 11.324558 (5.298) 115.745 1,310.76
12/31/98 Ending Redeemable Value 11.324558 0.000 115.745 1,310.76
Avg Annual Total Return: 31.08%
Neuberger & Berman AMT Partners
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.085131 110.070 110.070 1,000.00
12/31/98 Value before SC 9.317309 110.070 1,025.56
12/31/98 Surrender Charge 6.00% (60.00) 9.317309 (6.440) 103.630 965.56
12/31/98 Ending Redeemable Value 9.317309 0.000 103.630 965.56
Avg Annual Total Return: -3.44%
</TABLE>
<TABLE>
<CAPTION>
United Life and Annuity Insurance Company
SpectraSelect Enhanced Death Benefit Variable Annuity
Five Years
Scudder Money Market
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/09/95 Purchase 1,000.00 10.000000 100.000 100.000 1,000.00
12/31/98 Value before SC 11.126668 100.000 1,112.67
12/31/98 Surrender Charge 4.00% (40.00) 11.126668 (3.595) 96.405 1,072.67
12/31/98 Ending Redeemable Value 11.126668 0.000 96.405 1,072.67
Avg Annual Total Return: 2.20%
Scudder International
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 9.601844 104.147 104.147 1,000.00
12/31/98 Value before SC 14.298837 104.147 1,489.18
12/31/98 Surrender Charge 2.00% (20.00) 14.298837 (1.399) 102.748 1,469.18
12/31/98 Ending Redeemable Value 14.298837 0.000 102.748 1,469.18
Avg Annual Total Return: 8.00%
MFS Emerging Growth
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
07/24/95 Purchase 1,000.00 8.859339 112.875 112.875 1,000.00
12/31/98 Value before SC 18.596956 112.875 2,099.14
12/31/98 Surrender Charge 4.00% (40.00) 18.596956 (2.151) 110.724 2,059.14
12/31/98 Ending Redeemable Value 18.596956 0.000 110.724 2,059.14
Avg Annual Total Return: 23.36%
MFS Total Return
- ----------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/03/95 Purchase 1,000.00 8.201057 121.936 121.936 1,000.00
12/31/98 Value before SC 15.219683 121.936 1,855.82
12/31/98 Surrender Charge 4.00% (40.00) 15.219683 (2.628) 119.307 1,815.82
12/31/98 Ending Redeemable Value 15.219683 0.000 119.307 1,815.82
Avg Annual Total Return: 16.13%
MFS Growth With Income
- ----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
10/09/95 Purchase 1,000.00 5.282897 189.290 189.290 1,000.00
12/31/98 Value before SC 10.571367 189.290 2,001.05
12/31/98 Surrender Charge 4.00% (40.00) 10.571367 (3.784) 185.506 1,961.05
12/31/98 Ending Redeemable Value 10.571367 0.000 185.506 1,961.05
Avg Annual Total Return: 23.18%
MFS Research
- ------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
07/26/95 Purchase 1,000.00 5.458918 183.186 183.186 1,000.00
12/31/98 Value before SC 10.458713 183.186 1,915.89
12/31/98 Surrender Charge 4.00% (40.00) 10.458713 (3.825) 179.362 1,875.89
12/31/98 Ending Redeemable Value 10.458713 0.000 179.362 1,875.89
Avg Annual Total Return: 20.13%
MFS Utilities
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/03/95 Purchase 1,000.00 4.543093 220.114 220.114 1,000.00
12/31/98 Value before SC 10.519527 220.114 2,315.50
12/31/98 Surrender Charge 4.00% (40.00) 10.519527 (3.802) 216.312 2,275.50
12/31/98 Ending Redeemable Value 10.519527 0.000 216.312 2,275.50
Avg Annual Total Return: 22.88%
Dreyfus Growth & Income
- -----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/02/94 Purchase 1,000.00 7.000747 142.842 142.842 1,000.00
12/31/98 Value before SC 15.668280 142.842 2,238.09
12/31/98 Surrender Charge 3.00% (30.00) 15.668280 (1.915) 140.927 2,208.09
12/31/98 Ending Redeemable Value 15.668280 0.000 140.927 2,208.09
Avg Annual Total Return: 18.49%
Dreyfus Index
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 9.405219 106.324 106.324 1,000.00
12/31/98 Value before SC 20.217448 106.324 2,149.60
12/31/98 Surrender Charge 2.00% (20.00) 20.217448 (0.989) 105.335 2,129.60
12/31/98 Ending Redeemable Value 20.217448 0.000 105.335 2,129.60
Avg Annual Total Return: 16.32%
Federated Utilities
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
02/10/94 Purchase 1,000.00 9.618020 103.971 103.971 1,000.00
12/31/98 Value before SC 15.806520 103.971 1,643.43
12/31/98 Surrender Charge 3.00% (30.00) 15.806520 (1.898) 102.074 1,613.43
12/31/98 Ending Redeemable Value 15.806520 0.000 102.074 1,613.43
Avg Annual Total Return: 10.28%
Federated High Income
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/01/94 Purchase 1,000.00 10.569289 94.614 94.614 1,000.00
12/31/98 Value before SC 12.942427 94.614 1,224.53
12/31/98 Surrender Charge 3.00% (30.00) 12.942427 (2.318) 92.296 1,194.53
12/31/98 Ending Redeemable Value 12.942427 0.000 92.296 1,194.53
Avg Annual Total Return: 3.74%
Federated Government
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/27/94 Purchase 1,000.00 10.079524 99.211 99.211 1,000.00
12/31/98 Value before SC 11.767193 99.211 1,167.44
12/31/98 Surrender Charge 3.00% (30.00) 11.767193 (2.549) 96.662 1,137.44
12/31/98 Ending Redeemable Value 11.767193 0.000 96.662 1,137.44
Avg Annual Total Return: 2.74%
Federated American Leaders
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
02/10/94 Purchase 1,000.00 4.580362 218.323 218.323 1,000.00
12/31/98 Value before SC 10.136338 218.323 2,213.00
12/31/98 Surrender Charge 3.00% (30.00) 10.136338 (2.960) 215.364 2,183.00
12/31/98 Ending Redeemable Value 10.136338 0.000 215.364 2,183.00
Avg Annual Total Return: 17.31%
Federated Prime Money
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/18/94 Purchase 1,000.00 8.388020 119.218 119.218 1,000.00
12/31/98 Value before SC 10.204716 119.218 1,216.58
12/31/98 Surrender Charge 3.00% (30.00) 10.204716 (2.940) 116.278 1,186.58
12/31/98 Ending Redeemable Value 10.204716 0.000 116.278 1,186.58
Avg Annual Total Return: 4.24%
Van Eck Worldwide Hard Asset
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 10.155883 98.465 98.465 1,000.00
12/31/98 Value before SC 7.744548 98.465 762.57
12/31/98 Surrender Charge 2.00% (20.00) 7.744548 (2.582) 95.883 742.57
12/31/98 Ending Redeemable Value 7.744548 0.000 95.883 742.57
Avg Annual Total Return: -5.78%
Warburg Pincus Fixed Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/31/97 Purchase 1,000.00 9.172571 109.021 109.021 1,000.00
12/31/98 Value before SC 10.502919 109.021 1,145.04
12/31/98 Surrender Charge 6.00% (60.00) 10.502919 (5.713) 103.308 1,085.04
12/31/98 Ending Redeemable Value 10.502919 0.000 103.308 1,085.04
Avg Annual Total Return: 4.77%
Warburg Pincus Intl. Equity
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
06/30/95 Purchase 1,000.00 7.762053 128.832 128.832 1,000.00
12/31/98 Value before SC 8.948958 128.832 1,152.91
12/31/98 Surrender Charge 4.00% (40.00) 8.948958 (4.470) 124.362 1,112.91
12/31/98 Ending Redeemable Value 8.948958 0.000 124.362 1,112.91
Avg Annual Total Return: 3.10%
Warburg Pincus Post-Venture Cap.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
09/30/96 Purchase 1,000.00 7.943059 125.896 125.896 1,000.00
12/31/98 Value before SC 9.059077 125.896 1,140.50
12/31/98 Surrender Charge 5.00% (50.00) 9.059077 (5.519) 120.377 1,090.50
12/31/98 Ending Redeemable Value 9.059077 0.000 120.377 1,090.50
Avg Annual Total Return: 3.93%
Alger American Growth
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 8.430282 118.620 118.620 1,000.00
12/31/98 Value before SC 20.223505 118.620 2,398.91
12/31/98 Surrender Charge 2.00% (20.00) 20.223505 (0.989) 117.631 2,378.91
12/31/98 Ending Redeemable Value 20.223505 0.000 117.631 2,378.91
Avg Annual Total Return: 18.93%
AIM V.I. Capital Appreciation
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 5.140128 194.548 194.548 1,000.00
12/31/98 Value before SC 10.384834 194.548 2,020.35
12/31/98 Surrender Charge 2.00% (20.00) 10.384834 (1.926) 192.622 2,000.35
12/31/98 Ending Redeemable Value 10.384834 0.000 192.622 2,000.35
Avg Annual Total Return: 14.87%
AIM V.I. Diversified Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 7.606440 131.468 131.468 1,000.00
12/31/98 Value before SC 9.905502 131.468 1,302.25
12/31/98 Surrender Charge 2.00% (20.00) 9.905502 (2.019) 129.448 1,282.25
12/31/98 Ending Redeemable Value 9.905502 0.000 129.448 1,282.25
Avg Annual Total Return: 5.10%
AIM V.I. Growth
- ---------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 4.726603 211.568 211.568 1,000.00
12/31/98 Value before SC 11.510141 211.568 2,435.18
12/31/98 Surrender Charge 2.00% (20.00) 11.510141 (1.738) 209.831 2,415.18
12/31/98 Ending Redeemable Value 11.510141 0.000 209.831 2,415.18
Avg Annual Total Return: 19.29%
AIM V.I. Growth and Income
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/02/94 Purchase 1,000.00 4.724075 211.682 211.682 1,000.00
12/31/98 Value before SC 11.291881 211.682 2,390.28
12/31/98 Surrender Charge 3.00% (30.00) 11.291881 (2.657) 209.025 2,360.28
12/31/98 Ending Redeemable Value 11.291881 0.000 209.025 2,360.28
Avg Annual Total Return: 20.19%
AIM V.I. International Equity
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 6.234087 160.408 160.408 1,000.00
12/31/98 Value before SC 9.840036 160.408 1,578.42
12/31/98 Surrender Charge 2.00% (20.00) 9.840036 (2.033) 158.376 1,558.42
12/31/98 Ending Redeemable Value 9.840036 0.000 158.376 1,558.42
Avg Annual Total Return: 9.28%
Morgan Stanley Emerging Mkt Debt
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
06/16/97 Purchase 1,000.00 9.600468 104.162 104.162 1,000.00
12/31/98 Value before SC 6.755909 104.162 703.71
12/31/98 Surrender Charge 6.00% (60.00) 6.755909 (8.881) 95.280 643.71
12/31/98 Ending Redeemable Value 6.755909 0.000 95.280 643.71
Avg Annual Total Return: -24.88%
Morgan Stanley Equity Growth
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 6.741532 148.334 148.334 1,000.00
12/31/98 Value before SC 10.349565 148.334 1,535.19
12/31/98 Surrender Charge 6.00% (60.00) 10.349565 (5.797) 142.537 1,475.19
12/31/98 Ending Redeemable Value 10.349565 0.000 142.537 1,475.19
Avg Annual Total Return: 21.58%
Morgan Stanley Global Equity
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 7.460677 134.036 134.036 1,000.00
12/31/98 Value before SC 9.827441 134.036 1,317.23
12/31/98 Surrender Charge 6.00% (60.00) 9.827441 (6.105) 127.931 1,257.23
12/31/98 Ending Redeemable Value 9.827441 0.000 127.931 1,257.23
Avg Annual Total Return: 12.19%
Morgan Stanley High-Yield
- -------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 8.638043 115.767 115.767 1,000.00
12/31/98 Value before SC 9.954669 115.767 1,152.42
12/31/98 Surrender Charge 6.00% (60.00) 9.954669 (6.027) 109.740 1,092.42
12/31/98 Ending Redeemable Value 9.954669 0.000 109.740 1,092.42
Avg Annual Total Return: 4.54%
Morgan Stanley Value
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 7.715518 129.609 129.609 1,000.00
12/31/98 Value before SC 8.848250 129.609 1,146.81
12/31/98 Surrender Charge 6.00% (60.00) 8.848250 (6.781) 122.828 1,086.81
12/31/98 Ending Redeemable Value 8.848250 0.000 122.828 1,086.81
Avg Annual Total Return: 4.27%
Neuberger & Berman AMT Guardian
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/03/97 Purchase 1,000.00 6.868895 145.584 145.584 1,000.00
12/31/98 Value before SC 9.347893 145.584 1,360.90
12/31/98 Surrender Charge 6.00% (60.00) 9.347893 (6.419) 139.165 1,300.90
12/31/98 Ending Redeemable Value 9.347893 0.000 139.165 1,300.90
Avg Annual Total Return: 25.45%
Neuberger & Berman AMT Ltd. Mat.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 8.535075 117.164 117.164 1,000.00
12/31/98 Value before SC 10.142755 117.164 1,188.36
12/31/98 Surrender Charge 2.00% (20.00) 10.142755 (1.972) 115.192 1,168.36
12/31/98 Ending Redeemable Value 10.142755 0.000 115.192 1,168.36
Avg Annual Total Return: 3.16%
Neuberger & Berman AMT Mid-Cap
- ------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/03/97 Purchase 1,000.00 7.066911 141.505 141.505 1,000.00
12/31/98 Value before SC 11.324558 141.505 1,602.48
12/31/98 Surrender Charge 6.00% (60.00) 11.324558 (5.298) 136.206 1,542.48
12/31/98 Ending Redeemable Value 11.324558 0.000 136.206 1,542.48
Avg Annual Total Return: 45.30%
Neuberger & Berman AMT Partners
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/22/94 Purchase 1,000.00 4.256430 234.939 234.939 1,000.00
12/31/98 Value before SC 9.317309 234.939 2,189.00
12/31/98 Surrender Charge 3.00% (30.00) 9.317309 (3.220) 231.719 2,159.00
12/31/98 Ending Redeemable Value 9.317309 0.000 231.719 2,159.00
Avg Annual Total Return: 17.47%
</TABLE>
<TABLE>
<CAPTION>
United Life and Annuity Insurance Company
SpectraSelect Enhanced Death Benefit Variable Annuity
10 Years
Scudder Money Market
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/09/95 Purchase 1,000.00 10.000000 100.000 100.000 1,000.00
12/31/98 Value before SC 11.126668 100.000 1,112.67
12/31/98 Surrender Charge 4.00% (40.00) 11.126668 (3.595) 96.405 1,072.67
12/31/98 Ending Redeemable Value 11.126668 0.000 96.405 1,072.67
Avg Annual Total Return: 2.20%
Scudder International
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/88 Purchase 1,000.00 5.943254 168.258 168.258 1,000.00
12/31/98 Value before SC 14.298837 168.258 2,405.89
12/31/98 Surrender Charge 0.00% 0.00 14.298837 0.000 168.258 2,405.89
12/31/98 Ending Redeemable Value 14.298837 0.000 168.258 2,405.89
Avg Annual Total Return: 9.18%
MFS Emerging Growth
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
07/24/95 Purchase 1,000.00 8.859339 112.875 112.875 1,000.00
12/31/98 Value before SC 18.596956 112.875 2,099.14
12/31/98 Surrender Charge 4.00% (40.00) 18.596956 (2.151) 110.724 2,059.14
12/31/98 Ending Redeemable Value 18.596956 0.000 110.724 2,059.14
Avg Annual Total Return: 23.36%
MFS Total Return
- ----------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/03/95 Purchase 1,000.00 8.201057 121.936 121.936 1,000.00
12/31/98 Value before SC 15.219683 121.936 1,855.82
12/31/98 Surrender Charge 4.00% (40.00) 15.219683 (2.628) 119.307 1,815.82
12/31/98 Ending Redeemable Value 15.219683 0.000 119.307 1,815.82
Avg Annual Total Return: 16.13%
MFS Growth With Income
- ----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
10/09/95 Purchase 1,000.00 5.282897 189.290 189.290 1,000.00
12/31/98 Value before SC 10.571367 189.290 2,001.05
12/31/98 Surrender Charge 4.00% (40.00) 10.571367 (3.784) 185.506 1,961.05
12/31/98 Ending Redeemable Value 10.571367 0.000 185.506 1,961.05
Avg Annual Total Return: 23.18%
MFS Research
- ------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
07/26/95 Purchase 1,000.00 5.458918 183.186 183.186 1,000.00
12/31/98 Value before SC 10.458713 183.186 1,915.89
12/31/98 Surrender Charge 4.00% (40.00) 10.458713 (3.825) 179.362 1,875.89
12/31/98 Ending Redeemable Value 10.458713 0.000 179.362 1,875.89
Avg Annual Total Return: 20.13%
MFS Utilities
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/03/95 Purchase 1,000.00 4.543093 220.114 220.114 1,000.00
12/31/98 Value before SC 10.519527 220.114 2,315.50
12/31/98 Surrender Charge 4.00% (40.00) 10.519527 (3.802) 216.312 2,275.50
12/31/98 Ending Redeemable Value 10.519527 0.000 216.312 2,275.50
Avg Annual Total Return: 22.88%
Dreyfus Growth & Income
- -----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/02/94 Purchase 1,000.00 7.000747 142.842 142.842 1,000.00
12/31/98 Value before SC 15.668280 142.842 2,238.09
12/31/98 Surrender Charge 3.00% (30.00) 15.668280 (1.915) 140.927 2,208.09
12/31/98 Ending Redeemable Value 15.668280 0.000 140.927 2,208.09
Avg Annual Total Return: 18.49%
Dreyfus Index
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
09/29/89 Purchase 1,000.00 8.124629 123.083 123.083 1,000.00
12/31/98 Value before SC 20.217448 123.083 2,488.41
12/31/98 Surrender Charge 0.00% 0.00 20.217448 0.000 123.083 2,488.41
12/31/98 Ending Redeemable Value 20.217448 0.000 123.083 2,488.41
Avg Annual Total Return: 10.36%
Federated Utilities
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
02/10/94 Purchase 1,000.00 9.618020 103.971 103.971 1,000.00
12/31/98 Value before SC 15.806520 103.971 1,643.43
12/31/98 Surrender Charge 3.00% (30.00) 15.806520 (1.898) 102.074 1,613.43
12/31/98 Ending Redeemable Value 15.806520 0.000 102.074 1,613.43
Avg Annual Total Return: 10.28%
Federated High Income
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/01/94 Purchase 1,000.00 10.569289 94.614 94.614 1,000.00
12/31/98 Value before SC 12.942427 94.614 1,224.53
12/31/98 Surrender Charge 3.00% (30.00) 12.942427 (2.318) 92.296 1,194.53
12/31/98 Ending Redeemable Value 12.942427 0.000 92.296 1,194.53
Avg Annual Total Return: 3.74%
Federated Government
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/27/94 Purchase 1,000.00 10.079524 99.211 99.211 1,000.00
12/31/98 Value before SC 11.767193 99.211 1,167.44
12/31/98 Surrender Charge 3.00% (30.00) 11.767193 (2.549) 96.662 1,137.44
12/31/98 Ending Redeemable Value 11.767193 0.000 96.662 1,137.44
Avg Annual Total Return: 2.74%
Federated American Leaders
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
02/10/94 Purchase 1,000.00 4.580362 218.323 218.323 1,000.00
12/31/98 Value before SC 10.136338 218.323 2,213.00
12/31/98 Surrender Charge 3.00% (30.00) 10.136338 (2.960) 215.364 2,183.00
12/31/98 Ending Redeemable Value 10.136338 0.000 215.364 2,183.00
Avg Annual Total Return: 17.31%
Federated Prime Money
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/18/94 Purchase 1,000.00 8.388020 119.218 119.218 1,000.00
12/31/98 Value before SC 10.204716 119.218 1,216.58
12/31/98 Surrender Charge 3.00% (30.00) 10.204716 (2.940) 116.278 1,186.58
12/31/98 Ending Redeemable Value 10.204716 0.000 116.278 1,186.58
Avg Annual Total Return: 4.24%
Van Eck Worldwide Hard Asset
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
09/01/89 Purchase 1,000.00 7.859385 127.236 127.236 1,000.00
12/31/98 Value before SC 7.744548 127.236 985.39
12/31/98 Surrender Charge 0.00% 0.00 7.744548 0.000 127.236 985.39
12/31/98 Ending Redeemable Value 7.744548 0.000 127.236 985.39
Avg Annual Total Return: -0.16%
Warburg Pincus Fixed Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/31/97 Purchase 1,000.00 9.172571 109.021 109.021 1,000.00
12/31/98 Value before SC 10.502919 109.021 1,145.04
12/31/98 Surrender Charge 6.00% (60.00) 10.502919 (5.713) 103.308 1,085.04
12/31/98 Ending Redeemable Value 10.502919 0.000 103.308 1,085.04
Avg Annual Total Return: 4.77%
Warburg Pincus Intl. Equity
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
06/30/95 Purchase 1,000.00 7.762053 128.832 128.832 1,000.00
12/31/98 Value before SC 8.948958 128.832 1,152.91
12/31/98 Surrender Charge 4.00% (40.00) 8.948958 (4.470) 124.362 1,112.91
12/31/98 Ending Redeemable Value 8.948958 0.000 124.362 1,112.91
Avg Annual Total Return: 3.10%
Warburg Pincus Post-Venture Cap.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
09/30/96 Purchase 1,000.00 7.943059 125.896 125.896 1,000.00
12/31/98 Value before SC 9.059077 125.896 1,140.50
12/31/98 Surrender Charge 5.00% (50.00) 9.059077 (5.519) 120.377 1,090.50
12/31/98 Ending Redeemable Value 9.059077 0.000 120.377 1,090.50
Avg Annual Total Return: 3.93%
Alger American Growth
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/06/89 Purchase 1,000.00 3.700918 270.203 270.203 1,000.00
12/31/98 Value before SC 20.223505 270.203 5,464.46
12/31/98 Surrender Charge 0.00% 0.00 20.223505 0.000 270.203 5,464.46
12/31/98 Ending Redeemable Value 20.223505 0.000 270.203 5,464.46
Avg Annual Total Return: 18.55%
AIM V.I. Capital Appreciation
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 4.347200 230.033 230.033 1,000.00
12/31/98 Value before SC 10.384834 230.033 2,388.86
12/31/98 Surrender Charge 2.00% (20.00) 10.384834 (1.926) 228.107 2,368.86
12/31/98 Ending Redeemable Value 10.384834 0.000 228.107 2,368.86
Avg Annual Total Return: 16.46%
AIM V.I. Diversified Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 7.248512 137.959 137.959 1,000.00
12/31/98 Value before SC 9.905502 137.959 1,366.56
12/31/98 Surrender Charge 2.00% (20.00) 9.905502 (2.019) 135.940 1,346.56
12/31/98 Ending Redeemable Value 9.905502 0.000 135.940 1,346.56
Avg Annual Total Return: 5.40%
AIM V.I. Growth
- ---------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 4.316384 231.675 231.675 1,000.00
12/31/98 Value before SC 11.510141 231.675 2,666.62
12/31/98 Surrender Charge 2.00% (20.00) 11.510141 (1.738) 229.938 2,646.62
12/31/98 Ending Redeemable Value 11.510141 0.000 229.938 2,646.62
Avg Annual Total Return: 18.76%
AIM V.I. Growth and Income
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/02/94 Purchase 1,000.00 4.724075 211.682 211.682 1,000.00
12/31/98 Value before SC 11.291881 211.682 2,390.28
12/31/98 Surrender Charge 3.00% (30.00) 11.291881 (2.657) 209.025 2,360.28
12/31/98 Ending Redeemable Value 11.291881 0.000 209.025 2,360.28
Avg Annual Total Return: 20.19%
AIM V.I. International Equity
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 5.298542 188.731 188.731 1,000.00
12/31/98 Value before SC 9.840036 188.731 1,857.12
12/31/98 Surrender Charge 2.00% (20.00) 9.840036 (2.033) 186.699 1,837.12
12/31/98 Ending Redeemable Value 9.840036 0.000 186.699 1,837.12
Avg Annual Total Return: 11.34%
Morgan Stanley Emerging Mkt Debt
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
06/16/97 Purchase 1,000.00 9.600468 104.162 104.162 1,000.00
12/31/98 Value before SC 6.755909 104.162 703.71
12/31/98 Surrender Charge 6.00% (60.00) 6.755909 (8.881) 95.280 643.71
12/31/98 Ending Redeemable Value 6.755909 0.000 95.280 643.71
Avg Annual Total Return: -24.88%
Morgan Stanley Equity Growth
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 6.741532 148.334 148.334 1,000.00
12/31/98 Value before SC 10.349565 148.334 1,535.19
12/31/98 Surrender Charge 6.00% (60.00) 10.349565 (5.797) 142.537 1,475.19
12/31/98 Ending Redeemable Value 10.349565 0.000 142.537 1,475.19
Avg Annual Total Return: 21.58%
Morgan Stanley Global Equity
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 7.460677 134.036 134.036 1,000.00
12/31/98 Value before SC 9.827441 134.036 1,317.23
12/31/98 Surrender Charge 6.00% (60.00) 9.827441 (6.105) 127.931 1,257.23
12/31/98 Ending Redeemable Value 9.827441 0.000 127.931 1,257.23
Avg Annual Total Return: 12.19%
Morgan Stanley High-Yield
- -------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 8.638043 115.767 115.767 1,000.00
12/31/98 Value before SC 9.954669 115.767 1,152.42
12/31/98 Surrender Charge 6.00% (60.00) 9.954669 (6.027) 109.740 1,092.42
12/31/98 Ending Redeemable Value 9.954669 0.000 109.740 1,092.42
Avg Annual Total Return: 4.54%
Morgan Stanley Value
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 7.715518 129.609 129.609 1,000.00
12/31/98 Value before SC 8.848250 129.609 1,146.81
12/31/98 Surrender Charge 6.00% (60.00) 8.848250 (6.781) 122.828 1,086.81
12/31/98 Ending Redeemable Value 8.848250 0.000 122.828 1,086.81
Avg Annual Total Return: 4.27%
Neuberger & Berman AMT Guardian
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/03/97 Purchase 1,000.00 6.868895 145.584 145.584 1,000.00
12/31/98 Value before SC 9.347893 145.584 1,360.90
12/31/98 Surrender Charge 6.00% (60.00) 9.347893 (6.419) 139.165 1,300.90
12/31/98 Ending Redeemable Value 9.347893 0.000 139.165 1,300.90
Avg Annual Total Return: 25.45%
Neuberger & Berman AMT Ltd. Mat.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/88 Purchase 1,000.00 6.171148 162.044 162.044 1,000.00
12/31/98 Value before SC 10.142755 162.044 1,643.58
12/31/98 Surrender Charge 0.00% 0.00 10.142755 0.000 162.044 1,643.58
12/31/98 Ending Redeemable Value 10.142755 0.000 162.044 1,643.58
Avg Annual Total Return: 5.09%
Neuberger & Berman AMT Mid-Cap
- ------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/03/97 Purchase 1,000.00 7.066911 141.505 141.505 1,000.00
12/31/98 Value before SC 11.324558 141.505 1,602.48
12/31/98 Surrender Charge 6.00% (60.00) 11.324558 (5.298) 136.206 1,542.48
12/31/98 Ending Redeemable Value 11.324558 0.000 136.206 1,542.48
Avg Annual Total Return: 45.30%
Neuberger & Berman AMT Partners
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/22/94 Purchase 1,000.00 4.256430 234.939 234.939 1,000.00
12/31/98 Value before SC 9.317309 234.939 2,189.00
12/31/98 Surrender Charge 3.00% (30.00) 9.317309 (3.220) 231.719 2,159.00
12/31/98 Ending Redeemable Value 9.317309 0.000 231.719 2,159.00
Avg Annual Total Return: 17.47%
</TABLE>
<TABLE>
<CAPTION>
United Life and Annuity Insurance Company
SpectraSelect Enhanced Death Benefit Variable Annuity
Since Inception
Scudder Money Market
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/09/95 Purchase 1,000.00 10.000000 100.000 100.000 1,000.00
12/31/98 Value before SC 11.126668 100.000 1,112.67
12/31/98 Surrender Charge 4.00% (40.00) 11.126668 (3.595) 96.405 1,072.67
12/31/98 Ending Redeemable Value 11.126668 0.000 96.405 1,072.67
Avg Annual Total Return: 2.20%
Scudder International
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/01/87 Purchase 1,000.00 5.908267 169.254 169.254 1,000.00
12/31/98 Value before SC 14.298837 169.254 2,420.14
12/31/98 Surrender Charge 0.00% 0.00 14.298837 0.000 169.254 2,420.14
12/31/98 Ending Redeemable Value 14.298837 0.000 169.254 2,420.14
Avg Annual Total Return: 7.87%
MFS Emerging Growth
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
07/24/95 Purchase 1,000.00 8.859339 112.875 112.875 1,000.00
12/31/98 Value before SC 18.596956 112.875 2,099.14
12/31/98 Surrender Charge 4.00% (40.00) 18.596956 (2.151) 110.724 2,059.14
12/31/98 Ending Redeemable Value 18.596956 0.000 110.724 2,059.14
Avg Annual Total Return: 23.36%
MFS Total Return
- ----------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/03/95 Purchase 1,000.00 8.201057 121.936 121.936 1,000.00
12/31/98 Value before SC 15.219683 121.936 1,855.82
12/31/98 Surrender Charge 4.00% (40.00) 15.219683 (2.628) 119.307 1,815.82
12/31/98 Ending Redeemable Value 15.219683 0.000 119.307 1,815.82
Avg Annual Total Return: 16.13%
MFS Growth With Income
- ----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
10/09/95 Purchase 1,000.00 5.282897 189.290 189.290 1,000.00
12/31/98 Value before SC 10.571367 189.290 2,001.05
12/31/98 Surrender Charge 4.00% (40.00) 10.571367 (3.784) 185.506 1,961.05
12/31/98 Ending Redeemable Value 10.571367 0.000 185.506 1,961.05
Avg Annual Total Return: 23.18%
MFS Research
- ------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
07/26/95 Purchase 1,000.00 5.458918 183.186 183.186 1,000.00
12/31/98 Value before SC 10.458713 183.186 1,915.89
12/31/98 Surrender Charge 4.00% (40.00) 10.458713 (3.825) 179.362 1,875.89
12/31/98 Ending Redeemable Value 10.458713 0.000 179.362 1,875.89
Avg Annual Total Return: 20.13%
MFS Utilities
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/03/95 Purchase 1,000.00 4.543093 220.114 220.114 1,000.00
12/31/98 Value before SC 10.519527 220.114 2,315.50
12/31/98 Surrender Charge 4.00% (40.00) 10.519527 (3.802) 216.312 2,275.50
12/31/98 Ending Redeemable Value 10.519527 0.000 216.312 2,275.50
Avg Annual Total Return: 22.88%
Dreyfus Growth & Income
- -----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/02/94 Purchase 1,000.00 7.000747 142.842 142.842 1,000.00
12/31/98 Value before SC 15.668280 142.842 2,238.09
12/31/98 Surrender Charge 3.00% (30.00) 15.668280 (1.915) 140.927 2,208.09
12/31/98 Ending Redeemable Value 15.668280 0.000 140.927 2,208.09
Avg Annual Total Return: 18.49%
Dreyfus Index
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
09/29/89 Purchase 1,000.00 8.124629 123.083 123.083 1,000.00
12/31/98 Value before SC 20.217448 123.083 2,488.41
12/31/98 Surrender Charge 0.00% 0.00 20.217448 0.000 123.083 2,488.41
12/31/98 Ending Redeemable Value 20.217448 0.000 123.083 2,488.41
Avg Annual Total Return: 10.36%
Federated Utilities
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
02/10/94 Purchase 1,000.00 9.618020 103.971 103.971 1,000.00
12/31/98 Value before SC 15.806520 103.971 1,643.43
12/31/98 Surrender Charge 3.00% (30.00) 15.806520 (1.898) 102.074 1,613.43
12/31/98 Ending Redeemable Value 15.806520 0.000 102.074 1,613.43
Avg Annual Total Return: 10.28%
Federated High Income
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/01/94 Purchase 1,000.00 10.569289 94.614 94.614 1,000.00
12/31/98 Value before SC 12.942427 94.614 1,224.53
12/31/98 Surrender Charge 3.00% (30.00) 12.942427 (2.318) 92.296 1,194.53
12/31/98 Ending Redeemable Value 12.942427 0.000 92.296 1,194.53
Avg Annual Total Return: 3.74%
Federated Government
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/27/94 Purchase 1,000.00 10.079524 99.211 99.211 1,000.00
12/31/98 Value before SC 11.767193 99.211 1,167.44
12/31/98 Surrender Charge 3.00% (30.00) 11.767193 (2.549) 96.662 1,137.44
12/31/98 Ending Redeemable Value 11.767193 0.000 96.662 1,137.44
Avg Annual Total Return: 2.74%
Federated American Leaders
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
02/10/94 Purchase 1,000.00 4.580362 218.323 218.323 1,000.00
12/31/98 Value before SC 10.136338 218.323 2,213.00
12/31/98 Surrender Charge 3.00% (30.00) 10.136338 (2.960) 215.364 2,183.00
12/31/98 Ending Redeemable Value 10.136338 0.000 215.364 2,183.00
Avg Annual Total Return: 17.31%
Federated Prime Money
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/18/94 Purchase 1,000.00 8.388020 119.218 119.218 1,000.00
12/31/98 Value before SC 10.204716 119.218 1,216.58
12/31/98 Surrender Charge 3.00% (30.00) 10.204716 (2.940) 116.278 1,186.58
12/31/98 Ending Redeemable Value 10.204716 0.000 116.278 1,186.58
Avg Annual Total Return: 4.24%
Van Eck Worldwide Hard Asset
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
09/01/89 Purchase 1,000.00 7.859385 127.236 127.236 1,000.00
12/31/98 Value before SC 7.744548 127.236 985.39
12/31/98 Surrender Charge 0.00% 0.00 7.744548 0.000 127.236 985.39
12/31/98 Ending Redeemable Value 7.744548 0.000 127.236 985.39
Avg Annual Total Return: -0.16%
Warburg Pincus Fixed Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/31/97 Purchase 1,000.00 9.172571 109.021 109.021 1,000.00
12/31/98 Value before SC 10.502919 109.021 1,145.04
12/31/98 Surrender Charge 6.00% (60.00) 10.502919 (5.713) 103.308 1,085.04
12/31/98 Ending Redeemable Value 10.502919 0.000 103.308 1,085.04
Avg Annual Total Return: 4.77%
Warburg Pincus Intl. Equity
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
06/30/95 Purchase 1,000.00 7.762053 128.832 128.832 1,000.00
12/31/98 Value before SC 8.948958 128.832 1,152.91
12/31/98 Surrender Charge 4.00% (40.00) 8.948958 (4.470) 124.362 1,112.91
12/31/98 Ending Redeemable Value 8.948958 0.000 124.362 1,112.91
Avg Annual Total Return: 3.10%
Warburg Pincus Post-Venture Cap.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
09/30/96 Purchase 1,000.00 7.943059 125.896 125.896 1,000.00
12/31/98 Value before SC 9.059077 125.896 1,140.50
12/31/98 Surrender Charge 5.00% (50.00) 9.059077 (5.519) 120.377 1,090.50
12/31/98 Ending Redeemable Value 9.059077 0.000 120.377 1,090.50
Avg Annual Total Return: 3.93%
Alger American Growth
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/06/89 Purchase 1,000.00 3.700918 270.203 270.203 1,000.00
12/31/98 Value before SC 20.223505 270.203 5,464.46
12/31/98 Surrender Charge 0.00% 0.00 20.223505 0.000 270.203 5,464.46
12/31/98 Ending Redeemable Value 20.223505 0.000 270.203 5,464.46
Avg Annual Total Return: 18.55%
AIM V.I. Capital Appreciation
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 4.347200 230.033 230.033 1,000.00
12/31/98 Value before SC 10.384834 230.033 2,388.86
12/31/98 Surrender Charge 2.00% (20.00) 10.384834 (1.926) 228.107 2,368.86
12/31/98 Ending Redeemable Value 10.384834 0.000 228.107 2,368.86
Avg Annual Total Return: 16.46%
AIM V.I. Diversified Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 7.248512 137.959 137.959 1,000.00
12/31/98 Value before SC 9.905502 137.959 1,366.56
12/31/98 Surrender Charge 2.00% (20.00) 9.905502 (2.019) 135.940 1,346.56
12/31/98 Ending Redeemable Value 9.905502 0.000 135.940 1,346.56
Avg Annual Total Return: 5.40%
AIM V.I. Growth
- ---------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 4.316384 231.675 231.675 1,000.00
12/31/98 Value before SC 11.510141 231.675 2,666.62
12/31/98 Surrender Charge 2.00% (20.00) 11.510141 (1.738) 229.938 2,646.62
12/31/98 Ending Redeemable Value 11.510141 0.000 229.938 2,646.62
Avg Annual Total Return: 18.76%
AIM V.I. Growth and Income
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/02/94 Purchase 1,000.00 4.724075 211.682 211.682 1,000.00
12/31/98 Value before SC 11.291881 211.682 2,390.28
12/31/98 Surrender Charge 3.00% (30.00) 11.291881 (2.657) 209.025 2,360.28
12/31/98 Ending Redeemable Value 11.291881 0.000 209.025 2,360.28
Avg Annual Total Return: 20.19%
AIM V.I. International Equity
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 5.298542 188.731 188.731 1,000.00
12/31/98 Value before SC 9.840036 188.731 1,857.12
12/31/98 Surrender Charge 2.00% (20.00) 9.840036 (2.033) 186.699 1,837.12
12/31/98 Ending Redeemable Value 9.840036 0.000 186.699 1,837.12
Avg Annual Total Return: 11.34%
Morgan Stanley Emerging Mkt Debt
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
06/16/97 Purchase 1,000.00 9.600468 104.162 104.162 1,000.00
12/31/98 Value before SC 6.755909 104.162 703.71
12/31/98 Surrender Charge 6.00% (60.00) 6.755909 (8.881) 95.280 643.71
12/31/98 Ending Redeemable Value 6.755909 0.000 95.280 643.71
Avg Annual Total Return: -24.88%
Morgan Stanley Equity Growth
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 6.741532 148.334 148.334 1,000.00
12/31/98 Value before SC 10.349565 148.334 1,535.19
12/31/98 Surrender Charge 6.00% (60.00) 10.349565 (5.797) 142.537 1,475.19
12/31/98 Ending Redeemable Value 10.349565 0.000 142.537 1,475.19
Avg Annual Total Return: 21.58%
Morgan Stanley Global Equity
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 7.460677 134.036 134.036 1,000.00
12/31/98 Value before SC 9.827441 134.036 1,317.23
12/31/98 Surrender Charge 6.00% (60.00) 9.827441 (6.105) 127.931 1,257.23
12/31/98 Ending Redeemable Value 9.827441 0.000 127.931 1,257.23
Avg Annual Total Return: 12.19%
Morgan Stanley High-Yield
- -------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 8.638043 115.767 115.767 1,000.00
12/31/98 Value before SC 9.954669 115.767 1,152.42
12/31/98 Surrender Charge 6.00% (60.00) 9.954669 (6.027) 109.740 1,092.42
12/31/98 Ending Redeemable Value 9.954669 0.000 109.740 1,092.42
Avg Annual Total Return: 4.54%
Morgan Stanley Value
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 7.715518 129.609 129.609 1,000.00
12/31/98 Value before SC 8.848250 129.609 1,146.81
12/31/98 Surrender Charge 6.00% (60.00) 8.848250 (6.781) 122.828 1,086.81
12/31/98 Ending Redeemable Value 8.848250 0.000 122.828 1,086.81
Avg Annual Total Return: 4.27%
Neuberger & Berman AMT Guardian
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/03/97 Purchase 1,000.00 6.868895 145.584 145.584 1,000.00
12/31/98 Value before SC 9.347893 145.584 1,360.90
12/31/98 Surrender Charge 6.00% (60.00) 9.347893 (6.419) 139.165 1,300.90
12/31/98 Ending Redeemable Value 9.347893 0.000 139.165 1,300.90
Avg Annual Total Return: 25.45%
Neuberger & Berman AMT Ltd. Mat.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
09/10/84 Purchase 1,000.00 4.294826 232.838 232.838 1,000.00
12/31/98 Value before SC 10.142755 232.838 2,361.62
12/31/98 Surrender Charge 0.00% 0.00 10.142755 0.000 232.838 2,361.62
12/31/98 Ending Redeemable Value 10.142755 0.000 232.838 2,361.62
Avg Annual Total Return: 6.19%
Neuberger & Berman AMT Mid-Cap
- ------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/03/97 Purchase 1,000.00 7.066911 141.505 141.505 1,000.00
12/31/98 Value before SC 11.324558 141.505 1,602.48
12/31/98 Surrender Charge 6.00% (60.00) 11.324558 (5.298) 136.206 1,542.48
12/31/98 Ending Redeemable Value 11.324558 0.000 136.206 1,542.48
Avg Annual Total Return: 45.30%
Neuberger & Berman AMT Partners
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/22/94 Purchase 1,000.00 4.256430 234.939 234.939 1,000.00
12/31/98 Value before SC 9.317309 234.939 2,189.00
12/31/98 Surrender Charge 3.00% (30.00) 9.317309 (3.220) 231.719 2,159.00
12/31/98 Ending Redeemable Value 9.317309 0.000 231.719 2,159.00
Avg Annual Total Return: 17.47%
</TABLE>
<TABLE>
<CAPTION>
United Life and Annuity Insurance Company
SpectraSelect Standard Death Benefit Variable Annuity
SEC Average Annual Total Return
P(1+T)^N = ERV
Valuation Date 12/31/98
1-Year
Purchase Years Total Value of Avg. Annual Total
Fund Amount Invested Units Held Total Return Return
- ---- ------ -------- ---------- ------------ ------
<S> <C> <C> <C> <C> <C>
Scudder Money Market $1,000.00 1 $977.23 -2.28% -2.28%
Scudder International $1,000.00 1 $1,108.41 10.84% 10.84%
MFS Emerging Growth $1,000.00 1 $1,262.98 26.30% 26.30%
MFS Total Return $1,000.00 1 $1,047.74 4.77% 4.77%
MFS Growth With Income $1,000.00 1 $1,146.27 14.63% 14.63%
MFS Research $1,000.00 1 $1,129.73 12.97% 12.97%
MFS Utilities $1,000.00 1 $1,104.24 10.42% 10.42%
Dreyfus Growth & Income $1,000.00 1 $1,042.60 4.26% 4.26%
Dreyfus Index $1,000.00 1 $1,204.32 20.43% 20.43%
Federated Utilities $1,000.00 1 $1,063.66 6.37% 6.37%
Federated High Income $1,000.00 1 $952.72 -4.73% -4.73%
Federated Government $1,000.00 1 $1,001.62 0.16% 0.16%
Federated American Leaders $1,000.00 1 $1,099.16 9.92% 9.92%
Federated Prime Money $1,000.00 1 $978.16 -2.18% -2.18%
Van Eck Worldwide Hard Asset $1,000.00 1 $620.71 -37.93% -37.93%
Warburg Pincus Fixed Income $1,000.00 1 $1,005.77 0.58% 0.58%
Warburg Pincus Intl. Equity $1,000.00 1 $978.84 -2.12% -2.12%
Warburg Pincus Post-Venture Cap. $1,000.00 1 $990.30 -0.97% -0.97%
Alger American Growth $1,000.00 1 $1,400.18 40.02% 40.02%
AIM V.I. Capital Appreciation $1,000.00 1 $1,116.72 11.67% 11.67%
AIM V.I. Diversified Income $1,000.00 1 $961.43 -3.86% -3.86%
AIM V.I. Growth $1,000.00 1 $1,262.57 26.26% 26.26%
AIM V.I. Growth and Income $1,000.00 1 $1,199.12 19.91% 19.91%
AIM V.I. International Equity $1,000.00 1 $1,078.83 7.88% 7.88%
Morgan Stanley Emerging Mkt Debt $1,000.00 1 $646.13 -35.39% -35.39%
Morgan Stanley Equity Growth $1,000.00 1 $1,114.10 11.41% 11.41%
Morgan Stanley Global Equity $1,000.00 1 $1,057.22 5.72% 5.72%
Morgan Stanley High-Yield $1,000.00 1 $973.46 -2.65% -2.65%
Morgan Stanley Value $1,000.00 1 $905.05 -9.49% -9.49%
Neuberger & Berman AMT Guardian $1,000.00 1 $1,239.52 23.95% 23.95%
Neuberger & Berman AMT Ltd. Mat. $1,000.00 1 $969.40 -3.06% -3.06%
Neuberger & Berman AMT Mid-Cap $1,000.00 1 $1,313.50 31.35% 31.35%
Neuberger & Berman AMT Partners $1,000.00 1 $967.61 -3.24% -3.24%
5-Years
Purchase Years Total Value of Avg. Annual Total
Fund Amount Invested Units Held Total Return Return
Scudder Money Market $1,000.00 3.23 $1,079.99 2.41% 8.00%
Scudder International $1,000.00 5 $1,484.17 8.22% 48.42%
MFS Emerging Growth $1,000.00 3.44 $2,073.65 23.62% 107.37%
MFS Total Return $1,000.00 3.99 $1,830.73 16.36% 83.07%
MFS Growth With Income $1,000.00 3.23 $1,974.01 23.44% 97.40%
MFS Research $1,000.00 3.43 $1,889.09 20.38% 88.91%
MFS Utilities $1,000.00 3.99 $2,294.05 23.13% 129.40%
Dreyfus Growth & Income $1,000.00 4.67 $2,229.12 18.73% 122.91%
Dreyfus Index $1,000.00 5 $2,151.25 16.56% 115.12%
Federated Utilities $1,000.00 4.89 $1,629.60 10.50% 62.96%
Federated High Income $1,000.00 4.84 $1,206.46 3.95% 20.65%
Federated Government $1,000.00 4.76 $1,148.63 2.95% 14.86%
Federated American Leaders $1,000.00 4.89 $2,204.74 17.55% 120.47%
Federated Prime Money $1,000.00 4.12 $1,189.22 4.30% 18.92%
Van Eck Worldwide Hard Asset $1,000.00 5 $750.25 -5.58% -24.98%
Warburg Pincus Fixed Income $1,000.00 1.75 $1,089.06 5.00% 8.91%
Warburg Pincus Intl. Equity $1,000.00 3.5 $1,116.95 3.21% 11.69%
Warburg Pincus Post-Venture Cap. $1,000.00 2.25 $1,091.62 3.97% 9.16%
Alger American Growth $1,000.00 5 $2,403.07 19.17% 140.31%
AIM V.I. Capital Appreciation $1,000.00 5 $2,020.66 15.11% 102.07%
AIM V.I. Diversified Income $1,000.00 5 $1,295.35 5.31% 29.53%
AIM V.I. Growth $1,000.00 5 $2,439.66 19.53% 143.97%
AIM V.I. Growth and Income $1,000.00 4.67 $2,382.69 20.43% 138.27%
AIM V.I. International Equity $1,000.00 5 $1,574.29 9.50% 57.43%
Morgan Stanley Emerging Mkt Debt $1,000.00 1.54 $645.88 -24.71% -35.41%
Morgan Stanley Equity Growth $1,000.00 1.99 $1,481.33 21.83% 48.13%
Morgan Stanley Global Equity $1,000.00 1.99 $1,262.49 12.43% 26.25%
Morgan Stanley High-Yield $1,000.00 1.99 $1,097.03 4.76% 9.70%
Morgan Stanley Value $1,000.00 1.99 $1,091.39 4.49% 9.14%
Neuberger & Berman AMT Guardian $1,000.00 1.16 $1,304.06 25.72% 30.41%
Neuberger & Berman AMT Ltd. Mat. $1,000.00 5 $1,180.31 3.37% 18.03%
Neuberger & Berman AMT Mid-Cap $1,000.00 1.16 $1,546.19 45.60% 54.62%
Neuberger & Berman AMT Partners $1,000.00 4.78 $2,180.02 17.71% 118.00%
10-Years
Purchase Years Total Value of Avg. Annual Total
Fund Amount Invested Units Held Total Return Return
Scudder Money Market $1,000.00 3.23 $1,079.99 2.41% 8.00%
Scudder International $1,000.00 10 $2,454.63 9.40% 145.46%
MFS Emerging Growth $1,000.00 3.44 $2,073.65 23.62% 107.37%
MFS Total Return $1,000.00 3.99 $1,830.73 16.36% 83.07%
MFS Growth With Income $1,000.00 3.23 $1,974.01 23.44% 97.40%
MFS Research $1,000.00 3.43 $1,889.09 20.38% 88.91%
MFS Utilities $1,000.00 3.99 $2,294.05 23.13% 129.40%
Dreyfus Growth & Income $1,000.00 4.67 $2,229.12 18.73% 122.91%
Dreyfus Index $1,000.00 9.25 $2,535.02 10.58% 153.50%
Federated Utilities $1,000.00 4.89 $1,629.60 10.50% 62.96%
Federated High Income $1,000.00 4.84 $1,206.46 3.95% 20.65%
Federated Government $1,000.00 4.76 $1,148.63 2.95% 14.86%
Federated American Leaders $1,000.00 4.89 $2,204.74 17.55% 120.47%
Federated Prime Money $1,000.00 4.12 $1,189.22 4.30% 18.92%
Van Eck Worldwide Hard Asset $1,000.00 9.33 $1,004.00 0.04% 0.40%
Warburg Pincus Fixed Income $1,000.00 1.75 $1,089.06 5.00% 8.91%
Warburg Pincus Intl. Equity $1,000.00 3.5 $1,116.95 3.21% 11.69%
Warburg Pincus Post-Venture Cap. $1,000.00 2.25 $1,091.62 3.97% 9.16%
Alger American Growth $1,000.00 9.98 $5,574.96 18.79% 457.50%
AIM V.I. Capital Appreciation $1,000.00 5.66 $2,396.04 16.69% 139.60%
AIM V.I. Diversified Income $1,000.00 5.66 $1,362.11 5.61% 36.21%
AIM V.I. Growth $1,000.00 5.66 $2,676.96 19.00% 167.70%
AIM V.I. Growth and Income $1,000.00 4.67 $2,382.69 20.43% 138.27%
AIM V.I. International Equity $1,000.00 5.66 $1,858.25 11.57% 85.83%
Morgan Stanley Emerging Mkt Debt $1,000.00 1.54 $645.88 -24.71% -35.41%
Morgan Stanley Equity Growth $1,000.00 1.99 $1,481.33 21.83% 48.13%
Morgan Stanley Global Equity $1,000.00 1.99 $1,262.49 12.43% 26.25%
Morgan Stanley High-Yield $1,000.00 1.99 $1,097.03 4.76% 9.70%
Morgan Stanley Value $1,000.00 1.99 $1,091.39 4.49% 9.14%
Neuberger & Berman AMT Guardian $1,000.00 1.16 $1,304.06 25.72% 30.41%
Neuberger & Berman AMT Ltd. Mat. $1,000.00 10 $1,676.81 5.30% 67.68%
Neuberger & Berman AMT Mid-Cap $1,000.00 1.16 $1,546.19 45.60% 54.62%
Neuberger & Berman AMT Partners $1,000.00 4.78 $2,180.02 17.71% 118.00%
Since Inception
Purchase Years Total Value of Avg. Annual Total
Fund Amount Invested Units Held Total Return Return
Scudder Money Market $1,000.00 3.23 $1,079.99 2.41% 8.00%
Scudder International $1,000.00 11.67 $2,477.43 8.08% 147.74%
MFS Emerging Growth $1,000.00 3.44 $2,073.65 23.62% 107.37%
MFS Total Return $1,000.00 3.99 $1,830.73 16.36% 83.07%
MFS Growth With Income $1,000.00 3.23 $1,974.01 23.44% 97.40%
MFS Research $1,000.00 3.43 $1,889.09 20.38% 88.91%
MFS Utilities $1,000.00 3.99 $2,294.05 23.13% 129.40%
Dreyfus Growth & Income $1,000.00 4.67 $2,229.12 18.73% 122.91%
Dreyfus Index $1,000.00 9.25 $2,535.02 10.58% 153.50%
Federated Utilities $1,000.00 4.89 $1,629.60 10.50% 62.96%
Federated High Income $1,000.00 4.84 $1,206.46 3.95% 20.65%
Federated Government $1,000.00 4.76 $1,148.63 2.95% 14.86%
Federated American Leaders $1,000.00 4.89 $2,204.74 17.55% 120.47%
Federated Prime Money $1,000.00 4.12 $1,189.22 4.30% 18.92%
Van Eck Worldwide Hard Asset $1,000.00 9.33 $1,004.00 0.04% 0.40%
Warburg Pincus Fixed Income $1,000.00 1.75 $1,089.06 5.00% 8.91%
Warburg Pincus Intl. Equity $1,000.00 3.5 $1,116.95 3.21% 11.69%
Warburg Pincus Post-Venture Cap. $1,000.00 2.25 $1,091.62 3.97% 9.16%
Alger American Growth $1,000.00 9.98 $5,574.96 18.79% 457.50%
AIM V.I. Capital Appreciation $1,000.00 5.66 $2,396.04 16.69% 139.60%
AIM V.I. Diversified Income $1,000.00 5.66 $1,362.11 5.61% 36.21%
AIM V.I. Growth $1,000.00 5.66 $2,676.96 19.00% 167.70%
AIM V.I. Growth and Income $1,000.00 4.67 $2,382.69 20.43% 138.27%
AIM V.I. International Equity $1,000.00 5.66 $1,858.25 11.57% 85.83%
Morgan Stanley Emerging Mkt Debt $1,000.00 1.54 $645.88 -24.71% -35.41%
Morgan Stanley Equity Growth $1,000.00 1.99 $1,481.33 21.83% 48.13%
Morgan Stanley Global Equity $1,000.00 1.99 $1,262.49 12.43% 26.25%
Morgan Stanley High-Yield $1,000.00 1.99 $1,097.03 4.76% 9.70%
Morgan Stanley Value $1,000.00 1.99 $1,091.39 4.49% 9.14%
Neuberger & Berman AMT Guardian $1,000.00 1.16 $1,304.06 25.72% 30.41%
Neuberger & Berman AMT Ltd. Mat. $1,000.00 14.31 $2,430.20 6.40% 143.02%
Neuberger & Berman AMT Mid-Cap $1,000.00 1.16 $1,546.19 45.60% 54.62%
Neuberger & Berman AMT Partners $1,000.00 4.78 $2,180.02 17.71% 118.00%
</TABLE>
<TABLE>
<CAPTION>
United Life and Annuity Insurance Company
SpectraSelect Standard Death Benefit Variable Annuity
1 Year
Scudder Money Market
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/97 Purchase 1,000.00 9.876354 101.252 101.252 1,000.00
12/31/98 Value before SC 10.244006 101.252 1,037.23
12/31/98 Surrender Charge 6.00% (60.00) 10.244006 (5.857) 95.395 977.23
12/31/98 Ending Redeemable Value 10.244006 0.000 95.395 977.23
Avg Annual Total Return: -2.28%
Scudder International
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.620796 115.999 115.999 1,000.00
12/31/98 Value before SC 10.072603 115.999 1,168.41
12/31/98 Surrender Charge 6.00% (60.00) 10.072603 (5.957) 110.042 1,108.41
12/31/98 Ending Redeemable Value 10.072603 0.000 110.042 1,108.41
Avg Annual Total Return: 10.84%
MFS Emerging Growth
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.430433 118.618 118.618 1,000.00
12/31/98 Value before SC 11.153296 118.618 1,322.98
12/31/98 Surrender Charge 6.00% (60.00) 11.153296 (5.380) 113.238 1,262.98
12/31/98 Ending Redeemable Value 11.153296 0.000 113.238 1,262.98
Avg Annual Total Return: 26.30%
MFS Total Return
- ----------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.339933 107.067 107.067 1,000.00
12/31/98 Value before SC 10.346176 107.067 1,107.74
12/31/98 Surrender Charge 6.00% (60.00) 10.346176 (5.799) 101.268 1,047.74
12/31/98 Ending Redeemable Value 10.346176 0.000 101.268 1,047.74
Avg Annual Total Return: 4.77%
MFS Growth With Income
- ----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.775439 113.954 113.954 1,000.00
12/31/98 Value before SC 10.585566 113.954 1,206.27
12/31/98 Surrender Charge 6.00% (60.00) 10.585566 (5.668) 108.286 1,146.27
12/31/98 Ending Redeemable Value 10.585566 0.000 108.286 1,146.27
Avg Annual Total Return: 14.63%
MFS Research
- ------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.802654 113.602 113.602 1,000.00
12/31/98 Value before SC 10.472755 113.602 1,189.73
12/31/98 Surrender Charge 6.00% (60.00) 10.472755 (5.729) 107.873 1,129.73
12/31/98 Ending Redeemable Value 10.472755 0.000 107.873 1,129.73
Avg Annual Total Return: 12.97%
MFS Utilities
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.047650 110.526 110.526 1,000.00
12/31/98 Value before SC 10.533651 110.526 1,164.24
12/31/98 Surrender Charge 6.00% (60.00) 10.533651 (5.696) 104.830 1,104.24
12/31/98 Ending Redeemable Value 10.533651 0.000 104.830 1,104.24
Avg Annual Total Return: 10.42%
Dreyfus Growth & Income
- -----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.974877 111.422 111.422 1,000.00
12/31/98 Value before SC 9.895719 111.422 1,102.60
12/31/98 Surrender Charge 6.00% (60.00) 9.895719 (6.063) 105.359 1,042.60
12/31/98 Ending Redeemable Value 9.895719 0.000 105.359 1,042.60
Avg Annual Total Return: 4.26%
Dreyfus Index
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.736129 114.467 114.467 1,000.00
12/31/98 Value before SC 11.045238 114.467 1,264.32
12/31/98 Surrender Charge 6.00% (60.00) 11.045238 (5.432) 109.035 1,204.32
12/31/98 Ending Redeemable Value 11.045238 0.000 109.035 1,204.32
Avg Annual Total Return: 20.43%
Federated Utilities
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.692232 103.175 103.175 1,000.00
12/31/98 Value before SC 10.890777 103.175 1,123.66
12/31/98 Surrender Charge 6.00% (60.00) 10.890777 (5.509) 97.666 1,063.66
12/31/98 Ending Redeemable Value 10.890777 0.000 97.666 1,063.66
Avg Annual Total Return: 6.37%
Federated High Income
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.693338 103.164 103.164 1,000.00
12/31/98 Value before SC 9.816601 103.164 1,012.72
12/31/98 Surrender Charge 6.00% (60.00) 9.816601 (6.112) 97.052 952.72
12/31/98 Ending Redeemable Value 9.816601 0.000 97.052 952.72
Avg Annual Total Return: -4.73%
Federated Government
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.843521 101.590 101.590 1,000.00
12/31/98 Value before SC 10.450106 101.590 1,061.62
12/31/98 Surrender Charge 6.00% (60.00) 10.450106 (5.742) 95.848 1,001.62
12/31/98 Ending Redeemable Value 10.450106 0.000 95.848 1,001.62
Avg Annual Total Return: 0.16%
Federated American Leaders
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.756304 114.203 114.203 1,000.00
12/31/98 Value before SC 10.149961 114.203 1,159.16
12/31/98 Surrender Charge 6.00% (60.00) 10.149961 (5.911) 108.292 1,099.16
12/31/98 Ending Redeemable Value 10.149961 0.000 108.292 1,099.16
Avg Annual Total Return: 9.92%
Federated Prime Money
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.842795 101.597 101.597 1,000.00
12/31/98 Value before SC 10.218420 101.597 1,038.16
12/31/98 Surrender Charge 6.00% (60.00) 10.218420 (5.872) 95.725 978.16
12/31/98 Ending Redeemable Value 10.218420 0.000 95.725 978.16
Avg Annual Total Return: -2.18%
Van Eck Worldwide Hard Asset
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 10.066619 99.338 99.338 1,000.00
12/31/98 Value before SC 6.852426 99.338 680.71
12/31/98 Surrender Charge 6.00% (60.00) 6.852426 (8.756) 90.582 620.71
12/31/98 Ending Redeemable Value 6.852426 0.000 90.582 620.71
Avg Annual Total Return: -37.93%
Warburg Pincus Fixed Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.867963 101.338 101.338 1,000.00
12/31/98 Value before SC 10.517016 101.338 1,065.77
12/31/98 Surrender Charge 6.00% (60.00) 10.517016 (5.705) 95.633 1,005.77
12/31/98 Ending Redeemable Value 10.517016 0.000 95.633 1,005.77
Avg Annual Total Return: 0.58%
Warburg Pincus Intl. Equity
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.595660 116.338 116.338 1,000.00
12/31/98 Value before SC 8.929481 116.338 1,038.84
12/31/98 Surrender Charge 6.00% (60.00) 8.929481 (6.719) 109.618 978.84
12/31/98 Ending Redeemable Value 8.929481 0.000 109.618 978.84
Avg Annual Total Return: -2.12%
Warburg Pincus Post-Venture Cap.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.606471 116.192 116.192 1,000.00
12/31/98 Value before SC 9.039362 116.192 1,050.30
12/31/98 Surrender Charge 6.00% (60.00) 9.039362 (6.638) 109.554 990.30
12/31/98 Ending Redeemable Value 9.039362 0.000 109.554 990.30
Avg Annual Total Return: -0.97%
Alger American Growth
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.551981 116.932 116.932 1,000.00
12/31/98 Value before SC 12.487393 116.932 1,460.18
12/31/98 Surrender Charge 6.00% (60.00) 12.487393 (4.805) 112.127 1,400.18
12/31/98 Ending Redeemable Value 12.487393 0.000 112.127 1,400.18
Avg Annual Total Return: 40.02%
AIM V.I. Capital Appreciation
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.837126 113.159 113.159 1,000.00
12/31/98 Value before SC 10.398785 113.159 1,176.72
12/31/98 Surrender Charge 6.00% (60.00) 10.398785 (5.770) 107.389 1,116.72
12/31/98 Ending Redeemable Value 10.398785 0.000 107.389 1,116.72
Avg Annual Total Return: 11.67%
AIM V.I. Diversified Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.710670 102.980 102.980 1,000.00
12/31/98 Value before SC 9.918812 102.980 1,021.43
12/31/98 Surrender Charge 6.00% (60.00) 9.918812 (6.049) 96.930 961.43
12/31/98 Ending Redeemable Value 9.918812 0.000 96.930 961.43
Avg Annual Total Return: -3.86%
AIM V.I. Growth
- ---------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.714509 114.751 114.751 1,000.00
12/31/98 Value before SC 11.525590 114.751 1,322.57
12/31/98 Surrender Charge 6.00% (60.00) 11.525590 (5.206) 109.545 1,262.57
12/31/98 Ending Redeemable Value 11.525590 0.000 109.545 1,262.57
Avg Annual Total Return: 26.26%
AIM V.I. Growth and Income
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.980089 111.357 111.357 1,000.00
12/31/98 Value before SC 11.307041 111.357 1,259.12
12/31/98 Surrender Charge 6.00% (60.00) 11.307041 (5.306) 106.051 1,199.12
12/31/98 Ending Redeemable Value 11.307041 0.000 106.051 1,199.12
Avg Annual Total Return: 19.91%
AIM V.I. International Equity
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.652052 115.580 115.580 1,000.00
12/31/98 Value before SC 9.853241 115.580 1,138.83
12/31/98 Surrender Charge 6.00% (60.00) 9.853241 (6.089) 109.490 1,078.83
12/31/98 Ending Redeemable Value 9.853241 0.000 109.490 1,078.83
Avg Annual Total Return: 7.88%
Morgan Stanley Emerging Mkt Debt
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.580463 104.379 104.379 1,000.00
12/31/98 Value before SC 6.765021 104.379 706.13
12/31/98 Surrender Charge 6.00% (60.00) 6.765021 (8.869) 95.510 646.13
12/31/98 Ending Redeemable Value 6.765021 0.000 95.510 646.13
Avg Annual Total Return: -35.39%
Morgan Stanley Equity Growth
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.826692 113.293 113.293 1,000.00
12/31/98 Value before SC 10.363454 113.293 1,174.10
12/31/98 Surrender Charge 6.00% (60.00) 10.363454 (5.790) 107.503 1,114.10
12/31/98 Ending Redeemable Value 10.363454 0.000 107.503 1,114.10
Avg Annual Total Return: 11.41%
Morgan Stanley Global Equity
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.808114 113.532 113.532 1,000.00
12/31/98 Value before SC 9.840633 113.532 1,117.22
12/31/98 Surrender Charge 6.00% (60.00) 9.840633 (6.097) 107.435 1,057.22
12/31/98 Ending Redeemable Value 9.840633 0.000 107.435 1,057.22
Avg Annual Total Return: 5.72%
Morgan Stanley High-Yield
- -------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.645357 103.677 103.677 1,000.00
12/31/98 Value before SC 9.968043 103.677 1,033.46
12/31/98 Surrender Charge 6.00% (60.00) 9.968043 (6.019) 97.658 973.46
12/31/98 Ending Redeemable Value 9.968043 0.000 97.658 973.46
Avg Annual Total Return: -2.65%
Morgan Stanley Value
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.180977 108.921 108.921 1,000.00
12/31/98 Value before SC 8.860144 108.921 965.05
12/31/98 Surrender Charge 6.00% (60.00) 8.860144 (6.772) 102.149 905.05
12/31/98 Ending Redeemable Value 8.860144 0.000 102.149 905.05
Avg Annual Total Return: -9.49%
Neuberger & Berman AMT Guardian
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 7.203032 138.830 138.830 1,000.00
12/31/98 Value before SC 9.360463 138.830 1,299.52
12/31/98 Surrender Charge 6.00% (60.00) 9.360463 (6.410) 132.420 1,239.52
12/31/98 Ending Redeemable Value 9.360463 0.000 132.420 1,239.52
Avg Annual Total Return: 23.95%
Neuberger & Berman AMT Ltd. Mat.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.866314 101.355 101.355 1,000.00
12/31/98 Value before SC 10.156380 101.355 1,029.40
12/31/98 Surrender Charge 6.00% (60.00) 10.156380 (5.908) 95.447 969.40
12/31/98 Ending Redeemable Value 10.156380 0.000 95.447 969.40
Avg Annual Total Return: -3.06%
Neuberger & Berman AMT Mid-Cap
- ------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 8.256114 121.122 121.122 1,000.00
12/31/98 Value before SC 11.339762 121.122 1,373.50
12/31/98 Surrender Charge 6.00% (60.00) 11.339762 (5.291) 115.831 1,313.50
12/31/98 Ending Redeemable Value 11.339762 0.000 115.831 1,313.50
Avg Annual Total Return: 31.35%
Neuberger & Berman AMT Partners
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/97 Purchase 1,000.00 9.079169 110.142 110.142 1,000.00
12/31/98 Value before SC 9.329832 110.142 1,027.61
12/31/98 Surrender Charge 6.00% (60.00) 9.329832 (6.431) 103.711 967.61
12/31/98 Ending Redeemable Value 9.329832 0.000 103.711 967.61
Avg Annual Total Return: -3.24%
</TABLE>
<TABLE>
<CAPTION>
United Life and Annuity Insurance Company
SpectraSelect Standard Death Benefit Variable Annuity
5 Years
Scudder Money Market
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/09/95 Purchase 1,000.00 9.146510 109.331 109.331 1,000.00
12/31/98 Value before SC 10.244006 109.331 1,119.99
12/31/98 Surrender Charge 4.00% (40.00) 10.244006 (3.905) 105.427 1,079.99
12/31/98 Ending Redeemable Value 10.244006 0.000 105.427 1,079.99
Avg Annual Total Return: 2.41%
Scudder International
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 6.696447 149.333 149.333 1,000.00
12/31/98 Value before SC 10.072603 149.333 1,504.17
12/31/98 Surrender Charge 2.00% (20.00) 10.072603 (1.986) 147.347 1,484.17
12/31/98 Ending Redeemable Value 10.072603 0.000 147.347 1,484.17
Avg Annual Total Return: 8.22%
MFS Emerging Growth
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
07/24/95 Purchase 1,000.00 5.276794 189.509 189.509 1,000.00
12/31/98 Value before SC 11.153296 189.509 2,113.65
12/31/98 Surrender Charge 4.00% (40.00) 11.153296 (3.586) 185.923 2,073.65
12/31/98 Ending Redeemable Value 11.153296 0.000 185.923 2,073.65
Avg Annual Total Return: 23.62%
MFS Total Return
- ----------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
01/03/95 Purchase 1,000.00 5.530566 180.813 180.813 1,000.00
12/31/98 Value before SC 10.346176 180.813 1,870.73
12/31/98 Surrender Charge 4.00% (40.00) 10.346176 (3.866) 176.947 1,830.73
12/31/98 Ending Redeemable Value 10.346176 0.000 176.947 1,830.73
Avg Annual Total Return: 16.36%
MFS Growth With Income
- ----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
10/09/95 Purchase 1,000.00 5.255976 190.260 190.260 1,000.00
12/31/98 Value before SC 10.585566 190.260 2,014.01
12/31/98 Surrender Charge 4.00% (40.00) 10.585566 (3.779) 186.481 1,974.01
12/31/98 Ending Redeemable Value 10.585566 0.000 186.481 1,974.01
Avg Annual Total Return: 23.44%
MFS Research
- ------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
07/26/95 Purchase 1,000.00 5.428857 184.201 184.201 1,000.00
12/31/98 Value before SC 10.472755 184.201 1,929.09
12/31/98 Surrender Charge 4.00% (40.00) 10.472755 (3.819) 180.381 1,889.09
12/31/98 Ending Redeemable Value 10.472755 0.000 180.381 1,889.09
Avg Annual Total Return: 20.38%
MFS Utilities
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
01/03/95 Purchase 1,000.00 4.513041 221.580 221.580 1,000.00
12/31/98 Value before SC 10.533651 221.580 2,334.05
12/31/98 Surrender Charge 4.00% (40.00) 10.533651 (3.797) 217.783 2,294.05
12/31/98 Ending Redeemable Value 10.533651 0.000 217.783 2,294.05
Avg Annual Total Return: 23.13%
Dreyfus Growth & Income
- -----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/02/94 Purchase 1,000.00 4.380349 228.292 228.292 1,000.00
12/31/98 Value before SC 9.895719 228.292 2,259.12
12/31/98 Surrender Charge 3.00% (30.00) 9.895719 (3.032) 225.261 2,229.12
12/31/98 Ending Redeemable Value 9.895719 0.000 225.261 2,229.12
Avg Annual Total Return: 18.73%
Dreyfus Index
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 5.087047 196.578 196.578 1,000.00
12/31/98 Value before SC 11.045238 196.578 2,171.25
12/31/98 Surrender Charge 2.00% (20.00) 11.045238 (1.811) 194.767 2,151.25
12/31/98 Ending Redeemable Value 11.045238 0.000 194.767 2,151.25
Avg Annual Total Return: 16.56%
Federated Utilities
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
02/10/94 Purchase 1,000.00 6.562290 152.386 152.386 1,000.00
12/31/98 Value before SC 10.890777 152.386 1,659.60
12/31/98 Surrender Charge 3.00% (30.00) 10.890777 (2.755) 149.631 1,629.60
12/31/98 Ending Redeemable Value 10.890777 0.000 149.631 1,629.60
Avg Annual Total Return: 10.50%
Federated High Income
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
03/01/94 Purchase 1,000.00 7.939303 125.956 125.956 1,000.00
12/31/98 Value before SC 9.816601 125.956 1,236.46
12/31/98 Surrender Charge 3.00% (30.00) 9.816601 (3.056) 122.900 1,206.46
12/31/98 Ending Redeemable Value 9.816601 0.000 122.900 1,206.46
Avg Annual Total Return: 3.95%
Federated Government
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
03/27/94 Purchase 1,000.00 8.866313 112.786 112.786 1,000.00
12/31/98 Value before SC 10.450106 112.786 1,178.63
12/31/98 Surrender Charge 3.00% (30.00) 10.450106 (2.871) 109.916 1,148.63
12/31/98 Ending Redeemable Value 10.450106 0.000 109.916 1,148.63
Avg Annual Total Return: 2.95%
Federated American Leaders
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
02/10/94 Purchase 1,000.00 4.541900 220.172 220.172 1,000.00
12/31/98 Value before SC 10.149961 220.172 2,234.74
12/31/98 Surrender Charge 3.00% (30.00) 10.149961 (2.956) 217.216 2,204.74
12/31/98 Ending Redeemable Value 10.149961 0.000 217.216 2,204.74
Avg Annual Total Return: 17.55%
Federated Prime Money
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
11/18/94 Purchase 1,000.00 8.381120 119.316 119.316 1,000.00
12/31/98 Value before SC 10.218420 119.316 1,219.22
12/31/98 Surrender Charge 3.00% (30.00) 10.218420 (2.936) 116.380 1,189.22
12/31/98 Ending Redeemable Value 10.218420 0.000 116.380 1,189.22
Avg Annual Total Return: 4.30%
Van Eck Worldwide Hard Asset
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 8.896376 112.405 112.405 1,000.00
12/31/98 Value before SC 6.852426 112.405 770.25
12/31/98 Surrender Charge 2.00% (20.00) 6.852426 (2.919) 109.487 750.25
12/31/98 Ending Redeemable Value 6.852426 0.000 109.487 750.25
Avg Annual Total Return: -5.58%
Warburg Pincus Fixed Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
03/31/97 Purchase 1,000.00 9.152738 109.257 109.257 1,000.00
12/31/98 Value before SC 10.517016 109.257 1,149.06
12/31/98 Surrender Charge 6.00% (60.00) 10.517016 (5.705) 103.552 1,089.06
12/31/98 Ending Redeemable Value 10.517016 0.000 103.552 1,089.06
Avg Annual Total Return: 5.00%
Warburg Pincus Intl. Equity
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
06/30/95 Purchase 1,000.00 7.718154 129.565 129.565 1,000.00
12/31/98 Value before SC 8.929481 129.565 1,156.95
12/31/98 Surrender Charge 4.00% (40.00) 8.929481 (4.480) 125.085 1,116.95
12/31/98 Ending Redeemable Value 8.929481 0.000 125.085 1,116.95
Avg Annual Total Return: 3.21%
Warburg Pincus Post-Venture Cap.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
09/30/96 Purchase 1,000.00 7.917980 126.295 126.295 1,000.00
12/31/98 Value before SC 9.039362 126.295 1,141.62
12/31/98 Surrender Charge 5.00% (50.00) 9.039362 (5.531) 120.763 1,091.62
12/31/98 Ending Redeemable Value 9.039362 0.000 120.763 1,091.62
Avg Annual Total Return: 3.97%
Alger American Growth
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 5.153540 194.041 194.041 1,000.00
12/31/98 Value before SC 12.487393 194.041 2,423.07
12/31/98 Surrender Charge 2.00% (20.00) 12.487393 (1.602) 192.440 2,403.07
12/31/98 Ending Redeemable Value 12.487393 0.000 192.440 2,403.07
Avg Annual Total Return: 19.17%
AIM V.I. Capital Appreciation
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 5.095806 196.240 196.240 1,000.00
12/31/98 Value before SC 10.398785 196.240 2,040.66
12/31/98 Surrender Charge 2.00% (20.00) 10.398785 (1.923) 194.317 2,020.66
12/31/98 Ending Redeemable Value 10.398785 0.000 194.317 2,020.66
Avg Annual Total Return: 15.11%
AIM V.I. Diversified Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 7.540833 132.611 132.611 1,000.00
12/31/98 Value before SC 9.918812 132.611 1,315.35
12/31/98 Surrender Charge 2.00% (20.00) 9.918812 (2.016) 130.595 1,295.35
12/31/98 Ending Redeemable Value 9.918812 0.000 130.595 1,295.35
Avg Annual Total Return: 5.31%
AIM V.I. Growth
- ---------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 4.685853 213.408 213.408 1,000.00
12/31/98 Value before SC 11.525590 213.408 2,459.66
12/31/98 Surrender Charge 2.00% (20.00) 11.525590 (1.735) 211.673 2,439.66
12/31/98 Ending Redeemable Value 11.525590 0.000 211.673 2,439.66
Avg Annual Total Return: 19.53%
AIM V.I. Growth and Income
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
05/02/94 Purchase 1,000.00 4.686488 213.379 213.379 1,000.00
12/31/98 Value before SC 11.307041 213.379 2,412.69
12/31/98 Surrender Charge 3.00% (30.00) 11.307041 (2.653) 210.726 2,382.69
12/31/98 Ending Redeemable Value 11.307041 0.000 210.726 2,382.69
Avg Annual Total Return: 20.43%
AIM V.I. International Equity
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 6.180350 161.803 161.803 1,000.00
12/31/98 Value before SC 9.853241 161.803 1,594.29
12/31/98 Surrender Charge 2.00% (20.00) 9.853241 (2.030) 159.773 1,574.29
12/31/98 Ending Redeemable Value 9.853241 0.000 159.773 1,574.29
Avg Annual Total Return: 9.50%
Morgan Stanley Emerging Mkt Debt
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
06/16/97 Purchase 1,000.00 9.583761 104.343 104.343 1,000.00
12/31/98 Value before SC 6.765021 104.343 705.88
12/31/98 Surrender Charge 6.00% (60.00) 6.765021 (8.869) 95.474 645.88
12/31/98 Ending Redeemable Value 6.765021 0.000 95.474 645.88
Avg Annual Total Return: -24.71%
Morgan Stanley Equity Growth
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 6.723725 148.727 148.727 1,000.00
12/31/98 Value before SC 10.363454 148.727 1,541.33
12/31/98 Surrender Charge 6.00% (60.00) 10.363454 (5.790) 142.938 1,481.33
12/31/98 Ending Redeemable Value 10.363454 0.000 142.938 1,481.33
Avg Annual Total Return: 21.83%
Morgan Stanley Global Equity
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 7.440965 134.391 134.391 1,000.00
12/31/98 Value before SC 9.840633 134.391 1,322.49
12/31/98 Surrender Charge 6.00% (60.00) 9.840633 (6.097) 128.294 1,262.49
12/31/98 Ending Redeemable Value 9.840633 0.000 128.294 1,262.49
Avg Annual Total Return: 12.43%
Morgan Stanley High-Yield
- -------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 8.615218 116.074 116.074 1,000.00
12/31/98 Value before SC 9.968043 116.074 1,157.03
12/31/98 Surrender Charge 6.00% (60.00) 9.968043 (6.019) 110.054 1,097.03
12/31/98 Ending Redeemable Value 9.968043 0.000 110.054 1,097.03
Avg Annual Total Return: 4.76%
Morgan Stanley Value
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 7.695143 129.952 129.952 1,000.00
12/31/98 Value before SC 8.860144 129.952 1,151.39
12/31/98 Surrender Charge 6.00% (60.00) 8.860144 (6.772) 123.180 1,091.39
12/31/98 Ending Redeemable Value 8.860144 0.000 123.180 1,091.39
Avg Annual Total Return: 4.49%
Neuberger & Berman AMT Guardian
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/03/97 Purchase 1,000.00 6.862221 145.725 145.725 1,000.00
12/31/98 Value before SC 9.360463 145.725 1,364.06
12/31/98 Surrender Charge 6.00% (60.00) 9.360463 (6.410) 139.315 1,304.06
12/31/98 Ending Redeemable Value 9.360463 0.000 139.315 1,304.06
Avg Annual Total Return: 25.72%
Neuberger & Berman AMT Ltd. Mat.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/93 Purchase 1,000.00 8.461457 118.183 118.183 1,000.00
12/31/98 Value before SC 10.156380 118.183 1,200.31
12/31/98 Surrender Charge 2.00% (20.00) 10.156380 (1.969) 116.214 1,180.31
12/31/98 Ending Redeemable Value 10.156380 0.000 116.214 1,180.31
Avg Annual Total Return: 3.37%
Neuberger & Berman AMT Mid-Cap
- ------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
11/03/97 Purchase 1,000.00 7.060043 141.642 141.642 1,000.00
12/31/98 Value before SC 11.339762 141.642 1,606.19
12/31/98 Surrender Charge 6.00% (60.00) 11.339762 (5.291) 136.351 1,546.19
12/31/98 Ending Redeemable Value 11.339762 0.000 136.351 1,546.19
Avg Annual Total Return: 45.60%
Neuberger & Berman AMT Partners
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
03/22/94 Purchase 1,000.00 4.221606 236.877 236.877 1,000.00
12/31/98 Value before SC 9.329832 236.877 2,210.02
12/31/98 Surrender Charge 3.00% (30.00) 9.329832 (3.215) 233.661 2,180.02
12/31/98 Ending Redeemable Value 9.329832 0.000 233.661 2,180.02
Avg Annual Total Return: 17.71%
</TABLE>
<TABLE>
<CAPTION>
United Life and Annuity Insurance Company
SpectraSelect Standard Death Benefit Variable Annuity
10 Years
Scudder Money Market
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/09/95 Purchase 1,000.00 9.146510 109.331 109.331 1,000.00
12/31/98 Value before SC 10.244006 109.331 1,119.99
12/31/98 Surrender Charge 4.00% (40.00) 10.244006 (3.905) 105.427 1,079.99
12/31/98 Ending Redeemable Value 10.244006 0.000 105.427 1,079.99
Avg Annual Total Return: 2.41%
Scudder International
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
12/31/88 Purchase 1,000.00 4.103516 243.693 243.693 1,000.00
12/31/98 Value before SC 10.072603 243.693 2,454.63
12/31/98 Surrender Charge 0.00% 0.00 10.072603 0.000 243.693 2,454.63
12/31/98 Ending Redeemable Value 10.072603 0.000 243.693 2,454.63
Avg Annual Total Return: 9.40%
MFS Emerging Growth
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
07/24/95 Purchase 1,000.00 5.276794 189.509 189.509 1,000.00
12/31/98 Value before SC 11.153296 189.509 2,113.65
12/31/98 Surrender Charge 4.00% (40.00) 11.153296 (3.586) 185.923 2,073.65
12/31/98 Ending Redeemable Value 11.153296 0.000 185.923 2,073.65
Avg Annual Total Return: 23.62%
MFS Total Return
- ----------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
01/03/95 Purchase 1,000.00 5.530566 180.813 180.813 1,000.00
12/31/98 Value before SC 10.346176 180.813 1,870.73
12/31/98 Surrender Charge 4.00% (40.00) 10.346176 (3.866) 176.947 1,830.73
12/31/98 Ending Redeemable Value 10.346176 0.000 176.947 1,830.73
Avg Annual Total Return: 16.36%
MFS Growth With Income
- ----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
10/09/95 Purchase 1,000.00 5.255976 190.260 190.260 1,000.00
12/31/98 Value before SC 10.585566 190.260 2,014.01
12/31/98 Surrender Charge 4.00% (40.00) 10.585566 (3.779) 186.481 1,974.01
12/31/98 Ending Redeemable Value 10.585566 0.000 186.481 1,974.01
Avg Annual Total Return: 23.44%
MFS Research
- ------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
07/26/95 Purchase 1,000.00 5.428857 184.201 184.201 1,000.00
12/31/98 Value before SC 10.472755 184.201 1,929.09
12/31/98 Surrender Charge 4.00% (40.00) 10.472755 (3.819) 180.381 1,889.09
12/31/98 Ending Redeemable Value 10.472755 0.000 180.381 1,889.09
Avg Annual Total Return: 20.38%
MFS Utilities
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/03/95 Purchase 1,000.00 4.513041 221.580 221.580 1,000.00
12/31/98 Value before SC 10.533651 221.580 2,334.05
12/31/98 Surrender Charge 4.00% (40.00) 10.533651 (3.797) 217.783 2,294.05
12/31/98 Ending Redeemable Value 10.533651 0.000 217.783 2,294.05
Avg Annual Total Return: 23.13%
Dreyfus Growth & Income
- -----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/02/94 Purchase 1,000.00 4.380349 228.292 228.292 1,000.00
12/31/98 Value before SC 9.895719 228.292 2,259.12
12/31/98 Surrender Charge 3.00% (30.00) 9.895719 (3.032) 225.261 2,229.12
12/31/98 Ending Redeemable Value 9.895719 0.000 225.261 2,229.12
Avg Annual Total Return: 18.73%
Dreyfus Index
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
09/29/89 Purchase 1,000.00 4.357065 229.512 229.512 1,000.00
12/31/98 Value before SC 11.045238 229.512 2,535.02
12/31/98 Surrender Charge 0.00% 0.00 11.045238 0.000 229.512 2,535.02
12/31/98 Ending Redeemable Value 11.045238 0.000 229.512 2,535.02
Avg Annual Total Return: 10.58%
Federated Utilities
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
02/10/94 Purchase 1,000.00 6.562290 152.386 152.386 1,000.00
12/31/98 Value before SC 10.890777 152.386 1,659.60
12/31/98 Surrender Charge 3.00% (30.00) 10.890777 (2.755) 149.631 1,629.60
12/31/98 Ending Redeemable Value 10.890777 0.000 149.631 1,629.60
Avg Annual Total Return: 10.50%
Federated High Income
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
03/01/94 Purchase 1,000.00 7.939303 125.956 125.956 1,000.00
12/31/98 Value before SC 9.816601 125.956 1,236.46
12/31/98 Surrender Charge 3.00% (30.00) 9.816601 (3.056) 122.900 1,206.46
12/31/98 Ending Redeemable Value 9.816601 0.000 122.900 1,206.46
Avg Annual Total Return: 3.95%
Federated Government
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/27/94 Purchase 1,000.00 8.866313 112.786 112.786 1,000.00
12/31/98 Value before SC 10.450106 112.786 1,178.63
12/31/98 Surrender Charge 3.00% (30.00) 10.450106 (2.871) 109.916 1,148.63
12/31/98 Ending Redeemable Value 10.450106 0.000 109.916 1,148.63
Avg Annual Total Return: 2.95%
Federated American Leaders
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
02/10/94 Purchase 1,000.00 4.541900 220.172 220.172 1,000.00
12/31/98 Value before SC 10.149961 220.172 2,234.74
12/31/98 Surrender Charge 3.00% (30.00) 10.149961 (2.956) 217.216 2,204.74
12/31/98 Ending Redeemable Value 10.149961 0.000 217.216 2,204.74
Avg Annual Total Return: 17.55%
Federated Prime Money
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/18/94 Purchase 1,000.00 8.381120 119.316 119.316 1,000.00
12/31/98 Value before SC 10.218420 119.316 1,219.22
12/31/98 Surrender Charge 3.00% (30.00) 10.218420 (2.936) 116.380 1,189.22
12/31/98 Ending Redeemable Value 10.218420 0.000 116.380 1,189.22
Avg Annual Total Return: 4.30%
Van Eck Worldwide Hard Asset
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
09/01/89 Purchase 1,000.00 6.825133 146.517 146.517 1,000.00
12/31/98 Value before SC 6.852426 146.517 1,004.00
12/31/98 Surrender Charge 0.00% 0.00 6.852426 0.000 146.517 1,004.00
12/31/98 Ending Redeemable Value 6.852426 0.000 146.517 1,004.00
Avg Annual Total Return: 0.04%
Warburg Pincus Fixed Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/31/97 Purchase 1,000.00 9.152738 109.257 109.257 1,000.00
12/31/98 Value before SC 10.517016 109.257 1,149.06
12/31/98 Surrender Charge 6.00% (60.00) 10.517016 (5.705) 103.552 1,089.06
12/31/98 Ending Redeemable Value 10.517016 0.000 103.552 1,089.06
Avg Annual Total Return: 5.00%
Warburg Pincus Intl. Equity
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
06/30/95 Purchase 1,000.00 7.718154 129.565 129.565 1,000.00
12/31/98 Value before SC 8.929481 129.565 1,156.95
12/31/98 Surrender Charge 4.00% (40.00) 8.929481 (4.480) 125.085 1,116.95
12/31/98 Ending Redeemable Value 8.929481 0.000 125.085 1,116.95
Avg Annual Total Return: 3.21%
Warburg Pincus Post-Venture Cap.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
09/30/96 Purchase 1,000.00 7.917980 126.295 126.295 1,000.00
12/31/98 Value before SC 9.039362 126.295 1,141.62
12/31/98 Surrender Charge 5.00% (50.00) 9.039362 (5.531) 120.763 1,091.62
12/31/98 Ending Redeemable Value 9.039362 0.000 120.763 1,091.62
Avg Annual Total Return: 3.97%
Alger American Growth
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
01/06/89 Purchase 1,000.00 2.239906 446.447 446.447 1,000.00
12/31/98 Value before SC 12.487393 446.447 5,574.96
12/31/98 Surrender Charge 0.00% 0.00 12.487393 0.000 446.447 5,574.96
12/31/98 Ending Redeemable Value 12.487393 0.000 446.447 5,574.96
Avg Annual Total Return: 18.79%
AIM V.I. Capital Appreciation
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 4.304061 232.339 232.339 1,000.00
12/31/98 Value before SC 10.398785 232.339 2,416.04
12/31/98 Surrender Charge 2.00% (20.00) 10.398785 (1.923) 230.415 2,396.04
12/31/98 Ending Redeemable Value 10.398785 0.000 230.415 2,396.04
Avg Annual Total Return: 16.69%
AIM V.I. Diversified Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 7.176547 139.343 139.343 1,000.00
12/31/98 Value before SC 9.918812 139.343 1,382.11
12/31/98 Surrender Charge 2.00% (20.00) 9.918812 (2.016) 137.326 1,362.11
12/31/98 Ending Redeemable Value 9.918812 0.000 137.326 1,362.11
Avg Annual Total Return: 5.61%
AIM V.I. Growth
- ---------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 4.273550 233.997 233.997 1,000.00
12/31/98 Value before SC 11.525590 233.997 2,696.96
12/31/98 Surrender Charge 2.00% (20.00) 11.525590 (1.735) 232.262 2,676.96
12/31/98 Ending Redeemable Value 11.525590 0.000 232.262 2,676.96
Avg Annual Total Return: 19.00%
AIM V.I. Growth and Income
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
05/02/94 Purchase 1,000.00 4.686488 213.379 213.379 1,000.00
12/31/98 Value before SC 11.307041 213.379 2,412.69
12/31/98 Surrender Charge 3.00% (30.00) 11.307041 (2.653) 210.726 2,382.69
12/31/98 Ending Redeemable Value 11.307041 0.000 210.726 2,382.69
Avg Annual Total Return: 20.43%
AIM V.I. International Equity
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 5.245966 190.623 190.623 1,000.00
12/31/98 Value before SC 9.853241 190.623 1,878.25
12/31/98 Surrender Charge 2.00% (20.00) 9.853241 (2.030) 188.593 1,858.25
12/31/98 Ending Redeemable Value 9.853241 0.000 188.593 1,858.25
Avg Annual Total Return: 11.57%
Morgan Stanley Emerging Mkt Debt
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
06/16/97 Purchase 1,000.00 9.583761 104.343 104.343 1,000.00
12/31/98 Value before SC 6.765021 104.343 705.88
12/31/98 Surrender Charge 6.00% (60.00) 6.765021 (8.869) 95.474 645.88
12/31/98 Ending Redeemable Value 6.765021 0.000 95.474 645.88
Avg Annual Total Return: -24.71%
Morgan Stanley Equity Growth
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 6.723725 148.727 148.727 1,000.00
12/31/98 Value before SC 10.363454 148.727 1,541.33
12/31/98 Surrender Charge 6.00% (60.00) 10.363454 (5.790) 142.938 1,481.33
12/31/98 Ending Redeemable Value 10.363454 0.000 142.938 1,481.33
Avg Annual Total Return: 21.83%
Morgan Stanley Global Equity
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 7.440965 134.391 134.391 1,000.00
12/31/98 Value before SC 9.840633 134.391 1,322.49
12/31/98 Surrender Charge 6.00% (60.00) 9.840633 (6.097) 128.294 1,262.49
12/31/98 Ending Redeemable Value 9.840633 0.000 128.294 1,262.49
Avg Annual Total Return: 12.43%
Morgan Stanley High-Yield
- -------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 8.615218 116.074 116.074 1,000.00
12/31/98 Value before SC 9.968043 116.074 1,157.03
12/31/98 Surrender Charge 6.00% (60.00) 9.968043 (6.019) 110.054 1,097.03
12/31/98 Ending Redeemable Value 9.968043 0.000 110.054 1,097.03
Avg Annual Total Return: 4.76%
Morgan Stanley Value
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 7.695143 129.952 129.952 1,000.00
12/31/98 Value before SC 8.860144 129.952 1,151.39
12/31/98 Surrender Charge 6.00% (60.00) 8.860144 (6.772) 123.180 1,091.39
12/31/98 Ending Redeemable Value 8.860144 0.000 123.180 1,091.39
Avg Annual Total Return: 4.49%
Neuberger & Berman AMT Guardian
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
11/03/97 Purchase 1,000.00 6.862221 145.725 145.725 1,000.00
12/31/98 Value before SC 9.360463 145.725 1,364.06
12/31/98 Surrender Charge 6.00% (60.00) 9.360463 (6.410) 139.315 1,304.06
12/31/98 Ending Redeemable Value 9.360463 0.000 139.315 1,304.06
Avg Annual Total Return: 25.72%
Neuberger & Berman AMT Ltd. Mat.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
12/31/88 Purchase 1,000.00 6.056982 165.099 165.099 1,000.00
12/31/98 Value before SC 10.156380 165.099 1,676.81
12/31/98 Surrender Charge 0.00% 0.00 10.156380 0.000 165.099 1,676.81
12/31/98 Ending Redeemable Value 10.156380 0.000 165.099 1,676.81
Avg Annual Total Return: 5.30%
Neuberger & Berman AMT Mid-Cap
- ------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/03/97 Purchase 1,000.00 7.060043 141.642 141.642 1,000.00
12/31/98 Value before SC 11.339762 141.642 1,606.19
12/31/98 Surrender Charge 6.00% (60.00) 11.339762 (5.291) 136.351 1,546.19
12/31/98 Ending Redeemable Value 11.339762 0.000 136.351 1,546.19
Avg Annual Total Return: 45.60%
Neuberger & Berman AMT Partners
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
03/22/94 Purchase 1,000.00 4.221606 236.877 236.877 1,000.00
12/31/98 Value before SC 9.329832 236.877 2,210.02
12/31/98 Surrender Charge 3.00% (30.00) 9.329832 (3.215) 233.661 2,180.02
12/31/98 Ending Redeemable Value 9.329832 0.000 233.661 2,180.02
Avg Annual Total Return: 17.71%
</TABLE>
<TABLE>
<CAPTION>
United Life and Annuity Insurance Company
SpectraSelect Standard Death Benefit Variable Annuity
Since Inception
Scudder Money Market
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/09/95 Purchase 1,000.00 9.146510 109.331 109.331 1,000.00
12/31/98 Value before SC 10.244006 109.331 1,119.99
12/31/98 Surrender Charge 4.00% (40.00) 10.244006 (3.905) 105.427 1,079.99
12/31/98 Ending Redeemable Value 10.244006 0.000 105.427 1,079.99
Avg Annual Total Return: 2.41%
Scudder International
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
05/01/87 Purchase 1,000.00 4.065741 245.958 245.958 1,000.00
12/31/98 Value before SC 10.072603 245.958 2,477.43
12/31/98 Surrender Charge 0.00% 0.00 10.072603 0.000 245.958 2,477.43
12/31/98 Ending Redeemable Value 10.072603 0.000 245.958 2,477.43
Avg Annual Total Return: 8.08%
MFS Emerging Growth
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
07/24/95 Purchase 1,000.00 5.276794 189.509 189.509 1,000.00
12/31/98 Value before SC 11.153296 189.509 2,113.65
12/31/98 Surrender Charge 4.00% (40.00) 11.153296 (3.586) 185.923 2,073.65
12/31/98 Ending Redeemable Value 11.153296 0.000 185.923 2,073.65
Avg Annual Total Return: 23.62%
MFS Total Return
- ----------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
01/03/95 Purchase 1,000.00 5.530566 180.813 180.813 1,000.00
12/31/98 Value before SC 10.346176 180.813 1,870.73
12/31/98 Surrender Charge 4.00% (40.00) 10.346176 (3.866) 176.947 1,830.73
12/31/98 Ending Redeemable Value 10.346176 0.000 176.947 1,830.73
Avg Annual Total Return: 16.36%
MFS Growth With Income
- ----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
10/09/95 Purchase 1,000.00 5.255976 190.260 190.260 1,000.00
12/31/98 Value before SC 10.585566 190.260 2,014.01
12/31/98 Surrender Charge 4.00% (40.00) 10.585566 (3.779) 186.481 1,974.01
12/31/98 Ending Redeemable Value 10.585566 0.000 186.481 1,974.01
Avg Annual Total Return: 23.44%
MFS Research
- ------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
07/26/95 Purchase 1,000.00 5.428857 184.201 184.201 1,000.00
12/31/98 Value before SC 10.472755 184.201 1,929.09
12/31/98 Surrender Charge 4.00% (40.00) 10.472755 (3.819) 180.381 1,889.09
12/31/98 Ending Redeemable Value 10.472755 0.000 180.381 1,889.09
Avg Annual Total Return: 20.38%
MFS Utilities
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
01/03/95 Purchase 1,000.00 4.513041 221.580 221.580 1,000.00
12/31/98 Value before SC 10.533651 221.580 2,334.05
12/31/98 Surrender Charge 4.00% (40.00) 10.533651 (3.797) 217.783 2,294.05
12/31/98 Ending Redeemable Value 10.533651 0.000 217.783 2,294.05
Avg Annual Total Return: 23.13%
Dreyfus Growth & Income
- -----------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
05/02/94 Purchase 1,000.00 4.380349 228.292 228.292 1,000.00
12/31/98 Value before SC 9.895719 228.292 2,259.12
12/31/98 Surrender Charge 3.00% (30.00) 9.895719 (3.032) 225.261 2,229.12
12/31/98 Ending Redeemable Value 9.895719 0.000 225.261 2,229.12
Avg Annual Total Return: 18.73%
Dreyfus Index
- -------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
09/29/89 Purchase 1,000.00 4.357065 229.512 229.512 1,000.00
12/31/98 Value before SC 11.045238 229.512 2,535.02
12/31/98 Surrender Charge 0.00% 0.00 11.045238 0.000 229.512 2,535.02
12/31/98 Ending Redeemable Value 11.045238 0.000 229.512 2,535.02
Avg Annual Total Return: 10.58%
Federated Utilities
- -------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
02/10/94 Purchase 1,000.00 6.562290 152.386 152.386 1,000.00
12/31/98 Value before SC 10.890777 152.386 1,659.60
12/31/98 Surrender Charge 3.00% (30.00) 10.890777 (2.755) 149.631 1,629.60
12/31/98 Ending Redeemable Value 10.890777 0.000 149.631 1,629.60
Avg Annual Total Return: 10.50%
Federated High Income
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
03/01/94 Purchase 1,000.00 7.939303 125.956 125.956 1,000.00
12/31/98 Value before SC 9.816601 125.956 1,236.46
12/31/98 Surrender Charge 3.00% (30.00) 9.816601 (3.056) 122.900 1,206.46
12/31/98 Ending Redeemable Value 9.816601 0.000 122.900 1,206.46
Avg Annual Total Return: 3.95%
Federated Government
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
03/27/94 Purchase 1,000.00 8.866313 112.786 112.786 1,000.00
12/31/98 Value before SC 10.450106 112.786 1,178.63
12/31/98 Surrender Charge 3.00% (30.00) 10.450106 (2.871) 109.916 1,148.63
12/31/98 Ending Redeemable Value 10.450106 0.000 109.916 1,148.63
Avg Annual Total Return: 2.95%
Federated American Leaders
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
02/10/94 Purchase 1,000.00 4.541900 220.172 220.172 1,000.00
12/31/98 Value before SC 10.149961 220.172 2,234.74
12/31/98 Surrender Charge 3.00% (30.00) 10.149961 (2.956) 217.216 2,204.74
12/31/98 Ending Redeemable Value 10.149961 0.000 217.216 2,204.74
Avg Annual Total Return: 17.55%
Federated Prime Money
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/18/94 Purchase 1,000.00 8.381120 119.316 119.316 1,000.00
12/31/98 Value before SC 10.218420 119.316 1,219.22
12/31/98 Surrender Charge 3.00% (30.00) 10.218420 (2.936) 116.380 1,189.22
12/31/98 Ending Redeemable Value 10.218420 0.000 116.380 1,189.22
Avg Annual Total Return: 4.30%
Van Eck Worldwide Hard Asset
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
09/01/89 Purchase 1,000.00 6.825133 146.517 146.517 1,000.00
12/31/98 Value before SC 6.852426 146.517 1,004.00
12/31/98 Surrender Charge 0.00% 0.00 6.852426 0.000 146.517 1,004.00
12/31/98 Ending Redeemable Value 6.852426 0.000 146.517 1,004.00
Avg Annual Total Return: 0.04%
Warburg Pincus Fixed Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
03/31/97 Purchase 1,000.00 9.152738 109.257 109.257 1,000.00
12/31/98 Value before SC 10.517016 109.257 1,149.06
12/31/98 Surrender Charge 6.00% (60.00) 10.517016 (5.705) 103.552 1,089.06
12/31/98 Ending Redeemable Value 10.517016 0.000 103.552 1,089.06
Avg Annual Total Return: 5.00%
Warburg Pincus Intl. Equity
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
06/30/95 Purchase 1,000.00 7.718154 129.565 129.565 1,000.00
12/31/98 Value before SC 8.929481 129.565 1,156.95
12/31/98 Surrender Charge 4.00% (40.00) 8.929481 (4.480) 125.085 1,116.95
12/31/98 Ending Redeemable Value 8.929481 0.000 125.085 1,116.95
Avg Annual Total Return: 3.21%
Warburg Pincus Post-Venture Cap.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
09/30/96 Purchase 1,000.00 7.917980 126.295 126.295 1,000.00
12/31/98 Value before SC 9.039362 126.295 1,141.62
12/31/98 Surrender Charge 5.00% (50.00) 9.039362 (5.531) 120.763 1,091.62
12/31/98 Ending Redeemable Value 9.039362 0.000 120.763 1,091.62
Avg Annual Total Return: 3.97%
Alger American Growth
- ---------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
01/06/89 Purchase 1,000.00 2.239906 446.447 446.447 1,000.00
12/31/98 Value before SC 12.487393 446.447 5,574.96
12/31/98 Surrender Charge 0.00% 0.00 12.487393 0.000 446.447 5,574.96
12/31/98 Ending Redeemable Value 12.487393 0.000 446.447 5,574.96
Avg Annual Total Return: 18.79%
AIM V.I. Capital Appreciation
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 4.304061 232.339 232.339 1,000.00
12/31/98 Value before SC 10.398785 232.339 2,416.04
12/31/98 Surrender Charge 2.00% (20.00) 10.398785 (1.923) 230.415 2,396.04
12/31/98 Ending Redeemable Value 10.398785 0.000 230.415 2,396.04
Avg Annual Total Return: 16.69%
AIM V.I. Diversified Income
- ---------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 7.176547 139.343 139.343 1,000.00
12/31/98 Value before SC 9.918812 139.343 1,382.11
12/31/98 Surrender Charge 2.00% (20.00) 9.918812 (2.016) 137.326 1,362.11
12/31/98 Ending Redeemable Value 9.918812 0.000 137.326 1,362.11
Avg Annual Total Return: 5.61%
AIM V.I. Growth
- ---------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 4.273550 233.997 233.997 1,000.00
12/31/98 Value before SC 11.525590 233.997 2,696.96
12/31/98 Surrender Charge 2.00% (20.00) 11.525590 (1.735) 232.262 2,676.96
12/31/98 Ending Redeemable Value 11.525590 0.000 232.262 2,676.96
Avg Annual Total Return: 19.00%
AIM V.I. Growth and Income
- --------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
05/02/94 Purchase 1,000.00 4.686488 213.379 213.379 1,000.00
12/31/98 Value before SC 11.307041 213.379 2,412.69
12/31/98 Surrender Charge 3.00% (30.00) 11.307041 (2.653) 210.726 2,382.69
12/31/98 Ending Redeemable Value 11.307041 0.000 210.726 2,382.69
Avg Annual Total Return: 20.43%
AIM V.I. International Equity
- -----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
05/05/93 Purchase 1,000.00 5.245966 190.623 190.623 1,000.00
12/31/98 Value before SC 9.853241 190.623 1,878.25
12/31/98 Surrender Charge 2.00% (20.00) 9.853241 (2.030) 188.593 1,858.25
12/31/98 Ending Redeemable Value 9.853241 0.000 188.593 1,858.25
Avg Annual Total Return: 11.57%
Morgan Stanley Emerging Mkt Debt
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
06/16/97 Purchase 1,000.00 9.583761 104.343 104.343 1,000.00
12/31/98 Value before SC 6.765021 104.343 705.88
12/31/98 Surrender Charge 6.00% (60.00) 6.765021 (8.869) 95.474 645.88
12/31/98 Ending Redeemable Value 6.765021 0.000 95.474 645.88
Avg Annual Total Return: -24.71%
Morgan Stanley Equity Growth
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 6.723725 148.727 148.727 1,000.00
12/31/98 Value before SC 10.363454 148.727 1,541.33
12/31/98 Surrender Charge 6.00% (60.00) 10.363454 (5.790) 142.938 1,481.33
12/31/98 Ending Redeemable Value 10.363454 0.000 142.938 1,481.33
Avg Annual Total Return: 21.83%
Morgan Stanley Global Equity
- ----------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 7.440965 134.391 134.391 1,000.00
12/31/98 Value before SC 9.840633 134.391 1,322.49
12/31/98 Surrender Charge 6.00% (60.00) 9.840633 (6.097) 128.294 1,262.49
12/31/98 Ending Redeemable Value 9.840633 0.000 128.294 1,262.49
Avg Annual Total Return: 12.43%
Morgan Stanley High-Yield
- -------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 8.615218 116.074 116.074 1,000.00
12/31/98 Value before SC 9.968043 116.074 1,157.03
12/31/98 Surrender Charge 6.00% (60.00) 9.968043 (6.019) 110.054 1,097.03
12/31/98 Ending Redeemable Value 9.968043 0.000 110.054 1,097.03
Avg Annual Total Return: 4.76%
Morgan Stanley Value
- --------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
01/02/97 Purchase 1,000.00 7.695143 129.952 129.952 1,000.00
12/31/98 Value before SC 8.860144 129.952 1,151.39
12/31/98 Surrender Charge 6.00% (60.00) 8.860144 (6.772) 123.180 1,091.39
12/31/98 Ending Redeemable Value 8.860144 0.000 123.180 1,091.39
Avg Annual Total Return: 4.49%
Neuberger & Berman AMT Guardian
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
11/03/97 Purchase 1,000.00 6.862221 145.725 145.725 1,000.00
12/31/98 Value before SC 9.360463 145.725 1,364.06
12/31/98 Surrender Charge 6.00% (60.00) 9.360463 (6.410) 139.315 1,304.06
12/31/98 Ending Redeemable Value 9.360463 0.000 139.315 1,304.06
Avg Annual Total Return: 25.72%
Neuberger & Berman AMT Ltd. Mat.
- --------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
09/10/84 Purchase 1,000.00 4.179235 239.278 239.278 1,000.00
12/31/98 Value before SC 10.156380 239.278 2,430.20
12/31/98 Surrender Charge 0.00% 0.00 10.156380 0.000 239.278 2,430.20
12/31/98 Ending Redeemable Value 10.156380 0.000 239.278 2,430.20
Avg Annual Total Return: 6.40%
Neuberger & Berman AMT Mid-Cap
- ------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
---- ----------- ---- ------ ---------- --------------------------------------------
11/03/97 Purchase 1,000.00 7.060043 141.642 141.642 1,000.00
12/31/98 Value before SC 11.339762 141.642 1,606.19
12/31/98 Surrender Charge 6.00% (60.00) 11.339762 (5.291) 136.351 1,546.19
12/31/98 Ending Redeemable Value 11.339762 0.000 136.351 1,546.19
Avg Annual Total Return: 45.60%
Neuberger & Berman AMT Partners
- -------------------------------
Date Transaction Rate Amount Unit Value Units per Trans Total Units Held Total Value
- ---- ----------- ---- ------ ---------- --------------------------------------------
03/22/94 Purchase 1,000.00 4.221606 236.877 236.877 1,000.00
12/31/98 Value before SC 9.329832 236.877 2,210.02
12/31/98 Surrender Charge 3.00% (30.00) 9.329832 (3.215) 233.661 2,180.02
12/31/98 Ending Redeemable Value 9.329832 0.000 233.661 2,180.02
Avg Annual Total Return: 17.71%
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