-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LguyVTpfRORgHu4PjoRLP5a+XpwFt+2tbXmTrE1IhLUrkngDIt+A29dZjGiVpf97 KizD7+zQ1g1nUxCoSkiU3Q== 0000950168-00-001159.txt : 20000502 0000950168-00-001159.hdr.sgml : 20000502 ACCESSION NUMBER: 0000950168-00-001159 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20000501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WRL SERIES LIFE ACCOUNT CENTRAL INDEX KEY: 0000778209 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: SEC FILE NUMBER: 033-05143 FILM NUMBER: 615712 BUSINESS ADDRESS: STREET 1: 570 CARILLON PARKWAY CITY: ST PETERSBURG STATE: FL ZIP: 33716 BUSINESS PHONE: 2722991800 MAIL ADDRESS: STREET 1: 201 HIGHLAND AVENUE CITY: LARGO STATE: FL ZIP: 33770 497 1 WRL SP+ SUPPLEMENT DATED MAY 1, 2000 TO PROSPECTUS DATED MAY 1, 1994 WRL FREEDOM SP PLUS (R) The following information supplements information provided on page 7, fifth paragraph of the Prospectus under the heading "11. What Charges are Assessed in Connection with the Policy?"
Portfolio Rate --------- ---- WRL Great Companies-AmericaSM 0.80% WRL Great Companies-TechnologySM 0.80% WRL Value Line Aggressive Growth 0.80% Fidelity VIP Equity-Incom Portfolio - Service Class 2 0.48% Fidelity VIP II Contrafund(R)Portfolio - Service Class 2 0.58% Fidelity VIP III Growth Opportunities Portfolio - Service Class 2 0.58%
The following information is added to page 9, under the section entitled "Death Benefit, Cash Value and Net Surrender Value Illustrations" in the Prospectus: The information contained in both the explanation and "Hypothetical Illustrations" is out-of-date and should not be relied upon. In addition, current hypothetical illustrations for the new Portfolios are not included in Appendix A. The following information is added to page 8 of the Prospectus before the section entitled "Investment Experience Information" and represents both the actual annual expenses of the existing Portfolios incurred during 1999 (except as noted in the footnotes), and the estimated annual expenses, as a percentage of average net assets, of the new Portfolios:
WRL WRL J.P. WRL LKCM Morgan WRL WRL WRL VKAM Strategic Money Janus Janus AEGON Emerging Total Market Growth 2/ Global 3/ Bond Growth Return ------ --------- --------- ------ -------- ---------- Management Fees 0.40% 0.80% 0.80% 0.45% 0.80% 0.80% Other Expenses 0.04% 0.05% 0.12% 0.08% 0.07% 0.06% 12b-1 Fee N/A N/A N/A N/A N/A N/A Total Annual Expenses 0.44% 0.85% 0.92% 0.53% 0.87% 0.86% WRL WRL WRL WRL Alger WRL Federated Dean WRL NWQ Aggressive AEGON Growth & Asset C.A.S.E. Value Growth Balanced Income Allocation Growth Equity ---------- -------- --------- ---------- --------- ------ Management Fees 0.80% 0.80% 0.75% 0.80% 0.80% 0.80% Other Expenses 0.09% 0.09% 0.14% 0.07% 0.20% 0.10% 12b-1 Fee N/A N/A N/A N/A N/A N/A Total Annual Expenses 0.89% 0.89% 0.89% 0.87% 1.00% 0.90% WRL J.P. WRL GE WRL GE WRL Third Morgan International U.S. Avenue Real Estate Equity 4/ Equity Value Securities ------------- ------ ---------- ----------- Management Fees 1.00% 0.80% 0.80% 0.80% Other Expenses 0.20% 0.13% 0.20% 0.20% 12b-1 Fee N/A N/A N/A N/A Total Annual Expenses 1.20% 0.93% 1.00% 1.00%
WRL WRL WRL WRL T. Rowe WRL Pilgrim Goldman Goldman Price T. Rowe WRL Baxter WRL Sachs Sachs Dividend Price Salomon Mid Cap Dreyfus Growth 5/ Small Cap 5/ Growth 5/ Small Cap 5/ All Cap 5/ Growth 5/ Mid Cap 5/ --------- ------------ --------- ----------- ---------- --------- ------- -- Management Fees 0.90% 0.90% 0.90% 0.75% 0.90% 0.90% 0.85% Other Expenses 0.10% 0.10% 0.10% 0.25% 0.10% 0.10% 0.15% 12b-1 Fee N/A N/A N/A N/A N/A N/A N/A Total Annual Expenses 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% WRL Value WRL Great WRL Great Line Aggressive Companies - Companies - Growth 6/ America SM 6/ Technology SM 6/ --------- ------------- ---------------- Management Fees 0.80% 0.80% 0.80% Other Expenses 0.20% 0.20% 0.20% 12b-1 Fee N/A N/A N/A Total Annual Expenses 1.00% 1.00% 1.00% Fidelity VIP Fidelity VIP II Fidelity VIP III Equity-Income Contrafund(R) Growth Opportunities Portfolio - Portfolio - Portfolio - Service Class 2 8/ Service Class 2 8/ Service Class 2 8/ --------------- -- --------------- -- --------------- -- Management Fees 0.48% 0.58% 0.58% Other Expenses 0.10% 0.12% 0.13% 12b-1 Fee 7/ 0.25% 0.25% 0.25% Total Annual Expenses 0.83% 0.95% 0.96%
- ----------------- 1/ Effective January 1, 1997, the WRL Series Fund, Inc. ("WRL Fund") Board authorized the WRL Fund to charge each Portfolio of the WRL Fund an annual 12b-1 fee of up to 0.15% of each Portfolio's average daily net assets. However, the WRL Fund will not deduct the fee from any Portfolio before April 30, 2001. You will receive advance written notice if a Rule 12b-1 fee is to be deducted. See the WRL Fund prospectus for more detail. 2/ WRL Investment Management, Inc. ("WRL Management"), the WRL Fund's investment adviser, currently waives 0.025% of its advisory fee for the first $3 billion of the portfolio's average daily net assets (net fee - 0.775%); and 0.05% for the portfolio's average daily net assets above $3 billion (net fee - 0.75%). The fee table reflects estimated 2000 expenses because of the termination of the fee waiver. This waiver is voluntary and will be terminated June 25, 2000. 3/ WRL Management currently waives 0.025% of its advisory fee on portfolio average daily net assets over $2 billion (net fee - 0.775%). This waiver is voluntary and will be terminated on June 25, 2000. 4/ The fee table reflects estimated 2000 expenses because the expense limit for this portfolio will be reduced from 1.50% to 1.20% effective May 1, 2000. 5/ Because these portfolios did not commence operations until May 3, 1999, the percentages set forth as "Other Expenses" and "Total Annual Expenses" are annualized. 6/ Because these Portfolios did not commence operations until May 1, 2000, the percentages set forth as "Other Expenses" and "Total Annual Expenses" reflect estimates of "Other Expenses" for the first year of operations. 7/ The 12b-1 deducted for the Fidelity VIP Funds recovers certain shareholder support services provided by companies selling variable contracts investing in the Fidelity VIP Funds. The 12b-1 fees assessed against the Fidelity VIP Funds shares held for the Policies will be remitted to AFSG, the principal underwriter for the Policies. 8/ Service Class 2 expenses are based on estimated expenses for the year 2000. 2 9/ WRL Management has undertaken, until at least April 30, 2001, to pay expenses on behalf of the Portfolios of the WRL Fund to the extent normal operating expenses of a Portfolio exceed a stated percentage of each Portfolio's average daily net assets. The expense limit, the amount reimbursed by WRL Management during 1999 and the expense ratio without the reimbursement are listed below for each portfolio:
- ------------------------------------------------------------------------------------------------------------------- EXPENSE RATIO - ------------------------------------------------------------------------------------------------------------------- PORTFOLIO EXPENSE REIMBURSEMENT WITHOUT LIMIT AMOUNT REIMBURSEMENT - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- WRL VKAM Emerging Growth 1.00% $ N/A N/A WRL T. Rowe Price Small Cap 1.00% 63,542 2.46% WRL Goldman Sachs Small Cap 1.00% 60,555 5.57% WRL Pilgrim Baxter Mid Cap Growth 1.00% 34,986 1.40% WRL Alger Aggressive Growth 1.00% N/A N/A WRL Third Avenue Value 1.00% 10,734 1.06% WRL Value Line Aggressive Growth 1.00% N/A N/A WRL GE International Equity 1.20% 112,088 1.84% WRL Janus Global 1.00% N/A N/A WRL Great Companies - TechnologySM 1.00% N/A N/A WRL Janus Growth 1.00% N/A N/A WRL Goldman Sachs Growth 1.00% 49,677 2.68% WRL GE U.S. Equity 1.00% N/A N/A WRL Great Companies - AmericaSM 1.00% N/A N/A WRL Salomon All Cap 1.00% 53,174 2.87% WRL C.A.S.E. Growth 1.00% N/A N/A WRL Dreyfus Mid Cap 1.00% 34,541 4.89% WRL NWQ Value Equity 1.00% N/A N/A WRL T. Rowe Price Dividend Growth 1.00% 46,989 2.35% WRL Dean Asset Allocation 1.00% N/A N/A WRL LKCM Strategic Total Return 1.00% N/A N/A WRL J.P. Morgan Real Estate Securities 1.00% 51,924 2.69% WRL Federated Growth & Income 1.00% N/A N/A WRL AEGON Balanced 1.00% N/A N/A WRL AEGON Bond 0.70% N/A N/A WRL J.P. Morgan Money Market 0.70% N/A N/A - -------------------------------------------------------------------------------------------------------------------
The purpose of the preceding table is to help you understand the various costs and expenses that you will bear directly and indirectly. The table reflects charges and expenses of the Portfolios of the Funds for the fiscal year ended December 31, 1999 (except as noted in the footnotes). For more information on the charges described in this table, see the Fund prospectuses, which accompany this prospectus. The following is revised after the third paragraph on page 15 of the Prospectus under the heading "Other Performance Data": We are a member of the Insurance Marketplace Standards Association ("IMSA"). IMSA is an independent, voluntary organization of life insurance companies. It promotes high ethical standards in the sales and advertising of individual life insurance and annuity products. Companies must undergo a rigorous self and independent assessment of their practices to become a member of IMSA. The IMSA logo in our sales literature shows our ongoing commitment to these standards. The following information supplements information provided on pages 22-23 of the Prospectus under the heading "Investments of the Series Account - WRL Series Fund, Inc.": Beginning May 1, 2000, you may direct the money in your Policy into six new Sub-Accounts of the WRL Series Life Account. Each Sub-Account invests exclusively in a new Portfolio of the WRL Series Fund, Inc. ("WRL Fund") or the Variable Insurance Products Fund (VIP), Variable Insurance Products Fund II (VIP II) or Variable Insurance Products Fund III (VIP III) (the "Fidelity VIP Funds"). There is no assurance that any of the Portfolios will achieve its stated objective. More detailed information, including a description of risks, can be found in the Fund Prospectuses, which accompany this Supplement, and should be read carefully. 3
------------------------------------------------------------------------------------------------------------ PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE WRL GREAT COMPANIES - Great Companies, L.L.C. Seeks long-term growth of capital. AMERICASM WRL GREAT COMPANIES - Great Companies, L.L.C. Seeks long-term growth of capital. TECHNOLOGYSM WRL VALUE LINE Value Line, Inc. Seeks long-term growth of capital. AGGRESSIVE GROWTH FIDELITY VIP EQUITY - Fidelity Management & Seeks reasonable income by investing INCOME PORTFOLIO - Research Company primarily in income-producing SERVICE CLASS 2 equity securities. FIDELITY VIP II - Fidelity Management & Seeks long-term capital appreciation CONTRAFUND(R)PORTFOLIO - Research Company by investing primarily in a broad SERVICE CLASS 2 variety of common stocks, using both growth-oriented and contrarian disciplines. FIDELITY VIP III Fidelity Management & Seeks capital growth by investing in a wide GROWTH OPPORTUNITIES Research Company range of common domestic and foreign PORTFOLIO - SERVICE CLASS 2 stocks, and securities convertible into common stocks. ------------------------------------------------------------------------------------------------------------
In addition, effective May 1, 2000, the WRL GE/Scottish Equitable International Equity Portfolio of the WRL Fund in which you may currently invest through the Policy has changed its name. The new name is: WRL GE International Equity. The reason for the name change is because also effective May 1, 2000, GE Asset Management Incorporated will be the sole sub-adviser for this portfolio. See the WRL Fund prospectus for more details. Fidelity Management & Research Company ("FMR"), located at 82 Devonshire Street, Boston, Massachusetts 02109, serves as investment adviser to the Fidelity VIP Funds and manages the Fidelity VIP Funds in accordance with policies and guidelines established by the Fidelity VIP Funds' Board of Trustees. For certain portfolios, FMR has engaged investment sub-advisers to provide portfolio management services with regards to foreign investments. FMR and each sub-adviser are registered investment advisers under the Investment Advisers Act of 1940, as amended. See the Fidelity VIP Funds prospectuses for more information regarding FMR and the investment sub-advisers. The following paragraph is added after the carryover paragraph on page 29 of the Prospectus under the heading "Allocation of Premiums and Cash Value - Transfers." You may make an unlimited number of "non-substantive" transfers in a Policy year among the subaccounts although we do limit "substantive" transfers, as discussed in the following paragraph. WE WILL NOT BE RESPONSIBLE FOR SAME-DAY PROCESSING OF TRANSFERS IF FAXED TO A NUMBER OTHER THAN 727-299-1648. The Policy's transfer privilege is not intended to afford policyowners a way to speculate on short-term movements in the market. Excessive use of the transfer privilege can disrupt the management of the Portfolios and increase transaction costs. Accordingly, we have established a policy of limiting excessive transfer activity. We will limit transfer activity to two substantive transfers (at least 30 days apart) from each Portfolio, except from WRL J.P. Morgan Money Market during any 12-month period. We interpret "substantive" to mean either a dollar amount large enough to have a negative impact on a Portfolio's operations or a service of movements between Portfolios. We will not limit non-substantive transfers. 4 The following information replaces the paragraph on page 33 of the Prospectus under the heading "Charges against the Series Account - Investment Advisory Fee." The portfolios deduct management fees and expenses from the amounts you have invested in the portfolios. Some portfolios also deduct 12b-1 fees from portfolio assets. These fees and expenses currently range from 0.44% to 1.20%. See the Portfolio Annual Expense Table in this Supplement, and the Fund prospectuses. Our affiliate, AFSG Securities Corporation ("AFSG"), the principal underwriter for the Policies, will receive the 12-b fees deducted from portfolio assets for providing shareholder support services to the portfolios. We and our affiliates, including the principal underwriter for the Policies, may receive compensation from the investment advisers, administrators, and/or distributors (and an affiliate thereof) of the portfolios in connection with administrative or other services and cost savings experience by the investment advisers, administrators or distributors. It is anticipated that such compensation will be based on assets of the particular portfolios attributable to the Policy and may be significant. Some advisers, administrators, distributors or portfolios may pay us (and our affiliates) more than others. The following sentence is added to the following pages of the Prospectus and under the headings as indicated. "The signature of the owner's spouse is required if the owner is a resident of: Arizona, California, Idaho, Nevada, New Mexico, Washington or Wisconsin." Page 34 of the Prospectus under the heading "Policy Rights - Loan Privileges" after the first sentence. Page 36 of the Prospectus under the heading "Policy Rights - Surrender Privileges" after the first sentence. Page 39 of the Prospectus under the heading "General Provisions - Change of Owner or Beneficiary" and "General Provisions - Assignment." The following is a new paragraph added to page 43 of the Prospectus under the heading "Distribution of the Policies": AFSG will receive the 12b-1 fees assessed against the Fidelity VIP Funds shares held for the Policies as compensation for providing certain shareholder support services. AFSG will also receive an additional fee based on the value of shares of the Fidelity VIP Funds held for the Policies as compensation for providing certain recordkeeping services. The following paragraphs are added to page 45 under the heading "Tax Treatment of Policy Benefits - 3. Distributions from Policies Classified as Modified Endowment Contracts": If a Policy becomes a modified endowment contract ("MEC"), distributions that occur during the Policy year will be taxed as distributions from a MEC. In addition, distributions from a Policy within two years before it becomes a MEC will be taxed in this manner. This means that a distribution from a Policy that is not a MEC at the time when the distribution is made could later become taxable as a distribution from a MEC. Policy Loans. If a loan from a Policy is outstanding when the Policy is canceled or lapses, then the amount of the outstanding indebtedness will be taxed as if it were a distribution. The following is a new section to be added to page 46 of the Prospectus under the heading "Federal Tax Matters": SPECIAL RULES FOR 403(B) ARRANGEMENTS If this Policy is purchased by public school systems and certain tax-exempt organizations for their employees, then the federal, state and estate tax consequences could differ from those stated in the prospectus. A competent tax advisor should be consulted in connection with such purchase. Certain restrictions apply. The Policy must be purchased in connection with a tax-sheltered annuity described in section 403(b) of the Code. Premiums, distributions, and other transactions in connection with the Policy must be administered in coordination with the section 403(b) annuity. 5 The amount of life insurance that may be purchased on behalf of a participant in a 403(b) plan is limited. The current cost of insurance for the net amount at risk is treated under the Code as a "current fringe benefit" and must be included annually in the plan participant's gross income. This cost (generally referred to as the "P.S. 58" cost) is reported to the participant annually. If the plan participant dies while covered by the 403(b) plan and the Policy proceeds are paid to the participant's beneficiary, then the excess of the death benefit over the cash value will not be taxable. However, the cash value will generally be taxable to the extent it exceeds the participant's cost basis in the Policy. Policies owned under these types of plans may be subject to the Employee Retirement Income Security Act of 1974 ("ERISA"), which may impose additional requirements of Policy loans and other Policy provisions. Plan loans must also satisfy tax requirements in order to be treated as non-taxable. Plan loan requirements and provisions may differ from the Policy loan provisions stated in the prospectus. You should consult a qualified advisor regarding ERISA. The fifth paragraph on page 52 of the Prospectus under the heading "APPENDIX A - ILLUSTRATION OF BENEFITS" is changed as follows: The amounts we show for the death benefits, Cash Values and Net Surrender Values take into account (1) the daily charge for assuming mortality and expense risks assessed against each Sub-Account. This charge is equivalent to an annual charge of 0.90% of the average net assets of the Sub-Accounts; (2) estimated daily expenses equivalent to an effective average annual expense level of 0.92% of the Portfolios' average daily net assets; and (3) all applicable premium expense charges and Cash Value charges using the current monthly Policy charge. The 0.92% average Portfolio expense level assumes an equal allocation of amounts among the 29 Sub-Accounts. We used annual audited expenses incurred during 1999 as shown in the tables on pages 1 and 2 of this Supplement to calculate the average annual expense level. Because WRL Great Companies - AmericaSM, WRL Great Companies - TechnologySM and WRL Value Line Aggressive Growth portfolios, Fidelity VIP Equity-Income Portfolio - Service Class 2, Fidelity VIP II Contrafund(R) Portfolio - Service Class 2 and Fidelity VIP III Growth Opportunities Portfolio - - Service Class 2 had not commenced operations as of December 31, 1999, the estimated average annual Portfolio expense level reflects estimated expenses for each of these Portfolios for 2000. During 1999, WRL Management undertook to pay normal operating expenses of certain Portfolios that exceeded a certain stated percentage of those Portfolios' average daily net assets. WRL Management has undertaken until April 30, 2001 to pay expenses to the extent normal operating expenses of certain portfolios of the WRL Fund exceed a stated percentage of the Portfolio's average daily net assets. For details on these expense limits, the amounts reimbursed by WRL Management during 1999, and the expense ratios without reimbursements, see the Portfolio Annual Expense Table at the beginning of this Supplement. Without these waivers and reimbursements, total annual expenses for the Portfolios would have been greater, and the illustrations would have assumed that the assets in the Portfolios were subject to an average annual expense level of 1.53%. Taking into account the assumed charges of 1.82%, the gross annual investment return rates of 0%, 6% and 12% are equivalent to net annual investment return rates of -1.82%, 4.18%, and 10.18%. WRL00192-5/2000 6 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors of Western Reserve Life Assurance Co. of Ohio and Policy Owners of the WRL Series Life Account In our opinion, the accompanying statements of assets and liabilities and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of each of the Subaccounts constituting the WRL Series Life Account (a separate account of Western Reserve Life Assurance Co. of Ohio ("WRL")) at December 31, 1999, the results of each of their operations, the changes in each of their net assets and financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of WRL's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. [GRAPHIC OMITTED] PricewaterhouseCoopers LLP Tampa, Florida February 16, 2000 WRL SERIES LIFE ACCOUNT STATEMENTS OF ASSETS AND LIABILITIES AT DECEMBER 31, 1999 ALL AMOUNTS (EXCEPT PER UNIT AMOUNTS) IN THOUSANDS
WRL WRL WRL WRL J.P. MORGAN AEGON JANUS JANUS MONEY MARKET BOND GROWTH GLOBAL SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ASSETS: Investment in WRL Series Fund, Inc.: Shares ............................................. 58,182 2,559 17,348 12,035 ====== ===== ====== ====== Cost ............................................... $ 58,182 $ 29,390 $ 743,669 $ 257,249 ========= ========= ============ ========== Investment, at net asset value ...................... $ 58,182 $ 27,148 $ 1,353,104 $ 450,848 Transfers receivable from depositor ................. 0 0 853 650 --------- --------- ------------ ---------- Total assets ....................................... 58,182 27,148 1,353,957 451,498 --------- --------- ------------ ---------- LIABILITIES: Accrued expenses .................................... 0 0 0 0 Transfers payable to depositor ...................... 2,112 19 0 0 --------- --------- ------------ ---------- Total liabilities .................................. 2,112 19 0 0 --------- --------- ------------ ---------- Net assets ......................................... $ 56,070 $ 27,129 $ 1,353,957 $ 451,498 ========= ========= ============ ========== NET ASSETS CONSISTS OF: Policy Owners' equity ............................... $ 56,070 $ 27,129 $ 1,353,957 $ 451,498 Depositor's equity .................................. 0 0 0 0 --------- --------- ------------ ---------- Net assets applicable to units outstanding ......... $ 56,070 $ 27,129 $ 1,353,957 $ 451,498 ========= ========= ============ ========== Policy Owners' units ................................ 3,206 1,232 9,293 11,605 Depositor's units ................................... 0 0 0 0 --------- --------- ------------ ---------- Units outstanding .................................. 3,206 1,232 9,293 11,605 ========= ========= ============ ========== Accumulation unit value ............................ $ 17.49 $ 22.01 $ 145.70 $ 38.91 ========= ========= ============ ==========
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF ASSETS AND LIABILITIES AT DECEMBER 31, 1999 ALL AMOUNTS (EXCEPT PER UNIT AMOUNTS) IN THOUSANDS
WRL WRL WRL LKCM VKAM ALGER WRL STRATEGIC EMERGING AGGRESSIVE AEGON TOTAL RETURN GROWTH GROWTH BALANCED SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ASSETS: Investment in WRL Series Fund, Inc.: Shares ............................................. 6,332 13,205 10,626 1,436 ===== ====== ====== ===== Cost ............................................... $ 90,108 $ 343,339 $ 206,459 $ 17,378 ========== ========== ========== ========= Investment, at net asset value ...................... $ 106,667 $ 607,493 $ 353,584 $ 18,182 Transfers receivable from depositor ................. 0 637 594 1 ---------- ---------- ---------- --------- Total assets ....................................... 106,667 608,130 354,178 18,183 ---------- ---------- ---------- --------- LIABILITIES: Accrued expenses .................................... 0 0 0 0 Transfers payable to depositor ...................... 2 0 0 0 ---------- ---------- ---------- --------- Total liabilities .................................. 2 0 0 0 ---------- ---------- ---------- --------- Net assets ......................................... $ 106,665 $ 608,130 $ 354,178 $ 18,183 ========== ========== ========== ========= NET ASSETS CONSISTS OF: Policy Owners' equity ............................... $ 106,665 $ 608,130 $ 354,178 $ 18,183 Depositor's equity .................................. 0 0 0 0 ---------- ---------- ---------- --------- Net assets applicable to units outstanding ......... $ 106,665 $ 608,130 $ 354,178 $ 18,183 ========== ========== ========== ========= Policy Owners' units ................................ 4,674 9,357 7,928 1,186 Depositor's units ................................... 0 0 0 0 ---------- ---------- ---------- --------- Units outstanding .................................. 4,674 9,357 7,928 1,186 ========== ========== ========== ========= Accumulation unit value ............................ $ 22.82 $ 64.99 $ 44.67 $ 15.33 ========== ========== ========== =========
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF ASSETS AND LIABILITIES AT DECEMBER 31, 1999 ALL AMOUNTS (EXCEPT PER UNIT AMOUNTS) IN THOUSANDS
WRL FEDERATED WRL WRL WRL GROWTH & DEAN ASSET C.A.S.E. NWQ INCOME ALLOCATION GROWTH VALUE EQUITY SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ASSETS: Investment in WRL Series Fund, Inc.: Shares ............................................. 1,594 2,746 1,751 2,087 ===== ===== ===== ===== Cost ............................................... $ 19,647 $ 36,698 $ 25,553 $ 28,559 ========= ========= ========= ========= Investment, at net asset value ...................... $ 17,383 $ 33,309 $ 27,504 $ 26,650 Transfers receivable from depositor ................. 6 8 5 28 --------- --------- --------- --------- Total assets ....................................... 17,389 33,317 27,509 26,678 --------- --------- --------- --------- LIABILITIES: Accrued expenses .................................... 0 0 0 0 Transfers payable to depositor ...................... 0 0 0 0 --------- --------- --------- --------- Total liabilities .................................. 0 0 0 0 --------- --------- --------- --------- Net assets ......................................... $ 17,389 $ 33,317 $ 27,509 $ 26,678 ========= ========= ========= ========= NET ASSETS CONSISTS OF: Policy Owners' equity ............................... $ 17,389 $ 33,317 $ 27,509 $ 26,678 Depositor's equity .................................. 0 0 0 0 --------- --------- --------- --------- Net assets applicable to units outstanding ......... $ 17,389 $ 33,317 $ 27,509 $ 26,678 ========= ========= ========= ========= Policy Owners' units ................................ 1,117 2,128 1,657 1,895 Depositor's units ................................... 0 0 0 0 --------- --------- --------- --------- Units outstanding .................................. 1,117 2,128 1,657 1,895 ========= ========= ========= ========= Accumulation unit value ............................ $ 15.57 $ 15.66 $ 16.60 $ 14.08 ========= ========= ========= =========
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF ASSETS AND LIABILITIES AT DECEMBER 31, 1999 ALL AMOUNTS (EXCEPT PER UNIT AMOUNTS) IN THOUSANDS
WRL GE/SCOTTISH WRL EQUITABLE WRL WRL J.P. MORGAN INTERNATIONAL GE THIRD AVENUE REAL ESTATE EQUITY U.S. EQUITY VALUE SECURITIES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ASSETS: Investment in WRL Series Fund, Inc.: Shares ............................................. 489 1,669 329 78 === ===== === == Cost ............................................... $ 6,058 $ 24,322 $ 3,045 $ 674 ======== ========= ======== ======= Investment, at net asset value ...................... $ 6,985 $ 26,359 $ 3,435 $ 632 Transfers receivable from depositor ................. 28 57 0 0 -------- --------- -------- ------- Total assets ....................................... 7,013 26,416 3,435 632 -------- --------- -------- ------- LIABILITIES: Accrued expenses .................................... 0 0 0 0 Transfers payable to depositor ...................... 0 0 24 5 -------- --------- -------- ------- Total liabilities .................................. 0 0 24 5 -------- --------- -------- ------- Net assets ......................................... $ 7,013 $ 26,416 $ 3,411 $ 627 ======== ========= ======== ======= NET ASSETS CONSISTS OF: Policy Owners' equity ............................... $ 7,013 $ 26,416 $ 3,411 $ 304 Depositor's equity .................................. 0 0 0 323 -------- --------- -------- ------- Net assets applicable to units outstanding ......... $ 7,013 $ 26,416 $ 3,411 $ 627 ======== ========= ======== ======= Policy Owners' units ................................ 475 1,468 322 38 Depositor's units ................................... 0 0 0 40 -------- --------- -------- ------- Units outstanding .................................. 475 1,468 322 78 ======== ========= ======== ======= Accumulation unit value ............................ $ 14.76 $ 17.99 $ 10.59 $ 8.06 ======== ========= ======== =======
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF ASSETS AND LIABILITIES AT DECEMBER 31, 1999 ALL AMOUNTS (EXCEPT PER UNIT AMOUNTS) IN THOUSANDS
WRL WRL WRL WRL GOLDMAN SACHS GOLDMAN SACHS T. ROWE PRICE T. ROWE PRICE GROWTH SMALL CAP DIVIDEND GROWTH SMALL CAP SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ASSETS: Investment in WRL Series Fund, Inc.: Shares ............................................. 83 31 53 69 == == == == Cost ............................................... $ 858 $ 325 $ 505 $ 784 ======== ======== ======= ======== Investment, at net asset value ...................... $ 972 $ 346 $ 491 $ 924 Transfers receivable from depositor ................. 5 0 10 1 -------- -------- ------- -------- Total assets ....................................... 977 346 501 925 -------- -------- ------- -------- LIABILITIES: Accrued expenses .................................... 0 0 0 0 Transfers payable to depositor ...................... 0 2 0 0 -------- -------- ------- -------- Total liabilities .................................. 0 2 0 0 -------- -------- ------- -------- Net assets ......................................... $ 977 $ 344 $ 501 $ 925 ======== ======== ======= ======== NET ASSETS CONSISTS OF: Policy Owners' equity ............................... $ 949 $ 317 $ 478 $ 894 Depositor's equity .................................. 28 27 23 31 -------- -------- ------- -------- Net assets applicable to units outstanding ......... $ 977 $ 344 $ 501 $ 925 ======== ======== ======= ======== Policy Owners' units ................................ 84 28 52 72 Depositor's units ................................... 3 3 3 3 -------- -------- ------- -------- Units outstanding .................................. 87 31 55 75 ======== ======== ======= ======== Accumulation unit value ............................ $ 11.29 $ 10.92 $ 9.16 $ 12.31 ======== ======== ======= ========
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF ASSETS AND LIABILITIES AT DECEMBER 31, 1999 ALL AMOUNTS (EXCEPT PER UNIT AMOUNTS) IN THOUSANDS
WRL WRL WRL SALOMON PILGRIM BAXTER DREYFUS ALL CAP MID CAP GROWTH MID CAP SUBACCOUNT SUBACCOUNT SUBACCOUNT ASSETS: Investment in WRL Series Fund, Inc.: Shares ......................................... 34 285 30 == === == Cost ........................................... $ 365 $ 3,873 $ 298 ======== ======== ======== Investment, at net asset value .................. $ 383 $ 5,051 $ 322 Transfers receivable from depositor ............. 0 14 15 -------- -------- -------- Total assets ................................... 383 5,065 337 -------- -------- -------- LIABILITIES: Accrued expenses ................................ 0 0 0 Transfers payable to depositor .................. 0 0 0 -------- -------- -------- Total liabilities .............................. 0 0 0 -------- -------- -------- Net assets ..................................... $ 383 $ 5,065 $ 337 ======== ======== ======== NET ASSETS CONSISTS OF: Policy Owners' equity ........................... $ 356 $ 5,065 $ 312 Depositor's equity .............................. 27 0 25 -------- -------- -------- Net assets applicable to units outstanding ..... $ 383 $ 5,065 $ 337 ======== ======== ======== Policy Owners' units ............................ 33 317 30 Depositor's units ............................... 3 0 3 -------- -------- -------- Units outstanding .............................. 36 317 33 ======== ======== ======== Accumulation unit value ........................ $ 10.70 $ 15.98 $ 10.14 ======== ======== ========
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 ALL AMOUNTS IN THOUSANDS
WRL WRL WRL WRL J.P. MORGAN AEGON JANUS JANUS MONEY MARKET BOND GROWTH GLOBAL SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT INVESTMENT INCOME: Dividend income ........................................... $ 1,813 $ 1,562 $ 19,913 $ 0 Capital gain distributions ................................ 0 0 215,100 29,152 ------- -------- --------- --------- Total investment income .................................. 1,813 1,562 235,013 29,152 EXPENSES: Mortality and expense risk ................................ 339 233 8,918 2,614 ------- -------- --------- --------- Net investment income (loss) ............................. 1,474 1,329 226,095 26,538 ------- -------- --------- --------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on investment securities ......... 0 317 26,760 3,824 Change in unrealized appreciation (depreciation) .......... 0 (2,644) 235,401 149,719 ------- -------- --------- --------- Net gain (loss) on investment securities ................. 0 (2,327) 262,161 153,543 ------- -------- --------- --------- Net increase (decrease) in net assets resulting from operations ....................................... $ 1,474 $ (998) $ 488,256 $ 180,081 ======= ======== ========= =========
WRL WRL WRL LKCM VKAM ALGER WRL STRATEGIC EMERGING AGGRESSIVE AEGON TOTAL RETURN GROWTH GROWTH BALANCED SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT INVESTMENT INCOME: Dividend income ........................................... $ 2,159 $ 2,813 $ 15,251 $ 363 Capital gain distributions ................................ 6,826 82,040 22,784 0 -------- --------- --------- ------ Total investment income .................................. 8,985 84,853 38,035 363 EXPENSES: Mortality and expense risk ................................ 913 3,146 2,069 150 -------- --------- --------- ------ Net investment income (loss) ............................. 8,072 81,707 35,966 213 -------- --------- --------- ------ REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on investment securities ......... 3,286 39,266 5,348 292 Change in unrealized appreciation (depreciation) .......... (461) 178,458 96,140 (187) -------- --------- --------- ------ Net gain (loss) on investment securities ................. 2,825 217,724 101,488 105 -------- --------- --------- ------ Net increase (decrease) in net assets resulting from operations ....................................... $ 10,897 $ 299,431 $ 137,454 $ 318 ======== ========= ========= ======
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 ALL AMOUNTS IN THOUSANDS
WRL FEDERATED WRL WRL WRL GROWTH & DEAN ASSET C.A.S.E. NWQ INCOME ALLOCATION GROWTH VALUE EQUITY SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT INVESTMENT INCOME: Dividend income ........................................... $ 1,109 $ 1,118 $ 2,613 $ 219 Capital gain distributions ................................ 132 178 0 400 -------- --------- ------- ------- Total investment income .................................. 1,241 1,296 2,613 619 EXPENSES: Mortality and expense risk ................................ 150 342 211 240 -------- --------- ------- ------- Net investment income (loss) ............................. 1,091 954 2,402 379 -------- --------- ------- ------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on investment securities ......... 9 948 427 307 Change in unrealized appreciation (depreciation) .......... (2,087) (4,362) 3,473 850 -------- --------- ------- ------- Net gain (loss) on investment securities ................. (2,078) (3,414) 3,900 1,157 -------- --------- ------- ------- Net increase (decrease) in net assets resulting from operations ....................................... $ (987) $ (2,460) $ 6,302 $ 1,536 ======== ========= ======= =======
WRL GE/SCOTTISH WRL WRL EQUITABLE WRL THIRD J.P. MORGAN INTERNATIONAL GE AVENUE REAL ESTATE EQUITY U.S. EQUITY VALUE SECURITIES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT INVESTMENT INCOME: Dividend income ........................................... $ 24 $ 786 $ 89 $ 11 Capital gain distributions ................................ 358 1,131 0 0 ------- ------- ------ ------ Total investment income .................................. 382 1,917 89 11 EXPENSES: Mortality and expense risk ................................ 57 187 28 5 ------- ------- ------ ------ Net investment income (loss) ............................. 325 1,730 61 6 ------- ------- ------ ------ REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on investment securities ......... 296 575 (126) (75) Change in unrealized appreciation (depreciation) .......... 808 969 491 34 ------- ------- ------ ------ Net gain (loss) on investment securities ................. 1,104 1,544 365 (41) ------- ------- ------ ------ Net increase (decrease) in net assets resulting from operations ....................................... $ 1,429 $ 3,274 $ 426 $ (35) ======= ======= ====== ======
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 ALL AMOUNTS IN THOUSANDS
WRL WRL WRL WRL GOLDMAN SACHS GOLDMAN SACHS T. ROWE PRICE T. ROWE PRICE GROWTH SMALL CAP DIVIDEND GROWTH SMALL CAP SUBACCOUNT(1) SUBACCOUNT(1) SUBACCOUNT(1) SUBACCOUNT(1) INVESTMENT INCOME: Dividend income ........................................... $ 0 $ 15 $ 0 $ 29 Capital gain distributions ................................ 0 0 0 0 ----- ----- ----- ----- Total investment income .................................. 0 15 0 29 EXPENSES: Mortality and expense risk ................................ 2 1 1 3 ----- ----- ----- ----- Net investment income (loss) ............................. (2) 14 (1) 26 ------- ----- -------- ----- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on investment securities ......... (4) (2) (3) 22 Change in unrealized appreciation (depreciation) .......... 114 22 (14) 140 ------ ------ ------- ----- Net gain (loss) on investment securities ................. 110 20 (17) 162 ------ ------ ------- ----- Net increase (decrease) in net assets resulting from operations ....................................... $ 108 $ 34 $ (18) $ 188 ====== ====== ======= =====
WRL WRL WRL SALOMON PILGRIM BAXTER DREYFUS ALL CAP MID CAP GROWTH MID CAP SUBACCOUNT(1) SUBACCOUNT(1) SUBACCOUNT(1) INVESTMENT INCOME: Dividend income ..................................... $ 12 $ 13 $ 0 Capital gain distributions .......................... 0 0 0 ------ ------ ----- Total investment income ............................ 12 13 0 EXPENSES: Mortality and expense risk .......................... 1 8 1 ------ ------ ----- Net investment income (loss) ....................... 11 5 (1) ------ ------ ------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on investment securities ... (3) 91 (8) Change in unrealized appreciation (depreciation) .... 18 1,177 24 ------- ------ ------ Net gain (loss) on investment securities ........... 15 1,268 16 ------- ------ ------ Net increase (decrease) in net assets resulting from operations ................................. $ 26 $1,273 $ 15 ======= ====== ======
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED ALL AMOUNTS IN THOUSANDS
WRL WRL J.P. MORGAN AEGON MONEY MARKET BOND SUBACCOUNT SUBACCOUNT ------------------------- ------------------------ DECEMBER 31, DECEMBER 31, ------------------------- ------------------------ 1999 1998 1999 1998 ------------ ------------ ------------ ----------- OPERATIONS: Net investment income (loss) ..................... $ 1,474 $ 919 $ 1,329 $ 1,002 Net gain (loss) on investment securities ......... 0 0 (2,327) 713 ---------- ---------- -------- -------- Net increase (decrease) in net assets resulting from operations ....................... 1,474 919 (998) 1,715 ---------- ---------- -------- -------- CAPITAL UNIT TRANSACTIONS: Proceeds from units sold (transferred) ........... 38,977 12,763 7,560 9,472 ---------- ---------- -------- -------- Less cost of units redeemed: Administrative charges .......................... 3,050 3,123 2,538 2,292 Policy loans .................................... 1,775 1,163 954 594 Surrender benefits .............................. 4,017 1,250 846 865 Death benefits .................................. 115 10 29 159 ---------- ---------- -------- -------- 8,957 5,546 4,367 3,910 ---------- ---------- -------- -------- Increase (decrease) in net assets from capital unit transactions ...................... 30,020 7,217 3,193 5,562 ---------- ---------- -------- -------- Net increase (decrease) in net assets ........... 31,494 8,136 2,195 7,277 Depositor's equity contribution (net redemption) ................................ 0 0 0 0 NET ASSETS: Beginning of year ................................ 24,576 16,440 24,934 17,657 ---------- ---------- -------- -------- End of year ...................................... $ 56,070 $ 24,576 $ 27,129 $ 24,934 ========== ========== ======== ======== UNIT ACTIVITY: Units outstanding - beginning of year ............ 1,460 1,020 1,090 836 Units issued ..................................... 18,474 11,339 883 1,030 Units redeemed ................................... (16,728) (10,899) (741) (776) ---------- ---------- -------- -------- Units outstanding - end of year .................. 3,206 1,460 1,232 1,090 ========== ========== ======== ======== WRL JANUS GROWTH SUBACCOUNT --------------------------- DECEMBER 31, --------------------------- 1999 1998 -------------- ------------ OPERATIONS: Net investment income (loss) ..................... $ 226,095 $ 1,103 Net gain (loss) on investment securities ......... 262,161 295,459 ----------- --------- Net increase (decrease) in net assets resulting from operations ....................... 488,256 296,562 ----------- --------- CAPITAL UNIT TRANSACTIONS: Proceeds from units sold (transferred) ........... 192,993 140,684 ----------- --------- Less cost of units redeemed: Administrative charges .......................... 57,685 44,910 Policy loans .................................... 33,172 18,083 Surrender benefits .............................. 32,554 22,312 Death benefits .................................. 1,908 4,185 ----------- --------- 125,319 89,490 ----------- --------- Increase (decrease) in net assets from capital unit transactions ...................... 67,674 51,194 ----------- --------- Net increase (decrease) in net assets ........... 555,930 347,756 Depositor's equity contribution (net redemption) ................................ 0 0 NET ASSETS: Beginning of year ................................ 798,027 450,271 ----------- --------- End of year ...................................... $ 1,353,957 $ 798,027 =========== ========= UNIT ACTIVITY: Units outstanding - beginning of year ............ 8,668 7,972 Units issued ..................................... 2,854 2,967 Units redeemed ................................... (2,229) (2,271) ----------- --------- Units outstanding - end of year .................. 9,293 8,668 =========== =========
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED ALL AMOUNTS IN THOUSANDS
WRL WRL LKCM WRL JANUS STRATEGIC VKAM GLOBAL TOTAL RETURN EMERGING GROWTH SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------------- ------------------------- ------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, ------------------------- ------------------------- ------------------------- 1999 1998 1999 1998 1999 1998 ------------ ------------ ------------- ----------- ------------ ------------ OPERATIONS: Net investment income (loss) ..................... $ 26,538 $ 7,425 $ 8,072 $ 3,284 $ 81,707 $ 6,894 Net gain (loss) on investment securities ......... 153,543 38,427 2,825 4,347 217,724 59,514 --------- --------- --------- -------- --------- --------- Net increase (decrease) in net assets resulting from operations ....................... 180,081 45,852 10,897 7,631 299,431 66,408 --------- --------- --------- -------- --------- --------- CAPITAL UNIT TRANSACTIONS: Proceeds from units sold (transferred) ........... 81,308 72,962 11,792 24,191 94,168 64,824 --------- --------- --------- -------- --------- --------- Less cost of units redeemed: Administrative charges .......................... 25,132 19,369 8,436 7,696 25,202 19,612 Policy loans .................................... 9,284 4,953 3,000 2,319 11,395 5,601 Surrender benefits .............................. 8,537 5,662 3,136 2,587 11,025 7,688 Death benefits .................................. 194 591 378 1,047 512 368 --------- --------- --------- -------- --------- --------- 43,147 30,575 14,950 13,649 48,134 33,269 --------- --------- --------- -------- --------- --------- Increase (decrease) in net assets from capital unit transactions ...................... 38,161 42,387 (3,158) 10,542 46,034 31,555 --------- --------- --------- -------- --------- --------- Net increase (decrease) in net assets ........... 218,242 88,239 7,739 18,173 345,465 97,963 Depositor's equity contribution (net redemption) ................................ 0 0 0 0 0 0 NET ASSETS: Beginning of year ................................ 233,256 145,017 98,926 80,753 262,665 164,702 --------- --------- --------- -------- --------- --------- End of year ...................................... $ 451,498 $ 233,256 $ 106,665 $ 98,926 $ 608,130 $ 262,665 ========= ========= ========= ======== ========= ========= UNIT ACTIVITY: Units outstanding - beginning of year ............ 10,167 8,145 4,814 4,270 8,218 7,013 Units issued ..................................... 4,823 5,610 1,538 1,946 4,977 4,099 Units redeemed ................................... (3,385) (3,588) (1,678) (1,402) (3,838) (2,894) --------- --------- --------- -------- --------- --------- Units outstanding - end of year .................. 11,605 10,167 4,674 4,814 9,357 8,218 ========= ========= ========= ======== ========= =========
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED ALL AMOUNTS IN THOUSANDS
WRL WRL WRL ALGER AEGON FEDERATED AGGRESSIVE GROWTH BALANCED GROWTH & INCOME SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------------- ----------------------- ------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, ------------------------- ----------------------- ------------------------- 1999 1998 1999 1998 1999 1998 ------------ ------------ ----------- ----------- ------------ ------------ OPERATIONS: Net investment income (loss) ..................... $ 35,966 $ 7,851 $ 213 $ 227 $ 1,091 $ 644 Net gain (loss) on investment securities ......... 101,488 44,348 105 576 (2,078) (269) --------- --------- -------- -------- -------- -------- Net increase (decrease) in net assets resulting from operations ....................... 137,454 52,199 318 803 (987) 375 --------- --------- -------- -------- -------- -------- CAPITAL UNIT TRANSACTIONS: Proceeds from units sold (transferred) ........... 74,699 53,159 5,997 5,658 5,627 8,963 --------- --------- -------- -------- -------- -------- Less cost of units redeemed: Administrative charges .......................... 19,544 13,960 1,931 1,423 2,355 1,633 Policy loans .................................... 8,193 3,522 429 279 346 218 Surrender benefits .............................. 7,977 4,423 626 596 542 431 Death benefits .................................. 118 248 10 15 55 72 --------- --------- -------- -------- -------- -------- 35,832 22,153 2,996 2,313 3,298 2,354 --------- --------- -------- -------- -------- -------- Increase (decrease) in net assets from capital unit transactions ...................... 38,867 31,006 3,001 3,345 2,329 6,609 --------- --------- -------- -------- -------- -------- Net increase (decrease) in net assets ........... 176,321 83,205 3,319 4,148 1,342 6,984 Depositor's equity contribution (net redemption) ................................ 0 0 0 0 0 0 NET ASSETS: Beginning of year ................................ 177,857 94,652 14,864 10,716 16,047 9,063 --------- --------- -------- -------- -------- -------- End of year ...................................... $ 354,178 $ 177,857 $ 18,183 $ 14,864 $ 17,389 $ 16,047 ========= ========= ======== ======== ======== ======== UNIT ACTIVITY: Units outstanding - beginning of year ............ 6,669 5,230 990 756 976 563 Units issued ..................................... 3,640 3,797 637 578 714 966 Units redeemed ................................... (2,381) (2,358) (441) (344) (573) (553) --------- --------- -------- -------- -------- -------- Units outstanding - end of year .................. 7,928 6,669 1,186 990 1,117 976 ========= ========= ======== ======== ======== ========
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED ALL AMOUNTS IN THOUSANDS
WRL WRL WRL DEAN C.A.S.E. NWQ ASSET ALLOCATION GROWTH VALUE EQUITY SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------------- ------------------------ ------------------------ DECEMBER 31, DECEMBER 31, DECEMBER 31, ------------------------- ------------------------ ------------------------ 1999 1998 1999 1998 1999 1998 ------------ ------------ ----------- ------------ ------------ ----------- OPERATIONS: Net investment income (loss) ..................... $ 954 $ 3,419 $ 2,402 $ 1,475 $ 379 $ 2,021 Net gain (loss) on investment securities ......... (3,414) (1,087) 3,900 (1,114) 1,157 (4,683) -------- -------- -------- -------- -------- -------- Net increase (decrease) in net assets resulting from operations ....................... (2,460) 2,332 6,302 361 1,536 (2,662) -------- -------- -------- -------- -------- -------- CAPITAL UNIT TRANSACTIONS: Proceeds from units sold (transferred) ........... 1,729 13,703 7,781 8,731 3,283 6,086 -------- -------- -------- -------- -------- -------- Less cost of units redeemed: Administrative charges .......................... 3,875 3,421 2,946 2,433 2,874 2,846 Policy loans .................................... 991 748 668 520 713 643 Surrender benefits .............................. 901 925 678 295 605 401 Death benefits .................................. 89 160 12 60 32 165 -------- -------- -------- -------- -------- -------- 5,856 5,254 4,304 3,308 4,224 4,055 -------- -------- -------- -------- -------- -------- Increase (decrease) in net assets from capital unit transactions ...................... (4,127) 8,449 3,477 5,423 (941) 2,031 -------- -------- -------- -------- -------- -------- Net increase (decrease) in net assets ........... (6,587) 10,781 9,779 5,784 595 (631) Depositor's equity contribution (net redemption) ................................ 0 0 0 0 0 0 NET ASSETS: Beginning of year ................................ 39,904 29,123 17,730 11,946 26,083 26,714 -------- -------- -------- -------- -------- -------- End of year ...................................... $ 33,317 $ 39,904 $ 27,509 $ 17,730 $ 26,678 $ 26,083 ======== ======== ======== ======== ======== ======== UNIT ACTIVITY: Units outstanding - beginning of year ............ 2,383 1,867 1,417 969 1,982 1,916 Units issued ..................................... 937 1,377 1,347 1,317 1,296 1,748 Units redeemed ................................... (1,192) (861) (1,107) (869) (1,383) (1,682) -------- -------- -------- -------- -------- -------- Units outstanding - end of year .................. 2,128 2,383 1,657 1,417 1,895 1,982 ======== ======== ======== ======== ======== ========
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED ALL AMOUNTS IN THOUSANDS
WRL WRL WRL GE/SCOTTISH EQUITABLE GE THIRD AVENUE INTERNATIONAL EQUITY U.S. EQUITY VALUE SUBACCOUNT SUBACCOUNT SUBACCOUNT ----------------------- ----------------------- ----------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, ----------------------- ----------------------- ----------------------- 1999 1998 1999 1998 1999 1998(1) ----------- ----------- ----------- ----------- ----------- ----------- OPERATIONS: Net investment income (loss) ..................... $ 325 $ (32) $ 1,730 $ 434 $ 61 $ (11) Net gain (loss) on investment securities ......... 1,104 369 1,544 1,411 365 (142) ------- ------- -------- -------- ------- ------- Net increase (decrease) in net assets resulting from operations ....................... 1,429 337 3,274 1,845 426 (153) ------- ------- -------- -------- ------- ------- CAPITAL UNIT TRANSACTIONS: Proceeds from units sold (transferred) ........... 761 3,972 12,169 10,178 730 2,932 ------- ------- -------- -------- ------- ------- Less cost of units redeemed: Administrative charges .......................... 644 433 2,237 862 218 138 Policy loans .................................... 101 196 422 159 52 8 Surrender benefits .............................. 258 35 444 113 80 26 Death benefits .................................. 1 107 8 63 3 0 ------- ------- -------- -------- ------- ------- 1,004 771 3,111 1,197 353 172 ------- ------- -------- -------- ------- ------- Increase (decrease) in net assets from capital unit transactions ...................... (243) 3,201 9,058 8,981 377 2,760 ------- ------- -------- -------- ------- ------- Net increase (decrease) in net assets ........... 1,186 3,538 12,332 10,826 803 2,607 Depositor's equity contribution (net redemption) ................................ 0 0 0 0 (199) 200 NET ASSETS: Beginning of year ................................ 5,827 2,289 14,084 3,258 2,807 0 ------- ------- -------- -------- ------- ------- End of year ...................................... $ 7,013 $ 5,827 $ 26,416 $ 14,084 $ 3,411 $ 2,807 ======= ======= ======== ======== ======= ======= UNIT ACTIVITY: Units outstanding - beginning of year ............ 489 215 919 259 304 0 Units issued ..................................... 672 767 1,292 1,266 258 495 Units redeemed ................................... (686) (493) (743) (606) (240) (191) ------- ------- -------- -------- ------- ------- Units outstanding - end of year .................. 475 489 1,468 919 322 304 ======= ======= ======== ======== ======= =======
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED ALL AMOUNTS IN THOUSANDS
WRL WRL WRL WRL J.P. MORGAN GOLDMAN SACHS GOLDMAN SACHS T. ROWE PRICE REAL ESTATE SECURITIES GROWTH SMALL CAP DIVIDEND GROWTH SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ---------------------- --------------- --------------- ---------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, ---------------------- --------------- --------------- ---------------- 1999 1998(1) 1999(1) 1999(1) 1999(1) -------- ------------- --------------- --------------- ---------------- OPERATIONS: Net investment income (loss) ..................... $ 6 $ (4) $ (2) $ 14 $ (1) Net gain (loss) on investment securities ......... (41) (112) 110 20 (17) ----- ------ ------ ------ ---- Net increase (decrease) in net assets resulting from operations ....................... (35) (116) 108 34 (18) ----- ------ ------ ------ ---- CAPITAL UNIT TRANSACTIONS: Proceeds from units sold (transferred) ........... (26) 472 871 295 499 ----- ------ ------ ------ ---- Less cost of units redeemed: Administrative charges .......................... 19 4 18 5 2 Policy loans .................................... 0 43 2 5 0 Surrender benefits .............................. 1 0 7 0 3 Death benefits .................................. 1 0 0 0 0 ----- ------ ------ ------ ---- 21 47 27 10 5 ----- ------ ------ ------ ---- Increase (decrease) in net assets from capital unit transactions ...................... (47) 425 844 285 494 ----- ------ ------ ------ ---- Net increase (decrease) in net assets ........... (82) 309 952 319 476 Depositor's equity contribution (net redemption) ................................ 0 400 25 25 25 NET ASSETS: Beginning of year ................................ 709 0 0 0 0 ----- ------ ------ ------ ---- End of year ...................................... $ 627 $ 709 $ 977 $ 344 $ 501 ===== ====== ====== ====== ===== UNIT ACTIVITY: Units outstanding - beginning of year ............ 84 0 0 0 0 Units issued ..................................... 67 113 106 41 65 Units redeemed ................................... (73) (29) (19) (10) (10) ----- ------ ------ ------ ----- Units outstanding - end of year .................. 78 84 87 31 55 ===== ====== ====== ====== =====
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED ALL AMOUNTS IN THOUSANDS
WRL WRL WRL WRL T. ROWE PRICE SALOMON PILGRIM BAXTER DREYFUS SMALL CAP ALL CAP MID CAP GROWTH MID CAP SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT --------------- -------------- ---------------- ------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, --------------- -------------- ---------------- ------------- 1999(1) 1999(1) 1999(1) 1999(1) --------------- -------------- ---------------- ------------- OPERATIONS: Net investment income (loss) ..................... $ 26 $ 11 $ 5 $ (1) Net gain (loss) on investment securities ......... 162 15 1,268 16 ------ ------ ------ ---- Net increase (decrease) in net assets resulting from operations ....................... 188 26 1,273 15 ------ ------ ------ ---- CAPITAL UNIT TRANSACTIONS: Proceeds from units sold (transferred) ........... 727 344 3,885 297 ------ ------ ------ ---- Less cost of units redeemed: Administrative charges .......................... 15 9 37 0 Policy loans .................................... 0 3 18 0 Surrender benefits .............................. 0 0 30 0 Death benefits .................................. 0 0 0 0 ------ ------ ------ ---- 15 12 85 0 ------ ------ ------ ---- Increase (decrease) in net assets from capital unit transactions ...................... 712 332 3,800 297 ------ ------ ------ ---- Net increase (decrease) in net assets ........... 900 358 5,073 312 Depositor's equity contribution (net redemption) ................................ 25 25 (8) 25 NET ASSETS: Beginning of year ................................ 0 0 0 0 ------ ------ -------- ---- End of year ...................................... $ 925 $ 383 $ 5,065 $ 337 ====== ====== ======== ===== UNIT ACTIVITY: Units outstanding - beginning of year ............ 0 0 0 0 Units issued ..................................... 161 58 412 52 Units redeemed ................................... (86) (22) (95) (19) ------ ------ -------- ----- Units outstanding - end of year .................. 75 36 317 33 ====== ====== ======== =====
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED
WRL J.P. MORGAN MONEY MARKET SUBACCOUNT --------------------------------------------------------------------- DECEMBER 31, --------------------------------------------------------------------- 1999 1998 1997 1996 1995 -------------- ------------- ------------- ------------- ------------ Accumulation unit value, beginning of year ......... $ 16.83 $ 16.13 $ 15.45 $ 14.83 $ 14.19 Income from operations: Net investment income (loss) ..................... 0.66 0.70 0.68 0.62 0.64 Net realized and unrealized gain (loss) on investment ...................................... 0.00 0.00 0.00 0.00 0.00 -------- -------- -------- -------- -------- Net income (loss) from operations ............... 0.66 0.70 0.68 0.62 0.64 -------- -------- -------- -------- -------- Accumulation unit value, end of year ............... $ 17.49 $ 16.83 $ 16.13 $ 15.45 $ 14.83 ======== ======== ======== ======== ======== Total return ....................................... 3.92 % 4.36 % 4.37 % 4.17 % 4.49 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 56,070 $ 24,576 $ 16,440 $ 12,740 $ 10,759 Ratio of net investment income (loss) to average net assets ....................................... 3.87 % 4.24 % 4.28 % 4.07 % 4.37 %
WRL AEGON BOND SUBACCOUNT ------------------------------------------------------------------------- DECEMBER 31, ------------------------------------------------------------------------- 1999 1998 1997 1996 1995 --------------- ------------- ------------- -------------- -------------- Accumulation unit value, beginning of year ......... $ 22.89 $ 21.12 $ 19.53 $ 19.67 $ 16.14 Income from operations: Net investment income (loss) ..................... 1.13 1.01 1.01 0.99 1.05 Net realized and unrealized gain (loss) on investment ...................................... ( 2.01) 0.76 0.58 ( 1.13) 2.48 --------- -------- -------- -------- -------- Net income (loss) from operations ............... ( 0.88) 1.77 1.59 ( 0.14) 3.53 --------- -------- -------- -------- -------- Accumulation unit value, end of year ............... $ 22.01 $ 22.89 $ 21.12 $ 19.53 $ 19.67 ========= ======== ======== ======== ======== Total return ....................................... ( 3.81)% 8.34 % 8.18 % ( 0.75)% 21.81 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 27,129 $ 24,934 $ 17,657 $ 11,585 $ 10,066 Ratio of net investment income (loss) to average net assets ....................................... 5.10 % 4.58 % 5.06 % 5.34 % 5.80 %
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED
WRL JANUS GROWTH SUBACCOUNT ---------------------------------------------------------------------------- DECEMBER 31, ---------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ---------------- -------------- -------------- -------------- -------------- Accumulation unit value, beginning of year ......... $ 92.07 $ 56.48 $ 48.48 $ 41.47 $ 28.44 Income from operations: Net investment income (loss) ..................... 25.03 0.13 5.83 2.88 3.89 Net realized and unrealized gain (loss) on investment ...................................... 28.60 35.46 2.17 4.13 9.14 ---------- -------- -------- -------- -------- Net income (loss) from operations ............... 53.63 35.59 8.00 7.01 13.03 ---------- -------- -------- -------- -------- Accumulation unit value, end of year ............... $ 145.70 $ 92.07 $ 56.48 $ 48.48 $ 41.47 ========== ======== ======== ======== ======== Total return ....................................... 58.25 % 63.01 % 16.50 % 16.91 % 45.81 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 1,353,957 $ 798,027 $ 450,271 $ 349,491 $ 262,467 Ratio of net investment income (loss) to average net assets ....................................... 22.67 % 0.19 % 10.84 % 6.41 % 11.05 %
WRL JANUS GLOBAL SUBACCOUNT --------------------------------------------------------------------------- DECEMBER 31, --------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ---------------- -------------- -------------- -------------- ------------- Accumulation unit value, beginning of year ......... $ 22.94 $ 17.80 $ 15.13 $ 11.95 $ 9.80 Income from operations: Net investment income (loss) ..................... 2.44 0.82 2.30 1.50 0.45 Net realized and unrealized gain (loss) on investment ...................................... 13.53 4.32 0.37 1.68 1.70 ---------- -------- -------- -------- -------- Net income (loss) from operations ............... 15.97 5.14 2.67 3.18 2.15 ---------- -------- -------- -------- -------- Accumulation unit value, end of year ............... $ 38.91 $ 22.94 $ 17.80 $ 15.13 $ 11.95 ========== ======== ======== ======== ======== Total return ....................................... 69.58 % 28.86 % 17.69 % 26.60 % 21.96 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 451,498 $ 233,256 $ 145,017 $ 83,159 $ 37,049 Ratio of net investment income (loss) to average net assets ....................................... 9.07 % 3.92 % 13.39 % 11.09 % 4.25 %
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED
WRL LKCM STRATEGIC TOTAL RETURN SUBACCOUNT ------------------------------------------------------------------------ DECEMBER 31, ------------------------------------------------------------------------ 1999 1998 1997 1996 1995 -------------- -------------- -------------- -------------- ------------ Accumulation unit value, beginning of year ......... $ 20.55 $ 18.91 $ 15.66 $ 13.74 $ 11.12 Income from operations: Net investment income (loss) ..................... 1.68 0.71 1.56 0.82 0.68 Net realized and unrealized gain (loss) on investment ...................................... 0.59 0.93 1.69 1.10 1.94 -------- -------- -------- -------- -------- Net income (loss) from operations ............... 2.27 1.64 3.25 1.92 2.62 -------- -------- -------- -------- -------- Accumulation unit value, end of year ............... $ 22.82 $ 20.55 $ 18.91 $ 15.66 $ 13.74 ======== ======== ======== ======== ======== Total return ....................................... 11.07 % 8.66 % 20.77 % 13.97 % 23.55 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 106,665 $ 98,926 $ 80,753 $ 55,900 $ 39,648 Ratio of net investment income (loss) to average net assets ....................................... 7.93 % 3.67 % 8.89 % 5.76 % 5.47 %
WRL VKAM EMERGING GROWTH SUBACCOUNT ------------------------------------------------------------------------ DECEMBER 31, ------------------------------------------------------------------------ 1999 1998 1997 1996 1995 -------------- -------------- -------------- -------------- ------------ Accumulation unit value, beginning of year ......... $ 31.96 $ 23.48 $ 19.51 $ 16.56 $ 11.38 Income from operations: Net investment income (loss) ..................... 9.32 0.91 2.20 0.82 0.65 Net realized and unrealized gain (loss) on investment ...................................... 23.71 7.57 1.77 2.13 4.53 -------- -------- -------- -------- -------- Net income (loss) from operations ............... 33.03 8.48 3.97 2.95 5.18 -------- -------- -------- -------- -------- Accumulation unit value, end of year ............... $ 64.99 $ 31.96 $ 23.48 $ 19.51 $ 16.56 ======== ======== ======== ======== ======== Total return ....................................... 103.33 % 36.11 % 20.37 % 17.82 % 45.49 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 608,130 $ 262,665 $ 164,702 $ 107,925 $ 67,905 Ratio of net investment income (loss) to average net assets ....................................... 23.19 % 3.44 % 10.18 % 4.51 % 4.66 %
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED
WRL ALGER AGGRESSIVE GROWTH SUBACCOUNT ----------------------------------------------------------------------- DECEMBER 31, ----------------------------------------------------------------------- 1999 1998 1997 1996 1995 -------------- -------------- ------------- ------------- ------------- Accumulation unit value, beginning of year ......... $ 26.67 $ 18.10 $ 14.70 $ 13.43 $ 9.82 Income from operations: Net investment income (loss) ..................... 4.90 1.33 1.75 0.36 0.37 Net realized and unrealized gain (loss) on investment ...................................... 13.10 7.24 1.65 0.91 3.24 -------- -------- -------- -------- -------- Net income (loss) from operations ............... 18.00 8.57 3.40 1.27 3.61 -------- -------- -------- -------- -------- Accumulation unit value, end of year ............... $ 44.67 $ 26.67 $ 18.10 $ 14.70 $ 13.43 ======== ======== ======== ======== ======== Total return ....................................... 67.52 % 47.36 % 23.14 % 9.46 % 36.79 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 354,178 $ 177,857 $ 94,652 $ 54,408 $ 32,904 Ratio of net investment income (loss) to average net assets ....................................... 15.54 % 6.20 % 10.26 % 2.65 % 2.93 %
WRL AEGON BALANCED SUBACCOUNT ----------------------------------------------------------------------- DECEMBER 31, ----------------------------------------------------------------------- 1999 1998 1997 1996 1995 -------------- -------------- ------------- ------------- ------------- Accumulation unit value, beginning of year ......... $ 15.02 $ 14.17 $ 12.21 $ 11.13 $ 9.37 Income from operations: Net investment income (loss) ..................... 0.19 0.25 1.55 0.36 0.37 Net realized and unrealized gain (loss) on investment ...................................... 0.12 0.60 0.41 0.72 1.39 -------- -------- -------- -------- -------- Net income (loss) from operations ............... 0.31 0.85 1.96 1.08 1.76 -------- -------- -------- -------- -------- Accumulation unit value, end of year ............... $ 15.33 $ 15.02 $ 14.17 $ 12.21 $ 11.13 ======== ======== ======== ======== ======== Total return ....................................... 2.11 % 5.98 % 16.06 % 9.73 % 18.73 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 18,183 $ 14,864 $ 10,716 $ 6,418 $ 3,795 Ratio of net investment income (loss) to average net assets ....................................... 1.26 % 1.76 % 11.62 % 3.18 % 3.59 %
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED
WRL FEDERATED GROWTH & INCOME SUBACCOUNT --------------------------------------------------------------------- DECEMBER 31, --------------------------------------------------------------------- 1999 1998 1997 1996 1995 ------------- ------------- ------------- ------------- ------------- Accumulation unit value, beginning of year ......... $ 16.44 $ 16.09 $ 13.03 $ 11.77 $ 9.49 Income from operations: Net investment income (loss) ..................... 1.05 0.77 2.61 0.76 0.49 Net realized and unrealized gain (loss) on investment ...................................... ( 1.92) ( 0.42) 0.45 0.50 1.79 -------- -------- -------- -------- -------- Net income (loss) from operations ............... ( 0.87) 0.35 3.06 1.26 2.28 -------- -------- -------- -------- -------- Accumulation unit value, end of year ............... $ 15.57 $ 16.44 $ 16.09 $ 13.03 $ 11.77 ======== ======== ======== ======== ======== Total return ....................................... ( 5.31)% 2.13 % 23.54 % 10.64 % 24.14 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 17,389 $ 16,047 $ 9,063 $ 5,501 $ 2,631 Ratio of net investment income (loss) to average net assets ....................................... 6.51 % 4.83 % 18.50 % 6.38 % 4.57 %
WRL DEAN ASSET ALLOCATION SUBACCOUNT -------------------------------------------------------------------- DECEMBER 31, -------------------------------------------------------------------- 1999 1998 1997 1996 1995(1) ------------- ------------- ------------- ------------- ------------ Accumulation unit value, beginning of year ......... $ 16.74 $ 15.60 $ 13.50 $ 11.90 $ 10.00 Income from operations: Net investment income (loss) ..................... 0.41 1.58 1.20 0.53 0.61 Net realized and unrealized gain (loss) on investment ...................................... ( 1.49) ( 0.44) 0.90 1.07 1.29 -------- -------- -------- -------- -------- Net income (loss) from operations ............... ( 1.08) 1.14 2.10 1.60 1.90 -------- -------- -------- -------- -------- Accumulation unit value, end of year ............... $ 15.66 $ 16.74 $ 15.60 $ 13.50 $ 11.90 ======== ======== ======== ======== ======== Total return ....................................... ( 6.48)% 7.36 % 15.55 % 13.40 % 19.03 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 33,317 $ 39,904 $ 29,123 $ 17,946 $ 9,446 Ratio of net investment income (loss) to average net assets ....................................... 2.50 % 9.69 % 8.14 % 4.35 % 5.47 %
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED
WRL C.A.S.E. GROWTH SUBACCOUNT ------------------------------------------------------------ DECEMBER 31, ------------------------------------------------------------ 1999 1998 1997 1996(1) ------------- ------------- ------------- ------------ Accumulation unit value, beginning of year ......... $ 12.51 $ 12.32 $ 10.81 $ 10.00 Income from operations: Net investment income (loss) ..................... 1.52 1.24 1.51 0.37 Net realized and unrealized gain (loss) on investment ...................................... 2.57 ( 1.05) 0.00 0.44 -------- -------- -------- -------- Net income (loss) from operations ............... 4.09 0.19 1.51 0.81 -------- -------- -------- -------- Accumulation unit value, end of year ............... $ 16.60 $ 12.51 $ 12.32 $ 10.81 ======== ======== ======== ======== Total return ....................................... 32.65 % 1.56 % 14.00 % 8.09 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 27,509 $ 17,730 $ 11,946 $ 4,466 Ratio of net investment income (loss) to average net assets ....................................... 10.16 % 10.21 % 12.65 % 6.11 %
WRL NWQ VALUE EQUITY SUBACCOUNT ------------------------------------------------------------ DECEMBER 31, ------------------------------------------------------------ 1999 1998 1997 1996(1) ------------- ------------- ------------- ------------ Accumulation unit value, beginning of year ......... $ 13.16 $ 13.94 $ 11.25 $ 10.00 Income from operations: Net investment income (loss) ..................... 0.20 0.95 0.14 0.05 Net realized and unrealized gain (loss) on investment ...................................... 0.72 ( 1.73) 2.55 1.20 -------- -------- -------- -------- Net income (loss) from operations ............... 0.92 ( 0.78) 2.69 1.25 -------- -------- -------- -------- Accumulation unit value, end of year ............... $ 14.08 $ 13.16 $ 13.94 $ 11.25 ======== ======== ======== ======== Total return ....................................... 6.98 % ( 5.63)% 23.93 % 12.51 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 26,678 $ 26,083 $ 26,714 $ 8,887 Ratio of net investment income (loss) to average net assets ....................................... 1.42 % 6.84 % 1.05 % 0.77 %
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED
WRL GE/SCOTTISH EQUITABLE INTERNATIONAL EQUITY SUBACCOUNT WRL GE U.S. EQUITY SUBACCOUNT -------------------------------------- ---------------------------------------- DECEMBER 31, DECEMBER 31, -------------------------------------- ---------------------------------------- 1999 1998 1997(1) 1999 1998 1997(1) ------------ ------------ ------------ ------------- ------------- ------------ Accumulation unit value, beginning of year ...... $ 11.92 $ 10.65 $ 10.00 $ 15.33 $ 12.59 $ 10.00 Income from operations: Net investment income (loss) .................. 0.62 ( 0.09) ( 0.03) 1.38 0.73 0.99 Net realized and unrealized gain (loss) on investment ................................... 2.22 1.36 0.68 1.28 2.01 1.60 -------- -------- -------- -------- -------- -------- Net income (loss) from operations ............ 2.84 1.27 0.65 2.66 2.74 2.59 -------- -------- -------- -------- -------- -------- Accumulation unit value, end of year ............ $ 14.76 $ 11.92 $ 10.65 $ 17.99 $ 15.33 $ 12.59 ======== ======== ======== ======== ======== ======== Total return .................................... 23.84 % 11.84 % 6.54 % 17.35 % 21.78 % 25.89 % Ratios and supplemental data: Net assets at end of year (in thousands) ....... $ 7,013 $ 5,827 $ 2,289 $ 26,416 $ 14,084 $ 3,258 Ratio of net investment income (loss) to average net assets .................................... 5.09 % ( 0.81)% ( 0.28)% 8.27 % 5.30 % 8.28 %
WRL WRL THIRD AVENUE J.P. MORGAN VALUE REAL ESTATE SECURITIES SUBACCOUNT SUBACCOUNT ---------------------------- -------------------------- DECEMBER 31, DECEMBER 31, ---------------------------- -------------------------- 1999 1998(1) 1999 1998(1) ------------- ------------ ----------- ------------ Accumulation unit value, beginning of year ......... $ 9.23 $ 10.00 $ 8.46 $ 10.00 Income from operations: Net investment income (loss) ..................... 0.19 ( 0.05) 0.07 ( 0.05) Net realized and unrealized gain (loss) on investment ...................................... 1.17 ( 0.72) ( 0.47) ( 1.49) -------- -------- ------- -------- Net income (loss) from operations ............... 1.36 ( 0.77) ( 0.40) ( 1.54) -------- -------- ------- -------- Accumulation unit value, end of year ............... $ 10.59 $ 9.23 $ 8.06 $ 8.46 ======== ======== ======= ======== Total return ....................................... 14.68 % ( 7.67)% ( 4.63)% ( 15.44)% Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 3,411 $ 2,807 $ 627 $ 709 Ratio of net investment income (loss) to average net assets ....................................... 1.98 % ( 0.52)% 0.95% ( 0.90)%
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED
WRL WRL WRL T. ROWE PRICE WRL GOLDMAN SACHS GOLDMAN SACHS DIVIDEND T. ROWE PRICE GROWTH SMALL CAP GROWTH SMALL CAP SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT --------------- --------------- --------------- -------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, --------------- --------------- --------------- -------------- 1999(1) 1999(1) 1999(1) 1999(1) --------------- --------------- --------------- -------------- Accumulation unit value, beginning of year ......... $ 10.00 $ 10.00 $ 10.00 $ 10.00 Income from operations: Net investment income (loss) ..................... ( 0.05) 0.76 ( 0.04) 0.41 Net realized and unrealized gain (loss) on investment ...................................... 1.34 0.16 ( 0.80) 1.90 -------- -------- -------- -------- Net income (loss) from operations ............... 1.29 0.92 ( 0.84) 2.31 -------- -------- -------- -------- Accumulation unit value, end of period ............. $ 11.29 $ 10.92 $ 9.16 $ 12.31 ======== ======== ======== ======== Total return ....................................... 12.91 % 9.23 % ( 8.37)% 23.09 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 944 $ 344 $ 501 $ 925 Ratio of net investment income (loss) to average net assets ....................................... ( 0.90)% 15.66 % ( 0.90)% 8.13 %
WRL WRL PILGRIM WRL SALOMON BAXTER DREYFUS ALL CAP MID CAP GROWTH MID CAP SUBACCOUNT SUBACCOUNT SUBACCOUNT -------------- ---------------- ------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, -------------- ---------------- ------------- 1999(1) 1999(1) 1999(1) -------------- ---------------- ------------- Accumulation unit value, beginning of year ......... $ 10.00 $ 10.00 $ 10.00 Income from operations: Net investment income (loss) ..................... 0.40 0.04 ( 0.04) Net realized and unrealized gain (loss) on investment ...................................... 0.30 5.94 0.18 -------- -------- -------- Net income (loss) from operations ............... 0.70 5.98 0.14 -------- -------- -------- Accumulation unit value, end of period ............. $ 10.70 $ 15.98 $ 10.14 ======== ======== ======== Total return ....................................... 7.02 % 59.78 % 1.44 % Ratios and supplemental data: Net assets at end of year (in thousands) .......... $ 383 $ 5,065 $ 337 Ratio of net investment income (loss) to average net assets ....................................... 8.07 % 0.62 % ( 0.90)%
See Notes to the Financial Statements, which is an integral part of this report. WRL SERIES LIFE ACCOUNT NOTES TO THE FINANCIAL STATEMENTS AT DECEMBER 31, 1999 NOTE 1 -- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The WRL Series Life Account (the "Life Account"), was established as a variable life insurance separate account of Western Reserve Life Assurance Co. of Ohio ("WRL", or the "depositor") and is registered as a unit investment trust under the Investment Company Act of 1940, as amended. The Life Account contains twenty-three investment options referred to as subaccounts. Each subaccount invests in the corresponding Portfolio of the WRL Series Fund, Inc. (collectively referred to as the "Fund" and individually as a "Portfolio"), a registered management investment company under the Investment Company Act of 1940, as amended. The Fund has entered into annually renewable investment advisory agreements for each Portfolio with WRL Investment Management, Inc. ("WRL Management") as investment adviser. Costs incurred in connection with the advisory services rendered by WRL Management are paid by each Portfolio. WRL Management has entered into sub-advisory agreements with various management companies ("Sub-Advisers"), some of which are affiliates of WRL. Each Sub-Adviser is compensated directly by WRL Management. Effective May 1, 1999 the names on the following subaccounts were changed:
SUBACCOUNT FORMERLY - --------------------------------- --------------------------- WRL J.P. Morgan Money Market Money Market Subaccount WRL AEGON Bond Bond Subaccount WRL Janus Growth Growth Subaccount WRL Janus Global Global Subaccount WRL LKCM Strategic Total Return Strategic Total Return Subaccount WRL VKAM Emerging Growth Emerging Growth Subaccount WRL Alger Aggressive Growth Aggressive Growth Subaccount WRL AEGON Balanced Balanced Subaccount WRL Federated Growth & Income Growth & Income Subaccount WRL Dean Asset Allocation Tactical Asset Allocation Subaccount WRL C.A.S.E. Growth C.A.S.E. Growth Subaccount WRL NWQ Value Equity Value Equity Subaccount WRL GE/Scottish Equitable International Equity International Equity Subaccount WRL GE U.S. Equity U.S. Equity Subaccount WRL Third Avenue Value Third Avenue Value Subaccount WRL J.P. Morgan Real Estate Real Estate Securities Securities Subaccount
The Financial Statements reflect a full twelve month period for each year reported on, except as follows:
SUBACCOUNT INCEPTION DATE - ------------------------------------------------ --------------- WRL Dean Asset Allocation 01/03/1995 WRL C.A.S.E. Growth 05/01/1996 WRL NWQ Value Equity 05/01/1996 WRL GE/Scottish Equitable International Equity 01/02/1997 WRL GE U.S. Equity 01/02/1997 WRL Third Avenue Value 01/02/1998 WRL J.P. Morgan Real Estate Securities 05/01/1998 WRL Goldman Sachs Growth 07/01/1999 WRL Goldman Sachs Small Cap 07/01/1999 WRL T. Rowe Price Dividend Growth 07/01/1999 WRL T. Rowe Price Small Cap 07/01/1999 WRL Salomon All Cap 07/01/1999 WRL Pilgrim Baxter Mid Cap Growth 07/01/1999 WRL Dreyfus Mid Cap 07/01/1999
On July 1, 1999, WRL made initial contributions totaling $175,000 to the Life Account. The respective amounts of the contributions and units received are as follows:
SUBACCOUNT CONTRIBUTION UNITS - ----------------------------------- -------------- -------- WRL Goldman Sachs Growth $ 25,000 2,500 WRL Goldman Sachs Small Cap 25,000 2,500 WRL T. Rowe Price Dividend Growth 25,000 2,500 WRL T. Rowe Price Small Cap 25,000 2,500 WRL Salomon All Cap 25,000 2,500 WRL Pilgrim Baxter Mid Cap Growth 25,000 2,500 WRL Dreyfus Mid Cap 25,000 2,500
The Life Account holds assets to support the benefits under certain flexible premium variable universal life insurance policies (the "Policies") issued by WRL. The Life Account's equity transactions are accounted for using the appropriate effective date at the corresponding accumulation unit value. The following significant accounting policies, which are in conformity with accounting principles generally accepted in the United States, have been consistently applied in the preparation of the Life Account Financial Statements. The preparation of the Financial Statements required management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. WRL SERIES LIFE ACCOUNT NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) AT DECEMBER 31, 1999 NOTE 1 -- (CONTINUED) A. VALUATION OF INVESTMENTS AND SECURITIES TRANSACTIONS Investments in the Fund's shares are valued at the closing net asset value ("NAV") per share of the underlying Portfolio, as determined by the Fund. Investment transactions are accounted for on the trade date at the Portfolio NAV next determined after receipt of sale or redemption orders without sales charges. Dividend income and capital gains distributions are recorded on the ex-dividend date. The cost of investments sold is determined on a first-in, first-out basis. B. FEDERAL INCOME TAXES The operations of the Life Account are a part of and are taxed with the total operations of WRL, which is taxed as a life insurance company under the Internal Revenue Code. Under the Internal Revenue Code law, the investment income of the Life Account, including realized and unrealized capital gains, is not taxable to WRL. Accordingly, no provision for Federal income taxes has been made. NOTE 2 -- CHARGES AND DEDUCTIONS Charges are assessed by WRL in connection with the issuance and administration of the Policies. A. POLICY CHARGES Under some forms of the Policies, a sales charge and premium taxes are deducted by WRL prior to allocation of policy owner payments to the subaccounts. Contingent surrender charges may also apply. Under all forms of the Policy, monthly charges against policy cash values are made to compensate WRL for costs of insurance provided. B. LIFE ACCOUNT CHARGES A daily charge equal to an annual rate of .90 % of average daily net assets is assessed to compensate WRL for assumption of mortality and expense risks for administrative services in connection with issuance and administration of the Policies. This charge (not assessed at the individual contract level) effectively reduces the value of a unit outstanding during the year. NOTE 3 -- DIVIDEND DISTRIBUTIONS Dividends are not declared by the Life Account, since the increase in the value of the underlying investment in the Fund is reflected daily in the accumulation unit value used to calculate the equity value within the Life Account. Consequently, a dividend distribution by the underlying Fund does not change either the accumulation unit value or equity values within the Life Account. NOTE 4 -- SECURITIES TRANSACTIONS Securities transactions for the year ended December 31, 1999 are as follows (in thousands):
PURCHASES PROCEEDS OF FROM SALES SUBACCOUNT SECURITIES OF SECURITIES - ---------------------------------------- ------------ -------------- WRL J.P. Morgan Money Market $ 133,389 $ 99,679 WRL AEGON Bond 11,936 7,386 WRL Janus Growth 329,222 36,072 WRL Janus Global 71,976 7,800 WRL LKCM Strategic Total Return 14,849 9,892 WRL VKAM Emerging Growth 188,708 61,487 WRL Alger Aggressive Growth 83,923 9,614 WRL AEGON Balanced 4,525 1,311 WRL Federated Growth & Income 5,634 2,209 WRL Dean Asset Allocation 4,351 7,517 WRL C.A.S.E. Growth 10,787 4,903 WRL NWQ Value Equity 6,846 7,419 WRL GE/Scottish Equitable International Equity 5,739 5,682 WRL GE U.S. Equity 13,901 3,164 WRL Third Avenue Value 1,611 1,344 WRL J.P. Morgan Real Estate Securities 519 554 WRL Goldman Sachs Growth 977 115 WRL Goldman Sachs Small Cap 374 47 WRL T. Rowe Price Dividend Growth 543 35 WRL T. Rowe Price Small Cap 1,428 666 WRL Salomon All Cap 551 183 WRL Pilgrim Baxter Mid Cap Growth 4,402 620 WRL Dreyfus Mid Cap 470 164
NOTE 5 -- FINANCIAL HIGHLIGHTS Per unit information has been computed using average units outstanding throughout each period. Total return is not annualized for periods of less than one year. The ratio of net investment income (loss) to average net assets is annualized for periods of less than one year. REPORT OF INDEPENDENT AUDITORS The Board of Directors Western Reserve Life Assurance Co. of Ohio We have audited the accompanying statutory-basis balance sheets of Western Reserve Life Assurance Co. of Ohio (wholly owned indirectly by AEGON N.V.) as of December 31, 1999 and 1998, and the related statutory-basis statements of operations, changes in capital and surplus, and cash flows for each of the three years in the period ended December 31, 1999. Our audits also included the statutory-basis financial statement schedules required by Regulation S-X, Article 7. These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We did not audit the "Separate Account Assets" and "Separate Account Liabilities" in the statutory-basis balance sheets of the Company. The Separate Account financial statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the data included for the Separate Accounts, is based solely upon the reports of the other auditors. 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 and the reports of other auditors provide a reasonable basis for our opinion. As described in Note 1 to the financial statements, the Company presents its financial statements in conformity with accounting practices prescribed or permitted by the Insurance Department of the State of Ohio, which practices differ from generally accepted accounting principles. The variances between such practices and generally accepted accounting principles are also described in Note 1. The effects on the financial statements of these variances are not reasonably determinable but are presumed to be material. In our opinion, because of the effects of the matter described in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with generally accepted accounting principles, the financial position of Western Reserve Life Assurance Co. of Ohio at December 31, 1999 and 1998, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 1999. However, in our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Western Reserve Life Assurance Co. of Ohio at December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting practices prescribed or permitted by the Insurance Department of the State of Ohio. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic statutory-basis financial statements taken as a whole, present fairly in all material respects the information set forth therein. ERNST & YOUNG LLP Des Moines, Iowa February 18, 2000 WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO BALANCE SHEETS -- STATUTORY BASIS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31 ----------------------------- 1999 1998 ------------- ------------- ADMITTED ASSETS Cash and invested assets: Cash and short-term investments .......................... $ 23,932 $ 73,808 Bonds .................................................... 119,731 184,697 Common stocks: Affiliated entities (cost: 1999 and 1998 - $243)......... 2,156 704 Other (cost: 1999 and 1998 - $302)....................... 358 384 Mortgage loans on real estate ............................ 9,698 9,916 Home office properties .................................. 34,066 34,583 Investment properties ................................... 11,078 11,594 Policy loans ............................................ 182,975 112,982 Other invested assets ................................... -- 396 ----------- ---------- Total cash and invested assets ............................ 383,994 429,064 Premiums deferred and uncollected ......................... 785 900 Accrued investment income ................................. 1,638 2,867 Transfers from separate accounts due or accrued ........... 463,721 350,633 Cash surrender value of life insurance policies ........... 47,518 45,445 Other assets .............................................. 6,614 9,239 Separate account assets ................................... 11,587,982 6,999,290 ----------- ---------- Total admitted assets ..................................... $12,492,252 $7,837,438 =========== ==========
SEE ACCOMPANYING NOTES. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO BALANCE SHEETS -- STATUTORY BASIS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31 ----------------------------- 1999 1998 -------------- ------------ LIABILITIES AND CAPITAL AND SURPLUS Liabilities: Aggregate reserves for policies and contracts: Life .................................................................... $ 302,138 $ 231,596 Annuity ................................................................. 268,864 265,418 Policy and contract claim reserves ....................................... 9,269 9,233 Other policyholders' funds ............................................... 38,633 38,080 Remittances and items not allocated ...................................... 20,686 20,569 Federal income taxes payable ............................................. 5,873 5,716 Asset valuation reserve .................................................. 3,809 2,848 Interest maintenance reserve ............................................. 7,866 9,684 Short-term note payable to affiliate ..................................... 17,100 44,200 Payable to affiliate ..................................................... 964 37,907 Other liabilities ........................................................ 49,478 31,151 Separate account liabilities ............................................. 11,582,656 6,997,456 ----------- ---------- Total liabilities ......................................................... 12,307,336 7,693,858 Commitments and contingencies (NOTE 11) ................................... Capital and surplus: Common stock, $1.00 par value, 3,000,000 shares authorized and 2,500,000 shares issued and outstanding at December 31, 1999 and 1,500,000 shares authorized, issued and outstanding at December 31, 1998 2,500 1,500 Paid-in surplus .......................................................... 120,107 120,107 Unassigned surplus ....................................................... 62,309 21,973 ----------- ---------- Total capital and surplus ................................................. 184,916 143,580 ----------- ---------- Total liabilities and capital and surplus ................................. $12,492,252 $7,837,438 =========== ==========
SEE ACCOMPANYING NOTES. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO STATEMENTS OF OPERATIONS -- STATUTORY BASIS (DOLLARS IN THOUSANDS)
YEAR ENDED DECEMBER 31 -------------------------------------------- 1999 1998 1997 ------------- ------------- ------------ Revenues: Premiums and other considerations, net of reinsurance: Life .................................................................. $ 584,729 $ 476,053 $ 394,370 Annuity ............................................................... 1,104,525 794,841 822,149 Net investment income .................................................. 39,589 36,315 40,013 Amortization of interest maintenance reserve ........................... 1,751 744 1,576 Commissions and expense allowances on reinsurance ceded ................ 4,178 15,333 11 Income from fees associated with investment management, administration and contract guarantees for separate accounts ......... 19,620 72,817 -- Other income ........................................................... 44,366 67,751 3,016 ---------- ---------- ---------- 1,798,758 1,463,854 1,261,135 Benefits and expenses: Benefits paid or provided for: Life .................................................................. 35,591 42,982 28,060 Surrender benefits .................................................... 689,535 551,528 431,939 Other benefits ........................................................ 32,201 31,280 28,112 Increase (decrease) in aggregate reserves for policies and contracts: Life ................................................................. 70,542 42,940 29,485 Annuity .............................................................. 3,446 (30,872) (35,940) Other ................................................................ (121) 32,178 794 ---------- ---------- ---------- 831,194 670,036 482,450 Insurance expenses: Commissions ............................................................ 246,334 205,939 179,106 General insurance expenses ............................................. 112,536 102,611 70,546 Taxes, licenses and fees ............................................... 19,019 15,545 13,101 Net transfers to separate accounts ..................................... 540,443 475,435 519,214 Other expenses ......................................................... -- 59 21 ---------- ---------- ---------- 918,332 799,589 781,988 ---------- ---------- ---------- 1,749,526 1,469,625 1,264,438 ---------- ---------- ---------- Gain (loss) from operations before federal income tax expense (benefit) and net realized capital gains (losses) on investments ............................................... 49,232 (5,771) (3,303) Federal income tax expense (benefit) .................................... 11,816 (347) 469 ---------- ---------- ---------- Gain (loss) from operations before net realized capital gains (losses) on investments ........................................................ 37,416 (5,424) (3,772) Net realized capital gains (losses) on investments (net of related federal income taxes and amounts transferred to interest maintenance reserve) ......................................... (716) 1,494 747 ---------- ---------- ---------- Net income (loss) ....................................................... $ 36,700 $ (3,930) $ (3,025) ========== ========== ==========
SEE ACCOMPANYING NOTES. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS -- STATUTORY BASIS (DOLLARS IN THOUSANDS)
TOTAL COMMON PAID-IN UNASSIGNED CAPITAL AND STOCK SURPLUS SURPLUS SURPLUS -------- ----------- ------------ ------------ Balance at January 1, 1997 .......................... $1,500 $ 68,015 $ 26,041 $ 95,556 Net loss ........................................... -- -- (3,025) (3,025) Change in non-admitted assets ...................... -- -- (702) (702) Change in asset valuation reserve .................. -- -- 3,274 3,274 Change in surplus in separate accounts ............. -- -- (2,115) (2,115) Change in reserve valuation ........................ -- -- (1,872) (1,872) Capital contribution ............................... -- 20,000 -- 20,000 Tax effect of capital loss carry-forward utilized by affiliates ....................................... -- -- 3,747 3,747 ------ -------- -------- -------- Balance at December 31, 1997 ........................ 1,500 88,015 25,348 114,863 Net loss ........................................... -- -- (3,930) (3,930) Change in net unrealized capital gains ............. -- -- 248 248 Change in non-admitted assets ...................... -- -- (1,815) (1,815) Change in asset valuation reserve .................. -- -- (412) (412) Change in surplus in separate accounts ............. -- -- (341) (341) Change in reserve valuation ........................ -- -- (2,132) (2,132) Capital contribution ............................... -- 32,092 -- 32,092 Settlement of prior period tax returns ............. -- -- 353 353 Tax benefits on stock options exercised ............ -- -- 4,654 4,654 ------ -------- -------- -------- Balance at December 31, 1998 ........................ 1,500 120,107 21,973 143,580 Net income .......................................... -- -- 36,700 36,700 Change in net unrealized capital gains ............. -- -- 1,421 1,421 Change in non-admitted assets ...................... -- -- 703 703 Change in asset valuation reserve .................. -- -- (961) (961) Change in surplus in separate accounts ............. -- -- 451 451 Transfer from unassigned surplus to common stock (stock dividend) ........................... 1,000 -- (1,000) -- Settlement of prior period tax returns ............. -- -- 1,000 1,000 Tax benefits on stock options exercised ............ -- -- 2,022 2,022 ------ -------- -------- -------- Balance at December 31, 1999 ........................ $2,500 $120,107 $ 62,309 $184,916 ====== ======== ======== ========
SEE ACCOMPANYING NOTES. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO STATEMENTS OF CASH FLOWS -- STATUTORY BASIS (DOLLARS IN THOUSANDS)
YEAR ENDED DECEMBER 31 --------------------------------------------- 1999 1998 1997 ------------- ------------- ------------- OPERATING ACTIVITIES Premiums and other considerations, net of reinsurance .......... $1,738,870 $1,356,732 $1,223,898 Net investment income .......................................... 44,235 38,294 43,802 Life and accident and health claims ............................ (35,872) (44,426) (26,005) Surrender benefits and other fund withdrawals .................. (689,535) (551,528) (431,939) Other benefits to policyholders ................................ (32,642) (31,231) (28,147) Commissions, other expenses and other taxes .................... (382,372) (326,080) (262,901) Net transfers to separate accounts ............................. (628,762) (461,982) (596,347) Federal income taxes received (paid) ........................... (9,637) 11,956 5,006 Interest paid .................................................. -- -- (731) Other, net ..................................................... (21,054) (7,109) (14,901) ---------- ---------- ---------- Net cash used in operating activities .......................... (16,769) (15,374) (88,265) INVESTING ACTIVITIES Proceeds from investments sold, matured or repaid: Bonds and preferred stocks .................................... 114,177 143,449 146,963 Mortgage loans on real estate ................................. 212 221 2,116 Other ......................................................... 18 -- -- 114,407 143,670 149,079 Cost of investments acquired Bonds and preferred stocks .................................... (49,279) (68,202) (40,418) Common stocks ................................................. -- (93) (150) Mortgage loans on real estate ................................. (1) (5,313) (891) Real estate ................................................... (286) (26,213) (12,002) Policy loans .................................................. (69,993) (36,241) (24,137) Other ......................................................... (855) (414) -- ---------- ---------- ---------- (120,414) (136,476) (77,598) Net cash provided by (used in) investing activities ............ (6,007) 7,194 71,481 FINANCING ACTIVITIES Issuance (payment) of short-term note payable to affiliate, net ............................................... (27,100) 36,000 8,200 Capital contribution ........................................... -- 32,092 20,000 ---------- ---------- ---------- Net cash provided by (used in) financing activities ............ (27,100) 68,092 28,200 ---------- ---------- ---------- Increase (decrease) in cash and short-term investments ......... (49,876) 59,912 11,416 Cash and short-term investments at beginning of year ........... 73,808 13,896 2,480 ---------- ---------- ---------- Cash and short-term investments at end of year ................. $ 23,932 $ 73,808 $ 13,896 ========== ========== ==========
SEE ACCOMPANYING NOTES. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Western Reserve Life Assurance Co. of Ohio ("the Company") is a stock life insurance company and is a wholly-owned subsidiary of First AUSA Life Insurance Company which, in turn, is a wholly-owned subsidiary of AEGON USA, Inc. ("AEGON"). AEGON is an indirect wholly-owned subsidiary of AEGON N.V., a holding company organized under the laws of The Netherlands. NATURE OF BUSINESS The Company operates predominantly in the variable universal life and variable annuity areas of the life insurance business. The Company is licensed in 49 states, District of Columbia, Puerto Rico and Guam. Sales of the Company's products are through financial planners, independent representatives, financial institutions and stockbrokers. The majority of the Company's new life insurance written and a substantial portion of new annuities written is done through one marketing organization; the Company expects to maintain this relationship for the foreseeable future. BASIS OF PRESENTATION The preparation of financial statements of insurance companies requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. The accompanying financial statements have been prepared in conformity with accounting practices prescribed or permitted by the Insurance Department of the State of Ohio ("Insurance Department"), which practices differ from generally accepted accounting principles. The more significant of these differences are as follows: (a) bonds are generally reported at amortized cost rather than segregating the portfolio into held-to-maturity (reported at amortized cost), available-for-sale (reported at fair value), and trading (reported at fair value) classifications; (b) acquisition costs of acquiring new business are expensed as incurred rather than deferred and amortized over the life of the policies; (c) policy reserves on traditional life products are based on statutory mortality rates and interest which may differ from reserves based on reasonable assumptions of expected mortality, interest, and withdrawals which include a provision for possible unfavorable deviation from such assumptions; (d) policy reserves on certain investment products use discounting methodologies utilizing statutory interest rates rather than full account values; (e) reinsurance amounts are netted against the corresponding asset or WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED) liability rather than shown as gross amounts on the balance sheet; (f) deferred income taxes are not provided for the difference between the financial statement amounts and income tax bases of assets and liabilities; (g) net realized gains or losses attributed to changes in the level of interest rates in the market are deferred and amortized over the remaining life of the bond or mortgage loan, rather than recognized as gains or losses in the statement of operations when the sale is completed; (h) potential declines in the estimated realizable value of investments are provided for through the establishment of a formula-determined statutory investment reserve (reported as a liability), changes to which are charged directly to surplus, rather than through recognition in the statement of operations for declines in value, when such declines are judged to be other than temporary; (i) certain assets designated as "non-admitted assets" have been charged to unassigned surplus rather than being reported as assets; (j) revenues for universal life and investment products consist of the entire premiums received rather than policy charges for the cost of insurance, policy administration charges, amortization of policy initiation fees and surrender charges assessed; (k) pension expense is recorded as amounts are paid rather than accrued and expensed during the periods in which the employers provide service; (l) stock options settled in cash are recorded as an expense of the Company's indirect parent rather than charged to current operations; (m) adjustments to federal income taxes of prior years are charged or credited directly to unassigned surplus, rather than reported as a component of income tax expense in the statement of operations; and (n) the financial statements of wholly-owned affiliates are not consolidated with those of the Company. The effects of these variances have not been determined by the Company, but are presumed to be material. In 1998, the National Association of Insurance Commissioners (NAIC) adopted codified statutory accounting principles ("Codification") effective January 1, 2001. Codification will likely change, to some extent, prescribed statutory accounting practices and may result in changes to the accounting practices that the Company uses to prepare its statutory-basis financial statements. Codification will require adoption by the various states before it becomes the prescribed statutory basis of accounting for insurance companies domesticated within those states. Accordingly, before Codification becomes effective for the Company, the State of Ohio must adopt Codification as the prescribed basis of accounting on which domestic insurers must report their statutory-basis results to the Insurance Department. At this time it is unclear whether the State of Ohio will adopt Codification. However, based on current guidance, management believes that the impact of Codification will not be material to the Company's statutory-basis financial statements. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED) Other significant statutory accounting practices are as follows: CASH AND CASH EQUIVALENTS For purposes of the statements of cash flows, the Company considers all highly liquid investments with remaining maturities of one year or less when purchased to be cash equivalents. INVESTMENTS Investments in bonds (except those to which the Securities Valuation Office of the NAIC has ascribed a value), mortgage loans on real estate and short-term investments are reported at cost adjusted for amortization of premiums and accrual of discounts. Amortization is computed using methods which result in a level yield over the expected life of the investment. The Company reviews its prepayment assumptions on mortgage and other asset backed securities at regular intervals and adjusts amortization rates retrospectively when such assumptions are changed due to experience and/or expected future patterns. Common stocks of unaffiliated companies are carried at market, and the related unrealized capital gains/(losses) are reported in unassigned surplus without any adjustment for federal income taxes. Common stocks of the Company's wholly-owned affiliates are recorded at the equity in net assets. Home office and investment properties are reported at cost less allowances for depreciation. Depreciation is computed principally by the straight-line method. Policy loans are reported at unpaid principal. Other "admitted assets" are valued, principally at cost, as required or permitted by Ohio Insurance Laws. Realized capital gains and losses are determined on the basis of specific identification and are recorded net of related federal income taxes. The Asset Valuation Reserve (AVR) is established by the Company to provide for potential losses in the event of default by issuers of certain invested assets. These amounts are determined using a formula prescribed by the NAIC and are reported as a liability. The formula for the AVR provides for a corresponding adjustment for realized gains and losses. Under a formula prescribed by the NAIC, the Company defers, in the Interest Maintenance Reserve (IMR), the portion of realized gains and losses on sales of fixed income investments, principally bonds and mortgage loans, attributable to changes in the general level of interest rates and amortizes those deferrals over the remaining period to maturity of the security. During 1999, 1998 and 1997, net realized capital gains (losses) of $(67), $1,294 and $3,259, respectively, were credited to the IMR rather than being immediately WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED) recognized in the statements of operations. Amortization of these net gains aggregated $1,751, $744 and $1,576 for the years ended December 31, 1999, 1998 and 1997, respectively. Interest income is recognized on an accrual basis. The Company does not accrue income on bonds in default, mortgage loans on real estate in default and/or foreclosure or which are delinquent more than twelve months, or real estate where rent is in arrears for more than three months. Further, income is not accrued when collection is uncertain. No investment income due and accrued has been excluded for the years ended December 31, 1999, 1998 and 1997, with respect to such practices. AGGREGATE RESERVES FOR POLICIES Life and annuity reserves are developed by actuarial methods and are determined based on published tables using statutorily specified interest rates and valuation methods that will provide, in the aggregate, reserves that are greater than or equal to the minimum required by law. The aggregate policy reserves for life insurance policies are based principally upon the 1941, 1958 and 1980 Commissioners' Standard Ordinary Mortality Tables. The reserves are calculated using interest rates ranging from 2.25 to 5.50 percent and are computed principally on the Net Level Premium Valuation and the Commissioners' Reserve Valuation Methods. Reserves for universal life policies are based on account balances adjusted for the Commissioners' Reserve Valuation Method. Deferred annuity reserves are calculated according to the Commissioners' Annuity Reserve Valuation Method including excess interest reserves to cover situations where the future interest guarantees plus the decrease in surrender charges are in excess of the maximum valuation rates of interest. Reserves for immediate annuities and supplementary contracts with life contingencies are equal to the present value of future payments assuming interest rates ranging from 5.75 to 8.75 percent and mortality rates, where appropriate, from a variety of tables. POLICY AND CONTRACT CLAIM RESERVES Claim reserves represent the estimated accrued liability for claims reported to the Company and claims incurred but not yet reported through the statement date. These reserves are estimated using either individual case-basis valuations or statistical analysis techniques. These estimates are subject to the effects of trends in claim severity and frequency. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes available. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED) SEPARATE ACCOUNTS Assets held in trust for purchases of variable universal life and variable annuity contracts and the Company's corresponding obligation to the contract owners are shown separately in the balance sheets. The assets in the separate accounts are valued at market. Income and gains and losses with respect to the assets in the separate accounts accrue to the benefit of the policyholders and, accordingly, the operations of the separate accounts are not included in the accompanying financial statements. The separate accounts do not have any minimum guarantees and the investment risks associated with market value changes are borne entirely by the policyholders. The Company received variable contract premiums of $1,675,642, $1,240,858 and $1,164,013 in 1999, 1998 and 1997, respectively. All variable account contracts are subject to discretionary withdrawal by the policyholder at the market value of the underlying assets less the current surrender charge. Separate account contractholders have no claim against the assets of the general account. STOCK OPTION PLAN AEGON N.V. sponsors a stock option plan for eligible employees of the Company. Under this plan, certain employees have indicated a preference to immediately sell shares received as a result of their exercise of the stock options; in these situations, AEGON N.V. has settled such options in cash rather than issuing stock to these employees. These cash settlements are paid by the Company, and AEGON N.V. subsequently reimburses the Company for such payments. Under statutory accounting principles, the Company does not record any expense related to this plan, as the expense is recognized by AEGON N.V. However, the Company is allowed to record a deduction in the consolidated tax return filed by the Company and certain affiliates. The tax benefit of this deduction has been credited directly to unassigned surplus. RECLASSIFICATIONS Certain reclassifications have been made to the 1998 and 1997 financial statements to conform to the 1999 presentation. 2. FAIR VALUES OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, requires disclosure of fair value information about financial instruments, whether or not recognized in the statutory-basis balance sheet, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 2. FAIR VALUES OF FINANCIAL INSTRUMENTS--(CONTINUED) techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparisons to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. Statement of Financial Accounting Standards No. 107 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements and allows companies to forego the disclosures when those estimates can only be made at excessive cost. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: CASH AND SHORT-TERM INVESTMENTS: The carrying amounts reported in the statutory-basis balance sheet for these instruments approximate their fair values. INVESTMENT SECURITIES: Fair values for fixed maturity securities (including redeemable preferred stocks) are based on quoted market prices, where available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services or (in the case of private placements) are estimated by discounting 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 AND POLICY LOANS: The fair values for mortgage loans are estimated utilizing discounted cash flow analyses, using interest rates reflective of current market conditions and the risk characteristics of the loans. The fair value of policy loans are assumed to equal their carrying value. INVESTMENT CONTRACTS: Fair values for the Company's liabilities under investment-type insurance contracts are estimated using discounted cash flow calculations, based on interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts being valued. Fair values for the Company's insurance contracts other than investment contracts are not required to be disclosed. However, the fair values of liabilities under all insurance contracts are taken into consideration in the Company's overall management of interest rate risk, which minimizes exposure to changing interest rates through the matching of investment maturities with amounts due under insurance contracts. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 2. FAIR VALUES OF FINANCIAL INSTRUMENTS--(CONTINUED) The following sets forth a comparison of the fair values and carrying amounts of the Company's financial instruments subject to the provisions of Statement of Financial Accounting Standards No. 107:
December 31 ----------------------------------------------------- 1999 1998 --------------------------- ------------------------- Carrying Carrying Amount Fair Value Amount Fair Value ------------- ------------- ------------ ------------ ADMITTED ASSETS Cash and short-term investments ..... $ 23,932 $ 23,932 $ 73,808 $ 73,808 Bonds ............................... 119,731 119,076 184,697 192,556 Common stocks, other than affiliates 358 358 384 384 Mortgage loans on real estate ....... 9,698 9,250 9,916 10,390 Policy loans ........................ 182,975 182,975 112,982 112,982 Separate account assets ............. 11,587,982 11,587,982 6,999,290 6,999,290 LIABILITIES Investment contract liabilities ..... 301,403 294,342 297,349 294,105 Separate account annuities .......... 8,271,548 8,079,141 5,096,680 5,038,296
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 3. INVESTMENTS The carrying amount and estimated fair value of investments in debt securities are as follows:
Gross Gross Estimated Carrying Unrealized Unrealized Fair Amount Gains Losses Value ---------- ------------ ------------ ---------- DECEMBER 31, 1999 Bonds: United States Government and agencies .......... $ 4,755 $ 4 $ 66 $ 4,693 State, municipal and other government .......... 2,185 12 -- 2,197 Public utilities ............................... 13,134 129 368 12,895 Industrial and miscellaneous ................... 52,997 1,213 1,208 53,002 Mortgage and other asset-backed securities ..... 46,660 480 851 46,289 -------- ------ ------ -------- Total bonds ..................................... $119,731 $1,838 $2,493 $119,076 ======== ====== ====== ======== DECEMBER 31, 1998 Bonds: .......................................... United States Government and agencies .......... $ 4,749 $ 83 $ -- $ 4,832 State, municipal and other government .......... 3,234 117 -- 3,351 Public utilities ............................... 18,792 818 251 19,359 Industrial and miscellaneous ................... 96,332 6,685 577 102,440 Mortgage and other asset-backed securities ..... 61,590 1,235 251 62,574 -------- ------ ------ -------- Total bonds ..................................... $184,697 $8,938 $1,079 $192,556 ======== ====== ====== ========
The carrying amount and fair value of bonds at December 31, 1999 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.
Estimated Carrying Fair Amount Value ---------- ---------- Due in one year or less ............................ $ 10,521 $ 10,560 Due one through five years ......................... 32,248 31,993 Due five through ten years ......................... 17,342 17,104 Due after ten years ................................ 12,960 13,130 -------- -------- 73,071 72,787 Mortgage and other asset-backed securities ......... 46,660 46,289 -------- -------- $119,731 $119,076 ======== ========
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 3. INVESTMENTS--(CONTINUED) A detail of net investment income is presented below:
Year ended December 31 ------------------------------------ 1999 1998 1997 ---------- ---------- ---------- Interest on bonds .................... $ 12,094 $ 17,150 $ 25,723 Dividends on equity investments from subsidiaries ........................ 18,555 13,233 10,855 Interest on mortgage loans ........... 746 499 478 Rental income on real estate ......... 5,794 2,839 1,371 Interest on policy loans ............. 9,303 6,241 4,656 Other investment income .............. 414 540 26 -------- -------- -------- Gross investment income .............. 46,906 40,502 43,109 Investment expenses .................. (7,317) (4,187) (3,096) -------- -------- -------- Net investment income ................ $ 39,589 $ 36,315 $ 40,013 ======== ======== ========
Proceeds from sales and maturities of debt securities and related gross realized gains and losses were as follows:
Year ended December 31 --------------------------------------- 1999 1998 1997 ----------- ----------- ----------- Proceeds ...................... $114,177 $143,449 $146,963 ======== ======== ======== Gross realized gains .......... $ 1,762 $ 4,641 $ 3,921 Gross realized losses ......... 1,709 899 626 -------- -------- -------- Net realized gains ............ $ 53 $ 3,742 $ 3,295 ======== ======== ========
At December 31, 1999, bonds with an aggregate carrying value of $4,152 were on deposit with certain state regulatory authorities or were restrictively held in bank custodial accounts for benefit of such state regulatory authorities, as required by statute. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 3. INVESTMENTS--(CONTINUED) Realized investment gains (losses) and changes in unrealized gains (losses) for investments are summarized below:
Realized ------------------------------------- Year ended December 31 ------------------------------------- 1999 1998 1997 --------- ----------- ----------- Debt securities .................................. $ 53 $ 3,742 $ 3,295 Other invested assets ............................ 18 (18) -- ------ -------- -------- 71 3,724 3,295 Tax expense ...................................... (854) (936) (711) Transfer to interest maintenance reserve ......... 67 (1,294) (3,259) ------ -------- -------- Net realized gains (losses) ...................... $ (716) $ 1,494 $ 747 ====== ======== ========
Changes in Unrealized ---------------------------------------- Year ended December 31 ---------------------------------------- 1999 1998 1997 ------------ ------------ ---------- Debt securities .......................................... $ (8,514) $ (3,985) $ (896) Common stocks ............................................ 1,426 248 -- -------- -------- ------ Change in unrealized appreciation (depreciation) ......... $ (7,088) $ (3737) $ (896) ======== ======== ======
Gross unrealized gains (losses) on common stocks were as follows:
Unrealized ------------------- December 31 ------------------- 1999 1998 --------- ------- Unrealized gains ............. $1,995 $ 579 Unrealized losses ............ (26) (36) ------ ----- Net unrealized gains ......... $1,969 $ 543 ====== =====
During 1999, the Company did not issue any mortgage loans. The Company requires all mortgagees to carry fire insurance equal to the value of the underlying property. During 1999, 1998 and 1997, no mortgage loans were foreclosed and transferred to real estate. During 1999 and 1998, the Company held a mortgage loan loss reserve in the asset valuation reserve of $110 and $112, respectively. At December 31, 1999, the Company had no investments (excluding U. S. Government guaranteed or insured issues) which individually represented more than ten percent of capital and surplus and the asset valuation reserve, collectively. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 4. REINSURANCE The Company reinsures portions of certain insurance policies which exceed its established limits, thereby providing a greater diversification of risk and minimizing exposure on larger risks. The Company remains contingently liable with respect to any insurance ceded, and this would become an actual liability in the event that the assuming insurance company became unable to meet its obligations under the reinsurance treaty.
Year ended December 31 --------------------------------------------- 1999 1998 1997 ------------- ------------- ------------- Direct premiums ............. $1,748,265 $1,345,752 $1,219,271 Reinsurance assumed ......... -- 461 2,389 Reinsurance ceded ........... (59,011) (75,319) (5,141) ---------- ---------- ---------- Net premiums earned ......... $1,689,254 $1,270,894 $1,216,519 ========== ========== ==========
The Company received reinsurance recoveries in the amount of $4,916, $5,260 and $2,288 during 1999, 1998 and 1997, respectively. At December 31, 1999 and 1998, estimated amounts recoverable from reinsurers that have been deducted from policy and contract claim reserves totaled $1,557 and $1,003, respectively. The aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded at December 31, 1999 and 1998 of $3,487 and $2,849, respectively. 5. INCOME TAXES For federal income tax purposes, the Company joins in a consolidated tax return filing with certain affiliated companies. Under the terms of a tax-sharing agreement between the Company and its affiliates, the Company computes federal income tax expense as if it were filing a separate income tax return, except that tax credits and net operating loss carryforwards are determined on the basis of the consolidated group. Additionally, the alternative minimum tax is computed for the consolidated group and the resulting tax, if any, is allocated back to the separate companies on the basis of the separate companies' alternative minimum taxable income. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 5. INCOME TAXES--(CONTINUED) Federal income tax expense (benefit) differs from the amount computed by applying the statutory federal income tax rate to gain (loss) from operations before federal income tax expense (benefit) and realized capital gains (losses) on investments for the following reasons:
Year ended December 31 ------------------------------------------ 1999 1998 1997 ------------ ------------ ------------ Computed tax (benefit) at federal statutory rate (35%) ......... $ 17,231 $ (2,019) $ (1,156) Deferred acquisition costs -- tax basis ........................ 11,344 9,672 9,164 Tax reserve valuation .......................................... (2,272) 1,513 (194) Excess tax depreciation ........................................ (727) (442) (127) Amortization of IMR ............................................ (613) (260) (552) Dividend received deduction .................................... (10,784) (6,657) (5,326) Prior year over-accrual ........................................ (3,167) (2,322) (1,541) Other, net ..................................................... 804 168 201 --------- -------- -------- Federal income tax expense (benefit) ........................... $ 11,816 $ (347) $ 469 ========= ======== ========
Federal income tax expense (benefit) differs from the amount computed by applying the statutory federal income tax rate to realized gains (losses) due to the differences in book and tax asset bases at the time certain investments are sold. Prior to 1984, as provided for under the Life Insurance Company Tax Act of 1959, a portion of statutory income was not subject to current taxation, but was accumulated for income tax purposes in a memorandum account referred to as the policyholders' surplus account. No federal income taxes have been provided for in the financial statements on income deferred in the policyholders' surplus account ($293 at December 31, 1999). To the extent dividends are paid from the amount accumulated in the policyholders' surplus account, net earnings would be reduced by the amount of tax required to be paid. Should the entire amount in the policyholders' surplus account become taxable, the tax thereon computed at current rates would amount to approximately $103. At December 31, 1996, the Company had capital loss carryforwards of approximately $10,705, which were utilized by the Company's affiliates in the consolidated tax return filing in 1997. This transaction resulted in a receipt from the Company's affiliate of $3,747, which was credited directly to unassigned surplus. In 1999, the Company received $1,000 from its former parent, an unaffiliated company, for reimbursement of prior period tax payments made by the Company but owed by the former parent. In 1998, the Company reached a final settlement with the WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 Internal Revenue Service for 1994 and 1995 resulting in a tax refund of $300 and interest received of $53. Tax settlements for 1999 and 1998 were credited directly to unassigned surplus. 6. POLICY AND CONTRACT ATTRIBUTES A portion of the Company's policy reserves and other policyholders' funds relate to liabilities established on a variety of the Company's products, primarily separate accounts, that are not subject to significant mortality or morbidity risk; however, there may be certain restrictions placed upon the amount of funds that can be withdrawn without penalty. The amount of reserves on these products, by withdrawal characteristics are summarized as follows:
December 31 ------------------------------------------------------ 1999 1998 -------------------------- ------------------------- Percent Percent Amount of Total Amount of Total ------------- ---------- ------------- --------- Subject to discretionary withdrawal with market value adjustment ..................... $ 12,534 0% $ 12,810 0% Subject to discretionary withdrawal at book value less surrender charge ................. 73,903 1 76,289 1 Subject to discretionary withdrawal at market value ....................................... 8,271,441 96 5,096,680 94 Subject to discretionary withdrawal at book value (minimal or no charges or adjustments) ................................ 217,372 3 210,270 4 Not subject to discretionary withdrawal provision ................................... 15,433 0 15,681 1 ---------- -- ---------- -- 8,590,683 100% 5,411,730 100% === === Less reinsurance ceded ....................... 1,581 1,131 ---------- ---------- Total policy reserves on annuities and deposit fund liabilities ............................ $8,589,102 $5,410,599 ========== ==========
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 6. POLICY AND CONTRACT ATTRIBUTES--(CONTINUED) A reconciliation of the amounts transferred to and from the separate accounts is presented below:
Year ended December 31 --------------------------------------------- 1999 1998 1997 ------------- ------------- ------------- Transfers as reported in the summary of operations of the separate accounts statement: Transfers to separate accounts ................. $1,675,642 $1,240,858 $1,164,013 Transfers from separate accounts ............... 1,056,207 774,690 646,477 ---------- ---------- ---------- Net transfers to separate accounts ............. 619,435 466,168 517,536 Reconciling adjustments -- change in accruals for investment management, administration fees and contract guarantees, reinsurance and separate account surplus ..................... (78,992) 9,267 1,678 ---------- ---------- ---------- Transfers as reported in the summary of operations of the life, accident and health annual statement ............................. $ 540,443 $ 475,435 $ 519,214 ========== ========== ==========
Reserves on the Company's traditional life insurance products are computed using mean reserving methodologies. These methodologies result in the establishment of assets for the amount of the net valuation premiums that are anticipated to be received between the policy's paid-through date to the policy's next anniversary date. At December 31, 1999 and 1998, these assets (which are reported as premiums deferred and uncollected) and the amounts of the related gross premiums and loadings, are as follows:
Gross Loading Net --------- --------- ------- DECEMBER 31, 1999 Ordinary direct renewal business ......... $1,017 $232 $785 ------ ---- ---- $1,017 $232 $785 ====== ==== ==== DECEMBER 31, 1998 Ordinary direct renewal business ......... $1,101 $201 $900 ------ ---- ---- $1,101 $201 $900 ====== ==== ====
In 1994, the NAIC enacted a guideline to clarify reserving methodologies for contracts that require immediate payment of claims upon proof of death of the insured. Companies were allowed to grade the effects of the change in reserving methodologies over five years. A direct charge to surplus of $2,132 and $1,872 was made for the years ended December 31, 1998 and 1997, respectively, related to the change in reserve methodology. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 7. DIVIDEND RESTRICTIONS The Company is subject to limitations, imposed by the State of Ohio, on the payment of dividends to its parent company. Generally, dividends during any twelve month period may not be paid; without prior regulatory approval, in excess of the greater of (a) 10 percent of statutory capital and surplus as of the preceding December 31, or (b) statutory gain from operations for the preceding year. Subject to the availability of unassigned surplus at the time of such dividend, the maximum payment which may be made in 2000, without the prior approval of insurance regulatory authorities, is $36,700. 8. CAPITAL STRUCTURE During 1999, the Company's Board of Director's approved an amendment to the Company's Articles of Incorporation which increased the number of authorized capital shares to 3,000,000. The Board of Directors also authorized a stock dividend in the amount of $1,000, which was transferred from unassigned surplus. This amendment and stock dividend were in response to a change in California law which requires all life insurance companies which do business in the state to have capital stock of at least $2,500. 9. RETIREMENT AND COMPENSATION PLANS The Company's employees participate in a qualified benefit plan sponsored by AEGON. The Company has no legal obligation for the plan. The Company recognizes pension expense equal to its allocation from AEGON. The pension expense is allocated among the participating companies based on the Statement of Financial Accounting Standards No. 87 expense as a percent of salaries. The benefits are based on years of service and the employee's compensation during the highest five consecutive years of employment. Pension expense aggregated $1,105, $917 and $659 for the years ended December 31, 1999, 1998 and 1997, respectively. The plan is subject to the reporting and disclosure requirements of the Employee Retirement and Income Security Act of 1974. The Company's employees also participate in a contributory defined contribution plan sponsored by AEGON which is qualified under Section 401(k) of the Internal Revenue Service Code. Employees of the Company who customarily work at least 1,000 hours during each calendar year and meet the other eligibility requirements are participants of the plan. Participants may elect to contribute up to fifteen percent of their salary to the plan. The Company will match an amount up to three percent of the participant's salary. Participants may direct all of their contributions and plan balances to be invested in a variety of investment options. The plan is subject to the reporting and disclosure requirements of the Employee Retirement and Income Security Act of 1974. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 9. RETIREMENT AND COMPENSATION PLANS--(CONTINUED) Pension expense related to this plan was $816, $632 and $448 for the years ended December 31, 1999, 1998 and 1997, respectively. AEGON sponsors supplemental retirement plans to provide the Company's senior management with benefits in excess of normal pension benefits. The plans are noncontributory and benefits are based on years of service and the employee's compensation level. The plans are unfunded and nonqualified under the Internal Revenue Code. In addition, AEGON has established incentive deferred compensation plans for certain key employees of the Company. AEGON also sponsors an employee stock option plan for individuals employed at least three years and a stock purchase plan for its producers, with the participating affiliated companies establishing their own eligibility criteria, producer contribution limits and company matching formula. These plans have been accrued for or funded as deemed appropriate by management of AEGON and the Company. In addition to pension benefits, the Company participates in plans sponsored by AEGON that provide postretirement medical, dental and life insurance benefits to employees meeting certain eligibility requirements. Portions of the medical and dental plans are contributory. The expenses of the postretirement plans calculated on the pay-as-you-go basis are charged to affiliates in accordance with an intercompany cost sharing arrangement. The Company expensed $81, $157 and $99 for the years ended December 31, 1999, 1998 and 1997, respectively. 10. RELATED PARTY TRANSACTIONS The Company shares certain officers, employees and general expenses with affiliated companies. The Company receives data processing, investment advisory and management, marketing and administration services from certain affiliates. During 1999, 1998 and 1997, the Company paid $16,905 $12,763 and $10,040, respectively, for such services, which approximates their costs to the affiliates. The Company provides office space, marketing and administrative services to certain affiliates. During 1999, 1998 and 1997, the Company received $3,755, $5,125 and $4,395, respectively, for such services, which approximates their cost. Payable to affiliates and intercompany borrowings bear interest at the thirty-day commercial paper rate of 5.06% at December 31, 1999. During 1999, 1998 and 1997, the Company paid net interest of $1,997, $1,090 and $364, respectively, to affiliates. The Company received capital contributions of $32,092 and $20,000 from its parent in 1998 and 1997, respectively. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 10. RELATED PARTY TRANSACTIONS--(CONTINUED) At December 31, 1999 and 1998, the Company had short-term note payables to an affiliate of $17,100 and $44,200, respectively. Interest on these notes ranged from 5.15% to 5.9% at December 31, 1999 and 5.13% to 5.54% at December 31, 1998. During 1998, the Company purchased life insurance policies covering the lives of certain employees of the Company. Premiums of $43,500 were paid to an affiliate for these policies. At December 31, 1999 and 1998, the cash surrender value of these policies was $47,518 and $45,445, respectively. 11. COMMITMENTS AND CONTINGENCIES The Company is a party to legal proceedings incidental to its business. Although such litigation sometimes includes substantial demands for compensatory and punitive damages in addition to contract liability, it is management's opinion, after consultation with counsel and a review of available facts, that damages arising from such demands will not be material to the Company's financial position. The Company is subject to insurance guaranty laws in the states in which it writes business. These laws provide for assessments against insurance companies for the benefit of policyholders and claimants in the event of insolvency of other insurance companies. Assessments are charged to operations when received by the Company except where right of offset against other taxes paid is allowed by law; amounts available for future offsets are recorded as an asset on the Company's balance sheet. The future obligation has been based on the most recent information available from the National Organization of Life and Health Insurance Guaranty Association. Potential future obligations for unknown insolvencies are not determinable by the Company. The Company has established a reserve of $3,498 and $3,489 and an offsetting premium tax benefit of $837 and $828 at December 31, 1999 and 1998, respectively, for its estimated share of future guaranty fund assessments related to several major insurer insolvencies. The guaranty fund expense (credit) was $(20), $(74) and $0 at December 31, 1999, 1998 and 1997, respectively. 12. RECONCILIATION OF CAPITAL AND SURPLUS AND NET INCOME The following table reconciles capital and surplus and net income as reported in the 1998 Annual Statement filed with the Insurance Department of the State of Ohio, to the amounts reported in the accompanying financial statements: WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTES TO FINANCIAL STATEMENTS -- STATUTORY-BASIS--(CONTINUED) (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 12. RECONCILIATION OF CAPITAL AND SURPLUS AND NET INCOME--(CONTINUED)
Year ended December 31, 1998 December 31, 1998 ------------------- ------------------ Total Capital and Surplus Net Income/Loss ------------------- ------------------ Amounts reported in Annual Statement ............. $148,038 $ 528 Adjustment to federal income tax benefit ......... (4,458) (4,458) -------- -------- Amounts reported herein .......................... $143,580 $ (3,930) ======== ========
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES (DOLLARS IN THOUSANDS) DECEMBER 31, 1999 SCHEDULE I
AMOUNT AT WHICH FAIR SHOWN IN THE TYPE OF INVESTMENT COST (1) VALUE BALANCE SHEET - ------------------------------------------------------------ ------------ ---------- ---------------- FIXED MATURITIES Bonds: United States Government and government agencies and authorities ................................ $ 5,827 $ 5,820 $ 5,827 States, municipalities and political subdivisions ......... 7,110 7,275 7,110 Public utilities .......................................... 13,134 12,895 13,134 All other corporate bonds ................................. 93,660 93,086 93,660 --------- ------- --------- Total fixed maturities ..................................... 119,731 119,076 119,731 EQUITY SECURITIES Common stocks: Affiliated entities ....................................... 243 2,156 2,156 Industrial, miscellaneous and all other ................... 302 358 358 --------- ------- --------- Total equity securities .................................... 545 2,514 2,514 Mortgage loans on real estate .............................. 9,698 9,698 Real estate ................................................ 45,144 45,144 Policy loans ............................................... 182,975 182,975 Cash and short-term investments ............................ 23,932 23,932 --------- --------- Total investments .......................................... $ 382,025 $ 383,994 ========= =========
- ---------------- (1) Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and adjusted for amortization of premiums or accruals of discounts. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO SUPPLEMENTARY INSURANCE INFORMATION (DOLLARS IN THOUSANDS) SCHEDULE III
BENEFITS, CLAIMS, FUTURE POLICY POLICY AND NET LOSSES AND OTHER BENEFITS AND CONTRACT PREMIUM INVESTMENT SETTLEMENT OPERATING EXPENSES LIABILITIES REVENUE INCOME* EXPENSES EXPENSES* --------------- ------------- -------------- ------------ ------------ ------------ YEAR ENDED DECEMBER 31, 1999 Individual life ................ $ 291,106 $ 9,152 $ 583,656 $ 10,754 $ 178,237 $ 261,284 Group life ..................... 11,032 100 1,073 706 1,437 599 Annuity ........................ 268,864 17 1,104,525 28,129 651,520 116,006 --------- -------- ----------- -------- --------- --------- $ 571,002 $ 9,269 $ 1,689,254 $ 39,589 $ 831,194 $ 377,889 ========= ======== =========== ======== ========= ========= YEAR ENDED DECEMBER 31, 1998 Individual life ................ $ 221,050 $ 8,624 $ 474,120 $ 9,884 $ 122,542 $ 230,368 Group life ..................... 10,546 100 1,933 723 1,962 2,281 Annuity ........................ 265,418 509 794,841 25,708 545,532 91,505 --------- -------- ----------- -------- --------- --------- $ 497,014 $ 9,233 $ 1,270,894 $ 36,315 $ 670,036 $ 324,154 ========= ======== =========== ======== ========= ========= YEAR ENDED DECEMBER 31, 1997 Individual life ................ $ 177,088 $ 9,533 $ 390,452 $ 13,742 $ 88,738 $ 176,303 Group life ..................... 9,435 805 3,918 810 3,986 3,292 Annuity ........................ 296,290 591 822,149 25,461 389,726 83,179 --------- -------- ----------- -------- --------- --------- $ 482,813 $ 10,929 $ 1,216,519 $ 40,013 $ 482,450 $ 262,774 ========= ======== =========== ======== ========= =========
- ---------------- * Allocations of net investment income and other operating expenses are based on a number of assumptions and estimates, and the results would change if different methods were applied. WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO REINSURANCE (DOLLARS IN THOUSANDS) SCHEDULE IV
ASSUMED PERCENTAGE CEDED TO FROM OF AMOUNT GROSS OTHER OTHER NET ASSUMED AMOUNT COMPANIES COMPANIES AMOUNT TO NET -------------- -------------- ------------- -------------- ----------- YEAR ENDED DECEMBER 31, 1999 Life insurance in force ........ $63,040,741 $11,297,250 $ -- $51,743,494 0.0% =========== =========== ========== =========== === Premiums: Individual life ............... $ 604,628 $ 20,972 $ -- $ 583,656 0.0% Group life and health ......... 1,383 310 -- 1,073 0.0 Annuity ....................... 1,142,254 37,729 -- 1,104,525 0.0 ----------- ----------- ---------- ----------- --- $ 1,748,265 $ 59,011 $ -- $ 1,689,254 0.0% =========== =========== ========== =========== === YEAR ENDED DECEMBER 31, 1998 Life insurance in force ........ $51,064,173 $ 9,862,460 $ -- $41,201,713 0.0% =========== =========== ========== =========== === Premiums: Individual life ............... $ 493,633 $ 19,512 $ -- $ 474,121 0.0% Group life and health ......... 1,691 220 461 1,932 23.8 Annuity ....................... 850,428 55,587 -- 794,841 0.0 ----------- ----------- ---------- ----------- ---- $ 1,345,752 $ 75,319 $ 461 $ 1,270,894 .03% =========== =========== ========== =========== ==== YEAR ENDED DECEMBER 31, 1997 Life insurance in force ........ $40,221,361 $ 6,776,447 $2,692,822 $36,137,736 7.5% =========== =========== ========== =========== ==== Premiums: Individual life ............... $ 395,361 $ 4,910 $ -- $ 390,452 0.0% Group life and health ......... 1,761 231 2,389 3,918 61.0 Annuity ....................... 822,149 -- -- 822,149 0.0 ----------- ----------- ---------- ----------- ---- $ 1,219,271 $ 5,141 $ 2,389 $ 1,216,519 0.2% =========== =========== ========== =========== ====
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