-----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, UxjL6Rh8izZo6ly1DpKPcY2FatG3jGMb9hqxdJAJiJow3Y8x9u2mu6xXgBGmpPrE xrREoTFudOeIQR3+d0jCwg== 0001016843-97-000005.txt : 19970103 0001016843-97-000005.hdr.sgml : 19970103 ACCESSION NUMBER: 0001016843-97-000005 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970102 SROS: NONE 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: 1933 Act SEC FILE NUMBER: 033-05143 FILM NUMBER: 97500208 BUSINESS ADDRESS: STREET 1: 201 HIGHLAND AVE CITY: LARGO STATE: FL ZIP: 34640 BUSINESS PHONE: 813-587-1800 MAIL ADDRESS: STREET 1: 201 HIGHLAND AVENUE CITY: LARGO STATE: FL ZIP: 34640 497 1 SUPPLEMENT DATED JANUARY 1, 1997 TO PROSPECTUS DATED MAY 1, 1994 WRL FREEDOM SP PLUS(R) Effective January 1, 1997, WRL Investment Management, Inc. ("WRL Management"), a Florida corporation, will replace Western Reserve Life Assurance Co. of Ohio ("Western Reserve") as the investment adviser for the WRL Series Fund, Inc. (the "Fund"). WRL Management is a wholly-owned subsidiary of Western Reserve. Throughout the Prospectus, wherever Western Reserve is referred to as the Fund's investment adviser, Western Reserve will be replaced with WRL Management. THE FOLLOWING INFORMATION SUPPLEMENTS INFORMATION PROVIDED ON PAGES 22, TENTH PARAGRAPH OF THE PROSPECTUS UNDER THE HEADING "WESTERN RESERVE, THE SERIES ACCOUNT, AND THE FUND - WRL SERIES FUND, INC.": WRL Management serves as investment adviser to each Portfolio of the Fund and manages their assets in accordance with policies, programs and guidelines established by the Board of Directors of the Fund. THE FOLLOWING INFORMATION IS MODIFIED ON PAGE 33, UNDER THE HEADING "CHARGES AND DEDUCTIONS - CHARGES AGAINST THE SERIES ACCOUNT" AS FOLLOWS: Addition of new sub-heading after the fourth paragraph. EXPENSES OF THE FUND Deletion of sub-heading "Investment Advisory Fee." ADDITION OF A NEW PARAGRAPH BEFORE THE HEADING "GROUP OR SPONSORED ARRANGEMENTS" AS FOLLOWS: Effective January 1, 1997, the Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act ("Distribution Plan") and pursuant to the Plan, has entered into a Distribution Agreement with InterSecurities, Inc. ("ISI"), principal underwriter for the Fund. Under the Distribution Plan, the Fund, on behalf of the Portfolios, is authorized to pay to various service providers, as direct payment for expenses incurred in connection with the distribution of a Portfolio's shares, amounts equal to actual expenses associated with distributing a Portfolio's shares, up to a maximum rate of 0.15% (fifteen one-hundredths of one percent) on an annualized basis of the average daily net assets. This fee is measured and accrued daily and paid monthly. ISI has determined that it will not seek payment by the Fund of distribution expenses with respect to any Portfolio during the fiscal year ending December 31, 1997. Prior to ISI's seeking reimbursement, Policyowners will be notified in advance. THE ATTACHED FINANCIALS SUPPLEMENT THE FINANCIAL STATEMENTS INCLUDED IN THE MAY 1, 1996 PROSPECTUS BOOKLET. WRL SERIES LIFE ACCOUNT MONEY MARKET SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS ASSETS: SEPTEMBER 30, 1996 Investments at net asset value: WRL Series Fund, Inc.: Money Market Portfolio (14,772,612.310 shares; cost $ 14,772,612) ................................... $14,772,612 Accrued transfers from (to) depositor - net ............... 38,350 ----------- Total assets ......................................... 14,810,962 ----------- LIABILITIES: ................................................ 0 ----------- Total net assets ..................................... $14,810,962 =========== EQUITY ACCOUNTS: Policyowners' equity: Money Market sub-account (968,329.525481 units; $15.295374 unit value) ............................... $14,810,962 ----------- Total equity ......................................... $14,810,962 =========== STATEMENT OF OPERATIONS NINE MONTHS ENDED INVESTMENT INCOME: SEPTEMBER 30, 1996 Dividend income ...................................... $426,457 Capital gain distributions ........................... 0 -------- 426,457 EXPENSES: Mortality and expense risk charges ................... 76,494 -------- Net investment income (loss) ....................... 349,963 -------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ............................ 0 Change in unrealized appreciation (depreciation) ..................................... 0 -------- Net gain (loss) on investments ..................... 0 -------- Net increase (decrease) in equity accounts resulting from operations ............. $349,963 ========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS NINE MONTHS ENDED YEAR ENDED OPERATIONS: SEPTEMBER 30, 1996 DECEMBER 31, 1995 Net investment income (loss)............................... $ 349,963 $ 397,410 Net gain (loss) on investments............................. 0 0 ------------- ------------ Net increase (decrease) in equity accounts resulting from operations............................... 349,963 397,410 ------------- ------------ EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)........................ 6,152,998 3,139,280 ------------- ------------ Less cost of units redeemed: Administrative charges.................................. 1,753,507 1,356,484 Policy loans............................................ 179,641 219,767 Surrender benefits...................................... 499,065 899,893 Death benefits.......................................... 18,410 7,670 ------------- ------------ 2,450,623 2,483,814 ------------- ------------ Increase (decrease) in equity accounts from capital unit transactions............................. 3,702,375 655,466 ------------- ------------ Net increase (decrease) in equity accounts.............. 4,052,338 1,052,876 EQUITY ACCOUNTS: 7Beginning of period....................................... 10,758,624 9,705,748 ------------- ------------ End of period.............................................. $ 14,810,962 $ 10,758,624 ============= ============
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 1 WRL SERIES LIFE ACCOUNT MONEY MARKET SUB-ACCOUNT (UNAUDITED) - --------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED SEPT. 30 DECEMBER 31 -------- ----------------------------------------------- 1996 1995 1994 1993 1992 1991 -------- ------- ------- ------- ------- ------- Accumulation unit value, beginning of period $ 14.83 $ 14.19 $ 13.84 $ 13.63 $ 13.33 $ 12.78 Income from operations: Net investment income (loss)........ .47 .64 .35 .21 .30 .55 Net realized and unrealized gain (loss) on investments........ .00 .00 .00 .00 .00 .00 ------- ------- ------- ------- ------- ------- Total income (loss) from operations .47 .64 .35 .21 .30 .55 ------- ------- ------- ------- ------- ------- Accumulation unit value, end of period... $ 15.30 $ 14.83 $ 14.19 $ 13.84 $ 13.63 $ 13.33 ======= ======= ======= ======= ======= ======= Total return............................. 3.13% 4.49% 2.58% 1.52% 2.24% 4.34% Ratios and supplemental data: Net assets at end of period (in thousands) $14,811 $10,759 $ 9,706 $ 4,985 $ 4,619 $ 4,042 Ratio of net investment income (loss) to average net assets**................ 4.09% 4.37% 2.66% 1.51% 2.12% 4.28%
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. ** This ratio is annualized for the period ended September 30, 1996. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 2 WRL SERIES LIFE ACCOUNT BOND SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS ASSETS: SEPTEMBER 30, 1996 Investments at net asset value: WRL Series Fund, Inc.: Bond Portfolio (1,029,776.221 shares; cost $11,356,557) .................................. $ 11,044,802 Accrued transfers from (to) depositor - net ............. (8,481) ------------ Total assets ....................................... 11,036,321 ------------ LIABILITIES: .............................................. 0 ------------ Total net assets ................................... $ 11,036,321 ============ EQUITY ACCOUNTS: Policyowners' equity: Bond sub-account (580,868.722716 units; $18.999682 unit value) ............................. $ 11,036,321 ------------ Total equity ....................................... $ 11,036,321 ============ STATEMENT OF OPERATIONS NINE MONTHS ENDED INVESTMENT INCOME: SEPTEMBER 30, 1996 ------------------ Dividend income ...................................... $ 288,871 Capital gain distributions ........................... 0 --------- 288,871 EXPENSES: Mortality and expense risk charges ................... 69,846 --------- Net investment income (loss) ....................... 219,025 --------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ............................ (114,753) Unrealized appreciation (depreciation) ............... (464,520) --------- Net gain (loss) on investments ..................... (579,273) --------- Net increase (decrease) in net assets resulting from operations ...................... $(360,248) =========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS NINE MONTHS ENDED YEAR ENDED OPERATIONS: SEPTEMBER 30, 1996 DECEMBER 31, 1995 ------------------ ----------------- Net investment income (loss)............................ $ 219,025 $ 459,977 Net gain (loss) on investments.......................... (579,273) 1,080,157 ------------- ------------ Net increase (decrease) in equity accounts resulting from operations............................ (360,248) 1,540,134 ------------- ------------ EQUITY TRANSACTIONS: Proceeds from units sold (redeemed):.................... 2,715,612 3,749,029 ------------- ------------ Less cost of units redeemed: Administrative charges............................... 953,693 916,494 Policy loans......................................... 148,082 197,829 Surrender benefits................................... 260,483 357,384 Death benefits....................................... 22,917 10,202 ------------- ------------ 1,385,175 1,481,909 ------------- ------------ Increase (decrease) in equity accounts from capital unit transactions.......................... 1,330,437 2,267,120 ------------- ------------ Net increase (decrease) in equity accounts........... 970,189 3,807,254 EQUITY ACCOUNTS: Beginning of period..................................... 10,066,132 6,258,878 ------------- ------------ End of period........................................... $ 11,036,321 $ 10,066,132 ============= ============
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 3 WRL SERIES LIFE ACCOUNT BOND SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
SEPT. 30 DECEMBER 31 -------- ----------------------------------------------- 1996 1995 1994 1993 1992 1991 -------- ------- ------- ------- ------- ------- Accumulation unit value, beginning of period $ 19.67 $ 16.14 $ 17.50 $ 15.57 $ 14.68 $ 12.48 Income from operations: Net investment income (loss)........ .40 1.05 .89 2.11 1.00 .48 Net realized and unrealized gain (loss) on investments........ (1.07) 2.48 (2.25) (.18) (.11) 1.72 ------- ------- ------- ------- ------- ------- Total income (loss) from operations (.67) 3.53 (1.36) 1.93 .89 2.20 ------- ------- ------- ------- ------- ------- Accumulation unit value, end of period... $ 19.00 $ 19.67 $ 16.14 $ 17.50 $ 15.57 $ 14.68 ======= ======= ======= ======= ======= ======= Total return............................. (3.43)% 21.89% (7.77)% 12.40% 6.08% 17.63% Ratios and supplemental data: Net assets at end of period (in thousands) $11,036 $10,066 $ 6,259 $ 6,985 $ 4,558 $ 3,055 Ratio of net investment income (loss) to average net assets**................ 2.86% 5.80% 5.57% 12.92% 6.69% 3.59% - ---------------- * The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. ** This ratio is annualized for the period ended September 30, 1996.
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 4 WRL SERIES LIFE ACCOUNT GROWTH SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS ASSETS: SEPTEMBER 30, 1996 Investments at net asset value: WRL Series Fund, Inc.: Growth Portfolio (9,051,069.555 shares; cost $ 233,268,655) ............................... $ 333,851,051 Accrued transfers from (to) depositor - net ............ (277,798) ------------- Total assets ...................................... 333,573,253 ------------- LIABILITIES: ............................................. 0 ------------- Total net assets .................................. $ 333,573,253 ============= EQUITY ACCOUNTS: Policyowners' equity: Growth sub-account (6,908,195.647892 units; $ 48.286596 unit value)............... $ 333,573,253 ------------- Total equity.......................... $ 333,573,253 ============= STATEMENT OF OPERATIONS NINE MONTHS ENDED INVESTMENT INCOME: SEPTEMBER 30, 1996 Dividend income ..................................... $ 860,787 Capital gain distributions .......................... 1,077,884 ------------ 1,938,671 EXPENSES: Mortality and expense risk charges .................. 1,997,056 ------------ Net investment income (loss) ...................... (58,385) ------------ Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ........................... 4,232,941 Change in unrealized appreciation (depreciation) ...................................... 40,880,353 ------------ Net gain (loss) on investments ...................... 45,113,294 ------------ Net increase (decrease) in equity accounts resulting from operations ....................... $ 45,054,909 ============
STATEMENT OF CHANGES IN EQUITY ACCOUNTS NINE MONTHS ENDED YEAR ENDED OPERATIONS: SEPTEMBER 30, 1996 DECEMBER 31, 1995 Net investment income (loss)............................ $ (58,385) $ 23,250,380 Net gain (loss) on investments.......................... 45,113,294 54,801,782 ------------- ------------- Net increase (decrease) in equity accounts resulting from operations............................ 45,054,909 78,052,162 ------------- ------------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)..................... 62,530,238 61,850,933 ------------- ------------- Less cost of units redeemed: Administrative charges............................... 21,253,460 23,714,204 Policy loans......................................... 6,128,299 5,518,596 Surrender benefits................................... 8,699,115 8,982,170 Death benefits....................................... 398,125 711,078 ------------- ------------- 36,478,999 38,926,048 ------------- ------------- Increase (decrease) in equity accounts from capital unit transactions.......................... 26,051,239 22,924,885 ------------- ------------- Net increase (decrease) in equity accounts........... 71,106,148 100,977,047 EQUITY ACCOUNTS: Beginning of period..................................... 262,467,105 161,490,058 ------------- ------------- End of period........................................... $ 333,573,253 $ 262,467,105 ============= =============
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 5 WRL SERIES LIFE ACCOUNT GROWTH SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
SEPT. 30 DECEMBER 31 -------- ---------------------------------------------------- 1996 1995 1994 1993 1992 1991 -------- -------- -------- -------- -------- -------- Accumulation unit value, beginning of period $ 41.47 $ 28.44 $ 31.30 $ 30.37 $ 29.95 $ 18.91 Income from operations: Net investment income (loss)........ (.01) 3.89 .04 .46 1.09 1.72 Net realized and unrealized gain (loss) on investments........ 6.83 9.14 (2.90) .47 (.67) 9.32 -------- -------- -------- -------- -------- -------- Total income (loss) from operations 6.82 13.03 (2.86) .93 .42 11.04 -------- -------- -------- -------- -------- -------- Accumulation unit value, end of period... $ 48.29 $ 41.47 $ 28.44 $ 31.30 $ 30.37 $ 29.95 ======== ======== ======== ======== ======== ======== Total return............................. 16.44% 45.81% (9.13)% 3.06% 1.41% 58.37% Ratios and supplemental data: Net assets at end of period (in thousands) $333,573 $262,467 $161,490 $169,757 $146,053 $111,375 Ratio of net investment income (loss) to average net assets**................ (.03)% 11.05% .16% 1.56% 3.84% 7.14% - ---------------- * The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. ** This ratio is annualized for the period ended September 30, 1996.
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 6 WRL SERIES LIFE ACCOUNT SHORT-TO-INTERMEDIATE GOVERNMENT SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS ASSETS: SEPTEMBER 30, 1996 Investments at net asset value: WRL Series Fund, Inc.: Short-to-Intermediate Government Portfolio (144,126.953 shares; cost $ 1,484,619) .................................... $ 1,497,493 Accrued transfers from (to) depositor - net ............... (1,871) ----------- Total assets ......................................... 1,495,622 ----------- LIABILITIES: ................................................ 0 ----------- Total net assets ..................................... $ 1,495,622 =========== EQUITY ACCOUNTS: Policyowners' equity: Short-to-Intermediate Government sub-account (128,515.024738 units; $11.637719 unit value) ............................... $ 1,495,622 ----------- Total equity ......................................... $ 1,495,622 =========== STATEMENT OF OPERATIONS NINE MONTHS ENDED INVESTMENT INCOME: SEPTEMBER 30,1996 ----------------- Dividend income ....................................... $ 23,677 Capital gain distributions ............................ 0 -------- 23,677 EXPENSES: Mortality and expense risk charges .................... 10,115 -------- Net investment income (loss) ........................ 13,562 -------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ............................. 22,518 Change in unrealized appreciation (depreciation) ....................................... (25,656) -------- Net gain (loss) on investments ...................... (3,139) -------- Net increase (decrease) in net assets resulting from operations ......................... $ 10,423 ========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS NINE MONTHS ENDED YEAR ENDED OPERATIONS: SEPTEMBER 30,1996 DECEMBER 31, 1995 Net investment income (loss)........................ $ 13,562 $ 62,086 Net gain (loss) on investments...................... (3,139) 68,387 ------------- ------------ Net increase (decrease) in equity accounts resulting from operations........................ 10,423 130,473 ------------- ------------ EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)................ 144,541 679,242 ------------- ------------ Less cost of units redeemed: Administrative charges........................... 130,446 141,954 Policy loans..................................... 27,903 52,521 Surrender benefits............................... 18,978 41,967 Death benefits.................................. 0 144 ------------- ------------ 177,327 236,586 ------------- ------------ Increase (decrease) in equity accounts from capital unit transactions...................... (32,786) 442,656 ------------- ------------ Net increase (decrease) in equity accounts....... (22,363) 573,129 EQUITY ACCOUNTS: Beginning of period................................. 1,517,985 944,856 ------------- ------------ End of period....................................... $ 1,495,622 $ 1,517,985 ============= ============
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 7 WRL SERIES LIFE ACCOUNT SHORT-TO-INTERMEDIATE GOVERNMENT SUB-ACCOUNT (UNAUDITED) - --------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED SEPT. 30 DECEMBER 31 ------- ------------------------------------- 1996 1995 1994 1993 1992\dagger\ ------- ------- ------- ------- ------- Accumulation unit value, beginning of period $ 11.55 $ 10.27 $ 10.40 $ 10.04 $ 10.00 Income from operations: Net investment income (loss)........ .10 .61 .40 .14 .01 Net realized and unrealized gain (loss) on investments........ (.01) .67 (.53) .22 .03 ------- ------- ------- ------- ------- Total income (loss) from operations .09 1.28 (.13) .36 .04 ------- ------- ------- ------- ------- Accumulation unit value, end of period... $ 11.64 $ 11.55 $ 10.27 $ 10.40 $ 10.04 ======= ======= ======= ======= ======= Total return............................. .73% 12.53% (1.32)% 3.64% .38% Ratios and supplemental data: Net assets at end of period (in thousands) 1,496 $ 1,518 $ 945 $ 1,408 $ 803 Ratio of net investment income (loss) to average net assets**................ 1.22% 5.53% 4.06% 1.39% .16% - ------------ * The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. ** This ratio is annualized for the period ended September 30, 1996. \dagger\ The inception date of this sub-account was December 3, 1992. The total return is not annualized.
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 8 WRL SERIES LIFE ACCOUNT GLOBAL SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS ASSETS: SEPTEMBER 30, 1996 Investments at net asset value: WRL Series Fund, Inc.: Global Portfolio (3,830,440.472 shares; cost $ 59,223,121) .................................. $72,234,094 Accrued transfers from (to) depositor - net .............. 32,463 ----------- Total assets ........................................ 72,266,557 ----------- LIABILITIES: ............................................... 0 ----------- Total net assets .................................... $72,266,557 =========== EQUITY ACCOUNTS: Policyowners' equity: Global sub-account (4,974,425.092964 units; $ 14.527620 unit value) ............................. $72,266,557 ----------- Total equity ........................................ $72,266,557 =========== STATEMENT OF OPERATIONS NINE MONTHS ENDED INVESTMENT INCOME: SEPTEMBER 30,1996 Dividend income ........................................ $ 354,841 Capital gain distributions ............................. 114,391 ---------- 469,232 EXPENSES: Mortality and expense risk charges ..................... 368,006 ---------- Net investment income (loss) ......................... 101,226 ---------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions .............................. 282,560 Unrealized appreciation (depreciation) ................. 9,409,784 ---------- Net gain (loss) on investments ....................... 9,692,344 ---------- Net increase (decrease) in net assets resulting from operations ........................ $9,793,570 ==========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS NINE MONTHS ENDED YEAR ENDED OPERATIONS: SEPTEMBER 30, 1996 DECEMBER 31, 1995 Net investment income (loss)................................. $ 101,226 $ 1,187,745 Net gain (loss) on investments............................... 9,692,344 4,626,003 ------------- ------------ Net increase (decrease) in equity accounts resulting from operations................................. 9,793,570 5,813,748 ------------- ------------ EQUITY TRANSACTIONS: Proceeds from units sold (redeemed).......................... 32,319,930 15,012,786 ------------- ------------ Less cost of units redeemed: Administrative charges.................................... 4,391,586 4,017,781 Policy loans.............................................. 887,801 666,264 Surrender benefits........................................ 1,309,265 721,584 Death benefits............................................ 38,835 44,234 ------------- ------------ 6,627,487 5,449,863 ------------- ------------ Increase (decrease) in equity accounts from capital unit transactions............................... 25,692,443 9,562,923 ------------- ------------ Net increase (decrease) in equity accounts................ 35,486,013 15,376,671 Depositors' equity contribution (redemption).................. (268,153) 0 EQUITY ACCOUNTS: Beginning of period.......................................... 37,048,697 21,672,026 ------------- ------------ End of period................................................ $ 72,266,557 $ 37,048,697 ============= ============
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 9 WRL SERIES LIFE ACCOUNT GLOBAL SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED SEPT. 30 DECEMBER 31 -------- ----------------- 1996 1995 1994\dagger\ -------- ------- ------- Accumulation unit value, beginning of period $ 11.95 $ 9.80 $ 10.00 Income from operations: Net investment income (loss)........ .03 .45 .71 Net realized and unrealized gain (loss) on investments........ 2.55 1.70 (.91) ------- ------- ------- Total income (loss) from operations 2.58 2.15 (.20) ------- ------- ------- Accumulation unit value, end of period... $ 14.53 $ 11.95 $ 9.80 ======= ======= ======= Total return............................. 21.57% 21.96% (2.02)% Ratios and supplemental data: Net assets at end of period (in thousands) $72,267 $37,049 $21,672 Ratio of net investment income (loss) to average net assets**................ .29% 4.25% 7.39% * The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. ** This ratio is annualized for the period ended September 30, 1996. \dagger\ The inception date of this sub-account was March 1, 1994. The total return is not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 10 WRL SERIES LIFE ACCOUNT EQUITY-INCOME SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS ASSETS: SEPTEMBER 30, 1996 Investments at net asset value: WRL Series Fund, Inc.: Equity-Income Portfolio (3,657,160.333 shares; cost $ 43,154,636) ................................. $ 50,638,542 Accrued transfers from (to) depositor - net ............. (53,412) ------------ Total assets ....................................... 50,585,130 ------------ LIABILITIES: .............................................. 0 ------------ Total net assets ................................... $ 50,585,130 ============ EQUITY ACCOUNTS: Policyowners' equity: Equity-Income sub-account (3,414,735.720554 units; $ 14.813776 unit value) ............................ $ 50,585,130 ------------ Total equity ....................................... $ 50,585,130 ============ STATEMENT OF OPERATIONS NINE MONTHS ENDED INVESTMENT INCOME: SEPTEMBER 30, 1996 Dividend income ...................................... $ 312,575 Capital gain distributions ........................... 84,620 ---------- 397,195 EXPENSES: Mortality and expense risk charges ................... 302,955 ---------- Net investment income (loss) ....................... 94,240 ---------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ............................ 228,689 Unrealized appreciation (depreciation) ............... 3,032,915 ---------- Net gain (loss) on investments ..................... 3,261,604 ---------- Net increase (decrease) in net assets resulting from operations ...................... $3,355,844 ==========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS NINE MONTHS ENDED YEAR ENDED OPERATIONS: SEPTEMBER 30, 1996 DECEMBER 31, 1995 Net investment income (loss).................................. $ 94,240 $ 1,756,089 Net gain (loss) on investments................................ 3,261,604 4,992,475 ------------- ------------ Net increase (decrease) in equity accounts resulting from operations.................................. 3,355,844 6,748,564 ------------- ------------ EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)........................... 12,500,597 14,236,727 ------------- ------------ Less cost of units redeemed: Administrative charges..................................... 3,263,409 3,380,854 Policy loans............................................... 716,938 657,750 Surrender benefits......................................... 853,076 918,863 Death benefits............................................. 86,163 28,153 ------------- ------------ 4,919,586 4,985,620 ------------- ------------ Increase (decrease) in equity accounts from capital unit transactions................................ 7,581,011 9,251,107 ------------- ------------ Net increase (decrease) in equity accounts................. 10,936,855 15,999,671 EQUITY ACCOUNTS: Beginning of period........................................... 39,648,275 23,648,604 ------------- ------------ End of period................................................. $ 50,585,130 $ 39,648,275 ============= ============
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 11 WRL SERIES LIFE ACCOUNT EQUITY-INCOME SUB-ACCOUNT (UNAUDITED) - --------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED SEPT. 30 DECEMBER 31 -------- --------------------------- 1996 1995 1994 1993\dagger\ -------- ------- ------- ------- Accumulation unit value, beginning of period $ 13.74 $ 11.12 $ 11.28 $ 10.00 Income from operations: Net investment income (loss)........ .03 .68 .18 .19 Net realized and unrealized gain (loss) on investments........ 1.04 1.94 (.34) 1.09 ------- ------- ------- ------- Total income (loss) from operations 1.07 2.62 (.16) 1.28 ------- ------- ------- ------- Accumulation unit value, end of period... $ 14.81 $ 13.74 $ 11.12 $ 11.28 ======= ======= ======= ======= Total return............................. 7.82% 23.55% (1.42)% 12.81% Ratios and supplemental data: Net assets at end of period (in thousands) $50,585 $39,648 $23,649 $13,343 Ratio of net investment income (loss) to average net assets**................ .28% 5.47% 1.93% 1.89% - ---------------------------- * The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. ** This ratio is annualized for the period ended September 30, 1996. dagger\ The inception date of this sub-account was March 1, 1993. The total return is not annualized.
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 12 WRL SERIES LIFE ACCOUNT AGGRESSIVE GROWTH SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS ASSETS: SEPTEMBER 30, 1996 Aggressive Investments at net asset value: WRL Series Fund, Inc.: Aggressive Growth Portfolio (3,454,037.947 shares; cost $ 45,039,041) ................................. $ 48,078,822 Accrued transfers from (to) depositor - net ............. (46,950) ------------ Total assets ....................................... 48,031,872 ------------ LIABILITIES: .............................................. 0 ------------ Total net assets ................................... $ 48,031,872 ============ EQUITY ACCOUNTS: Policyowners' equity: Aggressive Growth sub-account (3,364,595.750104 units; $14.275674 unit value) ............................. $ 48,031,872 ------------ Total equity ....................................... $ 48,031,872 ============ STATEMENT OF OPERATIONS NINE MONTHS ENDED INVESTMENT INCOME: SEPTEMBER 30, 1996 Dividend income ....................................... $ 614,817 Capital gain distributions ............................ 216,587 ---------- 831,404 EXPENSES: Mortality and expense risk charges .................... 278,502 ---------- Net investment income (loss) ........................ 552,902 ---------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ............................. 1,954,191 Unrealized appreciation (depreciation) ................ 22,556 ---------- Net gain (loss) on investments ...................... 1,976,747 ---------- Net increase (decrease) in net assets resulting from operations ....................... $2,529,649 ==========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS NINE MONTHS ENDED YEAR ENDED OPERATIONS: SEPTEMBER 30, 1996 DECEMBER 31, 1995 Net investment income (loss).................................. $ 552,902 $ 663,994 Net gain (loss) on investments................................ 1,976,747 4,424,350 ------------- ------------ Net increase (decrease) in equity accounts resulting from operations.................................. 2,529,649 5,088,344 ------------- ------------ EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)........................... 18,767,881 23,169,917 ------------- ------------ Less cost of units redeemed: Administrative charges..................................... 4,483,421 2,568,298 Policy loans............................................... 609,118 627,821 Surrender benefits......................................... 1,070,651 712,307 Death benefits............................................. 6,437 80,922 ------------- ------------ 6,169,627 3,989,348 ------------- ------------ Increase (decrease) in equity accounts from capital unit transactions................................ 12,598,254 19,180,569 ------------- ------------ Net increase (decrease) in equity accounts................. 15,127,903 24,268,913 Depositor's equity contribution (redemption).................. 0 (274,290) EQUITY ACCOUNTS: Beginning of period........................................... 32,903,969 8,909,346 ------------- ------------ End of period................................................. $ 48,031,872 $ 32,903,969 ============= ============
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 13 WRL SERIES LIFE ACCOUNT AGGRESSIVE GROWTH SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED SEPT. 30 DECEMBER 31 -------- ----------------- 1996 1995 1994\dagger\ -------- ------- ------- Accumulation unit value, beginning of period $ 13.43 $ 9.82 $ 10.00 Income from operations: Net investment income (loss)........ .18 .37 (.06) Net realized and unrealized gain (loss) on investments........ .67 3.24 (.12) ------- ------- ------- Total income (loss) from operations .85 3.61 (.18) ------- ------- ------- Accumulation unit value, end of period... $ 14.28 $ 13.43 $ 9.82 ======= ======= ======= Total return............................. 6.33% 36.79% (1.85)% Ratios and supplemental data: Net assets at end of period (in thousands) $48,032 $32,904 $ 8,909 Ratio of net investment income (loss) to average net assets**................ 1.81% 2.93% (.60)% * The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. ** This ratio is annualized for the period ended September 30, 1996 \dagger\ The inception date of this sub-account was March 1, 1994. The total return is not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 14 WRL SERIES LIFE ACCOUNT BALANCED SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS ASSETS: SEPTEMBER 30, 1996 Investments at net asset value: WRL Series Fund, Inc.: Balanced Portfolio (478,127.36 shares; cost $ 4,853,852) .................................. $ 5,273,193 Accrued transfers from (to) depositor - net ............. (6,158) ----------- Total assets ....................................... 5,267,035 ----------- LIABILITIES: .............................................. 0 ----------- Total net assets ................................... $ 5,267,035 =========== EQUITY ACCOUNTS: Policyowners' equity: Balanced sub-account (456,622.641047 units; $ 11.534766 unit value) ............................ $ 5,267,035 ----------- Total equity ....................................... $ 5,267,035 =========== STATEMENT OF OPERATIONS NINE MONTHS ENDED INVESTMENT INCOME: SEPTEMBER 30, 1996 Dividend income ........................................ $ 31,381 Capital gain distributions ............................. 0 -------- 31,381 EXPENSES: Mortality and expense risk charges ..................... 31,297 -------- Net investment income (loss) ......................... 84 -------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions .............................. 67,906 Unrealized appreciation (depreciation) ................. 106,741 -------- Net gain (loss) on investments ....................... 174,647 -------- Net increase (decrease) in net assets resulting from operations ........................ $174,731 ========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS NINE MONTHS ENDED YEAR ENDED OPERATIONS: SEPTEMBER 30, 1996 DECEMBER 31, 1995 Net investment income (loss)................................... $ 84 $ 102,635 Net gain (loss) on investments................................. 174,647 401,549 ------------- ------------ Net increase (decrease) in equity accounts resulting from operations................................... 174,731 504,184 ------------- ------------ EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)............................ 2,043,775 1,545,514 ------------- ------------ Less cost of units redeemed: Administrative charges...................................... 404,262 327,290 Policy loans................................................ 55,007 29,025 Surrender benefits.......................................... 63,488 27,726 Death benefits.............................................. 3,933 14,881 ------------- ------------ 526,690 398,852 ------------- ------------ Increase (decrease) in equity accounts from capital unit transactions................................. 1,517,085 1,146,662 ------------- ------------ Net increase (decrease) in equity accounts.................. 1,691,816 1,650,846 Depositor's equity contribution (redemption)................... (220,175) 0 EQUITY ACCOUNTS: Beginning of period............................................ 3,795,394 2,144,548 ------------- ------------ End of period.................................................. $ 5,267,035 $ 3,795,394 ============= ============
The notes to the financial statements are an integral part of this report. - ------------------------------------------------------------------------------- 15 WRL SERIES LIFE ACCOUNT BALANCED SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED SEPT.30 DECEMBER 31 -------- ----------------------- 1996 1995 1994\dagger\ -------- ------- ------------- Accumulation unit value, beginning of period $ 11.13 $ 9.37 $ 10.00 Income from operations: Net investment income (loss)........ .00 .37 .22 Net realized and unrealized gain (loss) on investments........ .40 1.39 (.85) ------- ------- ------- Total income (loss) from operations .40 1.76 (.63) ------- ------- ------- Accumulation unit value, end of period... $ 11.53 $ 11.13 $ 9.37 ======= ======= ======= Total return............................. 3.68% 18.73% (6.29)% Ratios and supplemental data: Net assets at end of period (in thousands) $ 5,267 $ 3,795 $ 2,145 Ratio of net investment income (loss) to average net assets**................ .00% 3.59% 2.55% * The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. ** This ratio is annualized for the period ended September 30, 1996 \dagger\ The inception date of this sub-account was March 1, 1994. The total return is not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 16 WRL SERIES LIFE ACCOUNT EMERGING GROWTH SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS ASSETS: SEPTEMBER 30, 1996 Investments at net asset value: WRL Series Fund, Inc.: Emerging Growth Portfolio (5,215,027.007 shares; cost $ 72,827,461) .................................. $104,681,427 Accrued transfers from (to) depositor - net .............. 54,104 ------------ Total assets ........................................ 104,735,531 ------------ LIABILITIES: ............................................... 0 ------------ Total net assets .................................... $104,735,531 ============ EQUITY ACCOUNTS: Policyowners' equity: Emerging Growth sub-account (5,143,416.816593 units; $ 20.363026 unit value) ............................. $104,735,531 ------------ Total equity ........................................ $104,735,531 ============ STATEMENT OF OPERATIONS NINE MONTHS ENDED INVESTMENT INCOME: SEPTEMBER 30, 1996 Dividend income .................................... $ 3,998 Capital gain distributions ......................... 178,386 ------------ 182,384 EXPENSES: Mortality and expense risk charges ................. 564,594 ------------ Net investment income (loss) ..................... (382,210) ------------ Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions .......................... 858,061 Unrealized appreciation (depreciation) ............. 17,300,721 ------------ Net gain (loss) on investments ................... 18,158,782 ------------ Net increase (decrease) in net assets resulting from operations .................... $ 17,776,572 ============
STATEMENT OF CHANGES IN EQUITY ACCOUNTS NINE MONTHS ENDED YEAR ENDED OPERATIONS: SEPTEMBER 30, 1996 DECEMBER 31, 1995 Net investment income (loss)................................ $ (382,210) $ 2,356,904 Net gain (loss) on investments.............................. 18,158,782 16,180,870 ------------- ------------ Net increase (decrease) in equity accounts resulting from operations................................ 17,776,572 18,537,774 ------------- ------------ EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)......................... 28,842,554 21,556,186 ------------- ------------ Less cost of units redeemed: Administrative charges................................... 6,379,364 5,846,452 Policy loans............................................. 1,447,069 1,387,434 Surrender benefits....................................... 1,930,578 1,602,690 Death benefits........................................... 31,537 38,971 ------------- ------------ 9,788,548 8,875,547 ------------- ------------ Increase (decrease) in equity accounts from capital unit transactions.............................. 19,054,006 12,680,639 ------------- ------------ Net increase (decrease) in equity accounts............... 36,830,578 31,218,413 EQUITY ACCOUNTS: Beginning of period......................................... 67,904,953 36,686,540 ------------- ------------ End of period............................................... $ 104,735,531 $ 67,904,953 ============= ============
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 17 WRL SERIES LIFE ACCOUNT EMERGING GROWTH SUB-ACCOUNT (UNAUDITED) - --------------------------------------------------------------------------------
SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED SEPT. 30 DECEMBER 31 -------- --------------------------------- 1996 1995 1994 1993\dagger\ -------- ------- ------- ------------- Accumulation unit value, beginning of period $ 16.56 $ 11.38 $ 12.40 $ 10.00 Income from operations: Net investment income (loss)........ (.08) .65 (.09) (.09) Net realized and unrealized gain (loss) on investments........ 3.88 4.53 (.93) 2.49 ------- ------- ------- ------- Total income (loss) from operations 3.80 5.18 (1.02) 2.40 ------- ------- ------- ------ Accumulation unit value, end of period... $ 20.36 $ 16.56 $ 11.38 $ 12.40 ======= ======= ======= ======= Total return............................. 22.98% 45.49% (8.18)% 23.96% Ratios and supplemental data: Net assets at end of period (in thousands) $104,736 $67,905 $36,687 $18,620 Ratio of net investment income (loss) to average net assets**................ (.62)% 4.66% (.86)% (.77)% - ------------------ * The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. ** This ratio is annualized for the period ended September 30, 1996 \dagger\ The inception date of this sub-account was March 1, 1993. The total return is not annualized.
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 18 WRL SERIES LIFE ACCOUNT UTILITY SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS ASSETS: SEPTEMBER 30, 1996 Investments at net asset value: WRL Series Fund, Inc.: Utility Portfolio (398,719.984 shares; cost $ 4,334,954) .................................... $4,481,093 Accrued transfers from (to) depositor - net ............... 315 ---------- Total assets ......................................... 4,481,408 ---------- LIABILITIES: ................................................ 0 ---------- Total net assets ..................................... $4,481,408 ========== EQUITY ACCOUNTS: Policyowners' equity: Utility sub-account (376,602.892904 units; $ 11.899559 unit value) .............................. $4,481,408 ---------- Total equity ......................................... $4,481,408 ========== STATEMENT OF OPERATIONS NINE MONTHS ENDED INVESTMENT INCOME: SEPTEMBER 30, 1996 Dividend income ...................................... $ 24,453 Capital gain distributions ........................... 1,948 --------- 26,401 EXPENSES: Mortality and expense risk charges ................... 24,289 --------- Net investment income (loss) ....................... 2,112 --------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ............................ 108,198 Unrealized appreciation (depreciation) ............... (98,824) --------- Net gain (loss) on investments ..................... 9,374 --------- Net increase (decrease) in net assets resulting from operations ...................... $ 11,486 =========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS NINE MONTHS ENDED YEAR ENDED OPERATIONS: SEPTEMBER 30, 1996 DECEMBER 31, 1995 Net investment income (loss)............................... $ 2,112 $ 88,634 Net gain (loss) on investments............................. 9,374 336,528 ------------- ------------ Net increase (decrease) in equity accounts resulting from operations............................... 11,486 425,162 ------------- ------------ EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)........................ 2,489,074 1,368,262 ------------- ------------ Less cost of units redeemed: Administrative charges.................................. 303,641 221,419 Policy loans............................................ 43,852 26,862 Surrender benefits...................................... 67,364 126,576 Death benefits.......................................... 2,733 2,896 ------------- ------------ 417,590 377,753 ------------- ------------ Increase (decrease) in equity accounts from capital unit transactions............................. 2,071,484 990,509 ------------- ------------ Net increase (decrease) in equity accounts.............. 2,082,970 1,415,671 Depositors' equity contribution (redemption)............ (232,644) 0 EQUITY ACCOUNTS: Beginning of period........................................ 2,631,082 1,215,411 ------------- ------------ End of period.............................................. $ 4,481,408 $ 2,631,082 ============= ============
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 19 WRL SERIES LIFE ACCOUNT UTILITY SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED SEPT. 30 DECEMBER 31 -------- ----------------- 1996 1995 1994\dagger -------- ------- ------- Accumulation unit value, beginning of period $ 11.77 $ 9.49 $ 10.00 Income from operations: Net investment income (loss)........ .01 .49 .29 Net realized and unrealized gain (loss) on investments........ .12 1.79 (.80) ------- ------- ------- Total income (loss) from operations .13 2.28 (.51) ------- ------- ------- Accumulation unit value, end of period... $ 11.90 $ 11.77 $ 9.49 ======= ======= ======= Total return............................. 1.06% 24.14% (5.15)% Ratios and supplemental data: Net assets at end of period (in thousands) $4,481 $2,631 $ 1,215 Ratio of net investment income (loss) to average net assets.................. .08% 4.57% 3.09% * The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. ** This ratio is annualized for the period ended September 30, 1996 \dagger\ The inception date of this sub-account was March 1, 1994. The total return is not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 20 WRL SERIES LIFE ACCOUNT TACTICAL ASSET ALLOCATION SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS ASSETS: SEPTEMBER 30, 1996 Investments at net asset value: WRL Series Fund, Inc.: Tactical Asset Allocation Portfolio (1,217,272.416 shares; cost $ 13,823,979) ................................. $ 14,885,662 Accrued transfers from (to) depositor - net ............. (21,556) Total assets ....................................... 14,864,106 ------------ LIABILITIES: .............................................. 0 ------------ Total net assets ................................... $ 14,864,106 ============ EQUITY ACCOUNTS: Policyowners' equity: Tactical Asset Allocation sub-account (1,173,005.980111 units; $ 12.671808 unit value) ............................ $ 14,864,106 ------------ Total equity ....................................... $ 14,864,106 ============ STATEMENT OF OPERATIONS NINE MONTHS ENDED INVESTMENT INCOME: SEPTEMBER 30, 1996 Dividend income ....................................... $ 99,486 Capital gain distributions ............................ 0 -------- 99,486 EXPENSES: Mortality and expense risk charges .................... 86,544 -------- Net investment income (loss) ........................ 12,942 -------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ............................. 296,655 Unrealized appreciation (depreciation) ................ 445,964 -------- Net gain (loss) on investments ...................... 742,619 -------- Net increase (decrease) in net assets resulting from operations ....................... $755,561 ========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS NINE MONTHS ENDED PERIOD ENDED OPERATIONS: SEPTEMBER 30, 1996 DECEMBER 31, 1995* Net investment income (loss)............................... $ 12,942 $ 314,171 Net gain (loss) on investments............................. 742,619 733,874 ------------- ------------ Net increase (decrease) in equity accounts resulting from operations............................... 755,561 1,048,045 ------------- ------------ EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)........................ 6,456,969 9,081,189 ------------- ------------ Less cost of units redeemed: Administrative charges..................................... 767,103 434,848 Policy loans............................................... 253,319 145,685 Surrender benefits......................................... 773,024 70,630 Death benefits............................................. 835 22,440 ------------- ------------ 1,794,281 673,603 ------------- ------------ Increase (decrease) in equity accounts from capital unit transactions............................... 4,662,688 8,407,586 ------------- ------------ Net increase (decrease) in equity accounts................. 5,418,249 9,455,631 Depositor's equity contribution (redemption)............... 0 (9,774) EQUITY ACCOUNTS: Beginning of period........................................ 9,445,857 0 ------------- ------------ End of period.............................................. $ 14,864,106 $ 9,445,857 ============= ============
* The inception date of this sub-account was January 3, 1995. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 21 WRL SERIES LIFE ACCOUNT TACTICAL ASSET ALLOCATION SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED SEPT. 30 DECEMBER 31 1996 1995\dagger\ Accumulation unit value, beginning of period $ 11.90 $ 10.00 Income from operations: Net investment income (loss)........ .01 .61 Net realized and unrealized gain (loss) on investments........ .76 1.29 ------- ------- Total income (loss) from operations .77 1.90 ------- ------- Accumulation unit value, end of period... $ 12.67 $ 11.90 ======= ======= Total return............................. 6.46% 19.03% Ratios and supplemental data: Net assets at end of period (in thousands) $14,864 $ 9,446 Ratio of net investment income (loss) to average net assets**................ .14% 5.47% * The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. ** This ratio is annualized for the period ended September 30, 1996. \dagger\ The inception date of this sub-account was January 3, 1995. The total return is not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 22 WRL SERIES LIFE ACCOUNT C.A.S.E. GROWTH SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS ASSETS: SEPTEMBER 30, 1996 Investments at net asset value: WRL Series Fund, Inc.: C.A.S.E. Growth Portfolio (211,216.975 shares; cost $ 2,608,808) ................................... $ 2,715,157 Accrued transfers from (to) depositor - net .............. (56,062) ----------- Total assets ........................................ 2,659,095 ----------- LIABILITIES: ............................................... 0 ----------- Total net assets .................................... $ 2,659,095 =========== EQUITY ACCOUNTS: Policyowners' equity: C.A.S.E. Growth sub-account (258,931.483192 units; $ 10.171290 unit value) ............................. $ 2,633,667 Depositor's equity: C.A.S.E. Growth sub-account (2,500.000000 units; $ 10.171290 unit value .............................. 25,428 ----------- Total equity ........................................ $ 2,659,095 =========== STATEMENT OF OPERATIONS PERIOD ENDED INVESTMENT INCOME: SEPTEMBER 30, 1996* Dividend income ....................................... $ 739 Capital gain distributions ............................ 0 --------- 739 EXPENSES: Mortality and expense risk charges .................... 4,077 --------- Net investment income (loss) ........................ (3,338) --------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ............................. (2,194) Unrealized appreciation (depreciation) ................ 106,349 --------- Net gain (loss) on investments ...................... 104,155 --------- Net increase (decrease) in net assets resulting from operations ....................... $ 100,817 ========= STATEMENT OF CHANGES IN EQUITY ACCOUNTS PERIOD ENDED OPERATIONS: SEPTEMBER 30, 1996* Net investment income (loss) ............................. $ (3,338) Net gain (loss) on investments ........................... 104,155 ----------- Net increase (decrease) in equity accounts resulting from operations ............................. 100,817 ----------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed) ...................... 2,590,910 ----------- Less cost of units redeemed: Administrative charges ................................ 47,280 Policy loans .......................................... 0 Surrender benefits .................................... 10,352 Death benefits ........................................ 0 ----------- 57,632 Increase (decrease) in equity accounts from capital unit transactions ........................... 2,533,278 ----------- Net increase (decrease) in equity accounts ............ 2,634,095 Depositor's equity contribution (redemption) ............. 25,000 EQUITY ACCOUNTS: Beginning of period ...................................... 0 ----------- End of period ............................................ $ 2,659,095 =========== * The inception date of this sub-account was May 1, 1996. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 23 WRL SERIES LIFE ACCOUNT C.A.S.E. GROWTH SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED SEPTEMBER 30 1996\dagger\ Accumulation unit value, beginning of period $ 10.00 Income from operations: Net investment income (loss)........ (.05) Net realized and unrealized gain (loss) on investments........ .22 ------- Total income (loss) from operations .17 ------- Accumulation unit value, end of period... $ 10.17 ======= Total return............................. 1.71% Ratios and supplemental data: Net assets at end of period (in thousands) $ 2,659 Ratio of net investment income (loss) to average net assets**............. (1.67)% * The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. ** This ratio is annualized for the period ended September 30, 1996. \dagger\ The inception date of this sub-account was May 1, 1996. The total return is not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 24 WRL SERIES LIFE ACCOUNT VALUE EQUITY SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS ASSETS: SEPTEMBER 30, 1996 Investments at net asset value: WRL Series Fund, Inc.: Value Equity Portfolio (503,729.939 shares; cost $ 5,170,272) ................................ $5,351,399 Accrued transfers from (to) depositor - net ........... 31,656 ---------- Total assets ..................................... 5,383,055 ---------- LIABILITIES: ............................................ 0 ---------- Total net assets ................................. $5,383,055 ========== EQUITY ACCOUNTS: Policyowners' equity: Value Equity sub-account (488,616.296490 units; $ 10.583725 unit value) .......................... $5,171,381 Depositor's equity: Value Equity sub-account (20,000.000000 units; $ 10.583725 unit value ........................... 211,674 ---------- Total equity ..................................... $5,383,055 ========== STATEMENT OF OPERATIONS PERIOD ENDED INVESTMENT INCOME: SEPTEMBER 30, 1996* Dividend income ...................................... $ 0 Capital gain distributions ........................... 0 --------- 0 EXPENSES: Mortality and expense risk charges ................... 5,878 --------- Net investment income (loss) ....................... (5,878) --------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ............................ 3,604 Unrealized appreciation (depreciation) ............... 181,127 --------- Net gain (loss) on investments ..................... 184,731 --------- Net increase (decrease) in net assets resulting from operations ...................... $ 178,853 ========= STATEMENT OF CHANGES IN EQUITY ACCOUNTS PERIOD ENDED OPERATIONS: SEPTEMBER 30, 1996* Net investment income (loss) ............................ $ (5,878) Net gain (loss) on investments .......................... 184,731 ----------- Net increase (decrease) in equity accounts resulting from operations ............................ 178,853 ----------- EQUITY TRANSACTIONS: Proceeds from units sold (repurchased): Net payments (redemptions) ........................... 5,063,012 ----------- Less cost of units redeemed: Cost of insurance and administrative charges ......... 38,783 Policy loans ......................................... 0 Surrender benefits ................................... 20,027 Death benefits ....................................... 0 ----------- 58,810 Increase (decrease) in equity accounts from capital unit transactions .......................... 5,004,202 ----------- Net increase (decrease) in equity accounts ........... 5,183,055 Depositor's equity contribution (redemption) ............ 200,000 EQUITY ACCOUNTS: Beginning of period ..................................... 0 ----------- End of period ........................................... $ 5,383,055 =========== * The inception date of this sub-account was May 1, 1996 The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 25 WRL SERIES LIFE ACCOUNT VALUE EQUITY SUB-ACCOUNT (UNAUDITED) - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED SEPTEMBER 30 1996\dagger\ ------------ Accumulation unit value, beginning of period $ 10.00 Income from operations: Net investment income (loss)........ (.15) Net realized and unrealized gain (loss) on investments........ .73 ------- Total income (loss) from operations .58 ------- Accumulation unit value, end of period... $ 10.58 ======= Total return............................. 5.84% Ratios and supplemental data: Net assets at end of period (in thousa $ 5,383 Ratio of net investment income to average net assets**................ (3.64)% * The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. ** This ratio is annualized for the period ended September 30, 1996. \dagger\ The inception date of this sub-account was May 1, 1996. The total return is not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 26 WRL SERIES LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SEPTEMBER 30, 1996 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 the Western Reserve Life Assurance Co. of Ohio ("WRL") and is registered as a unit investment trust ("Trust") under the Investment Company Act of 1940, as amended. The Life Account contains thirteen investment options referred to as sub-accounts. Each sub-account invests in the corresponding portfolio of the WRL Series Fund, Inc. (the "Fund"), a registered management investment company under the Investment Company Act of 1940, as amended. These portfolios and their respective investment management organizations are as follows: PORTFOLIO INVESTMENT MANAGER - --------- ------------------ Money Market J.P. Morgan Investment Management Inc. Bond Janus Capital Corporation (JCC) Growth JCC Short-to-Intermediate AEGON USA Investment Government Management, Inc. ("AEGON Management") Global JCC Equity-Income Luther King Asset Management Inc. Emerging Growth Van Kampen/American Capital Asset Management,Inc. Aggressive Growth Fred Alger Management,Inc. Balanced AEGON Management Utility Federated Investment Counseling Tactical Asset Dean Investment Associates Allocation C.A.S.E. Growth C.A.S.E. Management, Inc. Value Equity NWQ Investment Management Company, Inc. WRL and AEGON Management are indirectly wholly-owned subsidiaries of AEGON USA, Inc., which is an indirect wholly-owned subsidiary of AEGON nv, a Netherlands Corporation. On May 1, 1996, WRL made an initial contribution to the Life Account C.A.S.E. Growth and Value Equity sub-accounts, which in turn invested in the respective portfolios. The amount of the contribution and the units received are as follows: SUB-ACCOUNT CONTRIBUTION UNITS - ----------- ------------ ------------- C.A.S.E. Growth $ 25,000 2,500.000000 Value Equity 200,000 20,000.000000 The Life Account holds assets to support the benefits under flexible premium variable universal life insurance policies (the "Policies") issued by WRL, which issued the first of such Policies on October 3, 1986. The Life Account's equity transactions are accounted for using the appropriate effective date at the corresponding accumulation unit value. The preparation of the financial statements in accordance wth generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following significant accounting policies, which are in conformity with generally accepted accounting principles for unit investment trusts, have been consistently used in preparation of the Trust's financial statements. A. VALUATION OF INVESTMENTS The investments in the Fund's shares are stated at the closing net asset value ("NAV") per share as determined by the Fund on September 30, 1996. Investment transactions are accounted for on the trade date, using the Fund NAV per share next determined after receipt of sale or redemption order without sales charges. Dividend income and capital gain 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 current 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 issuance and administration of the Policies. A. POLICY CHARGES Under some forms of the Policies, sales and other administrative charges are deducted by WRL prior to allocation of policyowner payments to the sub-accounts. - -------------------------------------------------------------------------------- 27 NOTES TO FINANCIAL STATEMENTS WRL SERIES LIFE ACCOUNT (UNAUDITED) - ------------------------------------------------------------------------------- Thereafter, monthly administrative charges are deducted from the sub-accounts, some of which continue only during the first policy year. Contingent surrender charges may also apply. Under the other forms of the Policies, such "front-end" and other administrative charges are not deducted prior to allocation of the initial premium payment but may reside as contingent surrender charges. 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 0.90% of average daily net assets of the Life Account is assessed to compensate WRL for assumption of mortality and expense risks in connection with issuance and administration of the Policies. This charge (not assessed at the individual policy level) effectively reduces the value of a unit outstanding during the year. NOTE 3 - DIVIDENDS AND DISTRIBUTIONS Dividends of the Fund's Money Market Portfolio are declared daily and reinvested monthly. Dividends of the remaining portfolios are declared and reinvested semi-annually, while capital gain distributions are declared and reinvested annually. Dividends and distributions of the Fund are generally paid to and reinvested by the Life Account the next business day after declaration. NOTE 4 - OTHER MATTERS As of September 30, 1996 the equity accounts include net unrealized appreciation (depreciation) on investments of: SUB-ACCOUNT ----------- Money Market.............................. $ n/a Bond...................................... (311,755) Growth.................................... 100,582,396 Short-to-Intermediate Government.......... 12,874 Global.................................... 13,010,973 Equity-Income............................. 7,483,906 Emerging Growth........................... 31,853,966 Aggressive Growth......................... 3,039,781 Balanced.................................. 419,341 Utility................................... 146,139 Tactical Asset Allocation................. 1,061,683 C.A.S.E. Growth........................... 106,349 Value Equity.............................. 181,127 - -------------------------------------------------------------------------------- 28 WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO BALANCE SHEET - STATUTORY BASIS AS OF SEPTEMBER 30, 1996 (IN THOUSANDS) (UNAUDITED) ASSETS ------ Bonds $ 397,320 Common stocks and mutual funds 610 Mortgage loans on real estate 6,079 Real estate 7,289 Policy loans 47,942 Cash and short-term investments (8,163) Separate account assets 3,295,321 Other assets 17,235 ---------- Total assets $3,763,633 ========== LIABILITIES AND CAPITAL AND SURPLUS ----------------------------------- Policy reserves $ 299,797 Other policy liabilities 30,655 Amounts due or accrued 14,118 Separate account liabilities 3,290,269 Borrowed money 25,900 Asset valuation reserve 6,033 --------- Total liabilities 3,666,772 Total capital and surplus 96,861 --------- Total liabilities, capital, and surplus $3,763,633 ========== See note to financial statements WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO STATEMENT OF OPERATIONS - STATUTORY BASIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (IN THOUSANDS) (UNAUDITED) Premium income $750,143 Net investment income 27,905 Net realized capital gains (losses) 89 Other income 10,172 Benefit payments incurred (241,024) Decrease in policy and contract reserves 94,965 Net transfers to separate accounts (491,331) Operating costs (143,580) -------- Income before income taxes 7,339 Federal income taxes (6,002) -------- Net income (loss) $ 1,337 ======== See note to financial statements
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO STATEMENT OF CHANGES IN CAPITAL AND SURPLUS-STATUTORY BASIS (IN THOUSANDS) (UNAUDITED) ADDITIONAL TOTAL COMMON PAID-IN UNASSIGNED CAPITAL AND STOCK CAPITAL SURPLUS SURPLUS ------- ---------- ---------- ----------- Balance at December 31, 1995 $1,500 $68,015 $28,424 $97,939 Net income 1,337 1,337 Change in reserve valuation basis - - (2,246) (2,246) Change in Unrealized gains (losses) - - 147 147 Change in non-admitted assets - - 96 96 Change in asset valuation reserves - - (444) (444) Change in separate accounts surplus - - 32 32 ------ ------- ------- ------- Balance at September 30, 1996 $1,500 $68,015 $27,346 $96,861 ====== ======= ======= =======
See note to financial statements WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO STATEMENT OF CASH FLOWS - STATUTORY BASIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (IN THOUSANDS) (UNAUDITED) Operations: Cash from insurance operations $(126,122) Investment income received 28,529 Federal income taxes (5,624) --------- Cash provided (used) by operations (103,217) --------- Investment activities: Proceeds from sale or maturity of long-term invested assets 92,739 Cost of long-term investments acquired (32,327) Other, net 10,243 --------- Cash provided (used) by investment activities 70,655 --------- Financing activities: Increase (decrease) in borrowed money 25,900 --------- Cash provided by (used in) financing activities 25,900 --------- Net increase (decrease) in cash and short-term investments (6,662) Cash and short-term investments: Beginning of year (1,501 --------- End of period $ (8,163) ========= See note to financial statements WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTE TO FINANCIAL STATEMENTS - STATUTORY BASIS AS OF SEPTEMBER 30, 1996 (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying unaudited statutory basis financial statements have been prepared in accordance with statutory accounting principles for interim financial information and the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. For further information, refer to the accompanying statutory basis financial statements and notes thereto for the year ended December 31, 1995. WRL SERIES LIFE ACCOUNT - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Western Reserve Life Assurance Co. of Ohio and Policyholders of the WRL Series Life Account In our opinion, the accompanying statements of assets, liabilities and equity accounts and the related statements of operations and of changes in equity accounts and the selected per unit data and ratios present fairly, in all material respects, the financial position of the Money Market, Bond, Growth, Short-to-Intermediate Government, Global, Equity-Income, Emerging Growth, Aggressive Growth, Balanced, Utility and Tactical Asset Allocation Sub-Accounts of the WRL Series Life Account (a separate account of Western Reserve Life Assurance Co. of Ohio, hereafter referred to as the "Life Account") at December 31, 1995, the results of each of their operations, the changes in each of their equity accounts and the selected per unit data and ratios for each of the periods indicated, in conformity with generally accepted accounting principles. These financial statements and selected per unit data and ratios (hereafter referred to as "financial statements") are the responsibility of the Life Account's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Kansas City, Missouri January 31, 1996 - -------------------------------------------------------------------------------- 1 WRL SERIES LIFE ACCOUNT MONEY MARKET SUB-ACCOUNT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
ASSETS: DECEMBER 31, 1995 Investments, at net asset value: WRL Series Fund, Inc.: Money Market Portfolio (10,819,939.810 shares; cost $ 10,819,940)..................... $ 10,819,940 Accrued transfers from (to) depositor - net.......................... (61,316) ----------------- Total assets........................... 10,758,624 ----------------- LIABILITIES:................................. 0 ----------------- Total net assets....................... $ 10,758,624 ================= EQUITY ACCOUNTS: Policy Owners' equity: Money Market sub-account (725,394.862557 units; $ 14.831403 unit value)................ $ 10,758,624 ----------------- Total equity........................... $ 10,758,624 =================
STATEMENT OF OPERATIONS
YEAR ENDED INVESTMENT INCOME: DECEMBER 31, 1995 Dividend income.......................... $ 478,782 Capital gain distributions............... 0 ----------------- 478,782 EXPENSES: Mortality and expense risk charges....... 81,372 ----------------- Net investment income (loss)........... 397,410 ----------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions........................... 0 Change in unrealized appreciation (depreciation)......................... 0 ----------------- Net gain (loss) on investments......... 0 ----------------- Net increase (decrease) in equity accounts resulting from operations......................... $ 397,410 =================
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
YEAR ENDED YEAR ENDED DECEMBER 31, 1995 DECEMBER 31, 1994 OPERATIONS: Net investment income (loss)........................................................... $ 397,410 $ 185,968 Net gain (loss) on investments......................................................... 0 0 ---------------- ----------------- Net increase (decrease) in equity accounts resulting from operations............................................................ 397,410 185,968 ---------------- ----------------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed).................................................... 3,139,280 6,263,945 ---------------- ----------------- Less cost of units redeemed: Administrative charges............................................................... 1,356,484 1,261,165 Policy loans......................................................................... 219,767 57,873 Surrender benefits................................................................... 899,893 409,880 Death benefits....................................................................... 7,670 562 ---------------- ----------------- 2,483,814 1,729,480 ---------------- ----------------- Increase (decrease) in equity accounts from capital unit transactions.......................................................... 655,466 4,534,465 ---------------- ----------------- Net increase (decrease) in equity accounts........................................... 1,052,876 4,720,433 EQUITY ACCOUNTS: Beginning of period.................................................................... 9,705,748 4,985,315 ---------------- ----------------- End of period.......................................................................... $ 10,758,624 $ 9,705,748 ================ =================
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 2 WRL SERIES LIFE ACCOUNT MONEY MARKET SUB-ACCOUNT - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
DECEMBER 31 ------------------------------------------------------------------------ 1995 1994 1993 1992 1991 -------- ------- ------- ------- ------- Accumulation unit value, beginning of period.... $ 14.19 $ 13.84 $ 13.63 $ 13.33 $ 12.78 Income from operations: Net investment income (loss)................ .64 .35 .21 .30 .55 Net realized and unrealized gain (loss) on investments................ .00 .00 .00 .00 .00 -------- ------- ------- ------- ------- Total income (loss) from operations....... .64 .35 .21 .30 .55 -------- ------- ------- ------- ------- Accumulation unit value, end of period.......... $ 14.83 $ 14.19 $ 13.84 $ 13.63 $ 13.33 ======== ======== ======== ======== ======== Total return.................................... 4.49% 2.58% 1.52% 2.24% 4.34% Ratios and supplemental data: Net assets at end of period (in thousands).... $ 10,759 $ 9,706 $ 4,985 $ 4,619 $ 4,042 Ratio of net investment income (loss) to average net assets....................... 4.37% 2.66% 1.51% 2.12% 4.28%
* The above table illustrates the change for a unit outstanding computed using average units outstanding throughout each period. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 3 WRL SERIES LIFE ACCOUNT BOND SUB-ACCOUNT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
ASSETS: DECEMBER 31, 1995 Investments, at net asset value: WRL Series Fund, Inc.: Bond Portfolio (886,633.291 shares; cost $ 9,906,273)...................... $ 10,059,038 Accrued transfers from (to) depositor - net.......................... 7,094 ----------------- Total assets........................... 10,066,132 ----------------- LIABILITIES:................................. 0 ----------------- Total net assets....................... $ 10,066,132 ================= EQUITY ACCOUNTS: Policy Owners' equity: Bond sub-account (511,648.226174 units; $ 19.673931 unit value)................ $ 10,066,132 ----------------- Total equity........................... $ 10,066,132 =================
STATEMENT OF OPERATIONS
YEAR ENDED INVESTMENT INCOME: DECEMBER 31, 1995 Dividend income.......................... $ 531,010 Capital gain distributions............... 0 ----------------- 531,010 EXPENSES: Mortality and expense risk charges....... 71,033 ----------------- Net investment income (loss)........... 459,977 ----------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions........................... (127,916) Change in unrealized appreciation (depreciation)......................... 1,208,073 ----------------- Net gain (loss) on investments......... 1,080,157 ----------------- Net increase (decrease) in equity accounts resulting from operations......................... $ 1,540,134 =================
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
YEAR ENDED YEAR ENDED DECEMBER 31, 1995 DECEMBER 31, 1994 OPERATIONS: Net investment income (loss).......................................................... $ 459,977 $ 346,531 Net gain (loss) on investments........................................................ 1,080,157 (901,953) ----------------- ----------------- Net increase (decrease) in equity accounts resulting from operations........................................................... 1,540,134 (555,422) ----------------- ----------------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)................................................... 3,749,029 678,317 ----------------- ----------------- Less cost of units redeemed: Administrative charges.............................................................. 916,494 595,277 Policy loans........................................................................ 197,829 57,084 Surrender benefits.................................................................. 357,384 194,018 Death benefits...................................................................... 10,202 2,326 ----------------- ----------------- 1,481,909 848,705 ----------------- ----------------- Increase (decrease) in equity accounts from capital unit transactions......................................................... 2,267,120 (170,388) ----------------- ----------------- Net increase (decrease) in equity accounts.......................................... 3,807,254 (725,810 EQUITY ACCOUNTS: Beginning of period................................................................... 6,258,878 6,984,688 ----------------- ----------------- End of period......................................................................... $ 10,066,132 $ 6,258,878 ================= =================
The notes to the financial statements are an integral part of this report - -------------------------------------------------------------------------------- 4 WRL SERIES LIFE ACCOUNT BOND SUB-ACCOUNT - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
DECEMBER 31 ------------------------------------------------------------------------ 1995 1994 1993 1992 1991 -------- ------- ------- ------- ------- Accumulation unit value, beginning of period.... $ 16.14 $ 17.50 $ 15.57 $ 14.68 $ 12.48 Income from operations: Net investment income (loss)................ 1.05 .89 2.11 1.00 .48 Net realized and unrealized gain (loss) on investments................ 2.48 (2.25) (.18) (.11) 1.72 -------- ------- ------- ------- ------- Total income (loss) from operations....... 3.53 (1.36) 1.93 .89 2.20 -------- ------- ------- ------- ------- Accumulation unit value, end of period.......... $ 19.67 $ 16.14 $ 17.50 $ 15.57 $ 14.68 ========= ======== ======== ======== ======== Total return.................................... 21.89% (7.77)% 12.40% 6.08% 17.63% Ratios and supplemental data: Net assets at end of period (in thousands).... $ 10,066 $ 6,259 $ 6,985 $ 4,558 $ 3,055 Ratio of net investment income (loss) to average net assets....................... 5.80% 5.57% 12.92% 6.69% 3.59%
* The above table illustrates the change for a unit outstanding computed using average units outstanding throughout each period. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 5 WRL SERIES LIFE ACCOUNT GROWTH SUB-ACCOUNT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
ASSETS: DECEMBER 31, 1995 Investments, at net asset value: WRL Series Fund, Inc.: Growth Portfolio (8,285,195.096 shares; cost $ 202,613,364).................. $ 262,315,405 Accrued transfers from (to) depositor - net........................ 151,700 ----------------- Total assets......................... 262,467,105 ----------------- LIABILITIES:............................... 0 ----------------- Total net assets..................... $ 262,467,105 ================= EQUITY ACCOUNTS: Policy Owners' equity: Growth sub-account (6,329,021.828348 units; $ 41.470406 unit value).............. $ 262,467,105 ----------------- Total equity......................... $ 262,467,105 =================
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995 INVESTMENT INCOME: Dividend income......................... $ 1,182,462 Capital gain distributions.............. 23,952,283 ---------------- 25,134,745 EXPENSES: Mortality and expense risk charges...... 1,884,365 ---------------- Net investment income (loss).......... 23,250,380 ---------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions.......................... 5,296,297 Change in unrealized appreciation (depreciation)........................ 49,505,485 ---------------- Net gain (loss) on investments........ 54,801,782 ---------------- Net increase (decrease) in equity accounts resulting from operations........................ $ 78,052,162 ================
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
YEAR ENDED YEAR ENDED DECEMBER 31, 1995 DECEMBER 31, 1994 OPERATIONS: Net investment income (loss)........................................................... $ 23,250,380 $ 242,685 Net gain (loss) on investments......................................................... 54,801,782 (16,096,859) ---------------- ---------------- Net increase (decrease) in equity accounts resulting from operations............................................................ 78,052,162 (15,854,174) ---------------- ---------------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed).................................................... 61,850,933 37,295,869 ---------------- ---------------- Less cost of units redeemed: Administrative charges............................................................... 23,714,204 20,971,223 Policy loans......................................................................... 5,518,596 2,955,838 Surrender benefits................................................................... 8,982,170 5,498,322 Death benefits....................................................................... 711,078 282,972 ---------------- ---------------- 38,926,048 29,708,355 ---------------- ---------------- Increase (decrease) in equity accounts from capital unit transactions.......................................................... 22,924,885 7,587,514 ---------------- ---------------- Net increase (decrease) in equity accounts........................................... 100,977,047 (8,266,660) EQUITY ACCOUNTS: Beginning of period.................................................................... 161,490,058 169,756,718 ---------------- ---------------- End of period.......................................................................... $ 262,467,105 $ 161,490,058 ================ ================
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 6 WRL SERIES LIFE ACCOUNT GROWTH SUB-ACCOUNT - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
DECEMBER 31 --------------------------------------------------------------- 1995 1994 1993 1992 --------- --------- --------- --------- Accumulation unit value, beginning of period.... $ 28.44 $ 31.30 $ 30.37 $ 29.95 Income from operations: Net investment income (loss)................ 3.89 .04 .46 1.09 Net realized and unrealized gain (loss) on investments................ 9.14 (2.90) .47 (.67) --------- --------- --------- --------- Total income (loss) from operations....... 13.03 (2.86) .93 .42 --------- --------- --------- --------- Accumulation unit value, end of period.......... $ 41.47 $ 28.44 $ 31.30 $ 30.37 ========== ========== ========== ========== Total return.................................... 45.81% (9.13)% 3.06% 1.41% Ratios and supplemental data: Net assets at end of period (in thousands).... $ 262,467 $ 161,490 $ 169,757 $ 146,053 Ratio of net investment income (loss) to average net assets....................... 11.05% .16% 1.56% 3.84% 1991 --------- Accumulation unit value, beginning of period.... $ 18.91 Income from operations: Net investment income (loss)................ 1.72 Net realized and unrealized gain (loss) on investments................ 9.32 --------- Total income (loss) from operations....... 11.04 --------- Accumulation unit value, end of period.......... $ 29.95 ========== Total return.................................... 58.37% Ratios and supplemental data: Net assets at end of period (in thousands).... $ 111,375 Ratio of net investment income (loss) to average net assets....................... 7.14%
* The above table illustrates the change for a unit outstanding computed using average units outstanding throughout each period. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 7 WRL SERIES LIFE ACCOUNT SHORT-TO-INTERMEDIATE GOVERNMENT SUB-ACCOUNT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
ASSETS: DECEMBER 31, 1995 Investments, at net asset value: WRL Series Fund, Inc.: Short-to-Intermediate Government Portfolio (142,006.075 shares; cost $ 1,440,621)...................... $ 1,479,151 Accrued transfers from (to) depositor - net.......................... 38,834 ----------------- Total assets........................... 1,517,985 ----------------- LIABILITIES:................................. 0 ----------------- Total net assets....................... $ 1,517,985 ================= EQUITY ACCOUNTS: Policy Owners' equity: Short-to-Intermediate Government sub-account (131,385.750734 units; $ 11.553647 unit value)................ $ 1,517,985 ----------------- Total equity........................... $ 1,517,985 =================
STATEMENT OF OPERATIONS
YEAR ENDED INVESTMENT INCOME: DECEMBER 31, 1995 Dividend income.......................... $ 72,133 Capital gain distributions............... 0 ----------------- 72,133 EXPENSES: Mortality and expense risk charges....... 10,047 ----------------- Net investment income (loss)........... 62,086 ----------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions........................... 2,109 Change in unrealized appreciation (depreciation)......................... 66,278 ----------------- Net gain (loss) on investments......... 68,387 ----------------- Net increase (decrease) in equity accounts resulting from operations......................... $ 130,473 =================
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
YEAR ENDED YEAR ENDED DECEMBER 31, 1995 DECEMBER 31, 1994 OPERATIONS: Net investment income (loss).......................................................... $ 62,086 $ 37,124 Net gain (loss) on investments........................................................ 68,387 (49,327) ----------------- ----------------- Net increase (decrease) in equity accounts resulting from operations........................................................... 130,473 (12,203) ----------------- ----------------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)................................................... 679,242 515,009 ----------------- ----------------- Less cost of units redeemed: Administrative charges.............................................................. 141,954 108,685 Policy loans........................................................................ 52,521 3,307 Surrender benefits.................................................................. 41,967 11,985 Death benefits...................................................................... 144 15,256 ----------------- ----------------- 236,586 139,233 ----------------- ----------------- Increase (decrease) in equity accounts from capital unit transactions......................................................... 442,656 375,776 ----------------- ----------------- Net increase (decrease) in equity accounts.......................................... 573,129 363,573 Depositor's equity contribution (redemption).......................................... 0 (826,666) EQUITY ACCOUNTS: Beginning of period................................................................... 944,856 1,407,949 ----------------- ----------------- End of period......................................................................... $ 1,517,985 $ 944,856 =================== ===================
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 8 WRL SERIES LIFE ACCOUNT SHORT-TO-INTERMEDIATE GOVERNMENT SUB-ACCOUNT - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
DECEMBER 31 ------------------------------------------------------- 1995 1994 1993 1992/dagger/ ------- ------- ------- ------- Accumulation unit value, beginning of period.... $ 10.27 $ 10.40 $ 10.04 $ 10.00 Income from operations: Net investment income (loss)................ .61 .40 .14 .01 Net realized and unrealized gain (loss) on investments................ .67 (.53) .22 .03 ------- ------- ------- ------- Total income (loss) from operations....... 1.28 (.13) .36 .04 ------- ------- ------- ------- Accumulation unit value, end of period.......... $ 11.55 $ 10.27 $ 10.40 $ 10.04 ======== ======== ======== ======== Total return.................................... 12.53% (1.32)% 3.64% .38% Ratios and supplemental data: Net assets at end of period (in thousands).... $ 1,518 $ 945 $ 1,408 $ 803 Ratio of net investment income (loss) to average net assets....................... 5.53% 4.06% 1.39% .16%
* The above table illustrates the change for a unit outstanding computed using average units outstanding throughout each period. /dagger/ The inception date of this sub-account was December 3, 1992. The total return and ratio of net investment income to average net assets are not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 9 WRL SERIES LIFE ACCOUNT GLOBAL SUB-ACCOUNT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
ASSETS: DECEMBER 31, 1995 Investments, at net asset value: WRL Series Fund, Inc.: Global Portfolio (2,386,494.041 shares; cost $ 33,426,846)..................... $ 37,028,035 Accrued transfers from (to) depositor - net.......................... 20,662 ----------------- Total assets........................... 37,048,697 ----------------- LIABILITIES:................................. 0 ----------------- Total net assets....................... $ 37,048,697 ================= EQUITY ACCOUNTS: Policy Owners' equity: Global sub-account (3,080,374.719544 units; $ 11.949748 unit value)................ $ 36,809,702 Depositors' equity: Global sub-account (20,000.000000 units; $ 11.949748 unit value)................ 238,995 ----------------- Total equity........................... $ 37,048,697 =================
STATEMENT OF OPERATIONS
YEAR ENDED INVESTMENT INCOME: DECEMBER 31, 1995 Dividend income.......................... $ 37,966 Capital gain distributions............... 1,399,851 ----------------- 1,437,817 EXPENSES: Mortality and expense risk charges....... 250,072 ----------------- Net investment income (loss)........... 1,187,745 ----------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions........................... 153,618 Change in unrealized appreciation (depreciation)......................... 4,472,385 ----------------- Net gain (loss) on investments......... 4,626,003 ----------------- Net increase (decrease) in equity accounts resulting from operations......................... $ 5,813,748 =================
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
YEAR ENDED PERIOD ENDED DECEMBER 31, 1995 DECEMBER 31, 1994* OPERATIONS: Net investment income (loss).......................................................... $ 1,187,745 $ 763,643 Net gain (loss) on investments........................................................ 4,626,003 (875,349) ----------------- ----------------- Net increase (decrease) in equity accounts resulting from operations........................................................... 5,813,748 (111,706) ----------------- ----------------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)................................................... 15,012,786 23,149,750 ----------------- ----------------- Less cost of units redeemed: Administrative charges.............................................................. 4,017,781 1,181,608 Policy loans........................................................................ 666,264 142,084 Surrender benefits.................................................................. 721,584 234,323 Death benefits...................................................................... 44,234 8,003 ----------------- ----------------- 5,449,863 1,566,018 ----------------- ----------------- Increase (decrease) in equity accounts from capital unit transactions......................................................... 9,562,923 21,583,732 ----------------- ----------------- Net increase (decrease) in equity accounts.......................................... 15,376,671 21,472,026 Depositor's equity contribution (redemption).......................................... 0 200,000 EQUITY ACCOUNTS: Beginning of period................................................................... 21,672,026 0 ----------------- ----------------- End of period......................................................................... $ 37,048,697 $ 21,672,026 =================== ===================
* The inception date of this sub-account was March 1, 1994. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 10 WRL SERIES LIFE ACCOUNT GLOBAL SUB-ACCOUNT - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
DECEMBER 31 ---------------------------- 1995 1994/dagger/ -------- ----------- Accumulation unit value, beginning of period.... $ 9.80 $ 10.00 Income from operations: Net investment income (loss)................ .45 .71 Net realized and unrealized gain (loss) on investments................ 1.70 (.91) -------- ----------- Total income (loss) from operations....... 2.15 (.20) -------- ----------- Accumulation unit value, end of period.......... $ 11.95 $ 9.80 ========= =========== Total return.................................... 21.96% (2.02)% Ratios and supplemental data: Net assets at end of period (in thousands).... $ 37,049 $ 21,672 Ratio of net investment income (loss) to average net assets....................... 4.25% 7.39%
* The above table illustrates the change for a unit outstanding computed using average units outstanding throughout each period. /dagger/ The inception date of this sub-account was March 1, 1994. The total return and ratio of net investment income to average net assets are not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 11 WRL SERIES LIFE ACCOUNT EQUITY-INCOME SUB-ACCOUNT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
ASSETS: DECEMBER 31, 1995 Investments, at net asset value: WRL Series Fund, Inc.: Equity-Income Portfolio (3,079,777.685 shares; cost $ 35,168,616)..................... $ 39,619,606 Accrued transfers from (to) depositor - net.......................... 28,669 ---------------- Total assets........................... 39,648,275 ---------------- LIABILITIES:................................. 0 ---------------- Total net assets....................... $ 39,648,275 ================ EQUITY ACCOUNTS: Policy Owners' equity: Equity-Income sub-account (2,885,803.576534 units; $ 13.739076 unit value)................ $ 39,648,275 ---------------- Total equity........................... $ 39,648,275 ================
STATEMENT OF OPERATIONS
YEAR ENDED INVESTMENT INCOME: DECEMBER 31, 1995 Dividend income.......................... $ 1,009,870 Capital gain distributions............... 1,034,053 --------------- 2,043,923 EXPENSES: Mortality and expense risk charges....... 287,834 --------------- Net investment income (loss)........... 1,756,089 --------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions........................... 220,725 Change in unrealized appreciation (depreciation)......................... 4,771,750 --------------- Net gain (loss) on investments......... 4,992,475 --------------- Net increase (decrease) in equity accounts resulting from operations......................... $ 6,748,564 ===============
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
YEAR ENDED YEAR ENDED DECEMBER 31, 1995 DECEMBER 31, 1994 OPERATIONS: Net investment income (loss).......................................................... $ 1,756,089 $ 347,798 Net gain (loss) on investments........................................................ 4,992,475 (596,517) ----------------- ----------------- Net increase (decrease) in equity accounts resulting from operations........................................................... 6,748,564 (248,719) ----------------- ----------------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)................................................... 14,236,727 13,516,053 ----------------- ----------------- Less cost of units redeemed: Administrative charges.............................................................. 3,380,854 1,893,532 Policy loans........................................................................ 657,750 296,848 Surrender benefits.................................................................. 918,863 406,848 Death benefits...................................................................... 28,153 19,871 ----------------- ----------------- 4,985,620 2,617,099 ----------------- ----------------- Increase (decrease) in equity accounts from capital unit transactions......................................................... 9,251,107 10,898,954 ----------------- ----------------- Net increase (decrease) in equity accounts.......................................... 15,999,671 10,650,235 Depositor's equity contribution (redemption).......................................... 0 (344,138) EQUITY ACCOUNTS: Beginning of period................................................................... 23,648,604 13,342,507 ----------------- ----------------- End of period......................................................................... $ 39,648,275 $ 23,648,604 ================= =================
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 12 WRL SERIES LIFE ACCOUNT EQUITY-INCOME SUB-ACCOUNT - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
DECEMBER 31 ------------------------------------------ 1995 1994 1993/dagger/ -------- -------- -------- Accumulation unit value, beginning of period.... $ 11.12 $ 11.28 $ 10.00 Income from operations: Net investment income (loss)................ .68 .18 .19 Net realized and unrealized gain (loss) on investments................ 1.94 (.34) 1.09 -------- -------- -------- Total income (loss) from operations....... 2.62 (.16) 1.28 -------- -------- -------- Accumulation unit value, end of period.......... $ 13.74 $ 11.12 $ 11.28 ========= ========= ========= Total return.................................... 23.55% (1.42)% 12.81% Ratios and supplemental data: Net assets at end of period (in thousands).... $ 39,648 $ 23,649 $ 13,343 Ratio of net investment income (loss) to average net assets....................... 5.47% 1.93% 1.89%
* The above table illustrates the change for a unit outstanding computed using average units outstanding throughout each period. /dagger/ The inception date of this sub-account was March 1, 1993. The total return and ratio of net investment income to average net assets are not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 13 WRL SERIES LIFE ACCOUNT EMERGING GROWTH SUB-ACCOUNT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
ASSETS: DECEMBER 31, 1995 Investments, at net asset value: WRL Series Fund, Inc.: Emerging Growth Portfolio (4,177,036.054 shares; cost $ 53,301,177)..................... $ 67,854,423 Accrued transfers from (to) depositor - net.......................... 50,530 ---------------- Total assets........................... 67,904,953 ---------------- LIABILITIES:................................. 0 ---------------- Total net assets....................... $ 67,904,953 ================ EQUITY ACCOUNTS: Policy Owners' equity: Emerging Growth sub-account (4,100,892.510689 units; $ 16.558579 unit value)................ $ 67,904,953 ---------------- Total equity........................... $ 67,904,953 ================
STATEMENT OF OPERATIONS
YEAR ENDED INVESTMENT INCOME: DECEMBER 31, 1995 Dividend income.......................... $ 10,599 Capital gain distributions............... 2,799,377 ----------------- 2,809,976 EXPENSES: Mortality and expense risk charges....... 453,072 ----------------- Net investment income (loss)........... 2,356,904 ----------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions........................... 276,206 Change in unrealized appreciation (depreciation)......................... 15,904,664 ----------------- Net gain (loss) on investments......... 16,180,870 ----------------- Net increase (decrease) in equity accounts resulting from operations......................... $ 18,537,774 =================
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
YEAR ENDED YEAR ENDED DECEMBER 31, 1995 DECEMBER 31, 1994 OPERATIONS: Net investment income (loss).......................................................... $ 2,356,904 $ (242,847) Net gain (loss) on investments........................................................ 16,180,870 (2,055,599) ----------------- ----------------- Net increase (decrease) in equity accounts resulting from operations........................................................... 18,537,774 (2,298,446) ----------------- ----------------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)................................................... 21,556,186 25,803,270 ----------------- ----------------- Less cost of units redeemed: Administrative charges.............................................................. 5,846,452 3,746,668 Policy loans........................................................................ 1,387,434 725,423 Surrender benefits.................................................................. 1,602,690 533,353 Death benefits...................................................................... 38,971 42,065 ----------------- ----------------- 8,875,547 5,047,509 ----------------- ----------------- Increase (decrease) in equity accounts from capital unit transactions......................................................... 12,680,639 20,755,761 ----------------- ----------------- Net increase (decrease) in equity accounts.......................................... 31,218,413 18,457,315 Depositor's equity contribution (redemption).......................................... 0 (390,327) EQUITY ACCOUNTS: Beginning of period................................................................... 36,686,540 18,619,552 ----------------- ----------------- End of period......................................................................... $ 67,904,953 $ 36,686,540 =================== ===================
The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 14 WRL SERIES LIFE ACCOUNT EMERGING GROWTH SUB-ACCOUNT - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
DECEMBER 31 ------------------------------------------ 1995 1994 1993/dagger/ -------- -------- -------- Accumulation unit value, beginning of period.... $ 11.38 $ 12.40 $ 10.00 Income from operations: Net investment income (loss)................ .65 (.09) (.09) Net realized and unrealized gain (loss) on investments................ 4.53 (.93) 2.49 -------- -------- -------- Total income (loss) from operations....... 5.18 (1.02) 2.40 -------- -------- -------- Accumulation unit value, end of period.......... $ 16.56 $ 11.38 $ 12.40 ========= ========= ========= Total return.................................... 45.49% (8.18)% 23.96% Ratios and supplemental data: Net assets at end of period (in thousands).... $ 67,905 $ 36,687 $ 18,620 Ratio of net investment income (loss) to average net assets....................... 4.66% (.86)% (.77)%
* The above table illustrates the change for a unit outstanding computed using average units outstanding throughout each period. /dagger/ The inception date of this sub-account was March 1, 1993. The total return and ratio of net investment income to average net assets are not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 15 WRL SERIES LIFE ACCOUNT AGGRESSIVE GROWTH SUB-ACCOUNT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
ASSETS: DECEMBER 31, 1995 Investments, at net asset value: WRL Series Fund, Inc.: Aggressive Growth Portfolio (2,477,941.266 shares; cost $ 29,816,384)................... $ 32,833,608 Accrued transfers from (to) depositor - net........................ 70,361 ----------------- Total assets......................... 32,903,969 ----------------- LIABILITIES:............................... 0 ----------------- Total net assets..................... $ 32,903,969 ================= EQUITY ACCOUNTS: Policy Owners' equity: Aggressive Growth sub-account (2,450,804.260823 units; $ 13.425784 unit value).............. $ 32,903,969 ----------------- Total equity......................... $ 32,903,969 =================
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995 INVESTMENT INCOME: Dividend income......................... $ 103 Capital gain distributions.............. 866,971 ---------------- 867,074 EXPENSES: Mortality and expense risk charges...... 203,080 ---------------- Net investment income (loss).......... 663,994 ---------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions.......................... 1,785,515 Change in unrealized appreciation (depreciation)........................ 2,638,835 ---------------- Net gain (loss) on investments........ 4,424,350 ---------------- Net increase (decrease) in equity accounts resulting from operations........................ $ 5,088,344 ================
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
YEAR ENDED PERIOD ENDED DECEMBER 31, 1995 DECEMBER 31, 1994* OPERATIONS: Net investment income (loss)........................................................... $ 663,994 $ (27,542) Net gain (loss) on investments......................................................... 4,424,350 384,517 ---------------- ---------------- Net increase (decrease) in equity accounts resulting from operations............................................................ 5,088,344 356,975 ---------------- ---------------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed).................................................... 23,169,917 8,797,727 ---------------- ---------------- Less cost of units redeemed: Administrative charges............................................................... 2,568,298 379,087 Policy loans......................................................................... 627,821 72,785 Surrender benefits................................................................... 712,307 48,513 Death benefits....................................................................... 80,922 4,971 ---------------- ---------------- 3,989,348 505,356 ---------------- ---------------- Increase (decrease) in equity accounts from capital unit transactions.......................................................... 19,180,569 8,292,371 ---------------- ---------------- Net increase (decrease) in equity accounts........................................... 24,268,913 8,649,346 Depositor's equity contribution (redemption)........................................... (274,290) 260,000 EQUITY ACCOUNTS: Beginning of period.................................................................... 8,909,346 0 ---------------- ---------------- End of period.......................................................................... $ 32,903,969 $ 8,909,346 ================ ================
* The inception date of this sub-account was March 1, 1994. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 16 WRL SERIES LIFE ACCOUNT AGGRESSIVE GROWTH SUB-ACCOUNT - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
DECEMBER 31 ------------------------- 1995 1994/dagger/ -------- -------- Accumulation unit value, beginning of period.... $ 9.82 $ 10.00 Income from operations: Net investment income (loss)................ .37 (.06) Net realized and unrealized gain (loss) on investments................ 3.24 (.12) -------- -------- Total income (loss) from operations....... 3.61 (.18) -------- -------- Accumulation unit value, end of period.......... $ 13.43 $ 9.82 ======== ======== Total return.................................... 36.79% (1.85)% Ratios and supplemental data: Net assets at end of period (in thousands).... $ 32,904 $ 8,909 Ratio of net investment income (loss) to average net assets....................... 2.93% (.60)%
* The above table illustrates the change for a unit outstanding computed using average units outstanding throughout each period. /dagger/ The inception date of this sub-account was March 1, 1994. The total return and ratio of net investment income to average net assets are not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 17 WRL SERIES LIFE ACCOUNT BALANCED SUB-ACCOUNT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
ASSETS: DECEMBER 31, 1995 Investments, at net asset value: WRL Series Fund, Inc.: Balanced Portfolio (356,742.991 shares; cost $ 3,481,188)...................... $ 3,793,788 Accrued transfers from (to) depositor - net.......................... 1,606 ----------------- Total assets........................... 3,795,394 ----------------- LIABILITIES:................................. 0 ----------------- Total net assets....................... $ 3,795,394 ================= EQUITY ACCOUNTS: Policy Owners' equity: Balanced sub-account (321,143.504151 units; $ 11.125506 unit value)................ $ 3,572,884 Depositors' equity: Balanced sub-account (20,000.000000 units; $ 11.125506 unit value)................ 222,510 ----------------- Total equity........................... $ 3,795,394 =================
STATEMENT OF OPERATIONS
YEAR ENDED INVESTMENT INCOME: DECEMBER 31, 1995 Dividend income.......................... $ 128,272 Capital gain distributions............... 0 ----------------- 128,272 EXPENSES: Mortality and expense risk charges....... 25,637 ----------------- Net investment income (loss)........... 102,635 ----------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions........................... (6,199) Change in unrealized appreciation (depreciation)......................... 407,748 ----------------- Net gain (loss) on investments......... 401,549 ----------------- Net increase (decrease) in equity accounts resulting from operations......................... $ 504,184 =================
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
YEAR ENDED PERIOD ENDED DECEMBER 31, 1995 DECEMBER 31, 1994* OPERATIONS: Net investment income (loss).......................................................... $ 102,635 $ 30,401 Net gain (loss) on investments........................................................ 401,549 (115,505) ----------------- ----------------- Net increase (decrease) in equity accounts resulting from operations........................................................... 504,184 (85,104) ----------------- ----------------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed)................................................... 1,545,514 2,131,962 ----------------- ----------------- Less cost of units redeemed: Administrative charges.............................................................. 327,290 84,481 Policy loans........................................................................ 29,025 0 Surrender benefits.................................................................. 27,726 15,378 Death benefits...................................................................... 14,811 2,451 ----------------- ----------------- 398,852 102,310 ----------------- ----------------- Increase (decrease) in equity accounts from capital unit transactions......................................................... 1,146,662 2,029,652 ----------------- ----------------- Net increase (decrease) in equity accounts.......................................... 1,650,846 1,944,548 Depositor's equity contribution (redemption).......................................... 0 200,000 EQUITY ACCOUNTS: Beginning of period................................................................. 2,144,548 0 ----------------- ----------------- End of period....................................................................... $ 3,795,394 $ 2,144,548 =================== =================
* The inception date of this sub-account was March 1, 1994. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 18 WRL SERIES LIFE ACCOUNT BALANCED SUB-ACCOUNT - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
DECEMBER 31 ----------------------- 1995 1994/dagger/ ------- ------- Accumulation unit value, beginning of period.... $ 9.37 $ 10.00 Income from operations: Net investment income (loss)................ .37 .22 Net realized and unrealized gain (loss) on investments................ 1.39 (.85) ------- ------- Total income (loss) from operations....... 1.76 (.63) ------- ------- Accumulation unit value, end of period.......... $ 11.13 $ 9.37 ======== ======== Total return.................................... 18.73% (6.29)% Ratios and supplemental data: Net assets at end of period (in thousands).... $ 3,795 $ 2,145 Ratio of net investment income (loss) to average net assets....................... 3.59% 2.55%
* The above table illustrates the change for a unit outstanding computed using average units outstanding throughout each period. /dagger/ The inception date of this sub-account was March 1, 1994. The total return and ratio of net investment income to average net assets are not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 19 WRL SERIES LIFE ACCOUNT UTILITY SUB-ACCOUNT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
ASSETS: DECEMBER 31, 1995 Investments, at net asset value: WRL Series Fund, Inc.: Utility Portfolio (236,391.086 shares; cost $ 2,384,572)...................... $ 2,629,535 Accrued transfers from (to) depositor - net.......................... 1,547 ----------------- Total assets........................... 2,631,082 ----------------- LIABILITIES:................................. 0 ----------------- Total net assets....................... $ 2,631,082 ================= EQUITY ACCOUNTS: Policy Owners' equity: Utility sub-account (203,453.934332 units; $ 11.774605 unit value)................ $ 2,395,590 Depositors' equity: Utility sub-account (20,000.000000 units; $ 11.774605 unit value)................ 235,492 ----------------- Total equity........................... $ 2,631,082 =================
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995 INVESTMENT INCOME: Dividend income......................... $ 86,266 Capital gain distributions.............. 19,740 ---------------- 106,006 EXPENSES: Mortality and expense risk charges...... 17,372 ---------------- Net investment income (loss).......... 88,634 ---------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions.......................... 44,646 Change in unrealized appreciation (depreciation)........................ 291,882 ---------------- Net gain (loss) on investments........ 336,528 ---------------- Net increase (decrease) in equity accounts resulting from operations........................ $ 425,162 ================
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
YEAR ENDED PERIOD ENDED DECEMBER 31, 1995 DECEMBER 31, 1994* OPERATIONS: Net investment income (loss)........................................................... $ 88,634 $ 23,434 Net gain (loss) on investments......................................................... 336,528 (58,002) ---------------- ----------------- Net increase (decrease) in equity accounts resulting from operations............................................................ 425,162 (34,568) ---------------- ----------------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed).................................................... 1,368,262 1,102,522 ---------------- ----------------- Less cost of units redeemed: Administrative charges............................................................... 221,419 42,870 Policy loans......................................................................... 26,862 0 Surrender benefits................................................................... 126,576 6,295 Death benefits....................................................................... 2,896 3,378 ---------------- ----------------- 377,753 52,543 ---------------- ----------------- Increase (decrease) in equity accounts from capital unit transactions.......................................................... 990,509 1,049,979 ---------------- ----------------- Net increase (decrease) in equity accounts........................................... 1,415,671 1,015,411 Depositor's equity contribution (redemption)........................................... 0 200,000 EQUITY ACCOUNTS: Beginning of period.................................................................... 1,215,411 0 ---------------- ----------------- End of period.......................................................................... $ 2,631,082 $ 1,215,411 ================== ===================
* The inception date of this sub-account was March 1, 1994. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 20 WRL SERIES LIFE ACCOUNT UTILITY SUB-ACCOUNT - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
DECEMBER 31 ------------------------ 1995 1994/dagger/ ------- -------- Accumulation unit value, beginning of period.... $ 9.49 $ 10.00 Income from operations: Net investment income (loss)................ .49 .29 Net realized and unrealized gain (loss) on investment................. 1.79 (.80) ------- -------- Total income (loss) from operations....... 2.28 (.51) ------- -------- Accumulation unit value, end of period.......... $11.77 $ 9.49 ======== ======== Total return.................................... 24.14% (5.15)% Ratios and supplemental data: Net assets at end of period (in thousands).... $2,631 $ 1,215 Ratio of net investment income (loss) to average net assets....................... 4.57% 3.09%
* The above table illustrates the change for a unit outstanding computed using average units outstanding throughout each period. /dagger/ The inception date for this sub-account was March 1, 1994. The total return and ratio of net investment income to average net assets are not annualized. The notes to the financial statements are an integral part of this report. - -------------------------------------------------------------------------------- 21 WRL SERIES LIFE ACCOUNT TACTICAL ASSET ALLOCATION SUB-ACCOUNT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
ASSETS: DECEMBER 31, 1995 Investments, at net asset value: WRL Series Fund, Inc.: Tactical Asset Allocation Portfolio (822,390.362 shares; cost $ 8,835,438)...................... $ 9,451,157 Accrued transfers from (to) depositor - net.......................... (5,300) ----------------- Total assets........................... 9,445,857 ----------------- LIABILITIES:................................. 0 ----------------- Total net assets....................... $ 9,445,857 ================= EQUITY ACCOUNTS: Policy Owners' equity: Tactical Asset Allocation sub-account (793,585.197167 units; $ 11.902763 unit value)................ $ 9,445,857 ----------------- Total equity........................... $ 9,445,857 =================
STATEMENT OF OPERATIONS
PERIOD ENDED INVESTMENT INCOME: DECEMBER 31, 1995* Dividend income......................... $ 193,985 Capital gain distributions.............. 171,580 ------------------ 365,565 EXPENSES: Mortality and expense risk charges...... 51,394 ------------------ Net investment income (loss).......... 314,171 ------------------ Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions.......................... 118,155 Change in unrealized appreciation (depreciation)........................ 615,719 ------------------ Net gain (loss) on investments........ 733,874 ------------------ Net increase (decrease) in equity accounts resulting from operations........................ $ 1,048,045 ==================
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
PERIOD ENDED DECEMBER 31, 1995* OPERATIONS: Net investment income (loss)................................................................................. $ 314,171 Net gain (loss) on investments............................................................................... 733,874 ------------------ Net increase (decrease) in equity accounts resulting from operations.................................................................................. 1,048,045 ------------------ EQUITY TRANSACTIONS: Proceeds from units sold (redeemed).......................................................................... 9,081,189 ------------------ Less cost of units redeemed: Administrative charges..................................................................................... 434,848 Policy loans............................................................................................... 145,685 Surrender benefits......................................................................................... 70,630 Death benefits............................................................................................. 22,440 ------------------ 673,603 ------------------ Increase (decrease) in equity accounts from capital unit transactions................................................................................ 8,407,586 ------------------ Net increase (decrease) in equity accounts................................................................. 9,455,631 Depositor's equity contribution (redemption)................................................................. (9,774) EQUITY ACCOUNTS: Beginning of period.......................................................................................... 0 ------------------ End of period................................................................................................ $ 9,445,857 ====================
* The inception of this sub-account was January 3, 1995. The notes to the financial statements, are an integral part of this report. - -------------------------------------------------------------------------------- 22 WRL SERIES LIFE ACCOUNT TACTICAL ASSET ALLOCATION SUB-ACCOUNT - -------------------------------------------------------------------------------- SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
DECEMBER 31, 1995/dagger/ ----------------- Accumulation unit value, beginning of period................. $ 10.00 Income from operations: Net investment income (loss)............................. .61 Net realized and unrealized gain (loss) on investments............................. 1.29 ----------- Total income (loss) from operations.................... 1.90 ----------- Accumulation unit value, end of period....................... $ 11.90 =========== Total return................................................. 19.03% Ratios and supplemental data: Net assets at end of period (in thousands)................. $ 9,446 Ratio of net investment income (loss) to average net assets.................................... 5.47%
* The above table illustrates the change for a unit outstanding computed using average units outstanding throughout each period. /dagger/ The inception date of this sub-account was January 3, 1995. The total return and ratio of net investment income to average net assets are not annualized. The notes to the financial statements, are an integral part of this report. - -------------------------------------------------------------------------------- 23 WRL SERIES LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- DECEMBER 31, 1995 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") and is registered as a unit investment trust ("Trust") under the Investment Company Act of 1940, as amended. The Life Account contains eleven investment options referred to as sub-accounts. Each sub-account invests in the corresponding portfolio of the WRL Series Fund, Inc. (the "Fund"), a registered management investment company under the Investment Company Act of 1940, as amended. These portfolios and their respective investment management organizations are as follows:
PORTFOLIO INVESTMENT MANAGER --------- ------------------------ Money Market Janus Capital Corporation ("JCC") Bond JCC Growth JCC Short-to-Intermediate AEGON USA Investment Government Management, Inc. ("AEGON Management") Global JCC Equity-Income Luther King Capital Management Corporation Emerging Growth Van Kampen American Capital Asset Management, Inc. Aggressive Growth Fred Alger Management, Inc. Balanced AEGON Management Utility Federated Investment Counseling Tactical Asset Dean Investment Associates Allocation
WRL and AEGON Management are indirectly wholly-owned subsidiaries of AEGON USA, Inc., which is an indirect wholly-owned subsidiary of AEGON nv, a Netherlands corporation. On January 3, 1995, WRL made an initial contribution of $200,000 to the Life Account, Tactical Asset Allocation sub-account, for which WRL received 20,000.000000 units. On April 20, 1995, WRL redeemed the initial contribution in the Life Account, Tactical Asset Allocation sub-account, for $209,775. The Life Account holds assets to support the benefits under flexible premium variable universal life insurance policies (the "Policies") issued by WRL, which issued the first of such Policies on October 3, 1986. The Life Account's equity transactions are accounted for using the appropriate effective date at the corresponding accumulation unit value. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following significant accounting policies, which are in conformity with generally accepted accounting principles for unit investment trusts, have been consistently used in preparation of the Trust's financial statements. A. VALUATION OF INVESTMENTS The investments in the Fund's shares are stated at the closing net asset value ("NAV") per share as determined by the Fund on December 31, 1995. Investment transactions are accounted for on the trade date, using the Fund NAV next determined after receipt of sale or redemption order without sales charges. Dividend income and capital gain 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 current 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 issuance and administration of the Policies. A. POLICY CHARGES Under some forms of the Policies, sales and other administrative charges are deducted by WRL prior to allocation of policyowner payments to the sub-accounts. Thereafter, monthly administrative charges are deducted from the sub-accounts, some of which continue only during the first policy year. Contingent surrender charges may also apply. - -------------------------------------------------------------------------------- 24 WRL SERIES LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- NOTE 2 - CHARGES AND DEDUCTIONS (CONTINUED) Under the other forms of the Policies, such "front-end" and other administrative charges are not deducted prior to allocation of the initial premium payment but may reside as contingent surrender charges. 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 0.90% of average daily net assets of the Life Account is assessed to compensate WRL for assumption of mortality and expense risks in connection with issuance and administration of the Policies. This charge (not assessed at the individual policy level) effectively reduces the value of a unit outstanding during the year. NOTE 3 - DIVIDENDS AND DISTRIBUTIONS Dividends of the Fund's Money Market Portfolio are declared daily and reinvested monthly. Dividends of the remaining portfolios are declared and reinvested semiannually, while capital gain distributions are declared and reinvested annually. Dividends and distributions of the Fund are generally paid to and reinvested by the Life Account the next business day after declaration. NOTE 4 - OTHER MATTERS As of December 31, 1995 the equity accounts include net unrealized appreciation (depreciation) on investments as follows: SUB-ACCOUNT - ----------------- Money Market.......................... $ n/a Bond.................................. 152,765 Growth................................ 59,702,041 Short-to-Intermediate Government...... 38,530 Global................................ 3,601,189 Equity-Income......................... 4,450,990 Emerging Growth....................... 14,553,246 Aggressive Growth..................... 3,017,224 Balanced.............................. 312,600 Utility............................... 244,963 Tactical Asset Allocation............. 615,719
- -------------------------------------------------------------------------------- 25 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 as of December 31, 1995 and 1994, 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, 1995. 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 based on our audits. We did not audit the "Separate Account Assets" and "Separate Account Liabilities" in the balance sheet 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 Account, 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. The Company presents its financial statements in conformity with the accounting practices prescribed or permitted by the Insurance Department of the State of Ohio. The variances between such practices and generally accepted accounting principles are described in Note 1. The effects of these variances are not reasonably determinable but we believe they are material. In our opinion, because of the materiality of the effects of the variances between generally accepted accounting principles and the accounting practices referred to in the preceding paragraph, the financial statements referred to above are not intended to and 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, 1995 and 1994, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 1995. In addition, 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, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 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 23, 1996
Western Reserve Life Assurance Co. of Ohio Balance Sheets - Statutory Basis (Dollars in thousands, except per share data) DECEMBER 31 1995 1994 ---------------------------- ADMITTED ASSETS Cash and invested assets: Cash and short-term investments $ 4,999 $ 46,722 Bonds 452,474 423,758 Stocks: Preferred, at market (cost: $78 in 1994) - 14 Common, at market (cost: $473 in 1995 and $1,944 in 1994) 834 2,541 Mortgage loans on real estate 6,181 9,539 Home office properties, at cost less accumulated depreciation ($1,505 in 1995 and $1,358 in 1994 5,121 4,818 Policy loans 37,125 27,520 ---------------------------- Total cash and invested assets 506,734 514,912 Premiums deferred and uncollected 1,787 1,763 Accrued investment income 7,565 7,505 Receivable from affiliates 4,337 481 Other assets 4,264 3,504 Separate account assets 2,419,205 1,596,736 ---------------------------- Total admitted assets $ 2,943,892 $2,124,901 ============================
SEE ACCOMPANYING NOTES. DECEMBER 31 1995 1994 ----------------------------- LIABILITIES AND CAPITAL AND SURPLUS Liabilities: Aggregate reserves for policies and contracts: Life $ 73,163 $ 84,689 Annuity 319,353 314,124 Policy and contract claim reserves 6,612 5,119 Other policyholders' funds 2,384 2,495 Remittances and items not allocated 5,136 4,613 Federal income taxes payable 1,417 96 Asset valuation reserve 5,590 8,491 Interest maintenance reserve 6,392 6,720 Payable to affiliate - 674 Other liabilities 10,102 8,239 Separate account liabilities 2,415,804 1,594,621 ----------------------------- Total liabilities 2,845,953 2,029,881 Commitments and contingencies Capital and surplus: Common stock, $1.00 par value, 1,500 shares authorized, issued and outstanding 1,500 1,500 Paid-in surplus 68,015 68,015 Unassigned surplus 28,424 25,505 ----------------------------- Total capital and surplus 97,939 95,020 ============================= Total liabilities and capital and surplus $2,943,892 $2,124,901 ============================= SEE ACCOMPANYING NOTES.
Western Reserve Life Assurance Co. of Ohio Statements of Operations - Statutory Basis (Dollars in thousands) YEAR ENDED DECEMBER 31 1995 1994 1993 ---------------------------------------- Revenues: Premiums and other considerations, net of reinsurance: Life $ 191,508 $150,991 $107,008 Annuity 378,390 449,141 449,361 Net investment income 40,891 40,139 46,197 Amortization of interest maintenance reserve 882 726 618 Commissions and expense allowances on reinsurance ceded 11 12 14 Other income 8,237 6,354 4,322 --------------------------------------- 619,919 647,363 607,520 Benefits and expenses: Benefits paid or provided for: Death, surrender and other life insurance and annuity benefits 243,658 230,511 111,785 Increase (decrease) in aggregate reserves for policies and contracts: Life (15,023) (11,332) (4,259) Annuity 5,229 (78,590) (12,486) --------------------------------------- 233,864 140,589 95,040 Insurance expenses: Net transfers to separate accounts 242,427 386,174 414,357 Commissions 82,903 78,168 60,975 General insurance expenses 37,246 33,100 24,701 Taxes, licenses and fees 8,919 5,931 5,682 --------------------------------------- 371,495 503,373 505,715 --------------------------------------- 605,359 643,962 600,755 --------------------------------------- Gain from operations before federal income taxes and realized capital gains (losses) on investments 14,560 3,401 6,765 Federal income tax expense 8,917 3,406 4,206 --------------------------------------- Gain (loss) from operations before realized capital gains (losses) on investments 5,643 (5) 2,559 Netrealized capital gains (losses) on investments (net of related federal income taxes and amounts transferred to interest maintenance reserve) (1,678) (1,133) 2,348 --------------------------------------- Net income (loss) $ 3,965 $ (1,138) $ 4,907 =======================================
SEE ACCOMPANYING NOTES.
Western Reserve Life Assurance Co. of Ohio Statements of Changes in Capital and Surplus - Statutory Basis (Dollars in thousands) Additional Total Common Paid-In Unassigned Capital and Stock Capital Surplus Surplus --------------------------------------------------------- Balance at January 1, 1993 $1,500 $23,015 $19,109 $43,624 Net income for 1993 - - 4,907 4,907 Net unrealized capital gains - - 1,503 1,503 Decrease in non-admitted assets - - 5,535 5,535 Increase in asset valuation reserves - - (1,706) (1,706) Increase in surplus in separate accounts - - 633 633 Dividend to stockholder - - (5,600) (5,600) Other adjustments - - 513 513 -------------------------------------------------------- Balance at December 31, 1993 1,500 23,015 24,894 49,409 Capital contribution - 45,000 - 45,000 Net loss for 1994 - - (1,138) (1,138) Net unrealized capital losses - - (9) (9) Decrease in non-admitted assets - - 368 368 Decrease in asset valuation reserves - - 4,321 4,321 Decrease in surplus in separate accounts - - (748) (748) Other adjustments - - (2,183) (2,183) -------------------------------------------------------- Balance at December 31, 1994 1,500 68,015 25,505 95,020 Net income for 1995 - - 3,965 3,965 Net unrealized capital losses - - (500) (500) Decrease in non-admitted assets - - 903 903 Decrease in asset valuation reserve - - 2,901 2,901 Decrease in surplus in separate accounts - - 541 541 Change in reserve valuation - - (3,496) (3,496) Other adjustments - - (1,395) (1,395) -------------------------------------------------------- Balance at December 31, 1995 $1,500 $68,015 $28,424 $97,939 ========================================================
SEE ACCOMPANYING NOTES.
Western Reserve Life Assurance Co. of Ohio Statements of Cash Flows - Statutory Basis (Dollars in thousands) YEAR ENDED DECEMBER 31 1995 1994 1993 ----------------------------------- SOURCES OF CASH Premiums and other considerations, net of reinsurance $ 569,934 $ 600,405 $ 556,353 Net investment income 42,359 41,977 47,424 Other income 8,052 6,311 4,245 ----------------------------------- 620,345 648,693 608,022 Life claims (16,759) (14,660) (12,820) Surrender benefits and other fund withdrawals (206,250) (196,169) (81,902) Other benefits to policyholders (19,041) (18,251) (17,385) Commissions, other expenses and taxes (128,314) (119,755) (92,572) Dividends to policyholders (26) (22) (44) Federal income taxes (7,531) (3,378) (3,573) Net increase in policy loans (9,605) (4,496) (4,686) Net transfers to separate accounts (242,427) (386,174) (414,357) ----------------------------------- Net cash used by operations (9,608) (94,212) (19,317) Proceeds from investments sold, matured or repaid: Bonds and redeemable preferred stock 108,554 99,241 203,547 Common stocks 2,108 80,066 81,391 Mortgage loans on real estate 1,954 132 764 Real estate -- -- 109 Miscellaneous -- (28) -- ----------------------------------- Total cash from investments 112,616 179,411 285,811 Capital contribution -- 45,000 -- Other sources 2,830 6,135 5,899 ----------------------------------- Total sources of cash 105,838 136,334 272,393 APPLICATIONS OF CASH Cost of investments acquired: Bonds and redeemable preferred stock 139,402 47,214 165,967 Common stocks 589 65,911 82,767 Mortgage loans on real estate 6 1,004 290 Real estate 449 37 478 ----------------------------------- Total investments acquired 140,446 114,166 249,502 Dividend to stockholder -- -- 5,600 Other applications, net 7,115 6,086 1,959 ----------------------------------- Total applications of cash 147,561 120,252 257,061 ----------------------------------- Net change in cash and short-term investments (41,723) 16,082 15,332 Cash and short-term investments at beginning of year 46,722 30,640 15,308 ----------------------------------- Cash and short-term investments at end of year $ 4,999 $ 46,722 $ 30,640 ===================================
SEE ACCOMPANYING NOTES. Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (Dollars in thousands) December 31, 1995 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 a wholly-owned subsidiary of AEGON nv, 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 and the District of Columbia. 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 on the basis of accounting practices prescribed or permitted by the Insurance Department of the State of Ohio, which practices differ in some respects from generally accepted accounting principles. The more significant of these differences are as follows: (a) bonds are generally carried at amortized cost rather than segregating the portfolio into held-to-maturity (carried at amortized cost), available-for-sale (carried at fair value), and trading (carried at fair value) classifications; (b) acquisition costs of acquiring new business are charged to current operations 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 receivable or payable rather than shown as gross amounts on the balance sheet; (f) deferred income taxes are not provided for the difference between the financial statement and income tax bases of assets and liabilities; (g) net realized gains or losses attributed to changes in the Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (continued) (Dollars in thousands) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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) declines in the estimated realizable value of investments are provided for through the establishment of a formula-determined statutory investment reserve (carried 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 surplus rather than being reported as assets; (j) revenues for universal life and investment products consist of premiums received rather than policy charges for the cost of insurance, policy administration charges, amortization of policy initiation fees and surrender charges assessed; and (k) pension expense is recorded as amounts are paid. The effects of these variances have not been determined by the Company. The National Association of Insurance Commissioners (NAIC) currently is in the process of recodifying statutory accounting practices, the result of which is expected to constitute the only source of "prescribed" statutory accounting practices. Accordingly, that project, which is expected to be completed in 1996, 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. 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. This amount includes $6,500 of short-term intercompany notes receivable at December 31, 1995. 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 security. The Company reviews its prepayment assumptions on mortgage and other asset backed securities at regular intervals and adjusts amortization rates prospectively when such assumptions are changed due to experience and/or expected future patterns. Investments in preferred stocks in good standing are reported at cost. Investments in preferred stocks not in good standing are reported at the lower of cost or market. Common stocks are carried at market and include shares of mutual funds (money market and other). Real estate is 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. Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (continued) (Dollars in thousands) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 anticipated 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, net of amounts attributed to changes in the general level of interest rates. 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 1995, 1994 and 1993, net realized capital gains of $554, $436 and $4,270, respectively, were credited to the IMR rather than being immediately recognized in the statements of operations. Amortization of these net gains aggregated $882, $726 and $618 for the years ended December 31, 1995, 1994 and 1993, 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. At December 31, 1995, 1994 and 1993, the Company excluded investment income due and accrued of $1, $237 and $0, respectively, 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 traditional 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% and are computed principally on the Net Level Valuation and the Commissioner's Reserve Valuation Method (CRVM). Reserves for universal life policies are based on account balances adjusted for the CRVM. Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (continued) (Dollars in thousands) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Deferred annuity reserves are calculated according to the Commissioners' Annuity Reserve Valuation Method plus 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 and without life contingencies are equal to the present value of future payments assuming interest rates ranging from 7.00% to 9.25% 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. Because 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. SEPARATE ACCOUNT 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. The Company received variable contract premiums of $467,142, $533,536 and $489,243 in 1995, 1994 and 1993, 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. RECLASSIFICATIONS Certain reclassifications have been made to the 1994 and 1993 financial statements to conform to the 1995 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 techniques. Those techniques are significantly affected by the assumptions used, including the Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (continued) (Dollars in thousands) 2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 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, CASH EQUIVALENTS, 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 and are recognized in the statutory-basis balance sheet. 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) 2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) The following sets forth a comparison of the fair values and carrying values of the Company's financial instruments subject to the provisions of Statement of Financial Accounting Standards No. 107:
DECEMBER 31 1995 1994 ---------------------------- --------------------------- CARRYING CARRYING VALUE FAIR VALUE VALUE FAIR VALUE ----------------------------------------------------------- ADMITTED ASSETS Bonds $ 452,474 $ 479,656 $ 423,758 $ 414,541 Stocks 834 834 2,555 2,555 Mortgage loans on real estate 6,181 6,536 9,539 7,915 Policy loans 37,125 37,125 27,520 27,520 Cash and short-term investments 4,999 4,999 46,722 46,722 Separate account assets 2,419,205 2,419,205 1,596,736 1,596,736 LIABILITIES Investment contract liabilities 309,556 279,347 302,890 245,161 Separate account annuities 1,930,590 1,930,590 1,316,237 1,316,237
3. INVESTMENTS The carrying value and estimated fair value of investments in debt securities are as follows:
GROSS GROSS ESTIMATED CARRYING UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE --------------------------------------------------------- DECEMBER 31, 1995 Bonds: United States Government and agencies $ 11,611 $ 64 $129 $ 11,546 State, municipal and other government 15,079 940 - 16,019 Public utilities 16,143 1,425 - 17,568 Industrial and miscellaneous 219,764 17,444 550 236,658 Mortgage-backed securities 189,877 8,228 240 197,865 --------------------------------------------------------- Total bonds $ 452,474 $28,101 $919 $479,656 =========================================================
Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (continued) (Dollars in thousands) 3. INVESTMENTS (CONTINUED)
GROSS GROSS ESTIMATED CARRYING UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE --------------------------------------------------------- DECEMBER 31, 1994 Bonds: United States Government and agencies $ 11,277 $ 17 $ 1,048 $ 10,246 State, municipal and other government 13,117 - 423 12,694 Public utilities 13,296 75 432 12,939 Industrial and miscellaneous 238,389 3,668 7,543 234,514 Mortgage-backed securities 147,679 1,597 5,128 144,148 --------------------------------------------------------- Total bonds 423,758 5,357 14,574 414,541 Preferred stock 14 - - 14 --------------------------------------------------------- $ 423,772 $ 5,357 $14,574 $414,555 =========================================================
Preferred stock required writedowns for the securities not in good standing to fair values of $64 in 1994. The carrying value and fair value of bonds at December 31, 1995 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 VALUE VALUE -------------------------- Due in one year or less $ 23,820 $ 23,842 Due one through five years 109,362 114,336 Due five through ten years 91,534 101,034 Due after ten years 37,881 42,579 -------------------------- 262,597 281,791 Mortgage and other asset backed securities 189,877 197,865 -------------------------- $ 452,474 $479,656 ========================== Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (continued) (Dollars in thousands) 3. INVESTMENTS (CONTINUED) A detail of net investment income is presented below: YEAR ENDED DECEMBER 31 1995 1994 1993 ---------------------------------- Interest on bonds $38,047 $37,318 $43,744 Dividends on equity investments 30 700 1,533 Interest on mortgage loans 573 616 832 Interest on policy loans 2,353 1,830 1,465 Other investment income 1,919 1,802 1,010 ---------------------------------- Gross investment income 42,922 42,266 48,584 Investment expenses (2,031) (2,127) (2,387) ---------------------------------- Net investment income $40,891 $40,139 $46,197 ================================== Proceeds from sales and maturities of debt securities and related gross realized gains and losses were as follows: YEAR ENDED DECEMBER 31 1995 1994 1993 ------------------------------------- Proceeds $108,554 $99,241 $203,547 ===================================== Gross realized gains $ 1,631 $ 2,019 $ 7,584 Gross realized losses 1,346 1,362 703 ------------------------------------- Net realized gains $ 285 $ 657 $ 6,881 ===================================== At December 31, 1995, bonds with an aggregate carrying value of $4,483 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) 3. INVESTMENTS (CONTINUED) Realized investment gains (losses) and changes in unrealized gains (losses) for investments are summarized below:
REALIZED ------------------------------------------ YEAR ENDED DECEMBER 31 1995 1994 1993 ------------------------------------------ Debt securities $ 285 $ 657 $6,881 Equity securities - (1,579) - Mortgage loans (1,409) - - Real estate - - (37) ------------------------------------------ (1,124) (922) 6,844 Tax effect - 225 (226) Transfer to interest maintenance reserve (554) (436) (4,270) ------------------------------------------ Net realized gains (losses) $(1,678) $(1,133) $2,348 ==========================================
UNREALIZED ------------------------------------ YEAR ENDED DECEMBER 31 1995 1994 1993 ------------------------------------ Debt securities $36,399 $(43,354) $5,598 Common stock (236) 1,009 1,581 ------------------------------------ Change in unrealized appreciation (depreciation) $36,163 $(42,345) $7,179 ====================================
Gross unrealized gains (losses) on common stocks were as follows: UNREALIZED --------------------------------- YEAR ENDED DECEMBER 31 1995 1994 1993 --------------------------------- Unrealized gains $361 $597 $1,045 Unrealized losses - - 1,457 --------------------------------- Net unrealized gains (losses) $361 $597 $ (412) ================================= The Company issued no mortgage loans during 1995. The maximum percentage of any one mortgage loan to the value of the underlying real estate at origination was 73%. The Company requires all mortgagees to carry fire insurance equal to the value of the underlying property. Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (continued) (Dollars in thousands) 3. INVESTMENTS (CONTINUED) During 1995, 1994 and 1993, no mortgage loans were foreclosed and transferred to real estate. During 1994, a mortgage loan loss reserve of $1,033 was established. This reserve was released in 1995 coincident with the loss recognition of $1,409 on a loan payoff. At December 31, 1995, 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. 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. 1995 1994 1993 -------------------------------------------- Direct premiums $570,413 $600,608 $556,641 Reinsurance assumed 1,569 1,232 1,015 Reinsurance ceded (2,084) (1,708) (1,287) -------------------------------------------- Net premiums earned $569,898 $600,132 $556,369 ============================================ The Company received reinsurance recoveries in the amount of $512, $1,146 and $1,135 during 1995, 1994 and 1993, respectively. At December 31, 1995 and 1994, estimated amounts recoverable from reinsurers that have been deducted from policy and contract claim reserves totaled $2 and $85, respectively. The aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded at December 31, 1995 and 1994 of $848 and $807, respectively. Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (continued) (Dollars in thousands) 5. INCOME TAXES Federal income tax expense differs from the amount computed by applying the statutory federal income tax rate to gain from operations before taxes and realized capital gains (losses) for the following reasons:
1995 1994 1993 ---------------------------------- Computed tax at federal statutory rate (35%) $5,096 $1,190 $2,368 Purchase accounting tax adjustments - - (424) Deferred acquisition costs - tax basis 4,241 4,043 3,395 Tax reserve valuation (49) (1,353) (817) Investment income differences 85 (109) (192) Amortization of IMR (309) (254) (216) Other, net (147) (111) 92 ---------------------------------- Federal income tax expense $8,917 $3,406 $4,206 ==================================
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, 1995). 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. In 1995, the Company reached a final settlement with the Internal Revenue Service for 1987 through 1993 resulting in taxes of $1,275 and interest of $120 (net of $65 tax effect). The assessment was charged to surplus as a prior period adjustment. During 1994, the Company settled tax years 1980 through 1986 with the Internal Revenue Service. The agreed upon settlement totaled $2.26 million in taxes and interest. The Company's former parent company, Kansas City Southern Industries, is principally liable for reimbursing this amount to the Company under the terms of an indemnification agreement made coincident with the sale of the Company. A charge to surplus of $1.8 million was made as a prior period adjustment related to this assessment. Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (continued) (Dollars in thousands) 6. POLICY AND CONTRACT ATTRIBUTES Participating life insurance policies are issued by the Company which entitle policyholders to a share in the earnings of the participating policies, provided that a dividend distribution, which is determined annually based on mortality and persistency experience of the participating policies, is authorized by the Company. Participating insurance constituted approximately 7.7% and 8.2% of life insurance in force at December 31, 1995 and 1994, respectively. A portion of the Company's policy reserves and other policyholders' funds relate to liabilities established on a variety of the Company's products 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 1995 1994 -------------------- ------------------- PERCENT PERCENT AMOUNT OF TOTAL AMOUNT OF TOTAL -------------------- -------------------- Subject to discretionary withdrawal with market value adjustment $ 13,422 1% $ 12,345 1% Subject to discretionary withdrawal at book value less surrender charge 60,970 3 73,733 4 Subject to discretionary withdrawal at market value 1,930,590 85 1,316,237 81 Subject to discretionary withdrawal at book value (minimal or no charges or adjustments) 227,549 10 207,779 13 Not subject to discretionary withdrawal provision 20,034 1 22,788 1 -------------------- ------------------- 2,252,565 100% 1,632,882 100% ========= ======== Less reinsurance ceded - - ---------- ----------- Total policy reserves on annuities and deposit fund liabilities $2,252,565 $1,632,882 ========== ==========
Reserves on the Company's traditional life 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, 1995 and 1994, these assets (which are reported as premiums deferred and uncollected) and the amounts of the related gross premiums and loadings, are as follows: Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (continued) (Dollars in thousands) 6. POLICY AND CONTRACT ATTRIBUTES (CONTINUED) GROSS LOADING NET ---------------------------------- DECEMBER 31, 1995 Ordinary direct first year business $ 47 $ 17 $ 30 Ordinary direct renewal business 1,707 229 1,478 Group life direct business 379 - 379 Reinsurance ceded (100) - (100) ---------------------------------- $2,033 $246 $1,787 ================================== DECEMBER 31, 1994 Ordinary direct first year business $ 46 $ 17 $ 29 Ordinary direct renewal business 1,649 252 1,397 Group life direct business 362 - 362 Reinsurance ceded (25) - (25) ---------------------------------- $2,032 $269 $1,763 ================================== At December 31, 1995 and 1994, the Company had insurance in force aggregating $2,374 and $3,403, respectively, in which the gross premiums are less than the net premiums required by the standard valuation standards established by the Insurance Department of the State of Ohio. The Company established policy reserves of $32 and $40 to cover these deficiencies at December 31, 1995 and 1994, respectively. 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 $3,496 and $450 was made for the years ended December 31, 1995 and 1994, respectively, related to the change in reserve methodology. 7. DIVIDEND RESTRICTIONS Generally, an insurance company's ability to pay dividends is limited to the amount that their net assets, as determined in accordance with statutory accounting practices, exceed minimum statutory capital requirements. However, payment of such amounts as dividends may be subject to approval by regulatory authorities. The maximum dividend payout which may be made without prior approval in 1996 is approximately $9,644. Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (continued) (Dollars in thousands) 8. 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 FASB Statement 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 $505, $397 and $249 for the years ended December 31, 1995, 1994 and 1993, 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. Pension expense related to this plan was $305, $250 and $176 for the years ended December 31, 1995, 1994 and 1993, 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 or funded as deemed appropriate by management of AEGON and the Company. Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (continued) (Dollars in thousands) 8. RETIREMENT AND COMPENSATION PLANS (CONTINUED) 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 $86, $70 and $0 for the years ended December 31, 1995, 1994 and 1993, respectively. 9. RELATED PARTY TRANSACTIONS The Company shares certain officers, employees and general expenses with affiliated companies. The Company receives investment advisory and management services from certain affiliates. During 1995, 1994 and 1993, the Company paid $8,825, $7,497 and $4,583, respectively, for such services, which approximates their costs to the affiliates. The Company provides office space, marketing and administrative services to certain affiliates. During 1995, 1994 and 1993, the Company received $4,545, $3,261 and $1,900, respectively, for such services, which approximates their cost. The Company had a receivable (payable) with affiliates of $3,625 and $(674) at December 31, 1995 and 1994, respectively. The Company paid a cash dividend to its immediate parent, First AUSA Life Insurance Company, of $5,600 in 1993, and during 1994 received capital contributions of $45,000. The Company has an agreement with an affiliate through which net agents debit balances are sold for cash. The net non-admitted assets sold during 1995, 1994 and 1993 aggregated $5,887, $3,553 and $4,555, respectively. At December 31, 1995, the Company has a $6,500 short-term note receivable from an affiliate. Interest on this note accrues at 5.82%. Western Reserve Life Assurance Co. of Ohio Notes to Financial Statements - Statutory-Basis (continued) (Dollars in thousands) 10. 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 $4,445 at December 31, 1995 for its estimated share of future guaranty fund assessments related to several post major insurer insolvencies. An asset of $1,319 at December 31, 1995 has been recorded relating to anticipated offsets available for certain state premium taxes to be utilized in future periods. The guaranty fund expense was $1,950, $618 and $329 at December 31, 1995, 1994 and 1993, respectively. Western Reserve Life Assurance Co. of Ohio Summary of Investments Other Than Investments in Related Parties (Dollars in thousands) December 31, 1995
SCHEDULE I AMOUNT AT WHICH SHOWN IN THE TYPE OF INVESTMENT COST (1) VALUE BALANCE SHEET - ----------------------------------------------------------------------------------------------- FIXED MATURITIES Bonds: United States Government and govern- ment agencies and authorities $108,398 $112,590 $108,213 Foreign governments 15,196 16,019 15,079 Public utilities 16,179 17,568 16,143 All other corporate bonds 315,676 333,479 313,039 ------------------------------------------------ Total fixed maturities 455,449 479,656 452,474 EQUITY SECURITIES Common stocks: Industrial, miscellaneous and all other 473 834 834 ------------------------------------------------ Total equity securities 473 834 834 Mortgage loans on real estate 6,181 6,536 6,181 Real estate 5,121 5,121 5,121 Policy loans 37,125 37,125 37,125 Cash and short-term investments 4,999 4,999 4,999 ------------------------------------------------ Total investments $509,348 $534,271 $506,734 ================================================
(1) Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts. Real estate is net of accumulated depreciation. Western Reserve Life Assurance Co. of Ohio Supplementary Insurance Information (Dollars in thousands) SCHEDULE III FUTURE POLICY POLICY AND BENEFITS AND UNEARNED CONTRACT EXPENSES PREMIUMS LIABILITIES --------------------------------------------- YEAR ENDED DECEMBER 31, 1995 Individual life $ 65,259 $41 $5,811 Group life and health 7,904 - 701 Annuity 319,353 - 100 ------------------------------------------- $392,516 $41 $6,612 =========================================== YEAR ENDED DECEMBER 31, 1994 Individual life $ 77,366 $52 $4,501 Group life 7,323 - 481 Annuity 314,124 - 137 ------------------------------------------- $ 398,813 $52 $5,119 =========================================== YEAR ENDED DECEMBER 31, 1993 Individual life $ 78,371 $56 $2,757 Group life 17,380 - 488 Annuity 392,714 - 763 ------------------------------------------- $ 488,465 $56 $4,008 ===========================================
NET BENEFITS OTHER PREMIUM REVENUE INVESTMENT AND CLAIMS OPERATING PREMIUMS REVENUE INCOME EXPENSES EXPENSES WRITTEN - ---------------------------------------------------------------------------------------------- $188,143 $ 9,470 $ 36,066 $ 83,675 $ 99,115 3,365 1,054 2,217 946 780 378,390 30,367 205,375 44,447 342,949 - ---------------------------------------------------------------------------------------------- $569,898 $40,891 $243,658 $129,068 $442,844 ============================================================================================== $147,282 $10,146 $ 29,272 $ 71,807 $ 89,467 3,709 372 1,754 1,329 1,846 449,141 29,621 199,485 44,063 421,176 - ---------------------------------------------------------------------------------------------- $600,132 $40,139 $230,511 $117,199 $512,489 ============================================================================================== $101,621 $10,943 $ 24,086 $ 52,514 $ 62,600 5,387 201 1,293 1,104 4,063 449,361 35,053 86,406 37,740 419,037 - ---------------------------------------------------------------------------------------------- $556,369 $46,197 $111,785 $ 91,358 $485,700 ==============================================================================================
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, 1995 Life insurance in force $21,057,581 $1,365,119 $ - $19,692,462 0.0% ============================================================================= Premiums: Individual life $ 189,870 $ 1,727 $ - $ 188,143 0.0% Group life and health 2,153 357 1,569 3,365 46.6 Annuity 378,390 - - 378,390 0.0 ----------------------------------------------------------------------------- $ 570,413 $ 2,084 $ 1,569 $ 569,898 0.2% ============================================================================= YEAR ENDED DECEMBER 31, 1994 Life insurance in force $14,321,386 $1,090,845 $1,271,402 $14,501,943 8.8% ============================================================================= Premiums: Individual life $ 148,766 $ 1,484 $ - $ 147,282 0.0% Group life 2,701 224 1,232 3,709 33.0 Annuity 449,141 - - 449,141 0.0 ----------------------------------------------------------------------------- $ 600,608 $ 1,708 $ 1,232 $ 600,132 0.4% ============================================================================= YEAR ENDED DECEMBER 31, 1993 Life insurance in force $ 9,881,904 $ 851,042 $1,009,201 $10,040,063 10.1% ============================================================================= Premiums: Individual life $ 102,817 $ 1,196 $ - $ 101,621 0.0% Group life 4,463 91 1,015 5,387 18.8 Annuity 449,361 - - 449,361 0.0 ----------------------------------------------------------------------------- $ 556,641 $ 1,287 $ 1,015 $ 556,369 0.2% =============================================================================
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