As filed with the Securities and Exchange Commission on June 27, 2008
Registration No. 333-58322/811-4420
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. | ¨ | |||
POST-EFFECTIVE AMENDMENT NO. 13 | x | |||
and/or | ||||
REGISTRATION STATEMENT UNDER THE INVESTMENT | ||||
COMPANY ACT OF 1940 | ||||
Amendment No. 68 | x | |||
(Check appropriate box or boxes) |
WRL SERIES LIFE ACCOUNT
(Exact Name of Registrant)
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
(Name of Depositor)
570 Carillon Parkway
St. Petersburg, FL 33716
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code:
(727) 299-1800
Arthur D. Woods, Esq.
Vice President and Senior Counsel
Western Reserve Life Assurance Co. of Ohio
570 Carillon Parkway
St. Petersburg, FL 33716
(Name and Address of Agent for Service)
Copy to:
Mary Jane Wilson-Bilik, Esq.
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
It is proposed that this filing will become effective (check appropriate box):
¨ | immediately upon filing pursuant to paragraph (b) |
¨ | on (date) , pursuant to paragraph (b) |
¨ | 60 days after filing pursuant to paragraph (a)(1) |
x | on September 15, 2008, pursuant to paragraph (a)(1) |
If appropriate, check the following box:
¨ | This post-effective amendment designates a new effective date for a previously filed post-effective amendment. |
PART A
INFORMATION REQUIRED IN A PROSPECTUS
P R O S P E C T U S | ||
September 15, 2008 |
WRL FREEDOM ELITE BUILDER®
issued through
WRL Series Life Account
by
Western Reserve Life Assurance Co. of Ohio
Administrative Office:
570 Carillon Parkway, St. Petersburg, Florida 33716
1-800-851-9777; (727) 299-1800
Direct all payments by check, and all correspondence and notices to the Mailing Address:
4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499
An Individual Flexible Premium Variable Life Insurance Policy
This prospectus describes the WRL Freedom Elite Builder ® , a flexible premium variable life insurance policy (the Policy). You can allocate your Policys cash value to the fixed account (which credits a specified guaranteed interest rate) and/or to the WRL Series Life Account, which invests through its subaccounts in portfolios of the Transamerica Series Trust (formerly AEGON/Transamerica Series Trust) Initial Class (the Series Trust), the Fidelity Variable Insurance Products Funds Service Class 2 (the Fidelity VIP Fund), the ProFunds and Access One Trust (Access Trust) (collectively, the funds). Please refer to the next page of this prospectus for the list of portfolios available to you under this Policy.
If you already own a life insurance policy, it may not be to your advantage to buy additional insurance or to replace your Policy with the policy described in this prospectus. And it may not be to your advantage to borrow money to purchase this Policy or to take withdrawals from another policy you own to make premium payments under the Policy.
Prospectuses for the portfolios of the funds must accompany this prospectus. Certain portfolios may not be available in all states. Please read these documents before investing and save them for future reference.
An investment in the Policy is not a bank deposit. The Policy is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The Securities and Exchange Commission has not approved or disapproved these securities or passed upon
the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
PORTFOLIOS AVAILABLE TO YOU UNDER YOUR POLICY
TRANSAMERICA SERIES TRUST*
Transamerica Asset Allocation Conservative VP
Transamerica Asset Allocation Growth VP
Transamerica Asset Allocation Moderate Growth VP
Transamerica Asset Allocation Moderate VP
Transamerica Balanced VP
Transamerica BlackRock Large Cap Value VP
Transamerica Capital Guardian U.S. Equity VP
Transamerica Capital Guardian Value VP
Transamerica Clarion Global Real Estate Securities VP
Transamerica Convertible Securities VP
Transamerica Equity VP
Transamerica Federated Market Opportunity VP
Transamerica Growth Opportunities VP
Transamerica Index 50 VP
Transamerica Index 75 VP
Transamerica International Moderate Growth VP
Transamerica JPMorgan Core Bond VP
Transamerica JPMorgan Enhanced Index VP
Transamerica JPMorgan Mid Cap Value VP**
Transamerica Legg Mason Partners All Cap VP
Transamerica MFS High Yield VP
Transamerica MFS International Equity VP
Transamerica Marsico Growth VP
Transamerica Money Market VP
Transamerica Munder Net50 VP
Transamerica PIMCO Total Return VP
Transamerica Science & Technology VP
Transamerica Small/Mid Cap Value VP
Transamerica T. Rowe Price Equity Income VP
Transamerica T. Rowe Price Small Cap VP
Transamerica Templeton Global VP
Transamerica Third Avenue Value VP
Transamerica U.S. Government Securities VP
Transamerica Value Balanced VP
Transamerica Van Kampen Mid-Cap Growth VP
PROFUNDS***
ProFund VP Asia 30
ProFund VP Basic Materials
ProFund VP Bull
ProFund VP Consumer Services
ProFund VP Emerging Markets
ProFund VP Europe 30
ProFund VP Falling U.S. Dollar
ProFund VP Financials
ProFund VP International
ProFund VP Japan
ProFund VP Mid-Cap
ProFund VP Money Market
ProFund VP NASDAQ 100 (formerly, ProFund VP OTC)
ProFund VP Oil & Gas
ProFund VP Pharmaceuticals
ProFund VP Precious Metals
ProFund VP Short Emerging Markets
ProFund VP Short International
ProFund VP Short NASDAQ-100
ProFund VP Short Small-Cap
ProFund VP Small-Cap
ProFund VP Small-Cap Value
ProFund VP Telecommunications
ProFund VP UltraSmall-Cap
ProFund VP U.S. Government Plus
ProFund VP Utilities
FIDELITY VIP FUNDS
Fidelity VIP Index 500 Portfolio±
Fidelity VIP Index 500 Portfolio±
Fidelity VIP Index 500 Portfolio±
Fidelity VIP Index 500 Portfolio
ACCESS ONE TRUST***
Access VP High Yield Fund
* | Effective May 1, 2008, several Transamerica Series Trust portfolios were renamed. For a complete list of both the former and new names of each portfolio, please refer to The Portfolios section in this prospectus. |
** | This portfolio no longer accepts new investments from current or prospective investors. If you surrender your Policys cash value from this portfolio, you may not reinvest in this portfolio. |
*** | The ProFunds and Access Trust portfolios permit frequent transfers. Investors in the ProFunds and/or Access Trust portfolios may bear the additional costs and investment risks of frequent transfers. See Disruptive Trading and Market Timing in this prospectus. |
+ | Effective May 1, 2003, this portfolio was no longer available for sale to new investors. |
1 | ||
1 | ||
1 | ||
1 | ||
2 | ||
2 | ||
3 | ||
3 | ||
3 | ||
3 | ||
4 | ||
4 | ||
4 | ||
4 | ||
4 | ||
5 | ||
5 | ||
6 | ||
Fee Tables (For Policies Purchased On or After September 15, 2008) |
6 | |
Fee Tables (For Policies Purchased Prior to September 15, 2008 and Issued Prior to January 1, 2009) |
||
26 | ||
Western Reserve, the Separate Account, the Fixed Account and the Portfolios |
27 | |
27 | ||
27 | ||
28 | ||
38 | ||
38 | ||
38 | ||
39 | ||
39 | ||
40 | ||
43 | ||
43 | ||
46 | ||
46 | ||
46 | ||
47 | ||
47 | ||
47 | ||
47 | ||
47 | ||
47 | ||
49 | ||
49 | ||
49 | ||
50 | ||
50 | ||
50 | ||
52 | ||
52 | ||
52 | ||
52 | ||
53 | ||
54 | ||
54 |
i
54 | ||
54 | ||
55 | ||
55 | ||
55 | ||
56 | ||
59 | ||
60 | ||
60 | ||
60 | ||
61 | ||
62 | ||
62 | ||
62 | ||
62 | ||
63 | ||
63 | ||
64 | ||
64 | ||
64 | ||
66 | ||
66 | ||
66 | ||
67 | ||
68 | ||
68 | ||
68 | ||
68 | ||
69 | ||
70 | ||
70 | ||
70 | ||
71 | ||
71 | ||
71 | ||
71 | ||
71 | ||
71 | ||
73 | ||
73 | ||
73 | ||
76 | ||
77 | ||
77 | ||
77 | ||
78 | ||
78 | ||
79 | ||
79 | ||
79 | ||
80 | ||
80 | ||
Primary Insured Rider (PIR) and Primary Insured Rider Plus (PIR Plus) |
80 | |
81 | ||
82 | ||
Settlement Options |
80 | |
82 |
ii
84 | ||
84 | ||
84 | ||
84 | ||
Table of Contents of the Statement of Additional Information |
90 | |
92 | ||
Appendix A Surrender Charge Per Thousand of Specified Amount Segment (Based on the gender and rate class of the insured) | 97 | |
Appendix B Illustrations | 99 | |
FOR POLICIES PURCHASED PRIOR TO SEPTEMBER 15, 2008 AND ISSUED PRIOR TO JANUARY 1, 2009: | ||
Appendix A Surrender Charge Per Thousand of Specified Amount Segment (Based on the gender and rate class of the insured) | 103 | |
Appendix B Illustrations | 105 | |
Prospectus Back Cover |
106 | |
Personalized Illustrations of Policy Benefits |
106 | |
Inquiries |
106 |
iii
Policy Benefits/Risks Summary | WRL Freedom Elite Builder® |
This summary describes the Policys important benefits and risks. More detailed information about the Policy appears later in this prospectus and in the Statement of Additional Information (SAI). For your convenience, we have provided a Glossary at the end of this prospectus that defines certain words and phrases used in this prospectus.
|
The WRL Freedom Elite Builder® is an individual flexible premium variable life insurance policy. The Policy gives you the potential for long-term life insurance coverage with the opportunity for tax-deferred cash value accumulation. The Policys cash value will increase or decrease depending on the investment performance of the subaccounts, the premiums you pay, the fees and charges we deduct, the interest we credit to the fixed account, and the effects of any Policy transactions (such as transfers, loans and partial withdrawals). Because returns are not guaranteed, the Policy is not suitable as a short-term savings vehicle. |
| The Policy is designed to be long-term in nature in order to provide significant life insurance benefits for you. However, purchasing this Policy involves certain risks. You should purchase the Policy only if you have the financial ability to keep it in force for a substantial period of time. You should consider the Policy in conjunction with other insurance you own. There may be adverse consequences should you decide to surrender your Policy early, such as payment of a surrender charge that applies during the first 15 Policy years (or during the 15-year period following an increase in the specified amount). |
| Fixed Account. You may place money in the fixed account where it earns at least 3% annual interest. We may declare higher rates of interest, but are not obligated to do so. The fixed account is part of our general account. The fixed account is not available to you if your Policy was purchased in the State of New Jersey prior to September 15, 2008 and issued prior to January 1, 2009. |
| Separate Account. You may direct the money in your Policy to any of the subaccounts of the separate account. Each subaccount invests exclusively in one of the portfolios listed on the cover of this prospectus. Money you place in a subaccount is subject to investment risk and its value will vary each day according to the investment performance of the portfolios in which the subaccounts invest. |
| Supplemental Benefits (Riders). Supplemental riders are available under the Policy. We deduct charges for these riders from cash value as part of the monthly deductions. These riders may not be available in all states. |
| No Lapse Guarantee. Until the no lapse date shown on your Policy schedule page, your Policy will remain in force and no grace period will begin, even if your net surrender value is too low to pay the monthly deductions, as long as, on any Monthiversary, you have paid total premiums (minus any cash withdrawals, minus any outstanding loan amount, minus any accrued interest, and minus any decrease charge) that equal or exceed the sum of the minimum monthly guarantee premiums in effect for each month from the Policy date up to and including the current month. |
| You select a premium payment plan but the plan is flexible you are not required to pay premiums according to the plan. You can change the frequency and amount, within limits, and can skip premium payments. Unplanned premiums may be made, within limits. Premium payments must be at least $50. |
| You increase your risk of lapse (i.e., having your policy terminate without value) if you do not regularly pay premiums at least as large as the current minimum monthly guarantee premium. Under certain circumstances, extra premiums may be required to prevent lapse. |
| Once we deliver your Policy, the free-look period begins. You may return the Policy during this period and receive a refund. Depending on the laws of the state governing your Policy (usually the state where you live), we will either allocate your net premium to the accounts you indicated on your application, or we will place your net premium in the reallocation account until the reallocation date as shown on your Policy schedule page. |
1
| If the insured dies while the Policy is in force, we will pay a death benefit to the beneficiary(ies), subject to applicable law and the forms of the Policy. The amount of the death benefit, generally depends on the specified amount of insurance you select, the death benefit option you chose, your Policys cash value, and any additional insurance provided by riders you purchase. |
| Choice Among Death Benefit Options. You must choose one of three death benefit options. We offer the following: |
| Option A is the greater of: |
| the current specified amount, or |
| a specified percentage, multiplied by the Policy's cash value on the date of the insured's death; or |
| the amount required for the Policy to qualify as a life insurance contract under Section 7702 of the Internal Revenue Code. |
Option B is the greater of:
| the current specified amount, plus the Policy's cash value on the date of the insured's death, or |
| a specified percentage, multiplied by the Policy's cash value on the date of the insured's death; or |
| the amount required for the Policy to qualify as a life insurance contract under Section 7702 of the Internal Revenue Code. |
Option C is the greater of:
| the amount payable under Option A, or |
| the current specified amount, multiplied by an age-based "factor," plus the Policy's cash value on the date of the insured's death; or |
| the amount required for the Policy to qualify as a life insurance contract under Section 7702 of the Internal Revenue Code. |
We will reduce the death benefit proceeds by any outstanding loan amount, including accrued interest, and any due and unpaid charges. We will increase the death benefit proceeds by any additional insurance benefits you add by rider.
We offer four (4) bands of specified amount coverage under this Policy. Each band has its own cost of insurance rates. In general, the greater the specified amount of your Policy, the lower the cost of insurance rates.
| Under current tax law, the death benefit should generally be U.S. federal income tax free to the beneficiary. Other taxes, such as estate taxes, may apply. |
|
Change in Death Benefit Option and Specified Amount. You may increase the specified amount once each Policy year on any Monthiversary. After the third Policy year and once each Policy year thereafter, you may change the death benefit option and increase or decrease the specified amount. You may not increase and decrease the specified amount in the same Policy year. Until the later of the end of the surrender charge period or the Policy anniversary on or following the insureds 65th birthday, we may limit the amount of the decrease to no more than 20% of the current specified amount. The new specified amount cannot be less than the minimum specified amount as shown in your Policy. |
| We guarantee that your Policy will not lapse until the no lapse date shown on your Policy schedule page as long as, on any Monthiversary, you have paid total premiums (minus any cash withdrawals, minus any outstanding loan amount, minus any accrued loan interest, and minus any decrease charge) that equal or exceed the sum of the minimum monthly guarantee premiums in effect for each month since the Policy date, up to, and including, the current month. If you take a cash withdrawal or a loan, if you increase or decrease your specified amount, or if you add, increase or decrease a rider, you may need to pay additional premiums in order to keep the no lapse period guarantee in effect. |
2
| The cash value is the sum of the Policy's value in the subaccounts and the fixed account (including any amount held in the loan reserve account) and is the starting point for calculating important values under the Policy, such as net surrender value and the death benefit. There is no guaranteed minimum cash value. The Policy may lapse if you do not have sufficient cash value in the Policy to pay the monthly deductions, the surrender charge, and/or any outstanding loan amount(s) and accrued loan interest. |
| The Policy will not lapse during the no lapse period as long as you have paid sufficient premiums. |
| You can transfer cash value among the subaccounts and the fixed account. You currently may make transfers in writing to our mailing address, by telephone or by fax to our administrative office, or electronically through our website. |
| Except as listed below, we charge a $25 transfer processing fee for each transfer after the first 12 transfers in a Policy year. |
| Dollar cost averaging and asset rebalancing programs are available. |
| Each Policy year, the Policy allows a cumulative transfer out of the fixed account of the greater of up to 25% of the amount in the fixed account, or the amount transferred out the previous Policy year. Currently, we do not, but reserve the right to, limit the number of transfers out of the fixed account to one per Policy year. If we modify or stop this current practice, we will notify you at the time of your transfer. |
| Transfers resulting from loans or the exercise of conversion rights, or due to reallocation of cash value immediately after the reallocation date, are currently not treated as transfers for the purpose of assessing the transfer charge. |
| Transfers via the Internet are not treated as transfers for the purpose of assessing the transfer charge. |
| Transfers among the ProFunds and/or the Access Trust subaccounts are not treated as transfers for the purpose of assessing the transfer charge. |
| We may impose restrictions on the transfer privilege. See the discussion of our policy with regard to market timing, including transfers, and the costs and risks to you that can result from programmed, large, frequent, or short-term transfers, in our Statement of Policy on Disruptive Trading and Market Timing. |
| After the first Policy year (as long as your Policy is in force), you may take a loan against the Policy up to 90% of the cash value, less any surrender charge and any outstanding policy loan, including accrued interest. We may permit a loan before the first anniversary for Policies issued pursuant to 1035 Exchanges. |
| The minimum loan amount is generally $500. |
| To secure the loan, we transfer an amount equal to your loan from your cash value to a loan reserve account. The loan reserve account is part of the fixed account. We will credit 3.0% interest annually on amounts in the loan reserve account. |
|
Before the 11th Policy year, we currently charge 3.75% interest annually, payable in arrears, on any outstanding loan amount. This charge is guaranteed not to exceed 4.0%. Interest not paid when due is added to the amount of the loan to be repaid. |
|
After the 10th Policy year, we will charge a preferred loan charge rate on an amount equal to the cash value minus total premiums paid (reduced by any cash withdrawals), minus any outstanding loan amount; and minus any accrued loan interest. We currently charge 3.0% interest on preferred loans. This charge is not guaranteed. |
| Federal income taxes and a penalty tax may apply to loans you take against the Policy. The federal tax consequence of loans with preferred rates is uncertain and may have adverse tax consequences. |
Cash Withdrawals and Surrenders
| You may take one withdrawal of cash value per Policy year after the first Policy year. The amount of the withdrawal may be limited to: |
| at least $500; and |
| no more than 10% of the net surrender value. |
|
After the 10th Policy year, the amount of a withdrawal may be limited to no less than $500 and to no more than the net surrender value less $500. |
3
| We will deduct a processing fee equal to $25 or 2% of the amount you withdraw (whichever is less) from the withdrawal, and we will pay you the balance. |
| A cash withdrawal will reduce the death benefit by at least the amount of the withdrawal. We will not impose a decrease charge when the specified amount is decreased as a result of taking a cash withdrawal. |
| You may fully surrender the Policy at any time before the insureds death or the maturity date. Life insurance coverage will end upon the full surrender of the Policy. You will receive the net surrender value (cash value minus surrender charge and minus any outstanding loan amount and accrued loan interest). The surrender charge will apply during the first 15 Policy years and during the first 15 years after each increase in specified amount. The surrender charge may be significant. You may receive little or no net surrender value if you surrender your Policy in the early Policy years. |
| A cash withdrawal will reduce the cash value, so it will increase the risk that the Policy will lapse. A cash withdrawal may also increase the risk that the no lapse guarantee will not remain in effect. |
| Federal income taxes and a penalty tax may apply to cash withdrawals and surrenders. |
We intend the Policy to satisfy the definition of life insurance under the Internal Revenue Code so that the death benefit generally should be excludible from the taxable income of the beneficiary. If your Policy is not a Modified Endowment Contract (MEC), you should not be deemed in receipt of any taxable gains in cash value until withdrawals and surrenders exceed your tax basis in the Policy or other distributions are made as described in the Federal Income Tax Considerations section in this prospectus. If your policy is a MEC, you will be taxed on any gains included in cash value when you take a withdrawal or a policy loan, or assign, pledge or surrender the Policy. Transfers between the subaccounts are not taxable transactions.
Risk of an Increase in Current Fees and Expenses
Certain fees and expenses currently are assessed at less than their guaranteed maximum levels. In the future, we may increase these current charges up to the guaranteed (that is, maximum) levels. If fees and expenses are increased, you may need to increase the amount and/or frequency of premiums to keep the Policy in force.
If you invest your Policys cash value in one or more subaccounts, then you will be subject to the risk that investment performance of the subaccounts will be unfavorable and that the cash value in your Policy will decrease. In addition, we deduct Policy fees and charges from your cash value, which can significantly reduce your cash value. During times of poor investment performance, this deduction will have an even greater impact on your cash value. You could lose everything you invest, and your Policy could lapse without value, unless you pay additional premiums. If you allocate premiums to the fixed account, then we credit your fixed account value with a declared rate of interest. You assume the risk that the interest rate on the fixed account may decrease, although it will never be lower than a guaranteed minimum annual effective rate of 3%.
Your Policy contains a no lapse period. Your Policy will not lapse before the no lapse date stated in your Policy as long as you pay sufficient minimum guarantee premiums. If you do not pay sufficient premiums, you will automatically lose the no lapse guarantee and you will increase the risk that your Policy will lapse.
You will lessen the risk of lapse of your Policy if you keep the no lapse guarantee in effect. Before you take a cash withdrawal, loan, increase or decrease the specified amount, or add, increase or decrease a rider, you should consider carefully the effect it will have on the no lapse guarantee.
If you take a cash withdrawal or Policy loan, if you increase or decrease the specified amount, or if you add, increase or decrease a rider, you will increase the risk of losing the no lapse guarantee. We deduct the total amount of your withdrawals, any outstanding loan amount, including accrued loan interest, and any decrease charge from your premiums paid when we determine whether your premium payments are high enough to keep the no lapse guarantee in effect.
4
After the no lapse period, your Policy may lapse if loans, cash withdrawals, the monthly deductions, and insufficient investment returns reduce the net surrender value to zero. The Policy will enter a grace period if, on any Monthiversary, the net surrender value (that is, the cash value minus the surrender charge, and minus any outstanding loan amount and accrued loan interest) is not enough to pay the monthly deductions due.
A Policy lapse may have adverse tax consequences.
If your Policy lapses, we may allow you to reinstate this Policy within five years after it has lapsed (and prior to the maturity date), subject to underwriting.
Tax Risks (Income Tax and MEC)
We expect that the Policy will generally be deemed a life insurance contract under federal tax law, and that the death benefit paid to the beneficiary will generally not be subject to federal income tax.
Depending on the total amount of premiums you pay, the Policy may be treated as a modified endowment contract ("MEC") under federal tax laws. If a Policy is treated as a MEC, partial withdrawals, surrenders, assignments, pledges and loans will be treated first as distributions of gain that are taxable as ordinary income, and treated as tax-free recovery of the owner's basis in the Policy only after all gain has been distributed. In addition, a 10% penalty tax may be imposed on the taxable portion of cash withdrawals, surrenders, assignments, pledges and loans taken before you reach age 59 1/2. If a Policy is not treated as a MEC, partial surrenders and withdrawals will not be subject to tax to the extent of your basis in the Policy. Amounts withdrawn in excess of your basis in the Policy, while subject to tax as ordinary income, will not be subject to a 10% penalty tax. Also, if your Policy is not a MEC, loans, assignments and pledges are not taxable when made although they may be taxable on the lapse or surrender of the Policy. You should consult a qualified tax advisor for assistance in all tax matters involving your Policy.
A Policy loan, whether or not repaid, will affect cash value over time because we subtract the amount of the loan from the subaccounts and the fixed account and place that amount in the loan reserve account within the fixed account as collateral. We then credit a fixed interest rate of 3.0% to the loan collateral. As a result, the loan collateral does not participate in the investment results of the subaccounts and may not continue to receive the current interest rates credited to the unloaned portion of the fixed account. The longer the loan is outstanding, the greater the effect is likely to be. Depending on the investment results of the subaccounts, and the interest rates credited to the fixed account, the effect could be favorable or unfavorable.
We also currently charge interest on Policy loans at a rate of up to 3.75%, payable in arrears. This charge will not exceed 4.0%. Interest is added to the amount of the loan to be repaid.
A Policy loan will make it more likely that a Policy would lapse. A Policy loan will increase the risk that the no lapse period will not remain in effect. There is also a risk that if the loan, insurance charges and unfavorable investment experience reduce your net surrender value, and the no lapse period guarantee is no longer in effect, then the Policy will lapse. Assuming Policy loans have not already been subject to tax as distributions, a significant tax liability could arise when the lapse occurs. Anyone considering using the Policy as a source of tax-free income by taking out Policy loans should consult a qualified tax advisor about the tax risks inherent in such a strategy before purchasing the Policy.
If the Policy is not a MEC and lapses or is surrendered while a loan is outstanding, you will realize taxable income equal to the lesser of the gain in the Policy or the sum of the excess of the loan balance (including accrued interest) and any cash received on surrender over your basis in the Policy. If the Policy is a MEC or becomes a MEC within two years of taking a loan, the amount of the loan will be taxed as if it were a withdrawal from the Policy.
If the Policy lapses or terminates due to volatility in the investment performance of the underlying portfolios or another reason, you may incur tax consequences at an unexpected time.
You should consult with your own qualified tax advisor to apply the law to your particular circumstances.
5
A comprehensive discussion of the risks of each portfolio may be found in each portfolios prospectus. Please refer to the prospectuses for the portfolios for more information.
There is no assurance that any portfolio will achieve its stated investment objective.
The following tables describe the fees and expenses that you will pay when buying, owning and surrendering the Policy. Please Note: We have included two versions of each table, which appear in sections: Section A includes the fee tables for Policies purchased on or after September 15, 2008 (or subsequent state approval) based on the Commissioners 2001 Standard Ordinary Tobacco and Non-Tobacco Mortality Tables (2001 C.S.O. Tables); and Section B includes the fee tables for Policies purchased prior to September 15, 2008 and issued prior to January 1, 2009, based on the Commissioners 1980 Standard Ordinary Tobacco and Non-Tobacco Mortality Tables (1980 C.S.O. Tables). If the amount of a charge depends on the personal characteristics of the insured or the owner, then the fee table lists the minimum and maximum charges we assess under the Policy, and the fees and charges of a representative insured with the characteristics set forth below. These charges may not be representative of the charges you will pay.
6
SECTION A
Fee Tables for Policies Purchased On or After September 15, 2008;
Based on the 2001 C.S.O. Tables
7
FOR POLICIES PURCHASED ON OR AFTER SEPTEMBER 15, 2008
The first table describes the fees and expenses that you will pay when buying the Policy, paying premiums, making cash withdrawals from the Policy, surrendering the Policy, or transferring Policy cash value among the subaccounts and the fixed account.
Transaction Fees
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Premium Expense Charges | Upon payment of each premium | As % of premium payment | As % of premium payment | |||
Premium Expense Charge |
First 10 Policy years:
6.0% on Policy with a specified amount of less than $250,000; and 4.0% on Policy with a specified amount of $250,000 -$499,999; no charge on Policy with a specified amount of $500,000 or more
For Residents of Puerto Rico: 12.0% on Policy with a specified amount of less than $250,000; 10.0% on Policy with a specified amount of $250,000 to $499,999; 6.0% on Policy with a specified amount of $500,0000 or more |
First 10 Policy years:
6.0% on Policy with a specified amount of less than $250,000; 4.0% on Policy with a specified amount of $250,000 -$499,999; no charge on Policy with a specified amount of $500,000 or more
For Residents of Puerto Rico: 10.0% on Policy with a specified amount of less than $250,000; 8.0% on Policy with a specified amount of $250,000 - $499,999; 4.0% on Policy with a specified amount of $500,000 or more | ||||
Policy year 11+:
2.5% on Policy with a specified amount of less than $500,000; no charge on Policy with a specified amount of $500,000 or more
For Residents of Puerto Rico: 8.5% on Policy with a specified amount of less than $500,000; 6.0% on Policy with a specified amount of $500,000 or more |
Policy year 11+:
2.5% on Policy with a specified amount of less than $500,000; no charge on Policy with a specified amount of $500,000 or more
For Residents of Puerto Rico: 6.5% on Policy with a specified amount of less than $500,000; 4.0% on Policy with a specified amount of $500,000 or more | |||||
Cash Withdrawal Charge2 | Upon withdrawal | 2% of the amount withdrawn, not to exceed $25 | 2% of the amount withdrawn, not to exceed $25 |
1 |
The Company reserves the right at any time to change the current charge but never to exceed the guaranteed charge. |
2 |
When we incur the expense of expedited delivery of your partial withdrawal or complete surrender payment, we currently assess the following additional charges: $20 for overnight delivery ($30 for Saturday delivery); and $25 for wire service. You can obtain further information about these charges by contacting our administrative office. |
8
FOR POLICIES PURCHASED ON OR AFTER SEPTEMBER 15, 2008
Transaction Fees
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Surrender Charge3 | Upon full surrender of the Policy during the first 15 Policy years or during the first 15 Policy years from the date of any increase in the specified amount | |||||
Maximum Charge4 |
$57.00 per $1,000 of specified amount during the first Policy year. | $57.00 per $1,000 of specified amount during the first Policy year. | ||||
Minimum Charge5 |
$11.99 per $1,000 of specified amount during the first Policy year. | $11.99 per $1,000 of specified amount during the first Policy year. | ||||
Initial Charge for a male insured, issue age 31, in the ultimate select non-tobacco use class |
$17.47 per $1,000 of specified amount during the first Policy year. | $17.47 per $1,000 of specified amount during the first Policy year. | ||||
Transfer Charge6 | Upon transfer | $25 for each transfer in excess of 12 per Policy year | $25 for each transfer in excess of 12 per Policy year |
3 |
The surrender charge will vary based on the issue age, gender and underwriting class of the insured on the Policy date and at the time of any increase in the specified amount. The amount of the surrender charge usually declines over time. Each increase in specified amount will have its own 15 year surrender charge period starting on the date of the increase and surrender charges that are based upon the insureds age, gender and underwriting class at the time of the increase. The surrender charge for each segment of specified amount is calculated as the surrender charge per $1,000 of specified amount in that segment multiplied by the surrender charge factor. The surrender charge factor on a Policy where the insureds age on the Policy date (or age at time of any specified amount increase) is less than 40 will be 1.00 for the first 5 Policy years and then decrease by 0.10 each Policy year until it reaches zero at the end of the 15th Policy year after the Policy date (or date of any specified amount increase). For a Policy where the age on the Policy date (or at time of any specified amount increase) is greater than 39, the surrender charge factor is less than 1.00 at the end of the first Policy year and decreases every year until it reaches zero at the end of the 15th Policy year after the Policy date (or date of any specified amount increase). The surrender charge shown in the table may not be typical of the charges you will pay. More detailed information about the surrender charges applicable to you is available from your agent. |
4 |
This maximum surrender charge is based on an insured with the following characteristics: Male, issue age 85, in the standard tobacco use underwriting class. This maximum charge may also apply to insureds with other characteristics. |
5 |
This minimum surrender charge is based on an insured with the following characteristics: Female, issue age 0, in the juvenile underwriting class. This minimum charge may also apply to insureds with other characteristics. |
6 |
The first 12 transfers per Policy year are free. |
9
FOR POLICIES PURCHASED ON OR AFTER SEPTEMBER 15, 2008
Transaction Fees
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Change in Net Premium Allocation Charge | Upon change of allocation instructions for premium payments | $25 | None | |||
Decrease Charge | When specified amount is decreased during the first 15 Policy years or during the first 15 years following any increase in specified amount | Equal to the surrender charge (as of the date of the decrease) applicable to that portion of the segment(s) of the specified amount that is/are decreased. | Equal to the surrender charge (as of the date of the decrease) applicable to that portion of the segment(s) of the specified amount that is/are decreased. | |||
Living Benefit Rider (an Accelerated Death Benefit) |
When rider is exercised | Discount Factor7 | Discount Factor7 |
7 |
We do not assess an administrative charge for this rider; however, we do reduce the single sum benefit by a discount factor to compensate us for lost income due to the early payment of the death benefit. |
10
FOR POLICIES PURCHASED ON OR AFTER SEPTEMBER 15, 2008
The table below describes the fees and expenses that you will pay periodically during the time that you own the Policy, not including portfolio fees and expenses.
Periodic Charges Other Than Portfolio Operating Expenses
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Monthly Policy Charge | Monthly, on the Policy date and on each Monthiversary | $12.00 per month | $10.00 per month | |||
Cost of Insurance8 (without Extra Ratings)9 |
Monthly, on the Policy date and on each Monthiversary | |||||
Maximum Charge10 |
$29.79 per $1,000 of net amount at risk per month11 | $28.30 per $1,000 of net amount at risk per month11 | ||||
Minimum Charge12 |
$0.02 per $1,000 of net amount at risk per month11 | $0.01 per $1,000 of net amount at risk per month11 |
8 |
Cost of insurance charges are based on the insureds issue age, gender, underwriting class, specified amount, Policy year, and the net amount at risk. Cost of insurance rates generally will increase each year with the age of the insured. Cost of insurance rates are generally lower for each higher band of specified amount. For example, band 2 (face amounts $250,000 - $499,000) generally has lower cost of insurance rates than those of band 1 (face amounts less than $250,000). The cost of insurance rates shown in the table may not be representative of the charges you will pay. Your policys schedule page will indicate the guaranteed cost of insurance charges applicable to your Policy. You can obtain more detailed information concerning your cost of insurance charges by contacting your agent. |
9 |
We may place an insured in a sub-standard underwriting class with extra ratings that reflect higher mortality risks and that result in higher cost of insurance rates. If the insured possesses additional mortality risks, we may add a surcharge to the cost of insurance rates of up to $83.33 monthly per $1,000 of net amount at risk. |
10 |
This maximum charge is based on an insured with the following characteristics: Male, age 85 at issue, standard tobacco class, with an initial face amount of less than $250,000 (Band 1) and in the 15th Policy year. This maximum charge may also apply to insureds with other characteristics. |
11 |
The net amount at risk equals the death benefit on a Monthiversary, divided by 1.0024663, minus the cash value on such Monthiversary. |
12 |
This minimum charge is based on an insured with the following characteristics: Female, age 5 at issue, juvenile class, with an initial face amount of $1,000,000 or higher (Band 4) and in the first Policy year. This minimum charge may also apply to insureds with other characteristics. |
11
FOR POLICIES PURCHASED ON OR AFTER SEPTEMBER 15, 2008
Periodic Charges Other Than Portfolio Operating Expenses
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Cost of Insurance (continued) |
||||||
Initial Charge for a male insured, issue age 31, in the ultimate select non-tobacco use class, band 1 |
$.08 per $1,000 of net amount at risk per month11 | $.08 per $1,000 of net amount at risk per month11 | ||||
Mortality and Expense Risk Charge | Daily | Annual rate of 1.50% of average daily net assets of each subaccount in which you are invested | Annual rate of 1.50% for Policy years 1 15, and 0.75% for Policy years 16+, of average daily net assets of each subaccount in which you are invested | |||
Loan Interest Spread13 | On Policy anniversary or earlier, as applicable14 | 1.0% (effective annual rate) | 0.75% (effective annual rate) | |||
Optional Rider Charges:15 |
||||||
Accidental Death Benefit Rider16 | Monthly, on the Policy date and on each Monthiversary until the insured reaches age 70 | |||||
Maximum Charge17 |
$0.18 per $1,000 of rider face amount per month | $0.18 per $1,000 of rider face amount per month | ||||
Minimum Charge18 |
$0.10 per $1,000 of rider face amount per month | $0.10 per $1,000 of rider face amount per month |
13 |
The Loan Interest Spread is the difference between the amount of interest we charge you for a loan (currently, an effective annual rate of 3.75%, guaranteed not to exceed 4.0%) and the amount of interest we credit to your loan reserve account (an effective annual rate of 3.0% guaranteed). After the 10th Policy year, we will charge preferred loan interest rates that are lower on a portion of the loan. The maximum loan interest spread on preferred loans is 1.00%, and the current spread is 0.0%. |
14 |
While a Policy loan is outstanding, loan interest is payable in arrears on each Policy anniversary, or, if earlier, on the date of loan repayment, Policy lapse, surrender, Policy termination, or the insureds death. |
15 |
Optional Rider Cost of insurance charges are based on each insureds issue age or attained age, gender and rider face amount. The cost of insurance rates shown in the table may not be representative of the charges you will pay. Your Policys schedule page will indicate the guaranteed cost of insurance charges applicable to your Policy. You can obtain more detailed information concerning your cost of insurance charges by contacting your agent. |
16 |
Rider cost of insurance charges are based on each insureds attained age, gender and rider face amount. The cost of insurance rates shown in the table may not be representative of the charges you will pay. The rider will indicate the maximum guaranteed rider charges applicable to your Policy. You can obtain more information about this rider by contacting your agent. |
17 |
This maximum charge is based on an insured with the following characteristics: Male, age 50 at issue standard tobacco underwriting class and in the 20th Policy year. This maximum charge may also apply to insureds with other characteristics. |
18 |
This minimum charge is based on an insured with the following characteristics: Male, age 45 at issue and in the first Policy year. This minimum charge may also apply to insureds with other characteristics. |
12
FOR POLICIES PURCHASED ON OR AFTER SEPTEMBER 15, 2008
Periodic Charges Other Than Portfolio Operating Expenses
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Accidental Death Benefit Rider (continued) | ||||||
Initial Charge for a male insured, issue age 31 |
$0.10 per $1,000 of rider face amount per month | $0.10 per $1,000 of rider face amount per month | ||||
Disability Waiver Rider19 |
Monthly, on the Policy date and on each Monthiversary until the insured reaches age 60 | |||||
Maximum Charge20 |
$0.39 per $1,000 of base Policy specified amount per month | $0.39 per $1,000 of base Policy specified amount per month | ||||
Minimum Charge21 |
$0.03 per $1,000 of base Policy specified amount per month | $0.03 per $1,000 of base Policy specified amount per month | ||||
Initial charge for a male insured, issue age 31 |
$0.05 per $1,000 of base Policy specified amount per month | $0.05 per $1,000 of base Policy specified amount per month |
19 |
Disability Waiver charges are based on the base insureds issue age, gender and net amount at risk. The charges shown are for base Policy only (no riders and benefits). The addition of other riders and benefits would increase these charges. The cost of insurance rates shown in the table may not be representative of the charges you will pay. Your Policys schedule page will indicate the guaranteed cost of insurance charges applicable to your Policy. You can obtain more detailed information concerning your cost of insurance charges by contacting your agent. |
20 |
This maximum charge is based on an insured with the following characteristics: Female, age 55 at issue. This maximum charge may also apply to insureds with other characteristics. |
21 |
This minimum charge is based on an insured with the following characteristics: Male, age 25 at issue. This minimum charge may also apply to insureds with other characteristics. |
13
FOR POLICIES PURCHASED ON OR AFTER SEPTEMBER 15, 2008
Periodic Charges Other Than Portfolio Operating Expenses
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Disability Waiver and Income Rider22 | Monthly, on the Policy date and on each Monthiversary until the insured reaches age 60 | |||||
Maximum Charge23 |
$0.86 per $10 monthly rider units | $0.86 per $10 monthly rider units | ||||
Minimum Charge24 |
$0.20 per $10 monthly rider units | $0.20 per $10 monthly rider units | ||||
Initial charge for a male insured, issue age 31 |
$0.24 per $10 monthly rider units | $0.24 per $10 monthly rider units | ||||
Childrens Insurance Rider25 |
Monthly, on the Policy date and on each Monthiversary until the youngest child reaches age 25 | $0.60 per $1,000 of rider face amount per month | $0.60 per $1,000 of rider face amount per month | |||
Other Insured Rider26 (without Extra Ratings)9 |
Monthly, on the Policy date and on each Monthiversary until the insured reaches age 100 | |||||
Maximum Charge27 |
$29.79 per $1,000 of rider face amount per month | $29.79 per $1,000 of rider face amount per month |
22 |
The charge for this rider is based on the base insureds issue age, gender and number of units of monthly disability income selected. |
23 |
This maximum charge is based on an insured with the following characteristics: Female, age 55 at issue. This maximum charge may also apply to insureds with other characteristics. |
24 |
This minimum charge is based on an insured with the following characteristics: Male, age 27 at issue. This minimum charge may also apply to insureds with other characteristics. |
25 |
The charge for this rider is based on the rider face amount and does not vary. |
26 |
Rider charges are cost of insurance charges that are based on each other insureds issue age, gender, underwriting class, Policy year, and the rider face amount. Cost of insurance rates for this rider generally will increase each year with the age of the other insured. The cost of insurance rates shown in the table may not be representative of the charges you will pay. The rider will indicate the maximum guaranteed rider charges applicable to your Policy. You can obtain more information about these riders by contacting your agent. |
27 |
This maximum charge is based on an insured with the following characteristics: Male, age 85 at issue standard tobacco underwriting class and in the 15th Policy year. This maximum charge may also apply to insureds with other characteristics. |
14
FOR POLICIES PURCHASED ON OR AFTER SEPTEMBER 15, 2008
Periodic Charges Other Than Portfolio Operating Expenses
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Other Insured Rider25 (continued) (without Extra Ratings)9 |
Monthly, on the Policy date and on each Monthiversary until the insured reaches age 100 | |||||
Minimum Charge28 |
$0.02 per $1,000 of rider face amount per month | $0.02 per $1,000 of rider face amount per month | ||||
Initial charge for a female insured, issue age 32, in the ultimate select non-tobacco use class |
$0.06 per $1,000 of rider face amount per month | $0.06 per $1,000 of rider face amount per month | ||||
Primary Insured Rider26 (without Extra Ratings)9 |
Monthly, on the Policy date and on each Monthiversary until the insured reaches age 95 | |||||
Maximum Charge29 |
$22.81 per $1,000 of rider face amount per month | $20.06 per $1,000 of rider face amount per month | ||||
Minimum Charge28 |
$0.02 per $1,000 of rider face amount per month | $0.02 per $1,000 of rider face amount per month | ||||
Initial charge for a male insured, issue age 31, in the ultimate select non-tobacco use class, band 1 |
$0.08 per $1,000 of rider face amount per month | $0.08 per $1,000 of rider face amount per month | ||||
Primary Insured Plus Rider26 (without Extra Ratings)9 |
Monthly, on the Policy date and on each Monthiversary until the insured reaches age 90 | |||||
Maximum Charge |
$16.52 per $1,000 of rider face amount per month30 | $14.91 per $1,000 of rider face amount per month31 |
28 |
This minimum charge is based on an insured with the following characteristics: Female, age 10 at issue, juvenile class and in the first Policy year. This minimum charge may also apply to insureds with other characteristics. |
29 |
This maximum charge is based on an insured with the following characteristics: Male, age 85 at issue standard tobacco underwriting class and in the 10th Policy year. This maximum charge may also apply to insureds with other characteristics. |
30 |
This maximum charge is based on an insured with the following characteristics: Male, age 85 at issue, standard tobacco use class and in the 5th Policy year. This maximum charge may also apply to insureds with other characteristics. |
31 |
This maximum charge is based on an insured with the following characteristics: Male, age 74 at issue, standard tobacco use class, 16th Policy year and a band 1 rider face amount of less than $1,000,000. This maximum charge may also apply to insureds with other characteristics. |
15
FOR POLICIES PURCHASED ON OR AFTER SEPTEMBER 15, 2008
Periodic Charges Other Than Portfolio Operating Expenses
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Primary Insured Plus Rider26 (without Extra Ratings) (continued) |
||||||
Minimum Charge |
$0.04 per $1,000 of rider face amount per month32 | $0.03 per $1,000 of rider face amount per month33 | ||||
Initial charge for a male insured, issue age 31, in the ultimate select non-tobacco use class, band 1 |
$0.08 per $1,000 of rider face amount per month | $0.06 per $1,000 of rider face amount per month |
For information concerning compensation paid for the sale of the Policy, see Sale of the Policies.
32 |
This minimum charge is based on an insured with the following characteristics: Female, age 18 at issue, ultimate select non-tobacco use class and in the first Policy year. The minimum charge may also apply to insureds with other characteristics. |
33 |
This minimum charge is based on an insured with the following characteristics: Female, age 29 at issue, ultimate select non-tobacco use class first Policy year and in a band 2 rider face amount of $1,000,000 or above. The minimum charge may also apply to insureds with other characteristics. |
16
SECTION B
Fee Tables for Policies Purchased Prior to September 15, 2008 and issued
prior to January 1, 2009; Based on the 1980 C.S.O. Tables
17
FOR POLICIES PURCHASED PRIOR TO SEPTEMBER 15, 2008 AND ISSUED PRIOR TO JANUARY 1, 2009
The first table describes the fees and expenses that you will pay when buying the Policy, paying premiums, making cash withdrawals from the Policy, surrendering the Policy, or transferring Policy cash value among the subaccounts and the fixed account.
Transaction Fees
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Premium Charges | Upon payment of each premium | As % of premium payment | As % of premium payment | |||
Premium Expense Charge |
First 10 Policy years:
6% on Policy with a specified amount of less than $250,000; and 4.0% on Policy with a specified amount of $250,000 - $499,999 |
First 10 Policy years:
6% on Policy with a specified amount of less than $250,000; and 4.0% on Policy with a specified amount of $250,000 - $499,999 | ||||
Policy year 11+:
2.5% on Policy with specified amount up to $499,999 |
Policy year 11+:
2.5% on Policy with specified amount up to $499,999 | |||||
Premium Collection Charge (only for Policies on direct pay notice) |
Upon payment of each premium | $3 per premium payment | $0 per premium payment | |||
Cash Withdrawal Charge20 | Upon withdrawal | 2.0% of the amount withdrawn, not to exceed $25 | 2.0% of the amount withdrawn, not to exceed $25 |
19 |
The Company reserves the right at any time to change the current charge but never to exceed the guaranteed charge. |
20 |
When we incur the expense of expedited delivery of your partial withdrawal or complete surrender payment, we currently assess the following additional charges: $20 for overnight delivery ($30 for Saturday delivery); and $25 for wire service. You can obtain further information about these charges by contacting our administrative office. |
18
FOR POLICIES PURCHASED PRIOR TO SEPTEMBER 15, 2008 AND ISSUED PRIOR TO JANUARY 1, 2009
Transaction Fees
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Surrender Charge21 | Upon full surrender of the Policy during the first 15 Policy years or during the first 15 Policy years from the date of any increase in the specified amount | |||||
Maximum Charge22 |
$57.00 per $1,000 of specified amount during the first Policy year. | $57.00 per $1,000 of specified amount during the first Policy year. | ||||
Minimum Charge23 |
$7.68 per $1,000 of specified amount during the first Policy year. | $7.68 per $1,000 of specified amount during the first Policy year. | ||||
Initial Charge for a male insured, issue age 31, in the ultimate select non-tobacco use class |
$13.04 per $1,000 of specified amount during the first Policy year. | $13.04 per $1,000 of specified amount during the first Policy year. | ||||
Transfer Charge24 |
Upon transfer | $25 for each transfer in excess of 12 per Policy year | $25 for each transfer in excess of 12 per Policy year |
21 |
The surrender charge will vary based on the issue age, gender and underwriting class of the insured on the Policy date and at the time of any increase in the specified amount. The amount of the surrender charge usually declines over time. Each increase in specified amount will have its own 15 year surrender charge period starting on the date of the increase and surrender charges that are based upon the insureds age, gender and underwriting class at the time of the increase. The surrender charge for each segment of specified amount is calculated as the surrender charge per $1,000 of specified amount in that segment multiplied by the surrender charge factor. The surrender charge factor on a Policy where the insureds age on the Policy date (or age at time of any specified amount increase) is less than 40 will be 1.00 for the first 5 Policy years and then decrease by 0.10 each Policy year until it reaches zero at the end of the 15th Policy year after the Policy date (or date of any specified amount increase). For a Policy where the age on the Policy date (or at time of any specified amount increase) is greater than 39, the surrender charge factor is less than 1.00 at the end of the first Policy year and decreases every year until it reaches zero at the end of the 15th Policy year after the Policy date (or date of any specified amount increase). The surrender charge shown in the table may not be typical of the charges you will pay. More detailed information about the surrender charges applicable to you is available from your agent. |
22 |
This maximum surrender charge is based on an insured with the following characteristics: Male, issue age 85, in the standard tobacco use underwriting class. This maximum charge may also apply to insureds with other characteristics. |
23 |
This minimum surrender charge is based on an insured with the following characteristics: Female, issue age 4, in the juvenile underwriting class. This minimum charge may also apply to insureds with other characteristics. |
24 |
The first 12 transfers per Policy year are free. |
19
FOR POLICIES PURCHASED PRIOR TO SEPTEMBER 15, 2008 AND ISSUED PRIOR TO JANUARY 1, 2009
Transaction Fees
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Change in Net Premium Allocation Charge | Upon change of allocation instructions for premium payments | $25 | None | |||
Decrease Charge | When specified amount is decreased during the first 15 Policy years or during the first 15 years following any increase in specified amount | Equal to the surrender charge (as of the date of the decrease) applicable to that portion of the segment(s) of the specified amount that is/are decreased. | Equal to the surrender charge (as of the date of the decrease) applicable to that portion of the segment(s) of the specified amount that is/are decreased. | |||
Living Benefit Rider (an Accelerated Death Benefit) |
When rider is exercised | Discount Factor25 | Discount Factor7 |
25 |
We do not assess an administrative charge for this rider; however, we do reduce the single sum benefit by a discount factor to compensate us for lost income due to the early payment of the death benefit. |
20
FOR POLICIES PURCHASED PRIOR TO SEPTEMBER 15, 2008 AND ISSUED PRIOR TO JANUARY 1, 2009
The table below describes the fees and expenses that you will pay periodically during the time that you own the Policy, not including portfolio fees and expenses.
Periodic Charges Other Than Portfolio Operating Expenses
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Monthly Policy Charge | Monthly, on the Policy date and on each Monthiversary | $7.50 per month | $5.00 per month | |||
Cost of Insurance26 (without Extra Ratings)27 |
Monthly, on the Policy date and on each Monthiversary | |||||
Maximum Charge28 |
$83.33 per $1,000 of net amount at risk per month29 | $60.21 per $1,000 of net amount at risk per month11 | ||||
Minimum Charge30 |
$0.06 per $1,000 of net amount at risk per month11 | $0.05 per $1,000 of net amount at risk per month11 |
26 |
Cost of insurance charges are based on the insureds issue age, gender, underwriting class, specified amount, Policy year, and the net amount at risk. Cost of insurance rates generally will increase each year with the age of the insured. Cost of insurance rates are generally lower for each higher band of specified amount. For example, band 2 (face amounts $250,000 - $499,000) generally has lower cost of insurance rates than those of band 1 (face amounts less than $250,000). The cost of insurance rates shown in the table may not be representative of the charges you will pay. Your policys schedule page will indicate the guaranteed cost of insurance charges applicable to your Policy. You can obtain more detailed information concerning your cost of insurance charges by contacting your agent. |
27 |
We may place an insured in a sub-standard underwriting class with extra ratings that reflect higher mortality risks and that result in higher cost of insurance rates. If the insured possesses additional mortality risks, we may add a surcharge to the cost of insurance rates of up to $83.33 monthly per $1,000 of net amount at risk. |
28 |
This maximum charge is based on an insured with the following characteristics: Male, age 85 at issue, standard tobacco class, with an initial face amount of less than $250,000 (Band 1) and in the 15th Policy year. This maximum charge may also apply to insureds with other characteristics. |
29 |
The net amount at risk equals the death benefit on a Monthiversary, divided by 1.0024663, minus the cash value on such Monthiversary. |
30 |
This minimum charge is based on an insured with the following characteristics: Female, age 10 at issue, juvenile class, with an initial face amount of $1,000,000 or higher (Band 4) and in the first Policy year. This minimum charge may also apply to insureds with other characteristics. |
21
FOR POLICIES PURCHASED PRIOR TO SEPTEMBER 15, 2008 AND ISSUED PRIOR TO JANUARY 1, 2009
Periodic Charges Other Than Portfolio Operating Expenses
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Cost of Insurance (continued) |
||||||
Initial Charge for a male insured, issue age 31, in the ultimate select non-tobacco use class, band 1 |
$0.12 per $1,000 of net amount at risk per month11 | $0.12 per $1,000 of net amount at risk per month11 | ||||
Mortality and Expense Risk Charge | Daily | Annual rate of 0.90% for Policy years 1 15, and 0.60% for Policy years 16+, of average daily net assets of each subaccount in which you are invested | Annual rate of 0.90% for Policy years 1 15, and 0.30% for Policy years 16+, of average daily net assets of each subaccount in which you are invested | |||
Loan Interest Spread31 | On Policy anniversary or earlier, as applicable32 | 1.0% (effective annual rate) | 0.75% (effective annual rate) | |||
Optional Rider Charges:33 |
||||||
Accidental Death Benefit Rider34 | Monthly, on the Policy date and on each Monthiversary until the insured reaches age 70 | |||||
Maximum Charge35 |
$0.18 per $1,000 of rider face amount per month | $0.18 per $1,000 of rider face amount per month | ||||
Minimum Charge36 |
$0.10 per $1,000 of rider face amount per month | $0.10 per $1,000 of rider face amount per month |
13 |
The Loan Interest Spread is the difference between the amount of interest we charge you for a loan (currently, an effective annual rate of 3.75%, guaranteed not to exceed 4.0%) and the amount of interest we credit to your loan reserve account (an effective annual rate of 3.0% guaranteed). After the 10th Policy year, we will charge preferred loan interest rates that are lower on a portion of the loan. The maximum loan interest spread on preferred loans is 1.00%, and the current spread is 0.0%. |
32 |
While a Policy loan is outstanding, loan interest is payable in arrears on each Policy anniversary, or, if earlier, on the date of loan repayment, Policy lapse, surrender, Policy termination, or the insureds death. |
33 |
Optional Rider Cost of insurance charges are based on each insureds issue age or attained age, gender and rider face amount. The cost of insurance rates shown in the table may not be representative of the charges you will pay. Your Policys schedule page will indicate the guaranteed cost of insurance charges applicable to your Policy. You can obtain more detailed information concerning your cost of insurance charges by contacting your agent. |
34 |
Rider cost of insurance charges are based on each insureds attained age, gender and rider face amount. The cost of insurance rates shown in the table may not be representative of the charges you will pay. The rider will indicate the maximum guaranteed rider charges applicable to your Policy. You can obtain more information about this rider by contacting your agent. |
35 |
This maximum charge is based on an insured with the following characteristics: Male, age 50 at issue standard tobacco underwriting class and in the 20th Policy year. This maximum charge may also apply to insureds with other characteristics. |
36 |
This minimum charge is based on an insured with the following characteristics: Male, age 45 at issue and in the first Policy year. This minimum charge may also apply to insureds with other characteristics. |
22
FOR POLICIES PURCHASED PRIOR TO SEPTEMBER 15, 2008 AND ISSUED PRIOR TO JANUARY 1, 2009
Periodic Charges Other Than Portfolio Operating Expenses
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Accidental Death Benefit Rider (continued) | ||||||
Initial Charge for a male insured, issue age 31 |
$0.10 per $1,000 of rider face amount per month | $0.10 per $1,000 of rider face amount per month | ||||
Disability Waiver Rider19 |
Monthly, on the Policy date and on each Monthiversary until the insured reaches age 60 | |||||
Maximum Charge20 |
$0.39 per $1,000 of base Policy specified amount per month | $0.39 per $1,000 of base Policy specified amount per month | ||||
Minimum Charge21 |
$0.03 per $1,000 of base Policy specified amount per month | $0.03 per $1,000 of base Policy specified amount per month | ||||
Initial charge for a male insured, issue age 31 |
$0.05 per $1,000 of base Policy specified amount per month | $0.05 per $1,000 of base Policy specified amount per month |
19 |
Disability Waiver charges are based on the base insureds issue age, gender and net amount at risk. The charges shown are for base Policy only (no riders and benefits). The addition of other riders and benefits would increase these charges. The cost of insurance rates shown in the table may not be representative of the charges you will pay. Your Policys schedule page will indicate the guaranteed cost of insurance charges applicable to your Policy. You can obtain more detailed information concerning your cost of insurance charges by contacting your agent. |
20 |
This maximum charge is based on an insured with the following characteristics: Female, age 55 at issue. This maximum charge may also apply to insureds with other characteristics. |
21 |
This minimum charge is based on an insured with the following characteristics: Male, age 25 at issue. This minimum charge may also apply to insureds with other characteristics. |
23
FOR POLICIES PURCHASED PRIOR TO SEPTEMBER 15, 2008 AND ISSUED PRIOR TO JANUARY 1, 2009
Periodic Charges Other Than Portfolio Operating Expenses
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Disability Waiver and Income Rider22 | Monthly, on the Policy date and on each Monthiversary until the insured reaches age 60 | |||||
Maximum Charge23 |
$0.86 per $10 monthly rider units | $0.86 per $10 monthly rider units | ||||
Minimum Charge24 |
$0.20 per $10 monthly rider units | $0.20 per $10 monthly rider units | ||||
Initial charge for a male insured, issue age 31 |
$0.24 per $10 monthly rider units | $0.24 per $10 monthly rider units | ||||
Childrens Insurance Rider25 | Monthly, on the Policy date and on each Monthiversary until the youngest child reaches age 25 | $0.60 per $1,000 of rider face amount per month | $0.60 per $1,000 of rider face amount per month | |||
Other Insured Rider26 (without Extra Ratings)9 |
Monthly, on the Policy date and on each Monthiversary until the insured reaches age 100 | |||||
Maximum Charge27 |
$83.33 per $1,000 of rider face amount per month | $70.83 per $1,000 of rider face amount per month |
22 |
The charge for this rider is based on the base insureds issue age, gender and number of units of monthly disability income selected. |
23 |
This maximum charge is based on an insured with the following characteristics: Female, age 55 at issue. This maximum charge may also apply to insureds with other characteristics. |
24 |
This minimum charge is based on an insured with the following characteristics: Male, age 27 at issue. This minimum charge may also apply to insureds with other characteristics. |
25 |
The charge for this rider is based on the rider face amount and does not vary. |
26 |
Rider charges are cost of insurance charges that are based on each other insureds issue age, gender, underwriting class, Policy year, and the rider face amount. Cost of insurance rates for this rider generally will increase each year with the age of the other insured. The cost of insurance rates shown in the table may not be representative of the charges you will pay. The rider will indicate the maximum guaranteed rider charges applicable to your Policy. You can obtain more information about these riders by contacting your agent. |
27 |
This maximum charge is based on an insured with the following characteristics: Male, age 85 at issue standard tobacco underwriting class and in the 15th Policy year. This maximum charge may also apply to insureds with other characteristics. |
24
FOR POLICIES PURCHASED PRIOR TO SEPTEMBER 15, 2008 AND ISSUED PRIOR TO JANUARY 1, 2009
Periodic Charges Other Than Portfolio Operating Expenses
Charge |
When Charge is Deducted |
Amount Deducted | ||||
Guaranteed Charge |
Current Charge1 | |||||
Other Insured Rider25 (continued) (without Extra Ratings)9 |
Monthly, on the Policy date and on each Monthiversary until the insured reaches age 100 | |||||
Minimum Charge28 |
$0.06 per $1,000 of rider face amount per month | $0.06 per $1,000 of rider face amount per month | ||||
Initial charge for a female insured, issue age 32, in the ultimate select non-tobacco use class |
$0.11 per $1,000 of rider face amount per month | $0.11 per $1,000 of rider face amount per month | ||||
Primary Insured Rider26 (without Extra Ratings)9 |
Monthly, on the Policy date and on each Monthiversary until the insured reaches age 95 | |||||
Maximum Charge29 |
$24.85 per $1,000 of rider face amount per month | $20.06 per $1,000 of rider face amount per month | ||||
Minimum Charge28 |
$0.06 per $1,000 of rider face amount per month | $0.05 per $1,000 of rider face amount per month | ||||
Initial charge for a male insured, issue age 31, in the ultimate select non-tobacco use class, band 1 |
$0.12 per $1,000 of rider face amount per month | $0.10 per $1,000 of rider face amount per month | ||||
Primary Insured Plus Rider26 (without Extra Ratings)9 |
Monthly, on the Policy date and on each Monthiversary until the insured reaches age 90 | |||||
Maximum Charge |
$18.46 per $1,000 of rider face amount per month30 | $14.91 per $1,000 of rider face amount per month31 |
28 |
This minimum charge is based on an insured with the following characteristics: Female, age 10 at issue, juvenile class and in the first Policy year. This minimum charge may also apply to insureds with other characteristics. |
29 |
This maximum charge is based on an insured with the following characteristics: Male, age 85 at issue standard tobacco underwriting class and in the 10th Policy year. This maximum charge may also apply to insureds with other characteristics. |
30 |
This maximum charge is based on an insured with the following characteristics: Male, age 85 at issue, standard tobacco use class and in the 5th Policy year. This maximum charge may also apply to insureds with other characteristics. |
31 |
This maximum charge is based on an insured with the following characteristics: Male, age 74 at issue, standard tobacco use class, 16th Policy year and a band 1 rider face amount of less than $1,000,000. This maximum charge may also apply to insureds with other characteristics. |
25
For information concerning compensation paid for the sale of the Policy, see Sale of the Policies.
Range of Expenses for the Portfolios1, 2
The next table shows the lowest and highest total operating expenses charged by the portfolios during the fiscal year ended December 31, 2007. Expenses of the portfolios may be higher or lower in the future. More detail concerning each portfolios fees and expenses is contained in the prospectus for each portfolio.
Lowest | Highest | |||||
Total Annual Portfolio Operating Expenses (total of all expenses that are deducted from portfolio assets, including management fees, 12b-1 fees, and other expenses) | 0.40 | % | 2.07 | % | ||
Net Annual Portfolio Operating Expenses (total of all expenses that are deducted from portfolio assets, including management fees, 12b-1 fees, and other expenses, after contractual waiver of fees and expenses)3 | 0.40 | % | 1.63 | % |
1 |
The portfolio expenses used to prepare this table were provided to Western Reserve by the funds. Western Reserve has not independently verified such information. The expenses shown are those incurred for the year ended December 31, 2007. Current or future expenses may be greater or less than those shown. |
2 |
The table showing the range of expenses for the portfolios takes into account the expenses of several Transamerica Series Trust asset allocation portfolios that are fund of funds. A fund of funds portfolio typically allocates its assets, within predetermined percentage ranges, among certain other Series Trust portfolios and certain portfolios of the Transamerica Funds (formerly, Transamerica IDEX Mutual Funds) (each such portfolio an Acquired Fund). Each fund of funds has its own set of operating expenses, as does each of the portfolios in which it invests. In determining the range of portfolio expenses, Western Reserve took into account the information received from the Transamerica Series Trust on the combined actual expenses for each of the fund of funds and for the portfolios in which it invests. (The combined expense information includes the pro rata portion of the fees and expenses incurred indirectly by a Transamerica Series Trust asset allocation portfolio as a result of its investment in shares of one or more Acquired Funds.) See the prospectus for the Transamerica Series Trust for a presentation of the applicable Acquired Fund fees and expenses. |
3 |
The range of Net Annual Portfolio Operating Expenses takes into account contractual arrangements for 27 portfolios that require a portfolios investment adviser to reimburse or waive portfolio expenses until April 30, 2009. Western Reserve, the Separate Account, the Fixed Account and the Portfolios. |
32 |
This minimum charge is based on an insured with the following characteristics: Female, age 18 at issue, ultimate select non-tobacco use class and in the first Policy year. The minimum charge may also apply to insureds with other characteristics. |
33 |
This minimum charge is based on an insured with the following characteristics: Female, age 29 at issue, ultimate select non-tobacco use class first Policy year and in a band 2 rider face amount of $1,000,000 or above. The minimum charge may also apply to insureds with other characteristics. |
26
Western Reserve, The Separate Account, The Fixed Account and The Portfolios
Western Reserve Life Assurance Co. of Ohio, located at 570 Carillon Parkway, St. Petersburg, Florida 33716, is the insurance company issuing the Policy. We are obligated to pay all benefits under the Policy.
The separate account is a separate account of Western Reserve, established under Ohio law. We own the assets in the separate account, and we may use assets in the separate account to support other variable life insurance policies we issue. The separate account is registered with the Securities and Exchange Commission (SEC) as a unit investment trust under the Investment Company Act of 1940, as amended (the 1940 Act).
The separate account is divided into subaccounts, each of which invests in shares of a specific portfolio of a fund. These subaccounts buy and sell portfolio shares at net asset value without any sales charge. Any dividends and distributions from a portfolio are reinvested at net asset value in shares of that portfolio.
Income, gains, and losses credited to, or charged against, a subaccount of the separate account reflect the subaccount's own investment experience and not the investment experience of our other assets. The separate account's assets may not be used to pay any of our liabilities other than those arising from the Policies and other variable life insurance policies we issue. If the separate account's assets exceed the required reserves and other liabilities, we may transfer the excess to our general account.
Changes to the Separate Account. As permitted by applicable law, we reserve the right to make certain changes to the structure and operation of the separate account, including, among others, the right to:
| Remove, combine, or add subaccounts and make the combined or new subaccounts available to you at our discretion; |
| Substitute shares of another registered open-end management company, which may have different fees and expenses, for shares of a subaccount at our discretion; |
| Close subaccounts to allocations of new premiums by existing or new policyowners at any time in our discretion; |
| Transfer assets supporting the Policies from one subaccount to another, or from the separate account to another separate account; |
| Combine the separate account with other separate accounts, and/or create new separate accounts; |
| Deregister the separate account under the 1940 Act, or operate the separate account as a management investment company under the 1940 Act, or as any other form permitted by law; and |
| Modify the provisions of the Policy to reflect changes to the subaccounts and the separate account and to comply with applicable law. |
Some, but not all, of these future changes may be the result of changes in applicable laws or interpretation of the laws.
The portfolios, which sell their shares to the subaccounts, may discontinue offering their shares to the subaccounts. We will not make any such changes without receiving any necessary approval of the SEC and applicable state insurance departments. We will notify you of any changes. We reserve the right to make other structural and operational changes affecting the separate account.
27
The fixed account is part of Western Reserve's general account. We use general account assets to support our insurance and annuity obligations other than those funded by separate accounts. Subject to applicable law, Western Reserve has sole discretion over the investment of the fixed account's assets. Western Reserve bears the full investment risk for all amounts contributed to the fixed account. Western Reserve guarantees that the amounts allocated to the fixed account will be credited interest daily at an annual net effective interest rate of at least 3.0%. We will determine any interest rate credited in excess of the guaranteed rate at our sole discretion. We have no formula for determining fixed account interest rates in excess of the guaranteed rate nor any duration for such rates.
Money you place in the fixed account will begin earning interest compounded daily at the current interest rate in effect at the time of your allocation. For Policies purchased on or after September 15, 2008, unless otherwise required by state law, we may restrict your allocations and transfers to the fixed account if the fixed account value, excluding the loan reserve, following the allocation or transfer would exceed $250,000. (This restriction does not apply to any transfer to the fixed account necessary in the exercise of conversion rights.) We may declare current interest rates from time to time. We may declare more than one interest rate for different money based upon the date of allocation or transfer to the fixed account. When we declare a current interest rate higher than the guaranteed rate on amounts allocated to the fixed account, we guarantee the higher rate on those amounts for at least one year (the "guarantee period") unless those amounts are transferred to the loan reserve. At the end of the guarantee period we may declare a new current interest rate on those amounts and any accrued interest thereon. We will guarantee this new current interest rate for another guarantee period. We credit interest greater than 3.0% during any guarantee period at our sole discretion. You bear the risk that interest we credit will not exceed 3.0%.
We allocate amounts from the fixed account for cash withdrawals, transfers to the subaccounts, or the monthly deductions charges on a first in, first out basis ("FIFO") for the purpose of crediting interest.
New Jersey: If your Policy was purchased in the State of New Jersey prior to September 15, 2008 and issued prior to January 1, 2009, the fixed account is not available to you. You may not direct or transfer premium payments or cash value to the fixed account. The fixed account is used solely for Policy loans.
The fixed account has not been registered with the Securities and Exchange Commission and the staff of the Securities and Exchange Commission has not reviewed the disclosure in this prospectus relating to the fixed account.
The Portfolios
Effective May 1, 2008, several Transamerica Series Trust portfolios were renamed as set forth in the following table:
FORMER NAME | NEW NAME | |
AEGON/TRANSAMERICA SERIES TRUST | TRANSAMERICA SERIES TRUST | |
Asset Allocation Conservative Portfolio | Transamerica Asset Allocation Conservative VP | |
Asset Allocation Growth Portfolio | Transamerica Asset Allocation Growth VP | |
Asset Allocation Moderate Growth Portfolio | Transamerica Asset Allocation Moderate Growth VP | |
Asset Allocation Moderate Portfolio | Transamerica Asset Allocation Moderate VP | |
BlackRock Large Cap Value | Transamerica BlackRock Large Cap Value VP | |
Capital Guardian U.S. Equity | Transamerica Capital Guardian U.S. Equity VP | |
Capital Guardian Value | Transamerica Capital Guardian Value VP | |
Clarion Global Real Estate Securities | Transamerica Clarion Global Real Estate Securities VP | |
Federated Market Opportunity | Transamerica Federated Market Opportunity VP | |
International Moderate Growth Fund | Transamerica International Moderate Growth VP | |
JPMorgan Core Bond | Transamerica JPMorgan Core Bond VP | |
JPMorgan Enhanced Index | Transamerica JPMorgan Enhanced Index VP | |
JPMorgan Mid Cap Value | Transamerica JPMorgan Mid Cap Value VP | |
Legg Mason Partners All Cap | Transamerica Legg Mason Partners All Cap VP | |
Marsico Growth | Transamerica Marsico Growth VP | |
MFS High Yield | Transamerica MFS High Yield VP | |
MFS International Equity | Transamerica MFS International Equity VP |
28
Munder Net50 | Transamerica Munder Net50 VP | |
PIMCO Total Return | Transamerica PIMCO Total Return VP | |
T. Rowe Price Equity Income | Transamerica T. Rowe Price Equity Income VP | |
T. Rowe Price Small Cap | Transamerica T. Rowe Price Small Cap VP | |
Templeton Transamerica Global | Transamerica Templeton Global VP | |
Third Avenue Value | Transamerica Third Avenue Value VP | |
Transamerica Balanced | Transamerica Balanced VP | |
Transamerica Convertible Securities | Transamerica Convertible Securities VP | |
Transamerica Equity | Transamerica Equity VP | |
Transamerica Growth Opportunities | Transamerica Growth Opportunities VP | |
Transamerica Money Market | Transamerica Money Market VP | |
Transamerica Science & Technology | Transamerica Science & Technology VP | |
Transamerica Small/Mid Cap Value | Transamerica Small/Mid Cap Value VP | |
Transamerica U.S. Government Securities | Transamerica U.S. Government Securities VP | |
Transamerica Value Balanced | Transamerica Value Balanced VP | |
Van Kampen Mid-Cap Growth | Transamerica Van Kampen Mid-Cap Growth VP |
The separate account invests in shares of the portfolios of a fund. Each portfolio is an investment division of a fund, which is an open-end management investment company registered with the SEC. Such registration does not involve supervision of the management or investment practices or policies of the portfolios by the SEC.
Each portfolio's assets are held separate from the assets of the other portfolios, and each portfolio has investment objectives and policies that are different from those of the other portfolios. Thus, each portfolio operates as a separate investment fund, and the income or loss of one portfolio has no effect on the investment performance of any other portfolio. Pending any required approval by a state insurance regulatory authority, certain subaccounts and corresponding portfolios may not be available to residents of some states.
Each portfolio's investment objective(s) and policies are summarized below. There is no assurance that any of the portfolios will achieve its stated objective(s). Certain portfolios may have investment objectives and policies similar to other portfolios that are managed by the same investment adviser or sub-adviser. The investment results of the portfolios, however, may be higher or lower than those of such other portfolios. We do not guarantee or make any representation that the investment results of the portfolios will be comparable to any other portfolio, even those with the same investment adviser or manager.
You can find more detailed information about the portfolios, including a description of risks, in the fund prospectuses. You may obtain a free copy of the fund prospectuses by contacting us at 1-800-851-9777 or visiting our website at www.westernreserve.com. You should read the fund prospectuses carefully.
Portfolio |
Sub-Adviser or Adviser and Investment Objective | |
TRANSAMERICA SERIES TRUST: |
||
Transamerica Asset Allocation Conservative VP* |
Transamerica Asset Management, Inc. | |
Seeks current income and preservation of capital. | ||
Portfolio Construction Consultant: Morningstar Associates, LLC | ||
Transamerica Asset Allocation Growth VP* |
Transamerica Asset Management, Inc.
Seeks long-term capital appreciation.
Portfolio Construction Consultant: Morningstar Associates, LLC |
* | Each asset allocation portfolio invests in a combination of underlying Transamerica Series Trust and Transamerica Funds portfolios. |
29
Portfolio |
Sub-Adviser or Adviser and Investment Objective | |
Transamerica Asset Allocation Moderate Growth VP* | Transamerica Asset Management, Inc.
Seeks long-term capital appreciation.
Portfolio Construction Consultant: Morningstar Associates, LLC | |
Transamerica Asset Allocation Moderate VP* | Transamerica Asset Management, Inc.
Seeks capital appreciation and current income.
Portfolio Construction Consultant Morningstar Associates, LLC | |
Transamerica Balanced VP | Transamerica Investment Management, LLC
Seeks to achieve long-term capital growth and current income with a secondary objective of capital preservation, by balancing investments among stocks, bonds, and cash or cash equivalents. | |
Transamerica BlackRock Large Cap Value VP | BlackRock Investment Management, LLC
Seeks long-term capital growth. | |
Transamerica Capital Guardian U.S. Equity VP | Capital Guardian Trust Company
Seeks to provide long-term growth of capital. | |
Transamerica Capital Guardian Value VP | Capital Guardian Trust Company
Seeks to provide long-term growth of capital and income. | |
Transamerica Clarion Global Real Estate Securities VP | ING Clarion Real Estate Securities, L.P.
Seeks long-term total return from investments primarily in equity securities of real estate companies. Total return will consist of realized and unrealized capital gains and losses plus income. | |
Transamerica Convertible Securities VP | Transamerica Investment Management, LLC
Seeks maximum total return through a combination of current income and capital appreciation. | |
Transamerica Equity VP | Transamerica Investment Management LLC
Seeks to maximize long-term growth. | |
Transamerica Federated Market Opportunities VP | Federated Equity Management Company of Pennsylvania
Seeks total return by investing in securities that have defensive characteristics. |
* | Each asset allocation portfolio invests in a combination of underlying Transamerica Series Trust and Transamerica Funds portfolios. |
30
Portfolio |
Sub-Adviser or Adviser and Investment Objective | |
Transamerica Growth Opportunities VP | Transamerica Investment Management LLC
Seeks to maximize long-term growth. | |
Transamerica Index 50 VP | AEGON USA Investment Management, LLC
Seeks to balance capital appreciation and income. | |
Transamerica Index 75 VP | AEGON USA Investment Management, LLC
Seeks capital appreciation as a primary objective and income as a secondary objective. | |
Transamerica International Moderate Growth VP* | Transamerica Asset Management, Inc.
Seeks capital appreciation with current income as a secondary objective.
Portfolio Construction Consultant:
Morningstar Associates, LLC | |
Transamerica JPMorgan Core Bond VP | JPMorgan Investment Advisors, Inc.
Seeks the highest possible current income within the confines of the primary goal of ensuring the protection of capital. | |
Transamerica JPMorgan Enhanced Index | JPMorgan Investment Advisors, Inc.
Seeks to earn a total return modestly in excess of the total return performance of the S&P 500 Composite Stock Price Index (including the reinvestment of dividends) while maintaining a volatility of return similar to the S&P 500 Composite Stock Price Index. | |
Transamerica JPMorgan Mid Cap Value VP* | JPMorgan Investment Advisors, Inc.
Seeks growth from capital appreciation. | |
Transamerica Legg Mason Partners All Cap VP | Clearbridge Advisors, LLC
Seeks capital appreciation. | |
Transamerica MFS High Yield VP | MFS® Investment Management
Seeks to provide high current income by investing primarily in a professionally managed diversified portfolio of fixed-income securities, some of which may involve equity features. Capital growth, if any, is a consideration secondary to the objective of high current income. |
* | This portfolio no longer accepts new investments from current or prospective investors. If you surrender all of your money from this portfolio, you may not reinvest in this portfolio. |
31
Portfolio |
Sub-Adviser or Adviser and Investment Objective | |
Transamerica MFS High Yield VP | MFS® Investment Management
Seeks to provide high current income by investing primarily in a professionally managed diversified portfolio of fixed-income securities, some of which may involve equity features. Capital growth, if any, is a consideration secondary to the objective of high current income. | |
Transamerica MFS International Equity VP | MFS® Investment Management
Seeks capital growth. | |
Transamerica Marsico Growth VP | Columbia Management Advisors, LLC
Seeks long-term growth of capital. | |
Transamerica Munder Net50 VP | Munder Capital Management
Seeks long-term capital appreciation. | |
Transamerica PIMCO Total Return VP | Pacific Investment Management Company LLC
Seeks maximum total return consistent with preservation of capital and prudent investment management. | |
Transamerica Science & Technology VP | Transamerica Investment Management, LLC
Seeks long-term growth of capital. | |
Transamerica Small/Mid Cap Value VP | Transamerica Investment Management, LLC
Seeks to maximize total return. | |
Transamerica T. Rowe Price Small Cap VP | T. Rowe Price Associates, Inc.
Seeks long-term growth of capital by investing primarily in common stocks of small growth companies. | |
Transamerica Templeton Global VP | Templeton Investment Counsel, LLC
Transamerica Investment Management, LLC
Seeks long-term growth of capital. | |
Transamerica Third Avenue Value VP | Third Avenue Management LLC
Seeks long-term capital appreciation. |
32
Portfolio |
Sub-Adviser or Adviser and Investment Objective | |
Transamerica U.S. Government Securities VP | Transamerica Investment Management, LLC
Seeks to provide as high a level of total return as is consistent with prudent investment strategies by investing under normal conditions at least 80% of its net assets in U.S. government debt obligations and mortgage-backed securities issued or guaranteed by the U.S. government, its agencies or government-sponsored entities. | |
Transamerica Value Balanced VP | Transamerica Investment Management, LLC
Seeks preservation of capital and competitive investment returns. | |
Transamerica Van Kampen Mid-Cap Growth VP | Van Kampen Asset Management Inc.
Seeks capital appreciation. | |
FIDELITY FUNDS: | ||
Fidelity VIP Contrafund® Portfolio* | Fidelity Management & Research Company
Seeks long-term capital appreciation. | |
Fidelity VIP Equity-Income Portfolio* | Fidelity Management & Research Company
Seeks reasonable income. The fund will also consider the potential for capital appreciation. The funds goal is to achieve a yield which exceeds the composite yield on the securities comprising the Standard & Poors 500 Index. | |
Fidelity VIP Growth Opportunities Portfolio* | Fidelity Management & Research Company
Seeks to provide capital growth. | |
Fidelity VIP Index 500 Portfolio | Fidelity Management & Research Company
Seeks investment results that correspond to the total return of common stocks publicly traded in the United States, as represented by the Standard & Poors 500 SM Index. | |
PROFUNDS**: | ||
ProFund VP Asia 30 | ProFund Advisors LLC
Seeks daily investment results, before the fees and expenses, that correspond to the daily performance of the ProFunds Asia 30 Index. |
* | Effective May 1, 2003, this portfolio was no longer available for sale to new investors. |
** | The ProFunds VP and Access Trust portfolios permit frequent transfers. Frequent transfers may increase portfolio turnover. A high level of portfolio turnover may negatively impact performance by increasing transaction costs. In addition, large movements of assets into and out of a ProFunds or Access Trust VP portfolio may negatively impact a funds ability to achieve its investment objective or maintain a consistent level of operating expenses. See Disruptive Trading and Market Timing. Some ProFunds or Access Trust VP portfolios may use investment techniques not associated with most mutual fund portfolios. Investors in the ProFunds and Access Trust VP portfolios will bear additional investment risks. See the ProFunds VP or Access Trust prospectus for a description of the investment objectives and risks associated with investing in the ProFunds or Access Trust VP portfolios. |
33
Portfolio |
Sub-Adviser or Adviser and Investment Objective | |
ProFund VP Basic Materials | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Basic Materials Index. | |
ProFund VP Bull | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the S&P 500 Index SM. | |
ProFund VP Consumer Services | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Consumer Services Index® (USDX). | |
ProFund VP Emerging Markets | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the Bank of New York Emerging Markets 50 ADR Index. | |
ProFund VP Europe 30 | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the ProFunds Europe 30 Index. | |
ProFund VP Falling U.S. Dollar | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the U.S. Dollar Index. | |
ProFund VP Financials | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Financials Index. |
34
Portfolio |
Sub-Adviser or Adviser and Investment Objective | |
ProFund VP International | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the Morgan Stanley Capital International Europe, Australasia and Far East (MSCI EAFE) Index. | |
ProFund VP Japan | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the Nikkei 225 Stock Average. | |
ProFund VP Mid-Cap | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the S&P MidCap 400 Index. | |
ProFund VP Money Market | ProFund Advisors LLC
Seeks a high level of current income consistent with liquidity and preservation of capital. | |
ProFund VP NASDAQ-100 (formerly, ProFund VP OTC) | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the NASDAQ-100 Index. | |
ProFund VP Oil & Gas | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Oil & Gas Index. | |
ProFund VP Pharmaceuticals | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Pharmaceuticals Index. | |
ProFund VP Precious Metals | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the Dow Jones Precious Metals Index. |
35
Portfolio |
Sub-Adviser or Adviser and Investment Objective | |
ProFund VP Short Emerging Markets | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the Bank of New York Emerging Markets 50 ADR Index. | |
ProFund VP Short International | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the Morgan Stanley Capital International Europe, Australasia and Far East (MSCI EAFE) Index. | |
ProFund VP Short NASDAQ-100 | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the NASDAQ-100 Index. | |
ProFund VP Short Small-Cap | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the Russell 2000 Index. | |
ProFund VP Small-Cap | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the Russell 2000 Index. | |
ProFund VP Small-Cap Value | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the S&P SmallCap 600/Citigroup Value Index. | |
ProFund VP Telecommunications | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Telecommunications Index. | |
ProFund VP UltraSmall-Cap | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the Russell 2000 Index. |
36
Portfolio |
Sub-Adviser or Adviser and Investment Objective | |
ProFund VP U.S. Government Plus | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to one and one-quarter times (125%) the daily price movement of the most recently issued 30-year U.S. Treasury Bond (Long Bond). | |
ProFund VP Utilities | ProFund Advisors LLC
Seeks daily investment results, before fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Utilities Index. | |
ACCESS TRUST*: | ||
Access VP High Yield Fund** | ProFund Advisors LLC
Seeks to provide investment results that correspond generally to the total return of the high yield market consistent with maintaining reasonable liquidity. |
* | The ProFunds VP and Access Trust portfolios permit frequent transfers. Frequent transfers may increase portfolio turnover. A high level of portfolio turnover may negatively impact performance by increasing transaction costs. In addition, large movements of assets into and out of a ProFunds or Access Trust VP portfolio may negatively impact a funds ability to achieve its investment objective or maintain a consistent level of operating expenses. See Disruptive Trading and Market Timing. Some ProFunds or Access Trust VP portfolios may use investment techniques not associated with most mutual fund portfolios. Investors in the ProFunds and Access Trust VP portfolios will bear additional investment risks. See the ProFunds VP or Access Trust prospectus for a description of the investment objectives and risks associated with investing in the ProFunds or Access Trust VP portfolios. |
** | Under normal market conditions, this portfolio invests at least 80% of its net assets in credit default swaps and other financial instruments that in combination have economic characteristics similar to the high yield debt (junk bonds) market and/or in high yield debt securities. |
Transamerica Asset Management, Inc. ("Transamerica Asset") (formerly, Transamerica Fund Advisors, Inc.), located at 570 Carillon Parkway, St. Petersburg, Florida 33716, is directly owned by Western Reserve (77%) and AUSA Holding Company (23%), and serves as investment adviser to the Transamerica Series Trust and manages the Transamerica Series Trust in accordance with policies and guidelines established by the Transamerica Series Trusts Board of Trustees. For certain portfolios, Transamerica Asset has engaged investment sub-advisers to provide portfolio management services. Transamerica Asset and each investment sub-adviser are registered investment advisers under the Investment Advisers Act of 1940, as amended. See the Transamerica Series Trust prospectuses for more information regarding Transamerica Asset and the investment sub-advisers.
Fidelity Management & Research Company (FMR), located at 82 Devonshire Street, Boston, Massachusetts 02109, serves as investment adviser to the Fidelity VIP Fund and manages the Fidelity VIP Fund in accordance with policies and guidelines established by the Fidelity VIP Funds Board of Trustees. For certain portfolios, FMR has engaged investment sub-advisers to provide portfolio management services with regard to foreign investments. FMR and each sub-adviser are registered investment advisers under the Investment Advisers Act of 1940, as amended. See the Fidelity VIP Fund prospectuses for more information regarding FMR and the investment sub-advisers.
Morningstar Associates, LLC ("Morningstar"), located at 225 West Wacker Drive, Chicago, Illinois 60606, serves as a "consultant" to Transamerica Asset for investment model creation and maintenance to the Transamerica Asset Allocation Conservative VP, Transamerica Asset Allocation Moderate VP, Transamerica Asset Allocation Moderate Growth VP, Transamerica Asset Allocation Growth VP, and Transamerica International Moderate Growth VP of the Series Trust. Morningstar will be paid an annual fee for its services. See the Series Trust prospectuses for more information regarding Morningstar.
37
ProFund Advisors LLC (ProFund Advisors), located at 7501 Wisconsin Avenue, Suite 1000, Bethesda, Maryland 20814, serves as the investment advisor and provides management services to all of the ProFunds and Access Trust portfolios. ProFund Advisors oversees the investment and reinvestment of the assets in each ProFunds and Access Trust portfolio in accordance with policies and guidelines established by the ProFunds and Access Trust's Board of Trustees. ProFund Advisors is a registered investment adviser under the Investment Advisers Act of 1940, as amended. See the ProFunds or Access Trust prospectuses for more information regarding ProFund Advisors.
Selection of Underlying Portfolios
The underlying portfolios offered through this product are selected by Western Reserve, and Western Reserve may consider various factors, including, but not limited to, asset class coverage, the strength of the advisers or sub-advisers reputation and tenure, brand recognition, performance, and the capability and qualification of each investment firm. Another factor that we may consider is whether the underlying portfolio or its service providers (e.g., the investment adviser or sub-advisers) or its affiliates will make payments to us or our affiliates in connection with certain administrative, marketing, and support services, or whether affiliates of the portfolio can provide marketing and distribution support for sales of the Policies. (For additional information on these arrangements, see Revenue We Receive.) We review the portfolios periodically and may remove a portfolio, or limit its availability to new premiums and/or transfers of cash value if we determine that a portfolio no longer satisfies one or more of the selection criteria, and/or if the portfolio has not attracted significant allocations from policyowners. We have included the Series Trust portfolios at least in part because they are managed by Transamerica Asset, our directly owned subsidiary.
You are responsible for choosing the portfolios, and the amounts allocated to each, that are appropriate for your own individual circumstances and your investment goals, financial situation, and risk tolerance. Since investment risk is borne by you, decisions regarding investment allocations should be carefully considered.
In making your investment selections, we encourage you to thoroughly investigate all of the information regarding the portfolios that is available to you, including each fund's prospectus, statement of additional information and annual and semi/annual reports. Other sources such as newspapers and financial and other magazines provide more current information, including information about any regulatory actions or investigations relating to a fund or portfolio. After you select portfolios for your initial premium, you should monitor and periodically re-evaluate your allocations to determine if they are still appropriate.
You bear the risk of any decline in the cash value of your Policy resulting from the performance of the portfolios you have chosen.
We do not recommend or endorse any particular portfolio and we do not provide investment advice.
Addition, Deletion, or Substitution of Portfolios
We do not guarantee that each portfolio will always be available for investment through the Policy. We reserve the right, subject to compliance with applicable law, to add new portfolios or portfolio classes, close existing portfolios or portfolio classes, or substitute portfolio shares that are held by any subaccount for shares of a different portfolio. New or substitute portfolios may have different fees and expenses and their availability may be limited to certain classes of purchasers. We will not add, delete or substitute any shares attributable to your interest in a subaccount without notice to you and prior approval of the SEC, to the extent required by the 1940 Act or other applicable law. We may also decide to purchase for the separate account securities from other portfolios. We reserve the right to transfer separate account assets to another separate account that we determine to be associated with the class of contracts to which the Policy belongs.
Your Right to Vote Portfolio Shares
Even though we are the legal owner of the portfolio shares held in the subaccounts, and have the right to vote on all matters submitted to shareholders of the portfolios, we will vote our shares only as policyowners instruct, as long as such action is required by law.
Before a vote of a portfolio's shareholders occurs, you will receive voting materials from us. We will ask you to instruct us on how to vote and to return your voting instructions to us in a timely manner. You will have the right to instruct us on the number of portfolio shares that corresponds to the amount of cash value you have in that portfolio (as of a date set by the portfolio).
38
If we do not receive voting instructions on time from some policyowners, we will vote those shares in the same proportion as the timely voting instructions we receive. Therefore, because of proportional voting, a small number of policyowners may control the outcome of a vote. Should federal securities laws, regulations and interpretations change, we may elect to vote portfolio shares in our own right. If required by state insurance officials, or if permitted under federal regulation, we may disregard certain owner voting instructions. If we ever disregard voting instructions, we will send you a summary in the next annual report to policyowners advising you of the action and the reasons we took such action.
This section describes the charges and deductions that we make under the Policy in consideration for: (1) the services and benefits we provide; (2) the costs and expenses we incur; and (3) the risks we assume. The fees and charges deducted under the Policy may result in a profit to us.
Services and benefits we provide under the Policy: | the death benefit, cash and loan benefits; | |
investment options, including premium allocations; | ||
administration of elective options; and | ||
the distribution of reports to owners. | ||
Costs and expenses we incur: | costs associated with processing and underwriting applications; | |
expenses of issuing and administering the Policy (including any Policy riders); | ||
overhead and other expenses for providing services and benefits and sales and marketing expenses, including compensation paid in connection with the sale of the Policies; and | ||
other costs of doing business, such as collecting premiums, maintaining records, processing claims, effecting transactions, and paying federal, state and local premium and other taxes and fees. | ||
Risks we assume: | that the charges we may deduct may be insufficient to meet our actual claims because insureds die sooner than we estimate; and | |
that the costs of providing the services and benefits under the Policies may exceed the charges we are allowed to deduct. |
Some or all the charges we deduct are used to pay aggregate Policy costs and expenses we incur in providing the services and benefits under the Policy and assuming the risks associated with the Policy.
Before we allocate the net premium payments you make, we will deduct the following charges:
The premium expense charge is equal to: | 6.0% of premiums during the first ten Policy years on Policies with a specified amount in force of less than $250,000 and 4.0% on Policies with a specified amount in force of $250,000 - $499,999 | |
For residents of Puerto Rico, the current charge is equal to 10.0% of premiums during the first ten Policy years on Policies with a specified amount in force of less than $250,000; 8.0% with a specified amount of $250,000 - $499,999; and 4.0% with a specified amount of $500,000 or more. We guarantee this charge will not exceed 12.0%, 10.0% and 6.0%, respectively for each such category; and |
39
2.5% of premiums thereafter on Policies with a specified amount less than $500,000. | ||
For residents of Puerto Rico, the current charge is equal to 6.5% of premiums after the first ten Policy years with a specified amount up to $499,999; and 4.0% with a specified amount of $500,000 or more. We guarantee this charge will not exceed 8.5% and 6.0%, respectively, for each such category. | ||
There is no premium expense charge for Policies with a specified amount of $500,000 or higher, except for Puerto Rico, as noted above. | ||
Certain events (such as increases or decreases in the specified amount, a change in death benefit option, or a cash withdrawal if you choose the Option A death benefit) may affect the specified amount in force. Premium expense charges will be based on the specified amount in force for the Base Policy at the time we receive the premium. | ||
Some or all of the premium expense charges we deduct are used to pay the aggregate Policy costs and expenses we incur, including distribution costs and/or state premium taxes. Although state premium tax rates imposed on us vary from state to state, the premium expense charge deducted will not vary with the state of residence of the policyowner, except for Puerto Rico, as noted above. | ||
Premium collection charge: | For Policies purchased prior to September 15, 2008 and issued prior to January 1, 2009, on direct pay notice, this charge equals $3.00 per premium payment. We currently do not impose this charge but reserve the right to do so in the future. | |
This charge only applies to Policies on direct pay notice. | ||
We will not increase this charge. |
We take the monthly deductions from the cash value on the Policy date and on each Monthiversary. We deduct this charge on a pro rata basis from all accounts (i.e., in the same proportion that the value in each subaccount and the fixed account bears to the total cash value on the Monthiversary). Because portions of the monthly deductions (such as cost of insurance) can vary monthly, the monthly deductions will also vary.
The monthly deductions are equal to: | the monthly Policy charge; plus | |
the monthly cost of insurance charge for the Policy; plus | ||
the monthly charge for any benefits provided by riders attached to the Policy; plus | ||
the decrease charge (if applicable) incurred as a result of a decrease in the specified amount. |
40
Monthly Policy Charge (for Policies Purchased on or After September 15, 2008): | ||
This charge currently equals $10 each Policy month. After the first Policy year, we may increase this charge. | ||
We guarantee this charge will never be more than $12 per month. | ||
This charge is used to cover aggregate Policy expenses. | ||
Monthly Policy Charge (for Policies Purchased Prior to September 15, 2008 and Issued Prior to January 1, 2009): | ||
This charge currently equals $5.00 each Policy month. After the first Policy year, we may increase this charge. | ||
We guarantee this charge will never be more than $7.50 per month. | ||
This charge is used to cover aggregate Policy expenses. | ||
Cost of Insurance Charge: | ||
We deduct this charge each month. It varies each month and is determined as follows: | ||
1. divide the death benefit on the Monthiversary by 1.0024663 (this factor reduces the net amount at risk, for purposes of computing the cost of insurance, by taking into account assumed monthly earnings at an annual rate of 3.0%); | ||
2. subtract the cash value on the Monthiversary after it has been allocated among the segments of specified amount in force in the following order: first, initial specified amount; then, each increase in specified amount starting with the oldest increase; then the next oldest, successively, until all cash value has been allocated (the resulting amounts are the net amount at risk for each segment of specified amount); | ||
3. multiply each segment of net amount at risk provided under 2. (above) by the appropriate monthly cost of insurance rate for that segment; and add the results together. | ||
Your monthly current cost of insurance rate depends, in part, on your specified amount band. The specified amount bands available are: | ||
Band 1: $50,000 - $249,999 | ||
Band 2: $250,000 - $499,999 | ||
Band 3: $500,000 - $999,999 | ||
Band 4: $1,000,000 and over | ||
Generally, the higher the specified amount band you choose, the lower the current cost of insurance rates. |
41
We determine your specified amount band by referring to the specified amount in force for the Base Policy (that is, the initial specified amount on the Policy date, plus any increases, and minus any decreases). Riders are not included in determining the Policys specified amount band. | ||
Optional Insurance Riders: | ||
The monthly deductions will include charges for any optional insurance benefits you add to your Policy by rider. |
To determine the monthly cost of insurance rates, we refer to a schedule of current cost of insurance rates using: the insured's issue age on the Policy date; issue age at the time of any increase in specified amount; specified amount band; gender; underwriting class; and the length of time from the Policy date or from the date of any increase in specified amount. The factors that affect the net amount at risk for each segment of specified amount include: the investment performance of the portfolios in which you invest; payment of premiums; the fees and charges deducted under the Policy; the death benefit option you chose; as well as any Policy transactions (such as loans, partial withdrawals, transfers, and changes in specified amount). The actual monthly cost of insurance rates are primarily based on our expectations as to future mortality experience and expenses. Monthly cost of insurance rates may be changed by us from time to time. The actual rates we charge will never be greater than the Table of Guaranteed Maximum Life Insurance Rates stated in your Policy. For Policies purchased on or after September 15, 2008, these guaranteed rates are based on the 2001 C.S.O. Mortality Tables and the insureds attained age, gender, and rate class. For Policies purchased prior to September 15, 2008 and issued prior to January 1, 2009, these guaranteed rates are based on the Commissioners 1980 Standard Ordinary Tobacco and Non-Tobacco Mortality Tables (1980 C.S.O. Tables) and the insured's attained age, gender, and rate class. For standard rate classes, these guaranteed rates will never be greater than the rates in the C.S.O. tables, that are applicable to your Policy.
If you increase the specified amount, different monthly cost of insurance rates may apply to that segment of specified amount, based on the insureds age and rate class at the time of the increase, gender, and the length of time since the increase. Increases in specified amount may move the Policy into a higher specified amount band, which may result in a decrease in the rates for the cost of insurance charge.
Decreases in specified amount may cause the Policy to drop into a lower band of specified amount, and may result in an increase in cost of insurance rates and premium expense charge rates. Decreases in specified amount will be applied on a last-in, first-out basis to the specified amount in force, and will first reduce the specified amount provided by the most recent increase in specified amount in force, then reduce the next most recent increases, successively, and thereafter reduce the initial specified amount.
The underwriting class of the insured will affect the cost of insurance rates. We use a standard method of underwriting in determining underwriting classes, which are based on the health of the insured. We currently place insureds into preferred and standard classes. We also place insureds into sub-standard classes with extra ratings, which reflect higher mortality risks, and will result in higher cost of insurance rates.
We may issue certain Policies on a simplified or expedited basis. Cost of insurance rates charged for any Policies issued on a simplified or expedited basis may cause healthy individuals to pay higher cost of insurance rates than they would pay under a substantially similar Policy that we offer using different underwriting criteria.
The cost of insurance charge for any optional insurance rider, and for any increase in rider specified amount, is calculated in the same manner used to determine the Base Policys cost of insurance charges. Generally, the current cost of insurance rates for the optional riders are lower than the current cost of insurance rates on the Base Policys net amount at risk. The guaranteed cost of insurance rates under the riders are substantially the same as the guaranteed cost of insurance rates on the Policys net amount at risk.
42
Mortality and Expense Risk Charge
We deduct a daily charge from your Policys cash value in each subaccount that, together with other fees and charges, compensates us for services rendered, the expenses expected to be incurred, and the risks assumed. This charge is equal to:
For Policies Purchased On or After September 15, 2008:
| your Policy's cash value in each subaccount; multiplied by |
| the daily pro rata portion of the annual mortality and expense risk charge rate of 1.50%. |
The annual rate for the mortality and expense risk charge is equal to 1.50% of the average daily net assets of each subaccount. We may reduce this charge to 0.75% after the first 15 Policy years, but we do not guarantee that we will do so, and we reserve the right to maintain this charge at the 1.50% level after the 15th Policy year.
For Policies Purchased Prior to September 15, 2008 and Issued Prior to January 1, 2009:
| your Policy's cash value in each subaccount; multiplied by |
| the daily pro rata portion of the annual mortality and expense risk charge rate of 0.90%. |
The annual rate for the mortality and expense risk charge is equal to 0.90% of the average daily net assets of each subaccount. We guarantee to reduce this charge to 0.60% after the first 15 Policy years. We may reduce this charge to 0.30% in the 16th Policy year, but we do not guarantee that we will do so, and we reserve the right to maintain this charge at the 0.60% level after the 15th Policy year.
If this charge, combined with other Policy fees and charges, does not cover our total actual costs for services rendered and expenses incurred, we absorb the loss. Conversely, if these fees and charges more than cover actual costs, the excess is added to our surplus. We expect to profit from these charges.
If you surrender your Policy completely during the first 15 years (or during the 15 year period following an increase in specified amount), we deduct a surrender charge from your cash value and pay the remaining cash value (less any outstanding loan amount) to you.
The surrender charge is a charge for each $1,000 of the initial specified amount of your Base Policy and of each increase in specified amount. The surrender charge that will apply on a full surrender of the Policy is the total of the surrender charge calculated for the initial specified amount, and the surrender charges calculated for each increase in specified amount, unless there has been a reduction in specified amount for which a decrease charge was applied.
The initial specified amount has a 15 year surrender charge period starting on the Policy date and surrender charges that are based upon the insured's issue age, gender and rate class on the Policy date. Each increase in specified amount has its own 15 year surrender charge period and surrender charges that are based upon the insured's issue age, gender and rate class at the time of the increase.
Decreases in specified amount will be applied to the specified amount in force on a last-in, first-out basis, and will first reduce the surrender charge on the most recent increase in specified amount in force, then, if still applicable, reduce the surrender charge on the next most recent increases, successively, and then reduce the surrender charge on the initial specified amount.
Example:
January 1, 2001 |
Policy issued for $300,000 | |
January 1, 2004 |
Policy increased by $200,000 | |
January 1, 2005 |
Policy decreased by $100,000 |
If the surrender charge on January 1, 2005 (before the decrease) is:
Coverage Layer |
Surrender Charge | ||
$300,000 |
$ | 4,656 | |
$200,000 |
$ | 3,624 |
43
The $200,000 layer is reduced to $100,000 on January 1, 2005 and a surrender charge of $1,812 is applied.
100 | ||||||||||||||
200 | x | $ | 3,624 | = | $ | 1,812 |
There is no surrender charge if you wait until the end of the 15th Policy anniversary to surrender your Policy and you have not increased your specified amount during the first 15 Policy years. The payment you receive is called the net surrender value. The formula we use reduces the surrender charge at older ages in compliance with state laws.
The surrender charge may be significant. You should evaluate this charge carefully before you consider a surrender. Under some circumstances the level of surrender charges might result in no net surrender value available if you surrender your Policy in the early Policy years. This will depend on a number of factors, but is more likely if:
| you pay premiums equal to or not much higher than the minimum monthly guarantee premium shown in your Policy; and/or |
| investment performance is low. |
In addition, surrender charges that apply for 15 years after any increase in specified amount will likely significantly reduce your net surrender value.
The surrender charge for each segment of specified amount is calculated as: | the surrender charge per $1,000 of specified amount in the segment (varies by issue age, gender and underwriting class on the Policy date or date of specified amount increase); multiplied by | |
the surrender charge factor. |
The surrender charge per thousand is calculated separately for initial specified amount and for each increase in specified amount, using the rates found in Appendix A.
The surrender charge factor is also calculated separately for the initial specified amount and for each increase in specified amount in force. The surrender charge factor varies by insured's issue age (on the Policy date or date of specified amount increase) and number of years since the Policy date or date of specified amount increase. For insureds issue ages 0-39, the surrender charge factor is equal to 1.00 during years 1-5. It decreases by 0.10 each year until the end of the 15th year when it is zero. If you are older than 39 on the Policy date or on the date of specified amount increase, the factor is less than 1.00 at the end of the first year and decreases to zero at the end of the 15th year. In no event are the surrender charge factors any greater than those shown on the table below. We always determine the surrender charge factor from the Policy date or date of specified amount increase to the surrender date, regardless of whether there were any prior lapses and reinstatements.
For Policies Purchased On or After September 15, 2008:
Surrender Charge Factors
Issue Ages 0-39
End of Year* |
Factor | |||
At Issue |
1.00 | |||
1-4 |
1.00 | |||
5 |
.99 | |||
6 |
.90 | |||
7 |
.80 | |||
8 |
.70 | |||
9 |
.60 | |||
10 |
.50 | |||
11 |
.40 | |||
12 |
.30 | |||
13 |
.20 | |||
14 |
.10 | |||
15 |
0 | |||
16+ |
0 |
44
* | The factor on any date other than a Policy anniversary, or anniversary of an increase in specified amount, will be determined proportionately using the factor at the end of the year prior to surrender, and the factor at the end of the year of surrender. |
Surrender Charge Example: Assume a male non-tobacco user purchases the Policy at issue age 30 with a specified amount of $100,000. The Policy is surrendered in Policy year 5. The surrender charge per $1,000 of specified amount is $17.13. This is multiplied by the surrender charge factor of 0.99:
The surrender charge |
= x x |
the surrender charge per $1,000 ($17.13) the number of thousands of initial specified amount (100) the surrender charge factor (0.99) | ||
= | $1,695.87 |
For Policies Purchased Prior To September 15, 2008 and Issued Prior to January 1, 2009:
Surrender Charge Factors
Issue Ages 0-39
End of Year* |
Factor | |||
At Issue |
1.00 | |||
1-5 |
1.00 | |||
6 |
.90 | |||
7 |
.80 | |||
8 |
.70 | |||
9 |
.60 | |||
10 |
.50 | |||
11 |
.40 | |||
12 |
.30 | |||
13 |
.20 | |||
14 |
.10 | |||
15 |
0 | |||
16+ |
0 |
* | The factor on any date other than a Policy anniversary, or anniversary of an increase in specified amount, will be determined proportionately using the factor at the end of the year prior to surrender, and the factor at the end of the year of surrender. |
Surrender Charge Example: Assume a male non-tobacco user purchases the Policy at issue age 30 with a specified amount of $100,000. The Policy is surrendered in Policy year 5. The surrender charge per $1,000 of specified amount is $12.52. This is multiplied by the surrender charge factor of 1.00.
The surrender charge |
= | the surrender charge per $1,000 ($12.52) x the number of thousands of initial specified amount (100) x the surrender charge factor (1.0) | ||
= | $1,252. |
45
The surrender charge helps us recover distribution expenses that we incur in connection with the Policy, including agent sales commissions, and printing and advertising costs, as well as aggregate Policy expenses.
If you decrease the specified amount during the first 15 Policy years (or during the 15 year period following an increase in specified amount), we will deduct a decrease charge from your cash value. Decreases in specified amount will be applied on a last-in, first-out basis to the current specified amount in force. The decrease charge will first be calculated based on the current surrender charge applicable to the most recent increase in specified amount still in force. If the amount of the decrease in specified amount is greater than the most recent increase in specified amount, then the charge will also be calculated based on the surrender charges applicable to the next most recent increases, successively, and then will also be calculated based on any remaining surrender charge on the initial specified amount, up to the amount of the requested decrease.
The decrease charge is equal to: | the surrender charge as of the date of the decrease applicable to that portion of the segment(s) of the specified amount that is/are decreased. See Surrender Charge above. |
We will not deduct the decrease charge from the cash value when a specified amount decrease results from:
| a change in the death benefit option; or |
| a cash withdrawal (when you select death benefit Option A). |
If a decrease charge is deducted because of a decrease in specified amount, any future decrease charges incurred during the surrender charge period will be based on the reduced specified amount.
We will determine the decrease charge using the above formula, regardless of whether your Policy has lapsed and been reinstated, or you have previously decreased your specified amount. We will not allow a decrease in specified amount if the decrease charge will cause the Policy to go into a grace period. A decrease in specified amount will generally decrease the insurance protection of the Policy.
| We currently allow you to make 12 transfers each year free of charge. |
| Except as listed below, we charge $25 for each additional transfer. |
| For purposes of assessing the transfer charge, all transfers made in one day, regardless of the number of subaccounts affected by the transfer, is considered a single transfer. |
| We deduct the transfer charge from the amount being transferred. |
| Transfers due to loans or the exercise of conversion rights or due to reallocation of cash value immediately after the reallocation date, currently do not count as transfers for the purpose of assessing this charge. |
| Transfers via the Internet do not count as transfers for the purpose of assessing this charge. |
| Transfers among the ProFunds and/or the Access Trust subaccounts do not count as transfers for the purpose of assessing this charge. |
| Transfers under dollar cost averaging and asset rebalancing do count as transfers for the purpose of this assessing this charge. |
| We will not increase this charge. |
We currently charge you an effective annual interest rate on a Policy loan of 3.75% (4.0% maximum guaranteed) on each Policy anniversary. We will also credit the amount in the loan reserve account with an effective annual interest rate of 3.0%. After offsetting the 3.0% interest we credit, the next cost of loans currently is 0.75% annually (1.0% maximum guaranteed). After the 10th Policy year, we will apply preferred loan charged rates on an amount equal to the cash value minus total premiums paid (less any cash withdrawals) and minus any outstanding loan amount including accrued loan interest. The current preferred loan effective annual interest rate charged is 3.00% and is not guaranteed.
46
Change in Net Premium Allocation Charge
We currently do not charge you if you change your net premium allocation. However, in the future we may decide to charge you $25 if you make more than one change per Policy year quarter. We will notify you if we decide to impose this charge.
| After the first Policy year, you may take one cash withdrawal per Policy year. |
| When you make a cash withdrawal, we charge a processing fee of $25 or 2% of the amount you withdraw, whichever is less. |
| We deduct this amount from the withdrawal, and we pay you the balance. |
| We will not increase this charge. |
We currently do not make any deductions for taxes from the separate account. We may do so in the future to the extent that such taxes are imposed by federal or state agencies.
| Living Benefit Rider. We do not assess an administrative charge for this rider; however, we do reduce the single sum benefit by a discount factor to compensate us for expected lost income resulting from the early payment of the death benefit. |
| Childrens Insurance Rider. We assess a cost of insurance charge based on the rider face amount, regardless of the number of children insured. |
| Accidental Death Benefit Rider. We assess a cost of insurance charge based on the insureds attained age and rider face amount. Cost of insurance charges generally will increase each year with the age of the insured. |
| Other Insured Rider. We assess a cost of insurance charge based on each other insureds issue age, gender, underwriting class, Policy year and the rider face amount. Cost of insurance charges generally will increase each year with the age of the insured. These charges will vary depending on whether the 1980 C.S.O. Mortality Tables or the 2001 C.S.O. Mortality Tables are applicable to your Policy, which depends upon the purchase and/or issue date of your Policy. |
| Disability Waiver Rider. We assess a rider charge based on the primary insureds issue age, gender and net amount at risk for the Policy, as well as a charge based on those riders that would be eligible to have monthly deductions waived. |
| Disability Waiver and Income Rider. The charge for this rider is based on the primary insureds issue age, gender and the amount of monthly waiver of premium benefit that would be paid in the event of total disability, as defined in the rider. |
| Primary Insured Rider (PIR) and Primary Insured Rider Plus (PIR Plus). We assess a cost of insurance charge based on the insureds issue age, gender, underwriting class, Policy year and the rider face amount. Cost of insurance charges generally will increase each year with the age of the insured. These charges will vary depending on whether the 1980 C.S.O. Mortality Tables or the 2001 C.S.O. Mortality Tables are applicable to your Policy, which depends upon the purchase and/or issue date of your Policy |
The portfolios deduct management fees and expenses from the amounts you have invested in the portfolios. These fees and expenses reduce the value of your portfolio shares. See the fund prospectuses for more detailed information about the funds.
47
We (and our affiliates) may directly or indirectly receive payments from the portfolios, their advisers, sub-advisers, distributors or affiliates thereof, in connection with certain administrative, marketing and other services we (and our affiliates) provide and expenses we incur. We (and/or our affiliates) generally receive three types of payments:
Rule 12b-1 Fees. Our affiliate, Transamerica Capital, Inc. (TCI) serves as the principal underwriter for the Policies. TCI receives some or all of the 12b-1 fees from the funds. Any 12b-1 fees received by TCI that are attributable to our variable insurance products are then credited to us. These fees range from 0.00% to 0.25% of the average daily assets of the certain portfolios attributable to the Policies and to certain other variable insurance products that we and our affiliates issue.
Administrative, Marketing and Support Service Fees (Service Fees). The investment adviser, sub-adviser, administrators, and/or distributors (or affiliates thereof) of the portfolios may make payments to us and/or our affiliates, including TCI. These payments may be derived, in whole or in part, from the profits the investment adviser or sub-adviser receives from the advisory fee deducted from portfolio assets. Policyowners, through their indirect investment in the portfolios, bear the costs of these advisory fees (see the prospectuses for the funds for more information). The amount of the payments we receive is based on a percentage of the assets of the particular portfolios attributable to the Policy and to certain other variable insurance products that our affiliates and we issue. These percentages differ and may be significant. Some advisers or sub-advisers (or other affiliates) pay us more than others.
The chart below provides the maximum combined percentages of 12b-1 fees and Service Fees that we anticipate will be paid to us on an annual basis:
Incoming Payments to Western Reserve and TCI
Fund |
Maximum Fee % of assets* |
Fund |
Maximum Fee % of assets* |
|||||
Transamerica Series Trust ** |
| Fidelity Variable Insurance Products Fund | 0.50 | %*** | ||||
ProFunds |
0.25 | % | Access Trust | 0.25 | % |
* | Payments are based on a percentage of the average assets of each fund portfolio owned by the subaccounts available under this Policy and under certain other variable insurance products offered by our affiliates and us. We may continue to receive 12b-1 fees and administrative fees on subaccounts that are closed to new investments, depending on the terms of the agreements supporting those payments and on the services we provide. |
** | Because the Transamerica Series Trust is managed by an affiliate, there are additional benefits to us and our affiliates for amounts you allocate to the Series Trust portfolios, in terms of our and our affiliates overall profitability. During 2007 we received $42.5 million from Transamerica Asset. |
*** | We receive this percentage once $100 million in fund shares are held by the subaccounts of Western Reserve and its affiliates. |
Other payments. We and our affiliates, including TCI, InterSecurities, Inc. (ISI), and World Group Securities (WGS), also directly or indirectly receive additional amounts or different percentages of assets under management from certain advisers and sub-advisers to the portfolios (or their affiliates) with regard to variable insurance products or mutual funds that are issued or managed by us and our affiliates. These payments may be derived, in whole or in part, from the profits the investment adviser or sub-adviser receives from the advisory fees deducted from portfolio assets. Policyowners, through their indirect investment in the portfolios, bear the costs of these advisory fees (see the prospectuses for the funds for more information). Certain advisers and sub-advisers of the underlying portfolios (or their affiliates) (1) may pay TCI amounts up to $75,000 per year to participate in a preferred sponsor program that provides such advisers and sub-advisers with access to TCIs wholesalers at TCIs national and regional sales conferences that are attended by TCIs wholesalers; (2) may provide our affiliates, and/or selling firms with wholesaling services to assist us in the distribution of the Policy and; (3) may provide us and/or certain affiliates and/or selling firms with occasional gifts, meals, tickets or other compensation as an incentive to market the portfolios and to cooperate with their promotional efforts. The amounts may be significant and provide the adviser or sub-adviser (or other affiliates) with increased access to us and to our affiliates involved in the distribution of the Policy.
For the calendar year ended December 31, 2007, TCI (and its predecessor, AFSG Securities Corporation AFSG) received revenue sharing payments ranging from $2,500 to $49,350 (for a total
48
of $381,768) from the following fund managers and/or sub-advisers to participate in TCIs events: T. Rowe Price Associates, Inc.; American Century Investment Management; MFS Investment Management; Transamerica Investment Management, LLC; Pacific Investment Management Company LLC; Jennison Associates; Lehman Brothers/Neuberger Berman; Legg Mason; Alliance Bernstein; Federated Funds; Fidelity Funds; ING Clarion; Merrill Lynch; AMVESCAP; BlackRock; Columbia Management LLC; JPMorgan Investment Management, Inc.; Oppenheimer Funds; and SunTrust.
Please note some of the aforementioned managers and/or sub-advisers may not be associated with underlying fund portfolios currently available in this product.
Proceeds from certain of these payments by the funds, the advisers, the sub-advisers and/or their affiliates may be profit to us, and may be used for any corporate purpose, including payment of expenses (i) that we and our affiliates incur in promoting, issuing, marketing, distributing and administering the Policies, and (ii) that we incur, in our role as intermediary in promoting, marketing and administering the fund portfolios.
For further details about the compensation payments we make in connection with the sale of the Policies, see "Sale of the Policies in this prospectus.
Depending on the state of issue, your Policy may be an individual Policy or a certificate issued under a group Policy. The Policy is subject to the insurance laws and regulations of each state or jurisdiction in which it is available for distribution. There may be differences between the Policy issued and the general Policy description contained in this prospectus because of requirements of the state where your Policy is issued. Some of the state specific differences are included in the prospectus, but this prospectus does not include references to all state specific differences. All state specific Policy features will be described in your Policy.
The Policy belongs to the owner named in the application. The owner may exercise all of the rights and options described in the Policy. The owner is the insured unless the application specifies a different person as the insured. If the owner dies before the insured and no contingent owner is named, then ownership of the Policy will pass to the owner's estate. The principal rights an owner may exercise are:
| to designate or change beneficiaries before the death of the surviving insured; |
| to receive amounts payable before the death of the insured; |
| to assign the Policy (if you assign the Policy, your rights and the rights of anyone who is to receive payment under the Policy are subject to the terms of that assignment); |
| to change the owner of this Policy; and |
| to change the specified amount of this Policy. |
No designation or change in designation of an owner will take effect unless we receive written request thereof. The request will take effect as of the date we receive it at our mailing address, subject to payment or other action taken by us before it was received.
Any modifications or waiver of any rights or requirements under the Policy must be in writing and signed by our president or secretary. No agent may bind us by making any promise not contained in this Policy.
Upon notice to you, we may modify the Policy:
| to make the Policy or the separate account comply with any law or regulation issued by a governmental agency to which we are subject; or |
| to assure continued qualification of the Policy as a life insurance contract under the Internal Revenue Code or to meet applicable requirements of other federal or state laws relating to variable life policies; or |
| to reflect a change in the operation of the separate account; or |
| to provide additional subaccounts and/or fixed account options. |
49
To purchase a Policy, you must submit a completed application and an initial premium to us through any licensed life insurance agent who is also a registered representative of a broker-dealer having a selling agreement with TCI, the principal underwriter for the Policy, and us.
There may be delays in our receipt and processing of applications and premium payments that are outside of our control for example, because of the failure of a selling broker-dealer or registered representative to promptly forward the application to us at our mailing address, or because of delays in determining whether the Policy is suitable for you. Any such delays will affect when your Policy can be issued.
You select the specified amount of insurance coverage for your Policy within the following limits. Our current minimum specified amount for a Policy is generally $50,000. We currently charge lower cost of insurance rates for Policies with specified amounts in higher bands of coverage. We offer the following specified amount bands of coverage:
| band 1: $50,000 - $249,999 |
| band 2: $250,000 - $499,999 |
| band 3: $500,000 - $999,999 |
| band 4: $1,000,000 and over |
We will generally only issue a Policy to you if you provide sufficient evidence that the insured meets our insurability standards. Your application is subject to our underwriting rules, and we may reject any application for any reason permitted by law. We will not issue a Policy to you if the insured is over age 85. The insured must be insurable and acceptable to us under our underwriting rules on the later of:
the date of your application; or
the date the insured completes all of the medical tests and examinations that we require.
Tax-Free "Section 1035" Exchanges
You can generally exchange one life insurance policy for another covering the same insured in a "tax-free exchange" under Section 1035 of the Internal Revenue Code. Before making an exchange, you should compare both life insurance policies carefully. Remember that if you exchange another life insurance policy for the one described in this prospectus, you might have to pay a surrender charge on your old policy, other charges may be higher (or lower), and the benefits may be different. If the exchange does not qualify for Section 1035 treatment, or if your current policy is subject to a policy loan, you may also have to pay federal income tax on the exchange. You should not exchange another life insurance policy for this one unless you determine, after knowing all the facts, that the exchange is in your best interest and not just better for the person selling you the Policy (that person will generally earn a commission if you buy this Policy through an exchange or otherwise).
When Insurance Coverage Takes Effect
Insurance coverage under the Policy will take effect only if all of the following conditions have been met: (1) the first full premium must be received by the Company at our mailing address; (2) during the lifetime of every proposed insured, the proposed owner must have personally received and accepted the Policy which was applied for and all answers on the application must be true and correct on the date such Policy is received and accepted; and (3) on the date of the later of either (1) or (2) above, all of the statements and answers given in the application must be true and complete, and there must have been no change in the insurability of any proposed insured.
Conditional Insurance Coverage. If you pay the full initial premium and have met all of the requirements listed in the conditional receipt attached to the application, and we deliver the conditional receipt to you, the insured may have conditional insurance coverage under the terms of the conditional receipt. The conditional insurance coverage may vary by state and/or underwriting standards. Because we do not accept initial premiums in advance for Policies with a specified amount in excess of $1,000,000, we do not offer conditional insurance coverage for Policies issued with a specified amount in excess of $1,000,000. Conditional insurance coverage is void if the check or draft you gave us to pay the initial premium is not honored when we first present it for payment.
50
The aggregate amount of conditional insurance coverage, if any, is the lesser of: | the amounts applied for under all conditional receipts issued by us; or | |
$500,000 of life insurance. | ||
Subject to the conditions and limitations of the conditional receipt, conditional insurance under the terms of the Policy applied for may become effective as of the later of: |
the date of application; or | |
the date of the last medical examination, test, and other screenings required by us, if any (the Effective Date). Such conditional insurance will take effect as of the Effective Date, as long as all of the following requirements are met: | ||
1. The person proposed to be insured is found to have been insurable as of the Effective Date, exactly as applied for in accordance with our underwriting rules and standards, without any modifications as to plan, amount, or premium rate; | ||
2. As of the Effective Date, all statements and answers given in the application must be true; | ||
3. The payment made with the application must not be less than the full initial premium for the mode of payment chosen in the application and must be received at our mailing address within the lifetime of the proposed insured; | ||
4. All medical examinations, tests, and other screenings required of the proposed insured by us are completed and the results received at our mailing address within 60 days of the date the application was signed; and | ||
5. All parts of the application, any supplemental application, questionnaires, addendum and/or amendment to the application are signed and received at our mailing address. | ||
Any conditional life insurance coverage terminates on the earliest of: | a. 60 days from the date the application was signed; | |
b. the date we either mail notice to the applicant of the rejection of the application and/or mail a refund of any amounts paid with the application; | ||
c. when the insurance applied for goes into effect under the terms of the Policy applied for; or | ||
d. the date we offer to provide insurance on terms that differ from the insurance for which you have applied. | ||
Special limitations of the conditional receipt: | the conditional receipt is not valid unless: | |
all blanks in the conditional receipt are completed; and | ||
the receipt is signed by an agent or authorized Company representative. | ||
Other limitations: | There is no conditional receipt coverage for riders or any additional benefits, if any, for which you may have applied. |
51
If one or more of the receipts conditions have not been met exactly, or if a proposed insured dies by suicide, we will not be liable except to return any payment made with the application. | ||
If we do not approve and accept the application within 60 days of the date you signed the application, the application will be deemed to be rejected by us and there will be no conditional insurance coverage. In that case, Western Reserves liability will be limited to returning any payment(s) you have made upon return of this receipt to us. |
Full Insurance Coverage and Allocation of Initial Premium. Once we determine that the insured meets our underwriting requirements and you have paid the initial premium, full insurance coverage will begin and we will begin to take the monthly deductions from your net premium. This date is the Policy date. On the Policy date (or on the record date if your Policy is backdated), we will allocate your initial net premium, minus monthly deductions, to the fixed account and the subaccounts you selected on your application, provided you live in a state that does not require a refund of full premium during the free-look period. If your state requires us to return the full premium in the event you exercise your free-look right, we will place your net premium in the reallocation account until the reallocation date. While held in the reallocation account, premium(s) will be credited with interest at the current fixed account rate.
On any day we credit net premiums or transfer cash value to a subaccount, we will convert the dollar amount of the net premium (or transfer) into subaccount units at the unit value for that subaccount, determined at the end of the day on which we receive the premium or transaction request at our mailing address. (Payments by check are priced when received at our mailing address or at the address on your billing coupon. Transfer requests, payments made by wire transfer, and electronic credit and debit transactionse.g., payments through direct deposit, debit transfers, and forms of e-commerce paymentsare priced when received at our administrative office.) We will credit amounts to the subaccounts only on a valuation date, that is, on a date the New York Stock Exchange (NYSE) is open for trading.
If you request, we may backdate a Policy by assigning a Policy date earlier than the date the Policy is issued. However, in no event will we backdate a Policy earlier than the earliest date allowed by state law or by our underwriting rules. Your request must be in writing and, if we approve the request, will amend your application. Your premiums, however, will be credited on the date the Policy is issued, not the backdated Policy date.
Cost of insurance charges are based in part on the age of the insured on the Policy date or on the date of any increase in specified amount. Generally, cost of insurance charges are lower at a younger age. We will deduct the monthly deductions, including cost of insurance charges, for the period that the Policy is backdated. This means that while the monthly deductions may be lower than what would have been charged had we not backdated the Policy, you will be paying for insurance during a period when the Policy was not in force.
You must instruct us on how to allocate your net premium among the subaccounts and the fixed account. The fixed account may not be available in all states. You must follow these guidelines:
| allocation percentages must be in whole numbers; |
52
| if you select dollar cost averaging, we may require you to have a minimum of $5,000 in each subaccount from which we will make transfers, and you may be required to transfer at least a total of $100 monthly; and |
| if you select asset rebalancing, the cash value of your Policy, if an existing Policy, or your minimum initial premium, if a new Policy, must be at least $5,000. |
Currently, you may change the allocation instructions for additional premium payments without charge at any time by writing us at our mailing address or calling us at our administrative office at 1-800-851-9777, Monday - Friday, between the hours of 8:30a.m. - 7:00p.m. Eastern time. The change will be effective as of the valuation date on which we receive the change at our mailing address or our administrative office. Upon instructions from you, the registered representative/agent of record for your Policy may also change your allocation instructions for you. The minimum amount you can allocate to a particular subaccount is 1.0% of a net premium payment. We reserve the right to limit the number of premium allocation changes or to charge $25 for each change in excess of one per Policy year quarter.
Whenever you direct money into a subaccount, we will credit your Policy with the number of units for that subaccount that can be bought for the dollar payment. Premium payments received at our mailing address, or at the address on your billing coupon (for payments made by check), or at our administrative office (for payments made by wire transfer and through electronic credit and debit transactions), before the NYSE closes are priced using the unit value determined at the closing of that regular business session of the NYSE (usually at 4:00 p.m. Eastern time). If we receive a premium payment after the NYSE closes, we will process the order using the subaccount unit value determined at the close of the next regular session of the NYSE. We will credit amounts to the subaccounts only on a valuation date, that is, on a date the NYSE is open for trading. Your cash value will vary with the investment experience of the subaccounts in which you invest. You bear the investment risk for amounts you allocate to the subaccounts.
You should periodically review how your cash value is allocated among the subaccounts and the fixed account because market conditions and your overall financial objectives may change.
Reallocation Account. If your state requires us to return your initial premium in the event you exercise your free-look right, we will allocate the initial net premium on the Policy date (or the record date if your Policy is backdated) to the reallocation account (or as otherwise mandated by state law) as shown on your Policy schedule page. While held in the reallocation account, net premium(s) will be credited with interest at the current fixed account rate and reduced by any monthly deductions due. The net premiums will remain in the reallocation account until the reallocation date. The reallocation date is the record date plus fifteen days. Please contact your agent for details concerning the free-look period for your state.
On the first valuation date on or after the reallocation date, we will reallocate all cash value from the reallocation account to the fixed account and the subaccounts you selected on the application. If you requested dollar cost averaging, on the reallocation date we will reallocate the cash value either to the fixed account, the WRL Transamerica Money Market VP subaccount or the WRL Transamerica JPMorgan Core Bond VP subaccount (depending on which account you selected on your application).
For states that do not require a full refund of the initial premium, the reallocation date is the same as the Policy date. On the Policy date, we will allocate your initial net premium, minus monthly deductions, to the fixed account and the subaccounts in accordance with the instructions you gave us on your application.
You generally have flexibility to determine the frequency and the amount of the premiums you pay. Unlike conventional insurance policies, you do not have to pay your premiums according to a rigid and inflexible premium schedule. Before we issue the Policy to you, we may require you to pay a premium at least equal to a minimum monthly guarantee premium set forth in your Policy. Thereafter (subject to the limitations described below), you may make unscheduled premium payments at any time and in any amount over $50. Under some circumstances, you may be required to pay extra premiums to prevent a lapse. Your minimum monthly guarantee premium may change if you request a change in your Policy. If this happens, we will notify you of the new minimum monthly guarantee premium. See Minimum Monthly Guarantee Premium below.
53
You will determine a planned periodic payment schedule, which allows you to pay level premiums at fixed intervals over a specified period of time. You are not required to pay premiums according to this schedule. You may change the amount, frequency, and the time period over which you make your planned periodic payments. Please be sure to notify us or your agent/registered representative of any address changes so that we may be able to keep your current address on record.
Even if you make your planned periodic payments on schedule, your Policy still may lapse. The duration of your Policy depends on the Policy's net surrender value. If the net surrender value is not high enough to pay the monthly deductions when due (and your no lapse period has expired) then your Policy will lapse (unless you make the payment we specify during the 61-day grace period).
Minimum Monthly Guarantee Premium
The full initial premium is the only premium you are required to pay under the Policy. However, you greatly increase your risk of lapse if you fail to regularly pay premiums at least as large as the current minimum monthly guarantee premium.
Until the no lapse date shown on your Policy schedule page, we guarantee that your Policy will not lapse, as long as on any Monthiversary you have paid total premiums (minus any cash withdrawals, minus any outstanding loan amount, minus any accrued loan interest and minus any decrease charge) that equal or exceed the sum of the minimum monthly guarantee premiums for each month from the Policy date up to and including the current month.
The initial minimum monthly guarantee premium is shown on your Policy's schedule page, and depends on a number of factors, including the age, gender, rate class of the insured, the specified amount requested, and your Policys applicable C.S.O. table. We will adjust the minimum monthly guarantee premium if you change death benefit options, increase or decrease the specified amount, or if any of the riders are added, or in force riders are increased or decreased. We will notify you of the new minimum monthly guarantee premium.
Until the no lapse date shown on your Policy schedule page, your Policy will remain in force and no grace period will begin, even if your net surrender value is too low to pay the monthly deductions, as long as on any Monthiversary the total amount of the premiums you have paid (minus any cash withdrawals, minus any outstanding loan amount and minus any accrued interest) equals or exceeds the sum of the minimum monthly guarantee premiums in effect for each month from the Policy date up to and including the current month. If you take a cash withdrawal, a loan, or if you increase or decrease your specified amount or if you add, increase or decrease a rider, you may need to pay additional premiums in order to keep the no lapse period guarantee in effect.
After the no lapse period ends, paying the current minimum monthly guarantee premium each month will not necessarily keep your Policy in force. You may need to pay additional premiums to keep the Policy in force.
We may require premium payments to be at least $50 ($1,000 if by wire). We may return premiums less than $50. We will not allow you to make any premium payments that would cause the total amount of the premiums you pay to exceed the current maximum premium limitations, if applicable, by which the Policy qualifies as life insurance under federal tax laws. This maximum is set forth in your Policy. If you make a payment that would cause your total premiums to be greater than the maximum premium limitations, we will return the excess portion of the premium payment, with interest, within 60 days after the end of that Policy year. We will not permit you to make additional premium payments until they are allowed by the maximum premium limitations. In addition, we reserve the right to refund a premium if the premium would increase the death benefit by more than the amount of the premium. We will not accept a payment that will cause the Policy to become a modified endowment contract without your consent.
54
We will consider any payments you make to be premium payments, unless you clearly identify them as loan repayments. We will deduct certain charges from your premium payments. We will accept premium payments by wire transfer.
If you wish to make payments by wire transfer, you should contact our administrative office at 1-800-851-9777 for instructions on wiring federal funds to us.
Tax-Free Exchanges (1035 Exchanges). We will accept part or all of your initial premium from one or more contracts insuring the same insured that qualify for tax-free exchanges under Section 1035 of the Internal Revenue Code. If you contemplate such an exchange, you should consult a competent tax advisor to learn the potential tax effects of such a transaction.
Subject to our underwriting requirements, we will permit you to make one additional cash payment within three business days of receipt at our administrative office of the proceeds from the 1035 Exchange before we finalize your Policy's specified amount.
You or your registered representative of record may make transfers among the subaccounts or from the subaccounts to the fixed account. You will be bound by any transfers made by your registered representative. We determine the amount you have available for transfers at the end of the valuation period when we receive your transfer request. We may, at any time, discontinue transfer privileges, modify our procedures, or limit the number of transfers we permit. The following features apply to transfers under the Policy:
| Each Policy year, the Policy allows a cumulative transfer out of the fixed account of the greater of up to 25% of the amount in the fixed account, or the amount transferred out the previous Policy year. Currently, we do not, but reserve the right to, limit the number of transfers out of the fixed account to one per Policy year. If we modify or stop this current practice, we will notify you at the time of your transfer. |
| For Policies Purchased On or After September 15, 2008: Unless otherwise required by state law, we may restrict transfers to the fixed account, if the fixed account value, excluding amounts in the loan reserve, following the transfer would exceed $250,000. This restriction will not apply to any transfer to the fixed account in the exercise of conversion rights. |
| You currently may request transfers in writing (in a form we accept), to our mailing address, by fax or by telephone to our administrative office, or electronically through our website (www.westernreserve.com). |
| There is no minimum amount that must be transferred. |
| There is no minimum amount that must remain in a subaccount after a transfer. |
| Except as listed below, we deduct a $25 charge from the amount transferred for each transfer in excess of 12 transfers in a Policy year. |
| We consider all transfers made in any one day to be a single transfer. |
| Transfers resulting from loans or the exercise of conversion rights, or due to the reallocation of cash value immediately after the reallocation date are currently not treated as transfers for the purpose of assessing the transfer charge. |
| Transfers via the Internet are not treated as transfers for the purpose of assessing the transfer charge. |
| Transfers among the ProFunds and/or Access Trust subaccounts do not count as transfers for the purpose of assessing the transfer charge. |
| Transfers under dollar cost averaging and asset rebalancing do count as transfers for the purpose of assessing the transfer charge. |
55
We will process any transfer order that is received in writing at our mailing address or by fax or by telephone at our administrative office before the NYSE closes (usually 4:00 p.m. Eastern time) using the subaccount unit value determined at the end of that session of the NYSE. If we receive the transfer order after the NYSE closes, we will process the order using the subaccount unit value determined at the close of the next regular business session of the NYSE.
Disruptive Trading and Market Timing
The market timing policy and the related procedures (discussed below) do not apply to the ProFunds or Access Trust subaccounts because the corresponding portfolios are specifically designed to accommodate frequent transfer activity. If you invest in the ProFunds or Access Trust subaccounts, you should be aware that you may bear the costs and increased risks of frequent transfers discussed below.
Statement of Policy. This variable insurance Policy was not designed for the use of market timers or frequent or disruptive traders. Such transfers may be harmful to the underlying fund portfolios and increase transaction costs.
Market timing and disruptive trading among the subaccounts or between the subaccounts and the fixed account can cause risks with adverse effects for other policyowners (and beneficiaries and underlying fund portfolios). These risks and harmful effects include:
(1) dilution of the interests of long-term investors in a subaccount if purchases or transfers into or out of an underlying fund portfolio are made at prices that do not reflect an accurate value for the underlying fund portfolios investments (some market timers attempt to do this through methods known as time-zone arbitrage and liquidity arbitrage);
(2) an adverse effect on portfolio management, such as:
(a) impeding a portfolio managers ability to sustain an investment objective;
(b) causing the underlying fund portfolio to maintain a higher level of cash than would otherwise be the case; or
(c) causing an underlying fund portfolio to liquidate investments prematurely (or otherwise at an inopportune time) in order to pay withdrawals or transfers out of the underlying fund portfolio; and
(3) increased brokerage and administrative expenses.
These costs are borne by all policyowners invested in those subaccounts, not just those making the transfers.
We have developed policies and procedures with respect to market timing and disruptive trading (which vary for certain subaccounts at the request of the underlying fund portfolios) and we do not make special arrangements or grant exceptions to accommodate market timing or other potentially disruptive or harmful trading. As discussed herein, we cannot detect or deter all market timing or other potentially disruptive trading. Do not invest with us if you intend to conduct market timing or potentially disruptive trading.
Detection. We employ various means in an attempt to detect and deter market timing and disruptive trading. However, despite our monitoring we may not be able to detect nor halt all harmful trading. In addition, because other insurance companies (and retirement plans) with different policies and procedures may invest in the underlying fund portfolios, we cannot guarantee that all harmful trading will be detected or that an underlying fund portfolio will not suffer from market timing and disruptive trading among subaccounts of variable products issued by these other insurance companies or retirement plans.
Deterrence. If we determine you are engaged in market timing or disruptive trading, we may take one or more actions in an attempt to halt such trading. Your ability to make transfers is subject to modification or restriction if we determine, in our sole opinion, that your exercise of the transfer privilege may disadvantage or potentially harm the rights or interests of other policyowners (or others having an interest in the variable insurance products). As described below, restrictions may take various forms, but under our current policies and procedures will include loss of expedited transfer privileges. We consider transfers by telephone, fax, overnight mail, or the Internet to be expedited transfers. This means that we would accept only written transfer requests with an original signature transmitted to us only by standard United States Postal Service First Class mail. We may also restrict the transfer privileges of others acting on your behalf, including your registered representative or an asset allocation or investment advisory service.
56
We reserve the right to reject any premium payment or transfer request from any person without prior notice, if, in our judgment, (1) the payment or transfer, or series of transfers, would have a negative impact on an underlying fund portfolio's operations; or (2) if an underlying fund portfolio would reject or has rejected our purchase order or has instructed us not to allow that purchase or transfer; or (3) because of a history of market timing and disruptive trading. We may impose other restrictions on transfers, or even prohibit transfers for any owner who, in our view, has abused, or appears likely to abuse, the transfer privilege on a case-by-case basis. We may, at any time and without prior notice, discontinue transfer privileges, modify our procedures, impose holding period requirements or limit the number, size, frequency, manner, or timing of transfers we permit. We also reserve the right to reverse a potentially harmful transfer if an underlying fund portfolio refuses or reverses our order; in such instances some policyowners may be treated differently than others in that some transfers may be reversed and others allowed. For all of these purposes, we may aggregate two or more variable insurance products that we believe are connected. Please note: If you engage a third party investment advisor for asset allocation services, then you must be subject to these transfer restrictions because of the actions of your investment advisor in providing those services.
In addition to our internal policies and procedures, we will administer your variable insurance product to comply with any applicable state, federal, and other regulatory requirements concerning transfers. We reserve the right to implement, administer, and charge you for any fee or restriction, including redemption fees, imposed by any underlying fund portfolio. To the extent permitted by law, we also reserve the right to defer the transfer privilege at any time that we are unable to purchase or redeem shares of any of the underlying fund portfolios.
Under our current policies and procedures, we do not:
| impose redemption fees on transfers; |
| expressly limit the number or size of transfers in a given period except for certain subaccounts where an underlying fund portfolio has advised us to prohibit certain transfers that exceed a certain size; or |
| provide a certain number of allowable transfers in a given period. |
Redemption fees, transfer limits, and other procedures or restrictions may be more or less successful than ours in deterring market timing or other disruptive trading and in preventing or limiting harm from such trading.
In the absence of a defensive transfer restriction (e.g., expressly limiting the number of trades within a given period or their size), it is likely that some level of market timing and disruptive trading will occur before it is detected and steps taken to deter it (although some level of market timing and disruptive trading can occur with a defensive transfer restriction).
Please note that the limits and restrictions described herein are subject to our ability to monitor transfer activity. Our ability to detect market timing or other disruptive trading may be limited by operational and technological systems, as well as by our ability to predict strategies employed by policyowners (or those acting on their behalf) to avoid detection. As a result, despite our efforts to prevent harmful trading activity among the variable investment options available under this variable insurance product, there is no assurance that we will be able to detect or deter market timing or disruptive trading by such policyowners or intermediaries acting on their behalf. Moreover, our ability to discourage and restrict market timing or disruptive trading may be limited by decisions of state regulatory bodies and court orders which we cannot predict.
Furthermore, we may revise our policies and procedures at our sole discretion at any time and without prior notice, as we deem necessary or appropriate: (1) to better detect and deter market timing or other harmful trading that may adversely affect other policyowners, other persons with material rights under the variable insurance products, or underlying fund shareholders generally; (2) to comply with state or federal regulatory requirements; or (3) to impose additional or alternative restrictions on owners engaging in market timing or disruptive trading among the investment options under the variable insurance product. In addition, we may not honor transfer requests if any variable investment option that would be affected by the transfer is unable to purchase or redeem shares of its corresponding underlying fund portfolio.
57
Underlying Fund Portfolio Frequent Trading Policies. The underlying fund portfolios may have adopted their own policies and procedures with respect to frequent purchases and redemptions of their respective shares. Underlying fund portfolios may, for example, assess a redemption fee (which we reserve the right to collect) on shares held for a relatively short period of time. The prospectuses for the underlying fund portfolios describe any such policies and procedures. The frequent trading policies and procedures of an underlying fund portfolio may be different, and more or less restrictive, than the frequent trading policies and procedures of other underlying fund portfolios and the policies and procedures we have adopted for our variable insurance policies to discourage market timing and disruptive trading. Policyowners should be aware that we may not have the contractual ability or the operational capacity to monitor policyowners transfer requests and apply the frequent trading policies and procedures of the respective underlying funds that would be affected by the transfers. Accordingly, policyowners and other persons who have material rights under our variable insurance products should assume that any protection they may have against potential harm from market timing and disruptive trading is the protection, if any, provided by the policies and procedures we have adopted for our variable insurance products to discourage market timing and other disruptive trading in certain subaccounts.
You should be aware that, as required by SEC regulation, we have entered into a written agreement with each underlying fund or principal underwriter that obligates us to provide the fund, upon written request, with information about you and your trading activities in the funds portfolios. In addition, we are obligated to execute instructions from the funds that may require us to restrict or prohibit your investment in a specific portfolio if the fund identifies you as violating the frequent trading policies that the fund has established for that portfolio.
If we receive a premium payment from you that you allocate into a fund that has directed us to restrict or prohibit your trades into the fund, then we will request new allocation instructions from you. If we receive from you a transfer request into a fund that has directed us to restrict or prohibit your trades, then we will not effect the transfer.
Omnibus Order. Policyowners and other persons with material rights under the variable insurance products also should be aware that the purchase and redemption orders received by the underlying fund portfolios generally are omnibus orders from intermediaries such as retirement plans and separate accounts funding variable insurance products. The omnibus orders reflect the aggregation and netting of multiple orders from individual retirement plan participants and individual owners of variable insurance products. The omnibus nature of these orders may limit the underlying fund portfolios ability to apply their respective frequent trading policies and procedures. We cannot guarantee that the underlying fund portfolios will not be harmed by transfer activity relating to the retirement plans or other insurance companies that may invest in the underlying fund portfolios. These other insurance companies are responsible for their own policies and procedures regarding frequent transfer activity. If their policies and procedures fail to successfully discourage harmful transfer activity, it will affect other owners of underlying fund portfolio shares, as well as the owners of all of the variable annuity or life insurance policies, including ours, whose variable investment options correspond to the affected underlying fund portfolios. In addition, if an underlying fund portfolio believes that an omnibus order we submit may reflect one or more transfer requests from owners engaged in market timing and disruptive trading, the underlying fund portfolio may reject the entire omnibus order and thereby delay or prevent us from implementing your request.
ProFunds and Access Trust Subaccounts. Because the above restrictions do not apply to the ProFunds or Access Trust subaccounts, they may have a greater risk than others of suffering from the harmful effects of market timing and disruptive trading, as discussed above (i.e., dilution, an adverse effect on portfolio management and increased expenses).
Telephone Privileges. Telephone transfer privileges will automatically apply to your Policy unless you provide other instructions. The telephone transfer privileges allow you to give authority to the registered representative or agent of record for your Policy to make telephone transfers and to change the allocation of future payments among the subaccounts and the fixed account on your behalf according to your instructions. To make a telephone transfer, you may call us at our administrative office at 1-800-851-9777, Monday - Friday, between the hours of 8:30 a.m. - 7:00 p.m. Eastern time, or fax your instructions to our interfund fax number 1-727-299-1648 (for all other fax requests, please use 1-727-299-1620).
Please note the following regarding telephone, Internet or fax transfers:
| We will employ reasonable procedures to confirm that telephone instructions are genuine. |
58
| If we follow these procedures, we are not liable for any loss, damage, cost or expense from complying with telephone instructions we reasonably believe to be authentic. You bear the risk of any such loss. |
| If we do not employ reasonable confirmation procedures, we may be liable for losses due to unauthorized or fraudulent instructions. |
| Such procedures may include requiring forms of personal identification prior to acting upon telephone instructions, providing written confirmation of transactions to owners, and/or tape recording telephone instructions received from owners. |
| We may also require written confirmation of your order. |
| If you do not want the ability to make telephone transfers, you should notify us in writing at our mailing address. |
| We will not be responsible for same-day processing of transfers if faxed to a number other than 1-727-299-1648 or 1-727-299-1620. |
| We will not be responsible for any transmittal problems when you fax us your order unless you report it to us within five business days and send us proof of your fax transmittal. We may discontinue this option at any time. |
We cannot guarantee that telephone and faxed transactions will always be available. For example, our offices may be closed during severe weather emergencies or there may be interruptions in telephone or fax service beyond our control. If the volume of calls is unusually high, we might not have someone immediately available to receive your order at our administrative office. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances.
Similarly, online transactions processed via the Internet may not always be possible. Telephone and computer systems, whether yours, your Internet service provider's, your agent's or Western Reserve's, can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may prevent or delay our receipt of your request. If you are experiencing problems, you should make your request or inquiry in writing. You should protect your personal identification number (PIN) because self-service options will be available to your agent of record and to anyone who provides your PIN. We will not be able to verify that the person using your PIN and providing instructions online is you or one authorized by you.
Currently, we do not, but reserve the right to, limit the number of transfers out of the fixed account to one per Policy year. If we change this, we will notify you.
We reserve the right to limit the maximum amount you may transfer from the fixed account to the greater of:
| 25% of the amount in the fixed account; or |
| the amount you transferred from the fixed account in the immediately preceding Policy year. |
We will make the transfer at the end of the valuation date on which we receive the request. For Policies Purchased On or After September 15, 2008: Unless otherwise required by state law, we may restrict transfers to the fixed account if the fixed account value, excluding amounts in the loan reserve following the transfer would exceed $250,000. (This restriction does not apply to any transfer to the fixed account necessary in the exercise of conversion rights.) We reserve the right to require that you make the transfer request in writing and that we receive the written transfer request no later than 30 days after a Policy anniversary. Transfers from the fixed account are not available through the Internet.
Except when used to pay premiums, we also may defer payment of any amounts from the fixed account for no longer than six months after we receive such written notice.
New Jersey: If your Policy was purchased in the State of New Jersey prior to September 15, 2008, and issued prior to January 1, 2009, the fixed account is not available to you. You may not direct or transfer any money to the fixed account.
59
If, within 24 months of your Policy date, you transfer all of your subaccount values to the fixed account, then we will not charge you a transfer fee, even if applicable. You must make your request in writing to our mailing address.
Dollar cost averaging is an investment strategy designed to reduce the average purchase price per unit. The strategy spreads the allocation of your premium into the subaccounts over a period of time. This potentially allows you to reduce the risk of investing most of your premium into the subaccounts at a time when prices are high. The success of this strategy is not assured and depends on market trends. You should consider carefully your financial ability to continue the program over a long enough period of time to purchase units when their value is low as well as when it is high. We make no guarantee that dollar cost averaging will result in a profit or protect you against loss.
Under dollar cost averaging, we automatically transfer a set dollar amount from the WRL Transamerica Money Market VP subaccount, the WRL Transamerica JPMorgan Core Bond VP subaccount or the fixed account to a subaccount that you choose. We will make the transfers monthly as of the end of the valuation date after the first Monthiversary after the reallocation date. We will make the first transfer in the month after we receive your request at our mailing address, provided that we receive the form by the 25th day of the month.
To start dollar cost averaging: | You must submit a completed form signed by the owner to us at our mailing address requesting dollar cost averaging; | |
You may be required to have at least $5,000 in each account from which we will make transfers; | ||
Your total transfers each month under dollar cost averaging may be limited to a minimum of $100; and | ||
Each month, you may not transfer more than one-tenth of the amount that was in your fixed account at the beginning of dollar cost averaging. |
You may request dollar cost averaging at any time. There is no charge for dollar cost averaging. However, each transfer under dollar cost averaging counts towards your 12 free transfers each year.
Dollar cost averaging will terminate if: | We receive at our mailing address your or your registered representatives or agent of records, request to cancel your participation; | |
The value in the accounts from which we make the transfers is depleted; | ||
You elect to participate in the asset rebalancing program; or | ||
You elect to participate in any asset allocation services provided by a third party. |
If you terminate your participation in the dollar cost averaging program, we will stop making dollar cost averaging transfers without a new completed dollar cost averaging request form signed by the owner. We may modify, suspend, or discontinue dollar cost averaging at any time.
We also offer an asset rebalancing program under which you may transfer amounts periodically to maintain a particular percentage allocation among the subaccounts you have selected. Asset rebalancing is not available with the fixed account. Cash value allocated to each subaccount will grow or decline in value at different rates. The asset rebalancing program automatically reallocates the cash value in the subaccounts at the end of each period to match
60
your Policy's currently effective premium allocation schedule. Cash value in the fixed account and the dollar cost averaging program is not available for this program. This program does not guarantee gains. A subaccount may still have losses.
You may elect asset rebalancing to occur on a monthly, quarterly, semi-annual or annual basis. Once we receive the asset rebalancing request form at our mailing address, we will change your premium allocation instructions to match your asset rebalancing request instructions, and we will implement the asset rebalancing program on the date you indicated. You may modify your allocations quarterly. We will credit the amounts transferred at the unit value next determined on the dates the transfers are made. If a day on which rebalancing would ordinarily occur falls on a day on which the NYSE is closed, rebalancing will occur on the next day that the NYSE is open.
To start asset rebalancing: | You must submit to us at our mailing address, a completed asset rebalancing request form, signed by the owner; and | |
You may be required to have a minimum cash value of $5,000 or make a $5,000 initial premium payment. |
There is no charge for the asset rebalancing program. However, each reallocation we make under the program counts towards your 12 free transfers each year.
Asset rebalancing will cease if: | you elect to participate in the dollar cost averaging program; | |
we receive at our mailing address, a request to discontinue participation from you, your registered representative, or agent of record; | ||
you make any transfer to or from any subaccount other than under a scheduled rebalancing; or | ||
you elect to participate in any asset allocation services provided by a third party. |
You may start and stop participation in the asset rebalancing program at any time, but we restrict your right to re-enter the program to once each Policy year. If you wish to resume the asset rebalancing program, you must complete a new request form. We may modify, suspend, or discontinue the asset rebalancing program at any time.
Third Party Asset Allocation Services
We do not offer any asset allocation programs or any investment models for use with your life insurance policy. You may authorize and engage your own investment advisor to manage your account. These investment advisors may be firms or persons who also are appointed by us, or whose affiliated broker-dealers are appointed by us, as authorized sellers of the Policies. Even if this is the case, however, please note that the investment advisor you engage to provide advice and/or make transfers for you is not acting on our behalf, but rather is acting on your behalf. We do not offer advice about how to allocate your cash value under any circumstance. We are not responsible for any recommendations such investment advisors make, any investment models or asset allocation programs they choose to follow, or any specific transfers they make on your behalf.
Any fee that is charged by your investment advisor is in addition to the fees and expenses that apply under your Policy. We are not a party to the agreement you have with your investment advisor. You will, however, receive confirmations of transactions that affect your Policy. Note: If you make withdrawals of cash value to pay advisory fees, then taxes may apply to any such withdrawals and tax penalties may be assessed on withdrawals made before you attain age 59- 1/2.
If your investment advisor has also acted as your insurance agent with respect to the sale of your Policy, he or she may be receiving compensation for services provided both as an insurance agent and investment advisor. Alternatively, the investment advisor may compensate the insurance agent from whom you purchased your Policy for the referral that led you to enter into your investment advisory relationship with the investment advisor. If you are interested in the details about the compensation that your investment advisor and/or your insurance agent receive in connection with your Policy, you should ask them for more details.
61
We, or an affiliate of ours, will process the financial transactions placed by your registered insurance agent or investment advisor. We reserve the right to discontinue doing so at any time and for any reason. We may require insurance agents or investment advisors, who are authorized by multiple policyowners to make financial transactions, to enter into an administrative agreement with Western Reserve as a condition of our accepting transactions on your behalf. The administrative agreement may impose limitations on the insurance agents or investment advisors ability to request financial transactions on your behalf. These limitations, which are discussed in the section entitled Transfers Disruptive Trading and Market Timing, are intended (i) to minimize the detrimental impact of an investment professional who is in a position to transfer large amounts of money for multiple clients in a particular portfolio or type of portfolio, or (ii) to comply with specific restrictions or limitations imposed by a portfolio(s) of Western Reserve.
Please note: Policies managed by your insurance agent also are subject to the restrictions on transfers between investment options that are discussed in the section entitled Transfers Disruptive Trading and Market Timing. Since transfer activity under contracts managed by an insurance agent or third party investment adviser may result in unfavorable consequences to all policyowners invested in the affected options, we reserve the right to limit the investment options available to a particular owner whose policy is managed by the advisor or to impose other transfer restrictions we deem necessary. In addition, Western Reserve may enter into administrative agreements with insurance agents or investment advisors that impose limits on their ability to request financial transactions on behalf of one or more policyowners, which also may limit the available investment options, require advance notice of large transactions, or impose other trading limitations on your insurance agent. You and your insurance agent will be informed of all such restrictions on an ongoing basis. Limitations that we may impose on your insurance agent or investment advisor under the terms of the administrative agreement do not apply to financial transactions requested by an owner on their own behalf, except as otherwise described in this prospectus.
| Varies from day to day, depending on the investment experience of the subaccounts you choose, the interest credited to the fixed account, the charges deducted and any other Policy transactions (such as additional premium payments, transfers, withdrawals and Policy loans); |
| serves as the starting point for calculating values under a Policy; |
| equals the sum of all values in each subaccount and the fixed account, including any amounts held in the loan reserve account (part of the fixed account) to secure any outstanding Policy loan; |
| is determined on the Policy date and on each valuation date; and |
| has no guaranteed minimum amount and may be more or less than premiums paid. |
The net surrender value is the amount we pay when you surrender your Policy while it is in force. We determine the net surrender value at the end of the valuation period when we receive your written surrender request at our mailing address.
Net surrender value on any valuation date equals: | the cash value as of such date; minus | |
any surrender charge as of such date; minus | ||
any outstanding Policy loan amount; minus | ||
any accrued Policy loan interest. |
Each subaccount's value is the cash value in that subaccount. At the end of any valuation period, the subaccount's value is equal to the number of units that the Policy has in the subaccount, multiplied by the unit value of that subaccount.
The number of units in any subaccount on any valuation date equals: | the initial units purchased at unit value on the Policy date, or reallocation date, if different; plus |
62
units purchased with additional net premium(s); plus | ||
units purchased via transfers from another subaccount or the fixed account; minus | ||
units redeemed to pay for monthly deductions; minus | ||
units redeemed to pay for cash withdrawals; minus | ||
units redeemed as part of a transfer to another subaccount or the fixed account (including the loan reserve account); minus | ||
units redeemed to pay cash withdrawals and transfer charges. |
Every time you allocate, transfer or withdraw money to or from a subaccount, we convert that dollar amount into units. We determine the number of units we credit to, or subtract from, your Policy by dividing the dollar amount of the allocation, transfer or cash withdrawal by the unit value for that subaccount next determined at the end of the valuation period on which the premium allocation, transfer request or cash withdrawal request is received: (i) at our mailing address (for written requests or payments by check); (ii) at our administrative office (for requests by fax or telephone , or for payments made through electronic credit and debit transactions); (iii) or electronically through our website.
The value (or price) of each subaccount unit will reflect the investment performance of the portfolio in which the subaccount invests. Unit values will vary among subaccounts. The unit value of each subaccount was originally established at $10 per unit. The unit value may increase or decrease from one valuation period to the next.
The unit value of any subaccount at the end of a valuation period is calculated as: | the total value of the portfolio shares held in the subaccount, including the value of any dividends or capital gains distribution declared and reinvested by the portfolio during the valuation period. This value is determined by multiplying the number of portfolio shares owned by the subaccount by the portfolios net asset value per share determined at the end of the valuation period; minus | |
a charge equal to the daily net assets of the subaccount multiplied by the daily equivalent of the daily mortality and expense risk charge; minus | ||
the accrued amount of reserve for any taxes or other economic burden resulting from applying tax laws that we determine to be properly attributable to the subaccount; and the result divided by | ||
the number of outstanding units in the subaccount before the purchase or redemption of any units on that date. |
The portfolio in which any subaccount invests will determine its net asset value per share once daily, as of the close of the regular business session of the NYSE (usually 4:00 p.m. Eastern time) except on customary national holidays on which the NYSE is closed, which coincides with the end of each valuation period.
On the Policy date, or the reallocation date, if different, the fixed account value is equal to the cash value allocated to the fixed account.
The fixed account value at the end of any valuation period is equal to: | the sum of net premium(s) allocated to the fixed account; plus |
63
any amounts transferred from a subaccount to the fixed account (including amounts transferred to the loan reserve account); plus | ||
total interest credited to the fixed account; minus | ||
amounts charged to pay for monthly deductions; minus | ||
amounts withdrawn or surrendered from the fixed account to pay for cash withdrawals (including any cash withdrawal charges); minus | ||
amounts transferred from the fixed account (including any transfer charges and any amounts transferred from the loan reserve account) to a subaccount. |
As long as the Policy is in force, we will determine the amount of and pay the death benefit proceeds on an individual Policy upon receipt at our mailing address of satisfactory proof of the insureds death, plus written direction (from each eligible recipient of death benefit proceeds) regarding how to pay the death benefit payment, and any other documents, forms and information we need. We may require return of the Policy. We will pay the death benefit proceeds to the primary beneficiary(ies), if living, or to a contingent beneficiary. If each beneficiary dies before the insured and there is no contingent beneficiary, we will pay the death benefit proceeds to the owner or the owners estate. We will pay the death benefit proceeds in a lump sum or under a payment option.
Death benefit proceeds equal: | the death benefit (described below); minus | |
any monthly deductions due during the grace period (if applicable); minus | ||
any outstanding loan amount and accrued loan interest; plus | ||
any additional insurance in force provided by rider. |
We may further adjust the amount of the death benefit proceeds if we contest the Policy or if you misstate the insured's age or gender.
The Policy provides a death benefit. The death benefit is determined at the end of the valuation period in which the insured dies. You must select one of the three death benefit options we offer in your application. If you do not choose a death benefit option in the application, the Option A death benefit option will automatically be in effect. No matter which death benefit option you choose, we guarantee that, as long as the Policy does not lapse, the death benefit will never be less than the specified amount on the date of the insured's death.
Death benefit Option A equals the greater of: | the current specified amount; or | |
a specified percentage called the limitation percentage, multiplied by | ||
the cash value on the insured's date of death; or | ||
the amount required for the Policy to qualify as a life insurance contract under Section 7702 of the Internal Revenue Code. |
64
Under Option A, your death benefit remains level unless the limitation percentage multiplied by the cash value is greater than the specified amount; then the death benefit will vary as the cash value varies.
The limitation percentage is the minimum percentage of cash value we must pay as the death benefit under federal tax requirements. It is based on the attained age of the insured at the beginning of each Policy year. The following table indicates the limitation percentages for different ages:
Attained Age |
Limitation Percentage | |
40 and under | 250% | |
41 to 45 | 250% minus 7% for each age over age 40 | |
46 to 50 | 215% minus 6% for each age over age 45 | |
51 to 55 | 185% minus 7% for each age over age 50 | |
56 to 60 | 150% minus 4% for each age over age 55 | |
61 to 65 | 130% minus 2% for each age over age 60 | |
66 to 70 | 120% minus 1% for each age over age 65 | |
71 to 75 | 115% minus 2% for each age over age 70 | |
76 to 90 | 105% | |
91 to 95 | 105% minus 1% for each age over age 90 | |
96 and older | 100% |
If the federal tax code requires us to determine the death benefit by reference to these limitation percentages, the Policy is described as in the corridor. An increase in the cash value will increase our risk, and we will increase the cost of insurance we deduct from the cash value.
Option A Illustration. Assume that the insureds attained age is under 40, there have been no withdrawals or decreases in specified amount, and that there are no outstanding loans. Under Option A, a Policy with a $100,000 specified amount will generally pay $100,000 in death benefits. However, because the death benefit must be equal to or be greater than 250% of cash value, any time the cash value of the Policy exceeds $40,000, the death benefit will exceed the $100,000 specified amount. Each additional dollar added to the cash value above $40,000 will increase the death benefit by $2.50.
Similarly, as long as the cash value exceeds $40,000, each dollar taken out of the cash value will reduce the death benefit by $2.50. If at any time the cash value multiplied by the limitation percentage is less than the specified amount, the death benefit will equal the specified amount of the Policy reduced by the dollar value of any cash withdrawals.
Death benefit Option B equals the greater of: | the current specified amount; plus | |
the cash value on the insureds date of death; or | ||
the limitation percentage, multiplied by | ||
the cash value on the insureds date of death; or | ||
the amount required for the Policy to qualify as a life insurance contract under Section 7702 of the Internal Revenue Code. |
Under Option B, the death benefit always varies as the cash value varies.
Option B Illustration. Assume that the insureds attained age is under 40 and that there are no outstanding loans. Under Option B, a Policy with a specified amount of $100,000 will generally pay a death benefit of $100,000 plus cash value. Thus, a Policy with a cash value of $10,000 will have a death benefit of $110,000 ($100,000 + $10,000). The death benefit, however, must be at least 250% of cash value. As a result, if the cash value of the Policy exceeds $66,667, the death benefit will be greater than the specified amount plus cash value. (The figure of $66,667 is derived by solving for cash value in the following calculation: $100,000 plus cash value = 250% multiplied by cash value.) Each additional dollar of cash value above $66,667 will increase the death benefit by $2.50.
65
Similarly, any time cash value exceeds $66,667, each dollar taken out of cash value will reduce the death benefit by $2.50. If at any time, cash value multiplied by the limitation percentage is less than the specified amount plus the cash value, then the death benefit will be the specified amount plus the cash value of the Policy.
Death benefit Option C equals the greater of: | death benefit Option A; or | |
the current specified amount, multiplied by | ||
an age-based factor equal to the lesser of | ||
1.0 or | ||
0.04 times (95 minus insureds attained age at death) (the factor will never be less than zero); plus | ||
the cash value on the insureds date of death; or | ||
the amount required for the Policy to qualify as a life insurance contract under Section 7702 of the Internal Revenue Code. |
Under Option C, the death benefit varies with the cash value and the insureds attained age.
Option CThree Illustrations.
1. Assume that the insured is under age 40 and that there are no outstanding loans. Under Option C, a Policy with a specified amount of $100,000 and with a cash value of $10,000 will have a death benefit of $110,000 ($100,000 x the minimum of (1.0 and (0.04 x (95-40))) + $10,000). Until the insured attains age 71, this benefit is the same as the Option B benefit.
2. Assume that the insured is attained age 75 and that there are no outstanding loans. Under Option C, a Policy with a specified amount of $100,000 and with a cash value of $22,000 will have a death benefit of $102,000 ($100,000 x the minimum of (1.0 and (0.04 x (95-75))) + $22,000).
3. Assume that the insured is attained age 75 and that there are no outstanding loans. Under Option C, a Policy with a specified amount of $100,000 and with a cash value of $9,000 will have a death benefit equal to the specified amount of $100,000, since the calculation of $100,000 times the minimum of (1.0 and (0.04 x (95-75))) plus $9,000 is less than the specified amount.
Effect of Cash Withdrawals on the Death Benefit
For Policies Purchased On or After September 15, 2008: When death benefit Option A is in effect or when death benefit Option C is in effect and the insureds attained age is 71 or greater, a cash withdrawal will reduce the specified amount by an amount equal to the amount of the cash withdrawal. For Policies Purchased Prior to September 15, 2008 and Issued Prior to January 1, 2009: If you choose Option A, a cash withdrawal will reduce the specified amount by an amount equal to the amount of the cash withdrawal. Regardless of the death benefit option you choose, a cash withdrawal will reduce the death benefit by at least the amount of the withdrawal. This decrease in specified amount may cause your Policy to be in a lower specified amount band, so that your cost of insurance rates would be higher.
Choosing Death Benefit Options
You must choose one death benefit option on your application. This is an important decision. The death benefit option you choose will have an impact on the dollar value of the death benefit, on your cash value, and on the amount of cost of insurance charges you pay.
If you do not select a death benefit option on your application, we will assume you selected death benefit Option A and will ask you to confirm the selection of Option A in writing or choose one of the other death benefit options.
66
You may find Option A more suitable for you if your goal is to increase your cash value through positive investment experience. You may find Option B more suitable if your goal is to increase your total death benefit. You may find Option C more suitable if your goal is to increase your total death benefit before you reach attained age 70, and to increase your cash value through positive investment experience thereafter.
Changing the Death Benefit Option
After the third Policy year, you may change your death benefit option once each Policy year. We will notify you of the new specified amount.
| You must send your written request to our mailing address. |
| The effective date of the change will be the Monthiversary on or following the date when we receive your request for a change. |
| You may not make a change that would decrease the specified amount below the minimum specified amount shown on your Policy schedule page. |
| There may be adverse federal tax consequences. You should consult a tax advisor before changing your Policys death benefit option. |
Increasing/Decreasing the Specified Amount
You may increase the specified amount once each Policy year if you have not already decreased the specified amount that year. After the Policy has been in force for three years, you may decrease the specified amount once each Policy year if you have not already increased the specified amount that year. An increase or decrease in the specified amount will affect your cost of insurance charge and your minimum monthly guarantee premium, your ability to maintain the no lapse period guarantee, and may have adverse federal tax consequences.
In addition, an increase or decrease in specified amount may move the Policy into a different specified amount band, so that your overall cost of insurance rate and premium expense charge rate will change. An increase in specified amount will be treated as an additional layer of coverage with its own cost of insurance rates, surrender charges and surrender charge period. If you increase your specified amount, we will notify you of your new minimum monthly guarantee premium and surrender charge schedule.
You should consult a tax advisor before increasing or decreasing your Policys specified amount.
Conditions for and impact of decreasing the specified amount: | You must send your written request to our mailing address; | |
Decreases are only allowed after the third Policy year; | ||
You may not increase and decrease your specified amount in the same Policy year; | ||
You may not decrease your specified amount lower than the minimum specified amount under band 1 shown on your Policy schedule page; | ||
You may not decrease your specified amount if it would disqualify your Policy as life insurance under the Internal Revenue Code; | ||
Until the later of the end of the surrender charge period or the Policy anniversary on or following the insureds 65th birthday, we may limit the amount of decrease to no more than 20% of the then current specified amount; | ||
A decrease in specified amount will take effect on the Monthiversary on or after we receive your written request; | ||
We will assess a decrease charge against the cash value if you request a decrease in your specified amount within the first 15 Policy years (or during the 15 year period subsequent to an increase in specified amount). |
67
Conditions for and impact of increasing the specified amount: | Your request must be applied for on a supplemental application and must include evidence of insurability satisfactory to us; | |
An increase in specified amount requires our approval and will take effect on the Monthiversary on or after the day we approve your request; | ||
We may require your increase in specified amount to be at least $50,000; | ||
You may not decrease and increase your specified amount in the same Policy year. |
If an increase or decrease to your Policys specified amount causes your specified amount band to change, then we will apply the new premium expense charge and cost of insurance rates to the amounts in the new band as of the effective date of the increase or decrease in specified amount. The new minimum monthly guarantee premium is effective on the date of increase or decrease. In addition, each increase in specified amount will have its own surrender charges that apply for 15 years after any increase. This charge may significantly reduce your net surrender value.
There are several ways of receiving proceeds under the death benefit and surrender provisions of the Policy, other than in a lump sum. These are described under Settlement Options in your Policy and in this prospectus.
Surrenders and Cash Withdrawals
You must make a written request containing an original signature to surrender your Policy for its net surrender value as calculated at the end of the valuation date on which we receive your request at our mailing address. The insured must be alive, the Policy must be in force, and it must be before the maturity date when you make your written request. A surrender is effective as of the date when we receive your written request at our mailing address. You will incur a surrender charge if you surrender the Policy during the first 15 Policy years (or during the 15-year period subsequent to an increase in specified amount). Written requests to surrender a Policy that are received at our mailing address before the NYSE closes are priced using the subaccount unit value determined at the close of that regular business session of the NYSE (usually 4:00 p.m. Eastern time). If we receive a written request at our mailing address after the NYSE closes, we will process the surrender request using the subaccount unit value determined at the close of the next regular business session of the NYSE.
Once you surrender your Policy, all coverage and other benefits under it cease and cannot be reinstated. We will normally pay you the net surrender value in a lump sum within seven days or under a settlement option. A surrender may have tax consequences. See Federal Income Tax Considerations.
After the first Policy year, you may request a cash withdrawal of a portion of your cash value subject to certain conditions.
Cash withdrawal conditions: | You must send your written cash withdrawal request with an original signature to our mailing address. If your withdrawal request is less than $50,000, then you may fax it to us at 1-727-299-1620. | |
We only allow one cash withdrawal per Policy year. | ||
We may limit the amount you can withdraw to at least $500 and the remaining net surrender value |
68
following a withdrawal may not be less than $500. During the first 10 Policy years, the amount of the withdrawal may be limited to no less than $500 and to no more than 10% of the net surrender value. After the 10th Policy year, the amount of a withdrawal may be limited to no less than $500 and to no more than the net surrender value less $500. | ||
You may not take a cash withdrawal if it will reduce the specified amount below the minimum specified amount set forth in the Policy. | ||
You may specify the subaccount(s) and the fixed account from which to make the withdrawal. If you do not specify an account, we will take the withdrawal from each account in accordance with your current premium allocation instructions. | ||
We generally will pay a cash withdrawal request within seven days following the valuation date we receive the request at our mailing address. | ||
We will deduct a processing fee equal to $25 or 2% of the amount you withdraw, whichever is less. We deduct this amount from the withdrawal, and we pay you the balance. | ||
You may not take a cash withdrawal that would disqualify your Policy as life insurance under the Internal Revenue Code. | ||
A cash withdrawal may have tax consequences. |
A cash withdrawal will reduce the cash value by the amount of the cash withdrawal, and will reduce the death benefit by at least the amount of the cash withdrawal. For Policies Purchased On or After September 15, 2008: When death benefit Option A is in effect or when Death benefit Option C is in effect and the insureds attained age is 71 or greater, a cash withdrawal will reduce the specified amount by an amount equal to the amount of the cash withdrawal. For Policies Purchased Prior to September 15, 2008 and Issued Prior to January 1, 2009. When death benefit Option A is in effect, a cash withdrawal will reduce the specified amount by an amount equal to the amount of the cash withdrawal.
A decrease in specified amount may cause your Policy to be in a lower specified amount band, so that your cost of insurance rates would be higher. You also may have to pay higher minimum monthly guarantee premiums and premium expense charges. We will not impose a decrease charge when the specified amount is decreased as a result of taking a cash withdrawal.
When we incur extraordinary expenses, such as overnight mail expenses or wire service fees, for expediting delivery of your partial withdrawal or complete surrender payment, we will deduct that charge from the payment. We currently charge $20 for an overnight delivery ($30 for Saturday delivery) and $25 for wire service. You can obtain further information about these charges by contacting us at our mailing address or our administrative office.
You may cancel a Policy for a refund during the free-look period by returning it, with a written request to cancel the Policy, to our mailing address or our administrative office, to one of our branch offices, or to the registered representative who sold you the Policy. The free-look period expires 10 days after you receive the Policy. In some states you may have more than 10 days. If you decide to cancel the Policy during the free-look period, we will treat the Policy as if it had never been issued. We will pay the refund within seven days after we receive the written request and returned Policy at our mailing address. The amount of the refund will be:
| any charges and taxes we deduct from your premiums; plus |
| any monthly deductions or other charges we deducted from amounts you allocated to the subaccounts and the fixed account; plus |
| your cash value in the subaccounts and the fixed account on the date the written request and Policy are received at our mailing address. |
69
Some states may require us to refund all of the premiums you paid for the Policy. (See Policy Features Premiums Allocation Premiums Reallocation Account.) In addition, some states may require us to allocate premium according to a policyowners instructions during the free-look period.
After the first Policy year (as long as the Policy is in force) you may borrow money from us using the Policy as the only security for the loan. We may permit a loan prior to the first anniversary for Policies issued pursuant to 1035 Exchanges. A loan that is taken from, or secured by, a Policy may have tax consequences. See Federal Income Tax Considerations.
Policy loans are subject to certain conditions: | we may require you to borrow at least $500; and | |
the maximum amount you may borrow is 90% of the cash value, less any surrender charge and any outstanding policy loan, including accrued interest. |
When you take a loan, we will withdraw an amount equal to the requested loan from each of the subaccounts and the fixed account based on your current premium allocation instructions (unless you specify otherwise). We will transfer that amount to the loan reserve account. The loan reserve account is the portion of the fixed account to which amounts are transferred as collateral for a Policy loan.
We normally pay the amount of the loan within seven days after we receive a proper loan request at our mailing address or, in the limited circumstances described below, by fax at our administrative office). We may postpone payment of loans under certain conditions.
You may request a loan by telephone by calling us at our administrative office at 1-800-851-9777, Monday - Friday, between the hours of 8:30 a.m.- 7:00 p.m. Eastern time. If the loan amount you request exceeds $50,000 or if the address of record has been changed within the past 10 days, we may reject your request or require a signature guarantee. If you do not want the ability to request a loan by telephone, you should notify us in writing at our mailing address. You will be required to provide certain information for identification purposes when you request a loan by telephone. We may ask you to provide us with written confirmation of your request. We will not be liable for processing a loan request if we believe the request is genuine.
You may also fax your loan request to us at our administrative office at 1-727-299-1620 (subject to a $499,999 limit by fax). We will not be responsible for any transmittal problems when you fax your request unless you report it to us within five business days and send us proof of your fax transmittal.
You can repay a loan at any time while the Policy is in force. Loan repayments must be sent to our mailing address and will be credited as of the date received. We will consider any payments you make on the Policy to be premium payments unless the payments are clearly identified as loan repayments. Because we do not apply the premium expense charge to loan repayments, it is very important that you indicate clearly if your payment is intended to repay all or part of a loan.
At each Policy anniversary, we will compare the outstanding loan amount, including accrued loan interest, to the amount in the loan reserve account. We will also make this comparison any time you repay all or part of the loan, or make a request to borrow an additional amount. At each such time, if the outstanding loan amount, including accrued loan interest, exceeds the amount in the loan reserve account, we will withdraw the difference from the subaccounts and the fixed account and transfer it to the loan reserve account, in the same manner as when a loan is made. If the amount in the loan reserve account exceeds the amount of the outstanding loan, including accrued loan interest, we will withdraw the difference from the loan reserve account and transfer it to the subaccounts and the fixed account in the same manner as current premiums are allocated. No charge will be imposed for these transfers, and these transfers are not treated as transfers in calculating the transfer charge. We reserve the right to require a transfer to the fixed account if the loans were originally transferred from the fixed account.
70
We currently charge you an effective annual interest rate on a Policy loan of 3.75% (4.0% maximum guaranteed) on each Policy anniversary. After the 10th Policy year, we may apply preferred loan charged rates on an amount equal to the cash value minus total premiums paid (less any cash withdrawals) and minus any outstanding loan amount including accrued loan interest. The current preferred loan effective annual interest rate charged is 3.00% and is not guaranteed.
Loan Reserve Interest Rate Credited
We will credit the amount in the loan reserve account with interest at an effective annual rate of 3.0%. After offsetting the 3.0% interest we credit, the net cost of loans currently is 0.75% annually (1.0% maximum guaranteed).
A Policy loan reduces the death benefit proceeds and net surrender value by the amount of any outstanding loan amount, including accrued loan interest. Repaying the loan causes the death benefit proceeds and net surrender value to increase by the amount of the repayment. As long as a loan is outstanding, we hold an amount equal to the loan as of the last Policy anniversary plus any accrued interest net of any loan payments. This amount is not affected by the separate accounts investment performance and may not be credited with the interest rates accruing on the unloaned portion of cash value in the fixed account. Amounts transferred from the separate account to the loan reserve account will affect the value in the separate account because we credit such amounts with an interest rate declared by us rather than a rate of return reflecting the investment results of the separate account.
We also currently charge interest on Policy loans at an effective new annual rate of 3.75%. Because interest is added to the amount of the Policy loan to be repaid, the size of the loan will constantly increase unless the Policy loan is repaid.
There are risks involved in taking a Policy loan, including the potential for a Policy to lapse if projected earnings, taking into account outstanding loans, are not achieved. A Policy loan may also have possible adverse tax consequences. You should consult a tax advisor before taking out a Policy loan.
We will notify you (and any assignee of record) if a loan causes your net surrender value to reach zero. If you do not submit a sufficient payment within 61 days from the date of the notice, your Policy may lapse.
Policy Lapse and Reinstatement
Your Policy may not necessarily lapse (terminate without value) if you fail to make a planned periodic payment. However, even if you make all your planned periodic payments, there is a possibility that your Policy will lose value and lapse. This Policy provides a no lapse period. See below. Once your no lapse period ends, or if the no lapse period guarantee is not in effect, your Policy may lapse (terminate without value) if the net surrender value on any Monthiversary is less than the monthly deductions due on that day. Such lapse might occur if unfavorable investment experience, loans and cash withdrawals cause a decrease in the net surrender value, or you have not paid sufficient premiums as discussed below to offset the monthly deductions.
If the net surrender value is not enough to pay the monthly deductions, we will mail a notice to your last known address and any assignee of record. The notice will specify the minimum payment you must pay and the final date by which we must receive the payment to prevent a lapse. We generally require that you make the payment within 61 days after the date of the notice. This 61-day period is called the grace period. We pay the death benefit proceeds if an insured dies during the grace period. If we do not receive the specified minimum payment by the end of the grace period, all coverage under the Policy will terminate without value.
71
This Policy provides a no lapse guarantee during the no lapse period. As long as you keep the no lapse period guarantee in effect, your Policy will not lapse and no grace period will begin. Even if your net surrender value is not enough to pay your monthly deductions, the Policy will not lapse as long as the no lapse period guarantee is in effect. The no lapse period guarantee will not extend beyond the no lapse date stated in your Policy. Each month we determine whether the no lapse period guarantee is still in effect. If the no lapse period guarantee is not in effect and the Policy is still in force, it can be restored by paying sufficient minimum monthly guarantee premiums at any time before the no lapse date.
No lapse date | For a Policy issued to any insured ages 0-60, the no lapse date is the lesser of the number of years to attained age 65 or the 20th Policy anniversary. | |
For a Policy issued to an insured ages 61-85, the no lapse date is the fifth Policy anniversary. | ||
The no lapse date is specified in your Policy. | ||
Early termination of the no lapse period | ||
The no lapse period guarantee will not be effective if you do not pay sufficient minimum monthly guarantee premiums. | ||
You must pay total premiums (minus withdrawals, outstanding loan amounts, and any decrease charge) that equal at least: | ||
the sum of the minimum monthly guarantee premiums in effect for each month from the Policy date up to and including the current month. | ||
Effect of changes on minimum monthly guarantee premium |
If, during the no lapse period, you change death benefit options, increase or decrease the specified amount, or add, terminate, increase or decrease a rider, we will adjust the minimum monthly guarantee premium. Depending upon the change made to the Policy or rider and the resulting impact on the level of the minimum monthly guaranteed premium, you may need to pay additional premiums to keep the Policy in force. We will not extend the length of the no lapse period. |
You will lessen the risk of Policy lapse if you keep the no lapse period in effect. Before you take a cash withdrawal or a loan or decrease the specified amount or add, increase or decrease a rider, you should consider carefully the effect it will have on the no lapse period guarantee.
See Minimum Monthly Guarantee Premium for a discussion of how the minimum monthly guarantee premium is calculated and can change.
We may reinstate a lapsed Policy within five years after the lapse (and prior to the maturity date). To reinstate the Policy you must:
| submit a written application for reinstatement to our mailing address; |
| provide evidence of insurability satisfactory to us; |
| if the no lapse period has expired, pay an amount sufficient to provide a net premium equal to any uncollected monthly deductions due up to the time of termination, plus two monthly deductions due in advance at the time of reinstatement, plus an amount sufficient to increase the cash value above the surrender charges in effect at the time of reinstatement; |
72
| if the no lapse period has not expired, pay the lesser of the premium described directly above, or the total minimum monthly guarantee premium from the Policy date through the month of lapse, plus two months of minimum monthly guarantee premiums, minus premiums previously paid net of any withdrawals, outstanding loans, accrued loan interest and surrender charge assessed upon a decrease in specified amount that has been deducted from the cash value. |
The cash value of the loan reserve on the reinstatement date will be zero. Your net surrender value on the reinstatement date will equal the cash value at the time your Policy lapsed, plus any net premiums you pay at reinstatement, minus one monthly deduction and any surrender charge. The reinstatement date for your Policy will be the Monthiversary on or following the day we approve your application for reinstatement. We may decline a request for reinstatement. We will not reinstate indebtedness.
Federal Income Tax Considerations
The following summarizes some of the basic federal income tax considerations associated with a Policy and does not purport to be complete or to cover all situations. This discussion is not intended as tax advice. Please consult counsel or other qualified tax advisors for more complete information. We base this discussion on our understanding of the present federal income tax laws as they are currently interpreted by the Internal Revenue Service (the IRS). Federal income tax laws and the current interpretations by the IRS may change.
A Policy must satisfy certain requirements set forth in the Internal Revenue Code (the Code) in order to qualify as a life insurance policy for federal income tax purposes and to receive the tax treatment normally accorded life insurance policies under federal tax law. Guidance as to how these requirements are to be applied is limited. Nevertheless, we believe that this Policy should generally satisfy the applicable Code requirements.
In certain circumstances, owners of variable life insurance policies have been considered for federal income tax purposes to be the owners of the assets of the separate account supporting their policies due to their ability to exercise investment control over those assets. Where this is the case, the policyowners have been currently taxed on income and gains attributable to the separate account assets. There is little guidance in this area, and some features of the Policies, such as your flexibility to allocate premiums and cash values, have not been explicitly addressed in published rulings. We believe that the Policy does not give you investment control over separate account assets.
In addition, the Code requires that the investments of the separate account be adequately diversified in order to treat the Policy as a life insurance policy for federal income tax purposes. We intend that the separate account, through the portfolios, will satisfy these diversification requirements.
The following discussion assumes that the Policy will qualify as a life insurance policy for federal income tax purposes.
Tax Treatment of Policy Benefits
In General. We believe that the Policy described in this prospectus is a life insurance policy under Code Section 7702. Section 7702 affects the taxation of life insurance policies and places limits on the relationship of the accumulation value to the death benefit. As life insurance policies, the death benefits of the policies are generally excludable from the gross income of the beneficiaries. In the absence of any guidance from the IRS on the issue, we believe that providing an amount at risk after age 99 in the manner provided should be sufficient to maintain the excludability of the death benefit after age 99. However, lack of specific IRS guidance makes the tax treatment of the death benefit after age 99 uncertain. Also, any increase in accumulation value should generally not be taxable until received by you or your designee. However, if your Policy is a modified endowment contract you may be taxed when you take a Policy loan, pledge or assign the Policy. Federal, state and local transfer, estate and other tax consequences of ownership or receipt of Policy proceeds depend on your circumstances and the beneficiary's circumstances. A tax advisor should be consulted on these consequences.
73
Generally, you will not be deemed to be in constructive receipt of the cash value until there is a distribution. When distributions from a Policy occur, or when loans are taken out from or secured by a Policy (e.g., by assignment), the tax consequences depend on whether the Policy is classified as a Modified Endowment Contract (MEC). Moreover, if a loan from a Policy that is not a MEC is outstanding when the Policy is surrendered or lapses, the amount of outstanding indebtedness will be used to determine to the amount distributed and will be taxed accordingly.
Modified Endowment Contracts. Under the Code, certain life insurance policies are classified as MECs and receive less favorable tax treatment than other life insurance policies. The rules are too complex to summarize here, but generally depend on the amount of premiums paid during the first seven Policy years or in the seven Policy years following certain changes in the Policy. Certain changes in the Policy after it is issued could also cause the Policy to be classified as a MEC. Due to the Policys flexibility, each Policys circumstances will determine whether the Policy is classified as a MEC. Among other things, a reduction in benefits could cause a Policy to become a MEC. If you do not want your Policy to be classified as a MEC, you should consult a tax advisor to determine the circumstances, if any, under which your Policy would or would not be classified as a MEC.
Upon issue of your Policy, we will notify you as to whether or not your Policy is classified as a MEC based on the initial premium we receive. If your Policy is not a MEC at issue, then you will also be notified of the maximum amount of additional premiums you can pay without causing your Policy to be classified as a MEC. If a payment would cause your Policy to become a MEC, you and your agent will be notified. At that time, you will need to notify us if you want to continue your Policy as a MEC. Unless you notify us that you do want to continue your Policy as a MEC, we will refund the dollar amount of the excess premium that would cause the Policy to become a MEC.
Multiple Policies. All MECs that we issue (or that our affiliates issue) to the same owner during any calendar year are treated as one MEC for purposes of determining the amount includible in the owners income when a taxable distribution occurs.
Distributions (other than Death Benefits) from MECs. Policies classified as MECs are subject to the following tax rules:
| All distributions other than death benefits from a MEC, including distributions upon surrender and cash withdrawals, will be treated first as distributions of gain taxable as ordinary income. They will be treated as tax-free recovery of the owners investment in the Policy only after all gain has been distributed. Your investment in the Policy is generally your total premium payments. When a distribution is taken from the Policy, your investment in the Policy is reduced by the amount of the distribution that is tax-free. |
| Loans taken from or secured by , by assignment from such a Policy are treated as distributions and taxed accordingly. If the Policy is part of a collateral assignment split dollar arrangement, the initial assignment as well as increases in cash value during the assignment may be treated as distributions and considered taxable. |
|
A 10% additional federal income tax is imposed on the amount included in income except where the distribution or loan is made when you have attained age 59 1/2 or are disabled, or where the distribution is part of a series of substantially equal periodic payments for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and the beneficiary. |
| If a Policy becomes a MEC, distributions that occur during the Policy year will be taxed as distributions from a MEC. In addition, distributions from a Policy within two years before it becomes a MEC will be taxed in this manner. This means that a distribution from a Policy that is not a MEC at the time when the distribution is made could later become taxable as a distribution from a MEC. |
Distributions (other than Death Benefits) from Policies that are not MECs. Distributions from a Policy that is not a MEC are generally treated first as a recovery of your investment in the Policy, and as taxable income after the recovery of all investment in the Policy. However, certain distributions which must be
74
made in order to enable the Policy to continue to qualify as a life insurance policy for federal income tax purposes if Policy benefits are reduced during the first 15 Policy years may be treated in whole or in part as ordinary income subject to tax. Distributions from or loans from or secured by a Policy that is not a MEC are not subject to the 10% additional tax.
Policy Loans. Loans from or secured by a Policy that is not a MEC are generally not treated as distributions. Instead, such loans are treated as indebtedness. If a loan from a Policy that is not a MEC is outstanding when the Policy is surrendered or lapses, the amount of the outstanding indebtedness will be taxed as if it were a distribution at that time. The tax consequences associated with Policy loans outstanding after the first 10 Policy years with preferred loan rates are less clear and a tax advisor should be consulted about such loans.
Deductibility of Policy Loan Interest. In general, interest you pay on a loan from a Policy will not be deductible. Before taking out a Policy loan, you should consult a tax advisor as to the tax consequences.
Investment in the Policy. Your investment in the Policy is generally the sum of the premium payments you made. When a distribution from the Policy occurs, your investment in the Policy is reduced by the amount of the distribution that is tax-free.
Withholding. To the extent that Policy distributions are taxable, they are generally subject to withholding for the recipients federal income tax liability. The federal income tax withholding rate is generally 10% of the taxable amount of the distribution. Withholding applies only if the taxable amount of all distributions are at least $200 during a taxable year. Some states also require withholding for state income taxes. With the exception of amounts that represent eligible rollover distributions from Pension Plans and 403(b) arrangements, which are subject to mandatory withholding of 20% for federal tax, recipients can generally elect, however, not to have tax withheld from distributions. If the taxable distributions are delivered to foreign countries, U.S. persons may not elect out of withholding. Taxable distributions to non-resident aliens are generally subject to withholding at a 30% rate unless withholding is eliminated under an international treaty with the United States. The payment of death benefits is generally not subject to withholding.
Business Uses of the Policy. The Policy may be used in various arrangements, including nonqualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans and others. The tax consequences of such plans and business uses of the Policy may vary depending on the particular facts and circumstances of each individual arrangement and business uses of the Policy. Therefore, if you are contemplating using the Policy in any such arrangement, you should be sure to consult a tax advisor as to tax attributes of the arrangement and in its use of life insurance. In recent years, moreover, Congress and the IRS have adopted new rules relating to nonqualified deterred compensation and to life insurance owned by businesses and life insurance used in split-dollar arrangements. The IRS has recently issued new guidance regarding concerns in the use of life insurance in employee welfare benefit plans, including, but not limited to, the deduction of employer contributions and the status of such plans as listed transactions. Any business contemplating the purchase of a new Policy or a change in an existing Policy should consult a tax advisor. Recent legislation under Section 101(j) of the Internal Revenue Code has imposed notice, consent and other provisions on policies owned by employees and certain other policies in order to receive death benefits tax-free and added additional reporting requirements.
Alternative Minimum Tax. There also may be an indirect tax upon the income in the Policy or the proceeds of a Policy under the federal corporate alternative minimum tax, if the policyowner is subject to that tax.
Living Benefit Rider (an Accelerated Death Benefit). We believe that the single-sum payment we make under this rider should be fully excludible from the gross income of the beneficiary, except in certain business contexts. You should consult a tax advisor about the consequences of adding this rider to your Policy, or requesting a single-sum payment.
Continuation of Policy Beyond Age 100. The tax consequences of continuing the Policy beyond the insureds attained age 100 are unclear and may include taxation of the gain in the Policy at the original maturity date or the taxation of the death benefit in whole or in part. You should consult a tax advisor if you intend to keep the Policy in force beyond the insureds attained age 100.
75
Other Tax Considerations. The transfer of the Policy or designation of a beneficiary may have federal, state, and/or local transfer and inheritance tax consequences, including the imposition of gift, estate, and generation-skipping transfer taxes. The individual situation of each owner or beneficiary will determine the extent, if any, to which federal, state, and local transfer and inheritance taxes may be imposed and how ownership or receipt of Policy proceeds will be treated for purposes of federal, state and local estate, inheritance, generation-skipping and other taxes.
Special Rules for Pension Plans and Section 403(b) Arrangements. If the Policy is purchased in connection with a section 401(a) qualified pension or profit sharing plan, including a section 401(k) plan, or in connection with a section 403(b) plan or program, federal and state income and estate tax consequences could differ from those stated in this prospectus. The purchase may also affect the qualified status of the plan. You should consult a qualified tax advisor in connection with such purchase.
Policies owned under these types of plans may be subject to the Employee Retirement Income Security Act of 1974, or ERISA, which may impose additional requirements on the purchase of policies by such plans. You should consult a qualified advisor regarding ERISA.
Settlement Options
If you surrender the Policy, you may elect to receive the net surrender value in either a lump sum or as a series of regular income payments under one of the three settlement options described below. In either event, life insurance coverage ends. Also, when the insured dies, the beneficiary may apply the lump sum death benefit proceeds to one of the same settlement options. If the regular payment under a settlement option would be less than $100, we will instead pay the proceeds in one lump sum. We may make other settlement options available in the future.
Once we begin making payments under a settlement option, you or the beneficiary will no longer have any value in the subaccounts or the fixed account. Instead, the only entitlement will be the amount of the regular payment for the period selected under the terms of the settlement option chosen. Depending upon the circumstances, the effective date of a settlement option is the surrender date or the insureds date of death.
Under any settlement option, the dollar amount of each payment will depend on four things:
| the amount of the surrender on the surrender date or death benefit proceeds on the insureds date of death; |
| the interest rate we credit on those amounts (we guarantee a minimum annual interest rate of 3.0%); |
| the mortality tables we use; and |
| the specific payment option(s) you choose. |
Option 1Equal Monthly Installments for a Fixed Period | We will pay the proceeds, plus interest, in equal monthly installments for a fixed period of your choice, but not longer than 240 months. | |
We will stop making payments once we have made all the payments for the period selected. | ||
Option 2Equal Monthly Installments for Life (Life Income) | At your or the beneficiarys direction, we will make equal monthly installments: | |
only for the life of the payee, at the end of which payments will end; or | ||
for the longer of the payees life, or for 10 years if the payee dies before the end of the first 10 years of payments; or | ||
for the longer of the payees life, or until the total amount of all payments we have made equals the proceeds that were applied to the settlement option. |
76
Option 3Equal Monthly Installments for the Life of the Payee and then to a Designated Survivor (Joint and Survivor) | We will make equal monthly payments during the joint lifetime of two persons, first to a chosen payee, and then to a co-payee, if living, upon the death of the payee. | |
Payments to the co-payee, if living, upon the payees death will equal either: | ||
the full amount paid to the payee before the payees death; or | ||
two-thirds of the amount paid to the payee before the payees death. | ||
All payments will cease upon the death of the co-payee. |
If the insured is living and the Policy is in force, the Policy will mature on the Policy anniversary nearest the insureds 100th birthday. This is the maturity date. On the maturity date we will pay you the net surrender value of your Policy.
If you send a written request to our mailing address, we will extend the maturity date if your Policy is still in force on the maturity date. Any riders in force on the scheduled maturity date will terminate on that date and will not be extended. Policy loans, partial withdrawals, and subaccount transfers may continue during the extension. Interest on any outstanding Policy loans will continue to accrue during the period for which the maturity date is extended. You must submit a written request to our mailing address for the extension between 90 and 180 days prior to the maturity date and elect one of the following:
1. | If you had previously selected death benefit Option B or C, we will change the death benefit to Option A. On each valuation date, we will adjust the specified amount to equal the cash value, and the limitation percentage will be 100%. We will not permit you to make additional premium payments unless it is required to prevent the Policy from lapsing. We will waive all future monthly deductions; or |
2. | We will automatically extend the maturity date until the next Policy anniversary. You must submit a written request to our mailing address, between 90 and 180 days before each subsequent Policy anniversary, stating that you wish to extend the maturity date for another Policy year. All benefits and charges will continue as set forth in your Policy. We will charge the then current cost of insurance rates. |
If you choose 2 above, you may change your election to 1 above at any time. However, if you choose 1 above, then you may not change your election to 2 above. Please note: Item 2 above may not be available in all states, or its terms may vary depending on a states insurance law requirements.
The tax consequences of extending the maturity date beyond the 100th birthday of the insured are uncertain, and may include taxation of the gain in the Policy at the original maturity date or taxation of the death benefit in whole or in part. You should consult a tax advisor as to those consequences.
We usually pay the amounts of any surrender, cash withdrawal, death benefit proceeds, or settlement options within seven calendar days after we receive all applicable written notices and/or due proofs of death at our mailing address. However, we can postpone such payments if:
| the NYSE is closed, other than customary weekend and holiday closing, or trading on the NYSE is restricted as determined by the SEC; or |
| the SEC permits, by an order, the postponement for the protection of policyowners; or |
| the SEC determines that an emergency exists that would make the disposal of securities held in the separate account or the determination of their value not reasonably practicable. |
If you have submitted a recent check or draft, we have the right to defer payment of surrenders, cash withdrawals, death benefit proceeds, or payments under a settlement option until such check or draft has been honored. We also reserve the right to defer payment of transfers, cash withdrawals, death benefit proceeds, or surrenders from the fixed account for up to six months.
77
If mandated under applicable law, we may be required to reject a premium payment and/or block a policyowners account and thereby refuse to pay any request for transfers, withdrawals, surrenders, loans or death benefits until instructions are received from the appropriate regulators. We may also be required to provide additional information about you or your account to governmental regulators.
You may enter into a split dollar arrangement with another owner or another person(s) whereby the payment of premiums and the right to receive the benefits under the Policy (i.e., cash surrender value of insurance proceeds) are split between the parties. There are different ways of allocating these rights.
For example, an employer and employee might agree that under a Policy on the life of the employee, the employer will pay the premiums and will have the right to receive the cash surrender value. The employee may designate the beneficiary to receive any insurance proceeds in excess of the cash surrender value. If the employee dies while such an arrangement is in effect, the employer would receive from the insurance proceeds the amount that he would have been entitled to receive upon surrender of the Policy and the employees beneficiary would receive the balance of the proceeds.
No transfer of Policy rights pursuant to a split dollar arrangement will be binding on us unless in writing and received by us at our mailing address. Split dollar arrangements may have tax consequences. You should consult a tax advisor before entering into a split dollar arrangement.
On July 30, 2002, President Bush signed into law significant accounting and corporate governance reform legislation, known as the Sarbanes-Oxley Act of 2002 (the Act). The Act prohibits, with limited exceptions, publicly-traded companies, including non-U.S. companies that have securities listed on exchanges in the United States, from extending, directly or through a subsidiary, many types of personal loans to their directors or executive officers. It is possible that this prohibition may be interpreted as applying to split-dollar life insurance policies for directors and executive officers of such companies, since such insurance arguably can be viewed as involving a loan from the employer for at least some purposes.
Although the prohibition on loans of publicly-traded companies is generally effective as of July 30, 2002, there is an exception for loans outstanding as of the date of enactment, as long as there is no material modification to the loan terms and the loan is not renewed after July 30, 2002. Any affected business contemplating the payment of a premium on an existing Policy, or the purchase of a new Policy, in connection with a split-dollar life insurance arrangement should consult legal counsel.
In addition, the IRS issued guidance that affects the tax treatment of split-dollar arrangements and the Treasury Department issued final regulations that would significantly affect the tax treatment of such arrangements. The IRS guidance and the final regulations affect all split dollar arrangements, not just those involving publicly-traded companies. Consult your qualified tax advisor with respect to the effect of this current and proposed guidance on your split dollar policy.
Your Policy will terminate on the earliest of:
the maturity date; |
the end of the grace period; or | |
the date the insured dies; |
the date the Policy is surrendered. |
Supplemental Benefits (Riders)
The following supplemental benefits (riders) are available and may be added to a Policy. Monthly charges for these riders are deducted from the cash value as part of the monthly deductions. The riders available with the
78
Policies do not build cash value and provide benefits that do not vary with the investment experience of the separate account. For purposes of the riders, the primary insured is the person insured under the Policy. These riders may not be available in all states, certain benefits and features may vary by state and they may be available under a different name in some states. Adding these supplemental benefits to an existing Policy or canceling them may have tax consequences; you should consult a tax advisor before doing so.
This rider provides a face amount of insurance on the primary insureds children. Our current minimum face amount for this rider for issue ages 15 days 18 years of age is $5,000. The maximum face amount is $20,000. At each childs age 25 or upon the death of the primary insured, whichever happens first, this rider may be converted to a new policy on each child insured with a maximum face amount of up to five times the face amount of the rider. We will pay a death benefit once we receive proof that the insured child died while both the rider and coverage were in force for that child. If the primary insured dies while the rider is in force, we will terminate the rider 31 days after the death, and we will offer a separate life insurance policy to each insured child.
Accidental Death Benefit Rider
Our current minimum face amount for this rider for issue ages 15-59 is $10,000. The maximum face amount available for this rider is $150,000 (up to 150% of specified amount).
Subject to certain limitations, we will pay the face amount if the primary insureds death results solely from accidental bodily injury where:
| the death is caused by external, violent, and accidental means; |
| the death occurs within 90 days of the accident; and |
| the death occurs while the rider is in force. |
The rider will terminate on the earliest of:
|
the Policy anniversary nearest the primary insured's 70th birthday; |
| the date the Policy terminates; or |
| the Monthiversary when the rider terminates at the owners request. |
This rider may insure the spouse (or a non-spouse Other Insured where required by state law) and/or dependent children of the primary insured. Please note that if a non-spouse Other Insured, as required by state law, is the insured, there may be adverse tax consequences. Subject to the terms of the rider, we will pay the face amount of the rider to the primary insured. Our current minimum face amount for this rider for issue ages 0-85 is $10,000. The maximum face amount is the lesser of $500,000 or the amount of coverage on the primary insured. The maximum number of Other Insured Riders that is allowed on any one Policy is five (5). We will pay the riders face amount when we receive proof at our mailing address of the Other Insured's death. Please refer to the applicable fee tables for your Policy to determine the respective charges for this rider. Subject to the following conditions, on any Monthiversary while the rider is in force, you may convert it to a new policy on the Other Insureds life (without evidence of insurability).
Conditions to convert the rider: | Your request must be in writing and sent to our mailing address; | |
The Other Insured has not reached his/her 70th birthday; | ||
The new policy is any permanent insurance policy that we currently offer for conversion; | ||
Subject to the minimum specified amount required for the new policy, the amount of the insurance under the new policy will equal the face amount in force under the rider as long as it meets the minimum face amount requirements of the original Policy; and |
79
We will base your premium on the Other Insured's rate class under the rider. | ||
Termination of the rider: | The rider will terminate on the earliest of: | |
the maturity date of the Policy; | ||
the Policy anniversary nearest to the Other Insureds 100th birthday; | ||
the date the Policy terminates for any reason except for death of the primary insured; | ||
31 days after the death of the primary insured; | ||
the date of conversion of this rider; or | ||
the Monthiversary on which the rider is terminated upon written request by the owner. |
Subject to certain conditions, we will waive the Policys monthly deductions while the primary insured is disabled. This rider may be purchased if the primary insureds issue age is 15-55 years of age. We must receive proof at our mailing address that:
| the primary insured is totally disabled; |
| the rider was in force when the primary insured became disabled; |
|
the primary insured became disabled before the Policy anniversary nearest your 60th birthday; and |
| the primary insured is continuously disabled for at least six months. |
We will not waive any deduction that becomes due more than one year before we receive written notice of your claim at our mailing address.
Disability Waiver and Income Rider
This rider has the same benefits as the Disability Waiver Rider, but adds a monthly income benefit for up to 120 months. This rider may be purchased if the primary insureds issue age is 15-55 years of age. The minimum income amount for this rider is $10. The maximum income amount is the lesser of 0.2% of your specified amount or $300 per month.
Primary Insured Rider (PIR) and Primary Insured Rider Plus (PIR Plus)
Under the PIR and the PIR Plus, we provide term insurance coverage on a different basis from the coverage in your Policy.
Features of PIR and PIR Plus: | The rider increases the Policys death benefit by the riders face amount; | |
The PIR may be purchased from issue ages 0-85; | ||
The PIR Plus may be purchased from issue ages 18-85; | ||
The PIR terminates when the insured turns 95, and the PIR Plus terminates when the insured turns 90; | ||
The minimum purchase amount for the PIR and PIR Plus is $25,000. There is no maximum purchase amount; | ||
We do not assess any additional surrender charge for PIR and PIR Plus; | ||
Generally PIR and PIR Plus coverage costs less than the insurance coverage under the Policy, but has no cash value; |
80
You may cancel or reduce your rider coverage without decreasing your Policy's specified amount; and | ||
You may generally decrease your specified amount without reducing your rider coverage. | ||
Conditions to convert the rider: | Your request must be in writing and sent to our mailing address; | |
The primary insured has not reached his/her 70th birthday; | ||
The new policy is any permanent insurance policy that we currently offer for conversions; | ||
Subject to the minimum specified amount required for the new policy, the amount of the insurance under the new policy will equal the specified amount in force under the rider as long as it meets the minimum specified amount requirements of a Base Policy; and | ||
We will base your premium on the primary insured's rate class under the rider. | ||
Termination of the rider: | The rider will terminate on the earliest of: | |
when the insured turns 95 for a PIR, and when the insured turns 90 for a PIR Plus; or | ||
the date the Policy terminates; or | ||
the date you fully convert the rider; or | ||
the Monthiversary on which you terminate the rider by written request. |
It may cost you less to reduce your PIR or PIR Plus coverage than to decrease your Policys specified amount, because we do not deduct a surrender charge in connection with your PIR or PIR Plus. It may cost you more to keep a higher specified amount under the Base Policy, because the specified amount may have a cost of insurance that is higher than the cost of the same amount of coverage under your PIR or PIR Plus. Any changes to the coverage of this rider may affect your minimum monthly guarantee premium. Please refer to the applicable fee tables for your Policy to determine the respective charges for these riders.
You should consult your registered representative to determine if you would benefit from PIR or PIR Plus. We may discontinue offering PIR or PIR Plus at any time. We may also modify the terms of these riders for new policies.
Living Benefit Rider (an Accelerated Death Benefit)
This rider allows us to pay all or a portion of the death benefit once we receive satisfactory proof (at our mailing address) that the insured is ill and has a life expectancy of one year or less. A doctor must certify the insured's life expectancy.
We will pay a single-sum benefit equal to:
| the death benefit on the date we pay the single-sum benefit; multiplied by |
| the election percentage of the death benefit you elect to receive; divided by |
| 1 + i (i equals the current yield on 90-day Treasury bills or the Policy loan interest rate, whichever is greater) (discount factor); minus |
| any indebtedness at the time we pay the single-sum benefit, multiplied by the election percentage. |
81
The maximum terminal illness death benefit used to determine the single-sum benefit as defined above is equal to:
| the death benefit available under the Policy once we receive satisfactory proof that the insured is ill; plus |
| the benefit available under any PIR or PIR Plus in force. |
| A single-sum benefit may not be greater than $500,000. |
The election percentage is a percentage that you select. It may not be greater than 100%.
We will not pay a benefit under the rider if the insured's terminal condition results from self-inflicted injuries that occur during the period specified in your Policy's suicide provision.
The rider terminates at the earliest of:
| the date the Policy terminates; |
| the date a settlement option takes effect; |
| the date we pay a single-sum benefit; or |
| the date you terminate the rider. |
We do not assess an administrative charge for this rider; however, we do reduce the single sum benefit by a discount factor to compensate us for expected lost income due to the early payment of the death benefit. This rider may not be available in all states, or its terms may vary depending on a state's insurance law requirements.
For example, suppose before the owner elects the single sum benefit, a Policy has a $400,000 death benefit and a $10,000 loan balance. Suppose that the current yield on 90-day Treasury bills is 6.00% and the Policy loan interest rate is 3.75%. Because the greater of these is 6%, that is the interest rate that will be used to discount the single sum benefit. The owner elects to accelerate 50% of the death benefit, so the single sum benefit equals $183,679.25, which is [($400,000 x 0.50 / 1.06) - ($10,000 x 0.50)]. After the acceleration, the remaining death benefit is $200,000, which is 50% of $400,000, and all Policy values will be reduced by 50%.
The tax consequences of adding this rider to an existing Policy or requesting payment under the rider are uncertain and you should consult a tax advisor before doing so.
Distribution and Principal Underwriting Agreement. Our affiliate, TCI, serves as principal underwriter for the Policies. We have entered into a principal underwriting and distribution agreement with TCI, for the distribution and sale of the Policies, effective May 1, 2007. We reimburse TCI for certain expenses it incurs in order to pay for the distribution of the Policies (e.g., commissions payable to selling firms selling the Policies, as described below.)
Compensation to Broker-Dealers Selling the Policies. The Policies are offered to the public through broker-dealers ("selling firms") that are licensed under the federal securities laws; the selling firm and/or its affiliates are also licensed under state insurance laws. The selling firms have entered into written selling agreements with us and with TCI as principal underwriter for the Policies. We pay commissions through TCI to the selling firms for their sales of the Policies. A limited number of affiliated and unaffiliated broker-dealers may also be paid commissions and overrides to wholesale the Policies, that is, to provide sales support and training to sales representatives at selling firms. We may also provide compensation to a limited number of broker-dealers for providing ongoing service in relation to Policies that have already been purchased.
The selling firms are paid commissions for the promotion and sale of the Policies according to one or more schedules. The amount and timing of commissions may vary depending on the selling agreement. The sales commission paid to broker-dealers during 2007 was, on average 55% of all premiums made during the first Policy year, plus 3% of all premiums made during Policy years 2 10. We will pay an additional trail commission of up to 0.30% of the Policy's subaccount value (excluding the fixed account) on the Policy anniversary if the cash value (minus amounts
82
attributable to loans) equals at least $5,000. Additional sales commissions may also be payable on premiums paid as a result of an increase in specified amount. Some selling firms may be required to return part of first year commissions if the Policy is not continued through the first two Policy years.
To the extent permitted by FINRA rules, Western Reserve, ISI and other affiliated parties may pay (or allow other broker-dealers to provide) promotional incentives or payments in the form of cash or non-cash compensation or reimbursement to some, but not all, selling firms. These arrangements are described further below.
The registered representative who sells you the Policy typically receives a portion of the compensation we (and our affiliates) pay to the selling firms, depending on the agreement between the selling firm and its registered representative and the firms internal compensation program. These programs may include other types of cash and non-cash compensation and other benefits. Ask your sales representative for further information about the compensation your sales representative, and the selling firm that employs your sales representative, may receive in connection with your purchase of a Policy. Also inquire about any revenue sharing arrangements that we and our affiliates may have with the selling firm, including the conflicts of interests that such arrangements may create.
Special Compensation that We Pay to Affiliated Wholesaling and Selling Firms. Our parent company provides paid-in capital to TCI and pays the cost of TCIs operating and other expenses, including costs for facilities, legal and accounting services, and other internal administrative functions.
Western Reserves two main distribution channels are ISI and WGS, both affiliates, who sell Western Reserve products.
WGS receives a 5% expense allowance on first year variable life target premiums paid for sales of Western Reserves variable life insurance products. In addition, WGS indirectly receives a payment of 2% of first year variable life target premiums as a licensing and commission allowance.
Western Reserve underwrites the cost of ISIs various facilities, third-party services and internal administrative functions, including employee salaries, sales representative training and computer systems, that are provided directly to ISI. These facilities and services are necessary for ISIs administration and operation, and Western Reserve is compensated by ISI for these expenses based on ISIs usage. In addition, Western Reserve and other affiliates pay for certain sales expenses of ISI, including the costs of preparing and producing prospectuses and sales promotional materials for the Policy.
Sales representatives and their managers at ISI and WGS may receive directly or indirectly additional cash benefits and non-cash compensation or reimbursements from us or our affiliates. Additional compensation or reimbursement arrangements may include payments in connection with the firms conferences or seminars, sales or training programs for invited selling representatives and other employees, seminars for the public, trips (such as travel, lodging and meals in connection therewith), entertainment, merchandise and other similar items, and payments, loans or loan guaranties to assist a firm or representative in connection with systems, operating, marketing and other business expenses. The amounts may be significant and may provide us with increased access to the sales representatives.
In addition, ISIs managers and/or sales representatives who meet certain productivity standards may be eligible for additional compensation. Sales of the Policies by affiliated selling firms may help sales representatives and/or their managers qualify for certain benefits, and may provide such persons with special incentive to sell our Policies. For example, ISIs and WGSs registered representatives, general agents, marketing directors and supervisors may be eligible to participate in a voluntary stock purchase plan that permits participants to purchase stock of AEGON N.V. (Western Reserves ultimate parent) by allocating a portion of the commissions they earn to purchase such shares. A portion of the contributions of commissions by ISIs representatives may be matched by ISI. ISIs and WGSs registered representatives may also be eligible to participate in a stock option and award plan. Registered representatives who meet certain production goals will be issued options on the stock of AEGON N.V.
Additional Compensation that We Pay to Selected Selling Firms. We may pay certain selling firms additional cash amounts for preferred product treatment of the Policies in their marketing programs in order to receive enhanced marketing services and increased access to their sales representatives. In exchange for providing us with access to their distribution network, such selling firms may receive additional compensation or reimbursement for,
83
among other things, the hiring and training of sales personnel, marketing, sponsoring of conferences and seminars, and/or other services they provide to us and our affiliates. To the extent permitted by applicable law, we and other parties may allow other non-cash incentives and compensation to be paid to these selling firms. These special compensation arrangements are not offered to all selling firms and the terms of such arrangements may differ between selling firms.
Special compensation arrangements are calculated in different ways by different selling firms and may be based on past or anticipated sales of the Policies or other criteria. For instance, Western Reserve made flat fee payments to several selling firms with payments ranging from $2,000 to $15,750 in 2007 for the sales of the Western Reserves insurance products.
During 2007, we had entered into preferred product arrangements with ISI, WGS, Berthel Fisher & Co Financial Services, H. Beck Inc., First Founders Securities Inc., Harbour Investments Inc., Coordinated Capital Securities, Inc., Trustmont Financial Group, Inc., Packerland Brokerage Services, Inc. and Investors Capital Corp. We paid the following amounts (in addition to sales commissions and expense allowances) to these firms:
Name of Firm |
Aggregate Amount Paid During 2007 | ||
H. Beck, Inc. |
$ | 10,000 | |
Berthel Fisher |
$ | 10,000 | |
Investors Capital Corp. |
$ | 15,750 | |
First Founders Securities, Inc. |
$ | 2,725 | |
Harbour Investments, Inc. |
$ | 6,000 | |
Coordinated Capital Securities, Inc. |
$ | 2,000 | |
Trustmont Financial Group, Inc. |
$ | 2,000 | |
Packerland Brokerage Services, Inc. |
$ | 3,000 |
No specific charge is assessed directly to policyowners or the separate account to cover commissions and other incentives or payments described above. We do intend to recoup commissions and other sales expenses and incentives we pay, however, through fees and charges deducted under the Policy and other corporate revenue.
You should be aware that a selling firm or its sales representatives may receive different compensation or incentives for selling one product over another. In some cases, these payments may create an incentive for the selling firm or its sales representatives to recommend or sell this Policy to you. You may wish to take such payments into account when considering and evaluating any recommendation relating to the Policies.
Western Reserve, like other life insurance companies, is involved in lawsuits, including class action lawsuits. In some lawsuits involving insurers, substantial damages have been sought and/or material settlement payments have been made. Although the outcome of any litigation cannot be predicted with certainty, at the present time there are no pending or threatened lawsuits that are likely to have a material adverse impact on the separate account, on TCIs ability to perform under its principal underwriting agreement, or on Western Reserves ability to meet its obligations under the Policy.
The financial statements of Western Reserve and the separate account are included in the SAI.
The average rates of return in Table 1 reflect each subaccount's actual historical investment performance, modified to reflect certain of the Policys fees and charges. The total return of a subaccount measures performance from the date the subaccount begins investing in the underlying portfolios. When the first subaccount investing in
84
the underlying portfolios has been in operation for 1, 3, 5 and 10 years, the total return for these periods will be provided, adjusted to reflect certain fees and charges for the Policy. We do not show performance for subaccounts in operation for less than six months. This information does not represent or project future investment performance.
These rates of return do not reflect other charges that are deducted under the Policy or from the separate account (such as the premium expense charge, monthly deductions or the surrender charge). If these charges were deducted, performance would be significantly lower. These rates of return are not estimates, projections or guarantees of future performance.
We also show below comparable figures for the unmanaged Standard & Poor's Index of 500 Common Stocks ("S&P 500"), a widely used measure of stock market performance. The S&P 500 does not reflect any deduction for the expenses of operating and managing an investment portfolio.
FOR POLICIES PURCHASED ON OR AFTER SEPTEMBER 15, 2008:
The numbers reflect deductions for the annual mortality and expense risk charge (1.50%), investment management fees and direct fund operating expenses.
Table 1
Average Annual Subaccount Total Return
For the Periods Ended on December 31, 2007
Portfolio* |
1 Year | 3 Years | 5 Years | 10 Years or Inception |
Subaccount Inception Date |
85
Because the ProFund VP Asia, ProFund VP Basic Materials, ProFund VP Consumer Services, ProFund VP Emerging Markets, ProFund VP Europe 30, ProFund VP Falling US Dollar, ProFund VP Financials, ProFund VP International, ProFund VP Japan, ProFund VP Mid-Cap, ProFund VP Oil & Gas, ProFund VP Pharmaceuticals, ProFund VP Precious Metals, ProFund Short Emerging Markets, ProFund VP Short International, ProFund VP Short NASDAQ-100 (formerly, ProFund VP Short OTC), ProFund VP Small-Cap Value, ProFund VP Telecommunications, ProFund VP UltraSmall-Cap, ProFund VP U.S. Government Plus, ProFund VP Utilities and Access VP High Yield Fund subaccounts commenced operations on February 28, 2008, and the Transamerica Index 50 VP and Transamerica Index 75 VP subaccounts commenced operations on May 1, 2008, the above Table does not reflect rates of return for these subaccounts.
Some portfolios began operation before their corresponding subaccount. For these portfolios, we have included in Table 2 below adjusted portfolio performance from the portfolio's inception date. The adjusted portfolio performance is designed to show the performance that would have resulted if the subaccount had been in operation during the time the portfolio was in operation.
Table 2
Adjusted Historical Portfolio Average Annual Total Return
For the Periods Ended on December 31, 2007
Portfolio* |
1 Year | 3 Years | 5 Years | 10 Years or Inception |
Portfolio Inception Date | |||||
Fidelity VIP Index 500 Portfolio | ||||||||||
Access VP High Yield Fund | ||||||||||
% | % | % | % |
86
* | Effective May 1, 2008, the Transamerica Series Trust portfolios were renamed. For a complete list of both the former and new names of each portfolio, please refer to The Portfolios section in this prospectus. |
Because the ProFund VP Emerging Markets, ProFund VP Falling U.S. Dollar, ProFund VP International, ProFund VP Mid-Cap, ProFund VP Short Emerging Markets and ProFund VP Short International did not commence operations until September 4, 2007, and the Transamerica Index 50 VP and Transamerica Index 75 VP did not commence operations until May 1, 2008, the above Table does not reflect rates of return for those portfolios.
The annualized yield for the WRL Transamerica Money Market VP portfolio for the seven days ended December 31, 2007 was %, and % for ProFund VP Money Market portfolio.
87
FOR POLICIES PURCHASED PRIOR TO SEPTEMBER 15, 2008 and ISSUED PRIOR TO JANUARY 1, 2009:
The numbers reflect deductions for the annual mortality and expense risk charge (0.90%), investment management fees and direct fund operating expenses.
Table 1
Average Annual Subaccount Total Return
For the Periods Ended on December 31, 2007
Portfolio* |
1 Year | 3 Years | 5 Years | 10 Years or Inception |
Subaccount Inception Date | |||||
88
Because the ProFund VP Asia, ProFund VP Basic Materials, ProFund VP Consumer Services, ProFund VP Emerging Markets, ProFund VP Europe 30, ProFund VP Falling US Dollar, ProFund VP Financials, ProFund VP International, ProFund VP Japan, ProFund VP Mid-Cap, ProFund VP Oil & Gas, ProFund VP Pharmaceuticals, ProFund VP Precious Metals, ProFund Short Emerging Markets, ProFund VP Short International, ProFund VP Short NASDAQ-100 (formerly, ProFund VP Short OTC), ProFund VP Small-Cap Value, ProFund VP Telecommunications, ProFund VP UltraSmall-Cap, ProFund VP U.S. Government Plus, ProFund VP Utilities and Access VP High Yield Fund subaccounts commenced operations on February 28, 2008, and the Transamerica Index 50 VP and Transamerica Index 75 VP subaccounts commenced operations on May 1, 2008, the above Table does not reflect rates of return for these subaccounts.
Some portfolios began operation before their corresponding subaccount. For these portfolios, we have included in Table 2 below adjusted portfolio performance from the portfolio's inception date. The adjusted portfolio performance is designed to show the performance that would have resulted if the subaccount had been in operation during the time the portfolio was in operation.
Table 2
Adjusted Historical Portfolio Average Annual Total Return
For the Periods Ended on December 31, 2007
Portfolio* |
1 Year | 3 Years | 5 Years | 10 Years or Inception |
Portfolio Inception Date | |||||
89
* | Effective May 1, 2008, the Transamerica Series Trust portfolios were renamed. For a complete list of both the former and new names of each portfolio, please refer to The Portfolios section in this prospectus. |
Because the ProFund VP Emerging Markets, ProFund VP Falling U.S. Dollar, ProFund VP International, ProFund VP Mid-Cap, ProFund VP Short Emerging Markets and ProFund VP Short International did not commence operations until September 4, 2007, and the Transamerica Index 50 VP and Transamerica Index 75 VP did not commence operations until May 1, 2008, the above Table does not reflect rates of return for those portfolios.
The annualized yield for the WRL Transamerica Money Market portfolio for the seven days ended December 31, 2007 was %, and % for ProFund VP Money Market portfolio.
Additional information regarding the investment performance of the portfolios appears in the fund prospectuses, which accompany this prospectus.
Table of Contents of the Statement of Additional Information
Glossary | ||
Additional Information |
90
Additional Information about Western Reserve and the Separate Account |
||
91
accounts | The options to which you can allocate your money. The accounts include the fixed account and the subaccounts in the separate account. | |
administrative office | Our administrative office address is P.O. Box 5068, Clearwater, Florida, 33758-5068. Our street address is 570 Carillon Parkway, St. Petersburg, Florida, 33716. Our phone number is 1-800-851-9777; our facsimile numbers are 1-727-299-1648 (for interfund transactions); and 1-727-299-1620 for all other requests. Our administrative office serves as the recipient of all website (www.westernreserve.com), telephonic and facsimile transactions, including, but not limited to transfer requests and premium payments made by wire transfer and through electronic credit and debit transactions (e.g., payments through direct deposit, debit transfers, and forms of e-commerce payments). Our hours are Monday Friday from 8:30 a.m. 7:00 p.m. Eastern time. Please do not send any checks, correspondence or notices to this office; send them to the mailing address. | |
attained age | The issue age of the person insured, plus the number of completed years since the Policy date (for the initial specified amount) or the date of each increase in specified amount. | |
Base Policy | The WRL Freedom Elite Builder variable life insurance policy without any supplemental riders. | |
beneficiary(ies) | The person or persons you select to receive the death benefit from the Policy. You name the primary beneficiary and contingent beneficiaries. | |
cash value | The sum of your Policy's value in the subaccounts and the fixed account. If there is a Policy loan outstanding, the cash value includes any amounts held in our fixed account to secure the Policy loan. | |
death benefit proceeds | The amount we will pay to the beneficiary(ies) on the insured's death. We will reduce the death benefit proceeds by the amount of any outstanding loan amount, including any accrued loan interest, and any due and unpaid monthly deductions. | |
decrease charge | Surrender charge that may be imposed upon a decrease in specified amount during the first 15 Policy years (or during the 15 years subsequent to an increase in specified amount). | |
fixed account | An option to which you may allocate net premiums and cash value. We guarantee that any amounts you allocate to the fixed account will earn interest at a declared rate. The fixed account is part of our general account. The fixed account is not available to you if your Policy was purchased in the State of New Jersey prior to September 15, 2008 and issued prior to January 1, 2009. | |
free-look period | The period during which you may return the Policy and receive a refund as described in the prospectus. The length of the free-look period varies by state. The free-look period is listed in the Policy. | |
funds | Investment companies which are registered with the U.S. Securities and Exchange Commission. The Policy allows you to invest in the portfolios of the funds through our subaccounts. We reserve the right to add other registered investment companies to the Policy in the future. | |
in force | While coverage under the Policy is active and the insureds life remains insured. | |
initial premium | The amount you must pay before insurance coverage begins under the Policy. The initial premium is shown on the schedule page of your Policy. |
92
insured | The person whose life is insured by the Policy. | |
issue age | The insured's age on his or her birthday nearest to the Policy date. When you increase the Base Policys specified amount of insurance coverage, the issue age for the new segment of specified amount coverage is the insureds age on his or her birthday nearest the date that the increase in specified amount takes effect. This age may be different from the attained age on other segments of specified amount coverage. | |
lapse | When life insurance coverage ends because you do not have enough cash value in the Policy to pay the monthly deductions, the surrender charge and any outstanding loan amount, including accrued loan interest, and you have not made a sufficient payment by the end of a grace period. | |
loan reserve account | A part of the fixed account to which amounts are transferred as collateral for Policy loans. | |
mailing address | Our mailing address is 4333 Edgewood Road, N.E., Cedar Rapids, Iowa, 52499. All premium payments and loan repayments made by check, correspondence and notices must be sent to this address. | |
maturity date | The Policy anniversary nearest the insured's 100th birthday if the insured is living and the Policy is still in force. It is the date when life insurance coverage under this Policy ends. You may continue coverage, at your option, under the Policy's extended maturity date benefit provision. | |
maximum fixed account value | For Policies Purchased On or After September 15, 2008: The maximum amount that may be allocated to the fixed account at any time without prior approval is the amount that would cause the fixed account to be $250,000, exclusive of loan reserve requirements. (This restriction does not apply to transfers to the fixed account necessary in the exercise of conversion rights). | |
minimum monthly guarantee premium | The amount shown on your Policy schedule page that we use during the no lapse period to determine whether a grace period will begin. We will adjust the minimum monthly guarantee premium if you change death benefit options, increase or decrease the specified amount, or add, terminate, increase or decrease a rider, and you may need to pay additional premiums in order to keep the no lapse guarantee in place. A grace period will begin whenever your net surrender value is not enough to meet monthly deductions and the no lapse period guarantee is no longer in effect. | |
Monthiversary | This is the day of each month when we determine Policy charges and deduct them from cash value. It is the same date each month as the Policy date. If there is no valuation date in the calendar month that coincides with the Policy date, the Monthiversary is the next valuation date. | |
monthly deductions | The monthly Policy charge, plus the monthly cost of insurance, plus the monthly charge for any riders added to your Policy, plus, if any, the decrease charge incurred as a result of a decrease in your specified amount. | |
mortality and expense risk charge | This charge is a daily deduction from each subaccount that is taken before determining the unit value of that subaccount. | |
net premium | The part of your premium that we allocate to the fixed account or the subaccounts. The net premium is equal to the premium you paid minus the premium expense charge and the premium collection charge. | |
net surrender value | The amount we will pay you if you surrender the Policy while it is in force. The net surrender value on the date you surrender is equal to: the cash value minus any surrender charge, and minus any outstanding loan amount and accrued loan interest. |
93
no lapse date | For a Policy issued to any insured ages 0-60, the no lapse date is the lesser of the anniversary on which the insured's attained age is 65 or the 20th Policy anniversary. For a Policy issued to an insured ages 61-85, the no lapse date is the fifth Policy anniversary. The no lapse date is specified in your Policy. | |
no lapse period | The period of time between the Policy date and the no lapse date during which the Policy will not lapse if certain conditions are met. | |
NYSE | The New York Stock Exchange. | |
planned periodic premium | A premium payment you make in a level amount at a fixed interval over a specified period of time. | |
Policy date | The date when our underwriting process is complete, full life insurance coverage goes into effect, the initial premium payment has been received, and we begin to make the monthly deductions. The Policy date is shown on the schedule page of your Policy. If you request, we may backdate a Policy by assigning a Policy date earlier than the date the Policy is issued. We measure Policy months, years, and anniversaries from the Policy date. | |
portfolio | One of the separate investment portfolios of a fund. | |
premium expense charge | The charge that is deducted from each premium payment before determining the net premium that will be credited to the cash value. | |
premiums | All payments you make under the Policy other than loan repayments. | |
reallocation account | That portion of the fixed account where we hold the net premium(s) from the record date until the reallocation date. | |
reallocation date | The date we reallocate all cash value held in the reallocation account to the fixed account and subaccounts you selected on your application. We place your net premium in the reallocation account (or as otherwise mandated by state law) only if your state requires us to return the full premium in the event you exercise your free-look right. In those states the reallocation date is the record date plus fifteen days. In all other states, the reallocation date is the Policy date. | |
record date | The date we record your Policy on our books.. The record date is generally the Policy date, unless the Policy is backdated. | |
separate account | The WRL Series Life Account. It is a separate investment account that is divided into subaccounts. We established the separate account to receive and invest net premiums under the Policy and other variable life insurance policies we issue. | |
specified amount | The minimum death benefit we will pay under the Policy provided the Policy is in force. The initial specified amount of life insurance that you have selected is shown on the Base Policy's schedule page that you receive when the Policy is issued. The specified amount in force is the initial specified amount, adjusted for any increases or decreases in the Base Policy's specified amount. Other events such as a request to increase or decrease the specified amount, change in death benefit option or a cash withdrawal (if you choose Option A death benefit) may also affect the specified amount in force. | |
subaccount | A subdivision of the separate account that invests exclusively in shares of one investment portfolio of a fund. |
94
surrender charge | If, during the first 15 Policy years (or during the 15 year period subsequent to an increase in specified amount), you fully surrender the Policy, we will deduct a surrender charge from your cash value. | |
termination | When the insured's life is no longer insured under the Policy or any rider, and the Policy or any rider is no longer in force. | |
valuation date | Each day the New York Stock Exchange is open for trading. Western Reserve is open for business whenever the New York Stock Exchange is open. | |
valuation period | The period of time over which we determine the change in the value of the subaccounts. Each valuation period begins at the close of normal trading on the New York Stock Exchange (usually 4:00 p.m. Eastern time on each valuation date) and ends at the close of normal trading of the New York Stock Exchange on the next valuation date. | |
we, us, our (Western Reserve) | Western Reserve Life Assurance Co. of Ohio. | |
written notice | The written notice you must sign and send us to request or exercise your rights as owner under the Policy. To be complete, it must: (1) be in a form we accept, (2) contain the information and documentation that we determine we need to take the action you request, and (3) be received at our mailing address. | |
you, your (owner or policyowner) | The person entitled to exercise all rights as owner under the Policy. |
95
FOR POLICIES PURCHASED ON OR AFTER
SEPTEMBER 15, 2008; BASED ON THE
2001 C.S.O. MORTALITY TABLES
96
FOR POLICIES PURCHASED ON OR AFTER SEPTEMBER 15, 2008:
Appendix A
Surrender Charge Per Thousand of Specified Amount Segment
(Based on the gender and rate class of the insured)
Issue Age |
Male Juvenile | Male Tobacco |
Male Non-Tobacco |
Female Juvenile |
Female Tobacco |
Female Non-Tobacco | ||||||
0 | 12.47 | n/a | n/a | 11.99 | n/a | n/a | ||||||
1 | 12.55 | n/a | n/a | 12.07 | n/a | n/a | ||||||
2 | 12.65 | n/a | n/a | 12.17 | n/a | n/a | ||||||
3 | 12.78 | n/a | n/a | 12.27 | n/a | n/a | ||||||
4 | 12.91 | n/a | n/a | 12.38 | n/a | n/a | ||||||
5 | 13.06 | n/a | n/a | 12.49 | n/a | n/a | ||||||
6 | 13.21 | n/a | n/a | 12.62 | n/a | n/a | ||||||
7 | 13.37 | n/a | n/a | 12.75 | n/a | n/a | ||||||
8 | 13.54 | n/a | n/a | 12.88 | n/a | n/a | ||||||
9 | 13.72 | n/a | n/a | 13.03 | n/a | n/a | ||||||
10 | 13.91 | n/a | n/a | 13.18 | n/a | n/a | ||||||
11 | 14.12 | n/a | n/a | 13.34 | n/a | n/a | ||||||
12 | 14.33 | n/a | n/a | 13.51 | n/a | n/a | ||||||
13 | 14.55 | n/a | n/a | 13.69 | n/a | n/a | ||||||
14 | 14.79 | n/a | n/a | 13.87 | n/a | n/a | ||||||
15 | 15.02 | n/a | n/a | 14.06 | n/a | n/a | ||||||
16 | 15.27 | n/a | n/a | 14.26 | n/a | n/a | ||||||
17 | 15.51 | n/a | n/a | 14.48 | n/a | n/a | ||||||
18 | n/a | 15.76 | 14.28 | n/a | 14.69 | 13.45 | ||||||
19 | n/a | 16.01 | 14.45 | n/a | 14.92 | 13.62 | ||||||
20 | n/a | 16.28 | 14.64 | n/a | 15.15 | 13.78 | ||||||
21 | n/a | 16.55 | 14.83 | n/a | 15.39 | 13.96 | ||||||
22 | n/a | 16.83 | 15.04 | n/a | 15.66 | 14.16 | ||||||
23 | n/a | 17.12 | 15.26 | n/a | 15.93 | 14.35 | ||||||
24 | n/a | 17.42 | 15.49 | n/a | 16.22 | 14.56 | ||||||
25 | n/a | 17.74 | 15.73 | n/a | 16.52 | 14.78 | ||||||
26 | n/a | 18.07 | 15.99 | n/a | 16.83 | 15.00 | ||||||
27 | n/a | 18.42 | 16.25 | n/a | 17.17 | 15.25 | ||||||
28 | n/a | 18.77 | 16.52 | n/a | 17.51 | 15.50 | ||||||
29 | n/a | 19.16 | 16.82 | n/a | 17.88 | 15.77 | ||||||
30 | n/a | 19.56 | 17.13 | n/a | 18.26 | 16.05 | ||||||
31 | n/a | 20.00 | 17.47 | n/a | 18.67 | 16.35 | ||||||
32 | n/a | 20.46 | 17.81 | n/a | 19.10 | 16.66 | ||||||
33 | n/a | 20.96 | 18.20 | n/a | 19.55 | 16.98 | ||||||
34 | n/a | 21.47 | 18.60 | n/a | 20.02 | 17.33 | ||||||
35 | n/a | 22.03 | 19.02 | n/a | 20.51 | 17.69 | ||||||
36 | n/a | 22.61 | 19.47 | n/a | 21.02 | 18.06 | ||||||
37 | n/a | 23.23 | 19.93 | n/a | 21.56 | 18.46 | ||||||
38 | n/a | 23.79 | 20.44 | n/a | 22.12 | 18.88 | ||||||
39 | n/a | 24.48 | 20.97 | n/a | 22.73 | 19.32 |
97
Issue Age |
Male Tobacco |
Male Non-Tobacco |
Female Tobacco |
Female Non-Tobacco | ||||
40 | 26.57 | 22.35 | 24.39 | 20.41 | ||||
41 | 27.45 | 23.01 | 25.14 | 20.95 | ||||
42 | 28.37 | 23.70 | 25.95 | 21.53 | ||||
43 | 29.34 | 24.44 | 26.80 | 22.14 | ||||
44 | 30.33 | 25.22 | 27.70 | 22.78 | ||||
45 | 31.44 | 26.04 | 28.66 | 23.47 | ||||
46 | 32.56 | 26.90 | 29.67 | 24.18 | ||||
47 | 33.75 | 27.83 | 30.75 | 24.94 | ||||
48 | 34.92 | 28.80 | 31.88 | 25.75 | ||||
49 | 36.10 | 29.83 | 33.07 | 26.60 | ||||
50 | 37.78 | 30.94 | 34.32 | 27.49 | ||||
51 | 39.32 | 32.14 | 35.62 | 28.43 | ||||
52 | 40.96 | 33.41 | 37.00 | 29.43 | ||||
53 | 42.69 | 34.75 | 38.44 | 30.47 | ||||
54 | 44.53 | 36.19 | 39.95 | 31.58 | ||||
55 | 46.46 | 37.70 | 41.53 | 32.75 | ||||
56 | 48.48 | 39.32 | 43.18 | 33.98 | ||||
57 | 50.61 | 41.03 | 44.93 | 35.28 | ||||
58 | 52.85 | 42.85 | 46.76 | 36.64 | ||||
59 | 55.25 | 44.80 | 48.69 | 38.10 | ||||
60 | 57.00 | 46.89 | 50.72 | 39.63 | ||||
61 | 57.00 | 49.12 | 52.86 | 41.25 | ||||
62 | 57.00 | 51.51 | 55.14 | 42.98 | ||||
63 | 57.00 | 54.03 | 57.00 | 44.82 | ||||
64 | 57.00 | 56.72 | 57.00 | 46.78 | ||||
65 | 57.00 | 57.00 | 57.00 | 48.87 | ||||
66 | 57.00 | 57.00 | 57.00 | 51.12 | ||||
67 | 57.00 | 57.00 | 57.00 | 53.52 | ||||
68 | 57.00 | 57.00 | 57.00 | 56.08 | ||||
69 & over | 57.00 | 57.00 | 57.00 | 57.00 |
98
FOR POLICIES PURCHASED ON OR AFTER SEPTEMBER 15, 2008:
Appendix B
Illustrations
The following illustrations show how certain values under a sample Policy would change with different rates of fictional investment performance over an extended period of time. In particular, the illustrations show how the death benefit, cash value, and net surrender value under a Policy issued to an insured of a given age, would change over time if the premiums indicated were paid and the return on the assets in the subaccounts were a uniform gross annual rate (before any expenses) of 0%, 6% or 10%. The tables illustrate Policy value that would result based on assumptions that you pay the premiums indicated, you do not change your specified amount, and you do not take any cash withdrawals or Policy loans. The values under the Policy will be different from those shown even if the returns averaged 0%, 6% or 10%, but fluctuated over and under those averages throughout the years shown.
We based the illustration on page 100 on a Policy for an insured who is a 31 year old male in the Ultimate Select rate class (the representative insured), annual premium paid on the first day of each Policy year of $600, a $100,000 initial specified amount and death benefit Option A. The illustration on that page also assumes cost of insurance charges based on our current cost of insurance rates.
The illustration for the representative insured on page 101 is based on the same factors as those on page 100, except the cost of insurance charges are based on the guaranteed cost of insurance rates and expenses (based on the 2001 Commissioners Standard Ordinary Mortality Table).
The amounts shown in the illustrations for the death benefits, cash values and net surrender values take into account the amount and timing of all Policy, subaccount and portfolio fees assessed under the Policy. The current illustration reflects the current charges for the Policy and the guaranteed illustration reflects the guaranteed charges for a Policy. These fees are: the daily charge for assuming mortality and expense risks assessed against each subaccount. This charge is equivalent to an annual charge of 1.50% of the average net assets of the subaccounts during the first 15 Policy years; we may reduce this charge to 0.75% in the 16th Policy year, but we do not guarantee that we will do so, and we reserve the right to maintain this charge at the 1.50% level after the 15th Policy year; estimated daily expenses equivalent to an effective arithmetic average annual expense level of 1.19% of the portfolios gross average daily net assets. The 1.19% gross average portfolio expense level assumes an equal allocation of amounts among the 62 subaccounts available to new investors. We used annualized actual audited expenses incurred during 2007 for the portfolios to calculate the gross average annual expense level; and the premium expense charge (6.0% of all premium payments during the first ten Policy years on Policies with a specified amount in force of less than $250,000 and 4% on Policies with a specified amount in force of $250,000$499,999, and 2.5% of all premiums paid thereafter on Policies with a specified amount less than $500,000) and cash value charges using the current monthly Policy charge.
The hypothetical returns shown in the tables are provided only to illustrate the mechanics of a hypothetical policy and do not represent past or future investment rates of return. Tax charges that may be attributable to the separate account are not reflected because we are not currently making such charges. If tax charges are deducted in the future, the separate account would have to earn a sufficient amount in excess of 0%, 6% or 10% or cover any tax charges to produce after tax returns of 0%, 6% or 10%. Your actual rates of return for a particular Policy likely will be more or less than the hypothetical investment rates of return. The actual return on your cash value will depend on factors such as the amounts you allocate to particular portfolios, the amounts deducted for the Policys monthly charges and other charges, the portfolios expense ratios, and your loan and withdrawal history, in addition to the actual investment experience of the portfolios.
We will furnish the owner, upon request, a personalized illustration reflecting the proposed insureds age, gender, risk classification and desired Policy features. Contact your registered representative or our administrative office. (See prospectus back cover Inquiries.)
99
WRL FREEDOM ELITE BUILDER
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
MALE ISSUE AGE 31
Specified Amount $100,000 | Ultimate Select Class | |
Annual Premium $600 | Option Type A |
Using Current Cost of Insurance Rates
DEATH BENEFIT Assuming Hypothetical Gross and Net Annual Investment Return of |
CASH VALUE Assuming Hypothetical Gross and Net Annual Investment Return of | |||||||||||||
End of Policy Year |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) | ||||||||
1 | 100,000 | 100,000 | 100,000 | 181 | 203 | 217 | ||||||||
2 | 100,000 | 100,000 | 100,000 | 359 | 415 | 453 | ||||||||
3 | 100,000 | 100,000 | 100,000 | 626 | 730 | 804 | ||||||||
4 | 100,000 | 100,000 | 100,000 | 886 | 1,056 | 1,182 | ||||||||
5 | 100,000 | 100,000 | 100,000 | 1,138 | 1,393 | 1,588 | ||||||||
6 | 100,000 | 100,000 | 100,000 | 1,380 | 1,737 | 2,019 | ||||||||
7 | 100,000 | 100,000 | 100,000 | 1,611 | 2,089 | 2,480 | ||||||||
8 | 100,000 | 100,000 | 100,000 | 1,829 | 2,446 | 2,967 | ||||||||
9 | 100,000 | 100,000 | 100,000 | 2,035 | 2,810 | 3,486 | ||||||||
10 | 100,000 | 100,000 | 100,000 | 2,228 | 3,179 | 4,036 | ||||||||
15 | 100,000 | 100,000 | 100,000 | 3,025 | 5,140 | 7,405 | ||||||||
20 | 100,000 | 100,000 | 100,000 | 3,434 | 7,277 | 12,220 | ||||||||
25 | 100,000 | 100,000 | 100,000 | 3,636 | 9,782 | 19,360 | ||||||||
30 (Age 61) | 100,000 | 100,000 | 100,000 | 2,964 | 12,016 | 29,364 | ||||||||
35 (Age 66) | 100,000 | 100,000 | 100,000 | 1,667 | 14,196 | 44,224 | ||||||||
40 (Age 71) | * | 100,000 | 100,000 | * | 15,566 | 66,399 | ||||||||
45 (Age 76) | * | 100,000 | 105,883 | * | 15,529 | 100,841 | ||||||||
50 (Age 81) | * | 100,000 | 160,797 | * | 12,391 | 153,140 | ||||||||
55 (Age 86) | * | 100,000 | 241,984 | * | 2,714 | 230,461 | ||||||||
60 (Age 91) | * | * | 361,334 | * | * | 344,128 | ||||||||
65 (Age 96) | * | * | 515,309 | * | * | 515,309 | ||||||||
69 (Age 100) | * | * | 713,560 | * | * | 713,560 |
NET SURRENDER VALUE Assuming Hypothetical Gross and Net Annual Investment Return of | ||||||||||||||
End of Policy Year |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) |
End of Policy Year |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) | |||||||
1 | | | | 20 | 3,434 | 7,277 | 12,220 | |||||||
2 | | | | 25 | 3,636 | 9,782 | 19,360 | |||||||
3 | | | | 30 (Age 61) | 2,964 | 12,016 | 29,364 | |||||||
4 | | | | 35 (Age 66) | 1,667 | 14,196 | 44,224 | |||||||
5 | | | | 40 (Age 71) | * | 15,566 | 66,399 | |||||||
6 | | 164 | 447 | 45 (Age 76) | * | 15,529 | 100,841 | |||||||
7 | 213 | 691 | 1,082 | 50 (Age 81) | * | 12,391 | 153,140 | |||||||
8 | 606 | 1,223 | 1,745 | 55 (Age 86) | * | 2,714 | 230,461 | |||||||
9 | 987 | 1,762 | 2,438 | 60 (Age 91) | * | * | 344,128 | |||||||
10 | 1,355 | 2,305 | 3,163 | 65 (Age 96) | * | * | 515,309 | |||||||
15 | 3,025 | 5,140 | 7,405 | 69 (Age 100) | * | * | 713,560 |
* | In the absence of an additional payment, the Policy would lapse. |
100
WRL FREEDOM ELITE BUILDER
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
MALE ISSUE AGE 31
Specified Amount $100,000 | Ultimate Select Class | |
Annual Premium $600 | Option Type A |
Using Guaranteed Cost of Insurance Rates
DEATH BENEFIT Assuming Hypothetical Gross and Net Annual Investment Return of |
CASH VALUE Assuming Hypothetical Gross and Net Annual Investment Return of | |||||||||||||
End of Policy Year |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) | ||||||||
1 | 100,000 | 100,000 | 100,000 | 181 | 203 | 217 | ||||||||
2 | 100,000 | 100,000 | 100,000 | 334 | 388 | 426 | ||||||||
3 | 100,000 | 100,000 | 100,000 | 574 | 675 | 747 | ||||||||
4 | 100,000 | 100,000 | 100,000 | 807 | 970 | 1,091 | ||||||||
5 | 100,000 | 100,000 | 100,000 | 1,032 | 1,273 | 1,459 | ||||||||
6 | 100,000 | 100,000 | 100,000 | 1,247 | 1,583 | 1,849 | ||||||||
7 | 100,000 | 100,000 | 100,000 | 1,451 | 1,899 | 2,265 | ||||||||
8 | 100,000 | 100,000 | 100,000 | 1,643 | 2,218 | 2,705 | ||||||||
9 | 100,000 | 100,000 | 100,000 | 1,823 | 2,541 | 3,171 | ||||||||
10 | 100,000 | 100,000 | 100,000 | 1,990 | 2,868 | 3,664 | ||||||||
15 | 100,000 | 100,000 | 100,000 | 2,653 | 4,581 | 6,659 | ||||||||
20 | 100,000 | 100,000 | 100,000 | 2,787 | 6,131 | 10,481 | ||||||||
25 | 100,000 | 100,000 | 100,000 | 2,203 | 7,251 | 15,320 | ||||||||
30 (Age 61) | 100,000 | 100,000 | 100,000 | 310 | 7,139 | 21,044 | ||||||||
35 (Age 66) | * | 100,000 | 100,000 | * | 4,614 | 27,559 | ||||||||
40 (Age 71) | * | * | 100,000 | * | * | 34,249 | ||||||||
45 (Age 76) | * | * | 100,000 | * | * | 40,034 | ||||||||
50 (Age 81) | * | * | 100,000 | * | * | 41,511 | ||||||||
55 (Age 86) | * | * | 100,000 | * | * | 27,521 | ||||||||
60 (Age 91) | * | * | * | * | * | * | ||||||||
65 (Age 96) | * | * | * | * | * | * | ||||||||
69 (Age 100) | * | * | * | * | * | * |
NET SURRENDER VALUE Assuming Hypothetical Gross and Net Annual Investment Return of | ||||||||||||||
End of Policy Year |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) |
End of Policy Year |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) | |||||||
1 | | | | 20 | 2,787 | 6,131 | 10,481 | |||||||
2 | | | | 25 | 2,203 | 7,251 | 15,320 | |||||||
3 | | | | 30 (Age 61) | 310 | 7,139 | 21,044 | |||||||
4 | | | | 35 (Age 66) | * | 4,614 | 27,559 | |||||||
5 | | | | 40 (Age 71) | * | * | 34,249 | |||||||
6 | | 10 | 277 | 45 (Age 76) | * | * | 40,034 | |||||||
7 | 54 | 501 | 868 | 50 (Age 81) | * | * | 41,511 | |||||||
8 | 420 | 995 | 1,482 | 55 (Age 86) | * | * | 27,521 | |||||||
9 | 775 | 1,493 | 2,123 | 60 (Age 91) | * | * | * | |||||||
10 | 1,116 | 1,995 | 2,791 | 65 (Age 96) | * | * | * | |||||||
15 | 2,653 | 4,581 | 6,659 | 69 (Age 100) | * | * | * |
* | In the absence of an additional payment, the Policy would lapse. |
101
APPENDICES A, B & C
FOR POLICIES PURCHASED PRIOR TO
SEPTEMBER 15, 2008 and ISSUED
PRIOR TO JANUARY 1, 2009; BASED ON THE
1980 C.S.O. MORTALITY TABLES
102
Surrender Charge Per Thousand of Specified Amount Segment
(Based on the gender and rate class of the insured)
Issue Age |
Male Non-Tobacco |
Male Tobacco |
Male/ Female Juvenile |
Female Non-Tobacco |
Female Tobacco | |||||
0 | N/A | N/A | 11.76 | N/A | N/A | |||||
1 | N/A | N/A | 8.16 | N/A | N/A | |||||
2 | N/A | N/A | 8.16 | N/A | N/A | |||||
3 | N/A | N/A | 7.92 | N/A | N/A | |||||
4 | N/A | N/A | 7.68 | N/A | N/A | |||||
5 | N/A | N/A | 7.68 | N/A | N/A | |||||
6 | N/A | N/A | 7.68 | N/A | N/A | |||||
7 | N/A | N/A | 7.68 | N/A | N/A | |||||
8 | N/A | N/A | 7.68 | N/A | N/A | |||||
9 | N/A | N/A | 7.68 | N/A | N/A | |||||
10 | N/A | N/A | 7.68 | N/A | N/A | |||||
11 | N/A | N/A | 7.68 | N/A | N/A | |||||
12 | N/A | N/A | 7.68 | N/A | N/A | |||||
13 | N/A | N/A | 7.92 | N/A | N/A | |||||
14 | N/A | N/A | 8.16 | N/A | N/A | |||||
15 | N/A | N/A | 8.40 | N/A | N/A | |||||
16 | N/A | N/A | 8.52 | N/A | N/A | |||||
17 | N/A | N/A | 8.88 | N/A | N/A | |||||
18 | 8.72 | 9.20 | 8.72 | 9.20 | ||||||
19 | 8.84 | 9.32 | 8.84 | 9.32 | ||||||
20 | 8.96 | 9.44 | 8.96 | 9.44 | ||||||
21 | 9.16 | 9.88 | 9.16 | 9.64 | ||||||
22 | 9.32 | 10.04 | 9.32 | 9.80 | ||||||
23 | 9.52 | 10.24 | 9.52 | 10.00 | ||||||
24 | 9.68 | 10.40 | 9.68 | 10.40 | ||||||
25 | 9.88 | 10.84 | 9.88 | 10.60 | ||||||
26 | 10.56 | 11.28 | 10.32 | 11.04 | ||||||
27 | 11.00 | 11.72 | 10.76 | 11.48 | ||||||
28 | 11.40 | 12.12 | 11.16 | 12.12 | ||||||
29 | 12.08 | 12.80 | 11.84 | 12.56 | ||||||
30 | 12.52 | 13.24 | 12.28 | 13.00 | ||||||
31 | 13.04 | 14.00 | 12.80 | 13.52 | ||||||
32 | 13.76 | 14.48 | 13.52 | 14.24 | ||||||
33 | 14.28 | 15.24 | 14.04 | 14.76 | ||||||
34 | 14.76 | 15.96 | 14.52 | 15.48 | ||||||
35 | 15.52 | 16.48 | 15.28 | 16.00 | ||||||
36 | 16.20 | 17.40 | 15.96 | 16.92 | ||||||
37 | 17.20 | 18.40 | 16.72 | 17.92 | ||||||
38 | 18.12 | 19.56 | 17.64 | 18.60 | ||||||
39 | 19.08 | 20.76 | 18.36 | 19.56 |
103
Issue Age |
Male Non-Tobacco |
Male Tobacco |
Female Non-Tobacco |
Female Tobacco | ||||
40 | 20.28 | 21.96 | 19.32 | 20.52 | ||||
41 | 21.64 | 23.56 | 20.68 | 22.12 | ||||
42 | 23.08 | 25.24 | 22.12 | 23.80 | ||||
43 | 24.44 | 27.08 | 23.15 | 25.40 | ||||
44 | 26.04 | 29.16 | 23.86 | 26.96 | ||||
45 | 27.44 | 31.04 | 24.59 | 27.83 | ||||
46 | 28.72 | 32.80 | 25.38 | 28.76 | ||||
47 | 29.84 | 34.56 | 26.22 | 29.73 | ||||
48 | 31.00 | 36.32 | 27.11 | 30.75 | ||||
49 | 32.24 | 38.32 | 28.04 | 31.84 | ||||
50 | 33.56 | 40.56 | 29.05 | 32.99 | ||||
51 | 34.98 | 42.56 | 30.11 | 34.20 | ||||
52 | 36.49 | 45.24 | 31.24 | 35.48 | ||||
53 | 38.10 | 47.68 | 32.45 | 36.84 | ||||
54 | 39.83 | 50.84 | 33.72 | 38.28 | ||||
55 | 41.68 | 53.28 | 35.09 | 39.79 | ||||
56 | 43.63 | 55.79 | 36.54 | 41.39 | ||||
57 | 45.74 | 57.00 | 38.08 | 43.06 | ||||
58 | 47.98 | 57.00 | 39.74 | 44.88 | ||||
59 | 50.38 | 57.00 | 41.54 | 46.85 | ||||
60 | 52.97 | 57.00 | 43.47 | 48.97 | ||||
61 | 55.74 | 57.00 | 45.57 | 51.26 | ||||
62 | 57.00 | 57.00 | 47.82 | 53.73 | ||||
63 | 57.00 | 57.00 | 50.26 | 56.41 | ||||
64 | 57.00 | 57.00 | 52.88 | 57.00 | ||||
65 | 57.00 | 57.00 | 55.68 | 57.00 | ||||
66 and over | 57.00 | 57.00 | 57.00 | 57.00 |
104
Illustrations
The following illustrations show how certain values under a sample Policy would change with different rates of fictional investment performance over an extended period of time. In particular, the illustrations show how the death benefit, cash value, and net surrender value under a Policy issued to an insured of a given age, would change over time if the premiums indicated were paid and the return on the assets in the subaccounts were a uniform gross annual rate (before any expenses) of 0%, 6% or 10%. The tables illustrate Policy value that would result based on assumptions that you pay the premiums indicated, you do not change your specified amount, and you do not take any cash withdrawals or Policy loans. The values under the Policy will be different from those shown even if the returns averaged 0%, 6% or 10%, but fluctuated over and under those averages throughout the years shown.
We based the illustration on page 106 on a Policy for an insured who is a 31 year old male in the Ultimate Select rate class (the representative insured), annual premium paid on the first day of each Policy year of $600, a $100,000 initial specified amount and death benefit Option A. The illustration on that page also assumes cost of insurance charges based on our current cost of insurance rates.
The illustration for the representative insured on page 107 is based on the same factors as those on page 106, except the cost of insurance charges are based on the guaranteed cost of insurance rates and expenses (based on the 1980 Commissioners Standard Ordinary Mortality Table).
The amounts shown in the illustrations for the death benefits, cash values and net surrender values take into account the amount and timing of all Policy, subaccount and portfolio fees assessed under the Policy. The current illustration reflects the current charges for the Policy and the guaranteed illustration reflects the guaranteed charges for a Policy. These fees are:
the daily charge for assuming mortality and expense risks assessed against each subaccount. This charge is equivalent to an annual charge of 0.90% of the average net assets of the subaccounts during the first 15 Policy years (we guarantee to reduce this charge to 0.60% after the first 15 Policy years). We may reduce this charge to 0.30% in the 16th Policy year, but we do not guarantee that we will do so, and we reserve the right to maintain this charge at the 0.60% level after the 15th Policy year; estimated daily expenses equivalent to an effective arithmetic average annual expense level of 1.19% of the portfolios gross average daily net assets. The 1.19% gross average portfolio expense level assumes an equal allocation of amounts among the 62 subaccounts available to new investors. We used annualized actual audited expenses incurred during 2007 for the portfolios to calculate the gross average annual expense level; and the premium expense charge (6.0% of all premium payments during the first ten Policy years on Policies with a specified amount in force of less than $250,000 and 4% on Policies with a specified amount in force of $250,000$499,999, and 2.5% of all premiums paid thereafter on Policies with a specified amount less than $500,000) and cash value charges using the current monthly Policy charge.
The hypothetical returns shown in the tables are provided only to illustrate the mechanics of a hypothetical policy and do not represent past or future investment rates of return. Tax charges that may be attributable to the separate account are not reflected because we are not currently making such charges. If tax charges are deducted in the future, the separate account would have to earn a sufficient amount in excess of 0%, 6% or 10% or cover any tax charges to produce after tax returns of 0%, 6% or 10%. Your actual rates of return for a particular Policy likely will be more or less than the hypothetical investment rates of return. The actual return on your cash value will depend on factors such as the amounts you allocate to particular portfolios, the amounts deducted for the Policys monthly charges and other charges, the portfolios expense ratios, and your loan and withdrawal history, in addition to the actual investment experience of the portfolios.
We will furnish the owner, upon request, a personalized illustration reflecting the proposed insureds age, gender, risk classification and desired Policy features. Contact your registered representative or our administrative office. (See prospectus back cover Inquiries.)
105
WRL FREEDOM ELITE BUILDER
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
MALE ISSUE AGE 31
Specified Amount $100,000 | Ultimate Select Class | |
Annual Premium $600 | Option Type A |
Using Current Cost of Insurance Rates
DEATH BENEFIT Assuming Hypothetical Gross and Net Annual Investment Return of |
CASH VALUE Assuming Hypothetical Gross and Net Annual Investment Return of | |||||||||||
End of Policy Year |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) | ||||||
1 | 100,000 | 100,000 | 100,000 | 352 | 379 | 397 | ||||||
2 | 100,000 | 100,000 | 100,000 | 693 | 770 | 823 | ||||||
3 | 100,000 | 100,000 | 100,000 | 1,026 | 1,175 | 1,281 | ||||||
4 | 100,000 | 100,000 | 100,000 | 1,351 | 1,595 | 1,775 | ||||||
5 | 100,000 | 100,000 | 100,000 | 1,666 | 2,027 | 2,304 | ||||||
6 | 100,000 | 100,000 | 100,000 | 1,970 | 2,473 | 2,871 | ||||||
7 | 100,000 | 100,000 | 100,000 | 2,263 | 2,932 | 3,479 | ||||||
8 | 100,000 | 100,000 | 100,000 | 2,546 | 3,404 | 4,131 | ||||||
9 | 100,000 | 100,000 | 100,000 | 2,811 | 3,884 | 4,823 | ||||||
10 | 100,000 | 100,000 | 100,000 | 3,059 | 4,371 | 5,559 | ||||||
15 | 100,000 | 100,000 | 100,000 | 4,045 | 6,933 | 10,051 | ||||||
20 | 100,000 | 100,000 | 100,000 | 4,518 | 9,723 | 16,496 | ||||||
25 | 100,000 | 100,000 | 100,000 | 4,951 | 13,250 | 26,355 | ||||||
30 (Age 61) | 100,000 | 100,000 | 100,000 | 4,754 | 17,115 | 40,945 | ||||||
35 (Age 66) | 100,000 | 100,000 | 100,000 | 3,697 | 21,210 | 62,898 | ||||||
40 (Age 71) | 100,000 | 100,000 | 111,105 | 1,266 | 25,204 | 96,613 | ||||||
45 (Age 76) | * | 100,000 | 155,268 | * | 28,862 | 147,874 | ||||||
50 (Age 81) | * | 100,000 | 236,011 | * | 31,232 | 224,773 | ||||||
55 (Age 86) | * | 100,000 | 356,049 | * | 30,461 | 339,094 | ||||||
60 (Age 91) | * | 100,000 | 533,503 | * | 23,045 | 508,098 | ||||||
65 (Age 96) | * | 100,000 | 763,993 | * | 4,027 | 763,993 | ||||||
69 (Age 100) | * | * | 1,061,774 | * | * | 1,061,774 |
NET SURRENDER VALUE Assuming Hypothetical Gross and Net Annual Investment Return of | ||||||||||||||
End of Policy Year |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) |
End of Policy Year |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) | |||||||
1 | | | | 20 | 4,518 | 9,723 | 16,496 | |||||||
2 | | | | 25 | 4,951 | 13,250 | 26,355 | |||||||
3 | | | | 30 (Age 61) | 4,754 | 17,115 | 40,945 | |||||||
4 | 47 | 291 | 471 | 35 (Age 66) | 3,697 | 21,210 | 62,898 | |||||||
5 | 362 | 723 | 1,000 | 40 (Age 71) | 1,266 | 25,204 | 96,613 | |||||||
6 | 797 | 1,300 | 1,698 | 45 (Age 76) | * | 28,862 | 147,874 | |||||||
7 | 1,220 | 1,889 | 2,436 | 50 (Age 81) | * | 31,232 | 224,773 | |||||||
8 | 1,633 | 2,491 | 3,218 | 55 (Age 86) | * | 30,461 | 339,094 | |||||||
9 | 2,029 | 3,102 | 4,041 | 60 (Age 91) | * | 23,045 | 508,098 | |||||||
10 | 2,407 | 3,719 | 4,907 | 65 (Age 96) | * | 4,027 | 763,993 | |||||||
15 | 4,045 | 6,933 | 10,051 | 69 (Age 100) | * | * | 1,061,774 |
* | In the absence of an additional payment, the Policy would lapse. |
106
WRL FREEDOM ELITE BUILDER
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
MALE ISSUE AGE 31
Specified Amount $100,000 | Ultimate Select Class | |
Annual Premium $600 | Option Type A |
Using Guaranteed Cost of Insurance Rates
DEATH BENEFIT Assuming Hypothetical Gross and Net Annual Investment Return of |
CASH VALUE Assuming Hypothetical Gross and Net Annual Investment Return of | |||||||||||
End of Policy Year |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) | ||||||
1 | 100,000 | 100,000 | 100,000 | 322 | 348 | 366 | ||||||
2 | 100,000 | 100,000 | 100,000 | 632 | 704 | 755 | ||||||
3 | 100,000 | 100,000 | 100,000 | 930 | 1,070 | 1,170 | ||||||
4 | 100,000 | 100,000 | 100,000 | 1,218 | 1,445 | 1,613 | ||||||
5 | 100,000 | 100,000 | 100,000 | 1,491 | 1,827 | 2,083 | ||||||
6 | 100,000 | 100,000 | 100,000 | 1,752 | 2,216 | 2,584 | ||||||
7 | 100,000 | 100,000 | 100,000 | 1,998 | 2,611 | 3,114 | ||||||
8 | 100,000 | 100,000 | 100,000 | 2,227 | 3,009 | 3,675 | ||||||
9 | 100,000 | 100,000 | 100,000 | 2,438 | 3,411 | 4,267 | ||||||
10 | 100,000 | 100,000 | 100,000 | 2,631 | 3,814 | 4,893 | ||||||
15 | 100,000 | 100,000 | 100,000 | 3,370 | 5,919 | 8,698 | ||||||
20 | 100,000 | 100,000 | 100,000 | 3,480 | 7,932 | 13,814 | ||||||
25 | 100,000 | 100,000 | 100,000 | 2,514 | 9,304 | 20,419 | ||||||
30 (Age 61) | * | 100,000 | 100,000 | * | 9,014 | 28,683 | ||||||
35 (Age 66) | * | 100,000 | 100,000 | * | 5,103 | 38,831 | ||||||
40 (Age 71) | * | * | 100,000 | * | * | 51,271 | ||||||
45 (Age 76) | * | * | 100,000 | * | * | 67,452 | ||||||
50 (Age 81) | * | * | 100,000 | * | * | 93,441 | ||||||
55 (Age 86) | * | * | 144,563 | * | * | 137,679 | ||||||
60 (Age 91) | * | * | 208,208 | * | * | 198,294 | ||||||
65 (Age 96) | * | * | 290,727 | * | * | 290,727 | ||||||
69 (Age 100) | * | * | 401,052 | * | * | 401,052 |
NET SURRENDER VALUE Assuming Hypothetical Gross and Net Annual Investment Return of | ||||||||||||||
End of Policy Year |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) |
End of Policy Year |
0% (Gross) -1.19 (Net) |
6% (Gross) 4.81% (Net) |
10% (Gross) 8.81% (Net) | |||||||
1 | | | | 20 | 3,480 | 7,932 | 13,814 | |||||||
2 | | | | 25 | 2,514 | 9,304 | 20,419 | |||||||
3 | | | | 30 (Age 61) | * | 9,014 | 28,683 | |||||||
4 | | 141 | 309 | 35 (Age 66) | * | 5,103 | 38,831 | |||||||
5 | 187 | 523 | 779 | 40 (Age 71) | * | * | 51,271 | |||||||
6 | 579 | 1,042 | 1,410 | 45 (Age 76) | * | * | 67,452 | |||||||
7 | 954 | 1,567 | 2,071 | 50 (Age 81) | * | * | 93,441 | |||||||
8 | 1,314 | 2,097 | 2,762 | 55 (Age 86) | * | * | 137,679 | |||||||
9 | 1,655 | 2,628 | 3,485 | 60 (Age 91) | * | * | 198,294 | |||||||
10 | 1,979 | 3,162 | 4,241 | 65 (Age 96) | * | * | 290,727 | |||||||
15 | 3,370 | 5,919 | 8,698 | 69 (Age 100) | * | * | 401,052 |
* | In the absence of an additional payment, the Policy would lapse. |
107
Prospectus Back Cover
Personalized Illustrations of Policy Benefits
In order to help you understand how your Policy values could vary over time under different sets of assumptions, we will provide you, without charge and upon request, with certain personalized hypothetical illustrations showing the death benefit, net surrender value and cash value. These hypothetical illustrations will be based on the age and insurance risk characteristics of the insured persons under your Policy and such factors as the specified amount band, death benefit option, premium payment amounts, and hypothetical rates of return (within limits) that you request. The illustrations are not a representation or guarantee of investment returns or cash value.
Inquiries
To learn more about the Policy, you should read the SAI dated the same date as this prospectus. The SAI has been filed with the SEC and is incorporated herein by reference. The table of contents of the SAI is included near the end of this prospectus.
For a free copy of the SAI, for other information about the Policy, and to obtain personalized illustrations, please contact your agent, or our administrative office at:
Western Reserve Life
570 Carillon Parkway
St. Petersburg, Florida 33716
1-800-851-9777
Facsimile: 1-727-299-1620 (for interfund transfers 1-727-299-1648)
(Monday - Friday from 8:30 a.m. - 7:00 p.m. Eastern time)
www.westernreserve.com
More information about the Registrant (including the SAI) may be reviewed and copied at the SECs Public Reference Room in Washington, D.C. For information on the operation of the Public Reference Room, please contact the SEC at 202-551-8090. You may also obtain copies of reports and other information about the Registrant on the SECs website at http://www.sec.gov and copies of this information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC at 100 F Street, NE, Washington, D.C. 20549. The Registrants file numbers are listed below.
TCI serves as the principal underwriter for the Policies. More information about TCI is available at http://www.finra.com or by calling 1-800-289-9999. You also can obtain an investor brochure from the Financial Regulatory Authority (FINRA) (formerly, NASD) describing its Public Disclosure Program.
SEC File No. 333-58322/811-4420
AG08205-09/2008
108
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF ADDITIONAL INFORMATION
September 15, 2008
WRL FREEDOM ELITE BUILDER®
issued through
WRL Series Life Account
by
Western Reserve Life Assurance Co. of Ohio
Administrative Office:
570 Carillon Parkway
St. Petersburg, Florida 33716
1-800-851-9777
(727) 299-1800
Direct all payments by check and all correspondence and
notices to the Mailing Address:
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499
This Statement of Additional Information (SAI) expands upon subjects discussed in the current prospectus for the WRL Freedom Elite Builder® flexible premium variable life insurance policy offered by Western Reserve Life Assurance Co. of Ohio. You may obtain a copy of the prospectus dated May 1, 2008, by calling our administrative office at 1-800-851-9777 (Monday Friday from 8:30 a.m. 7:00 p.m. Eastern time), or by writing to the mailing address at, Western Reserve Life, 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499. The prospectus sets forth information that a prospective investor should know before investing in a Policy. Terms used in this SAI have the same meanings as in the prospectus for the Policy.
This SAI is not a prospectus and should be read only in conjunction with the prospectuses for the Policy and the
AEGON/Transamerica Series Trust Initial Class, Fidelity Variable Insurance Products
Funds Service Class 2 Shares, the ProFunds, and the Access One Trust.
Table of Contents
2 | ||
5 | ||
5 | ||
6 | ||
6 | ||
6 | ||
6 | ||
7 | ||
7 | ||
7 | ||
Additional Information about Western Reserve and the Separate Account |
7 | |
8 | ||
8 | ||
8 | ||
8 | ||
8 | ||
9 | ||
9 | ||
9 | ||
9 | ||
9 | ||
9 | ||
10 | ||
11 | ||
11 | ||
11 | ||
11 | ||
11 | ||
11 |
i
Accounts | The options to which you can allocate your money. The accounts include the fixed account and the subaccounts in the separate account. | |
administrative office | Our administrative office address is P.O. Box 5068, Clearwater, Florida, 33758-5068. Our street address is 570 Carillon Parkway, St. Petersburg, Florida, 33716. Our phone number is 1-800-851-9777; our facsimile numbers are 727-299-1648 (for interfund transactions); and 727-299-1620 for all other requests. Our administrative office serves as the recipient of all website (www.westernreserve.com), telephonic and facsimile transactions, including, but not limited to transfer requests and premium payments made by wire transfer and through electronic credit and debit transactions (e.g., payments through direct deposit, debit transfers, and forms of e-commerce payments). Our hours are Monday Friday from 8:30 a.m. 7:00 p.m. Eastern time. Please do not send any checks, correspondence or notices to this office; send them to the mailing address. | |
attained age | The issue age of the person insured, plus the number of completed years since the Policy date (for the initial specified amount) or the date of each increase in specified amount. | |
Base Policy | The WRL Freedom Elite Builder variable life insurance policy without any supplemental riders. | |
beneficiary(ies) | The person or persons you select to receive the death benefit from the Policy. You name the primary beneficiary and contingent beneficiaries. | |
cash value | The sum of your Policys value in the subaccounts and the fixed account. If there is a Policy loan outstanding, the cash value includes any amounts held in our fixed account to secure the Policy loan. | |
death benefit proceeds | The amount we will pay to the beneficiary(ies) on the insureds death. We will reduce the death benefit proceeds by the amount of any outstanding loan amount, including any accrued loan interest, and any due and unpaid monthly deductions. | |
decrease charge | Surrender charge that may be imposed upon a decrease in specified amount during the first 15 Policy years (or during the 15 years subsequent to an increase in specified amount). | |
fixed account | An option to which you may allocate net premiums and cash value. We guarantee that any amounts you allocate to the fixed account will earn interest at a declared rate. The fixed account is part of our general account. The fixed account is not available to you if your Policy was purchased in the State of New Jersey prior to September 15, 2008 and issued prior to January 1, 2009.. | |
free-look period | The period during which you may return the Policy and receive a refund as described in the prospectus. The length of the free-look period varies by state. The free-look period is listed in the Policy. | |
funds | Investment companies which are registered with the U.S. Securities and Exchange Commission. The Policy allows you to invest in the portfolios of the funds through our subaccounts. We reserve the right to add other registered investment companies to the Policy in the future. | |
in force | While coverage under the Policy is active and the insureds life remains insured. | |
initial premium | The amount you must pay before insurance coverage begins under the Policy. The initial premium is shown on the schedule page of your Policy. | |
insured | The person whose life is insured by the Policy. | |
issue age | The insureds age on his or her birthday nearest to the Policy date. When you increase the Base Policys specified amount of insurance coverage, the issue age for the new segment of specified amount coverage is the insureds age on his or her birthday nearest the date that the increase in specified amount takes effect. This age may be different from the attained age on other segments of specified amount coverage. |
2
lapse | When life insurance coverage ends because you do not have enough cash value in the Policy to pay the monthly deduction, the surrender charge and any outstanding loan amount, including accrued loan interest, and you have not made a sufficient payment by the end of a grace period. | |
loan reserve account | A part of the fixed account to which amounts are transferred as collateral for Policy loans. | |
mailing address | Our mailing address is 4333 Edgewood Road, N.E., Cedar Rapids, Iowa, 52499. All premium payments and loan repayments made by check, correspondence and notices must be sent to this address. | |
maturity date | The Policy anniversary nearest the insureds 100th birthday if the insured is living and the Policy is still in force. It is the date when life insurance coverage under this Policy ends. You may continue coverage, at your option, under the Policys extended maturity date benefit provision. | |
maximum fixed account value | For Policies Purchased On or After September 15, 2008: The maximum amount that may be allocated to the fixed account at any time without prior approval is the amount that would cause the fixed account to be $250,000, exclusive of loan reserve requirements. (This restriction does not apply to transfers to the fixed account necessary in the exercise of conversion rights). | |
mortality and expense risk charge | This charge is a daily deduction from each subaccount that is taken before determining the unit value of that subaccount. | |
minimum monthly guarantee premium | The amount shown on your Policy schedule page that we use during the no lapse period to determine whether a grace period will begin. We will adjust the minimum monthly guarantee premium if you change death benefit options, increase or decrease the specified amount, or add, terminate, increase or decrease a rider, and you may need to pay additional premiums in order to keep the no lapse guarantee in place. A grace period will begin whenever your net surrender value is not enough to meet monthly deductions and the no lapse period guarantee is no longer in effect. | |
Monthiversary | This is the day of each month when we determine Policy charges and deduct them from cash value. It is the same date each month as the Policy date. If there is no valuation date in the calendar month that coincides with the Policy date, the Monthiversary is the next valuation date. | |
monthly deductions | The monthly Policy charge, plus the monthly cost of insurance, plus the monthly charge for any riders added to your Policy, plus, if any, the decrease charge incurred as a result of a decrease in your specified amount. | |
net premium | The part of your premium that we allocate to the fixed account or the subaccounts. The net premium is equal to the premium you paid minus the premium expense charge and the premium collection charge. | |
net surrender value | The amount we will pay you if you surrender the Policy while it is in force. The net surrender value on the date you surrender is equal to: the cash value minus any surrender charge, and minus any outstanding loan amount and accrued loan interest. | |
no lapse date | For a Policy issued to any insured ages 0-60, the no lapse date is the lesser of the anniversary on which the insureds attained age is 65 or the 20th Policy anniversary. For a Policy issued to an insured ages 61-85, the no lapse date is the fifth Policy anniversary. The no lapse date is specified in your Policy. | |
no lapse period | The period of time between the Policy date and the no lapse date during which the Policy will not lapse if certain conditions are met. | |
NYSE | The New York Stock Exchange. | |
planned periodic premium | A premium payment you make in a level amount at a fixed interval over a specified period of time. |
3
Policy date | The date when our underwriting process is complete, full life insurance coverage goes into effect, the initial premium payment has been received, and we begin to make the monthly deductions. The Policy date is shown on the schedule page of your Policy. If you request, we may backdate a Policy by assigning a Policy date earlier than the date the Policy is issued. We measure Policy months, years, and anniversaries from the Policy date. | |
portfolio | One of the separate investment portfolios of a fund. | |
premium expense charge | The charge that is deducted from each premium payment before determining the net premium that will be credited to the cash value. | |
premiums | All payments you make under the Policy other than loan repayments. | |
reallocation account | That portion of the fixed account where we hold the net premium(s) from the record date until the reallocation date. | |
reallocation date | The date we reallocate all cash value held in the reallocation account to the fixed account and subaccounts you selected on your application. We place your net premium in the reallocation account (or as otherwise mandated by state law) only if your state requires us to return the full premium in the event you exercise your free-look right. In those states the reallocation date is the Policy date (or the record date if you Policy is backdated), plus the number of days in your states free-look period, plus five days. In all other states, the reallocation date is the Policy date. | |
record date | The date we record your Policy on our books as an in force Policy. The record date is generally the Policy date, unless the Policy is backdated. | |
separate account | The WRL Series Life Account. It is a separate investment account that is divided into subaccounts. We established the separate account to receive and invest net premiums under the Policy and other variable life insurance policies we issue. | |
specified amount | The minimum death benefit we will pay under the Policy provided the Policy is in force. The initial specified amount of life insurance that you have selected is shown on the Base Policys schedule page that you receive when the Policy is issued. The specified amount in force is the initial specified amount, adjusted for any increases or decreases in the Base Policys specified amount. Other events such as a request to increase or decrease the specified amount, change in death benefit option or a cash withdrawal (if you choose Option A death benefit) may also affect the specified amount in force. | |
subaccount | A subdivision of the separate account that invests exclusively in shares of one investment portfolio of a fund. | |
surrender charge | If, during the first 15 Policy years (or during the 15 year period subsequent to an increase in specified amount), you fully surrender the Policy, we will deduct a surrender charge from the cash value. | |
termination | When the insureds life is no longer insured under the Policy or any rider, and the Policy or any rider is no longer in force. | |
valuation date | Each day the New York Stock Exchange is open for trading. Western Reserve is open for business whenever the New York Stock Exchange is open. | |
valuation period | The period of time over which we determine the change in the value of the subaccounts. Each valuation period begins at the close of normal trading on the New York Stock Exchange (usually 4:00 p.m. Eastern time on each valuation date) and ends at the close of normal trading of the New York Stock Exchange on the next valuation date. | |
we, us, our (Western Reserve) | Western Reserve Life Assurance Co. of Ohio. |
4
written notice | The written notice you must sign and send us to request or exercise your rights as owner under the Policy. To be complete, it must: (1) be in a form we accept, (2) contain the information and documentation that we determine we need to take the action you request, and (3) be received at our mailing address. | |
you, your (owner or policyowner) | The person entitled to exercise all rights as owner under the Policy. |
In order to supplement the description in the prospectus, the following provides additional information about Western Reserve and the Policy, which may be of interest to a prospective purchaser.
The Policy General Provisions
The Policy belongs to the owner named in the application. The owner may exercise all of the rights and options described in the Policy. The owner is the insured unless the application specifies a different person as the insured. If the owner dies before the insured and no contingent owner is named, then ownership of the Policy will pass to the owners estate. The owner may exercise certain rights described below.
Changing the Owner | Change the owner by providing written notice to us at our mailing address at any time while the insured is alive and the Policy is in force. | |
Change is effective as of the date that the written notice is accepted by us at our mailing address. | ||
Changing the owner does not automatically change the beneficiary. | ||
Changing the owner may have tax consequences. You should consult a tax advisor before changing the owner. | ||
We are not liable for payments we made before we received the written notice at our mailing address. | ||
Choosing the Beneficiary | The owner designates the beneficiary (the person to receive the death benefit when the insured dies) in the application. | |
If the owner designates more than one beneficiary, then each beneficiary shares equally in any death benefit proceeds unless the beneficiary designation states otherwise. | ||
If the beneficiary dies before the insured, then any contingent beneficiary becomes the beneficiary. | ||
If both the beneficiary and contingent beneficiary die before the insured, then the death benefit will be paid to the owner or the owners estate upon the insureds death. | ||
Changing the Beneficiary | The owner changes the beneficiary by providing written notice to us at our mailing address. | |
Change is effective as of the date the owner signs the written notice. | ||
We are not liable for any payments we made before we received the written notice at our mailing address. | ||
Assigning the Policy | The owner may assign Policy rights while the insured is alive. | |
The owner retains any ownership rights that are not assigned. | ||
Assignee may not change the owner or the beneficiary, and may not elect or change an optional method of payment. Any amount payable to the assignee will be paid in a lump sum. | ||
Claims under any assignment are subject to proof of interest and the extent of the assignment. |
5
We are not: | ||
bound by any assignment unless we receive a written notice of the assignment at our mailing address; | ||
responsible for the validity of any assignment; | ||
liable for any payment we made before we received written notice of the assignment at our mailing address; or | ||
bound by any assignment which results in adverse tax consequences to the owner, insured(s) or beneficiary(ies). | ||
Assigning the Policy may have tax consequences. You should consult a tax advisor before assigning the Policy. |
Our Right to Contest the Policy
In issuing this Policy, we rely on all statements made by or for the insured in the application or in a supplemental application. Therefore, if you make any material misrepresentation of a fact in the application (or any supplemental application), then we may contest the Policys validity or may resist a claim under the Policy for two years from the Policy date. For any portion of the specified amount that is issued as a result of a conversion, the contestability period is measured from the later of the policy date of the policy that was converted or the latest effective date of reinstatement of the converted policy.
A new two year contestability period shall apply to each increase in specified amount beginning on the effective date of each increase and will apply only to statements made in the application for the increase.
In the absence of fraud, we cannot bring any legal action to contest the validity of the Policy after the Policy (or requested increase in specified amount) has been in force during the insureds lifetime for two years from the Policy date, or if reinstated, for two years from the date of reinstatement. For any portion of the specified amount that is issued as a result of a conversion, the suicide period is measured from the later of the policy date of the policy that was converted or the latest effective date of reinstatement of the converted policy.
If the insured commits suicide, while sane or insane, within two years of the Policy date (or two years from the reinstatement date, if the Policy lapses and is reinstated), the Policy will terminate and our liability is limited to an amount equal to the premiums paid, less any outstanding loan amount, and less any cash withdrawals. We will pay this amount to the beneficiary in one sum.
If the insured commits suicide, while sane or insane, within two years from the effective date of any increase in specified amount, our liability with respect to such increase will be limited to its cost of insurance.
If the age or gender of the insured was stated incorrectly in the application or any supplemental application, then the death benefit will be adjusted based on what the cost of insurance charge for the most recent monthly deduction would have purchased based on the insureds correct age and gender.
Modifying the Policy
Only our President or Secretary may modify the Policy or waive any of our rights or requirements under the Policy. Any modification or waiver must be in writing. No registered representative may bind us by making any promise not contained in the Policy.
If we modify the Policy, we will provide you notice and we will make appropriate endorsements to the Policy.
In addition to the separate account, shares of the portfolios are also sold to other separate accounts that we (or our affiliates) establish to support variable annuity contracts and variable life insurance policies. It is possible that, in the future, it may become disadvantageous for variable life insurance separate accounts and variable annuity separate accounts to invest in the portfolios simultaneously. Neither the funds nor we currently foresee any such disadvantages, either to variable life insurance policyowners or to variable annuity contract owners. However, the funds Board of Directors/Trustees will monitor events in order to identify any material conflicts between the interests of such variable life insurance policyowners and variable annuity contract owners, and will determine what action, if any, it should take. Such action could include the sale of portfolio shares by one or more of the separate accounts, which could
6
have adverse consequences. Material conflicts could result from, for example, (1) changes in state insurance laws, (2) changes in federal income tax laws, or (3) differences in voting instructions between those given by variable life insurance policyowners and those given by variable annuity contract owners.
If a funds Board of Directors/Trustees were to conclude that separate funds should be established for variable life insurance and variable annuity separate accounts, Western Reserve will bear the attendant expenses, but variable life insurance policyowners and variable annuity contract owners would no longer have the economies of scale resulting from a larger combined fund.
Addition, Deletion, or Substitution of Portfolios
We do not guarantee that each portfolio will always be available for investment through the Policy. We reserve the right, subject to compliance with applicable law, to add new portfolios, close existing portfolios, or substitute portfolio shares that are held by any subaccount for shares of a different portfolio. New or substitute portfolios may have different fees and expenses and their availability may be limited to certain classes of purchasers. We will only add, delete or substitute shares of another portfolio of a fund (or of another open-end, registered investment company) if the shares of a portfolio are no longer available for investment, or if in our judgment further investment in any portfolio would become inappropriate in view of the purposes of the separate account. We will not add, delete or substitute any shares attributable to your interest in a subaccount without notice to you and prior approval of the SEC, to the extent required by the 1940 Act or other applicable law. We may also decide to purchase securities from other portfolios for the separate account. We reserve the right to transfer separate account assets to another separate account that we determine to be associated with the class of contracts to which the Policy belongs.
We also reserve the right to establish additional subaccounts of the separate account, each of which would invest in a new portfolio of a fund, or in shares of another investment company, with specified investment objectives. We may establish new subaccounts when, in our sole discretion, marketing, tax or investment conditions warrant. We will make any new subaccounts available to existing owners on a basis we determine. We may also eliminate one or more subaccounts for the same reasons as stated above.
In the event of any such substitution or change, we may make such changes in this and other policies as may be necessary or appropriate to reflect such substitution or change. If we deem it to be in the best interests of persons having voting rights under the Policies, and when permitted by law, the separate account may be (1) operated as a management company under the 1940 Act, (2) deregistered under the 1940 Act in the event such registration is no longer required, (3) managed under the direction of a committee, or (4) combined with one or more other separate accounts, or subaccounts.
Additional Information about Western Reserve and the Separate Account
Western Reserve is a stock life insurance company is a wholly-owned indirect subsidiary of Transamerica Corporation, which conducts most of its operations through subsidiary companies engaged in the insurance business or in providing non-insurance financial services. All of the stock of Transamerica Corporation is indirectly owned by AEGON N.V. of the Netherlands, a public company under Dutch law. Western Reserves administrative office is located at 570 Carillon Parkway, St. Petersburg, Florida 33716-1202 and the mailing address is 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499.
Western Reserve was initially incorporated in 1957 under the laws of Ohio and is subject to regulation by the Insurance Department of the State of Ohio, as well as by the insurance departments of all other states and jurisdictions in which it does business. Western Reserve is licensed to sell insurance in all states (except New York), Puerto Rico, Guam, and in the District of Columbia. Western Reserve submits annual statements on its operations and finances to insurance officials in all states and jurisdictions in which it does business. The Policy described in the prospectus has been filed with, and where required, approved by, insurance officials in those jurisdictions in which it is sold.
Western Reserve established the separate account as a separate investment account under Ohio law in 1985. We own the assets in the separate account and are obligated to pay all benefits under the Policies. The separate account is used to support other life insurance policies of Western Reserve, as well as for other purposes permitted by law. The separate account is registered with the SEC as a unit investment trust under the 1940 Act and qualifies as a separate account within the meaning of the federal securities laws.
Western Reserve holds the assets of the separate account physically segregated and apart from the general account. Western Reserve maintains records of all purchases and sales of portfolio shares by each of the subaccounts. A blanket bond was issued to AEGON USA, Inc. (AEGON USA) in the aggregate amount of $12 million, covering all of the employees of AEGON USA and its affiliates, including Western Reserve. A Stockbrokers Blanket Bond, issued to AEGON U.S.A. Securities, Inc. providing fidelity coverage, covers the activities of registered representatives of TCI to a limit of $10 million.
7
Arthur D. Woods, Vice President and Senior Counsel of Western Reserve, has provided legal advice on certain matters in connection with the issuance of the Policy.
Variations in Policy Provisions
Certain provisions of the Policy may vary from the descriptions in the prospectus, depending on when and where the Policy was issued, in order to comply with different state laws. These variations may include differences in charges, or Policy features may be unavailable or known by a different name. Please refer to your Policy, since any variations will be included in your Policy or in riders or endorsements attached to your Policy.
Personalized Illustrations of Policy Benefits
In order to help you understand how your Policy values would vary over time under different sets of assumptions, we will provide you with certain personalized illustrations upon request. These will be based on the age and insurance risk characteristics of the insured persons under your Policy and such factors as the specified amount, death benefit option, premium payment amounts, and rates of return (within limits) that you request.
The illustrations are not a representation or guarantee of investment returns or cash value. You may request illustrations that reflect the expenses of the portfolios in which you intend to invest.
We currently offer the Policies on a continuous basis. We anticipate continuing to offer the Policies, but reserve the right to discontinue the offering.
Our affiliate, TCI serves as principal underwriter for the Policies. TCIs home office is located at 4600 S. Syracuse Street, Suite 1100, Denver, Colorado 80237. TCI is an affiliate of Western Reserve and, like Western Reserve, is an indirect, wholly owned subsidiary of AEGON USA. TCI is registered as a broker-dealer with the Securities and Exchange Commission under the Securities Exchange Act of 1934 and is a member of NASD, Inc. TCI is not a member of the Securities Investor Protection Corporation.
The Policies are offered to the public through sales representatives of broker-dealers (selling firms) that have entered into selling agreements with us and with TCI. Sales representatives are appointed as our insurance agents.
During fiscal years 2007, 2006, and 2005 before TCI replaced our affiliate, AFSG Securities Corporation (AFSG) as principal underwriter for the Policies, the amounts paid to AFSG in connection with all Policies sold through the separate account were $21,215,096, $70,977,287 and $90,322,329, respectively. The amount paid to TCI for the period May 1, 2007 through December 31, 2007 in connection with all Policies sold through the separate account was $44,112,185. AFSG and TCI each passed through commissions it received to selling firms for their sales and did not retain any portion of them. Our parent company provides capital distributions to TCI (and provided capital distributions to AFSG) and pays for TCIs (and paid for AFSGs) operating and other expenses, including overhead, legal and accounting fees.
We and/or TCI or ISI may pay certain selling firms additional cash amounts for: (1) preferred product treatment of the Policies in their marketing programs, which may include marketing services and increased access to their sales representatives; (2) sales promotions relating to the Policies; (3) costs associated with sales conferences and educational seminars for their sales representatives; and (4) other sales expenses incurred by them. These additional payments are not offered to all selling firms, and the terms of any particular agreement governing the payments may vary among selling firms.
At least once each year, or more often as required by law, we will mail to policyowners at their last known address a report showing the following information as of the end of the report period:
the current cash value |
any activity since the last report | |
the current net surrender value |
projected values | |
the current death benefit |
investment experience of each subaccount | |
outstanding loans |
any other information required by law |
8
You may request additional copies of reports, but we may charge a fee for such additional copies. In addition, we will send written confirmations of any premium payments and other financial transactions you request including: changes in specified amount, changes in death benefit option, transfers, partial withdrawals, increases in loan amount, loan interest payments, loan repayments, lapses and reinstatements. We also will send copies of the annual and semi-annual report to shareholders for each portfolio in which you are indirectly invested.
We will maintain all records relating to the separate account and the fixed account.
Independent Registered Public Accounting Firm
The financial statements of the separate account at December 31, 2007 and for the periods disclosed in the financial statements, and the statutory-basis financial statements and schedules of Western Reserve at December 31, 2007 and 2006, and for each of the three years in the period ended December 31, 2007, appearing herein, have been audited by Ernst & Young LLP, 801 Grand Avenue, Suite 3000, Des Moines, Iowa 50309, independent registered public accounting firm, as set forth in their respective reports thereon appearing elsewhere herein, and are included in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing.
Actuarial matters included in this SAI have been examined by Lorne Schinbein, Vice President and Managing Actuary of Western Reserve, located at 570 Carillon Parkway, St. Petersburg, Florida 33716, as stated in the opinion filed as an exhibit to the registration statement.
Western Reserves statutory-basis financial statements and schedules, which include the Report of Independent Registered Public Accounting Firm, appear on the following pages. These statutory-basis financial statements and schedules should be distinguished from the separate accounts financial statements and you should consider these statutory-basis financial statements and schedules only as bearing upon Western Reserves ability to meet our obligations under the Policies. You should not consider our statutory-basis financial statements and schedules as bearing upon the investment performance of the assets held in the separate account.
Western Reserves statutory-basis financial statements and schedules at December 31, 20076 and 20065 and for each of the three years in the period ended December 31, 2006, have been prepared on the basis of statutory accounting principles rather than U.S. generally accepted accounting principles.
The separate accounts financial statements, which include the Report of Independent Registered Public Accounting Firm, also appear on the following pages.
The Policy uses mortality tables that distinguish between men and women. As a result, the Policy pays different benefits to men and women of the same age. Montana prohibits our use of actuarial tables that distinguish between males and females to determine premiums and policy benefits for policies issued on the lives of its residents. Therefore, we will base the premiums and benefits in Policies that we issue in Montana, to insure residents of that state, on actuarial tables that do not differentiate on the basis of gender.
Your cost of insurance charge will vary by the insureds gender, issue age on the Policy date, issue age at the time of any increase in specified amount, rate band, length of time from the Policy date or from the date of any increase in specified amount, and rate class. We currently place insureds into the following rate classes:
| ultimate select (preferred) non-tobacco use; |
| select (non-preferred) non-tobacco use; |
| ultimate standard (preferred) tobacco use; |
| standard (non-preferred) tobacco use; and |
| juvenile-under 18. |
9
We also place insureds in various sub-standard rate classes, which involve a higher mortality risk and higher charges. We generally charge higher rates for insureds who use tobacco. We currently charge lower cost of insurance rates for insureds who are in an ultimate class. An ultimate class is only available if our underwriting guidelines require you to take a blood test because of the specified amount you have chosen.
We are a member of the Insurance Marketplace Standards Association (IMSA). IMSA is an independent, voluntary organization of life insurance companies. It promotes high ethical standards in the sales and advertising of individual life insurance, long-term care insurance and annuity products. Through its Principles and Code of Ethical Market Conduct, IMSA encourages its member companies to develop and implement policies and procedures to promote sound market practices. Companies must undergo a rigorous self and independent assessment of their practices to become a member of IMSA. The IMSA logo in our sales literature shows our ongoing commitment to these standards. You may find more information about IMSA and its ethical standards at www.imsaethics.org in the Consumer section or by contacting IMSA at 240-497-2900.
10
Other Performance Data in Advertising Sales Literature
We may compare each subaccounts performance to the performance of:
| other variable life issuers in general; |
| variable life insurance policies which invest in mutual funds with similar investment objectives and policies, as reported by Lipper Analytical Services, Inc. (Lipper) and Morningstar, Inc. (Morningstar); and other services, companies, individuals, or industry or financial publications (e.g., Forbes, Money, The Wall Street Journal, Business Week, Barrons, Kiplingers Personal Finance, and Fortune); |
| Lipper and Morningstar rank variable annuity contracts and variable life policies. Their performance analysis ranks such policies and contracts on the basis of total return, and assumes reinvestment of distributions; but it does not show sales charges, redemption fees or certain expense deductions at the separate account level. |
| the Standard & Poors Index of 500 Common Stocks, or other widely recognized indices; |
| unmanaged indices may assume the reinvestment of dividends, but usually do not reflect deductions for the expenses of operating or managing an investment portfolio; or |
| other types of investments, such as: |
| certificates of deposit; |
| savings accounts and U.S. Treasuries; |
| certain interest rate and inflation indices (e.g., the Consumer Price Index); or |
| indices measuring the performance of a defined group of securities recognized by investors as representing a particular segment of the securities markets (e.g., Donoghue Money Market Institutional Average, Lehman Brothers Corporate Bond Index, or Lehman Brothers Government Bond Index). |
Western Reserves Published Ratings
We may publish in advertisements, sales literature, or reports we send to you the ratings and other information that an independent ratings organization assigns to us. These organizations include: A.M. Best Company, Moodys Investors Service, Inc., Standard & Poors Insurance Rating Services, and Fitch Ratings. These ratings are opinions regarding an operating insurance companys financial capacity to meet the obligations of its insurance policies in accordance with their terms. These ratings do not apply to the separate account, the subaccounts, the funds or their portfolios, or to their performance.
11
Report of Independent Registered Public Accounting Firm
The Board of Directors and Contract Owners
of the WRL Series Life Account
Western Reserve Life Assurance Co. of Ohio
We have audited the accompanying statements of assets and liabilities of each of the subaccounts constituting the WRL Series Life Account (comprised of the JPMorgan Core Bond, Asset Allocation Conservative, Asset Allocation Growth, Asset Allocation Moderate Growth, Asset Allocation Moderate, International Moderate Growth, MFS International Equity, Capital Guardian US Equity, Capital Guardian Value, Clarion Global Real Estate Securities, Federated Market Opportunity, Transamerica Science & Technology, JPMorgan Mid Cap Value, JPMorgan Enhanced Index, Marsico Growth, BlackRock Large Cap Value, MFS High Yield, Munder Net50, PIMCO Total Return, Legg Mason Partners All Cap, T. Rowe Price Equity Income, T. Rowe Price Small Cap, Templeton Transamerica Global, Third Avenue Value, Transamerica Balanced, Transamerica Convertible Securities, and Transamerica Equity subaccounts) as of December 31, 2007, and the related statements of operations and changes in net assets for the periods indicated thereon. These financial statements are the responsibility of the Separate Accounts management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Separate Accounts internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Separate Accounts internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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. Our procedures included confirmation of securities owned as of December 31, 2007 by correspondence with the mutual funds transfer agents. We believe that our audits provide a reasonable basis for our opinion.
S-1
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the respective subaccounts constituting the WRL Series Life Account at December 31, 2007, and the results of their operations and changes in net assets for the periods indicated thereon, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Des Moines, Iowa
March 21, 2008
S-2
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Assets and Liabilities
December 31, 2007
JPMorgan Core Bond Subaccount |
Asset Allocation - Conservative Subaccount |
Asset Allocation - Growth Subaccount |
Asset Allocation - Moderate Growth Subaccount |
Asset Allocation - Moderate Subaccount | |||||||||||
Assets |
|||||||||||||||
Investment in securities: |
|||||||||||||||
Number of shares |
3,990,495.885 | 2,501,954.763 | 24,536,955.101 | 25,823,375.712 | 8,017,394.829 | ||||||||||
Cost |
$ | 47,665,725 | $ | 28,042,581 | $ | 298,447,598 | $ | 307,698,253 | $ | 91,356,070 | |||||
Investments in mutual funds, at net asset value |
$ | 47,127,756 | $ | 28,747,460 | $ | 337,873,872 | $ | 363,334,896 | $ | 103,424,393 | |||||
Receivable for units sold |
| | | 3,115 | | ||||||||||
Total assets |
47,127,756 | 28,747,460 | 337,873,872 | 363,338,011 | 103,424,393 | ||||||||||
Liabilities |
|||||||||||||||
Payable for units redeemed |
7 | 5,581 | 523 | | 77,100 | ||||||||||
$ | 47,127,749 | $ | 28,741,879 | $ | 337,873,349 | $ | 363,338,011 | $ | 103,347,293 | ||||||
Net Assets: |
|||||||||||||||
Deferred annuity contracts terminable by owners |
$ | 47,127,749 | $ | 28,741,879 | $ | 337,873,349 | $ | 363,338,011 | $ | 103,347,293 | |||||
Total net assets |
$ | 47,127,749 | $ | 28,741,879 | $ | 337,873,349 | $ | 363,338,011 | $ | 103,347,293 | |||||
Accumulation units outstanding: |
|||||||||||||||
M&E - 0.90% |
1,357,776 | 1,878,277 | 15,935,988 | 17,940,651 | 5,682,655 | ||||||||||
M&E - 0.75% |
144,644 | 141,109 | 4,812,113 | 5,140,621 | 1,208,567 | ||||||||||
M&E - 0.00% |
116 | 2,859 | 47,524 | 12,487 | 12,563 | ||||||||||
Accumulation unit value: |
|||||||||||||||
M&E - 0.90% |
$ | 33.467825 | $ | 14.268131 | $ | 16.216761 | $ | 15.771784 | $ | 15.060047 | |||||
M&E - 0.75% |
$ | 11.647287 | $ | 13.544896 | $ | 16.397950 | $ | 15.609502 | $ | 14.584661 | |||||
M&E - 0.00% |
$ | 10.768243 | $ | 10.864355 | $ | 11.245820 | $ | 11.163548 | $ | 11.120533 | |||||
See accompanying notes.
S-3
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Assets and Liabilities
December 31, 2007
International Moderate Growth Subaccount |
MFS International Equity Subaccount |
Capital Guardian US Equity Subaccount |
Capital Guardian Value Subaccount |
Clarion Global Real Estate Securities Subaccount | |||||||||||
Assets |
|||||||||||||||
Investment in securities: |
|||||||||||||||
Number of shares |
783,261.856 | 7,788,558.687 | 162,763.817 | 209,009.698 | 3,978,510.225 | ||||||||||
Cost |
$ | 8,429,367 | $ | 67,338,396 | $ | 1,669,324 | $ | 4,160,874 | $ | 78,062,254 | |||||
Investments in mutual funds, at net asset value |
$ | 8,709,872 | $ | 69,162,401 | $ | 1,652,053 | $ | 3,833,238 | $ | 78,137,941 | |||||
Receivable for units sold |
5 | 12,181 | 1 | 2 | 14,779 | ||||||||||
Total assets |
8,709,877 | 69,174,582 | 1,652,054 | 3,833,240 | 78,152,720 | ||||||||||
Liabilities |
|||||||||||||||
Payable for units redeemed |
| | | | | ||||||||||
$ | 8,709,877 | $ | 69,174,582 | $ | 1,652,054 | $ | 3,833,240 | $ | 78,152,720 | ||||||
Net Assets: |
|||||||||||||||
Deferred annuity contracts terminable by owners |
$ | 8,709,877 | $ | 69,174,582 | $ | 1,652,054 | $ | 3,833,240 | $ | 78,152,720 | |||||
Total net assets |
$ | 8,709,877 | $ | 69,174,582 | $ | 1,652,054 | $ | 3,833,240 | $ | 78,152,720 | |||||
Accumulation units outstanding: |
|||||||||||||||
M&E - 0.90% |
545,417 | 4,520,343 | 122,773 | 228,651 | 2,412,261 | ||||||||||
M&E - 0.75% |
228,145 | | | 44,184 | 225,884 | ||||||||||
M&E - 0.00% |
5,667 | | | 353 | 2,681 | ||||||||||
Accumulation unit value: |
|||||||||||||||
M&E - 0.90% |
$ | 11.167621 | $ | 15.302950 | $ | 13.456141 | $ | 13.968719 | $ | 30.403676 | |||||
M&E - 0.75% |
$ | 11.195357 | $ | | $ | | $ | 14.391559 | $ | 21.179495 | |||||
M&E - 0.00% |
$ | 11.416565 | $ | | $ | | $ | 9.639273 | $ | 10.072416 | |||||
See accompanying notes.
S-4
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Assets and Liabilities
December 31, 2007
Federated Market Opportunity Subaccount |
Transamerica Science & Technology Subaccount |
JPMorgan Mid Cap Value Subaccount |
JPMorgan Enhanced Index Subaccount |
Marsico Growth Subaccount | |||||||||||
Assets |
|||||||||||||||
Investment in securities: |
|||||||||||||||
Number of shares |
6,155,786.574 | 4,479,542.214 | 956,283.570 | 137,887.330 | 1,565,252.037 | ||||||||||
Cost |
$ | 93,287,672 | $ | 19,800,695 | $ | 12,954,665 | $ | 2,062,831 | $ | 14,892,850 | |||||
Investments in mutual funds, at net asset value |
$ | 90,243,831 | $ | 23,965,551 | $ | 15,099,718 | $ | 2,265,489 | $ | 20,285,666 | |||||
Receivable for units sold |
| 59 | | 3 | 156 | ||||||||||
Total assets |
90,243,831 | 23,965,610 | 15,099,718 | 2,265,492 | 20,285,822 | ||||||||||
Liabilities |
|||||||||||||||
Payable for units redeemed |
3,939 | | 1,507 | | | ||||||||||
$ | 90,239,892 | $ | 23,965,610 | $ | 15,098,211 | $ | 2,265,492 | $ | 20,285,822 | ||||||
Net Assets: |
|||||||||||||||
Deferred annuity contracts terminable by owners |
$ | 90,239,892 | $ | 23,965,610 | $ | 15,098,211 | $ | 2,265,492 | $ | 20,285,822 | |||||
Total net assets |
$ | 90,239,892 | $ | 23,965,610 | $ | 15,098,211 | $ | 2,265,492 | $ | 20,285,822 | |||||
Accumulation units outstanding: |
|||||||||||||||
M&E - 0.90% |
2,625,698 | 4,126,550 | 847,741 | 137,323 | 1,583,088 | ||||||||||
M&E - 0.75% |
399,324 | 89,317 | 5,439 | 25,310 | 83,822 | ||||||||||
M&E - 0.00% |
294 | 1,669 | | 26 | 649 | ||||||||||
Accumulation unit value: |
|||||||||||||||
M&E - 0.90% |
$ | 32.504888 | $ | 5.480543 | $ | 17.714855 | $ | 13.852089 | $ | 12.006930 | |||||
M&E - 0.75% |
$ | 12.242932 | $ | 14.857564 | $ | 14.820240 | $ | 14.342019 | $ | 15.147314 | |||||
M&E - 0.00% |
$ | 10.090002 | $ | 13.682872 | $ | | $ | 10.817660 | $ | 12.511844 | |||||
See accompanying notes.
S-5
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Assets and Liabilities
December 31, 2007
BlackRock Large Cap Value Subaccount |
MFS High Yield Subaccount |
Munder Net50 Subaccount |
PIMCO Total Return Subaccount |
Legg Mason Partners All Cap Subaccount | |||||||||||
Assets |
|||||||||||||||
Investment in securities: |
|||||||||||||||
Number of shares |
3,596,683.179 | 152,883.660 | 1,323,986.089 | 1,164,976.423 | 3,177,134.845 | ||||||||||
Cost |
$ | 58,444,735 | $ | 1,333,395 | $ | 12,726,942 | $ | 13,006,703 | $ | 41,340,236 | |||||
Investments in mutual funds, at net asset value |
$ | 68,912,450 | $ | 1,336,203 | $ | 15,596,556 | $ | 13,571,975 | $ | 44,098,632 | |||||
Receivable for units sold |
29,402 | | | | | ||||||||||
Total assets |
68,941,852 | 1,336,203 | 15,596,556 | 13,571,975 | 44,098,632 | ||||||||||
Liabilities |
|||||||||||||||
Payable for units redeemed |
| | 1,856 | 10 | 942 | ||||||||||
$ | 68,941,852 | $ | 1,336,203 | $ | 15,594,700 | $ | 13,571,965 | $ | 44,097,690 | ||||||
Net Assets: |
|||||||||||||||
Deferred annuity contracts terminable by owners |
$ | 68,941,852 | $ | 1,336,203 | $ | 15,594,700 | $ | 13,571,965 | $ | 44,097,690 | |||||
Total net assets |
$ | 68,941,852 | $ | 1,336,203 | $ | 15,594,700 | $ | 13,571,965 | $ | 44,097,690 | |||||
Accumulation units outstanding: |
|||||||||||||||
M&E - 0.90% |
2,416,860 | 71,971 | 1,296,713 | 998,498 | 2,601,483 | ||||||||||
M&E - 0.75% |
109,492 | 29,319 | 63,181 | 59,461 | 52,511 | ||||||||||
M&E - 0.00% |
4,384 | 818 | 867 | 2,406 | 2,990 | ||||||||||
Accumulation unit value: |
|||||||||||||||
M&E - 0.90% |
$ | 27.700336 | $ | 13.284455 | $ | 11.319014 | $ | 12.854914 | $ | 16.655468 | |||||
M&E - 0.75% |
$ | 17.777906 | $ | 12.672089 | $ | 14.347037 | $ | 11.940914 | $ | 14.037004 | |||||
M&E - 0.00% |
$ | 10.828217 | $ | 10.483984 | $ | 12.375637 | $ | 10.944730 | $ | 10.592590 | |||||
See accompanying notes.
S-6
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Assets and Liabilities
December 31, 2007
T. Rowe Price Equity Income Subaccount |
T. Rowe Price Small Cap Subaccount |
Templeton Transamerica Global Subaccount |
Third Avenue Value Subaccount |
Transamerica Balanced Subaccount | |||||||||||
Assets |
|||||||||||||||
Investment in securities: |
|||||||||||||||
Number of shares |
1,562,038.357 | 2,257,057.224 | 12,262,252.311 | 5,698,511.097 | 490,124.039 | ||||||||||
Cost |
$ | 30,765,898 | $ | 24,368,034 | $ | 289,739,869 | $ | 110,121,198 | $ | 5,631,879 | |||||
Investments in mutual funds, at net asset value |
$ | 29,803,692 | $ | 23,179,978 | $ | 306,678,930 | $ | 123,942,616 | $ | 6,714,699 | |||||
Receivable for units sold |
301 | 201 | | 4,140 | 2,524 | ||||||||||
Total assets |
29,803,993 | 23,180,179 | 306,678,930 | 123,946,756 | 6,717,223 | ||||||||||
Liabilities |
|||||||||||||||
Payable for units redeemed |
| | 1,348 | | | ||||||||||
$ | 29,803,993 | $ | 23,180,179 | $ | 306,677,582 | $ | 123,946,756 | $ | 6,717,223 | ||||||
Net Assets: |
|||||||||||||||
Deferred annuity contracts terminable by owners |
$ | 29,803,993 | $ | 23,180,179 | $ | 306,677,582 | $ | 123,946,756 | $ | 6,717,223 | |||||
Total net assets |
$ | 29,803,993 | $ | 23,180,179 | $ | 306,677,582 | $ | 123,946,756 | $ | 6,717,223 | |||||
Accumulation units outstanding: |
|||||||||||||||
M&E - 0.90% |
2,088,735 | 1,629,844 | 9,007,397 | 3,960,665 | 409,746 | ||||||||||
M&E - 0.75% |
91,504 | 97,677 | 183,189 | 314,566 | 30,367 | ||||||||||
M&E - 0.00% |
2,163 | 77 | 3,888 | 6,531 | 2 | ||||||||||
Accumulation unit value: |
|||||||||||||||
M&E - 0.90% |
$ | 13.587309 | $ | 13.389139 | $ | 33.704372 | $ | 29.868058 | $ | 15.283764 | |||||
M&E - 0.75% |
$ | 15.304983 | $ | 13.893768 | $ | 16.606969 | $ | 17.740833 | $ | 14.974930 | |||||
M&E - 0.00% |
$ | 10.744831 | $ | 11.143839 | $ | 12.009257 | $ | 10.523822 | $ | 11.549117 | |||||
See accompanying notes.
S-7
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Assets and Liabilities
December 31, 2007
Transamerica Convertible Securities Subaccount |
Transamerica Equity Subaccount |
Transamerica Growth Opportunities Subaccount |
Transamerica Money Market Subaccount |
Transamerica Small/MidCap Value Subaccount | |||||||||||
Assets |
|||||||||||||||
Investment in securities: |
|||||||||||||||
Number of shares |
377,023.098 | 34,729,574.121 | 3,871,082.153 | 60,275,146.092 | 1,077,409.420 | ||||||||||
Cost |
$ | 4,546,769 | $ | 880,866,467 | $ | 67,890,421 | $ | 60,275,146 | $ | 21,995,400 | |||||
Investments in mutual funds, at net asset value |
$ | 4,705,248 | $ | 1,003,684,692 | $ | 70,376,274 | $ | 60,275,146 | $ | 23,810,748 | |||||
Receivable for units sold |
93 | | | 6,778 | 4 | ||||||||||
Total assets |
4,705,341 | 1,003,684,692 | 70,376,274 | 60,281,924 | 23,810,752 | ||||||||||
Liabilities |
|||||||||||||||
Payable for units redeemed |
| 19,346 | 2,667 | | | ||||||||||
$ | 4,705,341 | $ | 1,003,665,346 | $ | 70,373,607 | $ | 60,281,924 | $ | 23,810,752 | ||||||
Net Assets: |
|||||||||||||||
Deferred annuity contracts terminable by owners |
$ | 4,705,341 | $ | 1,003,665,346 | $ | 70,373,607 | $ | 60,281,924 | $ | 23,810,752 | |||||
Total net assets |
$ | 4,705,341 | $ | 1,003,665,346 | $ | 70,373,607 | $ | 60,281,924 | $ | 23,810,752 | |||||
Accumulation units outstanding: |
|||||||||||||||
M&E - 0.90% |
257,832 | 54,546,272 | 3,898,229 | 2,690,146 | 1,008,833 | ||||||||||
M&E - 0.75% |
21,757 | 434,379 | 139,341 | 343,002 | 265,941 | ||||||||||
M&E - 0.00% |
88 | 2,271 | 66 | 768 | 2,115 | ||||||||||
Accumulation unit value: |
|||||||||||||||
M&E - 0.90% |
$ | 16.944129 | $ | 18.261479 | $ | 17.414516 | $ | 20.991231 | $ | 18.635881 | |||||
M&E - 0.75% |
$ | 15.421452 | $ | 17.364663 | $ | 17.848338 | $ | 11.091245 | $ | 18.736403 | |||||
M&E - 0.00% |
$ | 12.187954 | $ | 11.843020 | $ | 12.616258 | $ | 10.584319 | $ | 12.998404 | |||||
See accompanying notes.
S-8
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Assets and Liabilities
December 31, 2007
Transamerica U.S. Government Securities Subaccount |
Transamerica Value Balanced Subaccount |
Van Kampen Mid-Cap Growth Subaccount |
ProFund VP Bull Subaccount |
ProFund VP Money Market Subaccount | |||||||||||
Assets |
|||||||||||||||
Investment in securities: |
|||||||||||||||
Number of shares |
114,709.958 | 10,729,117.744 | 13,880,073.581 | 37,958.804 | 26,511,367.660 | ||||||||||
Cost |
$ | 1,361,575 | $ | 138,130,436 | $ | 333,985,545 | $ | 1,186,949 | $ | 26,511,368 | |||||
Investments in mutual funds, at net asset value |
$ | 1,376,519 | $ | 152,246,181 | $ | 358,522,301 | $ | 1,172,927 | $ | 26,511,368 | |||||
Receivable for units sold |
1 | | 34,655 | | 2,791 | ||||||||||
Total assets |
1,376,520 | 152,246,181 | 358,556,956 | 1,172,927 | 26,514,159 | ||||||||||
Liabilities |
|||||||||||||||
Payable for units redeemed |
| 132 | | 363 | | ||||||||||
$ | 1,376,520 | $ | 152,246,049 | $ | 358,556,956 | $ | 1,172,564 | $ | 26,514,159 | ||||||
Net Assets: |
|||||||||||||||
Deferred annuity contracts terminable by owners |
$ | 1,376,520 | $ | 152,246,049 | $ | 358,556,956 | $ | 1,172,564 | $ | 26,514,159 | |||||
Total net assets |
$ | 1,376,520 | $ | 152,246,049 | $ | 358,556,956 | $ | 1,172,564 | $ | 26,514,159 | |||||
Accumulation units outstanding: |
|||||||||||||||
M&E - 0.90% |
80,984 | 5,803,725 | 7,533,570 | 88,778 | 2,046,097 | ||||||||||
M&E - 0.75% |
36,344 | 39,439 | 113,145 | 10,971 | 485,051 | ||||||||||
M&E - 0.00% |
| 854 | 1,565 | | | ||||||||||
Accumulation unit value: |
|||||||||||||||
M&E - 0.90% |
$ | 11.913641 | $ | 26.132313 | $ | 47.363689 | $ | 11.752149 | $ | 10.469995 | |||||
M&E - 0.75% |
$ | 11.328028 | $ | 14.500478 | $ | 15.196091 | $ | 11.779215 | $ | 10.496908 | |||||
M&E - 0.00% |
$ | 10.640731 | $ | 11.012821 | $ | 12.755564 | $ | 10.674605 | $ | 10.447302 | |||||
See accompanying notes.
S-9
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Assets and Liabilities
December 31, 2007
ProFund VP NASDAQ-100 Subaccount |
ProFund VP Short Small-Cap Subaccount |
ProFund VP Small-Cap Subaccount |
Fidelity VIP Contrafund® Subaccount |
Fidelity VIP Equity-Income Subaccount | |||||||||||
Assets |
|||||||||||||||
Investment in securities: |
|||||||||||||||
Number of shares |
684,385.819 | 94,999.539 | 56,768.079 | 949,554.860 | 569,109.398 | ||||||||||
Cost |
$ | 12,850,388 | $ | 1,425,069 | $ | 1,755,661 | $ | 24,570,620 | $ | 13,486,468 | |||||
Investments in mutual funds, at net asset value |
$ | 12,743,264 | $ | 1,410,743 | $ | 1,743,348 | $ | 26,074,776 | $ | 13,413,909 | |||||
Receivable for units sold |
6,059 | 430 | 4,664 | 17,074 | 299 | ||||||||||
Total assets |
12,749,323 | 1,411,173 | 1,748,012 | 26,091,850 | 13,414,208 | ||||||||||
Liabilities |
|||||||||||||||
Payable for units redeemed |
| | | | | ||||||||||
$ | 12,749,323 | $ | 1,411,173 | $ | 1,748,012 | $ | 26,091,850 | $ | 13,414,208 | ||||||
Net Assets: |
|||||||||||||||
Deferred annuity contracts terminable by owners |
$ | 12,749,323 | $ | 1,411,173 | $ | 1,748,012 | $ | 26,091,850 | $ | 13,414,208 | |||||
Total net assets |
$ | 12,749,323 | $ | 1,411,173 | $ | 1,748,012 | $ | 26,091,850 | $ | 13,414,208 | |||||
Accumulation units outstanding: |
|||||||||||||||
M&E - 0.90% |
650,542 | 151,035 | 142,528 | 1,662,224 | 892,431 | ||||||||||
M&E - 0.75% |
305,503 | 3,580 | 17,835 | | | ||||||||||
M&E - 0.00% |
| | | | | ||||||||||
Accumulation unit value: |
|||||||||||||||
M&E - 0.90% |
$ | 13.325685 | $ | 9.126544 | $ | 10.897537 | $ | 15.696949 | $ | 15.031093 | |||||
M&E - 0.75% |
$ | 13.356351 | $ | 9.147572 | $ | 10.922632 | $ | | $ | | |||||
M&E - 0.00% |
$ | 11.920610 | $ | 10.263012 | $ | 10.012510 | $ | | $ | | |||||
See accompanying notes.
S-10
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Assets and Liabilities
December 31, 2007
Fidelity VIP Growth Opportunities Subaccount |
Fidelity VIP Index 500 Subaccount | |||||
Assets |
||||||
Investment in securities: |
||||||
Number of shares |
311,098.406 | 39,751.567 | ||||
Cost |
$ | 5,680,486 | $ | 6,122,544 | ||
Investments in mutual funds, at net asset value |
$ | 6,893,941 | $ | 6,471,158 | ||
Receivable for units sold |
| | ||||
Total assets |
6,893,941 | 6,471,158 | ||||
Liabilities |
||||||
Payable for units redeemed |
18,989 | | ||||
$ | 6,874,952 | $ | 6,471,158 | |||
Net Assets: |
||||||
Deferred annuity contracts terminable by owners |
$ | 6,874,952 | $ | 6,471,158 | ||
Total net assets |
$ | 6,874,952 | $ | 6,471,158 | ||
Accumulation units outstanding: |
||||||
M&E - 0.90% |
661,082 | 145,383 | ||||
M&E - 0.75% |
| 312,320 | ||||
M&E - 0.00% |
| 54 | ||||
Accumulation unit value: |
||||||
M&E - 0.90% |
$ | 10.399540 | $ | 13.563516 | ||
M&E - 0.75% |
$ | | $ | 14.404047 | ||
M&E - 0.00% |
$ | | $ | 10.862590 | ||
See accompanying notes.
S-11
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Operations
Year Ended December 31, 2007
JPMorgan Core Bond Subaccount |
Asset Allocation - Conservative Subaccount |
Asset Allocation - Growth Subaccount |
Asset Allocation - Moderate Growth Subaccount |
Asset Allocation - Moderate Subaccount | ||||||||||||||
Net investment income (loss) |
||||||||||||||||||
Income: |
||||||||||||||||||
Dividends |
$ | 2,370,567 | $ | 873,545 | $ | 7,225,684 | $ | 8,216,722 | $ | 2,932,522 | ||||||||
Expenses: |
||||||||||||||||||
Administrative, mortality and expense risk charge |
409,644 | 241,516 | 2,728,729 | 2,982,893 | 852,138 | |||||||||||||
Net investment income (loss) |
1,960,923 | 632,029 | 4,496,955 | 5,233,829 | 2,080,384 | |||||||||||||
Net realized and unrealized capital gains (losses) on investments |
||||||||||||||||||
Net realized capital gains (losses) on investments: |
||||||||||||||||||
Realized gain distributions |
| 1,076,782 | 12,357,783 | 8,485,515 | 2,565,934 | |||||||||||||
Proceeds from sales |
5,814,140 | 9,569,850 | 18,729,726 | 17,411,897 | 9,582,705 | |||||||||||||
Cost of investments sold |
5,960,769 | 9,048,546 | 15,354,604 | 14,028,340 | 8,164,346 | |||||||||||||
Net realized capital gains (losses) on investments |
(146,629 | ) | 1,598,086 | 15,732,905 | 11,869,072 | 3,984,293 | ||||||||||||
Net change in unrealized appreciation/depreciation of investments: |
||||||||||||||||||
Beginning of period |
(1,385,551 | ) | 1,368,968 | 40,700,800 | 50,740,045 | 11,582,147 | ||||||||||||
End of period |
(537,969 | ) | 704,879 | 39,426,274 | 55,636,643 | 12,068,323 | ||||||||||||
Net change in unrealized appreciation/depreciation of investments |
847,582 | (664,089 | ) | (1,274,526 | ) | 4,896,598 | 486,176 | |||||||||||
Net realized and unrealized capital gains (losses) on investments |
700,953 | 933,997 | 14,458,379 | 16,765,670 | 4,470,469 | |||||||||||||
Increase (decrease) in net assets from operations |
$ | 2,661,876 | $ | 1,566,026 | $ | 18,955,334 | $ | 21,999,499 | $ | 6,550,853 | ||||||||
See accompanying notes.
S-12
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Operations
Year Ended December 31, 2007
International Moderate Growth Subaccount |
MFS International Equity Subaccount |
Capital Guardian US Equity Subaccount |
Capital Guardian Value Subaccount |
Clarion Global Real Estate Securities Subaccount |
|||||||||||||||
Net investment income (loss) |
|||||||||||||||||||
Income: |
|||||||||||||||||||
Dividends |
$ | 64,903 | $ | 709,706 | $ | 12,702 | $ | 46,688 | $ | 6,564,412 | |||||||||
Expenses: |
|||||||||||||||||||
Administrative, mortality and expense risk charge |
43,337 | 668,721 | 15,952 | 38,683 | 904,523 | ||||||||||||||
Net investment income (loss) |
21,566 | 40,985 | (3,250 | ) | 8,005 | 5,659,889 | |||||||||||||
Net realized and unrealized capital gains (losses) on investments |
|||||||||||||||||||
Net realized capital gains (losses) on investments: |
|||||||||||||||||||
Realized gain distributions |
38,589 | 13,097,625 | 155,747 | 288,878 | 6,663,780 | ||||||||||||||
Proceeds from sales |
868,670 | 15,943,690 | 212,820 | 2,100,151 | 35,205,481 | ||||||||||||||
Cost of investments sold |
760,684 | 13,634,962 | 190,680 | 1,942,226 | 25,721,637 | ||||||||||||||
Net realized capital gains (losses) on investments |
146,575 | 15,406,353 | 177,887 | 446,803 | 16,147,624 | ||||||||||||||
Net change in unrealized appreciation/depreciation of investments: |
|||||||||||||||||||
Beginning of period |
136,796 | 11,647,020 | 172,393 | 425,809 | 29,497,336 | ||||||||||||||
End of period |
280,505 | 1,824,005 | (17,271 | ) | (327,636 | ) | 75,687 | ||||||||||||
Net change in unrealized appreciation/depreciation of investments |
143,709 | (9,823,015 | ) | (189,664 | ) | (753,445 | ) | (29,421,649 | ) | ||||||||||
Net realized and unrealized capital gains (losses) on investments |
290,284 | 5,583,338 | (11,777 | ) | (306,642 | ) | (13,274,025 | ) | |||||||||||
Increase (decrease) in net assets from operations |
$ | 311,850 | $ | 5,624,323 | $ | (15,027 | ) | $ | (298,637 | ) | $ | (7,614,136 | ) | ||||||
See accompanying notes.
S-13
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Operations
Year Ended December 31, 2007
Federated Market Opportunity Subaccount |
Transamerica Science & Technology Subaccount |
JPMorgan Mid Cap Value Subaccount |
JPMorgan Enhanced Index Subaccount |
Marsico Growth Subaccount |
||||||||||||||||
Net investment income (loss) |
||||||||||||||||||||
Income: |
||||||||||||||||||||
Dividends |
$ | 3,592,224 | $ | | $ | 169,659 | $ | 27,935 | $ | 4,056 | ||||||||||
Expenses: |
||||||||||||||||||||
Administrative, mortality and expense risk charge |
865,033 | 127,755 | 157,660 | 19,403 | 142,628 | |||||||||||||||
Net investment income (loss) |
2,727,191 | (127,755 | ) | 11,999 | 8,532 | (138,572 | ) | |||||||||||||
Net realized and unrealized capital gains (losses) on investments |
||||||||||||||||||||
Net realized capital gains (losses) on investments: |
||||||||||||||||||||
Realized gain distributions |
461,489 | | 1,095,129 | 61,843 | 155,123 | |||||||||||||||
Proceeds from sales |
21,271,020 | 3,280,621 | 4,223,557 | 517,612 | 2,138,449 | |||||||||||||||
Cost of investments sold |
21,706,607 | 2,667,175 | 3,337,331 | 389,653 | 1,556,699 | |||||||||||||||
Net realized capital gains (losses) on investments |
25,902 | 613,446 | 1,981,355 | 189,802 | 736,873 | |||||||||||||||
Net change in unrealized appreciation/depreciation of investments: |
||||||||||||||||||||
Beginning of period |
1,267,989 | 946,464 | 3,691,584 | 334,876 | 3,249,570 | |||||||||||||||
End of period |
(3,043,841 | ) | 4,164,856 | 2,145,053 | 202,658 | 5,392,816 | ||||||||||||||
Net change in unrealized appreciation/depreciation of investments |
(4,311,830 | ) | 3,218,392 | (1,546,531 | ) | (132,218 | ) | 2,143,246 | ||||||||||||
Net realized and unrealized capital gains (losses) on investments |
(4,285,928 | ) | 3,831,838 | 434,824 | 57,584 | 2,880,119 | ||||||||||||||
Increase (decrease) in net assets from operations |
$ | (1,558,737 | ) | $ | 3,704,083 | $ | 446,823 | $ | 66,116 | $ | 2,741,547 | |||||||||
See accompanying notes.
S-14
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Operations
Year Ended December 31, 2007
BlackRock Large Cap Value Subaccount |
MFS High Yield Subaccount |
Munder Net50 Subaccount |
PIMCO Total Return Subaccount |
Legg Mason Partners All Cap Subaccount |
|||||||||||||||
Net investment income (loss) |
|||||||||||||||||||
Income: |
|||||||||||||||||||
Dividends |
$ | 692,080 | $ | 138,388 | $ | | $ | 310,246 | $ | 629,139 | |||||||||
Expenses: |
|||||||||||||||||||
Administrative, mortality and expense risk charge |
658,801 | 20,997 | 123,899 | 110,890 | 430,070 | ||||||||||||||
Net investment income (loss) |
33,279 | 117,391 | (123,899 | ) | 199,356 | 199,069 | |||||||||||||
Net realized and unrealized capital gains (losses) on investments |
|||||||||||||||||||
Net realized capital gains (losses) on investments: |
|||||||||||||||||||
Realized gain distributions |
8,017,907 | 81 | 346,959 | 844 | 2,505,502 | ||||||||||||||
Proceeds from sales |
11,265,925 | 5,925,175 | 5,001,439 | 12,294,933 | 6,278,773 | ||||||||||||||
Cost of investments sold |
8,592,303 | 6,025,462 | 3,642,476 | 11,935,846 | 5,474,107 | ||||||||||||||
Net realized capital gains (losses) on investments |
10,691,529 | (100,206 | ) | 1,705,922 | 359,931 | 3,310,168 | |||||||||||||
Net change in unrealized appreciation/depreciation of investments: |
|||||||||||||||||||
Beginning of period |
18,590,203 | (37,936 | ) | 2,573,935 | 116,043 | 6,106,695 | |||||||||||||
End of period |
10,467,715 | 2,808 | 2,869,614 | 565,272 | 2,758,396 | ||||||||||||||
Net change in unrealized appreciation/depreciation of investments |
(8,122,488 | ) | 40,744 | 295,679 | 449,229 | (3,348,299 | ) | ||||||||||||
Net realized and unrealized capital gains (losses) on investments |
2,569,041 | (59,462 | ) | 2,001,601 | 809,160 | (38,131 | ) | ||||||||||||
Increase (decrease) in net assets from operations |
$ | 2,602,320 | $ | 57,929 | $ | 1,877,702 | $ | 1,008,516 | $ | 160,938 | |||||||||
See accompanying notes.
S-15
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Operations
Year Ended December 31, 2007
T. Rowe Price Equity Income Subaccount |
T. Rowe Price Small Cap Subaccount |
Templeton Transamerica Global Subaccount |
Third Avenue Value Subaccount |
Transamerica Balanced Subaccount | |||||||||||||||
Net investment income (loss) |
|||||||||||||||||||
Income: |
|||||||||||||||||||
Dividends |
$ | 668,861 | $ | | $ | 4,573,301 | $ | 5,404,074 | $ | 65,861 | |||||||||
Expenses: |
|||||||||||||||||||
Administrative, mortality and expense risk charge |
275,761 | 206,182 | 2,676,085 | 1,244,707 | 52,420 | ||||||||||||||
Net investment income (loss) |
393,100 | (206,182 | ) | 1,897,216 | 4,159,367 | 13,441 | |||||||||||||
Net realized and unrealized capital gains (losses) on investments |
|||||||||||||||||||
Net realized capital gains (losses) on investments: |
|||||||||||||||||||
Realized gain distributions |
2,818,689 | 2,263,530 | | 19,363,516 | 25,368 | ||||||||||||||
Proceeds from sales |
7,804,406 | 4,589,135 | 26,925,633 | 23,099,792 | 822,023 | ||||||||||||||
Cost of investments sold |
7,314,787 | 4,696,745 | 26,571,829 | 17,133,529 | 685,233 | ||||||||||||||
Net realized capital gains (losses) on investments |
3,308,308 | 2,155,920 | 353,804 | 25,329,779 | 162,158 | ||||||||||||||
Net change in unrealized appreciation/depreciation of investments: |
|||||||||||||||||||
Beginning of period |
2,069,221 | (951,892 | ) | (20,124,535 | ) | 42,607,055 | 575,273 | ||||||||||||
End of period |
(962,206 | ) | (1,188,056 | ) | 16,939,061 | 13,821,418 | 1,082,820 | ||||||||||||
Net change in unrealized appreciation/depreciation of investments |
(3,031,427 | ) | (236,164 | ) | 37,063,596 | (28,785,637 | ) | 507,547 | |||||||||||
Net realized and unrealized capital gains (losses) on investments |
276,881 | 1,919,756 | 37,417,400 | (3,455,858 | ) | 669,705 | |||||||||||||
Increase (decrease) in net assets from operations |
$ | 669,981 | $ | 1,713,574 | $ | 39,314,616 | $ | 703,509 | $ | 683,146 | |||||||||
See accompanying notes.
S-16
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Operations
Year Ended December 31, 2007
Transamerica Convertible Securities Subaccount |
Transamerica Equity Subaccount |
Transamerica Growth Opportunities Subaccount |
Transamerica Money Market Subaccount |
Transamerica Small/MidCap Value Subaccount | ||||||||||||||
Net investment income (loss) |
||||||||||||||||||
Income: |
||||||||||||||||||
Dividends |
$ | 61,747 | $ | 225,828 | $ | 28,432 | $ | 2,691,559 | $ | 172,146 | ||||||||
Expenses: |
||||||||||||||||||
Administrative, mortality and expense risk charge |
29,434 | 8,759,669 | 553,802 | 491,563 | 148,121 | |||||||||||||
Net investment income (loss) |
32,313 | (8,533,841 | ) | (525,370 | ) | 2,199,996 | 24,025 | |||||||||||
Net realized and unrealized capital gains (losses) on investments |
||||||||||||||||||
Net realized capital gains (losses) on investments: |
||||||||||||||||||
Realized gain distributions |
322,418 | 39,790,124 | 4,574,521 | (17 | ) | 1,594,186 | ||||||||||||
Proceeds from sales |
1,364,513 | 106,322,096 | 7,319,248 | 43,319,843 | 1,926,711 | |||||||||||||
Cost of investments sold |
1,252,350 | 96,804,922 | 7,550,733 | 43,319,843 | 1,673,096 | |||||||||||||
Net realized capital gains (losses) on investments |
434,581 | 49,307,298 | 4,343,036 | (17 | ) | 1,847,801 | ||||||||||||
Net change in unrealized appreciation/depreciation of investments: |
||||||||||||||||||
Beginning of period |
145,364 | 25,299,553 | (5,529,180 | ) | | 585,122 | ||||||||||||
End of period |
158,479 | 122,818,225 | 2,485,853 | | 1,815,348 | |||||||||||||
Net change in unrealized appreciation/depreciation of investments |
13,115 | 97,518,672 | 8,015,033 | | 1,230,226 | |||||||||||||
Net realized and unrealized capital gains (losses) on investments |
447,696 | 146,825,970 | 12,358,069 | (17 | ) | 3,078,027 | ||||||||||||
Increase (decrease) in net assets from operations |
$ | 480,009 | $ | 138,292,129 | $ | 11,832,699 | $ | 2,199,979 | $ | 3,102,052 | ||||||||
See accompanying notes.
S-17
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Operations
Year Ended December 31, 2007
Transamerica U.S. Government Securities Subaccount |
Transamerica Value Balanced Subaccount |
Van Kampen Mid-Cap Growth Subaccount |
ProFund VP Bull Subaccount |
ProFund VP Money Market Subaccount | ||||||||||||||
Net investment income (loss) |
||||||||||||||||||
Income: |
||||||||||||||||||
Dividends |
$ | 39,203 | $ | 3,968,406 | $ | | $ | 8,934 | $ | 187,913 | ||||||||
Expenses: |
||||||||||||||||||
Administrative, mortality and expense risk charge |
7,618 | 1,410,208 | 3,051,748 | 38,244 | 47,448 | |||||||||||||
Net investment income (loss) |
31,585 | 2,558,198 | (3,051,748 | ) | (29,310 | ) | 140,465 | |||||||||||
Net realized and unrealized capital gains (losses) on investments |
||||||||||||||||||
Net realized capital gains (losses) on investments: |
||||||||||||||||||
Realized gain distributions |
| 2,440,866 | | 19,656 | | |||||||||||||
Proceeds from sales |
687,360 | 14,746,767 | 25,486,455 | 43,925,594 | 65,343,929 | |||||||||||||
Cost of investments sold |
698,078 | 13,231,404 | 26,208,476 | 44,203,138 | 65,343,929 | |||||||||||||
Net realized capital gains (losses) on investments |
(10,718 | ) | 3,956,229 | (722,021 | ) | (257,888 | ) | | ||||||||||
Net change in unrealized appreciation/depreciation of investments: |
||||||||||||||||||
Beginning of period |
(14,651 | ) | 11,842,497 | (43,888,016 | ) | (42,511 | ) | | ||||||||||
End of period |
14,944 | 14,115,745 | 24,536,756 | (14,022 | ) | | ||||||||||||
Net change in unrealized appreciation/depreciation of investments |
29,595 | 2,273,248 | 68,424,772 | 28,489 | | |||||||||||||
Net realized and unrealized capital gains (losses) on investments |
18,877 | 6,229,477 | 67,702,751 | (229,399 | ) | | ||||||||||||
Increase (decrease) in net assets from operations |
$ | 50,462 | $ | 8,787,675 | $ | 64,651,003 | $ | (258,709 | ) | $ | 140,465 | |||||||
See accompanying notes.
S-18
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Operations
Year Ended December 31, 2007
ProFund VP NASDAQ-100 Subaccount |
ProFund VP Short Small-Cap Subaccount |
ProFund VP Small-Cap Subaccount |
Fidelity VIP Contrafund® Subaccount |
Fidelity VIP Equity-Income Subaccount |
||||||||||||||||
Net investment income (loss) |
||||||||||||||||||||
Income: |
||||||||||||||||||||
Dividends |
$ | | $ | 283,467 | $ | 9,455 | $ | 185,663 | $ | 226,817 | ||||||||||
Expenses: |
||||||||||||||||||||
Administrative, mortality and expense risk charge |
54,442 | 39,232 | 33,588 | 225,125 | 135,433 | |||||||||||||||
Net investment income (loss) |
(54,442 | ) | 244,235 | (24,133 | ) | (39,462 | ) | 91,384 | ||||||||||||
Net realized and unrealized capital gains (losses) on investments |
||||||||||||||||||||
Net realized capital gains (losses) on investments: |
||||||||||||||||||||
Realized gain distributions |
| | 183,627 | 6,347,990 | 1,142,954 | |||||||||||||||
Proceeds from sales |
24,068,346 | 67,672,868 | 69,046,423 | 3,583,668 | 3,813,443 | |||||||||||||||
Cost of investments sold |
24,004,372 | 68,747,545 | 70,121,272 | 2,591,375 | 3,098,315 | |||||||||||||||
Net realized capital gains (losses) on investments |
63,974 | (1,074,677 | ) | (891,222 | ) | 7,340,283 | 1,858,082 | |||||||||||||
Net change in unrealized appreciation/depreciation of investments: |
||||||||||||||||||||
Beginning of period |
(15,502 | ) | 1,562 | 7,970 | 5,042,581 | 1,755,321 | ||||||||||||||
End of period |
(107,124 | ) | (14,326 | ) | (12,313 | ) | 1,504,156 | (72,559 | ) | |||||||||||
Net change in unrealized appreciation/depreciation of investments |
(91,622 | ) | (15,888 | ) | (20,283 | ) | (3,538,425 | ) | (1,827,880 | ) | ||||||||||
Net realized and unrealized capital gains (losses) on investments |
(27,648 | ) | (1,090,565 | ) | (911,505 | ) | 3,801,858 | 30,202 | ||||||||||||
Increase (decrease) in net assets from operations |
$ | (82,090 | ) | $ | (846,330 | ) | $ | (935,638 | ) | $ | 3,762,396 | $ | 121,586 | |||||||
See accompanying notes.
S-19
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Operations
Year Ended December 31, 2007
Fidelity VIP Growth Opportunities Subaccount |
Fidelity VIP Index 500 Subaccount |
|||||||
Net investment income (loss) |
||||||||
Income: |
||||||||
Dividends |
$ | | $ | 187,006 | ||||
Expenses: |
||||||||
Administrative, mortality and expense risk charge |
44,754 | 43,647 | ||||||
Net investment income (loss) |
(44,754 | ) | 143,359 | |||||
Net realized and unrealized capital gains (losses) on investments |
||||||||
Net realized capital gains (losses) on investments: |
||||||||
Realized gain distributions |
| | ||||||
Proceeds from sales |
1,383,528 | 1,343,643 | ||||||
Cost of investments sold |
992,993 | 1,133,588 | ||||||
Net realized capital gains (losses) on investments |
390,535 | 210,055 | ||||||
Net change in unrealized appreciation/depreciation of investments: |
||||||||
Beginning of period |
677,692 | 492,462 | ||||||
End of period |
1,213,455 | 348,614 | ||||||
Net change in unrealized appreciation/depreciation of investments |
535,763 | (143,848 | ) | |||||
Net realized and unrealized capital gains (losses) on investments |
926,298 | 66,207 | ||||||
Increase (decrease) in net assets from operations |
$ | 881,544 | $ | 209,566 | ||||
See accompanying notes.
S-20
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
JPMorgan Core Bond Subaccount |
Asset Allocation - Conservative Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 1,960,923 | $ | 2,022,995 | $ | 632,029 | $ | 585,793 | ||||||||
Net realized capital gains (losses) on investments |
(146,629 | ) | (305,580 | ) | 1,598,086 | 1,469,682 | ||||||||||
Net change in unrealized appreciation/ depreciation of investments |
847,582 | (362,253 | ) | (664,089 | ) | (47,398 | ) | |||||||||
Increase (decrease) in net assets from operations |
2,661,876 | 1,355,162 | 1,566,026 | 2,008,077 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
4,992,947 | 5,686,347 | 5,262,014 | 4,179,871 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
550,625 | (2,900,815 | ) | 1,032,552 | (1,023,530 | ) | ||||||||||
Contract terminations, withdrawals, and other deductions |
(2,305,909 | ) | (2,861,298 | ) | (2,175,865 | ) | (1,583,593 | ) | ||||||||
Contract maintenance charges |
(4,072,761 | ) | (4,313,128 | ) | (2,035,298 | ) | (2,060,811 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
(835,098 | ) | (4,388,894 | ) | 2,083,403 | (488,063 | ) | |||||||||
Net increase (decrease) in net assets |
1,826,778 | (3,033,732 | ) | 3,649,429 | 1,520,014 | |||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
45,300,971 | 48,334,703 | 25,092,450 | 23,572,436 | ||||||||||||
End of the period |
$ | 47,127,749 | $ | 45,300,971 | $ | 28,741,879 | $ | 25,092,450 | ||||||||
See accompanying notes.
S-21
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
Asset Allocation - Growth Subaccount |
Asset Allocation - Moderate Growth Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 4,496,955 | $ | 210,615 | $ | 5,233,829 | $ | 2,039,513 | ||||||||
Net realized capital gains (losses) on investments |
15,732,905 | 16,613,267 | 11,869,072 | 12,344,307 | ||||||||||||
Net change in unrealized appreciation/ depreciation of investments |
(1,274,526 | ) | 14,104,930 | 4,896,598 | 17,713,746 | |||||||||||
Increase (decrease) in net assets from operations |
18,955,334 | 30,928,812 | 21,999,499 | 32,097,566 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
83,125,984 | 76,561,645 | 79,242,009 | 82,342,985 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
5,619,308 | 22,305,764 | 4,353,215 | 16,134,297 | ||||||||||||
Contract terminations, withdrawals, and other deductions |
(13,520,685 | ) | (8,915,387 | ) | (17,556,207 | ) | (12,737,036 | ) | ||||||||
Contract maintenance charges |
(28,724,820 | ) | (24,052,634 | ) | (33,593,712 | ) | (29,673,704 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
46,499,787 | 65,899,388 | 32,445,305 | 56,066,542 | ||||||||||||
Net increase (decrease) in net assets |
65,455,121 | 96,828,200 | 54,444,804 | 88,164,108 | ||||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
272,418,228 | 175,590,028 | 308,893,207 | 220,729,099 | ||||||||||||
End of the period |
$ | 337,873,349 | $ | 272,418,228 | $ | 363,338,011 | $ | 308,893,207 | ||||||||
See accompanying notes.
S-22
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
Asset Allocation - Moderate Subaccount |
International Moderate Growth Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 (1) | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 2,080,384 | $ | 1,481,039 | $ | 21,566 | $ | (6,439 | ) | |||||||
Net realized capital gains (losses) on investments |
3,984,293 | 4,713,475 | 146,575 | 7,571 | ||||||||||||
Net change in unrealized appreciation/ depreciation of investments |
486,176 | 2,077,540 | 143,709 | 136,796 | ||||||||||||
Increase (decrease) in net assets from operations |
6,550,853 | 8,272,054 | 311,850 | 137,928 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
20,734,184 | 21,114,612 | 4,841,314 | 908,557 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
534,209 | 3,232,158 | 2,251,574 | 1,114,517 | ||||||||||||
Contract terminations, withdrawals, and other deductions |
(4,804,700 | ) | (3,834,149 | ) | (185,957 | ) | (31,340 | ) | ||||||||
Contract maintenance charges |
(10,173,042 | ) | (9,887,595 | ) | (574,665 | ) | (63,901 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
6,290,651 | 10,625,026 | 6,332,266 | 1,927,833 | ||||||||||||
Net increase (decrease) in net assets |
12,841,504 | 18,897,080 | 6,644,116 | 2,065,761 | ||||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
90,505,789 | 71,608,709 | 2,065,761 | | ||||||||||||
End of the period |
$ | 103,347,293 | $ | 90,505,789 | $ | 8,709,877 | $ | 2,065,761 | ||||||||
See accompanying notes.
S-23
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
MFS International Equity Subaccount |
Capital Guardian US Equity Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 40,985 | $ | 290,967 | $ | (3,250 | ) | $ | (5,579 | ) | ||||||
Net realized capital gains (losses) on investments |
15,406,353 | 3,510,139 | 177,887 | 173,866 | ||||||||||||
Net change in unrealized appreciation/ depreciation of investments |
(9,823,015 | ) | 6,211,680 | (189,664 | ) | (32,187 | ) | |||||||||
Increase (decrease) in net assets from operations |
5,624,323 | 10,012,786 | (15,027 | ) | 136,100 | |||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
6,047,099 | 9,683,796 | 131,558 | 153,798 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
562,941 | 11,424,005 | (30,493 | ) | (5,561 | ) | ||||||||||
Contract terminations, withdrawals, and other deductions |
(3,180,309 | ) | (2,438,388 | ) | (23,038 | ) | (12,028 | ) | ||||||||
Contract maintenance charges |
(4,177,806 | ) | (3,301,742 | ) | (115,426 | ) | (104,866 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
(748,075 | ) | 15,367,671 | (37,399 | ) | 31,343 | ||||||||||
Net increase (decrease) in net assets |
4,876,248 | 25,380,457 | (52,426 | ) | 167,443 | |||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
64,298,334 | 38,917,877 | 1,704,480 | 1,537,037 | ||||||||||||
End of the period |
$ | 69,174,582 | $ | 64,298,334 | $ | 1,652,054 | $ | 1,704,480 | ||||||||
See accompanying notes.
S-24
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
Capital Guardian Value Subaccount |
Clarion Global Real Estate Securities Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 8,005 | $ | 16,886 | $ | 5,659,889 | $ | 387,842 | ||||||||
Net realized capital gains (losses) on investments |
446,803 | 362,975 | 16,147,624 | 9,296,367 | ||||||||||||
Net change in unrealized appreciation/ depreciation of investments |
(753,445 | ) | 101,201 | (29,421,649 | ) | 15,548,052 | ||||||||||
Increase (decrease) in net assets from operations |
(298,637 | ) | 481,062 | (7,614,136 | ) | 25,232,261 | ||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
| 1,568,116 | 5,194,008 | 13,739,822 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
(508,454 | ) | 378,751 | (7,348,499 | ) | 14,782,443 | ||||||||||
Contract terminations, withdrawals, and other deductions |
(56,410 | ) | (118,489 | ) | (5,180,898 | ) | (3,535,320 | ) | ||||||||
Contract maintenance charges |
(288,722 | ) | (209,163 | ) | (6,457,096 | ) | (4,831,750 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
(853,586 | ) | 1,619,215 | (13,792,485 | ) | 20,155,195 | ||||||||||
Net increase (decrease) in net assets |
(1,152,223 | ) | 2,100,277 | (21,406,621 | ) | 45,387,456 | ||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
4,985,463 | 2,885,186 | 99,559,341 | 54,171,885 | ||||||||||||
End of the period |
$ | 3,833,240 | $ | 4,985,463 | $ | 78,152,720 | $ | 99,559,341 | ||||||||
See accompanying notes.
S-25
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
Federated Market Opportunity Subaccount |
Transamerica Science & Technology Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 2,727,191 | $ | 868,750 | $ | (127,755 | ) | $ | (97,790 | ) | ||||||
Net realized capital gains (losses) on investments |
25,902 | 9,858,201 | 613,446 | 1,148,378 | ||||||||||||
Net change in unrealized appreciation/ depreciation of investments |
(4,311,830 | ) | (8,664,027 | ) | 3,218,392 | (1,055,456 | ) | |||||||||
Increase (decrease) in net assets from operations |
(1,558,737 | ) | 2,062,924 | 3,704,083 | (4,868 | ) | ||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
6,295,470 | 11,052,033 | 7,722,350 | 1,149,113 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
(9,425,500 | ) | (7,785,234 | ) | 3,756,288 | (959,013 | ) | |||||||||
Contract terminations, withdrawals, and other deductions |
(4,631,888 | ) | (6,272,224 | ) | (792,247 | ) | (533,462 | ) | ||||||||
Contract maintenance charges |
(7,617,160 | ) | (8,468,944 | ) | (1,040,531 | ) | (921,939 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
(15,379,078 | ) | (11,474,369 | ) | 9,645,860 | (1,265,301 | ) | |||||||||
Net increase (decrease) in net assets |
(16,937,815 | ) | (9,411,445 | ) | 13,349,943 | (1,270,169 | ) | |||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
107,177,707 | 116,589,152 | 10,615,667 | 11,885,836 | ||||||||||||
End of the period |
$ | 90,239,892 | $ | 107,177,707 | $ | 23,965,610 | $ | 10,615,667 | ||||||||
See accompanying notes.
S-26
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
JPMorgan Mid Cap Value Subaccount |
JPMorgan Enhanced Index Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 11,999 | $ | (18,134 | ) | $ | 8,532 | $ | 3,238 | |||||||
Net realized capital gains (losses) on investments |
1,981,355 | 3,250,434 | 189,802 | 38,942 | ||||||||||||
Net change in unrealized appreciation/ depreciation of investments |
(1,546,531 | ) | (253,332 | ) | (132,218 | ) | 149,265 | |||||||||
Increase (decrease) in net assets from operations |
446,823 | 2,978,968 | 66,116 | 191,445 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
| | 757,139 | 306,025 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
(2,549,349 | ) | (4,960,805 | ) | (65,107 | ) | 16,610 | |||||||||
Contract terminations, withdrawals, and other deductions |
(975,507 | ) | (1,036,788 | ) | (55,377 | ) | (49,442 | ) | ||||||||
Contract maintenance charges |
(440,180 | ) | (602,529 | ) | (106,072 | ) | (74,070 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
(3,965,036 | ) | (6,600,122 | ) | 530,583 | 199,123 | ||||||||||
Net increase (decrease) in net assets |
(3,518,213 | ) | (3,621,154 | ) | 596,699 | 390,568 | ||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
18,616,424 | 22,237,578 | 1,668,793 | 1,278,225 | ||||||||||||
End of the period |
$ | 15,098,211 | $ | 18,616,424 | $ | 2,265,492 | $ | 1,668,793 | ||||||||
See accompanying notes.
S-27
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
Marsico Growth Subaccount |
BlackRock Large Cap Value Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | (138,572 | ) | $ | (117,223 | ) | $ | 33,279 | $ | (253,336 | ) | |||||
Net realized capital gains (losses) on investments |
736,873 | 763,991 | 10,691,529 | 4,434,377 | ||||||||||||
Net change in unrealized appreciation/ depreciation of investments |
2,143,246 | (15,946 | ) | (8,122,488 | ) | 5,495,844 | ||||||||||
Increase (decrease) in net assets from operations |
2,741,547 | 630,822 | 2,602,320 | 9,676,885 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
4,160,777 | 1,570,107 | 3,868,402 | 7,998,245 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
591,244 | (1,399,812 | ) | (1,444,569 | ) | 1,544,159 | ||||||||||
Contract terminations, withdrawals, and other deductions |
(637,368 | ) | (692,992 | ) | (3,402,298 | ) | (3,520,455 | ) | ||||||||
Contract maintenance charges |
(1,008,825 | ) | (1,007,996 | ) | (4,394,505 | ) | (4,025,326 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
3,105,828 | (1,530,693 | ) | (5,372,970 | ) | 1,996,623 | ||||||||||
Net increase (decrease) in net assets |
5,847,375 | (899,871 | ) | (2,770,650 | ) | 11,673,508 | ||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
14,438,447 | 15,338,318 | 71,712,502 | 60,038,994 | ||||||||||||
End of the period |
$ | 20,285,822 | $ | 14,438,447 | $ | 68,941,852 | $ | 71,712,502 | ||||||||
See accompanying notes.
S-28
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
MFS High Yield Subaccount |
Munder Net50 Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 117,391 | $ | 179,867 | $ | (123,899 | ) | $ | (112,324 | ) | ||||||
Net realized capital gains (losses) on investments |
(100,206 | ) | 15,283 | 1,705,922 | 879,864 | |||||||||||
Net change in unrealized appreciation/ depreciation of investments |
40,744 | (10,440 | ) | 295,679 | (880,370 | ) | ||||||||||
Increase (decrease) in net assets from operations |
57,929 | 184,710 | 1,877,702 | (112,830 | ) | |||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
2,073,293 | 809,293 | 1,821,748 | 1,395,604 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
(2,829,517 | ) | 51,741 | 1,406,981 | (1,775,174 | ) | ||||||||||
Contract terminations, withdrawals, and other deductions |
(91,921 | ) | (63,727 | ) | (599,661 | ) | (583,041 | ) | ||||||||
Contract maintenance charges |
(170,881 | ) | (115,256 | ) | (1,084,255 | ) | (1,018,452 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
(1,019,026 | ) | 682,051 | 1,544,813 | (1,981,063 | ) | ||||||||||
Net increase (decrease) in net assets |
(961,097 | ) | 866,761 | 3,422,515 | (2,093,893 | ) | ||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
2,297,300 | 1,430,539 | 12,172,185 | 14,266.078 | ||||||||||||
End of the period |
$ | 1,336,203 | $ | 2,297,300 | $ | 15,594,700 | $ | 12,172,185 | ||||||||
See accompanying notes.
S-29
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
PIMCO Total Return Subaccount |
Legg Mason Partners All Cap Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 199,356 | $ | 343,658 | $ | 199,069 | $ | 49,803 | ||||||||
Net realized capital gains (losses) on investments |
359,931 | (13,968 | ) | 3,310,168 | 7,506,947 | |||||||||||
Net change in unrealized appreciation/ depreciation of investments |
449,229 | 60,663 | (3,348,299 | ) | (200,582 | ) | ||||||||||
Increase (decrease) in net assets from operations |
1,008,516 | 390,353 | 160,938 | 7,356,168 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
3,328,951 | 1,170,881 | 4,030,008 | 4,501,426 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
2,435 | (1,674,574 | ) | (2,036,228 | ) | (3,760,040 | ) | |||||||||
Contract terminations, withdrawals, and other deductions |
(730,457 | ) | (768,516 | ) | (2,314,616 | ) | (2,258,609 | ) | ||||||||
Contract maintenance charges |
(886,629 | ) | (935,651 | ) | (3,359,021 | ) | (3,451,818 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
1,714,300 | (2,207,860 | ) | (3,679,857 | ) | (4,969,041 | ) | |||||||||
Net increase (decrease) in net assets |
2,722,816 | (1,817,507 | ) | (3,518,919 | ) | 2,387,127 | ||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
10,849,149 | 12,666,656 | 47,616,609 | 45,229,482 | ||||||||||||
End of the period |
$ | 13,571,965 | $ | 10,849,149 | $ | 44,097,690 | $ | 47,616,609 | ||||||||
See accompanying notes.
S-30
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
T. Rowe Price Equity Income Subaccount |
T. Rowe Price Small Cap Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 393,100 | $ | 211,584 | $ | (206,182 | ) | $ | (222,059 | ) | ||||||
Net realized capital gains (losses) on investments |
3,308,308 | 2,583,678 | 2,155,920 | 2,715,278 | ||||||||||||
Net change in unrealized appreciation/depreciation of investments |
(3,031,427 | ) | 1,035,479 | (236,164 | ) | (1,650,970 | ) | |||||||||
Increase (decrease) in net assets from operations |
669,981 | 3,830,741 | 1,713,574 | 842,249 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
2,946,962 | 2,694,197 | 2,563,431 | 1,085,664 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
521,931 | 4,542,098 | (85,936 | ) | (9,724,718 | ) | ||||||||||
Contract terminations, withdrawals, and other deductions |
(1,540,150 | ) | (1,264,415 | ) | (1,388,265 | ) | (1,234,661 | ) | ||||||||
Contract maintenance charges |
(1,758,033 | ) | (1,391,210 | ) | (1,544,166 | ) | (1,721,264 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
170,710 | 4,580,670 | (454,936 | ) | (11,594,979 | ) | ||||||||||
Net increase (decrease) in net assets |
840,691 | 8,411,411 | 1,258,638 | (10,752,730 | ) | |||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
28,963,302 | 20,551,891 | 21,921,541 | 32,674,271 | ||||||||||||
End of the period |
$ | 29,803,993 | $ | 28,963,302 | $ | 23,180,179 | $ | 21,921,541 | ||||||||
See accompanying notes.
S-31
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
Templeton Transamerica Global Subaccount |
Third Avenue Value Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 1,897,216 | $ | 1,024,313 | $ | 4,159,367 | $ | (108,426 | ) | |||||||
Net realized capital gains (losses) on investments |
353,804 | (4,778,836 | ) | 25,329,779 | 10,787,669 | |||||||||||
Net change in unrealized appreciation/depreciation of investments |
37,063,596 | 47,229,925 | (28,785,637 | ) | 6,786,272 | |||||||||||
Increase (decrease) in net assets from operations |
39,314,616 | 43,475,402 | 703,509 | 17,465,515 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
28,796,215 | 29,216,802 | 8,947,313 | 15,141,000 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
(7,117,588 | ) | (12,264,370 | ) | (5,708,582 | ) | 1,225,615 | |||||||||
Contract terminations, withdrawals, and other deductions |
(15,915,952 | ) | (14,285,538 | ) | (6,651,083 | ) | (6,088,487 | ) | ||||||||
Contract maintenance charges |
(20,591,918 | ) | (20,572,811 | ) | (7,894,808 | ) | (7,383,386 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
(14,829,243 | ) | (17,905,917 | ) | (11,307,160 | ) | 2,894,742 | |||||||||
Net increase (decrease) in net assets |
24,485,373 | 25,569,485 | (10,603,651 | ) | 20,360,257 | |||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
282,192,209 | 256,622,724 | 134,550,407 | 114,190,150 | ||||||||||||
End of the period |
$ | 306,677,582 | $ | 282,192,209 | $ | 123,946,756 | $ | 134,550,407 | ||||||||
See accompanying notes.
S-32
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
Transamerica Balanced Subaccount |
Transamerica Convertible Securities Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 13,441 | $ | 5,016 | $ | 32,313 | $ | 20,270 | ||||||||
Net realized capital gains (losses) on investments |
162,158 | 210,912 | 434,581 | 89,444 | ||||||||||||
Net change in unrealized appreciation/depreciation of investments |
507,547 | 151,036 | 13,115 | 104,994 | ||||||||||||
Increase (decrease) in net assets from operations |
683,146 | 366,964 | 480,009 | 214,708 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
1,073,586 | 657,124 | 1,390,813 | 496,265 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
514,637 | 649,432 | 235,493 | 25,531 | ||||||||||||
Contract terminations, withdrawals, and other deductions |
(273,544 | ) | (263,933 | ) | (94,353 | ) | (142,938 | ) | ||||||||
Contract maintenance charges |
(422,655 | ) | (391,446 | ) | (216,649 | ) | (226,080 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
892,024 | 651,177 | 1,315,304 | 152,778 | ||||||||||||
Net increase (decrease) in net assets |
1,575,170 | 1,018,141 | 1,795,313 | 367,486 | ||||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
5,142,053 | 4,123,912 | 2,910,028 | 2,542,542 | ||||||||||||
End of the period |
$ | 6,717,223 | $ | 5,142,053 | $ | 4,705,341 | $ | 2,910,028 | ||||||||
See accompanying notes.
S-33
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
Transamerica Equity Subaccount |
Transamerica Growth Opportunities Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | (8,533,841 | ) | $ | (3,650,425 | ) | $ | (525,370 | ) | $ | (393,488 | ) | ||||
Net realized capital gains (losses) on investments |
49,307,298 | 463,198 | 4,343,036 | 2,113,324 | ||||||||||||
Net change in unrealized appreciation/depreciation of investments |
97,518,672 | 38,313,856 | 8,015,033 | 506,103 | ||||||||||||
Increase (decrease) in net assets from operations |
138,292,129 | 35,126,629 | 11,832,699 | 2,225,939 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
81,314,312 | 45,872,577 | 10,230,614 | 7,982,615 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
(41,804,393 | ) | 637,153,963 | (2,359,509 | ) | (1,363,326 | ) | |||||||||
Contract terminations, withdrawals, and other deductions |
(54,642,782 | ) | (22,482,168 | ) | (2,989,052 | ) | (3,171,457 | ) | ||||||||
Contract maintenance charges |
(74,045,073 | ) | (31,943,395 | ) | (4,308,179 | ) | (4,555,520 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
(89,177,936 | ) | 628,600,977 | 573,874 | (1,107,688 | ) | ||||||||||
Net increase (decrease) in net assets |
49,114,193 | 663,727,606 | 12,406,573 | 1,118,251 | ||||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
954,551,153 | 290,823,547 | 57,967,034 | 56,848,783 | ||||||||||||
End of the period |
$ | 1,003,665,346 | $ | 954,551,153 | $ | 70,373,607 | $ | 57,967,034 | ||||||||
See accompanying notes.
S-34
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
Transamerica Money Market Subaccount |
Transamerica Small/MidCap Value Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 2,199,996 | $ | 1,890,724 | $ | 24,025 | $ | 8,998 | ||||||||
Net realized capital gains (losses) on investments |
(17 | ) | | 1,847,801 | 785,782 | |||||||||||
Net change in unrealized appreciation/depreciation of investments |
| | 1,230,226 | 372,142 | ||||||||||||
Increase (decrease) in net assets from operations |
2,199,979 | 1,890,724 | 3,102,052 | 1,166,922 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
16,175,478 | 11,827,776 | 8,579,930 | 5,619,248 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
4,991,135 | 2,688,816 | 2,714,815 | 924,977 | ||||||||||||
Contract terminations, withdrawals, and other deductions |
(7,811,003 | ) | (6,557,733 | ) | (369,629 | ) | (466,322 | ) | ||||||||
Contract maintenance charges |
(5,713,871 | ) | (5,636,297 | ) | (1,410,431 | ) | (760,999 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
7,641,739 | 2,322,562 | 9,514,685 | 5,316,904 | ||||||||||||
Net increase (decrease) in net assets |
9,841,718 | 4,213,286 | 12,616,737 | 6,483,826 | ||||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
50,440,206 | 46,226,920 | 11,194,015 | 4,710,189 | ||||||||||||
End of the period |
$ | 60,281,924 | $ | 50,440,206 | $ | 23,810,752 | $ | 11,194,015 | ||||||||
See accompanying notes.
S-35
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
Transamerica U.S. Government Securities Subaccount |
Transamerica Value Balanced Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 31,585 | $ | 21,415 | $ | 2,558,198 | $ | 2,503,842 | ||||||||
Net realized capital gains (losses) on investments |
(10,718 | ) | (21,335 | ) | 3,956,229 | 6,437,631 | ||||||||||
Net change in unrealized appreciation/depreciation of investments |
29,595 | 9,792 | 2,273,248 | 11,222,945 | ||||||||||||
Increase (decrease) in net assets from operations |
50,462 | 9,872 | 8,787,675 | 20,164,418 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
636,871 | 113,171 | 10,442,659 | 13,019,862 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
235,240 | (40,574 | ) | (3,805,461 | ) | (6,143,451 | ) | |||||||||
Contract terminations, withdrawals, and other deductions |
(124,111 | ) | (198,383 | ) | (7,962,858 | ) | (8,506,360 | ) | ||||||||
Contract maintenance charges |
(84,082 | ) | (84,836 | ) | (11,188,844 | ) | (11,614,243 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
663,918 | (210,622 | ) | (12,514,504 | ) | (13,244,192 | ) | |||||||||
Net increase (decrease) in net assets |
714,380 | (200,750 | ) | (3,726,829 | ) | 6,920,226 | ||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
662,140 | 862,890 | 155,972,878 | 149,052,652 | ||||||||||||
End of the period |
$ | 1,376,520 | $ | 662,140 | $ | 152,246,049 | $ | 155,972,878 | ||||||||
See accompanying notes.
S-36
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
Van Kampen Mid-Cap Growth Subaccount |
ProFund VP Bull Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 (1) | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | (3,051,748 | ) | $ | (2,791,746 | ) | $ | (29,310 | ) | $ | (1,546 | ) | ||||
Net realized capital gains (losses) on investments |
(722,021 | ) | (8,314,174 | ) | (257,888 | ) | 62,798 | |||||||||
Net change in unrealized appreciation/depreciation of investments |
68,424,772 | 37,381,675 | 28,489 | (42,511 | ) | |||||||||||
Increase (decrease) in net assets from operations |
64,651,003 | 26,275,755 | (258,709 | ) | 18,741 | |||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
33,158,062 | 35,133,583 | 4,220,565 | 1,565,844 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
(7,217,725 | ) | (21,375,087 | ) | (10,852,649 | ) | 6,878,303 | |||||||||
Contract terminations, withdrawals, and other deductions |
(18,279,999 | ) | (17,646,019 | ) | (145,578 | ) | (3,403 | ) | ||||||||
Contract maintenance charges |
(24,309,549 | ) | (25,068,709 | ) | (228,764 | ) | (21,786 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
(16,649,211 | ) | (28,956,232 | ) | (7,006,426 | ) | 8,418,958 | |||||||||
Net increase (decrease) in net assets |
48,001,792 | (2,680,477 | ) | (7,265,135 | ) | 8,437,699 | ||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
310,555,164 | 313,235,641 | 8,437,699 | | ||||||||||||
End of the period |
$ | 358,556,956 | $ | 310,555,164 | $ | 1,172,564 | $ | 8,437,699 | ||||||||
See accompanying notes.
S-37
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
ProFund VP Money Market Subaccount |
ProFund VP NASDAQ-100 Subaccount |
|||||||||||||||
2007 | 2006 (1) | 2007 | 2006 (1) | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 140,465 | $ | 35,309 | $ | (54,442 | ) | $ | (3,506 | ) | ||||||
Net realized capital gains (losses) on investments |
| | 63,974 | 35,520 | ||||||||||||
Net change in unrealized appreciation/depreciation of investments |
| | (91,622 | ) | (15,502 | ) | ||||||||||
Increase (decrease) in net assets from operations |
140,465 | 35,309 | (82,090 | ) | 16,512 | |||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
4,564,705 | 317,348 | 8,451,277 | 521,593 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
21,203,542 | 1,282,544 | 3,976,956 | 411,827 | ||||||||||||
Contract terminations, withdrawals, and other deductions |
(550,441 | ) | (93,163 | ) | (191,707 | ) | (3,453 | ) | ||||||||
Contract maintenance charges |
(312,098 | ) | (74,052 | ) | (329,586 | ) | (22,006 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
24,905,708 | 1,432,677 | 11,906,940 | 907,961 | ||||||||||||
Net increase (decrease) in net assets |
25,046,173 | 1,467,986 | 11,824,850 | 924,473 | ||||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
1,467,986 | | 924,473 | | ||||||||||||
End of the period |
$ | 26,514,159 | $ | 1,467,986 | $ | 12,749,323 | $ | 924,473 | ||||||||
See accompanying notes.
S-38
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
ProFund VP Short Small-Cap Subaccount |
ProFund VP Small-Cap Subaccount |
|||||||||||||||
2007 | 2006 (1) | 2007 | 2006 (1) | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | 244,235 | $ | (9,566 | ) | $ | (24,133 | ) | $ | (21,919 | ) | |||||
Net realized capital gains (losses) on investments |
(1,074,677 | ) | (618,914 | ) | (891,222 | ) | 477,452 | |||||||||
Net change in unrealized appreciation/depreciation of investments |
(15,888 | ) | 1,562 | (20,283 | ) | 7,970 | ||||||||||
Increase (decrease) in net assets from operations |
(846,330 | ) | (626,918 | ) | (935,638 | ) | 463,503 | |||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
1,656,055 | 378,696 | 1,133,702 | | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
868,713 | 531,227 | (1,514,608 | ) | 3,141,059 | |||||||||||
Contract terminations, withdrawals, and other deductions |
(220,931 | ) | (45,736 | ) | (162,214 | ) | (72,977 | ) | ||||||||
Contract maintenance charges |
(208,877 | ) | (74,726 | ) | (183,528 | ) | (121,287 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
2,094,960 | 789,461 | (726,648 | ) | 2,946,795 | |||||||||||
Net increase (decrease) in net assets |
1,248,630 | 162,543 | (1,662,286 | ) | 3,410,298 | |||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
162,543 | | 3,410,298 | | ||||||||||||
End of the period |
$ | 1,411,173 | $ | 162,543 | $ | 1,748,012 | $ | 3,410,298 | ||||||||
See accompanying notes.
S-39
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
Fidelity VIP Contrafund® Subaccount |
Fidelity VIP Equity-Income Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | (39,462 | ) | $ | 21,753 | $ | 91,384 | $ | 262,666 | |||||||
Net realized capital gains (losses) on investments |
7,340,283 | 3,071,627 | 1,858,082 | 1,796,402 | ||||||||||||
Net change in unrealized appreciation/depreciation of investments |
(3,538,425 | ) | (742,450 | ) | (1,827,880 | ) | 56,673 | |||||||||
Increase (decrease) in net assets from operations |
3,762,396 | 2,350,930 | 121,586 | 2,115,741 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
1,527,899 | 2,107,264 | 241,396 | 1,398,105 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
(838,156 | ) | 159,493 | (544,832 | ) | 1,713,424 | ||||||||||
Contract terminations, withdrawals, and other deductions |
(1,196,685 | ) | (1,439,871 | ) | (743,061 | ) | (637,863 | ) | ||||||||
Contract maintenance charges |
(1,359,119 | ) | (1,425,496 | ) | (863,987 | ) | (794,159 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
(1,866,061 | ) | (598,610 | ) | (1,910,484 | ) | 1,679,507 | |||||||||
Net increase (decrease) in net assets |
1,896,335 | 1,752,320 | (1,788,898 | ) | 3,795,248 | |||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
24,195,515 | 22,443,195 | 15,203,106 | 11,407,858 | ||||||||||||
End of the period |
$ | 26,091,850 | $ | 24,195,515 | $ | 13,414,208 | $ | 15,203,106 | ||||||||
See accompanying notes.
S-40
Western Reserve Life Assurance Co.
WRL Series Life Account
Statements of Changes in Net Assets
Years Ended December 31, 2007 and 2006, Except as Noted
Fidelity VIP Growth Opportunities Subaccount |
Fidelity VIP Index 500 Subaccount |
|||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations |
||||||||||||||||
Net investment income (loss) |
$ | (44,754 | ) | $ | (14,441 | ) | $ | 143,359 | $ | 15,440 | ||||||
Net realized capital gains (losses) on investments |
390,535 | 140,470 | 210,055 | 50,061 | ||||||||||||
Net change in unrealized appreciation/depreciation of investments |
535,763 | (1,851 | ) | (143,848 | ) | 385,117 | ||||||||||
Increase (decrease) in net assets from operations |
881,544 | 124,178 | 209,566 | 450,618 | ||||||||||||
Contract transactions |
||||||||||||||||
Net contract purchase payments |
1,318,595 | 477,058 | 1,978,623 | 1,845,319 | ||||||||||||
Transfer payments from (to) other subaccounts or general account |
1,456,240 | (55,156 | ) | 489,254 | 644,246 | |||||||||||
Contract terminations, withdrawals, and other deductions |
(239,908 | ) | (194,190 | ) | (311,258 | ) | (67,314 | ) | ||||||||
Contract maintenance charges |
(352,921 | ) | (270,579 | ) | (577,399 | ) | (413,676 | ) | ||||||||
Increase (decrease) in net assets from contract transactions |
2,182,006 | (42,867 | ) | 1,579,220 | 2,008,575 | |||||||||||
Net increase (decrease) in net assets |
3,063,550 | 81,311 | 1,788,786 | 2,459,193 | ||||||||||||
Net assets: |
||||||||||||||||
Beginning of the period |
3,811,402 | 3,730,091 | 4,682,372 | 2,223,179 | ||||||||||||
End of the period |
$ | 6,874,952 | $ | 3,811,402 | $ | 6,471,158 | $ | 4,682,372 | ||||||||
See accompanying notes.
S-41
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
1. | Organization and Summary of Significant Accounting Policies |
Organization
The WRL Series Life Account (the Life Account) was established as a variable accumulation deferred annuity separate account of Western Reserve Life Assurance Co. of Ohio (WRL or the depositor) and is registered as a unit investment trust under the Investment Company Act of 1940, as amended. The Life Account encompasses the following tax-deferred variable annuity Contracts (the Contracts) issued by WRL:
Class A:
WRL Freedom Freedom Builder
WRL Freedom Elite
WRL Freedom Equity Protector
WRL Freedom Wealth Protector
WRL Freedom Elite Builder
WRL Freedom Elite Advisor
Class B:
WRL Freedom Xcelerator
The Life Account contains multiple investment options referred to as subaccounts. Each subaccount invests exclusively in the corresponding Portfolio (the Portfolio) of a fund. The Life Account contains forty-two funds (collectively referred to as the Series Funds). Each is registered as an open-ended management investment company under the Investment Company Act of 1940, as amended.
Subaccount Investment by Fund:
AEGON/Transamerica Series Trust:
JPMorgan Core Bond
Asset Allocation - Conservative
Asset Allocation - Growth
Asset Allocation - Moderate Growth
Asset Allocation - Moderate
International Moderate Growth
MFS International Equity
Capital Guardian US Equity
Capital Guardian Value
Clarion Global Real Estate Securities
Federated Market Opportunity
Transamerica Science & Technology
JPMorgan Mid Cap Value
JPMorgan Enhanced Index
Marsico Growth
BlackRock Large Cap Value
MFS High Yield
Munder Net50
PIMCO Total Return
Legg Mason Partners All Cap
T. Rowe Price Equity Income
T. Rowe Price Small Cap
Templeton Transamerica Global
Third Avenue Value
Transamerica Balanced
Transamerica Convertible Securities
Transamerica Equity
S-42
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
1. | Organization and Summary of Significant Accounting Policies (continued) |
Transamerica Growth Opportunities
Transamerica Money Market
Transamerica Small/MidCap Value
Transamerica U.S. Government Securities
Transamerica Value Balanced
Van Kampen Mid-Cap Growth
Life Account classes A, B and C invest in AEGON Transamerica Series Trust initial class shares.
Variable Insurance Products Fund-Service Class 2:
Fidelity VIP Contrafund®
Fidelity VIP Equity-Income
Fidelity VIP Growth Opportunities
Fidelity VIP Index 500
Profunds
ProFund VP Bull
ProFund VP Money Market
ProFund VP NASDAQ-100
ProFund VP Short Small-Cap
ProFund VP Small-Cap
Each period reported on reflects a full twelve month period except as follows:
Subaccount |
Inception Date | |
MFS High Yield |
May 1, 2003 | |
Transamerica Small/Mid Cap Value |
May 1, 2004 | |
Fidelity VIP Index 500 Portfolio |
May 1, 2004 | |
International Moderate Growth |
May 1, 2006 | |
ProFund VP Bull |
June 12, 2006 | |
ProFund VP Money Market |
June 12, 2006 | |
ProFund VP NASDAQ-100 |
June 12, 2006 | |
ProFund VP Short Small-Cap |
June 12, 2006 | |
ProFund VP Small-Cap |
June 12, 2006 |
The following Portfolio name changes were made effective during the fiscal year ended December 31, 2007:
Portfolio |
Formerly | |
JPMorgan Core Bond |
AEGON Bond | |
Federated Market Opportunity |
Federated Growth & Income | |
JPMorgan Mid Cap Value |
J.P. Morgan Mid-Cap Value | |
JPMorgan Enhanced Index |
JP Morgan Enhanced Index | |
ProFund VP NASDAQ-100 |
ProFund VP OTC |
Investments
Net purchase payments received by the Life Account are invested in the portfolios of the Series Funds, as selected by the contract owner. Investments are stated at the closing net asset values per share on December 31, 2007.
Realized capital gains and losses from the sales of shares in the Series Funds are determined on the first-in, first-out basis. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date. Unrealized gains or losses from investments in the mutual funds are included in the Statements of Operations.
Dividend Income
Dividends received from the Series Funds investments are reinvested to purchase additional mutual fund shares.
S-43
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
2. | Investments |
The aggregate cost of purchases and proceeds from sales of investments for the period ended December 31, 2007 were as follows:
Purchases | Sales | |||||
AEGON/Transamerica Series Fund, Inc.: |
||||||
JPMorgan Core Bond |
$ | 6,939,941 | $ | 5,814,140 | ||
Asset Allocation - Conservative |
13,367,639 | 9,569,850 | ||||
Asset Allocation - Growth |
82,084,718 | 18,729,726 | ||||
Asset Allocation - Moderate Growth |
63,573,288 | 17,411,897 | ||||
Asset Allocation - Moderate |
20,596,772 | 9,582,705 | ||||
International Moderate Growth |
7,261,087 | 868,670 | ||||
MFS International Equity |
28,322,029 | 15,943,690 | ||||
Capital Guardian US Equity |
327,919 | 212,820 | ||||
Capital Guardian Value |
1,543,448 | 2,100,151 | ||||
Clarion Global Real Estate Securities |
33,721,998 | 35,205,481 | ||||
Federated Market Opportunity |
9,084,503 | 21,271,020 | ||||
Transamerica Science & Technology |
12,798,670 | 3,280,621 | ||||
JPMorgan Mid Cap Value |
1,367,167 | 4,223,557 | ||||
JPMorgan Enhanced Index |
1,118,570 | 517,612 | ||||
Marsico Growth |
5,260,651 | 2,138,449 | ||||
BlackRock Large Cap Value |
13,914,662 | 11,265,925 | ||||
MFS High Yield |
5,023,621 | 5,925,175 | ||||
Munder Net50 |
6,771,181 | 5,001,439 | ||||
PIMCO Total Return |
14,209,438 | 12,294,933 | ||||
Legg Mason Partners All Cap |
5,304,441 | 6,278,773 | ||||
T. Rowe Price Equity Income |
11,186,596 | 7,804,406 | ||||
T. Rowe Price Small Cap |
6,191,376 | 4,589,135 | ||||
Templeton Transamerica Global |
13,995,097 | 26,925,633 | ||||
Third Avenue Value |
35,311,456 | 23,099,792 | ||||
Transamerica Balanced |
1,750,338 | 822,023 | ||||
Transamerica Convertible Securities |
3,034,461 | 1,364,513 | ||||
Transamerica Equity |
47,692,439 | 106,322,096 |
S-44
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
2. | Investments (continued) |
Purchases | Sales | |||||
Transamerica Growth Opportunities |
$ | 11,943,424 | $ | 7,319,248 | ||
Transamerica Money Market |
53,157,736 | 43,319,843 | ||||
Transamerica Small/MidCap Value |
13,059,608 | 1,926,711 | ||||
Transamerica U.S. Government Securities |
1,382,863 | 687,360 | ||||
Transamerica Value Balanced |
7,231,325 | 14,746,767 | ||||
Van Kampen Mid-Cap Growth |
5,750,956 | 25,486,455 | ||||
Profunds |
||||||
ProFund VP Bull |
36,909,855 | 43,925,594 | ||||
ProFund VP Money Market |
90,389,635 | 65,343,929 | ||||
ProFund VP NASDAQ-100 |
35,914,784 | 24,068,346 | ||||
ProFund VP Short Small-Cap |
70,011,320 | 67,672,868 | ||||
ProFund VP Small-Cap |
68,475,145 | 69,046,423 | ||||
Variable Insurance Products Fund (VIP) - Service Class 2: |
||||||
Fidelity VIP Contrafund® |
8,009,040 | 3,583,668 | ||||
Fidelity VIP Equity-Income |
3,137,023 | 3,813,443 | ||||
Fidelity VIP Growth Opportunities |
3,539,777 | 1,383,528 | ||||
Fidelity VIP Index 500 |
3,066,223 | 1,343,643 |
S-45
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
3. | Accumulation Units Outstanding |
A summary of changes in equivalent accumulation units outstanding follows:
JPMorgan Core Bond Subaccount |
Asset Allocation - Conservative Subaccount |
Asset Allocation - Growth Subaccount |
Asset Allocation - Moderate Growth Subaccount |
Asset Allocation - Moderate Subaccount |
|||||||||||
Units outstanding at January 1, 2006 |
1,616,926 | 1,894,040 | 13,233,464 | 16,902,523 | 5,643,157 | ||||||||||
Units purchased |
489,446 | 751,361 | 8,801,934 | 9,221,661 | 2,751,668 | ||||||||||
Units redeemed and transferred |
(611,110 | ) | (785,759 | ) | (4,129,984 | ) | (5,151,832 | ) | (1,931,934 | ) | |||||
Units outstanding at December 31, 2006 |
1,495,262 | 1,859,642 | 17,905,414 | 20,972,352 | 6,462,891 | ||||||||||
Units purchased |
1,581,519 | 1,997,160 | 16,000,668 | 16,353,405 | 5,135,777 | ||||||||||
Units redeemed and transferred |
(1,574,246 | ) | (1,834,556 | ) | (13,110,457 | ) | (14,231,998 | ) | (4,694,883 | ) | |||||
Units outstanding at December 31, 2007 |
1,502,535 | 2,022,246 | 20,795,625 | 23,093,759 | 6,903,785 | ||||||||||
S-46
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
3. | Accumulation Units Outstanding |
A summary of changes in equivalent accumulation units outstanding follows:
International Moderate Growth Subaccount (1) |
MFS International Equity Subaccount |
Capital Guardian US Equity Subaccount |
Capital Guardian Value Subaccount |
Clarion Global Real Estate Securities Subaccount |
|||||||||||
Units outstanding at January 1, 2006 |
| 3,355,533 | 123,344 | 221,067 | 2,346,482 | ||||||||||
Units purchased |
283,124 | 2,569,006 | 30,090 | 183,243 | 1,518,607 | ||||||||||
Units redeemed and transferred |
(83,904 | ) | (1,379,405 | ) | (28,093 | ) | (74,485 | ) | (772,172 | ) | |||||
Units outstanding at December 31, 2006 |
199,220 | 4,545,134 | 125,341 | 329,825 | 3,092,917 | ||||||||||
Units purchased |
1,039,286 | 5,493,346 | 19,152 | 113,866 | 3,418,883 | ||||||||||
Units redeemed and transferred |
(459,277 | ) | (5,518,137 | ) | (21,720 | ) | (170,503 | ) | (3,870,973 | ) | |||||
Units outstanding at December 31, 2007 |
779,229 | 4,520,343 | 122,773 | 273,188 | 2,640,827 | ||||||||||
S-47
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
3. | Accumulation Units Outstanding |
A summary of changes in equivalent accumulation units outstanding follows:
Federated Market Opportunity Subaccount |
Transamerica Science & Technology Subaccount |
JPMorgan Mid Cap Value Subaccount |
JPMorgan Enhanced Index Subaccount |
Marsico Growth Subaccount |
|||||||||||
Units outstanding at January 1, 2006 |
3,758,586 | 2,830,782 | 1,489,231 | 109,037 | 1,584,536 | ||||||||||
Units purchased |
940,857 | 485,219 | 17,693 | 41,724 | 487,947 | ||||||||||
Units redeemed and transferred |
(1,227,024 | ) | (800,589 | ) | (434,479 | ) | (26,330 | ) | (650,090 | ) | |||||
Units outstanding at December 31, 2006 |
3,472,419 | 2,515,412 | 1,072,445 | 124,431 | 1,422,393 | ||||||||||
Units purchased |
2,919,178 | 707,767 | 715,248 | 92,694 | 1,529,607 | ||||||||||
Units redeemed and transferred |
(3,366,281 | ) | 994,358 | (934,513 | ) | (54,466 | ) | (1,284,441 | ) | ||||||
Units outstanding at December 31, 2007 |
3,025,316 | 4,217,537 | 853,180 | 162,659 | 1,667,559 | ||||||||||
S-48
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
3. | Accumulation Units Outstanding |
A summary of changes in equivalent accumulation units outstanding follows:
BlackRock Large Cap Value Subaccount |
MFS High Yield Subaccount |
Munder Net50 Subaccount |
PIMCO Total Return Subaccount |
Legg Mason Partners All Cap Subaccount |
|||||||||||
Units outstanding at January 1, 2006 |
2,618,758 | 120,203 | 1,441,506 | 1,100,536 | 3,199,406 | ||||||||||
Units purchased |
912,645 | 193,198 | 589,522 | 674,489 | 697,467 | ||||||||||
Units redeemed and transferred |
(820,196 | ) | (136,651 | ) | (795,875 | ) | (862,026 | ) | (1,028,030 | ) | |||||
Units outstanding at December 31, 2006 |
2,711,207 | 176,750 | 1,235,153 | 912,999 | 2,868,843 | ||||||||||
Units purchased |
2,743,268 | 414,513 | 1,755,350 | 2,083,958 | 2,280,925 | ||||||||||
Units redeemed and transferred |
(2,923,739 | ) | (489,155 | ) | (1,629,742 | ) | (1,936,591 | ) | (2,492,784 | ) | |||||
Units outstanding at December 31, 2007 |
2,530,736 | 102,108 | 1,360,761 | 1,060,366 | 2,656,984 | ||||||||||
S-49
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
3. | Accumulation Units Outstanding |
A summary of changes in equivalent accumulation units outstanding follows:
T. Rowe Price Equity Income Subaccount |
T. Rowe Price Small Cap Subaccount |
Templeton Transamerica Global Subaccount |
Third Avenue Value Subaccount |
Transamerica Balanced Subaccount |
|||||||||||
Units outstanding at January 1, 2006 |
1,821,470 | 2,719,220 | 10,257,628 | 4,469,405 | 328,735 | ||||||||||
Units purchased |
921,481 | 979,284 | 1,718,803 | 1,645,081 | 172,566 | ||||||||||
Units redeemed and transferred |
(567,988 | ) | (1,922,065 | ) | (2,365,313 | ) | (1,494,184 | ) | (122,081 | ) | |||||
Units outstanding at December 31, 2006 |
2,174,963 | 1,776,439 | 9,611,118 | 4,620,302 | 379,220 | ||||||||||
Units purchased |
2,503,795 | 1,722,378 | 10,411,900 | 4,357,428 | 450,269 | ||||||||||
Units redeemed and transferred |
(2,496,356 | ) | (1,771,218 | ) | (10,828,543 | ) | (4,695,968 | ) | (389,374 | ) | |||||
Units outstanding at December 31, 2007 |
2,182,402 | 1,727,599 | 9,194,475 | 4,281,762 | 440,115 | ||||||||||
S-50
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
3. | Accumulation Units Outstanding |
A summary of changes in equivalent accumulation units outstanding follows:
Transamerica Convertible Securities Subaccount |
Transamerica Equity Subaccount |
Transamerica Growth Opportunities Subaccount |
Transamerica Money Market Subaccount |
Transamerica Small/ MidCap Value Subaccount |
|||||||||||
Units outstanding at January 1, 2006 |
194,922 | 19,781,930 | 4,146,742 | 2,433,155 | 365,422 | ||||||||||
Units purchased |
185,687 | 47,273,875 | 1,474,760 | 3,645,016 | 664,035 | ||||||||||
Units redeemed and transferred |
(176,915 | ) | (6,800,780 | ) | (1,563,169 | ) | (3,513,826 | ) | (287,468 | ) | |||||
Units outstanding at December 31, 2006 |
203,694 | 60,255,025 | 4,058,333 | 2,564,345 | 741,989 | ||||||||||
Units purchased |
336,239 | 58,374,762 | 4,086,336 | 6,468,906 | 940,173 | ||||||||||
Units redeemed and transferred |
(260,256 | ) | (63,646,865 | ) | (4,107,033 | ) | (5,999,335 | ) | (405,274 | ) | |||||
Units outstanding at December 31, 2007 |
279,677 | 54,982,922 | 4,037,636 | 3,033,916 | 1,276,888 | ||||||||||
S-51
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
3. | Accumulation Units Outstanding |
A summary of changes in equivalent accumulation units outstanding follows:
Transamerica U.S. Government Securities Subaccount |
Transamerica Value Balanced Subaccount |
Van Kampen Mid-Cap Growth Subaccount |
ProFund VP Bull Subaccount (1) |
ProFund VP Money Market Subaccount (1) |
|||||||||||
Units outstanding at January 1, 2006 |
78,026 | 6,898,186 | 8,766,841 | | | ||||||||||
Units purchased |
48,939 | 950,602 | 1,518,373 | 1,205,279 | 3,228,678 | ||||||||||
Units redeemed and transferred |
(68,406 | ) | (1,524,200 | ) | (2,287,791 | ) | (468,565 | ) | (3,084,493 | ) | |||||
Units outstanding at December 31, 2006 |
58,559 | 6,324,588 | 7,997,423 | 736,714 | 144,185 | ||||||||||
Units purchased |
136,808 | 5,859,252 | 8,281,549 | 3,735,673 | 10,320,616 | ||||||||||
Units redeemed and transferred |
(78,039 | ) | (6,339,822 | ) | (8,630,693 | ) | (4,372,638 | ) | (7,933,653 | ) | |||||
Units outstanding at December 31, 2007 |
117,328 | 5,844,018 | 7,648,279 | 99,749 | 2,531,148 | ||||||||||
S-52
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
3. | Accumulation Units Outstanding |
A summary of changes in equivalent accumulation units outstanding follows:
ProFund VP NASDAQ-100 Subaccount (1) |
ProFund VP Short Small-Cap Subaccount (1) |
ProFund VP Small-Cap Subaccount (1) |
Fidelity VIP Contrafund® Subaccount |
Fidelity VIP Equity- Income Subaccount |
|||||||||||
Units outstanding at January 1, 2006 |
| | | 1,835,666 | 905,391 | ||||||||||
Units purchased |
640,243 | 2,512,744 | 2,719,436 | 668,658 | 382,794 | ||||||||||
Units redeemed and transferred |
(559,372 | ) | (2,494,294 | ) | (2,416,178 | ) | (712,415 | ) | (273,056 | ) | |||||
Units outstanding at December 31, 2006 |
80,871 | 18,450 | 303,258 | 1,791,909 | 1,015,129 | ||||||||||
Units purchased |
3,444,853 | 10,462,230 | 7,653,547 | 1,550,611 | 940,672 | ||||||||||
Units redeemed and transferred |
(2,569,679 | ) | (10,326,065 | ) | (7,796,442 | ) | (1,680,296 | ) | (1,063,370 | ) | |||||
Units outstanding at December 31, 2007 |
956,045 | 154,615 | 160,363 | 1,662,224 | 892,431 | ||||||||||
S-53
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
3. | Accumulation Units Outstanding |
A summary of changes in equivalent accumulation units outstanding follows:
Fidelity VIP Growth Opportunities Subaccount |
Fidelity VIP Index 500 Subaccount |
|||||
Units outstanding at January 1, 2006 |
455,162 | 187,457 | ||||
Units purchased |
166,367 | 323,618 | ||||
Units redeemed and transferred |
(175,121 | ) | (166,940 | ) | ||
Units outstanding at December 31, 2006 |
446,408 | 344,135 | ||||
Units purchased |
819,592 | 277,005 | ||||
Units redeemed and transferred |
(604,918 | ) | (163,383 | ) | ||
Units outstanding at December 31, 2007 |
661,082 | 457,757 | ||||
S-54
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
4. | Financial Highlights |
The Mutual Fund Account offers various death benefit options, which have differing fees that are charged against the contract owners account balance. These charges are discussed in more detail in the individual's policy. Differences in the fee structures for these units result in different unit values, expense ratios, and total returns.
Subaccount |
Year Ended | Units | Unit FairValue Corresponding to Lowest to Highest Expense Ratio |
Net Assets | Investment Income Ratio* |
Expense Ratio Lowest to Highest** |
Total Return Corresponding to Lowest to Highest Expense Ratio*** |
|||||||||||||||||||||||||||
JPMorgan Core Bond |
||||||||||||||||||||||||||||||||||
12/31/2007 | 1,502,535 | $ | 10.77 | to | $ | 33.47 | $ | 47,127,749 | 5.18 | % | 0.00 | % | to | 0.90 | % | 6.94 | % | to | 5.98 | % | ||||||||||||||
12/31/2006 | 1,495,262 | 10.07 | to | 31.58 | 45,300,971 | 5.23 | 0.00 | to | 0.90 | 0.69 | to | 2.99 | ||||||||||||||||||||||
12/31/2005 | 1,616,926 | 10.64 | to | 30.66 | 48,334,703 | 5.24 | 0.75 | to | 0.90 | 1.53 | to | 1.39 | ||||||||||||||||||||||
12/31/2004 | 1,703,657 | 10.48 | to | 30.24 | 51,050,290 | 6.75 | 0.75 | to | 0.90 | 3.75 | to | 3.59 | ||||||||||||||||||||||
12/31/2003 | 1,881,315 | 10.10 | to | 29.19 | 54,870,991 | 4.46 | 0.75 | to | 0.90 | 1.00 | to | 3.35 | ||||||||||||||||||||||
Asset Allocation - Conservative |
||||||||||||||||||||||||||||||||||
12/31/2007 | 2,022,246 | 10.86 | to | 14.27 | 28,741,879 | 3.22 | 0.00 | to | 0.90 | 6.38 | to | 5.43 | ||||||||||||||||||||||
12/31/2006 | 1,859,642 | 10.21 | to | 13.53 | 25,092,450 | 3.28 | 0.00 | to | 0.90 | 2.12 | to | 8.47 | ||||||||||||||||||||||
12/31/2005 | 1,894,040 | 11.81 | to | 12.48 | 23,572,436 | 2.78 | 0.75 | to | 0.90 | 4.40 | to | 4.25 | ||||||||||||||||||||||
12/31/2004 | 1,545,736 | 11.31 | to | 11.97 | 18,488,088 | 0.34 | 0.75 | to | 0.90 | 8.89 | to | 8.73 | ||||||||||||||||||||||
12/31/2003 | 1,008,444 | 10.39 | to | 11.01 | 11,098,258 | 0.13 | 0.75 | to | 0.90 | 3.88 | to | 21.82 | ||||||||||||||||||||||
Asset Allocation - Growth |
||||||||||||||||||||||||||||||||||
12/31/2007 | 20,795,625 | 11.25 | to | 16.22 | 337,873,349 | 2.30 | 0.00 | to | 0.90 | 7.76 | to | 6.79 | ||||||||||||||||||||||
12/31/2006 | 17,905,414 | 10.44 | to | 15.19 | 272,418,228 | 0.96 | 0.00 | to | 0.90 | 4.36 | to | 14.59 | ||||||||||||||||||||||
12/31/2005 | 13,233,464 | 13.36 | to | 13.25 | 175,590,028 | 0.49 | 0.75 | to | 0.90 | 11.40 | to | 11.24 | ||||||||||||||||||||||
12/31/2004 | 9,183,811 | 11.99 | to | 11.91 | 109,457,913 | 0.09 | 0.75 | to | 0.90 | 13.33 | to | 13.16 | ||||||||||||||||||||||
12/31/2003 | 4,004,475 | 10.58 | to | 10.53 | 42,156,566 | 0.16 | 0.75 | to | 0.90 | 5.83 | to | 29.63 | ||||||||||||||||||||||
Asset Allocation - Moderate Growth |
||||||||||||||||||||||||||||||||||
12/31/2007 | 23,093,759 | 11.16 | to | 15.77 | 363,338,011 | 2.40 | 0.00 | to | 0.90 | 7.81 | to | 6.84 | ||||||||||||||||||||||
12/31/2006 | 20,972,352 | 10.35 | to | 14.76 | 308,893,207 | 1.64 | 0.00 | to | 0.90 | 3.55 | to | 12.82 | ||||||||||||||||||||||
12/31/2005 | 16,902,523 | 12.91 | to | 13.08 | 220,729,099 | 1.18 | 0.75 | to | 0.90 | 9.09 | to | 8.93 | ||||||||||||||||||||||
12/31/2004 | 11,678,509 | 11.84 | to | 12.01 | 140,127,540 | 0.20 | 0.75 | to | 0.90 | 12.69 | to | 12.53 | ||||||||||||||||||||||
12/31/2003 | 6,173,245 | 10.50 | to | 10.67 | 65,890,483 | 0.15 | 0.75 | to | 0.90 | 5.02 | to | 26.03 |
S-55
4. | Financial Highlights (continued) |
Subaccount |
Year Ended | Units | Unit FairValue Corresponding to Lowest to Highest Expense Ratio |
Net Assets | Investment Income Ratio* |
Expense Ratio Lowest to Highest** |
Total Return Corresponding to Lowest to Highest Expense Ratio*** |
||||||||||||||||||||||||||||
Asset Allocation - Moderate |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 6,903,785 | 11.12 | to | 15.06 | 103,347,293 | 3.01 | 0.00 | to | 0.90 | 7.96 | to | 6.99 | |||||||||||||||||||||||
12/31/2006 | 6,462,891 | 10.30 | to | 14.08 | 90,505,789 | 2.68 | 0.00 | to | 0.90 | 3.01 | to | 10.49 | |||||||||||||||||||||||
12/31/2005 | 5,643,157 | 12.30 | to | 12.74 | 71,608,709 | 1.89 | 0.75 | to | 0.90 | 6.64 | to | 6.49 | |||||||||||||||||||||||
12/31/2004 | 4,444,247 | 11.54 | to | 11.96 | 53,053,473 | 0.27 | 0.75 | to | 0.90 | 10.56 | to | 10.40 | |||||||||||||||||||||||
12/31/2003 | 3,023,154 | 10.43 | to | 10.84 | 32,761,809 | 0.11 | 0.75 | to | 0.90 | 4.34 | to | 23.75 | |||||||||||||||||||||||
International Moderate Growth |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 779,229 | 11.42 | to | 11.17 | 8,709,877 | 1.27 | 0.00 | to | 0.90 | 8.69 | to | 7.72 | |||||||||||||||||||||||
12/31/2006 | (1) | 199,220 | 10.50 | to | 10.37 | 2,065,761 | 0.00 | 0.00 | to | 0.90 | 5.04 | to | 3.67 | ||||||||||||||||||||||
MFS International Equity |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 4,520,343 | 15.30 | to | 15.30 | 69,174,582 | 0.96 | 0.90 | to | 0.90 | 8.17 | to | 8.17 | |||||||||||||||||||||||
12/31/2006 | 4,545,134 | 14.15 | to | 14.15 | 64,298,334 | 1.45 | 0.90 | to | 0.90 | 21.97 | to | 21.97 | |||||||||||||||||||||||
12/31/2005 | 3,355,533 | 11.60 | to | 11.60 | 38,917,877 | 0.78 | 0.90 | to | 0.90 | 11.86 | to | 11.86 | |||||||||||||||||||||||
12/31/2004 | 3,118,682 | 10.37 | to | 10.37 | 32,335,564 | 0.00 | 0.90 | to | 0.90 | 13.32 | to | 13.32 | |||||||||||||||||||||||
12/31/2003 | 2,848,831 | 9.15 | to | 9.15 | 26,065,025 | 0.00 | 0.90 | to | 0.90 | 24.17 | to | 24.17 | |||||||||||||||||||||||
Capital Guardian US Equity |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 122,773 | 13.46 | to | 13.46 | 1,652,054 | 0.72 | 0.90 | to | 0.90 | (1.05 | ) | to | (1.05 | ) | |||||||||||||||||||||
12/31/2006 | 125,341 | 13.60 | to | 13.60 | 1,704,480 | 0.54 | 0.90 | to | 0.90 | 9.13 | to | 9.13 | |||||||||||||||||||||||
12/31/2005 | 123,344 | 12.46 | to | 12.46 | 1,537,037 | 0.56 | 0.90 | to | 0.90 | 5.36 | to | 5.36 | |||||||||||||||||||||||
12/31/2004 | 117,501 | 11.83 | to | 11.83 | 1,389,717 | 0.29 | 0.90 | to | 0.90 | 8.79 | to | 8.79 | |||||||||||||||||||||||
12/31/2003 | 102,982 | 10.87 | to | 10.87 | 1,119,621 | 0.13 | 0.90 | to | 0.90 | 35.28 | to | 35.28 | |||||||||||||||||||||||
Capital Guardian Value |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 273,188 | $ | 9.64 | to | $ | 13.97 | $ | 3,833,240 | 1.05 | % | 0.00 | % | to | 0.90 | % | (6.28 | )% | to | (7.12 | )% | |||||||||||||||
12/31/2006 | 329,825 | 10.29 | to | 15.04 | 4,985,463 | 1.36 | 0.00 | to | 0.90 | 2.86 | to | 15.46 | |||||||||||||||||||||||
12/31/2005 | 221,066 | 13.38 | to | 13.03 | 2,885,186 | 0.99 | 0.75 | to | 0.90 | 6.91 | to | 6.75 | |||||||||||||||||||||||
12/31/2004 | 185,493 | 12.52 | to | 12.20 | 2,265,839 | 1.07 | 0.75 | to | 0.90 | 15.83 | to | 15.66 | |||||||||||||||||||||||
12/31/2003 | 107,771 | 10.81 | to | 10.55 | 1,137,821 | 0.71 | 0.75 | to | 0.90 | 8.06 | to | 33.38 |
S-56
4. | Financial Highlights (continued) |
Subaccount |
Year Ended | Units | Unit FairValue Corresponding to Lowest to Highest Expense Ratio |
Net Assets | Investment Income Ratio* |
Expense Ratio Lowest to Highest** |
Total Return Corresponding to Lowest to Highest Expense Ratio*** |
|||||||||||||||||||||
Clarion Global Real Estate Securities |
||||||||||||||||||||||||||||
12/31/2007 | 2,640,827 | 10.07 | to | 30.40 | 78,152,720 | 6.51 | 0.00 | to | 0.90 | (6.70 | ) | to | (7.54 | ) | ||||||||||||||
12/31/2006 | 3,092,917 | 10.80 | to | 32.88 | 99,559,341 | 1.41 | 0.00 | to | 0.90 | 7.96 | to | 41.01 | ||||||||||||||||
12/31/2005 | 2,346,482 | 16.20 | to | 23.32 | 54,171,885 | 1.67 | 0.75 | to | 0.90 | 12.63 | to | 12.46 | ||||||||||||||||
12/31/2004 | 2,253,014 | 14.38 | to | 20.74 | 46,575,701 | 2.15 | 0.75 | to | 0.90 | 31.87 | to | 31.67 | ||||||||||||||||
12/31/2003 | 1,880,937 | 10.91 | to | 15.75 | 29,605,609 | 2.33 | 0.75 | to | 0.90 | 9.06 | to | 34.53 | ||||||||||||||||
Federated Market Opportunity |
||||||||||||||||||||||||||||
12/31/2007 | 3,025,316 | 10.09 | to | 32.50 | 90,239,892 | 3.71 | 0.00 | to | 0.90 | (0.48 | ) | to | (1.37 | ) | ||||||||||||||
12/31/2006 | 3,472,419 | 10.14 | to | 32.96 | 107,177,707 | 1.66 | 0.00 | to | 0.90 | 1.38 | to | 1.84 | ||||||||||||||||
12/31/2005 | 3,758,586 | 12.15 | to | 32.36 | 116,589,152 | 2.27 | 0.75 | to | 0.90 | 4.18 | to | 4.03 | ||||||||||||||||
12/31/2004 | 3,738,868 | 11.67 | to | 31.11 | 115,142,865 | 2.74 | 0.75 | to | 0.90 | 8.39 | to | 8.23 | ||||||||||||||||
12/31/2003 | 3,561,620 | 10.76 | to | 28.74 | 102,294,129 | 4.27 | 0.75 | to | 0.90 | 7.62 | to | 25.71 | ||||||||||||||||
Transamerica Science & Technology |
||||||||||||||||||||||||||||
12/31/2007 | 4,217,537 | 13.68 | to | 5.48 | 23,965,610 | 0.00 | 0.00 | to | 0.90 | 32.75 | to | 31.56 | ||||||||||||||||
12/31/2006 | 2,515,412 | 10.31 | to | 4.17 | 10,615,667 | 0.00 | 0.00 | to | 0.90 | 3.07 | to | 0.11 | ||||||||||||||||
12/31/2005 | 2,830,782 | 11.25 | to | 4.16 | 11,885,836 | 0.42 | 0.75 | to | 0.90 | 1.30 | to | 1.15 | ||||||||||||||||
12/31/2004 | 3,284,550 | 11.10 | to | 4.11 | 13,578,433 | 0.00 | 0.75 | to | 0.90 | 7.25 | to | 7.10 | ||||||||||||||||
12/31/2003 | 3,737,230 | 10.35 | to | 3.84 | 14,371,762 | 0.00 | 0.75 | to | 0.90 | 3.53 | to | 49.61 | ||||||||||||||||
JPMorgan Mid Cap Value |
||||||||||||||||||||||||||||
12/31/2007 | 853,180 | 14.82 | to | 17.71 | 15,098,211 | 0.97 | 0.75 | to | 0.90 | 2.06 | to | 1.91 | ||||||||||||||||
12/31/2006 | 1,072,445 | 14.52 | to | 17.38 | 18,616,424 | 0.80 | 0.75 | to | 0.90 | 16.37 | to | 16.20 | ||||||||||||||||
12/31/2005 | 1,489,231 | 12.48 | to | 14.96 | 22,237,578 | 0.22 | 0.75 | to | 0.90 | 8.34 | to | 8.18 | ||||||||||||||||
12/31/2004 | 1,335,977 | 11.52 | to | 13.83 | 18,459,737 | 0.04 | 0.75 | to | 0.90 | 0.00 | to | 13.56 | ||||||||||||||||
12/31/2003 | 1,250,497 | 12.18 | to | 12.18 | 15,226,569 | 0.11 | 0.90 | to | 0.90 | 30.25 | to | 30.25 | ||||||||||||||||
JPMorgan Enhanced Index |
||||||||||||||||||||||||||||
12/31/2007 | 162,659 | 10.82 | to | 13.85 | 2,265,492 | 1.28 | 0.00 | to | 0.90 | 4.54 | to | 3.60 | ||||||||||||||||
12/31/2006 | 124,431 | 10.35 | to | 13.37 | 1,668,793 | 1.10 | 0.00 | to | 0.90 | 3.48 | to | 14.29 | ||||||||||||||||
12/31/2005 | 109,037 | 12.08 | to | 11.70 | 1,278,225 | 1.31 | 0.75 | to | 0.90 | 2.69 | to | 2.54 | ||||||||||||||||
12/31/2004 | 102,732 | 11.76 | to | 11.41 | 1,174,754 | 0.79 | 0.75 | to | 0.90 | 10.19 | to | 10.03 | ||||||||||||||||
12/31/2003 | 86,604 | 10.67 | to | 10.37 | 898,846 | 0.51 | 0.75 | to | 0.90 | 6.74 | to | 27.79 |
S-57
4. | Financial Highlights (continued) |
Subaccount |
Year Ended | Units | Unit FairValue Corresponding to Lowest to Highest Expense Ratio |
Net Assets | Investment Income Ratio* |
Expense Ratio Lowest to Highest** |
Total Return Corresponding to Lowest to Highest Expense Ratio*** |
||||||||||||||||||||||||||||
Marsico Growth |
|
||||||||||||||||||||||||||||||||||
12/31/2007 | 1,667,559 | $ | 12.51 | to | $ | 12.01 | $ | 20,285,822 | 0.03 | % | 0.00 | % | to | 0.90 | % | 20.40 | % | to | 19.32 | % | |||||||||||||||
12/31/2006 | 1,422,393 | 10.39 | to | 10.06 | 14,438,447 | 0.13 | 0.00 | to | 0.90 | 3.92 | to | 4.42 | |||||||||||||||||||||||
12/31/2005 | 1,584,536 | 12.12 | to | 9.64 | 15,338,318 | 0.08 | 0.75 | to | 0.90 | 7.77 | to | 7.62 | |||||||||||||||||||||||
12/31/2004 | 1,568,428 | 11.25 | to | 8.95 | 14,072,469 | 0.00 | 0.75 | to | 0.90 | 11.41 | to | 11.25 | |||||||||||||||||||||||
12/31/2003 | 1,242,369 | 10.09 | to | 8.05 | 10,004,724 | 0.00 | 0.75 | to | 0.90 | 0.90 | to | 0.94 | |||||||||||||||||||||||
BlackRock Large Cap Value |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 2,530,736 | 10.83 | to | 27.70 | 68,941,852 | 0.95 | 0.00 | to | 0.90 | 4.64 | to | 3.70 | |||||||||||||||||||||||
12/31/2006 | 2,711,207 | 10.35 | to | 26.71 | 71,712,502 | 0.50 | 0.00 | to | 0.90 | 3.48 | to | 15.88 | |||||||||||||||||||||||
12/31/2005 | 2,618,758 | 14.75 | to | 23.05 | 60,038,994 | 0.68 | 0.75 | to | 0.90 | 15.08 | to | 14.91 | |||||||||||||||||||||||
12/31/2004 | 2,164,254 | 12.82 | to | 20.06 | 43,388,925 | 1.03 | 0.75 | to | 0.90 | 17.45 | to | 17.28 | |||||||||||||||||||||||
12/31/2003 | 2,231,396 | 10.91 | to | 17.10 | 38,151,724 | 0.83 | 0.75 | to | 0.90 | 9.13 | to | 28.62 | |||||||||||||||||||||||
MFS High Yield |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 102,108 | 10.48 | to | 13.28 | 1,336,203 | 5.62 | 0.00 | to | 0.90 | 1.85 | to | 0.94 | |||||||||||||||||||||||
12/31/2006 | 176,750 | 10.29 | to | 13.16 | 2,297,300 | 11.44 | 0.00 | to | 0.90 | 2.93 | to | 9.96 | |||||||||||||||||||||||
12/31/2005 | 120,203 | 11.38 | to | 11.97 | 1,430,539 | 6.75 | 0.75 | to | 0.90 | 1.05 | to | 0.91 | |||||||||||||||||||||||
12/31/2004 | 30,333 | 11.26 | to | 11.86 | 357,424 | 4.56 | 0.75 | to | 0.90 | 8.95 | to | 8.81 | |||||||||||||||||||||||
12/31/2003 | (1) | 39,961 | 10.34 | to | 10.90 | 434,213 | 0.28 | 0.75 | to | 0.90 | 3.40 | to | 8.90 | ||||||||||||||||||||||
Munder Net50 |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 1,360,761 | 12.38 | to | 11.32 | 15,594,700 | 0.00 | 0.00 | to | 0.90 | 17.04 | to | 15.99 | |||||||||||||||||||||||
12/31/2006 | 1,235,153 | 10.57 | to | 9.76 | 12,172,185 | 0.00 | 0.00 | to | 0.90 | 5.74 | to | (0.89 | ) | ||||||||||||||||||||||
12/31/2005 | 1,441,506 | 12.44 | to | 9.85 | 14,266,078 | 0.00 | 0.75 | to | 0.90 | 7.26 | to | 7.10 | |||||||||||||||||||||||
12/31/2004 | 1,655,749 | 11.60 | to | 9.19 | 15,258,930 | 0.00 | 0.75 | to | 0.90 | 14.47 | to | 14.31 | |||||||||||||||||||||||
12/31/2003 | 1,614,860 | 10.13 | to | 8.04 | 12,994,061 | 0.00 | 0.75 | to | 0.90 | 1.34 | to | 65.12 | |||||||||||||||||||||||
PIMCO Total Return |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 1,060,366 | 10.94 | to | 12.85 | 13,571,965 | 2.52 | 0.00 | to | 0.90 | 8.95 | to | 7.97 | |||||||||||||||||||||||
12/31/2006 | 912,999 | 10.05 | to | 11.91 | 10,849,149 | 3.78 | 0.00 | to | 0.90 | 0.46 | to | 3.28 | |||||||||||||||||||||||
12/31/2005 | 1,100,536 | 10.68 | to | 11.53 | 12,666,656 | 1.95 | 0.75 | to | 0.90 | 1.57 | to | 1.42 | |||||||||||||||||||||||
12/31/2004 | 905,243 | 10.51 | to | 11.37 | 10,272,817 | 1.54 | 0.75 | to | 0.90 | 3.71 | to | 3.56 | |||||||||||||||||||||||
12/31/2003 | 839,446 | 10.14 | to | 10.98 | 9,211,006 | 1.17 | 0.75 | to | 0.90 | 1.35 | to | 3.97 |
S-58
4. | Financial Highlights (continued) |
Subaccount |
Year Ended | Units | Unit FairValue Corresponding to Lowest to Highest Expense Ratio |
Net Assets | Investment Income Ratio* |
Expense Ratio Lowest to Highest** |
Total Return Corresponding to Lowest to Highest Expense Ratio*** |
|||||||||||||||||||||||||||
Legg Mason Partners All Cap |
||||||||||||||||||||||||||||||||||
12/31/2007 | 2,656,984 | 10.59 | to | 16.66 | 44,097,690 | 1.32 | 0.00 | to | 0.90 | 1.04 | to | 0.13 | ||||||||||||||||||||||
12/31/2006 | 2,868,843 | 10.48 | to | 16.63 | 47,616,609 | 1.00 | 0.00 | to | 0.90 | 4.84 | to | 17.50 | ||||||||||||||||||||||
12/31/2005 | 3,199,406 | 11.90 | to | 14.16 | 45,229,482 | 0.60 | 0.75 | to | 0.90 | 3.30 | to | 3.15 | ||||||||||||||||||||||
12/31/2004 | 3,632,195 | 11.52 | to | 13.72 | 49,799,331 | 0.23 | 0.75 | to | 0.90 | 8.32 | to | 8.16 | ||||||||||||||||||||||
12/31/2003 | 3,289,258 | 10.63 | to | 12.69 | 41,728,574 | 0.39 | 0.75 | to | 0.90 | 6.31 | to | 33.95 | ||||||||||||||||||||||
T. Rowe Price Equity Income |
||||||||||||||||||||||||||||||||||
12/31/2007 | 2,182,402 | 10.74 | to | 13.59 | 29,803,993 | 2.18 | 0.00 | to | 0.90 | 3.32 | to | 2.39 | ||||||||||||||||||||||
12/31/2006 | 2,174,963 | 10.40 | to | 13.27 | 28,963,302 | 1.62 | 0.00 | to | 0.90 | 4.00 | to | 17.90 | ||||||||||||||||||||||
12/31/2005 | 1,821,470 | 12.64 | to | 11.25 | 20,551,891 | 1.44 | 0.75 | to | 0.90 | 3.33 | to | 3.18 | ||||||||||||||||||||||
12/31/2004 | 1,494,674 | 12.23 | to | 10.91 | 16,318,345 | 0.85 | 0.75 | to | 0.90 | 13.95 | to | 13.79 | ||||||||||||||||||||||
12/31/2003 | 854,942 | 10.73 | to | 9.59 | 8,199,996 | 0.96 | 0.75 | to | 0.90 | 7.35 | to | 25.73 | ||||||||||||||||||||||
T. Rowe Price Small Cap |
||||||||||||||||||||||||||||||||||
12/31/2007 | 1,727,599 | 11.14 | to | 13.39 | 23,180,179 | 0.00 | 0.00 | to | 0.90 | 9.61 | to | 8.63 | ||||||||||||||||||||||
12/31/2006 | 1,776,439 | 10.17 | to | 12.33 | 21,921,541 | 0.00 | 0.00 | to | 0.90 | 1.67 | to | 2.67 | ||||||||||||||||||||||
12/31/2005 | 2,719,220 | 12.42 | to | 12.01 | 32,674,271 | 0.00 | 0.75 | to | 0.90 | 9.79 | to | 9.63 | ||||||||||||||||||||||
12/31/2004 | 2,141,030 | 11.31 | to | 10.95 | 23,455,627 | 0.00 | 0.75 | to | 0.90 | 9.54 | to | 9.38 | ||||||||||||||||||||||
12/31/2003 | 1,728,562 | 10.33 | to | 10.01 | 17,308,326 | 0.00 | 0.75 | to | 0.90 | 3.29 | to | 39.15 | ||||||||||||||||||||||
Templeton Transamerica Global |
||||||||||||||||||||||||||||||||||
12/31/2007 | 9,194,475 | $ | 12.01 | to | $ | 33.70 | $ | 306,677,582 | 1.54 | % | 0.00 | % | to | 0.90 | % | 15.25 | % | to | 14.21 | % | ||||||||||||||
12/31/2006 | 9,611,118 | 10.42 | to | 29.51 | 282,192,209 | 1.27 | 0.00 | to | 0.90 | 4.21 | to | 17.73 | ||||||||||||||||||||||
12/31/2005 | 10,257,628 | 12.31 | to | 25.07 | 256,622,724 | 1.05 | 0.75 | to | 0.90 | 6.67 | to | 6.51 | ||||||||||||||||||||||
12/31/2004 | 11,153,731 | 11.54 | to | 23.53 | 262,308,294 | 0.00 | 0.75 | to | 0.90 | 8.25 | to | 8.09 | ||||||||||||||||||||||
12/31/2003 | 11,515,920 | 10.66 | to | 21.77 | 250,696,512 | 0.00 | 0.75 | to | 0.90 | 6.65 | to | 22.15 | ||||||||||||||||||||||
Third Avenue Value |
||||||||||||||||||||||||||||||||||
12/31/2007 | 4,281,762 | 10.52 | to | 29.87 | 123,946,756 | 3.90 | 0.00 | to | 0.90 | 1.20 | to | 0.29 | ||||||||||||||||||||||
12/31/2006 | 4,620,302 | 10.40 | to | 29.78 | 134,550,407 | 0.80 | 0.00 | to | 0.90 | 3.99 | to | 15.04 | ||||||||||||||||||||||
12/31/2005 | 4,469,405 | 15.33 | to | 25.89 | 114,190,150 | 0.55 | 0.75 | to | 0.90 | 17.92 | to | 17.75 | ||||||||||||||||||||||
12/31/2004 | 3,748,044 | 13.00 | to | 21.99 | 82,119,637 | 0.66 | 0.75 | to | 0.90 | 23.87 | to | 23.69 | ||||||||||||||||||||||
12/31/2003 | 3,155,343 | 10.50 | to | 17.77 | 56,066,993 | 0.45 | 0.75 | to | 0.90 | 4.96 | to | 36.04 |
S-59
4. | Financial Highlights (continued) |
Subaccount |
Year Ended |
Units | Unit FairValue Corresponding to Lowest to Highest Expense Ratio |
Net Assets | Investment Income Ratio* |
Expense Ratio Lowest to Highest** |
Total Return Corresponding to Lowest to Highest Expense Ratio*** |
|||||||||||||||||||||
Transamerica Balanced |
||||||||||||||||||||||||||||
12/31/2007 | 440,115 | 11.55 | to | 15.28 | 6,717,223 | 1.12 | 0.00 | to | 0.90 | 13.61 | to | 12.59 | ||||||||||||||||
12/31/2006 | 379,220 | 10.17 | to | 13.58 | 5,142,053 | 1.00 | 0.00 | to | 0.90 | 1.66 | to | 8.15 | ||||||||||||||||
12/31/2005 | 328,735 | 12.26 | to | 12.55 | 4,123,912 | 1.37 | 0.75 | to | 0.90 | 7.16 | to | 7.00 | ||||||||||||||||
12/31/2004 | 320,575 | 11.44 | to | 11.73 | 3,758,867 | 1.23 | 0.75 | to | 0.90 | 10.32 | to | 10.16 | ||||||||||||||||
12/31/2003 | 281,176 | 10.37 | to | 10.65 | 2,993,302 | 0.19 | 0.75 | to | 0.90 | 3.72 | to | 12.88 | ||||||||||||||||
Transamerica Convertible Securities |
||||||||||||||||||||||||||||
12/31/2007 | 279,677 | 12.19 | to | 16.94 | 4,705,341 | 1.85 | 0.00 | to | 0.90 | 18.63 | to | 17.57 | ||||||||||||||||
12/31/2006 | 203,694 | 10.27 | to | 14.41 | 2,910,028 | 1.55 | 0.00 | to | 0.90 | 2.74 | to | 9.91 | ||||||||||||||||
12/31/2005 | 194,922 | 11.90 | to | 13.11 | 2,542,542 | 2.24 | 0.75 | to | 0.90 | 3.11 | to | 2.96 | ||||||||||||||||
12/31/2004 | 211,280 | 11.54 | to | 12.74 | 2,668,990 | 1.92 | 0.75 | to | 0.90 | 12.33 | to | 12.17 | ||||||||||||||||
12/31/2003 | 179,538 | 10.27 | to | 11.35 | 2,035,207 | 0.17 | 0.75 | to | 0.90 | 2.73 | to | 22.56 | ||||||||||||||||
Transamerica Equity |
||||||||||||||||||||||||||||
12/31/2007 | 54,982,922 | 11.84 | to | 18.26 | 1,003,665,346 | 0.02 | 0.00 | to | 0.90 | 16.29 | to | 15.24 | ||||||||||||||||
12/31/2006 | 60,255,025 | 10.18 | to | 15.85 | 954,551,153 | 0.00 | 0.00 | to | 0.90 | 1.84 | to | 7.75 | ||||||||||||||||
12/31/2005 | 19,781,930 | 13.94 | to | 14.71 | 290,823,547 | 0.36 | 0.75 | to | 0.90 | 15.67 | to | 15.50 | ||||||||||||||||
12/31/2004 | 20,350,784 | 12.05 | to | 12.73 | 259,098,023 | 0.00 | 0.75 | to | 0.90 | 14.94 | to | 14.77 | ||||||||||||||||
12/31/2003 | 945,566 | 10.49 | to | 11.09 | 10,488,937 | 0.00 | 0.75 | to | 0.90 | 4.88 | to | 30.05 | ||||||||||||||||
Transamerica Growth Opportunities |
||||||||||||||||||||||||||||
12/31/2007 | 4,037,636 | 12.62 | to | 17.41 | 70,373,607 | 0.05 | 0.00 | to | 0.90 | 23.09 | to | 21.98 | ||||||||||||||||
12/31/2006 | 4,058,333 | 10.25 | to | 14.28 | 57,967,034 | 0.23 | 0.00 | to | 0.90 | 2.50 | to | 4.16 | ||||||||||||||||
12/31/2005 | 4,146,742 | 14.01 | to | 13.71 | 56,848,783 | 0.00 | 0.75 | to | 0.90 | 15.36 | to | 15.19 | ||||||||||||||||
12/31/2004 | 4,139,106 | 12.14 | to | 11.90 | 49,251,986 | 0.00 | 0.75 | to | 0.90 | 15.75 | to | 15.58 | ||||||||||||||||
12/31/2003 | 431,388 | 10.49 | to | 10.29 | 4,441,137 | 0.00 | 0.75 | to | 0.90 | 4.88 | to | 30.04 | ||||||||||||||||
Transamerica Money Market |
||||||||||||||||||||||||||||
12/31/2007 | 3,033,916 | 10.58 | to | 20.99 | 60,281,924 | 4.86 | 0.00 | to | 0.90 | 5.03 | to | 4.09 | ||||||||||||||||
12/31/2006 | 2,564,345 | 10.08 | to | 20.17 | 50,440,206 | 4.68 | 0.00 | to | 0.90 | 0.78 | to | 3.80 | ||||||||||||||||
12/31/2005 | 2,433,155 | 10.24 | to | 19.43 | 46,226,920 | 2.88 | 0.75 | to | 0.90 | 2.11 | to | 1.96 | ||||||||||||||||
12/31/2004 | 2,386,257 | 10.02 | to | 19.05 | 44,846,711 | 0.98 | 0.75 | to | 0.90 | 0.25 | to | 0.10 | ||||||||||||||||
12/31/2003 | 3,057,560 | 10.00 | to | 19.04 | 58,161,963 | 0.81 | 0.75 | to | 0.90 | (0.01 | ) | to | (0.11 | ) |
S-60
4. | Financial Highlights (continued) |
Subaccount |
Year Ended |
Units | Unit FairValue Corresponding to Lowest to Highest Expense Ratio |
Net Assets | Investment Income Ratio* |
Expense Ratio Lowest to Highest** |
Total Return Corresponding to Lowest to Highest Expense Ratio*** |
||||||||||||||||||||||||||||
Transamerica Small/MidCap Value |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 1,276,888 | 13.00 | to | 18.64 | 23,810,752 | 1.00 | 0.00 | to | 0.90 | 24.74 | to | 23.62 | |||||||||||||||||||||||
12/31/2006 | 741,989 | 10.42 | to | 15.07 | 11,194,015 | 0.97 | 0.00 | to | 0.90 | 4.20 | to | 17.00 | |||||||||||||||||||||||
12/31/2005 | 365,422 | 12.92 | to | 12.88 | 4,710,189 | 0.48 | 0.75 | to | 0.90 | 12.71 | to | 12.55 | |||||||||||||||||||||||
12/31/2004 | (1) | 62,180 | 11.46 | to | 11.45 | 711,890 | 0.00 | 0.75 | to | 0.90 | 21.73 | to | 21.56 | ||||||||||||||||||||||
Transamerica U.S. Government Securities |
|
||||||||||||||||||||||||||||||||||
12/31/2007 | 117,328 | $ | 10.64 | to | $ | 11.91 | $ | 1,376,520 | 4.45 | % | 0.00 | % | to | 0.90 | % | 6.05 | % | to | 5.10 | % | |||||||||||||||
12/31/2006 | 58,559 | 10.03 | to | 11.34 | 662,140 | 3.52 | 0.00 | to | 0.90 | 0.34 | to | 2.35 | |||||||||||||||||||||||
12/31/2005 | 78,026 | 10.50 | to | 11.08 | 862,890 | 3.81 | 0.75 | to | 0.90 | 1.47 | to | 1.32 | |||||||||||||||||||||||
12/31/2004 | 51,200 | 10.35 | to | 10.93 | 553,600 | 3.64 | 0.75 | to | 0.90 | 2.52 | to | 2.37 | |||||||||||||||||||||||
12/31/2003 | 33,527 | 10.09 | to | 10.68 | 356,524 | 2.30 | 0.75 | to | 0.90 | 0.93 | to | 2.03 | |||||||||||||||||||||||
Transamerica Value Balanced |
|
||||||||||||||||||||||||||||||||||
12/31/2007 | 5,844,018 | 11.01 | to | 26.13 | 152,246,049 | 2.54 | 0.00 | to | 0.90 | 6.72 | to | 5.76 | |||||||||||||||||||||||
12/31/2006 | 6,324,588 | 10.32 | to | 24.71 | 155,972,878 | 2.55 | 0.00 | to | 0.90 | 3.20 | to | 14.24 | |||||||||||||||||||||||
12/31/2005 | 6,898,186 | 11.97 | to | 21.63 | 149,052,652 | 2.60 | 0.75 | to | 0.90 | 5.80 | to | 5.64 | |||||||||||||||||||||||
12/31/2004 | 7,584,776 | 11.31 | to | 20.47 | 155,232,534 | 1.44 | 0.75 | to | 0.90 | 9.14 | to | 8.98 | |||||||||||||||||||||||
12/31/2003 | 3,399,763 | 10.36 | to | 18.79 | 63,848,278 | 3.12 | 0.75 | to | 0.90 | 3.63 | to | 19.09 | |||||||||||||||||||||||
Van Kampen Mid-Cap Growth |
|
||||||||||||||||||||||||||||||||||
12/31/2007 | 7,648,279 | 12.76 | to | 47.36 | 358,556,956 | 0.00 | 0.00 | to | 0.90 | 22.53 | to | 21.43 | |||||||||||||||||||||||
12/31/2006 | 7,997,423 | 10.41 | to | 39.00 | 310,555,164 | 0.00 | 0.00 | to | 0.90 | 4.10 | to | 8.93 | |||||||||||||||||||||||
12/31/2005 | 8,766,841 | 11.45 | to | 35.81 | 313,235,641 | 0.09 | 0.75 | to | 0.90 | 6.75 | to | 6.59 | |||||||||||||||||||||||
12/31/2004 | 9,381,782 | 10.73 | to | 33.59 | 314,876,463 | 0.00 | 0.75 | to | 0.90 | 6.34 | to | 6.18 | |||||||||||||||||||||||
12/31/2003 | 9,928,670 | 10.09 | to | 31.64 | 314,045,521 | 0.00 | 0.75 | to | 0.90 | 0.90 | to | 27.01 | |||||||||||||||||||||||
ProFund VP Bull |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 99,749 | 10.67 | to | 11.75 | 1,172,564 | 0.21 | 0.00 | to | 0.90 | 3.55 | to | 2.62 | |||||||||||||||||||||||
12/31/2006 | (1) | 736,714 | 10.31 | to | 11.45 | 8,437,699 | 0.07 | 0.00 | to | 0.90 | 3.09 | to | 14.52 | ||||||||||||||||||||||
ProFund VP Money Market |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 2,531,148 | 10.45 | to | 10.47 | 26,514,159 | 3.20 | 0.00 | to | 0.90 | 3.77 | to | 2.84 | |||||||||||||||||||||||
12/31/2006 | (1) | 144,185 | 10.07 | to | 10.18 | 1,467,986 | 2.09 | 0.00 | to | 0.90 | 0.68 | to | 1.81 |
S-61
4. | Financial Highlights (continued) |
Subaccount |
Year Ended | Units | Unit FairValue Corresponding to Lowest to Highest Expense Ratio |
Net Assets | Investment Income Ratio* |
Expense Ratio Lowest to Highest** |
Total Return Corresponding to Lowest to Highest Expense Ratio*** |
||||||||||||||||||||||||||||
ProFund VP NASDAQ-100 |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 956,045 | 11.92 | to | 13.33 | 12,749,323 | 0.00 | 0.00 | to | 0.90 | 17.62 | to | 16.57 | |||||||||||||||||||||||
12/31/2006 | (1) | 80,871 | 10.13 | to | 11.43 | 924,473 | 0.00 | 0.00 | to | 0.90 | 1.34 | to | 14.31 | ||||||||||||||||||||||
ProFund VP Short Small-Cap |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 154,615 | 10.26 | to | 9.13 | 1,411,173 | 6.97 | 0.00 | to | 0.90 | 4.53 | to | 3.59 | |||||||||||||||||||||||
12/31/2006 | (1) | 18,450 | 9.82 | to | 8.81 | 162,543 | 0.15 | 0.00 | to | 0.90 | (1.82 | ) | to | (11.90 | ) | ||||||||||||||||||||
ProFund VP Small-Cap |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 160,363 | 10.01 | to | 10.90 | 1,748,012 | 0.23 | 0.00 | to | 0.90 | (2.21 | ) | to | (3.09 | ) | |||||||||||||||||||||
12/31/2006 | (1) | 303,258 | 10.24 | to | 11.25 | 3,410,298 | 0.00 | 0.00 | to | 0.90 | 2.39 | to | 12.45 | ||||||||||||||||||||||
Fidelity VIP Contrafund® |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 1,662,224 | $ | 15.70 | to | $ | 15.70 | $ | 26,091,850 | 0.74 | % | 0.90 | % | to | 0.90 | % | 16.25 | % | to | 16.25 | % | |||||||||||||||
12/31/2006 | 1,791,909 | 13.50 | to | 13.50 | 24,195,515 | 0.98 | 0.90 | to | 0.90 | 10.44 | to | 10.44 | |||||||||||||||||||||||
12/31/2005 | 1,835,666 | 12.23 | to | 12.23 | 22,443,195 | 0.11 | 0.90 | to | 0.90 | 15.61 | to | 15.61 | |||||||||||||||||||||||
12/31/2004 | 1,426,128 | 10.58 | to | 10.58 | 15,081,938 | 0.19 | 0.90 | to | 0.90 | 14.13 | to | 14.13 | |||||||||||||||||||||||
12/31/2003 | 1,131,264 | 9.27 | to | 9.27 | 10,482,511 | 0.28 | 0.90 | to | 0.90 | 27.05 | to | 27.05 | |||||||||||||||||||||||
Fidelity VIP Equity-Income |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 892,431 | 15.03 | to | 15.03 | 13,414,208 | 1.52 | 0.90 | to | 0.90 | 0.36 | to | 0.36 | |||||||||||||||||||||||
12/31/2006 | 1,015,129 | 14.98 | to | 14.98 | 15,203,106 | 3.03 | 0.90 | to | 0.90 | 18.86 | to | 18.86 | |||||||||||||||||||||||
12/31/2005 | 905,391 | 12.60 | to | 12.60 | 11,407,858 | 1.54 | 0.90 | to | 0.90 | 4.63 | to | 4.63 | |||||||||||||||||||||||
12/31/2004 | 1,044,759 | 12.04 | to | 12.04 | 12,581,219 | 1.36 | 0.90 | to | 0.90 | 10.24 | to | 10.24 | |||||||||||||||||||||||
12/31/2003 | 957,570 | 10.92 | to | 10.92 | 10,460,293 | 1.43 | 0.90 | to | 0.90 | 28.87 | to | 28.87 | |||||||||||||||||||||||
Fidelity VIP Growth Opportunities |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 661,082 | 10.40 | to | 10.40 | 6,874,952 | 0.00 | 0.90 | to | 0.90 | 21.80 | to | 21.80 | |||||||||||||||||||||||
12/31/2006 | 446,408 | 8.54 | to | 8.54 | 3,811,402 | 0.47 | 0.90 | to | 0.90 | 4.18 | to | 4.18 | |||||||||||||||||||||||
12/31/2005 | 455,162 | 8.20 | to | 8.20 | 3,730,091 | 0.67 | 0.90 | to | 0.90 | 7.71 | to | 7.71 | |||||||||||||||||||||||
12/31/2004 | 472,044 | 7.61 | to | 7.61 | 3,591,536 | 0.32 | 0.90 | to | 0.90 | 5.93 | to | 5.93 | |||||||||||||||||||||||
12/31/2003 | 432,103 | 7.18 | to | 7.18 | 3,103,466 | 0.40 | 0.90 | to | 0.90 | 28.25 | to | 28.25 | |||||||||||||||||||||||
Fidelity VIP Index 500 |
|||||||||||||||||||||||||||||||||||
12/31/2007 | 457,757 | 10.86 | to | 13.56 | 6,471,158 | 3.39 | 0.00 | to | 0.90 | 5.18 | to | 4.24 | |||||||||||||||||||||||
12/31/2006 | 344,135 | 10.33 | to | 13.01 | 4,682,372 | 1.24 | 0.00 | to | 0.90 | 3.27 | to | 14.41 | |||||||||||||||||||||||
12/31/2005 | 187,457 | 12.04 | to | 11.37 | 2,223,179 | 0.96 | 0.75 | to | 0.90 | 3.78 | to | 3.63 | |||||||||||||||||||||||
12/31/2004 | (1) | 49,601 | 11.60 | to | 10.98 | 560,487 | 0.18 | 0.75 | to | 0.90 | 9.52 | to | 14.53 |
S-62
Western Reserve Life Assurance Co.
WRL Series Life Account
Notes to Financial Statements
December 31, 2007
5. | Administrative, Mortality, and Expense Risk Charge |
Under some forms of the Policies, a sales charge and premium taxes are deducted by WRL prior to allocation of policy owner payments to the subaccounts. Contingent surrender charges may also apply.
Under all forms of the Policy, monthly charges against policy cash values are made to compensate WRL for costs of insurance provided.
A daily charge equal to an annual rate from 0.00% and 0.90% of average daily net assets is assessed to compensate WRL for assumption of mortaility and expense risks in connection with the issuance and administration of the Policies. This charge (not assessed at the individual contract level) effectively reduces the value of a unit outstanding during the year.
6. | Income Taxes |
Operations of the Life Account form a part of WRL, which is taxed as a life insurance company under Subchapter L of the Internal Revenue Code of 1986, as amended (the Code). The operations of the Life Account are accounted for separately from other operations of WRL for purposes of federal income taxation. The Life Account is not separately taxable as a regulated investment company under Subchapter M of the Code and is not otherwise taxable as an entity separate from WRL. Under existing federal income tax laws, the income of the Life Account is not taxable to WRL, as long as earnings are credited under the variable annuity contracts.
7. | Dividend Distributions |
Dividends are not declared by the Life Account, since the increase in the value of the underlying investment in the Series Funds is reflected daily in the accumulation unit price used to calculate the equity value within the Life Account. Consequently, a dividend distribution by the underlying Series Funds does not change either the accumulation unit price or equity values within the Life Account.
S-63
Report of Independent Registered Public Accounting Firm
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 (an indirect wholly-owned subsidiary of AEGON N.V.) as of December 31, 2007 and 2006, and the related statutory-basis statements of operations, changes in capital and surplus, and cash flow for each of the three years in the period ended December 31, 2007. Our audit 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 Companys management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Companys internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 our opinion.
As described in Note 1 to the financial statements, the Company presents its financial statements in conformity with accounting practices prescribed or permitted by the Ohio Department of Insurance, which practices differ from U.S. generally accepted accounting principles. The variances between such practices and U.S. generally accepted accounting principles also are described in Note 1. The effects on the financial statement of these variances are not reasonably determinable but are presumed to be material.
In our opinion, because of the effects of the matter described in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with U.S. generally accepted accounting principles, the financial position of Western Reserve Life Assurance Co. of Ohio at December 31, 2007 and 2006, or the results of its operations or its cash flow for each of the three years in the period ended December 31, 2007.
G - 1
However, in our opinion, 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, 2007 and 2006, and the results of its operations and its cash flow for each of the three years in the period ended December 31, 2007, in conformity with accounting practices prescribed or permitted by the Ohio Department of Insurance. 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.
As discussed in Note 2 to the financial statements, in 2006 Western Reserve Life Assurance Co. of Ohio changed its accounting for investments in certain low income housing tax credit properties.
March 28, 2008
G - 2
Western Reserve Life Assurance Co. of Ohio
Balance Sheets Statutory Basis
(Dollars in Thousands, Except per Share Amounts)
December 31 | ||||||
2007 | 2006 | |||||
Admitted assets |
||||||
Cash and invested assets: |
||||||
Bonds |
$ | 696,849 | $ | 623,828 | ||
Preferred stocks |
4,673 | 4,796 | ||||
Common stocks of affiliated entities (cost: 2007-$20,659 and 2006-$19,901) |
24,397 | 23,000 | ||||
Mortgage loans on real estate |
24,493 | 25,548 | ||||
Home office properties |
38,574 | 39,428 | ||||
Cash, cash equivalents and short-term investments |
45,633 | 112,307 | ||||
Policy loans |
410,844 | 344,781 | ||||
Other invested assets |
10,358 | 11,993 | ||||
Total cash and invested assets |
1,255,821 | 1,185,681 | ||||
Net deferred income tax asset |
30,879 | 30,527 | ||||
Premiums deferred and uncollected |
4,970 | 5,027 | ||||
Reinsurance receivable |
8,579 | 3,235 | ||||
Receivable from parent, subsidiaries and affiliates |
16,005 | 31,579 | ||||
Investment income due and accrued |
7,722 | 6,941 | ||||
Cash surrender value of life insurance policies |
63,948 | 61,729 | ||||
Other admitted assets |
7,386 | 7,665 | ||||
Separate account assets |
10,373,595 | 10,196,130 | ||||
Total admitted assets |
$ | 11,768,905 | $ | 11,528,514 | ||
G - 3
Western Reserve Life Assurance Co. of Ohio
Balance Sheets Statutory Basis (continued)
(Dollars in Thousands, Except per Share Amounts)
December 31 | ||||||||
2007 | 2006 | |||||||
Liabilities and capital and surplus |
||||||||
Liabilities: |
||||||||
Aggregate reserves for policies and contracts: |
||||||||
Life |
$ | 1,055,742 | $ | 986,405 | ||||
Annuity |
596,029 | 636,572 | ||||||
Life policy and contract claim reserves |
15,373 | 12,884 | ||||||
Liability for deposit-type contracts |
16,119 | 16,456 | ||||||
Other policyholders funds |
50 | 50 | ||||||
Remittances and items not allocated |
9,202 | 10,526 | ||||||
Borrowed funds |
| 18,885 | ||||||
Federal and foreign income taxes payable |
973 | 9,508 | ||||||
Transfers to separate account due or accrued |
(888,410 | ) | (931,425 | ) | ||||
Asset valuation reserve |
7,096 | 5,858 | ||||||
Funds held under coinsurance and other reinsurance treaties |
16,541 | 16,095 | ||||||
Payable to affiliates |
37,892 | 41,262 | ||||||
Amounts incurred under modified coinsurance agreements |
3,607 | 4,351 | ||||||
Payable for securities |
| 865 | ||||||
Unearned investment income |
10,472 | 9,589 | ||||||
Other liabilities |
25,921 | 27,405 | ||||||
Separate account liabilities |
10,373,595 | 10,196,130 | ||||||
Total liabilities |
11,280,202 | 11,061,416 | ||||||
Capital and surplus: |
||||||||
Common stock, $1.00 par value, 3,000,000 shares authorized and 2,500,000 shares issued and outstanding |
2,500 | 2,500 | ||||||
Paid-in surplus |
151,259 | 151,781 | ||||||
Unassigned surplus |
334,944 | 312,817 | ||||||
Total capital and surplus |
488,703 | 467,098 | ||||||
Total liabilities and capital and surplus |
$ | 11,768,905 | $ | 11,528,514 | ||||
See accompanying notes.
G - 4
Western Reserve Life Assurance Co. of Ohio
Statements of Operations Statutory Basis
(Dollars in Thousands)
Year Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Revenues: |
||||||||||||
Premiums and other considerations, net of reinsurance: |
||||||||||||
Life |
$ | 583,890 | $ | 582,936 | $ | 578,361 | ||||||
Annuity |
429,894 | 584,189 | 568,168 | |||||||||
Net investment income |
68,832 | 64,109 | 86,812 | |||||||||
Amortization of interest maintenance reserve |
(510 | ) | (437 | ) | 45 | |||||||
Commissions and expense allowances on reinsurance ceded |
11,826 | 9,385 | 3,383 | |||||||||
Reserve adjustments on reinsurance ceded |
10,216 | 8,451 | (1,018 | ) | ||||||||
Income from fees associated with investment management, administration and contract guarantees for separate accounts |
137,410 | 128,081 | 114,078 | |||||||||
Income earned on company owned life insurance |
2,323 | 2,257 | 2,267 | |||||||||
Income from administrative service agreement with affiliate |
38,629 | 36,528 | | |||||||||
Other income |
6,130 | 5,320 | 7,615 | |||||||||
1,288,640 | 1,420,819 | 1,359,711 | ||||||||||
Benefits and expenses: |
||||||||||||
Benefits paid or provided for: |
||||||||||||
Life |
74,138 | 65,610 | 80,266 | |||||||||
Surrender benefits |
1,206,556 | 1,047,578 | 963,670 | |||||||||
Annuity benefits |
49,912 | 47,275 | 40,836 | |||||||||
Other benefits |
1,564 | 2,587 | 2,586 | |||||||||
Increase (decrease) in aggregate reserves for policies and contracts: |
||||||||||||
Life |
69,337 | 34,451 | 511,178 | |||||||||
Annuity |
(40,543 | ) | (56,276 | ) | (78,445 | ) | ||||||
1,360,964 | 1,141,225 | 1,520,091 | ||||||||||
Insurance expenses: |
||||||||||||
Commissions |
174,497 | 167,682 | 156,876 | |||||||||
General insurance expenses |
111,553 | 101,204 | 92,552 | |||||||||
Taxes, licenses and fees |
20,455 | 16,459 | 15,204 | |||||||||
Net transfers from separate accounts |
(576,044 | ) | (186,676 | ) | (571,654 | ) | ||||||
Other expenses |
947 | 1,274 | 1,527 | |||||||||
(268,592 | ) | 99,943 | (305,495 | ) | ||||||||
Total benefits and expenses |
1,092,372 | 1,241,168 | 1,214,596 | |||||||||
Gain from operations before dividends to policyholders, federal income tax expense and net realized capital gains (losses) on investments |
196,268 | 179,651 | 145,115 | |||||||||
Dividends to policyholders |
27 | 29 | 30 | |||||||||
Gain from operations before federal income tax expense and net realized capital gains (losses) on investments |
196,241 | 179,622 | 145,085 | |||||||||
Federal income tax expense |
61,963 | 67,978 | 39,955 | |||||||||
Income from operations before net realized capital gains (losses) on investments |
134,278 | 111,644 | 105,130 | |||||||||
Net realized capital gains (losses) on investments (net of related federal income taxes and amounts transferred to interest maintenance reserve) |
(2,623 | ) | 345 | (584 | ) | |||||||
Net income |
$ | 131,655 | $ | 111,989 | $ | 104,546 | ||||||
See accompanying notes.
G - 5
Western Reserve Life Assurance Co. of Ohio
Statements of Changes in Capital and Surplus Statutory Basis
(Dollars in Thousands)
Common Stock |
Paid-In Surplus |
Unassigned Surplus |
Total Capital and Surplus |
||||||||||||
Balance at January 1, 2005 |
$ | 2,500 | $ | 151,019 | $ | 124,402 | $ | 277,921 | |||||||
Net income |
| | 104,546 | 104,546 | |||||||||||
Change in net unrealized capital gains and losses |
| | 17,411 | 17,411 | |||||||||||
Change in non-admitted assets |
| | (27,593 | ) | (27,593 | ) | |||||||||
Change in asset valuation reserve |
| | (2,828 | ) | (2,828 | ) | |||||||||
Change in liability for reinsurance in unauthorized companies |
| | (259 | ) | (259 | ) | |||||||||
Change in surplus in separate accounts |
| | (241 | ) | (241 | ) | |||||||||
Change in net deferred income tax asset |
| | 22,511 | 22,511 | |||||||||||
Surplus effect of reinsurance transaction |
| | (1,185 | ) | (1,185 | ) | |||||||||
Contributed surplus related to stock appreciation rights plan of indirect parent |
| 1,166 | | 1,166 | |||||||||||
Balance at December 31, 2005 |
2,500 | 152,185 | 236,764 | 391,449 | |||||||||||
Net income |
| | 111,989 | 111,989 | |||||||||||
Change in net unrealized capital gains and losses |
| | (43,656 | ) | (43,656 | ) | |||||||||
Change in non-admitted assets |
| | (42,577 | ) | (42,577 | ) | |||||||||
Change in asset valuation reserve |
| | 7,027 | 7,027 | |||||||||||
Change in liability for reinsurance in unauthorized companies |
| | 259 | 259 | |||||||||||
Change in surplus in separate accounts |
| | (141 | ) | (141 | ) | |||||||||
Change in net deferred income tax asset |
| | 24,874 | 24,874 | |||||||||||
Dividend to stockholder |
| | (2,000 | ) | (2,000 | ) | |||||||||
Cumulative effect of changes in accounting principles |
| | 1 | 1 | |||||||||||
Surplus effect of reinsurance transaction |
| | (969 | ) | (969 | ) | |||||||||
Contributed surplus related to stock appreciation rights plan of indirect parent |
| (404 | ) | | (404 | ) | |||||||||
Correction of prior year error |
| | 21,246 | 21,246 | |||||||||||
Balance at December 31, 2006 |
2,500 | 151,781 | 312,817 | 467,098 |
G - 6
Western Reserve Life Assurance Co. of Ohio
Statements of Changes in Capital and Surplus Statutory Basis (continued)
(Dollars in Thousands)
Common Stock |
Paid-In Surplus |
Unassigned Surplus |
Total Capital and Surplus |
||||||||||||
Balance at December 31, 2006 |
$ | 2,500 | $ | 151,781 | $ | 312,817 | $ | 467,098 | |||||||
Net income |
| | 131,655 | 131,655 | |||||||||||
Change in net unrealized capital gains and losses |
| | 638 | 638 | |||||||||||
Change in non-admitted assets |
| | (6,561 | ) | (6,561 | ) | |||||||||
Change in asset valuation reserve |
| | (1,238 | ) | (1,238 | ) | |||||||||
Change in net deferred income tax asset |
| | 8,842 | 8,842 | |||||||||||
Dividend to stockholder |
| | (110,000 | ) | (110,000 | ) | |||||||||
Surplus effect of reinsurance transaction |
| | (1,209 | ) | (1,209 | ) | |||||||||
Contributed surplus related to stock appreciation rights plan of indirect parent |
| (522 | ) | | (522 | ) | |||||||||
Balance at December 31, 2007 |
$ | 2,500 | $ | 151,259 | $ | 334,944 | $ | 488,703 | |||||||
See accompanying notes.
G - 7
Western Reserve Life Assurance Co. of Ohio
Statements of Cash Flow Statutory Basis
(Dollars in Thousands)
Year Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Operating activities |
||||||||||||
Premiums collected, net of reinsurance |
$ | 1,014,138 | $ | 1,167,315 | $ | 1,144,956 | ||||||
Net investment income received |
73,854 | 71,408 | 92,755 | |||||||||
Miscellaneous income received |
204,010 | 187,060 | 118,762 | |||||||||
Benefit and loss related payments |
(1,333,939 | ) | (1,165,987 | ) | (1,093,337 | ) | ||||||
Commissions, expenses paid and aggregate write-ins for deductions |
(311,221 | ) | (282,359 | ) | (271,622 | ) | ||||||
Net transfers to separate accounts and protected cell accounts |
619,060 | 191,125 | 88,327 | |||||||||
Dividends paid to policyholders |
(27 | ) | (29 | ) | (30 | ) | ||||||
Federal and foreign income taxes paid |
(69,082 | ) | (60,364 | ) | (53,662 | ) | ||||||
Net cash provided by operating activities |
196,793 | 108,169 | 26,149 | |||||||||
Investing activities |
||||||||||||
Proceeds from investments sold, matured or repaid: |
||||||||||||
Bonds |
393,160 | 513,300 | 758,904 | |||||||||
Preferred stocks |
| 3,020 | | |||||||||
Common stocks |
| 8,144 | | |||||||||
Mortgage loans on real estate |
1,058 | 988 | 5,085 | |||||||||
Other invested assets |
| | 3,750 | |||||||||
Miscellaneous proceeds |
7 | 962 | 245 | |||||||||
Total investment proceeds |
394,225 | 526,414 | 767,984 | |||||||||
Cost of investments acquired: |
||||||||||||
Bonds |
(467,479 | ) | (465,786 | ) | (778,751 | ) | ||||||
Preferred stocks |
| (2,488 | ) | | ||||||||
Common stocks |
(758 | ) | (4,126 | ) | | |||||||
Mortgage loans on real estate |
| (8,501 | ) | (6,208 | ) | |||||||
Real estate |
(36 | ) | (39 | ) | (153 | ) | ||||||
Other invested assets |
(1,335 | ) | (484 | ) | (1,007 | ) | ||||||
Miscellaneous applications |
(4,506 | ) | | (31,061 | ) | |||||||
Total cost of investments acquired |
(474,114 | ) | (481,424 | ) | (817,180 | ) | ||||||
Net increase in policy loans |
(66,063 | ) | (44,319 | ) | (20,804 | ) | ||||||
Net cost of investments acquired |
(540,177 | ) | (525,743 | ) | (837,984 | ) | ||||||
Net cash provided by (used in) investing activities |
(145,952 | ) | 671 | (70,000 | ) |
G - 8
Western Reserve Life Assurance Co. of Ohio
Statements of Cash Flow Statutory Basis (continued)
(Dollars in Thousands)
Year Ended December 31 | |||||||||||
2007 | 2006 | 2005 | |||||||||
Financing and miscellaneous activities |
|||||||||||
Cash provided (applied): |
|||||||||||
Borrowed funds received (returned) |
$ | (18,791 | ) | $ | 12,384 | $ | 6,407 | ||||
Net deposits (withdrawals) on deposit-type contracts and other insurance liabilities |
(835 | ) | (5,334 | ) | 5,284 | ||||||
Dividends to stockholder |
(110,000 | ) | (2,000 | ) | | ||||||
Other cash provided (applied) |
12,111 | (31,789 | ) | 38,787 | |||||||
Net cash provided by (used in) financing and miscellaneous activities |
(117,515 | ) | (26,739 | ) | 50,478 | ||||||
Net increase (decrease) in cash, cash equivalents and short-term investments |
(66,674 | ) | 82,101 | 6,627 | |||||||
Cash, cash equivalents and short-term investments: |
|||||||||||
Beginning of year |
112,307 | 30,206 | 23,579 | ||||||||
End of year |
$ | 45,633 | $ | 112,307 | $ | 30,206 | |||||
Noncash proceeds: |
|||||||||||
Hybrid schedule reclass |
$ | | $ | 4,308 | $ | |
See accompanying notes.
G - 9
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
Organization
Western Reserve Life Assurance Co. of Ohio (the Company) is a stock life insurance company and is a wholly owned subsidiary of AEGON USA, Inc. (AEGON). AEGON is an indirect, wholly owned subsidiary of AEGON N.V., a holding company organized under the laws of The Netherlands.
Nature of Business
The Company operates predominantly in the variable universal life and variable annuity areas of the life insurance business. The Company is licensed in 49 states, District of Columbia, Puerto Rico and Guam. Sales of the Companys products are through financial planners, independent representatives, financial institutions and stockbrokers. The majority of the Companys new life insurance, and a portion of new annuities, are written through an affiliated marketing organization.
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 of the Company have been prepared in conformity with accounting practices prescribed or permitted by the Ohio Department of Insurance, which practices differ from accounting principles generally accepted in the United States (GAAP). The more significant variances from GAAP are:
Investments: Investments in bonds and mandatory redeemable preferred stocks are reported at amortized cost or fair value based on their National Association of Insurance Commissioners (NAIC) rating; for GAAP, such fixed maturity investments would be designated at purchase as held-to-maturity, trading or available-for-sale. Held-to-maturity fixed investments would be reported at amortized cost, and the remaining fixed maturity investments would be reported at fair value with unrealized holding gains and losses reported in operations for those designated as trading and as a separate component of other comprehensive income for those designated as available-for-sale. Fair value for statutory purposes is based on the price published by the Securities Valuation Office of the NAIC (SVO), if available, whereas fair value for GAAP is based on quoted market prices.
G - 10
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)
All single class and multi-class mortgage-backed/asset-backed securities (e.g., CMOs) are adjusted for the effects of changes in prepayment assumptions on the related accretion of discount or amortization of premium of such securities using either the retrospective or prospective methods. If it is determined that a decline in fair value is other than temporary, the cost basis of the security is written down to the undiscounted estimated future cash flows. For GAAP purposes, all securities, purchased or retained, that represent beneficial interests in securitized assets (e.g., CMO, CBO, CDO, CLO, MBS and ABS securities), other than high credit quality securities, are adjusted using the prospective method when there is a change in estimated future cash flows. If it is determined that a decline in fair value is other than temporary, the cost basis of the security is written down to fair value. If high credit quality securities are adjusted, the retrospective method is used.
Investments in real estate are reported net of related obligations rather than on a gross basis as for GAAP. Real estate owned and occupied by the Company is included in investments rather than reported as an operating asset as under GAAP, and investment income and operating expenses for statutory reporting include rent for the Companys occupancy of those properties. Changes between depreciated cost and admitted amounts are credited or charged directly to unassigned surplus rather than to income as would be required under GAAP.
Valuation allowances for mortgage loans are established, if necessary, based on the difference between the net value of the collateral, determined as the fair value of the collateral less estimated costs to obtain and sell, and the recorded investment in the mortgage loan. Under GAAP, such allowances are based on the present value of expected future cash flows discounted at the loans effective interest rate or, if foreclosure is probable, on the estimated fair value of the collateral.
The initial valuation allowance and subsequent changes in the allowance for mortgage loans are charged or credited directly to unassigned surplus, rather than being included as a component of earnings as would be required under GAAP.
Valuation Reserves: Under a formula prescribed by the NAIC, the Company defers the portion of realized capital 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 bond or mortgage loan. That net deferral is reported as the interest maintenance reserve (IMR) in the accompanying balance sheets. Realized capital gains and losses are reported in income net of federal income tax and transfers to the IMR. Under GAAP, realized capital gains and losses would be reported in the income statement on a pretax basis in the period that the assets giving rise to the gains or losses are sold.
G - 11
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)
The asset valuation reserve (AVR) provides a valuation allowance for invested assets. The AVR is determined by an NAIC prescribed formula with changes reflected directly in unassigned surplus; AVR is not recognized for GAAP.
Subsidiaries: The accounts and operations of the Companys subsidiaries are not consolidated with the accounts and operations of the Company as would be required under GAAP.
Policy Acquisition Costs: The costs of acquiring and renewing business are expensed when incurred. Under GAAP, acquisition costs related to traditional life insurance and certain long-duration accident and health insurance, to the extent recoverable from future policy revenues, would be deferred and amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves; for universal life insurance and investment products, to the extent recoverable from future gross profits, deferred policy acquisition costs are amortized generally in proportion to the present value of expected gross profits from surrender charges and investment, mortality and expense margins.
Non-admitted Assets: Certain assets designated as non-admitted, principally the non-admitted portion of deferred income tax assets and agent debit balances, and other assets not specifically identified as an admitted asset within the NAIC Accounting Practices and Procedures Manual are excluded from the accompanying balance sheets and are charged directly to unassigned surplus. Under GAAP, such assets are included in the balance sheet to the extent that those assets are not impaired.
Universal Life and Annuity Policies: Revenues for universal life and annuity policies with mortality or morbidity risk (including annuities with purchase rate guarantees) consist of the entire premium received and benefits incurred represent the total of surrender and death benefits paid and the change in policy reserves. Premiums received and benefits incurred for annuity policies without mortality or morbidity risk are recorded using deposit accounting, and credited directly to an appropriate policy reserve account, without recognizing premium income or benefits paid. Under GAAP, for universal life, premiums received in excess of policy charges would not be recognized as premium revenue and benefits would represent interest credited to the account values and the excess of benefits paid over the policy account value. Under GAAP, for all annuity policies without significant mortality risk, premiums received and benefits paid would be recorded directly to the reserve liability.
Benefit Reserves: Certain policy reserves are calculated based on statutorily required interest and mortality assumptions rather than on estimated expected experience or actual account balances as would be required under GAAP.
G - 12
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)
Reinsurance: Any reinsurance balance amounts deemed to be uncollectible have been written off through a charge to operations. In addition, a liability for reinsurance balances has been provided for unsecured policy reserves ceded to reinsurers not authorized to assume such business. Changes to the liability are credited or charged directly to unassigned surplus. Under GAAP, an allowance for amounts deemed uncollectible would be established through a charge to earnings.
Policy and contract liabilities ceded to reinsurers have been reported as reductions of the related reserves rather than as assets as would be required under GAAP.
Commissions allowed by reinsurers on business ceded are reported as income when incurred rather than being deferred and amortized with deferred policy acquisition costs as required under GAAP.
Deferred Income Taxes: Deferred income tax assets are limited to 1) the amount of federal income taxes paid in prior years that can be recovered through loss carrybacks for existing temporary differences that reverse by the end of the subsequent calendar year, plus 2) the lesser of the remaining gross deferred income tax assets expected to be realized within one year of the balance sheet date or 10% of capital and surplus excluding any net deferred income tax assets, electronic data processing equipment and operating software and any net positive goodwill, plus 3) the amount of remaining gross deferred income tax assets that can be offset against existing gross deferred income tax liabilities. The remaining deferred income tax assets are non-admitted.
Deferred income taxes do not include amounts for state taxes. Under GAAP, state taxes are included in the computation of deferred income taxes, a deferred income tax asset is recorded for the amount of gross deferred income tax assets expected to be realized in all future years, and a valuation allowance is established for deferred income tax assets not realizable.
Policyholder Dividends: Policyholder dividends are recognized when declared rather than over the term of the related policies.
Statements of Cash Flow: Cash, cash equivalents and short-term investments in the statements of cash flow represent cash balances and investments with initial maturities of one year of less. Under GAAP, the corresponding caption of cash and cash equivalents includes cash balances and investments with initial maturities of three months or less.
The effects of the foregoing variances from GAAP on the accompanying statutory-basis financial statements have not been determined by the Company, but are presumed to be material.
G - 13
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)
Other significant accounting policies are as follows:
Investments
Investments in bonds, except those to which the SVO has ascribed a designation of an NAIC 6, are reported at amortized cost using the interest method.
Single class and multi-class mortgage-backed/asset-backed securities, categorized as bonds, are valued at amortized cost using the interest method including anticipated prepayments, except for those with an NAIC designation of 6, which are valued at the lower of amortized cost or fair value. Prepayment assumptions are obtained from dealer surveys or internal estimates and are based on the current interest rate and economic environment. The retrospective adjustment method is used to value all such securities, except principal-only and interest-only securities, which are valued using the prospective method.
Investments in both affiliated and unaffiliated 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 fair value as determined by the SVO and the related net unrealized capital gains (losses) are reported in unassigned surplus along with any adjustment for federal income taxes.
Beginning in 2006, hybrid securities, not classified as debt by the SVO, are reported as preferred stock. Hybrid securities, as defined by the NAIC, are securities designed with characteristics of both debt and equity and provide protection to the issuers senior note holders. Reclassifications of securities from bonds to preferred stock have been made by the Company in the amount of $4,308 as of December 31, 2006, due to the SVO identification of such securities. Although the classification has changed, these hybrid securities continue to meet the definition of a bond, in accordance with SSAP No. 26, Bonds, excluding Loan-backed and Structured Securities and therefore, are reported at amortized cost based upon their NAIC rating. A corresponding reclassification was not made as of December 31, 2007 or 2005.
Common stocks of noninsurance subsidiaries are reported based on underlying audited GAAP equity. The net change in the subsidiaries equity is included in the change in net unrealized capital gains or losses.
There are no restrictions on common or preferred stock.
Home office properties are reported at cost less allowances for depreciation. Depreciation of home office properties is computed principally by the straight-line method.
G - 14
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)
Short-term investments include investments with remaining maturities of one year or less at the time of acquisition and are principally stated at amortized cost.
Cash equivalents are short-term highly liquid investments with original maturities of three months or less and are principally stated at amortized cost.
Mortgage loans are reported at unpaid principal balances, less an allowance for impairment. A mortgage loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all principal and interest amounts due according to the contractual terms of the mortgage agreement. When management determines that the impairment is other than temporary, the mortgage loan is written down to realizable value and a realized loss is recognized.
Policy loans are reported at unpaid principal balances. Other admitted assets are valued principally at cost.
Investments in Low Income Housing Tax Credit (LIHTC) Properties are valued at amortized cost. Tax credits are recognized in operations in the tax reporting year in which the tax credit is utilized by the Company.
Realized capital gains and losses are determined using specific identification and are recorded net of related federal income taxes. Changes in admitted asset carrying amounts of bonds, mortgage loans, preferred and common stocks are credited or charged directly to unassigned surplus.
The carrying values of all investments are reviewed on an ongoing basis for credit deterioration or changes in estimated cash flows. If this review indicates a decline in fair value that is other than temporary, the carrying value of the investment is reduced to its fair value, and a specific writedown is taken. Such reductions in carrying value are recognized as realized losses on investments.
Under a formula prescribed by the NAIC, the Company defers, in the 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 2007, 2006 and 2005 net realized capital (losses) gains of $(177), $(2,235) and $(2,416), respectively, were credited to the IMR rather than being immediately recognized in the statements of operations. Amortization of these net (losses) gains aggregated $(510), $(437) and $45, for the years ended December 31, 2007, 2006 and 2005, respectively.
G - 15
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)
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. Investment income due and accrued of $13, $20 and $28 has been excluded for the years ended December 31, 2007, 2006 and 2005, respectively, with respect to such practices.
For dollar reverse repurchase agreements, the Company receives cash collateral in an amount at least equal to the market value of the securities transferred by the Company in the transaction as of the transaction date. Cash received as collateral will be invested as needed or used for general corporate purposes of the Company. At December 31, 2006, securities with a book value of $18,544, and a market value of $18,767, were subject to dollar reverse repurchase agreements. The Company did not participate in dollar reverse repurchase agreements as of December 31, 2007.
Derivative Instruments
Futures are marked to market on a daily basis and a cash payment is made or received by the Company. These payments are recognized as realized gains or losses in the financial statements.
Premiums and Annuity Considerations
Revenues for policies with mortality or morbidity risk (including annuities with purchase rate guarantees) consist of the entire premium received and are recognized over the premium paying periods of the related policies. Premiums received for annuity policies without mortality or morbidity risk are recorded using deposit accounting, and recorded directly to an appropriate policy reserve account, without recognizing premium income.
Aggregate Reserves for Policies and Contracts
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 Company waives deduction of deferred fractional premiums upon death and refunds portions of premiums beyond the date of death. Surrender values on policies do not exceed the corresponding benefit reserves. Additional premiums are charged or additional mortality charges are assessed for policies issued on substandard lives according to underwriting classification. Additional reserves are established when the results of cash flow testing under various interest rate scenarios indicate the need for such reserves or the net premiums exceed the gross premiums on any insurance in force.
G - 16
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)
Tabular interest, tabular less actual reserves released and tabular cost have been determined by formula. Tabular interest on funds not involving life contingencies has also been determined by formula.
The aggregate policy reserves for life insurance policies are based principally upon the 1941, 1958, 1980 and 2001 Commissioners Standard Ordinary Mortality Tables. The reserves are calculated using interest rates ranging from 2.0 to 5.5 percent and are computed principally on the Net Level Premium Valuation and the Commissioners Reserve Valuation Methods. Reserves for universal life policies are based on account balances adjusted for the Commissioners Reserve Valuation Method.
Deferred annuity reserves are calculated according to the Commissioners Annuity Reserve Valuation Method including excess interest reserves to cover situations where the future interest guarantees plus the decrease in surrender charges are in excess of the maximum valuation rates of interest. Reserves for immediate annuities and supplementary contracts with life contingencies are equal to the present value of future payments assuming interest rates ranging from 4.0 to 11.25 percent and mortality rates, where appropriate, from a variety of tables.
The liabilities related to guaranteed investment contracts and policyholder funds left on deposit with the Company generally are equal to fund balances less applicable surrender charges.
Policy and Contract Claim Reserves
Claim reserves represent the estimated accrued liability for claims reported to the Company and claims incurred but not yet reported through the statement date. These reserves are estimated using either individual case-basis valuations or statistical analysis techniques. These estimates are subject to the effects of trends in claim severity and frequency. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes available.
Liability for Deposit-Type Contracts
Deposit-type contracts do not incorporate risk from the death or disability of policyholders. These types of contracts may include supplemental contracts and certain annuity contracts. Deposits and withdrawals received on these contracts are recorded as a direct increase or decrease to the liability balance, and are not reflected as premiums, benefits or changes in reserve in the statement of operations.
G - 17
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)
Reinsurance
Coinsurance premiums, commissions, expense reimbursements and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies and the terms of the reinsurance contracts. Gains associated with reinsurance of inforce blocks of business are included in unassigned surplus and are amortized into income over the estimated life of the policies. Premiums ceded and recoverable losses have been reported as a reduction of premium income and benefits, respectively.
Separate Accounts
Separate accounts held by the Company primarily represent funds which are administered for individual variable universal life and variable annuity contracts. Assets held in trust for purchases of variable universal life and variable annuity contracts and the Companys corresponding obligation to the contract owners are shown separately in the balance sheets. The assets consist of shares in funds, considered common stock investments, which are valued daily and carried at fair value. The separate accounts, held for individual policyholders, do not have any minimum guarantees, and the investment risks associated with the fair value changes are borne entirely by the policyholder.
The Company received variable contract premiums of $910,067, $1,092,584 and $1,095,820, in 2007, 2006 and 2005, respectively. All variable account contracts are subject to discretionary withdrawal by the policyholder at the market value of the underlying assets less the current surrender charge. Separate account contract holders have no claim against the assets of the general account.
Income and gains and losses with respect to the assets in the separate accounts accrue to the benefit of the contract owners and, accordingly, the operations of the separate accounts are not included in the accompanying financial statements. In addition, the Company received $137,410, $128,081 and $114,078, in 2007, 2006 and 2005, respectively, related to fees associated with investment management, administration and contractual guarantees for separate accounts.
G - 18
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)
Stock Option Plan and Stock Appreciation Rights Plans
Prior to 2002 and in 2005 through 2007, AEGON N.V. sponsored a stock option plan for eligible employees of the company. Pursuant to the plan, the option price at the date of grant is equal to the market value of the stock. Under statutory accounting principles, the Company does not record any expense related to this plan. However, the Company is allowed to record a deduction in the consolidated tax return filed by the Company and certain affiliates. The tax benefit of this deduction has been credited directly to unassigned surplus.
The Companys employees participate in various stock appreciation rights (SAR) plans issued by the Companys indirect parent. In accordance with Statement of Statutory Accounting Principles (SSAP) No. 13, Stock Options and Stock Purchase Plans, the expense related to these plans for the Companys employees has been charged to the Company, with an offsetting amount credited to paid-in surplus. The Company recorded an expense (benefit) of $(832), $(538) and $719 for the years ended December 31, 2007, 2006 and 2005, respectively. In addition, the Company recorded an adjustment to paid-in surplus for the income tax effect related to these plans over and above the amount reflected in the statement of operations in the amount of $310, $134 and $447 for years ended December 31, 2007, 2006 and 2005, respectively.
Reclassifications
Certain reclassifications have been made to the 2006 and 2005 financial statements to conform to the 2007 presentation.
Beginning in 2006, the manner in which the reserves on Variable Annuity and Variable Universal Life contracts are split between the separate account and general account statements was modified. This modification resulted in the contract surrender value being held as the reserve in the separate account statement, and any reserves in excess of the surrender value being held as the reserve in the general account. As a result, the total reserves held by the Company did not change, although the new reserve split resulted in an increase in the general account reserves of approximately $479,175 and an offsetting decrease in the separate account reserves by this same amount as of December 31, 2006. The 2005 general account reserves have increased by $483,831, the amount of reserves that would have been recorded as of December 31, 2005 had this new approach been implemented at that time.
G - 19
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
2. Accounting Changes and Corrections of Errors
Effective January 1, 2006, the Company adopted SSAP No. 93, Accounting for Low Income Housing Tax Credit Property Investments. This statement established statutory accounting principles for investments in federal and certain state sponsored LIHTC properties. SSAP No. 93 states that LIHTC investments shall be initially recorded at cost and amortized based on the proportion of tax benefits received in the current year to the total estimated tax benefits to be allocated to the investor. Prior to 2006, the Companys investments in LIHTC investments were reported in accordance with SSAP No. 48, Joint Ventures, Partnerships and Limited Liability Companies and SSAP No. 88, Investments in Subsidiary, Controlled and Affiliated Entities and carried at audited GAAP equity. The cumulative effect is the difference between the audited GAAP equity amount at January 1, 2006 and the amortized cost assuming the new accounting principles had been applied retroactively for prior periods. As a result of the change, the Company reported a cumulative effect of a change of accounting principle that increased unassigned surplus by $1 at January 1, 2006.
During the preparation of the 2006 financial statements, the Company discovered an error in the reporting of cost basis in two of its noninsurance subsidiaries. At December 31, 2005, total cost for these subsidiaries was reported at $400, which was understated by a total of $21,246. This correction is reflected as a separate adjustment to unassigned surplus, with an offset to change in unrealized capital gains and losses in 2006. There is no income or surplus effect in the current or any prior period as a result of this correction.
3. Fair Values of Financial Instruments
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 sheets for these instruments approximate their fair values.
Bonds and Preferred Stocks: Fair values for bonds and preferred stocks are based on unit prices published by the SVO or, in the absence of SVO published unit prices or when amortized cost is used by the SVO as the unit price, quoted market prices provided by other third party organizations, where available.
For fixed maturity securities (including redeemable preferred stock) 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 the expected future cash flows using current market rates applicable to the coupon rate, credit and maturity of the investments. For equity securities that are not actively traded, estimated fair values are based on values of issues of comparable yield and quality.
G - 20
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
3. Fair Values of Financial Instruments (continued)
Mortgage Loans on Real Estate: The fair values for mortgage loans on real estate are estimated utilizing discounted cash flow analyses, using interest rates reflective of current market conditions and the risk characteristics of the loans.
Policy Loans: Carrying value of policy loans approximates their fair value.
Separate Account Assets: The fair value of separate account assets are based on quoted market prices.
Separate Account Annuity Liabilities: Separate account annuity liabilities are based upon the fair value of the related separate account assets.
Investment Contract Liabilities: Fair values for the Companys 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.
Payable for Securities: The carrying amounts reported in the statutory-basis balance sheets for these instruments approximate their fair values.
Fair values for the Companys insurance contracts other than investment-type contracts (including separate account universal life liabilities) are not required to be disclosed. However, the fair values of liabilities under all insurance contracts are taken into consideration in the Companys 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.
G - 21
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
3. Fair Values of Financial Instruments (continued)
The following sets forth a comparison of the fair values and carrying amounts of the Companys financial instruments:
December 31 | ||||||||||||
2007 | 2006 | |||||||||||
Carrying Amount |
Fair Value | Carrying Amount |
Fair Value | |||||||||
Admitted assets |
||||||||||||
Cash, cash equivalents and short-term investments |
$ | 45,633 | $ | 45,633 | $ | 112,307 | $ | 112,307 | ||||
Bonds |
696,849 | 694,605 | 623,828 | 619,432 | ||||||||
Preferred stock |
4,673 | 4,646 | 4,796 | 4,844 | ||||||||
Mortgage loans on real estate |
24,493 | 24,249 | 25,548 | 25,556 | ||||||||
Policy loans |
410,844 | 410,844 | 344,781 | 344,781 | ||||||||
Separate account assets |
10,373,595 | 10,373,595 | 10,196,130 | 10,196,130 | ||||||||
Liabilities |
||||||||||||
Investment contract liabilities |
607,967 | 606,177 | 652,763 | 652,027 | ||||||||
Borrowed funds |
| | 18,885 | 18,885 | ||||||||
Payable for securities |
| | 865 | 865 | ||||||||
Separate account annuity liabilities |
6,137,949 | 6,137,949 | 6,287,948 | 6,287,948 |
4. Investments
The carrying amount and estimated fair value of investments in bonds and preferred stock are as follows:
Carrying Amount |
Gross Unrealized Gains |
Gross Unrealized Losses 12 Months or More |
Gross Unrealized Losses Less Than 12 Months |
Estimated Fair Value | |||||||||||
December 31, 2007 |
|||||||||||||||
Bonds: |
|||||||||||||||
United States Government and agencies |
$ | 152,325 | $ | 5,531 | $ | | $ | 1 | $ | 157,855 | |||||
State, municipal and other government |
4,494 | 115 | | 58 | 4,551 | ||||||||||
Public utilities |
14,942 | 345 | 32 | | 15,255 | ||||||||||
Industrial and miscellaneous |
193,686 | 2,292 | 1,185 | 1,396 | 193,397 | ||||||||||
Mortgage and other asset-backed securities |
331,402 | 1,787 | 3,673 | 5,969 | 323,547 | ||||||||||
696,849 | 10,070 | 4,890 | 7,424 | 694,605 | |||||||||||
Unaffiliated preferred stock |
4,673 | 60 | 76 | 11 | 4,646 | ||||||||||
Total |
$ | 701,522 | $ | 10,130 | $ | 4,966 | $ | 7,435 | $ | 699,251 | |||||
G - 22
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
4. Investments (continued)
Carrying Amount |
Gross Unrealized Gains |
Gross Unrealized Losses 12 Months or More |
Gross Unrealized Losses Less Than 12 Months |
Estimated Fair Value | |||||||||||
December 31, 2006 |
|||||||||||||||
Bonds: |
|||||||||||||||
United States Government and agencies |
$ | 60,003 | $ | 6 | $ | 1,763 | $ | 68 | $ | 58,178 | |||||
State, municipal and other government |
6,851 | 240 | 1 | | 7,090 | ||||||||||
Public utilities |
23,975 | 397 | 102 | | 24,270 | ||||||||||
Industrial and miscellaneous |
184,399 | 2,577 | 2,703 | 360 | 183,913 | ||||||||||
Mortgage and other asset-backed securities |
348,600 | 1,281 | 3,553 | 347 | 345,981 | ||||||||||
623,828 | 4,501 | 8,122 | 775 | 619,432 | |||||||||||
Unaffiliated preferred stock |
4,796 | 129 | 81 | | 4,844 | ||||||||||
Total |
$ | 628,624 | $ | 4,630 | $ | 8,203 | $ | 775 | $ | 624,276 | |||||
At December 31, 2007 and 2006, respectively, for securities in an unrealized loss position greater than or equal to twelve months, the Company held 57 and 81 securities with a carrying amount of $181,439 and $312,735 and an unrealized loss of $4,966 and $8,203, with an average price of 97.3 and 98.3 (NAIC fair value/amortized cost). Of this portfolio, 97.43% and 98.92% were investment grade with associated unrealized losses of $4,645 and $7,999, respectively.
At December 31, 2007 and 2006, respectively, for securities that have been in a continuous loss position for less than twelve months, the Company held 59 and 54 securities with a carrying amount of $181,236 and $132,359 and an unrealized loss of $7,435 and $775 with an average price of 95.9 and 99.9 (NAIC fair value/amortized cost). Of this portfolio, 93.47% and 87.39% were investment grade with associated unrealized losses of $7,145 and $588, respectively.
The Company closely monitors below investment grade holdings and those investment grade issuers where the Company has concerns. The Company also regularly monitors industry sectors. Securities in unrealized loss positions that are considered other than temporary are written down to fair value. The Company considers relevant facts and circumstances in evaluating whether the impairment is other than temporary including: (1) the probability of the Company collecting all amounts due according to the contractual terms of the security in affect at the date of acquisition; and (2) the Companys decision to sell a security prior to its maturity at an amount below its carrying amount. Additionally, financial condition, near term prospects of the issuer and nationally recognized credit rating changes are monitored. For asset-backed securities, cash flow trends and underlying levels of collateral are monitored. The Company will record a charge to the statement of operations to the extent that these securities are subsequently determined to be other than temporarily impaired.
G - 23
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
4. Investments (continued)
Sub-prime mortgages are loans to homebuyers who have weak or impaired credit histories, are loans that are non-conforming or are loans that are second in priority. The Companys businesses in the United States do not sell or buy sub-prime mortgages directly. The Companys exposure to sub-prime mortgages is related to so-called asset-backed securities (ABS). These securities are pools of mortgages that have been securitized and offered to investors as asset-backed securities, where the mortgages are collateral. Most of the underlying mortgages within the pool have FICO scores below 660. Therefore, the ABS has been classified by the Company as a sub-prime mortgage position. Also included in the Companys total sub-prime mortgage position are ABS with second lien mortgages as collateral. The second lien mortgages may not necessarily have sub-prime FICO scores; however, the Company has included these ABS in its sub-prime position as its the second priority in terms of repayment. The Company does not have any direct residential mortgages to sub-prime borrowers outside of the ABS structures.
For ABS in an unrealized loss position, the Company considers them for impairment when there has been an adverse change in estimated cash flows from the cash flows previously projected at purchase, which is in accordance with SSAP 43, Loan-backed and Structured Securities. The Company did not impair any of its sub-prime mortgage positions in 2006 or 2007.
The actual cost, carrying value and fair value of the Companys sub-prime mortgage- backed ABS holdings at December 31, 2007 are $75,364, $75,328 and $68,859, respectively.
The estimated fair value of bonds and preferred stock with gross unrealized losses is as follows:
Losses 12 Months or More |
Losses Less Than 12 Months |
Total | |||||||
December 31, 2007 |
|||||||||
Bonds: |
|||||||||
United States Government and agencies |
$ | | $ | 823 | $ | 823 | |||
State, municipal and other government |
| 1,851 | 1,851 | ||||||
Public utilities |
4,963 | | 4,963 | ||||||
Industrial and miscellaneous |
61,784 | 48,785 | 110,569 | ||||||
Mortgage and other asset-backed securities |
106,518 | 121,865 | 228,383 | ||||||
173,265 | 173,324 | 346,589 | |||||||
Preferred stock |
3,207 | 477 | 3,684 | ||||||
$ | 176,472 | $ | 173,801 | $ | 350,273 | ||||
G - 24
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
4. Investments (continued)
Losses 12 Months or More |
Losses Less Than 12 Months |
Total | |||||||
December 31, 2006 |
|||||||||
Bonds: |
|||||||||
United States Government and agencies |
$ | 53,336 | $ | 3,382 | $ | 56,718 | |||
State, municipal and other government |
345 | | 345 | ||||||
Public utilities |
7,904 | 4,999 | 12,903 | ||||||
Industrial and miscellaneous |
96,635 | 29,104 | 125,739 | ||||||
Mortgage and other asset-backed securities |
142,988 | 94,099 | 237,087 | ||||||
301,208 | 131,584 | 432,792 | |||||||
Preferred stock |
3,324 | | 3,324 | ||||||
$ | 304,532 | $ | 131,584 | $ | 436,116 | ||||
The carrying amount and fair value of bonds at December 31, 2007, 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.
Carrying Amount |
Estimated Fair Value | |||||
Due in one year or less |
$ | 24,050 | $ | 24,063 | ||
Due one through five years |
142,162 | 141,987 | ||||
Due five through ten years |
39,191 | 39,448 | ||||
Due after ten years |
160,044 | 165,560 | ||||
365,447 | 371,058 | |||||
Mortgage and other asset-backed securities |
331,402 | 323,547 | ||||
$ | 696,849 | $ | 694,605 | |||
G - 25
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
4. Investments (continued)
A detail of net investment income is presented below:
Year Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Income: |
||||||||||||
Bonds |
$ | 32,953 | $ | 32,693 | $ | 30,014 | ||||||
Preferred stocks |
264 | 421 | | |||||||||
Common stock of affiliated entities |
6,160 | 10,010 | 35,871 | |||||||||
Mortgage loans on real estate |
1,501 | 1,183 | 2,013 | |||||||||
Real estate-home office properties |
7,243 | 7,400 | 7,316 | |||||||||
Policy loans |
22,127 | 18,870 | 17,266 | |||||||||
Cash, cash equivalents and short-term investments |
9,852 | 4,722 | 2,090 | |||||||||
Other |
(2,503 | ) | (2,443 | ) | 451 | |||||||
Gross investment income |
77,597 | 72,856 | 95,021 | |||||||||
Investment expenses |
(8,765 | ) | (8,747 | ) | (8,209 | ) | ||||||
Net investment income |
$ | 68,832 | $ | 64,109 | $ | 86,812 | ||||||
Investment expenses include expenses for the occupancy of company-owned property of $3,759, $3,668 and $3,649 during 2007, 2006 and 2005, respectively, as well as depreciation expense on these properties of $890, $887 and $880, respectively.
Proceeds from sales and maturities of debt securities and related gross realized gains and losses were as follows:
Year Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Proceeds |
$ | 393,160 | $ | 521,904 | $ | 758,904 | ||||||
Gross realized gains |
$ | 2,154 | $ | 1,685 | $ | 1,555 | ||||||
Gross realized losses |
(2,426 | ) | (4,689 | ) | (5,273 | ) | ||||||
Net realized losses |
$ | (272 | ) | $ | (3,004 | ) | $ | (3,718 | ) | |||
At December 31, 2007, bonds with an aggregate carrying value of $3,795 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.
G - 26
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
4. Investments (continued)
Net realized capital gains (losses) on investments and change in unrealized capital gains and losses are summarized below:
Realized | ||||||||||||
Year Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Debt securities |
$ | (272 | ) | $ | (3,004 | ) | $ | (3,718 | ) | |||
Common stock |
| (20 | ) | | ||||||||
Cash equivalents |
(1,230 | ) | | | ||||||||
Derivatives |
(2,240 | ) | (858 | ) | (78 | ) | ||||||
Other invested assets |
(164 | ) | 952 | 26 | ||||||||
(3,906 | ) | (2,930 | ) | (3,770 | ) | |||||||
Tax benefit |
1,106 | 1,040 | 770 | |||||||||
Transfer to interest maintenance reserve |
177 | 2,235 | 2,416 | |||||||||
Net realized capital gains (losses) on investments |
$ | (2,623 | ) | $ | 345 | $ | (584 | ) | ||||
Changes in Unrealized | ||||||||||||
Year Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Common stocks |
$ | 638 | $ | (43,656 | ) | $ | 18,801 | |||||
Other invested assets |
| | (1,390 | ) | ||||||||
Change in unrealized capital gains and losses |
$ | 638 | $ | (43,656 | ) | $ | 17,411 | |||||
The Company did not recognize any impairment write-downs for its investments in limited partnerships during the years ended December 31, 2007, 2006 or 2005.
Gross unrealized gains (losses) on common stocks of affiliated entities were as follows:
Unrealized | ||||||||
December 31 | ||||||||
2007 | 2006 | |||||||
Unrealized gains |
$ | 6,212 | $ | 5,574 | ||||
Unrealized losses |
(2,475 | ) | (2,475 | ) | ||||
Net unrealized gains |
$ | 3,737 | $ | 3,099 | ||||
G - 27
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
4. Investments (continued)
During 2007, the Company did not issue any mortgage loans. During 2006, the Company issued one mortgage loan at an interest rate of 6.35%. The maximum percentage of any one mortgage loan to the value of the underlying real estate at origination was 72%. The Company holds the mortgage document, which gives it the right to take possession of the property if the borrower fails to perform according to the terms of the agreement.
During 2007, 2006 and 2005, no mortgage loans were foreclosed and transferred to real estate. At December 31, 2007, 2006 and 2005, the Company held a mortgage loan loss reserve in the asset valuation reserve of $233, $243 and $171, respectively.
At December 31, 2007, the Company had three Low Income Housing Tax Credits. The remaining years of unexpired tax credits ranged from four to ten and none of the properties were subject to regulatory review. The length of time remaining for holding periods ranged from nine to fifteen years. The amount of contingent equity commitments expected to be paid during the years 2008 to 2012 are $2,053. There were no impairment losses, write-downs or reclassifications during 2007 related to these credits.
At December 31, 2006, the Company had two Low Income Housing Tax Credits. The remaining years of unexpired tax credits ranged from five to nine and none of the properties were subject to regulatory review. The length of time remaining for holding periods ranged from ten to eleven years. The amount of contingent equity commitments expected to be paid during the years 2007 to 2016 are $2,618. There were no impairment losses, write-downs, or reclassifications during 2006 related to any of these credits.
The Company issues products providing the customer a return based on the S&P 500 index. The Company uses S&P 500 index futures contracts to hedge the liability risk associated with these products.
Derivative instruments are subject to market risk, which is the possibility that future changes in market prices may make the instruments less valuable. The Company uses derivatives as hedges, consequently, when the value of the derivative changes, the value of a corresponding hedged asset or liability will move in the opposite direction. Market risk is a consideration when changes in the value of the derivative and the hedged item do not completely offset (correlation or basis risk) which is mitigated by active measuring and monitoring.
The Company did not recognize any unrealized gains or losses during 2007, 2006 or 2005 that represented the component of derivative instruments gain or loss that was excluded from the assessment of hedge effectiveness.
G - 28
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
4. Investments (continued)
The Company did not recognize any unrealized gains or losses during 2007 or 2006 for the component of derivative instruments utilized for hedging purposes that did not qualify for hedge accounting.
5. 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.
Premiums earned reflect the following reinsurance ceded amounts for the year ended December 31:
Year Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Direct premiums |
$ | 1,084,449 | $ | 1,229,963 | $ | 1,200,679 | ||||||
Reinsurance assumed affiliated |
3,853 | 2,382 | 791 | |||||||||
Reinsurance ceded affiliated |
(48,572 | ) | (43,611 | ) | (36,972 | ) | ||||||
Reinsurance ceded non-affiliated |
(25,946 | ) | (21,609 | ) | (17,969 | ) | ||||||
Net premiums earned |
$ | 1,013,784 | $ | 1,167,125 | $ | 1,146,529 | ||||||
The Company received reinsurance recoveries in the amount of $37,977, $34,248 and $42,537 during 2007, 2006 and 2005, respectively. At December 31, 2007 and 2006, estimated amounts recoverable from reinsurers that have been deducted from policy and contract claim reserves totaled $14,863 and $13,933, respectively. The aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded at December 31, 2007 and 2006 of $112,489 and $84,897, respectively. As of December 31, 2007 and 2006, the amount of reserve credits for reinsurance ceded that represented affiliated companies were $75,935 and $62,002, respectively.
The net amount of the reduction in surplus at December 31, 2007 if all reinsurance agreements were cancelled is $4,740.
G - 29
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
5. Reinsurance (continued)
During 2001, the Company entered into a reinsurance transaction with Transamerica International Re (Bermuda) Ltd., an affiliate of the Company. Under the terms of this transaction, the Company ceded the obligation for future guaranteed minimum death benefits included in certain of its variable annuity contracts. The difference between the initial premiums ceded of $37,176 and the reserve credit taken of $55,408 was credited directly to unassigned surplus on a net of tax basis. Over the course of this reinsurance treaty, the experience of the underlying policies will be reflected as a reduction to the amount initially credited to surplus. For years ended December 31, 2007, 2006 and 2005, the amount charged directly to unassigned surplus was $ 1,185. At December 31, 2007, the Company holds collateral in the form of letters of credit of $61,000 from the assuming company.
During 2006, the Company entered into a reinsurance agreement with Transamerica International Reinsurance Ireland, Ltd. (TIRI) an affiliate, to retrocede an inforce block of term life business effective January 1, 2006. The difference between the initial commission expense allowance received of $700 and ceded reserves of $332 resulted in an initial transaction gain of $368, which was credited to unassigned surplus on a net of tax basis in the amount of $240, in accordance with SSAP No. 61, Life, Deposit-Type and Accident and Health Reinsurance. For each of the years ended December 31, 2007 and 2006, the Company amortized $24 into earnings with a corresponding charge to unassigned surplus.
During 2007, the Company recaptured the risks related to the universal life business that was previously ceded to TIRI on a funds withheld basis. The Company paid recapture consideration of $525 and received $81 for assets recaptured related to the block. Reserves recaptured included $5,453 in life reserves and $30 in other claim reserves, resulting in a net pre-tax loss of $5,927, which is included in the statement of operations.
Letters of credit held for all unauthorized reinsurers as of December 31, 2007 and 2006 was $79,000 and $67,200, respectively.
G - 30
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
6. Income Taxes
The main components of deferred tax amounts are as follows:
December 31 | ||||||
2007 | 2006 | |||||
Deferred tax assets: |
||||||
Non-admitted assets |
$ | 6,650 | $ | 7,214 | ||
Tax-basis deferred acquisition costs |
93,168 | 93,272 | ||||
Reserves |
135,841 | 138,064 | ||||
Other |
13,151 | 11,518 | ||||
Total deferred income tax assets |
248,810 | 250,068 | ||||
Non-admitted deferred tax assets |
165,305 | 156,815 | ||||
Admitted deferred tax assets |
83,505 | 93,253 | ||||
Deferred tax liabilities: |
||||||
§807(f) adjustment liabilities |
52,151 | 62,039 | ||||
Other |
475 | 687 | ||||
Total deferred income tax liabilities |
52,626 | 62,726 | ||||
Net admitted deferred tax asset |
$ | 30,879 | $ | 30,527 | ||
The change in net deferred income tax assets is as follows:
December 31 | ||||||||||
2007 | 2006 | Change | ||||||||
Total deferred tax assets |
$ | 248,810 | $ | 250,068 | $ | (1,258 | ) | |||
Total deferred tax liabilities |
52,626 | 62,726 | (10,100 | ) | ||||||
Net deferred tax asset |
$ | 196,184 | $ | 187,342 | $ | 8,842 | ||||
December 31 | ||||||||||
2006 | 2005 | Change | ||||||||
Total deferred tax assets |
$ | 250,068 | $ | 236,815 | $ | 13,253 | ||||
Total deferred tax liabilities |
62,726 | 74,347 | 11,621 | |||||||
Net deferred tax asset |
$ | 187,342 | $ | 162,468 | $ | 24,874 | ||||
Non-admitted deferred tax assets increased $8,490, $22,220 and $27,476 for 2007, 2006 and 2005, respectively.
G - 31
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
6. Income Taxes (continued)
Federal income tax expense differs from the amount computed by applying the statutory federal income tax rate to gain (loss) from operations before federal income tax expense and net realized capital gains (losses) on investments for the following reasons:
Year Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Income tax expense (benefit) on operational gains and capital gains (losses) on investments computed at the federal statutory rate (35%) |
$ | 67,317 | $ | 61,842 | $ | 49,460 | ||||||
Deferred acquisition costs tax basis |
(314 | ) | 327 | 981 | ||||||||
Amortization of IMR |
179 | 153 | (16 | ) | ||||||||
Depreciation |
(56 | ) | (178 | ) | (178 | ) | ||||||
Dividends received deduction |
(8,946 | ) | (11,099 | ) | (25,155 | ) | ||||||
Low income housing credits |
(3,198 | ) | (3,167 | ) | (3,157 | ) | ||||||
Reinsurance transactions |
(423 | ) | (339 | ) | (415 | ) | ||||||
Reserves |
6,380 | 17,750 | 17,967 | |||||||||
Other |
(82 | ) | 1,649 | (302 | ) | |||||||
Federal income tax expense on operations and capital gains (losses) on investments |
60,857 | 66,938 | 39,185 | |||||||||
Less tax (benefit) on capital gains (losses) |
(1,106 | ) | (1,040 | ) | (770 | ) | ||||||
Total federal income tax expense |
$ | 61,963 | $ | 67,978 | $ | 39,955 | ||||||
The total statutory income taxes are computed as follows:
Year Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Federal income tax expense on operations and capital gains (losses) on investments |
$ | 60,857 | $ | 66,938 | $ | 39,185 | ||||||
Change in net deferred income taxes |
(8,842 | ) | (24,874 | ) | (22,511 | ) | ||||||
Total statutory income taxes |
$ | 52,015 | $ | 42,064 | $ | 16,674 | ||||||
For federal income tax purposes, the Company joins in a consolidated income tax return filing with its indirect parent, Transamerica Corporation. Under the terms of a tax sharing agreement between the Company and its affiliates, the Company computes federal income tax expense as if it were filing a separate income tax return, except that tax credits and net operating loss carryforwards are determined on the basis of the consolidated group. At December 31, 2006, the life subgroup had no loss carryforwards. Additionally, the alternative minimum tax is computed for the consolidated group and the resulting tax, if any, is allocated back to the separate companies on the basis of the separate companies alternative minimum taxable income.
The consolidated tax group, in which the Company is included, incurred income taxes during 2007, 2006 and 2005 of $40,084, $0 and $286,973, respectively, which will be available for recoupment in the event of future net losses.
G - 32
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
6. Income Taxes (continued)
The amount of tax contingencies calculated for the Company as of December 31, 2007 and 2006 is not material to the Companys financial position. Therefore, the total amount of tax contingencies that, if recognized, would affect the effective income tax rate is immaterial. The Company classifies interest and penalties related to income taxes as interest expense and penalty expense, respectively. The Companys interest expense related to income taxes as of December 31, 2007 and 2006 was not material and the Company recorded no liability for penalties.
The Companys federal income tax returns have been examined by the Internal Revenue Service and closing agreements have been executed through 2000. The examination for 2001 through 2004 has been completed and resulted in tax return adjustments that are currently being appealed. The Company believes that there are adequate defenses against or sufficient provisions established related to any open or contested tax provisions. An examination is underway for 2005 and 2006.
7. Policy and Contract Attributes
A portion of the Companys policy reserves and other policyholders funds relate to liabilities established on a variety of the Companys products, primarily separate accounts that are not subject to significant mortality or morbidity risk; however, there may be certain restrictions placed upon the amount of funds that can be withdrawn without penalty. The amount of reserves on these products, by withdrawal characteristics, is summarized as follows:
December 31 | ||||||||||||
2007 | 2006 | |||||||||||
Amount | Percent of Total |
Amount | Percent of Total |
|||||||||
Subject to discretionary withdrawal: |
||||||||||||
With market value adjustment |
$ | 20,695 | 0 | % | $ | 21,059 | 0 | % | ||||
At book value less current surrender charge of 5% or more |
81,307 | 1 | % | 97,945 | 1 | % | ||||||
At fair value |
6,164,883 | 91 | % | 6,322,414 | 91 | % | ||||||
Total with adjustment or at market value |
6,266,885 | 92 | % | 6,441,418 | 92 | % | ||||||
At book value without adjustment (minimal or no charge or adjustment) |
431,030 | 6 | % | 462,789 | 7 | % | ||||||
Not subject to discretionary withdrawal |
92,330 | 2 | % | 78,598 | 1 | % | ||||||
Total annuity reserves and deposit fund liabilities - before reinsurance |
6,790,245 | 100 | % | 6,982,805 | 100 | % | ||||||
Less reinsurance ceded |
35,260 | 33,153 | ||||||||||
Net annuity reserves and deposit fund liabilities |
$ | 6,754,985 | $ | 6,949,652 | ||||||||
G - 33
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
7. Policy and Contract Attributes (continued)
Information regarding the separate accounts of the Company is as follows:
Guaranteed Indexed |
Nonindexed Guaranteed Less than or Equal to 4% |
Nonindexed Guaranteed Greater than 4% |
Nonguaranteed Separate Accounts |
Total | |||||||||||
Premiums, deposits and other considerations for the year ended December 31, 2007 |
$ | | $ | | $ | | $ | 909,554 | $ | 909,554 | |||||
Reserves at December 31, 2007 for accounts with assets at fair value |
$ | | $ | | $ | | $ | 9,485,165 | $ | 9,485,165 | |||||
Reserves for separate accounts by withdrawal characteristics at December 31, 2007: |
|||||||||||||||
Subject to discretionary withdrawal: |
|||||||||||||||
With market value adjustment |
$ | | $ | | $ | | $ | | $ | | |||||
At book value without market value adjustment and with current surrender charge of 5% or more |
| | | 6,062,603 | 6,062,603 | ||||||||||
At fair value |
| | | 3,422,562 | 3,422,562 | ||||||||||
At book value without market value adjustment and with current surrender charge of less than 5% |
| | | | | ||||||||||
Subtotal |
| | | 9,485,165 | 9,485,165 | ||||||||||
Not subject to discretionary withdrawal |
| | | | | ||||||||||
Total separate account liabilities at December 31, 2007 |
$ | | $ | | $ | | $ | 9,485,165 | $ | 9,485,165 | |||||
G - 34
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
7. Policy and Contract Attributes (continued)
Guaranteed Indexed |
Nonindexed Guaranteed Less than or Equal to 4% |
Nonindexed Guaranteed Greater than 4% |
Nonguaranteed Separate Accounts |
Total | |||||||||||
Premiums, deposits and other considerations for the year ended December 31, 2006 |
$ | | $ | | $ | | $ | 1,092,105 | $ | 1,092,105 | |||||
Reserves at December 31, 2006 for accounts with assets at fair value |
$ | | $ | | $ | | $ | 9,264,404 | $ | 9,264,404 | |||||
Reserves for separate accounts by withdrawal characteristics at December 31, 2006: |
|||||||||||||||
Subject to discretionary withdrawal: |
|||||||||||||||
With market value adjustment |
$ | | $ | | $ | | $ | | $ | | |||||
At book value without market value adjustment and with current surrender charge of 5% or more |
| | | | | ||||||||||
At fair value |
| | | 9,264,404 | 9,264,404 | ||||||||||
At book value without market value adjustment and with current surrender charge of less than 5% |
| | | | | ||||||||||
Subtotal |
| | | 9,264,404 | 9,264,404 | ||||||||||
Not subject to discretionary withdrawal |
| | | | | ||||||||||
Total separate account liabilities at December 31, 2006 |
$ | | $ | | $ | | $ | 9,264,404 | $ | 9,264,404 | |||||
A reconciliation of the amounts transferred to and from the separate accounts is presented below:
Year Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Transfers as reported in the Summary of Operations of the Separate Accounts Statement: |
||||||||||||
Transfers to Separate Accounts |
$ | 910,067 | $ | 1,092,584 | $ | 1,095,820 | ||||||
Transfers from Separate Accounts |
1,484,712 | 1,758,650 | 1,671,242 | |||||||||
Net transfers to (from) Separate Accounts |
(574,645 | ) | (666,066 | ) | (575,422 | ) | ||||||
Reconciling adjustments: |
||||||||||||
Other |
(1,399 | ) | 215 | 3,768 | ||||||||
Transfers as reported in the Summary of Operations of the Company |
$ | (576,044 | ) | $ | (665,851 | ) | $ | (571,654 | ) | |||
G - 35
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
7. Policy and Contract Attributes (continued)
At December 31, 2007 and 2006, the Company had variable annuities with guaranteed living benefits as follows:
Year |
Benefit and Type of Risk |
Subjected Account Value |
Amount of Reserve Held |
Reinsurance Reserve Credit | |||||||
2007 |
Guaranteed Minimum Income Benefit |
$ | 1,633,606 | $ | 28,980 | $ | 4,250 | ||||
2006 |
Guaranteed Minimum Income Benefit |
$ | 1,787,240 | $ | 25,183 | $ | 3,152 |
For Variable Annuities with Guaranteed Living Benefits (VAGLB), the Company complies with Actuarial Guideline 39. This guideline defines a two step process for the determination of VAGLB reserves. The first step is to establish a reserve equal to the accumulated VAGLB charges for the policies in question. The second step requires a standalone asset adequacy analysis to determine the sufficiency of these reserves. This step has been satisfied by projecting 30 years into the future along 1000 stochastic variable return paths using a variety of assumptions as to VAGLB charges, lapse, withdrawal, annuitization and death. The results of this analysis are discounted back to the valuation date and compared to the accumulation of fees reserve to determine if an additional reserve needs to be established.
At December 31, 2007 and 2006, the Company had variable annuities with guaranteed death benefits as follows:
Year |
Benefit and Type of Risk |
Subjected Account Value |
Amount of Reserve Held |
Reinsurance Reserve Credit | |||||||
2007 |
Guaranteed Minimum Death Benefit |
$ | 6,291,420 | $ | 73,072 | $ | 35,260 | ||||
2006 |
Guaranteed Minimum Death Benefit |
$ | 6,564,098 | $ | 63,367 | $ | 33,153 |
For Variable Annuities with Minimum Guaranteed Death Benefits (MGDB), the Company complies with Actuarial Guideline 34. This guideline requires that MGDBs be projected by assuming an immediate drop in the values of the assets supporting the variable annuity contract, followed by a subsequent recovery at a net assumed return until the maturity of the contract. The immediate drop percentages and gross assumed returns vary by asset class and are defined in the guideline. Mortality is based on the 1994 Variable Annuity MGDB Mortality Table, which is also defined in the guideline.
G - 36
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
7. Policy and Contract Attributes (continued)
Reserves on the Companys traditional life insurance products are computed using mean reserving methodologies. These methodologies result in the establishment of assets for the amount of the net valuation premiums that are anticipated to be received between the policys paid-through date to the policys next anniversary date. At December 31, 2007 and 2006, these assets (which are reported as premiums deferred and uncollected) and the amounts of the related gross premiums and loading, are as follows:
Gross | Loading | Net | ||||||||
December 31, 2007 |
||||||||||
Ordinary direct renewal business |
$ | 3,046 | $ | 1,813 | $ | 4,859 | ||||
Ordinary new business |
262 | (151 | ) | 111 | ||||||
$ | 3,308 | $ | 1,662 | $ | 4,970 | |||||
December 31, 2006 |
||||||||||
Ordinary direct renewal business |
$ | 2,749 | $ | 1,475 | $ | 4,224 | ||||
Ordinary new business |
910 | (107 | ) | 803 | ||||||
$ | 3,659 | $ | 1,368 | $ | 5,027 | |||||
At December 31, 2007 and 2006, the Company had insurance in force aggregating $2,170,424 and $3,640,805 respectively, in which the gross premiums are less than the net premiums required by the valuation standards established by the Ohio Department of Insurance. The Company established policy reserves of $15,281 and $21,377 to cover these deficiencies at December 31, 2007 and 2006, respectively.
8. Dividend Restrictions
The Company is subject to limitations, imposed by the State of Ohio, on the payment of dividends to its parent company. Generally, dividends during any twelve month period may not be paid, without prior regulatory approval, in excess of the greater of (a) 10 percent of statutory surplus as of the preceding December 31, or (b) net income for the preceding year. Subject to the availability of unassigned surplus at the time of such dividend, the maximum payment which may be made in 2008, without the prior approval of insurance regulatory authorities, is $131,655.
9. Capital and Surplus
Life/health insurance companies are subject to certain Risk-Based Capital (RBC) requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life/health insurance company is to be determined based on the various risk factors related to it. At December 31, 2007, the Company meets the RBC requirements.
G - 37
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
10. Sales, Transfer, and Servicing of Financial Assets and Extinguishments of Liabilities
During 2006 and 2005, the Company sold $32,428 and $51,983, respectively, of agent balances without recourse to an affiliated entity. Prior to July 29, 2005, the agent debit balances were sold to Money Services, Inc. (MSI), an affiliated company. Subsequent to July 29, 2005, agent debit balances were sold without recourse to ADB Corporation, LLC (ADB), an affiliated company, and all rights, title and interest in the prior net debit balances owned by MSI prior to July 29, 2005, were fully assigned, without recourse, to ADB. The Company did not realize a gain or loss as a result of the sales. As of July 1, 2006, the Company no longer sells agent debit balances and thus retains such balances as non-admitted receivables. Agent receivables in the amount of $18,673 and $20,261 were non-admitted as of December 31, 2007 and 2006, respectively.
11. Retirement and Compensation Plans
The Companys 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 International Accounting Standards 19 (IAS 19), Accounting for Employee Benefits as a percent of salaries. The benefits are based on years of service and the employees compensation during the highest five consecutive years of employment. Pension expense allocated to the Company aggregated $1,829, $1,432 and $1,280 for 2007, 2006 and 2005, respectively. The plan is subject to the reporting and disclosure requirements of the Employee Retirement and Income Security Act of 1974.
The Companys 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 twenty-five percent of their salary to the plan. The Company will match an amount up to three percent of the participants 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. Expense related to this plan was $905, $864 and $836 for 2007, 2006 and 2005, respectively.
G - 38
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
11. Retirement and Compensation Plans (continued)
AEGON sponsors supplemental retirement plans to provide the Companys senior management with benefits in excess of normal pension benefits. The plans are noncontributory and benefits are based on years of service and the employees 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. The Companys allocation of expense for these plans for 2007, 2006 and 2005 was insignificant. AEGON also sponsors an employee stock option plan/stock appreciation rights for employees of the Company 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 funded as deemed appropriate by management of AEGON and the Company.
In addition to pension benefits, the Company participates in plans sponsored by AEGON that provide postretirement medical, dental and life insurance benefits to employees meeting certain eligibility requirements. Portions of the medical and dental plans are contributory. The postretirement expenses are charged to affiliates in accordance with an intercompany cost sharing arrangement. The Company expensed $179, $147 and $126 for 2007, 2006 and 2005, respectively.
12. Related Party Transactions
The Company shares certain officers, employees and general expenses with affiliated companies.
The Company is party to a Cost Sharing agreement between AEGON USA, Inc. companies, providing for services needed. The Company is also party to a Management and Administrative and Advisory agreement with AEGON USA Realty Advisors, Inc. whereby the Advisor serves as the administrator and advisor for the Companys mortgage loan operations by administering the day-to-day real estate and mortgage loan operations of the Company. AEGON USA Investment Management, LLC acts as a discretionary investment manager under an Investment Management Agreement with the Company. The Company is part of a Tax Allocation Agreement with its parent and other affiliated companies as described in Note 6. During 2007, 2006 and 2005, the Company paid $106,392, $94,305 and $91,667, respectively, for such services, which approximates their costs to the affiliates. During 2006, the Company executed an administration service agreement with Transamerica Fund Advisors, Inc. to provide administrative services to the AEGON/Transamerica Series Trust. The Company received $38,629 and $36,528 from this agreement during 2007 and 2006, respectively. The Company provides office space, marketing and administrative services to certain affiliates. During 2007, 2006 and 2005, the Company received $100,815, $91,726 and $85,975, respectively, for such services, which approximates their cost.
G - 39
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
12. Related Party Transactions (continued)
Receivables from and payables to affiliates and intercompany borrowings bear interest at the thirty-day commercial paper rate. At December 31, 2007 and 2006, the Company has a net amount of $21,887 and $9,683, respectively, due to affiliates. Terms of settlement require that these amounts are settled within 90 days. During 2007, 2006 and 2005, the Company paid net interest of $1,954, $1,599 and $1,027, respectively, to affiliates.
At December 31, 2007, the Company had a short-term note receivable of $9,600 from AEGON USA, Inc. The note is due by September 27, 2008 and bears interest at 5.62%. This note is reported as a short-term investment.
In prior years, the Company purchased life insurance policies covering the lives of certain employees of the Company from an affiliate. At December 31, 2007 and 2006, the cash surrender value of these policies was $63,948 and $61,729, respectively.
The Company paid ordinary common stock dividends of $110,000 and $2,000 to its parent on December 19, 2007 and September 8, 2006, respectively. No dividends were paid during 2005.
13. 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 managements opinion that damages arising from such demands will not be material to the Companys 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 Companys 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 and are not required to be accrued for financial reporting purposes. The Company has established a reserve of $3,344 and $3,364 with no offsetting premium tax benefit at December 31, 2007 and 2006, respectively, for its estimated share of future guaranty fund assessments related to several major insurer insolvencies. The guaranty fund expense (credit) was $(22), $36 and $59 for 2007, 2006 and 2005, respectively.
G - 40
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
13. Commitments and Contingencies (continued)
The Company participates in an agent-managed securities lending program. The Company receives collateral equal to 100%/102% of the fair market value of the loaned government/other domestic securities, respectively, as of the transaction date. If the fair value of the collateral is at any time less than 100%/102% of the fair value of the loaned securities, the counterparty is mandated to deliver additional collateral, the fair value of which, together with the collateral already held in connection with the lending transaction, is at least equal to 100%/102% of the fair value of the loaned government/other domestic securities, respectively. In the event the Company loans a foreign security and the denomination of the currency of the collateral is other than the denomination of the currency of the loaned foreign security, the Company receives and maintains collateral equal to 105% of the fair market value of the loaned security.
At December 31, 2007 and 2006, respectively, securities in the amount of $158,452 and $59,321 were on loan under security lending agreements. At December 31, 2007 the collateral the Company received from securities lending was in the form of cash.
The Company has contingent commitments of $2,053 and $2,618 as of December 31, 2007 and 2006, respectively, for low income housing tax credit investments.
The Company is required by the Commodity Futures Trading Commission (CFTC) to maintain assets on deposit with brokers for futures trading activity done on behalf of the Company. The broker has a secured interest with priority in the pledged assets, however, the Company has the right to recall and substitute the pledged assets. At December 31, 2007 and 2006 respectively, the Company pledged assets in the amount of $6,449 and $2,191 to satisfy the requirements of futures trading accounts.
There continues to be significant federal and state regulatory activity relating to financial services companies. The Company and certain of its affiliates have been examined by, and received requests for information from, the staff of the Securities and Exchange Commission (SEC). In particular, the Company continues to respond to requests for documents and information from the SEC staff in connection with an ongoing investigation, which has included requests for testimony by the Company, its personnel and other related persons regarding potential market timing and matters affecting certain employees and affiliates of the Company.
G - 41
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements Statutory Basis (continued)
(Dollars in Thousands)
13. Commitments and Contingencies (continued)
A number of other companies in this industry have announced settlements of enforcement actions with various regulatory agencies such as the SEC; those settlements have encompassed a wide range of remediation including injunctive relief, monetary penalties and restitution. The Company and its affiliates are working with the SEC in regard to this matter; however, the exact resolution cannot be determined at this time. Although it is not possible to provide a meaningful estimate of the range of potential outcomes at this time, the Company does not believe the resolution will be material to its financial position.
14. Debt
The Company had an outstanding liability for borrowed money in the amount of $18,885 as of December 31, 2006, due to participation in dollar reverse repurchase agreements. The Company did not participate in dollar reverse repurchase agreement at December 31, 2007. The Company enters reverse dollar repurchase agreements in which securities are delivered to the counterparty once adequate collateral has been received as stated in Note 1.
G - 42
Statutory-Basis Financial
Statement Schedules
G - 43
Western Reserve Life Assurance Co. of Ohio
Summary of Investments Other Than
Investments in Related Parties
(Dollars in Thousands)
December 31, 2007
Schedule I
Type of Investment |
Cost (1) | Fair Value |
Amount at Which Shown in the Balance Sheet | ||||||
Fixed maturities |
|||||||||
Bonds: |
|||||||||
United States Government and government agencies and authorities |
$ | 161,206 | $ | 167,011 | $ | 161,206 | |||
States, municipalities and political subdivisions |
30,832 | 31,404 | 30,832 | ||||||
Foreign governments |
3,662 | 3,722 | 3,662 | ||||||
Public utilities |
14,942 | 15,255 | 14,942 | ||||||
All other corporate bonds |
486,207 | 477,213 | 486,207 | ||||||
Preferred stock |
4,673 | 4,646 | 4,673 | ||||||
Total fixed maturities |
701,522 | 699,251 | 701,522 | ||||||
Mortgage loans on real estate |
24,493 | 24,493 | |||||||
Real estate |
38,574 | 38,574 | |||||||
Policy loans |
410,844 | 410,844 | |||||||
Cash, cash equivalents and short-term investments |
45,633 | 45,633 | |||||||
Other invested assets |
10,358 | 10,358 | |||||||
Total investments |
$ | 1,231,424 | $ | 1,231,424 | |||||
(1) | Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and adjusted for amortization of premiums or accruals of discounts. |
G - 44
Western Reserve Life Assurance Co. of Ohio
Supplementary Insurance Information
(Dollars in Thousands)
Schedule III
Future Policy Benefits and Expenses |
Policy and Contract Liabilities |
Premium Revenue |
Net Investment Income* |
Benefits, Claims, Losses and Settlement Expenses |
Other Operating Expenses* |
Premium Written | ||||||||||||||||
Year ended December 31, 2007 |
||||||||||||||||||||||
Individual life |
$ | 1,040,192 | $ | 14,956 | $ | 583,844 | $ | 42,731 | $ | 304,367 | $ | 241,395 | $ | | ||||||||
Group life |
15,550 | 100 | 46 | 646 | 915 | 53 | | |||||||||||||||
Annuity |
596,029 | 317 | 429,894 | 25,455 | 1,055,682 | (510,040 | ) | | ||||||||||||||
$ | 1,651,771 | $ | 15,373 | $ | 1,013,784 | $ | 68,832 | $ | 1,360,964 | $ | (268,592 | ) | $ | | ||||||||
Year ended December 31, 2006 |
||||||||||||||||||||||
Individual life |
$ | 971,044 | $ | 12,448 | $ | 582,703 | $ | 33,573 | $ | 727,802 | $ | (178,400 | ) | $ | | |||||||
Group life |
15,361 | 198 | 233 | 694 | 445 | 55 | | |||||||||||||||
Annuity |
636,572 | 238 | 584,189 | 29,842 | 892,153 | (200,887 | ) | | ||||||||||||||
$ | 1,622,977 | $ | 12,884 | $ | 1,167,125 | $ | 64,109 | $ | 1,620,400 | $ | (379,232 | ) | $ | | ||||||||
Year ended December 31, 2005 |
||||||||||||||||||||||
Individual life |
$ | 941,322 | $ | 18,346 | $ | 578,049 | $ | 34,086 | $ | 252,018 | $ | 244,614 | $ | | ||||||||
Group life |
15,288 | 100 | 312 | 1,026 | 1,722 | 1,357 | | |||||||||||||||
Annuity |
692,848 | 2 | 568,168 | 51,700 | 782,520 | (67,635 | ) | | ||||||||||||||
$ | 1,649,458 | $ | 18,448 | $ | 1,146,529 | $ | 86,812 | $ | 1,036,260 | $ | 178,336 | $ | | |||||||||
* | Allocations of net investment income and other operating expenses are based on a number of assumptions and estimates, and the results would change if different methods were applied. |
G - 45
Western Reserve Life Assurance Co. of Ohio
Reinsurance
(Dollars in Thousands)
Schedule IV
Gross Amount |
Ceded to Other Companies |
Assumed From Other Companies |
Net Amount |
Percentage of Amount Assumed to Net |
|||||||||||
Year ended December 31, 2007 |
|||||||||||||||
Life insurance in force |
$ | 99,363,588 | $ | 48,566,371 | $ | 17,211,679 | $ | 68,008,896 | 25 | % | |||||
Premiums: |
|||||||||||||||
Individual life |
$ | 646,758 | $ | 66,766 | $ | 3,853 | $ | 583,845 | 1 | % | |||||
Group life |
586 | 540 | | 46 | 0 | ||||||||||
Annuity |
437,105 | 7,212 | | 429,893 | 0 | ||||||||||
$ | 1,084,449 | $ | 74,518 | $ | 3,853 | $ | 1,013,784 | 1 | % | ||||||
Year ended December 31, 2006 |
|||||||||||||||
Life insurance in force |
$ | 90,434,049 | $ | 40,136,640 | $ | 17,246,515 | $ | 67,543,924 | 26 | % | |||||
Premiums: |
|||||||||||||||
Individual life |
$ | 637,660 | $ | 57,339 | $ | 2,382 | $ | 582,703 | 0 | % | |||||
Group life |
725 | 492 | | 233 | 0 | ||||||||||
Annuity |
591,578 | 7,389 | | 584,189 | 0 | ||||||||||
$ | 1,229,963 | $ | 65,220 | $ | 2,382 | $ | 1,167,125 | 0 | % | ||||||
Year ended December 31, 2005 |
|||||||||||||||
Life insurance in force |
$ | 85,891,325 | $ | 35,360,079 | $ | 4,106,724 | $ | 50,531,246 | 0 | % | |||||
Premiums: |
|||||||||||||||
Individual life |
$ | 622,657 | $ | 45,399 | $ | 791 | $ | 578,049 | 0 | % | |||||
Group life |
755 | 443 | | 312 | 0 | ||||||||||
Annuity |
577,267 | 9,099 | | 568,168 | 0 | ||||||||||
$ | 1,200,679 | $ | 54,941 | $ | 791 | $ | 1,146,529 | 0 | % | ||||||
G - 46
PART C - OTHER INFORMATION
Item 26. | Exhibits |
(a) | Resolution of the Board of Directors of Western Reserve establishing the separate account (1) |
(b) | Not Applicable |
(c) | Distribution of Policies |
(i) | Master Service and Distribution Compliance Agreement (2) |
(ii) | Amendment to Master Service and Distribution Compliance Agreement (3) |
(iii) | Form of Broker/Dealer Supervisory and Service Agreement (3) |
(iv) | Principal Underwriting Agreement (3) |
(v) | First Amendment to Principal Underwriting Agreement (3) |
(vi) | Second Amendment to Principal Underwriting Agreement (15) |
(vii) | Third Amendment to Principal Underwriting Agreement (17) |
(viii) | Form of Amendment No. 2 And Novation To The Amended And Restated Principal Underwriting Agreement between Transamerica Capital Inc. and Western Reserve (23) |
(d) | (i) Specimen Flexible Premium Variable Life Insurance Policy |
(ii) | Endorsement (EL101) (3) |
(iii) | Living Benefit Rider (5) |
(iv) | Other Insured Rider (5) |
(v) | Primary Insured Rider and Primary Insured Rider Plus (5) |
(vi) | AccelPay Rider (Form ACCP) (an Accelerated Death Benefit Rider) (4) |
(vii) | Associates Plan Variable Life Insurance Policy (VL96) (12) |
(viii) | Endorsement (EL114) (12) |
(e) | Application for Flexible Premium Variable Life Insurance Policy |
(f) | (i) Second Amended Articles of Incorporation of Western Reserve (2) |
(ii) | Certificate of First Amendment to the Second Amended Articles of Incorporation of Western Reserve (6) |
(iii) | Amended Code of Regulations (By-Laws) of Western Reserve (2) |
(g) | Reinsurance Contracts |
(i) | Reinsurance Treaty dated September 30, 2000 and Amendments Thereto (11) |
(ii) | Reinsurance Treaty dated July 1, 2002 and Amendments Thereto (11) |
(h) | Participation Agreements |
(i) | Participation Agreement Among Variable Insurance Products Fund, Fidelity Distributors Corporation and Western Reserve Life Assurance Co. of Ohio dated June 14, 1999 (7) |
(ii) | Amendment No. 1 dated March 15, 2000 to Participation Agreement Variable Insurance Products Fund (8) |
(iii) | Second Amendment dated April 12, 2001 to Participation Agreement Variable Insurance Products Fund (9) |
(iv) | Participation Agreement Among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Western Reserve Life Assurance Co. of Ohio dated June 14, 1999 (7) |
(v) | Amendment No. 1 dated March 15, 2000 to Participation Agreement Variable Insurance Products Fund II (8) |
(vi) | Second Amendment dated April 12, 2001 to Participation Agreement Variable Insurance Products Fund II (9) |
(vii) | Participation Agreement Among Variable Insurance Products Fund III, Fidelity Distributors Corporation and Western Reserve Life Assurance Co. of Ohio dated June 14, 1999 (7) |
(viii) | Amendment No. 1 dated March 15, 2000 to Participation Agreement Variable Insurance Products Fund III (8) |
(vix) | Second Amendment dated April 12, 2001 to Participation Agreement Variable Insurance Products Fund III (9) |
(vx) | Third Amendment to Participation Agreement Among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Western Reserve dated September 1, 2003 (15) |
C-1
(x) | Fourth Amendment to Participation Agreement Among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Western Reserve dated December 1, 2003 (16) |
(xi) | Participation Agreement between AEGON/Transamerica Series Fund, Inc. and Western Reserve dated February 21, 2001 and Amendments thereto (14) |
(xii) | Amendment No. 21 to Participation Agreement between AEGON/Transamerica Series Fund, Inc. and Western Reserve dated September 1, 2003 (15) |
(xiii) | Amendment No. 22 to Participation Agreement between AEGON/Transamerica Series Fund, Inc. and Western Reserve dated December 1, 2003 (16) |
(xiv) | Amendment No. 23 to Participation Agreement between AEGON/Transamerica Series Fund, Inc. and Western Reserve dated May 1, 2004 (17) |
(xv) | Participation Agreement Among ProFunds, Access One Trust, ProFunds Advisors LLC and Western Reserve dated June 6, 2006 (21) |
(xvi) | Amendment No. 24 to Participation Agreement between AEGON/Transamerica Series Fund, Inc. and Western Reserve dated October 22, 2004 (19) |
(xvii) | Amendment No. 25 to Participation Agreement between AEGON/Transamerica Series Trust and Western Reserve dated March 28, 2005 (20) |
(xviii) | Amendment No. 26 to Participation Agreement between AEGON/Transamerica Series Trust and Western Reserve dated September 1, 2005 (20) |
(xix) | Amendment No. 1 to Participation Agreement among Western Reserve, ProFunds, Access One Trust and ProFunds Advisors LLC dated June 1, 2007 (23) |
(xx) | Amendment No. 2 to Participation Agreement among Western Reserve, ProFunds, Access One Trust and ProFunds Advisors LLC dated August 30, 2007 (23) |
(xxi) | Amendment No. 3 to Participation Agreement among Western Reserve, ProFunds, Access One Trust and ProFund Advisors LLC dated February 28, 2008. (25) |
(xxii) | Amendment No. 27 to Participation Agreement between AEGON/Transamerica Series Trust and Western Reserve dated May 1, 2006 (24) |
(xxiii) | Amendment No. 28 to Participation Agreement between AEGON/Transamerica Series Trust and Western Reserve dated May 1, 2007 (24) |
(xxiv) | Amendment No. 29 to Participation Agreement between Transamerica Series Trust (formerly, AEGON/Transamerica Series Trust) dated May 1, 2008. (25) |
(i) | Not Applicable |
(j) | Not Applicable |
(k) | Opinion and Consent of Arthur D. Woods, Esq. as to the Legality of the Securities Being Registered (27) |
(l) | Opinion and Consent of Lorne Schinbein as to Actuarial Matters Pertaining to the Securities Being Registered (27) |
(m) | Sample Hypothetical Illustration (18) |
(n) | Other Opinions: |
(i) | Written Consent of Ernst & Young LLP (27) |
(o) | Not Applicable |
(p) | Not Applicable |
(q) | Memorandum describing issuance, transfer and redemption procedures (10) |
(r) | Powers of Attorney (26) |
Eric J. Martin
Brenda K. Clancy
Arthur C. Schneider
Charles T. Boswell
John R. Hunter
Tim L. Stonehocker
(1) | This exhibit was previously filed on Post-Effective Amendment No. 16 to Form S-6 Registration Statement dated April 21, 1998 (File No. 33-31140) and is incorporated herein by reference. |
(2) | This exhibit was previously filed on Post-Effective Amendment No. 11 to Form N-4 Registration Statement dated April 20, 1998 (File No. 33-49556) and is incorporated herein by reference. |
C-2
(3) | This exhibit was previously filed on Post-Effective Amendment No. 4 to Form S-6 Registration Statement dated April 21, 1999 (File No. 333-23359) and is incorporated herein by reference. |
(4) | This exhibit was previously filed on Post-Effective Amendment No. 3 to Form S-6 Registration Statement dated February 28, 2002 (File No. 333-58322) and is incorporated herein by reference. |
(5) | This exhibit was previously filed on the Initial Registration Statement to Form S-6 dated April 5, 2001 (File No. 333-58322) and is incorporated herein by reference. |
(6) | This exhibit was previously filed on Post-Effective Amendment No. 5 to Form S-6 Registration Statement dated April 19, 2000 (File No. 333-23359) and is incorporated herein by reference. |
(7) | This exhibit was previously filed on the Initial Registration Statement to Form S-6 Registration Statement dated September 23, 1999 (File No. 333-57681) and is incorporated herein by reference. |
(8) | This exhibit was previously filed on Pre-Effective Amendment No. 1 to Form N-4 Registration Statement dated April 10, 2000 (File No. 333-93169) and is incorporated herein by reference. |
(9) | This exhibit was previously filed on Post-Effective Amendment No. 16 to Form S-6 Registration Statement dated April 16, 2001 (File No. 33-69138) and is incorporated herein by reference. |
(10) | This exhibit was previously filed on Pre-Effective Amendment No. 1 to Form S-6 Registration Statement dated June 21, 2001 (File No. 333-58322) and is incorporated herein by reference. |
(11) | This exhibit was previously filed on Pre-Effective Amendment No. 1 to Form N-6 Registration Statement dated January 31, 2003 (File No. 333-100993) and is incorporated herein by reference. |
(12) | This exhibit was previously filed on Post-Effective Amendment No. 5 to Form N-6 Registration Statement dated February 10, 2003 (File No. 333-58322) and is incorporated herein by reference. |
(13) | This exhibit was previously filed on Post-Effective Amendment No. 1 to Form N-6 Registration Statement dated April 22, 2003 (File No. 333-100993) and is incorporated herein by reference. |
(14) | This exhibit was previously filed on the Initial Registration Statement to Form N-4 Registration Statement dated September 5, 2003 (File No. 333-108525) and is incorporated herein by reference. |
(15) | This exhibit was previously filed on Pre-Effective Amendment No. 1 to Form N-6 Registration Statement dated October 9, 2003 (Filed No. 333-107705) and is incorporated herein by reference. |
(16) | This exhibit was previously filed on the Initial Registration Statement to Form N-6 Registration Statement dated November 7, 2003 (File No. 333-110315) and is incorporated herein by reference. |
(17) | This exhibit was previously filed on Post-Effective Amendment No. 2 to Form N-6 Registration Statement dated April 16, 2004 (File No. 333-100993) and is incorporated herein by reference. |
(18) | This exhibit was previously filed on Post-Effective Amendment No. 7 to Form N-6 Registration Statement dated April 19, 2004 (File No. 333-58322) and is incorporated herein by reference. |
(19) | This exhibit was previously filed on Post-Effective Amendment No. 3 to Form N-6 Registration Statement dated February 28, 2005 (File No. 333-107705) and is incorporated herein by reference. |
(20) | This exhibit was previously filed on the Initial Registration Statement to Form N-6 Registration Statement dated September 28, 2005 (File No. 333-128650) and is incorporated herein by reference. |
(21) | This exhibit was previously filed on Initial Registration Statement to Form N-6 Registration Statement dated June 15, 2006 (File No. 333-135005) and is incorporated herein by reference. |
(22) | This exhibit was previously filed on Post-Effective Amendment No. 1 to Form N-6 Registration Statement dated April 12, 2007 (File No. 333-135005) and is incorporated herein by reference. |
(23) | This exhibit was previously filed on Pre-Effective Amendment No. 1 to Form N-6 Registration Statement dated October 16, 2007 (File No. 333-144117) and is incorporated herein by reference. |
(24) | This exhibit was previously filed on the Initial Registration Statement to Form N-6 Registration System dated June 28, 2007 and is incorporated herein by reference. |
(25) | This exhibit was previously filed on Post-Effective Amendment No. 6 to Form N-6 Registration Statement dated April 11, 2008 (File No. 333-110315) and is incorporated herein by reference. |
(26) | This exhibit was previously filed on Post-Effective Amendment No. 12 to Form N-6 Registration Statement dated April 18, 2008 (File No. 333-58322) and is incorporated herein by reference. |
(27) | To be filed by amendment. |
Item 27. | Directors and Officers of the Depositor |
Name |
Principal Business Address |
Position and Offices with Depositor | ||
Tim L. Stonehocker | (1) | Chairman of the Board | ||
Charles T. Boswell | (2) | Director and Chief Executive Officer | ||
Brenda K. Clancy | (1) | Director and President | ||
William H. Geiger | (2) | Secretary, Corporate Counsel and Group Vice President Compliance | ||
M. Craig Fowler | (3) | Vice President and Treasurer | ||
Arthur C. Schneider | (1) | Director, Senior Vice President and Chief Tax Officer | ||
John R. Hunter | (1) | Director and Chief Financial Officer |
C-3
(1) | 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001 |
(2) | 570 Carillon Parkway, St. Petersburg, Florida 33716 |
(3) | 400 W. Market Street, Louisville, Kentucky 40202 |
Item 28. | Persons Controlled by or Under Common Control with the Depositor or Registrant |
Name |
Jurisdiction of Incorporation |
Percent of Voting Securities Owned |
Business | |||
Academy Alliance Holdings Inc. | Canada | 100% Creditor Resources, Inc. | Holding company | |||
Academy Alliance Insurance Inc. | Canada | 100% Creditor Resources, Inc. | Insurance | |||
ADB Corporation, L.L.C. | Delaware | 100% AUSA Holding Company | Special purpose limited Liability company | |||
AEGON Alliances, Inc. | Virginia | 100% Benefit Plans, Inc. | Insurance company marketing support | |||
AEGON Asset Management Services, Inc. | Delaware | 100% AUSA Holding Co. | Registered investment advisor | |||
AEGON Assignment Corporation | Illinois | 100% AEGON Financial Services Group, Inc. | Administrator of structured settlements | |||
AEGON Assignment Corporation of Kentucky | Kentucky | 100% AEGON Financial Services Group, Inc. | Administrator of structured settlements | |||
AEGON Canada Inc. (ACI) | Canada | 100% TIHI | Holding company | |||
AEGON Capital Management, Inc. | Canada | 100% AEGON Canada Inc. | Portfolio management company/investment advisor | |||
AEGON Dealer Services Canada, Inc. | Canada | 100% National Financial Corporation | Mutual fund dealership | |||
AEGON Derivatives N.V. | Netherlands | 100% AEGON N.V. | Holding company | |||
AEGON Direct Marketing Services, Inc. | Maryland | Monumental Life Insurance Company owns 103,324 shares; Commonwealth General Corporation owns 37,161 shares | Marketing company | |||
AEGON Direct Marketing Services Australia Pty Ltd. | Australia | 100% Transamerica Direct Marketing Asia Pacific Pty Ltd. | Marketing/operations company | |||
AEGON Direct Marketing Services e Corretora de Seguros Ltda. | Brazil | 749,000 quota shares owned by AEGON DMS Holding B.V.; 1 quota share owned by AEGON International B.V. | Brokerage company | |||
AEGON Direct Marketing Services Europe Ltd. | United Kingdom | 100% Cornerstone International Holdings, Ltd. | Marketing | |||
AEGON Direct Marketing Services Hong Kong Limited | China | 100% AEGON DMS Holding B.V. | Provide consulting services ancillary to the marketing of insurance products overseas. | |||
AEGON Direct Marketing Services Japan K.K. | Japan | 100% AEGON DMS Holding B.V. | Marketing company | |||
AEGON Direct Marketing Services Korea Co., Ltd. | Korea | 100% AEGON DMS Holding B.V. | Provide consulting services ancillary to the marketing of insurance products overseas. | |||
AEGON Direct Marketing Services Mexico, S.A. de C.V. | Mexico | 100% AEGON DMS Holding B.V. | Provide management advisory and technical consultancy services. | |||
AEGON Direct Marketing Services Mexico Servicios, S.A. de C.V. | Mexico | 100% AEGON DMS Holding B.V. | Provide marketing, trading, telemarketing and advertising services in favor of any third party, particularly in favor of insurance and reinsurance companies. |
C-4
AEGON Direct Marketing Services, Inc. | Taiwan | 100% AEGON DMS Holding B.V. | Authorized business: Enterprise management consultancy, credit investigation services, to engage in business not prohibited or restricted under any law of R.O.C., except business requiring special permission of government | |||
AEGON Direct Marketing Services (Thailand) Ltd. | Thailand | 93% Transamerica International Direct Marketing Consultants, LLC; remaining 7% held by various AEGON employees | Marketing of insurance products in Thailand | |||
AEGON DMS Holding B.V. | Netherlands | 100% AEGON International N.V. | Holding company | |||
AEGON Financial Services Group, Inc. | Minnesota | 100% Transamerica Life Insurance Co. | Marketing | |||
AEGON Fund Management, Inc. | Canada | 100% AEGON Canada Inc. | Mutual fund manager | |||
AEGON Funding Corp. | Delaware | 100% AEGON USA, Inc. | Issue debt securities-net proceeds used to make loans to affiliates | |||
AEGON Institutional Markets, Inc. | Delaware | 100% Commonwealth General Corporation | Provider of investment, marketing and administrative services to insurance companies | |||
AEGON International B.V. | Netherlands | 100% AEGON N.V. | Holding company | |||
AEGON Ireland Services Limited | Ireland | 100% AEGON Ireland Holding B.V. | Provides the services of staff and vendors to AEGON Financial Assurance Ireland, Limited and AEGON Global Institutional Markets, PLC | |||
AEGON Life Insurance Agency | Taiwan | 100% AEGON Direct Marketing Services, Inc. (Taiwan) | Life insurance | |||
AEGON Managed Enhanced Cash, LLC | Delaware | Members: Transamerica Life Insurance Company (42.54%); Transamerica Occidental Life Insurance Company (21.38%); Monumental Life Insurance Company (20.54%); Life Investors Insurance Company of America (15.54%) | Investment vehicle for securities lending cash collateral | |||
AEGON Management Company | Indiana | 100% AEGON U.S. Holding Corporation | Holding company | |||
AEGON Direct Marketing Services e Corretora de Seguros de Vida Ltda. | Brazil | 749,000 quotes shares owned by AEGON DMS Holding B.V.; 1 quota share owned by AEGON International N.V. | Brokerage company | |||
AEGON N.V. | Netherlands | 22.238% of Vereniging AEGON Netherlands Membership Association | Holding company | |||
AEGON Nederland N.V. | Netherlands | 100% AEGON N.V. | Holding company | |||
AEGON Nevak Holding B.V. | Netherlands | 100% AEGON N.V. | Holding company | |||
AEGON Structured Settlements, Inc. | Kentucky | 100% Commonwealth General Corporation | Administers structured settlements of plaintiffs physical injury claims against property and casualty insurance companies | |||
AEGON U.S. Corporation | Iowa | AEGON U.S. Holding Corporation owns 12,962 shares; AEGON USA, Inc. owns 3,238 shares | Holding company | |||
AEGON U.S. Holding Corporation | Delaware | 1056 shares of Common Stock owned by Transamerica Corp.; 225 shares of Series A Voting Preferred Stock owned by Transamerica Corporation | Holding company | |||
AEGON USA Investment Management, LLC | Iowa | 100% AEGON USA, Inc. | Investment advisor |
C-5
AEGON USA Real Estate Services, Inc. | Delaware | 100% AEGON USA Realty Advisors, Inc. | Real estate and mortgage holding company | |||
AEGON USA Realty Advisors, Inc. | Iowa | 100% AUSA Holding Co, | Administrative and investment services | |||
AEGON USA Travel and Conference Services LLC | Iowa | 100% Money Services, Inc. | Travel and conference services | |||
AEGON USA, Inc. | Iowa | 10 shares Series A Preferred Stock owned by AEGON U.S Holding Corporation; 150,000 shares of Class B Non-Voting Stock owned by AEGON U.S. Corporation; 120 shares Voting Common Stock owned by AEGON U.S Corporation | Holding company | |||
AEGON/Transamerica Series Trust | Delaware | 100% AEGON/Transamerica Fund Advisors, Inc. | Mutual fund | |||
AFSG Securities Corporation | Pennsylvania | 100% Commonwealth General Corporation | Inactive | |||
ALH Properties Eight LLC | Delaware | 100% FGH USA LLC | Real estate | |||
ALH Properties Eleven LLC | Delaware | 100% FGH USA LLC | Real estate | |||
ALH Properties Fifteen LLC | Delaware | 100% FGH USA LLC | Real estate | |||
ALH Properties Five LLC | Delaware | 100% FGH USA LLC | Real estate | |||
ALH Properties Four LLC | Delaware | 100% FGH USA LLC | Real estate | |||
ALH Properties Nine LLC | Delaware | 100% FGH USA LLC | Real estate | |||
ALH Properties Seven LLC | Delaware | 100% FGH USA LLC | Real estate | |||
ALH Properties Seventeen LLC | Delaware | 100% FGH USA LLC | Real estate | |||
ALH Properties Sixteen LLC | Delaware | 100% FGH USA LLC | Real estate | |||
ALH Properties Ten LLC | Delaware | 100% FGH USA LLC | Real estate | |||
ALH Properties Twelve LLC | Delaware | 100% FGH USA LLC | Real estate | |||
ALH Properties Two LLC | Delaware | 100% FGH USA LLC | Real estate | |||
American Bond Services LLC | Iowa | 100% Transamerica Life Insurance Company (sole member) | Limited liability company | |||
Ampac, Inc. | Texas | 100% Academy Insurance Group, Inc. | Managing general agent | |||
Apple Partners of Iowa LLC | Iowa | Member: Monumental Life Insurance Company | Hold title on Trustees Deeds on secured property | |||
ARC Reinsurance Corporation | Hawaii | 100% Transamerica Corp, | Property & Casualty Insurance | |||
ARV Pacific Villas, A California Limited Partnership | California | General Partners - Transamerica Affordable Housing, Inc. (0.5%); Non-Affiliate of AEGON, Jamboree Housing Corp. (0.5%). Limited Partner: TOLIC (99%) | Property | |||
Asia Investments Holdings, Limited | Hong Kong | 99% TOLIC | Holding company | |||
AUSA Holding Company | Maryland | 100% AEGON USA, Inc. | Holding company | |||
AUSACAN LP | Canada | General Partner - AUSA Holding Co. (1%); Limited Partner - First AUSA Life Insurance Company (99%) | Inter-company lending and general business | |||
Bankers Financial Life Ins. Co. | Arizona | Class B Common stock is allocated 75% of total cumulative vote - AEGON USA, Inc. Class A Common stock (100% owned by non-AEGON shareholders) is allocated 25% of total cumulative vote. | Insurance | |||
Bay Area Community Investments I, LLC | California | 70% LIICA; 30% Monumental Life Insurance Company | Investments in low income housing tax credit properties |
C-6
Bay State Community Investments I, LLC | Delaware | 100% Monumental Life Insurance Company | Investments in low income housing tax credit properties | |||
Bay State Community Investments II, LLC | Delaware | 100% Monumental Life Insurance Company | Investments in low income housing tax credit properties | |||
Beijing Dafu Insurance Agency Co. Ltd. | Peoples Republic of China | 10% owned by WFG China Holdings, Inc.; 90% owned by private individual (non-AEGON associated), Chen Jun | Insurance Agency | |||
Canadian Premier Holdings Ltd. | Canada | 100% AEGON DMS Holding B.V. | Holding company | |||
Canadian Premier Life Insurance Company | Canada | 100% Canadian Premier Holdings Ltd. | Insurance company | |||
Capital General Development Corporation | Delaware | 2.64 shares of common stock owned by AEGON USA, Inc.; 18.79 shares of common stock owned by Commonwealth General Corporation | Holding company | |||
CBC Insurance Revenue Securitization, LLC | Delaware | 100% Clark Consulting, Inc. | Special purpose | |||
Clark/Bardes (Bermuda) Ltd. | Bermuda | 100% Clark, Inc. | Insurance agency | |||
Clark, Inc. | Delaware | 100% AUSA Holding Company | Holding company | |||
Clark Consulting, Inc. | Delaware | 100% Clark, Inc. | Financial consulting firm | |||
Clark Investment Strategies, inc. | Delaware | 100% Clark Consulting, Inc. | Registered investment advisor | |||
Clark Securities, Inc. | California | 100% Clark Consulting, Inc. | Broker-Dealer | |||
COLI Insurance Agency, Inc. | California | 100% Clark Consulting, Inc. | Inactive | |||
Commonwealth General Corporation (CGC) | Delaware | AEGON U.S. Corporation owns 100 shares; AEGON USA, Inc. owns 5 shares | Holding company | |||
Consumer Membership Services Canada Inc. | Canada | 100% Canadian Premier Holdings Ltd. | Marketing of credit card protection membership services in Canada | |||
Cornerstone International Holdings Ltd. | UK | 100% AEGON DMS Holding B.V. | Holding company | |||
CRC Creditor Resources Canadian Dealer Network Inc. | Canada | 100% Creditor Resources, Inc. | Insurance agency | |||
CRG Fiduciary Services, Inc. | California | 100% Clark Consulting, Inc. | Inactive | |||
CRG Insurance Agency, Inc. | California | 100% Clark Consulting, Inc. | Insurance agency | |||
Creditor Resources, Inc. | Michigan | 100% AUSA Holding Co. | Credit insurance | |||
CRI Canada Inc. | Canada | 100% Creditor Resources, Inc. | Holding company | |||
CRI Credit Group Services Inc. | Canada | 100% Creditor Resources, Inc. | Holding company | |||
CRI Systems, Inc. | Maryland | 100% Creditor Resources, Inc. | Technology | |||
Diversified Actuarial Services, Inc. | Massachusetts | 100% Diversified Investment Advisors, Inc. | Employee benefit and actuarial consulting | |||
Diversified Investment Advisors, Inc. | Delaware | 100% AUSA Holding Co. | Registered investment advisor | |||
Diversified Investors Securities Corp. | Delaware | 100% Diversified Investment Advisors, Inc. | Broker-Dealer | |||
ECB Insurance Agency, Inc. | California | 100% Clark Consulting, Inc. | Inactive | |||
Edgewood IP, LLC | Iowa | 100% TOLIC | Limited liability company | |||
Executive Benefit Services, Inc. | California | 100% Clark Consulting, Inc. | Inactive | |||
FGH Eastern Region LLC | Delaware | 100% FGH USA LLC | Real estate | |||
FGH Realty Credit LLC | Delaware | 100% FGH Eastern Region LLC | Real estate | |||
FGH USA LLC | Delaware | 100% RCC North America LLC | Real estate | |||
FGP 90 West Street LLC | Delaware | 100% FGH USA LLC | Real estate | |||
FGP Burkewood, Inc. | Delaware | 100% FGH USA LLC | Real estate | |||
FGP Bush Terminal, Inc. | Delaware | 100% FGH Realty Credit LLC | Real estate | |||
FGP Franklin LLC. | Delaware | 100% FGH USA LLC | Real estate | |||
FGP Herald Center, Inc. | Delaware | 100% FGH USA LLC | Real estate | |||
FGP Heritage Square, Inc. | Delaware | 100% FGH USA LLC | Real estate | |||
FGP Islandia, Inc. | Delaware | 100% FGH USA LLC | Real estate | |||
FGP Merrick, Inc. | Delaware | 100% FGH USA LLC | Real estate | |||
FGP West 32nd Street, Inc. | Delaware | 100% FGH USA LLC | Real estate | |||
FGP West Mezzanine LLC | Delaware | 100% FGH USA LLC | Real estate |
C-7
FGP West Street LLC | Delaware | 100% FGH USA LLC | Real estate | |||
FGP West Street Two LLC | Delaware | 100% FGH USA LLC | Real estate | |||
Fifth FGP LLC | Delaware | 100% FGH USA LLC | Real estate | |||
Financial Planning Services, Inc. | District of Columbia | 100% Commonwealth General Corporation | Special-purpose subsidiary | |||
Financial Resources Insurance Agency of Texas | Texas | 100% owned by Dan Trivers, VP & Director of Operations of Transamerica Financial Advisors, Inc., to comply with Texas insurance law | Retail sale of securities products | |||
First FGP LLC | Delaware | 100% FGH USA LLC | Real estate | |||
Flashdance, LLC | New York | 100% Transamerica Occidental Life Insurance Company | Broadway production | |||
Fourth & Market Funding, LLC | Delaware | 100% Commonwealth General Corporation | Investments | |||
Fourth FGP LLC | Delaware | 100% FGH USA LLC | Real estate | |||
Garnet Assurance Corporation | Kentucky | 100% Life Investors Insurance Company of America | Investments | |||
Garnet Assurance Corporation II | Iowa | 100% Monumental Life Insurance Company | Business investments | |||
Garnet Community Investments, LLC | Delaware | 100% Monumental Life Insurance Company | Investments | |||
Garnet Community Investments I, LLC | Delaware | 100% Life Investors Insurance Company of America | Securities | |||
Garnet Community Investments II, LLC | Delaware | 100% Monumental Life Insurance Company | Securities | |||
Garnet Community Investments III, LLC | Delaware | 100% Transamerica Occidental Life Insurance Company | Business investments | |||
Garnet Community Investments IV, LLC | Delaware | 100% Monumental Life Insurance Company | Investments | |||
Garnet Community Investments V, LLC | Delaware | 100% Monumental Life Insurance Company | Investments | |||
Garnet Community Investments VI, LLC | Delaware | 100% Monumental Life Insurance Company | Investments | |||
Garnet Community Investments VII, LLC | Delaware | 100% Monumental Life Insurance Company | Investments | |||
Garnet Community Investments VIII, LLC | Delaware | 100% Monumental Life Insurance Company | Investments | |||
Garnet Community Investments IX, LLC | Delaware | 100% Monumental Life Insurance Company | Investments | |||
Garnet Community Investments X, LLC | Delaware | 100% Monumental Life Insurance Company | Investments | |||
Garnet Community Investments XI, LLC | Delaware | 100% Monumental Life Insurance Company | Investments | |||
Garnet Community Investments XII, LLC | Delaware | 100% Monumental Life Insurance Company | Investments | |||
Garnet LIHTC Fund I, LLC | Delaware | Members: Garnet Community Investments I, LLC (0.01%); Goldenrod Asset Management, Inc.a non-AEGON affiliate (99.99%) | Investments | |||
Garnet LIHTC Fund II, LLC | Delaware | Members: Garnet Community Investments II, LLC (0.01%); Metropolitan Life Insurance Company, a non-AEGON affiliate (99.99%) | Investments | |||
Garnet LIHTC Fund III, LLC | Delaware | Members: Garnet Community Investments III, LLC (0.01%); Jefferson-Pilot Life Insurance Company, a non-AEGON affiliate (99.99%) | Investments |
C-8
Garnet LIHTC Fund IV, LLC | Delaware | Members: Garnet Community Investments IV, LLC (0.01%); Goldenrod Asset Management, Inc., a non-AEGON affiliate (99.99%) | Investments | |||
Garnet LIHTC Fund V, LLC | Delaware | Members: Garnet Community Investments V, LLC (0.01%); Lease Plan North America, Inc., a non-AEGON affiliate (99.99%) | Investments | |||
Garnet LIHTC Fund VI, LLC | Delaware | Members: Garnet Community Investments VI, LLC (0.01%); Pydna Corporation, a non-AEGON affiliate (99.99%) | Investments | |||
Garnet LIHTC Fund VII, LLC | Delaware | Members: Garnet Community Investments VII, LLC (0.01%); Washington Mutual Bank, a non-AEGON affiliate(99.99%) | Investments | |||
Garnet LIHTC Fund VIII, LLC | Delaware | Members: Garnet Community Investments VIII, LLC (0.01%); Washington Mutual Bank, a non-AEGON affiliate(99.99%) | Investments | |||
Garnet LIHTC Fund IX, LLC | Delaware | Members: Garnet Community Investments IX, LLC (0.01%); Bank of America, N.A., a non-AEGON affiliate (99.99%) | Investments | |||
Garnet LIHTC Fund X, LLC | Delaware | Members: Garnet Community Investments X, LLC (0.01%); Goldenrod Asset Management, a non-AEGON affiliate (99.99%) | Investments | |||
Garnet LIHTC Fund XI, LLC | Delaware | 100% Garnet Community Investments XI, LLC | Investments | |||
Garnet LIHTC Fund XII, LLC | Delaware | Garnet Community Investments XII, LLC (.01%); and the following non-AEGON affiliates: Bank of America, N.A.( 73.39%); Washington Mutual Bank (13.30%); NorLease, Inc. (13.30%) | Investments | |||
Garnet LIHTC Fund XII-A, LLC | Delaware | Garnet Community Investments XII, LLC (.01%); Bank of America, N.A., a non-AEGON affiliate (99.99%) | Investments | |||
Garnet LIHTC Fund XII-B, LLC | Delaware | Garnet Community Investments XII, LLC (.01%); Washington Mutual Bank, a non-AEGON affiliate (99.99%) | Investments | |||
Garnet LIHTC Fund XII-C, LLC | Delaware | Garnet Community Investments XII, LLC (.01%); NorLease, Inc., a non-AEGON affiliate (99.99%) | Investments | |||
Garnet LIHTC Fund XIII, LLC | Delaware | Members: Garnet Community Investments, LLC (0.01%); Washington Mutual Bank, a non-AEGON affiliate (68.10%); Norlease, Inc., a non-AEGON affiliate (31.89%) | Investments | |||
Garnet LIHTC Fund XIII-A, LLC | Delaware | Members: Garnet Community Investments, LLC (0.01%); Washington Mutual Bank, a non-AEGON affiliate (99.99%) | Investments | |||
Garnet LIHTC Fund XIII-B, LLC | Delaware | Members: Garnet Community Investments, LLC (0.01%); Norlease, Inc., a non-AEGON affiliate (99.99%) | Investments | |||
Garnet LIHTC Fund XIV, LLC | Delaware | 100% Garnet Community Investments, LLC | Investments |
C-9
Garnet LIHTC Fund XV, LLC | Delaware | 100% Garnet Community Investments, LLC | Investments | |||
Garnet LIHTC Fund XVI, LLC | Delaware | 100% Garnet Community Investments, LLC | Investments | |||
Garnet LIHTC Fund XVII, LLC | Delaware | 100% Garnet Community Investments, LLC | Investments | |||
Gemini Investments, Inc. | Delaware | 100% TLIC | Investment subsidiary | |||
Global Preferred Re Limited | Bermuda | 100% GPRE Acquisition Corp. | Reinsurance | |||
Global Premier Reinsurance Company, Ltd. | British Virgin | 100% Commonwealth General Corporation | Reinsurance company | |||
GPRE Acquisition Corp. | Delaware | 100% AEGON N.V. | Acquisition company | |||
Hott Feet Development LLC | New York | 100% Transamerica Occidental Life Insurance Company | Broadway production | |||
In the Pocket LLC | New York | 100% Transamerica Occidental Life Insurance Company | Broadway production | |||
Innergy Lending, LLC | Delaware | 50% World Financial Group, Inc.; 50% ComUnity Lending, Inc. (non-AEGON entity) | Lending | |||
InterSecurities, Inc. | Delaware | 100% AUSA Holding Co. | Broker-Dealer | |||
Investors Warranty of America, Inc. | Iowa | 100% AUSA Holding Co. | Leases business equipment | |||
Iowa Fidelity Life Insurance Co. | Arizona | Ordinary common stock is allowed 60% of total cumulative vote - AEGON USA, Inc. Participating common stock (100% owned by non-AEGON shareholders) is allowed 40% of total cumulative vote. | Insurance | |||
JMH Operating Company, Inc. | Mississippi | 100% Monumental Life Insurance Company | Real estate holdings | |||
Legacy General Insurance Company | Canada | 100% Canadian Premier Holdings Ltd. | Insurance company | |||
Life Investors Alliance, LLC | Delaware | 100% LIICA | Purchase, own, and hold the equity interest of other entities | |||
Life Investors Financial Group, Inc. | Iowa | 100% AUSA Holding Company | Special-purpose subsidiary | |||
Life Investors Insurance Company of America | Iowa | 679,802 shares Common Stock owned by AEGON USA, Inc.; 504,033 shares Series A Preferred Stock owned by AEGON USA, Inc. | Insurance | |||
LIICA Holdings, LLC | Delaware | Sole Member: Life Investors Insurance Company of America | To form and capitalize LIICA Re I, Inc. | |||
LIICA Re I, Inc. | Vermont | 100% LIICA Holdings, LLC | Captive insurance company | |||
LIICA Re II, Inc. | Vermont | 100% Life Investors Insurance Company of America | Captive insurance company | |||
Massachusetts Fidelity Trust Co. | Iowa | 100% AUSA Holding Co. | Trust company | |||
Merrill Lynch Life Insurance Company | Arkansas | 100% AEGON USA, Inc. | Insurance company | |||
ML Life Insurance Company of New York | New York | 100% AEGON USA, Inc. | Insurance company | |||
Money Concepts (Canada) Limited | Canada | 100% National Financial Corporation | Financial services, marketing and distribution | |||
Money Services, Inc. | Delaware | 100% AUSA Holding Co. | Provides financial counseling for employees and agents of affiliated companies | |||
Monumental General Administrators, Inc. | Maryland | 100% Monumental General Insurance Group, Inc. | Provides management services to unaffiliated third party administrator | |||
Monumental General Insurance Group, Inc. |
Maryland | 100% AUSA Holding Co. | Holding company |
C-10
Monumental Life Insurance Company | Iowa | 99.72% Capital General Development Corporation; .28% Commonwealth General Corporation | Insurance Company | |||
nVISION Financial, Inc. | Iowa | 100% AUSA Holding Company | Special-purpose subsidiary | |||
National Association Management and Consultant Services, Inc. | Maryland | 100% Monumental General Administrators, Inc. | Provides actuarial consulting services | |||
National Financial Corporation | Canada | 100% AEGON Canada, Inc. | Holding company | |||
National Financial Insurance Agency, Inc. | Canada | 100% 1488207 Ontario Limited | Insurance agency | |||
NEF Investment Company | California | 100% TOLIC | Real estate development | |||
New Markets Community Investment Fund, LLC | Iowa | 50% AEGON Institutional Markets, Inc.; 50% AEGON USA Realty Advisors, Inc. | Community development entity | |||
Penco, Inc. | Ohio | 100% AUSA Holding Company | Record keeping | |||
Pensaprima, Inc. | Iowa | 100% AEGON USA Realty Advisors, Inc. | Investments | |||
Peoples Benefit Services, Inc. | Pennsylvania | 100% Stonebridge Life Insurance Company | Special-purpose subsidiary | |||
Pine Falls Re, Inc. | Vermont | 100% Stonebridge Life Insurance Company | Captive insurance company | |||
Premier Solutions Group, Inc. | Maryland | 100% Creditor Resources, Inc. | Sales of reinsurance and credit insurance | |||
Primus Guaranty, Ltd. | Bermuda | Partners are: Transamerica Life Insurance Company (13.1%) and non-affiliates of AEGON: XL Capital, Ltd. (34.7%); CalPERS/PCG Corporate Partners Fund, LLC (13.0%); Radian Group (11.1%). The remaining 28.1% of stock is publicly owned. | Provides protection from default risk of investment grade corporate and sovereign issues of financial obligations. | |||
Prisma Holdings, Inc. I | Delaware | 100% AUSA Holding Co. | Holding company | |||
Prisma Holdings, Inc. II | Delaware | 100% AUSA Holding Co. | Holding company | |||
Pyramid Insurance Company, Ltd. | Hawaii | 100% Transamerica Corp. | Property & Casualty Insurance | |||
Quantitative Data Solutions, LLC | Delaware | 100% TOLIC | Special purpose corporation | |||
RCC North America LLC | Delaware | 100% AEGON USA, Inc. | Real estate | |||
Real Estate Alternatives Portfolio 1 LLC | Delaware | Members: 38.356% Transamerica Life Insurance Co.; 34.247% TOLIC; 18.356% LIICA; 6.301% Monumental Life Insurance Co.; 2.74% Transamerica Financial Life Insurance Co. | Real estate alternatives investment | |||
Real Estate Alternatives Portfolio 2 LLC | Delaware | Members: 59.5% Transamerica Life Insurance Co.; 30.75% TOLIC; 22.25%; Transamerica Financial Life Insurance Co.; 2.25% Stonebridge Life Insurance Co. | Real estate alternatives investment | |||
Real Estate Alternatives Portfolio 3 LLC | Delaware | Members: 30.4% Transamerica Life Insurance Company.; 23% Transamerica Occidental Life Insurance Company; 1% Stonebridge Life Insurance Company; 11% Life Investors Insurance Company of America; 19% Monumental Life Insurance Company | Real estate alternatives investment |
C-11
Real Estate Alternatives Portfolio 3A, Inc. | Delaware | 33.4% owned by Life Investors Insurance Company of America; 10% owned by Transamerica Occidental Life Insurance Company; 41.4% owned by Monumental Life Insurance Company; 9.4% owned by Transamerica Financial Life Insurance Company; 1% owned by Stonebridge Life Insurance Company | Real estate alternatives investment | |||
Real Estate Alternatives Portfolio 4 HR, LLC | Delaware | 34% owned by Transamerica Life Insurance Company; 30% owned by Transamerica Occidental Life Insurance Company; 32% owned by Monumental Life Insurance Company; 4% owned by Transamerica Financial Life Insurance Company | Investment vehicle for alternative real estate investments that are established annually for our affiliated companies common investment | |||
Real Estate Alternatives Portfolio 4 MR, LLC | Delaware | 34% owned by Transamerica Life Insurance Company; 30% owned by Transamerica Occidental Life Insurance Company; 32% owned by Monumental Life Insurance Company; 4% owned by Transamerica Financial Life Insurance Company | Investment vehicle for alternative real estate investments that are established annually for our affiliated companies common investment | |||
Real Estate Alternatives Portfolio 5 NR, LLC | Delaware | Manager: AEGON USA Realty Advisors, Inc. | Real estate investments | |||
Real Estate Alternatives Portfolio 5 RE, LLC | Delaware | Manager: AEGON USA Realty Advisors, Inc. | Real estate investments | |||
Realty Information Systems, Inc. | Iowa | 100% AEGON USA Realty Advisors, Inc. | Information Systems for real estate investment management | |||
Retirement Project Oakmont | CA | General Partners: Transamerica International Holdings, Inc. ; TOLIC; Transamerica Oakmont Retirement Associates, a CA limited partnership. Co-General Partners of Transamerica Oakmont Retirement Associates are Transamerica Oakmont Corp. and Transamerica Products I (Administrative General Partner). | Senior living apartment complex | |||
River Ridge Insurance Company | Vermont | 100% AEGON Management Company | Captive insurance company | |||
Second FGP LLC | Delaware | 100% FGH USA LLC | Real estate | |||
Selient Inc. | Canada | 100% Canadian Premier Holdings Ltd. | Application service provider providing loan origination platforms to Canadian credit unions. | |||
Seventh FGP LLC | Delaware | 100% FGH USA LLC | Real estate | |||
Short Hills Management Company | New Jersey | 100% AEGON U.S. Holding Corporation | Holding company | |||
Southwest Equity Life Ins. Co. | Arizona | Voting common stock is allocated 75% of total cumulative vote - AEGON USA, Inc. Participating Common stock (100% owned by non-AEGON shareholders) is allocated 25% of total cumulative vote. | Insurance | |||
Stonebridge Benefit Services, Inc. | Delaware | 100% Commonwealth General Corporation | Health discount plan |
C-12
Stonebridge Casualty Insurance Company | Ohio | 100% AEGON USA, Inc. | Insurance company | |||
Stonebridge Group, Inc. | Delaware | 100% Commonwealth General Corporation | General purpose corporation | |||
Stonebridge International Insurance Ltd. | UK | 100% Cornerstone International Holdings Ltd. | General insurance company | |||
Stonebridge Life Insurance Company | Vermont | 100% Commonwealth General Corporation | Insurance company | |||
Stonebridge Reinsurance Company | Vermont | 100% Stonebridge Life Insurance Company | Captive insurance company | |||
TA Air XI, Corp. | Delaware | 100% TCFC Air Holdings, Inc. | Special purpose corporation | |||
TAH-MCD IV, LLC | Iowa | 100% Transamerica Affordable Housing, Inc. | Serve as the general partner for McDonald Corporate Tax Credit Fund IV Limited Partnership | |||
TBK Insurance Agency of Ohio, Inc. | Ohio | 500 shares non-voting common stock owned by Transamerica Financial Advisors, Inc.; 1 share voting common stock owned by James Krost | Variable insurance contract sales in state of Ohio | |||
TCF Asset Management Corporation | Colorado | 100% TCFC Asset Holdings, Inc. | A depository for foreclosed real and personal property | |||
TCFC Air Holdings, Inc. | Delaware | 100% Transamerica Commercial Finance Corporation, I | Holding company | |||
TCFC Asset Holdings, Inc. | Delaware | 100% Transamerica Commercial Finance Corporation, I | Holding company | |||
TCFC Employment, Inc. | Delaware | 100% Transamerica Commercial Finance Corporation, I | Used for payroll for employees at TFC | |||
The AEGON Trust Advisory Board: Donald J. Shepard, Joseph B.M. Streppel, Alexander R. Wynaendts, and Craig D. Vermie | Delaware | AEGON International B.V. | Voting Trust | |||
The RCC Group, Inc. | Delaware | 100% FGH USA LLC | Real estate | |||
TIHI Mexico, S. de R.L. de C.V. | Mexico | 95% TIHI; 5% TOLIC | To render and receive all kind of administrative, accountant, mercantile and financial counsel and assistance to and from any other Mexican or foreign corporation, whether or not this company is a shareholder of them | |||
Transamerica Accounts Holding Corporation | Delaware | 100% TCFC Asset Holdings, Inc. | Holding company | |||
Transamerica Affinity Services, Inc. | Maryland | 100% AEGON Direct Marketing Services, Inc. | Marketing company | |||
Transamerica Affordable Housing, Inc. | California | 100% TRS | General partner LHTC Partnership | |||
Transamerica Annuity Service Corporation | New Mexico | 100% Transamerica International Holdings, Inc. | Performs services required for structured settlements | |||
Transamerica Asset Management, Inc. | Florida | Western Reserve Life Assurance Co. of Ohio owns 77%; AUSA Holding Co. owns 23% | Fund advisor | |||
Transamerica Aviation LLC | Delaware | 100% TCFC Air Holdings, Inc. | Special purpose corporation | |||
Transamerica Capital, Inc. | California | 100% AUSA Holding Co. | Broker/Dealer | |||
Transamerica Commercial Finance Corporation, I | Delaware | 100% TFC | Holding company | |||
Transamerica Consultora Y Servicios Limitada | Chile | 95% TOLIC; 5% Transamerica International Holdings, Inc. | Special purpose limited liability corporation | |||
Transamerica Consumer Finance Holding Company | Delaware | 100% TCFC Asset Holdings, Inc. | Consumer finance holding company | |||
Transamerica Corporation | Delaware | 100% The AEGON Trust | Major interest in insurance and finance | |||
Transamerica Corporation (Oregon) | Oregon | 100% Transamerica Corp. | Holding company | |||
Transamerica Direct Marketing Asia Pacific Pty Ltd. | Australia | 100% AEGON DMS Holding B.V. | Holding company |
C-13
Transamerica Direct Marketing Consultants, LLC | Maryland | 51% Hugh J. McAdorey; 49% AEGON Direct Marketing Services, Inc. | Provide consulting services ancillary to the marketing of insurance products overseas. | |||
Transamerica Direct Marketing Group-Mexico Servicios S.A. de C.V. | Mexico | 100% AEGON DMS Holding B.V. | Provide marketing, trading, telemarketing and advertising services in favor of any third party, particularly in favor of insurance and reinsurance companies. | |||
Transamerica Direct Marketing Services Korea Ltd. | Korea | 99% AEGON DMS Holding B.V.: 1% AEGON International B.V. | Marketing company | |||
Transamerica Distribution Finance - Overseas, Inc. | Delaware | 100% TCFC Asset Holdings, Inc. | Commercial Finance | |||
Transamerica Finance Corporation (TFC) | Delaware | 100% Transamerica Corp. | Commercial & Consumer Lending & equipment leasing | |||
Transamerica Financial Advisors, Inc. | Delaware | 100% Transamerica International Holdings, Inc. | Broker/dealer | |||
Transamerica Financial Life Insurance Company | New York | 87.40% AEGON USA, Inc.; 12.60% TOLIC | Insurance | |||
Transamerica Financial Resources Insurance Agency of Alabama, Inc. | Alabama | 100% Transamerica Financial Advisors, Inc. | Insurance agent & broker | |||
Transamerica Fund Services, Inc. | Florida | Western Reserve Life Assurance Co. of Ohio owns 44%; AUSA Holding Company owns 56% | Mutual fund | |||
Transamerica Funding LP | U.K. | 99% Transamerica Leasing Holdings, Inc.; 1% Transamerica Commercial Finance Corporation, I | Intermodal leasing | |||
Transamerica Holding B.V. | Netherlands | 100% AEGON International N.V. | Holding company | |||
Transamerica Home Loan | California | 100% Transamerica Finance Corporation | Consumer mortgages | |||
Transamerica IDEX Mutual Funds | Delaware | 100% InterSecurities, Inc. | Mutual fund | |||
Transamerica Income Shares, Inc. | Maryland | 100% AEGON/Transamerica Fund Advisers, Inc. | Mutual fund | |||
Transamerica Insurance Marketing Asia Pacific Pty Ltd. | Australia | 100% Transamerica Direct Marketing Asia Pacific Pty Ltd. | Insurance intermediary | |||
Transamerica International Direct Marketing Group, Inc. | Maryland | 100% Monumental General Insurance Group, Inc. | Marketing arm for sale of mass marketed insurance coverage | |||
Transamerica International Holdings, Inc. | Delaware | 100% AEGON USA, Inc. | Investments | |||
Transamerica International RE (Bermuda) Ltd. | Bermuda | 100% AEGON USA, Inc. | Reinsurance | |||
Transamerica Investment Management, LLC | Delaware | 80% Transamerica Investment Services, Inc. as Original Member; 20% owned by Professional Members (employees of Transamerica Investment Services, Inc.) | Investment advisor | |||
Transamerica Investment Services, Inc. (TISI) | Delaware | 100% Transamerica Corp. | Holding company | |||
Transamerica Investors, Inc. | Maryland | 100% Transamerica Investment Management, LLC | Advisor | |||
Transamerica Leasing Holdings, Inc. | Delaware | 100% Transamerica Finance Corporation | Holding company | |||
Transamerica Life (Bermuda) Ltd. | Bermuda | 100% Transamerica Occidental Life Insurance Company | Long-term life insurer in Bermuda - - will primarily write fixed universal life and term insurance | |||
Transamerica Life Canada | Canada | AEGON Canada Inc. owns 9,600,000 shares of common stock; AEGON International N.V. owns 3,568,941 shares of common stock and 184,000 shares of Series IV Preferred stock. | Life insurance company |
C-14
Transamerica Life Insurance Company | Iowa | 316,955 shares Common Stock owned by Transamerica Occidental Life Insurance Company; 87,755 shares Series B Preferred Stock owned by AEGON USA, Inc. | Insurance | |||
Transamerica Life Solutions, LLC | Delaware | Investors Warranty of America, Inc. - sole member | Provision of marketing, training, educational, and support services to life insurance professionals relating to the secondary market for life insurance, primarily through its affiliation with LexNet, LP, a life settlements marketplace. | |||
Transamerica Minerals Company | California | 100% TRS | Owner and lessor of oil and gas properties | |||
Transamerica Oakmont Corporation | California | 100% Transamerica International Holdings, Inc. | General partner retirement properties | |||
Transamerica Oakmont Retirement Associates | California | Co-General Partners are Transamerica Oakmont Corporation and Transamerica Products I (Administrative General Partner) | Senior living apartments | |||
Transamerica Occidental Life Insurance Company (TOLIC) | Iowa | 1,104,117 shares Common Stock owned by Transamerica International Holdings, Inc.; 1,103,466 shares of Preferred Stock owned by Transamerica Corporation | Life Insurance | |||
Transamerica Occidental's Separate Account Fund C | California | 100% TOLIC | Mutual fund | |||
Transamerica Pacific Insurance Company, Ltd. | Hawaii | 100% Transamerica Corp. | Life insurance | |||
Transamerica Pyramid Properties LLC | Iowa | 100% TOLIC | Realty limited liability company | |||
Transamerica Re Consultoria em Seguros e Servicos Ltda | Brazil | 95% TOLIC; 5% Transamerica International Holdings, Inc. | Insurance and reinsurance consulting | |||
Transamerica Realty Investment Properties LLC | Delaware | 100% TOLIC | Realty limited liability company | |||
Transamerica Realty Services, LLC (TRS) | Delaware | 100% AEGON USA Realty Advisors, Inc. | Real estate investments | |||
Transamerica Retirement Management, Inc. | Minnesota | 100% AEGON Financial Services Group, Inc. | Life Insurance and underwriting services | |||
Transamerica Securities Sales Corporation | Maryland | 100% Transamerica International Holdings, Inc. | Broker/Dealer | |||
Transamerica Small Business Capital, Inc. | Delaware | 100% TCFC Asset Holdings, Inc. | Holding company | |||
Transamerica Trailer Leasing AG | Switzerland | 100% Transamerica Leasing Holdings, Inc. | Leasing | |||
Transamerica Trailer Leasing Sp. Z.O.O. | Poland | 100% Transamerica Leasing Holdings, Inc. | Leasing | |||
Transamerica Vendor Financial Services Corporation | Delaware | 100% TCFC Asset Holdings, Inc. | Provides commercial leasing | |||
Unicom Administrative Services, Inc. | Pennsylvania | 100% Academy Insurance Group, Inc. | Provider of administrative services | |||
United Financial Services, Inc. | Maryland | 100% AEGON USA, Inc. | General agency | |||
Universal Benefits Corporation | Iowa | 100% AUSA Holding Co. | Third party administrator | |||
USA Administration Services, Inc. | Kansas | 100% TOLIC | Third party administrator | |||
Valley Forge Associates, Inc. | Pennsylvania | 100% Commonwealth General Corporation | Furniture & equipment lessor | |||
Westcap Investors, LLC | Delaware | 100% Transamerica Investment Management, LLC | Inactive |
C-15
Westcap Investors Series Fund, LLC | Delaware | Transamerica Investment Management, LLC is the Managing Member | This Series Fund is an unregistered investments vehicle for Transamerica Investment Management, LLC (former Westcap Investors, LLC) clients are Members | |||
Western Reserve Life Assurance Co. of Ohio | Ohio | 100% AEGON USA, Inc. | Insurance | |||
Westport Strategies, LLC | Delaware | AUSA Holding Company - sole Member | Provide administrative and support services, including but not limited to plan consulting, design and administration in connection with retail insurance brokerage business as carried on by producers related to corporate-owned or trust-owned life insurance policies | |||
WFG China Holdings, Inc. | Delaware | 100% World Financial Group, Inc. | Hold interest in Insurance Agency located in Peoples Republic of China | |||
WFG Insurance Agency of Puerto Rico, Inc. | Puerto Rico | 100% World Financial Group Insurance Agency, Inc. | Insurance agency | |||
WFG Properties Holdings, LLC | Georgia | 100% World Financial Group, Inc. | Marketing | |||
WFG Property & Casualty Insurance Agency of California, Inc. | California | 100% WFG Property & Casualty Insurance Agency, Inc. | Insurance agency | |||
WFG Property & Casualty Insurance Agency of Nevada, Inc. | Nevada | 100% WFG Property & Casualty Insurance Agency, Inc. | Insurance agency | |||
WFG Property & Casualty Insurance Agency, Inc. | Georgia | 100% World Financial Group Insurance Agency, Inc. | Insurance agency | |||
WFG Reinsurance Limited | Bermuda | 100% World Financial Group, Inc. | Reinsurance | |||
WFG Securities of Canada, Inc. | Canada | 100% World Financial Group Holding Company of Canada, Inc. | Mutual fund dealer | |||
World Financial Group Holding Company of Canada Inc. | Canada | 100% TIHI | Holding company | |||
World Financial Group Insurance Agency of Canada Inc. | Ontario | 50% World Financial Group Holding Co. of Canada Inc.; 50% World Financial Group Subholding Co. of Canada Inc. | Insurance agency | |||
World Financial Group Insurance Agency of Hawaii, Inc. | Hawaii | 100% World Financial Group Insurance Agency, Inc. | Insurance agency | |||
World Financial Group Insurance Agency of Massachusetts, Inc. | Massachusetts | 100% World Financial Group Insurance Agency, Inc. | Insurance agency | |||
World Financial Group Insurance Agency of Wyoming, Inc. | Wyoming | 100% World Financial Group Insurance Agency, Inc. | Insurance agency | |||
World Financial Group Insurance Agency, Inc. | California | 100% Western Reserve Life Assurance Co. of Ohio | Insurance agency | |||
World Financial Group Subholding Company of Canada Inc. | Canada | 100% World Financial Group Holding Company of Canada, Inc. | Holding company | |||
World Financial Group, Inc. | Delaware | 100% AEGON Asset Management Services, Inc. | Marketing | |||
World Group Securities, Inc. | Delaware | 100% AEGON Asset Management Services, Inc. | Broker-dealer | |||
Zahorik Company, Inc. | California | 100% AUSA Holding Co. | Inactive | |||
Zero Beta Fund, LLC | Delaware | Manager: AEGON USA Investment Management, LLC | Aggregating vehicle formed to hold various fund investments. |
Item 29. | Indemnification |
Provisions exist under the Ohio General Corporation Law, the Second Amended Articles of Incorporation of Western Reserve and the Amended Code of Regulations of Western Reserve whereby Western Reserve may indemnify certain persons against certain payments incurred by such persons. The following excerpts contain the substance of these provisions.
C-16
Ohio General Corporation Law
Section 1701.13 Authority of corporation.
(E)(1) A corporation may indemnify or agree to indemnify any person who was or is a party or is threatened to be made a party, to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, other than an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, or agent of another corporation (including a subsidiary of this corporation), domestic or foreign, nonprofit or for profit, partnership, joint venture, trust, or other enterprise, against expenses, including attorneys' fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendre or its equivalent, shall not, of itself create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any person who was or is a party, or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, or agent of another corporation, domestic or foreign, nonprofit or for profit, partnership, joint venture, trust, or other enterprise, against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any of the following:
(a) Any claim, issue, or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless, and only to the extent that the court of common pleas, or the court in which such action or suit was brought determines upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court of common pleas or such other court shall deem proper;
(b) Any action or suit in which the only liability asserted against a director is pursuant to section 1701.95 of the Revised Code.
(3) To the extent that a director, trustee, officer, employee, or agent has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in divisions (E)(1) and (2) of this section, or in defense of any claim, issue, or matter therein, he shall be indemnified against expenses, including attorneys' fees, actually and reasonably incurred by him in connection therewith.
(4) Any indemnification under divisions (E)(1) and (2) of this section, unless ordered by a court, shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, trustee, officer, employee, or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in divisions (E)(1) and (2) of this section. Such determination shall be made as follows:
(a) By a majority vote of a quorum consisting of directors of the indemnifying corporation who were not and are not parties to or threatened with any such action, suit, or proceeding;
(b) If the quorum described in division (E)(4)(a) of this section is not obtainable or if a majority vote of a quorum of disinterested directors so directs, in a written opinion by independent legal counsel other than an attorney, or a firm having associated with it an attorney, who has been retained by or who has performed services for the corporation, or any person to be indemnified within the past five years;
C-17
(c) By the shareholders;
(d) By the court of common pleas or the court in which such action, suit, or proceeding was brought.
Any determination made by the disinterested directors under division (E)(4)(a) or by independent legal counsel under division (E)(4)(b) of this section shall be promptly communicated to the person who threatened or brought the action or suit by or in the right of the corporation under division (E)(2) of this section, and within ten days after receipt of such notification, such person shall have the right to petition the court of common pleas or the court in which such action or suit was brought to review the reasonableness of such determination.
(5)(a) Unless at the time of a director's act or omission that is the subject of an action, suit or proceeding referred to in divisions (E)(1) and (2) of this section, the articles or the regulations of a corporation state by specific reference to this division that the provisions of this division do not apply to the corporation and unless the only liability asserted against a director in an action, suit, or proceeding referred to in divisions (E)(1) and (2) of this section is pursuant to section 1701.95 of the Revised Code, expenses, including attorney's fees, incurred by a director in defending the action, suit, or proceeding shall be paid by the corporation as they are incurred, in advance of the final disposition of the action, suit, or proceeding upon receipt of an undertaking by or on behalf of the director in which he agrees to do both of the following:
(i) Repay such amount if it is proved by clear and convincing evidence in a court of competent jurisdiction that his action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the corporation or undertaken with reckless disregard for the best interests of the corporation;
(ii) Reasonably cooperate with the corporation concerning the action, suit, or proceeding.
(b) Expenses, including attorneys' fees incurred by a director, trustee, officer, employee, or agent in defending any action, suit, or proceeding referred to in divisions (E)(1) and (2) of this section, may be paid by the corporation as they are incurred, in advance of the final disposition of the action, suit, or proceeding as authorized by the directors in the specific case upon receipt of an undertaking by or on behalf of the director, trustee, officer, employee, or agent to repay such amount, if it ultimately is determined that he is entitled to be indemnified by the corporation.
(6) The indemnification authorized by this section shall not be exclusive of, and shall be in addition to, any other rights granted to those seeking indemnification under the articles or the regulations or any agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, trustee, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.
(7) A corporation may purchase and maintain insurance or furnish similar protection, including but not limited to trust funds, letters of credit, or self-insurance on behalf of or for any person who is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, or agent of another corporation, domestic or foreign, nonprofit or for profit, partnership, joint venture, trust, or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under this section. Insurance may be purchased from or maintained with a person in which the corporation has a financial interest.
(8) The authority of a corporation to indemnify persons pursuant to divisions (E)(1) and (2) of this section does not limit the payment of expenses as they are incurred, indemnification, insurance, or other protection that may be provided pursuant to divisions (E)(5), (6), and (7) of this section. Divisions (E)(1) and (2) of this section do not create any obligation to repay or return payments made by the corporation pursuant to divisions (E)(5), (6), or (7).
(9) As used in this division, references to "corporation" include all constituent corporations in a consolidation or merger and the new or surviving corporation, so that any person who is or was a director, officer, employee, or agent of such a constituent corporation, or is or was serving at the request of such constituent
C-18
corporation as a director, trustee, officer, employee or agent of another corporation, domestic or foreign, nonprofit or for profit, partnership, joint venture, trust, or other enterprise, shall stand in the same position under this section with respect to the new or surviving corporation as he would if he had served the new or surviving corporation in the same capacity.
Second Amended Articles of Incorporation of Western Reserve
ARTICLE EIGHTH
EIGHTH: (1) The corporation may indemnify or agree to indemnify any person who was or is a party or is threatened to be made a party, to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, other than an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, or agent of another corporation (including a subsidiary of this corporation), domestic or foreign, nonprofit or for profit, partnership, joint venture, trust, or other enterprise, against expenses, including attorneys' fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendre or its equivalent, shall not, of itself create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful.
(2) The corporation may indemnify or agree to indemnify any person who was or is a party, or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, or agent of another corporation (including a subsidiary of this corporation), domestic or foreign, nonprofit or for profit, partnership, joint venture, trust, or other enterprise against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless, and only to the extent that the court of common pleas, or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court of common pleas or such other court shall deem proper.
(3) To the extent that a director, trustee, officer, employee, or agent has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in sections (1) and (2) of this article, or in defense of any claim, issue, or matter therein, he shall be indemnified against expenses, including attorneys' fees, actually and reasonably incurred by him in connection therewith.
(4) Any indemnification under sections (1) and (2) of this article, unless ordered by a court, shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, trustee, officer, employee, or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in sections (1) and (2) of this article. Such determination shall be made (a) by a majority vote of a quorum consisting of directors of the indemnifying corporation who were not and are not parties to or threatened with any such action, suit, or proceeding, or (b) if such a quorum is not obtainable or if a majority vote of a quorum of disinterested directors so directs, in a written opinion by independent legal counsel other than an attorney, or a firm having associated with it an attorney, who has been retained by or who has performed services for the corporation, or any person to be indemnified within the past five years, or (c) by the shareholders, or (d) by the court of common pleas or the court in which such action, suit, or proceeding was brought. Any determination made by the disinterested directors under section (4)(a) or by independent legal counsel under section (4)(b) of this article shall be promptly communicated to the person who threatened or brought the action or suit by or in the right of the corporation under section (2) of this article, and within ten days after receipt of such notification, such person shall have the right to petition the court of common pleas or the court in which such action or suit was brought to review the reasonableness of such determination.
C-19
(5) Expenses, including attorneys' fees incurred in defending any action, suit, or proceeding referred to in sections (1) and (2) of this article, may be paid by the corporation in advance of the final disposition of such action, suit, or proceeding as authorized by the directors in the specific case upon receipt of a written undertaking by or on behalf of the director, trustee, officer, employee, or agent to repay such amount, unless it shall ultimately be determined that he is entitled to be indemnified by the corporation as authorized in this article. If a majority vote of a quorum of disinterested directors so directs by resolution, said written undertaking need not be submitted to the corporation. Such a determination that a written undertaking need not be submitted to the corporation shall in no way affect the entitlement of indemnification as authorized by this article.
(6) The indemnification provided by this article shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under the articles or the regulations or any agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, trustee, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.
(7) The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, or agent of another corporation (including a subsidiary of this corporation), domestic or foreign, nonprofit or for profit, partnership, joint venture, trust, or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under this section.
(8) As used in this section, references to "the corporation" include all constituent corporations in a consolidation or merger and the new or surviving corporation, so that any person who is or was a director, officer, employee, or agent of such a constituent corporation, or is or was serving at the request of such constituent corporation as a director, trustee, officer, employee or agent of another corporation (including a subsidiary of this corporation), domestic or foreign, nonprofit or for profit, partnership, joint venture, trust, or other enterprise shall stand in the same position under this article with respect to the new or surviving corporation as he would if he had served the new or surviving corporation in the same capacity.
(9) The foregoing provisions of this article do not apply to any proceeding against any trustee, investment manager or other fiduciary of an employee benefit plan in such person's capacity as such, even though such person may also be an agent of this corporation. The corporation may indemnify such named fiduciaries of its employee benefit plans against all costs and expenses, judgments, fines, settlements or other amounts actually and reasonably incurred by or imposed upon said named fiduciary in connection with or arising out of any claim, demand, action, suit or proceeding in which the named fiduciary may be made a party by reason of being or having been a named fiduciary, to the same extent it indemnifies an agent of the corporation. To the extent that the corporation does not have the direct legal power to indemnify, the corporation may contract with the named fiduciaries of its employee benefit plans to indemnify them to the same extent as noted above. The corporation may purchase and maintain insurance on behalf of such named fiduciary covering any liability to the same extent that it contracts to indemnify.
Amended Code of Regulations of Western Reserve
ARTICLE V
Indemnification of Directors and Officers
Each Director, officer and member of a committee of this Corporation, and any person who may have served at the request of this Corporation as a Director, officer or member of a committee of any other corporation in which this Corporation owns shares of capital stock or of which this Corporation is a creditor (and his heirs, executors and administrators) shall be indemnified by the Corporation against all expenses, costs, judgments, decrees, fines or penalties as provided by, and to the extent allowed by, Article Eighth of the Corporation's Articles of Incorporation, as amended.
C-20
Rule 484 Undertaking
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of Western Reserve pursuant to the foregoing provisions or otherwise, Western Reserve has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Western Reserve of expenses incurred or paid by a director, officer or controlling person of Western Reserve in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Western Reserve will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Item 30. | Principal Underwriter |
(a) | Transamerica Capital, Inc. serves as the principal underwriter for the following: |
Transamerica Life Insurance Company Separate Accounts: The Retirement Builder Variable Annuity Account, Separate Account VA A, Separate Account VA B, Separate Account VA C, Separate Account VA D, Separate Account VA E, Separate Account VA F, Separate Account VA I, Separate Account VA J, Separate Account VA K, Separate Account VA L, Separate Account VA P, Separate Account VA Q, Separate Account VA R, Separate Account VA S, Separate Account VA W, Separate Account VA X, Separate Account VA Y; Separate Account VA Z, Separate Account VA EE, Separate Account VA-1, Separate Account VA-6, Separate Account VA-7, Separate Account VA-8, Transamerica Corporate Separate Account Sixteen, Separate Account VL A and Separate Account VUL A.
Transamerica Financial Life Insurance Company Separate Accounts: Separate Account VA BNY, Separate Account VA GNY, Separate Account VA HNY, Separate Account VA QNY, Separate Account VA WNY, Separate Account VA YNY, TFLIC Separate Account VNY, Separate Account VA-2LNY, TFLIC Separate Account C, Separate Account VA-5NLNY, Separate Account VA-6NY, TFLIC Series Annuity Account and TFLIC Series Life Account.
Western Reserve Life Assurance Co. of Ohio Separate Accounts: Separate Account VA U, Separate Account VA V, Separate Account VA AA, WRL Series Life Account, WRL Series Life Account G, WRL Series Life Corporate Account, WRL Series Annuity Account and WRL Series Annuity Account B.
Transamerica Occidental Life Insurance Company Separate Accounts: Separate Account VA-2L, Separate Account VA-5, and Transamerica Occidental Life Separate Account VUL-3.
Monumental Life Insurance Company Separate Accounts: Separate Account VA BB, Separate Account VA CC, Separate Account VA WM, and Separate Account VL E.
Merrill Lynch Life Insurance Company Separate Accounts: Merrill Lynch Life Variable Annuity Separate Account, Merrill Lynch Life Variable Annuity Separate Account A, Merrill Lynch Life Variable Annuity Separate Account B, Merrill Lynch Life Variable Annuity Separate Account C, Merrill Lynch Life Variable Annuity Separate Account D, Merrill Lynch Variable Life Separate Account, and Merrill Lynch Life Variable Life Separate Account II.
ML Life Insurance Company of New York Separate Accounts: ML of New York Variable Annuity Separate Account, ML of New York Variable Annuity Separate Account A, ML of New York Variable Annuity Separate Account B, ML of New York Variable Annuity Separate Account C, ML of New York Variable Annuity Separate Account D, ML of New York Variable Life Separate Account, and ML of New York Variable Life Separate Account II.
Transamerica Capital, Inc. also serves as principal underwriter for Transamerica Series Trust, Transamerica Funds and Transamerica Investors, Inc.
C-21
(b) | Directors and Officers of Transamerica Capital, Inc.: |
Name |
Principal Business Address |
Position and Offices with Underwriter | ||
Robert R. Frederick |
(1) | Chief Operations Officer, President and Director | ||
John T. Mallett |
(1) | Director | ||
Mark W. Mullin |
(1) | Director | ||
Lon J. Olejniczak |
(1) | Chief Executive Officer and Director | ||
Michael W. Brandsma |
(2) | Executive Vice President and Chief Financial Officer | ||
David R. Paulsen |
(2) | Executive Vice President | ||
Michael G. Petko |
(2) | Executive Vice President | ||
Anne M. Spaes |
(3) | Executive Vice President and Chief Marketing Officer | ||
Frank A. Camp |
(1) | Secretary | ||
Amy J. Boyle |
(4) | Assistant Vice President | ||
John W. Fischer |
(4) | Assistant Vice President | ||
Clifton W. Flenniken, III |
(5) | Assistant Vice President | ||
Dennis P. Gallagher |
(4) | Assistant Vice President | ||
Linda S. Gilmer |
(1) | Vice President | ||
Karen D. Heburn |
(4) | Vice President | ||
Kyle A. Keelan |
(4) | Assistant Vice President | ||
Christy Post-Rissin |
(4) | Assistant Vice President | ||
Brenda L. Smith |
(4) | Assistant Vice President | ||
Darin D. Smith |
(1) | Assistant Vice President | ||
Arthur D. Woods |
(4) | Assistant Vice President | ||
Tamara D. Barkdoll |
(2) | Assistant Secretary | ||
Erin K. Burke |
(1) | Assistant Secretary | ||
Jeffrey Eng |
(6) | Assistant Secretary |
(1) | 4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001 |
(2) | 4600 S Syracuse St, Suite 1100, Denver, CO 80237-2719 |
(3) | 400 West Market Street, Louisville, KY 40202 |
(4) | 570 Carillon Parkway, St. Petersburg, FL 33716 |
(5) | 1111 North Charles Street, Baltimore, MD 21201 |
(6) | 600 S. Hwy 169, Suite 1800, Minneapolis, MN 55426 |
(c) | Compensation to Principal Underwriter: |
Name of Principal Underwriter |
Net Underwriting Discounts and Commissions* |
Compensation on Events Occasioning the Deduction of A Deferred Sales Load |
Brokerage Commissions |
Other Compensation | |||||
AFSG Securities Corporation(1) |
$ | 44,112,185.21 | 0 | 0 | 0 | ||||
Transamerica Capital, Inc. |
$ | 21,215,095.56 | 0 | 0 | 0 |
C-22
(1) |
Effective May 1, 2007, Transamerica Capital, Inc. replaced AFSG Securities Corporation as principal underwriter for the policies. |
* | TCI and AFSG pass through any commissions paid to them to the selling firms and do not retain any portion of such payments. |
Item 31. | Location of Accounts and Records |
All accounts, books, or other documents required to be maintained by Section 31(a) of the 1940 Act and the rules promulgated thereunder are maintained by the Registrant through Western Reserve at 570 Carillon Parkway, St. Petersburg, Florida 33716, 4800 140th Avenue North, Clearwater, Florida 33762 or 12855 Starkey Road, Largo, Florida 33773.
Item 32. | Management Services |
Not Applicable
Item 33. | Fee Representation |
Western Reserve hereby represents that the fees and charges deducted under the WRL Freedom Elite Builder Policies, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Western Reserve.
C-23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, WRL Series Life Account, has duly caused this Post-Effective Amendment No. 13 to its Registration Statement to be signed on its behalf by the undersigned, thereunder duly authorized, in the city of St. Petersburg, state of Florida, on the 27 th day of June, 2008.
WRL SERIES LIFE ACCOUNT | ||
(Registrant) | ||
By: | */ | |
Tim L. Stonehocker*/, Chairman of the Board of Western Reserve Life Assurance Co. of Ohio | ||
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO | ||
(Depositor) | ||
By: | */ | |
Tim L. Stonehocker*/, Chairman of the Board |
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 13 to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
Signature |
Title |
Date | ||
|
Chairman of the Board | June 27, 2008 | ||
Tim L. Stonehocker */ | ||||
|
Director and Chief Executive | June 27, 2008 | ||
Charles T. Boswell */ Officer | ||||
|
Director and President | June 27, 2008 | ||
Brenda K. Clancy */ | ||||
|
Vice President, Treasurer and Controller | June 27, 2008 | ||
Allan J. Hamilton */ | ||||
|
Director, Actuary and Chief Financial Officer |
June 27, 2008 | ||
Christopher H. Garrett */ | ||||
|
Director, Senior Vice President and Chief Tax Officer |
June 27, 2008 | ||
Arthur C. Schneider */ |
*/s/ Arthur D. Woods |
Signed by Arthur D. Woods, Esq. |
As Attorney in Fact pursuant to the Powers of Attorney filed herewith |
Exhibit Index
Exhibit No. |
Description of Exhibit | |
26(d)(i) | Specimen Flexible Premium Variable Life Insurance Policy | |
26(e) | Application for Flexible Premium Variable Life Insurance Policy |
EXHIBIT 26(d)(i)
Specimen Flexible Premium Variable Life Insurance Policy
Home Office: Columbus, Ohio | ||
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO | Administrative Office: | |
(A STOCK COMPANY) | [P.O. Box 5068 | |
Clearwater, FL 33758] |
IN THIS POLICY, the Primary Insured is named on the Policy Schedule pages. Western Reserve Life Assurance Co. of Ohio will be referred to as We, Our or Us.
IF THE PRIMARY INSURED DIES while this Policy is In Force, WE WILL PAY the Death Benefit Proceeds to the Beneficiary upon receipt of due proof of the Primary Insureds death. THE AMOUNT OF THE DEATH BENEFIT PROCEEDS WILL INCREASE OR DECREASE DEPENDING ON THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS IN THE SEPARATE ACCOUNT AND ON THE DEATH BENEFIT OPTION SELECTED AS DESCRIBED IN THE DEATH BENEFIT PROVISIONS. IF the Primary Insured is alive on the Maturity Date and this Policy is In Force, WE WILL PAY the Net Surrender Value as of the Maturity Date. CASH VALUES WILL INCREASE OR DECREASE IN ACCORDANCE WITH THE POLICY VALUE PROVISIONS AND THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS IN THE SEPARATE ACCOUNT. CASH VALUES ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
THE PROVISIONS on the following pages are part of this Policy. This Policy is a legal contract between the Owner and Us. If the Owner chooses to exercise any of the rights of this Policy, it may result in termination of the benefits provided under certain Riders. READ THE POLICY CAREFULLY.
IN WITNESS WHEREOF, We have signed this Policy at Our Administrative Office in [Clearwater, Florida] as of the Policy Date.
Secretary | President |
RIGHT TO EXAMINE POLICY
The Owner may cancel this Policy by returning it to Us at [4333 Edgewood Road NE, Cedar Rapids, IA 52499] or to the representative through whom it was purchased within ten (10) days after receipt. If the Policy is returned within this period, it will be void from the beginning and a refund will be made to the Owner. The refund will equal the sum of:
1. | The difference between the premiums paid and the amounts allocated to any Accounts under the Policy; plus |
2. | The total amount of monthly deductions made and any other charges imposed on amounts allocated to the Accounts; plus |
3. | The value of amounts allocated to the Accounts on the date We or Our agent receive the returned Policy. |
If State law prohibits the calculation above, the refund will be the total of all premiums paid for this Policy.
Flexible Premium Variable Life Insurance Policy
Death Benefit Proceeds Payable at Death of Primary Insured Prior to Maturity Date
Net Surrender Value Payable at Maturity Date
Flexible Premiums Payable During Lifetime of Primary Insured Until Maturity Date
Non-Participating No Dividends
Some Benefits Reflect Investment Results
VL19 |
POLICY GUIDE
Policy Schedule |
3 | |
Glossary |
5 | |
Accounts |
5 | |
Administrative Office |
5 | |
Amount at Risk |
5 | |
Anniversary |
5 | |
Attained Age |
5 | |
Base Policy |
5 | |
Beneficiary |
5 | |
Cash Value |
5 | |
Death Benefit Proceeds |
5 | |
Fixed Account |
5 | |
Funds |
5 | |
In Force |
5 | |
Initial Premium |
5 | |
Internal Revenue Code |
5 | |
Issue Age |
6 | |
Lapse |
6 | |
Mailing Office |
6 | |
Maturity Date |
6 | |
Minimum Monthly Guarantee Premium |
6 | |
Monthiversary |
6 | |
Monthly Deduction |
6 | |
Mortality and Expense Risk Charge |
6 | |
Net Premium |
6 | |
Net Surrender Value |
6 | |
No Lapse Date |
6 | |
No Lapse Guarantee |
6 | |
Planned Premium |
7 | |
Policy Date |
7 | |
Premium Expense Charge |
7 | |
Reallocation Account |
7 | |
Reallocation Date |
7 | |
Record Date |
7 | |
Reinstatement |
7 | |
Rider |
7 | |
SEC |
7 | |
Separate Account |
7 | |
Subaccount |
7 | |
Surrender |
7 | |
Termination |
7 | |
Valuation Date |
8 | |
Valuation Period |
8 | |
Written Notice |
8 | |
General Provisions |
8 | |
The Policy |
8 | |
Ownership |
8 | |
Beneficiary |
9 | |
Assignment |
9 | |
Extended Maturity Date |
9 | |
Incontestability |
10 | |
Suicide |
10 | |
Issue Age and Sex |
10 | |
Annual Report |
10 | |
Termination |
10 | |
Policy Payment |
11 | |
Conversion Rights |
11 | |
Protection of Proceeds |
11 | |
Death Benefit Provisions |
11 | |
Death Benefit |
11 | |
Specified Amount |
11 | |
Option Type |
11 | |
Compliance with Federal Tax Code |
12 | |
Limitation Percentage |
12 | |
Changes |
13 | |
Death Benefit Proceeds |
14 | |
Premium Provisions |
14 | |
Payment |
14 | |
Premiums |
14 | |
Grace Period |
14 | |
No Lapse Guarantee |
15 | |
Reinstatement |
15 | |
Separate Account Provisions |
16 | |
The Separate Account |
16 | |
Subaccounts |
16 | |
Market Timing |
16 | |
Transfers |
17 | |
Changes |
17 | |
Unit Value |
18 | |
Fixed Account Provisions |
18 | |
Fixed Account |
18 | |
Fixed Account Interest Rate |
18 | |
Transfers |
19 | |
Policy Value Provisions |
19 | |
Net Premium |
19 | |
Allocation of Net Premiums |
19 | |
Monthly Deductions |
19 | |
Recovery of Monthly Deductions |
20 | |
Monthly Policy Charge |
20 | |
Monthly Cost of Insurance |
20 | |
Monthly Cost of Insurance Rates |
21 | |
Subaccount Value |
21 | |
Fixed Account Value |
21 | |
Cash Value |
21 | |
Surrender |
21 | |
Net Surrender Value |
22 | |
Surrender Charge |
22 | |
Surrender Charge Upon Decrease in Specified Amount |
22 | |
Withdrawals |
23 | |
Continuation of Insurance |
23 | |
Insufficient Value |
23 | |
Basis of Computations |
23 | |
Policy Loans |
24 | |
Settlement Options |
24 | |
Effective Date and First Payment Due |
24 | |
Betterment of Monthly Annuity |
24 | |
Availability |
25 | |
Age |
25 | |
Proof of Age and Sex |
25 | |
Proof of Survival |
25 | |
Interest |
25 | |
Table of Optional Methods of Settlement |
26 |
VL19 | Page 2 |
Western Reserve Life Assurance Co. of Ohio
Office: [Clearwater, Florida]
Policy Schedule
Policy Number: |
[0123456789 | ] | ||||||||||
Primary Insured: |
[John Doe | ] | ||||||||||
Issue Age And Sex: |
[35 - Male | ] | Policy Date: | [February 01, 2008 | ] | |||||||
Specified Amount: |
$ | [50,000.00 | ] | Record Date: | [February 01, 2008 | ] | ||||||
Option Type: |
[A | ] | Reallocation Date: | [February 16, 2008 | ] | |||||||
Planned Premium: |
$ | [600.00 | ] | No Lapse Date: | [February 01, 2028 | ] | ||||||
Payment Frequency: |
[Annually | ] | Maturity Date: | [February 1, 2073 | ] | |||||||
Initial Premium: |
$ | [600.00 | ] | Minimum Monthly | ||||||||
Guarantee Premium: | $ | [49.65 | ] | |||||||||
Rate Class: |
[Select | ] | ||||||||||
Rate Band: |
[Band 1 | ] | ||||||||||
Minimum Specified Amount: |
||||||||||||
Band 1: |
$ | 50,000.00 | ||||||||||
Band 2: |
$ | 250,000.00 | ||||||||||
Band 3: |
$ | 500,000.00 | ||||||||||
Band 4: |
$ | 1,000,000.00 | ||||||||||
Separate Account Provisions |
||||||||||||
Separate Account: |
[WRL Series Life Account] | |||||||||||
Mortality and Expense Risk Charge: |
||||||||||||
Policy Years 1-15: |
1.50% (Annually) | |||||||||||
Policy Years 16+: |
||||||||||||
Current: |
[.75]% (Annually) | |||||||||||
Guaranteed: |
1.50% (Annually) | |||||||||||
Reallocation Account: |
Fixed Account | |||||||||||
Policy Value Provisions |
||||||||||||
Premium Expense Charge: |
||||||||||||
Band 1: |
||||||||||||
Policy Years 1-10: |
6 | % | ||||||||||
Policy Years 11+: |
2.5 | % | ||||||||||
Band 2: |
||||||||||||
Policy Years 1-10: |
4 | % | ||||||||||
Policy Years 11+: |
2.5 | % | ||||||||||
Band 3: |
||||||||||||
All Policy Years: |
0 | % | ||||||||||
Band 4: |
||||||||||||
All Policy Years: |
0 | % | ||||||||||
Monthly Policy Charge: |
||||||||||||
Initial (Guaranteed for the First Policy Year): |
$ | [10.00 | ] | |||||||||
Guaranteed: |
$ | 12.00 | ||||||||||
Fixed Account Value Limit: |
[$ | 5,000.00-$250,000.00 | ] |
VL19 | Page 3 |
Western Reserve Life Assurance Co. of Ohio
Office: [Clearwater, Florida]
Policy Schedule (Continued)
Policy Number: [0123456789]
Table of Surrender Charges
Per $1,000 of Initial Specified Amount as of the Policy Date
The Table of Surrender Charges is applicable only to the Initial Specified Amount. Upon any increase to the Specified Amount, an additional Surrender Charge will be incurred.
Specified Amount: $[50,000.00]
Policy Date: [February 1, 2008]
End of Year* |
Surrender Charge | End of Year | Surrender Charge | |||
AT ISSUE | 19.02 | 8 | 13.31 | |||
1 | 19.02 | 9 | 11.41 | |||
2 | 19.02 | 10 | 9.51 | |||
3 | 19.02 | 11 | 7.61 | |||
4 | 19.02 | 12 | 5.71 | |||
5 | 19.02 | 13 | 3.80 | |||
6 | 17.12 | 14 | 1.90 | |||
7 | 15.22 | 15+ | 0.00 |
* | The surrender charge on any date other than an end of year will be interpolated between the two end of year charges. |
VL19 | Page 3A |
Western Reserve Life Assurance Co. of Ohio
Office: [Clearwater, Florida]
Rider Information
Policy Number: [0123456789] |
Monthly Deduction |
Base Policy |
$ | [14.32 | ] | |||||
Number: |
[0123456789 | ] | ||||||
Insured: |
[John Doe | ] | ||||||
Specified Amount: |
$ | [50,000.00 | ] | |||||
Rate Class: |
[Select | ] | ||||||
Primary Insured Rider: |
$ | [4.54 | ] | |||||
Number: |
[0123456789 | ] | ||||||
Insured: |
[John Doe | ] | ||||||
Face Amount: |
$ | [50,000.00 | ] | |||||
Rate Class: |
[Select | ] | ||||||
Other Insured Rider: |
$ | [3.71 | ] | |||||
Number: |
[0123456789 | ] | ||||||
Insured: |
[Jane Doe | ] | ||||||
Issue Age: |
[35 | ] | ||||||
Sex: |
[Female | ] | ||||||
Face Amount: |
$ | [50,000.00 | ] | |||||
Rate Class: |
[Select | ] |
The Monthly Deductions shown above are applicable for the first policy month. For Monthly Deductions after the first policy month, refer to the Rider form.
VL19 | Page 4 |
Western Reserve Life Assurance Co. of Ohio
Office: [Clearwater, Florida]
Policy Schedule
Policy Number: [0123456789]
Table of Guaranteed Maximum Life Insurance Rates Per $1,000
Guaranteed Rate Basis for Initial Specified Amount on Primary Insured
Commissioners 2001 Standard Ordinary Tobacco or Non-Tobacco Mortality Table
[John Doe]
[Male Lives]
[Select]
Attained Age |
Monthly Rate | Attained Age | Monthly Rate | |||
35 | 0.09083 | 74 | 3.02250 | |||
36 | 0.09583 | 75 | 3.33583 | |||
37 | 0.10000 | 76 | 3.67750 | |||
38 | 0.10750 | 77 | 4.07416 | |||
39 | 0.11416 | 78 | 4.53750 | |||
40 | 0.12166 | 79 | 5.07250 | |||
41 | 0.13166 | 80 | 5.65583 | |||
42 | 0.14416 | 81 | 6.32000 | |||
43 | 0.15833 | 82 | 7.01166 | |||
44 | 0.17500 | 83 | 7.75750 | |||
45 | 0.19416 | 84 | 8.58333 | |||
46 | 0.21250 | 85 | 9.50583 | |||
47 | 0.23250 | 86 | 10.52833 | |||
48 | 0.24416 | 87 | 11.64500 | |||
49 | 0.25750 | 88 | 12.84166 | |||
50 | 0.27666 | 89 | 14.10416 | |||
51 | 0.29916 | 90 | 15.42166 | |||
52 | 0.33000 | 91 | 16.66083 | |||
53 | 0.36333 | 92 | 17.95250 | |||
54 | 0.40583 | 93 | 19.31500 | |||
55 | 0.45833 | 94 | 20.75416 | |||
56 | 0.51166 | 95 | 22.26583 | |||
57 | 0.56916 | 96 | 23.64916 | |||
58 | 0.61833 | 97 | 25.12416 | |||
59 | 0.67500 | 98 | 26.69833 | |||
60 | 0.74333 | 99 | 28.37833 | |||
61 | 0.82666 | |||||
62 | 0.92833 | |||||
63 | 1.04250 | |||||
64 | 1.16250 | |||||
65 | 1.28916 | |||||
66 | 1.41750 | |||||
67 | 1.54750 | |||||
68 | 1.68750 | |||||
69 | 1.83250 | |||||
70 | 2.00833 | |||||
71 | 2.20500 | |||||
72 | 2.46333 | |||||
73 | 2.73583 |
VL19 | Page 4A |
Western Reserve Life Assurance Co. of Ohio
Office: [Clearwater, Florida]
Policy Schedule
Policy Number: [0123456789]
Table of Guaranteed Maximum Life Insurance Rates Per $1,000
Guaranteed Rate Basis for Initial Specified Amount on Primary Insured Rider
Commissioners 2001 Standard Ordinary Tobacco or Non-Tobacco Mortality Table
[John Doe]
[Male Lives]
[Select]
Attained Age |
Monthly Rate | Attained Age | Monthly Rate | |||
35 | 0.09083 | 74 | 3.02250 | |||
36 | 0.09583 | 75 | 3.33583 | |||
37 | 0.10000 | 76 | 3.67750 | |||
38 | 0.10750 | 77 | 4.07416 | |||
39 | 0.11416 | 78 | 4.53750 | |||
40 | 0.12166 | 79 | 5.07250 | |||
41 | 0.13166 | 80 | 5.65583 | |||
42 | 0.14416 | 81 | 6.32000 | |||
43 | 0.15833 | 82 | 7.01166 | |||
44 | 0.17500 | 83 | 7.75750 | |||
45 | 0.19416 | 84 | 8.58333 | |||
46 | 0.21250 | 85 | 9.50583 | |||
47 | 0.23250 | 86 | 10.52833 | |||
48 | 0.24416 | 87 | 11.64500 | |||
49 | 0.25750 | 88 | 12.84166 | |||
50 | 0.27666 | 89 | 14.10416 | |||
51 | 0.29916 | 90 | 15.42166 | |||
52 | 0.33000 | 91 | 16.66083 | |||
53 | 0.36333 | 92 | 17.95250 | |||
54 | 0.40583 | 93 | 19.31500 | |||
55 | 0.45833 | 94 | 20.75416 | |||
56 | 0.51166 | |||||
57 | 0.56916 | |||||
58 | 0.61833 | |||||
59 | 0.67500 | |||||
60 | 0.74333 | |||||
61 | 0.82666 | |||||
62 | 0.92833 | |||||
63 | 1.04250 | |||||
64 | 1.16250 | |||||
65 | 1.28916 | |||||
66 | 1.41750 | |||||
67 | 1.54750 | |||||
68 | 1.68750 | |||||
69 | 1.83250 | |||||
70 | 2.00833 | |||||
71 | 2.20500 | |||||
72 | 2.46333 | |||||
73 | 2.73583 |
VL19 | Page 4B |
Western Reserve Life Assurance Co. of Ohio
Office: [Clearwater, Florida]
Policy Schedule
Policy Number: [0123456789]
Table of Guaranteed Maximum Life Insurance Rates Per $1,000
Guaranteed Rate Basis for Initial Specified Amount on Other Insured Rider
Commissioners 2001 Standard Ordinary Tobacco or Non-Tobacco Mortality Table
[Jane Doe]
[Female Lives]
[Select]
Attained Age |
Monthly Rate | Attained Age | Monthly Rate | |||
35 | 0.07416 | 74 | 2.02333 | |||
36 | 0.07916 | 75 | 2.22000 | |||
37 | 0.08583 | 76 | 2.43583 | |||
38 | 0.08916 | 77 | 2.67333 | |||
39 | 0.09416 | 78 | 2.93583 | |||
40 | 0.10000 | 79 | 3.21916 | |||
41 | 0.10583 | 80 | 3.53583 | |||
42 | 0.11250 | 81 | 3.96583 | |||
43 | 0.12083 | 82 | 4.45083 | |||
44 | 0.13083 | 83 | 4.93416 | |||
45 | 0.14250 | 84 | 5.46833 | |||
46 | 0.15583 | 85 | 6.07000 | |||
47 | 0.17250 | 86 | 6.61583 | |||
48 | 0.19083 | 87 | 7.43750 | |||
49 | 0.21083 | 88 | 8.29583 | |||
50 | 0.23416 | 89 | 9.21083 | |||
51 | 0.26000 | 90 | 10.05416 | |||
52 | 0.28916 | 91 | 10.48083 | |||
53 | 0.32083 | 92 | 11.32000 | |||
54 | 0.35416 | 93 | 12.56500 | |||
55 | 0.39000 | 94 | 14.13666 | |||
56 | 0.43166 | 95 | 16.07666 | |||
57 | 0.47500 | 96 | 17.91916 | |||
58 | 0.52166 | 97 | 19.81583 | |||
59 | 0.56833 | 98 | 20.14083 | |||
60 | 0.61666 | 99 | 21.22833 | |||
61 | 0.66916 | |||||
62 | 0.72666 | |||||
63 | 0.78583 | |||||
64 | 0.85000 | |||||
65 | 0.92083 | |||||
66 | 0.99916 | |||||
67 | 1.08500 | |||||
68 | 1.18083 | |||||
69 | 1.28583 | |||||
70 | 1.40166 | |||||
71 | 1.53500 | |||||
72 | 1.68416 | |||||
73 | 1.84583 |
VL19 | Page 4C |
GLOSSARY
Accounts |
Allocation options including the Fixed Account and the Subaccounts of the Separate Account. | |
Administrative Office |
Our office located in [Clearwater, Florida]. | |
Amount at Risk |
The death benefit, as described in the Death Benefit Provisions, divided by 1.0024663, less the Cash Value of the Policy. | |
Anniversary |
The same day and month as the Policy Date for each succeeding year the Policy remains In Force. | |
Attained Age |
Attained Age refers to the Primary Insureds Issue Age plus the number of completed policy years. | |
Base Policy |
The Policy excluding any attached Riders. | |
Beneficiary |
The person or persons specified by the Owner to receive the Death Benefit Proceeds upon the Primary Insureds death. | |
Cash Value |
At the end of any Valuation Period, the Cash Value of the Policy is equal to the sum of the Subaccount Values plus the Fixed Account value. | |
Death Benefit Proceeds |
The amount payable upon the death of the Primary Insured in accordance with the Death Benefit Provisions. | |
Fixed Account |
An allocation option other than the Separate Account. The Fixed Account is part of Our general account. The portion of the Cash Value in the Fixed Account will earn interest as described in the Fixed Account Provisions. | |
Funds |
Designated mutual fund(s) registered with the SEC as investment companies under the Investment Company Act of 1940. Each Subaccount invests Net Premiums allocated to the Subaccount in a corresponding portfolio of a Fund. | |
In Force |
Condition under which the coverage under the Policy or Rider, if any, is active. | |
Initial Premium |
The amount which must be paid before coverage begins. The amount is shown on the Policy Schedule pages. | |
Internal Revenue Code |
The Internal Revenue Code of 1986, as amended. |
VL19 | Page 5 |
Issue Age | Issue Age refers to the Primary Insureds Age on his/her birthday nearest the Policy Date. | |
Lapse | Termination of the Policy at the end of the grace period. | |
Mailing Office | Our office located at [4333 Edgewood Road NE, Cedar Rapids, Iowa 52499]. | |
Maturity Date | The Anniversary nearest the Primary Insureds 100th birthday on which coverage under the Policy will terminate if the Primary Insured is living and the Policy is In Force. The Maturity Date may be extended as provided in the Extension of Maturity Date section of the General Provisions. | |
Minimum Monthly Guarantee Premium |
The Minimum Monthly Guarantee Premium for the first month is shown on the Policy Schedule pages. The cumulative Minimum Monthly Guarantee Premium is used by Us to determine whether a grace period will begin. | |
Monthiversary | The day of each month coinciding with the Policy Date. If there is no day in a calendar month which coincides with the Policy Date, the Monthiversary will be the first day of the next month. | |
Monthly Deduction | Set of charges We deduct from the Policys Cash Value on each Monthiversary. | |
Mortality and Expense Risk Charge |
A daily deduction from each Subaccount that is taken before determining the unit value of that Subaccount. | |
Net Premium | The portion of the premium available for allocation as set forth in the Policy Value Provisions. | |
Net Surrender Value | The amount payable upon Surrender in accordance with the Policy Value Provisions. | |
No Lapse Date | The date, as set forth on the Policy Schedule pages, prior to which the Policy will not lapse if certain conditions are met, even though the Net Surrender Value is insufficient to meet the Monthly Deduction. | |
No Lapse Guarantee | The guarantee that We will not begin a grace period provided the total premium received meets the requirements set forth in the No Lapse Guarantee provision. |
VL19 | Page 6 |
Planned Premium | Premiums paid according to a periodic payment schedule, which allows the Owner to pay level premiums at fixed intervals over a specified period of time. Planned Premiums are not required to be paid according to their schedule. The Owner may change the amount, frequency and period over which Planned Premiums are paid. | |
Policy Date | The date coverage is effective and Monthly Deductions commence under the Policy. Policy months, years and anniversaries are measured from the Policy Date, as shown on the Policy Schedule pages. | |
Premium Expense Charge |
The Premium Expense Charge is deducted from each premium payment before determining the Net Premium that will be credited to the Cash Value. | |
Reallocation Account | A portion of the Fixed Account where We hold the Net Premium(s) from the Record Date until the Reallocation Date. | |
Reallocation Date | The date on which any premiums are reallocated from the Reallocation Account to the Accounts as elected by the Owner on the application. The Reallocation Date is shown on the Policy Schedule pages. | |
Record Date | The date the Policy is recorded on Our books. The Record Date is shown on the Policy Schedule pages. | |
Reinstatement | Restoration of coverage under the Policy after it has Lapsed. Reinstatement is subject to the requirements of the Reinstatement section of the Premium Provisions. | |
Rider | Any attachment to the Policy that provides additional coverages or benefits. | |
SEC | The United States Securities and Exchange Commission. | |
Separate Account | A separate investment account shown on the Policy Schedule pages, which is composed of several Subaccounts established to receive and invest Net Premiums under the Policy. | |
Subaccount | A sub-division of the Separate Account. Each Subaccount invests exclusively in the shares of a specified Fund portfolio. | |
Surrender | The Termination of the Policy at the option of the Owner. | |
Termination | Condition under which coverage under the Policy or any Rider is no longer In Force. |
VL19 | Page 7 |
Valuation Date | Any day We are required by law to value the assets of the Separate Account. | |||
Valuation Period | The period commencing at the end of one Valuation Date and continuing to the end of the next succeeding Valuation Date. | |||
Written Notice | Written Notice means a notice by the Owner to Us requesting or exercising a right of the Owner as provided in the Policy provisions. In order for a notice to be considered a Written Notice: | |||
1. | It must be in writing and signed by the Owner; | |||
2. | It must be in a form acceptable to Us; and | |||
3. | It must contain the information and documentation, as determined in Our sole discretion, necessary for Us to take the action requested or for the Owner to exercise the right specified. | |||
A Written Notice will not be considered complete until all necessary supporting documentation required or requested by Us has been received by Us at Our Mailing Office. | ||||
GENERAL PROVISIONS | ||||
The Policy | The Policy is issued in consideration of the attached application and payment of the Initial Premium. The Policy, the attached application and any additional applications at the time of Reinstatement constitute the entire contract. All statements in these applications, in the absence of fraud, will be deemed representations and not warranties. No statement can be used to void the Policy or be used in defense of a claim unless it is contained in the written application. No Policy provision can be waived or changed except by endorsement. Such endorsement must be signed by Our President or Secretary. | |||
Upon notice to the Owner, We may amend the Policy: | ||||
1. | To make the Policy comply with any law or regulation issued by a government agency to which We are subject; | |||
2. | To assure qualification of the Policy under the Internal Revenue Code or other federal or state laws relating to variable life insurance policies; or | |||
3. | To reflect a change in the operation of the Separate Account. | |||
In the event that We so amend the Policy, We will send the Owner a copy of the amendment. The Owner may refuse such amendment by giving us notice in writing. Any refusal, however, may have adverse tax or other consequences to the Owner. | ||||
Ownership | The Policy belongs to the Owner. The Owner, as named in the application or subsequently changed, may exercise all rights under the Policy during the Primary Insureds lifetime including the right to transfer ownership. If the Owner should die during the Primary Insureds lifetime, ownership of the Policy will pass to the Owners estate if no contingent Owner is named. | |||
We will not be bound by any change in the ownership designation unless it is made by Written Notice. The change will be effective on the date the Written Notice is accepted by Us. If We request, the Policy must be returned to Our Mailing Office for endorsement. |
VL19 | Page 8 |
Beneficiary | The Beneficiary, as named in the application or subsequently changed, will receive the benefits payable upon the death of the Primary Insured. If the Beneficiary dies before the Primary Insured, the Contingent Beneficiary, if named, becomes the Beneficiary. | |||
If any Beneficiary dies at the same time as the Primary Insured, or within thirty (30) days after the Primary Insured, that Beneficiarys interest in the death benefit will end if We have not paid any benefits to that Beneficiary. If the interests of all designated Beneficiaries have ended when the Primary Insured dies, We will pay the death benefit to the Owner. If the Owner is not living at that time, We will pay the death benefit to the Owners estate. | ||||
We will not be bound by any change in the Beneficiary designation unless it is made by Written Notice. The change will be effective on the date the Written Notice was signed; however, no change will apply to any payment We made before the Written Notice is received. If We request, the Policy must be returned to Our Mailing Office for endorsement. | ||||
Assignment | The Policy may be assigned. We will not be bound by any assignment unless made by Written Notice and received at Our Mailing Office. The assignment will be effective on the date it was signed; however, no change will apply to any payment We made before Written Notice was received. We assume no responsibility for the validity of any assignment. | |||
Extended Maturity Date |
The Owner may request that the Maturity Date shown on the Policy Schedule pages be extended. The request must be in writing and received by Us at least ninety (90) days, but no more than one hundred and eighty (180) days, prior to the scheduled Maturity Date. Any Riders In Force on the scheduled Maturity Date will terminate on that date and will not be extended. Interest on any outstanding policy loan will continue to accrue during the period for which the Maturity Date is extended. | |||
The Maturity Date will be extended in accordance with either (1) or (2) below, as elected by the Owner at the time the request is made. If (2) is chosen, the Owner may elect to change to (1) at any time. Changes from (1) to (2) are not permitted. | ||||
1. | If the death benefit Option Type is other than Option A, the Option Type will be changed to Option A. Subsequent changes to the Option Type will not be allowed. On each Valuation Date, the Specified Amount will be adjusted to equal the Cash Value, and the Limitation Percentage will be 100%. No additional premium payments will be permitted. All future Monthly Deductions will be waived. | |||
2. | The Maturity Date will be automatically extended until the next Anniversary. At least ninety (90) days, but no more than one hundred and eighty (180) days, prior to each subsequent Anniversary, the Owner must request that the Maturity Date be extended each Policy year. All benefits and charges will continue as set forth in the Policy. Monthly Cost of Insurance Rates will be the then current Cost of Insurance Rates. |
VL19 | Page 9 |
Incontestability | The Policy shall be incontestable after it has been In Force for two (2) years from the Policy Date during the lifetime of the Primary Insured. For any portion of the Specified Amount that is issued as a result of a conversion, the contestability period is measured from the later of the policy date of the policy that was converted or the latest effective date of reinstatement of the converted policy. | |||
A new two (2) year contestability period shall apply to each increase in Specified Amount that requires evidence of insurability on the effective date of the increase. The new contestability period will apply only to statements made in the application for the increase. | ||||
If the Policy is reinstated, a new two (2) year contestability period (in addition to any remaining contestability period) shall apply from the date of the application for Reinstatement and will apply only to statements made in the application for Reinstatement. | ||||
Suicide | If the Primary Insured dies by suicide, while sane or insane, within two (2) years from the Policy Date, or two (2) years from the effective date of any Reinstatement of the Policy, the Policy shall terminate and Our total liability, including all Riders attached to the Policy, will be limited to the total premiums paid, less any loans and prior withdrawals, during such period. For any portion of the Specified Amount that is issued as a result of a conversion, the suicide period is measured from the later of the policy date of the policy that was converted or the latest effective date of reinstatement of the converted policy. | |||
If the Primary Insured dies by suicide, while sane or insane, within two (2) years from the effective date of any increase in insurance that requires evidence of insurability, Our total liability with respect to such increase will be its Cost of Insurance charges. | ||||
Issue Age and Sex | If the Primary Insureds date of birth or sex is not correctly stated, the death benefit will be adjusted based on what the Cost of Insurance charge for the most recent Monthly Deduction would have purchased based on the Primary Insureds correct date of birth and sex. No adjustment will be made to the Cash Value. | |||
Annual Report | This is a statement of the Policys activities during the policy year. We will send a report to the Owner at least once a year, or as requested. | |||
Termination | The Policy will terminate on the earliest of: | |||
1. | The Maturity Date unless extended; | |||
2. | The date of the Primary Insureds death; | |||
3. | The end of the grace period; or | |||
4. | The date of Surrender. |
VL19 | Page 10 |
Policy Payment | All proceeds to be paid upon Termination will be paid in one sum unless otherwise elected under the Settlement Options of the Policy. | |||
All payments and transfers from the Subaccounts will be processed as provided in the Policy unless one of the following situations exists: | ||||
1. | The New York Stock Exchange is closed; or | |||
2. | The SEC requires that trading be restricted or declares an emergency; or | |||
3. | The SEC allows Us to defer payments to protect Our policyowners. | |||
We reserve the right to defer the payment of any Fixed Account values for the period permitted by law, but not for more than six (6) months. | ||||
Conversion Rights | At any time upon written request within the first two (2) policy years, the Owner may elect to transfer all Subaccount Values to the Fixed Account without a transfer charge. | |||
Protection of Proceeds | Unless the Owner so directs in writing, no Beneficiary may assign any payments under the Policy before such payment is due. To the extent permitted by law, no payments under the Policy will be subject to the claims of creditors of any Beneficiary. | |||
DEATH BENEFIT PROVISIONS | ||||
Death Benefit | The death benefit is based upon the Specified Amount, Option Type and the Limitation Percentage applicable at time of death. | |||
Specified Amount | The Specified Amount is as shown on the Policy Schedule pages, unless changed in accordance with the Changes section or reduced by a cash withdrawal. | |||
Option Type | The Option Type is as shown on the Policy Schedule pages, unless changed in accordance with the Changes section of this provision. | |||
If Option Type A is in effect, the death benefit is the greater of: | ||||
1. | The Specified Amount; | |||
2. | The Limitation Percentage multiplied by the Cash Value of the Policy on the date of the Primary Insureds death; or | |||
3. | The amount required for the Policy to qualify as a life insurance contract under Section 7702 of the Internal Revenue Code. |
VL19 | Page 11 |
If Option Type B is in effect, the death benefit is the greater of: | ||||||
1. | The Specified Amount plus the Cash Value of the Policy on the date of the Primary Insureds death; | |||||
2. | The Limitation Percentage multiplied by the Cash Value of the Policy on the date of the Primary Insureds death; or | |||||
3. | The amount required for the Policy to qualify as a life insurance contract under Section 7702 of the Internal Revenue Code. | |||||
If Option Type C is in effect, the death benefit is the greater of: | ||||||
1. | The Option Type A benefit; | |||||
2. | The Specified Amount multiplied by the factor K plus the Cash Value of the Policy on the date of the Primary Insureds death, where the factor K is equal to the lesser of: | |||||
a. | 1; or | |||||
b. | .04 multiplied by (95 minus the Primary Insureds Attained Age at death). | |||||
The factor K will never be less than zero; or. | ||||||
3. | The amount required for the Policy to qualify as a life insurance contract under Section 7702 of the Internal Revenue Code. | |||||
Compliance with Federal Tax Code |
The Policy is intended to qualify under Section 7702 of the Internal Revenue Code as a life insurance contract for federal tax purposes. The provisions of the Policy (including any Rider or endorsement) will be interpreted or amended to ensure such qualification, regardless of any language to the contrary. | |||||
To the extent that the death benefit is increased to maintain qualification as a life insurance policy, We will make appropriate adjustments to any Monthly Deductions and any supplemental coverage and benefits (retroactively and prospectively) that are consistent with such an increase. We may deduct retroactive adjustments from the Cash Value or from any death benefits payable. Prospective adjustments will be reflected in the Monthly Deductions. | ||||||
Limitation Percentage | The Limitation Percentage is a percentage based on the Primary Insureds Attained Age at the beginning of the policy year equal to: |
Attained Age |
Limitation Percentage | |
40 and under | 250% | |
41 through 45 | 250% minus 7% for each Age over Age 40 | |
46 through 50 | 215% minus 6% for each Age over Age 45 | |
51 through 55 | 185% minus 7% for each Age over Age 50 | |
56 through 60 | 150% minus 4% for each Age over Age 55 | |
61 through 65 | 130% minus 2% for each Age over Age 60 | |
66 through 70 | 120% minus 1% for each Age over Age 65 | |
71 through 75 | 115% minus 2% for each Age over Age 70 | |
76 through 90 | 105% | |
91 through 95 | 105% minus 1% for each Age over Age 90 | |
96 through 99 | 100% |
VL19 | Page 12 |
Changes | After the third policy year, the Owner may change the Option Type by Written Notice. Changes will be effective on the first Monthiversary on or next following the day We receive Written Notice. No change in the Option Type will be allowed if the resulting Specified Amount would be less than the Band 1 Minimum Specified Amount shown on the Policy Schedule pages. | |||||
On the effective date of change to a new Option Type, the Specified Amount will be adjusted so that the Amount at Risk will be equal to that determined under the prior Option Type. | ||||||
The Specified Amount may be increased or decreased at any time after the third policy year by Written Notice. Until the end of the Surrender Charge period or the Anniversary nearest the Primary Insureds 65th birthday, We may limit any decrease to no more than 20% of the then current Specified Amount. All changes to the Specified Amount are subject to the following: | ||||||
1. | Any decrease will become effective on the first Monthiversary on or next following the date We receive Written Notice. Any such decrease will reduce the Specified Amount in the following order: | |||||
a. | Against insurance provided by the most recent increase; | |||||
b. | Against the next most recent increases successively; and | |||||
c. | Against insurance provided under the original application. | |||||
No decrease will be allowed if: | ||||||
a. | The Specified Amount after any requested decrease would be less than the Band 1 Minimum Specified Amount shown on the Policy Schedule pages; | |||||
b. | The requested decrease would force a cash withdrawal in order to maintain compliance with the definition of a life insurance contract as defined by the Internal Revenue Code and applicable regulations; or | |||||
c. | The decrease would cause the Policy to enter the grace period. | |||||
2. | Any request for an increase in Specified Amount must be applied for on a supplemental application and must include evidence of insurability satisfactory to Us. Such increase, if approved by Us, will be effective on the first Monthiversary on or next following Our Written Approval. We reserve the right to require any requested increase to be at least $50,000. | |||||
Only one change in the Option Type will be allowed within each policy year and only one change in the Specified Amount will be allowed within each policy year. | ||||||
If the Specified Amount is changed and the resulting Specified Amount causes a change in the Rate Band, the Premium Expense Charge and Cost of Insurance for the new band will apply starting with the effective date of change. |
VL19 | Page 13 |
Death Benefit Proceeds | The Death Benefit Proceeds is the amount payable by Us under the Policy provided the Policy has not terminated prior to the Primary Insureds death. Except as provided in the Suicide section of the General Provisions, the Death Benefit Proceeds will be equal to: | |||
1. | The death benefit; minus | |||
2. | Any Monthly Deductions due under the Recovery of Monthly Deductions provision; minus | |||
3. | Any outstanding policy loan; minus | |||
4. | Any accrued loan interest. | |||
PREMIUM PROVISIONS | ||||
Payment | The Initial Premium shown on the Policy Schedule pages must be paid on or before the Policy Date. All premiums after the Initial Premium are payable at Our Mailing Office. | |||
Premiums | The amount and frequency of Planned Premiums are shown on the Policy Schedule pages. The amount and frequency may be changed upon request, subject to Our approval. | |||
While the Policy is In Force, additional premiums may be paid at any time prior to the Maturity Date. We reserve the right to limit or refund any premium if: | ||||
1. | The amount is below Our current minimum payment requirement; or | |||
2. | The premium would increase the death benefit by more than the amount of the premium; or | |||
3. | The premium would disqualify the Policy as a life insurance contract as defined by the Internal Revenue Code and applicable regulations. | |||
We may require evidence of insurability before accepting a premium that would increase the death benefit by more than the amount of the premium. | ||||
Grace Period | If the Net Surrender Value on any Monthiversary is not sufficient to cover the Monthly Deductions on such day, We will mail a notice to the last known address of the Owner and any assignee of record. A grace period of sixty-one (61) days after the mailing date of the notice will be allowed for the payment of premiums. The notice will specify the minimum payment and the final date on which such payment must be received by Us to keep the Policy In Force. The Policy will remain In Force during the grace period. If the amount due is not received by Us within the grace period, all coverage under the Policy and any Riders will terminate without value at the end of the grace period. |
VL19 | Page 14 |
No Lapse Guarantee | Until the No Lapse Date shown on the Policy Schedule pages, no grace period will begin provided the total premiums received (minus any withdrawals, outstanding loans, accrued loan interest and Surrender Charge assessed upon a decrease in the Specified Amount that has been deducted from the Cash Value) equals or exceeds the Minimum Monthly Guarantee Premium times the number of months since the Policy Date, including the current month. The Minimum Monthly Guarantee Premium is shown on the Policy Schedule pages, unless changed due to a requested change under the Policy. Upon such change, the Owner will be notified of the new Minimum Monthly Guarantee Premium and the effective date for the new premium. | |||||
Reinstatement | If the Policy Lapses, it may be reinstated subject to the following: | |||||
1. | Receipt at Our Mailing Office of a Written Notice requesting Reinstatement. Such notice must be within five (5) years after the date of Termination and prior to the Maturity Date; and | |||||
2. | Receipt of evidence of insurability satisfactory to Us; and | |||||
3. | Receipt at Our Mailing Office of a Net Premium sufficient to reinstate the Policy. | |||||
If reinstated after the No Lapse Date, the required premium will be an amount sufficient to provide a Net Premium, as follows: | ||||||
a. | Any uncollected Monthly Deductions due up to the time of Termination; plus | |||||
b. | Two (2) Monthly Deductions due in advance at the time of Reinstatement; plus | |||||
c. | An amount sufficient to increase the Cash Value above the surrender charges in effect at the time of Reinstatement. | |||||
If reinstated before the No Lapse Date, the required premium will be the lesser of the premium described above or the following: | ||||||
a. | The total Minimum Monthly Guarantee Premium from issue through the month of Lapse; plus | |||||
b. | Two (2) months of Minimum Monthly Guarantee Premium; minus | |||||
c. | Any premiums already paid net of any withdrawals, outstanding loans and accrued loan interest. | |||||
The effective date of a Reinstatement shall be the date We approve the application for Reinstatement. Any policy loan as of the date of Termination will not be reinstated. Any Cash Value equal to the policy loan on the date of Reinstatement will also not be reinstated. On the first Monthiversary following Reinstatement, any previously uncollected Monthly Deductions due up to the time of the Policys Termination date will be taken. |
VL19 | Page 15 |
SEPARATE ACCOUNT PROVISIONS | ||||||
The Separate Account | The variable benefits under the Policy are provided through the Separate Account as shown on the Policy Schedule pages. The assets of the Separate Account are Our property. Assets equal to the reserve and other contractual liabilities under all policies issued in connection with the Separate Account will not be charged with liabilities arising out of any other business We may conduct. If the assets of the Separate Account exceed the liabilities arising under the policies supported by the Separate Account, the excess may be used to cover the liabilities of Our general account. The assets of the Separate Account shall be valued as often as any policy benefits vary, but at least monthly. | |||||
Subaccounts | The Separate Account has various Subaccounts with different investment objectives. We reserve the right to add or remove any Subaccount of the Separate Account. Income, if any, and any gains or losses, realized or unrealized, from assets in each Subaccount are credited to, or charged against, the amount allocated to that Subaccount without regard to income, gains or losses in other Subaccounts. Any amount charged against the investment base for federal or state income taxes will be deducted from that Subaccount. The assets of each Subaccount are invested in shares of a corresponding Fund portfolio. The value of a portfolio share is based on the value of the assets of the portfolio determined at the end of each Valuation Period in accordance with applicable law. | |||||
Market Timing | One or more of the Subaccounts may have been designed to accommodate large and frequent transfers. Large and frequent transfers may increase transaction costs and negatively affect performance of Subaccounts that invest in Fund(s) that are not designed to accommodate these types of transfers. We may reject any premium payment or transfer request if, in our judgment or in the judgment of any underlying Fund, the payment or transfer or series of transfers would have a negative impact on the Subaccounts or Fund portfolios operations, or if a Fund portfolio would reject our purchase order. We may impose other restrictions on transfers, levy a transfer fee or even prohibit transfers if the Owner, in our view, has abused, or appears likely to abuse, the transfer privilege. We may, at the direction of any underlying Fund, provide Owner transaction data to the underlying Fund and block Owner trades involving certain Subaccounts. | |||||
We may reject or restrict transfer requests or require that any transfer request be made in writing via United States Postal Service First Class mail, or any other reasonable remedial measures. | ||||||
We may implement, administer and assess a charge for any fee or restriction imposed by a Fund, including redemption fees imposed by a Fund on Subaccount assets that are redeemed out of the Fund in connection with a transfer. The Fund determines the amount of any redemption fee, and the fee would be retained by or paid to the Fund. Any redemption fees imposed by a Fund would not be retained by or paid to Us. |
VL19 | Page 16 |
Transfers | The Owner may transfer all or a portion of the Policys value in each Subaccount to other Subaccounts or the Fixed Account subject to the limitations imposed under the Transfers section of the Fixed Account Provisions of the Policy. We may charge a $25 fee for each transfer in excess of twelve (12) per policy year. This charge will be deducted from the funds transferred. A request for a transfer must be made in a form satisfactory to Us. The transfer will ordinarily take effect on the first Valuation Date on or following the date the request is received at Our Mailing Office. We may establish rules regarding, among other things, the minimum and maximum amounts you may transfer and the frequency of transfers. | |||
Changes | As permitted by applicable law, We may make changes to the Separate Account and Subaccounts which may include: | |||
1. | Transferring assets of the Separate Account or any Subaccount, which We determine to be associated with the class of contracts to which the Policy belongs, to another separate account or subaccount. In the event We make such a transfer, the term Separate Account or Subaccount as used in the Policy shall mean the separate account or subaccount to which We transfer the assets; | |||
2. | Removing, combining or adding Subaccounts and making the combined or added Subaccounts available for allocation of Net Premiums; | |||
3. | Closing certain Subaccounts to allocations of new Net Premiums by current or new Owners; | |||
4. | Combining the Separate Account or any Subaccount(s) with one or more other Separate Accounts or Subaccounts; | |||
5. | Establishing additional Separate Accounts or Subaccounts to invest in new portfolios of the Fund(s). | |||
6. | Operating the Separate Account as a management investment company; | |||
7. | Managing the Separate Account at the direction of a committee; | |||
8. | Endorsing the Policy, as permitted by law, to reflect changes to the Separate Account and Subaccounts as may be required by applicable law; | |||
9. | Changing the investment objective of a Subaccount; | |||
10. | Substituting, adding, or deleting Fund portfolios in which Subaccounts currently invest Net Premiums, to include portfolios of newly designated Funds; | |||
11. | Funding additional classes of variable life insurance contracts through the Separate Account; and | |||
12. | Restricting or eliminating any voting privileges of owners or other persons who have voting privileges in connection with the operation of the Separate Account. |
VL19 | Page 17 |
As required by law or regulation, We will not make changes unless We first file a statement with and receive approval from the appropriate official of the State of Our domicile, or unless such change is deemed approved in accordance with law or regulation. If required, such approval of any change will also be filed with the insurance department of the State where the Policy is delivered. | ||||
Unit Value | Some of the policy values fluctuate with the investment results of the Subaccounts. In order to determine how investment results affect the policy values, a unit value is determined for each Subaccount. The unit value of each Subaccount was originally established at $ 10 per unit. The unit value may increase or decrease from one Valuation Period to the next. Unit values also will vary between Subaccounts. The unit value of any Subaccount at the end of a Valuation Period is the result of: | |||
1. | The total value of the assets held in the Subaccount. This value is determined by multiplying the number of shares of the designated Fund portfolio owned by the Subaccount times the net asset value per share; minus | |||
2. | The accrued risk charge for adverse mortality and expense experience. The daily amount of this charge is equal to the daily net assets of the Subaccount multiplied by the daily equivalent of the Mortality and Expense Risk Charge. The maximum annual factor for the Mortality and Expense Risk Charge is shown on the Policy Schedule pages; minus | |||
3. | The accrued amount of reserve for any taxes or other economic burden resulting from the application of tax laws that are determined by Us to be properly attributable to the Subaccount; and the result divided by | |||
4. | The number of outstanding units in the Subaccount. | |||
The use of the unit value in determining contract values is described in the Policy Value Provisions. | ||||
FIXED ACCOUNT PROVISIONS |
Fixed Account | The Owner may allocate any portion of the Net Premiums to the Fixed Account. The Fixed Account is part of Our general account. Our general account consists of all assets that We own except those in the Separate Account and other separate accounts We may have. Except as limited by law, We have sole control over investment of the assets in Our general account. The Owner may allocate Net Premiums to the Fixed Account and transfer amounts between the Separate Account and the Fixed Account (subject to the following Transfers section). | |||
Fixed Account Interest Rate |
The Net Premium allocated to the Fixed Account will accrue interest from the Valuation Date on which We allocate it to the Fixed Account, as described in the Policy Value Provisions. Interest on the Fixed Account will be compounded daily at a minimum guaranteed effective annual interest rate of 3% per year. We may declare from time to time various higher current interest rates on the unloaned portion of the Fixed Account. We will never declare an interest rate that is lower than the guaranteed minimum effective annual interest rate. |
VL19 | Page 18 |
Transfers | On transfers from the Fixed Account to a Subaccount, We may impose the following limitations: | |||
1. | Written Notice must be received by Us within thirty (30) days after an Anniversary; | |||
2. | The transfer will take place on the date We receive such Written Notice. | |||
3. | The maximum amount that may be transferred is the greater of: (a) 25% of the amount in the Fixed Account; or (b) the amount transferred in the prior policy year from the Fixed Account. | |||
Unless We otherwise consent, transfers or allocation of premiums to the Fixed Account may be restricted if the Fixed Account Value excluding the loan reserve following the transfer or allocation will exceed the Fixed Account Value Limit shown on the Policy Schedule pages. This restriction will not apply for any transfer made under the Conversion Rights section of the General Provisions of the Policy. | ||||
We may charge a $25 fee for each transfer in excess of twelve (12) per policy year. This charge will be deducted from the funds transferred. | ||||
We may defer payment of any amounts from the Fixed Account for no longer than six (6) months after We receive such Written Notice. | ||||
POLICY VALUE PROVISIONS | ||||
Net Premium | The Net Premium equals the premium paid during a policy year multiplied by 100% minus the applicable Premium Expense Charge shown on the Policy Schedule pages. | |||
Allocation of Net Premiums |
Net Premiums will be allocated to the Subaccounts of the Separate Account and the Fixed Account on the first Valuation Date on or following the date the premium is received at Our Mailing Office; except any Net Premium received prior to the Policy Date will be allocated on the first Valuation Date on or following the Policy Date. All Net Premiums allocated prior to the Reallocation Date will be allocated to the Reallocation Account. On the first Valuation Date on or following the Reallocation Date, the values in the Reallocation Account will be transferred in accordance with the Owners allocation as shown in the application. | |||
We reserve the right to limit any allocation to any Account to no less than 1%. No fractional percentages may be permitted. The allocation may be changed by the Owner. We reserve the right to impose a charge of $25 for each change of allocation in excess of one per policy year quarter. The request for change of allocations must be in a form satisfactory to Us. The allocation change will be effective on the date the request for change is recorded by Us. | ||||
Monthly Deductions | On each Monthiversary, a monthly deduction for the Policy will be made equal to the sum of the following: | |||
1. | The Monthly Policy Charge as shown on the Policy Schedule pages; | |||
2. | The Monthly Cost of Insurance for the Policy; | |||
3. | The charge for benefits provided by Riders attached to the Policy; | |||
4. | The Surrender Charge upon a decrease in the Specified Amount, on the effective date of the decrease. |
VL19 | Page 19 |
Deductions will be withdrawn from each account in proportion to the value each bears to the Cash Value. | ||||||
Recovery of Monthly Deductions |
If the Net Surrender Value on any Monthiversary is not sufficient to cover the Monthly Deduction due on such day, the Cash Value of the Policy may be negative. This may occur while the Policy is being supported by the No Lapse Guarantee or during the grace period. Any such negative values will be accrued without any accumulation of interest and must be repaid by the Owner out of future premiums. If the Primary Insured dies before the Owner pays the amount due, We will subtract the amount required to provide insurance to the date the Primary Insured died from any Death Benefit Proceeds. | |||||
Monthly Policy Charge | Both the Initial and Guaranteed Monthly Policy Charge are shown on the Policy Schedule pages. It is Our intention to charge the Initial Monthly Policy Charge each month; however, We reserve the right to increase the Monthly Policy Charge up to the Guaranteed Monthly Policy Charge after the first policy year. Any change in this charge will be applied uniformly to all policies in effect for the same length of time. | |||||
Monthly Cost of Insurance |
The Monthly Cost of Insurance on each Monthiversary is determined as follows: | |||||
1. | Divide the death benefit on the Monthiversary by 1.0024663; and | |||||
2. | Reduce the result by the Cash Value on the Monthiversary in the following order until all Cash Value has been applied: | |||||
a. | Against the insurance provided under the original application; | |||||
b. | Against the insurance provided by the oldest increase; | |||||
c. | Against the insurance provided by the next oldest increase and each successive increase; | |||||
d. | Against the insurance provided by the most recent increase; | |||||
This results in the Amount at Risk for the Policy. | ||||||
3. | Divide the Amount at Risk by 1,000 to arrive at the number of thousands of Amount at Risk. | |||||
4. | Multiply the number of thousands of Amount at Risk by the appropriate Monthly Cost of Insurance Rate(s) to arrive at the Monthly Cost of Insurance. |
VL19 | Page 20 |
Monthly Cost of Insurance Rates |
The Monthly Cost of Insurance Rates will vary by the Primary Insureds sex, Age at issue, Age at the time of any increase in Specified Amount, Rate Band, plan of insurance, Rate Class, any rating and the duration from the Policy Date or the date of any increase in Specified Amount. Different Monthly Cost of Insurance Rates may apply to increases in the Specified Amount following the Policy Date. Monthly Cost of Insurance Rates may be changed by Us from time to time. A change in the Monthly Cost of Insurance Rates will apply to all persons of the same Attained Age, sex, plan of insurance, Rate Band, Rate Class, any rating and whose policies or increases have been in effect for the same length of time. The rates, before applying any rating, will not exceed those shown in the Table of Guaranteed Maximum Life Insurance Rates. | |||
Subaccount Value | At the end of any Valuation Period, the Subaccount Value is equal to the number of units that the Policy has in the Subaccount, multiplied by the unit value of that Subaccount. | |||
The number of units that the Policy has in each Subaccount is equal to: | ||||
1. | The initial units purchased on the Reallocation Date; plus | |||
2. | Units purchased at the time additional Net Premiums are allocated to the Subaccount; plus | |||
3. | Units purchased through transfers from another Subaccount or the Fixed Account; minus | |||
4. | Those units that are redeemed to pay for Monthly Deductions as they are due; minus | |||
5. | Any units that are redeemed to pay for cash withdrawals; minus | |||
6. | Any units that are redeemed as part of a transfer to another Account. | |||
The number of units purchased in or redeemed from a Subaccount is determined by dividing the dollar amount of each purchase or redemption by the unit value of the Subaccount as of the first Valuation Date on or following the date of purchase or redemption. | ||||
Fixed Account Value | At the end of any Valuation Period, the Fixed Account value is equal to: | |||
1. | The sum of all Net Premiums allocated to the Fixed Account; plus | |||
2. | Any amounts transferred from a Subaccount to the Fixed Account; plus | |||
3. | Total interest credited to the Fixed Account; minus | |||
4. | Any amounts charged to pay for Monthly Deductions as they are due; minus | |||
5. | Any amounts withdrawn from the Fixed Account to pay for cash withdrawals; minus | |||
6. | Any amounts transferred from the Fixed Account to a Subaccount. | |||
Cash Value | At the end of any Valuation Period, the Cash Value of the Policy is equal to the sum of the Subaccount Values plus the Fixed Account value. | |||
Surrender | While the Policy is In Force, the Owner may Surrender the Policy for the Net Surrender Value. Payment will usually be made within seven days of Written Notice, subject to the Policy Payment section of the General Provisions. |
VL19 | Page 21 |
Net Surrender Value | The Net Surrender Value is the amount payable upon Surrender of the Policy. At the end of each Valuation Period, the Net Surrender Value is equal to: | |||
1. | The Cash Value as of such date; minus | |||
2. | Any Surrender Charge as of such date; minus | |||
3. | Any outstanding policy loan; minus | |||
4. | Any accrued loan interest. | |||
Surrender Charge | During the first fifteen (15) policy years, a Surrender Charge will be incurred upon Surrender of the Policy. This charge will be based upon the Table of Surrender Charges shown on the Policy Schedule pages. | |||
During the first fifteen (15) years following each increase in the Specified Amount, an additional Surrender Charge will be effective based upon the amount of the increase and the Attained Age and Rate Class of the Primary Insured at the time of the increase. | ||||
Surrender Charge Upon Decrease in Specified Amount |
During the first fifteen (15) policy years, or during the fifteen (15) year period subsequent to each increase in Specified Amount, Surrender Charges will be assessed against the Cash Value upon a requested decrease in coverage. For decreases which reduce any increase in its entirety, the full Surrender Charge as determined under the Surrender Charge provisions above will be assessed against that portion of the decrease equal to the increase. For decreases that partially reduce any previous increase in Specified Amount or the amount in (d) below, a partial Surrender Charge will be assessed. This partial Surrender Charge will be equal to: | |||
1. | The amount of the Specified Amount decrease; multiplied by | |||
2. | The Surrender Charge shown on the Table of Surrender Charges applicable to that portion of the reduction in Specified Amount. | |||
Surrender Charges upon a decrease in Specified Amount will be charged in the following order: | ||||
a. | The Surrender Charges for the insurance provided by the most recent increase; | |||
b. | The Surrender Charges for insurance provided by the next most recent increase and each next most recent increase; | |||
c. | The Surrender Charges for insurance provided by the oldest increase; | |||
d. | The Surrender Charges for the insurance provided under the original application. | |||
A Surrender Charge will not be deducted from the Cash Value when a Specified Amount decrease results from (a) a change in Option Type, or (b) a withdrawal when the death benefit is Option Type A, as described in the Withdrawals Provision below. If a Surrender Charge is deducted due to a decrease in Specified Amount, any future Surrender Charges incurred during the Surrender Charge period will be based on the reduced Specified Amount. |
VL19 | Page 22 |
Withdrawals | Cash withdrawals may be made any time after the first policy year and while the Policy is In Force. Only one withdrawal is allowed during a policy year. The amount of a withdrawal may be limited to no less than $500 and to no more than 10% of the Net Surrender Value. After the first ten (10) policy years, the amount of a withdrawal may be limited to no less than $500 and to no more than the Net Surrender Value less $500. The remaining Net Surrender Value following a withdrawal may not be less than $500. The request for a withdrawal must be by Written Notice to Us. A processing fee of the lesser of 2% of the amount withdrawn or $ 25 will be deducted from each withdrawal amount and the balance paid to the Owner. | |
When a withdrawal is made, the Cash Value shall be reduced by the amount of the withdrawal. If the death benefit is Option Type A or if the death benefit is Option C and the Attained Age is seventy-one (71) or greater, the Specified Amount shall also be reduced by the amount of the withdrawal. These reductions will result in a reduction in the death benefit, which may be determined from the Death Benefit section. If the Specified Amount following the withdrawal results in a change in the Rate Band, the Premium Expense Charge and Cost of Insurance for the new band will apply starting with the effective date of the withdrawal. No withdrawal will be allowed if the resulting Specified Amount would be less than the Band 1 minimum Specified Amount shown on the Policy Schedule pages. | ||
The Accounts from which the withdrawal will be made may be specified in the Written Notice. If no Account is specified, the withdrawal amount will be withdrawn from each Account in accordance with the Owners current premium allocation instructions. Payment will usually be made within seven days of Written Notice, subject to the Policy Payment section of the General Provisions of the Policy. | ||
Continuation of Insurance |
Subject to the Grace Period section of the Premium Provisions, insurance coverage under the Policy and any benefits provided by Rider will be continued In Force until the Net Surrender Value is insufficient to cover the Monthly Deductions. This provision shall not continue the Policy beyond the Maturity Date nor continue any Rider beyond the date for its Termination, as provided in the Rider. | |
Insufficient Value | If the Net Surrender Value on any Monthiversary is not sufficient to cover the Monthly Deductions then due, the Policy shall terminate subject to the Grace Period section of the Premium Provisions. | |
Basis of Computations | Policy values and reserves are at least equal to those required by law. If required, a detailed statement of the method of computation of values and reserves has been filed with the insurance department of the State in which the Policy was delivered. |
VL19 | Page 23 |
Policy Loans | After the first policy year and during the continuance of the Policy, the Owner can borrow against the Policy an amount which is not greater than 90% of the Cash Value, less any Surrender Charges and any outstanding policy loan, including accrued interest. The amount of any policy loan may be limited to no less than $500, except as noted below. | |||
When a loan is made, an amount equal to the loan will be withdrawn from the Accounts and transferred to the loan reserve. The loan reserve is a portion of the Fixed Account used as collateral for any policy loan. We will credit the amount in the loan reserve with an effective annual interest rate of 3%. The Owner may specify the Account(s) from which the withdrawal will be made. If no Account is specified, the withdrawal will be made from each Account in accordance with the Owners current premium allocation instructions. | ||||
The loan date is the date We process a loan request. Payment will usually be made within seven (7) days of the date We receive proper loan request, subject to the Policy Payment section of the General Provisions of the Policy. The Policy will be the sole security for the loan. | ||||
While the Policy is In Force, any loan may be repaid. Any amounts received on the Policy will be considered premiums unless clearly marked as loan repayments. | ||||
On each Anniversary, We charge an annual interest rate on each policy loan. Interest not paid when due will be added to the loan and will bear interest up to the maximum policy loan rate. The annual interest rate is guaranteed not to exceed 4%, payable in arrears. From time to time, We may declare various lower policy loan interest rates. We may also apply different loan interest rates to different parts of the loan. | ||||
At each Anniversary, We will compare the amount of the outstanding loan to the amount in the loan reserve. At each such time, if this amount plus any accrued loan interest exceeds the amount in the loan reserve, We will withdraw the difference from the Accounts and transfer it to the loan reserve, in the same fashion as when a loan is made. If the amount in the loan reserve exceeds the amount of the outstanding loan, plus any accrued loan interest, We will withdraw the difference from the loan reserve and transfer it to the Accounts in accordance with the Owners current allocation instructions. However, We may require that the transfer be directed to the Fixed Account if such loans were originally transferred from the Fixed Account. | ||||
SETTLEMENT OPTIONS | ||||
Effective Date and First Payment Due |
The effective date of a settlement provision will be either the date of Surrender or the date of death. The first payment due will be on the effective date of the settlement provision. | |||
Betterment of Monthly Annuity |
The payee will receive the greater of: | |||
1. | The income rate guaranteed in the Policy; or | |||
2. | The income rates in effect for Us at the time income payments are made. |
VL19 | Page 24 |
Availability | If the payee is not a natural person, an optional method of settlement is only available with Our permission. No optional method of settlement is available if: | |||
1. | The payee is an assignee; or | |||
2. | The periodic payment is less than $100. | |||
Age | Age, when required, means age nearest birthday on the effective date of the option. An adjustment will be made in determining the age of the payee(s) when using the tables under Options B and C to obtain the amount of each monthly payment for each $ 1,000.00 of proceeds applied. The monthly payment for other age or sex combinations will be furnished upon request. |
Age Adjustment Table | ||||
Annuity Commencement Date |
Adjusted Age | |||
Before 2010 | Actual Age | |||
2010-2019 | Actual Age minus 1 | |||
2020-2026 | Actual Age minus 2 | |||
2027-2033 | Actual Age minus 3 | |||
2034-2040 | Actual Age minus 4 | |||
After 2040 | Determined by Us | |||
Proof of Age and Sex |
Prior to making the first payment under the Policy, We reserve the right to require satisfactory evidence of the birth date and sex of any payee. | |||
Proof of Survival | Prior to making any payment under the Policy, We reserve the right to require satisfactory evidence that any payee is alive on the due date of such payment. | |||
Interest | All settlement options are based on the Annuity 2000 Mortality Table with projection, if applicable, and a guaranteed annual interest rate of 3%. |
VL19 | Page 25 |
TABLE OF OPTIONAL METHODS OF SETTLEMENT
DESCRIPTION AND TABLES OF MONTHLY INSTALLMENT
PER $1,000 OF PROCEEDS
Option A Fixed Period | The proceeds will be paid in equal installments. The amount of each monthly installment is determined by multiplying the appropriate factor times the proceeds as of the effective date of settlement divided by 1,000. The installments will be paid over a fixed period determined from the following table: | |||
Fixed Period (in months) |
Factor | |||
60 | 17.91 | |||
120 | 9.61 | |||
180 | 6.87 | |||
240 | 5.51 |
Option B Life Income | The proceeds will be paid in equal installments determined from the following table. Such installments are payable: | |||
1. | During the payees lifetime only (Life Annuity); or | |||
2. | During a 10-year fixed period certain and for the payees remaining lifetime (Certain Period); or | |||
3. | Until the sum of installments paid equals the annuity proceeds applied and for the payees remaining lifetime (Installment Refund). |
Life Annuity | Certain Period | Installment Refund | ||||||||||
Payees Adjusted Age |
Male | Female | Male | Female | Male | Female | ||||||
55 |
4.18 | 4.01 | 4.13 | 3.99 | 3.99 | 3.89 | ||||||
60 |
4.64 | 4.42 | 4.57 | 4.38 | 4.36 | 4.23 | ||||||
65 |
5.30 | 4.98 | 5.14 | 4.89 | 4.83 | 4.67 | ||||||
70 |
6.21 | 5.78 | 5.86 | 5.58 | 5.43 | 5.26 | ||||||
75 |
7.46 | 6.94 | 6.70 | 6.45 | 6.22 | 6.04 | ||||||
80 |
9.23 | 8.66 | 7.61 | 7.46 | 7.24 | 7.08 | ||||||
85 |
11.72 | 11.24 | 8.44 | 8.40 | 8.55 | 8.45 |
Option C Joint and Survivor Life Income |
The proceeds will be paid in equal installments during the joint lifetime of two payees: |
1. Continuing upon the death of the first payee for the remaining lifetime of the survivor; or |
2. Reduced by one-third upon the death of the first payee and continuing for the remaining lifetime of the survivor. | |
Joint Life Income with Full Amount to Survivor |
Joint Life Income with 2/3 to Survivor |
The sample ages shown are Adjusted Ages
Male |
Female 55 |
60 | 65 | 70 | 75 | Male | Female 55 |
60 | 65 | 70 | 75 | |||||||||||
55 |
3.61 | 3.74 | 3.86 | 3.96 | 4.04 | 55 | 3.91 | 4.09 | 4.29 | 4.51 | 4.75 | |||||||||||
60 |
3.72 | 3.91 | 4.09 | 4.26 | 4.39 | 60 | 4.08 | 4.30 | 4.54 | 4.81 | 5.11 | |||||||||||
65 |
3.81 | 4.06 | 4.32 | 4.57 | 4.80 | 65 | 4.28 | 4.53 | 4.83 | 5.17 | 5.54 | |||||||||||
70 |
3.88 | 4.18 | 4.52 | 4.89 | 5.25 | 70 | 4.49 | 4.79 | 5.15 | 5.57 | 6.05 | |||||||||||
75 |
3.93 | 4.27 | 4.69 | 5.17 | 5.70 | 75 | 4.70 | 5.05 | 5.47 | 5.99 | 6.61 |
VL19 | Page 26 |
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
Flexible Premium Variable Life Insurance Policy
Death Benefit Proceeds Payable at Death of Primary Insured Prior to Maturity Date
Net Surrender Value Payable at Maturity Date
Flexible Premiums Payable During Lifetime of Primary Insured Until Maturity Date
Non-Participating No Dividends
Some Benefits Reflect Investment Results
VL19 |
EXHIBIT 26(e)
Application for Flexible Premium Variable Life Insurance Policy
SPECIMEN
WRL
INSURANCE ANNUITIES
Western Reserve Life Assurance Co. of Ohio
FEB and FWP
Life Insurance Application
MAIL TO:
4333 Edgewood Road NE,
Cedar Rapids, Iowa 52499
1-800-322-3796
THIS APPLICATION PREPARED FOR
Application Prepared by
Broker/Dealer
U000312 WFG
SPECIMEN
Application Checklist
Important Reminders
DO:
Complete the entire application (front and back).
Print application in blue or black ink.
Have applicant initial all changes.
Obtain all required signatures.
Complete and sign the Agents Report.
Include certification if a trust or corporation is owner and/or beneficiary of the policy.
DONT:
Use pencil or whiteout.
Accept or send money on applications that total more than $1,000,000.00.
Submit an agent check as the initial premium.
Submit starter checks.
PLEASE MAKE SURE ALL APPLICABLE FORMS WITHIN THE PACKET ARE COMPLETED
Leave with Applicant
THE FOLLOWING PAGES NEED TO BE LEFT WITH THE CONSUMER:
Privacy Notice
Conditional Receipt (If money taken with application)
Notices page (Notice of Investigative Report, Disclosure of Information, and Insurance Information Practices)
HIPAA Authorization for Release of Health Related Information
Agent Comments
SPECIMEN
[WRL Freedom Elite Builder and WRL Freedom Wealth Protector]
WRL WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO Individual Life Insurance Application
Mailing Address: [4333 Edgewood Road NE, Cedar Rapids, IA 52499]
Administrative Office: [P.O. Box 5068, Clearwater, FL 33758-5068]
SECTION 1. PROPOSED PRIMARY INSURED/OWNER SPECIFIED AMOUNT $
If proposed Contingent Owner is named, please use Additional Information Supplement.
1. Last Name First Name M.I.
2. Address (Cannot be a P.O. Box) Apt# City
State Zip Code 3. Years at Address 4. Home Phone ( ) 5. Driver License Number State
6. Sex Male Female 7. Date of Birth MM-DD-YYYY 8. Age 9. Place of Birth State/Country 10. Social Security Number
11. Height (ft. in.) 12. Weight (lbs.) 13. Marital Status 14. Employer #Years
15. Employers Address and Phone Number
16. Occupation & Duties
17. Have you used TOBACCO or any other product containing NICOTINE in the last 12 months? No Yes Date last used
18. Rate Class Quoted: Ult Select Select Ult Standard Standard Juvenile
SECTION 2. PROPOSED OTHER/JOINT INSURED SPECIFIED AMOUNT $
Check if proposed Joint Insured is also Joint Owner (FWP Only)
If more than one Other Insured, please use Additional Information Supplement.
We will allow the OIR death benefit recipient to be a choice of: Owner Primary Insured Same Beneficiary as the base policy
Other
1. Last Name First Name M.I.
2. Address (Cannot be a P.O. Box) Apt# City
State Zip Code 3. Years at Address 4. Home Phone ( ) 5. Driver License Number State
6. Sex Male Female 7. Date of Birth MM-DD-YYYY 8. Age 9. Place of Birth State/Country 10. Social Security Number
11. Height (ft. in.) 12. Weight (lbs.) 13. Marital Status 14. Relationship to proposed Primary Insured
15. Employer #Years
16. Employers Address and Phone Number
17. Occupation & Duties
18. Have you used TOBACCO or any other product containing NICOTINE in the last 12 months? No Yes Date last used
19. Rate Class Quoted: Ult Select Select Ult Standard Standard Juvenile
SECTION 3. APPLICANT/OWNER IF OTHER THAN THE PROPOSED PRIMARY INSURED If ownership is corporation, partnership or institutional body, please complete the Entity Certification of Authority form. If ownership is a trust, please complete the Trustee Certification Trust form. Attach a copy of the first page and the signature page of the Trust.
1. Last Name First Name M.I.
2. Address (Cannot be a P.O. Box) Apt# City
State Zip Code 3. Home Phone ( ) 4. Social Security Number / Tax ID #
5. Sex Male Female 6. Date of Birth/Trust Date MM-DD-YYYY 7. Relationship to proposed Primary Insured
8. Are you a citizen of USA Other Country Type of VISA
U000312 1
SPECIMEN
SECTION 4. CHILDRENS BENEFIT RIDER (Not available on FWP) SPECIFIED AMOUNT $
Name Relationship Date of Birth (mmddyyyy) Height (ft. in.) Weight (lbs.)
Are all children listed? Yes No Are children living with proposed Primary Insured? Yes No
If not, explain why:
SECTION 5. PRIMARY BENEFICIARY If percentage shares are not listed below, they will be divided equally among the beneficiaries. If ownership or beneficiary is a corporation, partnership or institutional body, please complete the Entity Certification of Authority form. If ownership or beneficiary is a trust, please complete the Trustee Certification Trust form. Attach a copy of the first page and the signature page of the Trust.
Name Percent Relationship Social Security Number/Tax ID#
Total 100
SECTION 6. CONTINGENT BENEFICIARY If percentage shares are not listed below, they will be divided equally among the beneficiaries.
Name Percent Relationship Social Security Number/Tax ID#
Total 100
SECTION 7. PROPOSED PLAN OF INSURANCE
WRL Freedom Elite Builder (FEB) WRL Freedom Wealth Protector (FWP)
SECTION 8. DEATH BENEFIT OPTION
A) Level Benefit B) Increasing Benefit C) Option B to Age 70 then grade to Option A (Not available on FWP)
SECTION 9. ADDITIONAL BENEFITS PRIMARY INSURED ONLY
WRL FEB
Primary Insured Rider Plus $
Primary Insured Rider $
Accidental Death Benefit Rider $
($150,000 maximum)
Disability Waiver and Income Rider ($300 per month maximum) $ per month
Disability Waiver Rider
WRL FWP
Joint Insured Rider $
Individual Insured Rider
Proposed Primary $
Proposed Joint Insured $
No Lapse Guarantee Option (must elect one)
Option 1 Option 2
We will allow the IIR death benefit recipient to be a choice of:
Owner Other proposed Insured Same Beneficiary as the base policy Other
U000312 2
SPECIMEN
SECTION 10. PREMIUMS PAYABLE
Initial Planned Premium $ Electronic (bank draft) Draft Date (1st through 28th)
Direct Bill Single Premium Annually Semiannually Quarterly Monthly Other
Premium Payor (If other than Owner) Applicant may specify a payor other than Owner and a Secondary Addressee who may be named to receive copies of notices and letters regarding possible lapses in coverage.
1. Payors Last Name First Name M.I.
2. Address (Cannot be a P.O. Box) Apt# City
State Zip Code 3. Home Phone 4. Social Security Number/Tax ID # 5. Relationship to proposed Primary Insured
Secondary Addressee
1. Last Name First Name M.I.
2. Address (Cannot be a P.O. Box) City State Zip Code
SECTION 11. PREMIUM ALLOCATION OPTIONS
I have completed and signed the allocation form. Please allocate funds accordingly.
SECTION 12. OTHER INSURANCE IN FORCE FOR ALL PROPOSED INSUREDS
A) Has any proposed Insured ever had life, disability or health insurance declined, rated, modified, issued with an exclusion rider, canceled, or not renewed? If yes, please explain. Yes No
B) Will the insurance applied for on any proposed Insured discontinue, replace or change any existing life or annuity policy? If yes, complete replacement forms, it appropriate. Yes No
C) Is there an application for life, accident or sickness insurance now pending or contemplated on any proposed Insured in this or any other company? It yes, give details in Agents Report. Yes No
D) Does any proposed Insured have existing life insurance policies or annuity contracts? Yes No
Proposed Insured Name Company Amount of Insurance Year Issued Replacement?
Yes No
Yes No
Yes No
IS THIS INTENDED TO BE A 1035 EXCHANGE? Yes No
Anticipated Cash Value Transfer $
SECTION 13. PERSONAL FINANCIAL STATEMENT FOR PROPOSED PRIMARY INSURED
All financial information on non-juvenile business must be that of the proposed Primary Insured, not the Owner.
A) Gross Income Current Year $
B) Gross Income Previous Year $
C) Source of Funds Employment Retirement Inheritance 1035 Exchange Other
D) Current Net Worth $
For over $1,000,000.00 applied coverage complete a separate Financial Questionnaire.
SECTION 14. BUSINESS FINANCIAL STATEMENT FOR PROPOSED PRIMARY INSURED
A) Current Estimated Market Value $
B) Assets Liquid $
Nonliquid $
C) Liabilities $
D) Net Worth $
U000312 3
SPECIMEN
SECTION 15. MEDICAL QUESTIONS Each question must be individually asked and answered for each proposed Insured.
Give the details to a No answer for medical question 15A and Yes answers to questions 15B-E below:
A) For the last 180 days has the proposed Primary Insured been actively at work, on a full time basis, at their usual place of business or employment? Yes No
B) To the best of your knowledge and belief, has any proposed Insured within the last 10 years been diagnosed, treated or been given medical advice by a member of the medical profession for:
1) Heart murmur, high blood pressure, chest pain, heart attack, stroke, or other disorder of the heart, blood vessels or circulatory system? Yes No
2) Asthma, emphysema, chronic bronchitis, tuberculosis, or any other respiratory disorder; colitis, ulcer or any other gastrointestinal disorder; jaundice, hepatitis, liver or kidney disorder? Yes No
3) Cancer, tumor, polyp, breast, prostate or any other reproductive disorder; or any thyroid or endocrine disorder? Yes No
4) Brain, nervous system, seizure or mental disorder, anxiety, depression, suicide attempt or any paralysis? Yes No
5) Diabetes, anemia, or any disorder of the blood; sugar, protein, or blood in the urine? Yes No
C) To the best of your knowledge and belief, has any proposed Insured within the last 10 years:
1) Used amphetamines, heroin, cocaine, marijuana, or any other illegal or controlled substance except as prescribed by a physician? Yes No
2) Received treatment or counseling for or been advised by a member of the medical profession to limit or discontinue the use of alcohol or prescribed or non-prescribed drugs, or been a member of any self help group such as Alcoholics Anonymous or Narcotics Anonymous? Yes No
3) Been on or are now on prescribed medication or prescribed diet? Yes No
4) Had or been advised to have any hospitalization, surgery, or any diagnostic test including, but not limited to, electrocardiograms, blood studies, scans, MRIs or other test? Yes No
5) Had an examination, treatment or consultation with a doctor or health care provider other than above? Yes No
D) Within the last 10 years, has any proposed Insured been told by a member of the medical profession that he or she had a diagnosis of AIDS (Acquired Immune Deficiency Syndrome). ARC (AIDS Related Complex), or the HIV (Human Immunodeficiency Virus) infection? Yes No
E) Has any proposed Insured had a parent, brother or sister who had any occurrence of or death from coronary artery disease prior to age 60? Yes No
SECTION 16. DETAILS TO ANSWERS FOR MEDICAL QUESTIONS Identify question number; state diagnosis, dates, duration, treatment, medications and results of each illness or injury. List the name, full address, phone number, and dates of each health care provider consulted.
Question #
Proposed Insureds Name
Diagnosis, Dates, Durations, Treatments, Medications and Results
Name, Address and Phone # of Attending Doctor and Hospital
SECTION 17. PERSONAL PHYSICIAN (if none, so state)
Proposed Insureds Name
Date Last Seen, Reason and Results
Name, Address and Phone # of Attending Doctor and Hospital
U000312 4
SPECIMEN
SECTION 18. RESIDENCY AND FOREIGN TRAVEL Each question must be individually asked and answered for each proposed Insured.
A) Is every proposed Insured a citizen of USA Other Country Type of VISA
B) How many years has the proposed Insured resided in the USA?
C) Has any proposed Insured resided outside the USA during the past 2 years or intends to live outside the USA during the next 2 years? Yes No If yes, provide details: include name of proposed Insured and location.
D) Does any proposed Insured intend to travel outside the USA during the next 2 years? Yes No
If yes, provide details: include name of proposed Insured, destination, number of trips, duration and purpose of each trip.
SECTION 19. DRIVING AND PUBLIC RECORDS Each question must be individually asked and answered for each proposed Insured.
A) Has any proposed Insured had their drivers license suspended, restricted, revoked, or been cited for a moving violation in the last 5 years? Yes No If yes, give description of the Department of Motor Vehicles action, plea, conviction or accident; the number of times the various occurrence(s) have taken place, the date and state of each occurrence:
B) Has any proposed Insured in the last 10 years pled guilty to or been convicted of a felony or misdemeanor or do they have any charges currently against them (other than a minor traffic violation)? Yes No If yes, give reason:
SECTION 20. SPECIAL ACTIVITIES Each question must be individually asked and answered for each proposed Insured.
A) Except as a passenger on a regularly scheduled flight, has any proposed Insured flown within the past 2 years, or does the proposed Insured have plans to fly in the next 2 years? If yes, complete the Avocation & Aviation Questionnaire. Yes No
B) In the past 2 years has any proposed Insured participated in or intends within the next 2 years to engage in organized racing (automobile, truck, motorcycle, or boat), underwater or sky diving, hang gliding, canyoneering, mountain or rock climbing? If yes, complete the Avocation & Aviation Questionnaire. Yes No
SECTION 21. SUITABILITY FOR VARIABLE LIFE INSURANCE POLICY
A) Have you, the proposed Primary Insured, and Applicant/Owner, if other than the proposed Primary Insured, received the current Prospectus for the policy? Yes No
B) Do you understand that the Death Benefit may be variable or fixed under specified conditions? Yes No
C) DO YOU UNDERSTAND THAT UNDER THE POLICY APPLIED FOR (EXCLUSIVE OF ANY OPTIONAL BENEFITS), THE ENTIRE AMOUNT OF THE POLICY CASH VALUE MAY INCREASE OR DECREASE DEPENDING UPON THE INVESTMENT EXPERIENCE? Yes No
D) With this in mind, is the policy in accordance with your insurance objectives and your anticipated financial needs? Yes No
SECTION 22. TRANSFER AUTHORIZATION TO BE COMPLETED BY APPLICANT/OWNER
(See Prospectus for transfer procedures.)
Your policy applied for, if issued, will automatically receive transfer privileges described in the applicable prospectus. These privileges allow the Owner and the registered representative of record to make transfers and to change the allocation of future payments unless declined below.
Western Reserve Life Assurance Co. of Ohio will not be liable for complying with transfer instructions it reasonably believes to be authentic, nor for any loss, damage, costs or expense in acting on such instructions, and Policy Owners will bear the risk of any such loss. Western Reserve Life Assurance Co. of Ohio will employ reasonable procedures to confirm that transfer instructions are genuine. If Western Reserve Life Assurance Co. of Ohio does not employ such procedures, it may be liable for losses due to unauthorized or fraudulent instructions. These procedures include but are not limited to requiring forms of personal identification prior to acting upon such transfer instruction, providing written confirmation of such transactions to the Owner and/or tape recording of telephone transfer request instructions received.
The registered representative does not have authority to make transfers or change payment allocations on my behalf.
U000312 5
SPECIMEN
FRAUD WARNING
The following state(s) and U.S. territories require that insurance applicants acknowledge a fraud warning statement. Please refer to the fraud warning statement for your state or U.S. territory as indicated below.
ARKANSAS, LOUISIANA and WEST VIRGINIA: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison.
COLORADO: It is unlawful to knowingly provide false, incomplete, or misleading facts or information to an insurance company for the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of insurance and civil damages. Any insurance company or agent of an insurance company who knowingly provides false, incomplete, or misleading facts or information to a policyholder or claimant for the purpose of defrauding or attempting to defraud the policyholder or claimant with regard to a settlement or award payable from insurance proceeds shall be reported to the Colorado Division of Insurance within the Department of Regulatory Agencies.
DISTRICT OF COLUMBIA: It is a crime to provide false or misleading information to an insurer for the purpose of defrauding the insurer or any other person. Penalties include imprisonment and/or fines. In addition, an insurer may deny insurance benefits if false information materially related to a claim was provided by the applicant.
FLORIDA: Any person who knowingly and with intent to injure, defraud, or deceive any insurer files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony of the third degree.
KENTUCKY: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance containing any materially false information or conceals, for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime.
MAINE: It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties may include imprisonment fines or a denial of insurance benefits.
MARYLAND: Any person who knowingly and willfully presents a false or fraudulent claim for payment of a loss or benefit or who knowingly and willfully presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison.
NEW JERSEY: Any person who includes any false or misleading information on an application for an insurance policy is subject to criminal and civil penalties.
NEW MEXICO: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to civil fines and criminal penalties.
OHIO: Any person who, with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement is guilty of insurance fraud.
OKLAHOMA: Any person who knowingly, and with intent to injure, defraud or deceive any insurer, makes any claim for the proceeds of an insurance policy containing any false, incomplete or misleading information is guilty of a felony.
PENNSYLVANIA: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties.
PUERTO RICO: Any person who knowingly, and with the intention to defraud, includes false information in an application for insurance or files, assists or abets in the filing of a fraudulent claim to obtain payment of a loss or other benefit, or files more than one claim for the same loss or damage, commits a felony, and if found guilty, shall be punished for each violation with a fine of no less than five thousand dollars ($5000), not to exceed ten thousand dollars ($10,000); or imprisoned for a fixed term of three (3) years, or both. If aggravating circumstances exist, the fixed jail term may be increased to a maximum of five (5) years; and if mitigating circumstances are present, the jail term may be reduced to a minimum of two (2) years.
TENNESSEE, VIRGINIA and WASHINGTON: It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits.
ALL OTHER STATES: Any person who knowingly presents a false statement in an application for insurance may be guilty of a criminal offense and subject to penalties under state law.
U000312 6
SPECIMEN
SECTION 23. AUTHORIZATION TO OBTAIN AND DISCLOSE INFORMATION
Each of the undersigned hereby certifies and represents as follows: The statements and answers given on this application are true and complete to the best of my knowledge and belief. I acknowledge and agree (A) that this application and any amendments shall be the basis for any insurance issued; (B) that the registered representative does not have the authority to waive any question on this application, to decide if insurance will be issued, or to modify any term or provision of any insurance which may be issued based on this application, only a writing signed by an officer of the Company can change the terms of this application or the terms of any insurance issued by the Company; (C) except as provided in the Conditional Receipt, if issued with the same proposed Insured(s) as on this application, no policy applied for shall take effect until after all of the following conditions have been met: 1) the minimum initial premium must be received by the Company; 2) the proposed Owner must have personally received and accepted the policy during the lifetime of each proposed Insured and there must have been no change in the insurability of any proposed Insured; and 3) on the date of the later of either 1) or 2) above, all of the statements and answers given in this application must be true and complete. Unless otherwise stated the undersigned applicant is the premium payor and Owner of the policy applied for.
I authorize MIB Group, Inc. and its members or affiliates, my employer or former employer, any consumer reporting agency or governmental agency, medical provider, or any insurer or reinsurer to provide medical or personal information about me that is reasonably required for the purposes stated in this authorization to Western Reserve Life Assurance Co. of Ohio, its administrators, representatives or its reinsurers. I understand the information obtained by use of the authorization will be used by Western Reserve Life Assurance Co. of Ohio to determine eligibility for insurance, and eligibility for benefits under an existing policy. Any information obtained will not be released by Western Reserve Life Assurance Co. of Ohio to any person or organization except to reinsurers, MIB Group, Inc. and its members or affiliates, or other persons or organizations performing business or legal services in connection with my application, claim or as may be otherwise lawfully required or as I may authorize. This authorization will expire 30 months from the date signed. A copy of this authorization shall be as valid as the original. Either my authorized representative or I may receive a copy of this authorization upon request.
The Company shall have 60 days from the date hereof within which to consider and act on this application and if within such period a policy has not been received by the applicant or if notice of approval or rejection has not been given, then this application shall be deemed to have been declined by the Company
I acknowledge receipt of the (1) Notice to Persons Applying for Insurance Regarding Investigative Report, (2) MIB Group, Inc. Pre-Notification, and (3) Notice of Insurance Information Practices.
I understand that any omissions or misstatements in this application could cause an otherwise valid claim to be denied
under any insurance issued from this application.
Signed at on
(city) (state) (month/day/year)
Signature of proposed Primary Insured/Owner
(Child over age 15 must sign)
Print Registered Rep. Name
Signature of Applicant/Owner if other than the proposed Primary Insured (If business insurance, show title of officer and name of firm. If trust, show trustees name)
Registered Rep. Number
Signature of proposed Other/Joint Insured
Signature of Registered Rep.
Signature of Parent or Legal Guardian of Children age 15 and under
Signature of Registered Rep. (Split)
SECTION 24. TAXPAYER IDENTIFICATION CERTIFICATION
Under current federal tax laws, the Company is required to obtain your Taxpayer Identification Number (e.g., a social security or employer identification number, or TIN) and certification that you are not subject to backup withholding. Please review the following certification and sign accordingly.
Under penalties of perjury, I certify that (1) the TIN listed in this application is my correct TIN; (2) I have not been notified that I am subject to backup withholding or I am not subject to backup withholding because I am an exempt recipient; and (3) I am a U.S. Person (U.S. citizen/legal resident). If not a U.S. Person, I have completed the appropriate Form W-8BEN.The IRS does not require your consent to any provision of this form other than this certification.
Signature of Owner Date
SECTION 25. OTHER INSURANCE TO BE COMPLETED BY THE REGISTERED REPRESENTATIVE
A) Will the policy applied for discontinue, replace or change any existing life insurance policy or annuity? Yes No
B) If replacement of existing insurance is involved, have you complied with all state requirements, including any Disclosure and Comparison Statements? Yes No N/A
If No, explain
C) Did you present and leave the Applicant/Owner approved sales material? Yes No
U000312 7
SPECIMEN
This page intentionally left blank
8
SPECIMEN
WRL
CONDITIONAL RECEIPT
(Detach and leave with applicant only if money is submitted with application. If within the past 12 months the proposed Insured has been diagnosed, treated or been given medical advice by a member of the medical profession for heart trouble, stroke or cancer, no payment may be accepted with the application. Do not accept money unless all required signatures below are obtained.)
PLEASE READ THIS CAREFULLY
No coverage will become effective prior to the delivery of the policy applied for unless and until all conditions of this receipt have been fulfilled exactly. No registered representative is authorized to waive or modify any of the provisions of the conditional receipt.
Make all checks payable to the Company. Do not make checks payable to the registered representative or leave the payee blank or you may jeopardize the insurance for which you have applied.
Received from , the sum of $ for the insurance application dated , with as the proposed Insured. The policy you applied for will not become effective unless and until a policy contract is delivered to you and all other conditions of coverage are met. However, subject to the conditions and limitations of this Receipt, conditional insurance under the terms of the policy applied for may become effective as of the later of (1) the date of application and (2) the date of the last medical examination, tests, and other screenings required by the Company, if any (the Effective Date). Such conditional insurance will take effect as of the Effective Date, so long as all of the following requirements are met:
1. Each person proposed to be insured is found to have been insurable as of the Effective Date, exactly as applied for in accordance with the Companys underwriting rules and standards, without any modifications as to plan, amount, or premium rate;
2. As of the Effective Date, all statements and answers given in the application must be true and complete to the best of my knowledge and belief.
3. The payment made with the application must not be less than the full initial premium for the mode of payment chosen in the application and must be received at our Administrative Office within the lifetime of the proposed Insured to whom the conditional insurance would apply and, if in the form of check or draft, must be honored for payment;
4. All medical examinations, tests, and other screenings required of the proposed Insured by the Company are completed and the results received at our Administrative Office within 60 days of the date the application was completed; and
5. All parts of the application, any supplemental application, questionnaires, addendum and/or amendment to the application are signed and received at our Administrative Office.
Any conditional insurance provided by this Receipt will terminate on the earliest of: (a) 60 days from the date the application was signed; (b) the date the Company either mails notice to the applicant of the rejection of the application and/or mails a refund of any amounts paid with the application; (c) when the insurance applied for goes into effect under the terms of the policy applied for; or (d) the date the Company offers to provide insurance on terms that differ from the insurance for which you have applied.
If one or more of this Receipts conditions have not been met exactly, or if the proposed Insured dies by suicide, the Company will not be liable except to return any payment made with the application.
If the Company does not approve and accept the application for insurance within 60 days of the date you signed the application, the application will be deemed to be rejected by the Company and there will be no conditional insurance. In that case, the Companys liability will be limited to returning any payment(s) you have made upon return of this Receipt to the Company.
The aggregate amount of conditional insurance provided under this Receipt, if any, and any other conditional receipt issued by the Company shall be limited to the lesser of the amount(s) applied for or $500,000 of life insurance. There is no conditional insurance for any riders, additional benefits, proposed Other Insured(s) or proposed insured child(ren) if any, for which you have applied.
Authorization (Signatures Required)
I certify that I have read and reviewed the Conditional Receipt and the Authorization to Obtain and Disclose Information in the application. The terms and conditions of the Conditional Receipt have been explained to me fully by the registered representative and I understand them.
Dated at on
City, State Date Signature of Registered or Authorized Company Rep.
Signature of proposed Primary Insured
Signature of Applicant (if other than proposed Primary Insured)
U000312 9
SPECIMEN
This page intentionally left blank
10
SPECIMEN
NOTICES
DETACH AND LEAVE THIS PAGE WITH APPLICANT
NOTICE TO PERSONS APPLYING FOR INSURANCE REGARDING INVESTIGATIVE REPORT
To proposed Insured: In connection with this application, an investigative consumer report may be prepared about you. Such reports are part of the process of evaluating risks for life and health insurance. Typically, this report will contain information about your character, general reputation, personal characteristics and mode of living. The information in the report may be obtained by talking with you or members of your family, business associates, financial sources, neighbors, and others you know. You may ask to be interviewed in connection with the preparation of any such report. Also, we may have the report updated if you apply for more coverage.
Upon your written request, we will let you know whether a report was prepared and we will give you the name, address, and telephone number of the agency preparing the report. By contacting that agency and providing proper identification, you may obtain a copy of the report.
MIB GROUP, INC. (MIB) PRE-NOTIFICATION
To proposed Insured and other persons proposed to be insured, if any. Information regarding your insurability will be treated as confidential. We or our reinsurer(s) may, however, make a brief report on this information to MIB Group, Inc., a non-profit membership organization of insurance companies that operates an information exchange on behalf of its members. If you apply to another MIB member company for life or health insurance coverage or a claim for benefits is submitted to such a company, MIB may, upon request, supply such company with the information in its file.
Upon receipt of a request from you, MIB will arrange disclosure of any information it may have in your file. If you question the accuracy of information in MIBs file, you may contact MIB and seek a correction in accordance with the procedures set forth in the federal Fair Credit Reporting Act. The address of MIBs information office is: Post Office Box 105, Essex Station, Boston, Massachusetts 02122; and telephone number is 866-692-6901 (TTY 866-346-3642 for hearing impaired).
NOTICE OF INSURANCE INFORMATION PRACTICES
To proposed Insured: Personal information may be collected from persons other than the individual(s) proposed for coverage. Such information as well as other personal or privileged information subsequently collected by us or our registered representative may in certain circumstances be disclosed to third parties without authorization. Upon request, you have the right to access your personal information and ask for corrections. You may obtain a complete description of our Information Practices by writing to Western Reserve Life Assurance Co. of Ohio, Attn: Director of Underwriting, [4333 Edgewood Road NE, Cedar Rapids, Iowa 52499].
PLEASE PROVIDE A COPY OF THIS NOTICE TO THE PROPOSED INSURED IF NOT A HOUSEHOLD MEMBER.
U000312 11
SPECIMEN
This page intentionally left blank
12
SPECIMEN
Additional Information Supplement (For use only with FEB)
SECTION 1. PROPOSED CONTINGENT OWNER If ownership is corporation, partnership or institutional body, please complete the Entity Certification of Authority form. If ownership is a trust, please complete the Trustee Certification Trust form. Attach a copy of the first page and the signature page of the Trust.
1. Last Name First Name M.I.
2. Address (Cannot be a P.O. Box) Apt# City
State Zip Code 3. Home Phone ( ) 4. Social Security Number/Tax ID #
5. Sex Male Female 6. Date of Birth/Trust Date MM-DD-YYYY 7. Relationship to proposed Primary Insured
8. Are you a citizen of USA Other Country Type of VISA
SECTION 2. PROPOSED OTHER INSURED SPECIFIED AMOUNT $
We will allow the OIR death benefit recipient to be a choice of: Owner Primary Insured Same Beneficiary as the base policy
Other
1. Last Name First Name M.I.
2. Address (Cannot be a P.O. Box) Apt# City
State Zip Code 3. Years at Address 4. Home Phone ( ) 5. Driver License Number State
6. Sex Male Female 7. Date of Birth MM-DD-YYYY 8. Age 9. Place of Birth State/Country 10. Social Security Number
11. Height (ft. in.) 12. Weight (lbs.) 13. Marital Status 14. Relationship to proposed Primary Insured
15. Employer #Years
16. Employers Address and Phone Number
17. Occupation & Duties
18. Have you used TOBACCO or any other product containing NICOTINE in the last 12 months? No Yes Date last used
19. Rate Class Quoted: Ult Select Select Ult Standard Standard Juvenile
SECTION 3. PROPOSED OTHER INSURED SPECIFIED AMOUNT $
We will allow the OIR death benefit recipient to be a choice of: Owner Primary Insured Same Beneficiary as the base policy
Other
1. Last Name First Name M.I.
2. Address (Cannot be a P.O. Box) Apt# City
State Zip Code 3. Years at Address 4. Home Phone ( ) 5. Driver License Number State
6. Sex Male Female 7. Date of Birth MM-DD-YYYY 8. Age 9. Place of Birth State/Country 10. Social Security Number
11. Height (ft. in.) 12. Weight (lbs.) 13. Marital Status 14. Relationship to proposed Primary Insured
15. Employer #Years
16. Employers Address and Phone Number
17. Occupation & Duties
18. Have you used TOBACCO or any other product containing NICOTINE in the last 12 months? No Yes Date last used
19. Rate Class Quoted: Ult Select Select Ult Standard Standard Juvenile
U000312 13
SPECIMEN
SECTION 4. PROPOSED OTHER INSURED SPECIFIED AMOUNT $
We will allow the OIR death benefit recipient to be a choice of: Owner Primary Insured Same Beneficiary as the base policy
Other
1. Last Name First Name M.I.
2. Address (Cannot be a P.O. Box) Apt# City
State Zip Code 3. Years at Address 4. Home Phone 5. Driver License Number State
6. Sex Male Female 7. Date of Birth MM-DD-YYYY 8. Age 9. Place of Birth State/Country 10. Social Security Number
11. Height (ft. in.) 12. Weight (lbs.) 13. Marital Status 14. Relationship to proposed Primary Insured
15. Employer and Employers Phone Number #Years
16. Employers Address
17. Occupation & Duties
18. Have you used TOBACCO or any other product containing NICOTINE in the last 12 months? No Yes Date last used
19. Rate Class Quoted: Ult Select Select Ult Standard Standard Juvenile
SECTION 5. PROPOSED OTHER INSURED SPECIFIED AMOUNT $
We will allow the OIR death benefit recipient to be a choice of: Owner Primary Insured Same Beneficiary as the base poIicy
Other
1. Last Name First Name M.I.
2. Address (Cannot be a P.O. Box) Apt# City
State Zip Code 3. Years at Address 4. Home Phone 5. Driver License Number State
6. Sex Male Female 7. Date of Birth MM-DD-YYYY 8. Age 9. Place of Birth State/Country 10. Social Security Number
11. Height (ft. in.) 12. Weight (lbs.) 13. Marital Status 14. Relationship to proposed Primary Insured
15. Employer and Employers Phone Number #Years
16. Employers Address
17. Occupation & Duties
18. Have you used TOBACCO or any other product containing NICOTINE in the last 12 months? No Yes Date last used
19. Rate Class Quoted: Ult Select Select Ult Standard Standard Juvenile
SECTION 6. DECLARATIONS
I (We) represent that all statements and answers made in this supplement are full, complete and true to the best of my (our) knowledge and belief. It is agreed that this statement shall be made part of the application, and is subject to all terms and conditions contained in the application.
Signed at on
(city)
(state)
(month/day/year)
sec. 2
Signature of proposed Other Insured (Child over age 15 must sign)
sec. 4
Signature of proposed Other Insured (Child over age 15 must sign)
sec. 3
Signature of proposed Other Insured (Child over age 15 must sign)
sec. 5
Signature of proposed Other Insured (Child over age 15 must sign)
Signature of Parent or Legal Guardian for Insured(s) age 15 and under
Signature of Applicant/Owner, if other than the proposed Primary Insured (If business insurance, show title of officer and name of firm. If trust, show trustees name)
Witness (Registered Representative)
U000312 14
SPECIMEN
AGENTS REPORT
(all sections must be completed)
1. Type of Sale (check only one box)
Personal/Family
Business Planning
Estate Planning
Premium Finance
Supplemental Purpose of Policy (check only one box)
Business
Key Employee
Executive Bonus
Deferred Compensation
Split Dollar
Buy/Sell - Is Partner applying for similar amount? Yes No
Name of Partner
Other
Personal/Family
Mortgage
Retirement
Education
Income to Family
Cash Accumulation
Estate Planning
Estate Liquidity
Wealth Replacement
2. Was this plan sold, presented or illustrated as a single employer
welfare benefit plan as defined under IRC Section 419?
Yes No
3. a) How long have you known the proposed Insured?
b) Relationship to proposed Insured:
c) Are you financially responsible for the proposed Insured?
Yes No
4. Is the proposed Insured or Owner a licensed Representative of any
Broker/Dealer? If yes, name and address of Broker/Dealer
5. Is the proposed Insured or Owner related to any affiliated Broker/
Dealer officer or employee? Yes No
If yes, name and address of Broker/Dealer
6. Did you give the Notice of Information Practices to the proposed Insured? Yes No
7. Are you submitting or do you plan to submit another application on any proposed Insured listed to WRL or any other company?
Yes No
Company Name
Face amount $
Total face amount to be placed with all companies $
8. Medical Examination
Are you arranging for the Medical Requirements?
Yes Paramedical Service used:
No Request Western Reserve Life Assurance Co. of Ohio order medical requirements.
9. Did you ask all questions in the physical presence of the proposed Insured? Yes No
10. Are you aware of anything about the health, habits, hazardous sports, environment or mode of living, which may affect the insurability of any person proposed for insurance?
Yes No
11. Financial Information of Applicant/Owner if other than the proposed Insured:
Gross Income Current Year: $
Current Net Worth: $
12. Did you comply with all requirements relative to obtaining Informed Consent for HIV and AIDS testing? Yes No
13. Identification Verification
Identification was viewed during face to face sale? Yes No
Type of Government issued photo ID
Issuer of Identification Document Number Expiration Date
14. Is the Agent or Split Agent also the Owner, Applicant or Payor?
Yes No
15. Writing Agent Name
Agent No.
Agents Telephone Number
Agents Fax Number
Agents E-Mail
Percent of Agents Split
Split Agent Name
Agent No. Percent of Agents Split
16. Was money taken with the application?
Yes No
If yes, was the Conditional Receipt completed and given to the applicant? Yes No
17. If proposed Insured is a juvenile (ages 0 through 15):
(a) Did you personally see child? Yes No
(b) Does child live with parents? Yes No (lf No, explain)
(c) Life insurance in force on fathers life? Yes No
If yes, list amount
Life insurance in force on mothers life? Yes No
If yes, list amount
(d) Life insurance applied for or in force on brothers and sisters? Yes No
If yes, list amount
I submit this application assuming full responsibility for delivery of any coverage issued and for immediate transmittal to the Company of the first premium when collected. I certify that I reviewed the photo identification of the person(s) seeking to open this policy and verified that person seeking to open this policy is the same person in the documents reviewed. I understand that misrepresentations in connection with this and other certifications in the Companys application documents may result in disciplinary action, termination, civil action or prosecution for violation of state or federal criminal laws.
$ has been paid by the Applicant with this application.
Signature of Writing Agent
Date
AG 0108 Std
SPECIMEN
This page intentionally left blank
SPECIMEN
PAYORS CHECK-O-MATIC PREMIUM PAYMENT PLAN
Authorization to Insurance Company
The Premium Payor hereby authorizes Western Reserve Life Assurance Co. of Ohio to debit his/her account or accounts by means of check or draft drawn or other order made whether by electronic or paper means at the below named financial institution for premiums that may become due under the policy as a result of this application. This authorization is to remain in effect until written notice of revocation is received at the Administrative Office of the Company or until the Check-O-Matic Premium Payment Plan is terminated in a manner provided below. I (We) expressly agree to all conditions applicable to the Check-O-Matic Premium Payment Plan including those appearing below.
Authorization to Financial Institution
As a convenience to me, I hereby request and authorize you to pay and charge to my account checks, drafts and other orders whether by electronic or paper means, with such debits made to my account and drawn or directed by Western Reserve Life Assurance Co. of Ohio to its own order, provided there are sufficient collected funds in said account to pay the same upon presentation. Until you receive written cancellation of this authorization by me (or either of us), you are fully protected when you honor any of those orders. You may, however, discontinue this arrangement by giving 30 days written notice to me (or either of us) and the insurance company Your treatment of and your rights regarding those orders, shall be the same as if I signed or initiated them. If any of those orders are not honored, whether with or without cause and whether intentionally or inadvertently, you shall be under no liability if insurance is forfeited as a result. Notice of charge for debit is hereby waived.
Initial Payment (Must Check One Box)
CHECK: Check this box if you are attaching a check for the initial modal premium. The check will be deposited upon receipt of the application by the Company.
AUTOMATIC WITHDRAWAL: Check this box to have the initial modal premium withdrawn from the account listed below. By checking this box, I/we agree that I/we want an amount sufficient to pay the initial premium due for the insurance policy withdrawn from the account. This initial premium amount may not equal the amount reflected below. I/we further understand that no insurance will be provided except under the terms of a conditional receipt which may be given at the time the application is taken, and then only if and when all conditions and requirements of the conditional receipt have been satisfied.
Initial premium will be withdrawn upon receipt of the application by the Company and not on the day of the future recurring monthly payment stated below.
Account Information
TAPE VOIDED CHECK HERE
If not attaching void check or if withdrawing from Savings Account, complete the following information
Bank Name, Office or Branch
Check one: Checking Savings
Payor Name(s)
Transit Routing Number Account Number
Complete the Following Information for Future Recurring Payments
Premium to Withdraw:
$
Withdraw on day of the month matching the policys effective date (this will be elected if no box is checked)
Withdraw on a different day of the month; choose a day between 1 and 28
Signature
Payor Signature(s) as on financial institutions records. A copy is as valid as the original.
X Date:
Conditions Applicable to Check-O-Matic Premium Payment Plan
No check, draft or any other orders, either by electronic or paper means, shall constitute payment until the Company actually receives payment thereof within the period provided in the policy.
The Check-O-Matic Premium Payment Plan may be terminated by either party by giving written notice to the other.
The Check-O-Matic Premium Payment Plan does not in any manner amend or alter the terms and provisions of any policy, contract or agreement except as may be specifically stated in a policy endorsement or properly executed contract amendment.
For changes or questions call: Toll-free 1-800-851-9777
Or Write: Western Reserve Life Assurance Co. of Ohio, 4333 Edgewood Road NE, Cedar Rapids, Iowa 52499
COM 1007
JTU>U4_9>&X3/R"R;P-ZB MDINL9W10S;JYM[B&=5:Q"9M$DLV4-J:>]PE#G53GZ\^7]<^[L#^2/YJV.^97 MQMC)RN77U?)?44&IH-T8PW(22[AQ;3L>JV)3L*CPS;, MR)2".N>>$X3]%UH,/FJ_>A?_`%7W/Z-]._[NJ!)>GT_I+Z,NG_\`Z2ZN_HZP MG^;58*\S8H`````````````````````````````````````````````````` M``````````````````````````````#% 6X'D<9J909GC=UB]S%> M:;?;>K+VND5DQ!M.DIM9^!)49=2]/0!\=;DSJ#-^%7+O:VHH\ZSQ;,]!;;F1 M\6NJR8_$MZLJ2RCW^"WT">WX3S,Y-4["DH<3Z'/QB/=C,98V[H_DG[.Y1>93 MQ?R>59 F]>[_UED,*]>D3\0D5!99[VSHZETK*2FH0I M1I=(B(SZ$9/_`"\_LB,,M.BP7;GEE9KD% PQN(^MY)NJ
+J K-F1]U[BR9[$[BDS6PG-T617D272V*GZ#&;>!X-A'0:D%XW?+H?>(C$
MAOV89997$=%JM%YUFC^3OF"<0^+_``JW!4[*P7+&=J7>^K>+ALUJNF5U7ASD
MO"Z:FM\G@5=S7642ZC.OR#CQTI<:Z)-9EV"N 2S&-A#93ZV'BD9I3GB.*\-XBZ(+\I)Z8_K,][=Y[A`S5,<-.*+
M5+X)5J>.>F#8]76;C7?5KS'ER>ZM2E&9^MJ7WNWL5U(5YYUG[NB!YVW_`/(R
MUU_S/PF_[V/B2].'^+_=]%]'Y"?]5/\`T$*\K^@'2$^^&_\`[+O];9G_`':8
M27?T:RON\EC56L;SRJ>"]K W4QJ.SWB2WWUEWE)+M!8G&>WEG/S"\^_\
MP3$?\&>$_6J"7CMY/F%Y]_Y@F(_X,\)^M4"\=O)\PO/O_,$Q'_!GA/UJ@7CM
MY/F%Y]_Y@F(_X,\)^M4"\=O)\PO/O_,$Q'_!GA/UJ@7CMY/F%Y]_Y@F(_P"#
M/"?K5`O';R?,+S[_`,P3$?\`!GA/UJ@7CMY/F%Y]_P"8)B/^#/"?K5`O';R?
M,+S[_P`P3$?\&>$_6J!>.WD^87GW_F"8C_@SPGZU0+QV\GS"\^_\P3$?\&>$
M_6J!>.WD^87GW_F"8C_@SPGZU0+QV\GS"\^_\P3$?\&>$_6J!>.WD^87GW_F
M"8C_`(,\)^M4"\=O)\PO/O\`S!,1_P`&>$_6J!>.WD^87GW_`)@F(_X,\)^M
M4"\=O)\PO/O_`#!,1_P9X3]:H%X[>3YA>??^8)B/^#/"?K5`O';R?,+S[_S!
M,1_P9X3]:H%X[>3YA>??^8)B/^#/"?K5`O';R?,+S[_S!,1_P9X3]:H%X[>3
MYA>??^8)B/\`@SPGZU0+QV\GS"\^_P#,$Q'_``9X3]:H%X[>3YA>??\`F"8C
M_@SPGZU0+QV\GS"\^_\`,$Q'_!GA/UJ@7CMY/F%Y]_Y@F(_X,\)^M4"\=O)\
MPO/O_,$Q'_!GA/UJ@7CMY/F%Y]_Y@F(_X,\)^M4"\=O)\PO/O_,$Q'_!GA/U
MJ@7CMY/F%Y]_Y@F(_P"#/"?K5`O';R?,+S[_`,P3$?\`!GA/UJ@7CMY/F%Y]
M_P"8)B/^#/"?K5`O';R_/F%Y]_Y@N(_X,\)^M4"\=O+,>4U7E5)P%Y&U&<97
M'SK+Z[B[MZ+D681<=C8E'R.U:UQD*95LSC,.=9Q:-N6OW11FY#R6_02C`C]N
MB4F$?\%XA_RO0?[JB`DZLH!`````````````````````````````````````
M````````!I7DI_9TW[_0KM3^8MZ"QK'W1CQ7$\@SWRJ<;P;$JY=QE6:>7S3X
MGC-0AYB.NTR#(N.,>GIJY$B4ZQ%87.L9C;1+<6AM)JZJ41$9@L_O_*I7#^%_
M,/8^HYU3G5#O6MNY&BN%/'Q>19->:SU3MW#J/6^Z8N0;5Q[64[3&0'4.8/0X
MG,?F,74Z1[^2G^^UT6E*$F:N(GI6LI?VO%KD!C&YIU/BU'GUY,I]O:'F\=]^
M3\]79XWJ3C1@=1KBNV3K7+XUIDQ7MUDN3.4-X;Z78$T[ERT)]V0VI!$9FXKJ
MB;@?$?GS@>AMGX`QALZ?DV7[+NLTQB1;WD>9B^+Z'=YQ_(Z2DRBQ6O&L2SC94FNLY\&++DJ
M]<5";8>\..1+>6RDTJ$=,<,IQN9K!2C]Y3P#F['XE<=-J\R=TX/9V>2\D2I,
M=XYZ
=H/W.OBQ[9')'XJZ@^2
MH4?/.T/!)^YU<8S:5ZGS,Y#MO]#[BI>':FD,]>G82FV*"&YTZ_B6%'SSM#5M
MW]S\P."X14W*G:-XT;B"-9XYKJK6EM1EWE]R37.$HVR/M+J77IV!2?/EM#9\
M3[G5QC5$C'8
3'2[C3SI,I
+0,\K
M8Z56.,+./;J0DO$>H9'?,EJ,D]5>H3#(R[2Z(<4?X`$"<9PB9F-+?2:#ORKS
M&F4V
QDDZ3%5!4P^;8GLS&[3'9EJ
MU'LW&%4>6M1Y"7VFU(E1W.[U0:3,D[]I:QJ.6F9*YC9OQ>N*G6;RV=6W&?:_
MC5E[E%9ES]K4VM-#BXSDLK)*.!AMM-R*GM';1INAESWZ^'"=.6A!]#`K^ML=
MQ'DARMRN'R=P9.LM)5FVM!9!01X&:3LOR]OC_=T>18_8Y8:)URFI7F3.2XG5
M5Z8UQ&;B^'&DS&'"4;"C,%J.FR5.A-KW^YM`Z^VY-PJ5B>39GA3-^_A-A*0C
MU2X-I]LX;%@HEI54V4N/XL.0HNJX;S;BB(S,@3NA!K'F'R/WE3;\QG55)QDD
M;8T5MFJQFULO7M/H`MXC1V(D=B+&:0S'C,ML,,MEW4-,M(
M)MMM!%Z$H0DB(!Y@`!^&1&1D9$9&70R/M(R/TD9?A(P&'XU@&(XA.N[+':2)
M63
'8[/R1Z]LH]JAC,66
Y M@@D(BBMP<(O#8K&U[L+G=5K!'FAG5N8[CN9<;@I;D:8Y:*Y@KBXF"%?C?C[M M!A"<08E3RX<_(Q=CHB>&'GJ3)L3"8T7+C%*JP[*E`Y(!L"\B/4V,%T@[G
G9YQ?$>*(.[KI#"L8X]B#^YEF%.3Y%X7&X^[N!1I@332USDTMJ
M1:K+,-!80K%:XK6O?NVHE92%01S),/XDF3PDD4OQ;CF52!!>]T+Y)(1&7Q
MX17O;A>Z1S 0(6M]C3E-8>H3Y@LR2Y;D3OR1D+80:ICS[]/KSC3UT-%&UET=PI
M[F63E%``2J\D&BAN/H\N;72=RV;!&^R20#D,_<6I6Z($CX[K'E4&6N?]'"M?FX"O
M1#(ECS'DMS%E_&C8KR1()@R1I7!RYD^1YU\%YH[Q52I(`-B.?&QO
M9#41:5V<%Y"9M2.%C`7/L7T8A$I+9F+=W5.2Y=M@EBS5%G'*@I"]Q$N,$D/8
M2SI7'41+D[QA/(#6DN,*)"G;E`5`$1:T2D\B]S"@#`$0K"DTKV:[+-SL/XCE
M.6T>:4LL06-X_!]`JL%,UHS;)B@V`'F$,M*,2L[*^,W865$T
MYHD[;((GB[1K'\1D!\28W).UN^BSQ)'R$RQQ8S5Q*9Z#,5DB%9R;QFE$E`*M
M8LR_&]2AE_?W3IL/HZQ[%2*12>1Y$>V1PDV$89A9P"U,C<80%)$\W1G-ILA3
M@4*>):QV=(T!#L=M9U\2(
QA%\