LINCOLN BENEFIT LIFE COMPANY
Supplement Dated April 29, 2016
To the following Prospectuses, as supplemented
CONSULTANT SOLUTIONS (CLASSIC, PLUS, ELITE, SELECT) PROSPECTUS DATED APRIL 29, 2016
CONSULTANT I PROSPECTUS DATED APRIL 29, 2016
LBL ADVANTAGE PROSPECTUS DATED MAY 1, 2004
CONSULTANT II PROSPECTUS DATED MAY 1, 2004
PREMIER PLANNER PROSPECTUS DATED MAY 1, 2004
The following information supplements the prospectus for your variable annuity contract issued by Lincoln Benefit Life Company.
SUPPLEMENTAL INFORMATION ABOUT
LINCOLN BENEFIT LIFE COMPANY
Page | ||||||
Item 3(c) |
Risk Factors | 1 | ||||
Item 11(a) |
Description of Business | 11 | ||||
Item 11(b) |
Description of Property | 13 | ||||
Item 11(c) |
Legal Proceedings | 13 | ||||
Item 11(e) |
Financial Statements and Notes to Financial Statements | 14 | ||||
Item 11(f) |
Selected Financial Data | 68 | ||||
Item 11(h) |
Managements Discussion and Analysis of Financial Condition and Results of Operations. | 68 | ||||
Item 11(i) |
Changes in or Disagreements with Accountants | 90 | ||||
Item 11(j) |
Quantitative and Qualitative Disclosures About Market Risk | 90 | ||||
Item 11(k) |
Directors and Executive Officers | 90 | ||||
Item 11(l) |
Executive Compensation | 92 | ||||
Item 11(m) |
Security Ownership of Certain Beneficial Owners and Management | 99 | ||||
Item 11(n) |
Transactions with Related Persons, Promoters and Certain Control Persons | 101 | ||||
105 |
Item 3(c). | Risk Factors |
LINCOLN BENEFIT LIFE RISK FACTORS
This document contains forward-looking statements that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. We assume no obligation to update any forward-looking statements as a result of new information or future events or developments.
These forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like plans, seeks, expects, will, should, anticipates, estimates, intends, believes, likely, targets and other words with similar meanings. These statements may address, among other things, our strategy for growth, investment results, regulatory approvals, market position, expenses, financial results, litigation and reserves. We believe that these statements are based on reasonable estimates, assumptions and plans. However, if the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those communicated in these forward-looking statements.
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In addition to the normal risks of business, we are subject to significant risks and uncertainties, including those listed below, which apply to us as an insurer and a provider of other products and financial services. These risks constitute our cautionary statements under the Private Securities Litigation Reform Act of 1995 and readers should carefully review such cautionary statements as they identify certain important factors that could cause actual results to differ materially from those in the forward-looking statements and historical trends. These cautionary statements are not exclusive and are in addition to other factors discussed elsewhere in this document, in our filings with the SEC or in materials incorporated therein by reference.
Changes in actual experience could materially affect the profitability of our business.
Our liability pricing includes long-term assumptions regarding investment returns, mortality, morbidity, persistency and operating costs and expenses of our business. We establish target returns based upon these factors and the average amount of capital that we must hold to support in-force contracts taking into account rating agencies and regulatory requirements. Profitability emerges over a period of years depending on the nature and life of the product and is subject to variability as actual results may differ from pricing assumptions. Additionally, many of our products have fixed or guaranteed terms that limit our ability to increase revenues or reduce benefits, including credited interest, once the product has been issued.
Our profitability depends on the adequacy of investment spreads, the management of market and credit risks associated with investments, the sufficiency of premiums and contract charges to cover mortality and morbidity benefits, the persistency of policies, and the management of operating costs and expenses within anticipated pricing allowances. Legislation and regulation of the insurance marketplace and products could also affect the profitability of our business.
Changes in reserve estimates may adversely affect our operating results.
The reserve for life-contingent contract benefits is computed on the basis of long-term actuarial assumptions of future investment yields, mortality, morbidity, persistency and expenses. We periodically review the adequacy of these reserves on an aggregate basis and if future experience differs significantly from assumptions, adjustments to reserves may be required which could have a material effect on our operating results.
Changes in market interest rates and/or credit spreads may lead to a significant decrease in the profitability of our spread-based products.
Our ability to manage our fixed annuities and interest-sensitive life products is dependent upon maintaining profitable spreads between investment yields and interest crediting rates. When market interest rates decrease or remain at relatively low levels, cash flows from renewal premium, investments that have matured or have been prepaid or sold may be reinvested at lower yields, reducing investment spread. Lowering interest crediting rates on some products in such an environment can partially offset decreases in investment yield. However, these changes could be limited by market conditions, regulatory minimum rates or contractual minimum rate guarantees on many contracts and may not match the timing or magnitude of changes in investment yields. Decreases in the interest crediting rates offered on products could make those products less attractive, leading to changes in the level of policy loans, surrenders and withdrawals. Non-parallel shifts in interest rates, such as increases in short-term rates without accompanying increases in medium- and long-term rates, can influence customer demand for fixed annuities, which could impact the level and profitability of new customer deposits. Increases in market interest rates can also have negative effects on our business, for example by increasing the attractiveness of other investments to our customers, which can lead to increased surrenders at a time when our fixed income investment asset values are lower as a result of the increase in interest rates. This could lead to the sale of fixed income securities at a loss.
For certain products, principally fixed annuity and interest-sensitive life products, the earned rate on assets could lag behind rising market yields. We may react to market conditions by increasing crediting rates, which could narrow spreads and reduce profitability on our business.
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Changes in estimates of profitability on interest-sensitive life, fixed annuities and other investment products may adversely affect our profitability and financial condition through the amortization of Value of Business Acquired (VOBA).
VOBA related to interest-sensitive life, fixed annuities and other investment contracts is amortized in proportion to actual historical gross profits and estimated future gross profits (EGP) over the estimated lives of the contracts. The principal assumptions for determining the amount of EGP are mortality, persistency, expenses, investment returns, including capital gains and losses on assets supporting contract liabilities, interest crediting rates to contractholders, and the effects of any hedges. Updates to these assumptions (commonly referred to as VOBA unlocking) could adversely affect our profitability and financial condition.
Guarantees within certain of our products may decrease our earnings, increase the volatility of our results, result in higher risk management costs and expose us to increased counterparty risk.
Certain of our products include guaranteed benefits. These guarantees are designed to protect policyholders against significant downturns in equity markets and interest rates. Any such periods of significant and sustained downturns in equity markets, increased equity volatility, or reduced interest rates could result in an increase in the valuation of our liabilities associated with those products. An increase in these liabilities would result in a decrease in our net income.
We use hedging and risk management strategies to mitigate the liability exposure and the volatility of net income associated with these liabilities. These strategies involve the use of reinsurance and derivatives, which may not be completely effective. In addition, hedging instruments may not effectively offset the costs of guarantees or may otherwise be insufficient in relation to our obligations. Furthermore, we are subject to the risk that changes in policyholder behavior or mortality, combined with adverse market events, produce economic losses not addressed by the risk management techniques employed. These, individually or collectively, may have a material adverse effect on our results of operations, including net income, financial condition or liquidity.
We may not be able to mitigate the capital impact associated with statutory reinsurance reserving requirements, potentially adversely impacting the profitability of our business.
To support statutory reserves for certain term and universal life insurance products with secondary guarantees, we currently utilize reinsurance and capital markets solutions for financing a portion of our statutory reserve requirements deemed to be non-economic. If we are not able to maintain sufficient financing as a result of market conditions or otherwise, this could potentially adversely impact the profitability of our business.
Changes in tax laws and interpretations may decrease the profitability of our products and could adversely affect the Company.
Under the Internal Revenue Code of 1986, as amended (the Code), income tax payable by policyholders on investment earnings is deferred during the accumulation period of certain life insurance and annuity products. This favorable tax treatment may give certain of our products a competitive advantage over other non-insurance products. To the extent that the Code is revised to reduce the tax-deferred status of life insurance and annuity products or to increase the tax-deferred status of competing products, all life insurance companies, including us, would be adversely affected with respect to their ability to retain policyholders who have acquired such products. Depending upon grandfathering provisions, life insurance companies would be affected by the surrenders of existing annuity contracts and life insurance policies. Changes in tax law, which have reduced the federal income tax rates on corporate dividends in certain circumstances, could make the tax advantages of investing in certain life insurance or annuity products less attractive. Additionally, changes in tax law based on proposals to establish new tax-advantaged retirement and life savings plans, if enacted, could reduce the tax advantage of investing in certain life insurance or annuity products. We cannot predict what changes to tax law or interpretations of existing tax law may ultimately be enacted or whether such changes could adversely affect us. In addition, changes in the federal estate tax laws could negatively affect the demand for the types of life insurance used in estate planning.
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The Company is dependent on the performance of others.
The Companys results may be affected by the performance of others because the Company has entered into various arrangements in support of our business operations involving third parties. Certain of these third parties may act on behalf of the Company or represent the Company in various capacities including the administration of its contractholders activities or the management of its invested assets on a day-to-day basis. Additionally, the Companys operations are dependent on various technologies, some of which are provided and/or maintained by third parties. Any of the third parties that the Company depends upon may default on their services or obligations to the Company due to bankruptcy, insolvency, lack of liquidity, adverse economic conditions, operational failure, fraud, or other reasons. Further, the Company may be held responsible for obligations that arise from the acts or omissions of these third parties. Such defaults could have a material adverse effect on the Companys financial condition and results of operations.
If our internal controls are ineffective, our operating results could be adversely affected.
Our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls or fraud. Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and operating results could be harmed and we could fail to meet our financial reporting obligations.
If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in Managements Discussion and Analysis of Financial Condition and Results of Operations. The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of investors, regulators and rating agencies.
Further acquisitions by Resolution Life, Inc. could be disruptive to our operations.
Resolution Life, Inc. intends to acquire additional runoff books of business from unrelated insurers and may seek to combine portions of the related operations with ours to recognize efficiencies. The risks and uncertainties related to these transactions include, but are not limited to:
| unanticipated difficulties and expenditures resulting from the transactions; |
| disruption of current plans and operations caused by the closing of the transactions and the transition to new management and service providers over time; |
| diversion of management time and focus from operating our business to addressing transaction integration challenges; and |
| the response of customers, agents, competitors and regulators to the closing of the transactions. |
Our failure to address these risks could cause us to incur unanticipated liabilities, impose harmful disruptions to our customer service operations and harm our business generally.
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Risks Relating to Investments
We are subject to market risk and declines in credit quality which may adversely affect investment income and cause realized and unrealized losses.
We are subject to the risk that we will incur losses due to adverse changes in interest rates or credit spreads. Adverse changes to these rates and spreads may occur due to changes in fiscal policy and the economic climate, the liquidity of a market or market segment, insolvency or financial distress of key market makers or participants, or changes in market perceptions of credit worthiness and/or risk tolerance.
We are subject to risks associated with potential declines in credit quality related to specific issuers or specific industries and a general weakening in the economy, which are typically reflected through credit spreads. Credit spread is the additional yield on fixed income securities above the risk-free rate (typically referenced as the yield on U.S. Treasury securities) that market participants require to compensate them for assuming credit, liquidity and/or prepayment risks. Credit spreads vary (i.e., increase or decrease) in response to the markets perception of risk and liquidity in a specific issuer or specific sector and are influenced by the credit ratings, and the reliability of those ratings, published by external rating agencies. A decline in the quality of our investment portfolio as a result of adverse economic conditions or otherwise could cause additional realized and unrealized losses on securities. Similarly, a ratings downgrade affecting a security we hold could indicate the credit quality of that security has deteriorated and could increase the capital we must hold to support that security to maintain our risk based capital levels. Levels of writedowns and impairments are impacted by intent to sell, or our assessment of the likelihood that we will be required to sell fixed maturity securities. Realized losses or impairments on these securities may have a material adverse effect on our net income in a particular period.
A decline in market interest rates or credit spreads would have an adverse effect on our investment income as we invest cash in new investments that may earn less than the portfolios average yield. In a declining interest rate environment, borrowers may prepay or redeem securities more quickly than expected as they seek to refinance at lower rates. An increase in market interest rates or credit spreads could have an adverse effect on the value of our investment portfolio by decreasing the fair values of the fixed income securities that comprise a substantial majority of our investment portfolio.
The determination of the fair value of our fixed income securities is subjective and could materially impact our operating results and financial condition.
In determining fair values we principally use the market approach which utilizes market transaction data for the same or similar instruments. The degree of management judgment involved in determining fair values is inversely related to the availability of market observable information. The fair value of assets may differ from the actual amount received upon sale of an asset in an orderly transaction between market participants at the measurement date. Moreover, the use of different valuation assumptions may have a material effect on the assets fair values. The difference between amortized cost or cost and fair value, net of deferred income taxes, certain VOBA, and certain reserves for life-contingent contract benefits, is reflected as a component of accumulated other comprehensive income in shareholders equity. Changing market conditions could materially affect the determination of the fair value of securities and unrealized net capital gains and losses could vary significantly.
Concentration of our investment portfolio in any particular segment of the economy may have adverse effects on our operating results and financial condition.
The concentration of our investment portfolio in any particular industry, collateral type, group of related industries, geographic sector or risk type could have an adverse effect on our investment portfolio and consequently on our results of operations and financial condition. Events or developments that have a negative impact on any particular industry, group of related industries or geographic region may have a greater adverse effect on the investment portfolio to the extent that the portfolio is concentrated, rather than diversified.
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The determination of the amount of realized capital losses recorded for impairments of our investments is subjective and could materially impact our operating results and financial condition.
The determination of the amount of realized capital losses recorded for impairments varies by investment type and is based on our ongoing evaluation and assessment of known and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information becomes available. We update our evaluations regularly and reflect changes in other-than-temporary impairments in our results of operations. The assessment of whether other-than-temporary impairments have occurred is based on our case-by-case evaluation of the underlying reasons for the decline in fair value. We define fair value generally as the price that would be received to sell an asset or paid to transfer a liability. Our conclusions on such assessments are judgmental and include assumptions and projections of future cash flows which may ultimately prove to be incorrect as assumptions, facts and circumstances change. Furthermore, historical trends may not be indicative of future impairments and additional impairments may need to be recorded in the future.
Deteriorating financial performance impacting commercial mortgage loans, securities collateralized by residential and commercial mortgage loans, and collateralized corporate loans may lead to write-downs and impact our results of operations and financial condition.
Changes in residential or commercial mortgage delinquencies, loss severities or recovery rates, declining residential or commercial real estate prices, corporate loan delinquencies or recovery rates, changes in credit or bond insurer strength ratings and the quality of service provided by service providers on securities in our portfolio could lead us to determine that write-downs are necessary in the future.
Our investment strategies may be adversely affected by developments in the financial markets.
Our investment management strategies may be adversely affected by unexpected developments in the financial markets. There may be a limited market for certain investments we hold in our investment portfolio, making them relatively illiquid. These include privately-placed fixed maturity securities, mortgage loans and policy loans. If we were forced to sell certain of our investments during periods of market volatility or disruption, market prices may be lower than our carrying value in such investments.
Risks Relating to the Insurance Industry
Difficult conditions in the global economy and capital markets generally could adversely affect our business and operating results.
Our business and results of operations are materially affected by conditions in the global capital markets and the economy generally. Stressed conditions, volatility and disruptions in global capital markets, particular markets, or financial asset classes can have an adverse effect on us, in part because we have a large investment portfolio and certain of our insurance liabilities are sensitive to changing market factors. Market factors, including interest rates, credit spreads, equity prices, real estate markets, consumer spending, business investment, government spending, the volatility and strength of the capital markets, deflation and inflation, all affect the business and economic environment and, ultimately, the amount and profitability of our business. Disruptions in one market or asset class can also spread to other markets or asset classes. Upheavals in the financial markets can also affect our business through their effects on general levels of economic activity, employment and customer behavior. Financial markets have also been affected periodically by concerns over U.S. fiscal policy. These issues could, on their own, or combined with the possible slowing of the global economy generally, have severe repercussions to the U.S. and global credit and financial markets, further exacerbate concerns over sovereign debt of other countries and disrupt economic activity in the U.S. and elsewhere.
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General economic conditions could adversely affect us in the form of consumer behavior and pressure investment results. Holders of some of our interest-sensitive life insurance and annuity products may engage in an elevated level of discretionary withdrawals of contractholder funds. Our investment results could be adversely affected as deteriorating financial and business conditions affect the issuers of the securities in our investment portfolio.
Losses from legal and regulatory actions may be material to our operating results or cash flows and may result in harm to our reputation.
We are involved in various legal actions, some of which involve claims for substantial amounts. We are also subject to various regulatory actions and inquiries, such as information requests, market conduct examinations, books and record examinations, from state and federal regulators and other authorities. A substantial legal liability or significant regulatory action against us, as well as regulatory inquiries or investigations could harm our reputation, result in material fines or penalties, result in significant legal costs and otherwise have a material adverse effect on our business, financial condition and results of operations. Even if we ultimately prevail in the litigation, regulatory actions or investigation, our ability to retain our current contractholders and recruit and retain employees could be materially and adversely impacted.
We are subject to extensive regulation and potential further restrictive regulation may increase our operating costs.
As an insurance company with separate accounts that are regulated as investment companies, we are subject to extensive laws and regulations. These laws and regulations are complex and subject to change. Changes may sometimes lead to additional expenses and increased legal exposure. Moreover, laws and regulations are administered and enforced by a number of different governmental authorities, each of which exercises a degree of interpretive latitude, including state insurance regulators, state securities administrators, state attorneys general, and federal agencies including the SEC, the FINRA and the U.S. Department of Justice. Consequently, we are subject to the risk that compliance with any particular regulators or enforcement authoritys interpretation of a legal issue may not result in compliance with anothers interpretation of the same issue, particularly when compliance is judged in hindsight. In addition, there is risk that any particular regulators or enforcement authoritys interpretation of a legal issue may change over time to our detriment, or that changes in the overall legal environment may, even absent any particular regulators or enforcement authoritys interpretation of a legal issue changing, cause us to change our views regarding the actions we need to take from a legal risk management perspective, thus necessitating changes to our practices that may, in some cases, limit our ability to grow or to improve the profitability of our business. Furthermore, in some cases, these laws and regulations are designed to protect or benefit the interests of a specific constituency rather than a range of constituencies. For example, state insurance laws and regulations are generally intended to protect or benefit purchasers or users of insurance products. In many respects, these laws and regulations limit our ability to maintain the profitability of our business.
Regulatory reforms, and the more stringent application of existing regulations, may make it more expensive for us to conduct our business and increase our capital requirements.
The federal government has enacted comprehensive regulatory reforms for financial services entities. As part of a larger effort to strengthen the regulation of the financial services market, certain reforms are applicable to the insurance industry, including the Federal Insurance Office (FIO) established within the Treasury Department.
In recent years, the state insurance regulatory framework has come under public scrutiny, members of Congress have discussed proposals to provide for federal chartering of insurance companies, and the FIO and Financial Stability Oversight Council were established. We can make no assurances regarding the potential impact of state or federal measures that may change the nature or scope of insurance and financial regulation. These regulatory reforms and any additional legislative change or regulatory requirements imposed upon us in
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connection with the federal governments regulatory reform of the financial services industry, and any more stringent enforcement of existing regulations by federal authorities, may make it more expensive for us to conduct our business, or limit our ability to grow.
Reinsurance may be unavailable at current levels and prices.
Market conditions beyond our control impact the availability and cost of the reinsurance. No assurances can be made that reinsurance will remain continuously available to us to the same extent and on the same terms and rates as is currently available. If we were unable to renew or purchase reinsurance protection in amounts that we consider sufficient and at prices that we consider acceptable, we may have to accept an increase in risk exposure, seek other alternatives, or accept reduced profitability.
Reinsurance subjects us to the credit risk of our reinsurers and may not be adequate to protect us against losses arising from ceded insurance, which could have a material effect on our operating results.
The collectability of reinsurance recoverables is subject to uncertainty arising from a number of factors, including changes in market conditions, whether insured losses meet the qualifying conditions of the reinsurance contract and whether reinsurers, or their affiliates, have the financial capacity and willingness to make payments under the terms of a reinsurance treaty or contract. Our ceded insurance risks include all new business generated in the thirty months following the closing of our acquisition by Resolution Life, Inc., which business will be entirely ceded to Allstate Life Insurance Company. Our inability to collect a material recovery from a reinsurer could have a material effect on our operating results.
Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs or our ability to obtain credit on acceptable terms.
In periods of extreme volatility and disruption in the capital and credit markets, liquidity and credit capacity may be severely restricted. In such circumstances, our ability to obtain capital to fund operating expenses, financing costs, capital expenditures or acquisitions may be limited, and the cost of any such capital may be significant. Our access to additional financing will depend on a variety of factors such as market conditions, the general availability of credit, the overall availability of credit to our industry, our credit ratings and credit capacity, as well as lenders perception of our long- or short-term financial prospects. Similarly, our access to funds may be impaired if regulatory authorities or rating agencies take negative actions against us. If a combination of these factors were to occur, our internal sources of liquidity may prove to be insufficient, and in such case, we may not be able to successfully obtain additional financing on favorable terms.
A downgrade or a potential downgrade in our financial strength or credit ratings could result in a loss of business and materially affect our financial condition and results of operations.
Financial strength ratings are published by various Nationally Recognized Statistical Rating Organizations (NRSRO) and similar entities not formally recognized as NRSROs. They indicate the NRSROs opinion regarding an insurance companys ability to meet contractholder and policyholder obligations, and are important to maintaining public confidence in our products and our competitive position.
Downgrades in our financial strength ratings could have a material adverse effect on our financial condition and results of operations in many ways, including materially increasing the number or amount of policy surrenders and withdrawals by contractholders and adversely affecting our ability to obtain reinsurance at reasonable prices or at all.
In view of the difficulties experienced by many financial institutions as a result of the financial crisis and ensuing global recession, including our competitors in the insurance industry, we believe it is possible that the NRSROs will continue to heighten the level of scrutiny that they apply to insurance companies, will continue
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to increase the frequency and scope of their credit reviews, will continue to request additional information from the companies that they rate, and may adjust upward the capital and other requirements employed in the models for maintenance of certain ratings levels. Our ratings could be downgraded at any time and without notice by any NRSRO. In addition, these regulatory reforms may also increase our minimum capital requirements.
A large scale pandemic, the continued threat of terrorism or military actions may have an adverse effect on the level of claim losses we incur, the value of our investment portfolio, our competitive position, liquidity, operating results and attractiveness of product offering.
A large scale pandemic, the continued threat of terrorism, within the United States and abroad, or military and other actions, and heightened security measures in response to these types of threats, may cause significant volatility and losses in our investment portfolio from interest rate changes, and result in loss of life, disruptions to commerce and reduced economic activity. Some of the assets in our investment portfolio may be adversely affected by reduced economic activity caused by a large scale pandemic or the continued threat of terrorism. Additionally, a large scale pandemic or terrorist act could have a material effect on renewal premium, profitability, competitiveness, liquidity, operating results and attractiveness of product offering.
Changes in accounting standards issued by the Financial Accounting Standards Board or other standard- setting bodies may adversely affect our results of operations and financial condition.
Our financial statements are subject to the application of generally accepted accounting principles, which are periodically revised, interpreted and/or expanded. Accordingly, we are required to adopt new guidance or interpretations, or could be subject to existing guidance as we enter into new transactions, which may have a material effect on our results of operations and financial condition that is either unexpected or has a greater impact than expected. For a description of changes in accounting standards that are currently pending and, if known, our estimates of their expected impact, see Note 2 of the financial statements.
The failure in cyber or other information security systems, as well as the occurrence of events unanticipated in our disaster recovery systems, management continuity planning or a support failure from external providers, could result in a loss or disclosure of confidential information, damage to our reputation and impairment of our ability to conduct business effectively.
We depend heavily upon computer systems to perform necessary business functions. We rely on these systems throughout our business for a variety of functions, including processing claims and applications, providing information to customers and distributors, performing actuarial analyses and maintaining financial records. We also retain confidential and proprietary information on our computer systems and we rely on sophisticated technologies and our third party vendors to maintain the security of that information. Our computer systems have been, and will likely continue to be, subject to computer viruses or other malicious codes, unauthorized access, cyber-attacks or other computer-related penetrations. While, to date, we have not experienced a material breach of cybersecurity, administrative and technical controls and other preventive actions we take to reduce the risk of cyber-incidents and protect our information technology may be insufficient to prevent physical and electronic break-ins, cyber-attacks or other security breaches to our computer systems. If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our operations, which could result in damage to our reputation, financial losses, litigation, increased costs, regulatory penalties and/or customer dissatisfaction or loss.
The occurrence of a disaster such as a natural catastrophe, epidemic, industrial accident, blackout, computer virus, terrorist attack or war, cyber-attack, events unanticipated in our disaster recovery systems, or a support failure from external providers, could have an adverse effect on our ability to conduct business and on our results of operations and financial condition, particularly if those events affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data. If a significant number of our third party
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service providers were unavailable in the event of a disaster, our ability to effectively conduct our business could be severely compromised. These interruptions also may interfere with our third party service providers to provide services and our employees ability to perform their job responsibilities.
The failure of our computer systems and/or our disaster recovery plans for any reason could cause significant interruptions in our operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to our customers. Such a failure could harm our reputation, subject us to regulatory sanctions and legal claims, lead to a loss of customers and revenues and otherwise adversely affect our business and financial results. Although we conduct due diligence, negotiate contractual provisions and, in many cases, conduct periodic reviews of our vendors, distributors, and other third parties that provide operational or information technology services to us to confirm compliance with the Companys information security standards, the failure of such third parties computer systems and/or their disaster recovery plans for any reason might cause significant interruptions in our operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to our customers. Such a failure could harm our reputation, subject us to regulatory sanctions and legal claims, lead to a loss of policyholders and revenues and otherwise adversely affect our business and financial results.
We are subject to data security and privacy risks that could negatively affect our results, operations or reputation.
Hackers and data thieves are increasingly sophisticated and operate large-scale and complex automated attacks. Any breach of our network may result in the loss of valuable business data, misappropriation of our consumers or employees personal information or a disruption of our business, which could give rise to unwanted media attention, materially damage our customer relationships and reputation and result in lost sales, fines or lawsuits.
In addition, we must comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data. Any failure to comply with these regulatory standards could subject us to legal and reputational risks. Misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against the Company by governmental entities or others, damage to our reputation and credibility and could have a negative impact on revenues and profits.
Loss of key vendor relationships or failure of a vendor to protect personal information of our customers, claimants or employees could affect our operations.
We rely on services and products provided by many vendors in the United States and abroad, specifically third party administrators of our policies, our invested assets, and vendors of computer hardware and software. In the event that one or more of our vendors suffers a bankruptcy or otherwise becomes unable to continue to provide products or services, or fails to protect personal information of our customers, claimants or employees, we may suffer operational impairments and financial losses.
We may not be able to protect our intellectual property and may be subject to infringement claims.
We rely on a combination of contractual rights and copyright, trademark, patent and trade secret laws to establish and protect our intellectual property. Although we use a broad range of measures to protect our intellectual property rights, third parties may infringe or misappropriate our intellectual property. We may have to litigate to enforce and protect our intellectual property and to determine its scope, validity or enforceability, which could divert significant resources and prove unsuccessful. An inability to protect our intellectual property could have a material effect on our business.
We may be subject to claims by third parties for patent, trademark or copyright infringement or breach of usage rights. Any such claims and any resulting litigation could result in significant expense and liability. If
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our third party providers or we are found to have infringed a third-party intellectual property right, either of us could be enjoined from providing certain products or services or from utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets or licenses. Alternatively, we could be required to enter into costly licensing arrangements with third parties or implement a costly work around. Any of these scenarios could have a material effect on our business and results of our operations.
Our risk management policies and procedures may leave us exposed to unidentified or unanticipated risk, which could negatively affect our business.
We have devoted significant resources to develop and periodically update our risk management policies and procedures to reflect ongoing review of our risks and expect to continue to do so in the future. Nonetheless, our policies and procedures may not be comprehensive and may not identify every risk to which we are exposed. Many of our methods for managing risk and exposures are based upon the use of observed historical market behavior or statistics based on historical models. As a result, these methods may not fully predict future exposures, which can be significantly greater than our historical measures indicate. Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that is publicly available or otherwise accessible to us. This information may not always be accurate, complete, up-to-date or properly evaluated. In addition, more extensive and perhaps different risk management policies and procedures might have to be implemented under pending regulations.
Our associates may take risks not in accordance with our risk management policies which could negatively affect our financial condition and business.
As an insurance enterprise, we are in the business of accepting certain risks. The associates who conduct our business, including executive officers and other members of management, investment professionals, sales agents, and other associates, do so in part by making decisions and choices that involve exposing us to risk. These include decisions such as pricing, determining what assets to purchase for investment and when to sell them, which business opportunities to pursue, and other decisions. We endeavor, in the design and implementation of our compensation programs and practices, to avoid giving our associates incentives to take excessive risks; however, associates may take such risks regardless of the structure of our compensation programs and practices. Similarly, although we employ controls and procedures designed to monitor associates business decisions and prevent us from taking excessive risks, and to prevent employee misconduct, these controls and procedures may not be effective. In such instances, the impact of those risks could harm our reputation and have a material adverse effect on our financial condition and business operations.
We may be unable to retain our highly qualified employees.
We must attract and retain employees to service our policyholders and manage and grow our business. We compete with other financial services companies for employees primarily on the basis of compensation and financial position. Our reputation, operations, and internal controls could be materially adversely affected if we are unsuccessful in retaining highly qualified employees. Our inability to recruit or our failure to retain a sufficient number of qualified individuals in the future may impair our efficiency and effectiveness to service policyholders, meet regulatory deadlines, and our ability to pursue growth opportunities.
Item 11(a). | Description of Business |
Lincoln Benefit Life Company (referred to in this document as we, Lincoln Benefit, our, us or the Company) was incorporated under the laws of the State of Nebraska in 1938. Lincoln Benefit is a wholly-owned subsidiary of Resolution Life, Inc., a Delaware corporation, which is a wholly-owned, indirect subsidiary of Resolution Life L.P. (the Limited Partnership), a Bermuda limited partnership, and Resolution Life (Parallel) Partnership, a Bermuda-based partnership.
11
On April 1, 2014, Resolution Life, Inc. acquired all the outstanding capital stock in Lincoln Benefit (the Acquisition) from Allstate Life Insurance Company (ALIC). Immediately prior to the closing of the transaction, Lincoln Benefit commuted certain business previously reinsured to ALIC, including (a) all of the fixed deferred annuity, value adjusted deferred annuity and indexed deferred annuity business written by the Company that was previously reinsured to ALIC, (b) all of the life insurance business written by the Company through independent producers that was previously reinsured to ALIC, other than certain specified life business, and (c) all of the net liability of the Company with respect to the accident and health and long-term care insurance business written by the Company that was previously reinsured to ALIC ((a), (b) and (c) collectively, the Recaptured Business). In connection with the closing, Lincoln Benefit and ALIC entered into an Amended and Restated Reinsurance Agreement (the ARRA), pursuant to which ALIC continues to reinsure business that was ceded by Lincoln Benefit to ALIC before the closing, with the exception of the Recaptured Business (the ALIC Reinsured Business). ALIC continues to provide certain services with respect to the Recaptured Business on a transitional basis, including services relating to processing of Life block commissions and agent licensing, 2015 agent bonus payments, and escheatment and unclaimed property processing.
ALIC continues to reinsure all life insurance business written by Lincoln Benefit through the Allstate Financial Sales channel, all immediate annuities written by Lincoln Benefit prior to closing of the Acquisition, and certain term life policies written by Lincoln Benefit. This business will continue to be administered by ALIC under an existing administrative services agreement between Lincoln Benefit and ALIC. The Allstate Financial sales channel will continue to sell Lincoln Benefit products until they are fully transitioned to a new Allstate company in 2017. As part of the Acquisition, ALIC has agreed to indemnify the Company for certain liabilities related to the pre-closing activities of the transferred business.
Lincoln Benefits variable annuity business is reinsured by ALIC under an existing reinsurance agreement between Lincoln Benefit and ALIC. In 2006, ALIC disposed of substantially all of its variable annuity business through reinsurance agreements with The Prudential Insurance Company of America, a subsidiary of Prudential Financial, Inc. and therefore mitigated this aspect of ALICs risk. The Company was not a direct participant of this agreement and its reinsurance agreement with ALIC remains unchanged.
Prior to July 18, 2013, we sold interest-sensitive traditional and variable life insurance and fixed annuities, including deferred and immediate, through independent master brokerage agencies. Effective January 1, 2014, we no longer offer fixed annuities such as deferred and immediate annuities, however, we continue to accept deposits on existing policies.
We have reinsurance agreements whereby certain premiums, contract charges, interest credited to policyholder account balances, contract benefits and expenses are ceded to ALIC and other non-affiliated reinsurers.
In our reports, we occasionally refer to statutory financial information. All domestic United States insurance companies are required to prepare statutory-basis financial statements. As a result, industry data is available that enables comparisons between insurance companies, including competitors that are not subject to the requirement to prepare financial statements in conformity with accounting principles generally accepted in the United States of America. We frequently use industry publications containing statutory financial information to assess our competitive position.
Lincoln Benefit is subject to extensive regulation, primarily at the state level. The method, extent and substance of such regulation varies by state but generally has its source in statutes that establish standards and requirements for conducting the business of insurance and that delegate regulatory authority to a state agency. These rules have a substantial effect on our business and relate to a wide variety of matters, including insurer solvency, reserve adequacy, insurance company licensing and examination, agent licensing, policy forms, rate
12
setting, the nature and amount of investments, claims practices, participation in guaranty funds, transactions with affiliates, the payment of dividends, underwriting standards, statutory accounting methods, trade practices and corporate governance.
In recent years, the state insurance regulatory framework has come under increased federal scrutiny. As part of an effort to strengthen the regulation of the financial services market, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) was enacted in 2010. Many regulations required pursuant to this law must still be finalized and we cannot predict what the final regulations will require, but do not expect a material impact on Lincoln Benefits operations. Dodd-Frank also created the Federal Insurance Office (FIO) within the Treasury Department. The FIO monitors the insurance industry, provides advice to the Financial Stability Oversight Council, represents the U.S. on international insurance matters and studies the current regulatory system. In addition, state legislators and insurance regulators continue to examine the appropriate nature and scope of state insurance regulation. We cannot predict whether any specific state or federal measures will be adopted to change the nature or scope of the regulation of insurance or what effect any such measures would have on Lincoln Benefit.
Item 11(b). | Description of Property |
Lincoln Benefit occupies leased office space in Lincoln, Nebraska and Rosemont, Illinois.
Item 11(c). | Legal Proceedings |
Lincoln Benefit is engaged in routine lawsuits, which, in managements judgment, are not of material importance to its total assets or business prospects.
13
Item 11(e) | Financial Statements and Notes to Financial Statements |
Lincoln Benefit Life Company
(A Wholly-Owned subsidiary of Resolution Life, Inc.)
December 31,2015
14
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholder of Lincoln Benefit Life Company:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations and comprehensive income, of shareholders equity and of cash flows present fairly, in all material respects, the financial position of Lincoln Benefit Life Company and its subsidiary at December 31, 2015 and December 31, 2014, and the results of their operations and their cash flows for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, Schedule I - Summary of Investments - Other than Investments in Related Parties and Schedule IV - Reinsurance (the financial statement schedules) present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedules are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audit. We conducted our audit of these statements 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
April 1, 2016
15
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholder of
Lincoln Benefit Life Company
Lincoln, Nebraska
We have audited the accompanying Statements of Operations and Comprehensive Income, Shareholders Equity and Cash Flows of Lincoln Benefit Life Company (the Company) for the year ended December 31, 2013 (Predecessors Basis) and for the period from January 1, 2014 through March 31, 2014 (Predecessors Basis). Our audits also included Schedule IV Reinsurance for the year ended December 31, 2013 (Predecessors Basis) and for the period from January 1, 2014 through March 31, 2014 (Predecessors Basis). These financial statements and financial statement schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and financial statement schedule 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. The Company is not required to have, nor were we engaged to perform, an audit of its 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, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the results of operations, shareholders equity and cash flows of Lincoln Benefit Life Company for the year ended December 31, 2013 (Predecessors Basis) and for the period from January 1, 2014 through March 31, 2014 (Predecessors Basis), in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, Schedule IV Reinsurance for the year ended December 31, 2013 (Predecessors Basis) and for the period from January 1, 2014 through March 31, 2014 (Predecessors Basis), when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
/s/ Deloitte & Touche, LLP
Chicago, Illinois
April 13, 2015
16
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
December 31, 2015 and December 31, 2014
($ in thousands, except par value data and share amounts)
December 31, 2015 |
December 31, 2014 |
|||||||
ASSETS |
||||||||
Fixed maturities, available-for-sale, at fair value (amortized cost $8,274,194 and $9,231,856) |
$ | 7,945,942 | $ | 9,390,647 | ||||
Commercial mortgage loans |
1,509,132 | 1,115,167 | ||||||
Policy loans |
186,827 | 194,385 | ||||||
Short-term investments |
184,820 | 361,369 | ||||||
Other invested assets |
18,412 | 26,897 | ||||||
|
|
|
|
|||||
Total Investments |
9,845,133 | 11,088,465 | ||||||
Cash |
49,121 | 49,730 | ||||||
Accrued investment income |
91,214 | 96,408 | ||||||
Reinsurance recoverables nonaffiliates |
5,984,458 | 5,694,965 | ||||||
Valuation of business acquired |
247,702 | 231,521 | ||||||
Deposit receivable |
1,250,328 | 1,383,388 | ||||||
Other assets |
633,091 | 592,202 | ||||||
Current income tax |
1,472 | | ||||||
Deferred tax asset, net |
65,040 | | ||||||
Separate account assets |
1,395,141 | 1,573,865 | ||||||
|
|
|
|
|||||
Total Assets |
$ | 19,562,700 | $ | 20,710,544 | ||||
|
|
|
|
|||||
LIABILITIES |
||||||||
Future policy benefits and other policyholder liabilities |
$ | 4,757,641 | $ | 4,528,949 | ||||
Policyholders account balances |
11,120,565 | 11,764,312 | ||||||
Accrued expenses and other liabilities |
95,826 | 188,656 | ||||||
Modified coinsurance payable |
1,250,328 | 1,383,388 | ||||||
Deferred tax liability |
| 40,732 | ||||||
Other long-term debt affiliate |
608,700 | 551,600 | ||||||
Separate account liabilities |
1,395,141 | 1,573,865 | ||||||
|
|
|
|
|||||
Total Liabilities |
$ | 19,228,201 | $ | 20,031,502 | ||||
|
|
|
|
|||||
SHAREHOLDERS EQUITY |
||||||||
Common stock, $100 par value, 30,000 shares authorized, 25,000 shares issued and outstanding |
$ | 2,500 | $ | 2,500 | ||||
Additional paid-in capital |
593,558 | 593,558 | ||||||
Accumulated other comprehensive income |
(154,699 | ) | 85,498 | |||||
Retained earnings (deficit) |
(106,860 | ) | (2,514 | ) | ||||
|
|
|
|
|||||
Total Shareholders Equity |
334,499 | 679,042 | ||||||
|
|
|
|
|||||
Total Liabilities and Shareholders Equity |
$ | 19,562,700 | $ | 20,710,544 | ||||
|
|
|
|
See Notes to the Consolidated Financial Statements
17
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Consolidated Statements of Operations and Comprehensive Income (Loss) (Successor) and Statements of Operations and Comprehensive Income (Loss) (Predecessor)
For the Year Ended December 31, 2015, the Period from April 1, 2014 through December 31, 2014, the Period from January 1, 2014 through March 31, 2014 and the Year Ended December 31, 2013
($ in thousands)
Successor | Predecessor | |||||||||||||||||||
For the Year Ended December 31, 2015 |
For the Period from April 1, 2014 through December 31, 2014 |
For the Period from January 1, 2014 through March 31, 2014 |
For the Year Ended December 31, 2013 |
|||||||||||||||||
Revenues |
||||||||||||||||||||
Premiums earned |
$ | 8,841 | $ | 20,384 | $ | | $ | | ||||||||||||
Fee income from policyholders |
353,932 | 259,169 | | | ||||||||||||||||
Net investment income |
398,931 | 288,571 | 2,350 | 10,935 | ||||||||||||||||
Realized investment gains, net |
113,538 | 46,092 | 285 | | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total revenues |
$ | 875,242 | $ | 614,216 | $ | 2,635 | $ | 10,935 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Expenses |
||||||||||||||||||||
Policyholders benefits |
351,744 | 216,543 | | | ||||||||||||||||
Return credited to policyholders account balances |
301,079 | 256,703 | | | ||||||||||||||||
Operating and acquisition expenses |
93,671 | 96,050 | | | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total expenses |
$ | 746,494 | $ | 569,296 | $ | | $ | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Income (Loss) Before Federal Income Tax |
$ | 128,748 | $ | 44,920 | $ | 2,635 | $ | 10,935 | ||||||||||||
Federal Income Tax Expense (Benefit) |
||||||||||||||||||||
Current |
22,528 | | 914 | 3,902 | ||||||||||||||||
Deferred |
23,566 | 14,234 | 8 | (77 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total income tax expense (benefit) |
46,094 | 14,234 | 922 | 3,825 | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
NET INCOME (LOSS) |
$ | 82,654 | $ | 30,686 | $ | 1,713 | $ | 7,110 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Other comprehensive (loss) income, before tax |
||||||||||||||||||||
Net unrealized investment gains (losses): |
||||||||||||||||||||
Unrealized investment gains (losses) for the period |
$ | (290,511 | ) | $ | 131,433 | $ | 2,364 | $ | (15,281 | ) | ||||||||||
Reclassification adjustment for (gains) losses included in net income |
79,023 | | 285 | 1 | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Net unrealized investment gains (losses) |
(369,534 | ) | 131,433 | 2,079 | (15,282 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Other comprehensive (loss) income, before tax |
||||||||||||||||||||
Less: Income tax expense (benefit) related to: |
||||||||||||||||||||
Unrealized investment gains (losses) for the period |
(101,679 | ) | 45,935 | 828 | (5,349 | ) | ||||||||||||||
Reclassification adjustment for (gains) losses included in net income |
(27,658 | ) | | (100 | ) | | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Net unrealized investment gains (losses) |
(129,337 | ) | 45,935 | 728 | (5,349 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Other comprehensive (loss) income |
(240,197 | ) | 85,498 | 1,351 | (9,933 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Comprehensive (loss) income |
$ | (157,543 | ) | $ | 116,184 | $ | 3,064 | $ | (2,823 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
See Notes to the Consolidated Financial Statements
18
Lincoln Benefit Life Company
Consolidated Statements of Shareholders Equity (Successor) and Statements of Shareholders Equity (Predecessor)
For the Year Ended December 31, 2015, the Period from April 1, 2014 through December 31, 2014, the Period from January 1, 2014 through March 31, 2014, and the Year Ended December 31, 2013
($ in thousands, except par value data and share amounts)
Common Stock | Additional Paid-In Capital |
Retained Earnings |
Accumulated Other Other Comprehensive Income (Loss) |
Total Shareholders Equity |
||||||||||||||||||||
Predecessor |
Shares | Amount | ||||||||||||||||||||||
Balance, December 31, 2012 |
25,000 | $ | 2,500 | $ | 180,000 | $ | 150,215 | $ | 13,803 | $ | 346,518 | |||||||||||||
Comprehensive income (loss) |
||||||||||||||||||||||||
Net income (loss) |
| | | 7,110 | | 7,110 | ||||||||||||||||||
Other comprehensive income (loss), net of tax |
| | | | (9,933 | ) | (9,933 | ) | ||||||||||||||||
|
|
|||||||||||||||||||||||
Total comprehensive income (loss) |
(2,823 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, December 31, 2013 |
25,000 | $ | 2,500 | $ | 180,000 | $ | 157,325 | $ | 3,870 | $ | 343,695 | |||||||||||||
Comprehensive income (loss) |
||||||||||||||||||||||||
Net income (loss) |
| | | 1,713 | | 1,713 | ||||||||||||||||||
Other comprehensive income (loss), net of tax |
| | | | 1,351 | 1,351 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Total comprehensive income (loss) |
3,064 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, March 31, 2014 |
25,000 | $ | 2,500 | $ | 180,000 | $ | 159,038 | $ | 5,221 | $ | 346,759 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Successor |
||||||||||||||||||||||||
Balance, April 1, 2014 |
25,000 | $ | 2,500 | $ | 593,308 | $ | | $ | | $ | 595,808 | |||||||||||||
Dividends to shareholder |
| | | (33,200 | ) | | (33,200 | ) | ||||||||||||||||
Capital contribution |
| | 250 | | | 250 | ||||||||||||||||||
Comprehensive income (loss) |
||||||||||||||||||||||||
Net income |
| | | 30,686 | | 30,686 | ||||||||||||||||||
Other comprehensive income (loss), net of tax |
| | | | 85,498 | 85,498 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Total comprehensive income (loss) |
116,184 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, December 31, 2014 |
25,000 | $ | 2,500 | $ | 593,558 | $ | (2,514 | ) | $ | 85,498 | $ | 679,042 | ||||||||||||
Dividends to shareholder |
| | | (187,000 | ) | | (187,000 | ) | ||||||||||||||||
Comprehensive income (loss) |
||||||||||||||||||||||||
Net income |
| | | 82,654 | | 82,654 | ||||||||||||||||||
Other comprehensive income (loss), net of tax |
| | | | (240,197 | ) | (240,197 | ) | ||||||||||||||||
|
|
|||||||||||||||||||||||
Total comprehensive income (loss) |
(157,543 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, December 31, 2015 |
25,000 | $ | 2,500 | $ |
593,558 |
|
$ | (106,860 | ) | $ | (154,699 | ) | $ | 334,499 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the Consolidated Financial Statements
19
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Consolidated Statements of Cash Flows (Successor) and Statements of Cash Flows (Predecessor)
For the Year Ended December 31, 2015, the Period from April 1, 2014 through December 31, 2014, the Period from January 1, 2014 through March 31, 2014 and the Year Ended December 31, 2013
($ in thousands)
Successor | Predecessor | |||||||||||||||||
For the Year Ended December 31, 2015 |
For the Period from April 1, 2014 through December 31, 2014 |
For the Period from January 1, 2014 through March 31, 2014 |
For the Year Ended December 31, 2013 |
|||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||
Net income (loss) |
$ | 82,654 | $ | 30,686 | $ | 1,713 | $ | 7,110 | ||||||||||
Adjustments to reconcile net income to net cash: |
||||||||||||||||||
Policy charges and fee income |
(353,932 | ) | (259,169 | ) | | | ||||||||||||
Interest credited |
301,079 | 256,703 | | | ||||||||||||||
Investment gains, net |
(125,986 | ) | (46,092 | ) | (285 | ) | | |||||||||||
Amortization/Accretion of bond premium, net |
44,701 | 44,112 | 94 | 630 | ||||||||||||||
Amortization of VOBA |
40,880 | 38,987 | | | ||||||||||||||
Changes in assets and liabilities: |
||||||||||||||||||
Decrease (increase) in insurance related liabilities and policy-related balances |
(24,884 | ) | (21,964 | ) | 6,402 | (6,147 | ) | |||||||||||
Decrease (increase) in receivable from/payable to affiliate |
| | 24,358 | (17,255 | ) | |||||||||||||
Deferred income tax expense (benefit) |
23,566 | 14,234 | 921 | (329 | ) | |||||||||||||
Decrease (increase) in accrued investment income |
5,194 | 6,838 | | | ||||||||||||||
Decrease (increase) in other assets and liabilities |
(27,417 | ) | 31,780 | (23,192 | ) | 16,007 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Net cash provided by (used in) operating activities |
(34,145 | ) | 96,115 | 10,011 | 16 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Cash flows from investing activities: |
||||||||||||||||||
Fixed maturities, available for sale |
||||||||||||||||||
Proceeds from sales and maturities |
4,739,792 | 1,844,344 | 21,341 | 62,645 | ||||||||||||||
Purchases |
(3,703,237 | ) | (1,898,874 | ) | | (38,896 | ) | |||||||||||
Commercial mortgage loans |
||||||||||||||||||
Proceeds from sales and paydowns |
164,658 | 150,849 | | | ||||||||||||||
Originations and purchases |
(559,110 | ) | | | | |||||||||||||
Net purchases, sales, maturities of derivatives |
(1,379 | ) | (8,636 | ) | | | ||||||||||||
Net purchases, sales, maturities of other investments |
184,107 | 620,425 | 55,924 | (31,738 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Net cash provided by (used in) investing activities |
824,831 | 708,108 | 77,265 | (7,989 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Cash flows from financing activities: |
||||||||||||||||||
Policyholders account deposits |
356,916 | 340,128 | | | ||||||||||||||
Policyholders account withdrawals |
(922,215 | ) | (1,141,289 | ) | | | ||||||||||||
Dividends paid to shareholder |
(187,000 | ) | (33,200 | ) | | | ||||||||||||
Change in overdrafts |
(38,996 | ) | 39,089 | | | |||||||||||||
Capital contribution |
| 250 | | | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Net cash provided by (used in) financing activities |
(791,295 | ) | (795,022 | ) | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Net increase (decrease) in cash and cash equivalents |
(609 | ) | 9,201 | 87,276 | (7,973 | ) | ||||||||||||
Cash and cash equivalents, beginning of period |
49,730 | 40,529 | 5,100 | 13,073 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Cash and cash equivalents, end of period |
$ | 49,121 | $ | 49,730 | $ | 92,376 | $ | 5,100 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Supplemental schedule of cash flow information: |
||||||||||||||||||
Cash paid during the year: |
||||||||||||||||||
Income taxes paid |
$ | 24,000 | $ | | $ | | $ | 4,200 | ||||||||||
Interest paid |
6,671 | $ | 4,585 | $ | | $ | | |||||||||||
Commutation Agreement proceeds (see Note 1): |
||||||||||||||||||
Cash received on April 1, 2014 |
$ | | $ | | $ | 143,348 | $ | | ||||||||||
Cash received subsequent to April 1, 2014 |
$ | | $ | | $ | 5,946 | $ | | ||||||||||
Invested assets transferred |
$ | | $ | | $ | 11,482,637 | $ | | ||||||||||
Noncash activities |
||||||||||||||||||
Issuance of vehicle note |
$ | | $ | 513,000 | $ | | $ | | ||||||||||
Issuance of other long-term debt |
$ | | $ | 513,000 | $ | | $ | | ||||||||||
Interest income on vehicle note |
$ | 22,880 | $ | 15,711 | $ | | $ | | ||||||||||
Interest expense on other long-term debt |
$ | 22,880 | $ | 15,711 | $ | | $ | | ||||||||||
Increase in vehicle note and other long-term debt |
$ | 57,100 | $ | 38,600 | $ | | $ | | ||||||||||
Increase in modified coinsurance payable and deposit receivable |
$ | 133,060 |
$ |
166,963 |
|
$ | | $ | |
See Notes to the Consolidated Financial Statements
20
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
1. | General |
Lincoln Benefit Life Company (the Company or Lincoln Benefit) is a stock insurance company domiciled in the State of Nebraska. It is a wholly owned subsidiary of Resolution Life, Inc. (Resolution), which in turn is a wholly owned subsidiary of Resolution Life Holdings, Inc. (Holdings). Resolution was formed on July 2, 2013 under the General Corporation Law of the State of Delaware.
On April 1, 2014, Lancaster Re Captive Insurance Company (Lancaster Re), a Nebraska domiciled captive insurance company, became a wholly owned subsidiary of Lincoln Benefit when it was contributed to Lincoln Benefit by Resolution.
The Company became a wholly owned subsidiary of Resolution on April 1, 2014 after receiving all required regulatory approvals. Prior to this date, it was a wholly owned subsidiary of Allstate Life Insurance Company (ALIC). On July 17, 2013, Holdings executed a Stock Purchase Agreement (the Purchase Agreement) to acquire 100% of the Company from ALIC (the Acquisition). In November 2013, Holdings assigned the right to acquire all of Lincoln Benefits outstanding capital stock to Resolution pursuant to an Assignment Agreement. The purchase price was $595.8 million.
The Company is authorized to sell life insurance and retirement products in all states except New York, as well as in the District of Columbia, the U.S. Virgin Islands and Guam. Prior to July 18, 2013, the Company sold interest-sensitive, traditional and variable life insurance products through both exclusive agencies (Allstate Financial Sales channel) and independent master brokerage agencies. Effective July 17, 2013, sales through the independent master brokerage agencies ceased, and sales through the Allstate Financial sales channel will continue for a period up to 30 months after the closing date of Acquisition. We operate as a single segment entity, based on the manner in which we use financial information to evaluate business performance and to determine the allocation of resources.
On April 1, 2014, immediately prior to the Acquisition, the Company, pursuant to a Partial Commutation Agreement, recaptured all deferred annuity, long-term care, accident and health and life business sold through Lincoln Benefits independent master brokerage agencies, other than specified life business, previously reinsured by ALIC. The primary impacts of the Partial Commutation Agreement with ALIC were the receipt of investments, the reduction of the related reinsurance recoverable and the reestablishment of deferred acquisition costs. The Companys assets and liabilities increased by $1.33 billion and $0.19 billion, respectively. Since the Partial Commutation Agreement occurred between entities under common control, the excess of assets received and liabilities assumed was recorded as a capital contribution through additional paid-in capital.
Additionally, Lincoln Benefit and ALIC entered into an Amended and Restated Reinsurance Agreement where ALIC continues to reinsure all life insurance business written by Lincoln Benefit through the Allstate Financial Sales channel, all immediate annuities written by Lincoln Benefit prior to closing of the Acquisition, and certain term life policies written by Lincoln Benefit. Lincoln Benefits variable annuity business will remain reinsured by ALIC under an existing reinsurance agreement between Lincoln Benefit and ALIC. This business will continue to be administered by ALIC under an existing administrative services agreement between Lincoln Benefit and ALIC.
As part of the Acquisition, ALIC has agreed to indemnify the Company for certain liabilities related to the pre-closing activities of the transferred business.
21
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Under the acquisition method of accounting, the assets acquired and liabilities assumed are recorded at fair value at the date of acquisition. The following table summarizes the fair values of assets acquired and liabilities assumed as of April 1, 2014:
($ in thousands) |
||||
Assets |
||||
Fixed maturities |
$ | 9,194,903 | ||
Commercial mortgage loans |
1,263,902 | |||
Policy loans |
196,451 | |||
Short-term investments |
979,728 | |||
Other invested assets |
1,104 | |||
Cash |
40,529 | |||
Accrued investment income |
103,246 | |||
Reinsurance recoverable |
5,606,879 | |||
Value of business acquired |
290,795 | |||
Deposit receivable |
1,550,351 | |||
Intangibles |
5,200 | |||
Other assets |
554,176 | |||
Separate account assets |
1,661,007 | |||
|
|
|||
Total assets acquired |
21,448,271 | |||
|
|
|||
Liabilities |
||||
Future policy benefits and other policyholder liabilities |
6,682,833 | |||
Policyholders account balances |
10,367,246 | |||
Accrued expenses and other liabilities |
78,026 | |||
Modified coinsurance payable |
1,550,351 | |||
Other long-term debt affiliate |
513,000 | |||
Separate account liabilities |
1,661,007 | |||
|
|
|||
Total liabilities assumed |
20,852,463 | |||
|
|
|||
Net assets acquired |
$ | 595,808 | ||
|
|
Included in the assets acquired is the value of business acquired (VOBA), which reflects the estimated fair value of in-force contracts acquired and represents the portion of the purchase price that is allocated to the future profits embedded in the acquired contracts at the acquisition date. See Note 11 for further explanation of VOBA. The assessment of fair value in accordance with ASC 805-20-25 included the establishment of intangible assets for VOBA and various state licenses.
Basis of Presentation
The Companys financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP). The financial statements are presented for Successor and Predecessor periods, which relate to the accounting periods after and before April 1, 2014, respectively, the date of the closing of the Acquisition. For periods after April 1, 2014, the accompanying financial statements comprise the consolidated financial statements of the Company, which include the accounts of the Company and its subsidiary. Due to the Acquisition and the application of push-down accounting, different bases of accounting have been used to prepare the Predecessor and Successor financial statements. A black line separates the Predecessor and Successor financial statements to highlight the lack of comparability between these two periods. The principal accounting policies applied in the preparation of these financial statements are set out below and in Note 2.
22
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Consolidation
The accompanying consolidated financial statements of the Successor include the accounts of Lincoln Benefit and its subsidiary, Lancaster Re. All significant intercompany balances and transactions have been eliminated on consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
2. | Significant Accounting Policies |
Cash
Cash includes cash on hand, amounts due from banks, money market securities, highly liquid overnight deposits, discount notes and commercial paper held in the ordinary course of business and other debt instruments with maturities of three months or less when purchased.
Investments
Fixed maturities include bonds, asset-backed securities (ABS) residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS). Fixed maturities, which may be sold prior to their contractual maturity, are designated as available-for-sale (AFS) and are carried at fair value. The difference between amortized cost and fair value, net of deferred income taxes, is reflected as a component of accumulated other comprehensive income. Cash received from calls, principal payments and make-whole payments and cash received from maturities and pay-downs are reflected as a component of proceeds from sales and maturities within the Consolidated Statement of Cash Flows Successor and Statement of Cash Flows Predecessor.
The Company recognizes other-than-temporary impairments (OTTI) for securities classified as AFS in accordance with ASC 320, Investments-Debt and Equity Securities. At least quarterly, management reviews impaired securities for OTTI. The Company considers several factors when determining if a security is OTTI, including but not limited to: its intent and ability to hold the impaired security until an anticipated recovery in value, the issuers ability to meet current and future principal and interest obligations for fixed maturity securities, the length and severity of the impairment, the financial condition and near term and long term prospects for the issuer. In making these evaluations, the Company exercises considerable judgment.
If the Company intends to sell or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, then the Company recognizes a charge to earnings for the full amount of the impairment (the difference between the amortized cost and fair value of the security). For fixed maturity securities that are considered OTTI and that the Company does not intend to sell and will not be required to sell, the Company separates the impairment into two components: credit loss and noncredit loss. Credit losses are charged to net realized investment losses and noncredit losses are charged to other comprehensive income. The credit loss component is the difference between the securitys amortized cost and the present value of its expected future cash flows discounted at the current effective rate. The remaining difference between the securitys fair value and the present value of its expected future cash flows is the noncredit loss. For corporate bonds, historical default (by rating) data is used as a proxy for the probability of default, and loss given default (by issuer) projections are applied to the par amount of the bond. Potential losses incurred on structured securities
23
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
are based on expected loss models rather than incurred loss models. Expected cash flows include assumptions about key systematic risks (e.g., unemployment rates, housing prices) and loan-specific information (e.g., delinquency rates, loan-to-value ratios). Estimating future cash flows is a quantitative and qualitative process that incorporates information received from third parties, along with assumptions and judgments about the future performance of the underlying collateral.
Commercial mortgage loans (CMLs) acquired at fair value are carried at amortized cost using the effective interest rate method. CMLs held by the Company are diversified by property type and geographic area throughout the U.S. CMLs are considered impaired when it is probable that the Company will not collect amounts due according to the terms of the original loan agreement. The Company assesses the impairment of loans individually for all loans in the portfolio. The Company estimates the fair value of the underlying collateral using internal valuations generally based on discounted cash flow analyses. The Company estimates an allowance for loan and lease losses (ALLL) representing potential credit losses embedded in the CML portfolio. The estimate is based on a consistently applied analysis of the loan portfolio and takes into consideration all available information, including industry, geographical, economic and political factors.
Policy loans represent loans the Company issues to policyholders. Policy loans are carried at unpaid principal balances. Interest income on such loans is recognized as earned using the contractually agreed upon interest rate and reflected in Net investment income in the Consolidated Statement of Operations and Comprehensive Income (Loss). Generally, interest is capitalized on the associated policys anniversary date.
Short-term investments include securities and other investments with remaining maturities of one year or less, but greater than three months, at the time of purchase and are stated at estimated fair value or amortized cost, which approximates fair value.
Derivatives
As part of the Companys overall risk management policy, the Company uses listed options and exchange traded futures to economically hedge its obligation under certain fixed indexed annuity and universal life contracts. Derivative financial instruments utilized by the Company during the year ended December 31, 2015 and in the period from April 1, 2014 through December 31, 2014 (the Successor Period) included index option contracts and futures contracts. Derivatives are carried in the Companys Consolidated Balance Sheet either as assets within Other invested assets or as liabilities within Accrued expenses and other liabilities at estimated fair value. The Company offsets the fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement. Accruals on derivatives are generally recorded in accrued investment income or within other liabilities. However, accruals that are not scheduled to settle within one year are included with the derivatives carrying value in other invested assets or other liabilities. If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are reported in realized investment gains, net in the Consolidated Statement of Operations and Comprehensive Income (Loss). The notional amounts specified in the contracts are used to calculate contractual payments under the agreements and are generally not representative of the potential for gain or loss on these contracts. Futures contracts are defined as commitments to buy or sell designated financial instruments based on specified prices, yields or indexes. Futures contracts provide returns at specified or optional dates based upon a specified index or interest rate applied to a notional amount. The Company uses futures to hedge exposures in indexed annuity and life contracts. Daily cash settlement of variation margins is required for futures contracts and is based on the changes in daily prices. The final settlement of futures contracts is in cash. Index option contracts provide returns at specified or optional dates based on a specified equity index applied to the options notional amount. The Company purchases and writes (sells) option contracts primarily to
24
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
reduce market risk associated with certain annuity and life contracts. When the Company purchases/sells option contracts at specific prices, it is required to pay/receive a premium to/from the counterparties. The amount of premium paid/received is based on the number of contracts purchased/sold, the specified price and the maturity date of the contract. The Company receives/pays cash equal to the premium of written/purchased options when the contract is established. If the option is exercised, the Company receives/pays cash equal to the product of the number of contracts and the specified price in the contract in exchange for the equity upon which the option is written/purchased. If the options are not exercised, then no additional cash is exchanged when the contract expires. Premiums paid are reported as a derivative asset and premiums received are reported as a derivative liability. Purchased put and call index option contracts are cash settled upon exercise and the gain or loss on the settlement is reported in net investment income. If the purchased option contract expires without being exercised, the premiums paid are reported as net investment income and the corresponding asset previously recorded is reversed. The change in the fair value of written option contracts is reported in Realized investment gains, net, with an adjustment to a corresponding liability. Written call index option contracts are cash settled upon exercise and the gain or loss on settlement is reported in Realized investment gains, net.
The Company has derivatives embedded in non-derivative host contracts that are required to be separated from the host contracts and accounted for at fair value. The Companys embedded derivatives are equity options in life and annuity product contracts, which provide equity returns to contractholders, guaranteed minimum accumulation and withdrawal benefits in variable annuity contracts. The Company has reinsurance agreements to transfer all the risk related to guarantee minimum income, accumulation and withdrawal benefits in variable annuity contracts to third party reinsurers. None of these derivatives are designated as accounting hedging instruments and all are gross liabilities reported in policyholder account balances or future policy benefits and other policyholder liabilities.
Investment Income and Realized Gains and Losses
Investment income primarily consists of interest and is recognized on an accrual basis using the effective yield method. Interest income for RMBS and CMBS is determined considering estimated pay-downs, including prepayments, obtained from third party data sources and internal estimates. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the prepayments originally anticipated and the actual prepayments received. For RMBS and CMBS of high credit quality with fixed interest rates, the effective yield is recalculated on a retrospective basis. For all others, the effective yield is recalculated on a prospective basis. Accrual of income is suspended for other-than-temporarily impaired fixed maturities when the timing and amount of cash flows expected to be received is not reasonably estimable. It is the Companys policy to cease to carry accrued interest on commercial mortgage loans that are over 90 days delinquent. The Company held no non-income producing investments as of December 31, 2015 or December 31, 2014.
Realized investment gains and losses net include gains and losses on investment sales and write-downs in value due to other-than-temporary declines in fair value. Realized capital gains and losses on investment sales, including principal payments, are determined on a specific identification basis.
Recognition of Premium Revenues and Fees, and Related Policyholders Benefits and Interest Credited
Prior to April 1, 2014 or the periods prior to April 1, 2014 (the Predecessor Periods), the Company had reinsurance agreements whereby all premiums, fee income from policyholders and returns credited to policyholders, policyholder benefits and substantially all expenses were ceded to ALIC and other reinsurers. Amounts reflected in the Statements of Operations and Comprehensive Income (Loss) are presented net of reinsurance.
25
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Traditional life insurance products consist principally of products with fixed and guaranteed premiums and benefits, primarily term and whole life insurance products. Premiums from these products are recognized as revenue when due from policyholders. Surrender values on traditional life and death benefits are reflected in policyholder benefits.
Immediate annuities with life contingencies provide insurance protection over a period that extends beyond the period during which premiums are collected. Premiums from these products are recognized as revenue when received at the inception of the contract. Benefits and expenses are recognized in relation to premiums. As of April 1, 2014, the Company has reinsurance agreements to transfer all the risk related to immediate annuities existing as of or prior to the Acquisition Date.
Interest-sensitive life contracts, such as universal life and single premium life, are insurance contracts whose terms are not fixed and guaranteed. The terms that may be changed include premiums paid by the policyholder, interest credited to the policyholder account balance and contract charges assessed against the policyholder account balance. Premiums from these contracts are reported as policyholder account balances. Fee income from policyholders consist of fees assessed against the policyholder account balance for the cost of insurance (mortality risk), contract administration and surrender of the policy prior to contractually specified dates. These charges are recognized as revenue when assessed against the policyholder account balance. Policyholder benefits include life-contingent benefit payments in excess of the policyholder account balance.
Contracts that do not subject the Company to significant risk arising from mortality or morbidity are referred to as investment contracts. Fixed annuities, including market value adjusted annuities, equity-indexed annuities and immediate annuities without life contingencies, are considered investment contracts. Consideration received for such contracts is reported as policyholder account balance deposits. Policy fees for investment contracts consist of fees assessed against the contractholder account balance for maintenance, administration and surrender of the contract prior to contractually specified dates, and are recognized when assessed against the policyholder account balance.
Return credited to policyholder funds represents interest accrued or paid on interest-sensitive life and investment contracts. Crediting rates for certain fixed annuities and interest-sensitive life contracts are adjusted periodically by the Company to reflect current market conditions subject to contractually guaranteed minimum rates. Crediting rates for indexed life and annuities are generally based on an equity index, such as the Standard & Poors (S&P) 500 Index.
Policy charges for variable life and variable annuity products consist of fees assessed against the policyholder account balances for contract maintenance, administration, mortality, expense and surrender of the contract prior to contractually specified dates. Policy benefits incurred for variable life and variable annuity products include guaranteed minimum death, income, withdrawal and accumulation benefits.
The Company incurs costs in connection with renewal insurance business. All acquisition-related costs, including commissions, as well as all indirect costs, are expensed as incurred and reported in Other expenses on the Consolidated Statement of Operations and Comprehensive Income (Loss) for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014.
Reinsurance
Reinsurance accounting is applied for ceded and assumed transactions when the risk transfer provisions of ASC 944-40, Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts, have
26
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
been met. To meet risk transfer requirements, a long-duration reinsurance contract must transfer mortality or morbidity risks, and subject the reinsurer to a reasonable possibility of a significant loss. Those contracts that do not meet risk transfer requirements are accounted for using deposit accounting. For short duration contracts, to meet risk transfer requirements the reinsurer must assume significant insurance risk and have a reasonable possibility of experiencing significant loss.
With respect to ceded reinsurance, the Company values reinsurance recoverables on reported claims at the time the underlying claim is recognized in accordance with contract terms. For future policy benefits, the Company estimates the amount of reinsurance recoverables based on the terms of the reinsurance contracts and historical reinsurance recovery information. The reinsurance recoverables are based on what the Company believes are reasonable estimates and the balance is reported as an asset in the Consolidated Balance Sheets (Successor). However, the ultimate amount of the reinsurance recoverable is not known until all claims are settled. Reinsurance contracts do not relieve the Company from its obligations to policyholders, and failure of reinsurers to honor their obligations could result in losses to the Company; consequently, allowances are established for amounts deemed uncollectible.
In the Predecessor periods, or the periods prior to April 1, 2014, the Company had reinsurance agreements whereby all insurance risks represented by premiums, fee income from policyholders, returns credited to policyholder account balances, policyholder benefits and substantially all expenses were ceded to ALIC and other reinsurers. Additionally, investment income earned on the assets that supported policyholder account balances and future policy benefits and other policyholder funds were not included in the Companys financial statements, as those assets were owned and managed by ALIC and other reinsurers under the terms of the reinsurance agreements.
Value of Business Acquired (VOBA)
For interest-sensitive life products, VOBA is amortized over the life of the policies in relation to the emergence of estimated gross profits (EGPs) from margins on mortality, interest, expenses, and surrenders, all of which are net of reinsurance and include actual realized gains and losses on investments. For non-interest sensitive life products, such as term life insurance, VOBA is amortized in relation to premium. VOBA is reviewed periodically for loss recognition to ensure that the unamortized balance is recoverable from future earnings from the business. The carrying amount of VOBA is adjusted for the effects of realized and unrealized gains and losses on debt securities classified as AFS.
Separate Accounts
Separate accounts assets are carried at fair value. The assets of the separate accounts are legally segregated and available only to settle separate account contract obligations. Separate accounts liabilities represent the contractholders claims to the related assets and are carried at an amount equal to the separate accounts assets. Investment income and realized capital gains and losses of the separate accounts accrue directly to the contractholders, and therefore are not included in the Companys Consolidated Statement of Operations and Comprehensive Income (Successor) or Statements of Operations and Comprehensive Income (Predecessor). Deposits to and surrenders and withdrawals from the separate accounts are reflected in separate accounts liabilities and are not included in cash flows.
Absent any contract provision wherein the Company provides a guarantee, variable annuity and variable life insurance contractholders bear the investment risk that the separate accounts funds may not meet their stated investment objectives.
27
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Future Policy Benefits and Other Policyholder Liabilities
Policy liabilities are established for future policy benefits on certain annuity, life, and long term care policies. Such liabilities are established in amounts adequate to meet the estimated future obligations of policies in-force. Changes in policy and contract claims are recorded in policyholder benefits in the Consolidated Statements of Operations and Comprehensive Income (Loss).
For ASC 944-20 products, benefit reserves are computed using the net level premium method for individual life, annuity and long-term care policies, and are based upon estimates as to future investment yield, mortality and lapse that include provisions for adverse deviation that were prevalent at the time the reserve was initially established. Mortality, morbidity and lapse assumptions for all policies are based on the Companys own experience and industry standards.
Liabilities for outstanding claims and claims adjustment expenses are estimates of payments to be made on life and health insurance contracts for reported claims and claims adjustment expenses. A liability is also held for claims adjustment expenses incurred but not reported as of the balance sheet date. These liabilities are determined using case basis evaluations and statistical analyses and represent estimates of the ultimate cost of all claims incurred but not paid. These estimates are continually reviewed and adjusted as necessary. Such adjustments are reflected in current operations.
Future policy benefit reserves for fixed indexed annuity policies with returns linked to the performance of a specified market index are equal to the excess of the sum of the fair value of the embedded derivative and the host (or guaranteed) component over the policyholder account balance. The change in the fair value of the embedded derivative is linked to the performance of the equity option. The host value is established as of the date of acquisition and is equal to the account value, plus the value of the unexpired options at the date of acquisition, less the embedded derivative, and accreted over the policys life at a constant rate of interest.
The Company holds additional liabilities for its no lapse guarantees (associated with universal life) and guaranteed minimum withdrawal benefits (associated with fixed indexed annuities). These are accounted for in accordance with ASC 944-20, Financial Services Insurance Activities.
Policy liabilities and accruals are based on the various estimates discussed above. Although the adequacy of these amounts cannot be assured, the Company believes that policy liabilities and accruals will be sufficient to meet future obligations of policies in-force. The amount of liabilities and accruals, however, could be revised if the estimates discussed above are revised.
Policyholders Account Balances
Policyholder account balances represent interest-bearing liabilities arising from the sale of products such as interest-sensitive life insurance and fixed annuities. Policyholder funds primarily comprise cumulative deposits received and interest credited to the contractholder less cumulative contract benefits, surrenders, withdrawals and contract charges for mortality or administrative expenses.
Future policy benefits reserves for the portion of fixed indexed annuities earning a fixed rate of interest, and other deferred annuity products are computed under a retrospective deposit method and represent policyholders account balances before applicable surrender charges. The prior year amount of $1.9 billion has been reclassified from Future Policy Benefits and Other Policyholder Liabilities to Policyholders Account Balances to conform with the current year presentation.
The Company holds additional liabilities for guaranteed minimum income benefits (GMIB) associated with variable annuities, which are accounted for in accordance with ASC 944-20, Financial Services Insurance Activities. The reserves for certain living benefit features, including guaranteed minimum accumulation benefits
28
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
(GMAB) and guaranteed minimum withdrawal benefits (GMWB) are accounted for as embedded derivatives, with fair values calculated as the present value of expected future benefit payments to contractholders less the present value of assessed rider fees attributable to the embedded derivative feature. This methodology could result in either a liability or contra-liability balance, given changing capital market conditions and various actuarial assumptions. The Companys GMIB, GMAB and GMWB reserves are ceded to external reinsurers. For additional information regarding the valuation of these optional living benefit features, see Note 10.
Income Taxes Successor
Income taxes are provided for using the asset and liability method under which deferred tax assets and liabilities are recognized for temporary differences between the financial statement and income tax bases of assets and liabilities. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The realizability of deferred tax assets is assessed at each reporting date and a deferred tax asset valuation allowance is established when there is uncertainty that such assets will be realized. Tax positions are assessed under a two-step approach, which requires the assessment of recognition and measurement. The Company reports interest expense related to income tax matters and tax penalties in other operating expenses in the Consolidated Statement of Operations and Comprehensive Income (Loss).
Income Taxes Predecessor
The income tax provision is calculated under the liability method. Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax bases of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are unrealized capital gains and losses, accrued expenses and reinsurance recoverables. A deferred tax asset valuation allowance is established when there is uncertainty that such assets will be realized.
Other Long-Term Debt
Effective April 1, 2014, and with Nebraska Department of Insurance (the NE DOI or the Department of Insurance) approval, Lancaster Re issued a variable funding Surplus Note (the Surplus Note) to its affiliate, Lanis, LLC. for $513 million and acquired from Lanis a Vehicle Note (the Vehicle Note) for $513 million. The Vehicle Note is held to support a portion of Lancaster Res reinsurance obligations and has been authorized as an acceptable form of reinsurance collateral pursuant to Nebraska Rev. Stat. §44-8216(8)(c)(i) which allows a special purpose financial captive insurer to establish any method of security that the Department deems acceptable. The scheduled maturity date of the Vehicle Note is April 1, 2034, and the scheduled maturity date of the Surplus Note is April 1, 2039, although each may be cancelled earlier or extended under certain conditions. The Surplus Note does not repay principal prior to maturity and principal payment at maturity is subject to the prior approval of the Department of Insurance. With pre-approval, the Surplus Note is increased each quarter with a corresponding increase in the Vehicle Note. With Department pre-approval, interest on the Surplus Note for the prior quarter is paid on the first day of each subsequent quarter at a rate consistent with the rate received on the Vehicle Note of 4%. The Surplus Note and Vehicle Note increased by $57.1 million and $38.6 million in the Successor Periods for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014, respectively. Interest expense of $22.9 million and $15.7 million was recognized in the Successor Periods for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014, respectively. The Surplus Note is unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims of Lancaster Re.
Other Assets and Accrued Expenses and Other Liabilities
Other assets consist primarily of premiums due, intangible assets, the Vehicle Note and receivables resulting from sales of securities that had not yet settled at the balance sheet date. Other liabilities consist primarily of accrued expenses, technical overdrafts, derivatives, and payables resulting from purchases of securities that had not yet been settled at the balance sheet date.
29
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Reclassifications
Certain prior year amounts have been reclassified to conform with the current year financial statement presentation.
Adoption of New Accounting Pronouncements
In February 2013, the Financial Accounting Standards Board issued guidance requiring expanded disclosures about the amounts reclassified out of accumulated other comprehensive income by component. The guidance requires the presentation of significant amounts reclassified out of accumulated other comprehensive income by income statement line item, but only if the amount reclassified is required under accounting principles generally accepted in the United States of America (GAAP) to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, cross-reference to other disclosures that provide additional detail about those amounts is required. The Company adopted the new guidance in 2013. The new guidance affects disclosures only and therefore had no impact on the Companys results of operations or financial position.
Effective November 18, 2014, the Company adopted new guidance on when, if ever, the cost of acquiring an entity should be used to establish a new accounting basis (pushdown) in the acquired entitys separate financial statements. The guidance provides an acquired entity and its subsidiaries with an irrevocable option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. If a reporting entity elects to apply pushdown accounting, its stand-alone financial statements would reflect the acquirers new basis in the acquired entitys assets and liabilities. The election to apply pushdown accounting should be determined by an acquired entity for each individual change-in-control event in which an acquirer obtains control of the acquired entity; however, an entity that does not elect to apply pushdown accounting in the period of a change-in-control can later elect to retrospectively apply pushdown accounting to the most recent change-in-control transaction as a change in accounting principle. The Company has applied pushdown accounting as a result of the Acquisition in the Successor Period, as disclosed in Note 1.
In January 2014, the FASB issued updated guidance for troubled debt restructurings clarifying when an in substance repossession or foreclosure occurs, and when a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan. The new guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2014. This guidance can be elected for prospective adoption or by using a modified retrospective transition method. The adoption of this new guidance in 2015 did not have a material impact on the Companys consolidated financial position, results of operations or financial statement disclosures.
In May 2014, the FASB issued a comprehensive new revenue recognition standard effective for fiscal years beginning after December 15, 2016 and interim periods within those years and should be applied retrospectively. In August 2015, the FASB amended the guidance to defer the effective date by one year, effective for the fiscal years beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new guidance will supersede nearly all existing revenue recognition guidance under GAAP; however, it will not impact the accounting for insurance contracts, leases, financial instruments and guarantees. For those contracts that are impacted by the new guidance, the guidance will require an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods or services. The Company is currently assessing the impact of the guidance on the Companys consolidated financial position, results of operations and financial statement disclosures.
30
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
In August 2014, the FASB issued guidance requiring that mortgage loans be derecognized and that a separate other receivable be recognized upon foreclosure if certain conditions are met. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The new guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2014, with early adoption permitted. The adoption of this guidance did not have a material impact on the Companys consolidated financial position, results of operations or financial statement disclosures.
In February 2015, the FASB issued updated guidance regarding consolidation. The pronouncement eliminates specialized guidance for limited partnerships and similar legal entities, and removes the indefinite deferral for certain investment funds. The new guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, with early adoption permitted. This guidance is not expected to have a significant effect on the Companys consolidated financial position, results of operations or financial statement disclosures.
In May 2015, the FASB issued new guidance on short-duration insurance contracts. The amendments in this new guidance are effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. The new guidance should be applied retrospectively by providing comparative disclosures for each period presented, except for those requirements that apply only to the current period. The new guidance requires insurance entities to provide users of financial statements with more transparent information about initial claim estimates and subsequent adjustments to these estimates, including information on: (i) reconciling from the claim development table to the balance sheet liability; (ii) methodologies and judgments in estimating claims; and (iii) the timing, and frequency of claims. This guidance is not expected to have a significant effect on the Companys consolidated financial position, results of operations or financial statement disclosures.
In May 2015, the FASB issued new guidance on fair value measurement effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years and which should be applied retrospectively to all periods presented. Earlier application is permitted. The amendments remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using NAV per share (or its equivalent) practical expedient. In addition, the amendments remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the NAV per share practical expedient. This guidance is not expected to have a significant effect on the Companys consolidated financial position, results of operations or financial statement disclosures.
In April 2015, the FASB issued new guidance on accounting for fees paid in a cloud computing arrangement, effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the new guidance is permitted and an entity can elect to adopt the guidance either: (1) prospectively to all arrangements entered into or materially modified after the effective date; or (2) retrospectively. The new guidance provides that all software licenses included in cloud computing arrangements be accounted for consistent with other licenses of intangible assets. However, if a cloud computing arrangement does not include a software license, the arrangement should be accounted for as a service contract, the accounting for which did not change. This guidance is not expected to have a significant effect on the Companys consolidated financial position, results of operations or financial statement disclosures.
In January 2016, the FASB issued new guidance on the recognition and measurement of financial instruments. The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted for the instrument-specific credit risk provision. The new guidance changes the current accounting guidance related to: (i) the classification and measurement of certain equity investments; (ii) the presentation of changes in the fair value of financial liabilities measured under
31
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
the fair value option that are due to instrument-specific credit risk; and (iii) certain disclosures associated with the fair value of financial instruments. The Company is currently assessing the impact of the guidance on the Companys consolidated financial position, results of operations and financial statement disclosures.
3. | Investments |
The amortized cost, gross unrealized gains and losses and fair value for fixed maturities as of December 31, 2015 and 2014 were as follows:
December 31, 2015 Successor ($ in thousands) |
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value | ||||||||||||
Fixed maturities |
||||||||||||||||
U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies |
$ | 163,096 | $ | 5,563 | $ | (81 | ) | $ | 168,578 | |||||||
Obligations of U.S. States and Political Subdivisions |
712,948 | 14,827 | (7,018 | ) | 720,757 | |||||||||||
Foreign government |
72,042 | 202 | (10,601 | ) | 61,643 | |||||||||||
Corporate securities |
6,060,561 | 31,263 | (353,149 | ) | 5,738,675 | |||||||||||
ABS |
542,503 | 2,517 | (8,229 | ) | 536,791 | |||||||||||
CMBS |
513,316 | 627 | (7,244 | ) | 506,699 | |||||||||||
RMBS |
209,728 | 4,600 | (1,529 | ) | 212,799 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total fixed maturities |
$ | 8,274,194 | $ | 59,599 | $ | (387,851 | ) | $ | 7,945,942 | |||||||
|
|
|
|
|
|
|
|
|||||||||
December 31, 2014 Successor ($ in thousands) |
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value | ||||||||||||
Fixed maturities |
||||||||||||||||
U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies |
$ | 287,077 | $ | 20,933 | $ | (58 | ) | $ | 307,952 | |||||||
Obligations of U.S. States and Political Subdivisions |
517,378 | 26,888 | (531 | ) | 543,735 | |||||||||||
Foreign government |
250,008 | 5,637 | (437 | ) | 255,208 | |||||||||||
Corporate securities |
7,279,391 | 132,481 | (34,127 | ) | 7,377,745 | |||||||||||
ABS |
378,906 | 6,145 | (2,408 | ) | 382,643 | |||||||||||
CMBS |
331,041 | 3,507 | (1,065 | ) | 333,483 | |||||||||||
RMBS |
188,055 | 2,849 | (1,023 | ) | 189,881 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total fixed maturities |
$ | 9,231,856 | $ | 198,440 | $ | (39,649 | ) | $ | 9,390,647 | |||||||
|
|
|
|
|
|
|
|
Scheduled Maturities Successor
The scheduled maturities for fixed maturities are as follows as of December 31, 2015:
($ in thousands) |
Amortized Cost |
Fair Value | ||||||
Due in one year or less |
$ | 190,261 | $ | 189,547 | ||||
Due after one year through five years |
1,461,237 | 1,459,059 | ||||||
Due after five years through ten years |
2,148,851 | 2,092,046 | ||||||
Due after ten years |
3,208,298 | 2,949,002 | ||||||
|
|
|
|
|||||
Total before asset and mortgage-backed securities |
7,008,647 | 6,689,654 | ||||||
Asset and mortgage-backed securities |
1,265,547 | 1,256,288 | ||||||
|
|
|
|
|||||
Total fixed maturities |
$ | 8,274,194 | $ | 7,945,942 | ||||
|
|
|
|
32
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Actual maturities may differ from those scheduled as a result of calls and make-whole payments by the issuers. Asset and mortgage-backed securities are shown separately because of the potential for prepayment of principal prior to contractual maturity dates.
Commercial Mortgage Loans Successor
The Company diversifies its commercial mortgage loan portfolio by geographical region to reduce concentration risk. The following table presents the Companys commercial mortgage loan portfolio by geographical region as of December 31, 2015 and December 31, 2014:
($ in thousands) |
December 31, 2015 |
December 31, 2014 |
||||||
Alabama |
$ | 1,508 | $ | 1,720 | ||||
Arizona |
34,911 | 35,481 | ||||||
California |
336,310 | 255,563 | ||||||
Colorado |
57,207 | 22,381 | ||||||
Connecticut |
25,374 | | ||||||
Florida |
86,698 | 20,779 | ||||||
Georgia |
67,213 | 27,502 | ||||||
Hawaii |
7,134 | 8,125 | ||||||
Illinois |
92,813 | 53,174 | ||||||
Iowa |
1,266 | 1,490 | ||||||
Kansas |
9,200 | | ||||||
Kentucky |
7,696 | 8,260 | ||||||
Maine |
3,905 | 4,114 | ||||||
Maryland |
33,844 | 35,536 | ||||||
Massachusetts |
90,897 | 92,963 | ||||||
Minnesota |
148,346 | 52,496 | ||||||
Missouri |
| 9,324 | ||||||
Nevada |
14,262 | 14,705 | ||||||
New Jersey |
68,720 | 84,007 | ||||||
New York |
94,985 | 72,625 | ||||||
North Carolina |
58,078 | 31,111 | ||||||
Ohio |
36,954 | 38,400 | ||||||
Oklahoma |
10,803 | 10,835 | ||||||
Pennsylvania |
41,975 | 37,688 | ||||||
South Carolina |
2,532 | 3,130 | ||||||
Tennessee |
5,278 | 5,719 | ||||||
Texas |
107,279 | 103,778 | ||||||
Utah |
44,366 | 45,914 | ||||||
Virginia |
2,353 | 18,572 | ||||||
Washington |
11,550 | 13,138 | ||||||
Wisconsin |
5,675 | 6,637 | ||||||
General allowance for loan loss |
| | ||||||
|
|
|
|
|||||
Total commercial mortgage loans |
$ | 1,509,132 | $ | 1,115,167 | ||||
|
|
|
|
33
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Credit Quality of Commercial Mortgage Loans
The credit quality of commercial mortgage loans held-for-investment were as follows at December 31, 2015 and December 31, 2014:
Recorded Investment | ||||||||||||||||||||||||||||
Debt Service Coverage Ratios | ||||||||||||||||||||||||||||
December 31, 2015
($ in thousands) |
> 1.20x | 1.00x - 1.20x | < 1.00x | Total | % of Total | Estimated Fair Value |
% of Total | |||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||
Loan-to-value ratios: |
||||||||||||||||||||||||||||
Less than 65% |
$ | 869,470 | $ | 85,869 | $ | 19,862 | $ | 975,201 | 64.6 | % | $ | 1,000,948 | 65.1 | % | ||||||||||||||
65% to 75% |
508,557 | 25,374 | | 533,931 | 35.4 | 535,690 | 34.9 | |||||||||||||||||||||
76% to 80% |
| | | | 0.0 | | 0.0 | |||||||||||||||||||||
Greater than 80% |
| | | | 0.0 | | 0.0 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | 1,378,027 | $ | 111,243 | $ | 19,862 | $ | 1,509,132 | 100.0 | % | $ | 1,536,638 | 100.0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Recorded Investment | ||||||||||||||||||||||||||||
Debt Service Coverage Ratios | ||||||||||||||||||||||||||||
December 31, 2014
($ in thousands) |
> 1.20x | 1.00x - 1.20x | < 1.00x | Total | % of Total | Estimated Fair Value |
% of Total | |||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||
Loan-to-value ratios: |
||||||||||||||||||||||||||||
Less than 65% |
$ | 930,592 | $ | 151,700 | $ | 29,460 | $ | 1,111,752 | 97.6 | % | $ | 1,146,030 | 97.6 | % | ||||||||||||||
65% to 75% |
16,591 | 10,537 | | 27,128 | 2.4 | 28,275 | 2.4 | |||||||||||||||||||||
76% to 80% |
| | | | 0.0 | | 0.0 | |||||||||||||||||||||
Greater than 80% |
| | | | 0.0 | | 0.0 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | 947,183 | $ | 162,237 | $ | 29,460 | $ | 1,138,880 | 100.0 | % | $ | 1,174,305 | 100.0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2015 and December 31, 2014, the Company had no allowance for credit losses for commercial mortgage loans. As of December 31, 2015 and December 31, 2014, $1,509 million and $1,139 million, respectively, of commercial mortgage loans were in current status with no commercial mortgage or other loans classified as past due. The Company defines current in its aging of past due commercial mortgage and other loans as less than 30 days past due.
Impaired loans include those loans for which it is probable that all amounts due will not be collected according to the contractual terms of the loan agreement. As of December 31, 2015 and December 31, 2014, the Company held no impaired commercial mortgage loans.
The Companys commercial mortgage may occasionally be involved in a troubled debt restructuring. As of December 31, 2015, the Company had no commitments to fund to borrowers that have been involved in a troubled debt restructuring. As of December 31, 2015 and December 31, 2014, the Company had no new troubled debt restructurings related to commercial mortgage and no payment defaults on commercial mortgages.
34
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Other Invested Assets Successor
The following table sets forth the composition of Other invested assets as of December 31, 2015 and December 31, 2014:
Amortized Cost
Successor | Successor | |||||||
($ in thousands) |
December 31, 2015 |
December 31, 2014 |
||||||
Low income housing tax credit properties |
$ | 677 | $ | 896 | ||||
Derivatives |
17,735 | 26,001 | ||||||
|
|
|
|
|||||
$ | 18,412 | $ | 26,897 | |||||
|
|
|
|
Net Investment Income
Net investment income for Successor Periods for the year ended December 31, 2015 and the period from April 1, 2014 through December 31, 2014 and Predecessor Periods for the period from January 1, 2014 through March 31, 2014 and year ended December 31, 2013 were as follows:
Successor | Predecessor | |||||||||||||||
($ in thousands) |
For the Year Ended December 31, 2015 |
For the Period from April 1, 2014 through December 31, 2014 |
For the Period from January 1, 2014 through March 31, 2014 |
For the Year Ended December 31, 2013 |
||||||||||||
Fixed maturities |
$ | 334,931 | $ | 231,972 | $ | 2,461 | $ | 11,545 | ||||||||
Commercial mortgage loans |
63,028 | 49,417 | | | ||||||||||||
Cash, cash equivalents and short-term investments |
511 | 4,786 | 16 | 23 | ||||||||||||
Other investment (loss) income |
9,543 | 7,353 | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross investment income |
408,013 | 293,528 | 2,477 | 11,568 | ||||||||||||
Investment expenses |
9,082 | 4,957 | 127 | 633 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net investment income |
$ | 398,931 | $ | 288,571 | $ | 2,350 | $ | 10,935 | ||||||||
|
|
|
|
|
|
|
|
35
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Realized Investment Gains and Losses
Realized investment gains and losses for Successor Periods for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014 and Predecessor Periods for the period from January 1, 2014 through March 31, 2014 and year ended December 31, 2013 were as follows:
Successor | Predecessor | |||||||||||||||
($ in thousands) |
For the Year Ended December 31, 2015 |
For the Period from April 1, 2014 through December 31, 2014 |
For the Period from January 1, 2014 through March 31, 2014 |
For the Year Ended December 31, 2013 |
||||||||||||
Realized investment gains, net |
||||||||||||||||
Fixed maturities |
$ | 120,421 | $ | 25,795 | $ | 285 | $ | | ||||||||
Commercial mortgage loans |
2,325 | 2,880 | | | ||||||||||||
Derivatives |
(9,208 | ) | 17,417 | | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net realized gains |
$ | 113,538 | $ | 46,092 | $ | 285 | $ | | ||||||||
|
|
|
|
|
|
|
|
There were no other-than-temporary impairment losses recorded in the Successor Periods for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014.
There were no other-than-temporary impairment losses recorded in the Predecessor Period from January 1, 2014 through March 31, 2014. Realized capital gains and losses in the Predecessor year ended December 31, 2013 included $2 thousand of other-than-temporary impairment losses related to RMBS, none of which were included in other comprehensive income. No other-than-temporary impairment losses were included in accumulated other comprehensive income as of December 31, 2015 or as of December 31, 2014.
Proceeds from sales of fixed maturities and gross realized investment gains and losses for Successor Periods for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014 and Predecessor Periods for the period from January 1, 2014 through March 31, 2014 and year ended December 31, 2013 were as follows:
Successor | Predecessor | |||||||||||||||
($ in thousands) |
For the Year Ended December 31, 2015 |
For the Period from April 1, 2014 through December 31, 2014 |
For the Period from January 1, 2014 through March 31, 2014 |
For the Year Ended December 31, 2013 |
||||||||||||
Fixed maturities, available-for-sale |
||||||||||||||||
Proceeds from sales |
$ | 3,864,356 | $ | 1,429,177 | $ | 5,277 | $ | 9,170 | ||||||||
Gross investment gains from sales |
147,287 | 30,403 | 317 | 3 | ||||||||||||
Gross investment losses from sales |
(26,829 | ) | (4,608 | ) | (32 | ) | (1 | ) |
Proceeds from sales excludes taxable exchanges of $72.4 million and $3.0 million for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014, respectively.
36
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Unrealized Investment Gains and Losses Successor
The following table summarizes the gross unrealized losses and fair value of fixed maturities by the length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2015 and December 31, 2014:
Less than 12 months | Greater than 12 months | |||||||||||||||||||||||
December 31, 2015
($ in thousands) |
Fair Value | Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
Fair Value | Gross Unrealized Losses |
||||||||||||||||||
U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies |
$ | 18,639 | $ | (77 | ) | $ | 98 | $ | (4 | ) | $ | 18,737 | $ | (81 | ) | |||||||||
Obligations of U.S. States and Political Subdivisions |
207,889 | (6,983 | ) | 4,030 | (35 | ) | 211,919 | (7,018 | ) | |||||||||||||||
Foreign government |
41,507 | (8,665 | ) | 5,965 | (1,936 | ) | 47,472 | (10,601 | ) | |||||||||||||||
All other corporate securities |
3,523,371 | (293,131 | ) | 209,474 | (60,018 | ) | 3,732,845 | (353,149 | ) | |||||||||||||||
ABS |
397,884 | (7,031 | ) | 15,040 | (1,198 | ) | 412,924 | (8,229 | ) | |||||||||||||||
CMBS |
437,244 | (7,164 | ) | 8,419 | (80 | ) | 445,663 | (7,244 | ) | |||||||||||||||
RMBS |
65,470 | (776 | ) | 29,659 | (753 | ) | 95,129 | (1,529 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total fixed income securities |
$ | 4,692,004 | $ | (323,827 | ) | $ | 272,685 | $ | (64,024 | ) | $ | 4,964,689 | $ | (387,851 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Less than 12 months | Greater than 12 months | |||||||||||||||||||||||
December 31, 2014
($ in thousands) |
Fair Value | Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
Fair Value | Gross Unrealized Losses |
||||||||||||||||||
U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies |
$ | 14,160 | $ | (58 | ) | $ | | $ | | $ | 14,160 | $ | (58 | ) | ||||||||||
Obligations of U.S. States and Political Subdivisions |
57,605 | (531 | ) | | | 57,605 | (531 | ) | ||||||||||||||||
Foreign government |
37,543 | (437 | ) | | | 37,543 | (437 | ) | ||||||||||||||||
All other corporate securities |
1,683,186 | (34,127 | ) | | | 1,683,186 | (34,127 | ) | ||||||||||||||||
ABS |
115,568 | (2,408 | ) | | | 115,568 | (2,408 | ) | ||||||||||||||||
CMBS |
135,203 | (1,065 | ) | | | 135,203 | (1,065 | ) | ||||||||||||||||
RMBS |
92,804 | (1,023 | ) | | | 92,804 | (1,023 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total fixed income securities |
$ | 2,136,069 | $ | (39,649 | ) | $ | | $ | | $ | 2,136,069 | $ | (39,649 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Monitoring
The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed maturity security whose carrying value may be other-than-temporarily impaired.
For each fixed maturity security in an unrealized loss position, the Company assesses whether management with the appropriate authority has made the decision to sell or whether it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If a security meets either of these criteria, the securitys decline in fair value is considered other-than-temporary and is recorded in earnings.
37
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
If the Company has not made the decision to sell the fixed maturity security and it is not more likely than not the Company will be required to sell the fixed maturity security before recovery of its amortized cost basis, the Company evaluates whether it expects to receive cash flows sufficient to recover the entire amortized cost basis of the security. The Company calculates the estimated recovery value by discounting the best estimate of future cash flows at the securitys original or current effective rate, as appropriate, and compares this to the amortized cost of the security. If the Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed maturity security, the credit loss component of the impairment is recorded in earnings, with the remaining amount of the unrealized loss related to other factors recognized in other comprehensive income.
The Companys portfolio monitoring process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost is below established thresholds. The process also includes the monitoring of other impairment indicators such as ratings, ratings downgrades and payment defaults. The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for potential other-than-temporary impairment using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Companys evaluation of other-than-temporary impairment for these fixed maturity securities are assumptions and estimates about the financial condition and future earnings potential of the issue or issuer. Some of the factors that may be considered in evaluating whether a decline in fair value is other than temporary are: 1) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices; 2) the specific reasons that a security is in an unrealized loss position, including overall market conditions which could affect liquidity; and 3) the length of time and extent to which the fair value has been less than amortized cost.
38
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Net Unrealized Investment Gains and Losses in AOCI
($ in thousands)
Predecessor |
Net Unrealized Gain (Losses) on Investments |
VOBA | Future Policy Benefits and Policyholders Account Balances |
Deferred Income Tax (Liability) Benefit |
Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses) |
|||||||||||||||
Balance, December 31, 2012 |
$ | 21,236 | $ | | $ | | $ | (7,433 | ) | $ | 13,803 | |||||||||
Net investment gains and losses on investments arising during the period |
(15,281 | ) | | | 5,349 | (9,932 | ) | |||||||||||||
Reclassification adjustment for gains and losses included in net income |
1 | | | | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 31, 2013 |
$ | 5,954 | $ | | $ | | $ | (2,084 | ) | $ | 3,870 | |||||||||
Net investment gains and losses on investments arising during the period |
2,364 | | | (828 | ) | 1,536 | ||||||||||||||
Reclassification adjustment for gains and losses included in net income |
285 | | | (100 | ) | 185 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, March 31, 2014 |
$ | 8,033 | $ | | $ | | $ | (2,812 | ) | $ | 5,221 | |||||||||
Successor |
||||||||||||||||||||
Balance, April 1, 2014 |
$ | | $ | | $ | | $ | | $ | | ||||||||||
Net investment gains and losses on investments arising during the period |
159,261 | | | (55,675 | ) | 103,586 | ||||||||||||||
Reclassification adjustment for gains and losses included in net income |
| | | | | |||||||||||||||
Impact of net unrealized investment gains and losses on VOBA |
| (20,287 | ) | | 7,100 | (13,187 | ) | |||||||||||||
Impact of net unrealized investment gains and losses on future policy benefits and policyholders account balances |
| | (7,541 | ) | 2,640 | (4,901 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 31, 2014 |
$ | 159,261 | $ | (20,287 | ) | $ | (7,541 | ) | $ | (45,935 | ) | $ | 85,498 | |||||||
Net investment gains and losses on investments arising during the period |
(408,019 | ) | | | 142,807 | (265,212 | ) | |||||||||||||
Reclassification adjustment for gains and losses included in net income |
79,023 | | | (27,658 | ) | 51,365 | ||||||||||||||
Impact of net unrealized investment gains and losses on VOBA |
| 57,061 | | (19,971 | ) | 37,090 | ||||||||||||||
Impact of net unrealized investment gains and losses on future policy benefits and policyholders account balances |
| | 60,447 | (21,157 | ) | 39,290 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 31, 2015 |
$ | (327,781 | ) | $ | 36,774 | $ | 52,906 | $ | 83,402 | $ | (154,699 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
39
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
4. | Derivative Financial Instruments |
See Note 2 for a description of the Companys accounting policies for derivatives and Note 5 for information about the fair value hierarchy for derivatives.
The following table provides a summary of the notional and fair value positions of derivative financial instruments as of December 31, 2015 and 2014:
($ in thousands) |
Successor | |||||||||||||||||||||||
December 31, 2015 | December 31, 2014 | |||||||||||||||||||||||
Gross Fair Value | Gross Fair Value | |||||||||||||||||||||||
Notional | Assets | Liabilities | Notional | Assets | Liabilities | |||||||||||||||||||
Assets |
||||||||||||||||||||||||
Equity Options |
$ | 879,853 | $ | 28,588 | $ | (10,961 | ) | $ | 593,610 | $ | 68,776 | $ | (43,104 | ) | ||||||||||
Futures |
15,373 | 108 | | 20,195 | 329 | | ||||||||||||||||||
Liabilities |
||||||||||||||||||||||||
Policyholders account balances |
||||||||||||||||||||||||
Derivatives embedded in life and annuity contracts |
||||||||||||||||||||||||
Equity-indexed annuity contracts(2) |
$ | 1,494,084 | $ | | $ | (64,138 | ) | $ | 1,734,264 | $ | | $ | (63,660 | ) | ||||||||||
Equity-indexed life contracts |
401,511 | | (11,701 | ) | 347,610 | | (18,720 | ) | ||||||||||||||||
Guaranteed accumulation benefits(1) |
95,752 | | (7,499 | ) | 120,714 | | (6,367 | ) | ||||||||||||||||
Guaranteed withdrawal benefits(1) |
13,264 | | (315 | ) | 17,102 | | (366 | ) |
(1) | As of April 1, 2014, these amounts were ceded in accordance with the Companys reinsurance agreements |
(2) | Notional amount represents account value of equity indexed contracts |
The standardized ISDA Master Agreement under which the Companys derivative transactions are executed include provisions for payment netting. In the normal course of business activities, if there is more than one derivative transaction with a single counterparty, the Company will set-off the cash flows of those derivatives into a single amount to be exchanged in settlement of the resulting net payable or receivable with that counterparty. The Company nets the fair value of all derivative financial instruments with counterparties for which an ISDA Master Agreement and related Credit Support Annex (CSA) have been executed. At December 31, 2015 and December 31, 2014, the Company held $0.8 million and $6.4 million in cash and securities collateral delivered by trade counterparties. This cash collateral is reported in Cash on the Consolidated Balance Sheet.
The following table presents the amount and location of gains (losses) recognized in income, net of reinsurance, for derivatives that were not designated or qualifying as hedging instruments for the Successor Period for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014:
For the Year Ended December 31, 2015 |
For the Period from April 1, 2014 through December 31, 2014 |
|||||||||||||||
($ in thousands) |
Realized Investment Gains (Losses) |
Policyholder Benefits |
Realized Investment Gains (Losses) |
Policyholder Benefits |
||||||||||||
Assets |
||||||||||||||||
Equity Options |
$ | (7,557 | ) | $ | | $ | 15,230 | $ | | |||||||
Futures |
(1,651 | ) | | 2,187 | | |||||||||||
Liabilities |
||||||||||||||||
Policyholders account balances |
||||||||||||||||
Equity-indexed annuity contracts |
$ | | $ | (478 | ) | $ | | $ | (5,622 | ) | ||||||
Equity-indexed life contracts |
| 956 | | 90 |
40
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
The following table presents the amount and location of gains (losses) recognized in income for derivatives that were not designated or qualifying as hedging instruments for the Predecessor Period from January 1, 2014 through March 31, 2014 and for the year ended December 31, 2013:
For the Period from January 1, 2014 through March 31, 2014 |
For the Year Ended December 31, 2013 |
|||||||||||||||
($ in thousands) |
Interest Credited(1) | Policyholder Benefits(1) |
Interest Credited(1) |
Policyholder Benefits(1) |
||||||||||||
Liabilities |
||||||||||||||||
Policyholders account balances |
||||||||||||||||
Derivatives embedded in life and annuity contracts |
$ | 16,427 | $ | 946 | $ | 36,890 | $ | 10,177 |
(1) | Prior to April 1, 2014, these amounts were ceded in accordance with the Companys reinsurance agreements. |
5. | Fair Value |
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Consolidated Balance Sheets (Successor) at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows:
Level 1 |
Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access. | |
Level 2 | Assets and liabilities whose values are based on the following: | |
(a) Quoted prices for similar assets or liabilities in active markets; | ||
(b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or | ||
(c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. | ||
Level 3 |
Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Companys estimates of the assumptions that market participants would use in valuing the assets and liabilities. |
The availability of observable inputs varies by instrument. In situations where fair value is based on internally developed pricing models or inputs that are unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised by the Company in determining fair value is typically greatest for instruments categorized in Level 3. In many instances, valuation inputs used to measure fair value fall into different levels of the fair value hierarchy. The category level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments.
The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company gains assurance that assets and liabilities are appropriately valued through the execution of various processes and controls designed to ensure the overall reasonableness and consistent
41
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
application of valuation methodologies, including inputs and assumptions, and compliance with accounting standards. For fair values received from third parties or internally estimated, the Companys processes and controls are designed to ensure that the valuation methodologies are appropriate and consistently applied, the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded. For example, on a continuing basis, the Company assesses the reasonableness of individual fair values that have stale security prices or that exceed certain thresholds as compared to previous fair values received from valuation service providers or brokers or derived from internal models. The Company performs procedures to understand and assess the methodologies, processes and controls of valuation service providers. In addition, the Company may validate the reasonableness of fair values by comparing information obtained from valuation service providers or brokers to other third party valuation sources for selected securities. The Company performs ongoing price validation procedures such as back-testing of actual sales, which corroborate the various inputs used in internal models to market observable data. When fair value determinations are expected to be more variable, the Company validates them through reviews by members of management who have relevant expertise and who are independent of those charged with executing investment transactions.
Successor
There are no assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2015 or December 31, 2014. The following table summarizes the Companys assets and liabilities measured at fair value on a recurring basis as of December 31, 2015 and December 31, 2014.
December 31, 2015 | ||||||||||||||||
Description for Each Class of Asset or Liability ($ in thousands) |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets at fair value |
||||||||||||||||
Fixed maturities |
||||||||||||||||
U.S Treasury Securities and Obligations of U.S. Government Authority and Agencies |
$ | 10,621 | $ | 157,957 | $ | | $ | 168,578 | ||||||||
Obligations of U.S. States and Political Subdivisions |
| 720,757 | | 720,757 | ||||||||||||
Foreign government |
| 61,643 | | 61,643 | ||||||||||||
All Other Corporate Securities |
| 5,727,155 | 11,520 | 5,738,675 | ||||||||||||
ABS |
| 522,531 | 14,260 | 536,791 | ||||||||||||
CMBS |
| 506,699 | | 506,699 | ||||||||||||
RMBS |
| 212,799 | | 212,799 | ||||||||||||
Short term investments |
166,358 | 18,462 | | 184,820 | ||||||||||||
Other invested assets |
||||||||||||||||
Equity Options |
17,627 | | | 17,627 | ||||||||||||
Futures |
108 | | | 108 | ||||||||||||
Separate accounts assets |
1,395,141 | | | 1,395,141 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets at fair value |
$ | 1,589,855 | $ | 7,928,003 | $ | 25,780 | $ | 9,543,638 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities at fair value |
||||||||||||||||
Policyholders account balances |
||||||||||||||||
Equity indexed annuity contracts |
$ | | $ | | $ | (64,138 | ) | $ | (64,138 | ) | ||||||
Equity indexed life contracts |
| (11,701 | ) | | (11,701 | ) | ||||||||||
Guaranteed minimum accumulation benefits |
| | (7,499 | ) | (7,499 | ) | ||||||||||
Guaranteed minimum withdrawal benefits |
| | (315 | ) | (315 | ) | ||||||||||
Separate accounts liabilities |
(1,395,141 | ) | | | (1,395,141 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities at fair value |
$ | (1,395,141 | ) | $ | (11,701 | ) | $ | (71,952 | ) | $ | (1,478,794 | ) | ||||
|
|
|
|
|
|
|
|
42
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
December 31, 2014 | ||||||||||||||||
Description for Each Class of Asset or Liability ($ in thousands) |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets at fair value |
||||||||||||||||
Fixed maturities |
||||||||||||||||
U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies |
$ | 12,408 | $ | 295,544 | $ | | $ | 307,952 | ||||||||
Obligations of U.S. States and Political Subdivisions |
| 543,735 | | 543,735 | ||||||||||||
Foreign government |
| 255,208 | | 255,208 | ||||||||||||
All Other Corporate Securities |
| 7,370,409 | 7,336 | 7,377,745 | ||||||||||||
ABS |
| 377,393 | 5,250 | 382,643 | ||||||||||||
CMBS |
| 330,790 | 2,693 | 333,483 | ||||||||||||
RMBS |
| 189,881 | | 189,881 | ||||||||||||
Short term investments |
191,979 | 145,677 | 23,713 | 361,369 | ||||||||||||
Other invested assets |
||||||||||||||||
Equity Options |
25,672 | | | 25,672 | ||||||||||||
Futures |
329 | | | 329 | ||||||||||||
Separate accounts assets |
1,573,865 | | | 1,573,865 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets at fair value |
$ | 1,804,253 | $ | 9,508,637 | $ | 38,992 | $ | 11,351,882 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities at fair value |
||||||||||||||||
Policyholders account balances |
||||||||||||||||
Equity indexed annuity contracts |
$ | | $ | | $ | (63,660 | ) | $ | (63,660 | ) | ||||||
Equity indexed life contracts |
| (18,720 | ) | | (18,720 | ) | ||||||||||
Guaranteed minimum accumulation benefits |
| | (6,367 | ) | (6,367 | ) | ||||||||||
Guaranteed minimum withdrawal benefits |
| | (366 | ) | (366 | ) | ||||||||||
Separate accounts liabilities |
(1,573,865 | ) | | | (1,573,865 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities at fair value |
$ | (1,573,865 | ) | $ | (18,720 | ) | $ | (70,393 | ) | $ | (1,662,978 | ) | ||||
|
|
|
|
|
|
|
|
There were no transfers between Level 1 and Level 2 during the period from April 1, 2014 through December 31, 2014. In 2015, U.S. Treasury securities were transferred to Level 1 as those securities are traded in an active market. The prior year presentation has been updated to conform to the current year presentation.
Summary of significant valuation techniques for assets and liabilities measured at fair value on a recurring basis
Fixed Maturities
The fair values of the Companys public fixed maturity securities are generally based on prices obtained from independent pricing services. Prices for each security are generally sourced from multiple pricing vendors, and a vendor hierarchy is maintained by asset type based on historical pricing experience and vendor expertise. The Company ultimately uses the price from the pricing service highest in the vendor hierarchy based on the respective asset type. The pricing hierarchy is updated for new financial products and recent pricing experience with various vendors. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. U.S. Treasury securities are included within Level 1 due to the market activity. Typical inputs used by these pricing services include but are not limited to, reported trades, benchmark
43
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
yields, issuer spreads, bids, offers, and/or estimated cash flow, prepayment speeds, and default rates. If the pricing information received from third party pricing services is deemed not reflective of market activity or other inputs observable in the market, the Company may challenge the price through a formal process with the pricing service or classify the securities as Level 3. If the pricing service updates the price to be more consistent with the presented market observations, the security remains within Level 2.
Indicative broker quotes are also used to determine fair value in circumstances where vendor pricing is not available, or where the Company ultimately concludes that pricing information received from independent pricing services is not reflective of market activity. If the Company concludes the values from both pricing services and brokers are not reflective of market activity, it may override the information with an internally-developed valuation. Pricing service overrides, internally-developed valuations and indicative broker quotes are generally included in Level 3 in the fair value hierarchy.
The fair value of private fixed maturities, which are comprised of investments in private placement securities are primarily determined using discounted cash flow models. These models primarily use observable inputs that include Treasury or similar base rates plus estimated credit spreads to value each security. The credit spreads are obtained through a survey of private market intermediaries who are active in both primary and secondary transactions, and consider, among other factors, the credit quality and industry sector of the issuer and the reduced liquidity associated with private placements. Since most private placements are valued using standard market observable inputs and inputs derived from, or corroborated by, market observable data including observed prices and spreads for similar publicly traded or privately traded issues, they have been reflected within Level 2. For certain private fixed maturities, the discounted cash flow model may incorporate significant unobservable inputs, which reflect the Companys own assumptions about the inputs that market participants would use in pricing the asset. To the extent management determines that such unobservable inputs are significant to the price of a security, a Level 3 classification is made. No private placement securities were classified as Level 3 as of December 31, 2015 or December 31, 2014.
Short-term Investments
Short-term investments include money market instruments, highly liquid debt instruments and certain other investments. Certain money market instruments are valued using unadjusted quoted prices in active markets that are accessible for identical assets and are primarily classified as Level 1. The remaining instruments in this category are generally fair valued based on market observable inputs and these investments have primarily been classified within Level 2. Short-term investments classified within Level 3 primarily consist of commercial mortgage loans. The fair value of the commercial mortgage loans is based upon the present value of the expected future cash flows discounted at the appropriate U.S. Treasury rate plus an appropriate credit spread for similar quality loans.
Other Invested Assets
The estimated fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives.
Separate Account Assets and Liabilities
Separate account assets and liabilities consist principally of investments in mutual fund shares. The fair values are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy.
44
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Policyholders Account Balances
The liabilities for guarantees primarily associated with the optional living benefit features of certain variable annuity contracts and equity indexed annuity contracts are calculated as the present value of future expected benefit payments to contractholders less the present value of assessed rider fees attributable to the optional living benefit feature. This methodology could result in either a liability or contra-liability balance, given changing capital market conditions and various actuarial assumptions. Since there is no observable active market for the transfer of these obligations, the valuations are calculated using internally developed models with option pricing techniques. The models are based on a risk neutral valuation framework and incorporate premiums for risks inherent in valuation techniques, inputs, and the general uncertainty around the timing and amount of future cash flows. The determination of these risk premiums requires the use of management judgment.
The significant inputs to the valuation models for these embedded derivatives include capital market assumptions, such as interest rate levels and volatility assumptions, as well as actuarially determined assumptions, including contractholder behavior, such as lapse rates, benefit utilization rates, withdrawal rates, and mortality rates. Since many of these assumptions are unobservable and are considered to be significant inputs to the liability valuation, the liability included in future policy benefits has been reflected within Level 3 in the fair value hierarchy.
Actuarial assumptions, including contractholder behavior and mortality, are reviewed at least annually, and updated based upon emerging experience, future expectations and other data, including any observable market data. These assumptions are generally updated annually unless a material change that the Company feels is indicative of a long term trend is observed in an interim period.
Level 3 Fair Value Measurements
The following table summarizes quantitative information about the significant unobservable inputs used in Level 3 fair value measurements:
($ in thousands) |
Fair Value |
Valuation |
Unobservable |
Range | Weighted Average | |||||||
Equity indexed annuity contracts |
$ | (64,138 | ) | Option Pricing Technique | Projected Option Cost | 1.40% - 2.11% | 1.70% |
Excluded from the table above at December 31, 2015 and December 31, 2014 are approximately $26 million and $15 million, respectively, Level 3 fair value measurements of investments for which the underlying quantitative inputs are not developed by the Company and are not reasonably available. These investments primarily consist of certain public debt securities with limited trading activity, including asset-backed instruments, and their fair values generally reflect unadjusted prices obtained from independent valuation service providers and indicative, non-binding quotes obtained from third-party broker-dealers recognized as market participants. Significant increases or decreases in the fair value amounts received from these pricing sources may result in the Companys reporting significantly higher or lower fair value measurements for these Level 3 investments.
The table above also excludes underlying quantitative inputs related to liabilities held for the Companys guaranteed minimum accumulation benefits and guaranteed withdrawal benefits. These liabilities are not developed by the Company as they are 100% ceded to external reinsurers. The development of these liabilities generally involve actuarially determined models and could result in the Company reporting significantly higher or lower fair value measurements for these Level 3 investments.
45
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014:
($ in thousands) | Balance as of January 1, 2015 |
Net income (loss) |
OCI | Transfers to Level 3 |
Transfers out of Level 3 |
Purchases | Sales | Issues | Settlements | Balance, December 31, 2015 |
||||||||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||||||||||||||||||
Fixed income securities |
||||||||||||||||||||||||||||||||||||||||
All other corporate securities |
$ | 7,336 | $ | (282 | ) | $ | 30 | $ | 13,255 | $ | (2,386 | ) | $ | | $ | | $ | | $ | (6,433 | ) | $ | 11,520 | |||||||||||||||||
ABS |
5,250 | 134 | (2,338 | ) | 17,191 | | | (5,000 | ) | | (977 | ) | 14,260 | |||||||||||||||||||||||||||
CMBS |
2,693 | 23,506 | 314 | | | | (20,192 | ) | | (6,321 | ) | | ||||||||||||||||||||||||||||
Short-term investments |
23,713 | 14 | | | | | | | (23,727 | ) | | |||||||||||||||||||||||||||||
Liabilities |
||||||||||||||||||||||||||||||||||||||||
Equity indexed annuity contracts |
(63,660 | ) | (478 | ) | | | | | | | | (64,138 | ) | |||||||||||||||||||||||||||
Guaranteed minimum accumulation benefits and guaranteed minimum withdrawal benefits(1) |
(6,733 | ) | (1,081 | ) | | | | | | | | (7,814 | ) | |||||||||||||||||||||||||||
($ in thousands) | Balance as of April 1, 2014 |
Net income (loss) |
OCI | Transfers to Level 3 |
Transfers out of Level 3 |
Purchases | Sales | Issues | Settlements | Balance, December 31, 2014 |
||||||||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||||||||||||||||||
Fixed income securities |
||||||||||||||||||||||||||||||||||||||||
All other corporate securities |
$ | 396,694 | $ | 4,514 | $ | (7,472 | ) | $ | | $ | (289,172 | ) | $ | | $ | (97,228 | ) | $ | | $ | | $ | 7,336 | |||||||||||||||||
ABS |
436 | | (55 | ) | | | 4,930 | | | (61 | ) | 5,250 | ||||||||||||||||||||||||||||
CMBS |
3,397 | 2,179 | (314 | ) | | | | | | (2,569 | ) | 2,693 | ||||||||||||||||||||||||||||
Short-term investments |
24,095 | 29 | | | | | (411 | ) | | | 23,713 | |||||||||||||||||||||||||||||
Liabilities |
||||||||||||||||||||||||||||||||||||||||
Equity indexed annuity contracts |
(58,038 | ) | (5,622 | ) | | | | | | | | (63,660 | ) | |||||||||||||||||||||||||||
Guaranteed minimum accumulation benefits and guaranteed minimum withdrawal benefits(1) |
(8,499 | ) | 1,766 | | | | | | | | (6,733 | ) |
(1) | These amount are 100% ceded in accordance with the Companys reinsurance agreements. |
Transfers into Level 3 are generally the result of unobservable inputs utilized within the valuation methodologies and the use of indicative broker quotes for assets that were previously valued using observable inputs. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the availability of pricing service information for certain assets that the Company is able to validate.
46
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
The following table presents the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. The financial instruments presented below are reported at carrying value on the Companys Consolidated Balance Sheet; however, in some cases, as described below, the carrying amount equals or approximates fair value as of December 31, 2015 and December 31, 2014:
December 31, 2015 ($ in thousands) |
||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets |
||||||||||||||||
Commercial mortgage loans |
$ | | $ | | $ | 1,536,638 | $ | 1,536,638 | ||||||||
Policy loans |
| | 186,827 | 186,827 | ||||||||||||
Cash |
49,121 | | | 49,121 | ||||||||||||
Vehicle note |
| | 638,270 | 638,270 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets at fair value |
$ | 49,121 | $ | | $ | 2,361,735 | $ | 2,410,856 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities at fair value |
||||||||||||||||
Policyholders account balances investment contracts |
$ | | $ | | $ | 5,967,973 | $ | 5,967,973 | ||||||||
Other long-term debt |
| | 638,270 | 638,270 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | | $ | | $ | 6,606,243 | $ | 6,606,243 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
December 31, 2014 ($ in thousands) |
||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets |
||||||||||||||||
Commercial mortgage loans |
$ | | $ | | $ | 1,150,510 | $ | 1,150,510 | ||||||||
Policy loans |
| | 194,385 | 194,385 | ||||||||||||
Cash |
49,730 | | | 49,730 | ||||||||||||
Vehicle note |
| | 551,600 | 551,600 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets at fair value |
$ | 49,730 | $ | | $ | 1,896,495 | $ | 1,946,225 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities at fair value |
|
|||||||||||||||
Policyholders account balances investment contracts |
$ | | $ | | $ | 6,609,253 | $ | 6,609,253 | ||||||||
Other long-term debt |
| | 551,600 | 551,600 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | | $ | | $ | 7,160,853 | $ | 7,160,853 | |||||||||
|
|
|
|
|
|
|
|
The fair values presented above have been determined by using available market information and by applying market valuation methodologies, as described in more detail below.
Commercial Mortgage Loans
The fair value of most commercial mortgage loans is based upon the present value of the expected future cash flows discounted at the appropriate U.S. Treasury rate plus an appropriate credit spread for similar quality loans.
Policy Loans
The fair value of policy loans was determined by discounting expected cash flows at the current loan coupon rate. As a result, the carrying value of the policy loans approximates the fair value.
Cash
The Company believes that due to the short-term nature of certain assets, the carrying value approximates fair value.
47
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Vehicle Note and Other Long-Term Debt
The fair value of the Vehicle note and Other long-term debt is based upon the present value of the expected future cash flows discounted at the appropriate U.S. Treasury rate.
Policyholders Account Balances Investment Contracts
Only the portion of policyholders account balances related to products that are investment contracts (those without significant mortality or morbidity risk) are reflected in the table above. For fixed deferred annuities fair values are derived using discounted projected cash flows based on interest rates that are representative of the Companys financial strength ratings, and hence reflect the Companys own nonperformance risk. For those balances that can be withdrawn by the customer at any time without prior notice or penalty, the fair value is the amount estimated to be payable to the customer as of the reporting date, which is generally the carrying value.
Predecessor
Summary of significant valuation techniques for assets and liabilities measured at fair value on a recurring basis
Level 1 Measurements
| Fixed maturities: Comprise certain U.S. Treasuries. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. |
| Short-term: Comprise actively traded money market funds that have daily quoted net asset values for identical assets that the Company can access. |
| Separate account assets: Comprise actively traded mutual funds that have daily quoted net asset values for identical assets that the Company can access. Net asset values for the actively traded mutual funds in which the separate account assets are invested and obtained daily from the fund managers. |
Level 2 Measurements
| Fixed maturities |
U.S. government and agencies: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads.
Municipal: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads.
Corporate, including privately placed: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Also included are privately placed securities valued using a discounted cash flow model that is widely accepted in the financial services industry and uses market observable inputs and inputs derived principally from, or corroborated by, observable market data. The primary inputs to the discounted cash flow model include an interest rate yield curve, as well as published credit spreads for similar assets in markets that are not active that incorporate the credit quality and industry sector of the issuer.
Foreign government: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads.
48
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
RMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, prepayment speeds, collateral performance and credit spreads.
CMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, collateral performance and credit spreads.
| Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. For certain short-term investments, amortized cost is used as the best estimate of fair value. |
Level 3 Measurements
| Policyholder account balances Successor; contractholder funds Predecessor: Derivatives embedded in certain life and annuity contracts are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities. The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of nonmarket observable inputs. |
The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the period from January 1, 2014 through March 31, 2014.
($ in thousands) |
Total gains (losses) included in: |
|||||||||||||||||||
Balance as of December 31, 2013 |
Net income(1) |
OCI | Transfers into Level 3 |
Transfers out of Level 3 |
||||||||||||||||
Liabilities |
||||||||||||||||||||
Contractholder funds: |
||||||||||||||||||||
Derivatives embedded in life and annuity contracts |
$ | (267,859 | ) | $ | 18,525 | $ | | $ | | $ | | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total recurring Level 3 liabilities |
$ | (267,859 | ) | $ | 18,525 | $ | | $ | | $ | | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Purchases | Sales | Issues | Settlements | Balance as of March 31, 2014 |
||||||||||||||||
Liabilities |
||||||||||||||||||||
Contractholder funds: |
||||||||||||||||||||
Derivatives embedded in life and annuity contracts |
$ | | $ | | $ | (3,764 | ) | $ | 2,612 | $ | (250,486 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total recurring Level 3 liabilities |
$ | | $ | | $ | (3,764 | ) | $ | 2,612 | $ | (250,486 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
(1) | The amount attributable to derivatives embedded in life and annuity contracts was reported as follows: $17.6 million in interest credited to contractholder funds and $946 thousand in contract benefits. These amounts were ceded in accordance with the Companys reinsurance agreements. |
49
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the year ended December 31, 2013.
($ in thousands) |
Total gains (losses) included in: |
|||||||||||||||||||
Balance as of December 31, 2012 |
Net income(1) |
OCI | Transfers into Level 3 |
Transfers out of Level 3 |
||||||||||||||||
Assets |
||||||||||||||||||||
Fixed maturities: |
||||||||||||||||||||
Corporate |
$ | 312 | $ | | $ | | $ | | $ | | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total recurring Level 3 assets |
$ | 312 | $ | | $ | | $ | | $ | | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Policyholders account balances: |
||||||||||||||||||||
Derivatives embedded in life and annuity contracts |
$ | (314,926 | ) | $ | 43,244 | $ | | $ | | $ | | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total recurring Level 3 liabilities |
$ | (314,926 | ) | $ | 43,244 | $ | | $ | | $ | | |||||||||
|
|
|
|
|
|
|
|
|
|
Purchases | Sales | Issues | Settlements | Balance as of December 31, 2013 |
||||||||||||||||
Assets |
||||||||||||||||||||
Fixed maturities: |
||||||||||||||||||||
Corporate |
$ | | $ | | $ | | $ | (312 | ) | $ | | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total recurring Level 3 assets |
$ | | $ | | $ | | $ | (312 | ) | $ | | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Policyholders account balances: |
||||||||||||||||||||
Derivatives embedded in life and annuity contracts |
$ | | $ | | $ | (6,621 | ) | $ | 10,444 | $ | (267,859 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total recurring Level 3 liabilities |
$ | | $ | | $ | (6,621 | ) | $ | 10,444 | $ | (267,859 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
(1) | The amount attributable to derivatives embedded in life and annuity contracts was reported as follows: $33.0 million in interest credited to contractholder funds and $10.2 million in contract benefits. These amounts were ceded in accordance with the Companys reinsurance agreements. |
Transfers between level categorizations may occur due to changes in the availability of market observable inputs, which generally are caused by changes in market conditions such as liquidity, trading volume or bid-ask spreads. Transfers between level categorizations may also occur due to changes in the valuation source. For example, in situations where a fair value quote is not provided by the Companys independent third-party valuation service provider and as a result the price is stale or has been replaced with a broker quote whose inputs have not been corroborated to be market observable, the security is transferred into Level 3. Transfers in and out of level categorizations are reported as having occurred at the beginning of the quarter in which the transfer occurred. Therefore, for all transfers into Level 3, all realized and changes in unrealized gains and losses in the quarter of transfer are reflected in the Level 3 rollforward table.
There were no transfers between Level 1 and Level 2 during the period from January 1, 2014 through March 31, 2014 or 2013.
50
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
The following table provides the change in unrealized gains and losses included in net income for Level 3 assets and liabilities.
($ in thousands) |
Period from January 1, 2014 through March 31, 2014 |
As of December 31, 2013 |
||||||
Liabilities |
||||||||
Policyholders account balances: |
||||||||
Derivatives embedded in life and annuity contracts |
$ | 18,525 | $ | 43,244 | ||||
|
|
|
|
|||||
Total recurring Level 3 liabilities |
$ | 18,525 | $ | 43,244 | ||||
|
|
|
|
The amounts in the table above represent the change in unrealized gains and losses included in net income for the period of time that the asset or liability was determined to be in Level 3. The amount attributable to derivatives embedded in life and annuity contracts is reported as follows: $17.6 million in interest credited to contractholder funds and $946 thousand in contract benefits in the period from January 1, 2014 through March 31, 2014, $33.0 million in interest credited to contractholder funds and $10.2 million in contract benefits in 2013. These amounts are ceded in accordance with the Companys reinsurance agreements.
6. | Reinsurance |
Successor
The Company has agreements that provide for reinsurance of certain policy-related risks. Under the agreements, premiums, contract charges, interest credited to policyholder funds, policy benefits and substantially all expenses are reinsured. The Company purchases reinsurance to limit aggregate and single losses on large risks. The Company cedes a portion of the mortality risk on certain life and long-term care policies under coinsurance agreements to a pool of twelve non-affiliated reinsurers. As of December 31, 2015 and December 31, 2014, approximately 99% of the Companys non-affiliated reinsurance recoverables are due from companies rated A- or better by S&P. ALIC represents over 65% of the Companys reinsurance recoverables as of December 31, 2015 and 2014.
On April 1, 2014, the Company entered into an experience rated modified coinsurance and monthly renewal term reinsurance arrangement with an external reinsurer under which risk on certain universal life and fixed annuity products is transferred. No portion of the assets constituting the consideration has been transferred to the reinsurer. This agreement was structured to finance reserves on certain universal life and fixed annuity products, in exchange for a fee based on those reserves. The profit to the reinsurer expected on the modified coinsurance and monthly renewable term portions is returned through an experience refund. The Company has determined that this agreement does not fulfill the requirements of risk transfer under generally accepted accounting principles and is accounted for on a deposit method of accounting. As of December 31, 2015 and 2014, the Company had a deposit receivable and a modified coinsurance payable of $1,250 million and $1,383 million, respectively, related to this agreement.
51
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
The effects of reinsurance on premiums earned and fee income from policyholders for the Successor Period for the year ended December 31, 2015 and for the period April 1, 2014 through December 31, 2014 were as follows:
($ in thousands) |
For the Year Ended December 31, 2015 |
For the Period from April 1, 2014 Through December 31, 2014 |
||||||
Direct |
$ | 1,463,472 | $ | 921,444 | ||||
Assumed |
5,939 | 5,258 | ||||||
Ceded |
(1,106,638 | ) | (702,833 | ) | ||||
|
|
|
|
|||||
Premiums and fee income, net of reinsurance |
$ | 362,773 | $ | 223,869 | ||||
|
|
|
|
The effects of reinsurance on return credited to policyholders account balances and policyholder benefits for the year ended December 31, 2015 and for the period April 1, 2014 through December 31, 2014 were as follows:
($ in thousands) |
For the Year Ended December 31, 2015 |
For the Period from April 1, 2014 Through December 31, 2014 |
||||||
Direct |
$ | 1,603,724 | $ | 1,104,420 | ||||
Assumed |
6,743 | 4,713 | ||||||
Ceded |
(957,643 | ) | (635,887 | ) | ||||
|
|
|
|
|||||
Return credited to policyholders account balances and policyholders benefits, net of reinsurance |
$ | 652,824 | $ | 473,246 | ||||
|
|
|
|
Predecessor
Prior to April 1, 2014, the Company had reinsurance agreements under which it reinsured all of its business to ALIC, Lincoln Benefit Re (LB Re) or non-affiliated reinsurers. Under the agreements, premiums, contract charges, interest credited to policyholders account balances, contract benefits and substantially all expenses were reinsured. The Company purchased reinsurance to limit aggregate and single losses on large risks. The Company ceded a portion of the mortality risk on certain life policies under coinsurance agreements to a pool of twelve non-affiliated reinsurers.
The effects of reinsurance on premiums and contract charges are as follows:
($ in thousands) |
Period from January 1, 2014 through March 31, 2014 |
2013 | ||||||
Direct |
$ | 331,899 | $ | 1,331,597 | ||||
Assumed |
1,581 | 6,830 | ||||||
Ceded: |
||||||||
Affiliate |
(244,797 | ) | (962,576 | ) | ||||
Non-affiliate |
(88,683 | ) | (375,851 | ) | ||||
|
|
|
|
|||||
Premiums and fee income, net of reinsurance |
$ | | $ | | ||||
|
|
|
|
52
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
The effects of reinsurance on return credited to policyholders account balances, policyholder benefits and other expenses are as follows:
($ in thousands) |
Period from January 1, 2014 through March 31, 2014 |
2013 | ||||||
Direct |
$ | 450,041 | $ | 1,938,015 | ||||
Assumed |
2,606 | 8,180 | ||||||
Ceded: |
||||||||
Affiliate |
(336,122 | ) | (1,505,010 | ) | ||||
Non-affiliate |
(116,525 | ) | (441,185 | ) | ||||
|
|
|
|
|||||
Return credited to policyholders, contract benefits and expenses, net of reinsurance |
$ | | $ | | ||||
|
|
|
|
7. | Income Taxes |
Successor
In connection with the Acquisition as defined in Note 1, ALIC made an election under Treasury Regulation Section 1.1502-36(d) for ALIC to eliminate tax basis in certain assets and tax attributes under the unified loss rules. As a result, the tax basis of certain of the Companys assets was reduced immediately prior to the Acquisition. The reduced tax bases were used to determine the deferred tax impact under the acquisition method of accounting as discussed in Note 1.
The Company is party to a federal income tax allocation agreement (the Tax Allocation Agreement) with Lancaster Re. The Company and Lancaster Re will file a separate consolidated federal income tax return for the period April 1, 2014 to December 31, 2014 and will continue to do so in future tax years under Internal Revenue Code Section 1504 (c)(1).
Following the Acquisition, the Company exited The Allstate Corporations consolidated federal income tax return and is no longer a party to the tax allocation agreement with its former affiliates. Final tax settlements were agreed to with The Allstate Corporation and no future tax allocations are expected to occur with The Allstate Corporation.
As part of the Acquisition, although the Company remains jointly and severally liable for consolidated tax liabilities, the Company is held harmless by ALIC in accordance with the Acquisition agreement and believes that the possibility of a tax liability for the pre-sale tax years is remote. Additionally, the Company does not believe it has any uncertain tax positions for its federal income tax return that would be material to its financial condition, results of income, or cash flows. Therefore, the Company did not record a liability for unrecognized tax contingencies/benefits at December 31, 2015 and December 31, 2014. As of December 31, 2015, there were no uncertain tax positions for which management believes it is reasonably possible that the total amounts of tax contingencies will significantly increase within 12 months of the reporting date. No amounts have been accrued for interest or penalties.
53
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
The components of the deferred income tax assets and liabilities as of December 31, 2015 and December 31, 2014 are as follows:
($ in thousands) |
December 31, 2015 | December 31, 2014 | ||||||
Deferred tax assets |
||||||||
Policyholder reserves |
$ | 2,058,446 | $ | 2,057,627 | ||||
Deferred acquisition costs |
41,664 | 24,850 | ||||||
Deferred financing costs |
8,707 | 10,755 | ||||||
Net operating loss carryforward |
| 7,500 | ||||||
Investments |
120,893 | | ||||||
Other assets |
688 | 38 | ||||||
|
|
|
|
|||||
Total deferred tax assets |
$ | 2,230,398 | $ | 2,100,770 | ||||
|
|
|
|
|||||
Deferred tax liabilities |
||||||||
Value of business acquired |
$ | (86,696 | ) | $ | (81,032 | ) | ||
Amounts recoverable from reinsurers |
(2,076,251 | ) | (2,010,157 | ) | ||||
Investments |
| (45,935 | ) | |||||
Intangibles |
(1,820 | ) | (1,820 | ) | ||||
Other liabilities |
(591 | ) | (2,558 | ) | ||||
|
|
|
|
|||||
Total deferred tax liabilities |
$ | (2,165,358 | ) | $ | (2,141,502 | ) | ||
|
|
|
|
|||||
Net deferred tax asset/(liability) |
$ | 65,040 | $ | (40,732 | ) | |||
|
|
|
|
The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance if necessary to reduce the deferred tax asset to an amount that is more likely than not expected to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance the Company considers many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) in which tax jurisdictions they were generated and the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that any tax attribute carryovers can be utilized in the various taxing jurisdictions; (6) any unique tax rules that would impact the utilization of the deferred tax assets; and (7) prudent and feasible tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused. Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized. The Company had no valuation allowance as of December 31, 2015 or December 31, 2014. With respect to deferred tax assets associated with investments, the Company has the ability and intent to hold these securities until recovery. Adjustments to the valuation allowance will be made if there is a change in managements assessment of the amount of deferred tax asset that is realizable.
At December 31, 2015, the Company had no net operating loss carryforwards, no capital loss carryforwards, or tax credit carryforwards.
54
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
A reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014 were as follows:
($ in thousands) |
For the Year Ended December 31, 2015 |
For the Period from April 1, 2014 Through December 31, 2014 |
||||||
Expected federal income tax expense |
45,062 | $ | 15,722 | |||||
Dividends received deduction |
(2,443 | ) | (1,470 | ) | ||||
Other |
3,475 | (18 | ) | |||||
|
|
|
|
|||||
Total income tax expense |
$ | 46,094 | $ | 14,234 | ||||
|
|
|
|
Other represents the establishment of additional deferred tax liabilities that existed at the time of Acquisition and identified during the completion of the consolidated federal income tax return for the 2014 tax year.
The dividends received deduction (DRD) reduces the amount of dividend income subject to U.S. tax and is the primary component of the non-taxable investment income, and, as such, is a significant component of the difference between the Companys effective tax rate and the federal statutory tax rate of 35%. The actual current year DRD can vary from the estimate based on factors such as, but not limited to, changes in the amount of dividends received that are eligible for the DRD, changes in the amount of distributions received from mutual fund investments, changes in the account balances of variable life and annuity contracts, and the Companys taxable income before the DRD.
However, there remains the possibility that the IRS and the U.S. Treasury will address, through subsequent guidance, certain issues related to the calculation of the DRD. For the last several years, the revenue proposals included in the Obama Administrations budgets included a proposal that would change the method used to determine the amount of the DRD. A change in the DRD, including the possible retroactive or prospective elimination of this deduction through guidance or legislation, could increase actual tax expense and reduce the Companys consolidated net income.
Predecessor
Prior to April 1, 2014, the Company joined The Allstate Corporation and its other subsidiaries (the Allstate Group) in the filing of a consolidated federal income tax return and was party to a federal income tax allocation agreement (the Allstate Tax Sharing Agreement). Under the Allstate Tax Sharing Agreement, the Company paid to or received from The Allstate Corporation the amount, if any, by which the Allstate Groups federal income tax liability was affected by virtue of inclusion of the Company in the consolidated federal income tax return. The Company also had a supplemental tax sharing agreement with respect to reinsurance ceded to ALIC to allocate the tax benefits and costs related to such reinsurance. Effectively, these agreements resulted in the Companys annual income tax provision being computed, with adjustments, as if the Company filed a separate return, adjusted for the reinsurance ceded to ALIC.
The IRS is currently examining the Allstate Groups 2013 and 2014 federal income tax returns. The IRS completed the audit of the Allstate Groups 2011 and 2012 federal income tax returns and issued a final Revenue Agents Report on June 10, 2015. The Allstate Groups tax years prior to 2011 have been examined by the IRS and the statute of limitations has expired on those years. Any adjustments that may result from IRS examinations of the Allstate Groups tax returns are not expected to have a material effect on the results of operations, cash flows or financial position of the Company.
55
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
The components of income tax expense are as follows:
($ in thousands) |
Period from January 1, 2014 through March 31, 2014 |
2013 | ||||||
Current |
$ | 914 | $ | 3,902 | ||||
Deferred |
8 | (77 | ) | |||||
|
|
|
|
|||||
Total income tax expense |
$ | 922 | $ | 3,825 | ||||
|
|
|
|
The Company paid no income taxes in the period from January 1, 2014 through March 31, 2014. The Company paid income taxes of $4.2 million in 2013.
A reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations is as follows:
Period from January 1, 2014 through March 31, 2014 |
2013 | |||||||
Statutory federal income tax rate |
35.0 | % | 35.0 | % | ||||
Other |
| | ||||||
|
|
|
|
|||||
Effective income tax rate |
35.0 | % | 35.0 | % | ||||
|
|
|
|
8. | Future Policy Benefits and Other Policyholder Liabilities Successor |
Life insurance liabilities include reserves for death benefits and other policy benefits. As of December 31, 2015 and 2014, future policy benefits and other policyholder liabilities consisted of the following:
($ in thousands) |
December 31, 2015 | December 31, 2014 | ||||||
Traditional life insurance |
$ | 1,567,388 | $ | 1,492,438 | ||||
Immediate fixed annuities |
584,948 | 635,858 | ||||||
Accident and health insurance |
1,580,809 | 1,462,110 | ||||||
Equity indexed annuities |
38,739 | 39,174 | ||||||
Other |
985,757 | 899,369 | ||||||
|
|
|
|
|||||
Total |
$ | 4,757,641 | $ | 4,528,949 | ||||
|
|
|
|
Future policy benefits are generally equal to the present value of future benefit payments and related expenses, less the present value of future net premiums. Assumptions as to mortality, morbidity and persistency are based on the Companys experience, industry data, and/or other factors, when the basis of the reserve is established. Interest rates used in the determination of present values range from 2.5% to 6.0% for setting reserves.
56
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
9. | Policyholder Account Balances Successor |
As of December 31, 2015 and 2014, policyholders account balances consisted of the following:
($ in thousands) |
December 31, 2015 | December 31, 2014 | ||||||
Interest-sensitive life contracts |
$ | 5,210,152 | $ | 5,085,470 | ||||
Individual annuities |
5,896,019 | 6,662,985 | ||||||
Other |
14,394 | 15,857 | ||||||
|
|
|
|
|||||
Total policyholders account balances |
$ | 11,120,565 | $ | 11,764,312 | ||||
|
|
|
|
Policyholders account balances represent an accumulation of account deposits plus credited interest less withdrawals, expenses and mortality charges, if applicable. These policyholders account balances also include provisions for benefits under non-life contingent payout annuities. Interest crediting rates range from 0.4% to 6.0% for interest sensitive contracts. Interest crediting rates for individual annuities range from 0.0% to 6.0%.
10. | Certain Nontraditional Long-Duration Contracts Successor |
The Company offered traditional variable annuity contracts through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contractholder. The Company also offered variable annuity contracts with general and separate account options where the Company contractually guarantees to the contractholder a return of no less than total deposits made to the contract less any partial withdrawals (return of net deposits). In certain of these variable annuity contracts, the Company also contractually guarantees to the contractholder a return of no less than (1) total deposits made to the contract less any partial withdrawals plus a minimum return (minimum return), and/or (2) the highest contract value on a specified date adjusted for any withdrawals (contract value). These guarantees include benefits that are payable in the event of death, annuitization or at specified dates during the accumulation period and withdrawal and income benefits payable during specified periods. The Company also issued annuity contracts with and without market value adjusted investment options (MVAs), which provide for a return of principal plus a fixed rate of return if held to maturity, or, alternatively, a market adjusted value if surrendered prior to maturity or if funds are allocated to other investment options. The market value adjustment may result in a gain or loss to the Company, depending on crediting rates or an indexed rate at surrender, as applicable. All of the risks associated with the Companys variable annuity contracts are reinsured with external reinsurers.
In addition, the Company issues certain variable life, variable universal life and universal life contracts where the Company contractually guarantees to the contractholder a death benefit even when there is insufficient value to cover monthly mortality and expense charges, whereas otherwise the contract would typically lapse (no lapse guarantee). Variable life and variable universal life contracts are offered with general and separate account options similar to variable annuities.
The assets supporting the variable portion of both traditional variable annuities and certain variable contracts with guarantees are carried at fair value and reported as Separate account assets with an equivalent amount reported as Separate account liabilities. Amounts assessed against the contractholders for mortality, administration, and other services are included within revenue in fee income from policyholders and changes in liabilities for minimum guarantees are generally included in policyholder benefits in the Consolidated Statement of Operations and Comprehensive Income (Loss) (Successor) and Statements of Operations and Comprehensive Income (Predecessor).
57
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. The Companys primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including fixed income and equity market returns, contract lapses and contractholder mortality.
For guarantees of benefits that are payable at annuitization, the net amount at risk is generally defined as the present value of the minimum guaranteed annuity payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. The Companys primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including fixed income and equity market returns, benefit utilization, timing of annuitization, contract lapses and contractholder mortality.
For guarantees of benefits that are payable at withdrawal, the net amount at risk is generally defined as the present value of the minimum guaranteed withdrawal payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. For guarantees of accumulation balances, the net amount at risk is generally defined as the guaranteed minimum accumulation balance minus the current account balance. The Companys primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including equity market returns, interest rates, market volatility or contractholder behavior used in the original pricing of these products.
The Companys contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed may not be mutually exclusive. The liabilities related to the net amount at risk are reflected within Future policy benefits and other policyholder liabilities or Policyholders account balances. As of December 31, 2015 and December 31, 2014, the Company had the following guarantees associated with these contracts, by product and guarantee type:
December 31, 2015 | ||||||||||||||||
($ in millions) |
In the Event of Death |
At Annuitization/ Accumulation |
For Cumulative Periodic Withdrawals |
Accumulation at Specified Dates |
||||||||||||
Variable Annuity Contracts |
||||||||||||||||
Separate account value |
$ | 608.8 | $ | 127.4 | $ | 12.8 | $ | 91.6 | ||||||||
Net amount at risk |
$ | 66.3 | $ | 16.9 | $ | 0.1 | $ | 7.4 | ||||||||
Average attained age of contractholders |
61 years | N/A | N/A | N/A | ||||||||||||
Weighted average waiting period until guarantee date |
N/A | None | N/A | 5 years | ||||||||||||
Variable Life, Variable Universal Life and Universal Life Contracts |
||||||||||||||||
No Lapse Guarantees |
||||||||||||||||
Separate account value |
$ | 307.3 | ||||||||||||||
General account value |
$ | 3,639.6 | ||||||||||||||
Net amount at risk |
$ | 84,370.9 | ||||||||||||||
Average attained age of contractholders |
48 years |
58
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
As of December 31, 2014, the Company had the following guarantees associated with these contracts, by product and guarantee type:
December 31, 2014 | ||||||||||||||||
($ in millions) |
In the Event of Death |
At Annuitization/ Accumulation |
For Cumulative Periodic Withdrawals |
Accumulation at Specified Dates |
||||||||||||
Variable Annuity Contracts |
||||||||||||||||
Separate account value |
$ | 742.7 | $ | 151.9 | $ | 16.6 | $ | 118.4 | ||||||||
Net amount at risk |
$ | 57.2 | $ | 15.2 | $ | 0.1 | $ | 6.2 | ||||||||
Average attained age of contractholders |
60 years | N/A | N/A | N/A | ||||||||||||
Weighted average waiting period until guarantee date |
N/A | None | N/A | 6 years | ||||||||||||
Variable Life, Variable Universal Life and Universal Life Contracts |
||||||||||||||||
No Lapse Guarantees |
||||||||||||||||
Separate account value |
$ | 325.1 | ||||||||||||||
General account value |
$ | 3,518.3 | ||||||||||||||
Net amount at risk |
$ | 89,942.8 | ||||||||||||||
Average attained age of contractholders |
51 years |
Liabilities for Guarantee Benefits
The liabilities for guaranteed minimum death benefits (GMDB) and secondary guarantees on interest-sensitive life and fixed annuities are included in Future policy benefits and other policyholder liabilities on the Consolidated Balance Sheet (Successor) and the related changes in the liabilities are included in Policyholder benefits in the Consolidated Statement of Operations and Comprehensive Income (Loss) for the Successor Period for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014. Guaranteed minimum income benefits (GMIB), guaranteed minimum withdrawal benefits (GMWB) and guaranteed minimum accumulation benefits (GMAB) features are accounted for as bifurcated embedded derivatives and are recorded at fair value within Policyholders account balances on the Consolidated Balance Sheet (Successor). The table below summarizes the changes in general account liabilities for guarantees on variable contracts.
59
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
GMDB | GMIB | GMWB/ GMAB |
Secondary Guarantees |
|||||||||||||||||
($ in thousands) |
Variable Annuity |
Variable Annuity |
Variable Annuity |
Interest- Sensitive Life and Fixed Annuities |
Total | |||||||||||||||
Predecessor |
||||||||||||||||||||
Net balance as of December 31, 2013 |
$ | | $ | | $ | | $ | | $ | | ||||||||||
Plus reinsurance recoverable |
8,444 | 8,743 | 9,444 | 281,771 | 308,402 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance as of December 31, 2013 |
$ | 8,444 | $ | 8,743 | $ | 9,444 | $ | 281,771 | $ | 308,402 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Less: reinsurance recoverable |
8,444 | 8,743 | 9,444 | 281,771 | 308,402 | |||||||||||||||
Net balance as of December 31, 2013 |
| | | | | |||||||||||||||
Incurred guarantee benefits |
| | | | | |||||||||||||||
Paid guarantee benefits |
| | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net change |
| | | | | |||||||||||||||
Net balance as of March 31, 2014 |
| | | | | |||||||||||||||
Plus reinsurance recoverable |
8,057 | 7,122 | 8,499 | 293,704 | 317,382 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance as of March 31, 2014 |
$ | 8,057 | $ | 7,122 | $ | 8,499 | $ | 293,704 | $ | 317,382 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Successor |
||||||||||||||||||||
Balance as of April 1, 2014 |
$ | 8,057 | $ | 7,122 | $ | 8,499 | $ | 552,163 | $ | 575,841 | ||||||||||
Less: reinsurance recoverable |
8,057 | 7,122 | 8,499 | 67,288 | 90,966 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net balance as of April 1, 2014 |
| | | 484,875 | 484,875 | |||||||||||||||
Incurred guarantee benefits |
| | | 159,104 | 159,104 | |||||||||||||||
Paid guarantee benefits |
| | | (108,252 | ) | (108,252 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net change |
| | | 50,852 | 50,852 | |||||||||||||||
Net balance as of December 31, 2014 |
| | | 535,727 | 535,727 | |||||||||||||||
Plus reinsurance recoverable |
8,358 | 8,240 | 6,733 | 83,733 | 107,064 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance as of December 31, 2014 |
$ | 8,358 | $ | 8,240 | $ | 6,733 | $ | 619,460 | $ | 642,791 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Less: reinsurance recoverable |
8,358 | 8,240 | 6,733 | 83,733 | 107,064 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net balance as of December 31, 2014 |
| | | 535,727 | 535,727 | |||||||||||||||
Incurred guarantee benefits |
| | | 217,626 | 217,626 | |||||||||||||||
Paid guarantee benefits |
| | | (118,063 | ) | (118,063 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net change |
| | | 99,563 | 99,563 | |||||||||||||||
Net balance as of December 31, 2015 |
| | | 635,290 | 635,290 | |||||||||||||||
Plus reinsurance recoverable |
8,844 | 5,663 | 7,814 | 100,317 | 122,638 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance as of December 31, 2015 |
$ | 8,844 | $ | 5,663 | $ | 7,814 | $ | 735,607 | $ | 757,928 | ||||||||||
|
|
|
|
|
|
|
|
|
|
60
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
11. | Value of Business Acquired Successor |
The following reflects the changes to the VOBA asset:
($ in thousands) |
For the Year Ended December 31, 2015 |
For the Period from April 1, 2014 Through December 31, 2014 |
||||||
Balance at beginning of period |
$ | 231,521 | $ | 290,795 | ||||
Business acquired |
| | ||||||
Amortized to expense during the year(1) |
(40,880 | ) | (38,987 | ) | ||||
Adjustment for unrealized investment losses during the year |
57,061 | (20,287 | ) | |||||
|
|
|
|
|||||
Balance at end of year |
$ | 247,702 | $ | 231,521 | ||||
|
|
|
|
(1) | Amount is included in Operating and Acquisition Expenses on the Consolidated Statements of Operations and Other Comprehensive Income (Loss) |
The following table provides estimated percentage of the VOBA balance to be amortized for the years indicated:
VOBA Amortization |
||||
2016 |
14 | % | ||
2017 |
12 | % | ||
2018 |
10 | % | ||
2019 |
8 | % | ||
2020 and thereafter |
56 | % |
12. | Commitments and Contingencies |
Regulation and Compliance
The Company is subject to changing social, economic and regulatory conditions. From time to time, regulatory authorities or legislative bodies seek to impose additional regulations regarding agent and broker compensation, regulate the nature of and amount of investments, and otherwise expand overall regulation of insurance products and the insurance industry. The Company has established procedures and policies to facilitate compliance with laws and regulations, to foster prudent business operations, and to support financial reporting. The Company routinely reviews its practices to validate compliance with laws and regulations and with internal procedures and policies. As a result of these reviews, from time to time the Company may decide to modify some of its procedures and policies. Such modifications, and the reviews that led to them, may be accompanied by payments being made and costs being incurred. The ultimate changes and eventual effects of these actions on the Companys business, if any, are uncertain.
The Company is currently being examined by certain states for compliance with unclaimed property laws. It is possible that this examination may result in additional payments of abandoned funds to states and to changes in the Companys practices and procedures for the identification of escheatable funds, which could impact benefit payments and reserves, among other consequences; however, it is not likely to have a material effect on the financial statements of the Company.
61
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
The Company is assessed amounts by the state guaranty funds to cover losses to policyholders of insolvent or rehabilitated insurance companies. Those mandatory assessments may be partially recovered through a reduction in future premium taxes in certain states. At December 31, 2015, the Company accrued $6.7 million for guaranty fund assessments which is expected to be offset by estimated future premium tax deductions of $11.1 million.
Litigation
The Company is involved from time to time in judicial, regulatory and arbitration proceedings concerning matters arising in connection with the conduct of its business. Management believes, based on currently available information, that the results of such proceedings, in the aggregate, will not have a material adverse effect on the Companys financial condition. Given the inherent difficulty of predicting the outcome of the Companys litigation and regulatory matters, particularly in cases or proceedings in which substantial or indeterminate damages or fines are sought, the Company cannot estimate losses or ranges of losses for cases or proceedings where there is only a reasonable possibility that a loss may be incurred. However, the Company believes that at the present time there are no pending or threatened lawsuits that are reasonably likely to have a material adverse effect on the consolidated financial position or results of operations.
In the normal course of its business, the Company has entered into agreements that include indemnities in favor of third parties, such as contracts with advisors and consultants, outsourcing agreements, information technology agreements and service agreements. The Company has also agreed to indemnify its directors, officers and employees in accordance with the Companys by-laws. The Company believes any potential liability under these agreements is neither probable nor estimable. Therefore, the Company has not recorded any associated liability.
Pledged or Restricted Assets
The Company had the following restricted assets:
| Certain bonds were on deposit with governmental authorities as required by law with market values of $8.4 million and $8.9 million at December 31, 2015 and December 31, 2014, respectively. |
| Derivative cash collateral received was reported as cash equivalents of $0.8 million and $6.4 million at December 31, 2015 and December 31, 2014, respectively. |
| Funds pledged on certain mortgage loans held in the investment portfolio to finance property improvements on underlying real estate totaling $18.4 million at December 31, 2015. |
13. | Regulatory Capital and Dividends |
The Company prepares its statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the State of Nebraska. Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners (NAIC), as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed.
The State of Nebraska requires insurance companies domiciled in its state to prepare statutory-basis financial statements in conformity with the NAIC Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the State of Nebraska Insurance Commissioner. Statutory accounting practices differ from GAAP primarily since they require establishing life insurance reserves based on different actuarial assumptions, and valuing certain investments at amortized cost. Statutory accounting practices do not give recognition to purchase accounting adjustments.
62
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Statutory net income was $74 million and $226 million for the years ended December 31, 2015 and December 31, 2014, respectively. Statutory capital and surplus was $555 million and $719 million as of December 31, 2015 and December 31, 2014, respectively.
Dividend | Limitations |
The ability of the Company to pay dividends is dependent on business conditions, income, cash requirements and other relevant factors. The payment of shareholder dividends by the Company without the prior approval of the Department of Insurance is limited to formula amounts based on net income and capital and surplus, determined in conformity with statutory accounting practices, as well as, the timing and amount of dividends paid in the preceding twelve months. In connection with the Acquisition, prior approval of the Nebraska Director of Insurance is required for the Company for any dividend or distribution for five years subsequent to the Acquisition. The Company paid dividends of $187.0 million and $33.2 million during the year ended December 31, 2015 and the period from April 1, 2014 through December 31, 2014, respectively.
Other
Without the prior approval of the Nebraska Director of Insurance, the Company may not:
1. | Acquire or enter into an agreement or understanding to acquire control of any insurer, assumptively acquire policies, or bulk reinsure business during the period of three years after the Acquisition. |
2. | Provide or propose to provide directly or indirectly any loans, advances, guarantees, pledges, or other financial assistance (excluding policy loans or investment portfolio transactions) during the period of three years after the Acquisition. |
3. | Engage in any material transaction during the period of three years after the Acquisition. Material transaction shall mean any transfer or encumbrance of assets that, together with all other transfers or encumbrances made within the preceding twelve months, exceeds in value the greater of five percent of Lincoln Benefits surplus as of the December 31st of the last preceding, or the net gain from operations of Lincoln Benefit for the twelve-month period ending the December 31st of the last preceding. For the purposes of this clause, Material Transaction shall exclude: (i) investment portfolio transactions; (ii) settlement of balances due to policyholders, agents or third party reinsurers under existing reinsurance agreements or; (iii) settlement of ordinary course payables including but not limited to taxes, third party administrators, suppliers or other ordinary course creditors, and intercompany payables arising under any approved intercompany services agreement |
Under state insurance laws, insurance companies are required to maintain paid up capital of not less than the minimum capital requirement applicable to the types of insurance they are authorized to write. Insurance companies are also subject to risk-based capital (RBC) requirements adopted by state insurance regulators. A companys authorized control level RBC is calculated using various factors applied to certain financial balances and activity. Companies that do not maintain statutory capital and surplus at a level in excess of the company action level RBC, which is two times authorized control level RBC, are required to take specified actions. Company action level RBC is significantly in excess of the minimum capital requirements.
14. | Leases |
In December 2014, the Company entered into a lease agreement, effective February 2015, to lease office space under a non-cancellable operating lease agreement that expires in January 31, 2026. For the year ended December 31, 2015, the Company made payments of $0.1 million pursuant to this operating lease. For the period from April 1, 2014 through December 31, 2014, the Company made no payments pursuant to this operating lease.
63
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
The minimum aggregate rental commitments as of December 31, 2015 were as follows:
($ in thousands) |
||||
2015 |
$ | 194 | ||
2016 |
207 | |||
2017 |
212 | |||
2018 |
217 | |||
2019 |
222 | |||
All future years |
1,489 | |||
|
|
|||
Aggregate total |
$ | 2,541 | ||
|
|
15. | Related Parties |
Successor
On April 1, 2014, the Company entered into a management services agreement with Resolution. Under this agreement, Resolution and Lincoln Benefit provide services to each other including but not limited to compliance, legal, risk management, accounting and reporting, treasury, tax and other management related services. Services are provided at cost. Resolution provided $13.9 million and $21.1 million in services to Lincoln Benefit for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014, respectively.
Effective April 1, 2014, the Company entered into a Fee Letter (the Fee Letter) with Lanis LLC (Lanis) pursuant to which the Company will pay Lanis the risk spread due on the Vehicle Note issued by Lanis to Lancaster Re. The total expense related to this risk spread for the year ended December 31, 2015 and the period from April 1, 2014 through December 31, 2014 was approximately $6.7 million and $4.3 million, respectively.
The Company reported the following receivables/ (payables) to affiliates as of December 31, 2015 and December 31, 2014 ($ in thousands):
December 31, 2015 | December 31, 2014 | |||||||
Resolution |
$ | (2,623 | ) | $ | (4,509 | ) | ||
Lanis |
$ | (1,742 | ) | $ | (1,564 | ) |
Intercompany receivable and payable balances are evaluated on an individual company basis. Intercompany balances are generally settled quarterly.
The Companys stock is pledged as collateral on Resolutions term loan agreement with a syndicate of lenders (Term Loan). The maturity date of the loan is June 15, 2018. The Term Loan was funded on April 1, 2014.
On April 1, 2014, the Company and RLI entered into a Letter Agreement whereby from and after the fifth anniversary of the date of the agreement, if the Company makes any payment pursuant to the Fee Letter, within ten Business Days of such payment by the Company, RLI shall reimburse the Company in cash in an amount equal to such payment by the Company.
Predecessor
All intercompany balances were settled prior to the Acquisition.
64
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Notes to Consolidated Financial Statements
Business operations
Prior to April 1, 2014, the Company used services performed by its affiliates, Allstate Insurance Company (AIC), ALIC and Allstate Investments LLC, and business facilities owned or leased and operated by AIC in conducting its business activities. In addition, the Company shared the services of employees with AIC. The Company reimbursed its affiliates for the operating expenses incurred on behalf of the Company. The Company was charged for the cost of these operating expenses based on the level of services provided. Operating expenses allocated to the Company were $50.1 million and $249.7 million in the period from January 1, 2014 through March 31, 2014, for the years ended December 31, 2013, respectively. Of these costs, the Company retained investment related expenses on the invested assets that were not transferred under the reinsurance agreements. All other costs were ceded to ALIC under the reinsurance agreements.
Broker-Dealer agreements
Prior to April 1, 2014, the Company had a service agreement with Allstate Distributors, L.L.C. (ADLLC), a broker-dealer company owned by ALIC, whereby ADLLC promoted and marketed products sold by the Company. In return for these services, the Company recorded expense of $12 thousand and $71 thousand in the period from January 1, 2014 through March 31, 2014 and for the year ended December 31, 2013, respectively, that was ceded to ALIC under the terms of the reinsurance agreements.
Prior to April 1, 2014, the Company received distribution services from Allstate Financial Services, LLC, an affiliated broker-dealer company, for certain annuity and variable life insurance contracts sold by Allstate exclusive agencies. For these services, the Company incurred commission and other distribution expenses of $2.2 million and $7.7 million in the period from January 1, 2014 through March 31, 2014 and for the year ended December 31, 2013, respectively, that were ceded to ALIC under the terms of the reinsurance agreements.
Reinsurance
The following table summarizes amounts that were ceded to ALIC under reinsurance agreements and reported net in the Statements of Operations and Comprehensive Income:
($ in thousands) |
Period from January 1, 2014 through March 31, 2014 |
2013 | ||||||
Premiums and contract charges |
$ | 244,797 | $ | 962,576 | ||||
Interest credited to contractholder funds, contract benefits and expenses |
336,122 | 1,505,010 |
In September 2012, the Company entered into a coinsurance reinsurance agreement with LB Re to cede certain interest-sensitive life insurance policies to LB Re.
Income taxes
Prior to April 1, 2014, the Company was a party to a federal income tax allocation agreement with The Allstate Corporation (see Note 7).
Intercompany loan agreement
Prior to April 1, 2014, the Company had an intercompany loan agreement with The Allstate Corporation.
65
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
Schedule I Summary of Investments Other Than Investments in Related Parties
December 31, 2015
($ in thousands) |
Amortized Cost |
Fair Value | Amount at which shown in the Consolidated Balance Sheet |
|||||||||
Type of Investment |
||||||||||||
Fixed maturities: |
||||||||||||
Bonds: |
||||||||||||
United States government, government agencies and authorities |
$ | 163,096 | $ | 168,578 | $ | 168,578 | ||||||
States, municipalities and political subdivisions |
712,948 | 720,757 | 720,757 | |||||||||
Foreign governments |
72,042 | 61,643 | 61,643 | |||||||||
All other corporate bonds |
6,060,561 | 5,738,675 | 5,738,675 | |||||||||
Residential mortgage-backed securities |
209,728 | 212,799 | 212,799 | |||||||||
Commercial mortgage-backed securities |
513,316 | 506,699 | 506,699 | |||||||||
Asset-backed securities |
542,503 | 536,791 | 536,791 | |||||||||
|
|
|
|
|
|
|||||||
Total fixed maturities |
$ | 8,274,194 | $ | 7,945,942 | $ | 7,945,942 | ||||||
Other securities: |
||||||||||||
Mortgage loans |
$ | 1,509,132 | $ | $ | 1,509,132 | |||||||
Derivatives |
26,128 | 17,735 | 17,735 | |||||||||
Other long-term assets |
677 | 677 | ||||||||||
Policy loans |
186,827 | 186,827 | ||||||||||
Short-term investments |
184,820 | 184,820 | ||||||||||
|
|
|
|
|
|
|||||||
Total other securities |
$ | 1,907,584 | $ | 17,735 | $ | 1,899,191 | ||||||
|
|
|
|
|
|
|||||||
Total investments |
$ | 10,181,778 | $ | 7,963,677 | $ | 9,845,133 | ||||||
|
|
|
|
|
|
66
Lincoln Benefit Life Company
(A Wholly-Owned Subsidiary of Resolution Life, Inc.)
($ in thousands) |
Gross Amount | Ceded to Other Companies |
Assumed from Other Companies |
Net Amount | Percentage of Amount Assumed to Net |
|||||||||||||||
Successor |
||||||||||||||||||||
Year Ended December 31, 2015 |
||||||||||||||||||||
Life insurance in force |
$ | 390,226,197 | $ | 384,704,438 | $ | 4,601,282 | $ | 10,123,041 | 45.5 | % | ||||||||||
|
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|
|
|
|
|
|
|||||||||||||
Premiums and contract charges: |
||||||||||||||||||||
Life and annuities |
$ | 1,405,005 | $ | (1,056,276 | ) | $ | 5,939 | $ | 354,668 | 1.7 | % | |||||||||
Accident and health insurance |
58,467 | (50,362 | ) | | 8,105 | 0.0 | % | |||||||||||||
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|
|
|
|
|
|
|
|||||||||||||
$ | 1,463,472 | $ | (1,106,638 | ) | $ | 5,939 | $ | 362,773 | 1.6 | % | ||||||||||
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|
|
|
|
|
|
|||||||||||||
Period from April 1, 2014 through December 31, 2014 |
||||||||||||||||||||
Life insurance in force |
$ | 395,385,878 | $ | 388,790,881 | $ | 5,106,566 | $ | 11,701,563 | 43.6 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Premiums and contract charges: |
||||||||||||||||||||
Life and annuities |
$ | 869,472 | $ | (669,382 | ) | $ | 5,258 | $ | 205,348 | 2.6 | % | |||||||||
Accident and health insurance |
51,972 | (33,451 | ) | | 18,521 | 0.0 | % | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
$ | 921,444 | $ | (702,833 | ) | $ | 5,258 | $ | 223,869 | 2.4 | % | ||||||||||
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|
|
|
|
|
|
|||||||||||||
|
||||||||||||||||||||
Predecessor |
||||||||||||||||||||
Period from January 1, 2014 through March 31, 2014 |
||||||||||||||||||||
Premiums and contract charges: |
||||||||||||||||||||
Life and annuities |
$ | 313,410 | $ | (314,991 | ) | $ | 1,581 | $ | | 0.0 | % | |||||||||
Accident and health insurance |
18,489 | (18,489 | ) | | | 0.0 | % | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
$ | 331,899 | $ | (333,480 | ) | $ | 1,581 | $ | | 0.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Year ended December 31, 2013 |
||||||||||||||||||||
Life insurance in force |
$ | 389,941,404 | $ | 395,421,202 | $ | 5,479,798 | $ | | 0.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Premiums and contract charges: |
||||||||||||||||||||
Life and annuities |
$ | 1,250,623 | $ | (1,257,453 | ) | $ | 6,830 | $ | | 0.0 | % | |||||||||
Accident and health insurance |
80,974 | (80,974 | ) | | | 0.0 | % | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
$ | 1,331,597 | $ | (1,338,427 | ) | $ | 6,830 | $ | | 0.0 | % | ||||||||||
|
|
|
|
|
|
|
|
No reinsurance or coinsurance income was netted against premiums ceded in the year ended December 31, 2015, the period from April 1, 2014 through December 31, 2014, the period from January 1, 2014 to March 31, 2014, or the year ended December 31, 2013.
67
Item 11(f). | Selected Financial Data |
5-YEAR SUMMARY OF SELECTED FINANCIAL DATA | ||||||||||||||||||||||||
Successor Period | Predecessor Period | |||||||||||||||||||||||
($ in millions) | 2015 | For the period from April 1, 2014 through December 31, 2014 |
For the period from January 1, 2014 through March 31, 2014 |
2013 | 2012 | 2011 | ||||||||||||||||||
Operating results |
||||||||||||||||||||||||
Net investment income |
$ | 398.9 | $ | 288.6 | $ | 2.4 | $ | 10.9 | $ | 11.6 | $ | 11.8 | ||||||||||||
Realized capital gains and (losses) |
113.5 | 46.1 | 0.3 | | 0.6 | 2.1 | ||||||||||||||||||
Total Revenues |
875.2 | 614.2 | 2.6 | 10.9 | 12.2 | 13.9 | ||||||||||||||||||
Net income |
82.7 | 30.7 | 1.7 | 7.1 | 7.9 | 9.1 | ||||||||||||||||||
Financial position |
||||||||||||||||||||||||
Investments |
$ | 9,845.1 | $ | 11,088.5 | $ | | $ | 346.8 | $ | 354.8 | $ | 346.6 | ||||||||||||
Total assets |
19,562.7 | 20,710.5 | | 18,844.8 | 19,782.0 | 20,863.6 | ||||||||||||||||||
Future policy benefits, other policyholder liabilities and policyholders account balances |
15,878.2 | 16,293.2 | | 16,681.5 | 17,680.5 | 18,689.1 | ||||||||||||||||||
Shareholders equity |
334.5 | 679.0 | | 343.7 | 346.5 | 338.3 |
Item 11(h). | Managements Discussion and Analysis of Financial Condition and Results of Operations |
OVERVIEW
The following discussion highlights significant factors influencing the financial position and results of operations of Lincoln Benefit. It should be read in conjunction with the financial statements and related notes found under Item 11(e) contained herein. We operate as a single segment entity, based on the manner in which we use financial information to evaluate business performance and to determine the allocation of resources.
The most important factors we monitor to evaluate the financial condition and performance of our Company include:
| For operations: premiums, benefits paid, contract charges, amounts ceded to reinsurers and return on investments including exposure to market risk, credit quality/experience, net investment income, cash flows, realized capital gains and losses, unrealized capital gains and losses, stability of long-term returns, and asset/liability duration (asset duration). |
| For financial condition: risk based capital ratio and capital position. |
APPLICATION OF CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires the application of accounting policies that often involve a significant degree of judgment. Management, on an ongoing basis, reviews estimates and assumptions used in the preparation of financial statements. If management determines that modifications in assumptions and estimates are appropriate given current facts and circumstances, the Companys results of operations and financial position as reported in the Consolidated Financial Statements could change significantly.
Management believes the critical accounting policies relating to the following areas are most dependent on the application of estimates, assumptions and judgments:
| Future policy benefits and other policyholder liabilities |
| Value of business acquired (VOBA) |
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| Investments Impairments and Fair Value Measurements |
| Income Taxes |
| Reserves for Contingencies |
Future Policy Benefits and Other Policyholder Liabilities
Policy liabilities are established for future policy benefits on certain annuity, life, and long term care policies. Such liabilities are established in amounts adequate to meet the estimated future obligations of policies in-force. Changes in policy and contract claims are recorded in policyholder benefits, in the Consolidated Statements of Operations and Comprehensive Income (Loss).
For ASC 944-20 products, benefit reserves are computed using the net level premium method for individual life, annuity and long-term care policies, and are based upon estimates as to future investment yield, mortality and lapse that include provisions for adverse deviation that were prevalent at the time the reserve was initially established. Mortality, morbidity and lapse assumptions for all policies are based on the Companys own experience and industry standards.
Liabilities for outstanding claims and claims adjustment expenses are estimates of payments to be made on life and health insurance contracts for reported claims and claims adjustment expenses. A liability is also held for claims adjustment expenses incurred but not reported as of the balance sheet date. These liabilities are determined using case basis evaluations and statistical analyses and represent estimates of the ultimate cost of all claims incurred but not paid. These estimates are continually reviewed and adjusted as necessary; such adjustments are reflected in current operations.
Future policy benefit reserves for fixed indexed annuity policies with returns linked to the performance of a specified market index are equal to the excess of the sum of the fair value of the embedded derivative and the host (or guaranteed) component over the policyholder account balance. The change in the fair value of the embedded derivative is linked primarily to the performance of the equity option. The host value is established as of the date of acquisition and is equal to the total account value, plus the value of the unexpired options at the date of acquisition, less the embedded derivative, and accreted over the policys life at a constant rate of interest.
Future policy benefits reserves for the portion of fixed indexed annuities earning a fixed rate of interest and other deferred annuity products are computed under a retrospective deposit method and represent policyholders account balances before applicable surrender charges.
The Company holds additional liabilities for its no lapse guarantees (associated with universal life policies) and guaranteed minimum withdrawal benefits (GMWB) associated with fixed annuities, which are accounted for in accordance with ASC 944-20, Financial Services Insurance Activities. The Companys reserves related to guaranteed minimum income benefits, guaranteed minimum accumulation benefits, and guaranteed minimum withdrawal benefits associated with variable annuities are ceded to third party reinsurers.
Policy liabilities and accruals are based on the various estimates discussed above. Although the adequacy of these amounts cannot be assured, the Company believes that policy liabilities and accruals will be sufficient to meet future obligations of policies in-force. The amount of liabilities and accruals, however, could be revised if the estimates discussed above are revised.
Sensitivity for Future Policy Benefit Reserves
The Companys liability for future policy benefits also includes reserves based on the present value of estimated future payments to or on behalf of contractholders, where the timing and amount of payment depends on policyholder mortality. Expected mortality is generally based on the Companys experience, industry data, and/or other factors. Interest rate assumptions are based on factors such as market conditions and expected investment
69
returns. After the initial establishment of reserves, premium deficiency and loss recognition tests are performed using best estimate assumptions as of the testing date without provisions for adverse deviation. When the liabilities for future policy benefits plus the present value of expected future gross premiums for the aggregate product group are insufficient to provide for expected future policy benefits and expenses for that line of business (i.e., reserves net of any VOBA asset), VOBA would first be written off and thereafter, if required, a premium deficiency reserve would be established by a charge to earnings.
Value of Business Acquired
In conjunction with the acquisition of a block of insurance policies or investment contracts, a portion of the purchase price is allocated to the right to receive future gross profits from the acquired insurance policies or investment contracts. This intangible asset, called value of business acquired, represents the estimated present value of future profits from the acquired policies. The estimated present value of future cash flows is based on certain assumptions, including mortality, persistency, expenses, and interest rates that the Company expects to experience in future years. For interest sensitive products, VOBA is amortized over the life of the policies in relation to the emergence of estimated gross profits from margins on mortality, interest, expenses, and surrenders, all of which are net of reinsurance and include actual realized gains and losses on investments. For non-interest sensitive products, such as term life insurance, VOBA is amortized in relation to premium. VOBA is reviewed periodically for loss recognition to ensure that the unamortized balance is recoverable from future earnings from the business. For certain contracts, this evaluation is performed as part of our premium deficiency testing. The carrying amount of VOBA is adjusted for the effects of realized and unrealized gains and losses on debt securities classified as available-for-sale.
Annual assumptions review and quarterly adjustments
Annually, we perform a comprehensive review of the assumptions used in estimating gross profits for future periods. We perform our annual review of assumptions during the third quarter.
Updates to assumptions may cause significant variability in amortization expense in the future. The impact on our results of operations of changes in lapse experience, mortality and revisions to expected future rates of return on investments can be offsetting and therefore we are unable to predict their movement or offsetting impact over time.
The quarterly adjustments for current period experience reflect the impact of differences between actual gross profits for a given period and the previously estimated expected gross profits for that period. To the extent each periods actual experience differs from the previous estimate for that period, the assumed level of total gross profits may change. In these cases, we recognize a cumulative adjustment to all previous periods amortization, also referred to as an experience true-up adjustment.
VOBA Sensitivities
For our equity-indexed annuity, variable and universal life policies, a significant portion of our gross profits is derived from interest and mortality margins. As a result, our estimates of future gross profits are significantly influenced by our interest and mortality assumptions. Our mortality assumptions are used to estimate future death claims over the life of these policies and may be developed based on Company experience, industry experience and other factors. Unless a material change in mortality experience that we feel is indicative of a long term trend is observed in an interim period, we generally update our mortality assumptions annually. Updates to our mortality assumptions in future periods could have a significant adverse or favorable effect on our results of operations.
The following table provides a demonstration of the sensitivity of the VOBA balance relative to our future interest and mortality assumptions by quantifying the adjustments that would be required, assuming both an
70
increase and decrease in our future interest and mortality margin by 10%. The information below is for illustrative purposes only and reflects only the direct effect of changes in our interest and mortality margin on the VOBA balance with no changes in any other assumptions such as persistency or expenses included in our evaluation of VOBA.
($ in millions) | December 31, 2015 | December 31, 2014 | ||||||
Decrease in future interest and mortality margin by 10% |
$ | (4.3 | ) | $ | (2.4 | ) | ||
Increase in future interest and mortality margin by 10% |
$ | 3.8 | $ | 2.1 |
In addition to the impacts of interest and mortality experience relative to our assumptions, other factors may also drive variability in amortization expense, particularly when our annual assumption updates are performed. As noted above, however, the impact on our results of operations of changes in these assumptions can be offsetting and we are unable to predict their movement or offsetting impact over time.
Valuation of Investments, Including Derivatives, and the Recognition of Other-than-Temporary Impairments
Our investment portfolio consists of public and private fixed maturity securities, commercial mortgage and other loans, other invested assets and derivative financial instruments. Derivatives are financial instruments whose values are derived from interest rates, financial indices or the values of securities. The derivative financial instruments we generally use are futures and options. Management believes the following accounting policies related to investments, including derivatives, are most dependent on the application of estimates and assumptions. Each of these policies is discussed further within other relevant disclosures related to the investments and derivatives, as referenced below:
| Valuation of investments, including derivatives; |
| Recognition of other-than-temporary impairments; and |
| Determination of the valuation allowance for losses on commercial mortgage and other loans. |
We present at fair value in the statements of financial position our investments classified as available-for-sale, including fixed maturities, derivatives, and embedded derivatives. For additional information regarding the key estimates and assumptions surrounding the determination of fair value of fixed maturity and equity securities, as well as derivative instruments, embedded derivatives and other investments, see Notes 2 and 5 to the Consolidated Financial Statements.
For our investments classified as available-for-sale, the impact of changes in fair value is recorded as an unrealized gain or loss in Accumulated other comprehensive income (loss), net (AOCI), a separate component of equity. For a discussion of our policies regarding other-than-temporary declines in investment value and the related methodology for recording other-than-temporary impairments of fixed maturity and equity securities, see Note 2 to the Consolidated Financial Statements.
Commercial mortgage loans (CMLs) acquired at fair value as a result of the Acquisition are carried at amortized cost using the effective interest rate method. CMLs held by the Company are diversified by property type and geographic area throughout the U.S. CMLs are considered impaired when it is probable that the Company will not collect amounts due according to the terms of the original loan agreement. The Company assesses the impairment of loans individually for all loans in the portfolio. The Company estimates the fair value of the underlying collateral using internal valuations generally based on discounted cash flow analyses. The Company estimates an allowance for loan losses (ALL) representing potential credit losses embedded in the CML portfolio. The estimate is based on a consistently applied analysis of the loan portfolio and takes into consideration all available information, including industry, geographical, economic and political factors.
71
Income Taxes
Income taxes represent the net amount of income taxes that the Company expects to pay to or receive from various taxing jurisdictions in connection with its operations. The Company provides for Federal and state income taxes currently payable, as well as those deferred due to temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryforward periods under the tax law in the applicable jurisdiction. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred tax assets will not be realized. Management considers all available evidence including past operating results, the existence of cumulative losses in the most recent years, forecasted earnings, future taxable income and prudent and feasible tax planning strategies. The Companys accounting for income taxes represents managements best estimate of the tax consequences of various events and transactions.
Significant management judgment is required in determining the provision for income taxes and deferred tax assets and liabilities, and in evaluating the Companys tax positions including evaluating uncertainties under the guidance for Accounting for Uncertainty in Income taxes. Under the guidance, the Company determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. The Companys liability for income taxes includes the liability for unrecognized tax benefits and interest that relate to tax years still subject to review by the Internal Revenue Service (IRS) or other taxing authorities. We do not anticipate any significant changes within the next 12 months to our total unrecognized tax benefits related to tax years for which the statute of limitations has not expired.
Reserves for Contingencies
A contingency is an existing condition that involves a degree of uncertainty that will ultimately be resolved upon the occurrence of future events. Under GAAP, reserves for contingencies are required to be established when the future event is probable and its impact can be reasonably estimated, such as in connection with an unresolved legal matter. The initial reserve reflects managements best estimate of the probable cost of ultimate resolution of the matter and is revised accordingly as facts and circumstances change and, ultimately, when the matter is brought to closure.
OPERATIONS
Overview and strategy. Prior to July 18, 2013, we sold interest-sensitive, traditional and variable life insurance, and fixed annuities including deferred and immediate through independent master brokerage agencies. Effective January 1, 2014, we no longer offer fixed annuities such as deferred and immediate annuities, however we continue to receive deposits on existing policies.
On April 1, 2014, all of the capital stock in Lincoln Benefit was acquired by Resolution Life, Inc. Immediately prior to that closing, Lincoln Benefit signed a Partial Commutation Agreement with ALIC (the Partial Commutation), whereby we commuted certain business previously reinsured to ALIC, including: (a) all of the fixed deferred annuity, value adjusted deferred annuity and indexed deferred annuity business written by the Company that was previously reinsured to ALIC; (b) all of the life insurance business written by the Company through independent producers that was previously reinsured to ALIC, other than certain specified life business; and (c) all of the net liability of the Company with respect to the accident and health and long-term care insurance business written by the Company that was previously reinsured to ALIC.
Immediately after the announcement of the execution of the Purchase Agreement in July 2013, we ceased soliciting and selling new policies through our independent agent channel. We continued to sell new policies provided through the Allstate exclusive agency channel for a transitional period following the execution of the Purchase Agreement until they are transitioned to a new Allstate company.
72
In connection with the Acquisition, Resolution Life, Inc. and ALIC entered into a Transition Services Agreement (the TSA), pursuant to which ALIC continues to provide certain services for the Recaptured Business. In 2015, the administration of our deferred annuity and life business was outsourced to unaffiliated third-party service providers, se2, LLC and AllianceOne Services, Inc. ALIC continues to administer the ALIC Reinsured Business pursuant to the ASA.
At the closing, Lincoln Benefit entered into two transactions with Hannover Re. The first transaction provided financing for a portion of our statutory reserves associated with our universal life business with no- lapse guarantees and our level premium term life business (the AXXX/XXX Financing). The second transaction involved a reinsurance agreement with Hannover Re, structured on a combined modified coinsurance and monthly renewable term reinsurance basis.
Our parent company, Resolution Life, Inc., is focused on the management of in-force policies of life insurance companies. Pursuant to this strategy, Resolution Life, Inc. intends to acquire additional life insurance companies or runoff blocks of business from unrelated insurers. Resolution Life, Inc. may seek to combine portions of its acquired businesses in order to recognize efficiencies.
Presentation of Financial Information
The financial statements are presented for Successor and Predecessor Periods, which relate to the accounting periods after and before April 1, 2014, respectively, the date of the closing of the Acquisition. For periods after April 1, 2014, the accompanying financial statements comprise the consolidated financial statements of the Company, which include the accounts of the Company and its subsidiary. Due to the Acquisition and the application of push-down accounting, different bases of accounting have been used to prepare the Predecessor and Successor financial statements. A black line separates the Predecessor and Successor financial statements to highlight the lack of comparability between these two periods.
Diminished Comparability of Pre- and Post-Acquisition Financial Information
As a result of the Acquisition and Partial Commutation effective April 1, 2014, comparison of the results of operations for the pre- and post-acquisition periods is not meaningful. For purposes of the Management Discussion and Analysis, the Company has provided comparative analysis of the Balance Sheet as of December 31, 2015 compared to December 31, 2014. For the Results of Operations, the Company has provided summary level information for the Successor and Predecessor Periods, but has only provided more detailed analysis of the components of operations for the Successor Period.
73
Financial Position
The following table outlines amounts reported in the Companys Balance Sheet as of December 31, 2015 as compared to December 31, 2014:
($ in millions) | December 31, 2015 | December 31, 2014 | ||||||
Assets |
||||||||
Cash and invested assets |
$ | 9,894.2 | $ | 11,138.2 | ||||
Reinsurance recoverables |
5,984.5 | 5,695.0 | ||||||
Valuation of business acquired (VOBA) |
247.7 | 231.5 | ||||||
Deposit receivable |
1,250.3 | 1,383.4 | ||||||
Other assets |
790.9 | 688.5 | ||||||
Separate account assets |
1,395.1 | 1,573.9 | ||||||
|
|
|
|
|||||
Total Assets |
$ | 19,562.7 | $ | 20,710.5 | ||||
|
|
|
|
|||||
Liabilities |
||||||||
Future policy benefits |
$ | 4,757.7 | $ | 4,500.3 | ||||
Policyholders account balances |
11,120.6 | 11,764.3 | ||||||
ModCo payable |
1,250.3 | 1,383.4 | ||||||
Long-term debt |
608.7 | 551.6 | ||||||
Other liabilities |
95.8 | 258.0 | ||||||
Separate account liabilities |
1,395.1 | 1,573.9 | ||||||
|
|
|
|
|||||
Total Liabilities |
$ | 19,228.2 | $ | 20,031.5 | ||||
|
|
|
|
|||||
Shareholders Equity |
||||||||
Common stock |
$ | 2.5 | $ | 2.5 | ||||
Additional paid-in capital |
593.6 | 593.6 | ||||||
Accumulated other comprehensive income |
(154.7 | ) | 85.4 | |||||
Retained earnings |
(106.9 | ) | (2.5 | ) | ||||
|
|
|
|
|||||
Total Shareholders Equity |
$ | 334.5 | $ | 679.0 | ||||
|
|
|
|
|||||
Total Liabilities and Shareholders Equity |
$ | 19,562.7 | $ | 20,710.5 | ||||
|
|
|
|
December 31, 2015 vs. December 31, 2014
Assets
Total assets decreased by $1.1 billion, from $20.7 billion at December 31, 2015 to $19.6 billion at December 31, 2015. Assets decline as the closed block of policies surrender, primarily our annuities and universal life blocks. Significant variances are as follows:
Cash and invested assets decreased by $1.2 billion, from $11.1 billion at December 31, 2014 to $9.9 billion at December 31, 2015. The asset portfolio declines as policy liabilities expire or surrender. The significant components of this balance and related decrease is described below.
The Companys fixed maturities bond portfolio decreased by $1.5 billion from $9.4 billion at December 31, 2014 to and $7.9 billion at December 31, 2015. The decline is comprised of policy liability runoff and reinvestment into mortgage loans. The fixed maturities bond portfolio is comprised of approximately 75% of publicly traded securities and approximately 25% in privately placed issuances.
Mortgage loans increased by $0.4 billion from $1.1 billion at December 31, 2014 to $1.5 billion at December 31, 2015. The increase is related to reinvestment of maturing mortgage loans and fixed maturities to new mortgage loan originations to improve both yield and asset and liability matching.
74
Policy loans decreased by $7.6 million from $194.4 million at December 31, 2014 to $186.8 million at December 31, 2015. These balances are expected to continue to decline over time in conjunction with the runoff of the retained policies.
Derivatives decreased by $8.3 million from $26.0 million at December 31, 2014 to $17.7 million at December 31, 2015. These balances are comprised primarily of options and futures that are used to economically hedge the market risk inherent in the Companys equity-indexed products. These assets are carried at fair value with changes in fair value recognized as realized investment gains for GAAP reporting purposes. The decline in these balances is primarily related to the equity market movement in 2015 and the expected runoff of our equity-indexed policies.
Cash and short-term investments decreased by $177.2 million from $411.1 million at December 31, 2014 to $233.9 million at December 31, 2015. The amount invested in cash and short-term investments fluctuates based on liquidity needs and the timing of investment decisions. Overall, short-term investments and cash range from 1% to 3% of overall invested assets.
Reinsurance recoverables arise under GAAP because reinsurance contracts do not relieve the ceding company of legal liability to contractholders, and therefore the ceding company is required to report reinsurance recoverables arising from these contracts separately as an asset while the policyholder liabilities ceded under these contracts are reported as future policyholder benefits or policyholder account balances.
Reinsurance recoverables increased by $289.5 million from $5.7 billion at December 31, 2014 to $6.0 billion as of December 31, 2015. This increase is primarily related to growth in long-term care reserves and the increase in business written by and ceded to ALIC. In 2015, ALIC continued to write new business in Lincoln Benefit, however this business is 100% ceded to ALIC under the existing coinsurance agreement.
Additionally, the Company maintains reinsurance to limit aggregate and single losses on large risks. The Company ceded a portion of the mortality risk on certain life policies under coinsurance agreements to a pool of twelve non-affiliated reinsurers.
Valuation of Business Acquired (VOBA) arises because at the Acquisition date, the assets acquired and liabilities assumed generally are required to be measured at fair value. Fair value for financial reporting purposes is defined in ASC 820 (Fair Value Measurements and Disclosures). ASC 820 emphasizes that fair value is a market participant-based exit price measurement, and not an entity-specific measurement.
Once it has been determined that an asset exists, the VOBA as of the Acquisition date is a part of the business combination, and this asset is measured at fair value in accordance with ASC 820 (i.e., the price that would be received to sell the asset in an ordinary transaction between market participants).
The actuarial appraisal method was used to determine the VOBA by lines of business and resulted in a total VOBA of $290.8 million at the acquisition date. This was determined by projecting the present value of after tax statutory profits, discounted at a risk discount rate (RDR) of 12% and adjusted by projected cost of capital. This was compared to a fair deal RDR between 10% and 16% and determined to create a collar of reasonable values around this central value. This statutory value is then converted to VOBA by adjusting for GAAP to statutory accounting differences.
VOBA increased by $16.2 million from $231.5 million at December 31, 2014 to $247.7 at December 31, 2015. The increase is primarily attributable to the increase in the shadow adjustment resulting from the Companys increase in gross unrealized losses in 2015. VOBA balances before the impact of unrealized losses and gains were $210.9 million and $251.8 million at December 31, 2015 and December 31, 2014, respectively.
Deposit receivable and ModCo Payable decreased by $133.1 million from $1.4 billion at December 31, 2014 to $1.3 billion at December 31, 2015. The deposit receivable and modco payable arise from the modified
75
coinsurance/monthly renewable term reinsurance agreement entered into with Hannover Re. For GAAP reporting purposes, a reinsurance transaction must pass significant risk to the reinsurer for a company to record a credit for liabilities ceded. The Company has determined that the reinsurance transaction with Hannover Re does not pass GAAP risk transfer requirements and therefore must account for the transaction under deposit accounting principles. Under deposit accounting, the Company is required to establish a Deposit Receivable asset on the balance sheet that represents the reinsurance recoverable with an offsetting ModCo Liability for the same amount. The decrease in the balance is consistent with the runoff of the reinsured blocks of business. We will continue to see these balances decline as the annuity blocks run off.
Other assets increased by $102.4 million from $688.5 million at December 31, 2014 to $790.9 million at December 31, 2015. The balance is primarily comprised of an intercompany note, or Vehicle Note that the Company entered into on April 1, 2014 with its affiliate Lanis LLC (Lanis) in the initial amount of $513.0 million. The Vehicle Note balance increased by $57.1 million from $551.6 million at December 31, 2014 to $608.7 million at December 31, 2015. Please see the discussion on the related Surplus Note in the Long Term Debt section below.
Separate Account assets and liabilities decreased by $178.7 million from $1.6 billion at December 31, 2014 to $1.4 billion at December 31, 2015. This decrease was primarily driven by variable annuity surrenders and benefits during the year.
The assets of Separate Accounts are carried at fair value for GAAP. Separate Accounts liabilities represent the contractholders claims to the related assets and are carried at the fair value of the assets. In the event the asset values of certain contractholder accounts are projected to be below the value guaranteed by the Company, a liability is established through a charge to earnings.
Lincoln Benefits variable annuity business and a portion of the Variable Life business is reinsured by ALIC under an existing reinsurance agreement between Lincoln Benefit and ALIC. As of December 31, 2015 and 2014, all assets of the Separate Accounts that support the variable annuity and variable life business were legally insulated.
Liabilities
Total liabilities decreased by $0.8 billion, from $20.0 billion at December 31, 2014 to $19.2 billion at December 31, 2015. The decrease consists of the following components:
Future policy benefits increased by $228.8 million from $4.5 billion at December 31, 2014 to $4.8 billion at December 31, 2015. Such liabilities are established to meet the estimated future obligations of policies in-force. The increase in these liabilities is primarily related to the increase in reserves established for secondary guarantees on universal life products.
Policyholders Account Balances decreased by $0.7 billion, from $11.8 billion at December 31, 2014 to $11.1 billion at December 31, 2015 as a result of policyholder maturities and surrenders. Policyholders account balances represent interest-bearing liabilities arising from the sale of products such as interest-sensitive life insurance and fixed annuities, and are comprised of cumulative deposits received and interest credited to the contractholder less cumulative contract benefits, surrenders, withdrawals and contract charges for mortality or administrative expenses.
The Company holds additional liabilities for guaranteed minimum income benefits (GMIB) associated with variable annuities, which are accounted for in accordance with ASC 944-20, Financial Services Insurance Activities. The reserves for certain living benefit features, including guaranteed minimum accumulation benefits (GMAB) and guaranteed minimum withdrawal benefits (GMWB) are accounted for as embedded derivatives, with fair values calculated as the present value of expected future benefit payments to
76
contractholders less the present value of assessed rider fees attributable to the embedded derivative feature. This methodology could result in either a liability or contra-liability balance, given changing capital market conditions and various actuarial assumptions. The Companys GMIB, GMAB and GMWB reserves are ceded to external reinsurers (with a small amount of retained GMWB coverage related to equity indexed annuities). For additional information regarding the valuation of these optional living benefit features, see Note 10 to the Consolidated Financial Statements.
Long-Term Debt increased by $57.1 million from $551.6 million at December 31, 2014 to $608.7 million at December 31, 2015. This balance represents a surplus note that was initially issued on April 1, 2014 in the amount of $513.0 million. With the Department of Insurance approval, Lancaster Re issued a variable funding Surplus Note (the Surplus Note) to its affiliate, Lanis, for $513.0 million and acquired from Lanis a Vehicle Note (the Vehicle Note) for $513.0 million. The Vehicle Note is held to support a portion of Lancaster Res reinsurance obligations and has been authorized as an acceptable form of reinsurance collateral pursuant to Nebraska Statutes.
With Department of Insurance pre-approval, (i) the Surplus Note is increased each quarter with a corresponding increase in the Vehicle Note, and (ii) interest on the Surplus Note for the prior quarter is paid on the first day of each subsequent quarter at a rate consistent with the rate received on the Vehicle Note of 4%. The Surplus Note and Vehicle Note increased by $57.1 million in 2015, primarily related to the increase in statutory universal life secondary guarantee reserves and term reserves. The Surplus Note is unsecured and subordinated to all present and future indebtedness, policy claims and other creditor claims of Lancaster Re.
Other liabilities decreased from $229.4 million at December 31, 2014 to $95.8 million at December 31, 2015. This balance consists of various policyholder related liabilities, other liability balances related to general expenses, unsettled trades, etc. and the net deferred tax liability. The decrease in this balance is comprised of a decrease in our deferred income tax liability, a decrease in securities payable and a decrease in cash overdrafts. The decrease in the deferred income tax liability as of December 31, 2015 is driven by the increase in unrealized losses in 2015.
Results of Operations
The following table outlines amounts reported in Net Income for the Successor and Predecessor Periods (Successor and Predecessor Periods are not comparable):
Successor Period | Predecessor Period | |||||||||||||||
($ in millions) | For the year ended December 31, 2015 |
For the period from April 1, 2014 through December 31, 2014 |
For the period from January 1, 2014 through March 31, 2014 |
For the year ended December 31, 2013 |
||||||||||||
Income before federal income tax |
$ | 128.7 | $ | 44.9 | $ | 2.6 | $ | 10.9 | ||||||||
Federal income taxes |
46.1 | 14.2 | 0.9 | 3.8 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net Income |
$ | 82.6 | $ | 30.7 | $ | 1.7 | $ | 7.1 | ||||||||
|
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|
|
|
|
|
|||||||||
Other comprehensive income (loss)(OCI) |
(240.2 | ) | 85.5 | 1.4 | (9.9 | ) | ||||||||||
|
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|
|
|
|
|
|
|||||||||
Comprehensive Income (Loss) |
$ | (157.6 | ) | $ | 116.2 | $ | 3.1 | $ | (2.8 | ) | ||||||
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|
|
|
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Results of Operations Successor Period
For the Year Ended December 31, 2015
Net income of $82.7 million was primarily derived from net realized capital gains arising from strategic reinvestment and our investment portfolio resegmentation in 2015 to better align our asset and liability cash flows. Other comprehensive loss of $240.2 million for year ended December 31, 2015 was primarily related to the increase in our net unrealized losses on fixed maturities of $487.0 million due to an increase in market yields on investments, partially offset by shadow adjustments related to VOBA and SOP 03-01 liabilities of $117.0 million.
For the Period from April 1, 2014 to December 31, 2014
Net income of $30.7 million for nine months of the Successor Period from April 1, 2014 to December 31, 2014 was driven by realized capital gains, net of changes in future policy benefits and VOBA and release of product margins.
Other comprehensive income for the nine months from April 1, 2014 to December 31, 2014 was primarily driven by unrealized gains on fixed maturities of $159.2 million as interest rates declined, partially offset by shadow adjustments related to VOBA and SOP 03-01 liabilities of $27.8 million.
The significant components of income in the Successor Period are summarized below.
Successor Period | ||||||||
($ in millions) | For the year ended December 31, 2015 |
For the period from April 1, 2014 through December 31, 2014 |
||||||
Revenues |
||||||||
Premiums earned |
$ | 8.8 | $ | 20.4 | ||||
Fee income from policyholders |
353.9 | 259.2 | ||||||
Net investment income |
398.9 | 288.6 | ||||||
Realized investment gains |
113.5 | 46.0 | ||||||
|
|
|
|
|||||
Total revenues |
$ | 875.1 | $ | 614.2 | ||||
Expenses |
||||||||
Policyholder benefits |
$ | 351.7 | $ | 216.6 | ||||
Interest credited to policyholders |
301.1 | 256.7 | ||||||
Other operating expenses |
52.7 | 57.0 | ||||||
Amortization of VOBA |
40.9 | 39.0 | ||||||
|
|
|
|
|||||
Total expenses |
$ | 746.4 | $ | 569.3 | ||||
|
|
|
|
|||||
Net Income before Federal Income Taxes |
$ | 128.7 | $ | 44.9 | ||||
|
|
|
|
Premiums Earned and Fee Income
Premiums earned were $8.8 million for the year ended December 31, 2015 and $20.4 for the nine-month period from April 1, 2014 to December 31, 2014. These premium relate primarily to traditional life and health insurance products and immediate annuities. Premiums from these products are recognized as revenue when received at the inception of the contract. Premiums earned are net of reinsurance premiums paid on the ceded business. We will continue to see premiums decline as we pay higher reinsurance premiums on universal life secondary guarantee and term life business.
Fee income from policyholders was $353.9 million for the year ended December 31, 2015 and $259.2 million for the nine-month period from April 1, 2014 to December 31, 2014. The fee income from policyholders consists
78
of fees assessed against the policyholder account balance for the cost of insurance (mortality risk), contract administration and surrender of the policy prior to contractually specified dates. These charges are recognized as revenue when assessed against the policyholder account balance. Fee income has been consistent on a quarterly basis since Acquisition.
Net investment income was $398.9 million for the year ended December 31, 2015 and $288.6 million for the nine-month period from April 1, 2014 to December 31, 2014. Net investment income was attributable to the following asset types:
($ in millions) | For the year ended December 31, 2015 |
For the period from April 1, 2014 through December 31, 2014 |
||||||
Fixed income securities |
$ | 334.9 | $ | 232.0 | ||||
Commercial mortgage loans |
63.0 | 49.4 | ||||||
Cash & short-term investments |
0.5 | 4.8 | ||||||
Other |
9.6 | 7.4 | ||||||
|
|
|
|
|||||
Gross investment income |
$ | 408.0 | $ | 293.6 | ||||
Investment expenses |
$ | 9.1 | $ | 5.0 | ||||
|
|
|
|
|||||
Net investment income |
$ | 398.9 | $ | 288.6 | ||||
|
|
|
|
Overall, net investment income has increased in 2015 primarily due to reinvestment efforts to better match asset and liability cash flows and to improve overall portfolio yield. Average yields have increased by asset type in 2015.
Realized investment gains were $113.5 million for the year ended December 31, 2015 and $46.0 million for the nine-month period from April 1, 2014 through December 31, 2014. The net realized gains in 2015 were related to asset liability management initiatives to improve yields and better match assets and liabilities.
Policyholder benefits were $351.7 million for the year ended December 31, 2015 and $216.6 million for the nine-month period from April 1, 2014 through December 31, 2014 includes both incurred claims and the change in liability for future policy benefits. Incurred claims decreased in 2015 compared to 2014 as mortality experience improved, but was offset by an increase in the change in the liability for future policy benefits related to secondary guarantees on universal life products.
Interest credited to policyholders was $301.1 million for the year ended December 31, 2015 and $256.7 million for the nine-month period from April 1, 2014 to December 31, 2014 and represents interest credited to liabilities arising from interest-sensitive life insurance and annuities products. Interest credited to policyholders decreased in 2015 due to lower account values resulting from runoff of business and lower amounts credited to the Companys equity-indexed annuity products, relating to equity market performance.
Operating and acquisition expenses were $52.7 million for the year ended December 31, 2015 and $57.0 million for the nine-month period from April 1, 2014 to December 31, 2014. These expenses are comprised of general operating expenses, premium taxes, and other fees associated with reinsurance. Amortization of VOBA was $40.9 million for the year ended December 31, 2015 and $39.0 million for the nine-month period from April 1, 2014 through December 31, 2014. Operating and acquisition expenses for the nine-month period from April 1, 2014 through December 31, 2014 included initial separation costs that will not be incurred in subsequent periods.
79
Other Information Related to Successor Period
The following table presents surrender and withdrawal amounts and rates for major insurance product lines for the year ended December 31, 2015 and the period from April 1, 2014 through December 31, 2014:
For the year ended December 31, 2015 |
For the period from April 1, 2014 through December 31, 2014 |
|||||||||||||||
Amounts ($ in millions) |
Rate | Amounts ($ in millions) |
Rate | |||||||||||||
Annuities |
$ | 784.3 | 13.2 | % | $ | 866.2 | 16.7 | % | ||||||||
Variable and interest sensitive life |
$ | 129.5 | 3.8 | % | $ | 112.0 | 4.2 | % |
Surrender rates have decreased in 2015 due primarily on equity based products. Higher surrenders were reported in 2014 for products reaching the end of specific guarantee periods (i.e., expiry of market value adjustments).
General Account Investment Portfolio
The General Account Investment Assets (GAIA) portfolio consists of a well-diversified portfolio of public and private fixed maturities, commercial mortgages and other loans and other invested assets. The General Account portfolios and investment results support the insurance liabilities of Lincoln Benefits business operations. The following table reconciles the balance sheet asset amounts to GAIA:
($ in millions) | December 31, 2015 |
December 31, 2014 |
||||||
Fixed maturities, available-for-sale, at fair value |
$ | 7,945.9 | $ | 9,390.6 | ||||
Commercial mortgage loans |
$ | 1,509.1 | $ | 1,115.2 | ||||
Policy loans |
$ | 186.8 | $ | 194.4 | ||||
Short-term investments |
$ | 184.8 | $ | 361.4 | ||||
Other invested assets |
$ | 18.5 | $ | 26.9 | ||||
|
|
|
|
|||||
Total Investments |
$ | 9,845.1 | $ | 11,088.5 | ||||
|
|
|
|
(1) | Assets listed in the Other category principally consist of derivative assets |
Investment Results of General Account Investment Assets
The following table summarizes investment results by asset category for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014:
For the Year Ended December 31, 2015 |
For the Period from April 1, 2014 through December 31, 2014 |
|||||||||||||||
($ in millions) | Amount | Yield | Amount | Yield(1) | ||||||||||||
Fixed income securities |
$ | 334.9 | 3.88 | % | $ | 232.0 | 3.48 | % | ||||||||
Commercial mortgage loans |
$ | 63.0 | 3.66 | % | $ | 49.4 | 3.14 | % | ||||||||
Cash, cash equivalents and short-term investments |
$ | 0.5 | 0.28 | % | $ | 4.8 | 0.36 | % | ||||||||
Other investment (loss) income |
$ | 9.6 | $ | 7.4 | ||||||||||||
|
|
|
|
|||||||||||||
Gross investment income |
$ | 408.0 | $ | 293.6 | ||||||||||||
|
|
|
|
(1) | Annualized |
Fixed Maturities
The fixed maturity portfolio consists largely of investment grade corporate debt securities and includes significant amounts of U.S. government and agency obligations. At December 31, 2015 and December 31, 2014, GAIA held CMBS with an amortized cost of $513 million and $331 million, respectively.
80
Fixed Maturities by Industry
The General Account fixed maturities portfolios include publicly-traded and privately-placed corporate debt securities across an array of industry categories. The following tables set forth these fixed maturities by industry category as of December 31, 2015 and December 31, 2014 along with their associated gross unrealized gains and losses:
December 31, 2015 ($ in millions) |
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value | ||||||||||||
U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies |
$ | 163.1 | $ | 5.6 | $ | (0.1 | ) | $ | 168.6 | |||||||
Obligations of U.S. States and Political Subdivisions |
712.9 | 14.8 | (7.0 | ) | 720.7 | |||||||||||
Foreign Governments |
72.0 | 0.2 | (10.6 | ) | 61.6 | |||||||||||
Corporate securities |
||||||||||||||||
Basic Materials |
406.8 | 0.9 | (56.2 | ) | 351.5 | |||||||||||
Communications |
556.1 | 1.1 | (37.2 | ) | 520.0 | |||||||||||
Consumer, Cyclical |
464.7 | 2.9 | (13.8 | ) | 453.8 | |||||||||||
Consumer, Non-cyclical |
825.1 | 7.4 | (21.8 | ) | 810.7 | |||||||||||
Diversified |
19.2 | 0.1 | (0.1 | ) | 19.2 | |||||||||||
Energy |
801.2 | 0.3 | (151.6 | ) | 649.9 | |||||||||||
Financial |
1,287.8 | 5.8 | (36.5 | ) | 1,257.1 | |||||||||||
Industrial |
1,063.4 | 9.1 | (15.2 | ) | 1,057.3 | |||||||||||
Technology |
236.8 | 1.7 | (9.0 | ) | 229.5 | |||||||||||
Utilities |
399.6 | 2.0 | (11.9 | ) | 389.7 | |||||||||||
ABS |
542.5 | 2.5 | (8.2 | ) | 536.8 | |||||||||||
CMBS |
513.3 | 0.6 | (7.2 | ) | 506.7 | |||||||||||
RMBS |
209.7 | 4.6 | (1.5 | ) | 212.8 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total fixed maturities |
$ | 8,274.2 | $ | 59.6 | $ | (387.9 | ) | $ | 7,945.9 | |||||||
|
|
|
|
|
|
|
|
December 31, 2014 ($ in millions) |
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value | ||||||||||||
U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies |
$ | 287.1 | $ | 20.9 | $ | | $ | 308.0 | ||||||||
Obligations of U.S. States and Political Subdivisions |
517.4 | 26.9 | (0.6 | ) | 543.7 | |||||||||||
Foreign Governments |
250.0 | 5.6 | (0.4 | ) | 255.2 | |||||||||||
Corporate securities |
||||||||||||||||
Basic Materials |
558.6 | 9.0 | (4.0 | ) | 563.6 | |||||||||||
Communications |
567.0 | 11.2 | (2.4 | ) | 575.8 | |||||||||||
Consumer, Cyclical |
470.0 | 9.0 | (1.0 | ) | 478.0 | |||||||||||
Consumer, Non-cyclical |
1,156.9 | 29.8 | (0.8 | ) | 1,185.9 | |||||||||||
Diversified |
17.2 | 0.2 | | 17.4 | ||||||||||||
Energy |
923.2 | 6.8 | (19.1 | ) | 910.9 | |||||||||||
Financial |
1,028.7 | 19.1 | (1.1 | ) | 1,046.7 | |||||||||||
Industrial |
1,668.4 | 30.3 | (3.4 | ) | 1,695.3 | |||||||||||
Technology |
208.5 | 2.8 | (0.4 | ) | 210.9 | |||||||||||
Utilities |
680.9 | 14.4 | (1.9 | ) | 693.4 | |||||||||||
ABS |
378.9 | 6.1 | (2.4 | ) | 382.6 | |||||||||||
CMBS |
331.0 | 3.5 | (1.1 | ) | 333.4 | |||||||||||
RMBS |
188.1 | 2.8 | (1.1 | ) | 189.8 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total fixed maturities |
$ | 9,231.6 | $ | 198.4 | $ | (39.7 | ) | $ | 9,390.6 | |||||||
|
|
|
|
|
|
|
|
Gross unrealized losses increased by $348.2 million from $39.7 million at December 31, 2014 to $387.9 million at December 31, 2015. The increase in unrealized losses was primarily due to a rise in interest rates in 2015 and a
81
general widening in credit spreads in select industries (especially in the energy and metals & mining sectors) and credits during the year ended December 31, 2015. The 10-year treasury yield curve rates at December 31, 2015 and 2014 were 2.27% and 2.17%, respectively.
Fixed Maturities by Credit Quality
The Securities Valuation Office (SVO) of the National Association of Insurance Commissioners (NAIC) evaluates the investments of insurers for regulatory reporting purposes and assigns fixed maturity securities to one of six categories (NAIC Designations). NAIC designations of 1 or 2 include fixed maturities considered investment grade, which include securities rated Baa3 or higher by Moodys or BBB- or higher by Standard & Poors. NAIC Designations of 3 through 6 are referred to as below investment grade, which include securities rated Ba1 or lower by Moodys and BB+ or lower by Standard & Poors. As a result of time lags between the funding of investments, the finalization of legal documents and the completion of the SVO filing process, the fixed maturity portfolio generally includes securities that have not yet been rated by the SVO as of each balance sheet date. Pending receipt of SVO ratings, the categorization of these securities by NAIC designation is based on the expected ratings indicated by internal analysis.
The following table sets forth the General Accounts fixed maturities by NAIC rating at the dates indicated:
December 31, 2015 ($ in millions) |
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
||||||||||||||
NAIC Rating | ||||||||||||||||||
1 | Aaa, Aa, A |
$ | 3,170.2 | $ | 34.7 | $ | (65.6 | ) | $ | 3,139.3 | ||||||||
2 | Baa |
3,430.2 | 15.5 | (268.7 | ) | 3,177.0 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Investment grade |
$ | 6,600.4 | $ | 50.2 | $ | (334.3 | ) | $ | 6,316.3 | |||||||||
3 | Ba |
391.7 | 1.0 | (33.8 | ) | 358.9 | ||||||||||||
4 | B |
16.6 | 0.7 | (2.8 | ) | 14.5 | ||||||||||||
5 | C and lower |
| | | | |||||||||||||
6 | In or near default |
| | | | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Below investment grade |
$ | 408.3 | $ | 1.7 | $ | (36.6 | ) | $ | 373.4 | |||||||||
Total before asset and mortgage-backed securities |
$ | 7,008.7 | $ | 51.9 | $ | (370.9 | ) | $ | 6,689.7 | |||||||||
Asset and mortgage-backed securities |
1,265.5 | 7.7 | (17.0 | ) | 1,256.3 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total fixed maturities |
$ | 8,274.2 | $ | 59.6 | $ | (387.9 | ) | $ | 7,945.9 | |||||||||
|
|
|
|
|
|
|
|
December 31, 2014 ($ in millions) |
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
||||||||||||||
NAIC Rating | ||||||||||||||||||
1 | Aaa, Aa, A |
$ | 4,287.4 | $ | 124.6 | $ | (4.9 | ) | $ | 4,407.1 | ||||||||
2 | Baa |
3,611.9 | 58.2 | (20.4 | ) | 3,649.7 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Investment grade |
$ | 7,899.3 | $ | 182.8 | $ | (25.3 | ) | $ | 8,056.8 | |||||||||
3 | Ba |
393.6 | 2.3 | (9.0 | ) | 386.9 | ||||||||||||
4 | B |
36.3 | 0.8 | (0.8 | ) | 36.3 | ||||||||||||
5 | C and lower |
4.7 | | (0.1 | ) | 4.6 | ||||||||||||
6 | In or near default |
| | | | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Below investment grade |
$ | 434.6 | $ | 3.1 | $ | (9.9 | ) | $ | 427.8 | |||||||||
Total before asset and mortgage-backed securities |
$ | 8,333.9 | $ | 185.9 | $ | (35.2 | ) | $ | 8,484.6 | |||||||||
Asset and mortgage-backed securities |
898.0 | 12.5 | (4.5 | ) | 906.0 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total fixed maturities |
$ | 9,231.9 | $ | 198.4 | $ | (39.7 | ) | $ | 9,390.6 | |||||||||
|
|
|
|
|
|
|
|
82
Below investment grade fixed maturities represented 9.4% and 25.0% of the gross unrealized losses at December 31, 2015 and December 31, 2014, respectively.
Commercial Mortgage Loans
At December 31, 2015 and December 31, 2014, approximately 15.3% and 10.1% of GAIA were in commercial mortgage loans. At December 31, 2015 and 2014, the carrying value of commercial mortgage loans was $1,509.1 million and $1,115.2 million, respectively.
The investment strategy for the mortgage loan portfolio emphasizes diversification by property type and geographic location with a primary focus on asset quality. The table below shows the breakdown of the amortized cost of the General Accounts investments in mortgage loans by geographic region as of December 31, 2015 and December 31, 2014:
($ in millions) | December 31, 2015 |
December 31, 2014 |
||||||
Alabama |
$ | 1.5 | $ | 1.8 | ||||
Arizona |
34.9 | 35.5 | ||||||
California |
336.3 | 255.6 | ||||||
Colorado |
57.2 | 22.4 | ||||||
Connecticut |
25.3 | | ||||||
Florida |
86.7 | 20.8 | ||||||
Georgia |
67.2 | 27.5 | ||||||
Hawaii |
7.1 | 8.1 | ||||||
Illinois |
92.8 | 53.2 | ||||||
Iowa |
1.3 | 1.5 | ||||||
Kansas |
9.2 | | ||||||
Kentucky |
7.7 | 8.3 | ||||||
Maine |
3.9 | 4.1 | ||||||
Maryland |
33.8 | 35.5 | ||||||
Massachusetts |
90.9 | 92.9 | ||||||
Minnesota |
148.3 | 52.5 | ||||||
Missouri |
| 9.3 | ||||||
Nevada |
14.3 | 14.7 | ||||||
New Jersey |
68.7 | 84.0 | ||||||
New York |
94.9 | 72.6 | ||||||
North Carolina |
58.1 | 31.1 | ||||||
Ohio |
37.0 | 38.4 | ||||||
Oklahoma |
10.8 | 10.8 | ||||||
Pennsylvania |
42.0 | 37.7 | ||||||
South Carolina |
2.5 | 3.2 | ||||||
Tennessee |
5.3 | 5.7 | ||||||
Texas |
107.3 | 103.8 | ||||||
Utah |
44.4 | 45.9 | ||||||
Virginia |
2.4 | 18.6 | ||||||
Washington |
11.6 | 13.1 | ||||||
Wisconsin |
5.7 | 6.6 | ||||||
General allowance for loan loss |
| | ||||||
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Total commercial mortgage loans |
$ | 1,509.1 | $ | 1,115.2 | ||||
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Commercial Mortgage Loan by Credit Quality
The values used in these ratio calculations were developed as part of the periodic review of the commercial mortgage loan portfolio, which includes an evaluation of the underlying collateral value as of December 31, 2015 and December 31, 2014.
December 31, 2015 | Recorded Investment | |||||||||||||||||||||||||||
Debt Service Coverage Ratios | ||||||||||||||||||||||||||||
($ in millions) | > 1.20x | 1.00x - 1.20x | < 1.00x | Total | % of Total | Estimated Fair Value | % of Total | |||||||||||||||||||||
Loan-to-value ratios: |
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Less than 65% |
$ | 869.5 | $ | 85.9 | $ | 19.8 | $ | 975.3 | 64.6 | % | $ | 1,000.9 | 65.1 | % | ||||||||||||||
65% to 75% |
508.5 | 25.4 | | 533.9 | 35.4 | 535.7 | 34.9 | |||||||||||||||||||||
76% to 80% |
| | | | 0.0 | | 0.0 | |||||||||||||||||||||
Greater than 80% |
| | | | 0.0 | | 0.0 | |||||||||||||||||||||
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Total |
$ | 1,378.0 | $ | 111.3 | $ | 19.8 | $ | 1,509.1 | 100.0 | % | $ | 1,536.6 | 100.0 | % | ||||||||||||||
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December 31, 2014 | Recorded Investment | |||||||||||||||||||||||||||
Debt Service Coverage Ratios | ||||||||||||||||||||||||||||
($ in millions) | > 1.20x | 1.00x - 1.20x | < 1.00x | Total | % of Total | Estimated Fair Value | % of Total | |||||||||||||||||||||
Loan-to-value ratios: |
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Less than 65% |
$ | 930.6 | $ | 151.7 | $ | 29.5 | $ | 1,111.8 | 97.6 | % | $ | 1,146.0 | 97.6 | % | ||||||||||||||
65% to 75% |
16.6 | 10.5 | | 27.1 | 2.4 | % | 28.3 | 2.4 | % | |||||||||||||||||||
76% to 80% |
| | | | 0.0 | % | | 0.0 | % | |||||||||||||||||||
Greater than 80% |
| | | | 0.0 | % | | 0.0 | % | |||||||||||||||||||
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Total |
$ | 947.2 | $ | 162.2 | $ | 29.5 | $ | 1,138.9 | 100.0 | % | $ | 1,174.3 | 100.0 | % | ||||||||||||||
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All of our mortgage loans that have a debt service coverage ratio of less than 1.0 are performing under the original contractual loan terms at December 31, 2015. At December 31, 2015, there were no mortgage loans classified as problem loans or considered a troubled debt restructuring.
Results of Operations Predecessor Period
Net income Net income for the period January 1, 2014 through March 31, 2014 and for the year ended December 31, 2013 is presented in the following table:
($ in thousands) | For the period January 1, 2014 through March 31, 2014 |
2013 | ||||||
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$ | 2,350 | $ | 10,935 | ||||
Realized capital gains and losses . . . . . . . . . . . . . . . . . . . |
285 | | ||||||
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
(922 | ) | (3,825 | ) | ||||
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Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$ | 1,713 | $ | 7,110 | ||||
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Under reinsurance agreements all premiums, contract charges, interest credited to policyholders account balances, contract benefits and substantially all expenses were ceded to ALIC, Lincoln Benefit Reinsurance Company (LB Re, an affiliate of Lincoln Benefit during the Predecessor Period) and other non-affiliated reinsurers, and were reflected net of such reinsurance in the Statements of Operations and Comprehensive Income. Results of operations included net investment income and realized capital gains and losses recognized in connection with the assets that were not transferred under the reinsurance agreements.
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Net income in the ninety day period ended March 31, 2014 was $1.7 million including net investment income and realized capital gains. Net income for the year ended December 31, 2013 decreased 10.5% in 2013 due to lower net investment income and the absence of net realized capital gains in 2013.
Net investment income The following table presents net investment income for the period January 1, 2014 through March 31, 2014 and for the year ended December 31, 2013.
($ in thousands) | For the period January 1, 2014 through |
2013 | ||||||
Fixed maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$ | 2,461 | $ | 11,545 | ||||
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . |
16 | 23 | ||||||
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Investment income, before expense . . . . . . . . . . . . . . . . . |
2,477 | 11,568 | ||||||
Investment expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
(127 | ) | (633 | ) | ||||
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Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$ | 2,350 | $ | 10,935 | ||||
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Net investment income was $2.4 million for the ninety-day period and $10.9 million for the year ended December 31, 2013. Both periods were impacted by lower yields.
Realized capital gains and losses were $0.3 million in the ninety-day period, primarily related to sales of investments and netted to zero in 2013 with gains from sales offsetting impairment write-downs.
MARKET RISK
Market risk is the risk that we will incur losses due to adverse changes in interest rates or credit spreads. We also have certain exposures to changes in equity prices in our equity-indexed annuities and separate accounts liabilities.
Overview. In formulating and implementing guidelines for investing funds, we seek to earn returns that contribute to stable profits while also meeting the future cash flow requirements of our liabilities.
We use quantitative and qualitative market-based approaches to measure, monitor and manage market risk. We evaluate our exposure to market risk through the use of multiple measures including but not limited to duration, earnings- and capital-at-risk, scenario analysis and sensitivity analysis. Duration measures the price sensitivity of assets or liabilities to changes in interest rates. For example, if interest rates increase 100 basis points, the fair value of an asset with a duration of 5 is expected to decrease in value by 5%. Earnings- and capital-at-risk are estimates of the change in earnings or capital that might be expected to emerge over a given time horizon in various defined stress tests. Scenario analysis estimates the potential changes in the value of various financial parameters that could occur under different hypothetical market conditions defined by changes to the market risk factors of interest rates and credit spreads. Sensitivity analysis estimates the potential changes in the value of various financial parameters that could occur under different hypothetical shocks to a market risk factor. In general, we establish investment portfolio asset allocation and market risk limits based upon a combination of duration, earnings- and capital-at-risk, scenario analysis and sensitivity analysis as well as a consideration of liquidity and diversification. The asset allocation limits place restrictions on the total funds that may be invested within an asset class. Comprehensive day-to-day management of market risk within defined tolerance ranges occurs as portfolio managers buy and sell within their respective markets based upon the acceptable boundaries established by investment and other risk policies.
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Interest rate risk is the risk that we will incur a loss due to adverse changes in interest rates. This risk arises when our investments are not fully matched to our liabilities, or when characteristics of the assets or liabilities change. Interest rate risk includes risks related to changes in U.S. Treasury yields and other key risk- free reference yields.
One of the measures used to quantify interest rate exposure is duration. To estimate asset durations, we project asset cash flows and calculate their net present value using a risk-free market interest rate adjusted for credit quality, sector attributes, liquidity and other specific risks. Duration is calculated by revaluing these cash flows at alternative interest rates and determining the percentage change in aggregate value. The asset projections include assumptions (based upon historical market experience and our experience) that are intended to reflect the effect of changing interest rates on the prepayment, leverage and/or option features of instruments, where applicable. The preceding assumptions relate primarily to mortgage-backed securities, and municipal and corporate obligations. Our asset duration was 6.2 years as of December 31, 2015 and 5.7 years as of December 31, 2014, respectively.
The difference between asset and liability duration is called the duration gap and is a measure of the mismatch between asset and liabilities. At the current time, because our asset durations are shorter than our liability durations, lower interest rate environments will in general result in more adverse financial outcomes than higher interest rate environments.
Based upon the information and assumptions used in the duration calculation, and interest rates in effect as of December 31, 2015, we estimate that a 100 basis point immediate, parallel fall in interest rates (rate shock) would increase the net fair value of the assets by $620 million, compared to $630 million as of December 31, 2014. The decrease is due to a decrease in the amount and mix of invested assets as the portfolio runs off over time. However, given the duration of our assets is shorter than the duration of our liabilities, lower interest rates will result in lower investment income on assets purchased in the future, resulting in a lower net investment income from the lower interest rates. The selection of a 100 basis point immediate, parallel change in interest rates should not be construed as our prediction of future market events, but only as an illustration of the potential effect of such an event.
To the extent that conditions differ from the assumptions we used in these calculations, duration and rate shock measures could be significantly impacted. Additionally, our calculations assume that the current relationship between short-term and long-term interest rates (the term structure of interest rates) will remain constant over time. As a result, these calculations may not fully capture the effect of non-parallel changes in the term structure of interest rates and/or large changes in interest rates.
Credit spread risk is the risk that we will incur a loss due to adverse changes in credit spreads (spreads). This risk arises from our investment in spread-sensitive fixed income assets.
We manage the spread risk in our assets. One of the measures used to quantify this exposure is spread duration. Spread duration measures the price sensitivity of the assets to changes in spreads. For example, if spreads increase 100 basis points, the fair value of an asset exhibiting a spread duration of 5 is expected to decrease in value by 5%. Losses due to credit spread duration result only if there is a requirement to sell assets (for example, to pay claims) prior to maturity at a time when the fair market value of assets is low due to higher credit spreads.
Spread duration is calculated similarly to interest rate duration. For our portfolio, spread duration is close to the asset duration, and thus has a similar sensitivity. As of December 31, 2015, the spread duration of assets was 6.7 years, compared to 5.7 years as of December 31, 2014. Based upon the information and assumptions we use in this spread duration calculation, and spreads in effect as of December 31, 2015, we estimate that a 100 basis point immediate, parallel increase in spreads across all asset classes, industry sectors
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and credit ratings (spread shock) would decrease the net fair value of the assets by $670 million as of December 31, 2015 compared to $630 million as of December 31, 2014. The decrease is due to a decrease in the amount and mix of invested assets as the portfolio runs off over time.
The selection of a 100 basis point immediate parallel change in spreads should not be construed as our prediction of future market events, but only as an illustration of the potential effect of such an event.
Credit default risk is the risk that we will incur a loss due to non-payment of principal or interest by a borrower on a specific financial instrument we own. This risk arises primarily from our investments in fixed income securities (for example, corporate bonds) and commercial mortgage loans.
We manage credit default risk through monitoring of the creditworthiness of the underlying borrowers of the securities and loans we are invested in. We use diversification to reduce credit default risk by spreading the risk across different borrowers, different industries, and different geographical locations. Furthermore, we constrain credit default risk through limits on the amount of securities and loans we own with specific credit ratings. Credit defaults may be recognized by the Company in income prior to an actual default by the underlying borrower.
A credit default loss of 1% on the portfolio would result in a loss of $74 million as of December 31, 2015, compared to $84 million as of December 31, 2014. The decrease is due to a decrease in the amount and mix of invested assets as the portfolio runs off over time. The selection of 1% should not be construed as our prediction of future market events, but as an illustration of the potential effect of such an event.
Equity price risk is the risk that we will incur losses due to adverse changes in the general levels of the equity markets. Equity risk exists for contract charges based on account balances as well as for guarantees for living, death and/or income benefits provided by our variable and equity indexed products.
Our variable life products are partially reinsured to ALIC. For the products that are retained, there is equity exposure to contract charges and fees that are based on separate account values, but there is only small exposure to guarantees.
All variable annuity contract charges and fees, liabilities and benefits, including guarantees for death and/or income benefits, are ceded to ALIC in accordance with the reinsurance agreements, thereby limiting our equity risk exposure. In 2006, ALIC disposed of substantially all of its variable annuity business through reinsurance agreements with The Prudential Insurance Company of America, a subsidiary of Prudential Financial, Inc. and therefore mitigated this aspect of ALICs risk. The Company was not a direct participant of this agreement and its reinsurance agreements with ALIC remain unchanged. As of December 31, 2015 and 2014, we had Separate Accounts assets related to variable annuity and variable life contracts totaling $1.6 billion and $1.7 billion, respectively.
As of December 31, 2015 and December 31, 2014, we had $1.6 billion and $1.8 billion in equity-indexed life and annuity liabilities that were not reinsured that provide customers with interest crediting rates based on the performance of the S&P 500, respectively. We maintain a hedging program that aims to offset the impact of equity market performance on the value of these guarantees. As of December 31, 2015 and December 31, 2014, we had $17.7 million and $26.0 million in market value of S&P 500 options and futures under the hedging program, respectively.
Counterparty credit risk relates to the Companys potential loss if a counterparty fails to perform under the terms of a contract. The Company manages its exposure to counterparty credit risk by utilizing highly rated counterparties, establishing risk control limits, executing legally enforceable master agreements and obtaining collateral where appropriate.
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Lincoln Benefits counterparty risk consists of the following two types of exposures: (1) Derivative counterparty risk: The Company only holds future contracts and option contracts which are traded on organized exchanges, which require margin deposits and guarantee the execution of trades, thereby mitigating potential credit risk. Exchanges serve as a marketplace for the buyer and the seller. The associated clearing house sits between the two sides of the trade. The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance in 2015 or 2014; and (2) Reinsurance counterparty risk. The reinsurance counterparty risk is the risk of the reinsurance counterparty failing to pay reinsurance recoveries in full to Lincoln Benefit in a timely manner (i.e., unwillingness to pay, not paying them in full or inability to pay.) We attempt to mitigate this risk by diversifying the risk with multiple reinsurers and monitoring their credit ratings.
CAPITAL RESOURCES AND LIQUIDITY
Capital resources consist of shareholders equity. The following table summarizes our capital resources as of December 31, 2015 and December 31, 2014:
($ in millions) | 2015 | 2014 | ||||||
Common stock, retained earnings and additional paid-in capital |
$ | 489.2 | $ | 593.5 | ||||
Accumulated other comprehensive income |
(154.7 | ) | 85.5 | |||||
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$ | 334.5 | $ | 679.0 | |||||
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Shareholders equity decreased in 2015 primarily due to unrealized capital losses and payment of dividends to our parent, offset by net income. Shareholders equity in 2014 increased primarily due to additional paid in capital resulting from the Acquisition and unrealized capital gains, offset by a dividend to our parent.
Financial strength ratings. Our financial strength ratings as of December 31, 2015 and December 31, 2014, were A- from A.M. Best Company, Inc. and BBB+ from Standard & Poors Ratings Services, both with a stable outlook. These ratings reflect the rating agencies opinions of our relative financial strength and are not a recommendation to buy or hold any investment. Ratings may be revised or revoked at any time at the sole discretion of the issuing rating agency.
The NAIC has developed a set of financial relationships or tests known as the Insurance Regulatory Information System to assist state regulators in monitoring the financial condition of insurance companies and identifying companies that require special attention or actions by insurance regulatory authorities. The NAIC analyzes financial data provided by insurance companies using prescribed ratios, each with defined usual ranges. Generally, regulators will begin to monitor an insurance company if its ratios fall outside the usual ranges for four or more of the ratios. If an insurance company has insufficient capital, regulators may act to reduce the amount of insurance it can issue. Our ratios are within these ranges.
Liquidity sources and uses. Our potential sources of funds principally include the following:
| Receipt of insurance premiums |
| Contractholder fund deposits |
| Reinsurance recoveries |
| Receipts of principal and interest on investments |
| Maturity or sales of investments |
Our potential uses of funds principally include the following.
| Payment of contract benefits, surrenders and withdrawals |
| Reinsurance cessions and payments |
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| Operating costs and expenses |
| Purchase of investments |
| Repayment of intercompany balances |
| Dividends to parent |
| Tax payments/settlements |
Cash flows. As reflected in our Statements of Cash Flows, net cash provided by operating activities was $34 million, $96 million, $10 million and $16 thousand for the year ended December 31, 2015, the nine-month period from April 1, 2014 to December 31, 2014, the three months ended March 31, 2014, and the year ended December 31, 2013, respectively. Fluctuations in net cash provided by operating activities primarily occur as a result of changes in net investment income and differences in the timing of reinsurance payments as well as cash contributions resulting from the Acquisition. Prior to 2014, fluctuations in net cash provided by operating activities primarily occurred as a result of changes in net investment income and differences in the timing of reinsurance payments to and from ALIC and payments to Allstate affiliates.
Prior to our acquisition by Resolution Life, under the terms of reinsurance agreements, all premiums and deposits, excluding variable annuity and life contract deposits allocated to separate accounts and those reinsured to non-affiliated reinsurers, were transferred to ALIC, which maintained the investment portfolios supporting our products. Payments of contractholder claims, benefits, contract surrenders and withdrawals and certain operating costs (excluding investment-related expenses), were reimbursed by ALIC, under the terms of the reinsurance agreements. Notwithstanding any reinsurance arrangements, we continue to have primary liability as a direct insurer for risks reinsured. Our ability to meet liquidity demands is dependent on reinsurers ability to meet those obligations under the reinsurance programs.
Our ability to pay dividends is dependent on business conditions, income, cash requirements and other relevant factors. The payment of shareholder dividends without the prior approval of the state insurance regulator is limited by Nebraska law to formula amounts based on net income and capital and surplus, determined in conformity with statutory accounting practices, as well as the timing and amount of dividends paid in the preceding twelve months. In addition, in connection with its approval of our acquisition by Resolution Life, the Department of Insurance order requires prior approval to pay any dividend for five years following the Acquisition. After receiving approval from the Department of Insurance, the Company paid dividends of $187.0 million and $33.2 million in the year ended December 31, 2015 and the period from April 1, 2014 through December 31, 2014, respectively. No dividends were paid in 2013.
Contractual obligations. Due to the reinsurance agreements that we have in place, certain contractual obligations are ceded to ALIC, Hannover and other non-affiliated reinsurers.
REGULATION AND LEGAL PROCEEDINGS
We are subject to extensive regulation and we are involved in various legal and regulatory actions, all of which have an effect on specific aspects of our business. For a detailed discussion of the legal and regulatory actions in which we are involved, see Note 12 of the financial statements.
PENDING ACCOUNTING STANDARDS
There are pending accounting standards that we have not implemented because the implementation date has not yet occurred. For a discussion of these pending standards, see Note 2 in the consolidated financial statements. The effect of implementing certain accounting standards on our financial results and financial condition is often based in part on market conditions at the time of implementation of the standard and other factors we are unable to determine prior to implementation. For this reason, we are sometimes unable to estimate the effect of certain pending accounting standards until the relevant authoritative body finalizes these standards or until we implement them.
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Item 11(i). | Changes in or Disagreements with Accountants |
None.
Item 11(j). | Quantitative and Qualitative Disclosures About Market Risk |
Information required for Item 11(j) is incorporated by reference to the material under the caption Market Risk in Item 11(h) of this report.
Item 11(k). | Directors and Executive Officers |
The biographies of each of the directors and executive officers as of April 1, 2016 are included below.
Clive Cowdery, 52, has been a director since April 2014. Mr. Cowdery is also a director and President of both Resolution Life GP Ltd. and Resolution Life (Parallel) GP Ltd., and a director of both Resolution Life Holdings, Inc. and Resolution Life, Inc. He is the Founder and Chairman of The Resolution Group. Before founding Resolution in 2003, Mr. Cowdery served as Chairman and Chief Executive of GE Insurance Holdings. Mr. Cowdery currently serves as a director of Prospect Publishing Limited, and he is the Founder and Chairman of the Resolution Foundation, a charitable organization dedicated to improving living standards for the 15 million people in Britain on low and middle incomes.
Jon Hack, 48, has been a director since April 2014. Mr. Hack is also a director of Resolution Life Holdings, Inc. and a director of Resolution Life, Inc. He currently serves as the Managing Partner for The Resolution Group. Prior to joining Resolution in 2009, Mr. Hack was a Managing Director and Head of European Financial Institutions Group for Lazard. Mr. Hack qualified as a chartered accountant in 1992 and is a member of The Institute of Chartered Accountants in England & Wales.
Ann Frohman, 52, has been a director since April 2014. Ms. Frohman is also a director of Resolution Life Holdings, Inc. and a director of Resolution Life, Inc. Ms. Frohman is currently self-employed at Frohman Law Office LLC, a law and government relations firm. From December 2010 to March 2012, Ms. Frohman served as Senior Vice President, Government and Industry for Physicians Mutual and Physicians Life Insurance Companies. Prior to that, Ms. Frohman held a number of leadership positions with the Nebraska Department of Insurance, including Director. Ms. Frohman is a licensed attorney with the Nebraska State Bar Association. Ms. Frohman has advised Resolution on issues of Nebraska law from time to time and expects to do so in the future.
Robert Stein, 67, has been a director since April 2014. Mr. Stein is also a director of Resolution Life Holdings, Inc. and a director of Resolution Life, Inc. From November 1976 to September 2011, Mr. Stein held various positions at Ernst & Young, including Partner. He currently serves on the boards of directors of Assurant, Inc. and Aviva plc. Mr. Stein is an actuary and a Certified Public Accountant. He is a Fellow of the Society of Actuaries and a member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants.
Grace Vandecruze, 52, has been a director since April 2014. Ms. Vandecruze is also a director of Resolution Life Holdings, Inc. and Resolution Life, Inc. Since 2006, Ms. Vandecruze has been employed with Grace Global Capital LLC, where she currently serves as Managing Director. Prior to that, she served as Managing Director at Fox-Pitt, Kelton and Vice President at Head & Company LLC. Ms. Vandecruze is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants.
Richard Carbone, 68, has been a director since April 2014. Mr. Carbone is also a director of Resolution Life Holdings, Inc. and a director of Resolution Life, Inc. Prior to joining Lincoln Benefit, Mr. Carbone served as Executive Vice President and Chief Financial Officer at Prudential Financial, Inc. and The Prudential Insurance Company of America. He also served as Senior Vice President and Chief Financial Officer
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of Prudential Financial, Inc. from November 2001 to January 2008 and Senior Vice President and Chief Financial Officer of The Prudential Insurance Company of America from July 1997 to January 2008. Prior to that, Mr. Carbone held various leadership roles at Salomon, Inc., Bankers Trust New York Corporation and Bankers Trust Company. Mr. Carbone is a member of the board of directors for E*Trade Financial Corporation. Mr. Carbone is a Certified Public Accountant (inactive).
Stephen Campbell, 49, has been a director since October 2015, and prior to that Mr. Campbell had been a director from May 2014 through May 2015. Mr. Campbell is also a director of Resolution Life Holdings, Inc. and a director of Resolution Life, Inc. From July 2015 through September 2015, Mr. Campbell was a counselor in the domestic finance office of the U.S. Department of Treasury. Since July 2013, Mr. Campbell has been self-employed as a consultant and investor. Prior to that, he was an Investment Banker with Lazard Freres & Co. from 2002 to July 2013. Mr. Campbell currently serves as a member of the board of directors for Hardscuffle, Inc. and American Life & Accident Insurance Company of Kentucky.
W. Weldon Wilson, 55, has been a director and Chief Executive Officer since April 2014. Mr. Wilson also serves as a director and Chief Executive Officer for Resolution Life Holdings, Inc. and Resolution Life, Inc. From 2010 to 2013, he was self-employed as a consultant. From July 1991 to December 2009, Mr. Wilson held various positions at Swiss Reinsurance Company, including Chief Executive Officer, President and Director of Swiss Re Life & Health America Inc. He is a licensed attorney with the State Bar of Texas.
Robyn Wyatt, 51, has been Executive Vice President, Chief Financial Officer and Treasurer since April 2014. Ms. Wyatt also serves as Executive Vice President, Chief Financial Officer and Treasurer of both Resolution Life Holdings, Inc. and Resolution Life, Inc. From March 2002 to September 2013, Ms. Wyatt held positions with various affiliates of Swiss Reinsurance Company, including Managing Director and Chief Financial Officer of Swiss Re Life & Health America Inc. Prior to that, she served as Vice President and Chief Accountant of Manulife Financial Corporation. Ms. Wyatt is a member of Chartered Accountants Australia and New Zealand and The Canadian Institute of Chartered Accountants.
Keith Gubbay, 61, has been President and Chief Actuarial Officer since April 2014. Mr. Gubbay also serves as President and Chief Actuarial Officer of both Resolution Life Holdings, Inc. and Resolution Life, Inc. From 2004 until he joined Resolution Life, Mr. Gubbay held various leadership positions in Sun Life Financial U.S., including Senior Vice-President and Chief Financial Officer. Prior to that, he served in various senior executive roles at ING Americas. Mr. Gubbay is a Member of the American Academy of Actuaries and a Fellow in the Society of Actuaries.
Simon Packer, 51, has been Chief Transformation Officer since April 2014. Mr. Packer also serves as Chief Transformation Officer of both Resolution Life Holdings, Inc. and Resolution Life, Inc. Prior to joining the Resolution Group in May 2006, Mr. Packer held leadership positions at a variety of U.K. life insurance companies, including Programme Manager at Clerical Medical Investment Group from August 2003 to April 2006 and Programme Manager at AXA Tech Ltd from April 2002 to January 2003.
Leigh McKegney, 32, has been Chief Legal Officer, Vice President and Secretary since May 2014. Ms. McKegney also serves as Chief Legal Officer, Vice President and Secretary of Resolution Life Holdings, Inc. and Resolution Life, Inc. From November 2010 to April 2014, Ms. McKegney was a corporate associate at Debevoise & Plimpton LLP. Ms. McKegney is a licensed attorney in the State of New York and registered as authorized house counsel in the State of Connecticut.
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Item 11(l). | Executive Compensation |
COMPENSATION DISCUSSION AND ANALYSIS
Executive officers of Lincoln Benefit also serve as officers of Resolution and other subsidiaries of Resolution and these executive officers received no compensation directly from Lincoln Benefit. They were employees of Resolution or a subsidiary. Allocations of compensation were made for each named executive based on the amount of the named executives time allocated to Lincoln Benefit under the Services Agreement by and between Resolution Life and Lincoln Benefit, effective as of April 1, 2014 (the Services Agreement). Those allocations are reflected in the Summary Compensation Table set forth below and in this Compensation Discussion and Analysis disclosure. The named executive officers may have received additional compensation for services rendered to Resolution or other Resolution subsidiaries, including Resolution Life, and those amounts are not reported.
Named Executives
This portion of the Compensation Discussion and Analysis describes Resolutions executive compensation program and specifically describes, for the following named executive officers (NEOs) of Lincoln Benefit below, the total 2015 compensation attributable to services rendered to Lincoln Benefit:
W. Weldon Wilson Chairman and Chief Executive Officer (CEO)
Robyn Wyatt Chief Financial Officer (CFO), Executive Vice President and Treasurer
Keith Gubbay President and Chief Actuary
Simon Packer Chief Transformation Officer
Karl Chappell Managing Director, Investments and Mergers and Acquisitions
2015 Compensation Philosophy
The objectives of Resolutions executive compensation program for 2015 were to (i) create a link between pay and performance, (ii) attract, motivate and retain talented employees, (iii) align the interests of executives and other employees with the interests of Resolutions shareholders and (iv) foster compliance and support sensible, but not excessive, risk taking. Resolution has designed the elements of its executive compensation program in order to meet these objectives.
Elements of the 2015 Compensation Program Design
All compensation and benefits paid to our officers is determined and paid or provided by Resolution. Resolution pays its executives, including the NEOs, base salary and bonus as set forth in each executives employment agreement. In addition, the executives, including NEOs, receive employee benefits on the same terms as other similarly situated executives of Resolution and its subsidiaries. The elements of compensation for the NEOs are determined pursuant to the terms of their individual employment agreements with Resolution. In 2015, Resolution established a compensation committee of its board of directors to oversee executive compensation matters, including advising on Resolutions compensation policies and reviewing and approving the determination of annual bonus payments earned by the executives. Resolution reviewed data metrics from third party vendors, the Hay Group and DW Simpson, in order to benchmark, using the Hay Group, its employees compensation against a broad range of industries, and using DW Simpson, its actuaries compensation against other life insurance companies. Mr. Wilson assists the compensation committee in setting compensation for the other Resolution executives.
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Employment Agreements
Each of Messrs. Wilson, Gubbay, Packer and Chappell and Ms. Wyatt is party to an employment agreement with Resolution, the parent of Resolution Life. Resolution negotiated each employment agreement at the time the officer became employed by Resolution in 2013 or 2014, prior to its acquisition of Lincoln Benefit. The terms of each agreement, including salary and target bonus opportunities, were determined based on an evaluation of appropriate compensation levels in the insurance industry and the level of compensation, benefits and other entitlements that Resolution considered necessary to attract and retain the executives. The employment agreements set each executives base salary and provide for an annual bonus opportunity expressed as a percentage of base salary, and employee benefits on the same terms as similarly situated executives of Resolution. Mr. Wilsons, Mr. Gubbays and Ms. Wyatts target annual bonus opportunity is 60%; and Mr. Chappells and Mr. Packers target annual bonus opportunity is 50%. The employment agreements of Messrs. Chappell and Packer also provide for reimbursement of certain relocation expenses. Mr. Gubbays and Ms. Wyatts employment agreement each provide for deferred sign-on bonuses payable in three equal amounts on the first through third anniversaries of the effective date of such employment agreement. The amount of each of these elements of compensation that is attributable to Lincoln Benefit is as set forth in the Summary Compensation Table.
Base Salary
For 2015, each NEO received the base salary set forth in his or her individual employment agreement, as adjusted by prior compensation committee approvals. The amount of each such NEOs base salary for 2015 that is attributable to Lincoln Benefit is as set forth in the Summary Compensation Table. No changes were made in 2016 to the salaries of each NEO.
Annual Bonus Payments
Variable cash compensation in the form of annual bonuses is provided to reward executives for results based on the past performance year. Each NEOs employment agreement provides for an annual performance-based bonus opportunity, with the target annual bonus amount expressed as a percentage of such NEOs base salary. The compensation committee of the board of directors of Resolution determines the annual bonus amount that has been earned by each NEO after considering a variety of individual- and Resolution-related performance factors. In determining the annual bonus payments for 2015, the compensation committee considered the objectives of Resolutions compensation philosophy, and considered the fact that 2015 represented the substantial completion of the build of a long-term platform for Resolution. For 2015, the compensation committee determined that Mssrs. Wilson and Gubbay and Ms. Wyatt had earned his or her annual performance-based bonus at 90% of the target performance level, and Mssrs. Packer and Chappell have earned their annual performance-based bonus at the target performance level, based on achievement of operational performance goals relating to building the Resolution business, including, completion of the migration of Lincoln Benefit policy administration from Allstate to Lincoln Benefits third-party administrators, finalizing its governance and risk framework, developing tools to better analyze and understand Lincoln Benefits results in order to make better risk mitigation decisions, and execution of key portfolio strategies. Because Resolution had not executed its acquisition strategy in 2015, the performance-based bonuses for Mssrs. Wilson and Gubbay and Ms. Wyatt were 90% of target. The amount of each such NEOs annual bonus that is attributable to Lincoln Benefit is as set forth in the Summary Compensation Table.
Long-Term Incentive Compensation
Each of Messrs. Wilson, Gubbay, Packer and Chappell and Ms. Wyatt participate in Resolutions long- term incentive compensation program, but have not received any long-term or equity-based compensation for their services to Lincoln Benefit. Grants under Resolutions long-term incentive compensation program were made to our NEOs prior to the acquisition of Lincoln Benefit, and are subject to satisfaction of vesting criteria
93
based on continued service to Resolution. As such equity was awarded prior to the acquisition of Lincoln Benefit and no expense related to such equity is allocated to Lincoln Benefit under the Services Agreement, such compensation is not included in the Summary Compensation Tables or other tables below.
Other Benefits
The NEOs participate in the benefit programs available to other employees of Resolution Life. These benefits include health and welfare coverage and participation in a Resolution 401(k) plan. Resolution matches employee contributions up to 6% of eligible pay.
94
Summary Compensation Table
The following table summarizes the compensation of our named executive officers for all services rendered to Lincoln Benefit for the last three fiscal years, in a manner consistent with the allocation of compensation under the Services Agreement or the Service and Expense Agreement, as applicable.
Name and Principal Position |
Year(3) | Salary ($) |
Bonus ($)(1) |
Stock ($) |
Option Awards ($) |
Non-Equity Incentive Plan |
Change in ($) |
All Other Compensation ($) |
Total ($) |
|||||||||||||||||||||||||||
W. Weldon Wilson |
||||||||||||||||||||||||||||||||||||
Chairman of the Board and |
2014 | 487,500 | 292,500 | | | | | 5,850 | 785,850 | |||||||||||||||||||||||||||
Chief Executive Officer |
2015 | 650,000 | 351,000 | | | | | 18,296 | 1,019,296 | |||||||||||||||||||||||||||
Robyn Wyatt |
||||||||||||||||||||||||||||||||||||
Executive Vice President, |
2014 | 270,000 | 356,850 | | | | | 7,020 | 633,870 | |||||||||||||||||||||||||||
Chief Financial Officer and |
2015 | 420,000 | 486,600 | | | | | 21,576 | 928,176 | |||||||||||||||||||||||||||
Treasurer |
||||||||||||||||||||||||||||||||||||
Keith Gubbay |
||||||||||||||||||||||||||||||||||||
President and Chief |
2014 | 262,500 | 357,375 | | | | | 5,850 | 625,725 | |||||||||||||||||||||||||||
Actuary |
2015 | 175,000 | 227,750 | | | | | 7,593 | 410,343 | |||||||||||||||||||||||||||
Simon Packer |
||||||||||||||||||||||||||||||||||||
Chief Transformation |
2014 | 297,000 | 148,500 | | | | | 43,277 | (2) | 488,777 | ||||||||||||||||||||||||||
Officer |
2015 | 396,000 | 198,000 | | | | | 55,451 | 649,451 | |||||||||||||||||||||||||||
Karl Chappell |
||||||||||||||||||||||||||||||||||||
Managing Director, |
2014 | 240,165 | 195,600 | | | | | 4,629 | 440,394 | |||||||||||||||||||||||||||
Investments and Mergers |
2015 | 320,000 | 160,000 | | | | | 11,680 | 491,680 | |||||||||||||||||||||||||||
and Acquisitions |
(1) | Amounts in this column for each of Ms. Wyatt and Messrs. Wilson, Gubbay, Packer and Chappell represent the portion of the NEOs annual performance-based bonus for 2015 that is attributable to services rendered to Lincoln Benefit, plus, in the case of Ms. Wyatt and Mr. Gubbay, the portion of the 2015 payment of the deferred sign-on bonus attributable to services rendered to Lincoln Benefit. |
(2) | Includes $29,315 in relocation benefits and $18,270 in 401(k) matching contributions. |
(3) | 2014 represents compensation for the period from April 1, 2014 to December 31, 2014. |
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Other Compensation Information
Potential Payments as a Result of Termination or Change in Control (CIC)
Each of the NEOs is party to an employment agreement with Resolution that provides for severance and/or other payments on certain terminations of employment. If Messrs. Gubbays, Packers or Chappells or Ms. Wyatts employment is terminated by mutual agreement between Resolution and the NEO, by Resolution without cause or by the NEO with good reason (such terminations, qualifying terminations), the NEO is entitled to the severance benefit described in the paragraph below; a pro-rated bonus for the year of termination, based on actual Resolution performance; and continued medical coverage at the same premium rate paid by active employees for the period during which the NEO receives the severance benefit. Mr. Gubbay and Ms. Wyatt are also entitled to payment of any unpaid portion of their deferred sign-on bonuses on such a qualifying termination or on a termination due to his or her death or disability. If Mr. Wilsons employment is terminated in a qualifying termination, he is entitled to a pro-rated bonus for the year of termination and continued medical coverage for twelve months at the same premium rate paid by active employees. Mr. Wilsons employment agreement does not provide for other severance payments.
On a qualifying termination of Ms. Wyatts or Mr. Gubbays employment following the second anniversary of the effective date of such NEOs employment agreement, the NEOs severance benefit is equal to one year of base salary plus target bonus. On a qualifying termination of Mr. Chappells or Mr. Packers employment following the first anniversary of the effective date of his employment agreement, he is entitled to an amount equal to one-half of the sum his annual base salary plus target bonus.
For these purposes, cause means (i) fraudulent statements or acts of the NEO with respect to the performance of his or her duties under the employment agreement, (ii) the NEOs conviction of, or plea of guilty or nolo contendere to, any crime that constitutes a felony or any crime that constitutes a misdemeanor involving moral turpitude, deceit, dishonesty or fraud and that results in material harm to Resolution, (iii) willful misconduct by the NEO with respect to Resolution or any of its subsidiaries, or (iv) a material breach by the NEO of his or her employment agreement. Good reason for these purposes means (a) a reduction in the NEOs base salary, annual bonus percentage, long-term incentive compensation percentage, for Mr. Gubbay and Ms. Wyatt only, deferred compensation, or Resolutions refusal to pay the NEO any compensation or benefits due, (b) a material diminution in the NEOs position, authority, duties or responsibilities, excluding any isolated, insubstantial and inadvertent action, (c) any willful breach by Resolution of a material term of the NEOs employment agreement, (d) Resolution requiring the NEO to engage in any unlawful or criminal act or (e) the bankruptcy of Resolution. For Mr. Gubbay, good reason also includes a termination of employment by Mr. Gubbay if (X) Resolution requests that he relocate his residence from the Boston, Massachusetts area after the second anniversary of the effective date of his agreement, (Y) he declines such request to relocate and (Z) he continues to perform his duties from the Boston, Massachusetts area for six months following his decline of the request to relocate (or such shorter period as agreed by Resolution). In order to terminate his or her employment for good reason, an NEO must give Resolution written notice and Resolution shall have 30 days to cure.
An NEOs severance payments are subject to such NEO signing a general release of claims. In addition, the NEOs are subject to covenants not to compete and not to solicit for one year following the date of termination (two years for Mr. Wilson), a non-disparagement covenant for three years following the date of termination, and an indefinite non-disclosure covenant.
96
Estimate of Potential Payments upon Termination of Employment or Change of Control
The following table summarizes estimated payments and benefits that would be provided to our NEOs pursuant to their employment agreements in connection with a termination of employment under various scenarios or a change in control and that are attributable to service to Lincoln Benefit and reimbursable under the Services Agreement, assuming such event occurred on December 31, 2015.
Name |
Event(1) | Base Salary; Bonus and Deferred Sign- On Bonus($)(2) |
Health & Welfare ($) |
Total Payments ($) |
||||||||||
W. Weldon Wilson |
Qualifying Termination | 390,000 | 6,296 | 396,296 | ||||||||||
Death or Disability | 0 | 0 | 0 | |||||||||||
Resignation | 0 | 0 | 0 | |||||||||||
Change in Control | 0 | 0 | 0 | |||||||||||
Robyn Wyatt |
Qualifying Termination | 1,183,800 | 9,976 | 1,193,776 | ||||||||||
Death or Disability | 259,800 | 0 | 259,800 | |||||||||||
Resignation | 0 | 0 | 0 | |||||||||||
Change in Control | 0 | 0 | 0 | |||||||||||
Keith Gubbay |
Qualifying Termination | 518,250 | 2,118 | 520,368 | ||||||||||
Death or Disability | 133,250 | 0 | 133,250 | |||||||||||
Resignation | 0 | 0 | 0 | |||||||||||
Change in Control | 0 | 0 | 0 | |||||||||||
Simon Packer |
Qualifying Termination | 495,000 | 9,439 | 504,439 | ||||||||||
Death or Disability | 0 | 0 | 0 | |||||||||||
Resignation | 0 | 0 | 0 | |||||||||||
Change in Control | 0 | 0 | 0 | |||||||||||
Karl Chappell |
Qualifying Termination | 400,000 | 12,088 | 412,088 | ||||||||||
Death or Disability | 0 | 0 | 0 | |||||||||||
Resignation | 0 | 0 | 0 | |||||||||||
Change in Control | 0 | 0 | 0 |
(1) | For Messrs. Wilson, Gubbay, Packer and Chappell and Ms. Wyatt, a qualifying termination is a termination by mutual agreement between Resolution and the executive, by the executive with good reason or by Resolution without cause. The amount included in the table is calculated based on the percentage of the executives time that would be allocated to Lincoln Benefit under the Services Agreement in the event of a qualifying termination on December 31, 2015. |
(2) | Because the termination of employment is deemed to occur on December 31, 2015, the pro-rated portion of any 2015 bonus payable as a result of termination would be 100%. |
Risk Management and Compensation
Resolution has performed a review of compensation policies and practices for all of its employees who provide services to Lincoln Benefit and has concluded that its compensation policies and practices are not reasonably likely to have a material adverse impact on Lincoln Benefit.
Director compensation
Our independent directors receive an annual cash retainer fee for their services on the boards of directors of Resolution and its subsidiaries, including Lincoln Benefit, a portion of which is allocated to Lincoln Benefit pursuant to the Services Agreement. The portion of the annual retainer allocated to Lincoln Benefit for 2015 is set forth in the table below. A non-employee director may also elect to defer receipt of all or a portion of his or
97
her annual retainer fee into a notional percentage equity interest in Resolution Life L.P. and Resolution Life (Parallel) Partnership (together, the Partnerships). The elected percentage of the Board retainer for a calendar year of service is converted into a notional percentage interest in the Partnerships when the year-end valuation of the Partnerships for the immediately prior year is available. The notional interest will be unvested until December 31st of the relevant year of service, and, as a general rule, if the directors Board service ends before December 31st, the unvested portion of the notional interest will be forfeited except that, in the case of a qualifying termination, a pro rata portion of the directors unvested portion of the notional interest will vest. If the Partnerships pay a distribution to their partners, the electing director will be paid, on a current basis, a distribution in cash based on notional interest (both vested and unvested) held by such director as of the record date of the distribution. Vested portions of notional interests will be settled in cash on the first to occur of (1) a liquidity event of the Partnerships and (2) termination of the directors board service, in which case settlement would occur in the year following the year in which the directors board service ends.
The following table summarizes the allocation of compensation of each of Lincoln Benefits independent directors during 2015 for his or her services as a member of the Board of Directors of Lincoln Benefit and its committees in a manner consistent with the allocation of compensation under the Services Agreement. Directors who are officers or employees of Resolution and its subsidiaries and other non-independent directors do not receive any additional compensation for their services as a director of Lincoln Benefit.
Name of Non-Employee Director | Fees Earned or Paid in Cash(1) ($) |
All Other Compensation(2) ($) |
Total ($) |
|||||||||
Stephen Campbell |
$ | 54,808 | | $ | 54,808 | |||||||
Richard Carbone |
$ | 98,438 | $ | 21,806 | $ | 120,244 | ||||||
Ann Frohman |
$ | 98,438 | $ | 30,496 | $ | 128,934 | ||||||
Robert Stein |
$ | 98,438 | $ | 21,806 | $ | 120,244 | ||||||
Grace Vandecruze |
$ | 98,438 | $ | 8,219 | $ | 106,657 |
(1) | Includes the portion of the cash retainer paid in the form of a deferred notional interest in the Partnerships at the election of the director. The following table sets forth, by grant date, the allocation of the number of Resolution deferred notional interest of the Partnerships credited to each director, the grant date fair value of each award and the percentage of such notional interest held at December 31, 2015 with respect to service as a Lincoln Benefit director in 2015 in a manner consistent with the allocation of compensation under the Services Agreement. All deferred notional interests vested on December 31, 2015. |
(2) | Reflects (i) for Messrs. Carbone and Stein and Ms. Vandecruze, distributions paid on their respective notional interests of the Partnerships and; (ii) for Ms. Frohman, the portion of a legal fee retainer for services as regulatory counsel with respect to Lincoln Benefit in 2015 in a manner consistent with the allocation of compensation under the Services Agreement. |
Grant Date |
Percentage of |
Grant Date |
Percentage of |
|||||||||||||
Richard Carbone |
|
April 1, July 1, October 1, 2015 |
|
0.0065 | % | 32,813 | 0.0276 | % | ||||||||
Robert Stein |
|
April 1, July 1, October 1, 2015 |
|
0.0065 | % | 32,813 | 0.0276 | % | ||||||||
Grace Vandecruze |
|
April 1, July 1, October 1, 2015 |
|
0.0016 | % | 8,203 | 0.0097 | % |
98
Compensation Committee Interlocks and Insider Participation
In February 2015, the Board of Directors of Resolution Life Holdings, Inc. established a compensation committee, whose primary function is to assist the Board with its oversight role with respect to the compensation of Resolution Life Holdings, Inc.s and its subsidiaries executive officers and other employees. No executive officer of Lincoln Benefit serves as a member of the compensation committee of another entity for which any executive officer served as a director for Lincoln Benefit.
Item 11(m). | Security Ownership of Certain Beneficial Owners and Management Security |
Ownership of Certain Beneficial Owners
The following table shows the number of Lincoln Benefit shares owned by any beneficial owner who owns more than five percent of any class of Lincoln Benefits voting securities.
Title of Class |
Name and Address of Beneficial Owner (b) |
Amount and Nature of Beneficial Ownership (c) |
Percent of Class (d) |
|||||
Capital Stock |
Resolution Life, Inc. One Station Place Metro Center, 7th Fl. Stamford, CT 06902 |
25,000 | 100 | % | ||||
N/A |
Resolution Life Holdings, Inc. One Station Place Metro Center, 7th Fl. Stamford, CT 06902 |
Indirect voting and investment power of shares owned by Resolution Life, Inc. |
N/A | |||||
N/A |
Resolution Life L.P. Canons Court 22 Victoria Street Hamilton, HM 12 Bermuda |
Indirect voting and investment power of shares owned by Resolution Life, Inc. |
N/A | |||||
N/A |
Resolution Life GP, Ltd. Canons Court 22 Victoria Street Hamilton, HM 12 Bermuda |
Indirect voting and investment power of shares owned by Resolution Life, Inc. | N/A | |||||
N/A |
Resolution Capital Limited 2 Queen Annes Gate London SW1H 9AA United Kingdom |
Indirect voting and investment power of shares owned by Resolution Life, Inc. |
N/A | |||||
N/A |
Clive Cowdery 2 Queen Annes Gate London SW1H 9AA United Kingdom |
Indirect voting and investment power of shares owned by Resolution Life, Inc. |
N/A |
99
Security Ownership of Directors and Executive Officers
The following table shows the number of shares of stock in Lincoln Benefit or its parents beneficially owned by each director and named executive officer of Lincoln Benefit individually, and by all executive officers and directors of Lincoln Benefit as a group. Shares reported as beneficially owned include certain shares held indirectly, as well as shares subject to stock options exercisable on or prior to March 31, 2016 and restricted stock units for which restrictions expire on or prior to March 31, 2016. The following share amounts are as of March 31, 2016.
Entity |
Title of Class of Equity Securities |
Number of Shares |
Statement Concerning Beneficial | |||
Lincoln Benefit, Resolution Life, | n/a | n/a | Lincoln Benefit is an indirect | |||
Inc., Resolution Life Holdings, Inc., | wholly-owned subsidiary of (i) | |||||
Resolution Life L.P., Resolution | Resolution Life L.P., which is | |||||
Life GP Ltd., Resolution Life | controlled by its general partner | |||||
(Parallel) Partnership, Resolution | Resolution Life GP Ltd. and (ii) | |||||
Life (Parallel) GP Ltd. | Resolution Life (Parallel) | |||||
Partnership, which is controlled by | ||||||
its managing partners, which | ||||||
includes Resolution Life (Parallel) | ||||||
GP Ltd. Resolution Life (Parallel) | ||||||
GP Ltd. is wholly-owned by | ||||||
Resolution Life GP Ltd. | ||||||
Resolution Life GP Ltd. is wholly- | ||||||
owned by Resolution Capital | ||||||
Limited, which is wholly-owned | ||||||
by Clive Cowdery. | ||||||
Resolution Life L.P. | n/a | n/a | Clive Cowdery has made an | |||
indirect commitment of $19.84 | ||||||
million to Resolution Life L.P., | ||||||
which currently accounts for 1.8% | ||||||
of the current total $1.1 billion of | ||||||
aggregate commitment of | ||||||
Resolution Life L.P. and | ||||||
Resolution Life (Parallel) | ||||||
Partnership. |
Changes in Control
On December 31, 2013, Resolution Life Holdings, Inc. and Resolution Life, Inc. entered into a Credit Agreement with Royal Bank of Canada (RBC), The Royal Bank of Scotland, PLC, RBC Capital Markets, RBS Securities Inc. and Lloyds Securities Inc. (the Credit Agreement). On April 1, 2014, Resolution Life Holdings, Inc. and Resolution Life, Inc. entered into a Guarantee and Collateral Agreement with Royal Bank of Canada (the Guarantee and Collateral Agreement). Pursuant to the Guarantee and Collateral Agreement, Resolution Life Holdings, Inc. pledged the securities of Resolution Life, Inc. to the Secured Parties (as defined in the Guarantee and Collateral Agreement) in order to secure a term loan to Resolution Life, Inc. for the acquisition of Lincoln Benefit. Pursuant to the Credit Agreement and the Guarantee and Collateral Agreement, Resolution Life, Inc. also pledged the securities of Lincoln Benefit to the Secured Parties (as defined in the Guarantee and Collateral Agreement).
If Resolution Life, Inc. defaults on its obligations under the Credit Agreement, RBC (as collateral agent), will have the option to receive all of the Resolution Life, Inc. and Lincoln Benefit stock pledged under the Credit Agreement and Guarantee and Collateral Agreement, including all voting and corporate rights to such stock.
100
Item 11(n). Transactions with Related Persons, Promoters and Certain Control Persons
On April 1, 2014, all of the capital stock in Lincoln Benefit was acquired by Resolution Life, Inc. Prior to this transaction, Lincoln Benefit was a wholly-owned subsidiary of ALIC.
Transactions with Related Persons
Prior to the acquisition of Lincoln Benefit from ALIC by Resolution Life, Inc., Lincoln Benefit was a party to certain intercompany agreements involving amounts greater than $120,000 between Lincoln Benefit and the following companies:
| Allstate Life Insurance Company (ALIC), the former direct parent of Lincoln Benefit; |
| Allstate Insurance Company (AIC), a former indirect parent of Lincoln Benefit; |
| Allstate Insurance Holdings, LLC (AIH), a former indirect parent of Lincoln Benefit; and |
| The Allstate Corporation (AllCorp), the former ultimate indirect parent of Lincoln Benefit. |
Transaction Description | Approximate dollar value of the amount involved in the transaction, per fiscal year1 |
Related Person(s)
involved in the transaction2 and the Related Persons interest in the transaction ($) |
||||||||||||||||||||||
($) | ALIC | AIC | AIH | AllCorp | ||||||||||||||||||||
Amended and Restated Service and Expense Agreement between Allstate Insurance Company, The Allstate Corporation and certain affiliates effective January 1, 2004, as amended by Amendment No. 1 effective January 1, 2009, and as supplemented by New York Insurer Supplement to Amended and Restated Service and Expense Agreement between Allstate Insurance Company, The Allstate Corporation, Allstate Life Insurance Company of New York and Intramerica Life Insurance Company, effective March 5, 2005. |
|
2013
2014 |
|
|
4,594,114,658
4,351,172,343 |
3
3 |
|
219,150,824
157,557,526 |
3
3 |
|
1,783,214,605
1,451,026,309 |
3
3 |
|
0
0 |
|
|
12,439,714
10,193,363 |
3
3 |
101
Transaction Description | Approximate dollar value of the amount involved in the transaction, per fiscal year1 |
Related Person(s)
involved in the transaction2 and the Related Persons interest in the transaction ($) |
||||||||||||||||||||||
($) | ALIC | AIC | AIH | AllCorp | ||||||||||||||||||||
Tax Sharing Agreement among The Allstate Corporation and certain affiliates dated as of November 12, 1996, as supplemented by Supplemental Intercompany Tax Sharing Agreement between Allstate Life Insurance Company and Lincoln Benefit Life Company effective December 21, 2000. |
|
2013
2014 |
|
|
403,752,626
991,183,410 |
4
4 |
|
(28,599,632
(118,361,063 |
)
) |
|
805,259,656
822,197,758 |
|
|
0
0 |
|
|
(361,417,973
16,223,615 |
)
| ||||||
Agreement for the Settlement of State and Local Tax Credits among Allstate Insurance Company and certain affiliates effective January 1, 2007. |
|
2013
2014 |
|
|
0
3,024,265 |
5 |
|
0
287,214 |
5 |
|
0
2,645,462 |
5 |
N/A | N/A | ||||||||||
Assignment and Delegation of Administrative Services Agreements, Underwriting Agreements, and Selling Agreements entered into as of September 1, 2011 between ALFS, Inc., Allstate Life Insurance Company, Allstate Life Insurance Company of New York, Allstate Distributors, LLC, Charter National Life Insurance Company, Intramerica Life Insurance Company, Allstate Financial Services, LLC, and Lincoln Benefit Life Company. |
|
2013
2014 |
|
|
12,927,091
4,119,257 |
6
6 |
|
(4,938,625
(140,501 |
)
) |
N/A | N/A | N/A | ||||||||||||
Investment Management Agreement among Allstate Investments, LLC, Allstate Insurance Company, The Allstate Corporation and certain affiliates effective January 1, 2007. |
|
2013
2014 |
|
|
174,642,625
129,435,627 |
3
3 |
|
82,062,732
49,913,891 |
3
3 |
|
79,465,291
68,450,895 |
3
3 |
N/A |
|
0
0 |
|
102
Transaction Description | Approximate dollar value of the amount involved in the transaction, per fiscal year1 |
Related Person(s)
involved in the transaction2 and the Related Persons interest in the transaction ($) |
||||||||||||||||||||
($) | ALIC | AIC | AIH | AllCorp | ||||||||||||||||||
Reinsurance Agreements between Lincoln Benefit Life Company and Allstate Life Insurance Company: Coinsurance Agreement effective December 31, 2001; Modified Coinsurance Agreement effective December 31, 2001; Modified Coinsurance Agreement effective December 31, 2001. |
|
2013
2014 |
|
|
528,831,836
(97,926,475 |
7
)8 |
|
(528,831,836
(97,926,475 |
)7
)8 |
N/A | N/A | N/A | ||||||||||
Reinsurance Agreement between Lincoln Benefit Life Company and Lincoln Benefit Reinsurance Company effective September 30, 2012. |
|
2013
2014 |
|
|
201,639
(99,556 |
7
)8 |
N/A | N/A | N/A | N/A | ||||||||||||
Administrative Services Agreement by and between Lincoln Benefit Life Company and Allstate Life Insurance Company, dated April 1, 2014. | 2014 | 8,459,377 | 9 | 8,459,377 | 9 | N/A | N/A | N/A | ||||||||||||||
Amended and Restated Reinsurance Agreement by and between Lincoln Benefit Life Company and Allstate Life Insurance Company, effective April 1, 2014. | 2014 | 83,830,677 | 7 | 83,830,677 | 7 | N/A | N/A | N/A |
(1) | Amounts are not included for fiscal year 2015 because ALIC, AIC, AIH and AllCorp were not related persons in 2015. |
(2) | Each identified Related Person is a Party to the transaction. |
(3) | Gross amount of expense received under the transaction. |
(4) | Total amounts paid to the Internal Revenue Service. |
(5) | Value of transfer transactions. |
(6) | Gross amount of the transaction. |
(7) | Net reinsurance income. |
(8) | Net reinsurance expense. |
(9) | Gross amount of the transaction. |
After Lincoln Benefit was acquired by Resolution Life, Inc., Lincoln Benefit is a party to certain intercompany agreements involving amounts greater than $120,000 between Lincoln Benefit and the following companies:
| Resolution Life, Inc. (RLI), the direct parent of Lincoln Benefit. |
| Resolution Life Holdings, Inc. (RLH), an indirect parent of Lincoln Benefit. |
| Lancaster Re Captive Insurance Company (Lancaster Re), a direct subsidiary of Lincoln Benefit |
| Lanis LLC, an affiliate of Lincoln Benefit |
103
Transaction Description | Approximate dollar value of the amount involved in the transaction, per fiscal year |
Approximate dollar value of the amount transaction, per fiscal year |
||||||||||||||||
($) | RLH | RLI | Lanis LLC | |||||||||||||||
Services Agreement between Resolution Life, Inc. and Lincoln Benefit Life Company effective April 1, 2014 |
|
2014 2015 |
|
|
(21,087,752 (13,864,952 |
)¹ )¹ |
N/A N/A |
|
21,087,752 13,864,952 |
¹ ¹ |
|
N/A N/A |
| |||||
Surplus Note Purchase Agreement between Lancaster Re Captive Insurance Company and Lanis LLC effective April 1, 2014 |
|
2014 2015 |
|
|
(15,711,000 (22,880,000 |
)² )² |
N/A N/A |
|
N/A N/A |
|
|
15,711,000 22,880,000 |
² ² | |||||
Vehicle Note Purchase Agreement between Lancaster Re Captive Insurance Company and Lanis LLC effective April 1, 2014 |
|
2014 2015 |
|
|
15,711,000 22,880,000 |
² ² |
N/A N/A |
|
N/A N/A |
|
|
(15,711,000 (22,880,000 |
)² )² | |||||
Fee Letter between Lincoln Benefit Life Company and Lanis LLC effective April 1, 2014 |
|
2014 2015 |
|
|
(4,584,514 (6,670,882 |
)3 )3 |
N/A N/A |
|
N/A N/A |
|
|
4,584,514 6,670,882 |
3 3 |
1 | Total expense amount reimbursed / (paid) under the transaction |
2 | Surplus/Vehicle Note Interest received (paid) |
3 | Payment of risk spread fee |
The agreements listed in the table immediately above relate to a transaction that Resolution Life, Inc., Resolution Life Holdings, Inc., Lancaster Re Captive Insurance Company, Lanis LLC and Lincoln Benefit Life Company have entered into with Hannover Life Reassurance Company of America, an unrelated party, in order to finance a portion of the insurance reserves held by Lincoln Benefit with respect to universal life insurance policies with secondary guarantees written by Lincoln Benefit.
Review and Approval of Related Person Transactions
For the Period Prior to April 1, 2014
Prior to the acquisition of Lincoln Benefit from ALIC by Resolution Life, Inc., all intercompany agreements to which Lincoln Benefit was a party were approved by Lincoln Benefits Board of Directors as well as by the board of any other affiliate of The Allstate Corporation that was a party to the agreement. When required, intercompany agreements were submitted for approval to the Nebraska Department of Insurance, Lincoln Benefits domestic regulator, and any additional states in which Lincoln Benefit might be commercially domiciled pursuant to the applicable states insurance holding company systems act. This process was documented in an internal procedure that captured the review and approval process of all intercompany agreements. All approvals were maintained in Lincoln Benefits corporate records.
Prior to the transaction with Resolution, while there was no formal process for the review and approval of related person transactions between unaffiliated entities specific to Lincoln Benefit, all directors and executive officers of Lincoln Benefit were subject to the Allstate Code of Ethics (Allstate Code). The Allstate Code includes a written conflict of interest policy that was adopted by the Board of Directors of the Allstate Corporation, the former ultimate parent company of Lincoln Benefit. Any potential relationship or activity that could impair independent thinking and judgment, including holding a financial interest in a business venture that is similar to Allstate, or in a business that has a relationship with Allstate, was required to be disclosed to Human Resources. Human Resources worked with representatives from the Law Department, including Enterprise Business Conduct, to determine whether an actual conflict of interest existed. Each director and executive officer was required to sign a Code of Ethics certification annually.
104
For the Period Beginning April 1, 2014
All intercompany agreements to which Lincoln Benefit is a party are approved by Lincoln Benefits Board of Directors as well as by the board of any other affiliate of Lincoln Benefit that is a party to the agreement. When required, intercompany agreements are submitted for approval to the Nebraska Department of Insurance, Lincoln Benefits domestic regulator, and any additional states in which Lincoln Benefit might be commercially domiciled pursuant to the applicable states insurance holding company systems act. This process is documented in an internal procedure that captures the review and approval process of all intercompany agreements. All approvals are maintained in Lincoln Benefits corporate records.
Subsequent to the acquisition by Resolution Life, Inc., while there is no formal process for the review and approval of related person transactions between unaffiliated entities specific to Lincoln Benefit, all directors, officers and employees of Lincoln Benefit are subject to Resolution Lifes Code of Conduct and its Conflict of Interest Guideline. The Resolution Code of Conduct includes a written conflict of interest policy that was adopted by the Board of Directors of Resolution Life, the parent company of Lincoln Benefit, and the Board of Directors of Lincoln Benefit. Any potential relationship or activity that could impair independent thinking and judgment, including holding a financial interest in a business venture that is similar to Lincoln Benefit and/or Resolution Life, or in a business that has a relationship with either entity, is required to be disclosed to Human
Resources and Compliance. Human Resources works with representatives from the Law Department, including Compliance, and the Audit Committee, if necessary, to determine whether an actual conflict of interest existed. All directors, officers and employees are required to sign a Code of Conduct certification and complete a Conflict of Interest Questionnaire annually.
Independence Standards for Directors
Although not subject to the independence standards of the New York Stock Exchange, for purposes of this registration statement, Lincoln Benefit has applied the independence standards required for listed companies of the New York Stock Exchange to the Board of Directors. Applying these standards, Lincoln Benefit has determined that five of its directors are independent: Stephen Campbell, Richard Carbone, Ann Frohman, Robert Stein and Grace Vandecruze.
A section entitled Experts is added to your prospectus as follows:
EXPERTS
The financial statements and related financial schedule of Lincoln Benefit Life Company for the year ended December 31, 2013 and for the period from January 1, 2014 through March 31, 2014 included in this Prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein and elsewhere in the Registration Statement. Such financial statements and financial statement schedule are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
The financial statements of Lincoln Benefit Life Company as of December 31, 2015 and December 31, 2014 and for the year ended December 31, 2015 and for the period from April 1, 2014 through December 31, 2014 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
105
The following change is made to the prospectuses for the LBL Advantage, Consultant II and Premier Planner:
Under the More Information section, the subsection entitled Legal Matters is deleted and replaced with the following:
LEGAL MATTERS
Matters of Nebraska law pertaining to the Contract, including the validity of the Contract and our right to issue the Contract under Nebraska law, have been passed upon by Lamson Dugan & Murray LLP, Omaha, Nebraska.
PRINCIPAL UNDERWRITER
Allstate Distributors, L.L.C. (ADLLC) serves as distributor of the securities registered herein. The securities offered herein are sold on a continuous basis, and there is no specific end date for the offering. ADLLC is a registered broker dealer under the Securities and Exchange Act of 1934, as amended, and is a member of the Financial Industry Regulatory Authority. ADLLC is not required to sell any specific number or dollar amount of securities, but will use its best efforts to sell the securities offered.
ADMINISTRATION
We have primary responsibility for all administration of the Contracts and the Variable Account. We entered into an administrative services agreement with Allstate Life. Allstate Life entered into an administrative services agreement with The Prudential Insurance Company of America (PICA) pursuant to which PICA or an affiliate provides administrative services to the Variable Account and the Contracts on our behalf. In addition, PICA entered into a master services agreement with se2, LLC, of 5801 SW 6th Avenue, Topeka, Kansas 66636, whereby se2, LLC provides certain business process outsourcing services with respect to the Contracts. se2, LLC may engage other service providers to provide certain administrative functions. These service providers may change over time, and as of December 31, 2015, consisted of the following: NTT DATA, Inc. (administrative services) located at 100 City Square, Boston, MA 02129; RR Donnelley Global Investment Markets, a division of RR Donnelley & Sons Company (compliance printing and mailing) located at 111 South Wacker Drive, Chicago, IL 60606; Jayhawk File Express, LLC (file storage and document destruction) located at 601 E. 5th Street, Topeka, KS 66601-2596; Co-Sentry.net, LLC (back-up printing and disaster recovery) located at 9394 West Dodge Rd, Suite 100, Omaha, NE 68114; Convey Compliance Systems, Inc. (withholding calculations and tax statement mailing) located at 3650 Annapolis Lane, Suite 190, Plymouth, MN 55447; Spangler Graphics, LLC (compliance mailings) located at 29305 44th Street, Kansas City, KS 66106; Veritas Document Solutions, LLC (compliance mailings) located at 913 Commerce Ct, Buffalo Grove, IL 60089; Records Center of Topeka, a division of Underground Vaults & Storage, Inc. (back-up tapes storage) located at 1540 NW Gage Blvd. #6, Topeka, KS 66618; Venio LLC, d/b/a Keane (lost shareholder search) located at PO Box 1508, Southeastern, PA 19399-1508; DST Systems, Inc. (FAN mail, positions, prices) located at 333 West 11 Street, 5th Floor, Kansas City, MO 64105.
In administering the Contracts, the following services are provided, among others:
| maintenance of Contract Owner records; |
| Contract Owner services; |
| calculation of unit values; |
| maintenance of the Variable Account; and |
| preparation of Contract Owner reports. |
106
We will send you Contract statements at least annually. We will also send you transaction confirmations. You should notify us promptly in writing of any address change. You should read your statements and confirmations carefully and verify their accuracy. You should contact us promptly if you have a question about a periodic statement or a confirmation. We will investigate all complaints and make any necessary adjustments retroactively, but you must notify us of a potential error within a reasonable time after the date of the questioned statement. If you wait too long, we will make the adjustment as of the date that we receive notice of the potential error. Correspondence you send by regular mail to our service center should be sent to P.O. Box 758566, Topeka, KS 66675-8566. Your correspondence will be picked up at this address and then delivered to our service center. Your correspondence is not considered received by us until it is received at our service center. Where this prospectus refers to the day when we receive a purchase payment, request, election, notice, transfer or any other transaction request from you, we mean the day on which that item (or the last requirement needed for us to process that item) arrives in complete and proper form at our service center or via the appropriate telephone or fax number if the item is a type we accept by those means. There are two main exceptions: if the item arrives at our service center (1) on a day that is not a business day, or (2) after the close of a business day, then, in each case, we are deemed to have received that item on the next business day.
We will also provide you with additional periodic and other reports, information and prospectuses as may be required by federal securities laws.
107
The Consultant Solutions Variable Annuities
(Classic, Plus, Elite, Select)
Lincoln Benefit Life Company
Street Address: 5801 SW 6th Ave. Topeka, KS 66636
Mailing Address: P.O. Box 758561, Topeka, KS 66675-8561
Telephone Number: 800-457-7617 / Fax Number: 1-785-228-4584
1940 Act file number: 811-07924
1933 Act file number: 333-109688
Prospectus dated April 29, 2016
Lincoln Benefit Life Company (Lincoln Benefit) is the issuer of the following individual and group flexible premium deferred variable annuity contracts (each, a Contract):
Consultant Solutions Classic
Consultant Solutions Plus
Consultant Solutions Elite
Consultant Solutions Select
Effective November 30, 2006, this product is no longer being offered for sale.
This prospectus contains information about each Contract that you should know before investing. Please keep it for future reference. Not all Contracts may be available in all states or through your sales representative. Please check with your sales representative for details.
Each Contract currently offers several investment alternatives (Investment Alternatives). The Investment Alternatives include fixed account options (Fixed Account Options), depending on the Contract, and include various* variable sub-accounts (Variable Sub-accounts) of the Lincoln Benefit Life Variable Annuity Account (Variable Account). Each Variable Sub-account invests exclusively in shares of the following underlying funds (Funds):
Invesco Variable Insurance Funds The Alger Portfolios Fidelity® Variable Insurance Products Goldman Sachs Variable Insurance Trust Janus Aspen Series Legg Mason Partners Variable Equity Trust Legg Mason Partners Variable Income Trust MFS® Variable Insurance Trust(SM)
|
MFS® Variable Insurance Trust II Oppenheimer Variable Account Funds PIMCO Variable Insurance Trust The Rydex Variable Trust T. Rowe Price Equity Series, Inc. Van Eck VIP Trust The Universal Institutional Funds, Inc. |
* Certain Variable Sub-Accounts are closed to Contract owners not invested in the specified Variable Sub-Accounts by a designated date. Please see pages 33-35 for more information.
Each Fund has multiple investment Portfolios (Portfolios). Not all of the Funds and/or Portfolios, however, may be available with your Contract. You should check with your sales representative for further information on the availability of the Funds and/or Portfolios. Your annuity application will list all available Portfolios.
For Consultant Solutions Plus Contracts, each time you make a purchase payment, we will add to your Contract value (Contract Value) a credit enhancement (Credit Enhancement) of up to 5% (depending on the issue age and your total purchase payments) of such purchase payment. Expenses for this Contract may be higher than a Contract without the Credit Enhancement. Over time, the amount of the Credit Enhancement may be more than offset by the fees associated with the Credit Enhancement.
We (Lincoln Benefit) have filed a Statement of Additional Information, dated April 29, 2016, with the Securities and Exchange Commission (SEC). It contains more information about each Contract and is incorporated herein by reference, which means that it is legally a part of this prospectus. Its table of contents appears on page 75 of this prospectus. For a free copy, please write or call us at the address or telephone number above, or go to the SECs Web site (http://www.sec.gov). You can find other information and documents about us, including documents that are legally part of this prospectus, at the SECs Web site.
IMPORTANT NOTICES |
The Securities and Exchange Commission has not approved or disapproved the securities described in this prospectus, nor has it passed on the accuracy or the adequacy of this prospectus. Anyone who tells you otherwise is committing a federal crime.
The Contracts may be distributed through broker-dealers that have relationships with banks or other financial institutions or by employees of such banks. However, the Contracts are not deposits in, or obligations of, or guaranteed or endorsed by, such institutions or any federal regulatory agency. Investment in the Contracts involves investment risks, including possible loss of principal.
The Contracts are not FDIC insured. |
Table of Contents
Page | |
Overview |
|
Important Terms |
1 |
Overview of Contracts |
3 |
The Contracts at a Glance |
4 |
How the Contracts Work |
8 |
Expense Tables |
9 |
Financial Information |
12 |
Contract Features |
|
The Contracts |
12 |
Purchases |
14 |
Contract Loans for 403(b) Contracts |
16 |
Contract Value |
17 |
Investment Alternatives |
33 |
The Variable Sub-accounts |
33 |
The Fixed Account Options |
37 |
Transfers |
41 |
Expenses |
44 |
Access to Your Money |
49 |
Income Payments |
50 |
Death Benefits |
56 |
Other Information |
|
Description of Lincoln Benefit Life Company and the Variable Account |
63 |
Taxes |
66 |
About Lincoln Benefit Life Company |
74 |
Statement of Additional Information Table of Contents |
75 |
Appendix A Contract Comparison Chart |
A-1 |
Appendix B Market Value Adjustment |
B-1 |
Appendix C Example of Calculation of Income Protection Benefit |
C-1 |
Appendix D Withdrawal Adjustment Example Death Benefits |
D-1 |
Appendix E Calculation of Enhanced Earnings Death Benefit |
E-1 |
Appendix F Withdrawal Adjustment Example Accumulation Benefit |
F-1 |
Appendix G SureIncome Withdrawal Benefit Option Calculation Examples |
G-1 |
Appendix H Accumulation Unit Values |
H-1 |
(i)
Important Terms
This prospectus uses a number of important terms that you may not be familiar with. The index below identifies the page that describes each term.
Page | |
AB Factor |
19 |
Accumulation Benefit |
18 |
TrueReturn Accumulation Benefit Option |
18 |
Accumulation Phase |
8 |
Accumulation Unit |
17 |
Accumulation Unit Value |
17 |
Annual Increase Death Benefit Option |
5 |
Annuitant |
13 |
Automatic Additions Program |
14 |
Automatic Portfolio Rebalancing Program |
43 |
Beneficiary |
13 |
Benefit Base |
19 |
Benefit Payment |
27 |
Benefit Payment Remaining |
27 |
Benefit Year |
27 |
Co-Annuitant |
13 |
*Contract |
12 |
Contract Anniversary |
5 |
Contract Owner (you) |
18 |
Contract Value |
28 |
Contract Year |
5 |
Credit Enhancement |
15 |
Dollar Cost Averaging Program |
43 |
Due Proof of Death |
56 |
Enhanced Earnings Death Benefit Option |
58 |
Excess of Earnings Withdrawal |
59 |
Fixed Account Options |
37 |
Free Withdrawal Amount |
46 |
Funds |
Cover |
Guarantee Period Account |
38 |
Guarantee Options |
19 |
Income Plan |
50 |
Income Protection Benefit Option |
53 |
In-Force Earnings |
58 |
In-Force Premium |
58 |
1
Page | |
Investment Alternatives |
33 |
IRA Contract |
5 |
Issue Date |
8 |
Lincoln Benefit (we) |
63 |
Market Value Adjustment |
39 |
Maximum Anniversary Value (MAV) Death Benefit Option |
57 |
Payout Phase |
8 |
Payout Start Date |
8 |
Payout Withdrawal |
52 |
Portfolios |
63 |
Qualified Contracts |
61 |
Return of Premium (ROP) Death Benefit |
56 |
Rider Application Date |
5 |
Rider Anniversary |
18 |
Rider Date |
18 |
Rider Fee |
5 |
Rider Maturity Date |
18 |
Rider Period |
18 |
Rider Trade-In Option |
25, 32 |
Right to Cancel |
15 |
SEC |
Cover |
Settlement Value |
56 |
Spousal Protection Benefit (Co-Annuitant) Option |
45 |
Standard Fixed Account Option |
37, 38 |
SureIncome Withdrawal Benefit Option |
26 |
Systematic Withdrawal Program |
49 |
Tax Qualified Contracts |
69 |
Transfer Period Account |
36 |
Trial Examination Period |
15 |
TrueBalanceSM Asset Allocation Program |
35 |
Withdrawal Benefit Factor |
27 |
Withdrawal Benefit Payout Phase |
28 |
Valuation Date |
15 |
Variable Account |
63 |
Variable Sub-account |
33 |
* In certain states a Contract may be available only as a group Contract. If you purchase a group Contract, we will issue you a certificate that represents your ownership and that summarizes the provisions of the group Contract. References to Contract in this prospectus include certificates, unless the context requires otherwise. References to Contract also include all four Contracts listed on the cover page of this prospectus, unless otherwise noted. However, we administer each Contract separately.
2
Overview of Contracts
The Contracts offer many of the same basic features and benefits. They differ primarily with respect to the charges imposed, as follows:
The Consultant Solutions Classic Contract has a mortality and expense risk charge of 1.25%, an administrative expense charge of 0.10%*, and a withdrawal charge of up to 7% with a 7-year withdrawal charge period;
The Consultant Solutions Plus Contract offers a Credit Enhancement of up to 5% on purchase payments, a mortality and expense risk charge of 1.45%, an administrative expense charge of 0.10%*, and a withdrawal charge of up to 8.5% with an 8-year withdrawal charge period;
The Consultant Solutions Elite Contract has a mortality and expense risk charge of 1.60%, an administrative expense charge of 0.10%*, and a withdrawal charge of up to 7% with a 3-year withdrawal charge period; and
The Consultant Solutions Select Contract has a mortality and expense risk charge of 1.70%, an administrative expense charge of 0.10%*, and no withdrawal charges.
Other differences among the Contracts relate to available Fixed Account Options. For a side-by-side comparison of these differences, please refer to Appendix A of this prospectus.
* The administrative expense charge may be increased, but will never exceed 0.25%. Once your Contract is issued, we will not increase the administrative expense charge for your Contract.
3
The Contracts at a Glance
The following is a snapshot of the Contracts. Please read the remainder of this prospectus for more information. Please note that these Contracts are no longer available for new sales. The information provided in this section is for informational purposes only.
Flexible Payments |
We are no longer offering new Contracts. You can add to your Contract as often and as much as you like, but each subsequent payment must be at least $1,000 ($100 for automatic payments).
We reserve the right to accept a lesser initial purchase payment amount for each Contract. We may limit the cumulative amount of purchase payments to a maximum of $1,000,000 in any Contract. You must maintain a minimum Contract Value of $1,000.
For Consultant Solutions Plus Contracts, each time you make a purchase payment, we will add to your Contract Value a Credit Enhancement of up to 5% of such purchase payment. |
Trial Examination Period |
You may cancel your Contract within 20 days of receipt or any longer period as your state may require (Trial Examination Period). Upon cancellation, we will return your purchase payments adjusted, to the extent federal or state law permits, to reflect the investment experience of any amounts allocated to the Variable Account, including the deduction of mortality and expense risk charges and administrative expense charges. If you cancel your Contract during the Trial Examination Period, the amount we refund to you will not include any Credit Enhancement. The amount you receive will be less applicable federal and state income tax withholding. See Trial Examination Period for details. |
Expenses |
Each Portfolio pays expenses that you will bear indirectly if you invest in a Variable Sub-account. You also will bear the following expenses:
Consultant Solutions Classic Contracts
Annual mortality and expense risk charge equal to 1.25% of average daily net assets.
Withdrawal charges ranging from 0% to 7% of purchase payments withdrawn.
Consultant Solutions Plus Contracts
Annual mortality and expense risk charge equal to 1.45% of average daily net assets.
Withdrawal charges ranging from 0% to 8.5% of purchase payments withdrawn.
Consultant Solutions Elite Contracts
Annual mortality and expense risk charge equal to 1.60% of average daily net assets.
Withdrawal charges ranging from 0% to 7% of purchase payments withdrawn.
Consultant Solutions Select Contracts
Annual mortality and expense risk charge equal to 1.70% of average daily net assets.
No withdrawal charges. |
|
All Contracts
Annual administrative expense charge of 0.10% average daily net assets (up to 0.25% for future Contracts).
Annual contract maintenance charge of $40 (reduced to $30 if Contract Value is at least $2000, and waived in certain cases).
If you select the Maximum Anniversary Value (MAV) Enhanced Death Benefit Option (MAV Death Benefit Option) you will pay an additional mortality and expense risk charge of 0.20% (up to 0.50% for Options added in the future). |
4
If you select the Annual Increase Enhanced Death Benefit Option (Annual Increase Death Benefit Option), you will pay an additional mortality and expense risk charge of 0.30% (up to 0.50% for options added in the future).
If you select the Enhanced Earnings Death Benefit Option you will pay an additional mortality and expense risk charge of 0.25% or 0.40% (up to 0.35% or 0.50% for Options added in the future) depending on the age of the oldest Owner, the Co-Annuitant, and/or oldest Annuitant on the date we receive the completed application or request to add the benefit, whichever is later (Rider Application Date).
If you select the TrueReturn Accumulation Benefit Option you would pay an additional annual fee (Rider Fee) of 0.50% (up to 1.25% for Options added in the future) of the Benefit Base in effect on each Contract anniversary (Contract Anniversary) during the Rider Period. You may not select the TrueReturn Accumulation Benefit Option together with the SureIncome Withdrawal Benefit Option.
If you select the SureIncome Withdrawal Benefit Option (SureIncome Option) you would pay an additional annual fee (SureIncome Option Fee) of 0.50% (up to 1.25% for Options added in the future) of the Benefit Base on each Contract Anniversary (See the SureIncome Option Fee section). You may not select the SureIncome Option together with the TrueReturn Accumulation Benefit Option.
If you select the Income Protection Benefit Option you will pay an additional mortality and expense risk charge of 0.50% (up to 0.75% for Options added in the future) during the Payout Phase of your Contract.
If you select the Spousal Protection Benefit (Co-Annuitant) Option you would pay an additional annual fee (Rider Fee) of 0.10% (up to 0.15% for Options added in the future) of the Contract Value (Contract Value) on each Contract Anniversary. This Option is available only for Individual Retirement Annuity (IRA) Contracts qualified under Section 408 of the Internal Revenue Code. For Contracts purchased on or after May 1, 2005, we may discontinue offering the Spousal Protection Benefit (Co-Annuitant) Option at any time. No Rider Fee is charged for the Spousal Protection Benefit (Co-Annuitant) Option for Contract Owners who added the Option prior to May 1, 2005.
Transfer fee equal to 1.00% (subject to increase to up to 2.00%) of the amount transferred after the 12th transfer in any Contract Year (Contract Year), but not more than $25. A Contract Year is measured from the date we issue your Contract or a Contract Anniversary.
State premium tax (if your state imposes one)
Not all Options are available in all states
We may discontinue offering any of these Options at any time. |
Investment Alternatives |
Each Contract offers several investment alternatives including:
Fixed Account Options that credit interest at rates we guarantee, and
Variable Sub-accounts investing in Portfolios offering professional money management by these investment advisers:
Invesco Advisers, Inc.
Fred Alger Management, Inc.
Fidelity Management & Research Company Goldman Sachs Asset Management, L.P.
|
5
Janus Capital Management LLC
MFS Investment Management
OppenheimerFunds, Inc.
Pacific Investment Management Company LLC
Guggenheim Investments
Legg Mason Partners Fund Advisor, LLC
T. Rowe Price Associates, Inc.
Van Eck Associates Corporation
Morgan Stanley Investment Management Inc.
Not all Fixed Account Options are available in all states or with all Contracts.
To find out current rates being paid on the Fixed Account Option(s), or to find out how the Variable Sub-accounts have performed, please call us at 800-457-7617. | |
Special Services |
For your convenience, we offer these special services:
Automatic Portfolio Rebalancing Program
Automatic Additions Program
Dollar Cost Averaging Program
Systematic Withdrawal Program
TrueBalanceSM Asset Allocation Program |
Income Payments |
You can choose fixed income payments, variable income payments, or a combination of the two. You can receive your income payments in one of the following ways (you may select more than one income plan):
life income with guaranteed number of payments
joint and survivor life income with guaranteed number of payments
guaranteed number of payments for a specified period
life income with cash refund
joint life income with cash refund
life income with installment refund
joint life income with installment refund
In addition, we offer an Income Protection Benefit Option that guarantees that your variable income payments will not fall below a certain level. |
6
Death Benefits |
If you die before the Payout Start Date, we will pay a death benefit subject to the conditions described in the Contract. In addition to the death benefit included in your Contract (ROP Death Benefit), the death benefit options we currently offer include:
MAV Death Benefit Option;
Annual Increase Death Benefit Option; and
Enhanced Earnings Death Benefit Option. |
Transfers |
Before the Payout Start Date, you may transfer your Contract Value among the investment alternatives, with certain restrictions. The minimum amount you may transfer is $100 or the amount remaining in the investment alternative, if less. The minimum amount that can be transferred into the Standard Fixed Account or Market Value Adjusted Account Options is $100.
A charge may apply after the 12th transfer in each Contract Year. |
Withdrawals |
You may withdraw some or all of your Contract Value at any time during the Accumulation Phase and during the Payout Phase in certain cases. In general, you must withdraw at least $50 at a time. If any withdrawal reduces your Contract Value to less than $1,000, we will treat the request as a withdrawal of the entire Contract Value, unless the SureIncome Withdrawal Benefit Option is in effect under your Contract. Withdrawals taken prior to annuitization (referred to in this prospectus as the Payout Phase) are generally considered to come from the earnings in the Contract first. If the Contract is tax-qualified, generally all withdrawals are treated as distributions of earnings. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. A withdrawal charge and a Market Value Adjustment may also apply. |
7
How the Contracts Work
Each Contract basically works in two ways.
First, each Contract can help you (we assume you are the Contract Owner) save for retirement because you can invest in your Contracts investment alternatives and generally pay no federal income taxes on any earnings until you withdraw them. You do this during what we call the Accumulation Phase of the Contract. The Accumulation Phase begins on the date we issue your Contract (we call that date the Issue Date) and continues until the Payout Start Date, which is the date we apply your money to provide income payments. During the Accumulation Phase, you may allocate your purchase payments to any combination of the Variable Sub-Accounts and/or Fixed Account Options. If you invest in a Fixed Account Option, you will earn a fixed rate of interest that we declare periodically. If you invest in any of the Variable Sub-Accounts, your investment return will vary up or down depending on the performance of the corresponding Portfolios.
Second, each Contract can help you plan for retirement because you can use it to receive retirement income for life and/or for a pre-set number of years, by selecting one of the income payment options (we call these Income Plans) described on page 50-51. You receive income payments during what we call the Payout Phase of the Contract, which begins on the Payout Start Date and continues until we make the last payment required by the Income Plan you select. During the Payout Phase, if you select a fixed income payment option, we guarantee the amount of your payments, which will remain fixed. If you select a variable income payment option, based on one or more of the Variable Sub-Accounts, the amount of your payments will vary up or down depending on the performance of the corresponding Portfolios. The amount of money you accumulate under your Contract during the Accumulation Phase and apply to an Income Plan will determine the amount of your income payments during the Payout Phase.
The timeline below illustrates how you might use your Contract.
Other income payment options are also available. See Income Payments.
As the Contract Owner, you exercise all of the rights and privileges provided by the Contract. If you die, any surviving Contract Owner or, if there is none, the Beneficiary will exercise the rights and privileges provided by the Contract. See The Contracts. In addition, if you die before the Payout Start Date, we will pay a death benefit to any surviving Contract Owner or, if there is none, to your Beneficiary. See Death Benefits.
Please call us at 800-457-7617 if you have any question about how the Contracts work.
8
Expense Tables
The table below lists the expenses that you will bear directly or indirectly when you buy a Contract. The table and the examples that follow do not reflect premium taxes that may be imposed by the state where you reside. For more information about Variable Account expenses, see Expenses, below. For more information about Portfolio expenses, please refer to the prospectuses for the Portfolios.
Contract Owner Transaction Expenses
Withdrawal Charge (as a percentage of purchase payments withdrawn)*
Number of Complete
Years Since We Received the Purchase Payment | |||||||||
Contract: |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8+ |
Consultant Solutions Classic |
7 % |
7 % |
6 % |
5 % |
4 % |
3 % |
2 % |
0 % |
0 % |
Consultant Solutions Plus |
8.5 % |
8.5 % |
8.5 % |
7.5 % |
6.5 % |
5.5 % |
4 % |
2.5 % |
0 % |
Consultant Solutions Elite: |
7 % |
6 % |
5 % |
0 % |
0 % |
0 % |
0 % |
0 % |
0 % |
Consultant Solutions Select: |
None | ||||||||
All Contracts: |
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Annual Contract Maintenance Charge |
$40** | ||||||||
Transfer Fee |
up to 2.00% of the amount transferred, but not more than $25*** | ||||||||
Premium Taxes |
0% to 3.50% of Purchase Payment**** | ||||||||
Loan Interest Rate |
7.25%***** |
* Each Contract Year, you may withdraw a portion of your purchase payments (and/or your earnings, in the case of Charitable Remainder Trusts) without incurring a withdrawal charge (Free Withdrawal Amount). See Withdrawal Charges for more information.
** Reduced to $30 if Contract Value is not less than $2000, and waived in certain cases. See Expenses.
*** Applies solely to the 13th and subsequent transfers within a Contract Year, excluding transfers due to dollar cost averaging and automatic portfolio rebalancing. We are currently assessing a transfer fee of 1.00% of the amount transferred, however, we reserve the right to raise the transfer fee to up to 2.00% of the amount transferred. The transfer fee will never be greater than $25.
**** Some States charge premium taxes that generally range from 0 to 3.5%. We are responsible for paying these taxes, and will deduct them from your Contract Value. Our current practice is to not charge for these taxes until the Payout Start Date or surrender of the Contract. See Premium Taxes for more information.
***** For more information, see Contract Loans for 403(b) Contracts. The loan interest rate is subject to change.
Variable Account Annual Expenses (as a percentage of average daily net asset value deducted from each Variable Sub-account)
If you select the basic Contract without any optional benefits, your Variable Account expenses would be as follows:
Basic Contract (without any optional benefit) |
Mortality
and Expense |
Administrative Expense Charge* |
Total Variable Account Annual Expense |
Consultant Solutions Classic |
1.25% |
0.10% |
1.35% |
Consultant Solutions Plus |
1.45% |
0.10% |
1.55% |
Consultant Solutions Elite |
1.60% |
0.10% |
1.70% |
Consultant Solutions Select |
1.70% |
0.10% |
1.80% |
* We reserve the right to raise the administrative expense charge to 0.25%. If we increase this charge, we will amend the prospectus, accordingly. However, we will not increase the charge once we issue your Contract.
Each Contract also offers optional riders that may be added to the Contract. For each optional rider you select, you would pay the following additional mortality and expense risk charge associated with each rider.
MAV Death Benefit Option |
Currently 0.20%, up to a maximum of 0.50% for Options added in the future * |
Annual Increase Death Benefit Option |
Currently 0.30%, up to a maximum of 0.50% for Options added in the future * |
Enhanced Earnings Death Benefit Option (issue age 0-70) |
Currently 0.25%, up to a maximum of 0.35% for Options added in the future * |
Enhanced Earnings Death Benefit Option (issue age 71-79) |
Currently 0.40%, up to a maximum of 0.50% for Options added in the future * |
If you select the Options with the highest possible combination of mortality and expense risk charges during the Accumulation Phase, your Variable Account expenses would be as follows, assuming current expenses:
Contract with the MAV Death Benefit Option, Annual Increase Death Benefit Option, and Enhanced Earnings Death Benefit Option (issue age 71-79) |
Mortality and Expense Risk Charge* |
Administrative Expense Charge* |
Total Variable Account Annual Expense |
Consultant Solutions Classic |
2.15% |
0.10% |
2.25% |
Consultant Solutions Plus |
2.35% |
0.10% |
2.45% |
Consultant Solutions Elite |
2.50% |
0.10% |
2.60% |
Consultant Solutions Select |
2.60% |
0.10% |
2.70% |
* As described above the administrative expense charge and the mortality and expense charge for certain Options may be higher in the future if you add this Option to your Contract. However, we will not increase the administrative expense charge once we issue your Contract, and we will not increase the charge for an Option once we add the Option to your Contract. If we increase any of these charges, we will amend the prospectus, accordingly.
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TrueReturn Accumulation Benefit Option Annual Fee
(annual rate as a percentage of Benefit Base on a Contract Anniversary)
TrueReturn Accumulation Benefit Option |
Currently 0.50%, up to a maximum of 1.25% for Options added in the future. * |
* If we increase this charge, we will amend the prospectus, accordingly. See TrueReturn Accumulation Benefit Option for details.
Spousal Protection Benefit (Co-Annuitant) Option Annual Fee
(annual rate as a percentage of Contract Value on a Contract Anniversary)
Spousal Protection Benefit (Co-Annuitant) Option |
Currently 0.10%, up to a maximum of 0.15% for Options added in the future * |
* For Options added on or after 5/1/2005. If we increase this charge, we will amend the prospectus, accordingly. See Spousal Protection Benefit (Co-Annuitant) Option for details.
SureIncome Option Fee
(annual rate as a percentage of Benefit Base on a Contract Anniversary)
SureIncome Withdrawal Benefit Option |
Currently 0.50%, up to a maximum of 1.25% for SureIncome Options added in the future * |
* If we increase this charge, we will amend the prospectus, accordingly. See SureIncome Withdrawal Benefit Option for details.
Income Protection Benefit Option Fee (Payout Phase only)*
(as a percentage of average daily net assets)
Income Protection Benefit Option |
Currently 0.50%, up to a maximum of 1.25% for Options added in the future* |
* See Income Payments Income Protection Benefit Option, below, for a description of the Income Protection Benefit Option. You may add this Option when you elect to receive annuity benefits. We begin to deduct the charge for this Option on the Payout Start Date. Currently, the charge for this Option is 0.50% of the average daily net Variable Account assets supporting the variable income payments to which the Income Protection Benefit Option applies. We will charge you the Option charge in effect when you choose to apply this Option to your Contract. We reserve the right to raise the Income Protection Benefit Option charge to up to 0.75%. If we increase this charge, we will amend the prospectus accordingly. Once your Income Protection Benefit Option is in effect, however, we will not change the option charge you will pay for this Option. See Expenses Mortality and Expense Risk Charge, below, for details.
Portfolio Annual Expenses Minimum and Maximum
The next table shows the minimum and maximum total operating expenses charged by the Portfolios that you may pay periodically during the time that you own the Contract. Advisors and/or other service providers of certain Portfolios may have agreed to waive their fees and/or reimburse Portfolio expenses in order to keep the Portfolios expenses below specified limits. The range of expenses shown in this table does not show the effect of any such fee waiver or expense reimbursement. More detail concerning each Portfolios fees and expenses appears in the second table below and in the prospectus for each Portfolio.
Minimum |
Maximum | |
Total Annual Portfolio Operating Expenses(1) (expenses that are deducted from Portfolio assets, which may include management fees, distribution and/or services (12b-1) fees, and other expenses) |
0.32% |
2.28% |
(1) Expenses are shown as a percentage of Portfolio average daily net assets (before any waiver or reimbursement) as of December 31, 2015.
Example 1
This Example is intended to help you compare the cost of investing in the Contracts with the cost of investing in other variable annuity contracts. These costs include Contract owner transaction expenses, Contract fees, Variable Account annual expenses, and Portfolio fees and expenses.
The example shows the dollar amount of expenses that you would bear directly or indirectly if you:
invested $10,000 in the Contract for the time periods indicated;
earned a 5% annual return on your investment;
surrendered your Contract, or you began receiving income payments for a specified period of less than 120 months, at the end of each time period;
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elected the MAV Death Benefit Option and the Annual Increase Death Benefit Option;
elected the Enhanced Earnings Death Benefit Option (assuming issue age 71-79);
elected the Spousal Protection Benefit (Co-Annuitant) Option; and
elected the TrueReturn Accumulation Benefit Option or SureIncome Withdrawal Benefit Option.
The example does not include any taxes or tax penalties you may be required to pay if you surrender your Contract.
The first line of the example assumes that the maximum fees and expenses of any of the Portfolios are charged. The second line of the example assumes that the minimum fees and expenses of any of the Portfolios are charged. Your actual expenses may be higher or lower than those shown below.
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Consultant Solutions Classic |
Consultant Solutions Plus | |||||||
1 Year |
3 Years |
5 Years |
10 Years |
1 Year |
3 Years |
5 Years |
10 Years | ||
Costs Based on Maximum |
$ 1,243 |
$ 2,450 |
$ 3,564 |
$ 6,403 |
$ 1,388 |
$ 2,711 |
$ 3851 |
$ 6,521 | |
Costs Based on Minimum |
$ 1,057 |
$ 1,918 |
$ 2,726 |
$ 4,970 |
$ 1,202 |
$ 2,183 |
$ 3,022 |
$ 5,119 | |
|
Consultant Solutions Elite |
Consultant Solutions Select | |||||||
1 Year |
3 Years |
5 Years |
10 Years |
1 Year |
3 Years |
5 Years |
10 Years | ||
Costs Based on Maximum |
$ 1,276 |
$ 2,457 |
$ 3,366 |
$ 6,630 |
$ 690 |
$ 2,055 |
$ 3,400 |
$ 6,683 | |
Costs Based on Minimum |
$ 1,091 |
$ 1,932 |
$ 2,543 |
$ 5,253 |
$ 504 |
$ 1,531 |
$ 2,582 |
$ 5,320 |
Example 2
This Example uses the same assumptions as Example 1 above, except that it assumes you decided not to surrender your Contract, or you began receiving income payments for a specified period of at least 120 months, at the end of each time period.
|
Consultant Solutions Classic |
Consultant Solutions Plus | ||||||
1 Year |
3 Years |
5 Years |
10 Years |
1 Year |
3 Years |
5 Years |
10 Years | |
Costs Based on Maximum |
$ 648 |
$ 1,940 |
$ 3,224 |
$ 6,403 |
$ 666 |
$ 1,988 |
$ 3,299 |
$ 6,521 |
Costs Based on Minimum |
$ 462 |
$ 1,408 |
$ 2,386 |
$ 4,970 |
$ 480 |
$ 1,461 |
$ 2,469 |
$ 5,119 |
|
Consultant Solutions Elite |
Consultant Solutions Select | ||||||
1 Year |
3 Years |
5 Years |
10 Years |
1 Year |
3 Years |
5 Years |
10 Years | |
Costs Based on Maximum |
$ 681 |
$ 2,032 |
$ 3,366 |
$ 6,630 |
$ 690 |
$ 2,055 |
$ 3,400 |
$ 6,683 |
Costs Based on Minimum |
$ 496 |
$ 1,507 |
$ 2,543 |
$ 5,253 |
$ 504 |
$ 1,531 |
$ 2,582 |
$ 5,320 |
Please remember that you are looking at examples and not a representation of past or future expenses. Your rate of return may be higher or lower than 5%, which is not guaranteed. The examples do not assume that any Portfolio expense waivers or reimbursement arrangements are in effect for the periods presented. The examples reflect the Free Withdrawal Amounts, if applicable, and the deduction of the annual contract maintenance charge of $30 each year. The above examples assume you have selected the MAV Death Benefit Option, the Annual Increase Death Benefit Option, the Enhanced Earnings Death Benefit Option (assuming the oldest Contract Owner and Co-Annuitant, or, if the Contract Owner is a non-living person, the oldest Annuitant, are age 71 or older, and all are age 79 or younger on the Rider Application Date), the Spousal Protection Benefit (Co-Annuitant) Option, and the TrueReturn Accumulation Benefit Option or SureIncome Withdrawal Benefit Option. If any or all of these features were not elected, the expense figures shown above would be slightly lower.
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Financial Information
To measure the value of your investment in the Variable Sub-Accounts during the Accumulation Phase, we use a unit of measure we call the Accumulation Unit. Each Variable Sub-Account has a separate value for its Accumulation Units we call Accumulation Unit Value. Accumulation Unit Value is analogous to, but not the same as, the share price of a mutual fund.
Accumulation Unit Values for the lowest and highest available combinations of Contract charges that affect Accumulation Unit Values for each Contract are shown in Appendix H of this prospectus. The Statement of Additional Information contains the Accumulation Unit Values for all other available combinations of Contract charges that affect Accumulation Unit Values for each Contract. The financial statements of Lincoln Benefit and the financial statements of the Variable Account, which are comprised of the financial statements of the underlying sub-accounts, appear in the Statement of Additional Information.
The Contracts
Please note that these Contracts are no longer available for new sales. The information provided in this section is for informational purposes only.
CONTRACT OWNER
Each Contract is an agreement between you, the Contract Owner, and Lincoln Benefit, a life insurance company. As the Contract Owner, you may exercise all of the rights and privileges provided to you by the Contract. That means it is up to you to select or change (to the extent permitted):
the investment alternatives during the Accumulation and Payout Phases,
the amount and timing of your purchase payments and withdrawals,
the programs you want to use to invest or withdraw money,
the income payment plan(s) you want to use to receive retirement income,
the Annuitant (either yourself or someone else) on whose life the income payments will be based,
the Beneficiary or Beneficiaries who will receive the benefits that the Contract provides when the last surviving Contract Owner dies, or, if the Contract Owner is a non-living person, an Annuitant dies, and
any other rights that the Contract provides, including restricting income payments to Beneficiaries.
If you die prior to the Payout Start Date, any surviving joint Contract Owner, or, if none, the Beneficiary, may exercise the rights and privileges provided to them by the Contract. If the sole surviving Contract Owner dies after the Payout Start Date, the Primary Beneficiary will receive any guaranteed income payments scheduled to continue.
If the Annuitant dies prior to the Payout Start Date and the Contract Owner is a non-living person, we will pay the death benefit to the current Contract Owner.
The Contract cannot be jointly owned by both a living and a non-living person. The Consultant Solutions Select is not available for purchase by non-living persons. The maximum age of any Contract Owner on the date we receive the completed application for each Contract is 90.
If you select the MAV Death Benefit Option, the Annual Increase Death Benefit Option, or the Enhanced Earnings Death Benefit Option, the maximum age of any Contract Owner on the Rider Application Date is currently 79. If you select the Spousal Protection Benefit (Co-Annuitant) Option, the maximum age of any Contract Owner on the Rider Application Date is currently age 90. If you select the SureIncome Withdrawal Benefit Option, the maximum age of any Contract Owner on the Rider Application Date is currently age 85.
The Contract can also be purchased as an IRA or TSA (also known as a 403(b)). The endorsements required to qualify these annuities under the Code may limit or modify your rights and privileges under the Contract. We use the term Qualified Contract to refer to a Contract issued as an IRA, 403(b), or with a Qualified Plan.
Except for certain Qualified Contracts, you may change the Contract Owner at any time by written notice in a form satisfactory to us. Until we receive your written notice to change the Contract Owner, we are entitled to rely on the most recent information in our files. We will provide a change of ownership form to be signed by you and filed with us. Once we accept the change, the change will take effect as of the date you signed the request. We will not be liable for any payment or settlement made prior to accepting the change. Accordingly, if you wish to change the Contract Owner, you should deliver your written notice to us promptly. Each change is subject to any payment we make or other action we take before we accept it. Changing ownership of this Contract may cause adverse tax consequences and may not be allowed under Qualified Contracts. Please consult with a competent tax advisor prior to making a request for a change of Contract Owner.
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ANNUITANT
The Annuitant is the individual whose age determines the latest Payout Start Date and whose life determines the amount and duration of income payments (other than under Income Plan 3). If the Contract is a Non-Qualified Contract, you also may designate a joint Annuitant, who is a second person on whose life income payments depend. Additional restrictions may apply in the case of Qualified Plans. The maximum age of the Annuitant on the date we receive the completed application for each Contract is 90.
If the Owner is a living person, the Owner may change the Annuitant before the Payout Start Date by written request in a form satisfactory to us. Once we accept a change, it takes effect on the date you signed the request. Each change is subject to any payment we make or other action we take before we accept it.
If you select the MAV Death Benefit Option, Annual Increase Death Benefit Option, or Enhanced Earnings Death Benefit Option, the maximum age of any Annuitant on the Rider Application Date is 79.
If you select the Spousal Protection Benefit (Co-Annuitant) Option, the maximum age of any Annuitant on the Rider Application date is age 90. If you select the Income Protection Benefit Option, the oldest Annuitant and joint Annuitant (if applicable) must be age 75 or younger on the Payout Start Date. If you select the SureIncome Withdrawal Benefit Option, the maximum age of any Annuitant on the Rider Application Date is currently age 85.
If you select an Income Plan that depends on the Annuitant or a joint Annuitants life, we may require proof of age and sex before income payments begin and proof that the Annuitant or joint Annuitant is still alive before we make each payment.
CO-ANNUITANT
Contract Owners of IRA Contracts that meet the following conditions and that elect the Spousal Protection Benefit Option must name their spouse as a Co-Annuitant:
the individually owned Contract must be either a traditional, Roth or Simplified Employee Pension IRA;
the Contract Owner must be age 90 or younger on the Rider Application Date;
and the Co-Annuitant must be age 79 or younger on the Rider Application Date; and
the Co-Annuitant must be the sole Primary Beneficiary under the Contract.
Under the Spousal Protection Benefit Option, the Co-Annuitant will be considered to be an Annuitant during the Accumulation Phase, except the Co-Annuitant will not be considered to be an Annuitant for purposes of determining the Payout Start Date and the Death of Annuitant provision of your Contract does not apply upon the death of the Co-Annuitant. If you are single when you purchase this Contract, and are married later, you may add the Spousal Protection Benefit Option within six months of your marriage only if you provide proof of marriage in a form satisfactory to us. You may change the Co-Annuitant to a new spouse within six months of re-marriage only if you provide proof of remarriage in a form satisfactory to us. At any time, there may only be one Co-Annuitant under your Contract. The Co-Annuitant will be considered an Owner for the purposes of determining the age or birthday of the Owners under the MAV Death Benefit Option, the Annual Increase Death Benefit Option and the Enhanced Earnings Death Benefit Option. See Spousal Protection Benefit Option and Death of Co-Annuitant for more information.
BENEFICIARY
You may name one or more Primary and Contingent Beneficiaries when you apply for a Contract. The Primary Beneficiary is the person who may, in accordance with the terms of the Contract, elect to receive the death settlement (Death Proceeds) or become the new Contract Owner pursuant to the Contract if the sole surviving Contract Owner dies before the Payout Start Date. If the sole surviving Contract Owner dies after the Payout Start Date, the Beneficiary will receive any guaranteed income payments scheduled to continue. A Contingent Beneficiary is the person selected by the Contract Owner who will exercise the rights of the Primary Beneficiary if all named Primary Beneficiaries die before the death of the sole surviving Contract Owner.
You may change or add Beneficiaries at any time, unless you have designated an irrevocable Beneficiary. We will provide a change of Beneficiary form to be signed by you and filed with us. After we accept the form, the change of Beneficiary will be effective as of the date you signed the form. Until we accept your written notice to change a Beneficiary, we are entitled to rely on the most recent Beneficiary information in our files. We will not be liable for any payment or settlement made prior to accepting the change. Accordingly, if you wish to change your Beneficiary, you should deliver your written notice to us promptly. Each Beneficiary change is subject to any payment made by us or any other action we take before we accept the change.
You may restrict income payments to Beneficiaries. We will provide a form to be signed by you and filed with us. Once we accept the form, the restriction will take effect as of the date you signed the request. Any restriction is subject to any payment made by us or any other action we take before we accept the request.
If you did not name a Beneficiary or, unless otherwise provided in the Beneficiary designation, if a named Beneficiary is no longer living and there are no other surviving Primary or Contingent Beneficiaries when the sole surviving Contract Owner dies, the new Beneficiary will be:
your spouse or, if he or she is no longer living,
your surviving children equally, or if you have no surviving children,
your estate.
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If more than one Beneficiary survives you, we will divide the death benefit among the surviving Beneficiaries according to your most recent written instructions. If you have not given us written instructions in a form satisfactory to us, we will pay the death benefit in equal amounts to the surviving Beneficiaries. If there is more than one Beneficiary in a class (e.g., more than one Primary Beneficiary) and one of the Beneficiaries predeceases the Contract Owner (the Annuitant if the Contract owner is not a living person), the remaining Beneficiaries in that class will divide the deceased Beneficiarys share in proportion to the original share of the remaining Beneficiaries.
For purposes of this Contract, in determining whether a living person, including a Contract Owner, Primary Beneficiary, Contingent Beneficiary, or Annuitant (Living Person A) has survived another living person, including a Contract Owner, Primary Beneficiary, Contingent Beneficiary, or Annuitant (Living Person B), Living Person A must survive Living Person B by at least 24 hours. Otherwise, Living Person A will be conclusively deemed to have predeceased Living Person B.
Where there are multiple Beneficiaries, we will only value the death proceeds at the time the first Beneficiary submits the necessary documentation in good order. Any death proceed amounts attributable to any Beneficiary which remain in the Variable Sub-accounts are subject to investment risk. If there is more than one Beneficiary taking shares of the death proceeds, each Beneficiary will be treated as a separate and independent owner of his or her respective share of the death proceeds. Each Beneficiary will exercise all rights related to his or her share of the death proceeds, including the sole right to select a death settlement option, subject to any restrictions previously placed upon the Beneficiary. Each Beneficiary may designate a Beneficiary(ies) for his or her respective share, but that designated Beneficiary(ies) will be restricted to the death settlement option chosen by the original Beneficiary.
If there is more than one Beneficiary and one of the Beneficiaries is a corporation, trust or other non-living person, all Beneficiaries will be considered to be non-living persons.
MODIFICATION OF THE CONTRACT
Only a Lincoln Benefit officer may approve a change in or waive any provision of the Contract. Any change or waiver must be in writing. None of our agents has the authority to change or waive the provisions of the Contract. We may not change the terms of the Contract without your consent, except to conform the Contract to applicable law or changes in the law. If a provision of the Contract is inconsistent with state law, we will follow state law.
ASSIGNMENT
You may not assign an interest in this Contract as collateral or security for a loan. However, you may assign periodic income payments under this Contract prior to the Payout Start Date. No Beneficiary may assign benefits under the Contract until they are due. We will not be bound by any assignment until the assignor signs it and files it with us. We are not responsible for the validity of any assignment. Federal law prohibits or restricts the assignment of benefits under many types of retirement plans and the terms of such plans may themselves contain restrictions on assignments. An assignment may also result in taxes or tax penalties. You should consult with an attorney before trying to assign periodic income payments under your Contract.
Purchases
MINIMUM PURCHASE PAYMENTS
The minimum initial purchase payment for Classic Contracts is $1,200 (Qualified or Non-Qualified Contracts); the minimum initial purchase payment for all other Non-Qualified Contracts is $10,000, ($2,000 for Qualified Contracts). All subsequent purchase payments under a Contract must be $1,000 or more ($100 for automatic payments). For Consultant Solutions Plus Contracts, purchase payments do not include any Credit Enhancements. You may make purchase payments at any time prior to the Payout Start Date; however, any additional payments after the initial purchase payment may be limited in some states. Please consult with your representative for details. The total amount of purchase payments we will accept for each Contract without our prior approval is $1,000,000. We reserve the right to accept a lesser initial purchase payment amount or lesser subsequent purchase payment amounts. We reserve the right to limit the availability of the investment alternatives for additional investments. We also reserve the right to reject any application. We may apply certain limitations, restrictions, and/or underwriting standards as a condition of our issuance of a Contract and/or acceptance of purchase payments.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments of $100 or more per month by automatically transferring money from your bank account. Please consult with your sales representative for detailed information. The Automatic Additions Program is not available for making purchase payments into the Dollar Cost Averaging Fixed Account Option.
ALLOCATION OF PURCHASE PAYMENTS
At the time you apply for a Contract, you must decide how to allocate your purchase payment among the investment alternatives. The allocation you specify on your application will be effective immediately. All allocations must be in whole percents that total 100% or in whole dollars. You can change your allocations by calling 1-800-457-7617.
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We will allocate your purchase payments to the investment alternatives according to your most recent instructions on file with us. Unless you notify us otherwise, we will allocate subsequent purchase payments according to the allocation for the previous purchase payment. We will effect any change in allocation instructions at the time we receive written notice of the change in good order.
For Consultant Solutions Select Contracts, the maximum amount that can be allocated during any single day to certain selected funds is $25,000. Please see the current list of funds affected by this restriction on page 41.
We will credit the initial purchase payment that accompanies your completed application to your Contract within 2 business days after we receive the payment at our home office. If your application is incomplete, we will ask you to complete your application within 5 business days. If you do so, we will credit your initial purchase payment to your Contract within that 5 business day period. If you do not, we will return your purchase payment at the end of the 5 business day period unless you expressly allow us to hold it until you complete the application. We will credit subsequent purchase payments to the Contract at the close of the business day on which we receive the purchase payment at our home office.
We use the term business day to refer to each day Monday through Friday that the New York Stock Exchange is open for business. We also refer to these days as Valuation Dates. Our business day closes when the New York Stock Exchange closes for regular trading, usually 4:00 p.m. Eastern Time (3:00 p.m. Central Time). If we receive your purchase payment after 3:00 p.m. Central Time on any Valuation Date, we will credit your purchase payment using the Accumulation Unit Values computed for the next Valuation Date.
There may be circumstances where the New York Stock Exchange is open, however, due to inclement weather, natural disaster or other circumstances beyond our control, our offices may be closed or our business processing capabilities may be restricted. Under those circumstances, your Contract Value may fluctuate based on changes in the Accumulation Unit Values, but you may not be able to transfer Contract Value, or make a purchase or redemption request.
With respect to both your initial purchase payment and any subsequent purchase payment that is pending investment in our Variable Account, we may hold the amount temporarily in a suspense account and may earn interest on amounts held in that suspense account. You will not be credited with any interest on amounts held in that suspense account.
CREDIT ENHANCEMENT
For Consultant Solutions Plus Contracts, each time you make a purchase payment, we will add to your Contract Value a Credit Enhancement equal to 4% of the purchase payment if the oldest Contract Owner, or, if the Contract Owner is a non-living person, the oldest Annuitant, is age 85 or younger on the date we receive the completed application for the Contract (Application Date). If the oldest Contract Owner or, if the Owner is a non-living person, the oldest Annuitant is age 86 or older and 90 or younger on the Application Date, we will add to your Contract Value a Credit Enhancement equal to 2% of the purchase payment. The thresholds apply individually to each Consultant Solutions Plus Contract you own. The additional Credit Enhancements and their corresponding thresholds are as follows:
Additional Credit Enhancement for Large Contracts |
Cumulative Purchase Payments less Cumulative Withdrawals must exceed: |
0.50% of the purchase payment |
$ 500,000 |
1.00% of the purchase payment |
$ 1,000,000 |
If, during the first Contract Year only, the cumulative purchase payments less cumulative withdrawals exceed the thresholds, the additional credit enhancement will apply to prior purchase payments, less cumulative withdrawals, and will be added to the Contract Value as of the date of the most recent purchase payment. The additional credit enhancement will be applied only once to any given purchase payment, current or prior.
If you exercise your right to cancel the Contract during the Trial Examination Period, the amount we refund to you will not include any Credit Enhancement. See Trial Examination Period below for details. The Consultant Solutions Plus Contract may not be available in all states.
We will allocate any Credit Enhancements to the investment alternatives according to the allocation instructions you have on file with us at the time we receive your purchase payment. We will allocate each Credit Enhancement among the investment alternatives in the same proportions as the most recent purchase payment. We do not consider Credit Enhancements to be investments in the Contract for income tax purposes.
We use a portion of the withdrawal charge and mortality and expense risk charge to help recover the cost of providing the Credit Enhancement under the Contract. See Expenses. Under certain circumstances (such as a period of poor market performance) the cost associated with the Credit Enhancement may exceed the sum of the Credit Enhancement and any related earnings. You should consider this possibility before purchasing the Contract.
TRIAL EXAMINATION PERIOD
You may cancel your Contract by providing us with written notice within the Trial Examination Period, which is the 20 day period after you receive the Contract, or such longer period that your state may require. If you exercise this Right to Cancel, the Contract terminates and we will pay you the full amount of your purchase payments allocated to the Fixed Account. We also will return your
15
purchase payments allocated to the Variable Account adjusted, to the extent federal or state law permits, to reflect investment gain or loss, including the deduction of mortality and expense risk charges and administrative expense charges that occurred from the date of allocation through the date of cancellation. If your Contract is qualified under Code Section 408(b), we will refund the greater of any purchase payments or the Contract Value. The amount you receive will be less applicable federal and state income tax withholding.
For Consultant Solutions Plus Contracts, we have received regulatory relief to enable us to recover the amount of any Credit Enhancement applied to Contracts that are cancelled during the Trial Examination Period. The amount we return to you upon exercise of this Right to Cancel will not include any Credit Enhancement. In states where required, we will return the amount of your purchase payments. In other states, we will return the amount of your purchase payments, reduced by the amount of any mortality and expense risk charges and administrative expense charges deducted prior to cancellation, and adjusted by any investment gain or loss associated with:
your Variable Account purchase payments; and
any portion of the Credit Enhancement assigned to the Variable Sub-accounts.
We reserve the right to allocate your purchase payments to the PIMCO Money Market Administrative Shares Sub-Account during the Trial Examination Period. For Contracts purchased in California by persons age 60 and older, you may elect to defer until the end of the Trial Examination Period allocation of your purchase payment to the Variable Sub-accounts. Unless you instruct otherwise, upon making this election, your purchase payment will be allocated to the PIMCO Money Market Administrative Shares Sub-Account. On the next Valuation Date 40 day after the issue date, your Contract Value will then be reallocated in accordance with your most recent investment allocation instructions.
State laws vary and may require a different period, other variations or adjustments. Please refer to your Contract for any state specific information.
Contract Loans for 403(b) Contracts
Subject to the restrictions described below, we will make loans to the Contract Owner of a Contract used in connection with a Tax Sheltered Annuity Plan (TSA Plan) under Section 403(b) of the Internal Revenue Code. Such loans may not be available in all states. Loans are not available under non-qualified Contracts. We will only make loans after the right to cancel period and before the Payout Start Date. All loans are subject to the terms of the Contract, the relevant qualified plan, and the Internal Revenue Code, which impose restrictions on loans. Loans may not be available with all rider options.
We will not make a loan to you if the total of the requested loan and your unpaid outstanding loans will be greater than the amount available for full withdrawal, including any applicable Market Value Adjustment, under your Contract on the date of the loan. In addition, you may not borrow a loan if the total of the requested loan and all of your loans under TSA Plans with the same employer is more than the lesser of (a) or (b) where:
(a) equals $50,000 minus the excess of the highest outstanding loan balance during the prior 12 months over the current outstanding loan balance; and
(b) equals the greater of $10,000 or half of the amount available for full withdrawal.
The minimum loan amount is $1,000.
To request a Contract loan, write to us at the address given on the first page of the prospectus. You alone are responsible for ensuring that your loan and repayments comply with tax requirements. Some of these requirements are stated in Section 72 of the Internal Revenue Code. Please seek advice from your plan administrator or tax advisor.
When we make a loan, we will transfer an amount equal to the loan amount from the Variable Account and/or the Fixed Account Options to the Loan Account as collateral for the loan. The Loan Account is an account established for amounts transferred from the Variable Sub-accounts or Fixed Account Options as security for an outstanding Contract loan. We will transfer to the Loan Account amounts from each Variable Sub-account in proportion to the total assets in all Variable Sub-accounts. If your loan amount is greater than your Contract Value in the Variable Sub-accounts, we will transfer the remaining required collateral from the Market Value Adjusted or Standard Fixed Account Option. If your loan amount is greater than your contract value in the Variable Sub-accounts and the Market Value Adjusted or Standard Fixed Account Option, we will transfer the remaining required collateral from the Dollar Cost Averaging Fixed Account Options.
We will not charge a Withdrawal Charge on the loan or on the transfer from the Variable Sub-accounts or any of the Fixed Account Options. We may, however, apply a Market Value Adjustment to a transfer from the Market Value Adjusted Fixed Account to the Loan Account. If we do, we will increase or decrease the amount remaining in the Market Value Adjusted Fixed Account by the amount of the Market Value Adjustment, so that the net amount transferred to the Loan Account will equal the desired loan amount. We will charge a Withdrawal Charge and apply a Market Value Adjustment, if applicable, on a distribution to repay the loan in full, in the event of loan default.
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We will credit interest to the amounts in the Loan Account. The annual interest rate credited to the Loan Account will be the greater of: (a) an annual effective rate of 3%; or (b) the loan interest rate minus 2.25%. The value of the amounts in the Loan Account are not affected by the changes in the value of the Variable Sub-accounts.
When you take out a loan, we will set the loan interest rate. That rate will apply to your loan until it is repaid. From time to time, we may change the loan interest rate applicable to new loans. We also reserve the right to change the terms of new loans.
We will subtract the outstanding Contract loan balance, including accrued but unpaid interest, from:
(1) the Death Proceeds;
(2) full withdrawal proceeds;
(3) the amount available for partial withdrawal; and
(4) the amount applied on the Payout Start Date to provide income payments.
If a New Owner elects to continue the Contract under Death of Owner Option D, the new Contract Value will be reduced by the amount of the loan outstanding plus accrued interest and the loan will be canceled.
Usually you must repay a Contract loan within five years of the date the loan is made. Scheduled payments must be level, amortized over the repayment period, and made at least quarterly. We may permit a repayment period of 15 or 30 years if the loan proceeds are used to acquire your principal residence. We may also permit other repayment periods.
You must mark your loan repayments as such. We will assume that any payment received from you is a Purchase Payment, unless you tell us otherwise. Generally, loan payments are allocated to the Variable Sub-account(s) in the proportion that you have selected for your most recent Purchase Payment. Allocations of loan payments are not permitted to the Fixed Accounts (Standard Fixed Account, Market Value Adjusted Account, and Dollar Cost Averaging Fixed Account Option). If your Purchase
Payment allocation includes any of the Fixed Accounts, the percentages allocated to the Fixed Accounts will be allocated instead to the PIMCO Money Market Sub-account.
If you do not make a loan payment when due, we will continue to charge interest on your loan. We also will declare the entire loan in default. We will subtract the defaulted loan balance plus accrued interest from any future distribution under the Contract and keep it in payment of your loan. Any defaulted amount plus interest will be treated as a distribution for tax purposes (as permitted by law). As a result, you may be required to pay taxes on the defaulted amount and incur the early withdrawal tax penalty. Until we are permitted by law to extinguish a defaulted loan, we will continue to charge interest and add unpaid interest to your outstanding loan balance.
If the total loan balance exceeds the amount available for full withdrawal, we will mail written notice to your last known address. The notice will state the amount needed to maintain the Contract in force. If we do not receive payment of this amount within 31 days after we mail this notice, we will terminate your Contract.
We may defer making any loan for 6 months after you ask us for a loan, unless the loan is to pay a premium to us.
Contract Value
On the Issue Date, the Contract Value is equal to your initial purchase payment (for Consultant Solutions Plus Contracts, your initial purchase payment plus the Credit Enhancement).
Thereafter, your Contract Value at any time during the Accumulation Phase is equal to the sum of the value of your Accumulation Units in the Variable Sub-accounts you have selected, plus your value in the Fixed Account Option(s) offered by your Contract.
ACCUMULATION UNITS
To determine the number of Accumulation Units of each Variable Sub-account to allocate to your Contract, we divide (i) the amount of the purchase payment or transfer you have allocated to a Variable Sub-account by (ii) the Accumulation Unit Value of that Variable Sub-account next computed after we receive your payment or transfer. For example, if we receive a $10,000 purchase payment allocated to a Variable Sub-account when the Accumulation Unit Value for the Sub-account is $10, we would credit 1,000 Accumulation Units of that Variable Sub-account to your Contract. For Consultant Solutions Plus Contracts, we would credit your Contract additional Accumulation Units of the Variable Sub-account to reflect the Credit Enhancement paid on your purchase payment. See Credit Enhancement. Withdrawals and transfers from a Variable Sub-account would, of course, reduce the number of Accumulation Units of that Sub-account allocated to your Contract.
ACCUMULATION UNIT VALUE
As a general matter, the Accumulation Unit Value for each Variable Sub-Account for each Contract will rise or fall to reflect:
changes in the share price of the Portfolio in which the Variable Sub-Account invests, and
the deduction of amounts reflecting the mortality and expense risk charge, administrative expense charge, and any provision for taxes that have accrued since we last calculated the Accumulation Unit Value.
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We determine any applicable withdrawal charges, Rider Fees (if applicable), transfer fees, and contract maintenance charges separately for each Contract. They do not affect the Accumulation Unit Value. Instead, we obtain payment of those charges and fees by redeeming Accumulation Units. For details on how we compute Accumulation Unit Values, please refer to the Statement of Additional Information.
We determine a separate Accumulation Unit Value for each Variable Sub-Account for each Contract on each Valuation Date. We also determine a separate set of Accumulation Unit Values that reflect the cost of each optional benefit, or available combination thereof, offered under the Contract.
You should refer to the prospectuses for the Funds for a description of how the assets of each Portfolio are valued, since that determination directly bears on the Accumulation Unit Value of the corresponding Variable Sub-Account and, therefore, your Contract Value.
TRUERETURN ACCUMULATION BENEFIT OPTION
We offer the TrueReturn Accumulation Benefit Option, which is available for an additional fee. The TrueReturn Accumulation Benefit Option guarantees a minimum Contract Value on the Rider Maturity Date. The Rider Maturity Date is determined by the length of the Rider Period which you select. The Option provides no minimum Contract Value if the Option terminates before the Rider Maturity Date. See Termination of the TrueReturn Accumulation Benefit Option below for details on termination.
The TrueReturn Accumulation Benefit Option is available at time of application for the Contract, or the date we receive a written request to add the option, whichever is later, subject to availability and issue requirements. Currently, you may not add the TrueReturn Option to your Contract after Contract issue without prior approval if your Contract Value is greater than $1,000,000 at the time you try to add the TrueReturn Option. Currently, you may have only one TrueReturn Accumulation Benefit Option in effect on your Contract at one time. You may have only either the TrueReturn Accumulation Benefit Option or the SureIncome Option in effect on your Contract at one time. The TrueReturn Accumulation Benefit Option has no maximum issue age, however the Rider Maturity Date must occur before the latest Payout Start Date, which is the later of the youngest Annuitants 99th birthday or the 10th Contract Anniversary. Once added to your Contract, the TrueReturn Accumulation Benefit Option may be cancelled at any time on or after the 5th Rider Anniversary by:
notifying us in writing in a form satisfactory to us; or
changing your investment allocations or making other changes so that that the allocation of investment alternatives no longer adheres to the investment requirements for the TrueReturn Accumulation Benefit Option. For more information regarding investment requirements for this Option, see the Investment Requirements section below.
The Rider Anniversary is the anniversary of the Rider Date. We reserve the right to extend the date on which the TrueReturn Accumulation Benefit Option may be cancelled to up to the 10th Rider Anniversary at any time in our sole discretion. Any change we make will not apply to a TrueReturn Accumulation Benefit Option that was added to your Contract prior to the implementation date of the change.
When you add the TrueReturn Accumulation Benefit Option to your Contract, you must select a Rider Period and a Guarantee Option. The Rider Period and Guarantee Option you select determine the AB Factor, which is used to determine the Accumulation Benefit, described below. The Rider Period begins on the Rider Date and ends on the Rider Maturity Date. The Rider Date is the date the TrueReturn Accumulation Benefit Option was made a part of your Contract. We currently offer Rider Periods ranging from 8 to 20 years depending on the Guarantee Option you select. You may select any Rider Period from among those we currently offer, provided the Rider Maturity Date occurs prior to the latest Payout Start Date. We reserve the right to offer additional Rider Periods in the future, and to discontinue offering any of the Rider Periods at any time. We currently offer two Guarantee Options, Guarantee Option 1 and Guarantee Option 2. The Guarantee Option you select has specific investment requirements, which are described in the Investment Requirements section below and may depend upon the Rider Date. We reserve the right to offer additional Guarantee Options in the future, and to discontinue offering any of the Guarantee Options at any time. After the Rider Date, the Rider Period and Guarantee Option may not be changed.
The TrueReturn Accumulation Benefit Option may not be available in all states. We may discontinue offering the TrueReturn Accumulation Benefit Option at any time.
Accumulation Benefit.
On the Rider Maturity Date, if the Accumulation Benefit is greater than the Contract Value, the Contract Value will be increased to equal the Accumulation Benefit. The excess amount of any such increase will be allocated to the PIMCO Money Market Variable Sub-account. You may transfer the excess amount out of the PIMCO Money Market Variable Sub-account and into another investment alternative at any time thereafter. However, each transfer you make will count against the 12 transfers you can make each Contract Year without paying a transfer fee. Prior to the Rider Maturity Date, the Accumulation Benefit will not be available as a Contract Value, Settlement Value, or Death Proceeds. Additionally, we will not pay an Accumulation Benefit if the TrueReturn Accumulation Benefit Option is terminated for any reason prior to the Rider Maturity Date. After the Rider Maturity Date, the TrueReturn Accumulation Benefit Option provides no additional benefit.
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The Accumulation Benefit is equal to the Benefit Base multiplied by the AB Factor. The AB Factor is determined by the Rider Period and Guarantee Option you selected as of the Rider Date. The following table shows the AB Factors available for the Rider Periods and Guarantee Options we currently offer.
AB Factors | ||
Rider Period (number of years) |
Guarantee Option 1 |
Guarantee Option 2 |
8 |
100.0 % |
NA |
9 |
112.5 % |
NA |
10 |
125.0 % |
100.0 % |
11 |
137.5 % |
110.0 % |
12 |
150.0 % |
120.0 % |
13 |
162.5 % |
130.0 % |
14 |
175.0 % |
140.0 % |
15 |
187.5 % |
150.0 % |
16 |
200.0 % |
160.0 % |
17 |
212.5 % |
170.0 % |
18 |
225.0 % |
180.0 % |
19 |
237.5 % |
190.0 % |
20 |
250.0 % |
200.0 % |
The following examples illustrate the Accumulation Benefit calculations under Guarantee Options 1 and 2 on the Rider Maturity Date. For the purpose of illustrating the Accumulation Benefit calculation, the examples assume the Benefit Base is the same on the Rider Date and the Rider Maturity Date.
Example 1: Guarantee Option 1
Guarantee Option: |
1 |
Rider Period: |
15 |
AB Factor: |
187.5% |
Rider Date: |
1/2/04 |
Rider Maturity Date: |
1/2/19 |
Benefit Base on Rider Date: |
$50,000 |
Benefit Base on rider Maturity Date: |
$50,000 |
On the Rider Maturity Date (1/2/19): | |
Accumulation Benefit |
= Benefit Base on Rider Maturity Date × AB Factor |
|
= $50,000 × 187.5% |
|
= $93,750 |
Example 2: Guarantee Option 2
Guarantee Option: |
2 |
Rider Period: |
15 |
AB Factor: |
150.0% |
Rider Date: |
1/2/04 |
Rider Maturity Date: |
1/2/19 |
Benefit Base on Rider Date: |
$50,000 |
Benefit Base on rider Maturity Date: |
$50,000 |
On the Rider Maturity Date (1/2/19): | |
Accumulation Benefit |
= Benefit Base on Rider Maturity Date × AB Factor |
|
= $50,000 × 150.0% |
|
= $75,000 |
Guarantee Option 1 offers a higher AB Factor and more rider periods than Guarantee Option 2. Guarantee Option 1 and Guarantee Option 2 have different investment restrictions. See Investment Requirements below for more information.
Benefit Base.
The Benefit Base is used solely for purposes of determining the Rider Fee and the Accumulation Benefit. The Benefit Base is not available as a Contract Value, Settlement Value, or Death Proceeds. On the Rider Date, the Benefit Base is equal to the Contract Value. After the Rider Date, the Benefit Base will be recalculated for purchase payments and withdrawals as follows:
The Benefit Base will be increased by purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) made prior to or on the first Contract Anniversary following the Rider Date. Subject to the terms and conditions of your Contract, you may add purchase payments after this date, but they will not be included in the calculation of the Benefit Base. Therefore, if you plan to make purchase payments after the first Contract Anniversary following the Rider Date, you should consider carefully whether this Option is appropriate for your needs.
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The Benefit Base will be decreased by a Withdrawal Adjustment for each withdrawal you make. The Withdrawal Adjustment is equal to (a) divided by (b), with the result multiplied by (c), where:
(a) = the withdrawal amount;
(b) = the Contract Value immediately prior to the withdrawal; and
(c) = the Benefit Base immediately prior to the withdrawal.
Withdrawals taken prior to annuitization (referred to in this prospectus as the Payout Phase) are generally considered to come from the earnings in the Contract first. If the Contract is tax-qualified, generally all withdrawals are treated as distributions of earnings. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. A withdrawal charge also may apply. See Appendix G for numerical examples that illustrate how the Withdrawal Adjustment is applied.
The Benefit Base will never be less than zero.
Investment Requirements.
If you add the TrueReturn Option to your Contract, you must adhere to certain requirements related to the investment alternatives in which you may invest during the Rider Period. The specific requirements will depend on the model portfolio option (Model Portfolio Option) you have selected and the effective date of your TrueReturn Option. These requirements are described below in more detail. These requirements may include, but are not limited to, maximum investment limits on certain Variable Sub-accounts or on certain Fixed Account Options, exclusion of certain Variable Sub-accounts or of certain Fixed Account Options, required minimum allocations to certain Variable Sub-accounts, and restrictions on transfers to or from certain investment alternatives.
We may also require that you use the Automatic Portfolio Rebalancing Program. We may change the specific requirements that are applicable to a Guarantee Option or a Model Portfolio Option available under a Guarantee Option at any time in our sole discretion. Any changes we make will not apply to a TrueReturn Option that was made part of your Contract prior to the implementation date of the change, except for changes made due to a change in investment alternatives available under the Contract. Any changes we make will not apply to a new TrueReturn Option elected subsequent to the change pursuant to the Rider Trade-In Option.
If you have an outstanding loan balance, you may not elect the TrueReturn Option until the outstanding balance has been repaid. If you elect the TrueReturn Option, we will not make a policy loan to you until the TrueReturn Option matures or is cancelled.
When you add the TrueReturn Option to your Contract, you must allocate your entire Contract Value as follows:
1) to a model portfolio option (Model Portfolio Option) available with the Guarantee Option you selected, as defined below; or
2) to the DCA Fixed Account Option and then transfer all purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) and interest according to a Model Portfolio Option available for use with the Guarantee Option you selected; or
3) to a combination of (1) and (2) above.
For (2) and (3) above, the requirements for the DCA Fixed Account Option must be met. See the Dollar Cost Averaging Fixed Account Option section of this prospectus for more information.
On the Rider Date, you must select only one of the Model Portfolio Options in which to allocate your Contract Value. After the Rider Date, you may transfer your entire Contract Value to any of the other Model Portfolio Options available with your Guarantee Option. We currently offer several Model Portfolio Options with each of the available Guarantee Options. The Model Portfolio Options that are available under Guarantee Options may differ depending upon the effective date of your TrueReturn Option. Please refer to the Model Portfolio Option 1, Model Portfolio Option 2 and TrueBalanceSM Model Portfolio Options sections below for more details. We may add other Model Portfolio Options in the future. We also may remove Model Portfolio Options in the future anytime prior to the date you select such Model Portfolio Option. In addition, if the investment alternatives available under the Contract change, we may revise the Model Portfolio Options. The following table summarizes the Model Portfolio Options currently available for use with each Guarantee Option under the TrueReturn Option:
Guarantee Option 1 |
Guarantee Option 2 |
* Model Portfolio Option 1 * TrueBalance Conservative Model Portfolio Option * TrueBalance Moderately Conservative Model Portfolio Option |
* Model Portfolio Option 2 * TrueBalance Conservative Model Portfolio Option * TrueBalance Moderately Conservative Model Portfolio Option * TrueBalance Moderate Model Portfolio Option * TrueBalance Moderately Aggressive Model Portfolio Option * TrueBalance Aggressive Model Portfolio Option |
You may not allocate any of your Contract Value to the Standard Fixed Account Option or to the MVA Fixed Account Option. You must transfer any portion of your Contract Value that is allocated to the Standard Fixed Account Option or to the MVA Fixed Account Option to the Variable Sub-accounts prior to adding the TrueReturn Option to your Contract. Transfers from the MVA Fixed Account Option may be subject to a Market Value Adjustment. You may allocate any portion of your purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) to the DCA Fixed Account Option on the Rider Date, provided the DCA Fixed Account Option is available with your Contract and in your state. See the Dollar Cost Averaging Fixed Account Option
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section of this prospectus for more information. We use the term Transfer Period Account to refer to each purchase payment allocation made to the DCA Fixed Account Option for a specified term length. At the expiration of a Transfer Period Account any remaining amounts in the Transfer Period Account will be transferred to the Variable Sub-Accounts according to the percentage allocations for the Model Portfolio Option you selected.
Any subsequent purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) made to your Contract will be allocated to the Variable Sub-Accounts according to your most recent instructions on file with us. You must comply with any required percentage allocations for the Model Portfolio Option you have selected. You may also request that purchase payments (and Credit Enhancement for Consultant Solutions Plus Contracts) be allocated to the DCA Fixed Account Option.
Model Portfolio Option 1.
If you choose Model Portfolio Option 1 or transfer your entire Contract Value into Model Portfolio Option 1, you must allocate a certain percentage of your Contract Value into each of three asset categories. Please note that certain investment alternatives are not available under Model Portfolio Option 1. You may choose the Variable Sub-Accounts in which you want to invest, provided you maintain the percentage allocation requirements for each category. You may also make transfers among the Variable Sub-Accounts within each category at any time, provided you maintain the percentage allocation requirements for each category. However, each transfer you make will count against the 12 transfers you can make each Contract Year without paying a transfer fee.
Effective May 1, 2005, certain Variable Sub-Accounts under Model Portfolio 1 have been reclassified into different asset categories. These changes apply to TrueReturn Accumulation Benefit Options effective both prior to and on or after May 1, 2005. The following table describes the percentage allocation requirements for Model Portfolio Option 1 and Variable Sub-Accounts available under each category:
Model Portfolio Option 1
20% Category A
50% Category B
30% Category C
0% Category D
Category A
Fidelity® VIP Government Money Market Service Class 2 Sub-Account (formerly, Fidelity® VIP Money Market Service Class 2 Sub-Account)
PIMCO Money Market Administrative Shares Sub-Account
Category B
Fidelity® VIP Investment Grade Bond Service Class 2 Sub-Account
Western Asset Variable Global High Yield Bond Class II Sub-Account
MFS High Yield Service Class Sub-Account
PIMCO Foreign Bond (U.S. Dollar-Hedged) Administrative Shares Sub-Account
PIMCO Real Return Administrative Shares Sub-Account
PIMCO Total Return - Administrative Shares Sub Account
UIF U.S. Real Estate, Class II Sub-Account(8)
Invesco V.I. Government Securities, Series II Sub-Account
Category C
Invesco V.I. Value Opportunities Series II Sub-Account(2)
Invesco V.I. Core Equity Series II Sub-Account
Invesco V.I. Mid Cap Core Equity Series II Sub-Account(7)
Fidelity® VIP Contrafund® Service Class 2 Sub-Account
Fidelity® VIP Equity-Income Service Class 2 Sub-Account
Fidelity® VIP Index 500 Service Class 2 Sub-Account
Fidelity® VIP Overseas Service Class 2 Sub-Account
Fidelity® VIP Asset Manager(SM) Service Class 2 Sub-Account
Janus Aspen Series Overseas Service Shares Sub-Account
Janus Aspen Series Forty Service Shares Sub-Account
Janus Aspen Series Perkins Mid Cap Value Service Shares Sub-Account(6)
Janus Aspen Series Balanced Service Shares Sub-Account
ClearBridge Variable Large Cap Value Class I Sub-Account
MFS Investors Trust Service Class Sub-Account
MFS Total Return Service Class Sub-Account
MFS® MA Investors Growth Stock Service Class Sub-Account(4)
MFS Value Service Class Sub-Account
Oppenheimer Discovery Mid Cap Growth/VA Class 2 Shares Sub-Account(1)
Oppenheimer Main Street Small Cap Fund/VA Class 2 Shares Sub-Account
Guggenheim VIF Long Short Equity Sub-Account
T. Rowe Price Equity Income II Sub-Account
T. Rowe Price Blue Chip Growth II Sub-Account
Invesco V.I. Growth and Income, Series II Sub-Account
Category D (Variable Sub-Accounts not available under Model Portfolio Option 1)
Invesco V.I. American Franchise Series II Sub-Account
Alger Large Cap Growth Class S Sub-Account
Alger Capital Appreciation Class S Sub-Account
Alger Mid Cap Growth Class S Sub-Account(3)
Fidelity® VIP Growth Service Class 2 Sub-Account
MFS New Discovery Service Class Sub-Account
Oppenheimer Global/VA Class 2 Shares Sub-Account
UIF Growth, Class II Sub-Account
Van Eck VIP Emerging Markets Sub-Account
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Van Eck VIP Global Hard Assets Sub-Account
Invesco V.I. Mid Cap Growth Series II Sub-Account
(1) Effective as of August 30, 2010, the following Variable Sub-Account closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date:
Oppenheimer Discovery Mid Cap Growth/VA Class 2 Shares Sub-Account
Contract Owners who had contract value invested in this Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdraw or otherwise transfer their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in this Variable Sub-Account as of the specified closure date may not invest in the Variable Sub-Account.
(2) Effective August 19, 2011, the Invesco V.I. Value Opportunities Series II Sub-Account closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date. Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdraw or otherwise transfer their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in the Variable Sub-Account as of the closure date may not invest in the Variable Sub-Account.
(3) Effective as of January 31, 2014, the Alger Mid-Cap Growth Class S Sub-Account was closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date. Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdrew or otherwise transferred their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in the Variable Sub-Account as of the closure date will not be permitted to invest in the Variable Sub-Account.
(4) On or about March 27, 2015, the MFS® MA Investors Growth Stock Portfolio Service Class, a portfolio of MFS® Variable Insurance Trust II, acquired the MFS® Investors Growth Stock Series Service Class, a series of MFS® Variable Insurance Trust.
(5) Effective May 1, 2015, PIMCO Total Return - Administrative Shares Sub-Account is closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter. An application is pending with the Securities and Exchange Commission requesting an order to allow Lincoln Benefit to remove the PIMCO Total Return Portfolio Administrative Shares as an investment option under your variable annuity contract and substitute a new investment option, the BlackRock Total Return V.I. Portfolio Class I Shares. Lincoln Benefit anticipates that, if such order is granted, the proposed substitution will occur during the second quarter of 2016.
(6) Effective April 13, 2015, the Janus Aspen Series Perkins Mid Cap Value Service Shares sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
(7) Effective September 1, 2015, the Invesco V.I. Mid Cap Core Equity Fund Series II sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
(8) Effective February 23, 2016, the UIF U.S. Real Estate Portfolio, Class II sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
Each calendar quarter, we will use the Automatic Portfolio Rebalancing Program to automatically rebalance your Contract Value in each Variable Sub-Account and return it to the percentage allocation requirements for Model Portfolio Option 1. We will use the percentage allocations as of your most recent instructions.
Model Portfolio Option 2.
The investment requirements under Model Portfolio Option 2 depend on the effective date of your TrueReturn Accumulation Benefit Option.
Rider Date prior to May 1, 2005
If your TrueReturn Accumulation Benefit Option Rider Date is prior to May 1, 2005, and you choose Model Portfolio Option 2 or transfer your entire Contract Value into Model Portfolio Option 2 under Guarantee Option 2, you must allocate your Contract Value among four asset categories in accordance with the percentage allocation requirements set out in the table below. You may choose the Variable Sub-Accounts in which you want to invest, provided you maintain the percentage allocation requirements for each category. You may also make transfers among the Variable Sub-Accounts within each category at any time, provided you maintain the percentage allocation requirements for each category. However, each transfer you make will count against the 12 transfers you can make each Contract Year without paying a transfer fee.
The following table describes the percentage allocation requirements for Model Portfolio Option 2 (Rider Date prior to May 1, 2005) and the Variable Sub-Accounts available under each category:
Model Portfolio Option 2
(Rider Date Prior to May 1, 2005)
10% Category A
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20% Category B
50% Category C
20% Category D
Category A
Fidelity® VIP Government Money Market Service Class 2 Sub-Account (formerly, Fidelity® VIP Money Market Service Class 2 Sub-Account)
PIMCO Money Market Administrative Shares Sub-Account
Category B
Fidelity® VIP Investment Grade Bond Service Class 2 Sub-Account
Western Asset Variable Global High Yield Bond Class II Sub-Account
MFS High Yield Service Class Sub-Account
PIMCO Foreign Bond (U.S. Dollar-Hedged) Administrative Shares Sub-Account
PIMCO Real Return Administrative Shares Sub-Account
PIMCO Total Return Administrative Shares Sub Account
UIF U.S. Real Estate, Class II Sub-Account(7)
Invesco V.I. Government Securities, Series II Sub-Account
Category C
Invesco V.I. Value Opportunities Series II Sub-Account
Invesco V.I. Mid Cap Core Equity Series II Sub-Account(6)
Fidelity® VIP Equity-Income Service Class 2 Sub-Account
Fidelity® VIP Index 500 Service Class 2 Sub-Account
Fidelity® VIP Asset Manager(SM) Service Class 2 Sub-Account
Janus Aspen Series Perkins Mid Cap Value Service Shares Sub-Account(5)
Janus Aspen Series Balanced Service Shares Sub-Account
ClearBridge Variable Large Cap Value Class I Sub-Account
MFS Investors Trust Service Class Sub-Account
MFS Total Return Service Class Sub-Account
MFS Value Service Class Sub-Account
Oppenheimer Discovery Mid Cap Growth Fund/VA Class 2 Shares Sub-Account(1)
T. Rowe Price Equity Income II Sub-Account
Invesco V.I. Growth and Income, Series II Sub-Account
Category D
Invesco V.I. American Franchise Series II Sub-Account
Invesco V.I. Core Equity Series II Sub-Account
Alger Large Cap Growth Class S Sub-Account
Alger Capital Appreciation Class S Sub-Account
Alger Mid Cap Growth Class S Sub-Account(2)
Fidelity® VIP Contrafund® Service Class 2 Sub-Account
Fidelity® VIP Growth Service Class 2 Sub-Account
Fidelity® VIP Overseas Service Class 2 Sub-Account
Janus Aspen Series Overseas Service Shares Sub-Account
Janus Aspen Series Forty Service Shares Sub-Account
MFS New Discovery Service Class Sub-Account
MFS® MA Investors Growth Stock Service
Class Sub-Account(3)
Oppenheimer Global Fund/VA Class 2 Shares
Oppenheimer Main Street Small Cap Fund Class 2 Shares
Guggenheim VIF Long Short Equity Sub-Account
T. Rowe Price Blue Chip Growth II Sub-Account
UIF Growth, Class II Sub-Account
Van Eck VIP Emerging Markets Sub-Account
Van Eck VIP Global Hard Assets Sub-Account
Invesco V.I. Mid Cap Growth, Series II Sub-Account
(1) Effective as of August 30, 2010, the following Variable Sub-Account closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date:
Oppenheimer Discovery Mid Cap Growth/VA Class 2 Shares Sub-Account
Contract Owners who had contract value invested in this Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdraw or otherwise transfer their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in this Variable Sub-Account as of the specified closure date may not invest in the Variable Sub-Account.
(2) Effective as of January 31, 2014, the Alger Mid-Cap Growth Class S Sub-Account was closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date. Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdrew or otherwise transferred their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in the Variable Sub-Account as of the closure date will not be permitted to invest in the Variable Sub-Account.
(3) On or about March 27, 2015, the MFS® MA Investors Growth Stock Portfolio Service Class, a portfolio of MFS® Variable Insurance Trust II, acquired the MFS® Investors Growth Stock Series Service Class, a series of MFS® Variable Insurance Trust.
(4) Effective May 1, 2015, the PIMCO Total Return Administrative Shares Sub Account is closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter. An application is pending with the Securities and Exchange Commission requesting an order to allow Lincoln Benefit to remove the PIMCO Total Return Portfolio Administrative Shares as an investment option under your variable annuity contract and substitute a new investment option, the BlackRock Total Return V.I. Portfolio Class I Shares. Lincoln Benefit anticipates that, if such order is granted, the proposed substitution will occur during the second quarter of 2016.
(5) Effective April 13, 2015, the Janus Aspen Series Perkins Mid Cap Value Service Shares sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account
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if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter. .
(6) Effective September 1, 2015, the Invesco V.I. Mid Cap Core Equity Fund Series II sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
(7) Effective February 23, 2016, the UIF U.S. Real Estate Portfolio, Class II sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
Each calendar quarter, we will use the Automatic Portfolio Rebalancing Program to automatically rebalance your Contract Value in each Variable Sub-Account and return it to the percentage allocation requirements for Model Portfolio Option 2 (Rider Date prior to May 1, 2005). We will use the percentage allocations as of your most recent instructions.
Rider Date on or after May 1, 2005
If your TrueReturn Accumulation Benefit Option Rider Date is on or after May 1, 2005, and you choose Model Portfolio Option 2 or transfer your entire Contract Value into Model Portfolio Option 2 under Guarantee Option 2, you may allocate your Contract Value among any of a selected group of available Variable Sub-Accounts listed below. However, you may not allocate your Contract Value among any of the excluded Variable Sub-Accounts listed below. You may choose to invest in or transfer among any of the available Variable Sub-Accounts, however, each transfer you make will count against the 12 transfers you can make each Contract Year without paying a transfer fee.
The following table lists the available and excluded Variable Sub-Accounts under Model Portfolio Option 2 (Rider Date on or after May 1, 2005):
Model Portfolio Option 2
(Rider Date on or after May 1, 2005)
Available
Invesco V.I. Value Opportunities Series II Sub-Account(2)
Invesco V.I. Core Equity Series II Sub-Account
Invesco V.I. Mid Cap Core Equity Series II Sub-Account (7)
Fidelity® VIP Contrafund® Service Class 2 Sub-Account
Fidelity® VIP Equity-Income Service Class 2 Sub-Account
Fidelity® VIP Index 500 Service Class 2 Sub-Account
Fidelity® VIP Investment Grade Bond Service Class 2 Sub-Account
Fidelity® VIP Overseas Service Class 2 Sub-Account
Fidelity® VIP Asset Manager(SM) Service Class 2 Sub-Account
Fidelity® VIP Government Money Market Service Class 2 Sub-Account (formerly, Fidelity® VIP Money Market Service Class 2 Sub-Account)
Janus Aspen Series Overseas Service Shares Sub-Account
Janus Aspen Series Forty Service Shares Sub-Account
Janus Aspen Series Perkins Mid Cap Value Service Shares Sub-Account(5)
Janus Aspen Series Balanced Service Shares Sub-Account
Western Asset Variable Global High Yield Bond Class II Sub-Account
ClearBridge Variable Large Cap Value Class I Sub-Account
MFS Investors Trust Service Class Sub-Account
MFS High Yield Service Class Sub-Account
MFS® MA Investors Growth Stock Service
Class Sub-Account(4)
MFS Total Return Service Class Sub-Account
MFS Value Service Class Sub-Account
PIMCO Foreign Bond (U.S. Dollar-Hedged) Administrative Shares Sub-Account
PIMCO Money Market Administrative Shares Sub-Account
PIMCO Real Return Administrative Shares Sub-Account
PIMCO Total Return Administrative Shares Sub Account
Oppenheimer Discovery Mid Cap Growth Fund/VA Class 2 Shares Sub-Account(1)
Oppenheimer Main Street Small Cap Fund Class 2 Shares
Guggenheim VIF Long Short Equity Sub-Account
T. Rowe Price Equity Income II Sub-Account
T. Rowe Price Blue Chip Growth II Sub-Account
UIF U.S. Real Estate, Class II Sub-Account(8)
Invesco V.I. Growth and Income, Series II Sub-Account
Invesco V.I. Government Securities, Series II Sub-Account
Model Portfolio Option 2
(Rider Date on or after May 1, 2005)
Excluded
Invesco V.I. American Franchise Series II Sub-Account
Alger Large Cap Growth Class S Sub-Account
Alger Capital Appreciation Class S Sub-Account
Alger Mid Cap Growth Class S Sub-Account (3)
Fidelity® VIP Growth Service Class 2 Sub-Account
MFS New Discovery Service Class Sub-Account
Oppenheimer Global Fund/VA Class 2 Shares Sub-Account
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UIF Growth Class II Sub-Account
Van Eck VIP Emerging Markets Sub-Account
Van Eck VIP Global Hard Assets Sub-Account
Invesco V.I. Mid Cap Growth, Series II Sub-Account
(1) Effective as of August 30, 2010, the following Variable Sub-Account closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date:
Oppenheimer Discovery Mid Cap Growth/VA Class 2 Shares Sub-Account
Contract Owners who had contract value invested in this Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdraw or otherwise transfer their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in this Variable Sub-Account as of the specified closure date may not invest in the Variable Sub-Account.
(2) Effective August 19, 2011, the Invesco V.I. Value Opportunities Series II Sub-Account closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date. Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdraw or otherwise transfer their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in the Variable Sub-Account as of the closure date may not invest in the Variable Sub-Account.
(3) Effective as of January 31, 2014, the Alger Mid-Cap Growth Class S Sub-Account was closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date. Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdrew or otherwise transferred their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in the Variable Sub-Account as of the closure date will not be permitted to invest in the Variable Sub-Account.
(4) On or about March 27, 2015, the MFS® MA Investors Growth Stock Portfolio Service Class, a portfolio of MFS® Variable Insurance Trust II, acquired the MFS® Investors Growth Stock Series Service Class, a series of MFS® Variable Insurance Trust.
(5) Effective April 13, 2015, the Janus Aspen Series Perkins Mid Cap Value Service Shares sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
(6) Effective May 1, 2015, PIMCO Total Return Administrative Shares Sub Account is closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter. An application is pending with the Securities and Exchange Commission requesting an order to allow Lincoln Benefit to remove the PIMCO Total Return Portfolio Administrative Shares as an investment option under your variable annuity contract and substitute a new investment option, the BlackRock Total Return V.I. Portfolio Class I Shares. Lincoln Benefit anticipates that, if such order is granted, the proposed substitution will occur during the second quarter of 2016.
(7) Effective September 1, 2015, the Invesco V.I. Mid Cap Core Equity Fund Series II sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
(8) Effective February 23, 2016, the UIF U.S. Real Estate Portfolio, Class II sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
TrueBalanceSM Model Portfolio Options.
If you choose one of the TrueBalanceSM Model Portfolio Options or transfer your entire Contract Value into one of the TrueBalanceSM Model Portfolio Options, you may not choose the Variable Sub-Accounts or make transfers among the Variable Sub-Accounts in the TrueBalance Model Portfolio Option. Each TrueBalance Model Portfolio involves an allocation of assets among a group of pre-selected Variable Sub-Accounts. You cannot make transfers among the Variable Sub-Accounts nor vary the Variable Sub-Accounts that comprise a TrueBalance Model Portfolio Option. If you choose a TrueBalance Model Portfolio Option, we will invest and periodically reallocate your Contract Value according to the allocation percentages and requirements for the TrueBalance Model Portfolio Option you have selected currently. For more information regarding the TrueBalance program, see the TrueBalanceSM Asset Allocation Program section of this prospectus. However, note that the restrictions described in this section, specifically the restrictions on transfers and the requirement that all of your Contract Value be allocated to a TrueBalance Model Portfolio Option, apply to the TrueBalance program only if you have added the TrueReturn Option to your Contract.
Please note only certain TrueBalance Model Portfolio Options are available with your TrueReturn Option as summarized in the table under Investment Requirements above.
Cancellation of the TrueReturn Option.
You may not cancel the TrueReturn Option or make transfers, changes to your investment allocations, or changes to the Automatic Portfolio Rebalancing Program that are inconsistent with the investment restrictions applicable to your Guarantee Option and/or Model Portfolio Option prior to the 5th Rider Anniversary. Failure to comply with the investment requirements for any reason may result in the cancellation of the TrueReturn Option. On or after the 5th Rider Anniversary, we will cancel the TrueReturn Option if you make transfers, changes to your investment allocations, or changes to the Automatic Portfolio Rebalancing Program that are inconsistent with the investment requirements applicable to your Guarantee Option and/or Model Portfolio Option. We will not cancel
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the TrueReturn Option or make any changes to your investment allocations or to the Automatic Portfolio Rebalancing Program that are inconsistent with the investment restrictions applicable to your Guarantee Option until we receive notice from you that you wish to cancel the TrueReturn Option. No Accumulation Benefit will be paid if you cancel the Option prior to the Rider Maturity Date.
Death of Owner or Annuitant.
If the Contract Owner or Annuitant dies before the Rider Maturity Date and the Contract is continued under Option D of the Death of Owner or Death of Annuitant provision as described on page 61 of this prospectus, then the TrueReturn Option will continue, unless the new Contract Owner elects to cancel this Option. If the TrueReturn Option is continued, it will remain in effect until terminated. If the Contract is not continued under Option D, then the TrueReturn Option will terminate on the date we receive a Complete Request for Settlement of the Death Proceeds.
If an Annuitant dies before the Payout Start Date, and the Contract is continued under Category 1 of the Death of Annuitant provision of the Contract, the TrueReturn Accumulation Benefit Option will remain in effect until terminated. If the Contract is not continued under Category 1, then the TrueReturn Accumulation Benefit Option will terminate on the date we receive a complete request for settlement of the Death Proceeds.
Rider Trade-In Option.
We offer a Rider Trade-In Option that allows you to cancel your TrueReturn Accumulation Benefit Option and immediately add a new TrueReturn Accumulation Benefit Option (New Option), provided all of the following conditions are met:
The trade-in must occur on or after the 5th Rider Anniversary and prior to the Rider Maturity Date.
The New Option will be made a part of your Contract on the date the existing TrueReturn Accumulation Benefit Option is cancelled, provided it is cancelled for reasons other than the termination of your Contract.
The New Option must be a TrueReturn Accumulation Benefit Option that we make available for use with the Rider Trade-In Option.
The issue requirements and terms and conditions of the New Option must be met as of the date the New Option is made a part of your Contract.
For example, if you trade-in your TrueReturn Accumulation Benefit Option:
the new Rider Fee will be based on the Rider Fee percentage applicable to a new TrueReturn Accumulation Benefit Option at the time of trade-in;
the Benefit Base for the New Option will be based on the Contract Value as of the new Rider Date;
the AB Factor will be determined by the Rider Periods and Guarantee Options available with the New Option;
the Model Portfolio Options will be determined by the Model Portfolio Options offered with the Guarantee Options available with the New Option;
any waiting period for canceling the New Option will start again on the new Rider Date;
any waiting period for exercising the Rider Trade-In Option will start again on the new Rider Date; and
the terms and conditions of the Rider Trade-In Option will be according to the requirements of the New Option.
Currently, we are also making the SureIncome Option available at the time of your first utilization of this TrueReturn Accumulation Benefit Option Rider Trade-In Option. We may discontinue offering the SureIncome Option under the Rider Trade-In Option for new TrueReturn Accumulation Benefit Options added in the future at anytime at our discretion. If we do so, TrueReturn Options issued prior to this time will continue to have the SureIncome Option available at the time of the first utilization of this TrueReturn Rider Trade-In Option. You may cancel your TrueReturn Accumulation Benefit Option and immediately add a new SureIncome Option, provided all of the following conditions are met:
The trade-in must occur on or after the 5th Rider Anniversary and prior to the Rider Maturity Date. We reserve the right to extend the date at which time the trade-in may occur to up to the 10th anniversary of the Rider Date at any time in our sole discretion. Any change we make will not apply to a TrueReturn Accumulation Benefit Option that was added to your Contract prior to the implementation date of the change.
The new SureIncome Option will be made a part of your Contract on the date the existing TrueReturn Accumulation Benefit Option is cancelled, provided it is cancelled for reasons other than the termination of your Contract.
The new SureIncome Option must be a SureIncome Option that we make available for use with this Rider Trade-In Option.
The issue requirements and terms and conditions of the new SureIncome Option must be met as of the date the new SureIncome Option is made a part of your Contract.
You should consult with your sales representative before trading in your TrueReturn Accumulation Benefit Option.
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Termination of the TrueReturn Option.
The TrueReturn Option will terminate on the earliest of the following to occur:
on the Rider Maturity Date;
on the Payout Start Date;
on the date your Contract is terminated;
on the date the Option is cancelled;
on the date we receive a Complete Request for Settlement of the Death Proceeds; or
on the date the Option is replaced with a New Option under the Rider Trade-In Option.
We will not pay an Accumulation Benefit if the TrueReturn Option is terminated for any reason prior to the Rider Maturity Date.
SUREINCOME WITHDRAWAL BENEFIT OPTION
We offer the SureIncome Withdrawal Benefit Option, which is available for an additional fee. The SureIncome Option provides a guaranteed withdrawal benefit that gives you the right to take limited partial withdrawals that total an amount equal to your purchase payments plus any applicable credit enhancements (subject to certain restrictions). Therefore, regardless of the subsequent fluctuations in the value of your Contract Value, you are entitled to a Benefit Payment each Benefit Year until your Benefit Base is exhausted (terms defined below).
The SureIncome Option guarantees an amount up to the Benefit Payment Remaining which will be available for withdrawal from the Contract each Benefit Year until the Benefit Base (defined below) is reduced to zero. If the Contract Value is reduced to zero and the Benefit Base is still greater than zero, we will distribute an amount equal to the Benefit Base to the Contract Owner as described below under the Withdrawal Benefit Payout Phase.
For purposes of the SureIncome Option, withdrawal means the gross amount of a withdrawal before any applicable charges such as withdrawal charges, fees, taxes or adjustments including any applicable Market Value Adjustments and surrender charges. Under the SureIncome Option, we currently do not treat a withdrawal that reduces the Contract Value to less than $1,000 as a withdrawal of the entire Contract Value.
The Rider Date is the date the SureIncome Option was made a part of your Contract. The initial Benefit Year is the period between the Rider Date and the first Contract Anniversary after the Rider Date. Each subsequent Benefit Year will coincide with (the same as) the Contract Year.
The SureIncome Option is available at issue of the Contract, or may be added later, subject to availability and issue requirements. You may not add the SureIncome Option to your Contract after Contract issue without our prior approval if your Contract Value is greater than $1,000,000 at the time you try to add the SureIncome Option. You may have only one SureIncome Option in effect on your Contract at one time. You may only have either the TrueReturn Accumulation Benefit Option, or the SureIncome Option in effect on your Contract at the same time. The SureIncome Option is only available if the oldest Contract Owner and oldest Annuitant are age 85 or younger on the effective date of the Rider (the Rider Application Date) (The maximum age may depend on your state). The SureIncome Option is not available to be added to a Contract categorized as a Tax Sheltered Annuity as defined under Internal Revenue Code Section 403(b) at this time. We reserve the right to make the SureIncome Option available to such Contracts on a nondiscriminatory basis in the future at our discretion. Once added to your Contract, the SureIncome Option may be cancelled at any time on or after the 5th calendar year anniversary of the Rider Date by notifying us in writing in a form satisfactory to us.
The SureIncome Option may not be available in all states. We may discontinue offering the SureIncome Option at any time to new Contract Owners and to existing Contract Owners who did not elect the SureIncome Option prior to the date of discontinuance.
Withdrawal Benefit Factor
The Withdrawal Benefit Factor is used to determine the Benefit Payment and Benefit Payment Remaining. We currently offer a Withdrawal Benefit Factor equal to 8%. We reserve the right to make other Withdrawal Benefit Factors available in the future for new SureIncome Options and/or to eliminate the current Withdrawal Benefit Factor. Once a Withdrawal Benefit Factor has been established for a SureIncome Option, it cannot be changed after the Rider Date unless that SureIncome Option is terminated.
Benefit Payment and Benefit Payment Remaining
The Benefit Payment is the amount available at the beginning of each Benefit Year that you may withdraw during that Benefit Year. The Withdrawal Benefit Factor and the Benefit Base are used to determine your Benefit Payment. The Benefit Payment Remaining is the amount remaining after any previous withdrawals in a Benefit Year that you may withdraw without reducing your Benefit Base by more than the amount of the withdrawal and without reducing your Benefit Payment available in future Benefit Years. Please note that any premiums or withdrawals made on a Contract Anniversary would be applied to the Benefit Year that just ended on that Contract Anniversary.
At the beginning of each Benefit Year, the Benefit Payment Remaining is equal to the Benefit Payment.
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During each Benefit Year the Benefit Payment Remaining will be increased by purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) multiplied by the Withdrawal Benefit Factor (currently 8% for new SureIncome Options) and reduced by the amount of each withdrawal. The Benefit Payment Remaining will never be less than zero.
On the Rider Date, the Benefit Payment is equal to the greater of:
The Contract Value multiplied by the Withdrawal Benefit Factor (currently 8% for new SureIncome Options); or
The value of the Benefit Payment of the previous Withdrawal Benefit Option (attached to your Contract) that is being terminated under a rider trade-in option (see Rider Trade-In Option below for more information), if applicable.
After the Rider Date, the Benefit Payment will be increased by purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) multiplied by the Withdrawal Benefit Factor and affected by withdrawals as follows:
If the withdrawal is less than or equal to the Benefit Payment Remaining in effect immediately prior to the withdrawal, the Benefit Payment is unchanged.
If the withdrawal is greater than the Benefit Payment Remaining in effect immediately prior to the withdrawal, the Benefit Payment will be the lesser of:
The Benefit Payment immediately prior to the withdrawal; or
The Contract Value immediately prior to withdrawal less the amount of the withdrawal, multiplied by the Withdrawal Benefit Factor.
At our discretion, the Benefit Payment available during a Benefit Year may be increased on a nondiscriminatory basis and without prior notice in order to satisfy IRS minimum distribution requirements on the Contract under which this Option has been elected. We are currently not increasing the Benefit Payment available to satisfy IRS minimum distribution requirements, which may result in a withdrawal greater than the Benefit Payment Remaining.
Benefit Base
The Benefit Base is not available as a Contract Value or Settlement Value. The Benefit Base is used solely to help calculate the Rider Fee, the amount that may be withdrawn and payments that may be received under the SureIncome Option. On the Rider Date, the Benefit Base is equal to the Contract Value. After the Rider Date, the Benefit Base will be increased by purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) and decreased by withdrawals as follows:
If the withdrawal is less than or equal to the Benefit Payment Remaining in effect immediately prior to the withdrawal, the Benefit Base will be reduced by the amount of the withdrawal.
If the withdrawal is greater than the Benefit Payment Remaining in effect immediately prior to the withdrawal, the Benefit Base will be the lesser of:
The Contract Value immediately prior to withdrawal less the amount of the withdrawal; or
The Benefit Base immediately prior to withdrawal less the amount of the withdrawal.
The Benefit Base may also be reduced in other situations as detailed in the Owner and Assignment of Payments or Interest section below.
If the Benefit Base is reduced to zero, this SureIncome Option will terminate.
For numerical examples that illustrate how the values defined under the SureIncome Option are calculated, see Appendix G.
Contract Owner and Assignment of Payments or Interest
If you change the Contract Owner or assign any payments or interest under this Contract, as allowed, to any living or non-living person other than your spouse on or after the first calendar year anniversary of the Rider Date, the Benefit Base will be recalculated to be the lesser of the Contract Value and the Benefit Base at the time of assignment.
Contract Value
If your Contract Value is reduced to zero due to fees or withdrawals and your Benefit Base is still greater than zero, your Contract will immediately enter the Withdrawal Benefit Payout Phase. Under the SureIncome Option, we currently do not treat a withdrawal that reduces the Contract Value to less than $1,000 as a withdrawal of the entire Contract Value. We reserve the right to change this at any time.
Withdrawal Benefit Payout Phase
Under the Withdrawal Benefit Payout Phase, the Accumulation Phase of the Contract ends and the Contract enters the Payout Phase subject to the following:
The Withdrawal Benefit Payout Start Date is the date the Withdrawal Benefit Payout Phase is entered and the Accumulation Phase of the Contract ends.
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No further withdrawals, purchase payments or any other actions associated with the Accumulation Phase can be made after the Withdrawal Benefit Payout Start Date.
The Payout Start Date is the first day of the next Benefit Year after the Withdrawal Benefit Payout Start Date. We reserve the right to allow other Payout Start Dates to be requested on a nondiscriminatory basis without prior notice.
During the Withdrawal Benefit Payout Phase, we will make scheduled fixed income payments to the Owner (or new Contract Owner) at the end of each month starting one month after the Payout Start Date. The amount of each payment will be equal to the Benefit Payment divided by 12, unless a payment frequency other than monthly is requested in a form acceptable to us and received by us before the first payment is made (the amount of each payment will be adjusted accordingly; i.e. if the payment frequency requested is quarterly, the amount of each payment will be equal to the Benefit Payment divided by 4). Payments will be made over a period certain such that total payments made will equal the Benefit Base on the Payout Start Date; therefore, the final payment may be reduced. If your Contract is a qualified contract, meaning an individual retirement annuity qualified as defined under Internal Revenue Code Section 408(b) or a Tax Sheltered Annuity as defined under Internal Revenue Code Section 403(b), the period certain cannot exceed that which is required by Internal Revenue Code Section 401(a)(9) and regulations promulgated thereunder. Therefore, the amount of each payment under this Option may be larger so that the sum of the payments made over this period equals the Benefit Base on the Payout Start Date. Additionally, if your Contract is a qualified contract, we will not permit a change in the payment frequency or level.
If your Contract is a non-qualified contract, we reserve the right to allow other payment frequencies or levels to be requested on a nondiscriminatory basis without prior notice. In no event will we allow more than one change in the payment frequency or level during a Contract Year.
If the Contract Owner dies before all payments have been made, the remaining payments will continue to be made to the new Contract Owner as scheduled.
Once all scheduled payments have been paid, the Contract will terminate.
Generally, you may not make withdrawals, purchase payments or any other actions associated with the Accumulation Phase after the Withdrawal Benefit Payout Start Date.
EXAMPLE
Beginning of Benefit Year 1*
Contract Value = $100,000
Benefit Base = $100,000
Benefit Payment = $8,000
Benefit Payment Remaining = $8,000
In this example, you can take a Benefit Payment of up to $8,000 in Benefit Year 1. If a withdrawal of $6,000 is taken then the following values would apply:
Contract Value = $94,000 (Assuming that your Contract Value has not been affected by any other factors)
Benefit Base = $94,000
Benefit Payment = $8,000
Benefit Payment Remaining = $2,000
Beginning of Benefit Year 2
Contract Value = $70,000 (Assuming that your contract value has declined due to poor performance)
Benefit Base = $94,000
Benefit Payment = $8,000
Benefit Payment Remaining = $8,000 (resets at the beginning of each Benefit Year)
In Benefit Year 2 you have the right to a Benefit Payment of $8,000 and since you have not taken any withdrawals yet in Benefit Year 2, the Benefit Payment Remaining would also be $8,000 at the beginning of Benefit Year 2.
* This example assumes an initial Contract Value of $100,000, no additional purchase payments, a withdrawal benefit factor of 8% and does not take into account fees or charges.
Investment Requirements
If you add the SureIncome Option to your Contract, you must adhere to certain requirements related to the investment alternatives in which you may invest. The specific requirements are described below in more detail and will depend on your currently selected Model Portfolio Option and your Withdrawal Benefit Factor. These requirements may include, but are not limited to, maximum investment limits on certain Variable Sub-Accounts or on certain Fixed Account Options, exclusion of certain Variable Sub-Accounts or of
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certain Fixed Account Options, required minimum allocations to certain Variable Sub-Accounts, and restrictions on transfers to or from certain investment alternatives. We may also require that you use the Automatic Portfolio Rebalancing Program. We may change the specific requirements that are applicable at any time in our sole discretion. Any changes we make will not apply to a SureIncome Option that was made a part of your Contract prior to the implementation date of the change, except for changes made due to a change in investment alternatives available under the Contract. This restriction does not apply to a new Option elected pursuant to the Rider Trade-In Option. We reserve the right to have requirements unique to specific Withdrawal Benefit Factors if we make other Withdrawal Benefit Factors available in the future, including specific model portfolio options (Model Portfolio Options) as described below, available only to certain Withdrawal Benefit Factors.
When you add the SureIncome Option to your Contract, you must allocate your entire Contract Value as follows:
1) to a Model Portfolio Option available as described below;
2) to the DCA Fixed Account Option and then transfer all purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) and interest to the Variable Sub-Accounts; or
3) to a combination of (1) and (2) above.
For (2) and (3) above, the requirements for the DCA Fixed Account Option must be met. See the Dollar Cost Averaging Fixed Account Option section of this prospectus for more information.
On the Rider Date, you must select only one of the Model Portfolio Options in which to allocate your Contract Value. After the Rider Date, you may transfer your entire Contract Value to any of the other available Model Portfolio Options. We currently offer several Model Portfolio Options. The Model Portfolio Options that are available may differ depending upon the effective date of your Withdrawal Benefit Option and your Withdrawal Benefit Factor. Please refer to the Model Portfolio Option and TrueBalanceSM Model Portfolio Options sections for more details. We may add other Model Portfolio Options in the future. We also may remove Model Portfolio Options in the future anytime prior to the date you select such Model Portfolio Option. In addition, if the investment alternatives available under the Contract change, we may revise the Model Portfolio Options. The following table summarizes the Model Portfolio Options currently available for use:
*Model Portfolio Option 1
*TrueBalance Conservative Model Portfolio Option
*TrueBalance Moderately Conservative Model Portfolio Option
*TrueBalance Moderate Model Portfolio Option
*TrueBalance Moderately Aggressive Model Portfolio Option
*TrueBalance Aggressive Model Portfolio Option
You may not allocate any of your Contract Value to the Standard Fixed Account Option or to the Market Value Adjusted Fixed Account Option. You must transfer any portion of your Contract Value that is allocated to the Standard Fixed Account Option or to the Market Value Adjusted Fixed Account Option to the Variable Sub-Accounts prior to adding the SureIncome Option to your Contract. Transfers from the Market Value Adjusted Fixed Account Option may be subject to a Market Value Adjustment. You may allocate any portion of your purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) to the DCA Fixed Account Option on the Rider Date, provided the DCA Fixed Account Option is available with your Contract and in your state. See the Dollar Cost Averaging Fixed Account Option section of this prospectus for more information. We use the term Transfer Period Account to refer to each purchase payment allocation made to the DCA Fixed Account Option for a specified term length. At the expiration of a Transfer Period Account any remaining amounts in the Transfer Period Account will be transferred to the Variable Sub-Accounts according to your most recent percentage allocation selections.
Any subsequent purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) made to your Contract will be allocated to the Variable Sub-Accounts according to your specific instructions or your allocation for the previous purchase payment, unless you request that the purchase payment (and Credit Enhancement for Consultant Solutions Plus Contracts) be allocated to the DCA Fixed Account Option. Purchase payments allocated to the DCA Fixed Account Option must be $500 or more. Any withdrawals you request will reduce your Contract Value invested in each of the investment alternatives on a pro rata basis in the proportion that your Contract Value in each bears to your total Contract Value in all Variable Sub-Accounts, unless you request otherwise.
Model Portfolio Option 1.
If you choose Model Portfolio Option 1 or transfer your entire Contract Value into Model Portfolio Option 1, you currently may allocate up to 100% of your Contract Value in any manner you choose to the Available Variable Sub-Accounts shown in the table below. You may not allocate ANY PORTION of your Contract Value to the Excluded Variable Sub-Accounts. You may make transfers among any of the Available Variable Sub-Accounts. However, each transfer you make will count against the 12 transfers you can make each Contract Year without paying a transfer fee.
Currently the Available Variable Sub-Accounts and the Excluded Variable Sub-Accounts are as follows:
Available
Invesco V.I. Value Opportunities Series II Sub-Account(2)
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Invesco V.I. Core Equity Series II Sub-Account
Invesco V.I. Mid Cap Core Equity Series II Sub-Account(7)
Fidelity® VIP Contrafund® Service Class 2 Sub-Account
Fidelity® VIP Equity-Income Service Class 2 Sub-Account
Fidelity® VIP Index 500 Service Class 2 Sub-Account
Fidelity® VIP Investment Grade Bond Service Class 2 Sub-Account
Fidelity® VIP Overseas Service Class 2 Sub-Account
Fidelity® VIP Asset Manager(SM) Service Class 2 Sub-Account
Fidelity® VIP Government Money Market Service Class 2 Sub-Account (formerly, Fidelity® VIP Money Market Service Class 2 Sub-Account)
Janus Aspen Series Overseas Service Shares Sub-Account
Janus Aspen Series Forty Service Shares Sub-Account
Janus Aspen Series Perkins Mid Cap Value Service Shares Sub-Account(5)
Janus Aspen Series Balanced Service Shares Sub-Account
Western Asset Variable Global High Yield Bond Class II Sub-Acount
ClearBridge Variable Large Cap Value Class I Sub-Account
MFS Investors Trust Service Class Sub-Account
MFS High Yield Service Class Sub-Account
MFS® MA Investors Growth Stock Service Class Sub-Account(4)
MFS Total Return Service Class Sub-Account
MFS Value Service Class Sub-Account
Oppenheimer Discovery Mid Cap Growth Fund/VA Class 2 Shares Sub-Account(1)
Oppenheimer Main Street Small Cap Fund Class 2 Shares Sub-Account
PIMCO Foreign Bond (U.S. Dollar-Hedged) Administrative Shares Sub-Account
PIMCO Money Market Administrative Shares Sub-Account
PIMCO Real Return Administrative Shares Sub-Account
PIMCO Total Return Administrative Shares Sub Account
Guggenheim VIF Long Short Equity Sub-Account
T. Rowe Price Equity Income II Sub-Account
T. Rowe Price Blue Chip Growth II Sub-Account
UIF U.S. Real Estate, Class II Sub-Account(8)
Invesco V.I. Growth and Income, Series II Sub-Account
Invesco V.I. Government Securities, Series II Sub-Account
Excluded
Invesco V.I. American Franchise Series II Sub-Account
Alger Large Cap Growth Class S Sub-Account
Alger Capital Appreciation Class S Sub-Account
Alger Mid Cap Growth Class S Sub-Account(3)
Fidelity® VIP Growth Service Class 2 Sub-Account
MFS New Discovery Service Class Sub-Account
Oppenheimer Global Fund/VA Class 2 Shares
UIF Growth, Class II Sub-Account
Van Eck VIP Emerging Markets Sub-Account
Van Eck VIP Global Hard Assets Sub-Account
Invesco V.I. Mid Cap Growth, Series II Sub-Account
(1) Effective as of August 30, 2010, the following Variable Sub-Account closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date:
Oppenheimer Discovery Mid Cap Growth Fund/VA Class 2 Shares Sub-Account
Contract Owners who had contract value invested in this Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdraw or otherwise transfer their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in this Variable Sub-Account as of the specified closure date may not invest in the Variable Sub-Account.
(2) Effective August 19, 2011, the Invesco V.I. Value Opportunities Series II Sub-Account closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date. Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdraw or otherwise transfer their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in the Variable Sub-Account as of the closure date may not invest in the Variable Sub-Account.
(3) Effective as of January 31, 2014, the Alger Mid-Cap Growth Class S Sub-Account was closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date. Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdrew or otherwise transferred their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in the Variable Sub-Account as of the closure date will not be permitted to invest in the Variable Sub-Account.
(4) On or about March 27, 2015, the MFS® MA Investors Growth Stock Portfolio Service Class, a portfolio of MFS® Variable Insurance Trust II, acquired the MFS® Investors Growth Stock Series Service Class, a series of MFS® Variable Insurance Trust.
(5) Effective April 13, 2015, the Janus Aspen Series Perkins Mid Cap Value Service Shares sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
(6) Effective May 1, 2015, the PIMCO Total Return Administrative Shares Sub Account is closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter. An application is pending with the Securities and Exchange Commission requesting an order to allow Lincoln Benefit to remove the PIMCO Total Return Portfolio Administrative Shares as an investment option under your variable annuity contract and substitute a new investment option, the BlackRock Total Return V.I. Portfolio Class I Shares. Lincoln Benefit anticipates that, if such order is granted, the proposed substitution will occur during the second quarter of 2016.
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(7) Effective September 1, 2015, the Invesco V.I. Mid Cap Core Equity Fund Series II sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
(8) Effective February 23, 2016, the UIF U.S. Real Estate Portfolio, Class II sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
TrueBalanceSM Model Portfolio Options.
If you choose one of the TrueBalanceSM Model Portfolio Options or transfer your entire Contract Value into one of the TrueBalanceSM Model Portfolio Options, you may not choose the Variable Sub-Accounts or make transfers among the Variable Sub-Accounts in the TrueBalance Model Portfolio Option. Each TrueBalance Model Portfolio involves an allocation of assets among a group of pre-selected Variable Sub-Accounts. You cannot make transfers among the Variable Sub-Accounts nor vary the Variable Sub-Accounts that comprise a TrueBalance Model Portfolio Option. If you choose a TrueBalance Model Portfolio Option, we will invest and periodically reallocate your Contract Value according to the allocation percentages and requirements for the TrueBalance Model Portfolio Option you have selected currently. For more information regarding the TrueBalance program, see the TrueBalanceSM Asset Allocation Program section of this prospectus. However, note that the restrictions described in this section, specifically the restrictions on transfers and the requirement that all of your Contract Value be allocated to a TrueBalance Model Portfolio Option, apply to the TrueBalance program only if you have added the SureIncome Option to your Contract.
Cancellation of the SureIncome Option
You may not cancel the SureIncome Option prior to the 5th calendar year anniversary of the Rider Date. On or after the 5th calendar year anniversary of the Rider Date you may cancel the rider by notifying us in writing in a form satisfactory to us. We reserve the right to extend the date at which time the cancellation may occur to up to the 10th calendar year anniversary of the Rider Date at any time in our sole discretion. Any change we make will not apply to a SureIncome Option that was added to your Contract prior to the implementation date of the change.
Rider Trade-In Option
We offer a Rider Trade-In Option that allows you to cancel your SureIncome Option and immediately add a new Withdrawal Benefit Option (New SureIncome Option). We may also offer other Options (Other New Options) under the Rider Trade-In Option. However, you may only select one Option under this Rider Trade-In Option at the time you cancel your SureIncome Option. Currently, we are also making the TrueReturn Accumulation Benefit Option available at the time of your first utilization of this Rider Trade-In Option so that you have the ability to switch from the SureIncome Option to the TrueReturn Accumulation Benefit Option. We may discontinue offering the TrueReturn Option under the Rider Trade-In Option for New SureIncome Options added in the future at anytime at our discretion.
This Rider Trade-in Option is available provided all of the following conditions are met:
The trade-in must occur on or after the 5th calendar year anniversary of the Rider Date. We reserve the right to extend the date at which time the trade-in may occur to up to the 10th calendar year anniversary of the Rider Date at any time in our sole discretion. Any change we make will not apply to a SureIncome Option that was added to your Contract prior to the implementation date of the change.
The New Option will be made a part of your Contract on the date the existing Option is cancelled, provided it is cancelled for reasons other than the termination of your Contract.
The New Option must be an Option that we make available for use with this Rider Trade-In Option.
The issue requirements and terms and conditions of the New Option must be met as of the date the New Option is made a part of your Contract.
If the New Option is a SureIncome Option, the New Option must provide that the new Benefit Payment be greater than or equal to your current Benefit Payment as of the date the Rider Trade-In Option is exercised, if applicable.
You should consult with your sales representative before trading in your SureIncome Option.
Death of Owner or Annuitant.
If the Contract Owner dies before the Rider Maturity Date and the Contract is continued under Option D of the Death of Owner provision of your Contract, as described on page 59 of your prospectus, then the SureIncome Option will continue, unless the new Contract Owner elects to cancel this Option. If the SureIncome Option is continued, it will remain in effect until terminated. If the Contract is not continued under Option D, then the SureIncome Option will terminate on the date we receive a Complete Request for Settlement of the Death Proceeds.
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If an Annuitant dies before the Payout Start Date, and the Contract is continued under Category 1 of the Death of Annuitant provision of the Contract, the SureIncome Option will remain in effect until terminated. If the Contract is not continued under Category 1, then the SureIncome Option will terminate on the date we receive a complete request for settlement of the Death Proceeds.
Termination of the SureIncome Option
This SureIncome Option will terminate on the earliest of the following to occur:
The Benefit Base is reduced to zero;
On the Payout Start Date (except if the Contract enters the Withdrawal Benefit Payout Phase as defined under the Withdrawal Benefit Payout Phase section);
On the date the Contract is terminated;
On the date the SureIncome Option is cancelled;
On the date we receive a Complete Request for Settlement of the Death Proceeds; or
On the date the SureIncome Option is replaced with a New Option under the Rider Trade-In Option.
Investment Alternatives: The Variable Sub-accounts
You may allocate your purchase payments to various Variable Sub-accounts. Each Variable Sub-account invests in the shares of a corresponding Portfolio. Each Portfolio has its own investment objective(s) and policies. We briefly describe the Portfolios below.
For more complete information about each Portfolio, including expenses and risks associated with each Portfolio, please refer to the prospectuses for the Funds. We will mail to you a prospectus for each Portfolio related to the Variable Sub-Accounts to which you allocate your purchase payment.
You should carefully consider the investment objectives, risks, charges and expenses of the investment alternatives when making an allocation to the Variable Sub-Accounts. To obtain any or all of the underlying Portfolio prospectuses, please contact us at 800-457-7617.
Portfolio |
Investment Objective |
Investment Adviser | |
Invesco Variable Insurance Funds |
|||
Invesco V.I. Value Opportunities Fund Series II(2) |
Long-term growth of capital |
Invesco Advisers, Inc. | |
Invesco V.I. American Franchise Fund Series II |
Capital appreciation | ||
Invesco V.I. Core Equity Fund Series II |
Long-term growth of capital | ||
Invesco V.I. Mid Cap Core Equity Fund Series II(7) |
Long-term growth of capital | ||
Invesco V.I. Mid Cap Growth Portfolio, Series II |
Capital growth | ||
Invesco V.I. Government Securities, Series II |
Total return, comprised of current income and capital appreciation | ||
Invesco V.I. Growth and Income Portfolio, Series II |
Long-term growth of capital and income. | ||
The Alger Portfolios | |||
Alger Large Cap Growth Portfolio Class S |
Long-term capital appreciation |
Fred Alger Management, Inc. | |
Alger Capital Appreciation Portfolio Class S |
Long-term capital appreciation | ||
Alger Mid Cap Growth Portfolio Class S(3) |
Long-term capital appreciation | ||
Fidelity® Variable Insurance Products | |||
Fidelity® VIP Asset Manager(SM) Portfolio Service Class 2 |
High total return with reduced risk over the long term by allocating its assets among stocks, bonds, and short-term instruments. |
Fidelity Management & Research Company | |
Fidelity® VIP Contrafund® Portfolio Service Class 2 |
Long-term capital appreciation | ||
Fidelity® VIP Equity-Income Portfolio Service Class 2 |
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(SM) Index (S&P 500®). | ||
Fidelity® VIP Growth Portfolio Service Class 2 |
To achieve capital appreciation | ||
Fidelity® VIP Index 500 Portfolio Service Class 2 |
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 (S&P 500®) | ||
Fidelity® VIP Investment Grade Bond Portfolio Service Class 2 |
As high a level of current income as is consistent with the preservation of capital | ||
Fidelity® VIP Government Money Market Portfolio Service Class 2 (formerly, Fidelity® VIP Money Market Portfolio Service Class 2) |
As high a level of current income as is consistent with preservation of capital and liquidity. | ||
Fidelity® VIP Overseas Portfolio Service Class 2 |
Long-term growth of capital | ||
Goldman Sachs Variable Insurance Trust | |||
Goldman Sachs VIT Mid Cap Value Fund |
Long-term capital appreciation |
Goldman Sachs Asset Management, L. P. |
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Portfolio |
Investment Objective |
Investment Adviser | |
Janus Aspen Series |
|||
Janus Aspen Series Balanced Portfolio Service Shares |
Long-term capital growth, consistent with preservation of capital and balanced by current income. |
Janus Capital Management LLC | |
Janus Aspen Series Flexible Bond Portfolio Institutional Shares |
Maximum total return, consistent with preservation of capital | ||
Janus Aspen Series Overseas Portfolio Service Shares |
Long-term growth of capital. | ||
Janus Aspen Series Forty Portfolio Service Shares |
Long-term growth of capital | ||
Janus Aspen Series Perkins Mid Cap Value Portfolio Service Shares(5) |
Capital appreciation. |
Subadviser: Perkins Investment Management LLC | |
Legg Mason Partners Variable Equity Trust | |||
ClearBridge Variable Large Cap Value Portfolio Class I |
Long-term growth of capital. Current income is a secondary objective |
Legg Mason Partners Fund Advisor, LLC, adviser; ClearBridge Investments, LLC, sub-adviser. (Western Asset Management Company manages the portion of the fund's cash and short term investments allocated to it) | |
Legg Mason Partners Variable Income Trust | |||
Western Asset Variable Global High Yield Bond Portfolio Class II |
Maximum total return |
Legg Mason Partners Fund Adviser, LLC; Western Asset Management Company, Western Asset Management Company Limited & Western Asset Management Company Pte. Ltd., sub-advisers. | |
MFS® Variable Insurance Trust(SM) II | |||
MFS® High Yield Series - Service Class |
Total return with an emphasis on high current income, but also considering capital appreciation |
MFS Investment Management | |
MFS® Investors Trust Series - Service Class |
Capital appreciation | ||
MFS® New Discovery Series - Service Class |
Capital appreciation | ||
MFS® Total Return Series - Service Class |
Total return | ||
MFS® Value Series - Service Class |
Capital appreciation | ||
MFS® Variable Insurance Trust II |
|||
MFS® MA Investors Growth Stock Service Class Sub-Account(4) |
Capital appreciation | ||
Oppenheimer Variable Account Funds |
|||
Oppenheimer Global Fund/VA Class 2 Shares |
Capital appreciation |
OppenheimerFunds, Inc. | |
Oppenheimer Main Street Small Cap Fund®/VA Class 2 Shares |
Capital appreciation. | ||
Oppenheimer Discovery Mid Cap Growth Fund/VA Class 2 Shares(1) |
Capital appreciation. | ||
PIMCO Variable Insurance Trust | |||
PIMCO Foreign Bond Portfolio (U.S. Dollar-Hedged) Administrative Shares |
Maximum total return, consistent with preservation of capital and prudent investment management. |
Pacific Investment Management Company LLC | |
PIMCO Money Market Portfolio Administrative Shares |
Maximum current income, consistent with preservation of capital and daily liquidity | ||
PIMCO Real Return Portfolio Administrative Shares |
Maximum real return, consistent with preservation of real capital and prudent investment management | ||
PIMCO Total Return Portfolio Administrative Shares |
Maximum total return, consistent with preservation of capital and prudent investment management | ||
The Rydex Variable Trust | |||
Guggenheim VIF Long Short Equity Fund |
Long-term capital appreciation. |
Guggenheim Investments | |
T. Rowe Price Equity Series, Inc. | |||
T. Rowe Price Blue Chip Growth Portfolio II |
Long-term capital growth. Income is a secondary objective. |
T. Rowe Price Associates, Inc. | |
T. Rowe Price Equity Income Portfolio II |
High level of dividend income and long-term capital growth primarily through investments in stocks. |
Portfolio |
Investment Objective |
Investment Adviser |
The Universal Institutional Funds, Inc. |
||
UIF Growth Portfolio, Class II |
Long-term capital appreciation by investing primarily in growth-oriented equity securities of large capitalization companies. |
Morgan Stanley Investment Management Inc. |
UIF U.S. Real Estate Portfolio, Class II(8) |
Above average current income and long-term capital appreciation by investing primarily in equity securities of companies in the U.S. real estate industry, including real estate investment trusts. | |
Van Eck VIP Trust |
||
Van Eck VIP Emerging Markets Fund |
Long-term capital appreciation by investing primarily in equity securities in emerging markets around the world |
Van Eck Associates Corporation |
Van Eck VIP Global Hard Assets Fund |
Long-term capital appreciation by investing primarily in hard asset securities. Income is a secondary consideration | |
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(1) Effective as of August 30, 2010, the following Variable Sub-Account closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date:
Oppenheimer Discovery Mid Cap Growth Fund/VA Class 2 Shares Sub-Account
Contract Owners who had contract value invested in this Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdraw or otherwise transfer their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in this Variable Sub-Account as of the specified closure date may not invest in the Variable Sub-Account.
(2) Effective August 19, 2011, the Invesco V.I. Value Opportunities Series II Sub-Account closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date. Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdraw or otherwise transfer their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in the Variable Sub-Account as of the closure date may not invest in the Variable Sub-Account.
(3) Effective as of January 31, 2014, the Alger Mid-Cap Growth Class S Sub-Account was closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date. Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdrew or otherwise transferred their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in the Variable Sub-Account as of the closure date will not be permitted to invest in the Variable Sub-Account.
(4) On or about March 27, 2015, the MFS® MA Investors Growth Stock Portfolio Service Class, a portfolio of MFS® Variable Insurance Trust II, acquired the MFS® Investors Growth Stock Series Service Class, a series of MFS® Variable Insurance Trust.
(5) Effective April 13, 2015, the Janus Aspen Series Perkins Mid Cap Value Service Shares sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
(6) Effective May 1, 2015, the PIMCO Total Return Administrative Shares Sub Account is closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter. An application is pending with the Securities and Exchange Commission requesting an order to allow Lincoln Benefit to remove the PIMCO Total Return Portfolio Administrative Shares as an investment option under your variable annuity contract and substitute a new investment option, the BlackRock Total Return V.I. Portfolio Class I Shares. Lincoln Benefit anticipates that, if such order is granted, the proposed substitution will occur during the second quarter of 2016.
(7) Effective September 1, 2015, the Invesco V.I. Mid Cap Core Equity Fund Series II sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
(8) Effective February 23, 2016, the UIF U.S. Real Estate Portfolio, Class II sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
Amounts you allocate to Variable Sub-accounts may grow in value, decline in value, or grow less than you expect, depending on the investment performance of the Portfolios in which those Variable Sub-accounts invest. You bear the investment risk that the Portfolios might not meet their investment objectives. Shares of the Portfolios are not deposits in, or obligations of, or guaranteed or endorsed by, any bank and are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
TRUEBALANCESM ASSET ALLOCATION PROGRAM
The TrueBalance asset allocation program (TrueBalance program) is no longer offered for new enrollments. If you enrolled in the TrueBalance program prior to January 31, 2008, you may remain in the program. If you terminate your enrollment or otherwise transfer your Contract Value out of the program, you may not re-enroll.
There is no additional charge for the TrueBalance program. Participation in the TrueBalance program may be limited if you have elected certain Contract Options that impose restrictions on the investment alternatives which you may invest, such as the Income Protection Benefit Option, the TrueReturn Accumulation Benefit Option or a Withdrawal Benefit Option. See the sections of this prospectus discussing these Options for more information.
Asset allocation is the process by which your Contract Value is invested in different asset classes in a way that matches your risk tolerance, time horizon, and investment goals. Theoretically, different asset classes tend to behave differently under various economic and market conditions. By spreading your Contract Value across a range of asset classes, you may, over time, be able to reduce the risk of investment volatility and potentially enhance returns. Asset allocation does not guarantee a profit or protect against loss in a declining market.
Your sales representative helps you determine whether participating in an asset allocation program is appropriate for you. You complete a questionnaire to identify your investment style. Based on your investment style, you select one asset allocation model portfolio among the available model portfolios which may range from conservative to aggressive. Your Contract Value is allocated among the Variable Sub-Accounts according to your selected model portfolio. Not all Variable Sub-Accounts are available in any one
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model portfolio, and you must only allocate your Contract Value to the limited number of Variable Sub-Accounts available in the model portfolio you select. You should not select a model portfolio without first consulting with your sales representative.
Lincoln Benefit and the principal underwriter of the Contracts, Allstate Distributors, L.L.C., Inc., do not intend to provide any personalized investment advice in connection with the TrueBalance program and you should not rely on this program as providing individualized investment recommendations to you.
Lincoln Benefit retained an independent investment management firm (investment management firm) to construct the TrueBalance model portfolios. The investment management firm does not provide advice to Lincoln Benefits Contract Owners. Neither Lincoln Benefit nor the investment management firm is acting for any Contract Owner as a fiduciary or as an investment manager, as such terms are defined under applicable laws and regulations relating to the Employee Retirement Income Security Act of 1974 (ERISA).
The investment management firm does not take into account any information about any Contract Owner or any Contract Owners assets when creating, providing or maintaining any TrueBalance model portfolio. Individual Contract Owners should ultimately rely on their own judgment and/or the judgment of a financial advisor in making their investment decisions. Neither Lincoln Benefit nor the investment management firm is responsible for determining the suitability of the TrueBalance model portfolios for the Contract Owners purposes.
Each of the five model portfolios specifies an allocation among a mix of Variable Sub-Accounts that considers the investment goals of the applicable investment style. On the business day we accept your participation in the TrueBalance program, we will automatically reallocate any existing Contract Value in the Variable Sub-Accounts according to the model portfolio you selected. If any portion of your existing Contract Value is allocated to the Standard Fixed Account or MVA Fixed Account Options and you wish to allocate any portion of it to the model portfolio, you must transfer that portion to the Variable Sub-Accounts. In addition, as long as you participate in the TrueBalance program, you must allocate all of your purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) to the Fixed Account Options and/or the Variable Sub-Accounts currently offered in your model portfolio. Any purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) you allocate to the DCA Fixed Account Option will be automatically transferred, along with interest, in equal monthly installments to the Variable Sub-Accounts according to the model portfolio you selected.
We use the term Transfer Period Account to refer to each purchase payment allocation made to the DCA Fixed Account Option for a specified term length. At the expiration of a Transfer Period Account any remaining amounts in the Transfer Period Account will be transferred to the Variable Sub-Account according to the percentage allocation for the model portfolio you selected.
Lincoln Benefit may offer new or revised TrueBalance model portfolios at any time, and may retain a different investment management firm to create any such new or revised TrueBalance model portfolios. Lincoln Benefit will not automatically reallocate your Contract Value allocated to the Variable Sub-Accounts to match any new or revised model portfolios that are offered. If you are invested in the TrueBalance model portfolio, your registered representative or the selling broker-dealer will notify you of any new or revised TrueBalance model portfolios that may be made available. If you wish to invest in accordance with a new or revised TrueBalance model portfolio, you must submit a transfer request to transfer your Contract Value in your existing TrueBalance model portfolio to the new TrueBalance model portfolio. If you do not request a transfer to a new TrueBalance model portfolio, we will continue to rebalance your Contract Value in accordance with your existing TrueBalance model portfolio. At any given time, you may only elect a TrueBalance model portfolio that is available at the time of election.
You may select only one model portfolio at a time. However, you may change your selection of model portfolio at any time, provided you select only a currently available model portfolio. Each change you make in your model portfolio selection will count against the 12 transfers you can make each Contract Year without paying a transfer fee. You should consult with your sales representative before making a change to your model portfolio selection to determine whether the new model portfolio is appropriate for your needs.
Since the performance of each Variable Sub-Account may cause a shift in the percentage allocated to each Variable Sub-Account, at least once every calendar quarter we will automatically rebalance all of your Contract Value in the Variable Sub-Accounts according to your currently selected model portfolio.
Unless you notify us otherwise, any purchase payments you make after electing the TrueBalance program will be allocated to your model portfolio and/or to the Fixed Account Options according to your most recent instructions on file with us. Once you elect to participate in the TrueBalance program, you may allocate subsequent purchase payments to any of the Fixed Account Options available with your Contract and/or to any of the Variable Sub-Accounts included in your model portfolio, but only according to the allocation specifications of that model portfolio. You may not allocate subsequent purchase payments to a Variable Sub-Account that is not included in your model portfolio. Subsequent purchase payments allocated to the Variable Sub-Accounts will be automatically rebalanced at the end of the next calendar quarter according to the allocation percentages for your currently selected model portfolio.
You may not make transfers from the Variable Sub-Accounts to any of the other Variable Sub-Accounts. You may make transfers, as allowed under the contract, from the Fixed Account Options to other Fixed Account Options or to the Variable Sub-Accounts included in your model portfolio, but only according to the allocation specifications of that model portfolio. You may make transfers from the Variable Sub-Accounts to any of the Fixed Account Options, except the DCA Fixed Account Option. Transfers to Fixed Account Options may be inconsistent with the investment style you selected and with the purpose of the TrueBalance program. However, all of your Contract Value in the Variable Sub-Accounts will be automatically rebalanced at the end of the next calendar quarter according
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to the percentage allocations for your currently selected model portfolio. You should consult with your sales representative before making transfers.
If you own the TrueReturn Accumulation Benefit Option, on the Rider Maturity Date the Contract Value may be increased due to the TrueReturn Accumulation Benefit Option. Any increase will be allocated to the PIMCO Money Market Administrative Shares Sub-Account. You may make transfers from this Variable Sub-Account to the Fixed Account Options (as allowed) or the Variable Sub-Accounts included in your model portfolio, but only according to the allocation specification of that model portfolio. All of your Contract Value in the Variable Sub-Accounts will be automatically rebalanced at the end of the next calendar quarter according to the percentage allocations for your currently selected model portfolio.
If you make a partial withdrawal from any of the Variable Sub-Accounts, your remaining Contract Value in the Variable Sub-Accounts will be automatically rebalanced at the end of the next calendar quarter according to the percentage allocations for your currently selected model portfolio. If you are participating in the Systematic Withdrawal Program when you add the TrueBalance program or change your selection of model portfolios, you may need to update your withdrawal instructions. If you have any questions, please consult your sales representative.
Your participation in the TrueBalance program is subject to the programs terms and conditions, and you may change model portfolios or terminate your participation in the TrueBalance program at any time by notifying us in a form satisfactory to us. We reserve the right to modify or terminate the TrueBalance program at any time.
Investment Alternatives: The Fixed Account Options
You may allocate all or a portion of your purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) to the Fixed Account Options. The Fixed Account Options we offer include the Dollar Cost Averaging Fixed Account Option, the Standard Fixed Account Option, and the Market Value Adjusted Fixed Account Option. We may offer additional Fixed Account Options in the future. Some Options are not available in all states. In addition, Lincoln Benefit may limit the availability of some Fixed Account Options. Please consult with your representative for current information. The Fixed Account supports our insurance and annuity obligations. The Fixed Account consists of our general assets other than those in segregated asset accounts. We have sole discretion to invest the assets of the Fixed Account, subject to applicable law. Any money you allocate to the Fixed Account does not entitle you to share in the investment experience of the Fixed Account.
DOLLAR COST AVERAGING FIXED ACCOUNT OPTION
The Dollar Cost Averaging Fixed Account Option (DCA Fixed Account Option) is one of the investment alternatives that you can use to establish a Dollar Cost Averaging Program, as described on page 43.
This option allows you to allocate purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) to the Fixed Account that will then automatically be transferred, along with interest, in equal monthly installments to the investment alternatives that you have selected. In the future, we may offer other installment frequencies in our discretion. Each purchase payment allocated to the DCA Fixed Account Option must be at least $100.
At the time you allocate a purchase payment to the DCA Fixed Account Option, you must specify the term length over which the transfers are to take place. We use the term Transfer Period Account to refer to each purchase payment allocation made to the DCA Fixed Account Option for a specified term length. You establish a new Transfer Period Account each time you allocate a purchase payment to the DCA Fixed Account Option. We currently offer term lengths from which you may select for your Transfer Period Account(s), ranging from 3 to 12 months. We may modify or eliminate the term lengths we offer in the future. Refer to Appendix A for more information.
Your purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) will earn interest while in the DCA Fixed Account Option at the interest rate in effect at the time of the allocation, depending on the term length chosen for the Transfer Period Account and the type of Contract you have. The interest rates may also differ from those available for other Fixed Account Options. The minimum interest rate associated with the DCA Fixed Account Option is based upon state requirements and the date an application to purchase a Contract is signed. This minimum interest rate will not change after Contract issue.
You must transfer all of your money, plus accumulated interest, out of a Transfer Period Account to other investment alternatives in equal monthly installments during the term of the Transfer Period Account. We reserve the right to restrict the investment alternatives available for transfers from any Transfer Period Account. You may not transfer money from the Transfer Period Accounts to any of the Fixed Account Options available under your Contract. The first transfer will occur on the 25th day after you establish a Transfer Period Account and monthly thereafter. If we do not receive an allocation instruction from you when we receive the purchase payment, we will transfer each installment to the money market Variable Sub-account until we receive a different allocation instruction. At the expiration of a Transfer Period Account any remaining amounts in the Transfer Period Account will be transferred to the PIMCO Money Market Administrative Shares Sub-Account unless you request a different investment alternative. Transferring Contract Value to the PIMCO Money Market Administrative Shares Sub-Account in this manner may not be consistent with the theory of dollar cost averaging described on page 43.
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If you discontinue the DCA Fixed Account Option before the expiration of a Transfer Period Account, we will transfer any remaining amount in the Transfer Period Account to the PIMCO Money Market Administrative Shares Sub-Account unless you request a different investment alternative.
If you have a TrueReturn Option or SureIncome Option, at the expiration of a Transfer Period Account or if you discontinue the DCA Fixed Account Option any amounts remaining in the Transfer Period Account will be transferred according to the investment
requirements applicable to the Option you selected.
You may not transfer money into the DCA Fixed Account Option or add to an existing Transfer Period Account. You may not use the Automatic Additions Program to allocate purchase payments to the DCA Fixed Account Option.
The DCA Fixed Account Option currently is not available if you have selected the Consultant Solutions Select Contract.
The DCA Fixed Account Option may not be available in your state. Please check with your representative for availability.
STANDARD FIXED ACCOUNT OPTION
If you have selected the Consultant Solutions Classic Contract, you may allocate purchase payments or transfer amounts into the Standard Fixed Account Option. Each such allocation establishes a Guarantee Period Account within the Standard Fixed Account Option (Standard Fixed Guarantee Period Account), which is defined by the date of the allocation. You may not allocate a purchase payment or transfer to any existing Guarantee Period Account. Each purchase payment or transfer allocated to a Standard Fixed Guarantee Period Account must be at least $100.
The Standard Fixed Account Option is not available in all states.
At the time you allocate a purchase payment or transfer amount to the Standard Fixed Account Option, you must select the Guarantee Period for that allocation from among the available Standard Fixed Guarantee Periods. We currently offer Standard Fixed Guarantee Periods of 1 year in length for Consultant Solutions Classic. For Consultant Solutions Plus, Select and Elite Contracts, we currently are not offering the Standard Fixed Account Option. Refer to Appendix A for more information. We may offer other Guarantee Periods in the future. If you allocate a purchase payment to the Standard Fixed Account Option, but do not select a Standard Fixed Guarantee Period for the new Standard Fixed Guarantee Period Account, we will allocate the purchase payment or transfer to a new Standard Fixed Guarantee Period Account with the same Standard Fixed Guarantee Period as the Standard Fixed Guarantee Period Account of your most recent purchase payment or transfer. If we no longer offer that Standard Fixed Guarantee Period, then we will allocate the purchase payment or transfer to a new Standard Fixed Guarantee Period Account with the next shortest term currently offered. If you have not made a prior allocation to a Guarantee Period Account, then we will allocate the purchase payment or transfer to a new Standard Fixed Guarantee Period Account of the shortest Standard Fixed Guarantee Period we are offering at that time.
Some Standard Fixed Guarantee Periods are not available in all states. Please check with your representative for availability.
The amount you allocate to a Standard Fixed Guarantee Period Account will earn interest at the interest rate in effect for that Standard Fixed Guarantee Period at the time of the allocation. Interest rates may differ depending on the type of Contract you have and may also differ from those available for other Fixed Account Options. The minimum interest rate associated with the Standard Fixed Account Option is based upon state requirements and the date an application to purchase a Contract is signed. This minimum interest rate will not change after Contract issue.
In any Contract Year, the combined amount of withdrawals and transfers from a Standard Fixed Guarantee Period Account may not exceed 30% of the amount used to establish that Standard Fixed Guarantee Period Account. This limitation is waived if you withdraw your entire Contract Value. It is also waived for amounts in a Standard Fixed Guarantee Period Account during the 30 days following its renewal date (30-Day Window), described below, and for a single withdrawal made by your surviving spouse within one year of continuing the Contract after your death.
Amounts under the 30% limit that are not withdrawn in a Contract Year do not carry over to subsequent Contract Years.
At the end of a Standard Fixed Guarantee Period and each year thereafter, we will declare a renewal interest rate that will be guaranteed for 1 year. Subsequent renewal dates will be on the anniversaries of the first renewal date. Prior to a renewal date, we will send you a notice that will outline the options available to you. During the 30-Day Window following the expiration of a Standard Fixed Guarantee Period Account, the 30% limit for transfers and withdrawals from that Guarantee Period Account is waived and you may elect to:
transfer all or part of the money from the Standard Fixed Guarantee Period Account to establish a new Guarantee Period Account within the Standard Fixed Account Option; or
transfer all or part of the money from the Standard Fixed Guarantee Period Account to other investment alternatives available at the time; or
withdraw all or part of the money from the Standard Fixed Guarantee Period Account. Withdrawal charges and taxes may apply.
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Withdrawals taken to satisfy IRS minimum distribution rules will count against the 30% limit. The 30% limit will be waived for a Contract Year to the extent that:
you have already exceeded the 30% limit and you must still make a withdrawal during that Contract Year to satisfy IRS minimum distribution rules; or
you have not yet exceeded the 30% limit but you must make a withdrawal during that Contract Year to satisfy IRS minimum distribution rules, and such withdrawal will put you over the 30% limit.
The money in the Standard Fixed Guarantee Period Account will earn interest at the declared renewal rate from the renewal date until the date we receive notification of your election. If we receive notification of your election to make a transfer or withdrawal from a renewing Standard Fixed Guarantee Period Account on or before the renewal date, the transfer or withdrawal will be deemed to have occurred on the renewal date. If we receive notification of your election to make a transfer or withdrawal from the renewing Standard Fixed Guarantee Period Account after the renewal date, but before the expiration of the 30-Day Window, the transfer or withdrawal will be deemed to have occurred on the day we receive such notice. Any remaining balance not withdrawn or transferred from the renewing Standard Fixed Guarantee Period Account will continue to earn interest until the next renewal date at the declared renewal rate. If we do not receive notification from you within the 30-Day Window, we will assume that you have elected to renew the Standard Fixed Guarantee Period Account and the amount in the renewing Standard Fixed Guarantee Period Account will continue to earn interest at the declared renewal rate until the next renewal date, and will be subject to all restrictions of the Standard Fixed Account Option.
The Standard Fixed Account Option currently is available only with the Consultant Solutions Classic Contract.
MARKET VALUE ADJUSTED FIXED ACCOUNT OPTION
You may allocate purchase payments or transfer amounts into the Market Value Adjusted Fixed Account Option. Each such allocation establishes a Guarantee Period Account within the Market Value Adjusted Fixed Account Option (Market Value Adjusted Fixed Guarantee Period Account), which is defined by the date of the allocation and the length of the initial interest rate guarantee period (Market Value Adjusted Fixed Guarantee Period). You may not allocate a purchase payment or transfer to any existing Guarantee Period Account. Each purchase payment or transfer allocated to a Market Value Adjusted Fixed Guarantee Period Account must be at least $100.
At the time you allocate a purchase payment or transfer amount to the Market Value Adjusted Fixed Account Option, you must select the Guarantee Period for that allocation from among the Guarantee Periods available for the Market Value Adjusted Fixed Account Option. We currently offer Market Value Adjusted Fixed Guarantee Periods of 1, 3, 5, 7, and 10 years. Refer to Appendix A for more information. We may offer other Guarantee Periods in the future. If you allocate a purchase payment to the Market Value Adjusted Fixed Account Option, but do not select a Market Value Adjusted Fixed Guarantee Period for the new Market Value Adjusted Fixed Guarantee Period Account, we will allocate the purchase payment or transfer to a new Market Value Adjusted Fixed Guarantee Period Account with the same Market Value Adjusted Fixed Guarantee Period as the Market Value Adjusted Fixed Guarantee Period Account of your most recent purchase payment or transfer. If we no longer offer that Market Value Adjusted Fixed Guarantee Period, then we will allocate the purchase payment or transfer to a new Market Value Adjusted Fixed Guarantee Period Account with the next shortest term currently offered. If you have not made a prior allocation to a Market Value Adjusted Fixed Guarantee Period Account, then we will allocate the purchase payment or transfer to a new Market Value Adjusted Fixed Guarantee Period Account of the shortest Market Value Adjusted Fixed Guarantee Period we are offering at that time. The Market Value Adjusted Fixed Account Option is not available in all states. Please check with your representative for availability.
The amount you allocate to a Market Value Adjusted Fixed Guarantee Period Account will earn interest at the interest rate in effect for that Market Value Adjusted Fixed Guarantee Period at the time of the allocation. Interest rates may differ depending on the type of Contract you have and may also differ from those available for other Fixed Account Options.
Withdrawals and transfers from a Market Value Adjusted Fixed Guarantee Period Account may be subject to a Market Value Adjustment. A Market Value Adjustment may also apply to amounts in the Market Value Adjusted Fixed Account Option if we pay Death Proceeds or if the Payout Start Date begins on a day other than during the 30-day period after such Market Value Adjusted Fixed Guarantee Period Account expires (30-Day MVA Window). We will not make a Market Value Adjustment if you make a transfer or withdrawal during the 30-Day MVA Window.
We apply a Market Value Adjustment to reflect changes in interest rates from the time you first allocate money to a Market Value Adjusted Fixed Guarantee Period Account to the time the money is taken out of that Market Value Adjusted Fixed Guarantee Period Account under the circumstances described above. We use the U.S. Treasury Note Constant Maturity Yield as reported in Federal Reserve Statistical Release H.15 (Treasury Rate) to calculate the Market Value Adjustment. We do so by comparing the Treasury Rate for a maturity equal to the Market Value Adjusted Fixed Guarantee Period at the time the Market Value Adjusted Fixed Guarantee Period Account is established with the Treasury Rate for the same maturity at the time the money is taken from the Market Value Adjusted Fixed Guarantee Period Account.
The Market Value Adjustment may be positive or negative, depending on changes in interest rates. As such, you bear the investment risk associated with changes in interest rates. If interest rates have increased since the establishment of a Market Value Adjusted Fixed Guarantee Period Account, the Market Value Adjustment, together with any applicable withdrawal charges, premium taxes, and
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income tax withholdings could reduce the amount you receive upon full withdrawal from a Market Value Adjusted Fixed Guarantee Period Account to an amount less than the purchase payment used to establish that Market Value Adjusted Fixed Guarantee Period Account.
Generally, if at the time you establish a Market Value Adjusted Fixed Guarantee Period Account, the Treasury Rate for a maturity equal to that Market Value Adjusted Fixed Guarantee Period is higher than the applicable Treasury Rate at the time money is to be taken from the Market Value Adjusted Fixed Guarantee Period Account, the Market Value Adjustment will be positive. Conversely, if at the time you establish a Market Value Adjusted Fixed Guarantee Period Account, the applicable Treasury Rate is lower than the applicable Treasury Rate at the time the money is to be taken from the Market Value Adjusted Fixed Guarantee Period Account, the Market Value Adjustment will be negative.
For example, assume that you purchase a Contract and allocate part of the initial purchase payment (and Credit Enhancements for Consultant Solutions Plus Contracts) to the Market Value Adjusted Fixed Account Option to establish a 5-year Market Value Adjusted Fixed Guarantee Period Account. Assume that the 5-year Treasury Rate at that time is 4.50%. Next, assume that at the end of the 3rd year, you withdraw money from the Market Value Adjusted Fixed Guarantee Period Account. If, at that time, the 5-year Treasury Rate is 4.20%, then the Market Value Adjustment will be positive. Conversely, if the 5-year Treasury Rate at that time is 4.80%, then the Market Value Adjustment will be negative.
The formula used to calculate the Market Value Adjustment and numerical examples illustrating its application are shown in Appendix B of this prospectus.
At the end of a Market Value Adjusted Fixed Guarantee Period, the Market Value Adjusted Fixed Guarantee Period Account expires and we will automatically transfer the money from such Guarantee Period Account to establish a new Market Value Adjusted Fixed Guarantee Period Account with the same Market Value Adjusted Fixed Guarantee Period, unless you notify us otherwise. The new Market Value Adjusted Fixed Guarantee Period Account will be established as of the day immediately following the expiration date of the expiring Market Value Adjusted Guarantee Period Account (New Account Start Date.) If the Market Value Adjusted Fixed Guarantee Period is no longer being offered, we will establish a new Market Value Adjusted Fixed Guarantee Period Account with the next shortest Market Value Adjusted Fixed Guarantee Period available. Prior to the expiration date, we will send you a notice, which will outline the options available to you. During the 30-Day MVA Window a Market Value Adjustment will not be applied to transfers and withdrawals from the expiring Market Value Adjusted Fixed Guarantee Period Account and you may elect to:
transfer all or part of the money from the Market Value Adjusted Fixed Guarantee Period Account to establish a new Guarantee Period Account within the Market Value Adjusted Fixed Account Option; or
transfer all or part of the money from the Market Value Adjusted Fixed Guarantee Period Account to other investment alternatives available at the time; or
withdraw all or part of the money from the Market Value Adjusted Fixed Guarantee Period Account. Withdrawal charges and taxes may apply.
The money in the Market Value Adjusted Fixed Guarantee Period Account will earn interest at the interest rate declared for the new Market Value Adjusted Fixed Guarantee Period Account from the New Account Start Date until the date we receive notification of your election. If we receive notification of your election to make a transfer or withdrawal from an expiring Market Value Adjusted Fixed Guarantee Period Account on or before the New Account Start Date, the transfer or withdrawal will be deemed to have occurred on the New Account Start Date. If we receive notification of your election to make a transfer or withdrawal from the expiring Market Value Adjusted Fixed Guarantee Period Account after the New Account Start Date, but before the expiration of the 30-Day MVA Window, the transfer or withdrawal will be deemed to have occurred on the day we receive such notice. Any remaining balance not withdrawn or transferred will earn interest for the term of the new Market Value Adjusted Fixed Guarantee Period Account, at the interest rate declared for such Account. If we do not receive notification from you within the 30-Day Window, we will assume that you have elected to transfer the amount in the expiring Market Value Adjusted Fixed Guarantee Period Account to establish a new Market Value Adjusted Fixed Guarantee Period Account with the same Market Value Adjusted Fixed Guarantee Period, and the amount in the new Market Value Adjusted Fixed Guarantee Period Account will continue to earn interest at the interest rate declared for the new Market Value Adjusted Fixed Guarantee Period Account, and will be subject to all restrictions of the Market Value Adjusted Fixed Account Option. If we no longer offer that Market Value Adjusted Fixed Guarantee Period, the Market Value Adjusted Fixed Guarantee Period for the new Market Value Adjusted Fixed Guarantee Period Account will be the next shortest term length we offer for the Market Value Adjusted Fixed Account Option at that time, and the interest rate will be the rate declared by us at that time for such term.
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Investment Alternatives: Transfers
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer Contract Value among the investment alternatives. You may not transfer Contract Value to the DCA Fixed Account Option or add to an existing Transfer Period Account. You may request transfers in writing on a form that we provided or by telephone according to the procedure described below.
You may make up to 12 transfers per Contract Year without charge. Currently, a transfer fee equal to 1.00% of the amount transferred applies to each transfer after the 12th transfer in any Contract Year. This fee may be changed, but in no event will it exceed 2.00% of the amount transferred. Multiple transfers on a single Valuation Date are considered a single transfer for purposes of assessing the transfer fee. If you added the TrueReturn Accumulation Benefit Option or SureIncome Option to your Contract, certain restrictions on transfers apply. See the TrueReturn Accumulation Benefit Option and SureIncome Withdrawal Benefit Option sections of this prospectus for more information. In any event, the transfer fee will never be greater than $25.
The minimum amount that you may transfer from the Standard Fixed Account Option, Market Value Adjusted Fixed Account Option or a Variable Sub-account is $100 or the total remaining balance in the Standard Fixed Account Option, Market Value Adjusted Fixed Account Option or the Variable Sub-account, if less. These limitations do not apply to the DCA Fixed Account Option. The total amount that you may transfer or withdraw from a Standard Fixed Guarantee Period Account in a Contract Year is 30% of the amount used to establish that Guarantee Period Account. See Standard Fixed Account Option. The minimum amount that can be transferred to the Standard Fixed Account Option and the Market Value Adjusted Fixed Account Option is $100.
We will process transfer requests that we receive before 3:00 p.m. Central Time on any Valuation Date using the Accumulation Unit Values for that Date. We will process requests completed after 3:00 p.m. on any Valuation Date using the Accumulation Unit Values for the next Valuation Date. The Contract permits us to defer transfers from the Fixed Account Options for up to 6 months from the date we receive your request. If we decide to postpone transfers from any Fixed Account Option for 30 days or more, we will pay interest as required by applicable law. Any interest would be payable from the date we receive the transfer request to the date we make the transfer.
For Consultant Solutions Select Contracts, the maximum amount that may be allocated during any single day to certain selected funds by telephone, fax, Internet, overnight or express mail services, same day messenger, or in person is $25,000. All trades exceeding this daily limit must be made by first class US Mail. The funds currently affected by this restriction are:
Fidelity VIP Overseas Service Class 2 Sub-Account
Janus Aspen Series Overseas Service Shares Sub-Account
Oppenheimer Global Fund/VA Class 2 Shares Sub-Account
Van Eck VIP Emerging Markets Sub-Account
MFS High Income Service Class Sub-Account
Western Asset Variable Global High Yield Bond Class II Sub-Account
We reserve the right to waive any transfer restrictions.
TRANSFERS DURING THE PAYOUT PHASE
During the Payout Phase, you may make transfers among the Variable Sub-Accounts so as to change the relative weighting of the Variable Sub-Accounts on which your variable income payments will be based. You may make up to 12 transfers per Contract Year within each Income Plan. You may not convert any portion of your fixed income payments into variable income payments. You may not make transfers among Income Plans. You may make transfers from the variable income payments to the fixed income payments to increase the proportion of your income payments consisting of fixed income payments, unless you have selected the Income Protection Benefit Option.
TELEPHONE OR ELECTRONIC TRANSFERS
You may make transfers by telephone by calling 800-457-7617. The cut-off time for telephone transfer requests is 3:00 p.m. Central Time. In the event that the New York Stock Exchange closes early, i.e., before 3:00 p.m. Central Time, or in the event that the Exchange closes early for a period of time but then reopens for trading on the same day, we will process telephone transfer requests as of the close of the Exchange on that particular day. We will not accept telephone requests received from you at any telephone number other than the number that appears in this paragraph or received after the close of trading on the Exchange. If you own the Contract with a joint Contract Owner, unless we receive contrary instructions, we will accept instructions from either you or the other Contract Owner.
We may suspend, modify or terminate the telephone transfer privilege, as well as any other electronic or automated means we previously approved, at any time without notice.
We use procedures that we believe provide reasonable assurance that the telephone transfers are genuine. For example, we tape telephone conversations with persons purporting to authorize transfers and request identifying information. Accordingly, we disclaim any liability for losses resulting from allegedly unauthorized telephone transfers. However, if we do not take reasonable steps to help ensure that a telephone authorization is valid, we may be liable for such losses.
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MARKET TIMING & EXCESSIVE TRADING
The Contracts are intended for long-term investment. Market timing and excessive trading can potentially dilute the value of Variable Sub-Accounts and can disrupt management of a Portfolio and raise its expenses, which can impair Portfolio performance and adversely affect your Contract Value. Our policy is not to accept knowingly any money intended for the purpose of market timing or excessive trading. Accordingly, you should not invest in the Contract if your purpose is to engage in market timing or excessive trading, and you should refrain from such practices if you currently own a Contract.
We seek to detect market timing or excessive trading activity by reviewing trading activities. Portfolios also may report suspected market-timing or excessive trading activity to us. If, in our judgment, we determine that the transfers are part of a market timing strategy or are otherwise harmful to the underlying Portfolio, we will impose the trading limitations as described below under Trading Limitations. Because there is no universally accepted definition of what constitutes market timing or excessive trading, we will use our reasonable judgment based on all of the circumstances.
While we seek to deter market timing and excessive trading in Variable Sub-Accounts, because our procedures involve the exercise of reasonable judgment, we may not identify or prevent some market timing or excessive trading. Moreover, imposition of trading limitations is triggered by the detection of market timing or excessive trading activity, and the trading limitations are not applied prior to detection of such trading activity. Therefore, our policies and procedures do not prevent such trading activity before it is detected. As a result, some investors may be able to engage in market timing and excessive trading, while others are prohibited, and the Portfolio may experience the adverse effects of market timing and excessive trading described above.
TRADING LIMITATIONS
We reserve the right to limit transfers among the investment alternatives in any Contract year, require that all future transfer requests be submitted through U.S. Postal Service First Class Mail thereby refusing to accept transfer requests via telephone, facsimile, Internet, or overnight delivery, or to refuse any transfer request, if:
we believe, in our sole discretion, that certain trading practices, such as excessive trading, by, or on behalf of, one or more Contract Owners, or a specific transfer request or group of transfer requests, may have a detrimental effect on the Accumulation Unit Values of any Variable Sub-Account or on the share prices of the corresponding Portfolio or otherwise would be to the disadvantage of other Contract Owners; or
we are informed by one or more of the Portfolios that they intend to restrict the purchase, exchange, or redemption of Portfolio shares because of excessive trading or because they believe that a specific transfer or group of transfers would have a detrimental effect on the prices of Portfolio shares.
In making the determination that trading activity constitutes market timing or excessive trading, we will consider, among other things:
the total dollar amount being transferred, both in the aggregate and in the transfer request;
the number of transfers you make over a period of time and/or the period of time between transfers (note: one set of transfers to and from a Variable Sub-Account in a short period of time can constitute market timing);
whether your transfers follow a pattern that appears designed to take advantage of short term market fluctuations, particularly within certain Variable Sub-Account underlying Portfolios that we have identified as being susceptible to market timing activities (e.g., International, High Yield, and Small Cap Variable Sub-Accounts);
whether the manager of the underlying Portfolio has indicated that the transfers interfere with Portfolio management or otherwise adversely impact the Portfolio; and
the investment objectives and/or size of the Variable Sub-Account underlying Portfolio.
We seek to apply these trading limitations uniformly. However, because these determinations involve the exercise of discretion, it is possible that we may not detect some market timing or excessive trading activity. As a result, it is possible that some investors may be able to engage in market timing or excessive trading activity, while others are prohibited, and the Portfolio may experience the adverse effects of market timing and excessive trading described above.
If we determine that a Contract Owner has engaged in market timing or excessive trading activity, we will require that all future transfer requests be submitted through U.S. Postal Service First Class Mail thereby refusing to accept transfer requests via telephone, facsimile, Internet, or overnight delivery. If we determine that a Contract Owner continues to engage in a pattern of market timing or excessive trading activity we will restrict that Contract Owner from making future additions or transfers into the impacted Variable Sub-Account(s) or will restrict that Contract Owner from making future additions or transfers into the class of Variable Sub-Account(s) if the Variable Sub-Accounts(s) involved are vulnerable to arbitrage market timing trading activity (e.g., International, High Yield, and Small Cap Variable Sub-Accounts).
In our sole discretion, we may revise our Trading Limitations at any time as necessary to better deter or minimize market timing and excessive trading or to comply with regulatory requirements.
SHORT TERM TRADING FEES
The underlying Portfolios are authorized by SEC regulation to adopt and impose redemption fees if a Portfolios Board of Directors determines that such fees are necessary to minimize or eliminate short-term transfer activity that can reduce or dilute the value of outstanding shares issued by the Portfolio. The Portfolio will set the parameters relating to the redemption fee and such parameters
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may vary by Portfolio. If a Portfolio elects to adopt and charge redemption fees, these fees will be passed on to the Contract Owner(s) responsible for the short-term transfer activity generating the fee.
We will administer and collect redemption fees in connection with transfers between the Variable Sub-Accounts and forward these fees to the Portfolio. Please consult the Portfolios prospectus for more complete information regarding the fees and charges associated with each Portfolio.
DOLLAR COST AVERAGING PROGRAM
Through our Dollar Cost Averaging Program, you may automatically transfer a fixed dollar amount on a regular basis from any Variable Sub-Account or any Fixed Account Option to any of the other Variable Sub-Accounts. You may not use the Dollar Cost Averaging Program to transfer amounts to the Fixed Account Options. This program is available only during the Accumulation Phase.
We will not charge a transfer fee for transfers made under this Program, nor will such transfers count against the 12 transfers you can make each Contract Year without paying a transfer fee.
By investing amounts on a regular basis instead of investing the total amount at one time, Dollar Cost Averaging may decrease the effect of market fluctuations on the investment of your Purchase Payment. This may result in a lower average cost of units over time. However, there is no guarantee that Dollar Cost Averaging will result in a profit or protect against a loss in a declining market. We do not deduct a charge for participating in a Dollar Cost Averaging program. Call or write us for instructions on how to enroll.
AUTOMATIC PORTFOLIO REBALANCING PROGRAM
Once you have allocated your money among the Variable Sub-Accounts, the performance of each Sub-Account may cause a shift in the percentage you allocated to each Sub-Account. If you select our Automatic Portfolio Rebalancing Program, we will automatically rebalance the Contract Value in each Variable Sub-Account and return it to the desired percentage allocations. Money you allocate to the Fixed Account will not be included in the rebalancing.
We will rebalance your account quarterly, semi-annually, or annually. We will measure these periods according to your instructions. We will transfer amounts among the Variable Sub-Accounts to achieve the percentage allocations you specify. You can change your allocations at any time by contacting us in writing or by telephone. The new allocation will be effective with the first rebalancing that occurs after we receive your written or telephone request. We are not responsible for rebalancing that occurs prior to receipt of proper notice of your request.
Example:
Assume that you want your initial purchase payment split among 2 Variable Sub-accounts. You want 40% to be in the PIMCO Foreign Bond (U.S. Dollar-Hedged) Administrative Shares Sub-Account Variable Sub-account and 60% to be in the Fidelity VIP Index 500 Service Class 2 Sub-Account Variable Sub-account. Over the next 2 months the bond market does very well while the stock market performs poorly. At the end of the first quarter, the PIMCO Foreign Bond (U.S. Dollar-Hedged) Administrative Shares Sub-Account Variable Sub-account now represents 50% of your holdings because of its increase in value. If you choose to have your holdings in a Contract or Contracts rebalanced quarterly, on the first day of the next quarter we would sell some of your units in the PIMCO Foreign Bond (U.S. Dollar-Hedged) Administrative Shares Sub-Account Variable Sub-account for the appropriate Contract(s) and use the money to buy more units in the Fidelity VIP Index 500 Service Class 2 Sub-Account Variable Sub-account so that the percentage allocations would again be 40% and 60% respectively.
The transfers made under the program do not count towards the 12 transfers you can make without paying a transfer fee, and are not subject to a transfer fee.
Portfolio rebalancing is consistent with maintaining your allocation of investments among market segments, although it is accomplished by reducing your Contract Value allocated to the Variable Sub-Accounts that performed better during the previous time period.
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Expenses
As a Contract Owner, you will bear, directly or indirectly, the charges and expenses described below.
CONTRACT MAINTENANCE CHARGE
During the Accumulation Phase, on each Contract Anniversary, we will deduct a $40 contract maintenance charge from your assets invested in the PIMCO Money Market Variable Sub-account ($30 if the Contract value is equal to or greater than $2,000.) If there are insufficient assets in that Variable Sub-account, we will deduct the balance of the charge proportionally from the other Variable Sub-accounts. We also will deduct this charge if you withdraw your entire Contract Value, unless your Contract qualifies for a waiver. During the Payout Phase, we will deduct the charge proportionately from each income payment.
The charge is to compensate us for the cost of administering the Contracts and the Variable Account. Maintenance costs include expenses we incur in billing and collecting purchase payments; keeping records; processing death claims, cash withdrawals, and policy changes; proxy statements; calculating Accumulation Unit Values and income payments; and issuing reports to Contract Owners and regulatory agencies. We cannot increase the charge. We will waive this charge for a Contract Anniversary if, on that date:
your Contract Value is equal to or greater than $50,000; or
your entire Contract Value is allocated to the Fixed Account Options or, after the Payout Start Date, if all income payments are fixed income payments.
We also reserve the right to waive this charge if you own more than one Contract and the Contracts meet certain minimum dollar amount requirements. In addition, we reserve the right to waive this charge for all Contracts.
ADMINISTRATIVE EXPENSE CHARGE
We currently deduct an administrative expense charge daily at an annual rate of 0.10% of the average daily net assets you have invested in the Variable Sub-accounts. We intend this charge to cover actual administrative expenses that exceed the revenues from the contract maintenance charge. There is no necessary relationship between the amount of administrative charge imposed on a given Contract and the amount of expenses that may be attributed to that Contract. We assess this charge each day during the Accumulation Phase and the Payout Phase. We may increase this charge for Contracts issued in the future, but in no event will it exceed 0.25%. We guarantee that after your Contract is issued we will not increase this charge for your Contract.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a mortality and expense risk charge daily from the net assets you have invested in the Variable Sub-Accounts. We assess mortality and expense risk charges during the Accumulation and Payout Phases of the Contract, except as noted below. The annual mortality and expense risk charge for the Contracts without any optional benefit are as follows:
Consultant Solutions Classic |
1.25% |
Consultant Solutions Plus |
1.45% |
Consultant Solutions Elite |
1.60% |
Consultant Solutions Select |
1.70% |
The mortality and expense risk charge is for all the insurance benefits available with your Contract (including our guarantee of annuity rates and the death benefits), for certain expenses of the Contract, and for assuming the risk (expense risk) that the current charges will not be sufficient in the future to cover the cost of administering the Contract. The mortality and expense risk charge also helps pay for the cost of the Credit Enhancement under the Consultant Solutions Plus Contract. If the charges under the Contract are not sufficient, then we will bear the loss. We charge an additional amount for the optional benefits to compensate us for the additional risk that we accept by providing these options.
You will pay additional mortality and expense risk charges if you add any optional benefits to your Contract. The additional mortality and expense risk charge you pay will depend upon which of the options you select:
MAV Death Benefit Option: The current mortality and expense risk charge for this option is 0.20%. This charge may be increased, but will never exceed 0.50%. We guarantee that we will not increase the mortality and expense risk charge for this option after you have added it to your Contract. We deduct the charge for this option only during the Accumulation Phase.
Annual Increase Death Benefit Option: The current mortality and expense risk charge for this option is 0.30%. This charge may be increased, but will never exceed 0.50%. We guarantee that we will not increase the mortality and expense risk charge for this option after you have added it to your Contract. We deduct the charge for this option only during the Accumulation Phase.
Enhanced Earnings Death Benefit Option: The current mortality and expense risk charge for this option is:
0.25% (maximum of 0.35%) if the oldest Contract Owner and Co-Annuitant, or, if the Contract is owned by a non-living person, the oldest Annuitant, are age 70 or younger on the Rider Application Date; or
0.40% (maximum of 0.50%) if the oldest Contract Owner or, if older, the Co-Annuitant, or, if the Contract is owned by a non-living person, the oldest Annuitant, is age 71 or older and age 79 or younger on the Rider Application Date.
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The charges may be increased but they will never exceed the maximum charges shown above. We guarantee that we will not increase the mortality and expense risk charge for this option after you have added it to your Contract. However, if your spouse elects to continue the Contract in the event of your death and if he or she elects to continue the Enhanced Earnings Death Benefit Option, the charge will be based on the age of the new Contract Owner at the time the Contract is continued. Refer to the Death Benefit Payments provision in this prospectus for more information. We deduct the charge for this option only during the Accumulation Phase.
Income Protection Benefit Option: The current mortality and expense risk charge for this option is 0.50%. This charge may be increased, but will never exceed 0.75%. We guarantee that we will not increase the mortality and expense risk for this option after you have added it to your Contract. This option may be added to your Contract on the Payout Start Date. The charge will be deducted only during the Payout Phase.
TRUERETURN ACCUMULATION BENEFIT OPTION FEE
We charge a separate annual Rider Fee for the TrueReturn Accumulation Benefit Option. The current annual Rider Fee is 0.50% of the Benefit Base. We deduct the Rider Fee on each Contract Anniversary during the Rider Period or until you terminate the Option, if earlier. We reserve the right to increase the Rider Fee to up to 1.25%. We currently charge the same Rider Fee regardless of the Rider Period and Guarantee Option you select, however we reserve the right to charge different fees for different Rider Periods and Guarantee Options in the future. However, once we issue your Option, we cannot change the Rider Fee that applies to your Contract. If you elect to exercise the Rider Trade-In Option, the new Rider Fee will be based on the Rider Fee percentage applicable to a new TrueReturn Accumulation Benefit Option at the time of trade-in.
The Rider Fee is deducted only from the Variable Sub-account(s) on a pro rata basis in the proportion that your value in each Variable Sub-account bears to your total value in all Variable Sub-accounts. Rider Fees will decrease the number of Accumulation Units in each Variable Sub-account. If you terminate the Option, or terminate the Contract by a total withdrawal, prior to the Rider Maturity Date on a date other than the Contract Anniversary, we will deduct a Rider Fee that is prorated based on the number of full months between the Contract Anniversary immediately prior to the termination and the date of the termination. However, if the Option is terminated due to death of the Contract Owner or Annuitant, we will not charge a Rider Fee unless the date we receive a Complete Request for Settlement of the Death Proceeds is also a Contract Anniversary. If the Option is terminated on the Payout Start Date, we will not charge a Rider Fee unless the Payout Start Date is also a Contract Anniversary. Additionally, if you elect to exercise the Rider Trade-In Option and cancel the Option on a date other than a Contract Anniversary, we will not deduct a Rider Fee on the date the Option is terminated. Refer to the TrueReturn Accumulation Benefit Option section of this prospectus for more information.
SPOUSAL PROTECTION BENEFIT (CO-ANNUITANT) OPTION FEE
We charge a separate annual Rider Fee for the Spousal Protection Benefit (Co-Annuitant) Option. The current annual Rider Fee is 0.10% of the Contract Value. This fee applies to Options added on or after May 1, 2005. For Options added prior to May 1, 2005, there is no charge associated with the Options. We deduct the Rider Fee on each Contract Anniversary and in certain circumstances on the date you terminate the Option. We reserve the right to increase the annual Rider Fee on newly issued Options to up to 0.15% of the Contract Value. We also reserve the right to charge different Rider Fees for new Spousal Protection Benefit (Co-Annuitant) Options we offer in the future. However, once we issue your Option, we cannot change the Rider Fee that applies to your Contract.
The Rider Fee is deducted only from the Variable Sub-Account(s) on a pro-rata basis in the proportion that your value in each Variable Sub-Account bears to your total value in all Variable Sub-Accounts. Rider Fees will decrease the number of Accumulation Units in each Variable Sub-Account. If, at the time the Rider Fee is deducted, the Rider Fee exceeds the total value in all Variable Sub-Accounts, the excess of the Rider Fee over the total value in all Variable Sub-Accounts will be waived.
The first Rider Fee will be deducted on the first Contract Anniversary following the Rider Date. A Rider Fee will be deducted on each subsequent Contract Anniversary while the Rider is in force.
For the first Contract Anniversary following the Rider Date, the Rider Fee is equal to the number of full months from the Rider Date to the first Contract Anniversary, divided by twelve, multiplied by 0.10%, with the result multiplied by the Contract Value as of the first Contract Anniversary. For subsequent Contract Anniversaries, the Rider Fee is equal to 0.10% multiplied by the Contract Value as of that Contract Anniversary.
If the Rider is terminated for any reason on a Contract Anniversary, we will deduct a full Rider Fee. If the Option is terminated on a date other than a Contract Anniversary, we will deduct a pro rata Rider Fee, except we will not charge any Rider Fee if the Option is terminated on the Payout Start Date or due to the death of the Contract Owner or Annuitant. If we charge a Rider Fee on the termination of the Option, the Rider Fee will be reduced pro rata, so that you are only charged for the number of full months this Option was in effect.
SUREINCOME WITHDRAWAL BENEFIT OPTION FEE
We charge a separate annual Rider Fee for the SureIncome Option (SureIncome Option Fee or Rider Fee). The current annual Rider Fee is 0.50% of the Benefit Base. We deduct the Rider Fee on each Contract Anniversary up to and including the date you terminate the Option. We reserve the right to increase the Rider Fee to up to 1.25% of the Benefit Base. We also reserve the right to charge different Rider Fees for different Withdrawal Benefit Factors we may offer in the future. However, once we issue your SureIncome Option, we cannot change the Rider Fee that applies to your Option. If you elect to exercise the Rider Trade-In Option, the new Rider Fee will be based on the Rider Fee percentage applicable to a new SureIncome Option at the time of trade-in.
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The Rider Fee is deducted only from the Variable Sub-Account(s) on a pro-rata basis in the proportion that your Contract Value in each Variable Sub-Account bears to your total Contract Value in all Variable Sub-Accounts. Rider Fees will decrease the number of Accumulation Units in each Variable Sub-Account. If, at the time the Rider Fee is deducted, the Rider Fee exceeds the total Contract Value in all Variable Sub-Accounts, the excess of the Rider Fee over the total Contract Value in all Variable Sub-Accounts will be waived.
The first Rider Fee will be deducted on the first Contract Anniversary following the Rider Date. A Rider Fee will be deducted on each subsequent Contract Anniversary the SureIncome Option is in force.
For the first Contract Anniversary following the Rider Date, the Rider Fee is equal to the number of full months from the Rider Date to the first Contract Anniversary, divided by twelve, multiplied by 0.50%, with the result multiplied by the Benefit Base as of the first Contract Anniversary. For subsequent Contract Anniversaries, the Rider Fee is equal to the 0.50% multiplied by the Benefit Base as of that Contract Anniversary.
If the SureIncome Option is terminated for any reason on a Contract Anniversary, we will deduct a full Rider Fee. If the SureIncome Option is terminated on a date other than a Contract Anniversary, we will deduct a pro rata Rider Fee, except we will not charge any Rider Fee if the SureIncome Option is terminated on the Payout Start Date or due to the death of the Contract Owner or Annuitant. If we charge a Rider Fee on the termination of the SureIncome Option, the Rider Fee will be reduced pro rata, so that you are only charged for the number of full months the SureIncome Option was in effect.
TRANSFER FEE
We impose a fee upon transfers in excess of 12 during any Contract Year. The current fee is equal to 1.00% of the dollar amount transferred. This fee may be increased, but in no event will it exceed 2.00% of the dollar amount transferred. In any event, the transfer fee will never be greater than $25. We will not charge a transfer fee on transfers that are part of a Dollar Cost Averaging Program or Automatic Portfolio Rebalancing Program.
WITHDRAWAL CHARGE
For all of the contracts except the Consultant Solutions Select, we may assess a withdrawal charge from the purchase payment(s) you withdraw. The amount of the charge will depend on the number of years that have elapsed since we received the purchase payment being withdrawn. A schedule showing the withdrawal charges applicable to each Contract appears on page 9. If you make a withdrawal before the Payout Start Date, we will apply the withdrawal charge percentage in effect on the date of the withdrawal, or the withdrawal charge percentage in effect on the following day, whichever is lower.
Withdrawals also may be subject to tax penalties or income tax. You should consult with your tax counsel or other tax advisor regarding any withdrawals.
Withdrawals from the Market Value Adjusted Fixed Account Option may be subject to a market value adjustment. Refer to page 39 for more information on market value adjustments.
FREE WITHDRAWAL AMOUNT
You can withdraw up to the Free Withdrawal Amount each Contract Year without paying the withdrawal charge. The Free Withdrawal Amount for a Contract Year is equal to 15% of all purchase payments (excluding Credit Enhancements for Consultant Solutions Plus Contracts) that are subject to a withdrawal charge as of the beginning of that Contract Year, plus 15% of the purchase payments added to the Contract during the Contract Year. The withdrawal charge applicable to Contracts owned by Charitable Remainder Trusts is described below.
Purchase payments no longer subject to a withdrawal charge will not be used to determine the Free Withdrawal Amount for a Contract Year, nor will they be assessed a withdrawal charge, if withdrawn. The Free Withdrawal Amount is not available in the Payout Phase.
You may withdraw up to the Free Withdrawal Amount in each Contract Year it is available without paying a withdrawal charge; however, the amount withdrawn may be subject to a Market Value Adjustment or applicable taxes. If you do not withdraw the entire Free Withdrawal Amount in a Contract Year, any remaining portion may not be carried forward to increase the Free Withdrawal Amount in a later Contract Year.
For purposes of assessing the withdrawal charge, we will treat withdrawals as coming from the oldest purchase payments first as follows:
1) Purchase payments that no longer are subject to withdrawal charges;
2) Free Withdrawal Amount (if available);
3) Remaining purchase payments subject to withdrawal charges, beginning with the oldest purchase payment;
4) Any earnings not previously withdrawn.
However, for federal income tax purposes, earnings are considered to come out first, which means that you will pay taxes on the earnings portion of your withdrawal.
If the Contract Owner is a Charitable Remainder Trust, the Free Withdrawal Amount in a Contract Year is equal to the greater of:
The Free Withdrawal Amount described above; or
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Earnings as of the beginning of the Contract Year that have not been previously withdrawn.
For purposes of assessing the withdrawal charge for a Charitable Remainder Trust-Owned Contract, we will treat withdrawals as coming from the earnings first and then the oldest purchase payments as follows:
1) Earnings not previously withdrawn;
2) Purchase payments that are no longer subject to withdrawal charges;
3) Free Withdrawal Amount in excess of earnings;
4) Purchase payments subject to withdrawal charges, beginning with the oldest purchase payment.
If you have selected the Consultant Solutions Select Contract, there are no withdrawal charges applicable and, therefore, no Free Withdrawal Amount. Amounts withdrawn may be subject to a Market Value Adjustment or applicable taxes.
All Contracts
We do not apply a withdrawal charge in the following situations:
the death of the Contract Owner or Annuitant (unless the Settlement Value is used);
withdrawals taken to satisfy IRS minimum distribution rules for the Contract; or
withdrawals that qualify for one of the waivers described below.
We use the amounts obtained from the withdrawal charge to pay sales commissions and other promotional or distribution expenses associated with marketing the Contracts, and to help defray the cost of the Credit Enhancement for the Consultant Solutions Plus Contracts. To the extent that the withdrawal charge does not cover all sales commissions and other promotional or distribution expenses, or the cost of the Credit Enhancement, we may use any of our corporate assets, including potential profit which may arise from the mortality and expense risk charge or any other charges or fee described above, to make up any difference.
Withdrawals taken prior to annuitization (referred to in this prospectus as the Payout Phase) are generally considered to come from the earnings in the Contract first. If the Contract is tax-qualified, generally all withdrawals are treated as distributions of earnings. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. You should consult your own tax counsel or other tax advisers regarding any withdrawals.
Confinement Waiver. We will waive the withdrawal charge on all withdrawals taken under your Contract if the following conditions are satisfied:
1. you, or, if the Contract Owner is not a living person, the Annuitant, are first confined to a long term care facility or a hospital for at least 90 consecutive days. You or the Annuitant must first enter the long term care facility or hospital at least 30 days after the Issue Date,
2. we receive your request for withdrawal and written proof of the stay no later than 90 days following the end of your or the Annuitants stay at the long term care facility or hospital, and
3. Due proof of confinement is received by us prior to or at the time of, a request for a withdrawal.
Due Proof includes, but is not limited to, a letter signed by a physician stating the dates the Owner or Annuitant was confined, the name and location of the Long Term Care Facility or Hospital, a statement that the confinement was medically necessary, and, if released, the date the Owner or Annuitant was released from the Long Term Care Facility or Hospital.
Terminal Illness Waiver. We will waive the withdrawal charge on all withdrawals under your Contract if:
1. you or the Annuitant, if the Contract Owner is not a living person, are diagnosed by a physician as having a terminal illness (as defined in the Contract) at least 30 days after the Issue Date, and
2. you provide Due Proof of diagnosis to us before or at the time you request the withdrawal.
Due Proof includes, but is not limited to, a letter signed by a physician stating that the Owner or Annuitant has a Terminal Illness and the date the Terminal Illness was first diagnosed.
Unemployment Waiver. We will waive the withdrawal charge on one partial or a full withdrawal taken under your Contract, if you meet the following requirements:
1. you or the Annuitant, if the Contract Owner is not a living person, become unemployed at least one year after the Issue Date,
2. you or the Annuitant receive unemployment compensation (as defined in the Contract) for at least 30 days as a result of that unemployment, and
3. you or the Annuitant claim this benefit within 180 days of your or the Annuitants initial receipt of unemployment compensation, and we receive due proof that you are or have been unemployed and that unemployment compensation has been received for at least thirty consecutive days prior to or at the time of the request for withdrawal.
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Unemployment Compensation means unemployment compensation received from a unit of state or federal government in the U.S. Due Proof includes, but is not limited to, a legible photocopy of an unemployment compensation payment that meets the above described criteria with regard to dates and a signed letter from you stating that you or the Annuitant meet the above described criteria.
You may exercise this benefit once over the term of the Contract. Amounts withdrawn may be subject to Market Value Adjustments.
These waivers do not apply under the Consultant Solutions Select.
Please refer to your Contract for more detailed information about the terms and conditions of these waivers.
The laws of your state may limit the availability of these waivers and may also change certain terms and/or benefits available under the waivers. You should consult your Contract for further details on these variations. Also, even if you do not pay a withdrawal charge because of these waivers, a Market Value Adjustment may apply and you still may be required to pay taxes or tax penalties on the amount withdrawn. You should consult your tax advisor to determine the effect of a withdrawal on your taxes.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge premium taxes or similar taxes. We are responsible for paying these taxes and will deduct them from your Contract Value. Some of these taxes are due when the Contract is issued, others are due when income payments begin or upon surrender. Our current practice is not to charge anyone for these taxes until income payments begin or when a total withdrawal occurs including payment upon death. We may some time in the future discontinue this practice and deduct premium taxes from the purchase payments. Premium taxes generally range from 0% to 3.5%, depending on the state.
At the Payout Start Date, we deduct the charge for premium taxes from each investment alternative in the proportion that the Contract Value in the investment alternative bears to the total Contract Value.
DEDUCTION FOR VARIABLE ACCOUNT INCOME TAXES
We are not currently maintaining a provision for taxes. In the future, however, we may establish a provision for taxes if we determine, in our sole discretion, that we will incur a tax as a result of the operation of the Variable Account. We will deduct for any taxes we incur as a result of the operation of the Variable Account, whether or not we previously made a provision for taxes and whether or not it was sufficient. Our status under the Internal Revenue Code is briefly described in the Taxes section of this prospectus.
OTHER EXPENSES
Each Portfolio deducts management fees and other expenses from its assets. You indirectly bear the charges and expenses of the Portfolios whose shares are held by the Variable Sub-accounts. These fees and expenses are described in the prospectuses for the Portfolios. For a summary of Portfolio annual expenses, see page 10. We receive compensation from the investment advisers, administrators or distributors, or their affiliates, of the Portfolios in connection with the administrative services we provide to the Portfolios. We collect this compensation under agreement between us and the Portfolios investment adviser, administrators or distributors, and is calculated based on a percentage of the average assets allocated to the Portfolio.
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Access to Your Money
WITHDRAWALS
You can withdraw some or all of your Contract Value at any time prior to the Payout Start Date. Withdrawals also are available under limited circumstances on or after the Payout Start Date. See Income Plans on page 50.
The amount payable upon withdrawal is the Contract Value (or portion thereof) next computed after we receive the request for a withdrawal at our home office, adjusted by any applicable Market Value Adjustment, less any applicable withdrawal charges, income tax withholding, penalty tax, contract maintenance charge, Rider Fee, and any premium taxes. We will pay withdrawals from the Variable Account within 7 days of receipt of the request, subject to postponement in certain circumstances. You can withdraw money from the Variable Account or the Fixed Account Option(s) available under your Contract. To complete a partial withdrawal from the Variable Account, we will cancel Accumulation Units in an amount equal to the withdrawal and any applicable charges, fees and taxes.
You must name the investment alternative from which you are taking the withdrawal. If none is named, then the withdrawal request is incomplete and cannot be honored.
In general, you must withdraw at least $50 at a time.
Withdrawals from the Standard Fixed Account Option may be subject to a restriction. See Standard Fixed Account Option on page 38.
Withdrawals taken prior to the Payout Start Date are generally considered to come from the earnings in the Contract first. If the Contract is tax-qualified, generally all withdrawals are treated as distributions of earnings. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal penalty tax. If any withdrawal reduces your Contract Value to less than $1,000, we will treat the request as a withdrawal of the entire Contract Value, unless the SureIncome Withdrawal Benefit Option is currently attached to your Contract. If you request a total withdrawal, we may require that you return your Contract to us. Your Contract will terminate if you withdraw all of your Contract Value, subject to certain exceptions if the SureIncome Withdrawal Benefit Option is currently attached to your Contract. See SureIncome Withdrawal Benefit Option for more details. We will, however, ask you to confirm your withdrawal request before terminating your Contract. If we terminate your Contract, we will distribute to you its Contract Value, adjusted by any applicable Market Value Adjustment, less withdrawal and other charges and taxes.
WRITTEN REQUESTS AND FORMS IN GOOD ORDER. Written requests must include sufficient information and/or documentation, and be sufficiently clear, to enable us to complete your request without the need to exercise discretion on our part to carry it out. You may contact our Customer Service Center to learn what information we require for your particular request to be in good order. Additionally, we may require that you submit your request on our form. We reserve the right to determine whether any particular request is in good order, and to change or waive any good order requirements at any time.
POSTPONEMENT OF PAYMENTS
We may postpone the payment of any amounts due from the Variable Account under the Contract if:
1. The New York Stock Exchange is closed for other than usual weekends or holidays, or trading on the Exchange is otherwise restricted,
2. An emergency exists as defined by the SEC, or
3. The SEC permits delay for your protection.
We may delay payments or transfers from the Fixed Account Option(s) available under your Contract for up to 6 months or shorter period if required by law. If we delay payment or transfer for 30 days or more, we will pay interest as required by law.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly, quarterly, semi-annual, or annual basis at any time prior to the Payout Start Date. Please consult your sales representative or call us at 800-457-7617 for more information.
Depending on fluctuations in the value of the Variable Sub-Accounts and the value of the Fixed Account Options, systematic withdrawals may reduce or even exhaust the Contract Value. Income taxes may apply to systematic withdrawals. Please consult your tax advisor before taking any withdrawal.
We will make systematic withdrawal payments to you or your designated payee. At our discretion, we may modify or suspend the Systematic Withdrawal Program and charge a processing fee for the service. If we modify or suspend the Systematic Withdrawal Program, existing systematic withdrawal payments will not be affected.
MINIMUM CONTRACT VALUE
If your request for a partial withdrawal would reduce your Contract Value to less than $1,000, we may treat it as a request to withdraw your entire Contract Value, unless the SureIncome Withdrawal Benefit Option is currently attached to your Contract. Your Contract will terminate if you withdraw all of your Contract Value. We will, however, ask you to confirm your withdrawal request before
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terminating your Contract. If we terminate your Contract, we will distribute to you its Contract Value, adjusted by any applicable Market Value Adjustment, less withdrawal and other charges and applicable taxes.
Income Payments
PAYOUT START DATE
The Payout Start Date is the day that we apply your Contract Value, adjusted by any applicable Market Value Adjustment and less applicable taxes, to an Income Plan. The first income payment may occur no sooner than 30 days after the Issue Date. The Payout Start Date must occur on or before the later of:
the youngest Annuitants 99th birthday, or
the 10th Contract Anniversary.
You may change the Payout Start Date at any time by notifying us in writing of the change at least 30 days before the scheduled Payout Start Date. Absent a change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An Income Plan is a series of payments made on a scheduled basis to you or to another person designated by you. You may select more than one Income Plan. If you choose more than one Income Plan, you must specify what proportions of your Contract Value, adjusted by any Market Value Adjustment and less any applicable taxes, should be allocated to each such Income Plan. For tax reporting purposes, your cost basis and any gain on the Contract will be allocated proportionally to each Income Plan you select based on the proportion of your Contract Value applied to each such Income Plan. We reserve the right to limit the number of Income Plans that you may select. If you choose to add the Income Protection Benefit Option, certain restrictions may apply as described under Income Protection Benefit Option, below.
If you do not select an Income Plan, we will make income payments in accordance with Income Plan 1 with a Guaranteed Payment Period of 10 years. On the Payout Start Date, the portion of the Contract Value in any Fixed Account Option, adjusted by any applicable Market Value Adjustment and less any applicable taxes, will be used to derive fixed income payments; the portion of the Contract Value in any Variable Sub-account, less any applicable taxes, will be used to derive variable income payments.
If any Contract Owner dies during the Payout Phase, the new Contract Owner will be the surviving Contract Owner. If there is no surviving Contract Owner, the new Contract Owner will be the Beneficiary(ies) as described in the Beneficiary section of this prospectus. Any remaining income payments will be paid to the new Contract Owner as scheduled. Income payments to Beneficiaries may be subject to restrictions established by the Contract Owner. After the Payout Start Date, you may not make withdrawals (except as described below) or change your choice of Income Plan.
Currently seven Income Plans are available. Depending on the Income Plan(s) you choose, you may receive:
fixed income payments;
variable income payments; or
a combination of the two.
Partial annuitizations are not allowed. Your total Contract Value, adjusted by any applicable Market Value Adjustment, and less any applicable taxes, must be applied to your Income Plan(s) on the Payout Start Date.
A portion of each payment will be considered taxable and the remaining portion will be a non-taxable return of your investment in the Contract, which is also called the basis. Once the basis in the Contract is depleted, all remaining payments will be fully taxable. If the Contract is tax-qualified, generally, all payments will be fully taxable. Taxable payments taken prior to age 59 1/2 may be subject to an additional 10% federal tax penalty.
The seven Income Plans are:
Income Plan 1 Life Income with Guaranteed Number of Payments. Under this plan, we make periodic income payments for at least as long as the Annuitant lives. If the Annuitant dies in the Payout Phase, we will continue to pay income payments until the guaranteed number of payments has been paid. The number of months guaranteed (Guaranteed Payment Period) may be 0 months, or range from 60 to 360 months. If the Annuitant is age 90 or older as of the Payout Start Date, the Guaranteed Payment Period may range from 60 to 360 months.
Income Plan 2 Joint and Survivor Life Income with Guaranteed Number of Payments. Under this plan, we make periodic income payments for at least as long as either the Annuitant or the joint Annuitant, named at the time the Income Plan was selected, lives. If both the Annuitant and joint Annuitant die in the Payout Phase, we will continue to pay the income payments until the guaranteed number of payments has been paid. The Guaranteed Payment Period may be 0 months, or range from 60 to 360 months. If either the Annuitant or joint Annuitant is age 90 or older as of the Payout Start Date, the Guaranteed Payment Period may range from 60 to 360 months. You may elect a reduced survivor plan of 50%, 66% or 75% of the payment amount. If you do not elect a reduced survivor amount, the payments will remain at 100%. If you elect a reduced survivor payment plan, the amount of each income
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payment initially will be higher but a reduction will take place at the later of 1) the death of an Annuitant; or 2) at the end of the guaranteed payment period.
Income Plan 3 Guaranteed Number of Payments. Under this plan, we make periodic income payments for the period you have chosen. These payments do not depend on the Annuitants life. The shortest number of months guaranteed is 60 (120 if the Payout Start Date occurs prior to the third Contract Anniversary). The longest number of months guaranteed is 360 or the number of months between the Payout Start Date and the date that the Annuitant reaches age 100, if greater. In no event may the number of months guaranteed exceed 600. We will deduct the mortality and expense risk charge from the assets of the Variable Sub-account supporting this Income Plan even though we may not bear any mortality risk. You may make withdrawals, change the length of the guaranteed payment period, or change the frequency of income payments under Income Plan 3. See Modifying Payments and Payout Withdrawals below for more details.
Income Plan 4 Life Income with Cash Refund. Under this plan, we make periodic income payments until the death of the Annuitant. If the death of the Annuitant occurs before the total amount applied to an Income Plan is paid out, we will pay a lump sum payment of the remaining amount. Payments under this plan are available only as fixed income payments.
Income Plan 5 Joint Life Income with Cash Refund. Under this plan, we make periodic income payments until the deaths of both the Annuitant and joint Annuitant. If the deaths of both the Annuitant and joint Annuitant occur before the total amount applied to an Income Plan is paid out, we will pay a lump sum payment of the remaining amount. Currently, a reduced survivor plan is not available. Payments under this plan are available only as fixed income payments.
Income Plan 6 Life Income with Installment Refund. Under this plan, we make periodic income payments until the later of (1) the death of the Annuitant, or (2) the total amount paid out under the annuity is equal to the total amount applied to the Income Plan. If the death of the Annuitant occurs before the total amount applied to an Income Plan is paid out, we will continue to make payments in the same manner until any remaining payments are paid out. Payments under this plan are available only as fixed income payments.
Income Plan 7 Joint Life Income with Installment Refund. Under this plan, we make periodic income payments until the later of (1) the deaths of both the Annuitant and joint Annuitant, or (2) the total amount paid out under the annuity is equal to the total amount applied to the Income Plan. If the deaths of both the Annuitant and joint Annuitant occur before the total amount applied to an Income Plan is paid out, we will continue to make payments in the same manner until any remaining payments are paid out. Currently, a reduced survivor plan is not available. Payments under this plan are available only as fixed income payments.
If you choose an Income Plan with payments that continue for the life of the Annuitant or joint Annuitant, we may require proof of age and sex of the Annuitant or joint Annuitant before starting income payments, and proof that the Annuitant or joint Annuitant is alive before we make each payment. Please note that under Income Plans 1 and 2, if you do not select a Guaranteed Payment Period, it is possible that the payee could receive only one income payment if the Annuitant and any joint Annuitant both die before the second income payment, or only two income payments if they die before the third income payment, and so on.
The length of any Guaranteed Payment Period under your selected Income Plan generally will affect the dollar amounts of each income payment. As a general rule, longer Guarantee Payment Periods result in lower income payments, all other things being equal. For example, if you choose an Income Plan with payments that depend on the life of the Annuitant but with no guaranteed payments, the income payments generally will be greater than the income payments made under the same Income Plan with a specified Guaranteed Payment Period.
Modifying Payments
After the Payout Start Date, you may make the following changes under Income Plan 3:
You may request to modify the length of the Guaranteed Payment Period. Currently, we allow you to make this change once each Contract Year. We reserve the right to change this practice at any time without prior notice. If you elect to change the length of the Guaranteed Payment Period, the new Guaranteed Payment Period must be within the original minimum and maximum period you would have been permitted to select on the Payout Start Date. However, the maximum payment period permitted will be shortened by the period elapsed since the original Guaranteed Payment Period began. If you change the length of your Guaranteed Payment Period, we will compute the present value of your remaining payments, using the same assumptions we would use if you were terminating the income payments, as described in Payout Withdrawal. We will then adjust the remaining payments to equal what that value would support based on those same assumptions and based on the revised Guaranteed Payment Period.
You may request to change the frequency of your payments. We currently allow you to make this change once each Contract Year. We reserve the right to change this practice at any time without prior notice. Changes to either the frequency of payments or length of the Guaranteed Payment Period will result in a change to the payment amount and may change the amount of each payment that is taxable to you.
Modifying payments of this Contract may not be allowed under Qualified Contracts. In order to satisfy required minimum distributions (RMD) under current Treasury regulations, once income payments have begun over a Guaranteed Payment Period, the Guaranteed Payment Period cannot be changed even if the new period is shorter than the maximum permitted. Please consult with a competent tax advisor prior to making a request to modify payments if your Contract is subject to RMD requirements.
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Any change to either the frequency of payments or length of a Guaranteed Payment Period will take effect on the next payment date after we accept the requested change.
Payout Withdrawal
You may terminate all or a portion of the income payments being made under Income Plan 3 at any time and withdraw their present value (Withdrawal Value), subject to a Payout Withdrawal Charge, by requesting a withdrawal (Payout Withdrawal) in writing. For variable income payments, the withdrawal value is equal to the present value of the variable income payments being terminated, calculated using a discount rate equal to the assumed investment rate that was used in determining the initial variable payment. For fixed income payments, the withdrawal value is equal to the present value of the fixed income payments being terminated, calculated using a discount rate equal to the applicable current interest rate (this may be the initial interest rate in some states.) The applicable current interest rate is the rate we are using on the date we receive your Payout Withdrawal request to determine income payments for a new annuitization with a payment period equal to the remaining payment period of the income payments being terminated.
A Payout Withdrawal must be a least $50. If any Payout Withdrawal reduces the value of the remaining income payments to an amount not sufficient to provide an initial payment of at least $20, we reserve the right to terminate the Contract and pay you the present value of the remaining income payments in a lump sum. If you withdraw the entire value of the remaining income payments, the Contract will terminate.
You must specify the Investment Alternative(s) from which you wish to make a Payout Withdrawal. If you withdraw a portion of the value of your remaining income payments, the payment period will remain unchanged and your remaining payment amounts will be reduced proportionately.
Payout Withdrawal Charge
To determine the Payout Withdrawal Charge, we assume that purchase payments are withdrawn first, beginning with the oldest payment. When an amount equal to all purchase payments have been withdrawn, additional withdrawals will not be assessed a Payout Withdrawal Charge.
Payout Withdrawals will be subject to a Payout Withdrawal Charge for each Contract as follows:
|
Number of Complete Years Since We Received the Purchase | ||||||||
Contract: |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8+ |
Consultant Solutions Classic |
7 % |
7 % |
6 % |
5 % |
4 % |
3 % |
2 % |
0 % |
0 % |
Consultant Solutions Plus |
8.5 % |
8.5 % |
8.5 % |
7.5 % |
6.5 % |
5.5 % |
4 % |
2.5 % |
0 % |
Consultant Solutions Elite |
7 % |
6 % |
5 % |
0 % |
0 % |
0 % |
0 % |
0 % |
0 % |
Consultant Solutions Select |
None |
Additional Information. We may make other Income Plans available. You may obtain information about them by writing or calling us. On the Payout Start Date, you must specify the portion of the Contract Value to be applied to variable income payments and the portion to be applied to fixed income payments. For the portion of your Contract Value to be applied to variable income payments, you must also specify the Variable Sub-Accounts on which to base the variable income payments as well as the allocation among those Variable Sub-Accounts. If you do not tell us how to allocate your Contract Value among fixed and variable income payments, we will apply your Contract Value in the Variable Account to variable income payments and your Contract Value in the Fixed Account to fixed income payments.
We will apply your Contract Value, adjusted by any applicable Market Value Adjustment, less applicable taxes to your Income Plan(s) on the Payout Start Date. We can make income payments in monthly, quarterly, semi-annual or annual installments, as you select. If the Contract Value is less than $2,000 or not enough to provide an initial payment of at least $20, and state law permits, we may:
terminate the Contract and pay you the Contract Value, adjusted by any applicable Market Value Adjustment and less any applicable taxes, in a lump sum instead of the periodic payments you have chosen, or
reduce the frequency of your payments so that each payment will be at least $20.
VARIABLE INCOME PAYMENTS
The amount of your variable income payments depends upon the investment results of the Variable Sub-accounts you select, the premium taxes you pay, the age and sex of the Annuitant, and the Income Plan you choose. We guarantee that the payments will not be affected by (a) company mortality experience or (b) the amount of our administration expenses.
We cannot predict the total amount of your variable income payments, which may be more or less than your total purchase payments because (a) variable income payments vary with the investment results of the underlying Portfolios; and (b) under some of the Income Plans, we make income payments only so long as an Annuitant is alive or any applicable Guaranteed Payment Period has not yet expired.
In calculating the amount of the periodic payments in the annuity tables in the Contracts, we used an assumed investment rate (AIR, also known as benchmark rate) of 3%. Currently, you may choose either a 6%, 5%, or 3% AIR per year. If you select the Income Protection Benefit Option, however, the 3% AIR must apply. The 6% and 5% AIR may not be available in all states (check with your
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representative for availability). Currently, if you do not choose one, the 3% AIR will automatically apply. We reserve the right to offer other assumed investment rates. If the actual net investment return of the Variable Sub-accounts you choose is less than the AIR, then the dollar amount of your variable income payments will decrease. The dollar amount of your variable income payments will increase, however, if the actual net investment return exceeds the AIR. The dollar amount of the variable income payments stays level if the net investment return equals the AIR. With a higher AIR, your initial income payment will be larger than with a lower AIR. While income payments continue to be made, however, this disparity will become smaller and, if the payments have continued long enough, each payment will be smaller than if you had initially chosen a lower AIR.
Please refer to the Statement of Additional Information for more detailed information as to how we determine variable income payments.
You may also elect a variable income payment stream consisting of level monthly, quarterly or semi-annual payments. If you elect to receive level monthly, quarterly or semi-annual payments, the payments must be recalculated annually. You may only elect to receive level payments at or before the Payout Start Date. If you have elected level payments for an Income Plan(s), you may not make any variable to fixed payment transfers within such Income Plan(s). We will determine the amount of each annual payment as described above, place this amount in our general account, and then distribute it in level monthly, quarterly or semi-annual payments. The sum of the level payments will exceed the annual calculated amount because of an interest rate factor we use, which may vary from year to year, but will not be less than 2% per year. If the Annuitant dies while you are receiving level payments, you will not be entitled to receive any remaining level payments for that year (unless the Annuitant dies before the end of the Guaranteed Payment Period). For example, if you have selected Income Plan 1 with no Guaranteed Payment Period and the Annuitant dies during the year, the Beneficiary will not be entitled to receive the remaining level payments for that year.
INCOME PROTECTION BENEFIT OPTION
We offer an Income Protection Benefit Option, which may be added to your Contract on the Payout Start Date for an additional mortality and expense risk charge if you have selected variable income payments subject to the following conditions:
The Annuitant and joint Annuitant, if applicable, must be age 75 or younger on the Payout Start Date.
You must choose Income Plan 1 or 2 and the Guaranteed Payment Period must be for at least 120 months, unless the Internal Revenue Service requires a different payment period.
You may apply the Income Protection Benefit Option to more than one Income Plan.
The AIR must be 3% for the Income Plan(s) that you wish to apply this benefit to.
You may only add the Income Protection Benefit Option on the Payout Start Date and, once added, the option cannot be cancelled.
You may not add the Income Protection Benefit Option without our prior approval if your Contract Value is greater than $1,000,000 at the time you choose to add the Income Protection Benefit Option.
You may not convert variable income payments to fixed income payments.
If you select the Income Protection Benefit Option, we guarantee that your variable income payments under each of the Income Plans to which the option is applied will never be less that 85% of the initial variable amount income value (Income Protection Benefit), as calculated on the Payout Start Date under such Income Plans, unless you have elected a reduced survivor payment plan under Income Plan 2. If you have elected a reduced survivor payment plan, we guarantee that your variable income payments to which the option is applied will never be less than 85% of the initial variable amount income value prior to the later of 1) the death of an Annuitant; or 2) the end of the guaranteed payment period. On or after the later of these events, we guarantee that your variable income payments will never be less than 85% of the initial variable amount income value multiplied by the percentage you elected for your reduced survivor plan. See Appendix C for numerical examples that illustrate how the Income Protection Benefit is calculated.
If you add the Income Protection Benefit Option to your Contract, the mortality and expense risk charge during the Payout Phase will be increased. Currently, the charge for this option is 0.50%. We may change the amount we charge, but it will not exceed 0.75%. Once the option is issued, we will not increase what we charge you for the benefit.
Investment Requirements.
If you add the Income Protection Benefit Option to your Contract, you must adhere to certain requirements related to the investment alternatives in which you may invest during the Payout Phase with respect to the assets supporting the variable income payments to which the Income Protection Benefit Option applies. These requirements may include, but are not limited to, maximum investment limits on certain Variable Sub-accounts, exclusion of certain Variable Sub-accounts, required minimum allocations to certain Variable Sub-accounts, and restrictions on transfers to or from certain investment alternatives. We may also require that you use the Automatic Portfolio Rebalancing Program. We may change the specific requirements that are applicable at any time in our sole discretion. Any changes we make will not apply to the Income Protection Benefit Option if it was added to your Contract prior to the implementation date of the change, except for changes made due to a change in Variable Sub-accounts available under the Contract.
When you add the Income Protection Benefit Option to your Contract, you must allocate to a model portfolio option the entire portion of your Contract Value allocated to the Variable Sub-accounts.
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We currently offer one Model Portfolio Option; however, we may add more Model Portfolio Options in the future. Transfers made for purposes of adhering to your Model Portfolio Option will not count towards the number of free transfers you may make each Contract Year.
The following table summarizes the Model Portfolio Option currently available for use with the Income Protection Benefit Option:
* Model Portfolio Option 1
Each calendar quarter, we will use the Automatic Portfolio Rebalancing Program to automatically rebalance your Contract Value in each Variable Sub-account and return it to the percentage allocations for your Model Portfolio Option, using the percentage allocations as of your most recent instructions.
Model Portfolio Option 1
You must allocate a certain percentage of the portion of your Contract Value allocated to the Variable Sub-accounts into each of three asset categories. You may choose the Variable Sub-accounts in which you want to invest, provided you maintain the percentage allocation requirements for each category. You may also make transfers among the Variable Sub-accounts within each category at any time, provided you maintain the percentage allocation requirements for each category. However, each transfer you make will count against the 12 transfers you can make each Contract Year without paying a transfer fee.
The following table describes the percentage allocation requirements for Model Portfolio Options 1 and Variable Sub-accounts available under each category:
Model Portfolio Option 1
20% Category A
50% Category B
30% Category C
CATEGORY A
Fidelity® VIP Government Money Market Service Class 2 Sub-Account (formerly, Fidelity® VIP Money Market Service Class 2 Sub-Account)
PIMCO Money Market Administrative Shares Sub-Account
Model Portfolio Option 1
CATEGORY B
Fidelity® VIP Investment Grade Bond Service Class 2 Sub-Account
Western Asset Variable Global High Yield Bond Class II Sub-Account
MFS High Yield Service Class Sub-Account
PIMCO Foreign Bond (U.S. Dollar-Hedged) Administrative Shares Sub-Account
PIMCO Real Return Administrative Shares Sub-Account
PIMCO Total Return Administrative Shares Sub-Account
UIF U.S. Real Estate, Class II Sub-Account(6)
Invesco V.I. Government Securities, Series II Sub-Account
CATEGORY C
Invesco V.I. Value Opportunities Series II Sub-Account
Invesco V.I. Core Equity Series II Sub-Account
Invesco V.I. Mid Cap Core Equity Series II Sub-Account(5)
Fidelity® VIP Contrafund® Service Class 2 Sub-Account
Fidelity® VIP Equity-Income Service Class 2 Sub-Account
Fidelity® VIP Index 500 Service Class 2 Sub-Account
Fidelity® VIP Overseas Service Class 2 Sub-Account
Fidelity® VIP Asset Manager(SM) Service Class 2 Sub-Account
Janus Aspen Series Overseas Service Shares Sub-Account
Janus Aspen Series Forty Service Shares Sub-Account
Janus Aspen Series Perkins Mid Cap Value Service Shares Sub-Account(4)
Janus Aspen Series Balanced Service Shares Sub-Account
ClearBridge Variable Large Cap Value Class II Sub-Account
MFS Investors Trust Service Class Sub-Account
MFS® MA Investors Growth Stock Service Class Sub-Account(2)
MFS Total Return Service Class Sub-Account
MFS Value Service Class Sub-Account
Oppenheimer Discovery Mid Cap Growth Fund/VA Service Shares Sub-Account(1)
Oppenheimer Main Street Small Cap®/VA Service Shares Sub-Account
Guggenheim VIF Long Short Equity Sub-Account
T. Rowe Price Equity Income II Sub-Account
T. Rowe Price Blue Chip Growth II Sub-Account
Invesco V.I. Growth and Income, Series II Sub-Account
(1) Effective as of August 30, 2010, the following Variable Sub-Account closed to all Contract Owners except those Contract Owners who had contract value invested in the Variable Sub-Account as of the closure date:
Oppenheimer Discovery Mid Cap Growth Fund/VA Service Shares Sub-Account
Contract Owners who had contract value invested in this Variable Sub-Account as of the closure date may continue to submit additional investments into the Variable Sub-Account thereafter, although they will not be permitted to invest in the Variable Sub-Account if they withdraw or otherwise transfer their entire contract value from the Variable Sub-Account following the closure date. Contract Owners who did not have contract value invested in this Variable Sub-Account as of the specified closure date may not invest in the Variable Sub-Account.
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(2) On or about March 27, 2015, the MFS® MA Investors Growth Stock Portfolio Service Class, a portfolio of MFS® Variable Insurance Trust II, acquired the MFS® Investors Growth Stock Series Service Class, a series of MFS® Variable Insurance Trust.
(3) Effective May 1, 2015, the PIMCO Total Return Administrative Shares Sub Account is closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter. An application is pending with the Securities and Exchange Commission requesting an order to allow Lincoln Benefit to remove the PIMCO Total Return Portfolio Administrative Shares as an investment option under your variable annuity contract and substitute a new investment option, the BlackRock Total Return V.I. Portfolio Class I Shares. Lincoln Benefit anticipates that, if such order is granted, the proposed substitution will occur during the second quarter of 2016.
(4) Effective April 13, 2015, the Janus Aspen Series Perkins Mid Cap Value Service Shares sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
(5) Effective September 1, 2015, the Invesco V.I. Mid Cap Core Equity Fund Series II sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
(6) Effective February 23, 2016, the UIF U.S. Real Estate Portfolio, Class II sub-account was closed to all contract owners except those contract owners who have contract value invested in the variable sub-account as of the closure date. Contract owners who have contract value invested in the variable sub-account as of the closure date may continue to submit additional investments into the variable sub-account thereafter, although they will not be permitted to invest in the variable sub-account if they withdraw or otherwise transfer their entire contract value from the variable sub-account following the closure date. Contract owners who do not have contract value invested in the variable sub-account as of the closure date will not be permitted to invest in the variable sub-account thereafter.
FIXED INCOME PAYMENTS
We guarantee income payment amounts derived from any Fixed Account Option for the duration of the Income Plan. The guaranteed income payment amounts will change if the frequency of payments or the length of the payment period changes.
We calculate the fixed income payments by:
adjusting the portion of the Contract Value in any Fixed Account Option on the Payout Start Date by any applicable Market Value Adjustment;
deducting any applicable taxes; and
applying the resulting amount to the greater of: (a) the appropriate income payment factor for the selected Income Plan from the Income Payment Table in your Contract; or (b) such other income payment factor as we are offering on the Payout Start Date.
We may defer your request to make a withdrawal from fixed income payments for a period of up to 6 months or whatever shorter time state law may require. If we defer payments for 30 days or more, we will pay interest as required by law from the date we receive the withdrawal request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts covered by this prospectus contain income payment tables that provide for different payments to men and women of the same age, except in states that require unisex tables. We reserve the right to use income payment tables that do not distinguish on the basis of sex to the extent permitted by applicable law. In certain employment-related situations, employers are required by law to use the same income payment tables for men and women. Accordingly, if the Contract is used in connection with an employment-related retirement or benefit plan and we do not offer unisex annuity tables in your state, you should consult with legal counsel as to whether the Contract is appropriate.
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Death Benefits
DEATH PROCEEDS
Under certain conditions, described below, we will pay a death settlement (Death Proceeds) for this Contract on the death of the Contract Owner, Annuitant, or Co-Annuitant if the death occurs prior to the Payout Start Date. The Death Proceeds will not exceed the Contract Value plus $1 million. If the Owner or Annuitant dies after the Payout Start Date, we will pay remaining income payments as described in the Payout Phase section of your Contract. See Income Payments on page 50 for more information.
We will determine the value of the Death Proceeds as of the end of the Valuation Date during which we receive the first Complete Request for Settlement (the next Valuation Date, if we receive the request after 3:00 p.m. Central Time). In order to be considered a Complete Request for Settlement, a claim for distribution of the Death Proceeds must include Due Proof of Death in any of the following forms of documentation:
A certified copy of the death certificate;
A certified copy of a decree of a court of competent jurisdiction as to the finding of death; or
Any other proof acceptable to us.
Death Proceeds are determined based on when we receive a Complete Request for Settlement:
If we receive a Complete Request for Settlement within 180 days of the death of the Contract Owner, Annuitant, or Co-Annuitant, as applicable, the Death Proceeds are equal to the Death Benefit.
If we receive a Complete Request for Settlement more than 180 days after the death of the Contract Owner, Annuitant, or Co-Annuitant, as applicable, the Death Proceeds are equal to the greater of the Contract Value or Settlement Value. We reserve the right to waive or extend, in a nondiscriminatory manner, the 180-day period in which the Death Proceeds will equal the Death Benefit.
Where there are multiple Beneficiaries, we will only value the Death Proceeds at the time the first Beneficiary submits the necessary documentation in good order. Any Death Proceeds amounts attributable to any Beneficiary which remain in the Variable Sub-accounts are subject to investment risk.
DEATH BENEFIT OPTIONS
In addition to the ROP Death Benefit included in your Contract, we offer the following death benefit options which may be added to your Contract:
MAV Death Benefit Option
Annual Increase Death Benefit Option
Enhanced Earnings Death Benefit Option
The amount of the Death Benefit depends on which death benefit option(s) you select. Not all death benefit options are available in all states.
You may select any combination of death benefit options on the issue date of your Contract or at a later date, subject to state availability and issue age restrictions. You may not add any of the death benefit options to your Contract after Contract issue without our prior approval if your Contract Value is greater than $1,000,000 at the time you want to add an option.
The Death Benefit is equal to the Enhanced Earnings Death Benefit (if selected) plus the greatest of:
The Contract Value;
The Settlement Value;
The ROP Death Benefit;
The MAV Death Benefit Option (if selected); or
The Annual Increase Death Benefit Option (if selected).
The Settlement Value is the amount that would be paid in the event of a full withdrawal of the Contract Value.
The ROP Death Benefit is equal to the sum of all purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts), reduced by a proportional withdrawal adjustment for each withdrawal. The withdrawal adjustment is equal to the withdrawal amount divided by the Contract Value immediately prior to the withdrawal, and the result is multiplied by:
The sum of all purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) made prior to the withdrawal, less any prior withdrawal adjustments.
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Maximum Anniversary Value Death Benefit Option.
The MAV Death Benefit Option is available only if the oldest Contract Owner and Co-Annuitant, or, if the Contract is owned by a non-living person, the oldest Annuitant, are age 79 or younger on the Rider Application Date. There is an additional mortality and expense risk charge for this death benefit option, currently equal to 0.20%. We may change what we charge for this death benefit option, but it will never exceed 0.50%. Once added to your Contract, we guarantee that we will not increase the mortality and expense risk charge you pay for this death benefit option.
On the date we issue the rider for this benefit (Rider Date), the MAV Death Benefit is equal to the Contract Value. After the Rider Date and prior to the date we determine the Death Proceeds (see Death Proceeds on page 56), the MAV Death Benefit is recalculated each time a purchase payment or withdrawal is made as well as on each Contract Anniversary as follows:
Each time a purchase payment is made, the MAV Death Benefit is increased by the amount of the purchase payment (and Credit Enhancement for Consultant Solutions Plus Contracts).
Each time a withdrawal is made, the MAV Death Benefit is reduced by a proportional withdrawal adjustment, defined as the withdrawal amount divided by the Contract Value immediately prior to the withdrawal, and the result multiplied by the most recently calculated MAV Death Benefit.
On each Contract Anniversary until the first Contract Anniversary following the 80th birthday of the oldest Contract Owner or Co-Annuitant, whichever occurs first, or, if the Contract is owned by a non-living person, the oldest Annuitant, the MAV Death Benefit is recalculated as the greater of the Contract Value on that date or the most recently calculated MAV Death Benefit.
If no purchase payments or withdrawals are made after the Rider Date, the MAV Death Benefit will be equal to the greatest of the Contract Value on the Rider Date and the Contract Values on each subsequent Contract Anniversary after the Rider Date through the first Contract Anniversary following the 80th birthday of the oldest Contract Owner or Co-Annuitant, whichever occurs first, or, if the Contract is owned by a non-living person, the oldest Annuitant, but before the date we determine the Death Proceeds. If, upon death of the Contract Owner, the Contract is continued under Option D as described on page 60, and if the New Contract Owner is age 80 or younger on the date we determine the Death Proceeds, then the MAV Death Benefit Option will continue. The MAV Death Benefit will continue to be recalculated for purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts), withdrawals, and on each Contract Anniversary after the date we determine the Death Proceeds until the earlier of:
The first Contract Anniversary following the 80th birthday of either the oldest Contract Owner or the Co-Annuitant, whichever is earlier, or, if the Contract is owned by a non-living person, the oldest Annuitant. (After the 80th birthday of either the oldest Contract Owner or the Co-Annuitant, whichever is earlier, or, if the Contract is owned by a non-living person, the oldest Annuitant, the MAV Death Benefit will be recalculated only for purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) and withdrawals); or
The date we next determine the Death Proceeds.
Annual Increase Death Benefit Option.
The Annual Increase Death Benefit Option is only available if the oldest Contract Owner and Co-Annuitant, or, if the Contract is owned by a non-living person, the oldest Annuitant, are age 79 or younger on the Rider Application Date. There is an additional mortality and expense risk charge for this death benefit option, currently equal to 0.30%. We may change what we charge for this death benefit option, but it will never exceed 0.50%. Once added to your Contract, we guarantee that we will not increase the mortality and expense risk charge you pay for this death benefit option.
On the date we issue the rider for this benefit (Rider Date), the Annual Increase Death Benefit is equal to the Contract Value. The Annual Increase Death Benefit, plus purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) made after the Rider Date and less withdrawal adjustments for withdrawals made after the Rider Date, will accumulate interest on a daily basis at a rate equivalent to 5% per year (may be 3% in certain states), subject to the Cap defined below. This accumulation will continue until the earlier of:
(a) the first Contract Anniversary following the 80th birthday of the oldest Contract Owner or Co-Annuitant, whichever occurs first, or, if the Contract is owned by a non-living person, the oldest Annuitant; or
(b) the date we determine the Death Proceeds.
After the 5% interest accumulation (may be 3% in certain states) ends, the Annual Increase Death Benefit will continue to be increased by purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) and reduced by withdrawal adjustments for withdrawals until the death benefit option terminates. The withdrawal adjustment is a proportional adjustment, defined as the withdrawal amount divided by the Contract Value immediately prior to the withdrawal, and the result multiplied by the amount of the Annual Increase Death Benefit immediately prior to the withdrawal.
The Annual Increase Death Benefit Cap is equal to:
200% of the Contract Value as of the Rider Date; plus
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200% of purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) made after the Rider Date, but excluding any purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) made in the 12-month period immediately prior to the death of a Contract Owner or the Co-Annuitant, or, if the Contract is owned by a non-living person, an Annuitant; minus
Withdrawal adjustments for any withdrawals made after the Rider Date. Refer to Appendix E for withdrawal adjustment examples.
If, upon death of the Contract Owner, the Contract is continued under Option D as described on page 60, and if the New Contract Owner is age 80 or younger on the date we determine the Death Proceeds, then the Annual Increase Death Benefit Option will continue. The amount of the Annual Increase Death Benefit as of the date we determine the Death Proceeds, plus subsequent purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts), less withdrawal adjustments for any subsequent withdrawals, will accumulate daily at a rate equivalent to 5% per year (may be 3% in certain states) from the date we determine the Death Proceeds, until the earlier of:
The first Contract Anniversary following the 80th birthday of either the oldest Contract Owner or the Co-Annuitant, whichever is earlier, or, if the Contract is owned by a non-living person, the oldest Annuitant. (After the 80th birthday of either the oldest Contract Owner or the Co-Annuitant, whichever is earlier, or, if the Contract is owned by a non-living person, the oldest Annuitant, the Annual Increase Death Benefit will be recalculated only for purchase payments and withdrawals (and Credit Enhancements for Consultant Solutions Plus Contracts)); or
The date we next determine the Death Proceeds.
Enhanced Earnings Death Benefit Option.
The Enhanced Earnings Death Benefit Option is only available if the oldest Contract Owner and Co-Annuitant, or, if the Contract is owned by a non-living person, the oldest Annuitant, are age 79 or younger on the Rider Application Date. There is an additional mortality and expense risk charge for this death benefit option, currently equal to:
0.25%, if the oldest Contract Owner and Co-Annuitant, or, if the Contract is owned by a non-living person, the oldest Annuitant, are age 70 or younger on the Rider Application Date; and
0.40%, if the oldest Contract Owner or, if older, the Co-Annuitant, or, if the Contract is owned by a non-living person, the oldest Annuitant, is age 71 or older and age 79 or younger on the Rider Application Date.
We may change what we charge for this death benefit option, but it will never exceed 0.35% for issue ages 0-70 and 0.50% for issue ages 71-79. Once added to your Contract, we guarantee that we will not increase the mortality and expense risk charge you pay for this death benefit option. However, if your spouse elects to continue the Contract in the event of your death and if he or she elects to continue the Enhanced Earnings Death Benefit Option, the mortality and expense risk charge for the death benefit option will be based on the ages of the oldest new Contract Owner and the Co-Annuitant, or, if the Contract is owned by a non-living person, the oldest Annuitant, at the time the Contract is continued.
If the oldest Contract Owner and Co-Annuitant, or, if the Contract is owned by a non-living person, the oldest Annuitant, are age 70 or younger on the Rider Application Date, the Enhanced Earnings Death Benefit is equal to the lesser of:
100% of In-Force Premium (excluding purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) made after the date we issue the rider for this benefit (Rider Date) and during the twelve-month period immediately prior to the death of a Contract Owner or Co-Annuitant, or, if the Contract is owned by a non-living person, an Annuitant); or
40% of In-Force Earnings
calculated as of the date we determine the Death Proceeds.
If the oldest Contract Owner or, if older, the Co-Annuitant, or, if the Contract is owned by a non-living person, the oldest Annuitant, is age 71 or older and age 79 or younger on the Rider Application Date, the Enhanced Earnings Death Benefit is equal to the lesser of:
50% of In-Force Premium (excluding purchase payments (and Credit Enhancements for Consultant Solutions Plus Contracts) made after the Rider Date and during the twelve-month period immediately prior to the death of a Contract Owner or Co-Annuitant, or, if the Contract is owned by a non-living person, an Annuitant); or
25% of In-Force Earnings
calculated as of the date we determine the Death Proceeds.
In-Force Earnings are equal to the current Contract Value less In-Force Premium. If this quantity is negative, then In-Force Earnings are equal to zero.
In-Force Premium is equal to the Contract Value on the Rider Date, plus the sum of all purchase payments, including any associated credit enhancements, made after the Rider Date, less the sum of all Excess-of-Earnings Withdrawals made after the Rider Date.
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An Excess-of-Earnings Withdrawal is equal to the excess, if any, of the amount of the withdrawal over the amount of the In-Force Earnings immediately prior to the withdrawal.
Refer to Appendix E for numerical examples that illustrate how the Enhanced Earnings Death Benefit Option is calculated.
If, upon death of the Contract Owner, the Contract is continued under Option D as described on page 60, and if the New Contract Owner is younger than age 80 on the date we determine the Death Proceeds, then this death benefit option will continue unless the New Contract Owner elects to terminate the death benefit option. If the death benefit option is continued, the following will apply as of the date we determine the Death Proceeds upon continuation:
The Rider Date will be changed to the date we determine the Death Proceeds;
The In-Force Premium is equal to the Contract Value as of the new Rider Date plus all purchase payments, including any associated credit enhancements, made after the Rider Date, less the sum of all the Excess-of-Earnings Withdrawals made after the Rider Date;
The Enhanced Earnings Death Benefit after the new Rider Date will be determined as described above, but using the ages of the oldest Contract Owner and Co-Annuitant, or, if the Contract is owned by a non-living person, the oldest Annuitant, as of the new Rider Date.
The mortality and expense risk charge, for this rider, will be determined as described above, but using the ages of the oldest Contract Owner and Co-Annuitant, or, if the Contract is owned by a non-living person, the oldest Annuitant, as of the new Rider Date.
If the Contract Owners, Co-Annuitants or Annuitants age is misstated, the Enhanced Earnings Death Benefit and the mortality and expense risk charge for this death benefit option will be calculated according to the corrected age as of the Rider Date. Your Contract Value will be adjusted to reflect the mortality and expense risk charge for this death benefit option that should have been assessed based on the corrected age.
ALL OPTIONS.
We reserve the right to impose limitations on the Investment Alternatives in which you may invest as a condition of these options. These restrictions may include, but are not limited to, maximum investment limits on certain investment alternatives, exclusion of certain investment alternatives, required minimum allocations to certain investment alternatives, restrictions on transfers to and from certain investment alternatives, and/or the required use of Automatic Portfolio Rebalancing. Currently, no such restrictions are being imposed.
These death benefit options will terminate and the corresponding Rider Fee will cease on the earliest of the following to occur:
the date the Contract is terminated;
if, upon the death of the Contract Owner, the Contract is continued under Option D as described in the Death of Owner section on page 60, and the New Owner is older than age 80 (age 80 or older for the Enhanced Earnings Death Benefit Option) on the date we determine the Death Proceeds. The death benefit option will terminate on the date we determine the Death Proceeds;
if the Contract is not continued in the Accumulation Phase under either the Death of Owner or Death of Annuitant provisions of the Contract. The death benefit option will terminate on the date we determine the Death Proceeds;
on the date the Contract Owner (if the current Contract Owner is a living person) is changed for any reason other than death unless the New Contract Owner is a trust and the Annuitant is a current Contract Owner;
on the date the Contract Owner (if the current Contract Owner is a non-living person) is changed for any reason unless the New Contract Owner is a non-living person or is a current Annuitant; or
the Payout Start Date.
Notwithstanding the preceding, in the event of the Contract Owners death, if the Contract Owners spouse elects to continue the Contract (as permitted in the Death of Owner provision below) he or she may terminate the Enhanced Earnings Death Benefit at that time.
DEATH BENEFIT PAYMENTS
Death of Contract Owner
If a Contract Owner dies prior to the Payout Start Date, then the surviving Contract Owners will be the New Contract Owners. If there are no surviving Contract Owners, then subject to any restrictions previously placed upon them, the Beneficiaries will be the New Contract Owners.
If there is more than one New Contract Owner taking a share of the Death Proceeds, each New Contract Owner will be treated as a separate and independent Contract Owner of his or her respective share of the Death Proceeds. Each New Contract Owner will exercise all rights related to his or her share of the Death Proceeds, including the sole right to elect one of the Option(s) below, subject to any restrictions previously placed upon the New Contract Owner. Each New Contract Owner may designate a Beneficiary(ies) for his or her respective share, but that designated Beneficiary(ies) will be restricted to the Option chosen by the original New Contract Owner.
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The Options available to each New Contract Owner will be determined by the applicable following Category in which the New Contract Owner is defined. An Option will be deemed to have been chosen on the day we receive written notification in a form satisfactory to us. If we do not receive instructions on where to send the payment within 5 years of the date of death, the funds will be escheated.
New Contract Owner Categories
Category 1. If your spouse (or Annuitants spouse in the case of a grantor trust-owned Contract) is the sole New Contract Owner of the entire Contract, your spouse must choose from among the death settlement Options A, B, C, D, or E described below. If he or she does not choose one of these Options, then Option D will apply.
Category 2. If the New Contract Owner is a living person who is not your spouse (or Annuitants spouse in the case of a grantor trust-owned Contract), or there is more than one New Contract Owner, all of whom are living persons, each New Contract Owner must choose from among the death settlement Options A, B, C, or E described below. If a New Contract Owner does not choose one of these Options, then Option C will apply for that New Contract Owner.
Category 3. If there are one or more New Contract Owner(s) and at least one of the New Contract Owners is a non-living person such as a corporation or a trust, all New Contract Owners are considered to be non-living persons for purposes of the death settlement options. Each New Contract Owner must choose death settlement Option A or C described below. If a New Contract Owner does not choose one of these Options, then Option C will apply for that New Contract Owner.
The death settlement options we currently offer are:
Option A. The New Contract Owner may elect to receive the Death Proceeds in a lump sum.
Option B. The New Contract Owner may elect to apply the Death Proceeds to one of the Income Plans described above. Such income payments must begin within one year of the date of death and must be payable:
Over the life of the New Contract Owner; or
For a guaranteed payment period of at least 5 years (60 months), but not to exceed the life expectancy of the New Contract Owner; or
Over the life of the New Contract Owner with a guaranteed payment period of at least 5 years (60 months), but not to exceed the life expectancy of the New Contract Owner.
Option C. The New Contract Owner may elect to receive the Contract Value payable within 5 years of the date of death. The Contract Value, as of the date we receive the first Complete Request for Settlement, will be reset to equal the Death Proceeds as of that date. Any excess amount of the Death Proceeds over the Contract Value on that date will be allocated to the PIMCO Money Market Variable Sub-account unless the New Contract Owner provides other allocation instructions.
The New Contract Owner may not make any additional purchase payments under this option. Withdrawal charges will be waived for any withdrawals made during the 5-year period after the date of death; however, amounts withdrawn may be subject to Market Value Adjustments. The New Contract Owner may exercise all rights set forth in the Transfers provision.
If the New Contract Owner dies before the Contract Value is completely withdrawn, the New Contract Owners Beneficiary(ies) will receive the greater of the remaining Settlement Value or the remaining Contract Value within 5 years of the date of the original Contract Owners death.
Option D. The New Contract Owner may elect to continue the Contract in the Accumulation Phase. If the Contract Owner was also the Annuitant, then the New Contract Owner will be the new Annuitant. This Option may only be exercised once per Contract. The Contract Value, as of the date we receive the first Complete Request for Settlement, will be reset to equal the Death Proceeds as of that date. Note that if you elected to receive required minimum distributions under a Minimum Distribution Option, the program will be discontinued upon receipt of notification of death. The final required minimum distribution must be distributed prior to establishing a beneficiary payment option for the balance of the Contract.
Unless otherwise instructed by the continuing spouse, the excess, if any, of the Death Proceeds over the Contract Value will be allocated to the Sub-accounts of the Variable Account. This excess will be allocated in proportion to your Contract Value in those Sub-accounts as of the end of the Valuation Date that we receive the complete request for settlement except that any portion of this excess attributable to the Fixed Account Options will be allocated to the PIMCO Money Market Variable Sub-account.
Within 30 days after the date we determine the Death Proceeds, the New Contract Owner may transfer all or a portion of the excess of the Death Proceeds, if any, into any combination of Variable Sub-accounts, the Standard Fixed Account and the Market Value Adjusted Fixed Account without incurring a transfer fee. Any such transfer does not count as one of the free transfers allowed each Contract Year and is subject to any minimum allocation amount specified in this Contract.
The New Contract Owner may make a single withdrawal of any amount within one year of the date of your death without incurring a Withdrawal Charge; however, the amount withdrawn may be subject to a Market Value Adjustment and a 10% tax penalty if the New Contract Owner is under age 59 1/2.
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Option E. For Nonqualified Contracts, the New Contract Owner may elect to make withdrawals at least annually of amounts equal to the Annual Required Distribution calculated for each calendar year. The first such withdrawal must occur within:
One year of the date of death;
The same calendar year as the date we receive the first Complete Request for Settlement; and
One withdrawal frequency.
The New Contract Owner must select the withdrawal frequency (monthly, quarterly, semi-annual, or annual). Once this option is elected and frequency of withdrawals is chosen, they cannot be changed by the New Contract Owner and become irrevocable.
In the calendar year in which the Death Proceeds are determined, the Annual Required Distribution is equal to the Contract Value on the date of the first distribution divided by the Life Expectancy of the New Contract Owner and the result multiplied by a fraction that represents the portion of the calendar year remaining after the date of the first distribution. (The Contract Value, as of the date we receive the Complete Request for Settlement, will be reset to equal the Death Proceeds as of that date. The Contract Value on the date of the first distribution may be more or less than the Contract Value as of the date we receive the Complete Request for Settlement.) The Life Expectancy in that calendar year is equal to the life expectancy value from IRS Tables based on the age of the New Contract Owner as of his or her birthday in the same calendar year.
In any subsequent calendar year, the Annual Required Distribution is equal to the Contract Value as of December 31 of the prior year divided by the remaining Life Expectancy of the New Contract Owner. In each calendar year after the calendar year in which the first distribution occurred, the Life Expectancy of the New Contract Owner is the Life Expectancy calculated in the previous calendar year minus one (1) year. If the Life Expectancy is less than one (1), the Annual Required Distribution is equal to the Contract Value.
If the New Contract Owner dies before the Contract Value is completely withdrawn, the scheduled withdrawals will continue to be paid to the New Contract Owners Beneficiary(ies). The Contract Value invested in the Variable Sub-Accounts will be subject to investment risk until it is withdrawn.
We reserve the right to offer additional death settlement options.
Death of Annuitant
If the Annuitant dies prior to the Payout Start Date, then the surviving Contract Owners will have the Options available to the New Contract Owner, determined by the applicable following category in which the New Contract Owner is defined, unless:
The Annuitant was also the Contract Owner, in which case the Death of Owner provisions above apply; or
The Contract Owner is a grantor trust established by a living person, in which case the Beneficiary(ies) will be deemed the New Contract Owners and the Death of Contract Owner provisions above will apply.
Surviving Contract Owner Categories
Category 1. If the Owner is a living person, the Contract will continue in the Accumulation Phase with a new Annuitant. The Contract Value will not be increased by any excess of the Death Proceeds over the Contract Value as of the date that we determine the value of the Death Proceeds.
The new Annuitant will be:
A person you name by written request, subject to the conditions described in the Annuitant section of this Contract; otherwise,
The youngest Owner; otherwise,
The youngest Beneficiary.
Category 2. If the Owner is a corporation, trust, or other non-living person, the Owner must choose between the following two options:
Option A. The Owner may elect to receive the Death Proceeds in a lump sum.
Option B. The Owner may elect to receive the Contract Value payable within 5 years of the Annuitants date of death. Under this Option, the excess, if any, of the Death Proceeds over the Contract Value, as of the date that we determine the value of the Death Proceeds, will be added to the Contract Value. Unless otherwise instructed by the Owner, this excess will be allocated to the PIMCO Money Market Variable Sub-account. During the 5 year period that follows the Annuitants date of death, the Owner may exercise all rights as set forth in the Transfers section. Withdrawal Charges will be waived for any withdrawals made during this 5 year period, however, the amount withdrawal may be subject to a Market Value Adjustment.
No additional purchase payments may be added to the Contract under this section. Withdrawal Charges will be waived for any withdrawals made during this 5 year period.
We reserve the right to offer additional death settlement options.
Qualified Contracts
The death settlement options for Qualified Plans, including IRAs, may be different to conform with the individual tax requirements of each type of Qualified Plan. Please refer to your Endorsement for IRA plans, if applicable, for additional information on your death
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settlement options. In the case of certain qualified plans, the terms of the plans may govern the right to benefits, regardless of the terms of the Contract.
Spousal Protection Benefit (Co-Annuitant) Option and Death of Co-Annuitant
We offer a Spousal Protection Benefit (Co-Annuitant) Option that may be added to your Contract subject to the following conditions:
The individually owned Contract must be either a traditional, Roth, or Simplified Employee Pension IRA.
The Contract Owners spouse must be the sole Primary Beneficiary of the Contract and will be the named Co-Annuitant.
The Contract Owner must be age 90 or younger on the Rider Application Date; and the Co-Annuitant must be age 79 or younger on the Rider Application Date.
The option may only be added when we issue the Contract or within 6 months of the Contract Owners marriage. We may require proof of marriage in a form satisfactory to us. Currently, you may not add the option to your Contract without our prior approval if your Contract Value is greater than $1,000,000 at the time you choose to add the Option.
Under the Spousal Protection Benefit Option, the Co-Annuitant will be considered to be an Annuitant under the Contract during the Accumulation Phase except that the Co-Annuitant will not be considered to be an Annuitant for purposes of determining the Payout Start Date and the Death of Annuitant provision of your Contract does not apply on the death of the Co-Annuitant.
You may change the Co-Annuitant to a new spouse only if you provide proof of remarriage in a form satisfactory to us. Once we accept a change, the change will take effect on the date you signed the request. Each change is subject to any payment we make or other action we take before we accept it. At any time, there may only be one Co-Annuitant under your Contract.
There is an annual Rider Fee of 0.10% of the Contract Value for Options added on or after May 1, 2005. For Options added prior to this date, there is no charge for this Option. We reserve the right to assess an annual Rider Fee not to exceed 0.15% for Options added in the future. Once this Option is added to your Contract, we guarantee that we will not increase what we charge you for this Option. For Contracts purchased on or after May 1, 2005, we may discontinue offering the Spousal Protection Benefit (Co-Annuitant) Option at any time.
The option will terminate upon the date your written termination request is accepted by us or will terminate on the earliest of the following occurrences:
upon the death of the Co-Annuitant (as of the date we determine the Death Proceeds);
upon the death of the Contract Owner (as of the date we determine the Death Proceeds);
on the date the Contract is terminated;
on the Payout Start Date; or
on the date you change the beneficiary of the Contract and the change is accepted by us;
for options added on or after May 1, 2005, the Contract Owner may terminate the option upon the divorce of the Contract Owner and the Co-Annuitant by providing written notice and proof of divorce in a form satisfactory to us;
for options added prior to May 1, 2005, the Owner may terminate this option at anytime by written notice in a form satisfactory to us.
Once the Option is terminated, a new Spousal Protection Benefit (Co-Annuitant) Option cannot be added to the Contract unless the last Option attached to the Contract was terminated due to divorce or a change of beneficiary.
Death of Co-Annuitant. If the Co-Annuitant dies prior to the Payout Start Date, subject to the following conditions, the Contract will be continued according to Option D under the Death of Owner provision of your Contract:
The Co-Annuitant must have been your legal spouse on the date of his or her death; and
Option D of the Death of Owner provision of your Contract has not previously been exercised.
The Contract may only be continued once under Option D under the Death of Owner provision. For a description of Option D, see the Death of Owner section of this prospectus.
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Description of Lincoln Benefit Life Company and the Variable Account
LINCOLN BENEFIT LIFE COMPANY
Lincoln Benefit is a stock life insurance company organized under the laws of the state of Nebraska in 1938. Our legal domicile and principal business address is 1221 N Street, Suite 200, Lincoln, NE 68508. Lincoln Benefit is a wholly-owned subsidiary of Resolution Life, Inc., a Delaware corporation, which is a wholly-owned, indirect subsidiary of Resolution Life L.P. a Bermuda limited partnership and Resolution Life (Parallel) Partnership, a Bermuda-based partnership.
We are authorized to conduct life insurance and annuity business in the District of Columbia, Guam, U.S. Virgin Islands and all states except New York. We will market the Contract everywhere we conduct variable annuity business. The Contracts covered by this prospectus are issued by us and will be funded in the Variable Account and/or the Fixed Account.
Lincoln Benefit has reinsurance agreements whereby certain premiums, contract charges, interest credited to contractholder funds, benefits and expenses are ceded to Allstate Life Insurance Company (Allstate Life) and other non-affiliated reinsurers. The benefits and provisions of the Contracts have not been changed by these transactions and agreements. None of the transactions or agreements has changed the fact that we are primarily liable to you for your Contract.
State Regulation of Lincoln Benefit
We are subject to the laws of Nebraska and regulated by the Nebraska Department of Insurance. Every year we file an annual statement with the Department of Insurance covering our operations for the previous year and our financial condition as of the end of the year. We are inspected periodically by the Department of Insurance to verify our contract liabilities and reserves. Our books and records are subject to review by the Department of Insurance at all times. We are also subject to regulation under the insurance laws of every jurisdiction in which we operate.
Financial Statements
The financial statements of Lincoln Benefit and the financial statements of the Separate Account, which are comprised of the financial statements of the underlying Sub-Accounts, are set forth in the Statement of Additional Information.
VARIABLE ACCOUNT
Lincoln Benefit Life Variable Annuity Account was originally established in 1992, as a segregated asset account of Lincoln Benefit. The Variable Account meets the definition of a separate account under the federal securities laws and is registered with the SEC as a unit investment trust under the Investment Company Act of 1940. The SEC does not supervise the management of the Variable Account or Lincoln Benefit.
We own the assets of the Variable Account, but we hold them separate from our other assets. To the extent that these assets are attributable to the Contract Value of the Contracts covered by this prospectus, these assets are not chargeable with liabilities arising out of any other business we may conduct. Income, gains, and losses, whether or not realized, from assets allocated to the Variable Account are credited to or charged against the Variable Account without regard to our other income, gains, or losses. Our obligations arising under the Contracts are general corporate obligations of Lincoln Benefit.
The Variable Account is divided into Sub-accounts. The assets of each Sub-account are invested in the shares of one of the Portfolios. We do not guarantee the investment performance of the Variable Account, its Sub-accounts or the Portfolios. Values allocated to the Variable Account and the amount of Variable Annuity payments will rise and fall with the values of shares of the Portfolios and are also reduced by Contract charges. We may also use the Variable Account to fund our other annuity contracts. We will account separately for each type of annuity contract funded by the Variable Account.
We have included additional information about the Variable Account in the Statement of Additional Information. You may obtain a copy of the Statement of Additional Information by writing to us or calling us at 1-800-457-7617. We have reproduced the Table of Contents of the Statement of Additional Information on page 75.
THE PORTFOLIOS
Dividends and Capital Gain Distributions. We automatically reinvest all dividends and capital gains distributions from the Portfolios in shares of the distributing Portfolios at their net asset value.
Voting Privileges. As a general matter, you do not have a direct right to vote the shares of the Portfolios held by the Variable Sub-Accounts to which you have allocated your Contract Value. Under current law, however, you are entitled to give us instructions on how to vote those shares on certain matters. Based on our present view of the law, we will vote the shares of the Portfolios that we hold directly or indirectly through the Variable Account in accordance with instructions that we receive from Contract Owners entitled to give such instructions.
As a general rule, before the Payout Start Date, the Contract Owner or anyone with a voting interest is the person entitled to give voting instructions. The number of shares that a person has a right to instruct will be determined by dividing the Contract Value
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allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio as of the record date of the meeting. After the Payout Start Date the person receiving income payments has the voting interest. The payees number of votes will be determined by dividing the reserve for such Contract allocated to the applicable Sub-Account by the net asset value per share of the corresponding Portfolio. The votes decrease as income payments are made and as the reserves for the Contract decrease.
We will vote shares attributable to Contracts for which we have not received instructions, as well as shares attributable to us, in the same proportion as we vote shares for which we have received instructions, unless we determine that we may vote such shares in our own discretion. We will apply voting instructions to abstain on any item to be voted upon on a pro-rata basis to reduce the votes eligible to be cast.
We reserve the right to vote Portfolio shares as we see fit without regard to voting instructions to the extent permitted by law. If we disregard voting instructions, we will include a summary of that action and our reasons for that action in the next semi-annual financial report we send to you.
Changes in Portfolios. If the shares of any of the Portfolios are no longer available for investment by the Variable Account or if, in our judgment, further investment in such shares is no longer desirable in view of the purposes of the Contract, we may eliminate that Portfolio and substitute shares of another eligible investment fund. Any substitution of securities will comply with the requirements of the Investment Company Act of 1940. We also may add new Variable Sub-Accounts that invest in additional underlying funds. We will notify you in advance of any change.
Conflicts of Interest. Certain of the Portfolios sell their shares to separate accounts underlying both variable life insurance and variable annuity contracts. It is conceivable that in the future it may be unfavorable for variable life insurance separate accounts and variable annuity separate accounts to invest in the same Portfolio. The board of directors/trustees of these Portfolios monitors for possible conflicts among separate accounts buying shares of the Portfolios. Conflicts could develop for a variety of reasons. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, the Portfolios board of directors/trustees may require a separate account to withdraw its participation in a Portfolio. A Portfolios net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account withdrawing because of a conflict.
THE CONTRACTS
Distribution. Allstate Distributors, LLC (ADLLC), located at 3075 Sanders Road, Northbrook, IL 60062-7154 serves as distributor of the Contracts. ADLLC is a wholly owned subsidiary of Allstate Life. ADLLC is registered as a broker-dealer under the Securities Exchange Act of 1934, as amended, and is a member of the Financial Industry Regulatory Authority (FINRA).
ADLLC does not sell Contracts directly to purchasers. ADLLC enters into selling agreements with affiliated and unaffiliated broker-dealers and banks to sell the Contracts through their registered representatives. The broker-dealers are registered with the SEC and are FINRA member firms. Their registered representatives are licensed as insurance agents by applicable state insurance authorities and appointed as agents of Lincoln Benefit in order to sell the Contracts. Contracts also may be sold by representatives or employees of banks that may be acting as broker-dealers without separate registration under the Exchange Act, pursuant to legal and regulatory exceptions.
We will pay commissions to broker-dealers and banks which sell the Contracts. Commissions paid vary, but we may pay up to a maximum sales commission of 7.5% of total purchase payments. In addition, we may pay ongoing annual compensation of up to 1.25% of Contract Value. Individual representatives receive a portion of compensation paid to the broker-dealer or bank with which they are associated in accordance with the broker-dealers or banks practices. We estimate that commissions and annual compensation, when combined, will not exceed 8.5% of total purchase payments. However, commissions and annual compensation could exceed that amount because ongoing annual compensation is related to Contract Value and the number of years the Contract is held.
From time to time, we pay asset-based compensation and/or marketing allowances to banks and broker-dealers. These payments vary among individual banks and broker dealers, and the asset-based payments may be up to 0.25% of Contract Value annually. These payments are intended to contribute to the promotion and marketing of the Contracts, and they vary among banks and broker-dealers. The marketing and distribution support services include but are not limited to: (1) placement of the Contracts on a list of preferred or recommended products in the banks or broker-dealers distribution system; (2) sales promotions with regard to the Contracts; (3) participation in sales conferences; and (4) helping to defray the costs of sales conferences and educational seminars for the bank or broker-dealers registered representatives. A list of broker-dealers and banks that ADLLC paid pursuant to such arrangements is provided in the Statement of Additional Information, which is available upon request. For a free copy, please write or call us at the address or telephone number listed on the front page of this prospectus, or go to the SECs Web site (http://www.sec.gov).
To the extent permitted by FINRA rules and other applicable laws and regulations, we may pay or allow other promotional incentives or payments in the form of cash or non-cash compensation. We may not offer the arrangements to all broker-dealers and banks and the terms of the arrangement may differ among broker-dealers and banks.
Individual registered representatives, broker-dealers, banks, and branch managers within some broker-dealers and banks participating in one of these compensation arrangements may receive greater compensation for selling the contract than for selling a different contact that is not eligible for the compensation arrangement. While we take the compensation into account when establishing contract
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charges, any such compensation will be paid by us or ADLLC and will not result in any additional charge to you. Your registered representative can provide you with more information about the compensation arrangements that apply to the sale of the contract.
Lincoln Benefit does not pay ADLLC a commission for distribution of the Contracts. ADLLC compensates its representatives who act as wholesalers, and their sales management personnel, for Contract sales. This compensation is based on a percentage of premium payments and/or a percentage of Contract values. The underwriting agreement with ADLLC provides that we will reimburse ADLLC for expenses incurred in distributing the Contracts, including any liability to Contract Owners arising out of services rendered or Contracts issued.
Lincoln Benefit and ADLLC have also entered into wholesaling agreements with certain independent contractors and their broker-dealers. Under these agreements, compensation based on a percentage of premium payments and/or Contract values is paid to the wholesaling broker-dealer for the wholesaling activities of their registered representative.
Administration. We have primary responsibility for all administration of the Contracts and the Variable Account. We entered into an administrative services agreement with Allstate Life. Allstate Life has entered into an administrative services agreement with The Prudential Insurance Company of America (PICA), pursuant to which PICA or an affiliate provides administrative services to the Variable Account and the Contracts on our behalf. In addition, PICA entered into a master services agreement with se2, LLC, of 5801 SW 6th Avenue, Topeka, Kansas 66636, whereby se2, LLC provides certain business process outsourcing services with respect to the Contracts. se2, LLC may engage other service providers to provide certain administrative functions. These service providers may change over time, and as of December 31, 2015, consisted of the following: NTT DATA, Inc. (administrative services) located at 100 City Square, Boston, MA 02129; RR Donnelley Global Investment Markets, a division of RR Donnelley & Sons Company (compliance printing and mailing) located at 111 South Wacker Drive, Chicago, IL 60606; Jayhawk File Express, LLC (file storage and document destruction) located at 601 E. 5th Street, Topeka, KS 66601-2596; Co-Sentry.net, LLC (back-up printing and disaster recovery) located at 9394 West Dodge Rd, Suite 100, Omaha, NE 68114; Convey Compliance Systems, Inc. (withholding calculations and tax statement mailing) located at 3650 Annapolis Lane, Suite 190, Plymouth, MN 55447; Spangler Graphics, LLC (compliance mailings) located at 29305 44th Street, Kansas City, KS 66106; Veritas Document Solutions, LLC (compliance mailings) located at 913 Commerce Ct, Buffalo Grove, IL 60089; Records Center of Topeka, a division of Underground Vaults & Storage, Inc. (back-up tapes storage) located at 1540 NW Gage Blvd. #6, Topeka, KS 66618; Venio LLC, d/b/a Keane (lost shareholder search) located at PO Box 1508, Southeastern, PA 19399-1508; DST Systems, Inc. (FAN mail, positions, prices) located at 333 West 11 Street, 5th Floor, Kansas City, MO 64105.
In administering the Contracts, the following services are provided, among others:
maintenance of Contract Owner records;
Contract Owner services;
calculation of unit values;
maintenance of the Variable Account; and
preparation of Contract Owner reports.
We will send you Contract statements at least annually. We will also send you transaction confirmations. You should notify us promptly in writing of any address change. You should read your statements and confirmations carefully and verify their accuracy. You should contact us promptly if you have a question about a periodic statement or a confirmation. We will investigate all complaints and make any necessary adjustments retroactively, but you must notify us of a potential error within a reasonable time after the date of the questioned statement. If you wait too long, we will make the adjustment as of the date that we receive notice of the potential error. Correspondence you send by regular mail to our service center should be sent to P.O. Box 758566, Topeka, KS 66675-8566. Your correspondence will be picked up at this address and then delivered to our service center. Your correspondence is not considered received by us until it is received at our service center. Where this prospectus refers to the day when we receive a purchase payment, request, election, notice, transfer or any other transaction request from you, we mean the day on which that item (or the last requirement needed for us to process that item) arrives in complete and proper form at our service center or via the appropriate telephone or fax number if the item is a type we accept by those means. There are two main exceptions: if the item arrives at our service center (1) on a day that is not a business day, or (2) after the close of a business day, then, in each case, we are deemed to have received that item on the next business day.
We will also provide you with additional periodic and other reports, information and prospectuses as may be required by federal securities laws.
We provide information about cyber security risks associated with this Contract in the Statement of Additional Information.
ANNUITIES HELD WITHIN A QUALIFIED PLAN
If you use the Contract within an employer sponsored qualified retirement plan, the plan may impose different or additional conditions or limitations on withdrawals, waivers of withdrawal charges, death benefits, Payout Start Dates, income payments, and other Contract features. In addition, adverse tax consequences may result if Qualified Plan limits on distributions and other conditions are not met.
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Please consult your Qualified Plan administrator for more information. Lincoln Benefit no longer issues deferred annuities to employer sponsored qualified retirement plans.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Variable Account. Lincoln Benefit is engaged in routine lawsuits which, in our managements judgment, are not of material importance to the respective total assets or material with respect to the Variable Account.
LEGAL MATTERS
Matters of Nebraska law pertaining to the Contract, including the validity of the Contract and Lincoln Benefits right to issue the Contract under Nebraska law, have been passed upon by Lamson Dugan & Murray LLP, Omaha, Nebraska.
Taxes
The following discussion is general and is not intended as tax advice. Lincoln Benefit makes no guarantee regarding the tax treatment of any Contract or transaction involving a Contract.
Federal, state, local and other tax consequences of ownership or receipt of distributions under an annuity contract depend on your individual circumstances. If you are concerned about any tax consequences with regard to your individual circumstances, you should consult a competent tax adviser.
TAXATION OF LINCOLN BENEFIT LIFE COMPANY
Lincoln Benefit is taxed as a life insurance company under Part I of Subchapter L of the Code. Since the Variable Account is not an entity separate from Lincoln Benefit, and its operations form a part of Lincoln Benefit, it will not be taxed separately. Investment income and realized capital gains of the Variable Account are automatically applied to increase reserves under the Contract. Under existing federal income tax law, Lincoln Benefit believes that the Variable Account investment income and capital gains will not be taxed to the extent that such income and gains are applied to increase the reserves under the Contract. Accordingly, Lincoln Benefit does not anticipate that it will incur any federal income tax liability attributable to the Variable Account, and therefore Lincoln Benefit does not intend to make provisions for any such taxes. If Lincoln Benefit is taxed on investment income or capital gains of the Variable Account, then Lincoln Benefit may impose a charge against the Variable Account in order to make provision for such taxes.
TAXATION OF VARIABLE ANNUITIES IN GENERAL
Tax Deferral. Generally, you are not taxed on increases in the Contract Value until a distribution occurs. This rule applies only where:
the Contract Owner is a natural person,
the investments of the Variable Account are adequately diversified according to Treasury Department regulations, and
Lincoln Benefit is considered the owner of the Variable Account assets for federal income tax purposes.
Non-Natural Owners. Non-natural owners are also referred to as Non Living Owners in this prospectus. As a general rule, annuity contracts owned by non-natural persons such as corporations, trusts, or other entities are not treated as annuity contracts for federal income tax purposes. The income on such contracts does not enjoy tax deferral and is taxed as ordinary income received or accrued by the non-natural owner during the taxable year.
Exceptions to the Non-Natural Owner Rule. There are several exceptions to the general rule that annuity contracts held by a non-natural owner are not treated as annuity contracts for federal income tax purposes. Contracts will generally be treated as held by a natural person if the nominal owner is a trust or other entity which holds the contract as agent for a natural person. However, this special exception will not apply in the case of an employer who is the nominal owner of an annuity contract under a non-Qualified deferred compensation arrangement for its employees. Other exceptions to the non-natural owner rule are: (1) contracts acquired by an estate of a decedent by reason of the death of the decedent; (2) certain qualified contracts; (3) contracts purchased by employers upon the termination of certain Qualified Plans; (4) certain contracts used in connection with structured settlement agreements; and (5) immediate annuity contracts, purchased with a single premium, when the annuity starting date is no later than a year from purchase of the annuity and substantially equal periodic payments are made, not less frequently than annually, during the annuity period.
Trusts are required to complete and submit a Certificate of Entity form, and we will tax report based on the information provided on this form.
Grantor Trust Owned Annuity. Contracts owned by a grantor trust are considered owned by a non-natural owner. Grantor trust owned contracts receive tax deferral as described in the Exceptions to the Non-Natural Owner Rule section. In accordance with the Code, upon the death of the annuitant, the death benefit must be paid. According to your Contract, the Death Benefit is paid to the beneficiary. A trust named beneficiary, including a grantor trust, has two options for receiving any death benefits: 1) a lump sum payment, or 2) payment deferred up to five years from date of death.
Diversification Requirements. For a Contract to be treated as an annuity for federal income tax purposes, the investments in the Variable Account must be adequately diversified consistent with standards under Treasury Department regulations. If the investments in the Variable Account are not adequately diversified, the Contract will not be treated as an annuity contract for federal
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income tax purposes. As a result, the income on the Contract will be taxed as ordinary income received or accrued by the Contract owner during the taxable year. Although Lincoln Benefit does not have control over the Portfolios or their investments, we expect the Portfolios to meet the diversification requirements.
Ownership Treatment. The IRS has stated that a contract owner will be considered the owner of separate account assets if he possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. At the time the diversification regulations were issued, the Treasury Department announced that the regulations do not provide guidance concerning circumstances in which investor control of the separate account investments may cause a Contract owner to be treated as the owner of the separate account. The Treasury Department also stated that future guidance would be issued regarding the extent that owners could direct sub-account investments without being treated as owners of the underlying assets of the separate account.
Your rights under the Contract are different than those described by the IRS in private and published rulings in which it found that Contract owners were not owners of separate account assets. For example, if your contract offers more than twenty (20) investment alternatives you have the choice to allocate premiums and contract values among a broader selection of investment alternatives than described in such rulings. You may be able to transfer among investment alternatives more frequently than in such rulings. These differences could result in you being treated as the owner of the Variable Account. If this occurs, income and gain from the Variable Account assets would be includible in your gross income. Lincoln Benefit does not know what standards will be set forth in any regulations or rulings which the Treasury Department may issue. It is possible that future standards announced by the Treasury Department could adversely affect the tax treatment of your Contract. We reserve the right to modify the Contract as necessary to attempt to prevent you from being considered the federal tax owner of the assets of the Variable Account. However, we make no guarantee that such modification to the Contract will be successful.
Taxation of Partial and Full Withdrawals. If you make a partial withdrawal under a Non-Qualified Contract, amounts received are taxable to the extent the Contract Value, without regard to surrender charges, exceeds the investment in the Contract. The investment in the Contract is the gross premium paid for the contract minus any amounts previously received from the Contract if such amounts were properly excluded from your gross income. If you make a full withdrawal under a Non-Qualified Contract, the amount received will be taxable only to the extent it exceeds the investment in the Contract.
Taxation of Annuity Payments. Generally, the rule for income taxation of annuity payments received from a Non-Qualified Contract provides for the return of your investment in the Contract in equal tax-free amounts over the payment period. The balance of each payment received is taxable. For fixed annuity payments, the amount excluded from income is determined by multiplying the payment by the ratio of the investment in the Contract (adjusted for any refund feature or period certain) to the total expected value of annuity payments for the term of the Contract. If you elect variable annuity payments, the amount excluded from taxable income is determined by dividing the investment in the Contract by the total number of expected payments. The annuity payments will be fully taxable after the total amount of the investment in the Contract is excluded using these ratios. If any variable payment is less than the excludable amount you should contact a competent tax advisor to determine how to report any unrecovered investment. The federal tax treatment of annuity payments is unclear in some respects. As a result, if the IRS should provide further guidance, it is possible that the amount we calculate and report to the IRS as taxable could be different. If you die, and annuity payments cease before the total amount of the investment in the Contract is recovered, the unrecovered amount will be allowed as a deduction for your last taxable year.
Partial Annuitization
Effective January 1, 2011, an individual may partially annuitize their non-qualified annuity if the contract so permits. The Small Business Jobs Act of 2010 included a provision which allows for a portion of a non-qualified annuity, endowment or life insurance contract to be annuitized while the balance is not annuitized. The annuitized portion must be paid out over 10 or more years or over the lives of one or more individuals. The annuitized portion of the contract is treated as a separate contract for purposes of determining taxability of the payments under IRC section 72. We do not currently permit partial annuitization.
Taxation of Level Monthly Variable Annuity Payments. You may have an option to elect a variable income payment stream consisting of level monthly payments that are recalculated annually. Although we will report your levelized payments to the IRS in the year distributed, it is possible the IRS could determine that receipt of the first monthly payout of each annual amount is constructive receipt of the entire annual amount. If the IRS were to take this position, the taxable amount of your levelized payments would be accelerated to the time of the first monthly payout and reported in the tax year in which the first monthly payout is received.
Withdrawals After the Payout Start Date. Federal tax law is unclear regarding the taxation of any additional withdrawal received after the Payout Start Date. It is possible that a greater or lesser portion of such a payment could be taxable than the amount we determine.
Distribution at Death Rules. In order to be considered an annuity contract for federal income tax purposes, the Contract must provide:
if any Contract Owner dies on or after the Payout Start Date but before the entire interest in the Contract has been distributed, the remaining portion of such interest must be distributed at least as rapidly as under the method of distribution being used as of the date of the Contract Owners death;
if any Contract Owner dies prior to the Payout Start Date, the entire interest in the Contract will be distributed within 5 years after the date of the Contract Owners death. These requirements are satisfied if any portion of the Contract Owners interest
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that is payable to (or for the benefit of) a designated Beneficiary is distributed over the life of such Beneficiary (or over a period not extending beyond the life expectancy of the Beneficiary) and the distributions begin within 1 year of the Contract Owners death. If the Contract Owners designated Beneficiary is the surviving spouse of the Contract Owner, the Contract may be continued with the surviving spouse as the new Contract Owner;
if the Contract Owner is a non-natural person, then the Annuitant will be treated as the Contract Owner for purposes of applying the distribution at death rules. In addition, a change in the Annuitant on a Contract owned by a non-natural person will be treated as the death of the Contract Owner.
Prior to a 2013 Supreme Court decision, and consistent with Section 3 of the federal Defense of Marriage Act (DOMA), same sex marriages under state law were not recognized as same sex marriages for purposes of federal law. However, in United States v. Windsor, the U.S. Supreme Court struck down Section 3 of DOMA as unconstitutional, thereby recognizing a valid same sex marriage for federal law purposes. On June 26, 2015, the Supreme Court ruled in Obergefell v. Hodges that same-sex couples have a constitutional right to marry, thus requiring all states to allow same-sex marriage. The Windsor and Obergefell decisions mean that the federal and state tax law provisions applicable to an opposite sex spouse will also apply to a same sex spouse. Please note that a civil union or registered domestic partnership is generally not recognized as a marriage.
Please consult with your tax or legal advisor for more information
Taxation of Annuity Death Benefits. Death Benefit amounts are included in income as follows:
if distributed in a lump sum, the amounts are taxed in the same manner as a total withdrawal, or
if distributed under an Income Plan, the amounts are taxed in the same manner as annuity payments.
Medicare Tax on Net Investment Income. The Patient Protection and Affordable Care Act, enacted in 2010, included a Medicare tax on investment income. This tax assesses a 3.8% surtax on the lesser of (1) net investment income or (2) the excess of modified adjusted gross income over a threshold amount. The threshold amount is $250,000 for married taxpayers filing jointly, $125,000 for married taxpayers filing separately, $200,000 for single taxpayers, and approximately $12,300 for trusts. The taxable portion of payments received as a withdrawal, surrender, annuity payment, death benefit payment or any other actual or deemed distribution under the contract will be considered investment income for purposes of this surtax.
Penalty Tax on Premature Distributions. A 10% penalty tax applies to the taxable amount of any premature distribution from a non-Qualified Contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions:
made on or after the date the Contract Owner attains age 59 1/2,
made as a result of the Contract Owners death or becoming totally disabled,
made in substantially equal periodic payments (as defined by the Code) over the Contract Owners life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary,
made under an immediate annuity and the annuity start date is no more than one year from the date of purchase (the first annuity payment must commence within 13 months of the date of purchase), or
attributable to investment in the Contract before August 14, 1982.
You should consult a competent tax advisor to determine how these exceptions may apply to your situation.
Substantially Equal Periodic Payments. With respect to non-Qualified Contracts using substantially equal periodic payments or immediate annuity payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other material modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the Contract Owners attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. A material modification does not include permitted changes described in published IRS rulings. You should consult a competent tax advisor prior to creating or modifying a substantially equal periodic payment stream.
Tax Free Exchanges under Internal Revenue Code Section 1035. A 1035 exchange is a tax-free exchange of a non-Qualified life insurance contract, endowment contract or annuity contract into a non-Qualified annuity contract. The contract owner(s) must be the same on the old and new contract. Basis from the old contract carries over to the new contract so long as we receive that information from the relinquishing company. If basis information is never received, we will assume that all exchanged funds represent earnings and will allocate no cost basis to them. After you elect an Income Plan, as described in the Income Payments section earlier in the prospectus, you are not eligible for a tax-free exchange under Section 1035.
Partial Exchanges. The IRS has issued rulings that permit partial exchanges of annuity contracts. Effective for exchanges on or after October 24, 2011, where there is a surrender or distribution from either the initial annuity contract or receiving annuity contract within 180 days of the date on which the partial exchange was completed, the IRS will apply general tax rules to determine the substance and treatment of the original transfer.
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If a partial exchange is retroactively negated, the amount originally transferred to the recipient contract is treated as a withdrawal from the source contract, taxable to the extent of any gain in that contract on the date of the exchange. An additional 10% tax penalty may also apply if the Contract Owner is under age 59 1/2. Your Contract may not permit partial exchanges.
Taxation of Ownership Changes. If you transfer a non-Qualified Contract without full and adequate consideration to a person other than your spouse (or to a former spouse incident to a divorce), you will be taxed on the difference between the Contract Value and the investment in the Contract at the time of transfer. Any assignment or pledge (or agreement to assign or pledge) of the Contract Value is taxed as a withdrawal of such amount or portion and may also incur the 10% penalty tax.
Aggregation of Annuity Contracts. The Code requires that all non-Qualified deferred annuity contracts issued by Lincoln Benefit (or its affiliates) to the same Contract Owner during any calendar year be aggregated and treated as one annuity contract for purposes of determining the taxable amount of a distribution.
INCOME TAX WITHHOLDING
Generally, Lincoln Benefit is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made or no U.S. taxpayer identification number is provided we will automatically withhold the required 10% of the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory.
Lincoln Benefit is required to withhold federal income tax using the wage withholding rates for all annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number.
Generally, Code Section 1441 provides that Lincoln Benefit as a withholding agent must withhold 30% of the taxable amounts paid to a non-resident alien. A non- resident alien is someone other than a U.S. citizen or resident alien. We require an original IRS Form W-8BEN at issue to certify the owners foreign status. Withholding may be reduced or eliminated if covered by an income tax treaty between the U.S. and the non-resident aliens country of residence if the payee provides a U.S. taxpayer identification number on a fully completed Form W-8BEN. A U.S. taxpayer identification number is a social security number or an individual taxpayer identification number (ITIN). ITINs are issued by the IRS to non-resident alien individuals who are not eligible to obtain a social security number. The U.S. does not have a tax treaty with all countries nor do all tax treaties provide an exclusion or lower withholding rate for annuities.
Certain payees may be subject to the Foreign Accounts Tax Compliance Act (FATCA) which may require 30% mandatory withholding for certain entities. Please consult with your tax advisor for additional information regarding FATCA.
TAX QUALIFIED CONTRACTS
The income on tax sheltered annuity (TSA) and IRA investments is tax deferred, and the income from annuities held by such plans does not receive any additional tax deferral. You should review the annuity features, including all benefits and expenses, prior to purchasing an annuity as a TSA or IRA. Tax Qualified Contracts are contracts purchased as or in connection with:
Individual Retirement Annuities (IRAs) under Code Section 408(b);
Roth IRAs under Code Section 408A;
Simplified Employee Pension (SEP IRA) under Code Section 408(k);
Savings Incentive Match Plans for Employees (SIMPLE IRA) under Code Section 408(p);
Tax Sheltered Annuities under Code Section 403(b);
Corporate and Self Employed Pension and Profit Sharing Plans under Code Section 401; and
State and Local Government and Tax-Exempt Organization Deferred Compensation Plans under Code Section 457.
Lincoln Benefit reserves the right to limit the availability of the Contract for use with any of the retirement plans listed above or to modify the Contract to conform with tax requirements. If you use the Contract within an employer sponsored qualified retirement plan, the plan may impose different or additional conditions or limitations on withdrawals, waiver of charges, death benefits, Payout Start Dates, income payments, and other Contract features. In addition, adverse tax consequences may result if Qualified Plan limits on distributions and other conditions are not met. Please consult your Qualified Plan administrator for more information. Lincoln Benefit no longer issues deferred annuities to employer sponsored qualified retirement plans.
The tax rules applicable to participants with tax qualified annuities vary according to the type of contract and the terms and conditions of the endorsement. Adverse tax consequences may result from certain transactions such as excess contributions, premature distributions, and, distributions that do not conform to specified commencement and minimum distribution rules. Lincoln Benefit can issue an individual retirement annuity on a rollover or transfer of proceeds from a decedents IRA, TSA, or employer sponsored retirement plan under which the decedents surviving spouse is the beneficiary. Lincoln Benefit does not offer an individual retirement
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annuity that can accept a transfer of funds for any other, non-spousal, beneficiary of a decedents IRA, TSA, or employer sponsored qualified retirement plan. Note that in 2014, the U.S. Supreme Court ruled that Inherited IRAs, other than IRAs inherited by the owners spouse, do not qualify as retirement assets for purposes of protection under the federal bankruptcy laws.
Please refer to your Endorsement for IRAs or 403(b) plans, if applicable, for additional information on your death settlement options. In the case of certain Qualified Plans, the terms of the Qualified Plan Endorsement and the plans may govern the right to benefits, regardless of the terms of the Contract.
Taxation of Withdrawals from an Individually Owned Tax Qualified Contract. If you make a partial withdrawal under a Tax Qualified Contract other than a Roth IRA, the portion of the payment that bears the same ratio to the total payment that the investment in the Contract (i.e., nondeductible IRA contributions) bears to the Contract Value, is excluded from your income. We do not keep track of nondeductible contributions, and generally all tax reporting of distributions from Tax Qualified Contracts other than Roth IRAs will indicate that the distribution is fully taxable.
Qualified distributions from Roth IRAs are not included in gross income. Qualified distributions are any distributions made more than five taxable years after the taxable year of the first contribution to any Roth IRA and which are:
made on or after the date the Contract Owner attains age 59 1/2,
made to a beneficiary after the Contract Owners death,
attributable to the Contract Owner being disabled, or
made for a first time home purchase (first time home purchases are subject to a lifetime limit of $10,000).
Nonqualified distributions from Roth IRAs are treated as made from contributions first and are included in gross income only to the extent that distributions exceed contributions.
Required Minimum Distributions. Generally, Tax Qualified Contracts (excluding Roth IRAs) require minimum distributions upon reaching age 70 1/2. Failure to withdraw the required minimum distribution will result in a 50% tax penalty on the shortfall not withdrawn from the Contract. Effective December 31, 2005, the IRS requires annuity contracts to include the actuarial present value of other benefits for purposes of calculating the required minimum distribution amount. These other benefits may include accumulation, income, or death benefits. Not all income plans offered under the Contract satisfy the requirements for minimum distributions. Because these distributions are required under the Code and the method of calculation is complex, please see a competent tax advisor.
The Death Benefit and Tax Qualified Contracts. Pursuant to the Code and IRS regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA) may not invest in life insurance contracts. However, an IRA may provide a death benefit that equals the greater of the purchase payments or the Contract Value. The Contract offers a death benefit that in certain circumstances may exceed the greater of the purchase payments or the Contract Value. We believe that the Death Benefits offered by your Contract do not constitute life insurance under these regulations.
It is also possible that certain death benefits that offer enhanced earnings could be characterized as an incidental death benefit. If the death benefit were so characterized, this could result in current taxable income to a Contract Owner. In addition, there are limitations on the amount of incidental death benefits that may be provided under Qualified Plans, such as in connection with a TSA or employer sponsored qualified retirement plan.
Lincoln Benefit reserves the right to limit the availability of the Contract for use with any of the Qualified Plans listed above.
Penalty Tax on Premature Distributions from Tax Qualified Contracts. A 10% penalty tax applies to the taxable amount of any premature distribution from a Tax Qualified Contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions:
made on or after the date the Contract Owner attains age 59 1/2,
made as a result of the Contract Owners death or total disability,
made in substantially equal periodic payments (as defined by the Code) over the Contract Owners life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary,
made after separation from service after age 55 (does not apply to IRAs),
made pursuant to an IRS levy,
made for certain medical expenses,
made to pay for health insurance premiums while unemployed (applies only for IRAs),
made for qualified higher education expenses (applies only for IRAs)
made for a first time home purchase (up to a $10,000 lifetime limit and applies only for IRAs), and
from an IRA or attributable to elective deferrals under a 401(k) plan, 403(b) annuity, or certain similar arrangements made to individuals who (because of their being members of a reserve component) are ordered or called to active duty after Sept. 11, 2001, for a period of more than 179 days or for an indefinite period; and made during the period beginning on the date of the order or call to duty and ending at the close of the active duty period.
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During the first 2 years of the individuals participation in a SIMPLE IRA, distributions that are otherwise subject to the premature distribution penalty, will be subject to a 25% penalty tax.
You should consult a competent tax advisor to determine how these exceptions may apply to your situation.
Substantially Equal Periodic Payments on Tax Qualified Contracts. With respect to Tax Qualified Contracts using substantially equal periodic payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other material modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the taxpayers attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. A material modification does not include permitted changes described in published IRS rulings. You should consult a competent tax advisor prior to creating or modifying a substantially equal periodic payment stream.
Income Tax Withholding on Tax Qualified Contracts. Generally, Lincoln Benefit is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions that are not considered eligible rollover distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made or if no U.S. taxpayer identification number is provided, we will automatically withhold the required 10% from the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory. Lincoln Benefit is required to withhold federal income tax at a rate of 20% on all eligible rollover distributions unless you elect to make a direct rollover of such amounts to an IRA or eligible retirement plan. Eligible rollover distributions generally include all distributions from Tax Qualified Contracts, including TSAs but excluding IRAs, with the exception of:
required minimum distributions, or,
a series of substantially equal periodic payments made over a period of at least 10 years, or,
a series of substantially equal periodic payments made over the life (joint lives) of the participant (and beneficiary), or,
hardship distributions.
With respect to any Contract held under a Section 457 plan or by the trustee of a Section 401 Pension or Profit Sharing Plan, we will not issue payments directly to a plan participant or beneficiary. Consequently, the obligation to comply with the withholding requirements described above will be the responsibility of the plan.
For all annuitized distributions that are not subject to the 20% withholding requirement, Lincoln Benefit is required to withhold federal income tax using the wage withholding rates. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number.
Generally, Code Section 1441 provides that Lincoln Benefit as a withholding agent must withhold 30% of the taxable amounts paid to a non-resident alien. A non-resident alien is someone other than a U.S. citizen or resident alien. We require an original IRS Form W-8BEN at issue to certify the owners foreign status. Withholding may be reduced or eliminated if covered by an income tax treaty between the U.S. and the non-resident aliens country of residence if the payee provides a U.S. taxpayer identification number on a fully completed Form W-8BEN. A U.S. taxpayer identification number is a social security number or an individual taxpayer identification number (ITIN). ITINs are issued by the IRS to non-resident alien individuals who are not eligible to obtain a social security number. The U.S. does not have a tax treaty with all countries nor do all tax treaties provide an exclusion or lower withholding rate for annuities.
Certain payees may be subject to the Foreign Accounts Tax Compliance Act (FATCA) which may require 30% mandatory withholding for certain entities. Please consult with your tax advisor for additional information regarding FATCA.
Charitable IRA Distributions. Certain qualified IRA distributions for charitable purposes are eligible for an exclusion from gross income, up to $100,000 for otherwise taxable IRA distributions from a traditional or Roth IRA. A qualified charitable distribution is a distribution that is made (1) directly by the IRA trustee to certain qualified charitable organizations and (2) on or after the date the IRA owner attains age 70 1/2. Distributions that are excluded from income under this provision are not taken into account in determining the individuals deductions, if any, for charitable contributions.
The IRS has indicated that an IRA trustee is not responsible for determining whether a distribution to a charity is one that satisfies the requirements of the charitable giving incentive. Consistent with the applicable IRS instructions, we report these distributions as normal IRA distributions on Form 1099-R. Individuals are responsible for reflecting the distributions as charitable IRA distributions on their personal tax returns.
Individual Retirement Annuities. Code Section 408(b) permits eligible individuals to contribute to an individual retirement program known as an Individual Retirement Annuity (IRA). Individual Retirement Annuities are subject to limitations on the amount that can be contributed and on the time when distributions may commence. Certain distributions from other types of qualified retirement plans may be rolled over on a tax-deferred basis into an Individual Retirement Annuity. For IRA rollovers, an individual
71
can only make an IRA to IRA rollover if the individual has not made a rollover involving any IRAs owned by the individual in the prior 12 months. An IRA transfer is a tax-free trustee-to-trustee transfer from one IRA account to another. IRA transfers are not subject to this 12 month rule.
Roth Individual Retirement Annuities. Code Section 408A permits eligible individuals to make nondeductible contributions to an individual retirement program known as a Roth Individual Retirement Annuity. Roth Individual Retirement Annuities are subject to limitations on the amount that can be contributed and on the time when distributions may commence.
A traditional Individual Retirement Account or Annuity may be converted or rolled over to a Roth Individual Retirement Annuity. For distributions after 2007, the Pension Protection Act of 2006 allows distributions from qualified retirement plans including tax sheltered annuities and governmental Section 457 plans to be rolled over directly into a Roth IRA, subject to the usual rules that apply to conversions from a traditional IRA into a Roth IRA. The income portion of a conversion or rollover distribution is taxable currently, but is exempted from the 10% penalty tax on premature distributions. Prior to January 1, 2010, income and filing status limitations applied to rollovers from non-Roth accounts to a Roth IRA. Effective January 1, 2005, the IRS requires conversions of annuity contracts to include the actuarial present value of other benefits for purposes of valuing the taxable amount of the conversion.
Annuities Held By Individual Retirement Accounts (commonly known as Custodial IRAs). Code Section 408 permits a custodian or trustee of an Individual Retirement Account to purchase an annuity as an investment of the Individual Retirement Account. If an annuity is purchased inside of an Individual Retirement Account, then the Annuitant must be the same person as the beneficial owner of the Individual Retirement Account.
If you have a contract issued as an IRA under Code Section 408(b) and request to change the ownership to an IRA custodian permitted under Section 408, we will treat a request to change ownership from an individual to a custodian as an indirect rollover. We will send a Form 1099R to report the distribution and the custodian should issue a Form 5498 for the contract value contribution.
Generally, the death benefit of an annuity held in an Individual Retirement Account must be paid upon the death of the Annuitant. However, in most states, the Contract permits the custodian or trustee of the Individual Retirement Account to continue the Contract in the accumulation phase, with the Annuitants surviving spouse as the new Annuitant, if the following conditions are met:
1) The custodian or trustee of the Individual Retirement Account is the owner of the annuity and has the right to the death proceeds otherwise payable under the Contract;
2) The deceased Annuitant was the beneficial owner of the Individual Retirement Account;
3) We receive a complete request for settlement for the death of the Annuitant; and
4) The custodian or trustee of the Individual Retirement Account provides us with a signed certification of the following:
(a) The Annuitants surviving spouse is the sole beneficiary of the Individual Retirement Account;
(b) The Annuitants surviving spouse has elected to continue the Individual Retirement Account as his or her own Individual Retirement Account; and
(c) The custodian or trustee of the Individual Retirement Account has continued the Individual Retirement Account pursuant to the surviving spouses election.
Simplified Employee Pension IRA (SEP IRA). Code Section 408(k) allows eligible employers to establish simplified employee pension plans for their employees using individual retirement annuities. These employers may, within specified limits, make deductible contributions on behalf of the employees to the individual retirement annuities. Employers intending to use the Contract in connection with such plans should seek competent tax advice.
Savings Incentive Match Plans for Employees (SIMPLE IRA). Code Section 408(p) allows eligible employers with 100 or fewer employees to establish SIMPLE retirement plans for their employees using individual retirement annuities. In general, a SIMPLE IRA consists of a salary deferral program for eligible employees and matching or non-elective contributions made by employers. Employers intending to purchase the Contract as a SIMPLE IRA should seek competent tax and legal advice. SIMPLE IRA plans must include the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2007 (EGTRRA) to avoid adverse tax consequences. If your current SIMPLE IRA plan uses IRS Model Form 5304-SIMPLE with a revision date of March 2012 or later, then your plan is up to date. If your plan has a revision date prior to March 2012, please consult with your tax or legal advisor to determine the action you need to take in order to comply with this requirement.
To determine if you are eligible to contribute to any of the above listed IRAs (traditional, Roth, SEP, or SIMPLE), please refer to IRS Publication 590 and your competent tax advisor.
Tax Sheltered Annuities. Code Section 403(b) provides tax-deferred retirement savings plans for employees of certain non-profit and educational organizations. Under Section 403(b), any contract used for a 403(b) plan must provide that distributions attributable to salary reduction contributions made after 12/31/88, and all earnings on salary reduction contributions, may be made only on or after the date the employee:
attains age 59 1/2,
severs employment,
72
dies,
becomes disabled, or
incurs a hardship (earnings on salary reduction contributions may not be distributed on account of hardship).
These limitations do not apply to withdrawals where Lincoln Benefit is directed to transfer some or all of the Contract Value to another 403(b) plan. Generally, we do not accept funds in 403(b) contracts that are subject to the Employee Retirement Income Security Act of 1974 (ERISA).
Caution: Under IRS regulations we can accept contributions, transfers and rollovers only if we have entered into an information-sharing agreement, or its functional equivalent, with the applicable employer or its plan administrator. Unless your contract is grandfathered from certain provisions in these regulations, we will only process certain transactions (e.g, transfers, withdrawals, hardship distributions and, if applicable, loans) with employer approval. This means that if you request one of these transactions we will not consider your request to be in good order, and will not therefore process the transaction, until we receive the employers approval in written or electronic form.
Corporate and Self-Employed Pension and Profit Sharing Plans.
Section 401(a) of the Code permits corporate employers to establish various types of tax favored retirement plans for employees. Self-employed individuals may establish tax favored retirement plans for themselves and their employees (commonly referred to as H.R.10 or Keogh). Such retirement plans may permit the purchase of annuity contracts. Lincoln Benefit no longer issues annuity contracts to employer sponsored qualified retirement plans.
There are two owner types for contracts intended to qualify under Section 401(a): a qualified plan fiduciary or an annuitant owner.
A qualified plan fiduciary exists when a qualified plan trust that is intended to qualify under Section 401(a) of the Code is the owner. The qualified plan trust must have its own tax identification number and a named trustee acting as a fiduciary on behalf of the plan. The annuitant should be the person for whose benefit the contract was purchased.
An annuitant owner exists when the tax identification number of the owner and annuitant are the same, or the annuity contract is not owned by a qualified plan trust. The annuitant should be the person for whose benefit the contract was purchased.
If a qualified plan fiduciary is the owner of the contract, the qualified plan must be the beneficiary so that death benefits from the annuity are distributed in accordance with the terms of the qualified plan. Annuitant owned contracts require that the beneficiary be the annuitants spouse (if applicable), which is consistent with the required IRS language for qualified plans under Section 401(a). A completed Annuitant Owned Qualified Plan Designation of Beneficiary form is required in order to change the beneficiary of an annuitant owned Qualified Plan contract.
State and Local Government and Tax-Exempt Organization Deferred Compensation Plans. Section 457 of the Code permits employees of state and local governments and tax-exempt organizations to defer a portion of their compensation without paying current taxes. The employees must be participants in an eligible deferred compensation plan. In eligible governmental plans, all assets and income must be held in a trust/custodial account/annuity contract for the exclusive benefit of the participants and their beneficiaries. To the extent the Contracts are used in connection with a non-governmental eligible plan, employees are considered general creditors of the employer and the employer as owner of the Contract has the sole right to the proceeds of the Contract. Under eligible 457 plans, contributions made for the benefit of the employees will not be includible in the employees gross income until distributed from the plan. Lincoln Benefit no longer issues annuity contracts to 457 plans.
Gifts and Generation-skipping Transfers
The transfer of the contract 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. For example, the transfer of the contract to, or the designation as a beneficiary of, or the payment of proceeds to, a person who is assigned to a generation which is two or more generations below the generation assignment of the owner may have generation skipping transfer tax consequences under federal tax law. The individual situation of each contract 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 contract proceeds will be treated for purposes of federal, state and local estate, inheritance, generation skipping and other taxes. Under certain circumstances, the Tax Code may impose a generation-skipping transfer (GST) tax when all or part of an annuity contract is transferred to, or a death benefit is paid to, an individual two or more generations younger than the owner. Regulations issued under the Tax Code may require us to deduct the tax from your contract, or from any applicable payment, and pay it directly to the IRS. Additionally, if you transfer your Annuity to another person for less than adequate consideration, there may be federal or state income tax consequences. The potential application of these taxes underscores the importance of seeking guidance from a qualified adviser to help ensure that your estate plan adequately addresses your needs and those of your beneficiaries under all possible scenarios.
73
About Lincoln Benefit Life Company
Rule 12h-7 under the Securities Exchange Act of 1934, as amended (the Exchange Act) exempts an insurance company from filing reports under the Exchange Act when the insurance company issues certain types of insurance products that are registered under the Securities Act of 1933 and such products are regulated under state law. The variable annuities described in this prospectus fall within the exemption provided under rule 12h-7. We rely on the exemption provided under rule 12h-7 and do not file reports under the Exchange Act.
74
Statement of Additional Information
Table of Contents
Additions, Deletions, or Substitutions of Investments |
|
The Contracts |
|
Calculation of Accumulation Unit Values |
|
Calculation of Variable Income Payments |
General Matters |
|
Experts |
|
Financial Statements |
|
Accumulation Unit Values |
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. WE DO NOT AUTHORIZE ANYONE TO PROVIDE ANY INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS.
75
Appendix A
Contract Comparison Chart
Feature |
Classic |
Plus |
Elite |
Select |
Credit Enhancement |
None |
up
to 5% depending on |
None |
None |
Mortality and Expense Risk Charge (Base Contract) |
1.25% |
1.45% |
1.60% |
1.70% |
Withdrawal Charge (% of purchase payment) |
7/ 7/ 6/ 5/ 4/ 3/ 2 |
8.5/
8.5/ 8.5/ 7.5/ |
7/ 6/ 5 |
None |
Withdrawal Charge Waivers |
Confinement, Terminal Illness, Unemployment |
Confinement,
Terminal |
Confinement,
Terminal |
N/A |
The Fixed Account Options available depend on the type of Contract you have purchased and the state in which your Contract was issued. The following tables summarize the availability of the Fixed Account Options in general. Please check with your representative for specific details for your state.
DCA Fixed Account Option* | ||||
Classic |
Plus |
Elite |
Select | |
Transfer Periods |
6-month |
6-month |
6-month |
N/A |
12-month |
12-month |
12-month |
N/A |
Standard Fixed Account Option (not available in all states)** | ||||
Classic |
Plus |
Elite |
Select | |
Guarantee Periods |
1-year |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A | |
N/A |
N/A |
N/A |
N/A | |
N/A |
N/A |
N/A |
N/A |
MVA Fixed Account Option (not available in all states)*** | ||||
Classic |
Plus |
Elite |
Select | |
Guarantee Periods |
1-year |
1-year |
1-year |
1-year |
3-year |
3-year |
3-year |
3-year | |
5-year |
5-year |
5-year |
5-year | |
7-year |
7-year |
7-year |
7-year | |
10-year |
10-year |
10-year |
10-year |
* At the time you allocate a purchase payment to the DCA Fixed Account Option, if you do not specify the term length over which the transfers are to take place, the default transfer period will be 6 months for the 6-month option and 12 months for the 12 month option.
** May be available only in states where the MVA Fixed Account Option is not offered.
*** Not available in states where the Standard Fixed Account Options are offered.
A-1
Appendix B Market Value Adjustment
The Market Value Adjustment is based on the following:
I |
= |
the Treasury Rate for a maturity equal to the term length of the Guarantee Period for the week preceding the establishment of the Market Value Adjusted Fixed Guarantee Period Account; |
J |
= |
the Treasury Rate for a maturity equal to the term length of the Market Value Adjusted Fixed Guarantee Period Account for the week preceding the date amounts are transferred or withdrawn from the Market Value Adjusted Fixed Guarantee Period Account, the date we determine the Death Proceeds, or the Payout Start Date, as the case may be (Market Value Adjustment Date). |
N |
= |
the number of whole and partial years from the Market Value Adjustment Date to the expiration of the term length of the Market Value Adjusted Fixed Guarantee Period Account. |
Treasury Rate means the U.S. Treasury Note Constant Maturity yield as reported in Federal Reserve Board Statistical Release H.15. If such yields cease to be available in Federal Reserve Board Statistical Release H.15, then we will use an alternate source for such information in our discretion.
The Market Value Adjustment factor is determined from the following formula:
.9 × [I-(J + .0025)] × N
The denominator of the MVA formula includes a factor, currently equal to 0.0025 or 25 basis points. The factor is an adjustment that is applied when an MVA is assessed (regardless of whether the MVA is positive or negative) and, relative to when no factor is applied, will reduce the amount being surrendered or transferred from the MVA Fixed Guarantee Period Account.
To determine the Market Value Adjustment, we will multiply the Market Value Adjustment factor by the amount transferred, withdrawn, paid as Death Proceeds, or applied to an Income Plan from a Market Value Adjusted Fixed Guarantee Period Account at any time other than during the 30 day period after such Guarantee Period Account expires. NOTE: These examples assume that premium taxes are not applicable.
Examples Of Market Value Adjustment | |
Purchase Payment: |
$10,000 allocated to a Market Value Adjusted Fixed Guarantee Period Account |
Guarantee Period: |
5 years |
Interest Rate: |
4.50% |
Full Withdrawal: |
End of Contract Year 3 |
Contract: |
Consultant Solutions Classic* |
Example 1: (Assumes Declining Interest Rates) | |||
Step 1: Calculate Contract Value at End of Contract Year 3: |
= |
$10,000.00 × (1.045)3 = $11,411.66 | |
Step 2: Calculate the Free Withdrawal Amount: |
= |
.15 × $10,000 = $1,500 | |
Step 3: Calculate the Withdrawal Charge: |
= |
.06 × ($10,000 $1,500) = $510 | |
Step 4: Calculate the Market Value Adjustment: |
I |
= |
4.50% |
|
J |
= |
4.20% 730 DAYS |
|
N |
= |
= 2 365 DAYS |
|
Market Value Adjustment Factor: .9 × [I (J + .0025)] × N | ||
|
= |
.9 × [.045 - (.042 + .0025)] × 2 = .0009 | |
|
Market Value Adjustment = Market Value Adjustment Factor × Amount Subject To Market Value Adjustment: | ||
|
= |
.0009 × $11,411.66 = $10.27 | |
Step 5: Calculate the amount received by Contract owner as a result of full withdrawal at the end of Contract Year 3: |
= |
$11,411.66 - $510 + $10.27 = $10,911.93 |
Example 2: (Assumes Rising Interest Rates) | |||
Step 1: Calculate Contract Value at End of Contract Year 3: |
= |
$10,000.00 × (1.045)3 = $11,411.66 | |
Step 2: Calculate the Free Withdrawal Amount: |
= |
.15 × $10,000 = $1,500 | |
Step 3: Calculate the Withdrawal Charge: |
= |
.06 × ($10,000 $1,500) = $510 | |
Step 4: Calculate the Market Value Adjustment: |
I |
= |
4.50% |
|
J |
= |
4.80% 730 DAYS |
|
N |
= |
= 2 365 DAYS |
|
Market Value Adjustment Factor: .9 × [I (J + .0025)] × N | ||
|
= |
.9 × [(.045 - (.048 + .0025)] × (2) = .0099 | |
|
Market Value Adjustment = Market Value Adjustment Factor × Amount Subject To Market Value Adjustment: | ||
|
= |
.0099 × $11,411.66 = ($112.98) | |
Step 5: Calculate the amount received by Contract owner as a result of full withdrawal at the end of Contract Year 3: |
= |
$11,411.66 - $510 $112.98 = $10,788.68 |
* These examples assume the election of the Consultant Solutions Classic Contract for the purpose of illustrating the Market Value Adjustment calculation. The amounts would be different under Consultant Solutions Plus, Consultant Solutions Elite Contracts, and Consultant Solutions Select Contracts which have different expenses and withdrawal charges.
B-1
Appendix C
Example of Calculation of Income Protection Benefit
Appendix C illustrates how we calculate the amount guaranteed under the Income Protection Benefit Option. Please remember that you are looking at an example only. Please also remember that the Income Protection Benefit Option may only be added to Income Plans 1 and/or 2, and only to those Income Plans for which you have selected variable income payments.
To illustrate the calculation of the amount guaranteed under the Income Protection Benefit Option, we assume the following:
Adjusted age of Annuitant on the Payout Start Date: |
65 |
Sex of Annuitant: |
male |
Income Plan selected: |
1 |
Payment frequency: |
monthly |
Amount applied to variable income payments under the Income Plan: |
$100,000.00 |
The example assumes that the withdrawal charge period has expired for all purchase payments. In accordance with the terms of the Contract, the following additional assumptions apply:
Assumed investment rate: |
3% |
Guaranteed minimum variable income payment: |
85% of the initial variable amount income value |
Step 1 Calculation of the initial variable amount income value:
Using the assumptions stated above, the initial monthly income payment is $5.49 per $1,000 applied to variable income payments under Income Plan 1. Therefore, the initial variable amount income value = $100,000 × $5.49/1000 = $549.00.
Step 2 Calculation of the amount guaranteed under the Income Protection Benefit Option:
guaranteed minimum variable income payment = 85% × initial variable amount income value = 85% × $549.00 = $466.65.
Step 3 Illustration of the effect of the minimum payment guarantee under the Income Protection Benefit Option:
If in any month your variable income payments would fall below the amount guaranteed under the Income Protection Benefit Option, your payment for that month will equal the guaranteed minimum variable income payment. For example, you would receive $466.65 even if the amount of your monthly income payment would have been less than that as a result of declining investment experience. On the other hand, if your monthly income payment is greater than the minimum guaranteed $466.65, you would receive the greater amount.
C-1
Appendix D
Withdrawal Adjustment Example Death Benefits*
Issue Date: January 1, 2005
Initial Purchase Payment: $50,000 (For Consultant Solutions Plus Contracts, assume a $2,000 Credit Enhancement would apply assuming issue age 85 or younger (a $1,000 Credit Enhancement would apply assuming issue age 86-90)).
|
|
|
|
|
Death Benefit Amount
| ||||
|
|
|
|
|
ROP Value
|
|
Annual
| ||
Date |
Type of Occurrence |
Beginning |
Transaction |
Contract Value After Occurrence |
Classic, |
Plus |
Maximum |
Classic, |
Plus |
1/1/06 |
Contract Anniversary |
$ 55,000 |
_ |
$ 55,000 |
$ 50,000 |
$ 52,000 |
$ 55,000 |
$ 52,500 |
$ 54,600 |
7/1/06 |
Partial Withdrawal |
$ 60,000 |
$ 15,000 |
$ 45,000 |
$ 37,500 |
$ 39,000 |
$ 41,250 |
$ 40,339 |
$ 41,953 |
The following shows how we compute the adjusted death benefits in the example above. Please note that the withdrawal reduces the Purchase Payment Value, the Maximum Anniversary Value, and the Enhanced Beneficiary Value by the same proportion as the withdrawal reduces the Contract Value.
Classic, Elite and Select |
Plus | ||
ROP Death Benefit |
|||
Partial Withdrawal Amount |
(a) |
$15,000 |
$15,000 |
Contract Value Immediately Prior to Partial Withdrawal |
(b) |
$60,000 |
$60,000 |
Value of Death Benefit Amount Immediately Prior to Partial Withdrawal |
(c) |
$50,000 |
$52,000 |
Withdrawal Adjustment |
[(a)/(b)]*(c) |
$12,500 |
$13,000 |
Adjusted Death Benefit |
$37,500 |
$39,000 | |
MAV Death Benefit |
|||
Partial Withdrawal Amount |
(a) |
$15,000 |
$15,000 |
Contract Value Immediately Prior to Partial Withdrawal |
(b) |
$60,000 |
$60,000 |
Value of Death Benefit Amount Immediately Prior to Partial Withdrawal |
(c) |
$55,000 |
$55,000 |
Withdrawal Adjustment |
[(a)/(b)]*(c) |
$13,750 |
$13,750 |
Adjusted Death Benefit |
$41,250 |
$41,250 | |
Annual Increase Death Benefit** |
|||
Partial Withdrawal Amount |
(a) |
$15,000 |
$15,000 |
Contract Value Immediately Prior to Partial Withdrawal |
(b) |
$60,000 |
$60,000 |
Value of Death Benefit Amount Immediately Prior to Partial Withdrawal (assumes 181 days worth of interest on $52,500 and $54,600, respectively) |
(c) |
$53,786 |
$55,937 |
Withdrawal Adjustment |
[(a)/(b)]*(c) |
$13,446 |
$13,984 |
Adjusted Death Benefit |
$40,339 |
$41,953 |
* For purpose of illustrating the withdrawal adjustment calculation, the example assumes the same hypothetical Contract Values and Maximum Anniversary Value for all Contracts, net of applicable fees and charges. Actual death benefit amounts will differ due to the different fees and charges under each Contract and the Credit Enhancement available under the Consultant Solutions Plus Contract. Please remember that you are looking at an example and that your investment performance may be greater or lower than the figures shown.
** Calculations for the Annual Increase Death Benefit assume that interest accumulates on a daily basis at a rate equivalent to 5% per year. There may be certain states in which the Benefit provides for interest that accumulates at a rate of 3% per year. If calculations assumed an interest rate of 3% per year, the adjusted death benefit would be lower.
D-1
Appendix E
Calculation of Enhanced Earnings Death Benefit*
The following are examples of the Enhanced Earnings Death Benefit Option. For illustrative purposes, the examples assume Earnings in each case. Please remember that you are looking at examples and that your investment performance may be greater or lower than the figures shown.
Example 1: Elected When Contract Was Issued Without Any Subsequent Additions or Withdrawals
In this example, assume that the oldest Contract Owner is age 55 on the Rider Application Date and elects the Enhanced Earnings Death Benefit Option when the Contract is issued. The Contract Owner makes an initial purchase payment of $100,000. After four years, the Contract Owner dies. On the date Lincoln Benefit receives a Complete Request for Settlement, the Contract Value is $125,000. Prior to his death, the Contract Owner did not make any additional purchase payments or take any withdrawals.
Excess of Earnings Withdrawals |
= |
$0 |
Purchase Payments in the 12 months prior to death |
= |
$0 |
In-Force Premium |
= |
$100,000 ($100,000 + $0 - $0) |
In-Force Earnings |
= |
$25,000 ($125,000 - $100,000) |
Enhanced Earnings Death Benefit** |
= |
40%*$25,000 = $10,000 |
Since In-Force Earnings are less than 100% of the In-Force Premium (excluding purchase payments in the 12 months prior to death), the In-Force Earnings are used to compute the Enhanced Earnings Death Benefit amount.
* For purposes of illustrating the calculation of Enhanced Earnings Death Benefit Option, the example assumes the same hypothetical Contract Values for all Contracts, net of applicable fees and charges. Actual death benefit amounts will differ due to the different fees and charges under each Contract and the Credit Enhancement available under the Consultant Solutions Plus Contract.
** If the oldest Contract Owner or Co-Annuitant had been over age 70, and both were age 79 or younger on the Rider Application Date, the Enhanced Earnings Death Benefit would be 25% of the In-Force Earnings ($6,250.00).
Example 2: Elected When Contract Was Issued With Subsequent Withdrawals
In this example, assume the same facts as above, except that the Contract Owner has taken a withdrawal of $10,000 during the second year of the Contract. Immediately prior to the withdrawal, the Contract Value is $105,000. Here, $5,000 of the withdrawal is in excess of the In-Force Earnings at the time of the withdrawal. The Contract Value on the date Lincoln Benefit receives a Complete Request for Settlement will be assumed to be $114,000.
Excess of Earnings Withdrawals |
= |
$5,000 ($10,000 - $5,000) |
Purchase Payments in the 12 months prior to death |
= |
$0 |
In-Force Premium |
= |
$95,000 ($100,000 + $0 - $5,000) |
In-Force Earnings |
= |
$19,000 ($114,000 - $95,000) |
Enhanced Earnings Death Benefit** |
= |
40%*$19,000 = $7,600 |
Since In-Force Earnings are less than 100% of the In-Force Premium (excluding purchase payments in the 12 months prior to death), the In-Force Earnings are used to compute the Enhanced Earnings Death Benefit amount.
* For purposes of illustrating the calculation of Enhanced Earnings Death Benefit Option, the example assumes the same hypothetical Contract Values for all Contracts, net of applicable fees and charges. Actual death benefit amounts will differ due to the different fees and charges under each Contract and the Credit Enhancement available under the Consultant Solutions Plus Contract.
** If the oldest Contract Owner or Co-Annuitant had been over age 70, and both were age 79 or younger on the Rider Application Date, the Enhanced Earnings Death Benefit would be 25% of the In-Force Earnings ($4,750.00).
Example 3: Elected After Contract Was Issued With Subsequent Additions and Withdrawals
This example is intended to illustrate the effect of adding the Enhanced Earnings Death Benefit Option after the Contract has been issued and the effect of later purchase payments. In this example, assume there is no Co-Annuitant and that the oldest Contract Owner is age 72 on the Rider Application Date. At the time the Contract is issued, the Contract Owner makes a purchase payment of $100,000. After two years pass, the Contract Owner elects to add the Enhanced Earnings Death Benefit Option. On the date this Rider is added, the Contract Value is $110,000. Two years later, the Contract Owner withdraws $50,000. Immediately prior to the withdrawal, the Contract Value is $130,000. Another two years later, the Contract Owner makes an additional purchase payment of $40,000. Immediately after the additional purchase payment, the Contract Value is $130,000. Two years later, the Contract Owner dies with a Contract Value of $140,000 on the date Lincoln Benefit receives a Complete Request for Settlement.
E-1
Excess of Earnings Withdrawals |
= |
$30,000 ($50,000 - $20,000) |
Purchase Payments in the 12 months prior to death |
= |
$0 |
In-Force Premium |
= |
$120,000 ($110,000 + $40,000 - $30,000) |
In-Force Earnings |
= |
$20,000 ($140,000 - $120,000) |
Enhanced Earnings Death Benefit** |
= |
25%*$20,000 = $5,000 |
In this example, In-Force Premium is equal to the Contract Value on Rider Application Date plus the additional purchase payment and minus the Excess-of-Earnings Withdrawal.
Since In-Force Earnings are less than 50% of the In-Force Premium (excluding purchase payments in the 12 months prior to death), the In-Force Earnings are used to compute the Enhanced Earnings Death Benefit amount.
* For purposes of illustrating the calculation of Enhanced Earnings Death Benefit Option, the example assumes the same hypothetical Contract Values for all Contracts, net of applicable fees and charges. Actual death benefit amounts will differ due to the different fees and charges under each Contract and the Credit Enhancement available under the Consultant Solutions Plus Contract.
** If the oldest Contract Owner had been age 70 or younger on the Rider Application Date, the Enhanced Earnings Death Benefit would be 40% of the In-Force Earnings ($8,000.00).
Example 4: Spousal Continuation:
This example is intended to illustrate the effect of a surviving spouse electing to continue the Contract upon the death of the Contract Owner on a Contract with the Enhanced Earnings Death Benefit Option and MAV Death Benefit Option. In this example, assume that there is no Co-Annuitant and that the oldest Contract Owner is age 60 at the time the Contract is purchased (with the Enhanced Earnings Death Benefit Option but without any other option) with a $100,000 purchase payment. Five years later the Contract Owner dies and the surviving spouse elects to continue the Contract. The Contract Value and Maximum Anniversary Value at this time are $150,000 and $160,000, respectively.
Excess of Earnings Withdrawals |
= |
$0 |
Purchase Payments in the 12 months prior to death |
= |
$0 |
In-Force Premium |
= |
$100,000 ($100,000 + $0 - $0) |
In-Force Earnings |
= |
$50,000 ($150,000 - $100,000) |
Enhanced Earnings Death Benefit** |
= |
40%*$50,000 = $20,000 |
Contract Value |
= |
$150,000 |
Death Benefit |
= |
$160,000 |
Enhanced Earnings Death Benefit |
= |
$20,000 |
Continuing Contract Value |
= |
$180,000 ($160,000 + $20,000) |
Since In-Force Earnings are less than 100% of the In-Force Premium (excluding purchase payments in the 12 months prior to death), the In-Force Earnings are used to compute the Enhanced Earnings Death Benefit amount.
Assume the surviving spouse is age 72 when the Contract is continued. At this time, the surviving spouse has the option to continue the Enhanced Earnings Death Benefit Option at an additional mortality and expense risk charge of 0.40% and with an In-Force Premium amount equal to the Contract Value and the Rider Date reset to the date the Contract is continued. If this selection is made, the Enhanced Earnings Death Benefit will be equal to the lesser of 25% of the In-Force Earnings and 50% of In-Force Premium. Otherwise, the surviving spouse may elect to terminate the Enhanced Earnings Death Benefit Option at the time of continuation.
* For purposes of illustrating the calculation of Enhanced Earnings Death Benefit Option, the example assumes the same hypothetical Contract Values and Maximum Anniversary Values for all Contracts, net of applicable fees and charges. Actual death benefit amounts will differ due to the different fees and charges under each Contract and the Credit Enhancement available under the Consultant Solutions Plus Contract.
** If the oldest Contract Owner had been over age 70 , and both were age 79 or younger on the Rider Application Date, the Enhanced Earnings Death Benefit would be 25% of the In-Force Earnings ($12,500.00).
E-2
Appendix F
Withdrawal Adjustment Example Accumulation Benefit*
Rider Date: January 1, 2007
Initial Purchase Payment: $50,000 (For Consultant Solutions Plus Contracts, assume a $2,000 Credit Enhancement would apply assuming issue age 85 or younger (a $1,000 Credit Enhancement would apply assuming issue age 86-90))
Initial Benefit Base: $50,000 for Consultant Solutions Classic, Elite and Select Contracts, $52,000 for Consultant Solutions Plus Contracts (assuming issue age 85 or younger)
|
|
|
|
|
Benefit Base
| |
Date |
Type of Occurrence |
Beginning Contract Value |
Transaction Amount |
Contract Value |
Classic, Elite and Select |
Plus |
1/1/2008 |
Contract Anniversary |
$ 55,000 |
_ |
$ 55,000 |
$ 50,000 |
$52,000 |
7/1/2008 |
Partial Withdrawal |
$ 60,000 |
$ 15,000 |
$ 45,000 |
$ 37,500 |
$39,000 |
The following shows how we compute the adjusted Benefit Bases in the example above. Please note the withdrawal reduces the Benefit Base by the same proportion as the withdrawal reduces the Contract Value.
Classic, Elite and Select |
Plus | ||
Benefit Base |
|||
Partial Withdrawal Amount |
(a) |
$15,000 |
$15,000 |
Contract Value Immediately Prior to Partial Withdrawal |
(b) |
$60,000 |
$60,000 |
Value of Benefit Base Immediately Prior to Partial Withdrawal |
(c) |
$50,000 |
$52,000 |
Withdrawal Adjustment |
[(a)/(b)]*(c) |
$12,500 |
$13,000 |
Adjusted Benefit Base |
$37,500 |
$39,000 |
* For the purpose of illustrating the withdrawal adjustment calculation, the example assumes the same hypothetical Contract Values, net of applicable fees and charges. Actual Contract Values will differ due to the different fees and charges under each Contract and the Credit Enhancement available under Consultant Solutions Plus Contracts. Please remember that you are looking at an example and that your investment performance may be greater or lower than the figures shown.
F-1
Appendix G SureIncome Withdrawal Benefit Option Calculation Examples
Example 1: Assume you purchase a Consultant Solutions contract with a $100,000 initial purchase payment and add the SureIncome Option at issue.
Your Benefit Base is $100,000, which is your initial purchase payment of $100,000.
Your Benefit Payment is $8,000, which is 8% of your initial purchase payment.
Your Benefit Payment Remaining for this Benefit Year is $8,000, which is equal to your Benefit Payment at the beginning of this Benefit Year.
Example 2: Assume Example 1 is continued and an additional purchase payment of $40,000 is made in the first Benefit Year.
The Benefit Base is increased to $140,000, which is your prior Benefit Base ($100,000) plus your additional purchase payment ($40,000).
The Benefit Payment is increased to $11,200, which is your prior Benefit Payment ($8,000) plus 8% of your additional purchase payment ($40,000).
The Benefit Payment Remaining is increased to $11,200, which is your Benefit Payment Remaining prior to your additional purchase payment ($8,000) plus 8% of your additional purchase payment ($40,000).
Example 3: Assume Example 1 is continued and a withdrawal of $8,000 is made during the first Benefit Year.
The Benefit Base is reduced to $92,000, which is your prior Benefit Base ($100,000) less your withdrawal ($8,000).
The Benefit Payment is unchanged and remains $8,000.
The Benefit Payment Remaining in the first Benefit Year is $0, which is your Benefit Payment Remaining prior to your withdrawal ($8,000) less your withdrawal ($8,000).
Example 4: Assume example 1 is continued and a withdrawal of $25,000 is made during the first Benefit Year. Assume the Contract Value prior to the withdrawal was $130,000. Because the $25,000 withdrawal is larger than the Benefit Payment Remaining, the Benefit Base and Benefit Payment will be recalculated according to applicable formulas.
The Benefit Base is reduced to $75,000, determined by the following calculation: the lesser of ($130,000 $25,000) and ($100,000 $25,000) = $75,000.
The Benefit Payment remains $8,000, determined by the following calculation: the lesser of ($8,000) and (8% x ($130,000 $25,000)) = $8,000.
There is no Benefit Payment Remaining because the withdrawal has reduced it to $0.
Example 5: Assume example 3 is continued and an additional withdrawal of $5,000 is taken in the same year (the first Benefit Year). Assume the Contract Value prior to the additional withdrawal was $60,000. Because the $5,000 withdrawal is larger than the Benefit Payment Remaining ($0), the Benefit Base and Benefit Payment will be recalculated according to applicable formulas.
The Benefit Base is reduced to $55,000, determined by the following calculation: the lesser of ($60,000 $5,000) and ($92,000 $5,000) = $55,000.
The Benefit Payment is reduced to $4,400, determined by the following formula: the lesser of ($8,000) and ((8% x ($60,000 $5,000)) = $4,400.
The Benefit Payment Remaining is unchanged at $0.
Example 6: Assume example 5 is continued and an additional Purchase Payment of $40,000 is made in the same year (the first Benefit Year).
The Benefit Base is increased to $95,000, which is your prior Benefit Base ($55,000) plus your additional purchase payment ($40,000).
The Benefit Payment is increased to $7,600, which is your prior Benefit Payment ($4,400) plus 8% of your additional purchase payment ($40,000).
The Benefit Payment Remaining is increased to $3,200, which is your Benefit Payment Remaining prior to your additional purchase payment ($0) plus 8% of your additional purchase payment ($40,000).
Example 7: Assume example 6 is continued and an additional withdrawal of $3,200 is taken in the same year (the first Benefit Year).
The Benefit Base is reduced to $91,800, which is your prior Benefit Base ($95,000) less your withdrawal ($3,200).
The Benefit Payment is unchanged and remains $7,600.
The Benefit Payment Remaining is reduced to $0, which is your Benefit Payment Remaining prior to your withdrawal ($3,200) less your withdrawal ($3,200).
G-1
APPENDIX H ACCUMULATION UNIT VALUES
Appendix H presents the Accumulation Unit Values and number of Accumulation Units outstanding for each Variable Sub-Account since the Variable Sub-Accounts were first offered under the Contracts. This Appendix includes Accumulation Unit Values representing the highest and lowest available combinations of Contract charges that affect Accumulation Unit Values for each Contract. The Statement of Additional Information, which is available upon request without charge, contains the Accumulation Unit Values for all other available combinations of Contract charges that affect Accumulation Unit values for each Contract. Please contract us at 800-457-7617 to obtain a copy of the Statement of Additional Information.
The LBL Consultant Solutions Classic, Elite, Plus and Select Contracts and all of the Variable Sub-Accounts shown below were first offered under the Contracts on February 2, 2004, except for the Premier VIT OpCap Balanced Sub-Account which was first offered under the Contracts on April 30, 2004; and the Janus Aspen Perkins Small Company Value Portfolio Service Shares Sub-Account and Oppenheimer Small- & Mid-Cap Growth Fund/VA Service Shares Sub-Account which were first offered under the Contracts on May 1, 2005; and the Invesco V.I. Core Equity Series II Sub-Account which was first offered under the Contracts on May 1, 2006; and the Legg Mason ClearBridge Variable Fundamental All Cap Value Portfolio Class I Shares Sub-Account and Legg Mason ClearBridge Variable Large Cap Value Portfolio Class I Shares Sub-Account which were first offered under the Contracts on April 27, 2007; and the Janus Aspen Overseas Portfolio Service Share Sub-Account which was first offered under the Contracts on April 30, 2008; and the Invesco V.I. Government Securities Fund Series II Sub-Account which was first offered under the Contracts on April 29, 2011; and the Invesco Van Kampen V.I. American Franchise Fund Series II Sub-Account which was first offered under the Contracts on April 27, 2012.
The name of the following Sub-Account changed since December 31, 2015. The names shown in the tables of Accumulation Units correspond to the name of the Sub-Account as of December 31, 2015:
Sub-Account Name as of December 31, 2015 (as appears in the following tables of Accumulation Unit Values) |
Sub-Account Name on/about May 1, 2016: | |
Van Eck VIP Emerging Markets Fund |
VanEck VIP Emerging Markets Fund | |
Van Eck VIP Global Hard Assets Fund |
VanEck VIP Global Hard Assets Fund |
H-1
CONSULTANT SOLUTIONS VARIABLE ANNUITIES: LBL Consultant Solution Classic Contracts
PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT*
Low
Mortality & Expense = 1.25
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Alger Capital Appreciation Portfolio Class S |
||||||||||||||||
2006 | $11.509 | $13.506 | 132,966 | |||||||||||||
2007 | $13.506 | $17.746 | 141,537 | |||||||||||||
2008 | $17.746 | $9.582 | 106,723 | |||||||||||||
2009 | $9.582 | $14.244 | 103,782 | |||||||||||||
2010 | $14.244 | $15.967 | 81,615 | |||||||||||||
2011 | $15.967 | $15.653 | 71,835 | |||||||||||||
2012 | $15.653 | $18.204 | 91,871 | |||||||||||||
2013 | $18.204 | $24.205 | 40,645 | |||||||||||||
2014 | $24.205 | $27.089 | 41,065 | |||||||||||||
2015 | $27.089 | $28.304 | 36,266 | |||||||||||||
Alger Large Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $11.134 | $11.523 | 222,959 | |||||||||||||
2007 | $11.523 | $13.598 | 210,459 | |||||||||||||
2008 | $13.598 | $7.204 | 237,432 | |||||||||||||
2009 | $7.204 | $10.465 | 192,485 | |||||||||||||
2010 | $10.465 | $11.656 | 149,608 | |||||||||||||
2011 | $11.656 | $11.411 | 129,818 | |||||||||||||
2012 | $11.411 | $12.313 | 101,373 | |||||||||||||
2013 | $12.313 | $16.346 | 79,784 | |||||||||||||
2014 | $16.346 | $17.828 | 164,785 | |||||||||||||
2015 | $17.828 | $17.826 | 155,888 | |||||||||||||
Alger Mid Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $11.485 | $12.450 | 308,342 | |||||||||||||
2007 | $12.450 | $16.122 | 291,878 | |||||||||||||
2008 | $16.122 | $6.605 | 291,655 | |||||||||||||
2009 | $6.605 | $9.859 | 287,119 | |||||||||||||
2010 | $9.859 | $11.562 | 207,809 | |||||||||||||
2011 | $11.562 | $10.427 | 178,217 | |||||||||||||
2012 | $10.427 | $11.900 | 145,851 | |||||||||||||
2013 | $11.900 | $15.895 | 114,252 | |||||||||||||
2014 | $15.895 | $16.869 | 94,587 | |||||||||||||
2015 | $16.869 | $16.327 | 81,563 | |||||||||||||
ClearBridge Variable Fundamental All Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.509 | 48,073 | |||||||||||||
2008 | $9.509 | $5.949 | 43,169 | |||||||||||||
2009 | $5.949 | $7.592 | 39,260 | |||||||||||||
2010 | $7.592 | $8.733 | 32,930 | |||||||||||||
2011 | $8.733 | $8.081 | 27,368 | |||||||||||||
2012 | $8.081 | $9.166 | 26,563 | |||||||||||||
2013 | $9.166 | $11.951 | 21,828 | |||||||||||||
2014 | $11.951 | $12.883 | 0 |
H-2
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
ClearBridge Variable Large Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.749 | 96,362 | |||||||||||||
2008 | $9.749 | $6.191 | 93,685 | |||||||||||||
2009 | $6.191 | $7.604 | 79,400 | |||||||||||||
2010 | $7.604 | $8.211 | 60,894 | |||||||||||||
2011 | $8.211 | $8.502 | 48,053 | |||||||||||||
2012 | $8.502 | $9.771 | 43,691 | |||||||||||||
2013 | $9.771 | $12.759 | 23,351 | |||||||||||||
2014 | $12.759 | $14.061 | 37,777 | |||||||||||||
2015 | $14.061 | $13.473 | 25,876 | |||||||||||||
Fidelity VIP Asset Manager Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.460 | $11.056 | 134,814 | |||||||||||||
2007 | $11.056 | $12.561 | 148,955 | |||||||||||||
2008 | $12.561 | $8.809 | 146,295 | |||||||||||||
2009 | $8.809 | $11.190 | 119,875 | |||||||||||||
2010 | $11.190 | $12.580 | 112,596 | |||||||||||||
2011 | $12.580 | $12.061 | 77,639 | |||||||||||||
2012 | $12.061 | $13.354 | 57,021 | |||||||||||||
2013 | $13.354 | $15.194 | 50,790 | |||||||||||||
2014 | $15.194 | $15.819 | 46,043 | |||||||||||||
2015 | $15.819 | $15.596 | 39,779 | |||||||||||||
Fidelity VIP Contrafund® Portfolio Service Class 2 |
||||||||||||||||
2006 | $13.106 | $14.408 | 891,858 | |||||||||||||
2007 | $14.408 | $16.672 | 862,174 | |||||||||||||
2008 | $16.672 | $9.425 | 782,708 | |||||||||||||
2009 | $9.425 | $12.596 | 702,455 | |||||||||||||
2010 | $12.596 | $14.529 | 608,058 | |||||||||||||
2011 | $14.529 | $13.934 | 502,184 | |||||||||||||
2012 | $13.934 | $15.965 | 366,709 | |||||||||||||
2013 | $15.965 | $20.624 | 282,865 | |||||||||||||
2014 | $20.624 | $22.717 | 232,099 | |||||||||||||
2015 | $22.717 | $22.503 | 186,712 | |||||||||||||
Fidelity VIP Equity-Income Portfolio Service Class 2 |
||||||||||||||||
2006 | $11.290 | $13.358 | 699,045 | |||||||||||||
2007 | $13.358 | $13.344 | 675,449 | |||||||||||||
2008 | $13.344 | $7.528 | 651,012 | |||||||||||||
2009 | $7.528 | $9.646 | 556,829 | |||||||||||||
2010 | $9.646 | $10.935 | 507,555 | |||||||||||||
2011 | $10.935 | $10.858 | 393,828 | |||||||||||||
2012 | $10.858 | $12.538 | 304,289 | |||||||||||||
2013 | $12.538 | $15.811 | 211,218 | |||||||||||||
2014 | $15.811 | $16.920 | 158,397 | |||||||||||||
2015 | $16.920 | $15.984 | 136,197 | |||||||||||||
Fidelity VIP Government Money Market Portfolio Service Class 2 formerly, Fidelity VIP Money Market Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.104 | $10.429 | 1,383,659 | |||||||||||||
2007 | $10.429 | $10.797 | 1,358,656 | |||||||||||||
2008 | $10.797 | $10.946 | 1,573,766 | |||||||||||||
2009 | $10.946 | $10.850 | 1,408,990 | |||||||||||||
2010 | $10.850 | $10.711 | 1,056,049 | |||||||||||||
2011 | $10.711 | $10.568 | 995,591 | |||||||||||||
2012 | $10.568 | $10.426 | 767,257 | |||||||||||||
2013 | $10.426 | $10.286 | 618,987 | |||||||||||||
2014 | $10.286 | $10.148 | 472,894 | |||||||||||||
2015 | $10.148 | $10.012 | 381,361 |
H-3
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Fidelity VIP Growth Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.209 | $10.734 | 362,183 | |||||||||||||
2007 | $10.734 | $13.411 | 341,543 | |||||||||||||
2008 | $13.411 | $6.971 | 316,734 | |||||||||||||
2009 | $6.971 | $8.800 | 268,644 | |||||||||||||
2010 | $8.800 | $10.752 | 234,521 | |||||||||||||
2011 | $10.752 | $10.604 | 183,811 | |||||||||||||
2012 | $10.604 | $11.967 | 111,743 | |||||||||||||
2013 | $11.967 | $16.056 | 87,560 | |||||||||||||
2014 | $16.056 | $17.584 | 67,893 | |||||||||||||
2015 | $17.584 | $18.544 | 51,691 | |||||||||||||
Fidelity VIP Index 500 Portfolio Service Class 2 |
||||||||||||||||
2006 | $11.004 | $12.532 | 1,175,182 | |||||||||||||
2007 | $12.532 | $13.002 | 1,100,162 | |||||||||||||
2008 | $13.002 | $8.060 | 1,084,831 | |||||||||||||
2009 | $8.060 | $10.043 | 981,330 | |||||||||||||
2010 | $10.043 | $11.366 | 794,035 | |||||||||||||
2011 | $11.366 | $11.413 | 670,286 | |||||||||||||
2012 | $11.413 | $13.019 | 525,991 | |||||||||||||
2013 | $13.019 | $16.941 | 379,644 | |||||||||||||
2014 | $16.941 | $18.933 | 326,211 | |||||||||||||
2015 | $18.933 | $18.880 | 265,767 | |||||||||||||
Fidelity VIP Investment Grade Bond Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.269 | $10.549 | 806,750 | |||||||||||||
2007 | $10.549 | $10.831 | 811,904 | |||||||||||||
2008 | $10.831 | $10.315 | 588,837 | |||||||||||||
2009 | $10.315 | $11.750 | 550,819 | |||||||||||||
2010 | $11.750 | $12.466 | 526,200 | |||||||||||||
2011 | $12.466 | $13.164 | 567,827 | |||||||||||||
2012 | $13.164 | $13.713 | 328,111 | |||||||||||||
2013 | $13.713 | $13.249 | 239,889 | |||||||||||||
2014 | $13.249 | $13.804 | 196,159 | |||||||||||||
2015 | $13.804 | $13.502 | 175,007 | |||||||||||||
Fidelity VIP Overseas Portfolio Service Class 2 |
||||||||||||||||
2006 | $12.810 | $14.883 | 762,307 | |||||||||||||
2007 | $14.883 | $17.185 | 776,150 | |||||||||||||
2008 | $17.185 | $9.500 | 781,458 | |||||||||||||
2009 | $9.500 | $11.829 | 694,356 | |||||||||||||
2010 | $11.829 | $13.167 | 617,998 | |||||||||||||
2011 | $13.167 | $10.737 | 562,383 | |||||||||||||
2012 | $10.737 | $12.750 | 414,825 | |||||||||||||
2013 | $12.750 | $16.372 | 309,349 | |||||||||||||
2014 | $16.372 | $14.811 | 266,449 | |||||||||||||
2015 | $14.811 | $15.093 | 215,156 | |||||||||||||
Goldman Sachs VIT Mid Cap Value Fund Institutional |
||||||||||||||||
2015 | $10.000 | $8.738 | 72,245 | |||||||||||||
Guggenheim VIF Long Short Equity Fund |
||||||||||||||||
2006 | $11.890 | $13.065 | 91,432 | |||||||||||||
2007 | $13.065 | $15.819 | 78,479 | |||||||||||||
2008 | $15.819 | $9.249 | 92,524 | |||||||||||||
2009 | $9.249 | $11.614 | 80,586 | |||||||||||||
2010 | $11.614 | $12.741 | 74,184 | |||||||||||||
2011 | $12.741 | $11.745 | 56,732 | |||||||||||||
2012 | $11.745 | $12.099 | 44,489 | |||||||||||||
2013 | $12.099 | $14.020 | 32,853 | |||||||||||||
2014 | $14.020 | $14.217 | 25,371 | |||||||||||||
2015 | $14.217 | $14.202 | 20,367 |
H-4
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. American Franchise Fund Series II |
||||||||||||||||
2012 | $10.000 | $9.785 | 16,939 | |||||||||||||
2013 | $9.785 | $13.494 | 13,297 | |||||||||||||
2014 | $13.494 | $14.400 | 11,516 | |||||||||||||
2015 | $14.400 | $14.880 | 10,691 | |||||||||||||
Invesco V.I. Capital Appreciation Series II |
||||||||||||||||
2006 | $11.036 | $11.547 | 61,199 | |||||||||||||
2007 | $11.547 | $12.727 | 56,382 | |||||||||||||
2008 | $12.727 | $7.203 | 52,348 | |||||||||||||
2009 | $7.203 | $8.578 | 42,532 | |||||||||||||
2010 | $8.578 | $9.749 | 34,260 | |||||||||||||
2011 | $9.749 | $8.837 | 25,164 | |||||||||||||
2012 | $8.837 | $10.148 | 0 | |||||||||||||
Invesco V.I. Core Equity Fund Series II |
||||||||||||||||
2006 | $10.000 | $10.800 | 173,314 | |||||||||||||
2007 | $10.800 | $11.493 | 185,437 | |||||||||||||
2008 | $11.493 | $7.900 | 185,880 | |||||||||||||
2009 | $7.900 | $9.974 | 159,397 | |||||||||||||
2010 | $9.974 | $10.749 | 157,890 | |||||||||||||
2011 | $10.749 | $10.573 | 133,055 | |||||||||||||
2012 | $10.573 | $11.850 | 110,594 | |||||||||||||
2013 | $11.850 | $15.073 | 82,642 | |||||||||||||
2014 | $15.073 | $16.036 | 61,238 | |||||||||||||
2015 | $16.036 | $14.870 | 56,069 | |||||||||||||
Invesco V.I. Government Securities Fund Series II |
||||||||||||||||
2011 | $10.000 | $12.215 | 114,080 | |||||||||||||
2012 | $12.215 | $12.317 | 80,890 | |||||||||||||
2013 | $12.317 | $11.804 | 54,619 | |||||||||||||
2014 | $11.804 | $12.096 | 45,371 | |||||||||||||
2015 | $12.096 | $11.940 | 34,417 | |||||||||||||
Invesco V.I. Growth and Income Fund Series II |
||||||||||||||||
2006 | $11.996 | $13.725 | 824,335 | |||||||||||||
2007 | $13.725 | $13.881 | 783,069 | |||||||||||||
2008 | $13.881 | $9.283 | 680,370 | |||||||||||||
2009 | $9.283 | $11.365 | 614,322 | |||||||||||||
2010 | $11.365 | $12.579 | 526,375 | |||||||||||||
2011 | $12.579 | $12.129 | 417,385 | |||||||||||||
2012 | $12.129 | $13.681 | 302,328 | |||||||||||||
2013 | $13.681 | $18.054 | 207,226 | |||||||||||||
2014 | $18.054 | $19.585 | 155,774 | |||||||||||||
2015 | $19.585 | $18.680 | 131,202 | |||||||||||||
Invesco V.I. Mid Cap Core Equity Fund Series II |
||||||||||||||||
2006 | $11.629 | $12.732 | 405,969 | |||||||||||||
2007 | $12.732 | $13.725 | 387,292 | |||||||||||||
2008 | $13.725 | $9.656 | 323,756 | |||||||||||||
2009 | $9.656 | $12.370 | 277,636 | |||||||||||||
2010 | $12.370 | $13.885 | 245,585 | |||||||||||||
2011 | $13.885 | $12.807 | 221,182 | |||||||||||||
2012 | $12.807 | $13.975 | 166,828 | |||||||||||||
2013 | $13.975 | $17.710 | 121,224 | |||||||||||||
2014 | $17.710 | $18.200 | 98,489 | |||||||||||||
2015 | $18.200 | $17.185 | 87,914 |
H-5
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. Mid Cap Growth Fund Series II |
||||||||||||||||
2006 | $12.180 | $12.608 | 54,285 | |||||||||||||
2007 | $12.608 | $14.626 | 48,758 | |||||||||||||
2008 | $14.626 | $7.671 | 44,989 | |||||||||||||
2009 | $7.671 | $11.833 | 35,133 | |||||||||||||
2010 | $11.833 | $14.857 | 45,521 | |||||||||||||
2011 | $14.857 | $13.285 | 26,213 | |||||||||||||
2012 | $13.285 | $14.629 | 19,233 | |||||||||||||
2013 | $14.629 | $19.714 | 16,890 | |||||||||||||
2014 | $19.714 | $20.943 | 15,348 | |||||||||||||
2015 | $20.943 | $20.876 | 13,730 | |||||||||||||
Invesco V.I. Value Opportunities Fund Series II |
||||||||||||||||
2006 | $11.176 | $12.452 | 287,925 | |||||||||||||
2007 | $12.452 | $12.451 | 280,725 | |||||||||||||
2008 | $12.451 | $5.907 | 303,579 | |||||||||||||
2009 | $5.907 | $8.610 | 262,919 | |||||||||||||
2010 | $8.610 | $9.083 | 213,414 | |||||||||||||
2011 | $9.083 | $8.657 | 168,059 | |||||||||||||
2012 | $8.657 | $10.047 | 118,174 | |||||||||||||
2013 | $10.047 | $13.209 | 86,832 | |||||||||||||
2014 | $13.209 | $13.863 | 72,668 | |||||||||||||
2015 | $13.863 | $12.219 | 64,268 | |||||||||||||
Invesco Van Kampen V.I. Government Fund Series II |
||||||||||||||||
2006 | $10.379 | $10.558 | 182,914 | |||||||||||||
2007 | $10.558 | $11.145 | 211,170 | |||||||||||||
2008 | $11.145 | $11.161 | 357,895 | |||||||||||||
2009 | $11.161 | $11.105 | 185,515 | |||||||||||||
2010 | $11.105 | $11.491 | 165,810 | |||||||||||||
2011 | $11.491 | $11.561 | 0 | |||||||||||||
Janus Aspen Overseas Portfolio Service Shares |
||||||||||||||||
2008 | $10.000 | $7.074 | 105,650 | |||||||||||||
2009 | $7.074 | $12.496 | 123,025 | |||||||||||||
2010 | $12.496 | $15.411 | 123,784 | |||||||||||||
2011 | $15.411 | $10.287 | 94,045 | |||||||||||||
2012 | $10.287 | $11.485 | 77,594 | |||||||||||||
2013 | $11.485 | $12.948 | 55,546 | |||||||||||||
2014 | $12.948 | $11.228 | 47,677 | |||||||||||||
2015 | $11.228 | $10.101 | 36,325 | |||||||||||||
Janus Aspen Perkins Mid Cap Value Portfolio Service Shares |
||||||||||||||||
2006 | $12.266 | $13.924 | 564,227 | |||||||||||||
2007 | $13.924 | $14.720 | 539,843 | |||||||||||||
2008 | $14.720 | $10.470 | 471,189 | |||||||||||||
2009 | $10.470 | $13.729 | 408,012 | |||||||||||||
2010 | $13.729 | $15.625 | 316,553 | |||||||||||||
2011 | $15.625 | $14.955 | 265,915 | |||||||||||||
2012 | $14.955 | $16.344 | 197,499 | |||||||||||||
2013 | $16.344 | $20.285 | 136,482 | |||||||||||||
2014 | $20.285 | $21.700 | 111,102 | |||||||||||||
2015 | $21.700 | $20.617 | 71,663 | |||||||||||||
Janus Aspen Perkins Small Company Value Portfolio Service Shares |
||||||||||||||||
2006 | $10.974 | $13.193 | 178,295 | |||||||||||||
2007 | $13.193 | $12.219 | 196,175 | |||||||||||||
2008 | $12.219 | $7.724 | 180,098 | |||||||||||||
2009 | $7.724 | $7.321 | 0 |
H-6
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Janus Aspen Series Balanced Portfolio Service Shares |
||||||||||||||||
2006 | $11.285 | $12.292 | 242,446 | |||||||||||||
2007 | $12.292 | $13.373 | 234,531 | |||||||||||||
2008 | $13.373 | $11.074 | 193,608 | |||||||||||||
2009 | $11.074 | $13.719 | 209,853 | |||||||||||||
2010 | $13.719 | $14.633 | 179,215 | |||||||||||||
2011 | $14.633 | $14.631 | 148,727 | |||||||||||||
2012 | $14.631 | $16.364 | 109,677 | |||||||||||||
2013 | $16.364 | $19.339 | 88,822 | |||||||||||||
2014 | $19.339 | $20.650 | 73,363 | |||||||||||||
2015 | $20.650 | $20.455 | 68,230 | |||||||||||||
Janus Aspen Series Foreign Stock Portfolio Service Shares |
||||||||||||||||
2006 | $11.861 | $13.814 | 165,929 | |||||||||||||
2007 | $13.814 | $16.114 | 179,041 | |||||||||||||
2008 | $16.114 | $15.166 | 0 | |||||||||||||
Janus Aspen Series Forty Portfolio Service Shares |
||||||||||||||||
2006 | $12.759 | $13.735 | 168,017 | |||||||||||||
2007 | $13.735 | $18.512 | 143,770 | |||||||||||||
2008 | $18.512 | $10.170 | 144,900 | |||||||||||||
2009 | $10.170 | $14.650 | 134,229 | |||||||||||||
2010 | $14.650 | $15.388 | 118,575 | |||||||||||||
2011 | $15.388 | $14.127 | 100,834 | |||||||||||||
2012 | $14.127 | $17.261 | 67,165 | |||||||||||||
2013 | $17.261 | $22.287 | 48,189 | |||||||||||||
2014 | $22.287 | $23.848 | 32,440 | |||||||||||||
2015 | $23.848 | $26.335 | 28,588 | |||||||||||||
Janus Aspen Series INTECH Risk-Managed Core Portfolio Service Shares |
||||||||||||||||
2006 | $12.407 | $13.558 | 164,908 | |||||||||||||
2007 | $13.558 | $14.194 | 134,550 | |||||||||||||
2008 | $14.194 | $8.928 | 125,288 | |||||||||||||
2009 | $8.928 | $10.793 | 103,124 | |||||||||||||
2010 | $10.793 | $11.587 | 0 | |||||||||||||
MFS Investors Growth Stock Portfolio Service Class |
||||||||||||||||
2015 | $10.000 | $18.555 | 66,203 | |||||||||||||
MFS VIT II High Yield Service Class |
||||||||||||||||
2013 | $10.000 | $16.079 | 64,391 | |||||||||||||
2014 | $16.079 | $16.264 | 51,344 | |||||||||||||
2015 | $16.264 | $15.335 | 45,480 | |||||||||||||
MFS® High Income Series Service Class |
||||||||||||||||
2006 | $10.724 | $11.637 | 238,258 | |||||||||||||
2007 | $11.637 | $11.655 | 216,819 | |||||||||||||
2008 | $11.655 | $8.202 | 178,367 | |||||||||||||
2009 | $8.202 | $11.751 | 144,690 | |||||||||||||
2010 | $11.751 | $13.261 | 136,106 | |||||||||||||
2011 | $13.261 | $13.587 | 113,107 | |||||||||||||
2012 | $13.587 | $15.337 | 80,632 | |||||||||||||
2013 | $15.337 | $15.563 | 0 | |||||||||||||
MFS® Investors Growth Stock Series Service Class |
||||||||||||||||
2006 | $10.767 | $11.398 | 467,604 | |||||||||||||
2007 | $11.398 | $12.483 | 434,299 | |||||||||||||
2008 | $12.483 | $7.760 | 408,811 | |||||||||||||
2009 | $7.760 | $10.648 | 318,596 | |||||||||||||
2010 | $10.648 | $11.781 | 265,360 | |||||||||||||
2011 | $11.781 | $11.666 | 228,670 | |||||||||||||
2012 | $11.666 | $13.428 | 156,807 | |||||||||||||
2013 | $13.428 | $17.227 | 103,739 | |||||||||||||
2014 | $17.227 | $18.884 | 82,937 | |||||||||||||
2015 | $18.884 | $19.059 | 0 |
H-7
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
MFS® Investors Trust Series Service Class |
||||||||||||||||
2006 | $11.413 | $12.689 | 38,786 | |||||||||||||
2007 | $12.689 | $13.772 | 40,966 | |||||||||||||
2008 | $13.772 | $9.068 | 32,809 | |||||||||||||
2009 | $9.068 | $11.322 | 33,920 | |||||||||||||
2010 | $11.322 | $12.384 | 28,628 | |||||||||||||
2011 | $12.384 | $11.922 | 27,057 | |||||||||||||
2012 | $11.922 | $13.975 | 16,900 | |||||||||||||
2013 | $13.975 | $18.162 | 9,109 | |||||||||||||
2014 | $18.162 | $19.836 | 8,924 | |||||||||||||
2015 | $19.836 | $19.559 | 8,143 | |||||||||||||
MFS® New Discovery Series Service Class |
||||||||||||||||
2006 | $10.304 | $11.480 | 113,307 | |||||||||||||
2007 | $11.480 | $11.579 | 100,633 | |||||||||||||
2008 | $11.579 | $6.908 | 87,061 | |||||||||||||
2009 | $6.908 | $11.103 | 91,123 | |||||||||||||
2010 | $11.103 | $14.890 | 131,452 | |||||||||||||
2011 | $14.890 | $13.148 | 57,960 | |||||||||||||
2012 | $13.148 | $15.681 | 41,545 | |||||||||||||
2013 | $15.681 | $21.845 | 28,411 | |||||||||||||
2014 | $21.845 | $19.935 | 22,594 | |||||||||||||
2015 | $19.935 | $19.244 | 20,627 | |||||||||||||
MFS® Total Return Series Service Class |
||||||||||||||||
2006 | $10.914 | $12.019 | 375,040 | |||||||||||||
2007 | $12.019 | $12.323 | 335,392 | |||||||||||||
2008 | $12.323 | $9.443 | 283,876 | |||||||||||||
2009 | $9.443 | $10.966 | 279,887 | |||||||||||||
2010 | $10.966 | $11.860 | 248,952 | |||||||||||||
2011 | $11.860 | $11.886 | 198,071 | |||||||||||||
2012 | $11.886 | $13.007 | 127,302 | |||||||||||||
2013 | $13.007 | $15.236 | 104,395 | |||||||||||||
2014 | $15.236 | $16.269 | 66,440 | |||||||||||||
2015 | $16.269 | $15.956 | 56,973 | |||||||||||||
MFS® Value Series Service Class |
||||||||||||||||
2006 | $11.737 | $13.954 | 194,233 | |||||||||||||
2007 | $13.954 | $14.810 | 188,327 | |||||||||||||
2008 | $14.810 | $9.826 | 163,225 | |||||||||||||
2009 | $9.826 | $11.869 | 120,920 | |||||||||||||
2010 | $11.869 | $13.023 | 95,563 | |||||||||||||
2011 | $13.023 | $12.787 | 91,183 | |||||||||||||
2012 | $12.787 | $14.618 | 46,801 | |||||||||||||
2013 | $14.618 | $19.554 | 32,771 | |||||||||||||
2014 | $19.554 | $21.258 | 26,177 | |||||||||||||
2015 | $21.258 | $20.775 | 24,701 | |||||||||||||
Oppenheimer Discovery Mid Cap Growth Fund/VA Service Shares |
||||||||||||||||
2006 | $11.723 | $11.877 | 87,641 | |||||||||||||
2007 | $11.877 | $12.423 | 90,045 | |||||||||||||
2008 | $12.423 | $6.224 | 86,645 | |||||||||||||
2009 | $6.224 | $8.121 | 82,002 | |||||||||||||
2010 | $8.121 | $10.188 | 73,066 | |||||||||||||
2011 | $10.188 | $10.134 | 64,612 | |||||||||||||
2012 | $10.134 | $11.613 | 51,998 | |||||||||||||
2013 | $11.613 | $15.538 | 41,735 | |||||||||||||
2014 | $15.538 | $16.175 | 28,501 | |||||||||||||
2015 | $16.175 | $16.969 | 24,195 |
H-8
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Oppenheimer Global Fund/VA Service Shares |
||||||||||||||||
2006 | $12.817 | $14.840 | 463,678 | |||||||||||||
2007 | $14.840 | $15.529 | 425,468 | |||||||||||||
2008 | $15.529 | $9.141 | 339,967 | |||||||||||||
2009 | $9.141 | $12.566 | 318,882 | |||||||||||||
2010 | $12.566 | $14.343 | 214,515 | |||||||||||||
2011 | $14.343 | $12.943 | 179,849 | |||||||||||||
2012 | $12.943 | $15.443 | 146,194 | |||||||||||||
2013 | $15.443 | $19.347 | 109,747 | |||||||||||||
2014 | $19.347 | $19.478 | 89,230 | |||||||||||||
2015 | $19.478 | $19.920 | 75,907 | |||||||||||||
Oppenheimer Main Street Small Cap Fund/VA Service Shares |
||||||||||||||||
2006 | $12.256 | $13.864 | 760,414 | |||||||||||||
2007 | $13.864 | $13.485 | 690,006 | |||||||||||||
2008 | $13.485 | $8.247 | 595,786 | |||||||||||||
2009 | $8.247 | $11.137 | 488,782 | |||||||||||||
2010 | $11.137 | $13.520 | 394,097 | |||||||||||||
2011 | $13.520 | $13.020 | 328,526 | |||||||||||||
2012 | $13.020 | $15.113 | 241,866 | |||||||||||||
2013 | $15.113 | $20.965 | 166,716 | |||||||||||||
2014 | $20.965 | $23.093 | 143,307 | |||||||||||||
2015 | $23.093 | $21.393 | 118,088 | |||||||||||||
PIMCO Foreign Bond Portfolio (U.S. Dollar-Hedged) Administrative Shares |
||||||||||||||||
2006 | $10.769 | $10.857 | 508,415 | |||||||||||||
2007 | $10.857 | $11.099 | 482,258 | |||||||||||||
2008 | $11.099 | $10.688 | 356,974 | |||||||||||||
2009 | $10.688 | $12.192 | 328,033 | |||||||||||||
2010 | $12.192 | $13.050 | 307,466 | |||||||||||||
2011 | $13.050 | $13.745 | 255,082 | |||||||||||||
2012 | $13.745 | $15.030 | 198,826 | |||||||||||||
2013 | $15.030 | $14.901 | 151,236 | |||||||||||||
2014 | $14.901 | $16.340 | 115,842 | |||||||||||||
2015 | $16.340 | $16.167 | 79,864 | |||||||||||||
PIMCO Money Market Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.096 | $10.420 | 459,580 | |||||||||||||
2007 | $10.420 | $10.781 | 401,905 | |||||||||||||
2008 | $10.781 | $10.875 | 447,414 | |||||||||||||
2009 | $10.875 | $10.740 | 560,031 | |||||||||||||
2010 | $10.740 | $10.600 | 537,780 | |||||||||||||
2011 | $10.600 | $10.464 | 392,314 | |||||||||||||
2012 | $10.464 | $10.329 | 323,462 | |||||||||||||
2013 | $10.329 | $10.196 | 276,731 | |||||||||||||
2014 | $10.196 | $10.059 | 223,502 | |||||||||||||
2015 | $10.059 | $9.925 | 187,142 | |||||||||||||
PIMCO Real Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.671 | $10.602 | 937,569 | |||||||||||||
2007 | $10.602 | $11.576 | 902,299 | |||||||||||||
2008 | $11.576 | $10.615 | 928,688 | |||||||||||||
2009 | $10.615 | $12.398 | 713,734 | |||||||||||||
2010 | $12.398 | $13.223 | 615,212 | |||||||||||||
2011 | $13.223 | $14.568 | 496,281 | |||||||||||||
2012 | $14.568 | $15.629 | 375,351 | |||||||||||||
2013 | $15.629 | $13.997 | 273,276 | |||||||||||||
2014 | $13.997 | $14.234 | 227,624 | |||||||||||||
2015 | $14.234 | $13.662 | 186,219 |
H-9
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
PIMCO Total Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.392 | $10.647 | 1,083,265 | |||||||||||||
2007 | $10.647 | $11.424 | 1,062,806 | |||||||||||||
2008 | $11.424 | $11.812 | 823,099 | |||||||||||||
2009 | $11.812 | $13.293 | 875,022 | |||||||||||||
2010 | $13.293 | $14.178 | 871,323 | |||||||||||||
2011 | $14.178 | $14.492 | 710,717 | |||||||||||||
2012 | $14.492 | $15.667 | 565,502 | |||||||||||||
2013 | $15.667 | $15.152 | 385,565 | |||||||||||||
2014 | $15.152 | $15.587 | 296,643 | |||||||||||||
2015 | $15.587 | $15.446 | 242,117 | |||||||||||||
Premier VIT OpCap Balanced Portfolio |
||||||||||||||||
2006 | $10.951 | $11.970 | 86,922 | |||||||||||||
2007 | $11.970 | $11.284 | 76,705 | |||||||||||||
2008 | $11.284 | $7.661 | 66,388 | |||||||||||||
2009 | $7.661 | $7.391 | 0 | |||||||||||||
Premier VIT OpCap Renaissance Portfolio |
||||||||||||||||
2006 | $10.576 | $11.620 | 218,567 | |||||||||||||
2007 | $11.620 | $12.187 | 170,119 | |||||||||||||
2008 | $12.187 | $11.013 | 0 | |||||||||||||
T. Rowe Price Blue Chip Growth Portfolio II |
||||||||||||||||
2006 | $10.932 | $11.791 | 846,349 | |||||||||||||
2007 | $11.791 | $13.084 | 814,281 | |||||||||||||
2008 | $13.084 | $7.402 | 830,392 | |||||||||||||
2009 | $7.402 | $10.354 | 670,845 | |||||||||||||
2010 | $10.354 | $11.848 | 550,687 | |||||||||||||
2011 | $11.848 | $11.848 | 447,857 | |||||||||||||
2012 | $11.848 | $13.780 | 419,459 | |||||||||||||
2013 | $13.780 | $19.148 | 299,644 | |||||||||||||
2014 | $19.148 | $20.559 | 163,215 | |||||||||||||
2015 | $20.559 | $22.472 | 123,658 | |||||||||||||
T. Rowe Price Equity Income Portfolio II |
||||||||||||||||
2006 | $11.361 | $13.299 | 1,402,991 | |||||||||||||
2007 | $13.299 | $13.516 | 1,333,577 | |||||||||||||
2008 | $13.516 | $8.498 | 1,156,148 | |||||||||||||
2009 | $8.498 | $10.500 | 989,299 | |||||||||||||
2010 | $10.500 | $11.885 | 793,746 | |||||||||||||
2011 | $11.885 | $11.605 | 637,701 | |||||||||||||
2012 | $11.605 | $13.386 | 445,276 | |||||||||||||
2013 | $13.386 | $17.088 | 356,536 | |||||||||||||
2014 | $17.088 | $18.055 | 256,724 | |||||||||||||
2015 | $18.055 | $16.546 | 220,062 | |||||||||||||
UIF Growth Portfolio, Class II |
||||||||||||||||
2006 | $11.829 | $12.114 | 88,585 | |||||||||||||
2007 | $12.114 | $14.539 | 86,678 | |||||||||||||
2008 | $14.539 | $7.265 | 87,977 | |||||||||||||
2009 | $7.265 | $11.835 | 73,057 | |||||||||||||
2010 | $11.835 | $14.316 | 71,085 | |||||||||||||
2011 | $14.316 | $13.693 | 54,754 | |||||||||||||
2012 | $13.693 | $15.406 | 33,571 | |||||||||||||
2013 | $15.406 | $22.452 | 27,571 | |||||||||||||
2014 | $22.452 | $23.497 | 56,127 | |||||||||||||
2015 | $23.497 | $25.954 | 45,347 |
H-10
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
UIF U.S. Real Estate Portfolio, Class II |
||||||||||||||||
2006 | $14.804 | $20.106 | 695,926 | |||||||||||||
2007 | $20.106 | $16.407 | 515,759 | |||||||||||||
2008 | $16.407 | $10.026 | 445,861 | |||||||||||||
2009 | $10.026 | $12.709 | 374,792 | |||||||||||||
2010 | $12.709 | $16.239 | 303,954 | |||||||||||||
2011 | $16.239 | $16.927 | 247,891 | |||||||||||||
2012 | $16.927 | $19.307 | 189,555 | |||||||||||||
2013 | $19.307 | $19.380 | 156,289 | |||||||||||||
2014 | $19.380 | $24.744 | 122,056 | |||||||||||||
2015 | $24.744 | $24.879 | 97,327 | |||||||||||||
Van Eck VIP Emerging Markets Fund Initial Class |
||||||||||||||||
2006 | $15.764 | $21.694 | 140,010 | |||||||||||||
2007 | $21.694 | $29.449 | 151,951 | |||||||||||||
2008 | $29.449 | $10.231 | 88,994 | |||||||||||||
2009 | $10.231 | $21.517 | 153,256 | |||||||||||||
2010 | $21.517 | $26.924 | 141,498 | |||||||||||||
2011 | $26.924 | $19.725 | 66,474 | |||||||||||||
2012 | $19.725 | $25.258 | 48,444 | |||||||||||||
2013 | $25.258 | $27.912 | 35,404 | |||||||||||||
2014 | $27.912 | $27.421 | 29,680 | |||||||||||||
2015 | $27.421 | $23.266 | 21,679 | |||||||||||||
Van Eck VIP Global Hard Assets Fund Initial Class |
||||||||||||||||
2006 | $18.637 | $22.889 | 151,158 | |||||||||||||
2007 | $22.889 | $32.819 | 197,678 | |||||||||||||
2008 | $32.819 | $17.442 | 80,392 | |||||||||||||
2009 | $17.442 | $27.106 | 126,577 | |||||||||||||
2010 | $27.106 | $34.558 | 69,632 | |||||||||||||
2011 | $34.558 | $28.484 | 56,911 | |||||||||||||
2012 | $28.484 | $29.050 | 40,084 | |||||||||||||
2013 | $29.050 | $31.677 | 30,113 | |||||||||||||
2014 | $31.677 | $25.279 | 25,664 | |||||||||||||
2015 | $25.279 | $16.596 | 23,263 | |||||||||||||
Van Eck VIP Multi-Manager Alternative Initial Class |
||||||||||||||||
2006 | $9.804 | $10.509 | 63,097 | |||||||||||||
2007 | $10.509 | $10.787 | 68,791 | |||||||||||||
2008 | $10.787 | $9.247 | 106,076 | |||||||||||||
2009 | $9.247 | $10.387 | 101,362 | |||||||||||||
2010 | $10.387 | $10.757 | 99,575 | |||||||||||||
2011 | $10.757 | $10.371 | 72,358 | |||||||||||||
2012 | $10.371 | $10.367 | 38,505 | |||||||||||||
2013 | $10.367 | $10.743 | 27,201 | |||||||||||||
2014 | $10.743 | $10.485 | 21,796 | |||||||||||||
2015 | $10.485 | $10.389 | 0 | |||||||||||||
Western Asset Variable Global High Yield Bond Portfolio Class II |
||||||||||||||||
2006 | $11.105 | $12.089 | 703,308 | |||||||||||||
2007 | $12.089 | $11.885 | 698,823 | |||||||||||||
2008 | $11.885 | $8.104 | 589,498 | |||||||||||||
2009 | $8.104 | $12.379 | 454,032 | |||||||||||||
2010 | $12.379 | $14.007 | 377,768 | |||||||||||||
2011 | $14.007 | $13.994 | 305,012 | |||||||||||||
2012 | $13.994 | $16.299 | 243,475 | |||||||||||||
2013 | $16.299 | $17.053 | 169,399 | |||||||||||||
2014 | $17.053 | $16.569 | 150,676 | |||||||||||||
2015 | $16.569 | $15.352 | 125,882 |
* | The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.25% and an administrative expense charge of 0.10%. |
H-11
CONSULTANT SOLUTIONS VARIABLE ANNUITIES: LBL Consultant Solution Classic Contracts
PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING
FOR EACH VARIABLE SUB-ACCOUNT*
High
Mortality & Expense = 2.15
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Alger Capital Appreciation Portfolio Class S |
||||||||||||||||
2006 | $11.309 | $13.152 | 0 | |||||||||||||
2007 | $13.152 | $17.121 | 0 | |||||||||||||
2008 | $17.121 | $9.160 | 0 | |||||||||||||
2009 | $9.160 | $13.493 | 0 | |||||||||||||
2010 | $13.493 | $14.987 | 0 | |||||||||||||
2011 | $14.987 | $14.558 | 0 | |||||||||||||
2012 | $14.558 | $16.776 | 0 | |||||||||||||
2013 | $16.776 | $22.104 | 0 | |||||||||||||
2014 | $22.104 | $24.512 | 0 | |||||||||||||
2015 | $24.512 | $25.378 | 0 | |||||||||||||
Alger Large Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $10.942 | $11.220 | 0 | |||||||||||||
2007 | $11.220 | $13.120 | 0 | |||||||||||||
2008 | $13.120 | $6.887 | 0 | |||||||||||||
2009 | $6.887 | $9.913 | 0 | |||||||||||||
2010 | $9.913 | $10.941 | 0 | |||||||||||||
2011 | $10.941 | $10.614 | 0 | |||||||||||||
2012 | $10.614 | $11.347 | 0 | |||||||||||||
2013 | $11.347 | $14.927 | 0 | |||||||||||||
2014 | $14.927 | $16.132 | 0 | |||||||||||||
2015 | $16.132 | $15.982 | 0 | |||||||||||||
Alger Mid Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $11.286 | $12.123 | 0 | |||||||||||||
2007 | $12.123 | $15.555 | 0 | |||||||||||||
2008 | $15.555 | $6.314 | 18,946 | |||||||||||||
2009 | $6.314 | $9.339 | 18,946 | |||||||||||||
2010 | $9.339 | $10.853 | 0 | |||||||||||||
2011 | $10.853 | $9.697 | 0 | |||||||||||||
2012 | $9.697 | $10.966 | 0 | |||||||||||||
2013 | $10.966 | $14.515 | 0 | |||||||||||||
2014 | $14.515 | $15.264 | 0 | |||||||||||||
2015 | $15.264 | $14.638 | 0 | |||||||||||||
ClearBridge Variable Fundamental All Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.450 | 0 | |||||||||||||
2008 | $9.450 | $5.858 | 2,596 | |||||||||||||
2009 | $5.858 | $7.407 | 2,582 | |||||||||||||
2010 | $7.407 | $8.443 | 2,570 | |||||||||||||
2011 | $8.443 | $7.742 | 0 | |||||||||||||
2012 | $7.742 | $8.701 | 0 | |||||||||||||
2013 | $8.701 | $11.241 | 0 | |||||||||||||
2014 | $11.241 | $12.015 | 0 |
H-12
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
ClearBridge Variable Large Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.688 | 0 | |||||||||||||
2008 | $9.688 | $6.096 | 0 | |||||||||||||
2009 | $6.096 | $7.419 | 0 | |||||||||||||
2010 | $7.419 | $7.939 | 0 | |||||||||||||
2011 | $7.939 | $8.145 | 0 | |||||||||||||
2012 | $8.145 | $9.275 | 0 | |||||||||||||
2013 | $9.275 | $12.001 | 0 | |||||||||||||
2014 | $12.001 | $13.105 | 0 | |||||||||||||
2015 | $13.105 | $12.443 | 0 | |||||||||||||
Fidelity VIP Asset Manager Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.279 | $10.765 | 0 | |||||||||||||
2007 | $10.765 | $12.119 | 0 | |||||||||||||
2008 | $12.119 | $8.421 | 109 | |||||||||||||
2009 | $8.421 | $10.600 | 109 | |||||||||||||
2010 | $10.600 | $11.808 | 108 | |||||||||||||
2011 | $11.808 | $11.218 | 109 | |||||||||||||
2012 | $11.218 | $12.307 | 113 | |||||||||||||
2013 | $12.307 | $13.875 | 123 | |||||||||||||
2014 | $13.875 | $14.314 | 124 | |||||||||||||
2015 | $14.314 | $13.983 | 126 | |||||||||||||
Fidelity VIP Contrafund® Portfolio Service Class 2 |
||||||||||||||||
2006 | $12.880 | $14.030 | 292 | |||||||||||||
2007 | $14.030 | $16.085 | 280 | |||||||||||||
2008 | $16.085 | $9.010 | 1,763 | |||||||||||||
2009 | $9.010 | $11.932 | 1,704 | |||||||||||||
2010 | $11.932 | $13.638 | 1,549 | |||||||||||||
2011 | $13.638 | $12.960 | 1,428 | |||||||||||||
2012 | $12.960 | $14.713 | 1,134 | |||||||||||||
2013 | $14.713 | $18.833 | 1,057 | |||||||||||||
2014 | $18.833 | $20.555 | 993 | |||||||||||||
2015 | $20.555 | $20.176 | 928 | |||||||||||||
Fidelity VIP Equity-Income Portfolio Service Class 2 |
||||||||||||||||
2006 | $11.095 | $13.007 | 0 | |||||||||||||
2007 | $13.007 | $12.875 | 0 | |||||||||||||
2008 | $12.875 | $7.197 | 8,417 | |||||||||||||
2009 | $7.197 | $9.137 | 8,329 | |||||||||||||
2010 | $9.137 | $10.264 | 7,490 | |||||||||||||
2011 | $10.264 | $10.099 | 5,648 | |||||||||||||
2012 | $10.099 | $11.555 | 5,322 | |||||||||||||
2013 | $11.555 | $14.438 | 4,931 | |||||||||||||
2014 | $14.438 | $15.310 | 4,672 | |||||||||||||
2015 | $15.310 | $14.331 | 4,438 | |||||||||||||
Fidelity VIP Government Money Market Portfolio Service Class 2 formerly, Fidelity VIP Money Market Portfolio Service Class 2 |
||||||||||||||||
2006 | $9.929 | $10.155 | 0 | |||||||||||||
2007 | $10.155 | $10.417 | 0 | |||||||||||||
2008 | $10.417 | $10.465 | 3,763 | |||||||||||||
2009 | $10.465 | $10.278 | 4,430 | |||||||||||||
2010 | $10.278 | $10.054 | 4,467 | |||||||||||||
2011 | $10.054 | $9.829 | 2,972 | |||||||||||||
2012 | $9.829 | $9.608 | 3,233 | |||||||||||||
2013 | $9.608 | $9.393 | 3,670 | |||||||||||||
2014 | $9.393 | $9.183 | 3,799 | |||||||||||||
2015 | $9.183 | $8.977 | 2,795 |
H-13
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Fidelity VIP Growth Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.032 | $10.452 | 0 | |||||||||||||
2007 | $10.452 | $12.939 | 0 | |||||||||||||
2008 | $12.939 | $6.664 | 0 | |||||||||||||
2009 | $6.664 | $8.336 | 0 | |||||||||||||
2010 | $8.336 | $10.092 | 0 | |||||||||||||
2011 | $10.092 | $9.863 | 0 | |||||||||||||
2012 | $9.863 | $11.029 | 0 | |||||||||||||
2013 | $11.029 | $14.662 | 0 | |||||||||||||
2014 | $14.662 | $15.910 | 0 | |||||||||||||
2015 | $15.910 | $16.626 | 0 | |||||||||||||
Fidelity VIP Index 500 Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.813 | $12.202 | 0 | |||||||||||||
2007 | $12.202 | $12.544 | 0 | |||||||||||||
2008 | $12.544 | $7.705 | 1,127 | |||||||||||||
2009 | $7.705 | $9.513 | 1,113 | |||||||||||||
2010 | $9.513 | $10.669 | 1,102 | |||||||||||||
2011 | $10.669 | $10.615 | 136 | |||||||||||||
2012 | $10.615 | $11.998 | 130 | |||||||||||||
2013 | $11.998 | $15.470 | 105 | |||||||||||||
2014 | $15.470 | $17.132 | 97 | |||||||||||||
2015 | $17.132 | $16.928 | 0 | |||||||||||||
Fidelity VIP Investment Grade Bond Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.091 | $10.272 | 0 | |||||||||||||
2007 | $10.272 | $10.450 | 0 | |||||||||||||
2008 | $10.450 | $9.861 | 2,057 | |||||||||||||
2009 | $9.861 | $11.131 | 2,068 | |||||||||||||
2010 | $11.131 | $11.702 | 1,842 | |||||||||||||
2011 | $11.702 | $12.244 | 1,833 | |||||||||||||
2012 | $12.244 | $12.638 | 246 | |||||||||||||
2013 | $12.638 | $12.098 | 268 | |||||||||||||
2014 | $12.098 | $12.491 | 268 | |||||||||||||
2015 | $12.491 | $12.106 | 0 | |||||||||||||
Fidelity VIP Overseas Portfolio Service Class 2 |
||||||||||||||||
2006 | $12.588 | $14.492 | 0 | |||||||||||||
2007 | $14.492 | $16.580 | 0 | |||||||||||||
2008 | $16.580 | $9.082 | 1,097 | |||||||||||||
2009 | $9.082 | $11.205 | 1,129 | |||||||||||||
2010 | $11.205 | $12.359 | 1,004 | |||||||||||||
2011 | $12.359 | $9.986 | 1,039 | |||||||||||||
2012 | $9.986 | $11.750 | 946 | |||||||||||||
2013 | $11.750 | $14.951 | 854 | |||||||||||||
2014 | $14.951 | $13.402 | 956 | |||||||||||||
2015 | $13.402 | $13.532 | 829 | |||||||||||||
Goldman Sachs VIT Mid Cap Value Fund Institutional |
||||||||||||||||
2015 | $10.000 | $8.685 | 0 | |||||||||||||
Guggenheim VIF Long Short Equity Fund |
||||||||||||||||
2006 | $11.684 | $12.722 | 0 | |||||||||||||
2007 | $12.722 | $15.263 | 0 | |||||||||||||
2008 | $15.263 | $8.841 | 804 | |||||||||||||
2009 | $8.841 | $11.001 | 799 | |||||||||||||
2010 | $11.001 | $11.959 | 796 | |||||||||||||
2011 | $11.959 | $10.924 | 0 | |||||||||||||
2012 | $10.924 | $11.150 | 0 | |||||||||||||
2013 | $11.150 | $12.803 | 0 | |||||||||||||
2014 | $12.803 | $12.864 | 0 | |||||||||||||
2015 | $12.864 | $12.733 | 0 |
H-14
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. American Franchise Fund Series II |
||||||||||||||||
2012 | $10.000 | $9.018 | 0 | |||||||||||||
2013 | $9.018 | $12.323 | 0 | |||||||||||||
2014 | $12.323 | $13.029 | 0 | |||||||||||||
2015 | $13.029 | $13.341 | 0 | |||||||||||||
Invesco V.I. Capital Appreciation Series II |
||||||||||||||||
2006 | $10.845 | $11.244 | 0 | |||||||||||||
2007 | $11.244 | $12.279 | 0 | |||||||||||||
2008 | $12.279 | $6.886 | 0 | |||||||||||||
2009 | $6.886 | $8.126 | 0 | |||||||||||||
2010 | $8.126 | $9.151 | 0 | |||||||||||||
2011 | $9.151 | $8.219 | 0 | |||||||||||||
2012 | $8.219 | $9.410 | 0 | |||||||||||||
Invesco V.I. Core Equity Fund Series II |
||||||||||||||||
2006 | $10.000 | $10.734 | 0 | |||||||||||||
2007 | $10.734 | $11.317 | 0 | |||||||||||||
2008 | $11.317 | $7.708 | 0 | |||||||||||||
2009 | $7.708 | $9.643 | 0 | |||||||||||||
2010 | $9.643 | $10.298 | 0 | |||||||||||||
2011 | $10.298 | $10.037 | 0 | |||||||||||||
2012 | $10.037 | $11.147 | 0 | |||||||||||||
2013 | $11.147 | $14.049 | 0 | |||||||||||||
2014 | $14.049 | $14.810 | 0 | |||||||||||||
2015 | $14.810 | $13.608 | 0 | |||||||||||||
Invesco V.I. Government Securities Fund Series II |
||||||||||||||||
2011 | $10.000 | $11.361 | 267 | |||||||||||||
2012 | $11.361 | $11.351 | 267 | |||||||||||||
2013 | $11.351 | $10.779 | 267 | |||||||||||||
2014 | $10.779 | $10.945 | 267 | |||||||||||||
2015 | $10.945 | $10.706 | 267 | |||||||||||||
Invesco V.I. Growth and Income Fund Series II |
||||||||||||||||
2006 | $11.789 | $13.365 | 0 | |||||||||||||
2007 | $13.365 | $13.392 | 0 | |||||||||||||
2008 | $13.392 | $8.874 | 6,338 | |||||||||||||
2009 | $8.874 | $10.766 | 6,552 | |||||||||||||
2010 | $10.766 | $11.807 | 5,971 | |||||||||||||
2011 | $11.807 | $11.281 | 5,332 | |||||||||||||
2012 | $11.281 | $12.608 | 5,132 | |||||||||||||
2013 | $12.608 | $16.486 | 4,569 | |||||||||||||
2014 | $16.486 | $17.721 | 4,279 | |||||||||||||
2015 | $17.721 | $16.749 | 3,952 | |||||||||||||
Invesco V.I. Mid Cap Core Equity Fund Series II |
||||||||||||||||
2006 | $11.427 | $12.398 | 0 | |||||||||||||
2007 | $12.398 | $13.242 | 0 | |||||||||||||
2008 | $13.242 | $9.231 | 1,270 | |||||||||||||
2009 | $9.231 | $11.718 | 1,268 | |||||||||||||
2010 | $11.718 | $13.032 | 1,264 | |||||||||||||
2011 | $13.032 | $11.911 | 350 | |||||||||||||
2012 | $11.911 | $12.879 | 357 | |||||||||||||
2013 | $12.879 | $16.173 | 352 | |||||||||||||
2014 | $16.173 | $16.468 | 356 | |||||||||||||
2015 | $16.468 | $15.408 | 356 |
H-15
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. Mid Cap Growth Fund Series II |
||||||||||||||||
2006 | $11.969 | $12.277 | 0 | |||||||||||||
2007 | $12.277 | $14.111 | 0 | |||||||||||||
2008 | $14.111 | $7.333 | 0 | |||||||||||||
2009 | $7.333 | $11.209 | 0 | |||||||||||||
2010 | $11.209 | $13.945 | 0 | |||||||||||||
2011 | $13.945 | $12.356 | 0 | |||||||||||||
2012 | $12.356 | $13.481 | 0 | |||||||||||||
2013 | $13.481 | $18.002 | 0 | |||||||||||||
2014 | $18.002 | $18.950 | 0 | |||||||||||||
2015 | $18.950 | $18.717 | 0 | |||||||||||||
Invesco V.I. Value Opportunities Fund Series II |
||||||||||||||||
2006 | $10.982 | $12.125 | 0 | |||||||||||||
2007 | $12.125 | $12.013 | 0 | |||||||||||||
2008 | $12.013 | $5.647 | 1,098 | |||||||||||||
2009 | $5.647 | $8.155 | 1,086 | |||||||||||||
2010 | $8.155 | $8.526 | 1,087 | |||||||||||||
2011 | $8.526 | $8.051 | 80 | |||||||||||||
2012 | $8.051 | $9.259 | 75 | |||||||||||||
2013 | $9.259 | $12.062 | 73 | |||||||||||||
2014 | $12.062 | $12.544 | 72 | |||||||||||||
2015 | $12.544 | $10.955 | 79 | |||||||||||||
Invesco Van Kampen V.I. Government Fund Series II |
||||||||||||||||
2006 | $10.200 | $10.281 | 0 | |||||||||||||
2007 | $10.281 | $10.753 | 0 | |||||||||||||
2008 | $10.753 | $10.670 | 267 | |||||||||||||
2009 | $10.670 | $10.520 | 267 | |||||||||||||
2010 | $10.520 | $10.786 | 267 | |||||||||||||
2011 | $10.786 | $10.819 | 0 | |||||||||||||
Janus Aspen Overseas Portfolio Service Shares |
||||||||||||||||
2008 | $10.000 | $6.762 | 0 | |||||||||||||
2009 | $6.762 | $11.837 | 0 | |||||||||||||
2010 | $11.837 | $14.465 | 0 | |||||||||||||
2011 | $14.465 | $9.568 | 0 | |||||||||||||
2012 | $9.568 | $10.584 | 0 | |||||||||||||
2013 | $10.584 | $11.824 | 0 | |||||||||||||
2014 | $11.824 | $10.159 | 0 | |||||||||||||
2015 | $10.159 | $9.056 | 0 | |||||||||||||
Janus Aspen Perkins Mid Cap Value Portfolio Service Shares |
||||||||||||||||
2006 | $12.053 | $13.558 | 565 | |||||||||||||
2007 | $13.558 | $14.202 | 531 | |||||||||||||
2008 | $14.202 | $10.009 | 547 | |||||||||||||
2009 | $10.009 | $13.005 | 521 | |||||||||||||
2010 | $13.005 | $14.666 | 506 | |||||||||||||
2011 | $14.666 | $13.909 | 509 | |||||||||||||
2012 | $13.909 | $15.063 | 259 | |||||||||||||
2013 | $15.063 | $18.524 | 223 | |||||||||||||
2014 | $18.524 | $19.635 | 228 | |||||||||||||
2015 | $19.635 | $18.485 | 233 | |||||||||||||
Janus Aspen Perkins Small Company Value Portfolio Service Shares |
||||||||||||||||
2006 | $10.906 | $12.993 | 0 | |||||||||||||
2007 | $12.993 | $11.923 | 0 | |||||||||||||
2008 | $11.923 | $7.468 | 0 | |||||||||||||
2009 | $7.468 | $7.057 | 0 |
H-16
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Janus Aspen Series Balanced Portfolio Service Shares |
||||||||||||||||
2006 | $11.089 | $11.970 | 0 | |||||||||||||
2007 | $11.970 | $12.902 | 0 | |||||||||||||
2008 | $12.902 | $10.586 | 0 | |||||||||||||
2009 | $10.586 | $12.996 | 0 | |||||||||||||
2010 | $12.996 | $13.735 | 0 | |||||||||||||
2011 | $13.735 | $13.608 | 0 | |||||||||||||
2012 | $13.608 | $15.081 | 0 | |||||||||||||
2013 | $15.081 | $17.661 | 0 | |||||||||||||
2014 | $17.661 | $18.686 | 0 | |||||||||||||
2015 | $18.686 | $18.340 | 0 | |||||||||||||
Janus Aspen Series Foreign Stock Portfolio Service Shares |
||||||||||||||||
2006 | $11.655 | $13.452 | 0 | |||||||||||||
2007 | $13.452 | $15.547 | 0 | |||||||||||||
2008 | $15.547 | $14.589 | 0 | |||||||||||||
Janus Aspen Series Forty Portfolio Service Shares |
||||||||||||||||
2006 | $12.539 | $13.375 | 0 | |||||||||||||
2007 | $13.375 | $17.861 | 0 | |||||||||||||
2008 | $17.861 | $9.723 | 0 | |||||||||||||
2009 | $9.723 | $13.877 | 0 | |||||||||||||
2010 | $13.877 | $14.444 | 0 | |||||||||||||
2011 | $14.444 | $13.139 | 0 | |||||||||||||
2012 | $13.139 | $15.907 | 0 | |||||||||||||
2013 | $15.907 | $20.352 | 0 | |||||||||||||
2014 | $20.352 | $21.579 | 0 | |||||||||||||
2015 | $21.579 | $23.612 | 0 | |||||||||||||
Janus Aspen Series INTECH Risk-Managed Core Portfolio Service Shares |
||||||||||||||||
2006 | $12.192 | $13.202 | 0 | |||||||||||||
2007 | $13.202 | $13.695 | 0 | |||||||||||||
2008 | $13.695 | $8.535 | 0 | |||||||||||||
2009 | $8.535 | $10.224 | 0 | |||||||||||||
2010 | $10.224 | $10.943 | 0 | |||||||||||||
MFS Investors Growth Stock Portfolio Service Class |
||||||||||||||||
2015 | $10.000 | $16.636 | 0 | |||||||||||||
MFS VIT II High Yield Service Class |
||||||||||||||||
2013 | $10.000 | $14.683 | 2,048 | |||||||||||||
2014 | $14.683 | $14.717 | 2,064 | |||||||||||||
2015 | $14.717 | $13.749 | 1,972 | |||||||||||||
MFS® High Income Series Service Class |
||||||||||||||||
2006 | $10.538 | $11.331 | 0 | |||||||||||||
2007 | $11.331 | $11.245 | 0 | |||||||||||||
2008 | $11.245 | $7.842 | 3,928 | |||||||||||||
2009 | $7.842 | $11.132 | 3,672 | |||||||||||||
2010 | $11.132 | $12.448 | 3,380 | |||||||||||||
2011 | $12.448 | $12.637 | 1,952 | |||||||||||||
2012 | $12.637 | $14.135 | 1,882 | |||||||||||||
2013 | $14.135 | $14.261 | 0 | |||||||||||||
MFS® Investors Growth Stock Series Service Class |
||||||||||||||||
2006 | $10.580 | $11.098 | 0 | |||||||||||||
2007 | $12.125 | $12.013 | 0 | |||||||||||||
2008 | $12.013 | $7.419 | 155 | |||||||||||||
2009 | $7.419 | $10.087 | 132 | |||||||||||||
2010 | $10.087 | $11.058 | 129 | |||||||||||||
2011 | $11.058 | $10.850 | 133 | |||||||||||||
2012 | $10.850 | $12.375 | 126 | |||||||||||||
2013 | $12.375 | $15.732 | 103 | |||||||||||||
2014 | $15.732 | $17.087 | 97 | |||||||||||||
2015 | $17.087 | $17.209 | 0 |
H-17
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
MFS® Investors Trust Series Service Class |
||||||||||||||||
2006 | $11.215 | $12.355 | 0 | |||||||||||||
2007 | $11.098 | $12.043 | 0 | |||||||||||||
2008 | $12.043 | $8.669 | 923 | |||||||||||||
2009 | $8.669 | $10.725 | 918 | |||||||||||||
2010 | $10.725 | $11.624 | 914 | |||||||||||||
2011 | $11.624 | $11.088 | 0 | |||||||||||||
2012 | $11.088 | $12.879 | 0 | |||||||||||||
2013 | $12.879 | $16.585 | 0 | |||||||||||||
2014 | $16.585 | $17.949 | 0 | |||||||||||||
2015 | $17.949 | $17.537 | 0 | |||||||||||||
MFS® New Discovery Series Service Class |
||||||||||||||||
2006 | $10.126 | $11.178 | 0 | |||||||||||||
2007 | $11.178 | $11.171 | 0 | |||||||||||||
2008 | $11.171 | $6.604 | 1,098 | |||||||||||||
2009 | $6.604 | $10.518 | 1,092 | |||||||||||||
2010 | $10.518 | $13.976 | 1,087 | |||||||||||||
2011 | $13.976 | $12.229 | 0 | |||||||||||||
2012 | $12.229 | $14.451 | 0 | |||||||||||||
2013 | $14.451 | $19.948 | 0 | |||||||||||||
2014 | $19.948 | $18.038 | 0 | |||||||||||||
2015 | $18.038 | $17.254 | 0 | |||||||||||||
MFS® Total Return Series Service Class |
||||||||||||||||
2006 | $10.725 | $11.703 | 314 | |||||||||||||
2007 | $11.703 | $11.889 | 301 | |||||||||||||
2008 | $11.889 | $9.027 | 2,083 | |||||||||||||
2009 | $9.027 | $10.388 | 2,077 | |||||||||||||
2010 | $10.388 | $11.133 | 2,061 | |||||||||||||
2011 | $11.133 | $11.055 | 1,027 | |||||||||||||
2012 | $11.055 | $11.987 | 763 | |||||||||||||
2013 | $11.987 | $13.914 | 763 | |||||||||||||
2014 | $13.914 | $14.721 | 763 | |||||||||||||
2015 | $14.721 | $14.306 | 763 | |||||||||||||
MFS® Value Series Service Class |
||||||||||||||||
2006 | $11.534 | $13.587 | 0 | |||||||||||||
2007 | $13.587 | $14.288 | 0 | |||||||||||||
2008 | $14.288 | $9.393 | 858 | |||||||||||||
2009 | $9.393 | $11.244 | 854 | |||||||||||||
2010 | $11.244 | $12.224 | 850 | |||||||||||||
2011 | $12.224 | $11.893 | 0 | |||||||||||||
2012 | $11.893 | $13.472 | 0 | |||||||||||||
2013 | $13.472 | $17.856 | 0 | |||||||||||||
2014 | $17.856 | $19.235 | 0 | |||||||||||||
2015 | $19.235 | $18.627 | 0 | |||||||||||||
Oppenheimer Discovery Mid Cap Growth Fund/VA Service Shares |
||||||||||||||||
2006 | $11.651 | $11.697 | 0 | |||||||||||||
2007 | $11.697 | $12.123 | 0 | |||||||||||||
2008 | $12.123 | $6.018 | 0 | |||||||||||||
2009 | $6.018 | $7.780 | 0 | |||||||||||||
2010 | $7.780 | $9.671 | 0 | |||||||||||||
2011 | $9.671 | $9.533 | 0 | |||||||||||||
2012 | $9.533 | $10.824 | 0 | |||||||||||||
2013 | $10.824 | $14.350 | 0 | |||||||||||||
2014 | $14.350 | $14.802 | 0 | |||||||||||||
2015 | $14.802 | $15.388 | 0 |
H-18
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Oppenheimer Global Fund/VA Service Shares |
||||||||||||||||
2006 | $12.595 | $14.450 | 0 | |||||||||||||
2007 | $14.450 | $14.982 | 0 | |||||||||||||
2008 | $14.982 | $8.738 | 18,728 | |||||||||||||
2009 | $8.738 | $11.903 | 18,643 | |||||||||||||
2010 | $11.903 | $13.463 | 1,017 | |||||||||||||
2011 | $13.463 | $12.038 | 961 | |||||||||||||
2012 | $12.038 | $14.232 | 885 | |||||||||||||
2013 | $14.232 | $17.667 | 819 | |||||||||||||
2014 | $17.667 | $17.624 | 826 | |||||||||||||
2015 | $17.624 | $17.860 | 727 | |||||||||||||
Oppenheimer Main Street Small Cap Fund/VA Service Shares |
||||||||||||||||
2006 | $12.044 | $13.500 | 0 | |||||||||||||
2007 | $13.500 | $13.011 | 0 | |||||||||||||
2008 | $13.011 | $7.884 | 2,247 | |||||||||||||
2009 | $7.884 | $10.549 | 2,138 | |||||||||||||
2010 | $10.549 | $12.690 | 1,809 | |||||||||||||
2011 | $12.690 | $12.109 | 1,696 | |||||||||||||
2012 | $12.109 | $13.928 | 850 | |||||||||||||
2013 | $13.928 | $19.145 | 713 | |||||||||||||
2014 | $19.145 | $20.895 | 657 | |||||||||||||
2015 | $20.895 | $19.181 | 630 | |||||||||||||
PIMCO Foreign Bond Portfolio (U.S. Dollar-Hedged) Administrative Shares |
||||||||||||||||
2006 | $10.583 | $10.572 | 574 | |||||||||||||
2007 | $10.572 | $10.708 | 546 | |||||||||||||
2008 | $10.708 | $10.218 | 4,709 | |||||||||||||
2009 | $10.218 | $11.549 | 4,792 | |||||||||||||
2010 | $11.549 | $12.249 | 4,688 | |||||||||||||
2011 | $12.249 | $12.784 | 3,110 | |||||||||||||
2012 | $12.784 | $13.851 | 806 | |||||||||||||
2013 | $13.851 | $13.608 | 862 | |||||||||||||
2014 | $13.608 | $14.786 | 850 | |||||||||||||
2015 | $14.786 | $14.495 | 501 | |||||||||||||
PIMCO Money Market Portfolio Administrative Shares |
||||||||||||||||
2006 | $9.922 | $10.147 | 635 | |||||||||||||
2007 | $10.147 | $10.401 | 596 | |||||||||||||
2008 | $10.401 | $10.396 | 3,790 | |||||||||||||
2009 | $10.396 | $10.174 | 3,856 | |||||||||||||
2010 | $10.174 | $9.950 | 3,891 | |||||||||||||
2011 | $9.950 | $9.732 | 1,674 | |||||||||||||
2012 | $9.732 | $9.519 | 1,607 | |||||||||||||
2013 | $9.519 | $9.310 | 1,650 | |||||||||||||
2014 | $9.310 | $9.102 | 1,723 | |||||||||||||
2015 | $9.102 | $8.899 | 1,713 | |||||||||||||
PIMCO Real Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.487 | $10.324 | 477 | |||||||||||||
2007 | $10.324 | $11.168 | 458 | |||||||||||||
2008 | $11.168 | $10.148 | 918 | |||||||||||||
2009 | $10.148 | $11.745 | 923 | |||||||||||||
2010 | $11.745 | $12.412 | 908 | |||||||||||||
2011 | $12.412 | $13.550 | 872 | |||||||||||||
2012 | $13.550 | $14.404 | 473 | |||||||||||||
2013 | $14.404 | $12.782 | 510 | |||||||||||||
2014 | $12.782 | $12.880 | 518 | |||||||||||||
2015 | $12.880 | $12.250 | 257 |
H-19
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
PIMCO Total Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.212 | $10.368 | 0 | |||||||||||||
2007 | $10.368 | $11.022 | 0 | |||||||||||||
2008 | $11.022 | $11.293 | 6,237 | |||||||||||||
2009 | $11.293 | $12.592 | 6,277 | |||||||||||||
2010 | $12.592 | $13.308 | 5,926 | |||||||||||||
2011 | $13.308 | $13.479 | 4,412 | |||||||||||||
2012 | $13.479 | $14.439 | 529 | |||||||||||||
2013 | $14.439 | $13.837 | 558 | |||||||||||||
2014 | $13.837 | $14.104 | 564 | |||||||||||||
2015 | $14.104 | $13.849 | 329 | |||||||||||||
Premier VIT OpCap Balanced Portfolio |
||||||||||||||||
2006 | $10.785 | $11.682 | 0 | |||||||||||||
2007 | $11.682 | $10.911 | 0 | |||||||||||||
2008 | $10.911 | $7.340 | 0 | |||||||||||||
2009 | $7.340 | $7.061 | 0 | |||||||||||||
Premier VIT OpCap Renaissance Portfolio |
||||||||||||||||
2006 | $10.393 | $11.315 | 0 | |||||||||||||
2007 | $11.315 | $11.758 | 0 | |||||||||||||
2008 | $11.758 | $10.620 | 0 | |||||||||||||
T. Rowe Price Blue Chip Growth Portfolio II |
||||||||||||||||
2006 | $10.743 | $11.481 | 335 | |||||||||||||
2007 | $11.481 | $12.623 | 321 | |||||||||||||
2008 | $12.623 | $7.076 | 2,407 | |||||||||||||
2009 | $7.076 | $9.808 | 2,378 | |||||||||||||
2010 | $9.808 | $11.121 | 2,128 | |||||||||||||
2011 | $11.121 | $11.019 | 2,111 | |||||||||||||
2012 | $11.019 | $12.700 | 231 | |||||||||||||
2013 | $12.700 | $17.485 | 198 | |||||||||||||
2014 | $17.485 | $18.603 | 189 | |||||||||||||
2015 | $18.603 | $20.148 | 91 | |||||||||||||
T. Rowe Price Equity Income Portfolio II |
||||||||||||||||
2006 | $11.165 | $12.949 | 737 | |||||||||||||
2007 | $12.949 | $13.040 | 706 | |||||||||||||
2008 | $13.040 | $8.124 | 18,755 | |||||||||||||
2009 | $8.124 | $9.946 | 18,736 | |||||||||||||
2010 | $9.946 | $11.156 | 2,148 | |||||||||||||
2011 | $11.156 | $10.794 | 1,218 | |||||||||||||
2012 | $10.794 | $12.336 | 802 | |||||||||||||
2013 | $12.336 | $15.604 | 728 | |||||||||||||
2014 | $15.604 | $16.337 | 735 | |||||||||||||
2015 | $16.337 | $14.834 | 657 | |||||||||||||
UIF Growth Portfolio, Class II |
||||||||||||||||
2006 | $11.624 | $11.796 | 0 | |||||||||||||
2007 | $11.796 | $14.027 | 0 | |||||||||||||
2008 | $14.027 | $6.945 | 336 | |||||||||||||
2009 | $6.945 | $11.211 | 331 | |||||||||||||
2010 | $11.211 | $13.437 | 327 | |||||||||||||
2011 | $13.437 | $12.736 | 324 | |||||||||||||
2012 | $12.736 | $14.198 | 327 | |||||||||||||
2013 | $14.198 | $20.502 | 322 | |||||||||||||
2014 | $20.502 | $21.262 | 320 | |||||||||||||
2015 | $21.262 | $23.271 | 318 |
H-20
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
UIF U.S. Real Estate Portfolio, Class II |
||||||||||||||||
2006 | $14.547 | $19.578 | 582 | |||||||||||||
2007 | $19.578 | $15.830 | 630 | |||||||||||||
2008 | $15.830 | $9.584 | 29,447 | |||||||||||||
2009 | $9.584 | $12.038 | 29,312 | |||||||||||||
2010 | $12.038 | $15.242 | 4,699 | |||||||||||||
2011 | $15.242 | $15.744 | 3,609 | |||||||||||||
2012 | $15.744 | $17.793 | 1,615 | |||||||||||||
2013 | $17.793 | $17.697 | 1,815 | |||||||||||||
2014 | $17.697 | $22.389 | 1,463 | |||||||||||||
2015 | $22.389 | $22.306 | 1,329 | |||||||||||||
Van Eck VIP Emerging Markets Fund Initial Class |
||||||||||||||||
2006 | $15.491 | $21.124 | 130 | |||||||||||||
2007 | $21.124 | $28.413 | 124 | |||||||||||||
2008 | $28.413 | $9.781 | 119 | |||||||||||||
2009 | $9.781 | $20.382 | 119 | |||||||||||||
2010 | $20.382 | $25.272 | 114 | |||||||||||||
2011 | $25.272 | $18.346 | 109 | |||||||||||||
2012 | $18.346 | $23.277 | 0 | |||||||||||||
2013 | $23.277 | $25.489 | 0 | |||||||||||||
2014 | $25.489 | $24.812 | 0 | |||||||||||||
2015 | $24.812 | $20.859 | 0 | |||||||||||||
Van Eck VIP Global Hard Assets Fund Initial Class |
||||||||||||||||
2006 | $18.314 | $22.288 | 0 | |||||||||||||
2007 | $22.288 | $31.665 | 0 | |||||||||||||
2008 | $31.665 | $16.674 | 818 | |||||||||||||
2009 | $16.674 | $25.677 | 789 | |||||||||||||
2010 | $25.677 | $32.438 | 756 | |||||||||||||
2011 | $32.438 | $26.492 | 641 | |||||||||||||
2012 | $26.492 | $26.772 | 950 | |||||||||||||
2013 | $26.772 | $28.926 | 65 | |||||||||||||
2014 | $28.926 | $22.873 | 63 | |||||||||||||
2015 | $22.873 | $14.879 | 61 | |||||||||||||
Van Eck VIP Multi-Manager Alternative Initial Class |
||||||||||||||||
2006 | $9.634 | $10.233 | 0 | |||||||||||||
2007 | $10.233 | $10.407 | 0 | |||||||||||||
2008 | $10.407 | $8.840 | 1,179 | |||||||||||||
2009 | $8.840 | $9.840 | 1,172 | |||||||||||||
2010 | $9.840 | $10.097 | 1,167 | |||||||||||||
2011 | $10.097 | $9.646 | 0 | |||||||||||||
2012 | $9.646 | $9.554 | 0 | |||||||||||||
2013 | $9.554 | $9.811 | 0 | |||||||||||||
2014 | $9.811 | $9.488 | 0 | |||||||||||||
2015 | $9.488 | $9.365 | 0 | |||||||||||||
Western Asset Variable Global High Yield Bond Portfolio Class II |
||||||||||||||||
2006 | $10.912 | $11.771 | 310 | |||||||||||||
2007 | $11.771 | $11.467 | 298 | |||||||||||||
2008 | $11.467 | $7.747 | 1,488 | |||||||||||||
2009 | $7.747 | $11.727 | 1,421 | |||||||||||||
2010 | $11.727 | $13.147 | 1,283 | |||||||||||||
2011 | $13.147 | $13.016 | 1,276 | |||||||||||||
2012 | $13.016 | $15.022 | 207 | |||||||||||||
2013 | $15.022 | $15.573 | 209 | |||||||||||||
2014 | $15.573 | $14.993 | 223 | |||||||||||||
2015 | $14.993 | $13.765 | 0 |
* | The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 2.15% and an administrative expense charge of 0.10%. |
H-21
CONSULTANT SOLUTIONS VARIABLE ANNUITIES: LBL Consultant Solution Elite Contracts
PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT*
Low
Mortality & Expense = 1.6
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Alger Capital Appreciation Portfolio Class S |
||||||||||||||||
2006 | $11.431 | $13.368 | 10,380 | |||||||||||||
2007 | $13.368 | $17.501 | 11,158 | |||||||||||||
2008 | $17.501 | $9.416 | 23,230 | |||||||||||||
2009 | $9.416 | $13.948 | 13,955 | |||||||||||||
2010 | $13.948 | $15.579 | 5,543 | |||||||||||||
2011 | $15.579 | $15.219 | 4,559 | |||||||||||||
2012 | $15.219 | $17.636 | 3,457 | |||||||||||||
2013 | $17.636 | $23.368 | 2,983 | |||||||||||||
2014 | $23.368 | $26.059 | 1,401 | |||||||||||||
2015 | $26.059 | $27.131 | 1,136 | |||||||||||||
Alger Large Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $11.059 | $11.405 | 4,747 | |||||||||||||
2007 | $11.405 | $13.411 | 3,856 | |||||||||||||
2008 | $13.411 | $7.079 | 4,663 | |||||||||||||
2009 | $7.079 | $10.247 | 4,047 | |||||||||||||
2010 | $10.247 | $11.373 | 2,041 | |||||||||||||
2011 | $11.373 | $11.095 | 1,764 | |||||||||||||
2012 | $11.095 | $11.929 | 793 | |||||||||||||
2013 | $11.929 | $15.780 | 674 | |||||||||||||
2014 | $15.780 | $17.150 | 1,654 | |||||||||||||
2015 | $17.150 | $17.087 | 435 | |||||||||||||
Alger Mid Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $11.407 | $12.323 | 32,839 | |||||||||||||
2007 | $12.323 | $15.900 | 22,247 | |||||||||||||
2008 | $15.900 | $6.490 | 21,572 | |||||||||||||
2009 | $6.490 | $9.654 | 11,236 | |||||||||||||
2010 | $9.654 | $11.282 | 7,031 | |||||||||||||
2011 | $11.282 | $10.138 | 5,317 | |||||||||||||
2012 | $10.138 | $11.529 | 4,294 | |||||||||||||
2013 | $11.529 | $15.345 | 4,016 | |||||||||||||
2014 | $15.345 | $16.228 | 2,552 | |||||||||||||
2015 | $16.228 | $15.650 | 2,334 | |||||||||||||
ClearBridge Variable Fundamental All Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.486 | 4,256 | |||||||||||||
2008 | $9.486 | $5.914 | 1,123 | |||||||||||||
2009 | $5.914 | $7.520 | 1,578 | |||||||||||||
2010 | $7.520 | $8.619 | 1,081 | |||||||||||||
2011 | $8.619 | $7.948 | 320 | |||||||||||||
2012 | $7.948 | $8.983 | 320 | |||||||||||||
2013 | $8.983 | $11.671 | 1,327 | |||||||||||||
2014 | $11.671 | $12.539 | 0 |
H-22
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
ClearBridge Variable Large Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.725 | 16,715 | |||||||||||||
2008 | $9.725 | $6.154 | 14,358 | |||||||||||||
2009 | $6.154 | $7.532 | 11,945 | |||||||||||||
2010 | $7.532 | $8.104 | 3,027 | |||||||||||||
2011 | $8.104 | $8.362 | 1,134 | |||||||||||||
2012 | $8.362 | $9.576 | 3,170 | |||||||||||||
2013 | $9.576 | $12.460 | 356 | |||||||||||||
2014 | $12.460 | $13.682 | 89 | |||||||||||||
2015 | $13.682 | $13.064 | 89 | |||||||||||||
Fidelity VIP Asset Manager Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.390 | $10.942 | 20,152 | |||||||||||||
2007 | $10.942 | $12.387 | 18,915 | |||||||||||||
2008 | $12.387 | $8.657 | 20,457 | |||||||||||||
2009 | $8.657 | $10.957 | 12,979 | |||||||||||||
2010 | $10.957 | $12.275 | 7,846 | |||||||||||||
2011 | $12.275 | $11.727 | 4,966 | |||||||||||||
2012 | $11.727 | $12.937 | 1,499 | |||||||||||||
2013 | $12.937 | $14.668 | 1,420 | |||||||||||||
2014 | $14.668 | $15.217 | 1,295 | |||||||||||||
2015 | $15.217 | $14.950 | 629 | |||||||||||||
Fidelity VIP Contrafund® Portfolio Service Class 2 |
||||||||||||||||
2006 | $13.018 | $14.260 | 98,161 | |||||||||||||
2007 | $14.260 | $16.442 | 98,587 | |||||||||||||
2008 | $16.442 | $9.262 | 69,273 | |||||||||||||
2009 | $9.262 | $12.334 | 49,531 | |||||||||||||
2010 | $12.334 | $14.177 | 23,726 | |||||||||||||
2011 | $14.177 | $13.548 | 21,964 | |||||||||||||
2012 | $13.548 | $15.467 | 13,387 | |||||||||||||
2013 | $15.467 | $19.910 | 10,269 | |||||||||||||
2014 | $19.910 | $21.853 | 7,943 | |||||||||||||
2015 | $21.853 | $21.571 | 3,050 | |||||||||||||
Fidelity VIP Equity-Income Portfolio Service Class 2 |
||||||||||||||||
2006 | $11.214 | $13.221 | 52,728 | |||||||||||||
2007 | $13.221 | $13.160 | 47,153 | |||||||||||||
2008 | $13.160 | $7.398 | 28,570 | |||||||||||||
2009 | $7.398 | $9.445 | 20,770 | |||||||||||||
2010 | $9.445 | $10.670 | 8,880 | |||||||||||||
2011 | $10.670 | $10.557 | 5,135 | |||||||||||||
2012 | $10.557 | $12.147 | 6,612 | |||||||||||||
2013 | $12.147 | $15.264 | 9,562 | |||||||||||||
2014 | $15.264 | $16.277 | 6,728 | |||||||||||||
2015 | $16.277 | $15.322 | 3,677 | |||||||||||||
Fidelity VIP Government Money Market Portfolio Service Class 2 formerly, Fidelity VIP Money Market Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.036 | $10.322 | 161,389 | |||||||||||||
2007 | $10.322 | $10.648 | 125,834 | |||||||||||||
2008 | $10.648 | $10.757 | 157,527 | |||||||||||||
2009 | $10.757 | $10.624 | 92,275 | |||||||||||||
2010 | $10.624 | $10.451 | 95,672 | |||||||||||||
2011 | $10.451 | $10.275 | 48,128 | |||||||||||||
2012 | $10.275 | $10.101 | 30,696 | |||||||||||||
2013 | $10.101 | $9.930 | 17,599 | |||||||||||||
2014 | $9.930 | $9.762 | 19,898 | |||||||||||||
2015 | $9.762 | $9.597 | 10,055 |
H-23
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Fidelity VIP Growth Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.140 | $10.623 | 8,255 | |||||||||||||
2007 | $10.623 | $13.226 | 7,221 | |||||||||||||
2008 | $13.226 | $6.850 | 5,106 | |||||||||||||
2009 | $6.850 | $8.617 | 3,946 | |||||||||||||
2010 | $8.617 | $10.492 | 2,279 | |||||||||||||
2011 | $10.492 | $10.310 | 6,878 | |||||||||||||
2012 | $10.310 | $11.594 | 840 | |||||||||||||
2013 | $11.594 | $15.500 | 796 | |||||||||||||
2014 | $15.500 | $16.915 | 750 | |||||||||||||
2015 | $16.915 | $17.775 | 747 | |||||||||||||
Fidelity VIP Index 500 Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.930 | $12.403 | 65,217 | |||||||||||||
2007 | $12.403 | $12.823 | 59,035 | |||||||||||||
2008 | $12.823 | $7.921 | 48,787 | |||||||||||||
2009 | $7.921 | $9.834 | 31,067 | |||||||||||||
2010 | $9.834 | $11.091 | 25,140 | |||||||||||||
2011 | $11.091 | $11.097 | 17,231 | |||||||||||||
2012 | $11.097 | $12.613 | 16,671 | |||||||||||||
2013 | $12.613 | $16.355 | 13,008 | |||||||||||||
2014 | $16.355 | $18.213 | 10,144 | |||||||||||||
2015 | $18.213 | $18.097 | 9,444 | |||||||||||||
Fidelity VIP Investment Grade Bond Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.199 | $10.441 | 73,225 | |||||||||||||
2007 | $10.441 | $10.682 | 66,985 | |||||||||||||
2008 | $10.682 | $10.137 | 32,315 | |||||||||||||
2009 | $10.137 | $11.506 | 24,417 | |||||||||||||
2010 | $11.506 | $12.164 | 23,917 | |||||||||||||
2011 | $12.164 | $12.799 | 15,817 | |||||||||||||
2012 | $12.799 | $13.286 | 10,933 | |||||||||||||
2013 | $13.286 | $12.790 | 10,989 | |||||||||||||
2014 | $12.790 | $13.279 | 9,449 | |||||||||||||
2015 | $13.279 | $12.942 | 9,093 | |||||||||||||
Fidelity VIP Overseas Portfolio Service Class 2 |
||||||||||||||||
2006 | $12.723 | $14.730 | 67,797 | |||||||||||||
2007 | $14.730 | $16.948 | 84,726 | |||||||||||||
2008 | $16.948 | $9.336 | 62,637 | |||||||||||||
2009 | $9.336 | $11.583 | 48,389 | |||||||||||||
2010 | $11.583 | $12.847 | 18,960 | |||||||||||||
2011 | $12.847 | $10.439 | 9,501 | |||||||||||||
2012 | $10.439 | $12.352 | 8,360 | |||||||||||||
2013 | $12.352 | $15.806 | 12,069 | |||||||||||||
2014 | $15.806 | $14.248 | 8,840 | |||||||||||||
2015 | $14.248 | $14.467 | 5,585 | |||||||||||||
Goldman Sachs VIT Mid Cap Value Fund Institutional |
||||||||||||||||
2015 | $10.000 | $8.717 | 35 | |||||||||||||
Guggenheim VIF Long Short Equity Fund |
||||||||||||||||
2006 | $11.810 | $12.931 | 8,282 | |||||||||||||
2007 | $12.931 | $15.601 | 6,921 | |||||||||||||
2008 | $15.601 | $9.088 | 5,207 | |||||||||||||
2009 | $9.088 | $11.372 | 5,103 | |||||||||||||
2010 | $11.372 | $12.432 | 3,286 | |||||||||||||
2011 | $12.432 | $11.419 | 1,218 | |||||||||||||
2012 | $11.419 | $11.722 | 723 | |||||||||||||
2013 | $11.722 | $13.535 | 387 | |||||||||||||
2014 | $13.535 | $13.676 | 414 | |||||||||||||
2015 | $13.676 | $13.613 | 345 |
H-24
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. American Franchise Fund Series II |
||||||||||||||||
2012 | $10.000 | $9.480 | 410 | |||||||||||||
2013 | $9.480 | $13.027 | 530 | |||||||||||||
2014 | $13.027 | $13.852 | 557 | |||||||||||||
2015 | $13.852 | $14.263 | 582 | |||||||||||||
Invesco V.I. Capital Appreciation Series II |
||||||||||||||||
2006 | $10.962 | $11.429 | 1,382 | |||||||||||||
2007 | $11.429 | $12.551 | 1,120 | |||||||||||||
2008 | $12.551 | $7.078 | 840 | |||||||||||||
2009 | $7.078 | $8.400 | 647 | |||||||||||||
2010 | $8.400 | $9.513 | 927 | |||||||||||||
2011 | $9.513 | $8.592 | 384 | |||||||||||||
2012 | $8.592 | $9.855 | 0 | |||||||||||||
Invesco V.I. Core Equity Fund Series II |
||||||||||||||||
2006 | $10.000 | $10.774 | 15,396 | |||||||||||||
2007 | $10.774 | $11.424 | 18,197 | |||||||||||||
2008 | $11.424 | $7.825 | 13,767 | |||||||||||||
2009 | $7.825 | $9.844 | 15,508 | |||||||||||||
2010 | $9.844 | $10.572 | 7,904 | |||||||||||||
2011 | $10.572 | $10.362 | 6,374 | |||||||||||||
2012 | $10.362 | $11.572 | 4,343 | |||||||||||||
2013 | $11.572 | $14.667 | 3,742 | |||||||||||||
2014 | $14.667 | $15.549 | 3,638 | |||||||||||||
2015 | $15.549 | $14.367 | 3,717 | |||||||||||||
Invesco V.I. Government Securities Fund Series II |
||||||||||||||||
2011 | $10.000 | $11.876 | 889 | |||||||||||||
2012 | $11.876 | $11.933 | 888 | |||||||||||||
2013 | $11.933 | $11.395 | 898 | |||||||||||||
2014 | $11.395 | $11.636 | 802 | |||||||||||||
2015 | $11.636 | $11.445 | 670 | |||||||||||||
Invesco V.I. Growth and Income Fund Series II |
||||||||||||||||
2006 | $11.915 | $13.585 | 65,009 | |||||||||||||
2007 | $13.585 | $13.689 | 61,062 | |||||||||||||
2008 | $13.689 | $9.122 | 42,540 | |||||||||||||
2009 | $9.122 | $11.129 | 24,464 | |||||||||||||
2010 | $11.129 | $12.273 | 12,069 | |||||||||||||
2011 | $12.273 | $11.792 | 6,451 | |||||||||||||
2012 | $11.792 | $13.255 | 5,229 | |||||||||||||
2013 | $13.255 | $17.429 | 4,397 | |||||||||||||
2014 | $17.429 | $18.840 | 2,923 | |||||||||||||
2015 | $18.840 | $17.906 | 2,684 | |||||||||||||
Invesco V.I. Mid Cap Core Equity Fund Series II |
||||||||||||||||
2006 | $11.550 | $12.601 | 25,207 | |||||||||||||
2007 | $12.601 | $13.536 | 25,250 | |||||||||||||
2008 | $13.536 | $9.489 | 10,026 | |||||||||||||
2009 | $9.489 | $12.113 | 7,481 | |||||||||||||
2010 | $12.113 | $13.548 | 7,476 | |||||||||||||
2011 | $13.548 | $12.452 | 3,890 | |||||||||||||
2012 | $12.452 | $13.539 | 3,050 | |||||||||||||
2013 | $13.539 | $17.097 | 7,749 | |||||||||||||
2014 | $17.097 | $17.508 | 6,973 | |||||||||||||
2015 | $17.508 | $16.473 | 2,741 |
H-25
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. Mid Cap Growth Fund Series II |
||||||||||||||||
2006 | $12.098 | $12.478 | 1,436 | |||||||||||||
2007 | $12.478 | $14.424 | 713 | |||||||||||||
2008 | $14.424 | $7.538 | 715 | |||||||||||||
2009 | $7.538 | $11.587 | 659 | |||||||||||||
2010 | $11.587 | $14.496 | 750 | |||||||||||||
2011 | $14.496 | $12.917 | 617 | |||||||||||||
2012 | $12.917 | $14.173 | 478 | |||||||||||||
2013 | $14.173 | $19.031 | 420 | |||||||||||||
2014 | $19.031 | $20.147 | 373 | |||||||||||||
2015 | $20.147 | $20.011 | 371 | |||||||||||||
Invesco V.I. Value Opportunities Fund Series II |
||||||||||||||||
2006 | $11.100 | $12.324 | 26,039 | |||||||||||||
2007 | $12.324 | $12.279 | 15,073 | |||||||||||||
2008 | $12.279 | $5.805 | 4,867 | |||||||||||||
2009 | $5.805 | $8.431 | 2,549 | |||||||||||||
2010 | $8.431 | $8.863 | 1,587 | |||||||||||||
2011 | $8.863 | $8.417 | 1,390 | |||||||||||||
2012 | $8.417 | $9.734 | 1,353 | |||||||||||||
2013 | $9.734 | $12.752 | 1,319 | |||||||||||||
2014 | $12.752 | $13.336 | 1,305 | |||||||||||||
2015 | $13.336 | $11.712 | 1,107 | |||||||||||||
Invesco Van Kampen V.I. Government Fund Series II |
||||||||||||||||
2006 | $10.309 | $10.449 | 6,825 | |||||||||||||
2007 | $10.449 | $10.992 | 5,828 | |||||||||||||
2008 | $10.992 | $10.968 | 4,131 | |||||||||||||
2009 | $10.968 | $10.875 | 2,469 | |||||||||||||
2010 | $10.875 | $11.212 | 1,400 | |||||||||||||
2011 | $11.212 | $11.267 | 0 | |||||||||||||
Janus Aspen Overseas Portfolio Service Shares |
||||||||||||||||
2008 | $10.000 | $6.951 | 5,243 | |||||||||||||
2009 | $6.951 | $12.236 | 3,147 | |||||||||||||
2010 | $12.236 | $15.037 | 4,829 | |||||||||||||
2011 | $15.037 | $10.002 | 580 | |||||||||||||
2012 | $10.002 | $11.127 | 398 | |||||||||||||
2013 | $11.127 | $12.500 | 372 | |||||||||||||
2014 | $12.500 | $10.801 | 371 | |||||||||||||
2015 | $10.801 | $9.682 | 73 | |||||||||||||
Janus Aspen Perkins Mid Cap Value Portfolio Service Shares |
||||||||||||||||
2006 | $12.183 | $13.781 | 59,842 | |||||||||||||
2007 | $13.781 | $14.517 | 53,518 | |||||||||||||
2008 | $14.517 | $10.289 | 34,104 | |||||||||||||
2009 | $10.289 | $13.444 | 24,911 | |||||||||||||
2010 | $13.444 | $15.246 | 13,338 | |||||||||||||
2011 | $15.246 | $14.540 | 8,153 | |||||||||||||
2012 | $14.540 | $15.835 | 2,351 | |||||||||||||
2013 | $15.835 | $19.583 | 1,124 | |||||||||||||
2014 | $19.583 | $20.875 | 853 | |||||||||||||
2015 | $20.875 | $19.762 | 816 | |||||||||||||
Janus Aspen Perkins Small Company Value Portfolio Service Shares |
||||||||||||||||
2006 | $10.947 | $13.116 | 20,417 | |||||||||||||
2007 | $13.116 | $12.103 | 23,686 | |||||||||||||
2008 | $12.103 | $7.624 | 18,835 | |||||||||||||
2009 | $7.624 | $7.217 | 0 |
H-26
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Janus Aspen Series Balanced Portfolio Service Shares |
||||||||||||||||
2006 | $11.209 | $12.166 | 20,866 | |||||||||||||
2007 | $12.166 | $13.188 | 19,377 | |||||||||||||
2008 | $13.188 | $10.882 | 23,268 | |||||||||||||
2009 | $10.882 | $13.434 | 15,495 | |||||||||||||
2010 | $13.434 | $14.278 | 12,291 | |||||||||||||
2011 | $14.278 | $14.226 | 10,648 | |||||||||||||
2012 | $14.226 | $15.854 | 6,237 | |||||||||||||
2013 | $15.854 | $18.670 | 5,750 | |||||||||||||
2014 | $18.670 | $19.865 | 5,459 | |||||||||||||
2015 | $19.865 | $19.607 | 4,323 | |||||||||||||
Janus Aspen Series Foreign Stock Portfolio Service Shares |
||||||||||||||||
2006 | $11.781 | $13.672 | 5,830 | |||||||||||||
2007 | $13.672 | $15.892 | 7,627 | |||||||||||||
2008 | $15.892 | $14.940 | 0 | |||||||||||||
Janus Aspen Series Forty Portfolio Service Shares |
||||||||||||||||
2006 | $12.673 | $13.594 | 14,144 | |||||||||||||
2007 | $13.594 | $18.257 | 18,465 | |||||||||||||
2008 | $18.257 | $9.994 | 10,342 | |||||||||||||
2009 | $9.994 | $14.345 | 10,515 | |||||||||||||
2010 | $14.345 | $15.015 | 3,195 | |||||||||||||
2011 | $15.015 | $13.736 | 2,150 | |||||||||||||
2012 | $13.736 | $16.723 | 1,689 | |||||||||||||
2013 | $16.723 | $21.516 | 1,355 | |||||||||||||
2014 | $21.516 | $22.941 | 1,181 | |||||||||||||
2015 | $22.941 | $25.243 | 1,083 | |||||||||||||
Janus Aspen Series INTECH Risk-Managed Core Portfolio Service Shares |
||||||||||||||||
2006 | $12.323 | $13.419 | 21,808 | |||||||||||||
2007 | $13.419 | $13.998 | 20,140 | |||||||||||||
2008 | $13.998 | $8.773 | 14,493 | |||||||||||||
2009 | $8.773 | $10.569 | 9,316 | |||||||||||||
2010 | $10.569 | $11.333 | 0 | |||||||||||||
MFS Investors Growth Stock Portfolio Service Class |
||||||||||||||||
2015 | $10.000 | $17.786 | 529 | |||||||||||||
MFS VIT II High Yield Service Class |
||||||||||||||||
2013 | $10.000 | $15.523 | 6,542 | |||||||||||||
2014 | $15.523 | $15.646 | 3,773 | |||||||||||||
2015 | $15.646 | $14.699 | 999 | |||||||||||||
MFS® High Income Series Service Class |
||||||||||||||||
2006 | $10.651 | $11.517 | 9,006 | |||||||||||||
2007 | $11.517 | $11.495 | 8,010 | |||||||||||||
2008 | $11.495 | $8.061 | 5,959 | |||||||||||||
2009 | $8.061 | $11.507 | 4,547 | |||||||||||||
2010 | $11.507 | $12.940 | 3,042 | |||||||||||||
2011 | $12.940 | $13.210 | 1,990 | |||||||||||||
2012 | $13.210 | $14.859 | 1,450 | |||||||||||||
2013 | $14.859 | $15.045 | 0 | |||||||||||||
MFS® Investors Growth Stock Series Service Class |
||||||||||||||||
2006 | $10.694 | $11.281 | 40,226 | |||||||||||||
2007 | $11.281 | $12.310 | 35,303 | |||||||||||||
2008 | $12.310 | $7.626 | 25,945 | |||||||||||||
2009 | $7.626 | $10.427 | 17,812 | |||||||||||||
2010 | $10.427 | $11.495 | 5,120 | |||||||||||||
2011 | $11.495 | $11.342 | 5,750 | |||||||||||||
2012 | $11.342 | $13.009 | 1,691 | |||||||||||||
2013 | $13.009 | $16.631 | 1,408 | |||||||||||||
2014 | $16.631 | $18.165 | 642 | |||||||||||||
2015 | $18.165 | $18.319 | 0 |
H-27
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
MFS® Investors Trust Series Service Class |
||||||||||||||||
2006 | $11.336 | $12.558 | 2,311 | |||||||||||||
2007 | $12.558 | $13.582 | 2,327 | |||||||||||||
2008 | $13.582 | $8.911 | 2,892 | |||||||||||||
2009 | $8.911 | $11.086 | 3,394 | |||||||||||||
2010 | $11.086 | $12.084 | 1,009 | |||||||||||||
2011 | $12.084 | $11.591 | 845 | |||||||||||||
2012 | $11.591 | $13.540 | 3,469 | |||||||||||||
2013 | $13.540 | $17.534 | 1,277 | |||||||||||||
2014 | $17.534 | $19.082 | 1,997 | |||||||||||||
2015 | $19.082 | $18.749 | 1,629 | |||||||||||||
MFS® New Discovery Series Service Class |
||||||||||||||||
2006 | $10.235 | $11.362 | 2,619 | |||||||||||||
2007 | $11.362 | $11.419 | 2,212 | |||||||||||||
2008 | $11.419 | $6.789 | 512 | |||||||||||||
2009 | $6.789 | $10.872 | 580 | |||||||||||||
2010 | $10.872 | $14.529 | 2,245 | |||||||||||||
2011 | $14.529 | $12.784 | 206 | |||||||||||||
2012 | $12.784 | $15.192 | 0 | |||||||||||||
2013 | $15.192 | $21.089 | 82 | |||||||||||||
2014 | $21.089 | $19.177 | 82 | |||||||||||||
2015 | $19.177 | $18.446 | 28 | |||||||||||||
MFS® Total Return Series Service Class |
||||||||||||||||
2006 | $10.841 | $11.896 | 48,499 | |||||||||||||
2007 | $11.896 | $12.153 | 36,646 | |||||||||||||
2008 | $12.153 | $9.279 | 30,804 | |||||||||||||
2009 | $9.279 | $10.738 | 24,445 | |||||||||||||
2010 | $10.738 | $11.573 | 4,986 | |||||||||||||
2011 | $11.573 | $11.557 | 4,481 | |||||||||||||
2012 | $11.557 | $12.602 | 3,966 | |||||||||||||
2013 | $12.602 | $14.709 | 3,453 | |||||||||||||
2014 | $14.709 | $15.650 | 2,086 | |||||||||||||
2015 | $15.650 | $15.295 | 1,568 | |||||||||||||
MFS® Value Series Service Class |
||||||||||||||||
2006 | $11.658 | $13.810 | 10,015 | |||||||||||||
2007 | $13.810 | $14.605 | 11,214 | |||||||||||||
2008 | $14.605 | $9.656 | 15,987 | |||||||||||||
2009 | $9.656 | $11.623 | 5,318 | |||||||||||||
2010 | $11.623 | $12.707 | 1,869 | |||||||||||||
2011 | $12.707 | $12.433 | 874 | |||||||||||||
2012 | $12.433 | $14.162 | 615 | |||||||||||||
2013 | $14.162 | $18.877 | 744 | |||||||||||||
2014 | $18.877 | $20.449 | 300 | |||||||||||||
2015 | $20.449 | $19.914 | 192 | |||||||||||||
Oppenheimer Discovery Mid Cap Growth Fund/VA Service Shares |
||||||||||||||||
2006 | $11.695 | $11.807 | 10,770 | |||||||||||||
2007 | $11.807 | $12.306 | 10,772 | |||||||||||||
2008 | $12.306 | $6.143 | 10,137 | |||||||||||||
2009 | $6.143 | $7.987 | 8,923 | |||||||||||||
2010 | $7.987 | $9.984 | 12,682 | |||||||||||||
2011 | $9.984 | $9.897 | 3,274 | |||||||||||||
2012 | $9.897 | $11.301 | 332 | |||||||||||||
2013 | $11.301 | $15.066 | 2,349 | |||||||||||||
2014 | $15.066 | $15.628 | 3,121 | |||||||||||||
2015 | $15.628 | $16.338 | 1,493 |
H-28
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Oppenheimer Global Fund/VA Service Shares |
||||||||||||||||
2006 | $12.730 | $14.688 | 32,798 | |||||||||||||
2007 | $14.688 | $15.315 | 24,924 | |||||||||||||
2008 | $15.315 | $8.982 | 23,059 | |||||||||||||
2009 | $8.982 | $12.305 | 10,881 | |||||||||||||
2010 | $12.305 | $13.995 | 9,555 | |||||||||||||
2011 | $13.995 | $12.584 | 8,198 | |||||||||||||
2012 | $12.584 | $14.962 | 5,690 | |||||||||||||
2013 | $14.962 | $18.677 | 5,164 | |||||||||||||
2014 | $18.677 | $18.737 | 3,744 | |||||||||||||
2015 | $18.737 | $19.095 | 3,043 | |||||||||||||
Oppenheimer Main Street Small Cap Fund/VA Service Shares |
||||||||||||||||
2006 | $12.174 | $13.721 | 40,614 | |||||||||||||
2007 | $13.721 | $13.299 | 39,454 | |||||||||||||
2008 | $13.299 | $8.105 | 24,375 | |||||||||||||
2009 | $8.105 | $10.905 | 13,961 | |||||||||||||
2010 | $10.905 | $13.191 | 7,439 | |||||||||||||
2011 | $13.191 | $12.659 | 3,339 | |||||||||||||
2012 | $12.659 | $14.642 | 3,301 | |||||||||||||
2013 | $14.642 | $20.240 | 4,131 | |||||||||||||
2014 | $20.240 | $22.215 | 2,771 | |||||||||||||
2015 | $22.215 | $20.506 | 2,301 | |||||||||||||
PIMCO Foreign Bond Portfolio (U.S. Dollar-Hedged) Administrative Shares |
||||||||||||||||
2006 | $10.696 | $10.745 | 45,056 | |||||||||||||
2007 | $10.745 | $10.946 | 43,735 | |||||||||||||
2008 | $10.946 | $10.503 | 23,896 | |||||||||||||
2009 | $10.503 | $11.939 | 12,188 | |||||||||||||
2010 | $11.939 | $12.733 | 10,058 | |||||||||||||
2011 | $12.733 | $13.364 | 5,594 | |||||||||||||
2012 | $13.364 | $14.561 | 7,941 | |||||||||||||
2013 | $14.561 | $14.386 | 7,699 | |||||||||||||
2014 | $14.386 | $15.719 | 1,868 | |||||||||||||
2015 | $15.719 | $15.497 | 1,413 | |||||||||||||
PIMCO Money Market Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.028 | $10.313 | 110,294 | |||||||||||||
2007 | $10.313 | $10.632 | 72,629 | |||||||||||||
2008 | $10.632 | $10.687 | 73,225 | |||||||||||||
2009 | $10.687 | $10.517 | 32,253 | |||||||||||||
2010 | $10.517 | $10.343 | 20,402 | |||||||||||||
2011 | $10.343 | $10.174 | 15,383 | |||||||||||||
2012 | $10.174 | $10.007 | 11,760 | |||||||||||||
2013 | $10.007 | $9.843 | 16,236 | |||||||||||||
2014 | $9.843 | $9.676 | 8,548 | |||||||||||||
2015 | $9.676 | $9.514 | 7,265 | |||||||||||||
PIMCO Real Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.599 | $10.493 | 72,477 | |||||||||||||
2007 | $10.493 | $11.416 | 60,196 | |||||||||||||
2008 | $11.416 | $10.432 | 34,791 | |||||||||||||
2009 | $10.432 | $12.141 | 21,242 | |||||||||||||
2010 | $12.141 | $12.902 | 14,123 | |||||||||||||
2011 | $12.902 | $14.164 | 21,288 | |||||||||||||
2012 | $14.164 | $15.142 | 18,459 | |||||||||||||
2013 | $15.142 | $13.512 | 4,211 | |||||||||||||
2014 | $13.512 | $13.693 | 1,539 | |||||||||||||
2015 | $13.693 | $13.096 | 1,298 |
H-29
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
PIMCO Total Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.322 | $10.538 | 83,160 | |||||||||||||
2007 | $10.538 | $11.266 | 81,848 | |||||||||||||
2008 | $11.266 | $11.608 | 60,359 | |||||||||||||
2009 | $11.608 | $13.017 | 40,000 | |||||||||||||
2010 | $13.017 | $13.834 | 33,201 | |||||||||||||
2011 | $13.834 | $14.090 | 22,858 | |||||||||||||
2012 | $14.090 | $15.179 | 18,280 | |||||||||||||
2013 | $15.179 | $14.628 | 17,046 | |||||||||||||
2014 | $14.628 | $14.994 | 13,014 | |||||||||||||
2015 | $14.994 | $14.806 | 10,446 | |||||||||||||
Premier VIT OpCap Balanced Portfolio |
||||||||||||||||
2006 | $10.887 | $11.858 | 5,951 | |||||||||||||
2007 | $11.858 | $11.138 | 5,481 | |||||||||||||
2008 | $11.138 | $7.535 | 3,960 | |||||||||||||
2009 | $7.535 | $7.261 | 0 | |||||||||||||
Premier VIT OpCap Renaissance Portfolio |
||||||||||||||||
2006 | $10.505 | $11.501 | 22,405 | |||||||||||||
2007 | $11.501 | $12.019 | 16,051 | |||||||||||||
2008 | $12.019 | $10.859 | 0 | |||||||||||||
T. Rowe Price Blue Chip Growth Portfolio II |
||||||||||||||||
2006 | $10.858 | $11.670 | 75,772 | |||||||||||||
2007 | $11.670 | $12.903 | 81,626 | |||||||||||||
2008 | $12.903 | $7.274 | 62,701 | |||||||||||||
2009 | $7.274 | $10.138 | 40,435 | |||||||||||||
2010 | $10.138 | $11.561 | 17,197 | |||||||||||||
2011 | $11.561 | $11.519 | 10,165 | |||||||||||||
2012 | $11.519 | $13.351 | 6,390 | |||||||||||||
2013 | $13.351 | $18.485 | 7,235 | |||||||||||||
2014 | $18.485 | $19.777 | 7,923 | |||||||||||||
2015 | $19.777 | $21.540 | 7,026 | |||||||||||||
T. Rowe Price Equity Income Portfolio II |
||||||||||||||||
2006 | $11.285 | $13.162 | 137,043 | |||||||||||||
2007 | $13.162 | $13.329 | 129,012 | |||||||||||||
2008 | $13.329 | $8.351 | 99,308 | |||||||||||||
2009 | $8.351 | $10.281 | 73,212 | |||||||||||||
2010 | $10.281 | $11.597 | 25,536 | |||||||||||||
2011 | $11.597 | $11.284 | 12,800 | |||||||||||||
2012 | $11.284 | $12.968 | 12,131 | |||||||||||||
2013 | $12.968 | $16.497 | 8,812 | |||||||||||||
2014 | $16.497 | $17.368 | 7,183 | |||||||||||||
2015 | $17.368 | $15.860 | 6,400 | |||||||||||||
UIF Growth Portfolio, Class II |
||||||||||||||||
2006 | $11.749 | $11.990 | 17,724 | |||||||||||||
2007 | $11.990 | $14.338 | 6,708 | |||||||||||||
2008 | $14.338 | $7.139 | 4,442 | |||||||||||||
2009 | $7.139 | $11.589 | 2,932 | |||||||||||||
2010 | $11.589 | $13.968 | 450 | |||||||||||||
2011 | $13.968 | $13.314 | 293 | |||||||||||||
2012 | $13.314 | $14.926 | 228 | |||||||||||||
2013 | $14.926 | $21.675 | 189 | |||||||||||||
2014 | $21.675 | $22.604 | 189 | |||||||||||||
2015 | $22.604 | $24.879 | 183 |
H-30
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
UIF U.S. Real Estate Portfolio, Class II |
||||||||||||||||
2006 | $14.704 | $19.900 | 69,224 | |||||||||||||
2007 | $19.900 | $16.181 | 49,043 | |||||||||||||
2008 | $16.181 | $9.852 | 38,054 | |||||||||||||
2009 | $9.852 | $12.444 | 33,843 | |||||||||||||
2010 | $12.444 | $15.845 | 19,381 | |||||||||||||
2011 | $15.845 | $16.458 | 8,481 | |||||||||||||
2012 | $16.458 | $18.705 | 7,027 | |||||||||||||
2013 | $18.705 | $18.709 | 3,220 | |||||||||||||
2014 | $18.709 | $23.803 | 1,651 | |||||||||||||
2015 | $23.803 | $23.848 | 1,198 | |||||||||||||
Van Eck VIP Emerging Markets Fund Initial Class |
||||||||||||||||
2006 | $15.658 | $21.471 | 13,500 | |||||||||||||
2007 | $21.471 | $29.043 | 16,859 | |||||||||||||
2008 | $29.043 | $10.054 | 11,964 | |||||||||||||
2009 | $10.054 | $21.070 | 11,191 | |||||||||||||
2010 | $21.070 | $26.271 | 2,198 | |||||||||||||
2011 | $26.271 | $19.178 | 1,130 | |||||||||||||
2012 | $19.178 | $24.471 | 998 | |||||||||||||
2013 | $24.471 | $26.946 | 1,020 | |||||||||||||
2014 | $26.946 | $26.378 | 1,254 | |||||||||||||
2015 | $26.378 | $22.301 | 1,098 | |||||||||||||
Van Eck VIP Global Hard Assets Fund Initial Class |
||||||||||||||||
2006 | $18.511 | $22.654 | 38,120 | |||||||||||||
2007 | $22.654 | $32.366 | 35,969 | |||||||||||||
2008 | $32.366 | $17.140 | 19,035 | |||||||||||||
2009 | $17.140 | $26.543 | 17,279 | |||||||||||||
2010 | $26.543 | $33.720 | 8,793 | |||||||||||||
2011 | $33.720 | $27.694 | 8,168 | |||||||||||||
2012 | $27.694 | $28.144 | 8,014 | |||||||||||||
2013 | $28.144 | $30.580 | 4,622 | |||||||||||||
2014 | $30.580 | $24.317 | 3,471 | |||||||||||||
2015 | $24.317 | $15.908 | 3,014 | |||||||||||||
Van Eck VIP Multi-Manager Alternative Initial Class |
||||||||||||||||
2006 | $9.738 | $10.401 | 1,929 | |||||||||||||
2007 | $10.401 | $10.638 | 1,607 | |||||||||||||
2008 | $10.638 | $9.087 | 2,544 | |||||||||||||
2009 | $9.087 | $10.171 | 2,363 | |||||||||||||
2010 | $10.171 | $10.496 | 574 | |||||||||||||
2011 | $10.496 | $10.084 | 518 | |||||||||||||
2012 | $10.084 | $10.044 | 556 | |||||||||||||
2013 | $10.044 | $10.372 | 585 | |||||||||||||
2014 | $10.372 | $10.087 | 395 | |||||||||||||
2015 | $10.087 | $9.979 | 0 | |||||||||||||
Western Asset Variable Global High Yield Bond Portfolio Class II |
||||||||||||||||
2006 | $11.030 | $11.964 | 67,099 | |||||||||||||
2007 | $11.964 | $11.721 | 64,359 | |||||||||||||
2008 | $11.721 | $7.963 | 43,788 | |||||||||||||
2009 | $7.963 | $12.122 | 22,070 | |||||||||||||
2010 | $12.122 | $13.667 | 14,823 | |||||||||||||
2011 | $13.667 | $13.606 | 12,099 | |||||||||||||
2012 | $13.606 | $15.792 | 5,568 | |||||||||||||
2013 | $15.792 | $16.463 | 4,878 | |||||||||||||
2014 | $16.463 | $15.939 | 3,953 | |||||||||||||
2015 | $15.939 | $14.716 | 3,316 |
* | The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.60% and an administrative expense charge of 0.10%. |
H-31
CONSULTANT SOLUTIONS VARIABLE ANNUITIES: LBL Consultant Solution Elite Contracts PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT*
High
Mortality & Expense = 2.5
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Alger Capital Appreciation Portfolio Class S |
||||||||||||||||
2006 | $11.232 | $13.015 | 0 | |||||||||||||
2007 | $13.015 | $16.883 | 0 | |||||||||||||
2008 | $16.883 | $9.000 | 0 | |||||||||||||
2009 | $9.000 | $13.210 | 0 | |||||||||||||
2010 | $13.210 | $14.620 | 0 | |||||||||||||
2011 | $14.620 | $14.151 | 0 | |||||||||||||
2012 | $14.151 | $16.249 | 0 | |||||||||||||
2013 | $16.249 | $21.332 | 0 | |||||||||||||
2014 | $21.332 | $23.572 | 0 | |||||||||||||
2015 | $23.572 | $24.317 | 0 | |||||||||||||
Alger Large Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $10.867 | $11.104 | 0 | |||||||||||||
2007 | $11.104 | $12.937 | 0 | |||||||||||||
2008 | $12.937 | $6.767 | 0 | |||||||||||||
2009 | $6.767 | $9.705 | 0 | |||||||||||||
2010 | $9.705 | $10.673 | 0 | |||||||||||||
2011 | $10.673 | $10.317 | 0 | |||||||||||||
2012 | $10.317 | $10.990 | 0 | |||||||||||||
2013 | $10.990 | $14.406 | 0 | |||||||||||||
2014 | $14.406 | $15.513 | 0 | |||||||||||||
2015 | $15.513 | $15.314 | 0 | |||||||||||||
Alger Mid Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $11.209 | $11.998 | 0 | |||||||||||||
2007 | $11.998 | $15.338 | 0 | |||||||||||||
2008 | $15.338 | $6.204 | 0 | |||||||||||||
2009 | $6.204 | $9.143 | 0 | |||||||||||||
2010 | $9.143 | $10.587 | 0 | |||||||||||||
2011 | $10.587 | $9.426 | 0 | |||||||||||||
2012 | $9.426 | $10.621 | 0 | |||||||||||||
2013 | $10.621 | $14.008 | 0 | |||||||||||||
2014 | $14.008 | $14.678 | 0 | |||||||||||||
2015 | $14.678 | $14.025 | 0 | |||||||||||||
ClearBridge Variable Fundamental All Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.427 | 0 | |||||||||||||
2008 | $9.427 | $5.823 | 0 | |||||||||||||
2009 | $5.823 | $7.337 | 0 | |||||||||||||
2010 | $7.337 | $8.332 | 0 | |||||||||||||
2011 | $8.332 | $7.613 | 0 | |||||||||||||
2012 | $7.613 | $8.526 | 0 | |||||||||||||
2013 | $8.526 | $10.975 | 0 | |||||||||||||
2014 | $10.975 | $11.691 | 0 |
H-32
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
ClearBridge Variable Large Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.665 | 0 | |||||||||||||
2008 | $9.665 | $6.060 | 0 | |||||||||||||
2009 | $6.060 | $7.348 | 0 | |||||||||||||
2010 | $7.348 | $7.835 | 0 | |||||||||||||
2011 | $7.835 | $8.009 | 0 | |||||||||||||
2012 | $8.009 | $9.088 | 0 | |||||||||||||
2013 | $9.088 | $11.717 | 0 | |||||||||||||
2014 | $11.717 | $12.749 | 0 | |||||||||||||
2015 | $12.749 | $12.061 | 0 | |||||||||||||
Fidelity VIP Asset Manager Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.209 | $10.654 | 0 | |||||||||||||
2007 | $10.654 | $11.950 | 0 | |||||||||||||
2008 | $11.950 | $8.274 | 0 | |||||||||||||
2009 | $8.274 | $10.377 | 0 | |||||||||||||
2010 | $10.377 | $11.519 | 0 | |||||||||||||
2011 | $11.519 | $10.904 | 0 | |||||||||||||
2012 | $10.904 | $11.919 | 0 | |||||||||||||
2013 | $11.919 | $13.390 | 0 | |||||||||||||
2014 | $13.390 | $13.765 | 0 | |||||||||||||
2015 | $13.765 | $13.399 | 0 | |||||||||||||
Fidelity VIP Contrafund® Portfolio Service Class 2 |
||||||||||||||||
2006 | $12.792 | $13.885 | 0 | |||||||||||||
2007 | $13.885 | $15.861 | 0 | |||||||||||||
2008 | $15.861 | $8.853 | 0 | |||||||||||||
2009 | $8.853 | $11.681 | 0 | |||||||||||||
2010 | $11.681 | $13.304 | 0 | |||||||||||||
2011 | $13.304 | $12.598 | 0 | |||||||||||||
2012 | $12.598 | $14.250 | 0 | |||||||||||||
2013 | $14.250 | $18.176 | 0 | |||||||||||||
2014 | $18.176 | $19.767 | 0 | |||||||||||||
2015 | $19.767 | $19.333 | 0 | |||||||||||||
Fidelity VIP Equity-Income Portfolio Service Class 2 |
||||||||||||||||
2006 | $11.019 | $12.872 | 0 | |||||||||||||
2007 | $12.872 | $12.695 | 0 | |||||||||||||
2008 | $12.695 | $7.071 | 0 | |||||||||||||
2009 | $7.071 | $8.945 | 0 | |||||||||||||
2010 | $8.945 | $10.012 | 0 | |||||||||||||
2011 | $10.012 | $9.817 | 0 | |||||||||||||
2012 | $9.817 | $11.191 | 0 | |||||||||||||
2013 | $11.191 | $13.934 | 0 | |||||||||||||
2014 | $13.934 | $14.722 | 0 | |||||||||||||
2015 | $14.722 | $13.732 | 0 | |||||||||||||
Fidelity VIP Government Money Market Portfolio Service Class 2 formerly, Fidelity VIP Money Market Portfolio Service Class 2 |
||||||||||||||||
2006 | $9.861 | $10.049 | 0 | |||||||||||||
2007 | $10.049 | $10.272 | 0 | |||||||||||||
2008 | $10.272 | $10.282 | 0 | |||||||||||||
2009 | $10.282 | $10.062 | 0 | |||||||||||||
2010 | $10.062 | $9.808 | 0 | |||||||||||||
2011 | $9.808 | $9.554 | 0 | |||||||||||||
2012 | $9.554 | $9.306 | 0 | |||||||||||||
2013 | $9.306 | $9.065 | 0 | |||||||||||||
2014 | $9.065 | $8.830 | 0 | |||||||||||||
2015 | $8.830 | $8.602 | 0 |
H-33
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Fidelity VIP Growth Portfolio Service Class 2 |
||||||||||||||||
2006 | $9.964 | $10.343 | 0 | |||||||||||||
2007 | $10.343 | $12.759 | 0 | |||||||||||||
2008 | $12.759 | $6.547 | 0 | |||||||||||||
2009 | $6.547 | $8.161 | 0 | |||||||||||||
2010 | $8.161 | $9.845 | 0 | |||||||||||||
2011 | $9.845 | $9.587 | 0 | |||||||||||||
2012 | $9.587 | $10.682 | 0 | |||||||||||||
2013 | $10.682 | $14.150 | 0 | |||||||||||||
2014 | $14.150 | $15.300 | 0 | |||||||||||||
2015 | $15.300 | $15.931 | 0 | |||||||||||||
Fidelity VIP Index 500 Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.740 | $12.076 | 0 | |||||||||||||
2007 | $12.076 | $12.370 | 0 | |||||||||||||
2008 | $12.370 | $7.571 | 0 | |||||||||||||
2009 | $7.571 | $9.313 | 0 | |||||||||||||
2010 | $9.313 | $10.408 | 0 | |||||||||||||
2011 | $10.408 | $10.318 | 0 | |||||||||||||
2012 | $10.318 | $11.620 | 0 | |||||||||||||
2013 | $11.620 | $14.930 | 0 | |||||||||||||
2014 | $14.930 | $16.474 | 0 | |||||||||||||
2015 | $16.474 | $16.220 | 0 | |||||||||||||
Fidelity VIP Investment Grade Bond Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.022 | $10.166 | 0 | |||||||||||||
2007 | $10.166 | $10.305 | 0 | |||||||||||||
2008 | $10.305 | $9.689 | 0 | |||||||||||||
2009 | $9.689 | $10.897 | 0 | |||||||||||||
2010 | $10.897 | $11.415 | 0 | |||||||||||||
2011 | $11.415 | $11.902 | 0 | |||||||||||||
2012 | $11.902 | $12.241 | 0 | |||||||||||||
2013 | $12.241 | $11.676 | 0 | |||||||||||||
2014 | $11.676 | $12.011 | 0 | |||||||||||||
2015 | $12.011 | $11.600 | 0 | |||||||||||||
Fidelity VIP Overseas Portfolio Service Class 2 |
||||||||||||||||
2006 | $12.502 | $14.342 | 0 | |||||||||||||
2007 | $14.342 | $16.349 | 0 | |||||||||||||
2008 | $16.349 | $8.923 | 0 | |||||||||||||
2009 | $8.923 | $10.970 | 0 | |||||||||||||
2010 | $10.970 | $12.056 | 0 | |||||||||||||
2011 | $12.056 | $9.707 | 0 | |||||||||||||
2012 | $9.707 | $11.380 | 0 | |||||||||||||
2013 | $11.380 | $14.429 | 0 | |||||||||||||
2014 | $14.429 | $12.887 | 0 | |||||||||||||
2015 | $12.887 | $12.966 | 0 | |||||||||||||
Goldman Sachs VIT Mid Cap Value Fund Institutional |
||||||||||||||||
2015 | $10.000 | $8.664 | 0 | |||||||||||||
Guggenheim VIF Long Short Equity Fund |
||||||||||||||||
2006 | $11.604 | $12.590 | 0 | |||||||||||||
2007 | $12.590 | $15.050 | 0 | |||||||||||||
2008 | $15.050 | $8.687 | 0 | |||||||||||||
2009 | $8.687 | $10.771 | 0 | |||||||||||||
2010 | $10.771 | $11.667 | 0 | |||||||||||||
2011 | $11.667 | $10.618 | 0 | |||||||||||||
2012 | $10.618 | $10.800 | 0 | |||||||||||||
2013 | $10.800 | $12.355 | 0 | |||||||||||||
2014 | $12.355 | $12.370 | 0 | |||||||||||||
2015 | $12.370 | $12.201 | 0 |
H-34
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. American Franchise Fund Series II |
||||||||||||||||
2012 | $10.000 | $8.734 | 0 | |||||||||||||
2013 | $8.734 | $11.892 | 0 | |||||||||||||
2014 | $11.892 | $12.529 | 0 | |||||||||||||
2015 | $12.529 | $12.783 | 0 | |||||||||||||
Invesco V.I. Capital Appreciation Series II |
||||||||||||||||
2006 | $10.771 | $11.127 | 0 | |||||||||||||
2007 | $11.127 | $12.108 | 0 | |||||||||||||
2008 | $12.108 | $6.766 | 0 | |||||||||||||
2009 | $6.766 | $7.955 | 0 | |||||||||||||
2010 | $7.955 | $8.927 | 0 | |||||||||||||
2011 | $8.927 | $7.989 | 0 | |||||||||||||
2012 | $7.989 | $9.136 | 0 | |||||||||||||
Invesco V.I. Core Equity Fund Series II |
||||||||||||||||
2006 | $10.000 | $10.708 | 0 | |||||||||||||
2007 | $10.708 | $11.250 | 0 | |||||||||||||
2008 | $11.250 | $7.634 | 0 | |||||||||||||
2009 | $7.634 | $9.517 | 0 | |||||||||||||
2010 | $9.517 | $10.127 | 0 | |||||||||||||
2011 | $10.127 | $9.835 | 0 | |||||||||||||
2012 | $9.835 | $10.883 | 0 | |||||||||||||
2013 | $10.883 | $13.667 | 0 | |||||||||||||
2014 | $13.667 | $14.356 | 0 | |||||||||||||
2015 | $14.356 | $13.143 | 0 | |||||||||||||
Invesco V.I. Government Securities Fund Series II |
||||||||||||||||
2011 | $10.000 | $11.043 | 0 | |||||||||||||
2012 | $11.043 | $10.994 | 0 | |||||||||||||
2013 | $10.994 | $10.403 | 0 | |||||||||||||
2014 | $10.403 | $10.525 | 0 | |||||||||||||
2015 | $10.525 | $10.258 | 0 | |||||||||||||
Invesco V.I. Growth and Income Fund Series II |
||||||||||||||||
2006 | $11.708 | $13.227 | 0 | |||||||||||||
2007 | $13.227 | $13.206 | 0 | |||||||||||||
2008 | $13.206 | $8.719 | 0 | |||||||||||||
2009 | $8.719 | $10.540 | 0 | |||||||||||||
2010 | $10.540 | $11.518 | 0 | |||||||||||||
2011 | $11.518 | $10.965 | 0 | |||||||||||||
2012 | $10.965 | $12.212 | 0 | |||||||||||||
2013 | $12.212 | $15.911 | 0 | |||||||||||||
2014 | $15.911 | $17.041 | 0 | |||||||||||||
2015 | $17.041 | $16.048 | 0 | |||||||||||||
Invesco V.I. Mid Cap Core Equity Fund Series II |
||||||||||||||||
2006 | $11.349 | $12.269 | 0 | |||||||||||||
2007 | $12.269 | $13.058 | 0 | |||||||||||||
2008 | $13.058 | $9.070 | 0 | |||||||||||||
2009 | $9.070 | $11.472 | 0 | |||||||||||||
2010 | $11.472 | $12.713 | 0 | |||||||||||||
2011 | $12.713 | $11.578 | 0 | |||||||||||||
2012 | $11.578 | $12.474 | 0 | |||||||||||||
2013 | $12.474 | $15.608 | 0 | |||||||||||||
2014 | $15.608 | $15.836 | 0 | |||||||||||||
2015 | $15.836 | $14.764 | 0 |
H-35
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. Mid Cap Growth Fund Series II |
||||||||||||||||
2006 | $11.888 | $12.149 | 0 | |||||||||||||
2007 | $12.149 | $13.914 | 0 | |||||||||||||
2008 | $13.914 | $7.205 | 0 | |||||||||||||
2009 | $7.205 | $10.974 | 0 | |||||||||||||
2010 | $10.974 | $13.604 | 0 | |||||||||||||
2011 | $13.604 | $12.010 | 0 | |||||||||||||
2012 | $12.010 | $13.057 | 0 | |||||||||||||
2013 | $13.057 | $17.373 | 0 | |||||||||||||
2014 | $17.373 | $18.223 | 0 | |||||||||||||
2015 | $18.223 | $17.934 | 0 | |||||||||||||
Invesco V.I. Value Opportunities Fund Series II |
||||||||||||||||
2006 | $10.907 | $12.000 | 0 | |||||||||||||
2007 | $12.000 | $11.845 | 0 | |||||||||||||
2008 | $11.845 | $5.549 | 0 | |||||||||||||
2009 | $5.549 | $7.984 | 0 | |||||||||||||
2010 | $7.984 | $8.317 | 0 | |||||||||||||
2011 | $8.317 | $7.826 | 0 | |||||||||||||
2012 | $7.826 | $8.968 | 0 | |||||||||||||
2013 | $8.968 | $11.641 | 0 | |||||||||||||
2014 | $11.641 | $12.062 | 0 | |||||||||||||
2015 | $12.062 | $10.497 | 0 | |||||||||||||
Invesco Van Kampen V.I. Government Fund Series II |
||||||||||||||||
2006 | $10.130 | $10.174 | 0 | |||||||||||||
2007 | $10.174 | $10.603 | 0 | |||||||||||||
2008 | $10.603 | $10.484 | 0 | |||||||||||||
2009 | $10.484 | $10.299 | 0 | |||||||||||||
2010 | $10.299 | $10.522 | 0 | |||||||||||||
2011 | $10.522 | $10.542 | 0 | |||||||||||||
Janus Aspen Overseas Portfolio Service Shares |
||||||||||||||||
2008 | $10.000 | $6.644 | 0 | |||||||||||||
2009 | $6.644 | $11.588 | 0 | |||||||||||||
2010 | $11.588 | $14.111 | 0 | |||||||||||||
2011 | $14.111 | $9.300 | 0 | |||||||||||||
2012 | $9.300 | $10.251 | 0 | |||||||||||||
2013 | $10.251 | $11.411 | 0 | |||||||||||||
2014 | $11.411 | $9.769 | 0 | |||||||||||||
2015 | $9.769 | $8.677 | 0 | |||||||||||||
Janus Aspen Perkins Mid Cap Value Portfolio Service Shares |
||||||||||||||||
2006 | $11.971 | $13.418 | 0 | |||||||||||||
2007 | $13.418 | $14.004 | 0 | |||||||||||||
2008 | $14.004 | $9.835 | 0 | |||||||||||||
2009 | $9.835 | $12.732 | 0 | |||||||||||||
2010 | $12.732 | $14.307 | 0 | |||||||||||||
2011 | $14.307 | $13.520 | 0 | |||||||||||||
2012 | $13.520 | $14.589 | 0 | |||||||||||||
2013 | $14.589 | $17.877 | 0 | |||||||||||||
2014 | $17.877 | $18.882 | 0 | |||||||||||||
2015 | $18.882 | $17.712 | 0 | |||||||||||||
Janus Aspen Perkins Small Company Value Portfolio Service Shares |
||||||||||||||||
2006 | $10.880 | $12.916 | 0 | |||||||||||||
2007 | $12.916 | $11.809 | 0 | |||||||||||||
2008 | $11.809 | $7.371 | 0 | |||||||||||||
2009 | $7.371 | $6.956 | 0 |
H-36
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Janus Aspen Series Balanced Portfolio Service Shares |
||||||||||||||||
2006 | $11.014 | $11.846 | 0 | |||||||||||||
2007 | $11.846 | $12.723 | 0 | |||||||||||||
2008 | $12.723 | $10.402 | 0 | |||||||||||||
2009 | $10.402 | $12.723 | 0 | |||||||||||||
2010 | $12.723 | $13.399 | 0 | |||||||||||||
2011 | $13.399 | $13.228 | 0 | |||||||||||||
2012 | $13.228 | $14.606 | 0 | |||||||||||||
2013 | $14.606 | $17.044 | 0 | |||||||||||||
2014 | $17.044 | $17.969 | 0 | |||||||||||||
2015 | $17.969 | $17.573 | 0 | |||||||||||||
Janus Aspen Series Foreign Stock Portfolio Service Shares |
||||||||||||||||
2006 | $11.576 | $13.312 | 0 | |||||||||||||
2007 | $13.312 | $15.331 | 0 | |||||||||||||
2008 | $15.331 | $14.368 | 0 | |||||||||||||
Janus Aspen Series Forty Portfolio Service Shares |
||||||||||||||||
2006 | $12.453 | $13.236 | 0 | |||||||||||||
2007 | $13.236 | $17.612 | 0 | |||||||||||||
2008 | $17.612 | $9.553 | 0 | |||||||||||||
2009 | $9.553 | $13.586 | 0 | |||||||||||||
2010 | $13.586 | $14.090 | 0 | |||||||||||||
2011 | $14.090 | $12.772 | 0 | |||||||||||||
2012 | $12.772 | $15.407 | 0 | |||||||||||||
2013 | $15.407 | $19.642 | 0 | |||||||||||||
2014 | $19.642 | $20.751 | 0 | |||||||||||||
2015 | $20.751 | $22.624 | 0 | |||||||||||||
Janus Aspen Series INTECH Risk-Managed Core Portfolio Service Shares |
||||||||||||||||
2006 | $12.109 | $13.065 | 0 | |||||||||||||
2007 | $13.065 | $13.504 | 0 | |||||||||||||
2008 | $13.504 | $8.386 | 0 | |||||||||||||
2009 | $8.386 | $10.010 | 0 | |||||||||||||
2010 | $10.010 | $10.701 | 0 | |||||||||||||
MFS Investors Growth Stock Portfolio Service Class |
||||||||||||||||
2015 | $10.000 | $15.941 | 0 | |||||||||||||
MFS VIT II High Yield Service Class |
||||||||||||||||
2013 | $10.000 | $14.171 | 0 | |||||||||||||
2014 | $14.171 | $14.152 | 0 | |||||||||||||
2015 | $14.152 | $13.175 | 0 | |||||||||||||
MFS® High Income Series Service Class |
||||||||||||||||
2006 | $10.466 | $11.214 | 0 | |||||||||||||
2007 | $11.214 | $11.089 | 0 | |||||||||||||
2008 | $11.089 | $7.705 | 0 | |||||||||||||
2009 | $7.705 | $10.898 | 0 | |||||||||||||
2010 | $10.898 | $12.143 | 0 | |||||||||||||
2011 | $12.143 | $12.284 | 0 | |||||||||||||
2012 | $12.284 | $13.691 | 0 | |||||||||||||
2013 | $13.691 | $13.782 | 0 | |||||||||||||
MFS® Investors Growth Stock Series Service Class |
||||||||||||||||
2006 | $10.508 | $10.983 | 0 | |||||||||||||
2007 | $12.000 | $11.845 | 0 | |||||||||||||
2008 | $11.845 | $7.289 | 0 | |||||||||||||
2009 | $7.289 | $9.875 | 0 | |||||||||||||
2010 | $9.875 | $10.788 | 0 | |||||||||||||
2011 | $10.788 | $10.546 | 0 | |||||||||||||
2012 | $10.546 | $11.985 | 0 | |||||||||||||
2013 | $11.985 | $15.182 | 0 | |||||||||||||
2014 | $15.182 | $16.431 | 0 | |||||||||||||
2015 | $16.431 | $16.534 | 0 |
H-37
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
MFS® Investors Trust Series Service Class |
||||||||||||||||
2006 | $11.139 | $12.227 | 0 | |||||||||||||
2007 | $10.983 | $11.876 | 0 | |||||||||||||
2008 | $11.876 | $8.518 | 0 | |||||||||||||
2009 | $8.518 | $10.500 | 0 | |||||||||||||
2010 | $10.500 | $11.339 | 0 | |||||||||||||
2011 | $11.339 | $10.778 | 0 | |||||||||||||
2012 | $10.778 | $12.474 | 0 | |||||||||||||
2013 | $12.474 | $16.006 | 0 | |||||||||||||
2014 | $16.006 | $17.260 | 0 | |||||||||||||
2015 | $17.260 | $16.803 | 0 | |||||||||||||
MFS® New Discovery Series Service Class |
||||||||||||||||
2006 | $10.057 | $11.063 | 0 | |||||||||||||
2007 | $11.063 | $11.016 | 0 | |||||||||||||
2008 | $11.016 | $6.489 | 0 | |||||||||||||
2009 | $6.489 | $10.297 | 0 | |||||||||||||
2010 | $10.297 | $13.634 | 0 | |||||||||||||
2011 | $13.634 | $11.886 | 0 | |||||||||||||
2012 | $11.886 | $13.996 | 0 | |||||||||||||
2013 | $13.996 | $19.252 | 0 | |||||||||||||
2014 | $19.252 | $17.345 | 0 | |||||||||||||
2015 | $17.345 | $16.532 | 0 | |||||||||||||
MFS® Total Return Series Service Class |
||||||||||||||||
2006 | $10.652 | $11.582 | 0 | |||||||||||||
2007 | $11.582 | $11.723 | 0 | |||||||||||||
2008 | $11.723 | $8.870 | 0 | |||||||||||||
2009 | $8.870 | $10.170 | 0 | |||||||||||||
2010 | $10.170 | $10.860 | 0 | |||||||||||||
2011 | $10.860 | $10.746 | 0 | |||||||||||||
2012 | $10.746 | $11.610 | 0 | |||||||||||||
2013 | $11.610 | $13.428 | 0 | |||||||||||||
2014 | $13.428 | $14.156 | 0 | |||||||||||||
2015 | $14.156 | $13.708 | 0 | |||||||||||||
MFS® Value Series Service Class |
||||||||||||||||
2006 | $11.455 | $13.447 | 0 | |||||||||||||
2007 | $13.447 | $14.090 | 0 | |||||||||||||
2008 | $14.090 | $9.229 | 0 | |||||||||||||
2009 | $9.229 | $11.008 | 0 | |||||||||||||
2010 | $11.008 | $11.924 | 0 | |||||||||||||
2011 | $11.924 | $11.561 | 0 | |||||||||||||
2012 | $11.561 | $13.048 | 0 | |||||||||||||
2013 | $13.048 | $17.233 | 0 | |||||||||||||
2014 | $17.233 | $18.497 | 0 | |||||||||||||
2015 | $18.497 | $17.848 | 0 | |||||||||||||
Oppenheimer Discovery Mid Cap Growth Fund/VA Service Shares |
||||||||||||||||
2006 | $11.623 | $11.627 | 0 | |||||||||||||
2007 | $11.627 | $12.007 | 0 | |||||||||||||
2008 | $12.007 | $5.939 | 0 | |||||||||||||
2009 | $5.939 | $7.651 | 0 | |||||||||||||
2010 | $7.651 | $9.476 | 0 | |||||||||||||
2011 | $9.476 | $9.308 | 0 | |||||||||||||
2012 | $9.308 | $10.530 | 0 | |||||||||||||
2013 | $10.530 | $13.911 | 0 | |||||||||||||
2014 | $13.911 | $14.298 | 0 | |||||||||||||
2015 | $14.298 | $14.810 | 0 |
H-38
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Oppenheimer Global Fund/VA Service Shares |
||||||||||||||||
2006 | $12.509 | $14.301 | 0 | |||||||||||||
2007 | $14.301 | $14.774 | 0 | |||||||||||||
2008 | $14.774 | $8.586 | 0 | |||||||||||||
2009 | $8.586 | $11.653 | 0 | |||||||||||||
2010 | $11.653 | $13.133 | 0 | |||||||||||||
2011 | $13.133 | $11.701 | 0 | |||||||||||||
2012 | $11.701 | $13.784 | 0 | |||||||||||||
2013 | $13.784 | $17.050 | 0 | |||||||||||||
2014 | $17.050 | $16.948 | 0 | |||||||||||||
2015 | $16.948 | $17.114 | 0 | |||||||||||||
Oppenheimer Main Street Small Cap Fund/VA Service Shares |
||||||||||||||||
2006 | $11.962 | $13.360 | 0 | |||||||||||||
2007 | $13.360 | $12.830 | 0 | |||||||||||||
2008 | $12.830 | $7.747 | 0 | |||||||||||||
2009 | $7.747 | $10.328 | 0 | |||||||||||||
2010 | $10.328 | $12.379 | 0 | |||||||||||||
2011 | $12.379 | $11.770 | 0 | |||||||||||||
2012 | $11.770 | $13.489 | 0 | |||||||||||||
2013 | $13.489 | $18.476 | 0 | |||||||||||||
2014 | $18.476 | $20.093 | 0 | |||||||||||||
2015 | $20.093 | $18.378 | 0 | |||||||||||||
PIMCO Foreign Bond Portfolio (U.S. Dollar-Hedged) Administrative Shares |
||||||||||||||||
2006 | $10.511 | $10.462 | 0 | |||||||||||||
2007 | $10.462 | $10.559 | 0 | |||||||||||||
2008 | $10.559 | $10.039 | 0 | |||||||||||||
2009 | $10.039 | $11.307 | 0 | |||||||||||||
2010 | $11.307 | $11.949 | 0 | |||||||||||||
2011 | $11.949 | $12.427 | 0 | |||||||||||||
2012 | $12.427 | $13.416 | 0 | |||||||||||||
2013 | $13.416 | $13.133 | 0 | |||||||||||||
2014 | $13.133 | $14.219 | 0 | |||||||||||||
2015 | $14.219 | $13.889 | 0 | |||||||||||||
PIMCO Money Market Portfolio Administrative Shares |
||||||||||||||||
2006 | $9.854 | $10.042 | 0 | |||||||||||||
2007 | $10.042 | $10.257 | 0 | |||||||||||||
2008 | $10.257 | $10.215 | 0 | |||||||||||||
2009 | $10.215 | $9.961 | 0 | |||||||||||||
2010 | $9.961 | $9.706 | 0 | |||||||||||||
2011 | $9.706 | $9.460 | 0 | |||||||||||||
2012 | $9.460 | $9.219 | 0 | |||||||||||||
2013 | $9.219 | $8.985 | 0 | |||||||||||||
2014 | $8.985 | $8.752 | 0 | |||||||||||||
2015 | $8.752 | $8.527 | 0 | |||||||||||||
PIMCO Real Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.415 | $10.217 | 0 | |||||||||||||
2007 | $10.217 | $11.013 | 0 | |||||||||||||
2008 | $11.013 | $9.971 | 0 | |||||||||||||
2009 | $9.971 | $11.498 | 0 | |||||||||||||
2010 | $11.498 | $12.108 | 0 | |||||||||||||
2011 | $12.108 | $13.171 | 0 | |||||||||||||
2012 | $13.171 | $13.951 | 0 | |||||||||||||
2013 | $13.951 | $12.335 | 0 | |||||||||||||
2014 | $12.335 | $12.386 | 0 | |||||||||||||
2015 | $12.386 | $11.738 | 0 |
H-39
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
PIMCO Total Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.142 | $10.260 | 0 | |||||||||||||
2007 | $10.260 | $10.868 | 0 | |||||||||||||
2008 | $10.868 | $11.096 | 0 | |||||||||||||
2009 | $11.096 | $12.328 | 0 | |||||||||||||
2010 | $12.328 | $12.982 | 0 | |||||||||||||
2011 | $12.982 | $13.102 | 0 | |||||||||||||
2012 | $13.102 | $13.985 | 0 | |||||||||||||
2013 | $13.985 | $13.354 | 0 | |||||||||||||
2014 | $13.354 | $13.563 | 0 | |||||||||||||
2015 | $13.563 | $13.270 | 0 | |||||||||||||
Premier VIT OpCap Balanced Portfolio |
||||||||||||||||
2006 | $10.721 | $11.571 | 0 | |||||||||||||
2007 | $11.571 | $10.768 | 0 | |||||||||||||
2008 | $10.768 | $7.218 | 0 | |||||||||||||
2009 | $7.218 | $6.936 | 0 | |||||||||||||
Premier VIT OpCap Renaissance Portfolio |
||||||||||||||||
2006 | $10.322 | $11.198 | 0 | |||||||||||||
2007 | $11.198 | $11.595 | 0 | |||||||||||||
2008 | $11.595 | $10.470 | 0 | |||||||||||||
T. Rowe Price Blue Chip Growth Portfolio II |
||||||||||||||||
2006 | $10.670 | $11.362 | 0 | |||||||||||||
2007 | $11.362 | $12.447 | 0 | |||||||||||||
2008 | $12.447 | $6.953 | 0 | |||||||||||||
2009 | $6.953 | $9.602 | 0 | |||||||||||||
2010 | $9.602 | $10.849 | 0 | |||||||||||||
2011 | $10.849 | $10.711 | 0 | |||||||||||||
2012 | $10.711 | $12.300 | 0 | |||||||||||||
2013 | $12.300 | $16.875 | 0 | |||||||||||||
2014 | $16.875 | $17.889 | 0 | |||||||||||||
2015 | $17.889 | $19.305 | 0 | |||||||||||||
T. Rowe Price Equity Income Portfolio II |
||||||||||||||||
2006 | $11.089 | $12.815 | 0 | |||||||||||||
2007 | $12.815 | $12.858 | 0 | |||||||||||||
2008 | $12.858 | $7.982 | 0 | |||||||||||||
2009 | $7.982 | $9.737 | 0 | |||||||||||||
2010 | $9.737 | $10.882 | 0 | |||||||||||||
2011 | $10.882 | $10.492 | 0 | |||||||||||||
2012 | $10.492 | $11.948 | 0 | |||||||||||||
2013 | $11.948 | $15.059 | 0 | |||||||||||||
2014 | $15.059 | $15.710 | 0 | |||||||||||||
2015 | $15.710 | $14.214 | 0 | |||||||||||||
UIF Growth Portfolio, Class II |
||||||||||||||||
2006 | $11.545 | $11.674 | 0 | |||||||||||||
2007 | $11.674 | $13.832 | 0 | |||||||||||||
2008 | $13.832 | $6.824 | 0 | |||||||||||||
2009 | $6.824 | $10.976 | 0 | |||||||||||||
2010 | $10.976 | $13.108 | 0 | |||||||||||||
2011 | $13.108 | $12.380 | 0 | |||||||||||||
2012 | $12.380 | $13.752 | 0 | |||||||||||||
2013 | $13.752 | $19.787 | 0 | |||||||||||||
2014 | $19.787 | $20.446 | 0 | |||||||||||||
2015 | $20.446 | $22.297 | 0 |
H-40
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
UIF U.S. Real Estate Portfolio, Class II |
||||||||||||||||
2006 | $14.448 | $19.375 | 0 | |||||||||||||
2007 | $19.375 | $15.610 | 0 | |||||||||||||
2008 | $15.610 | $9.417 | 0 | |||||||||||||
2009 | $9.417 | $11.785 | 0 | |||||||||||||
2010 | $11.785 | $14.869 | 0 | |||||||||||||
2011 | $14.869 | $15.303 | 0 | |||||||||||||
2012 | $15.303 | $17.233 | 0 | |||||||||||||
2013 | $17.233 | $17.079 | 0 | |||||||||||||
2014 | $17.079 | $21.530 | 0 | |||||||||||||
2015 | $21.530 | $21.374 | 0 | |||||||||||||
Van Eck VIP Emerging Markets Fund Initial Class |
||||||||||||||||
2006 | $15.386 | $20.905 | 0 | |||||||||||||
2007 | $20.905 | $28.017 | 0 | |||||||||||||
2008 | $28.017 | $9.610 | 0 | |||||||||||||
2009 | $9.610 | $19.955 | 0 | |||||||||||||
2010 | $19.955 | $24.654 | 0 | |||||||||||||
2011 | $24.654 | $17.833 | 0 | |||||||||||||
2012 | $17.833 | $22.545 | 0 | |||||||||||||
2013 | $22.545 | $24.599 | 0 | |||||||||||||
2014 | $24.599 | $23.859 | 0 | |||||||||||||
2015 | $23.859 | $19.987 | 0 | |||||||||||||
Van Eck VIP Global Hard Assets Fund Initial Class |
||||||||||||||||
2006 | $18.189 | $22.057 | 0 | |||||||||||||
2007 | $22.057 | $31.224 | 0 | |||||||||||||
2008 | $31.224 | $16.383 | 0 | |||||||||||||
2009 | $16.383 | $25.138 | 0 | |||||||||||||
2010 | $25.138 | $31.644 | 0 | |||||||||||||
2011 | $31.644 | $25.752 | 0 | |||||||||||||
2012 | $25.752 | $25.930 | 0 | |||||||||||||
2013 | $25.930 | $27.916 | 0 | |||||||||||||
2014 | $27.916 | $21.995 | 0 | |||||||||||||
2015 | $21.995 | $14.257 | 0 | |||||||||||||
Van Eck VIP Multi-Manager Alternative Initial Class |
||||||||||||||||
2006 | $9.568 | $10.127 | 0 | |||||||||||||
2007 | $10.127 | $10.262 | 0 | |||||||||||||
2008 | $10.262 | $8.686 | 0 | |||||||||||||
2009 | $8.686 | $9.633 | 0 | |||||||||||||
2010 | $9.633 | $9.850 | 0 | |||||||||||||
2011 | $9.850 | $9.376 | 0 | |||||||||||||
2012 | $9.376 | $9.253 | 0 | |||||||||||||
2013 | $9.253 | $9.468 | 0 | |||||||||||||
2014 | $9.468 | $9.124 | 0 | |||||||||||||
2015 | $9.124 | $8.992 | 0 | |||||||||||||
Western Asset Variable Global High Yield Bond Portfolio Class II |
||||||||||||||||
2006 | $10.838 | $11.649 | 0 | |||||||||||||
2007 | $11.649 | $11.307 | 0 | |||||||||||||
2008 | $11.307 | $7.612 | 0 | |||||||||||||
2009 | $7.612 | $11.481 | 0 | |||||||||||||
2010 | $11.481 | $12.826 | 0 | |||||||||||||
2011 | $12.826 | $12.652 | 0 | |||||||||||||
2012 | $12.652 | $14.549 | 0 | |||||||||||||
2013 | $14.549 | $15.029 | 0 | |||||||||||||
2014 | $15.029 | $14.418 | 0 | |||||||||||||
2015 | $14.418 | $13.189 | 0 |
* | The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 2.50% and an administrative expense charge of 0.10%. |
H-41
CONSULTANT SOLUTIONS VARIABLE ANNUITIES: LBL Consultant Solution Plus Contracts
PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT*
Low
Mortality & Expense = 1.45
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Alger Capital Appreciation Portfolio Class S |
||||||||||||||||
2006 | $11.464 | $13.427 | 127,011 | |||||||||||||
2007 | $13.427 | $17.606 | 140,144 | |||||||||||||
2008 | $17.606 | $9.487 | 131,667 | |||||||||||||
2009 | $9.487 | $14.074 | 104,489 | |||||||||||||
2010 | $14.074 | $15.744 | 103,711 | |||||||||||||
2011 | $15.744 | $15.404 | 88,456 | |||||||||||||
2012 | $15.404 | $17.877 | 81,631 | |||||||||||||
2013 | $17.877 | $23.724 | 54,094 | |||||||||||||
2014 | $23.724 | $26.496 | 47,231 | |||||||||||||
2015 | $26.496 | $27.628 | 36,444 | |||||||||||||
Alger Large Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $11.091 | $11.455 | 291,942 | |||||||||||||
2007 | $11.455 | $13.491 | 242,972 | |||||||||||||
2008 | $13.491 | $7.133 | 252,657 | |||||||||||||
2009 | $7.133 | $10.340 | 217,489 | |||||||||||||
2010 | $10.340 | $11.494 | 189,088 | |||||||||||||
2011 | $11.494 | $11.230 | 139,411 | |||||||||||||
2012 | $11.230 | $12.092 | 96,100 | |||||||||||||
2013 | $12.092 | $16.021 | 67,839 | |||||||||||||
2014 | $16.021 | $17.438 | 54,369 | |||||||||||||
2015 | $17.438 | $17.400 | 41,192 | |||||||||||||
Alger Mid Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $11.441 | $12.377 | 436,382 | |||||||||||||
2007 | $12.377 | $15.995 | 397,229 | |||||||||||||
2008 | $15.995 | $6.539 | 448,194 | |||||||||||||
2009 | $6.539 | $9.741 | 382,540 | |||||||||||||
2010 | $9.741 | $11.401 | 312,036 | |||||||||||||
2011 | $11.401 | $10.261 | 265,823 | |||||||||||||
2012 | $10.261 | $11.686 | 212,330 | |||||||||||||
2013 | $11.686 | $15.578 | 166,426 | |||||||||||||
2014 | $15.578 | $16.500 | 131,872 | |||||||||||||
2015 | $16.500 | $15.937 | 104,319 | |||||||||||||
ClearBridge Variable Fundamental All Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.496 | 77,930 | |||||||||||||
2008 | $9.496 | $5.929 | 78,084 | |||||||||||||
2009 | $5.929 | $7.551 | 64,493 | |||||||||||||
2010 | $7.551 | $8.668 | 54,410 | |||||||||||||
2011 | $8.668 | $8.005 | 41,829 | |||||||||||||
2012 | $8.005 | $9.061 | 35,482 | |||||||||||||
2013 | $9.061 | $11.790 | 29,999 | |||||||||||||
2014 | $11.790 | $12.685 | 0 |
H-42
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
ClearBridge Variable Large Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.735 | 115,189 | |||||||||||||
2008 | $9.735 | $6.170 | 84,142 | |||||||||||||
2009 | $6.170 | $7.563 | 69,529 | |||||||||||||
2010 | $7.563 | $8.150 | 65,270 | |||||||||||||
2011 | $8.150 | $8.421 | 57,030 | |||||||||||||
2012 | $8.421 | $9.659 | 42,202 | |||||||||||||
2013 | $9.659 | $12.587 | 36,017 | |||||||||||||
2014 | $12.587 | $13.843 | 44,069 | |||||||||||||
2015 | $13.843 | $13.238 | 28,986 | |||||||||||||
Fidelity VIP Asset Manager Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.420 | $10.991 | 196,893 | |||||||||||||
2007 | $10.991 | $12.461 | 181,005 | |||||||||||||
2008 | $12.461 | $8.722 | 200,576 | |||||||||||||
2009 | $8.722 | $11.056 | 174,938 | |||||||||||||
2010 | $11.056 | $12.405 | 162,655 | |||||||||||||
2011 | $12.405 | $11.869 | 131,291 | |||||||||||||
2012 | $11.869 | $13.114 | 97,344 | |||||||||||||
2013 | $13.114 | $14.892 | 74,318 | |||||||||||||
2014 | $14.892 | $15.473 | 46,037 | |||||||||||||
2015 | $15.473 | $15.224 | 40,466 | |||||||||||||
Fidelity VIP Contrafund® Portfolio Service Class 2 |
||||||||||||||||
2006 | $13.056 | $14.324 | 1,038,503 | |||||||||||||
2007 | $14.324 | $16.540 | 915,580 | |||||||||||||
2008 | $16.540 | $9.332 | 1,036,462 | |||||||||||||
2009 | $9.332 | $12.446 | 860,886 | |||||||||||||
2010 | $12.446 | $14.327 | 791,650 | |||||||||||||
2011 | $14.327 | $13.713 | 685,524 | |||||||||||||
2012 | $13.713 | $15.679 | 547,018 | |||||||||||||
2013 | $15.679 | $20.213 | 419,146 | |||||||||||||
2014 | $20.213 | $22.219 | 326,693 | |||||||||||||
2015 | $22.219 | $21.966 | 244,603 | |||||||||||||
Fidelity VIP Equity-Income Portfolio Service Class 2 |
||||||||||||||||
2006 | $11.246 | $13.279 | 914,542 | |||||||||||||
2007 | $13.279 | $13.239 | 882,993 | |||||||||||||
2008 | $13.239 | $7.453 | 958,622 | |||||||||||||
2009 | $7.453 | $9.531 | 838,502 | |||||||||||||
2010 | $9.531 | $10.783 | 770,594 | |||||||||||||
2011 | $10.783 | $10.685 | 663,554 | |||||||||||||
2012 | $10.685 | $12.314 | 562,960 | |||||||||||||
2013 | $12.314 | $15.496 | 416,246 | |||||||||||||
2014 | $15.496 | $16.550 | 326,978 | |||||||||||||
2015 | $16.550 | $15.603 | 264,517 | |||||||||||||
Fidelity VIP Government Money Market Portfolio Service Class 2 formerly, Fidelity VIP Money Market Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.065 | $10.367 | 1,929,547 | |||||||||||||
2007 | $10.367 | $10.712 | 1,860,555 | |||||||||||||
2008 | $10.712 | $10.838 | 2,312,870 | |||||||||||||
2009 | $10.838 | $10.720 | 1,916,252 | |||||||||||||
2010 | $10.720 | $10.562 | 1,575,490 | |||||||||||||
2011 | $10.562 | $10.400 | 1,456,478 | |||||||||||||
2012 | $10.400 | $10.239 | 1,250,130 | |||||||||||||
2013 | $10.239 | $10.081 | 1,052,425 | |||||||||||||
2014 | $10.081 | $9.926 | 785,582 | |||||||||||||
2015 | $9.926 | $9.773 | 617,151 |
H-43
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Fidelity VIP Growth Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.170 | $10.671 | 179,143 | |||||||||||||
2007 | $10.671 | $13.305 | 176,462 | |||||||||||||
2008 | $13.305 | $6.902 | 239,711 | |||||||||||||
2009 | $6.902 | $8.695 | 226,398 | |||||||||||||
2010 | $8.695 | $10.603 | 196,977 | |||||||||||||
2011 | $10.603 | $10.435 | 163,363 | |||||||||||||
2012 | $10.435 | $11.753 | 121,700 | |||||||||||||
2013 | $11.753 | $15.736 | 95,517 | |||||||||||||
2014 | $15.736 | $17.199 | 82,906 | |||||||||||||
2015 | $17.199 | $18.101 | 66,778 | |||||||||||||
Fidelity VIP Index 500 Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.961 | $12.458 | 1,364,532 | |||||||||||||
2007 | $12.458 | $12.899 | 1,221,783 | |||||||||||||
2008 | $12.899 | $7.980 | 1,372,538 | |||||||||||||
2009 | $7.980 | $9.923 | 1,179,069 | |||||||||||||
2010 | $9.923 | $11.208 | 1,056,165 | |||||||||||||
2011 | $11.208 | $11.232 | 897,385 | |||||||||||||
2012 | $11.232 | $12.785 | 718,378 | |||||||||||||
2013 | $12.785 | $16.604 | 526,001 | |||||||||||||
2014 | $16.604 | $18.519 | 391,701 | |||||||||||||
2015 | $18.519 | $18.429 | 324,647 | |||||||||||||
Fidelity VIP Investment Grade Bond Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.229 | $10.487 | 1,278,546 | |||||||||||||
2007 | $10.487 | $10.746 | 1,490,496 | |||||||||||||
2008 | $10.746 | $10.213 | 1,404,977 | |||||||||||||
2009 | $10.213 | $11.610 | 1,239,977 | |||||||||||||
2010 | $11.610 | $12.293 | 1,143,680 | |||||||||||||
2011 | $12.293 | $12.954 | 962,082 | |||||||||||||
2012 | $12.954 | $13.468 | 788,124 | |||||||||||||
2013 | $13.468 | $12.985 | 587,576 | |||||||||||||
2014 | $12.985 | $13.502 | 410,110 | |||||||||||||
2015 | $13.502 | $13.179 | 333,031 | |||||||||||||
Fidelity VIP Overseas Portfolio Service Class 2 |
||||||||||||||||
2006 | $12.760 | $14.796 | 827,908 | |||||||||||||
2007 | $14.796 | $17.049 | 807,662 | |||||||||||||
2008 | $17.049 | $9.406 | 916,161 | |||||||||||||
2009 | $9.406 | $11.688 | 807,903 | |||||||||||||
2010 | $11.688 | $12.983 | 685,772 | |||||||||||||
2011 | $12.983 | $10.566 | 691,059 | |||||||||||||
2012 | $10.566 | $12.521 | 571,559 | |||||||||||||
2013 | $12.521 | $16.046 | 450,554 | |||||||||||||
2014 | $16.046 | $14.487 | 370,578 | |||||||||||||
2015 | $14.487 | $14.732 | 283,468 | |||||||||||||
Goldman Sachs VIT Mid Cap Value Fund Institutional |
||||||||||||||||
2015 | $10.000 | $8.726 | 103,904 | |||||||||||||
Guggenheim VIF Long Short Equity Fund |
||||||||||||||||
2006 | $11.844 | $12.989 | 96,320 | |||||||||||||
2007 | $12.989 | $15.694 | 104,063 | |||||||||||||
2008 | $15.694 | $9.157 | 117,641 | |||||||||||||
2009 | $9.157 | $11.475 | 103,531 | |||||||||||||
2010 | $11.475 | $12.564 | 89,854 | |||||||||||||
2011 | $12.564 | $11.558 | 85,709 | |||||||||||||
2012 | $11.558 | $11.882 | 72,991 | |||||||||||||
2013 | $11.882 | $13.741 | 58,754 | |||||||||||||
2014 | $13.741 | $13.906 | 30,656 | |||||||||||||
2015 | $13.906 | $13.863 | 24,479 |
H-44
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. American Franchise Fund Series II |
||||||||||||||||
2012 | $10.000 | $9.610 | 70,498 | |||||||||||||
2013 | $9.610 | $13.226 | 48,636 | |||||||||||||
2014 | $13.226 | $14.084 | 36,426 | |||||||||||||
2015 | $14.084 | $14.525 | 19,992 | |||||||||||||
Invesco V.I. Capital Appreciation Series II |
||||||||||||||||
2006 | $10.994 | $11.479 | 125,960 | |||||||||||||
2007 | $11.479 | $12.626 | 110,380 | |||||||||||||
2008 | $12.626 | $7.132 | 125,423 | |||||||||||||
2009 | $7.132 | $8.476 | 104,680 | |||||||||||||
2010 | $8.476 | $9.613 | 90,374 | |||||||||||||
2011 | $9.613 | $8.697 | 82,747 | |||||||||||||
2012 | $8.697 | $9.980 | 0 | |||||||||||||
Invesco V.I. Core Equity Fund Series II |
||||||||||||||||
2006 | $10.000 | $10.785 | 274,689 | |||||||||||||
2007 | $10.785 | $11.454 | 276,101 | |||||||||||||
2008 | $11.454 | $7.857 | 288,185 | |||||||||||||
2009 | $7.857 | $9.900 | 241,788 | |||||||||||||
2010 | $9.900 | $10.648 | 206,986 | |||||||||||||
2011 | $10.648 | $10.452 | 176,338 | |||||||||||||
2012 | $10.452 | $11.691 | 158,457 | |||||||||||||
2013 | $11.691 | $14.840 | 130,436 | |||||||||||||
2014 | $14.840 | $15.756 | 88,838 | |||||||||||||
2015 | $15.756 | $14.581 | 76,543 | |||||||||||||
Invesco V.I. Government Securities Fund Series II |
||||||||||||||||
2011 | $10.000 | $12.020 | 316,576 | |||||||||||||
2012 | $12.020 | $12.096 | 290,657 | |||||||||||||
2013 | $12.096 | $11.569 | 202,678 | |||||||||||||
2014 | $11.569 | $11.831 | 183,808 | |||||||||||||
2015 | $11.831 | $11.655 | 157,885 | |||||||||||||
Invesco V.I. Growth and Income Fund Series II |
||||||||||||||||
2006 | $11.950 | $13.645 | 965,056 | |||||||||||||
2007 | $13.645 | $13.771 | 913,686 | |||||||||||||
2008 | $13.771 | $9.191 | 900,825 | |||||||||||||
2009 | $9.191 | $11.230 | 788,311 | |||||||||||||
2010 | $11.230 | $12.403 | 688,083 | |||||||||||||
2011 | $12.403 | $11.935 | 595,214 | |||||||||||||
2012 | $11.935 | $13.436 | 476,292 | |||||||||||||
2013 | $13.436 | $17.694 | 331,949 | |||||||||||||
2014 | $17.694 | $19.156 | 246,664 | |||||||||||||
2015 | $19.156 | $18.234 | 194,119 | |||||||||||||
Invesco V.I. Mid Cap Core Equity Fund Series II |
||||||||||||||||
2006 | $11.584 | $12.657 | 442,279 | |||||||||||||
2007 | $12.657 | $13.617 | 404,724 | |||||||||||||
2008 | $13.617 | $9.561 | 420,218 | |||||||||||||
2009 | $9.561 | $12.223 | 365,382 | |||||||||||||
2010 | $12.223 | $13.691 | 354,072 | |||||||||||||
2011 | $13.691 | $12.603 | 317,651 | |||||||||||||
2012 | $12.603 | $13.724 | 237,613 | |||||||||||||
2013 | $13.724 | $17.358 | 169,959 | |||||||||||||
2014 | $17.358 | $17.801 | 134,490 | |||||||||||||
2015 | $17.801 | $16.775 | 98,531 |
H-45
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. Mid Cap Growth Fund Series II |
||||||||||||||||
2006 | $12.133 | $12.534 | 38,306 | |||||||||||||
2007 | $12.534 | $14.510 | 38,611 | |||||||||||||
2008 | $14.510 | $7.594 | 49,182 | |||||||||||||
2009 | $7.594 | $11.692 | 81,540 | |||||||||||||
2010 | $11.692 | $14.650 | 83,826 | |||||||||||||
2011 | $14.650 | $13.073 | 74,716 | |||||||||||||
2012 | $13.073 | $14.367 | 43,857 | |||||||||||||
2013 | $14.367 | $19.321 | 29,770 | |||||||||||||
2014 | $19.321 | $20.485 | 25,435 | |||||||||||||
2015 | $20.485 | $20.377 | 14,736 | |||||||||||||
Invesco V.I. Value Opportunities Fund Series II |
||||||||||||||||
2006 | $11.133 | $12.379 | 418,263 | |||||||||||||
2007 | $12.379 | $12.352 | 293,495 | |||||||||||||
2008 | $12.352 | $5.849 | 426,442 | |||||||||||||
2009 | $5.849 | $8.507 | 343,201 | |||||||||||||
2010 | $8.507 | $8.957 | 319,363 | |||||||||||||
2011 | $8.957 | $8.519 | 281,990 | |||||||||||||
2012 | $8.519 | $9.867 | 201,378 | |||||||||||||
2013 | $9.867 | $12.946 | 126,948 | |||||||||||||
2014 | $12.946 | $13.560 | 84,104 | |||||||||||||
2015 | $13.560 | $11.927 | 57,888 | |||||||||||||
Invesco Van Kampen V.I. Government Fund Series II |
||||||||||||||||
2006 | $10.339 | $10.496 | 394,113 | |||||||||||||
2007 | $10.496 | $11.057 | 382,399 | |||||||||||||
2008 | $11.057 | $11.051 | 541,227 | |||||||||||||
2009 | $11.051 | $10.973 | 477,547 | |||||||||||||
2010 | $10.973 | $11.331 | 471,942 | |||||||||||||
2011 | $11.331 | $11.392 | 0 | |||||||||||||
Janus Aspen Overseas Portfolio Service Shares |
||||||||||||||||
2008 | $10.000 | $7.003 | 153,801 | |||||||||||||
2009 | $7.003 | $12.347 | 149,089 | |||||||||||||
2010 | $12.347 | $15.197 | 152,251 | |||||||||||||
2011 | $15.197 | $10.123 | 158,712 | |||||||||||||
2012 | $10.123 | $11.279 | 100,717 | |||||||||||||
2013 | $11.279 | $12.691 | 73,848 | |||||||||||||
2014 | $12.691 | $10.982 | 55,277 | |||||||||||||
2015 | $10.982 | $9.860 | 38,605 | |||||||||||||
Janus Aspen Perkins Mid Cap Value Portfolio Service Shares |
||||||||||||||||
2006 | $12.219 | $13.842 | 636,948 | |||||||||||||
2007 | $13.842 | $14.604 | 603,783 | |||||||||||||
2008 | $14.604 | $10.366 | 628,536 | |||||||||||||
2009 | $10.366 | $13.565 | 498,879 | |||||||||||||
2010 | $13.565 | $15.407 | 458,370 | |||||||||||||
2011 | $15.407 | $14.716 | 389,734 | |||||||||||||
2012 | $14.716 | $16.051 | 290,229 | |||||||||||||
2013 | $16.051 | $19.881 | 234,824 | |||||||||||||
2014 | $19.881 | $21.225 | 182,034 | |||||||||||||
2015 | $21.225 | $20.125 | 117,497 | |||||||||||||
Janus Aspen Perkins Small Company Value Portfolio Service Shares |
||||||||||||||||
2006 | $10.959 | $13.149 | 208,907 | |||||||||||||
2007 | $13.149 | $12.153 | 204,185 | |||||||||||||
2008 | $12.153 | $7.667 | 200,043 | |||||||||||||
2009 | $7.667 | $7.261 | 0 |
H-46
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Janus Aspen Series Balanced Portfolio Service Shares |
||||||||||||||||
2006 | $11.241 | $12.220 | 474,671 | |||||||||||||
2007 | $12.220 | $13.267 | 419,411 | |||||||||||||
2008 | $13.267 | $10.964 | 387,556 | |||||||||||||
2009 | $10.964 | $13.555 | 378,329 | |||||||||||||
2010 | $13.555 | $14.429 | 330,052 | |||||||||||||
2011 | $14.429 | $14.398 | 275,246 | |||||||||||||
2012 | $14.398 | $16.070 | 226,957 | |||||||||||||
2013 | $16.070 | $18.954 | 172,344 | |||||||||||||
2014 | $18.954 | $20.198 | 136,802 | |||||||||||||
2015 | $20.198 | $19.967 | 113,049 | |||||||||||||
Janus Aspen Series Foreign Stock Portfolio Service Shares |
||||||||||||||||
2006 | $11.815 | $13.733 | 125,898 | |||||||||||||
2007 | $13.733 | $15.987 | 130,612 | |||||||||||||
2008 | $15.987 | $15.037 | 0 | |||||||||||||
Janus Aspen Series Forty Portfolio Service Shares |
||||||||||||||||
2006 | $12.710 | $13.654 | 160,923 | |||||||||||||
2007 | $13.654 | $18.366 | 194,043 | |||||||||||||
2008 | $18.366 | $10.069 | 230,987 | |||||||||||||
2009 | $10.069 | $14.475 | 199,558 | |||||||||||||
2010 | $14.475 | $15.174 | 172,341 | |||||||||||||
2011 | $15.174 | $13.902 | 146,080 | |||||||||||||
2012 | $13.902 | $16.952 | 118,380 | |||||||||||||
2013 | $16.952 | $21.844 | 70,817 | |||||||||||||
2014 | $21.844 | $23.326 | 50,625 | |||||||||||||
2015 | $23.326 | $25.706 | 36,778 | |||||||||||||
Janus Aspen Series INTECH Risk-Managed Core Portfolio Service Shares |
||||||||||||||||
2006 | $12.359 | $13.478 | 168,301 | |||||||||||||
2007 | $13.478 | $14.082 | 157,185 | |||||||||||||
2008 | $14.082 | $8.839 | 156,723 | |||||||||||||
2009 | $8.839 | $10.665 | 133,212 | |||||||||||||
MFS Investors Growth Stock Portfolio Service Class |
||||||||||||||||
2015 | $10.000 | $18.112 | 109,954 | |||||||||||||
MFS VIT II High Yield Service Class |
||||||||||||||||
2013 | $10.000 | $15.759 | 158,197 | |||||||||||||
2014 | $15.759 | $15.908 | 118,084 | |||||||||||||
2015 | $15.908 | $14.969 | 82,244 | |||||||||||||
MFS® High Income Series Service Class |
||||||||||||||||
2006 | $10.682 | $11.568 | 409,143 | |||||||||||||
2007 | $11.568 | $11.563 | 406,241 | |||||||||||||
2008 | $11.563 | $8.121 | 391,449 | |||||||||||||
2009 | $8.121 | $11.611 | 306,693 | |||||||||||||
2010 | $11.611 | $13.077 | 294,022 | |||||||||||||
2011 | $13.077 | $13.371 | 273,293 | |||||||||||||
2012 | $13.371 | $15.063 | 228,130 | |||||||||||||
2013 | $15.063 | $15.265 | 0 | |||||||||||||
MFS® Investors Growth Stock Series Service Class |
||||||||||||||||
2006 | $10.725 | $11.331 | 530,447 | |||||||||||||
2007 | $11.331 | $12.384 | 487,942 | |||||||||||||
2008 | $12.384 | $7.683 | 536,714 | |||||||||||||
2009 | $7.683 | $10.521 | 428,012 | |||||||||||||
2010 | $10.521 | $11.617 | 388,447 | |||||||||||||
2011 | $11.617 | $11.480 | 336,778 | |||||||||||||
2012 | $11.480 | $13.187 | 273,676 | |||||||||||||
2013 | $13.187 | $16.884 | 204,575 | |||||||||||||
2014 | $16.884 | $18.470 | 148,779 | |||||||||||||
2015 | $18.470 | $18.633 | 0 |
H-47
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
MFS® Investors Trust Series Service Class |
||||||||||||||||
2006 | $11.369 | $12.614 | 75,414 | |||||||||||||
2007 | $12.614 | $13.663 | 71,252 | |||||||||||||
2008 | $13.663 | $8.978 | 89,673 | |||||||||||||
2009 | $8.978 | $11.187 | 85,026 | |||||||||||||
2010 | $11.187 | $12.212 | 69,448 | |||||||||||||
2011 | $12.212 | $11.732 | 62,992 | |||||||||||||
2012 | $11.732 | $13.725 | 52,324 | |||||||||||||
2013 | $13.725 | $17.801 | 35,957 | |||||||||||||
2014 | $17.801 | $19.402 | 26,032 | |||||||||||||
2015 | $19.402 | $19.092 | 22,464 | |||||||||||||
MFS® New Discovery Series Service Class |
||||||||||||||||
2006 | $10.265 | $11.413 | 143,917 | |||||||||||||
2007 | $11.413 | $11.488 | 133,227 | |||||||||||||
2008 | $11.488 | $6.840 | 145,739 | |||||||||||||
2009 | $6.840 | $10.971 | 134,171 | |||||||||||||
2010 | $10.971 | $14.683 | 134,012 | |||||||||||||
2011 | $14.683 | $12.939 | 122,440 | |||||||||||||
2012 | $12.939 | $15.400 | 83,911 | |||||||||||||
2013 | $15.400 | $21.410 | 77,443 | |||||||||||||
2014 | $21.410 | $19.499 | 51,836 | |||||||||||||
2015 | $19.499 | $18.784 | 37,627 | |||||||||||||
MFS® Total Return Series Service Class |
||||||||||||||||
2006 | $10.872 | $11.948 | 786,417 | |||||||||||||
2007 | $11.948 | $12.225 | 733,113 | |||||||||||||
2008 | $12.225 | $9.349 | 623,702 | |||||||||||||
2009 | $9.349 | $10.836 | 575,285 | |||||||||||||
2010 | $10.836 | $11.695 | 513,670 | |||||||||||||
2011 | $11.695 | $11.697 | 443,345 | |||||||||||||
2012 | $11.697 | $12.774 | 341,459 | |||||||||||||
2013 | $12.774 | $14.933 | 288,713 | |||||||||||||
2014 | $14.933 | $15.912 | 185,627 | |||||||||||||
2015 | $15.912 | $15.575 | 132,833 | |||||||||||||
MFS® Value Series Service Class |
||||||||||||||||
2006 | $11.692 | $13.872 | 185,240 | |||||||||||||
2007 | $13.872 | $14.693 | 178,813 | |||||||||||||
2008 | $14.693 | $9.728 | 218,888 | |||||||||||||
2009 | $9.728 | $11.728 | 183,765 | |||||||||||||
2010 | $11.728 | $12.841 | 196,581 | |||||||||||||
2011 | $12.841 | $12.584 | 179,027 | |||||||||||||
2012 | $12.584 | $14.356 | 109,358 | |||||||||||||
2013 | $14.356 | $19.164 | 83,721 | |||||||||||||
2014 | $19.164 | $20.792 | 58,443 | |||||||||||||
2015 | $20.792 | $20.279 | 42,888 | |||||||||||||
Oppenheimer Discovery Mid Cap Growth Fund/VA Service Shares |
||||||||||||||||
2006 | $11.707 | $11.837 | 86,941 | |||||||||||||
2007 | $11.837 | $12.356 | 79,497 | |||||||||||||
2008 | $12.356 | $6.178 | 88,007 | |||||||||||||
2009 | $6.178 | $8.044 | 77,979 | |||||||||||||
2010 | $8.044 | $10.071 | 77,409 | |||||||||||||
2011 | $10.071 | $9.998 | 78,447 | |||||||||||||
2012 | $9.998 | $11.434 | 69,630 | |||||||||||||
2013 | $11.434 | $15.267 | 60,472 | |||||||||||||
2014 | $15.267 | $15.861 | 46,296 | |||||||||||||
2015 | $15.861 | $16.606 | 30,187 |
H-48
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Oppenheimer Global Fund/VA Service Shares |
||||||||||||||||
2006 | $12.767 | $14.753 | 416,951 | |||||||||||||
2007 | $14.753 | $15.406 | 390,850 | |||||||||||||
2008 | $15.406 | $9.050 | 394,574 | |||||||||||||
2009 | $9.050 | $12.416 | 321,152 | |||||||||||||
2010 | $12.416 | $14.143 | 280,674 | |||||||||||||
2011 | $14.143 | $12.737 | 253,922 | |||||||||||||
2012 | $12.737 | $15.166 | 203,828 | |||||||||||||
2013 | $15.166 | $18.961 | 154,977 | |||||||||||||
2014 | $18.961 | $19.051 | 112,800 | |||||||||||||
2015 | $19.051 | $19.445 | 80,895 | |||||||||||||
Oppenheimer Main Street Small Cap Fund/VA Service Shares |
||||||||||||||||
2006 | $12.209 | $13.782 | 658,435 | |||||||||||||
2007 | $13.782 | $13.379 | 616,978 | |||||||||||||
2008 | $13.379 | $8.165 | 662,016 | |||||||||||||
2009 | $8.165 | $11.004 | 576,312 | |||||||||||||
2010 | $11.004 | $13.331 | 470,789 | |||||||||||||
2011 | $13.331 | $12.812 | 400,433 | |||||||||||||
2012 | $12.812 | $14.842 | 329,397 | |||||||||||||
2013 | $14.842 | $20.548 | 262,728 | |||||||||||||
2014 | $20.548 | $22.587 | 196,508 | |||||||||||||
2015 | $22.587 | $20.882 | 147,834 | |||||||||||||
PIMCO Foreign Bond Portfolio (U.S. Dollar-Hedged) Administrative Shares |
||||||||||||||||
2006 | $10.728 | $10.793 | 524,188 | |||||||||||||
2007 | $10.793 | $11.011 | 473,852 | |||||||||||||
2008 | $11.011 | $10.582 | 431,280 | |||||||||||||
2009 | $10.582 | $12.047 | 415,232 | |||||||||||||
2010 | $12.047 | $12.868 | 419,495 | |||||||||||||
2011 | $12.868 | $13.526 | 346,787 | |||||||||||||
2012 | $13.526 | $14.760 | 306,129 | |||||||||||||
2013 | $14.760 | $14.605 | 250,415 | |||||||||||||
2014 | $14.605 | $15.983 | 189,665 | |||||||||||||
2015 | $15.983 | $15.781 | 140,091 | |||||||||||||
PIMCO Money Market Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.057 | $10.359 | 727,162 | |||||||||||||
2007 | $10.359 | $10.696 | 706,907 | |||||||||||||
2008 | $10.696 | $10.767 | 859,497 | |||||||||||||
2009 | $10.767 | $10.612 | 907,129 | |||||||||||||
2010 | $10.612 | $10.453 | 852,225 | |||||||||||||
2011 | $10.453 | $10.297 | 840,060 | |||||||||||||
2012 | $10.297 | $10.144 | 627,157 | |||||||||||||
2013 | $10.144 | $9.993 | 504,746 | |||||||||||||
2014 | $9.993 | $9.838 | 339,164 | |||||||||||||
2015 | $9.838 | $9.688 | 293,085 | |||||||||||||
PIMCO Real Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.630 | $10.540 | 1,126,346 | |||||||||||||
2007 | $10.540 | $11.484 | 1,038,569 | |||||||||||||
2008 | $11.484 | $10.510 | 1,164,877 | |||||||||||||
2009 | $10.510 | $12.250 | 983,651 | |||||||||||||
2010 | $12.250 | $13.039 | 897,156 | |||||||||||||
2011 | $13.039 | $14.336 | 786,960 | |||||||||||||
2012 | $14.336 | $15.349 | 687,658 | |||||||||||||
2013 | $15.349 | $13.718 | 465,157 | |||||||||||||
2014 | $13.718 | $13.923 | 343,298 | |||||||||||||
2015 | $13.923 | $13.336 | 251,384 |
H-49
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
PIMCO Total Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.352 | $10.585 | 1,399,499 | |||||||||||||
2007 | $10.585 | $11.333 | 1,362,786 | |||||||||||||
2008 | $11.333 | $11.695 | 1,498,179 | |||||||||||||
2009 | $11.695 | $13.134 | 1,507,227 | |||||||||||||
2010 | $13.134 | $13.980 | 1,377,334 | |||||||||||||
2011 | $13.980 | $14.261 | 1,279,562 | |||||||||||||
2012 | $14.261 | $15.386 | 1,062,330 | |||||||||||||
2013 | $15.386 | $14.851 | 772,482 | |||||||||||||
2014 | $14.851 | $15.246 | 494,725 | |||||||||||||
2015 | $15.246 | $15.077 | 371,146 | |||||||||||||
Premier VIT OpCap Balanced Portfolio |
||||||||||||||||
2006 | $10.914 | $11.906 | 102,842 | |||||||||||||
2007 | $11.906 | $11.200 | 100,376 | |||||||||||||
2008 | $11.200 | $7.589 | 91,560 | |||||||||||||
2009 | $7.589 | $7.317 | 0 | |||||||||||||
Premier VIT OpCap Renaissance Portfolio |
||||||||||||||||
2006 | $10.535 | $11.552 | 181,544 | |||||||||||||
2007 | $11.552 | $12.091 | 133,825 | |||||||||||||
2008 | $12.091 | $10.924 | 0 | |||||||||||||
T. Rowe Price Blue Chip Growth Portfolio II |
||||||||||||||||
2006 | $10.890 | $11.722 | 1,046,476 | |||||||||||||
2007 | $11.722 | $12.980 | 921,017 | |||||||||||||
2008 | $12.980 | $7.329 | 1,076,189 | |||||||||||||
2009 | $7.329 | $10.230 | 850,454 | |||||||||||||
2010 | $10.230 | $11.683 | 736,797 | |||||||||||||
2011 | $11.683 | $11.659 | 644,527 | |||||||||||||
2012 | $11.659 | $13.533 | 548,267 | |||||||||||||
2013 | $13.533 | $18.767 | 405,540 | |||||||||||||
2014 | $18.767 | $20.109 | 305,885 | |||||||||||||
2015 | $20.109 | $21.935 | 210,587 | |||||||||||||
T. Rowe Price Equity Income Portfolio II |
||||||||||||||||
2006 | $11.318 | $13.221 | 1,710,177 | |||||||||||||
2007 | $13.221 | $13.409 | 1,570,162 | |||||||||||||
2008 | $13.409 | $8.413 | 1,608,523 | |||||||||||||
2009 | $8.413 | $10.374 | 1,377,891 | |||||||||||||
2010 | $10.374 | $11.719 | 1,195,528 | |||||||||||||
2011 | $11.719 | $11.421 | 1,031,213 | |||||||||||||
2012 | $11.421 | $13.146 | 823,514 | |||||||||||||
2013 | $13.146 | $16.748 | 595,171 | |||||||||||||
2014 | $16.748 | $17.659 | 458,609 | |||||||||||||
2015 | $17.659 | $16.150 | 368,424 | |||||||||||||
UIF Growth Portfolio, Class II |
||||||||||||||||
2006 | $11.783 | $12.043 | 118,076 | |||||||||||||
2007 | $12.043 | $14.424 | 101,174 | |||||||||||||
2008 | $14.424 | $7.193 | 110,041 | |||||||||||||
2009 | $7.193 | $11.694 | 91,860 | |||||||||||||
2010 | $11.694 | $14.116 | 75,917 | |||||||||||||
2011 | $14.116 | $13.475 | 61,271 | |||||||||||||
2012 | $13.475 | $15.130 | 43,733 | |||||||||||||
2013 | $15.130 | $22.005 | 33,018 | |||||||||||||
2014 | $22.005 | $22.983 | 21,144 | |||||||||||||
2015 | $22.983 | $25.335 | 14,770 |
H-50
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
UIF U.S. Real Estate Portfolio, Class II |
||||||||||||||||
2006 | $14.747 | $19.988 | 844,038 | |||||||||||||
2007 | $19.988 | $16.278 | 713,922 | |||||||||||||
2008 | $16.278 | $9.926 | 725,507 | |||||||||||||
2009 | $9.926 | $12.557 | 582,988 | |||||||||||||
2010 | $12.557 | $16.013 | 449,938 | |||||||||||||
2011 | $16.013 | $16.658 | 391,905 | |||||||||||||
2012 | $16.658 | $18.961 | 306,501 | |||||||||||||
2013 | $18.961 | $18.994 | 248,646 | |||||||||||||
2014 | $18.994 | $24.202 | 174,211 | |||||||||||||
2015 | $24.202 | $24.285 | 145,647 | |||||||||||||
Van Eck VIP Emerging Markets Fund Initial Class |
||||||||||||||||
2006 | $15.703 | $21.566 | 197,437 | |||||||||||||
2007 | $21.566 | $29.216 | 217,317 | |||||||||||||
2008 | $29.216 | $10.130 | 178,770 | |||||||||||||
2009 | $10.130 | $21.260 | 178,220 | |||||||||||||
2010 | $21.260 | $26.549 | 152,306 | |||||||||||||
2011 | $26.549 | $19.411 | 116,500 | |||||||||||||
2012 | $19.411 | $24.805 | 83,350 | |||||||||||||
2013 | $24.805 | $27.356 | 66,803 | |||||||||||||
2014 | $27.356 | $26.820 | 43,893 | |||||||||||||
2015 | $26.820 | $22.710 | 30,817 | |||||||||||||
Van Eck VIP Global Hard Assets Fund Initial Class |
||||||||||||||||
2006 | $18.565 | $22.754 | 196,815 | |||||||||||||
2007 | $22.754 | $32.560 | 208,194 | |||||||||||||
2008 | $32.560 | $17.269 | 189,943 | |||||||||||||
2009 | $17.269 | $26.783 | 172,839 | |||||||||||||
2010 | $26.783 | $34.077 | 146,787 | |||||||||||||
2011 | $34.077 | $28.030 | 117,868 | |||||||||||||
2012 | $28.030 | $28.529 | 92,607 | |||||||||||||
2013 | $28.529 | $31.046 | 66,782 | |||||||||||||
2014 | $31.046 | $24.725 | 46,420 | |||||||||||||
2015 | $24.725 | $16.200 | 33,795 | |||||||||||||
Van Eck VIP Multi-Manager Alternative Initial Class |
||||||||||||||||
2006 | $9.766 | $10.447 | 69,904 | |||||||||||||
2007 | $10.447 | $10.701 | 67,655 | |||||||||||||
2008 | $10.701 | $9.156 | 83,819 | |||||||||||||
2009 | $9.156 | $10.264 | 84,209 | |||||||||||||
2010 | $10.264 | $10.607 | 84,068 | |||||||||||||
2011 | $10.607 | $10.206 | 82,536 | |||||||||||||
2012 | $10.206 | $10.181 | 57,367 | |||||||||||||
2013 | $10.181 | $10.530 | 47,261 | |||||||||||||
2014 | $10.530 | $10.256 | 36,536 | |||||||||||||
2015 | $10.256 | $10.153 | 0 | |||||||||||||
Western Asset Variable Global High Yield Bond Portfolio Class II |
||||||||||||||||
2006 | $11.062 | $12.018 | 1,048,615 | |||||||||||||
2007 | $12.018 | $11.791 | 1,007,552 | |||||||||||||
2008 | $11.791 | $8.023 | 988,849 | |||||||||||||
2009 | $8.023 | $12.232 | 724,610 | |||||||||||||
2010 | $12.232 | $13.812 | 624,088 | |||||||||||||
2011 | $13.812 | $13.771 | 547,554 | |||||||||||||
2012 | $13.771 | $16.007 | 441,801 | |||||||||||||
2013 | $16.007 | $16.714 | 360,164 | |||||||||||||
2014 | $16.714 | $16.207 | 273,843 | |||||||||||||
2015 | $16.207 | $14.985 | 212,545 |
* | The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.45% and an administrative expense charge of 0.10%. |
H-51
CONSULTANT SOLUTIONS VARIABLE ANNUITIES: LBL Consultant Solution Plus Contracts PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT*
High
Mortality & Expense = 2.35
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Alger Capital Appreciation Portfolio Class S |
||||||||||||||||
2006 | $11.265 | $13.074 | 0 | |||||||||||||
2007 | $13.074 | $16.985 | 0 | |||||||||||||
2008 | $16.985 | $9.069 | 0 | |||||||||||||
2009 | $9.069 | $13.331 | 0 | |||||||||||||
2010 | $13.331 | $14.776 | 0 | |||||||||||||
2011 | $14.776 | $14.325 | 0 | |||||||||||||
2012 | $14.325 | $16.473 | 0 | |||||||||||||
2013 | $16.473 | $21.660 | 0 | |||||||||||||
2014 | $21.660 | $23.971 | 0 | |||||||||||||
2015 | $23.971 | $24.766 | 0 | |||||||||||||
Alger Large Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $10.899 | $11.154 | 0 | |||||||||||||
2007 | $11.154 | $13.015 | 0 | |||||||||||||
2008 | $13.015 | $6.818 | 626 | |||||||||||||
2009 | $6.818 | $9.794 | 0 | |||||||||||||
2010 | $9.794 | $10.787 | 0 | |||||||||||||
2011 | $10.787 | $10.443 | 0 | |||||||||||||
2012 | $10.443 | $11.142 | 0 | |||||||||||||
2013 | $11.142 | $14.627 | 0 | |||||||||||||
2014 | $14.627 | $15.775 | 0 | |||||||||||||
2015 | $15.775 | $15.597 | 0 | |||||||||||||
Alger Mid Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $11.242 | $12.051 | 0 | |||||||||||||
2007 | $12.051 | $15.431 | 0 | |||||||||||||
2008 | $15.431 | $6.251 | 0 | |||||||||||||
2009 | $6.251 | $9.226 | 0 | |||||||||||||
2010 | $9.226 | $10.700 | 0 | |||||||||||||
2011 | $10.700 | $9.542 | 0 | |||||||||||||
2012 | $9.542 | $10.768 | 0 | |||||||||||||
2013 | $10.768 | $14.223 | 0 | |||||||||||||
2014 | $14.223 | $14.927 | 0 | |||||||||||||
2015 | $14.927 | $14.285 | 0 | |||||||||||||
ClearBridge Variable Fundamental All Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.436 | 0 | |||||||||||||
2008 | $9.436 | $5.838 | 0 | |||||||||||||
2009 | $5.838 | $7.367 | 0 | |||||||||||||
2010 | $7.367 | $8.380 | 0 | |||||||||||||
2011 | $8.380 | $7.668 | 0 | |||||||||||||
2012 | $7.668 | $8.600 | 0 | |||||||||||||
2013 | $8.600 | $11.088 | 0 | |||||||||||||
2014 | $11.088 | $11.829 | 0 |
H-52
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
ClearBridge Variable Large Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.675 | 0 | |||||||||||||
2008 | $9.675 | $6.075 | 0 | |||||||||||||
2009 | $6.075 | $7.379 | 0 | |||||||||||||
2010 | $7.379 | $7.879 | 0 | |||||||||||||
2011 | $7.879 | $8.067 | 0 | |||||||||||||
2012 | $8.067 | $9.168 | 0 | |||||||||||||
2013 | $9.168 | $11.838 | 0 | |||||||||||||
2014 | $11.838 | $12.900 | 0 | |||||||||||||
2015 | $12.900 | $12.223 | 0 | |||||||||||||
Fidelity VIP Asset Manager Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.239 | $10.702 | 0 | |||||||||||||
2007 | $10.702 | $12.022 | 0 | |||||||||||||
2008 | $12.022 | $8.337 | 1,129 | |||||||||||||
2009 | $8.337 | $10.472 | 1,128 | |||||||||||||
2010 | $10.472 | $11.642 | 1,127 | |||||||||||||
2011 | $11.642 | $11.038 | 1,127 | |||||||||||||
2012 | $11.038 | $12.084 | 1,078 | |||||||||||||
2013 | $12.084 | $13.596 | 1,029 | |||||||||||||
2014 | $13.596 | $13.998 | 0 | |||||||||||||
2015 | $13.998 | $13.647 | 0 | |||||||||||||
Fidelity VIP Contrafund® Portfolio Service Class 2 |
||||||||||||||||
2006 | $12.829 | $13.947 | 0 | |||||||||||||
2007 | $13.947 | $15.957 | 0 | |||||||||||||
2008 | $15.957 | $8.920 | 0 | |||||||||||||
2009 | $8.920 | $11.788 | 0 | |||||||||||||
2010 | $11.788 | $13.446 | 0 | |||||||||||||
2011 | $13.446 | $12.752 | 0 | |||||||||||||
2012 | $12.752 | $14.447 | 0 | |||||||||||||
2013 | $14.447 | $18.455 | 0 | |||||||||||||
2014 | $18.455 | $20.101 | 706 | |||||||||||||
2015 | $20.101 | $19.690 | 670 | |||||||||||||
Fidelity VIP Equity-Income Portfolio Service Class 2 |
||||||||||||||||
2006 | $11.051 | $12.930 | 0 | |||||||||||||
2007 | $12.930 | $12.772 | 0 | |||||||||||||
2008 | $12.772 | $7.125 | 1,122 | |||||||||||||
2009 | $7.125 | $9.027 | 1,121 | |||||||||||||
2010 | $9.027 | $10.120 | 1,120 | |||||||||||||
2011 | $10.120 | $9.937 | 1,120 | |||||||||||||
2012 | $9.937 | $11.346 | 1,071 | |||||||||||||
2013 | $11.346 | $14.148 | 1,022 | |||||||||||||
2014 | $14.148 | $14.972 | 936 | |||||||||||||
2015 | $14.972 | $13.986 | 888 | |||||||||||||
Fidelity VIP Government Money Market Portfolio Service Class 2 formerly, Fidelity VIP Money Market Portfolio Service Class 2 |
||||||||||||||||
2006 | $9.890 | $10.095 | 0 | |||||||||||||
2007 | $10.095 | $10.334 | 0 | |||||||||||||
2008 | $10.334 | $10.360 | 408 | |||||||||||||
2009 | $10.360 | $10.154 | 0 | |||||||||||||
2010 | $10.154 | $9.912 | 0 | |||||||||||||
2011 | $9.912 | $9.671 | 0 | |||||||||||||
2012 | $9.671 | $9.435 | 0 | |||||||||||||
2013 | $9.435 | $9.204 | 0 | |||||||||||||
2014 | $9.204 | $8.980 | 0 | |||||||||||||
2015 | $8.980 | $8.761 | 0 |
H-53
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Fidelity VIP Growth Portfolio Service Class 2 |
||||||||||||||||
2006 | $9.993 | $10.390 | 0 | |||||||||||||
2007 | $10.390 | $12.836 | 0 | |||||||||||||
2008 | $12.836 | $6.597 | 0 | |||||||||||||
2009 | $6.597 | $8.235 | 0 | |||||||||||||
2010 | $8.235 | $9.951 | 0 | |||||||||||||
2011 | $9.951 | $9.704 | 0 | |||||||||||||
2012 | $9.704 | $10.829 | 0 | |||||||||||||
2013 | $10.829 | $14.367 | 0 | |||||||||||||
2014 | $14.367 | $15.559 | 0 | |||||||||||||
2015 | $15.559 | $16.226 | 0 | |||||||||||||
Fidelity VIP Index 500 Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.771 | $12.130 | 0 | |||||||||||||
2007 | $12.130 | $12.444 | 0 | |||||||||||||
2008 | $12.444 | $7.628 | 0 | |||||||||||||
2009 | $7.628 | $9.398 | 0 | |||||||||||||
2010 | $9.398 | $10.519 | 0 | |||||||||||||
2011 | $10.519 | $10.445 | 0 | |||||||||||||
2012 | $10.445 | $11.781 | 0 | |||||||||||||
2013 | $11.781 | $15.160 | 0 | |||||||||||||
2014 | $15.160 | $16.753 | 0 | |||||||||||||
2015 | $16.753 | $16.520 | 0 | |||||||||||||
Fidelity VIP Investment Grade Bond Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.051 | $10.211 | 0 | |||||||||||||
2007 | $10.211 | $10.367 | 0 | |||||||||||||
2008 | $10.367 | $9.763 | 0 | |||||||||||||
2009 | $9.763 | $10.997 | 0 | |||||||||||||
2010 | $10.997 | $11.537 | 0 | |||||||||||||
2011 | $11.537 | $12.047 | 0 | |||||||||||||
2012 | $12.047 | $12.410 | 0 | |||||||||||||
2013 | $12.410 | $11.855 | 0 | |||||||||||||
2014 | $11.855 | $12.215 | 0 | |||||||||||||
2015 | $12.215 | $11.814 | 0 | |||||||||||||
Fidelity VIP Overseas Portfolio Service Class 2 |
||||||||||||||||
2006 | $12.539 | $14.406 | 0 | |||||||||||||
2007 | $14.406 | $16.448 | 0 | |||||||||||||
2008 | $16.448 | $8.991 | 925 | |||||||||||||
2009 | $8.991 | $11.070 | 449 | |||||||||||||
2010 | $11.070 | $12.185 | 448 | |||||||||||||
2011 | $12.185 | $9.826 | 448 | |||||||||||||
2012 | $9.826 | $11.537 | 429 | |||||||||||||
2013 | $11.537 | $14.650 | 409 | |||||||||||||
2014 | $14.650 | $13.106 | 0 | |||||||||||||
2015 | $13.106 | $13.206 | 0 | |||||||||||||
Goldman Sachs VIT Mid Cap Value Fund Institutional |
||||||||||||||||
2015 | $10.000 | $8.673 | 0 | |||||||||||||
Guggenheim VIF Long Short Equity Fund |
||||||||||||||||
2006 | $11.638 | $12.647 | 0 | |||||||||||||
2007 | $12.647 | $15.141 | 0 | |||||||||||||
2008 | $15.141 | $8.753 | 0 | |||||||||||||
2009 | $8.753 | $10.869 | 0 | |||||||||||||
2010 | $10.869 | $11.791 | 0 | |||||||||||||
2011 | $11.791 | $10.748 | 0 | |||||||||||||
2012 | $10.748 | $10.949 | 0 | |||||||||||||
2013 | $10.949 | $12.545 | 0 | |||||||||||||
2014 | $12.545 | $12.580 | 0 | |||||||||||||
2015 | $12.580 | $12.426 | 0 |
H-54
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. American Franchise Fund Series II |
||||||||||||||||
2012 | $10.000 | $8.854 | 0 | |||||||||||||
2013 | $8.854 | $12.075 | 0 | |||||||||||||
2014 | $12.075 | $12.741 | 0 | |||||||||||||
2015 | $12.741 | $13.020 | 0 | |||||||||||||
Invesco V.I. Capital Appreciation Series II |
||||||||||||||||
2006 | $10.803 | $11.177 | 0 | |||||||||||||
2007 | $11.177 | $12.181 | 0 | |||||||||||||
2008 | $12.181 | $6.817 | 0 | |||||||||||||
2009 | $6.817 | $8.028 | 0 | |||||||||||||
2010 | $8.028 | $9.022 | 0 | |||||||||||||
2011 | $9.022 | $8.087 | 0 | |||||||||||||
2012 | $8.087 | $9.253 | 0 | |||||||||||||
Invesco V.I. Core Equity Fund Series II |
||||||||||||||||
2006 | $10.000 | $10.719 | 0 | |||||||||||||
2007 | $10.719 | $11.279 | 0 | |||||||||||||
2008 | $11.279 | $7.666 | 0 | |||||||||||||
2009 | $7.666 | $9.571 | 0 | |||||||||||||
2010 | $9.571 | $10.200 | 0 | |||||||||||||
2011 | $10.200 | $9.921 | 0 | |||||||||||||
2012 | $9.921 | $10.995 | 0 | |||||||||||||
2013 | $10.995 | $13.829 | 0 | |||||||||||||
2014 | $13.829 | $14.549 | 0 | |||||||||||||
2015 | $14.549 | $13.341 | 0 | |||||||||||||
Invesco V.I. Government Securities Fund Series II |
||||||||||||||||
2011 | $10.000 | $11.178 | 0 | |||||||||||||
2012 | $11.178 | $11.146 | 0 | |||||||||||||
2013 | $11.146 | $10.562 | 0 | |||||||||||||
2014 | $10.562 | $10.704 | 0 | |||||||||||||
2015 | $10.704 | $10.448 | 0 | |||||||||||||
Invesco V.I. Growth and Income Fund Series II |
||||||||||||||||
2006 | $11.743 | $13.286 | 0 | |||||||||||||
2007 | $13.286 | $13.286 | 0 | |||||||||||||
2008 | $13.286 | $8.785 | 0 | |||||||||||||
2009 | $8.785 | $10.636 | 0 | |||||||||||||
2010 | $10.636 | $11.641 | 0 | |||||||||||||
2011 | $11.641 | $11.099 | 0 | |||||||||||||
2012 | $11.099 | $12.380 | 0 | |||||||||||||
2013 | $12.380 | $16.155 | 0 | |||||||||||||
2014 | $16.155 | $17.330 | 0 | |||||||||||||
2015 | $17.330 | $16.345 | 0 | |||||||||||||
Invesco V.I. Mid Cap Core Equity Fund Series II |
||||||||||||||||
2006 | $11.383 | $12.324 | 0 | |||||||||||||
2007 | $12.324 | $13.137 | 0 | |||||||||||||
2008 | $13.137 | $9.139 | 0 | |||||||||||||
2009 | $9.139 | $11.577 | 0 | |||||||||||||
2010 | $11.577 | $12.849 | 0 | |||||||||||||
2011 | $12.849 | $11.720 | 0 | |||||||||||||
2012 | $11.720 | $12.646 | 0 | |||||||||||||
2013 | $12.646 | $15.848 | 0 | |||||||||||||
2014 | $15.848 | $16.104 | 0 | |||||||||||||
2015 | $16.104 | $15.037 | 0 |
H-55
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. Mid Cap Growth Fund Series II |
||||||||||||||||
2006 | $11.923 | $12.204 | 0 | |||||||||||||
2007 | $12.204 | $13.998 | 0 | |||||||||||||
2008 | $13.998 | $7.259 | 0 | |||||||||||||
2009 | $7.259 | $11.074 | 0 | |||||||||||||
2010 | $11.074 | $13.749 | 0 | |||||||||||||
2011 | $13.749 | $12.157 | 0 | |||||||||||||
2012 | $12.157 | $13.238 | 0 | |||||||||||||
2013 | $13.238 | $17.640 | 0 | |||||||||||||
2014 | $17.640 | $18.532 | 0 | |||||||||||||
2015 | $18.532 | $18.266 | 0 | |||||||||||||
Invesco V.I. Value Opportunities Fund Series II |
||||||||||||||||
2006 | $10.939 | $12.053 | 0 | |||||||||||||
2007 | $12.053 | $11.917 | 0 | |||||||||||||
2008 | $11.917 | $5.591 | 0 | |||||||||||||
2009 | $5.591 | $8.057 | 0 | |||||||||||||
2010 | $8.057 | $8.406 | 0 | |||||||||||||
2011 | $8.406 | $7.922 | 0 | |||||||||||||
2012 | $7.922 | $9.092 | 0 | |||||||||||||
2013 | $9.092 | $11.820 | 0 | |||||||||||||
2014 | $11.820 | $12.266 | 0 | |||||||||||||
2015 | $12.266 | $10.691 | 0 | |||||||||||||
Invesco Van Kampen V.I. Government Fund Series II |
||||||||||||||||
2006 | $10.160 | $10.220 | 0 | |||||||||||||
2007 | $10.220 | $10.667 | 0 | |||||||||||||
2008 | $10.667 | $10.563 | 0 | |||||||||||||
2009 | $10.563 | $10.393 | 0 | |||||||||||||
2010 | $10.393 | $10.634 | 0 | |||||||||||||
2011 | $10.634 | $10.660 | 0 | |||||||||||||
Janus Aspen Overseas Portfolio Service Shares |
||||||||||||||||
2008 | $10.000 | $6.694 | 0 | |||||||||||||
2009 | $6.694 | $11.694 | 0 | |||||||||||||
2010 | $11.694 | $14.262 | 0 | |||||||||||||
2011 | $14.262 | $9.414 | 0 | |||||||||||||
2012 | $9.414 | $10.393 | 0 | |||||||||||||
2013 | $10.393 | $11.586 | 0 | |||||||||||||
2014 | $11.586 | $9.934 | 0 | |||||||||||||
2015 | $9.934 | $8.838 | 0 | |||||||||||||
Janus Aspen Perkins Mid Cap Value Portfolio Service Shares |
||||||||||||||||
2006 | $12.007 | $13.478 | 0 | |||||||||||||
2007 | $13.478 | $14.089 | 0 | |||||||||||||
2008 | $14.089 | $9.909 | 0 | |||||||||||||
2009 | $9.909 | $12.849 | 0 | |||||||||||||
2010 | $12.849 | $14.460 | 0 | |||||||||||||
2011 | $14.460 | $13.686 | 0 | |||||||||||||
2012 | $13.686 | $14.790 | 0 | |||||||||||||
2013 | $14.790 | $18.152 | 0 | |||||||||||||
2014 | $18.152 | $19.201 | 0 | |||||||||||||
2015 | $19.201 | $18.040 | 0 | |||||||||||||
Janus Aspen Perkins Small Company Value Portfolio Service Shares |
||||||||||||||||
2006 | $10.891 | $12.949 | 0 | |||||||||||||
2007 | $12.949 | $11.858 | 0 | |||||||||||||
2008 | $11.858 | $7.412 | 0 | |||||||||||||
2009 | $7.412 | $6.999 | 0 |
H-56
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Janus Aspen Series Balanced Portfolio Service Shares |
||||||||||||||||
2006 | $11.046 | $11.899 | 0 | |||||||||||||
2007 | $11.899 | $12.799 | 0 | |||||||||||||
2008 | $12.799 | $10.481 | 0 | |||||||||||||
2009 | $10.481 | $12.839 | 0 | |||||||||||||
2010 | $12.839 | $13.542 | 0 | |||||||||||||
2011 | $13.542 | $13.390 | 0 | |||||||||||||
2012 | $13.390 | $14.808 | 0 | |||||||||||||
2013 | $14.808 | $17.306 | 0 | |||||||||||||
2014 | $17.306 | $18.273 | 0 | |||||||||||||
2015 | $18.273 | $17.898 | 0 | |||||||||||||
Janus Aspen Series Foreign Stock Portfolio Service Shares |
||||||||||||||||
2006 | $11.610 | $13.372 | 0 | |||||||||||||
2007 | $13.372 | $15.423 | 0 | |||||||||||||
2008 | $15.423 | $14.462 | 0 | |||||||||||||
Janus Aspen Series Forty Portfolio Service Shares |
||||||||||||||||
2006 | $12.490 | $13.295 | 0 | |||||||||||||
2007 | $13.295 | $17.719 | 0 | |||||||||||||
2008 | $17.719 | $9.625 | 0 | |||||||||||||
2009 | $9.625 | $13.710 | 0 | |||||||||||||
2010 | $13.710 | $14.241 | 0 | |||||||||||||
2011 | $14.241 | $12.928 | 0 | |||||||||||||
2012 | $12.928 | $15.620 | 0 | |||||||||||||
2013 | $15.620 | $19.943 | 0 | |||||||||||||
2014 | $19.943 | $21.102 | 0 | |||||||||||||
2015 | $21.102 | $23.043 | 0 | |||||||||||||
Janus Aspen Series INTECH Risk-Managed Core Portfolio Service Shares |
||||||||||||||||
2006 | $12.144 | $13.124 | 0 | |||||||||||||
2007 | $13.124 | $13.585 | 0 | |||||||||||||
2008 | $13.585 | $8.449 | 0 | |||||||||||||
2009 | $8.449 | $10.101 | 0 | |||||||||||||
2010 | $10.101 | $10.804 | 0 | |||||||||||||
MFS Investors Growth Stock Portfolio Service Class |
||||||||||||||||
2015 | $10.000 | $16.236 | 0 | |||||||||||||
MFS VIT II High Yield Service Class |
||||||||||||||||
2013 | $10.000 | $14.388 | 0 | |||||||||||||
2014 | $14.388 | $14.392 | 0 | |||||||||||||
2015 | $14.392 | $13.418 | 0 | |||||||||||||
MFS® High Income Series Service Class |
||||||||||||||||
2006 | $10.497 | $11.264 | 0 | |||||||||||||
2007 | $11.264 | $11.156 | 0 | |||||||||||||
2008 | $11.156 | $7.763 | 0 | |||||||||||||
2009 | $7.763 | $10.998 | 0 | |||||||||||||
2010 | $10.998 | $12.273 | 0 | |||||||||||||
2011 | $12.273 | $12.434 | 0 | |||||||||||||
2012 | $12.434 | $13.879 | 0 | |||||||||||||
2013 | $13.879 | $13.985 | 0 | |||||||||||||
MFS® Investors Growth Stock Series Service Class |
||||||||||||||||
2006 | $10.539 | $11.033 | 0 | |||||||||||||
2007 | $12.053 | $11.917 | 0 | |||||||||||||
2008 | $11.917 | $7.344 | 0 | |||||||||||||
2009 | $7.344 | $9.965 | 0 | |||||||||||||
2010 | $9.965 | $10.903 | 0 | |||||||||||||
2011 | $10.903 | $10.676 | 0 | |||||||||||||
2012 | $10.676 | $12.151 | 0 | |||||||||||||
2013 | $12.151 | $15.416 | 0 | |||||||||||||
2014 | $15.416 | $16.709 | 0 | |||||||||||||
2015 | $16.709 | $16.820 | 0 |
H-57
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
MFS® Investors Trust Series Service Class |
||||||||||||||||
2006 | $11.172 | $12.282 | 0 | |||||||||||||
2007 | $11.033 | $11.947 | 0 | |||||||||||||
2008 | $11.947 | $8.582 | 0 | |||||||||||||
2009 | $8.582 | $10.596 | 0 | |||||||||||||
2010 | $10.596 | $11.461 | 0 | |||||||||||||
2011 | $11.461 | $10.910 | 0 | |||||||||||||
2012 | $10.910 | $12.646 | 0 | |||||||||||||
2013 | $12.646 | $16.252 | 0 | |||||||||||||
2014 | $16.252 | $17.552 | 0 | |||||||||||||
2015 | $17.552 | $17.114 | 0 | |||||||||||||
MFS® New Discovery Series Service Class |
||||||||||||||||
2006 | $10.086 | $11.112 | 0 | |||||||||||||
2007 | $11.112 | $11.082 | 0 | |||||||||||||
2008 | $11.082 | $6.538 | 0 | |||||||||||||
2009 | $6.538 | $10.391 | 0 | |||||||||||||
2010 | $10.391 | $13.780 | 0 | |||||||||||||
2011 | $13.780 | $12.032 | 0 | |||||||||||||
2012 | $12.032 | $14.189 | 0 | |||||||||||||
2013 | $14.189 | $19.547 | 0 | |||||||||||||
2014 | $19.547 | $17.639 | 0 | |||||||||||||
2015 | $17.639 | $16.838 | 0 | |||||||||||||
MFS® Total Return Series Service Class |
||||||||||||||||
2006 | $10.684 | $11.634 | 0 | |||||||||||||
2007 | $11.634 | $11.794 | 0 | |||||||||||||
2008 | $11.794 | $8.937 | 2,314 | |||||||||||||
2009 | $8.937 | $10.263 | 1,124 | |||||||||||||
2010 | $10.263 | $10.976 | 1,123 | |||||||||||||
2011 | $10.976 | $10.878 | 1,123 | |||||||||||||
2012 | $10.878 | $11.771 | 1,074 | |||||||||||||
2013 | $11.771 | $13.634 | 1,025 | |||||||||||||
2014 | $13.634 | $14.395 | 779 | |||||||||||||
2015 | $14.395 | $13.961 | 739 | |||||||||||||
MFS® Value Series Service Class |
||||||||||||||||
2006 | $11.489 | $13.507 | 0 | |||||||||||||
2007 | $13.507 | $14.175 | 0 | |||||||||||||
2008 | $14.175 | $9.299 | 0 | |||||||||||||
2009 | $9.299 | $11.108 | 0 | |||||||||||||
2010 | $11.108 | $12.052 | 0 | |||||||||||||
2011 | $12.052 | $11.702 | 0 | |||||||||||||
2012 | $11.702 | $13.228 | 0 | |||||||||||||
2013 | $13.228 | $17.497 | 0 | |||||||||||||
2014 | $17.497 | $18.810 | 0 | |||||||||||||
2015 | $18.810 | $18.178 | 0 | |||||||||||||
Oppenheimer Discovery Mid Cap Growth Fund/VA Service Shares |
||||||||||||||||
2006 | $11.635 | $11.657 | 0 | |||||||||||||
2007 | $11.657 | $12.056 | 0 | |||||||||||||
2008 | $12.056 | $5.973 | 0 | |||||||||||||
2009 | $5.973 | $7.706 | 0 | |||||||||||||
2010 | $7.706 | $9.559 | 0 | |||||||||||||
2011 | $9.559 | $9.404 | 0 | |||||||||||||
2012 | $9.404 | $10.656 | 0 | |||||||||||||
2013 | $10.656 | $14.098 | 0 | |||||||||||||
2014 | $14.098 | $14.512 | 0 | |||||||||||||
2015 | $14.512 | $15.055 | 0 |
H-58
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Oppenheimer Global Fund/VA Service Shares |
||||||||||||||||
2006 | $12.546 | $14.365 | 0 | |||||||||||||
2007 | $14.365 | $14.863 | 0 | |||||||||||||
2008 | $14.863 | $8.651 | 0 | |||||||||||||
2009 | $8.651 | $11.760 | 0 | |||||||||||||
2010 | $11.760 | $13.274 | 0 | |||||||||||||
2011 | $13.274 | $11.845 | 0 | |||||||||||||
2012 | $11.845 | $13.975 | 0 | |||||||||||||
2013 | $13.975 | $17.312 | 0 | |||||||||||||
2014 | $17.312 | $17.235 | 0 | |||||||||||||
2015 | $17.235 | $17.430 | 0 | |||||||||||||
Oppenheimer Main Street Small Cap Fund/VA Service Shares |
||||||||||||||||
2006 | $11.997 | $13.420 | 0 | |||||||||||||
2007 | $13.420 | $12.907 | 0 | |||||||||||||
2008 | $12.907 | $7.805 | 0 | |||||||||||||
2009 | $7.805 | $10.422 | 0 | |||||||||||||
2010 | $10.422 | $12.511 | 0 | |||||||||||||
2011 | $12.511 | $11.915 | 0 | |||||||||||||
2012 | $11.915 | $13.676 | 0 | |||||||||||||
2013 | $13.676 | $18.760 | 0 | |||||||||||||
2014 | $18.760 | $20.434 | 0 | |||||||||||||
2015 | $20.434 | $18.718 | 0 | |||||||||||||
PIMCO Foreign Bond Portfolio (U.S. Dollar-Hedged) Administrative Shares |
||||||||||||||||
2006 | $10.541 | $10.509 | 0 | |||||||||||||
2007 | $10.509 | $10.623 | 0 | |||||||||||||
2008 | $10.623 | $10.116 | 0 | |||||||||||||
2009 | $10.116 | $11.410 | 0 | |||||||||||||
2010 | $11.410 | $12.077 | 0 | |||||||||||||
2011 | $12.077 | $12.579 | 0 | |||||||||||||
2012 | $12.579 | $13.601 | 0 | |||||||||||||
2013 | $13.601 | $13.334 | 0 | |||||||||||||
2014 | $13.334 | $14.459 | 0 | |||||||||||||
2015 | $14.459 | $14.146 | 0 | |||||||||||||
PIMCO Money Market Portfolio Administrative Shares |
||||||||||||||||
2006 | $9.883 | $10.087 | 0 | |||||||||||||
2007 | $10.087 | $10.318 | 0 | |||||||||||||
2008 | $10.318 | $10.292 | 0 | |||||||||||||
2009 | $10.292 | $10.052 | 0 | |||||||||||||
2010 | $10.052 | $9.810 | 0 | |||||||||||||
2011 | $9.810 | $9.576 | 0 | |||||||||||||
2012 | $9.576 | $9.347 | 0 | |||||||||||||
2013 | $9.347 | $9.123 | 0 | |||||||||||||
2014 | $9.123 | $8.901 | 0 | |||||||||||||
2015 | $8.901 | $8.684 | 0 | |||||||||||||
PIMCO Real Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.446 | $10.263 | 0 | |||||||||||||
2007 | $10.263 | $11.079 | 0 | |||||||||||||
2008 | $11.079 | $10.047 | 0 | |||||||||||||
2009 | $10.047 | $11.603 | 0 | |||||||||||||
2010 | $11.603 | $12.237 | 0 | |||||||||||||
2011 | $12.237 | $13.332 | 0 | |||||||||||||
2012 | $13.332 | $14.143 | 0 | |||||||||||||
2013 | $14.143 | $12.525 | 0 | |||||||||||||
2014 | $12.525 | $12.596 | 0 | |||||||||||||
2015 | $12.596 | $11.955 | 0 |
H-59
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
PIMCO Total Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.172 | $10.306 | 0 | |||||||||||||
2007 | $10.306 | $10.934 | 0 | |||||||||||||
2008 | $10.934 | $11.180 | 1,432 | |||||||||||||
2009 | $11.180 | $12.441 | 675 | |||||||||||||
2010 | $12.441 | $13.121 | 674 | |||||||||||||
2011 | $13.121 | $13.263 | 674 | |||||||||||||
2012 | $13.263 | $14.178 | 645 | |||||||||||||
2013 | $14.178 | $13.559 | 616 | |||||||||||||
2014 | $13.559 | $13.793 | 0 | |||||||||||||
2015 | $13.793 | $13.515 | 0 | |||||||||||||
Premier VIT OpCap Balanced Portfolio |
||||||||||||||||
2006 | $10.749 | $11.618 | 0 | |||||||||||||
2007 | $11.618 | $10.829 | 0 | |||||||||||||
2008 | $10.829 | $7.270 | 0 | |||||||||||||
2009 | $7.270 | $6.989 | 0 | |||||||||||||
Premier VIT OpCap Renaissance Portfolio |
||||||||||||||||
2006 | $10.352 | $11.248 | 0 | |||||||||||||
2007 | $11.248 | $11.665 | 0 | |||||||||||||
2008 | $11.665 | $10.534 | 0 | |||||||||||||
T. Rowe Price Blue Chip Growth Portfolio II |
||||||||||||||||
2006 | $10.701 | $11.413 | 0 | |||||||||||||
2007 | $11.413 | $12.523 | 0 | |||||||||||||
2008 | $12.523 | $7.005 | 0 | |||||||||||||
2009 | $7.005 | $9.690 | 0 | |||||||||||||
2010 | $9.690 | $10.965 | 0 | |||||||||||||
2011 | $10.965 | $10.842 | 0 | |||||||||||||
2012 | $10.842 | $12.470 | 0 | |||||||||||||
2013 | $12.470 | $17.134 | 0 | |||||||||||||
2014 | $17.134 | $18.192 | 621 | |||||||||||||
2015 | $18.192 | $19.662 | 589 | |||||||||||||
T. Rowe Price Equity Income Portfolio II |
||||||||||||||||
2006 | $11.121 | $12.873 | 0 | |||||||||||||
2007 | $12.873 | $12.936 | 0 | |||||||||||||
2008 | $12.936 | $8.042 | 1,333 | |||||||||||||
2009 | $8.042 | $9.826 | 0 | |||||||||||||
2010 | $9.826 | $10.999 | 0 | |||||||||||||
2011 | $10.999 | $10.620 | 0 | |||||||||||||
2012 | $10.620 | $12.113 | 0 | |||||||||||||
2013 | $12.113 | $15.291 | 0 | |||||||||||||
2014 | $15.291 | $15.976 | 0 | |||||||||||||
2015 | $15.976 | $14.477 | 0 | |||||||||||||
UIF Growth Portfolio, Class II |
||||||||||||||||
2006 | $11.579 | $11.726 | 0 | |||||||||||||
2007 | $11.726 | $13.915 | 0 | |||||||||||||
2008 | $13.915 | $6.875 | 0 | |||||||||||||
2009 | $6.875 | $11.076 | 0 | |||||||||||||
2010 | $11.076 | $13.248 | 0 | |||||||||||||
2011 | $13.248 | $12.531 | 0 | |||||||||||||
2012 | $12.531 | $13.941 | 0 | |||||||||||||
2013 | $13.941 | $20.091 | 0 | |||||||||||||
2014 | $20.091 | $20.792 | 0 | |||||||||||||
2015 | $20.792 | $22.710 | 0 |
H-60
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
UIF U.S. Real Estate Portfolio, Class II |
||||||||||||||||
2006 | $14.491 | $19.462 | 0 | |||||||||||||
2007 | $19.462 | $15.704 | 0 | |||||||||||||
2008 | $15.704 | $9.488 | 0 | |||||||||||||
2009 | $9.488 | $11.893 | 0 | |||||||||||||
2010 | $11.893 | $15.028 | 0 | |||||||||||||
2011 | $15.028 | $15.491 | 0 | |||||||||||||
2012 | $15.491 | $17.471 | 0 | |||||||||||||
2013 | $17.471 | $17.341 | 0 | |||||||||||||
2014 | $17.341 | $21.895 | 0 | |||||||||||||
2015 | $21.895 | $21.769 | 0 | |||||||||||||
Van Eck VIP Emerging Markets Fund Initial Class |
||||||||||||||||
2006 | $15.431 | $20.999 | 0 | |||||||||||||
2007 | $20.999 | $28.186 | 0 | |||||||||||||
2008 | $28.186 | $9.683 | 0 | |||||||||||||
2009 | $9.683 | $20.137 | 0 | |||||||||||||
2010 | $20.137 | $24.917 | 0 | |||||||||||||
2011 | $24.917 | $18.051 | 0 | |||||||||||||
2012 | $18.051 | $22.856 | 0 | |||||||||||||
2013 | $22.856 | $24.977 | 0 | |||||||||||||
2014 | $24.977 | $24.263 | 218 | |||||||||||||
2015 | $24.263 | $20.357 | 207 | |||||||||||||
Van Eck VIP Global Hard Assets Fund Initial Class |
||||||||||||||||
2006 | $18.243 | $22.156 | 0 | |||||||||||||
2007 | $22.156 | $31.412 | 0 | |||||||||||||
2008 | $31.412 | $16.508 | 0 | |||||||||||||
2009 | $16.508 | $25.368 | 0 | |||||||||||||
2010 | $25.368 | $31.982 | 0 | |||||||||||||
2011 | $31.982 | $26.067 | 0 | |||||||||||||
2012 | $26.067 | $26.288 | 0 | |||||||||||||
2013 | $26.288 | $28.345 | 0 | |||||||||||||
2014 | $28.345 | $22.367 | 0 | |||||||||||||
2015 | $22.367 | $14.521 | 0 | |||||||||||||
Van Eck VIP Multi-Manager Alternative Initial Class |
||||||||||||||||
2006 | $9.596 | $10.172 | 0 | |||||||||||||
2007 | $10.172 | $10.324 | 0 | |||||||||||||
2008 | $10.324 | $8.752 | 0 | |||||||||||||
2009 | $8.752 | $9.721 | 0 | |||||||||||||
2010 | $9.721 | $9.955 | 0 | |||||||||||||
2011 | $9.955 | $9.491 | 0 | |||||||||||||
2012 | $9.491 | $9.381 | 0 | |||||||||||||
2013 | $9.381 | $9.614 | 0 | |||||||||||||
2014 | $9.614 | $9.278 | 0 | |||||||||||||
2015 | $9.278 | $9.150 | 0 | |||||||||||||
Western Asset Variable Global High Yield Bond Portfolio Class II |
||||||||||||||||
2006 | $10.870 | $11.701 | 0 | |||||||||||||
2007 | $11.701 | $11.376 | 0 | |||||||||||||
2008 | $11.376 | $7.669 | 0 | |||||||||||||
2009 | $7.669 | $11.585 | 0 | |||||||||||||
2010 | $11.585 | $12.963 | 0 | |||||||||||||
2011 | $12.963 | $12.807 | 0 | |||||||||||||
2012 | $12.807 | $14.750 | 0 | |||||||||||||
2013 | $14.750 | $15.260 | 0 | |||||||||||||
2014 | $15.260 | $14.662 | 0 | |||||||||||||
2015 | $14.662 | $13.433 | 0 |
* | The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 2.35% and an administrative expense charge of 0.10%. |
H-61
CONSULTANT SOLUTIONS VARIABLE ANNUITIES: LBL Consultant Solution Select Contracts
PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT*
Low
Mortality & Expense = 1.7
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Alger Capital Appreciation Portfolio Class S |
||||||||||||||||
2006 | $11.409 | $13.328 | 4,489 | |||||||||||||
2007 | $13.328 | $17.432 | 18,890 | |||||||||||||
2008 | $17.432 | $9.369 | 12,250 | |||||||||||||
2009 | $9.369 | $13.864 | 8,797 | |||||||||||||
2010 | $13.864 | $15.470 | 4,945 | |||||||||||||
2011 | $15.470 | $15.097 | 2,846 | |||||||||||||
2012 | $15.097 | $17.477 | 2,301 | |||||||||||||
2013 | $17.477 | $23.133 | 1,926 | |||||||||||||
2014 | $23.133 | $25.772 | 1,300 | |||||||||||||
2015 | $25.772 | $26.804 | 1,422 | |||||||||||||
Alger Large Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $11.038 | $11.371 | 10,863 | |||||||||||||
2007 | $11.371 | $13.357 | 10,486 | |||||||||||||
2008 | $13.357 | $7.044 | 20,165 | |||||||||||||
2009 | $7.044 | $10.186 | 15,504 | |||||||||||||
2010 | $10.186 | $11.294 | 14,306 | |||||||||||||
2011 | $11.294 | $11.006 | 13,568 | |||||||||||||
2012 | $11.006 | $11.821 | 12,190 | |||||||||||||
2013 | $11.821 | $15.622 | 10,963 | |||||||||||||
2014 | $15.622 | $16.961 | 10,450 | |||||||||||||
2015 | $16.961 | $16.881 | 10,560 | |||||||||||||
Alger Mid Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $11.385 | $12.286 | 5,659 | |||||||||||||
2007 | $12.286 | $15.837 | 32,351 | |||||||||||||
2008 | $15.837 | $6.458 | 30,915 | |||||||||||||
2009 | $6.458 | $9.596 | 15,709 | |||||||||||||
2010 | $9.596 | $11.203 | 14,156 | |||||||||||||
2011 | $11.203 | $10.056 | 12,397 | |||||||||||||
2012 | $10.056 | $11.424 | 6,470 | |||||||||||||
2013 | $11.424 | $15.191 | 4,773 | |||||||||||||
2014 | $15.191 | $16.048 | 3,896 | |||||||||||||
2015 | $16.048 | $15.461 | 3,847 | |||||||||||||
ClearBridge Variable Fundamental All Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.479 | 553 | |||||||||||||
2008 | $9.479 | $5.904 | 8,461 | |||||||||||||
2009 | $5.904 | $7.499 | 6,476 | |||||||||||||
2010 | $7.499 | $8.587 | 6,522 | |||||||||||||
2011 | $8.587 | $7.910 | 7,429 | |||||||||||||
2012 | $7.910 | $8.931 | 7,479 | |||||||||||||
2013 | $8.931 | $11.592 | 2,349 | |||||||||||||
2014 | $11.592 | $12.442 | 0 |
H-62
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
ClearBridge Variable Large Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.718 | 10,050 | |||||||||||||
2008 | $9.718 | $6.144 | 8,585 | |||||||||||||
2009 | $6.144 | $7.511 | 4,311 | |||||||||||||
2010 | $7.511 | $8.074 | 3,403 | |||||||||||||
2011 | $8.074 | $8.322 | 4,149 | |||||||||||||
2012 | $8.322 | $9.520 | 3,911 | |||||||||||||
2013 | $9.520 | $12.375 | 2,511 | |||||||||||||
2014 | $12.375 | $13.576 | 2,540 | |||||||||||||
2015 | $13.576 | $12.949 | 1,521 | |||||||||||||
Fidelity VIP Asset Manager Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.369 | $10.910 | 19,985 | |||||||||||||
2007 | $10.910 | $12.338 | 10,303 | |||||||||||||
2008 | $12.338 | $8.614 | 15,530 | |||||||||||||
2009 | $8.614 | $10.891 | 13,118 | |||||||||||||
2010 | $10.891 | $12.189 | 8,427 | |||||||||||||
2011 | $12.189 | $11.633 | 8,191 | |||||||||||||
2012 | $11.633 | $12.821 | 10,063 | |||||||||||||
2013 | $12.821 | $14.521 | 7,851 | |||||||||||||
2014 | $14.521 | $15.049 | 6,124 | |||||||||||||
2015 | $15.049 | $14.770 | 5,606 | |||||||||||||
Fidelity VIP Contrafund® Portfolio Service Class 2 |
||||||||||||||||
2006 | $12.993 | $14.218 | 32,667 | |||||||||||||
2007 | $14.218 | $16.377 | 80,603 | |||||||||||||
2008 | $16.377 | $9.216 | 102,855 | |||||||||||||
2009 | $9.216 | $12.260 | 81,493 | |||||||||||||
2010 | $12.260 | $14.077 | 53,895 | |||||||||||||
2011 | $14.077 | $13.440 | 45,208 | |||||||||||||
2012 | $13.440 | $15.327 | 37,230 | |||||||||||||
2013 | $15.327 | $19.710 | 24,831 | |||||||||||||
2014 | $19.710 | $21.611 | 23,735 | |||||||||||||
2015 | $21.611 | $21.311 | 20,812 | |||||||||||||
Fidelity VIP Equity-Income Portfolio Service Class 2 |
||||||||||||||||
2006 | $11.192 | $13.182 | 19,478 | |||||||||||||
2007 | $13.182 | $13.108 | 98,411 | |||||||||||||
2008 | $13.108 | $7.361 | 102,049 | |||||||||||||
2009 | $7.361 | $9.388 | 75,431 | |||||||||||||
2010 | $9.388 | $10.595 | 78,583 | |||||||||||||
2011 | $10.595 | $10.473 | 57,292 | |||||||||||||
2012 | $10.473 | $12.038 | 60,518 | |||||||||||||
2013 | $12.038 | $15.111 | 52,689 | |||||||||||||
2014 | $15.111 | $16.097 | 45,304 | |||||||||||||
2015 | $16.097 | $15.137 | 45,292 | |||||||||||||
Fidelity VIP Government Money Market Portfolio Service Class 2 formerly, Fidelity VIP Money Market Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.016 | $10.291 | 33,135 | |||||||||||||
2007 | $10.291 | $10.606 | 258,815 | |||||||||||||
2008 | $10.606 | $10.703 | 280,115 | |||||||||||||
2009 | $10.703 | $10.560 | 204,879 | |||||||||||||
2010 | $10.560 | $10.378 | 115,332 | |||||||||||||
2011 | $10.378 | $10.193 | 105,038 | |||||||||||||
2012 | $10.193 | $10.010 | 93,580 | |||||||||||||
2013 | $10.010 | $9.830 | 99,838 | |||||||||||||
2014 | $9.830 | $9.654 | 58,641 | |||||||||||||
2015 | $9.654 | $9.482 | 39,320 |
H-63
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Fidelity VIP Growth Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.120 | $10.592 | 11,849 | |||||||||||||
2007 | $10.592 | $13.173 | 75,363 | |||||||||||||
2008 | $13.173 | $6.816 | 71,379 | |||||||||||||
2009 | $6.816 | $8.565 | 57,607 | |||||||||||||
2010 | $8.565 | $10.418 | 58,821 | |||||||||||||
2011 | $10.418 | $10.228 | 39,731 | |||||||||||||
2012 | $10.228 | $11.490 | 48,616 | |||||||||||||
2013 | $11.490 | $15.345 | 38,482 | |||||||||||||
2014 | $15.345 | $16.728 | 42,969 | |||||||||||||
2015 | $16.728 | $17.561 | 34,065 | |||||||||||||
Fidelity VIP Index 500 Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.908 | $12.366 | 43,696 | |||||||||||||
2007 | $12.366 | $12.772 | 211,816 | |||||||||||||
2008 | $12.772 | $7.881 | 225,131 | |||||||||||||
2009 | $7.881 | $9.775 | 188,699 | |||||||||||||
2010 | $9.775 | $11.013 | 186,215 | |||||||||||||
2011 | $11.013 | $11.008 | 112,062 | |||||||||||||
2012 | $11.008 | $12.499 | 96,761 | |||||||||||||
2013 | $12.499 | $16.191 | 101,931 | |||||||||||||
2014 | $16.191 | $18.012 | 85,546 | |||||||||||||
2015 | $18.012 | $17.879 | 77,986 | |||||||||||||
Fidelity VIP Investment Grade Bond Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.180 | $10.410 | 31,813 | |||||||||||||
2007 | $10.410 | $10.639 | 90,643 | |||||||||||||
2008 | $10.639 | $10.086 | 138,607 | |||||||||||||
2009 | $10.086 | $11.437 | 109,299 | |||||||||||||
2010 | $11.437 | $12.079 | 73,245 | |||||||||||||
2011 | $12.079 | $12.697 | 52,851 | |||||||||||||
2012 | $12.697 | $13.166 | 43,691 | |||||||||||||
2013 | $13.166 | $12.662 | 32,645 | |||||||||||||
2014 | $12.662 | $13.132 | 22,768 | |||||||||||||
2015 | $13.132 | $12.786 | 14,698 | |||||||||||||
Fidelity VIP Overseas Portfolio Service Class 2 |
||||||||||||||||
2006 | $12.698 | $14.687 | 16,491 | |||||||||||||
2007 | $14.687 | $16.880 | 84,356 | |||||||||||||
2008 | $16.880 | $9.289 | 71,734 | |||||||||||||
2009 | $9.289 | $11.514 | 59,741 | |||||||||||||
2010 | $11.514 | $12.757 | 48,418 | |||||||||||||
2011 | $12.757 | $10.355 | 44,346 | |||||||||||||
2012 | $10.355 | $12.241 | 53,374 | |||||||||||||
2013 | $12.241 | $15.647 | 46,559 | |||||||||||||
2014 | $15.647 | $14.090 | 44,726 | |||||||||||||
2015 | $14.090 | $14.293 | 30,202 | |||||||||||||
Goldman Sachs VIT Mid Cap Value Fund Institutional |
||||||||||||||||
2015 | $10.000 | $8.711 | 1,711 | |||||||||||||
Guggenheim VIF Long Short Equity Fund |
||||||||||||||||
2006 | $11.787 | $12.893 | 5,562 | |||||||||||||
2007 | $12.893 | $15.539 | 6,080 | |||||||||||||
2008 | $15.539 | $9.043 | 13,735 | |||||||||||||
2009 | $9.043 | $11.304 | 13,289 | |||||||||||||
2010 | $11.304 | $12.345 | 12,260 | |||||||||||||
2011 | $12.345 | $11.328 | 12,101 | |||||||||||||
2012 | $11.328 | $11.616 | 11,965 | |||||||||||||
2013 | $11.616 | $13.399 | 1,459 | |||||||||||||
2014 | $13.399 | $13.525 | 864 | |||||||||||||
2015 | $13.525 | $13.449 | 326 |
H-64
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. American Franchise Fund Series II |
||||||||||||||||
2012 | $10.000 | $9.394 | 5,393 | |||||||||||||
2013 | $9.394 | $12.897 | 3,297 | |||||||||||||
2014 | $12.897 | $13.699 | 3,048 | |||||||||||||
2015 | $13.699 | $14.091 | 2,831 | |||||||||||||
Invesco V.I. Capital Appreciation Series II |
||||||||||||||||
2006 | $10.940 | $11.395 | 4,420 | |||||||||||||
2007 | $11.395 | $12.501 | 9,752 | |||||||||||||
2008 | $12.501 | $7.043 | 14,356 | |||||||||||||
2009 | $7.043 | $8.349 | 12,418 | |||||||||||||
2010 | $8.349 | $9.446 | 6,468 | |||||||||||||
2011 | $9.446 | $8.523 | 6,151 | |||||||||||||
2012 | $8.523 | $9.773 | 0 | |||||||||||||
Invesco V.I. Core Equity Fund Series II |
||||||||||||||||
2006 | $10.000 | $10.767 | 3,608 | |||||||||||||
2007 | $10.767 | $11.405 | 16,749 | |||||||||||||
2008 | $11.405 | $7.804 | 23,452 | |||||||||||||
2009 | $7.804 | $9.807 | 16,715 | |||||||||||||
2010 | $9.807 | $10.522 | 14,055 | |||||||||||||
2011 | $10.522 | $10.302 | 12,208 | |||||||||||||
2012 | $10.302 | $11.494 | 11,510 | |||||||||||||
2013 | $11.494 | $14.553 | 8,377 | |||||||||||||
2014 | $14.553 | $15.412 | 8,069 | |||||||||||||
2015 | $15.412 | $14.226 | 8,177 | |||||||||||||
Invesco V.I. Government Securities Fund Series II |
||||||||||||||||
2011 | $10.000 | $11.781 | 12,345 | |||||||||||||
2012 | $11.781 | $11.825 | 7,815 | |||||||||||||
2013 | $11.825 | $11.281 | 9,571 | |||||||||||||
2014 | $11.281 | $11.508 | 7,672 | |||||||||||||
2015 | $11.508 | $11.307 | 6,961 | |||||||||||||
Invesco V.I. Growth and Income Fund Series II |
||||||||||||||||
2006 | $11.892 | $13.544 | 12,839 | |||||||||||||
2007 | $13.544 | $13.635 | 34,015 | |||||||||||||
2008 | $13.635 | $9.076 | 41,700 | |||||||||||||
2009 | $9.076 | $11.062 | 31,070 | |||||||||||||
2010 | $11.062 | $12.187 | 27,922 | |||||||||||||
2011 | $12.187 | $11.698 | 24,168 | |||||||||||||
2012 | $11.698 | $13.135 | 22,503 | |||||||||||||
2013 | $13.135 | $17.254 | 19,862 | |||||||||||||
2014 | $17.254 | $18.632 | 12,486 | |||||||||||||
2015 | $18.632 | $17.690 | 15,920 | |||||||||||||
Invesco V.I. Mid Cap Core Equity Fund Series II |
||||||||||||||||
2006 | $11.528 | $12.564 | 10,458 | |||||||||||||
2007 | $12.564 | $13.482 | 12,802 | |||||||||||||
2008 | $13.482 | $9.442 | 35,385 | |||||||||||||
2009 | $9.442 | $12.040 | 23,028 | |||||||||||||
2010 | $12.040 | $13.453 | 21,748 | |||||||||||||
2011 | $13.453 | $12.352 | 22,611 | |||||||||||||
2012 | $12.352 | $13.417 | 17,790 | |||||||||||||
2013 | $13.417 | $16.926 | 16,032 | |||||||||||||
2014 | $16.926 | $17.314 | 14,497 | |||||||||||||
2015 | $17.314 | $16.275 | 13,712 |
H-65
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. Mid Cap Growth Fund Series II |
||||||||||||||||
2006 | $12.075 | $12.441 | 3,261 | |||||||||||||
2007 | $12.441 | $14.367 | 10,156 | |||||||||||||
2008 | $14.367 | $7.500 | 5,141 | |||||||||||||
2009 | $7.500 | $11.517 | 10,158 | |||||||||||||
2010 | $11.517 | $14.395 | 7,082 | |||||||||||||
2011 | $14.395 | $12.813 | 6,034 | |||||||||||||
2012 | $12.813 | $14.045 | 6,076 | |||||||||||||
2013 | $14.045 | $18.840 | 4,784 | |||||||||||||
2014 | $18.840 | $19.924 | 3,162 | |||||||||||||
2015 | $19.924 | $19.769 | 1,652 | |||||||||||||
Invesco V.I. Value Opportunities Fund Series II |
||||||||||||||||
2006 | $11.079 | $12.288 | 8,519 | |||||||||||||
2007 | $12.288 | $12.230 | 26,372 | |||||||||||||
2008 | $12.230 | $5.776 | 28,022 | |||||||||||||
2009 | $5.776 | $8.380 | 17,395 | |||||||||||||
2010 | $8.380 | $8.801 | 15,645 | |||||||||||||
2011 | $8.801 | $8.349 | 12,474 | |||||||||||||
2012 | $8.349 | $9.646 | 7,102 | |||||||||||||
2013 | $9.646 | $12.624 | 6,070 | |||||||||||||
2014 | $12.624 | $13.188 | 4,517 | |||||||||||||
2015 | $13.188 | $11.571 | 3,652 | |||||||||||||
Invesco Van Kampen V.I. Government Fund Series II |
||||||||||||||||
2006 | $10.289 | $10.419 | 5,556 | |||||||||||||
2007 | $10.419 | $10.948 | 21,802 | |||||||||||||
2008 | $10.948 | $10.914 | 24,600 | |||||||||||||
2009 | $10.914 | $10.809 | 15,906 | |||||||||||||
2010 | $10.809 | $11.133 | 41,188 | |||||||||||||
2011 | $11.133 | $11.184 | 0 | |||||||||||||
Janus Aspen Overseas Portfolio Service Shares |
||||||||||||||||
2008 | $10.000 | $6.916 | 7,352 | |||||||||||||
2009 | $6.916 | $12.163 | 7,507 | |||||||||||||
2010 | $12.163 | $14.932 | 5,973 | |||||||||||||
2011 | $14.932 | $9.922 | 5,705 | |||||||||||||
2012 | $9.922 | $11.027 | 6,067 | |||||||||||||
2013 | $11.027 | $12.375 | 3,622 | |||||||||||||
2014 | $12.375 | $10.681 | 1,555 | |||||||||||||
2015 | $10.681 | $9.565 | 1,088 | |||||||||||||
Janus Aspen Perkins Mid Cap Value Portfolio Service Shares |
||||||||||||||||
2006 | $12.159 | $13.740 | 10,246 | |||||||||||||
2007 | $13.740 | $14.459 | 34,280 | |||||||||||||
2008 | $14.459 | $10.238 | 42,657 | |||||||||||||
2009 | $10.238 | $13.363 | 30,080 | |||||||||||||
2010 | $13.363 | $15.139 | 24,624 | |||||||||||||
2011 | $15.139 | $14.424 | 21,913 | |||||||||||||
2012 | $14.424 | $15.692 | 16,678 | |||||||||||||
2013 | $15.692 | $19.386 | 14,698 | |||||||||||||
2014 | $19.386 | $20.644 | 8,246 | |||||||||||||
2015 | $20.644 | $19.524 | 6,864 | |||||||||||||
Janus Aspen Perkins Small Company Value Portfolio Service Shares |
||||||||||||||||
2006 | $10.940 | $13.093 | 2,462 | |||||||||||||
2007 | $13.093 | $12.071 | 12,418 | |||||||||||||
2008 | $12.071 | $7.596 | 19,904 | |||||||||||||
2009 | $7.596 | $7.188 | 0 |
H-66
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Janus Aspen Series Balanced Portfolio Service Shares |
||||||||||||||||
2006 | $11.187 | $12.130 | 1,999 | |||||||||||||
2007 | $12.130 | $13.136 | 14,877 | |||||||||||||
2008 | $13.136 | $10.828 | 22,471 | |||||||||||||
2009 | $10.828 | $13.353 | 19,202 | |||||||||||||
2010 | $13.353 | $14.178 | 20,105 | |||||||||||||
2011 | $14.178 | $14.112 | 18,228 | |||||||||||||
2012 | $14.112 | $15.711 | 10,712 | |||||||||||||
2013 | $15.711 | $18.483 | 8,198 | |||||||||||||
2014 | $18.483 | $19.646 | 6,363 | |||||||||||||
2015 | $19.646 | $19.371 | 4,798 | |||||||||||||
Janus Aspen Series Foreign Stock Portfolio Service Shares |
||||||||||||||||
2006 | $11.758 | $13.632 | 2,516 | |||||||||||||
2007 | $13.632 | $15.829 | 6,797 | |||||||||||||
2008 | $15.829 | $14.875 | 0 | |||||||||||||
Janus Aspen Series Forty Portfolio Service Shares |
||||||||||||||||
2006 | $12.649 | $13.554 | 2,354 | |||||||||||||
2007 | $13.554 | $18.185 | 13,531 | |||||||||||||
2008 | $18.185 | $9.944 | 14,716 | |||||||||||||
2009 | $9.944 | $14.259 | 12,938 | |||||||||||||
2010 | $14.259 | $14.910 | 10,052 | |||||||||||||
2011 | $14.910 | $13.625 | 8,840 | |||||||||||||
2012 | $13.625 | $16.572 | 7,253 | |||||||||||||
2013 | $16.572 | $21.300 | 5,800 | |||||||||||||
2014 | $21.300 | $22.688 | 3,321 | |||||||||||||
2015 | $22.688 | $24.939 | 2,507 | |||||||||||||
Janus Aspen Series INTECH Risk-Managed Core Portfolio Service Shares |
||||||||||||||||
2006 | $12.299 | $13.379 | 901 | |||||||||||||
2007 | $13.379 | $13.943 | 13,792 | |||||||||||||
2008 | $13.943 | $8.729 | 10,922 | |||||||||||||
2009 | $8.729 | $10.506 | 5,256 | |||||||||||||
MFS Investors Growth Stock Portfolio Service Class |
||||||||||||||||
2015 | $10.000 | $17.572 | 5,959 | |||||||||||||
MFS VIT II High Yield Service Class |
||||||||||||||||
2013 | $10.000 | $15.367 | 4,159 | |||||||||||||
2014 | $15.367 | $15.473 | 4,685 | |||||||||||||
2015 | $15.473 | $14.522 | 3,448 | |||||||||||||
MFS® High Income Series Service Class |
||||||||||||||||
2006 | $10.631 | $11.483 | 6,286 | |||||||||||||
2007 | $11.483 | $11.449 | 23,290 | |||||||||||||
2008 | $11.449 | $8.020 | 27,280 | |||||||||||||
2009 | $8.020 | $11.438 | 18,164 | |||||||||||||
2010 | $11.438 | $12.849 | 12,581 | |||||||||||||
2011 | $12.849 | $13.105 | 10,973 | |||||||||||||
2012 | $13.105 | $14.725 | 5,772 | |||||||||||||
2013 | $14.725 | $14.899 | 0 | |||||||||||||
MFS® Investors Growth Stock Series Service Class |
||||||||||||||||
2006 | $10.673 | $11.248 | 7,739 | |||||||||||||
2007 | $11.248 | $12.262 | 18,306 | |||||||||||||
2008 | $12.262 | $7.588 | 22,364 | |||||||||||||
2009 | $7.588 | $10.365 | 18,949 | |||||||||||||
2010 | $10.365 | $11.415 | 15,205 | |||||||||||||
2011 | $11.415 | $11.251 | 12,320 | |||||||||||||
2012 | $11.251 | $12.892 | 10,941 | |||||||||||||
2013 | $12.892 | $16.464 | 10,784 | |||||||||||||
2014 | $16.464 | $17.965 | 6,946 | |||||||||||||
2015 | $17.965 | $18.113 | 0 |
H-67
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
MFS® Investors Trust Series Service Class |
||||||||||||||||
2006 | $11.314 | $12.521 | 1,693 | |||||||||||||
2007 | $12.521 | $13.528 | 3,450 | |||||||||||||
2008 | $13.528 | $8.867 | 5,345 | |||||||||||||
2009 | $8.867 | $11.020 | 3,217 | |||||||||||||
2010 | $11.020 | $11.999 | 1,719 | |||||||||||||
2011 | $11.999 | $11.498 | 3,714 | |||||||||||||
2012 | $11.498 | $13.417 | 3,388 | |||||||||||||
2013 | $13.417 | $17.358 | 3,108 | |||||||||||||
2014 | $17.358 | $18.871 | 2,607 | |||||||||||||
2015 | $18.871 | $18.523 | 2,415 | |||||||||||||
MFS® New Discovery Series Service Class |
||||||||||||||||
2006 | $10.215 | $11.329 | 2,187 | |||||||||||||
2007 | $11.329 | $11.374 | 10,252 | |||||||||||||
2008 | $11.374 | $6.755 | 10,509 | |||||||||||||
2009 | $6.755 | $10.807 | 13,125 | |||||||||||||
2010 | $10.807 | $14.427 | 9,230 | |||||||||||||
2011 | $14.427 | $12.681 | 8,946 | |||||||||||||
2012 | $12.681 | $15.055 | 7,889 | |||||||||||||
2013 | $15.055 | $20.877 | 4,629 | |||||||||||||
2014 | $20.877 | $18.965 | 3,804 | |||||||||||||
2015 | $18.965 | $18.224 | 5,636 | |||||||||||||
MFS® Total Return Series Service Class |
||||||||||||||||
2006 | $10.820 | $11.861 | 18,099 | |||||||||||||
2007 | $11.861 | $12.104 | 20,247 | |||||||||||||
2008 | $12.104 | $9.233 | 26,900 | |||||||||||||
2009 | $9.233 | $10.674 | 20,112 | |||||||||||||
2010 | $10.674 | $11.492 | 13,332 | |||||||||||||
2011 | $11.492 | $11.464 | 13,081 | |||||||||||||
2012 | $11.464 | $12.488 | 11,293 | |||||||||||||
2013 | $12.488 | $14.561 | 9,152 | |||||||||||||
2014 | $14.561 | $15.477 | 7,803 | |||||||||||||
2015 | $15.477 | $15.110 | 4,680 | |||||||||||||
MFS® Value Series Service Class |
||||||||||||||||
2006 | $11.635 | $13.770 | 2,124 | |||||||||||||
2007 | $13.770 | $14.547 | 8,826 | |||||||||||||
2008 | $14.547 | $9.608 | 4,507 | |||||||||||||
2009 | $9.608 | $11.553 | 3,502 | |||||||||||||
2010 | $11.553 | $12.618 | 2,399 | |||||||||||||
2011 | $12.618 | $12.333 | 2,554 | |||||||||||||
2012 | $12.333 | $14.034 | 2,402 | |||||||||||||
2013 | $14.034 | $18.688 | 2,381 | |||||||||||||
2014 | $18.688 | $20.223 | 1,921 | |||||||||||||
2015 | $20.223 | $19.674 | 923 | |||||||||||||
Oppenheimer Discovery Mid Cap Growth Fund/VA Service Shares |
||||||||||||||||
2006 | $11.687 | $11.787 | 7,348 | |||||||||||||
2007 | $11.787 | $12.272 | 5,022 | |||||||||||||
2008 | $12.272 | $6.120 | 7,593 | |||||||||||||
2009 | $6.120 | $7.949 | 8,703 | |||||||||||||
2010 | $7.949 | $9.927 | 6,348 | |||||||||||||
2011 | $9.927 | $9.830 | 7,146 | |||||||||||||
2012 | $9.830 | $11.213 | 5,665 | |||||||||||||
2013 | $11.213 | $14.934 | 3,682 | |||||||||||||
2014 | $14.934 | $15.475 | 4,374 | |||||||||||||
2015 | $15.475 | $16.161 | 2,520 |
H-68
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Oppenheimer Global Fund/VA Service Shares |
||||||||||||||||
2006 | $12.706 | $14.644 | 10,134 | |||||||||||||
2007 | $14.644 | $15.254 | 111,096 | |||||||||||||
2008 | $15.254 | $8.938 | 64,672 | |||||||||||||
2009 | $8.938 | $12.231 | 44,368 | |||||||||||||
2010 | $12.231 | $13.897 | 41,921 | |||||||||||||
2011 | $13.897 | $12.483 | 32,097 | |||||||||||||
2012 | $12.483 | $14.826 | 36,198 | |||||||||||||
2013 | $14.826 | $18.489 | 32,092 | |||||||||||||
2014 | $18.489 | $18.530 | 30,546 | |||||||||||||
2015 | $18.530 | $18.865 | 26,022 | |||||||||||||
Oppenheimer Main Street Small Cap Fund/VA Service Shares |
||||||||||||||||
2006 | $12.150 | $13.681 | 11,584 | |||||||||||||
2007 | $13.681 | $13.246 | 44,402 | |||||||||||||
2008 | $13.246 | $8.064 | 43,930 | |||||||||||||
2009 | $8.064 | $10.840 | 31,176 | |||||||||||||
2010 | $10.840 | $13.099 | 26,227 | |||||||||||||
2011 | $13.099 | $12.557 | 21,911 | |||||||||||||
2012 | $12.557 | $14.509 | 23,005 | |||||||||||||
2013 | $14.509 | $20.037 | 19,793 | |||||||||||||
2014 | $20.037 | $21.969 | 18,283 | |||||||||||||
2015 | $21.969 | $20.259 | 15,722 | |||||||||||||
PIMCO Foreign Bond Portfolio (U.S. Dollar-Hedged) Administrative Shares |
||||||||||||||||
2006 | $10.676 | $10.714 | 8,948 | |||||||||||||
2007 | $10.714 | $10.902 | 33,647 | |||||||||||||
2008 | $10.902 | $10.451 | 27,562 | |||||||||||||
2009 | $10.451 | $11.867 | 25,316 | |||||||||||||
2010 | $11.867 | $12.644 | 20,331 | |||||||||||||
2011 | $12.644 | $13.257 | 16,521 | |||||||||||||
2012 | $13.257 | $14.430 | 14,395 | |||||||||||||
2013 | $14.430 | $14.241 | 12,784 | |||||||||||||
2014 | $14.241 | $15.546 | 5,997 | |||||||||||||
2015 | $15.546 | $15.310 | 4,556 | |||||||||||||
PIMCO Money Market Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.009 | $10.283 | 27,607 | |||||||||||||
2007 | $10.283 | $10.590 | 32,822 | |||||||||||||
2008 | $10.590 | $10.634 | 91,586 | |||||||||||||
2009 | $10.634 | $10.454 | 70,508 | |||||||||||||
2010 | $10.454 | $10.271 | 58,599 | |||||||||||||
2011 | $10.271 | $10.092 | 65,420 | |||||||||||||
2012 | $10.092 | $9.916 | 35,580 | |||||||||||||
2013 | $9.916 | $9.744 | 41,518 | |||||||||||||
2014 | $9.744 | $9.569 | 31,288 | |||||||||||||
2015 | $9.569 | $9.399 | 31,282 | |||||||||||||
PIMCO Real Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.579 | $10.462 | 16,994 | |||||||||||||
2007 | $10.462 | $11.371 | 42,156 | |||||||||||||
2008 | $11.371 | $10.380 | 41,393 | |||||||||||||
2009 | $10.380 | $12.068 | 32,397 | |||||||||||||
2010 | $12.068 | $12.812 | 32,722 | |||||||||||||
2011 | $12.812 | $14.051 | 20,871 | |||||||||||||
2012 | $14.051 | $15.005 | 16,504 | |||||||||||||
2013 | $15.005 | $13.377 | 14,113 | |||||||||||||
2014 | $13.377 | $13.542 | 9,334 | |||||||||||||
2015 | $13.542 | $12.938 | 6,186 |
H-69
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
PIMCO Total Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.302 | $10.507 | 28,759 | |||||||||||||
2007 | $10.507 | $11.221 | 79,939 | |||||||||||||
2008 | $11.221 | $11.550 | 109,474 | |||||||||||||
2009 | $11.550 | $12.939 | 93,450 | |||||||||||||
2010 | $12.939 | $13.737 | 84,488 | |||||||||||||
2011 | $13.737 | $13.977 | 122,070 | |||||||||||||
2012 | $13.977 | $15.042 | 111,189 | |||||||||||||
2013 | $15.042 | $14.481 | 49,016 | |||||||||||||
2014 | $14.481 | $14.829 | 28,408 | |||||||||||||
2015 | $14.829 | $14.627 | 25,235 | |||||||||||||
Premier VIT OpCap Balanced Portfolio |
||||||||||||||||
2006 | $10.868 | $11.826 | 560 | |||||||||||||
2007 | $11.826 | $11.096 | 7,098 | |||||||||||||
2008 | $11.096 | $7.499 | 9,792 | |||||||||||||
2009 | $7.499 | $7.225 | 0 | |||||||||||||
Premier VIT OpCap Renaissance Portfolio |
||||||||||||||||
2006 | $10.484 | $11.467 | 6,181 | |||||||||||||
2007 | $11.467 | $11.971 | 12,010 | |||||||||||||
2008 | $11.971 | $10.815 | 0 | |||||||||||||
T. Rowe Price Blue Chip Growth Portfolio II |
||||||||||||||||
2006 | $10.837 | $11.636 | 16,451 | |||||||||||||
2007 | $11.636 | $12.852 | 54,684 | |||||||||||||
2008 | $12.852 | $7.238 | 68,814 | |||||||||||||
2009 | $7.238 | $10.078 | 50,583 | |||||||||||||
2010 | $10.078 | $11.480 | 35,122 | |||||||||||||
2011 | $11.480 | $11.427 | 29,928 | |||||||||||||
2012 | $11.427 | $13.230 | 30,044 | |||||||||||||
2013 | $13.230 | $18.300 | 22,612 | |||||||||||||
2014 | $18.300 | $19.559 | 16,859 | |||||||||||||
2015 | $19.559 | $21.281 | 12,660 | |||||||||||||
T. Rowe Price Equity Income Portfolio II |
||||||||||||||||
2006 | $11.263 | $13.123 | 28,044 | |||||||||||||
2007 | $13.123 | $13.276 | 72,693 | |||||||||||||
2008 | $13.276 | $8.309 | 93,184 | |||||||||||||
2009 | $8.309 | $10.220 | 63,978 | |||||||||||||
2010 | $10.220 | $11.515 | 56,769 | |||||||||||||
2011 | $11.515 | $11.193 | 48,248 | |||||||||||||
2012 | $11.193 | $12.851 | 37,818 | |||||||||||||
2013 | $12.851 | $16.331 | 24,332 | |||||||||||||
2014 | $16.331 | $17.176 | 14,093 | |||||||||||||
2015 | $17.176 | $15.669 | 10,593 | |||||||||||||
UIF Growth Portfolio, Class II |
||||||||||||||||
2006 | $11.726 | $11.954 | 1,579 | |||||||||||||
2007 | $11.954 | $14.281 | 1,834 | |||||||||||||
2008 | $14.281 | $7.103 | 3,770 | |||||||||||||
2009 | $7.103 | $11.520 | 5,504 | |||||||||||||
2010 | $11.520 | $13.870 | 4,539 | |||||||||||||
2011 | $13.870 | $13.207 | 4,772 | |||||||||||||
2012 | $13.207 | $14.791 | 4,328 | |||||||||||||
2013 | $14.791 | $21.457 | 3,807 | |||||||||||||
2014 | $21.457 | $22.354 | 3,003 | |||||||||||||
2015 | $22.354 | $24.579 | 1,744 |
H-70
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
UIF U.S. Real Estate Portfolio, Class II |
||||||||||||||||
2006 | $14.675 | $19.841 | 23,273 | |||||||||||||
2007 | $19.841 | $16.117 | 49,639 | |||||||||||||
2008 | $16.117 | $9.803 | 52,161 | |||||||||||||
2009 | $9.803 | $12.369 | 39,348 | |||||||||||||
2010 | $12.369 | $15.734 | 29,572 | |||||||||||||
2011 | $15.734 | $16.326 | 27,469 | |||||||||||||
2012 | $16.326 | $18.536 | 24,708 | |||||||||||||
2013 | $18.536 | $18.521 | 21,474 | |||||||||||||
2014 | $18.521 | $23.540 | 15,395 | |||||||||||||
2015 | $23.540 | $23.561 | 11,583 | |||||||||||||
Van Eck VIP Emerging Markets Fund Initial Class |
||||||||||||||||
2006 | $15.627 | $21.408 | 5,890 | |||||||||||||
2007 | $21.408 | $28.927 | 22,998 | |||||||||||||
2008 | $28.927 | $10.004 | 15,749 | |||||||||||||
2009 | $10.004 | $20.943 | 10,954 | |||||||||||||
2010 | $20.943 | $26.087 | 7,376 | |||||||||||||
2011 | $26.087 | $19.024 | 5,823 | |||||||||||||
2012 | $19.024 | $24.250 | 5,143 | |||||||||||||
2013 | $24.250 | $26.676 | 4,678 | |||||||||||||
2014 | $26.676 | $26.087 | 2,040 | |||||||||||||
2015 | $26.087 | $22.032 | 1,431 | |||||||||||||
Van Eck VIP Global Hard Assets Fund Initial Class |
||||||||||||||||
2006 | $18.475 | $22.587 | 59,022 | |||||||||||||
2007 | $22.587 | $32.238 | 35,164 | |||||||||||||
2008 | $32.238 | $17.055 | 36,260 | |||||||||||||
2009 | $17.055 | $26.383 | 36,520 | |||||||||||||
2010 | $26.383 | $33.484 | 30,164 | |||||||||||||
2011 | $33.484 | $27.472 | 22,360 | |||||||||||||
2012 | $27.472 | $27.890 | 21,376 | |||||||||||||
2013 | $27.890 | $30.273 | 19,427 | |||||||||||||
2014 | $30.273 | $24.049 | 17,441 | |||||||||||||
2015 | $24.049 | $15.716 | 12,344 | |||||||||||||
Van Eck VIP Multi-Manager Alternative Initial Class |
||||||||||||||||
2006 | $9.719 | $10.370 | 8,505 | |||||||||||||
2007 | $10.370 | $10.595 | 5,710 | |||||||||||||
2008 | $10.595 | $9.042 | 3,607 | |||||||||||||
2009 | $9.042 | $10.110 | 2,562 | |||||||||||||
2010 | $10.110 | $10.422 | 2,634 | |||||||||||||
2011 | $10.422 | $10.003 | 2,497 | |||||||||||||
2012 | $10.003 | $9.953 | 2,675 | |||||||||||||
2013 | $9.953 | $10.268 | 1,125 | |||||||||||||
2014 | $10.268 | $9.975 | 571 | |||||||||||||
2015 | $9.975 | $9.865 | 0 | |||||||||||||
Western Asset Variable Global High Yield Bond Portfolio Class II |
||||||||||||||||
2006 | $11.008 | $11.929 | 15,302 | |||||||||||||
2007 | $11.929 | $11.675 | 47,449 | |||||||||||||
2008 | $11.675 | $7.924 | 53,932 | |||||||||||||
2009 | $7.924 | $12.049 | 33,607 | |||||||||||||
2010 | $12.049 | $13.571 | 22,444 | |||||||||||||
2011 | $13.571 | $13.497 | 19,914 | |||||||||||||
2012 | $13.497 | $15.649 | 13,535 | |||||||||||||
2013 | $15.649 | $16.298 | 11,196 | |||||||||||||
2014 | $16.298 | $15.763 | 8,819 | |||||||||||||
2015 | $15.763 | $14.539 | 8,273 |
* | The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.70% and an administrative expense charge of 0.10%. |
H-71
CONSULTANT SOLUTIONS VARIABLE ANNUITIES: LBL Consultant Solution Select Contracts
PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT*
High
Mortality & Expense = 2.6
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Alger Capital Appreciation Portfolio Class S |
||||||||||||||||
2006 | $11.210 | $12.977 | 0 | |||||||||||||
2007 | $12.977 | $16.815 | 0 | |||||||||||||
2008 | $16.815 | $8.955 | 0 | |||||||||||||
2009 | $8.955 | $13.130 | 0 | |||||||||||||
2010 | $13.130 | $14.517 | 0 | |||||||||||||
2011 | $14.517 | $14.037 | 0 | |||||||||||||
2012 | $14.037 | $16.100 | 0 | |||||||||||||
2013 | $16.100 | $21.116 | 0 | |||||||||||||
2014 | $21.116 | $23.309 | 0 | |||||||||||||
2015 | $23.309 | $24.021 | 0 | |||||||||||||
Alger Large Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $10.846 | $11.071 | 0 | |||||||||||||
2007 | $11.071 | $12.885 | 0 | |||||||||||||
2008 | $12.885 | $6.733 | 0 | |||||||||||||
2009 | $6.733 | $9.646 | 0 | |||||||||||||
2010 | $9.646 | $10.597 | 0 | |||||||||||||
2011 | $10.597 | $10.233 | 0 | |||||||||||||
2012 | $10.233 | $10.890 | 0 | |||||||||||||
2013 | $10.890 | $14.260 | 0 | |||||||||||||
2014 | $14.260 | $15.340 | 0 | |||||||||||||
2015 | $15.340 | $15.128 | 0 | |||||||||||||
Alger Mid Cap Growth Portfolio Class S |
||||||||||||||||
2006 | $11.187 | $11.962 | 0 | |||||||||||||
2007 | $11.962 | $15.277 | 0 | |||||||||||||
2008 | $15.277 | $6.172 | 0 | |||||||||||||
2009 | $6.172 | $9.087 | 0 | |||||||||||||
2010 | $9.087 | $10.512 | 0 | |||||||||||||
2011 | $10.512 | $9.350 | 0 | |||||||||||||
2012 | $9.350 | $10.524 | 0 | |||||||||||||
2013 | $10.524 | $13.866 | 0 | |||||||||||||
2014 | $13.866 | $14.514 | 0 | |||||||||||||
2015 | $14.514 | $13.855 | 0 | |||||||||||||
ClearBridge Variable Fundamental All Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.420 | 0 | |||||||||||||
2008 | $9.420 | $5.813 | 0 | |||||||||||||
2009 | $5.813 | $7.316 | 0 | |||||||||||||
2010 | $7.316 | $8.301 | 0 | |||||||||||||
2011 | $8.301 | $7.577 | 0 | |||||||||||||
2012 | $7.577 | $8.476 | 0 | |||||||||||||
2013 | $8.476 | $10.900 | 0 | |||||||||||||
2014 | $10.900 | $11.600 | 0 |
H-72
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
ClearBridge Variable Large Cap Value Portfolio Class I |
||||||||||||||||
2007 | $10.000 | $9.658 | 0 | |||||||||||||
2008 | $9.658 | $6.049 | 0 | |||||||||||||
2009 | $6.049 | $7.328 | 0 | |||||||||||||
2010 | $7.328 | $7.805 | 0 | |||||||||||||
2011 | $7.805 | $7.971 | 0 | |||||||||||||
2012 | $7.971 | $9.035 | 0 | |||||||||||||
2013 | $9.035 | $11.637 | 0 | |||||||||||||
2014 | $11.637 | $12.649 | 0 | |||||||||||||
2015 | $12.649 | $11.954 | 0 | |||||||||||||
Fidelity VIP Asset Manager Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.189 | $10.622 | 0 | |||||||||||||
2007 | $10.622 | $11.902 | 0 | |||||||||||||
2008 | $11.902 | $8.233 | 0 | |||||||||||||
2009 | $8.233 | $10.314 | 0 | |||||||||||||
2010 | $10.314 | $11.438 | 0 | |||||||||||||
2011 | $11.438 | $10.816 | 0 | |||||||||||||
2012 | $10.816 | $11.811 | 0 | |||||||||||||
2013 | $11.811 | $13.255 | 0 | |||||||||||||
2014 | $13.255 | $13.611 | 0 | |||||||||||||
2015 | $13.611 | $13.236 | 0 | |||||||||||||
Fidelity VIP Contrafund® Portfolio Service Class 2 |
||||||||||||||||
2006 | $12.767 | $13.843 | 0 | |||||||||||||
2007 | $13.843 | $15.798 | 0 | |||||||||||||
2008 | $15.798 | $8.809 | 0 | |||||||||||||
2009 | $8.809 | $11.611 | 0 | |||||||||||||
2010 | $11.611 | $13.210 | 0 | |||||||||||||
2011 | $13.210 | $12.496 | 0 | |||||||||||||
2012 | $12.496 | $14.120 | 0 | |||||||||||||
2013 | $14.120 | $17.992 | 0 | |||||||||||||
2014 | $17.992 | $19.546 | 0 | |||||||||||||
2015 | $19.546 | $19.097 | 0 | |||||||||||||
Fidelity VIP Equity-Income Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.997 | $12.834 | 0 | |||||||||||||
2007 | $12.834 | $12.644 | 0 | |||||||||||||
2008 | $12.644 | $7.035 | 0 | |||||||||||||
2009 | $7.035 | $8.891 | 0 | |||||||||||||
2010 | $8.891 | $9.942 | 0 | |||||||||||||
2011 | $9.942 | $9.737 | 0 | |||||||||||||
2012 | $9.737 | $11.089 | 0 | |||||||||||||
2013 | $11.089 | $13.793 | 0 | |||||||||||||
2014 | $13.793 | $14.558 | 0 | |||||||||||||
2015 | $14.558 | $13.565 | 0 | |||||||||||||
Fidelity VIP Government Money Market Portfolio Service Class 2 formerly, Fidelity VIP Money Market Portfolio Service Class 2 |
||||||||||||||||
2006 | $9.842 | $10.020 | 0 | |||||||||||||
2007 | $10.020 | $10.231 | 0 | |||||||||||||
2008 | $10.231 | $10.230 | 0 | |||||||||||||
2009 | $10.230 | $10.001 | 0 | |||||||||||||
2010 | $10.001 | $9.738 | 0 | |||||||||||||
2011 | $9.738 | $9.477 | 0 | |||||||||||||
2012 | $9.477 | $9.221 | 0 | |||||||||||||
2013 | $9.221 | $8.973 | 0 | |||||||||||||
2014 | $8.973 | $8.732 | 0 | |||||||||||||
2015 | $8.732 | $8.497 | 0 |
H-73
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Fidelity VIP Growth Portfolio Service Class 2 |
||||||||||||||||
2006 | $9.944 | $10.313 | 0 | |||||||||||||
2007 | $10.313 | $12.707 | 0 | |||||||||||||
2008 | $12.707 | $6.514 | 0 | |||||||||||||
2009 | $6.514 | $8.111 | 0 | |||||||||||||
2010 | $8.111 | $9.776 | 0 | |||||||||||||
2011 | $9.776 | $9.509 | 0 | |||||||||||||
2012 | $9.509 | $10.584 | 0 | |||||||||||||
2013 | $10.584 | $14.006 | 0 | |||||||||||||
2014 | $14.006 | $15.129 | 0 | |||||||||||||
2015 | $15.129 | $15.737 | 0 | |||||||||||||
Fidelity VIP Index 500 Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.719 | $12.040 | 0 | |||||||||||||
2007 | $12.040 | $12.320 | 0 | |||||||||||||
2008 | $12.320 | $7.533 | 0 | |||||||||||||
2009 | $7.533 | $9.257 | 0 | |||||||||||||
2010 | $9.257 | $10.334 | 0 | |||||||||||||
2011 | $10.334 | $10.235 | 0 | |||||||||||||
2012 | $10.235 | $11.515 | 0 | |||||||||||||
2013 | $11.515 | $14.779 | 0 | |||||||||||||
2014 | $14.779 | $16.291 | 0 | |||||||||||||
2015 | $16.291 | $16.023 | 0 | |||||||||||||
Fidelity VIP Investment Grade Bond Portfolio Service Class 2 |
||||||||||||||||
2006 | $10.002 | $10.136 | 0 | |||||||||||||
2007 | $10.136 | $10.263 | 0 | |||||||||||||
2008 | $10.263 | $9.641 | 0 | |||||||||||||
2009 | $9.641 | $10.831 | 0 | |||||||||||||
2010 | $10.831 | $11.334 | 0 | |||||||||||||
2011 | $11.334 | $11.805 | 0 | |||||||||||||
2012 | $11.805 | $12.129 | 0 | |||||||||||||
2013 | $12.129 | $11.558 | 0 | |||||||||||||
2014 | $11.558 | $11.878 | 0 | |||||||||||||
2015 | $11.878 | $11.459 | 0 | |||||||||||||
Fidelity VIP Overseas Portfolio Service Class 2 |
||||||||||||||||
2006 | $12.477 | $14.299 | 0 | |||||||||||||
2007 | $14.299 | $16.284 | 0 | |||||||||||||
2008 | $16.284 | $8.878 | 0 | |||||||||||||
2009 | $8.878 | $10.904 | 0 | |||||||||||||
2010 | $10.904 | $11.971 | 0 | |||||||||||||
2011 | $11.971 | $9.628 | 0 | |||||||||||||
2012 | $9.628 | $11.277 | 0 | |||||||||||||
2013 | $11.277 | $14.282 | 0 | |||||||||||||
2014 | $14.282 | $12.744 | 0 | |||||||||||||
2015 | $12.744 | $12.808 | 0 | |||||||||||||
Goldman Sachs VIT Mid Cap Value Fund Institutional |
||||||||||||||||
2015 | $10.000 | $8.658 | 0 | |||||||||||||
Guggenheim VIF Long Short Equity Fund |
||||||||||||||||
2006 | $11.582 | $12.553 | 0 | |||||||||||||
2007 | $12.553 | $14.990 | 0 | |||||||||||||
2008 | $14.990 | $8.643 | 0 | |||||||||||||
2009 | $8.643 | $10.705 | 0 | |||||||||||||
2010 | $10.705 | $11.584 | 0 | |||||||||||||
2011 | $11.584 | $10.532 | 0 | |||||||||||||
2012 | $10.532 | $10.701 | 0 | |||||||||||||
2013 | $10.701 | $12.230 | 0 | |||||||||||||
2014 | $12.230 | $12.233 | 0 | |||||||||||||
2015 | $12.233 | $12.052 | 0 |
H-74
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. American Franchise Fund Series II |
||||||||||||||||
2012 | $10.000 | $8.654 | 0 | |||||||||||||
2013 | $8.654 | $11.772 | 0 | |||||||||||||
2014 | $11.772 | $12.390 | 0 | |||||||||||||
2015 | $12.390 | $12.628 | 0 | |||||||||||||
Invesco V.I. Capital Appreciation Series II |
||||||||||||||||
2006 | $10.750 | $11.094 | 0 | |||||||||||||
2007 | $11.094 | $12.059 | 0 | |||||||||||||
2008 | $12.059 | $6.732 | 0 | |||||||||||||
2009 | $6.732 | $7.907 | 0 | |||||||||||||
2010 | $7.907 | $8.864 | 0 | |||||||||||||
2011 | $8.864 | $7.925 | 0 | |||||||||||||
2012 | $7.925 | $9.059 | 0 | |||||||||||||
Invesco V.I. Core Equity Fund Series II |
||||||||||||||||
2006 | $10.000 | $10.700 | 0 | |||||||||||||
2007 | $10.700 | $11.230 | 0 | |||||||||||||
2008 | $11.230 | $7.613 | 0 | |||||||||||||
2009 | $7.613 | $9.481 | 0 | |||||||||||||
2010 | $9.481 | $10.078 | 0 | |||||||||||||
2011 | $10.078 | $9.778 | 0 | |||||||||||||
2012 | $9.778 | $10.808 | 0 | |||||||||||||
2013 | $10.808 | $13.560 | 0 | |||||||||||||
2014 | $13.560 | $14.229 | 0 | |||||||||||||
2015 | $14.229 | $13.013 | 0 | |||||||||||||
Invesco V.I. Government Securities Fund Series II |
||||||||||||||||
2011 | $10.000 | $10.954 | 0 | |||||||||||||
2012 | $10.954 | $10.894 | 0 | |||||||||||||
2013 | $10.894 | $10.297 | 0 | |||||||||||||
2014 | $10.297 | $10.408 | 0 | |||||||||||||
2015 | $10.408 | $10.133 | 0 | |||||||||||||
Invesco V.I. Growth and Income Fund Series II |
||||||||||||||||
2006 | $11.685 | $13.187 | 0 | |||||||||||||
2007 | $13.187 | $13.153 | 0 | |||||||||||||
2008 | $13.153 | $8.675 | 0 | |||||||||||||
2009 | $8.675 | $10.476 | 0 | |||||||||||||
2010 | $10.476 | $11.436 | 0 | |||||||||||||
2011 | $11.436 | $10.876 | 0 | |||||||||||||
2012 | $10.876 | $12.100 | 0 | |||||||||||||
2013 | $12.100 | $15.749 | 0 | |||||||||||||
2014 | $15.749 | $16.851 | 0 | |||||||||||||
2015 | $16.851 | $15.853 | 0 | |||||||||||||
Invesco V.I. Mid Cap Core Equity Fund Series II |
||||||||||||||||
2006 | $11.327 | $12.233 | 0 | |||||||||||||
2007 | $12.233 | $13.005 | 0 | |||||||||||||
2008 | $13.005 | $9.025 | 0 | |||||||||||||
2009 | $9.025 | $11.403 | 0 | |||||||||||||
2010 | $11.403 | $12.624 | 0 | |||||||||||||
2011 | $12.624 | $11.484 | 0 | |||||||||||||
2012 | $11.484 | $12.360 | 0 | |||||||||||||
2013 | $12.360 | $15.450 | 0 | |||||||||||||
2014 | $15.450 | $15.660 | 0 | |||||||||||||
2015 | $15.660 | $14.584 | 0 |
H-75
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Invesco V.I. Mid Cap Growth Fund Series II |
||||||||||||||||
2006 | $11.864 | $12.113 | 0 | |||||||||||||
2007 | $12.113 | $13.859 | 0 | |||||||||||||
2008 | $13.859 | $7.169 | 0 | |||||||||||||
2009 | $7.169 | $10.907 | 0 | |||||||||||||
2010 | $10.907 | $13.507 | 0 | |||||||||||||
2011 | $13.507 | $11.913 | 0 | |||||||||||||
2012 | $11.913 | $12.938 | 0 | |||||||||||||
2013 | $12.938 | $17.197 | 0 | |||||||||||||
2014 | $17.197 | $18.020 | 0 | |||||||||||||
2015 | $18.020 | $17.716 | 0 | |||||||||||||
Invesco V.I. Value Opportunities Fund Series II |
||||||||||||||||
2006 | $10.886 | $11.964 | 0 | |||||||||||||
2007 | $11.964 | $11.798 | 0 | |||||||||||||
2008 | $11.798 | $5.521 | 0 | |||||||||||||
2009 | $5.521 | $7.936 | 0 | |||||||||||||
2010 | $7.936 | $8.258 | 0 | |||||||||||||
2011 | $8.258 | $7.763 | 0 | |||||||||||||
2012 | $7.763 | $8.886 | 0 | |||||||||||||
2013 | $8.886 | $11.523 | 0 | |||||||||||||
2014 | $11.523 | $11.928 | 0 | |||||||||||||
2015 | $11.928 | $10.369 | 0 | |||||||||||||
Invesco Van Kampen V.I. Government Fund Series II |
||||||||||||||||
2006 | $10.110 | $10.144 | 0 | |||||||||||||
2007 | $10.144 | $10.561 | 0 | |||||||||||||
2008 | $10.561 | $10.431 | 0 | |||||||||||||
2009 | $10.431 | $10.237 | 0 | |||||||||||||
2010 | $10.237 | $10.447 | 0 | |||||||||||||
2011 | $10.447 | $10.464 | 0 | |||||||||||||
Janus Aspen Overseas Portfolio Service Shares |
||||||||||||||||
2008 | $10.000 | $6.611 | 0 | |||||||||||||
2009 | $6.611 | $11.518 | 0 | |||||||||||||
2010 | $11.518 | $14.012 | 0 | |||||||||||||
2011 | $14.012 | $9.225 | 0 | |||||||||||||
2012 | $9.225 | $10.158 | 0 | |||||||||||||
2013 | $10.158 | $11.295 | 0 | |||||||||||||
2014 | $11.295 | $9.660 | 0 | |||||||||||||
2015 | $9.660 | $8.572 | 0 | |||||||||||||
Janus Aspen Perkins Mid Cap Value Portfolio Service Shares |
||||||||||||||||
2006 | $11.948 | $13.378 | 0 | |||||||||||||
2007 | $13.378 | $13.948 | 0 | |||||||||||||
2008 | $13.948 | $9.785 | 0 | |||||||||||||
2009 | $9.785 | $12.655 | 0 | |||||||||||||
2010 | $12.655 | $14.206 | 0 | |||||||||||||
2011 | $14.206 | $13.411 | 0 | |||||||||||||
2012 | $13.411 | $14.456 | 0 | |||||||||||||
2013 | $14.456 | $17.696 | 0 | |||||||||||||
2014 | $17.696 | $18.671 | 0 | |||||||||||||
2015 | $18.671 | $17.497 | 0 | |||||||||||||
Janus Aspen Perkins Small Company Value Portfolio Service Shares |
||||||||||||||||
2006 | $10.873 | $12.894 | 0 | |||||||||||||
2007 | $12.894 | $11.777 | 0 | |||||||||||||
2008 | $11.777 | $7.343 | 0 | |||||||||||||
2009 | $7.343 | $6.927 | 0 |
H-76
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Janus Aspen Series Balanced Portfolio Service Shares |
||||||||||||||||
2006 | $10.992 | $11.810 | 0 | |||||||||||||
2007 | $11.810 | $12.672 | 0 | |||||||||||||
2008 | $12.672 | $10.349 | 0 | |||||||||||||
2009 | $10.349 | $12.646 | 0 | |||||||||||||
2010 | $12.646 | $13.304 | 0 | |||||||||||||
2011 | $13.304 | $13.121 | 0 | |||||||||||||
2012 | $13.121 | $14.473 | 0 | |||||||||||||
2013 | $14.473 | $16.872 | 0 | |||||||||||||
2014 | $16.872 | $17.768 | 0 | |||||||||||||
2015 | $17.768 | $17.360 | 0 | |||||||||||||
Janus Aspen Series Foreign Stock Portfolio Service Shares |
||||||||||||||||
2006 | $11.553 | $13.273 | 0 | |||||||||||||
2007 | $13.273 | $15.270 | 0 | |||||||||||||
2008 | $15.270 | $14.306 | 0 | |||||||||||||
Janus Aspen Series Forty Portfolio Service Shares |
||||||||||||||||
2006 | $12.429 | $13.197 | 0 | |||||||||||||
2007 | $13.197 | $17.542 | 0 | |||||||||||||
2008 | $17.542 | $9.505 | 0 | |||||||||||||
2009 | $9.505 | $13.504 | 0 | |||||||||||||
2010 | $13.504 | $13.991 | 0 | |||||||||||||
2011 | $13.991 | $12.669 | 0 | |||||||||||||
2012 | $12.669 | $15.267 | 0 | |||||||||||||
2013 | $15.267 | $19.443 | 0 | |||||||||||||
2014 | $19.443 | $20.520 | 0 | |||||||||||||
2015 | $20.520 | $22.349 | 0 | |||||||||||||
Janus Aspen Series INTECH Risk-Managed Core Portfolio Service Shares |
||||||||||||||||
2006 | $12.085 | $13.026 | 0 | |||||||||||||
2007 | $13.026 | $13.450 | 0 | |||||||||||||
2008 | $13.450 | $8.343 | 0 | |||||||||||||
2009 | $8.343 | $9.949 | 0 | |||||||||||||
2010 | $9.949 | $10.633 | 0 | |||||||||||||
MFS Investors Growth Stock Portfolio Service Class |
||||||||||||||||
2015 | $10.000 | $15.747 | 0 | |||||||||||||
MFS VIT II High Yield Service Class |
||||||||||||||||
2013 | $10.000 | $14.027 | 0 | |||||||||||||
2014 | $14.027 | $13.994 | 0 | |||||||||||||
2015 | $13.994 | $13.014 | 0 | |||||||||||||
MFS® High Income Series Service Class |
||||||||||||||||
2006 | $10.446 | $11.180 | 0 | |||||||||||||
2007 | $11.180 | $11.044 | 0 | |||||||||||||
2008 | $11.044 | $7.666 | 0 | |||||||||||||
2009 | $7.666 | $10.832 | 0 | |||||||||||||
2010 | $10.832 | $12.057 | 0 | |||||||||||||
2011 | $12.057 | $12.185 | 0 | |||||||||||||
2012 | $12.185 | $13.566 | 0 | |||||||||||||
2013 | $13.566 | $13.647 | 0 | |||||||||||||
MFS® Investors Growth Stock Series Service Class |
||||||||||||||||
2006 | $10.488 | $10.951 | 0 | |||||||||||||
2007 | $11.964 | $11.798 | 0 | |||||||||||||
2008 | $11.798 | $7.252 | 0 | |||||||||||||
2009 | $7.252 | $9.815 | 0 | |||||||||||||
2010 | $9.815 | $10.711 | 0 | |||||||||||||
2011 | $10.711 | $10.461 | 0 | |||||||||||||
2012 | $10.461 | $11.876 | 0 | |||||||||||||
2013 | $11.876 | $15.029 | 0 | |||||||||||||
2014 | $15.029 | $16.248 | 0 | |||||||||||||
2015 | $16.248 | $16.346 | 0 |
H-77
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
MFS® Investors Trust Series Service Class |
||||||||||||||||
2006 | $11.117 | $12.191 | 0 | |||||||||||||
2007 | $10.951 | $11.828 | 0 | |||||||||||||
2008 | $11.828 | $8.475 | 0 | |||||||||||||
2009 | $8.475 | $10.436 | 0 | |||||||||||||
2010 | $10.436 | $11.259 | 0 | |||||||||||||
2011 | $11.259 | $10.691 | 0 | |||||||||||||
2012 | $10.691 | $12.361 | 0 | |||||||||||||
2013 | $12.361 | $15.844 | 0 | |||||||||||||
2014 | $15.844 | $17.068 | 0 | |||||||||||||
2015 | $17.068 | $16.599 | 0 | |||||||||||||
MFS® New Discovery Series Service Class |
||||||||||||||||
2006 | $10.037 | $11.030 | 0 | |||||||||||||
2007 | $11.030 | $10.972 | 0 | |||||||||||||
2008 | $10.972 | $6.456 | 0 | |||||||||||||
2009 | $6.456 | $10.234 | 0 | |||||||||||||
2010 | $10.234 | $13.538 | 0 | |||||||||||||
2011 | $13.538 | $11.790 | 0 | |||||||||||||
2012 | $11.790 | $13.869 | 0 | |||||||||||||
2013 | $13.869 | $19.057 | 0 | |||||||||||||
2014 | $19.057 | $17.152 | 0 | |||||||||||||
2015 | $17.152 | $16.331 | 0 | |||||||||||||
MFS® Total Return Series Service Class |
||||||||||||||||
2006 | $10.631 | $11.548 | 0 | |||||||||||||
2007 | $11.548 | $11.676 | 0 | |||||||||||||
2008 | $11.676 | $8.825 | 0 | |||||||||||||
2009 | $8.825 | $10.109 | 0 | |||||||||||||
2010 | $10.109 | $10.783 | 0 | |||||||||||||
2011 | $10.783 | $10.659 | 0 | |||||||||||||
2012 | $10.659 | $11.505 | 0 | |||||||||||||
2013 | $11.505 | $13.292 | 0 | |||||||||||||
2014 | $13.292 | $13.998 | 0 | |||||||||||||
2015 | $13.998 | $13.541 | 0 | |||||||||||||
MFS® Value Series Service Class |
||||||||||||||||
2006 | $11.433 | $13.407 | 0 | |||||||||||||
2007 | $13.407 | $14.033 | 0 | |||||||||||||
2008 | $14.033 | $9.183 | 0 | |||||||||||||
2009 | $9.183 | $10.941 | 0 | |||||||||||||
2010 | $10.941 | $11.840 | 0 | |||||||||||||
2011 | $11.840 | $11.467 | 0 | |||||||||||||
2012 | $11.467 | $12.929 | 0 | |||||||||||||
2013 | $12.929 | $17.058 | 0 | |||||||||||||
2014 | $17.058 | $18.291 | 0 | |||||||||||||
2015 | $18.291 | $17.631 | 0 | |||||||||||||
Oppenheimer Discovery Mid Cap Growth Fund/VA Service Shares |
||||||||||||||||
2006 | $11.615 | $11.607 | 0 | |||||||||||||
2007 | $11.607 | $11.974 | 0 | |||||||||||||
2008 | $11.974 | $5.917 | 0 | |||||||||||||
2009 | $5.917 | $7.614 | 0 | |||||||||||||
2010 | $7.614 | $9.421 | 0 | |||||||||||||
2011 | $9.421 | $9.244 | 0 | |||||||||||||
2012 | $9.244 | $10.448 | 0 | |||||||||||||
2013 | $10.448 | $13.787 | 0 | |||||||||||||
2014 | $13.787 | $14.156 | 0 | |||||||||||||
2015 | $14.156 | $14.648 | 0 |
H-78
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
Oppenheimer Global Fund/VA Service Shares |
||||||||||||||||
2006 | $12.485 | $14.258 | 0 | |||||||||||||
2007 | $14.258 | $14.715 | 0 | |||||||||||||
2008 | $14.715 | $8.542 | 0 | |||||||||||||
2009 | $8.542 | $11.583 | 0 | |||||||||||||
2010 | $11.583 | $13.040 | 0 | |||||||||||||
2011 | $13.040 | $11.607 | 0 | |||||||||||||
2012 | $11.607 | $13.659 | 0 | |||||||||||||
2013 | $13.659 | $16.877 | 0 | |||||||||||||
2014 | $16.877 | $16.759 | 0 | |||||||||||||
2015 | $16.759 | $16.905 | 0 | |||||||||||||
Oppenheimer Main Street Small Cap Fund/VA Service Shares |
||||||||||||||||
2006 | $11.939 | $13.320 | 0 | |||||||||||||
2007 | $13.320 | $12.778 | 0 | |||||||||||||
2008 | $12.778 | $7.708 | 0 | |||||||||||||
2009 | $7.708 | $10.265 | 0 | |||||||||||||
2010 | $10.265 | $12.291 | 0 | |||||||||||||
2011 | $12.291 | $11.675 | 0 | |||||||||||||
2012 | $11.675 | $13.367 | 0 | |||||||||||||
2013 | $13.367 | $18.289 | 0 | |||||||||||||
2014 | $18.289 | $19.870 | 0 | |||||||||||||
2015 | $19.870 | $18.155 | 0 | |||||||||||||
PIMCO Foreign Bond Portfolio (U.S. Dollar-Hedged) Administrative Shares |
||||||||||||||||
2006 | $10.490 | $10.431 | 0 | |||||||||||||
2007 | $10.431 | $10.517 | 0 | |||||||||||||
2008 | $10.517 | $9.989 | 0 | |||||||||||||
2009 | $9.989 | $11.239 | 0 | |||||||||||||
2010 | $11.239 | $11.865 | 0 | |||||||||||||
2011 | $11.865 | $12.326 | 0 | |||||||||||||
2012 | $12.326 | $13.294 | 0 | |||||||||||||
2013 | $13.294 | $13.000 | 0 | |||||||||||||
2014 | $13.000 | $14.060 | 0 | |||||||||||||
2015 | $14.060 | $13.720 | 0 | |||||||||||||
PIMCO Money Market Portfolio Administrative Shares |
||||||||||||||||
2006 | $9.835 | $10.012 | 0 | |||||||||||||
2007 | $10.012 | $10.215 | 0 | |||||||||||||
2008 | $10.215 | $10.164 | 0 | |||||||||||||
2009 | $10.164 | $9.900 | 0 | |||||||||||||
2010 | $9.900 | $9.638 | 0 | |||||||||||||
2011 | $9.638 | $9.384 | 0 | |||||||||||||
2012 | $9.384 | $9.135 | 0 | |||||||||||||
2013 | $9.135 | $8.894 | 0 | |||||||||||||
2014 | $8.894 | $8.655 | 0 | |||||||||||||
2015 | $8.655 | $8.423 | 0 | |||||||||||||
PIMCO Real Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.395 | $10.186 | 0 | |||||||||||||
2007 | $10.186 | $10.969 | 0 | |||||||||||||
2008 | $10.969 | $9.921 | 0 | |||||||||||||
2009 | $9.921 | $11.429 | 0 | |||||||||||||
2010 | $11.429 | $12.022 | 0 | |||||||||||||
2011 | $12.022 | $13.064 | 0 | |||||||||||||
2012 | $13.064 | $13.824 | 0 | |||||||||||||
2013 | $13.824 | $12.210 | 0 | |||||||||||||
2014 | $12.210 | $12.248 | 0 | |||||||||||||
2015 | $12.248 | $11.595 | 0 |
H-79
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
PIMCO Total Return Portfolio Administrative Shares |
||||||||||||||||
2006 | $10.122 | $10.230 | 0 | |||||||||||||
2007 | $10.230 | $10.824 | 0 | |||||||||||||
2008 | $10.824 | $11.040 | 0 | |||||||||||||
2009 | $11.040 | $12.254 | 0 | |||||||||||||
2010 | $12.254 | $12.890 | 0 | |||||||||||||
2011 | $12.890 | $12.996 | 0 | |||||||||||||
2012 | $12.996 | $13.857 | 0 | |||||||||||||
2013 | $13.857 | $13.219 | 0 | |||||||||||||
2014 | $13.219 | $13.412 | 0 | |||||||||||||
2015 | $13.412 | $13.108 | 0 | |||||||||||||
Premier VIT OpCap Balanced Portfolio |
||||||||||||||||
2006 | $10.703 | $11.539 | 0 | |||||||||||||
2007 | $11.539 | $10.728 | 0 | |||||||||||||
2008 | $10.728 | $7.183 | 0 | |||||||||||||
2009 | $7.183 | $6.901 | 0 | |||||||||||||
Premier VIT OpCap Renaissance Portfolio |
||||||||||||||||
2006 | $10.302 | $11.164 | 0 | |||||||||||||
2007 | $11.164 | $11.548 | 0 | |||||||||||||
2008 | $11.548 | $10.428 | 0 | |||||||||||||
T. Rowe Price Blue Chip Growth Portfolio II |
||||||||||||||||
2006 | $10.649 | $11.329 | 0 | |||||||||||||
2007 | $11.329 | $12.398 | 0 | |||||||||||||
2008 | $12.398 | $6.918 | 0 | |||||||||||||
2009 | $6.918 | $9.544 | 0 | |||||||||||||
2010 | $9.544 | $10.772 | 0 | |||||||||||||
2011 | $10.772 | $10.625 | 0 | |||||||||||||
2012 | $10.625 | $12.188 | 0 | |||||||||||||
2013 | $12.188 | $16.704 | 0 | |||||||||||||
2014 | $16.704 | $17.690 | 0 | |||||||||||||
2015 | $17.690 | $19.071 | 0 | |||||||||||||
T. Rowe Price Equity Income Portfolio II |
||||||||||||||||
2006 | $11.067 | $12.777 | 0 | |||||||||||||
2007 | $12.777 | $12.807 | 0 | |||||||||||||
2008 | $12.807 | $7.942 | 0 | |||||||||||||
2009 | $7.942 | $9.678 | 0 | |||||||||||||
2010 | $9.678 | $10.805 | 0 | |||||||||||||
2011 | $10.805 | $10.407 | 0 | |||||||||||||
2012 | $10.407 | $11.839 | 0 | |||||||||||||
2013 | $11.839 | $14.907 | 0 | |||||||||||||
2014 | $14.907 | $15.535 | 0 | |||||||||||||
2015 | $15.535 | $14.041 | 0 | |||||||||||||
UIF Growth Portfolio, Class II |
||||||||||||||||
2006 | $11.522 | $11.639 | 0 | |||||||||||||
2007 | $11.639 | $13.776 | 0 | |||||||||||||
2008 | $13.776 | $6.789 | 0 | |||||||||||||
2009 | $6.789 | $10.909 | 0 | |||||||||||||
2010 | $10.909 | $13.015 | 0 | |||||||||||||
2011 | $13.015 | $12.280 | 0 | |||||||||||||
2012 | $12.280 | $13.626 | 0 | |||||||||||||
2013 | $13.626 | $19.586 | 0 | |||||||||||||
2014 | $19.586 | $20.218 | 0 | |||||||||||||
2015 | $20.218 | $22.026 | 0 |
H-80
Sub-Accounts | For the Year Ending December 31 |
Accumulation Unit Value at Beginning of Period |
Accumulation Unit Value at End of Period |
Number of Units Outstanding at End of Period |
||||||||||||
UIF U.S. Real Estate Portfolio, Class II |
||||||||||||||||
2006 | $14.420 | $19.318 | 0 | |||||||||||||
2007 | $19.318 | $15.547 | 0 | |||||||||||||
2008 | $15.547 | $9.370 | 0 | |||||||||||||
2009 | $9.370 | $11.714 | 0 | |||||||||||||
2010 | $11.714 | $14.764 | 0 | |||||||||||||
2011 | $14.764 | $15.179 | 0 | |||||||||||||
2012 | $15.179 | $17.076 | 0 | |||||||||||||
2013 | $17.076 | $16.906 | 0 | |||||||||||||
2014 | $16.906 | $21.290 | 0 | |||||||||||||
2015 | $21.290 | $21.114 | 0 | |||||||||||||
Van Eck VIP Emerging Markets Fund Initial Class |
||||||||||||||||
2006 | $15.355 | $20.843 | 0 | |||||||||||||
2007 | $20.843 | $27.905 | 0 | |||||||||||||
2008 | $27.905 | $9.562 | 0 | |||||||||||||
2009 | $9.562 | $19.834 | 0 | |||||||||||||
2010 | $19.834 | $24.479 | 0 | |||||||||||||
2011 | $24.479 | $17.688 | 0 | |||||||||||||
2012 | $17.688 | $22.340 | 0 | |||||||||||||
2013 | $22.340 | $24.349 | 0 | |||||||||||||
2014 | $24.349 | $23.594 | 0 | |||||||||||||
2015 | $23.594 | $19.744 | 0 | |||||||||||||
Van Eck VIP Global Hard Assets Fund Initial Class |
||||||||||||||||
2006 | $18.154 | $21.992 | 0 | |||||||||||||
2007 | $21.992 | $31.099 | 0 | |||||||||||||
2008 | $31.099 | $16.301 | 0 | |||||||||||||
2009 | $16.301 | $24.986 | 0 | |||||||||||||
2010 | $24.986 | $31.420 | 0 | |||||||||||||
2011 | $31.420 | $25.543 | 0 | |||||||||||||
2012 | $25.543 | $25.693 | 0 | |||||||||||||
2013 | $25.693 | $27.633 | 0 | |||||||||||||
2014 | $27.633 | $21.750 | 0 | |||||||||||||
2015 | $21.750 | $14.083 | 0 | |||||||||||||
Van Eck VIP Multi-Manager Alternative Initial Class |
||||||||||||||||
2006 | $9.549 | $10.097 | 0 | |||||||||||||
2007 | $10.097 | $10.221 | 0 | |||||||||||||
2008 | $10.221 | $8.642 | 0 | |||||||||||||
2009 | $8.642 | $9.575 | 0 | |||||||||||||
2010 | $9.575 | $9.780 | 0 | |||||||||||||
2011 | $9.780 | $9.300 | 0 | |||||||||||||
2012 | $9.300 | $9.169 | 0 | |||||||||||||
2013 | $9.169 | $9.372 | 0 | |||||||||||||
2014 | $9.372 | $9.022 | 0 | |||||||||||||
2015 | $9.022 | $8.887 | 0 | |||||||||||||
Western Asset Variable Global High Yield Bond Portfolio Class II |
||||||||||||||||
2006 | $10.817 | $11.614 | 0 | |||||||||||||
2007 | $11.614 | $11.262 | 0 | |||||||||||||
2008 | $11.262 | $7.573 | 0 | |||||||||||||
2009 | $7.573 | $11.411 | 0 | |||||||||||||
2010 | $11.411 | $12.735 | 0 | |||||||||||||
2011 | $12.735 | $12.549 | 0 | |||||||||||||
2012 | $12.549 | $14.417 | 0 | |||||||||||||
2013 | $14.417 | $14.877 | 0 | |||||||||||||
2014 | $14.877 | $14.257 | 0 | |||||||||||||
2015 | $14.257 | $13.029 | 0 |
* | The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 2.60% and an administrative expense charge of 0.10%. |
H-81
535-4