N-6 1 exec.txt As filed with the Securities and Exchange Commission on May 1, 2007. Registration Nos. -------------- 811-21136 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] Pre-Effective Amendment No. _ [ ] Post-Effective Amendment No. _ [ ] REGISTRATION STATEMENT UNDER THE INVESTMENT ACT OF 1940 Amendment No. 6 [X] ------------------------ AMERITAS VARIABLE SEPARATE ACCOUNT VL (REGISTRANT) ------------------------ AMERITAS LIFE INSURANCE CORP. (DEPOSITOR) 5900 "O" Street Lincoln, Nebraska 68510 402-467-1122 ------------------------ Robert G. Lange Vice President, General Counsel & Assistant Secretary Ameritas Life Insurance Corp. 5900 "O" Street Lincoln, Nebraska 68510 402-467-7465 ------------------------ Approximate Date of Proposed Public Offering: As soon as practicable after effective date. TITLE OF SECURITIES BEING REGISTERED: SECURITIES OF UNIT INVESTMENT TRUST EXECUTIVE SELECT Flexible Premium Variable Universal Life Insurance The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a) may determine. No filing fee is due because an indefinite amount of securities is deemed to have been registered in reliance on Section 24(f) of the Investment Company Act of 1940. -------------------------------------------------------------------------------- PROSPECTUS: May 1, 2007 AMERITAS EXECUTIVE SELECT LIFE INSURANCE CORP. Flexible Premium A UNIFI COMPANY Variable Universal Life Insurance Policy Ameritas Variable Separate Account VL -------------------------------------------------------------------------------- This prospectus describes the Policy, especially its Separate Account. The Policy is designed for use by employers for funding key-executive non-qualified deferred compensation plans. The Policy is designed to help you, the Policy Owner, provide life insurance protection while having flexibility, within limits, as to the amount and timing of premium payments, the amount of the death benefit, and in how to invest your Policy value. THE VALUE OF YOUR POLICY WILL GO UP OR DOWN BASED ON THE INVESTMENT PERFORMANCE OF THE INVESTMENT OPTIONS YOU CHOOSE. THE AMOUNT OF THE DEATH BENEFIT CAN ALSO VARY AS A RESULT OF INVESTMENT PERFORMANCE. You may allocate all or part of your Policy value among a variety of variable investment options (where you have the investment risk, including possible loss of principal) with allocated indirect interests in non-publicly traded portfolios from several prominent portfolio managers. You may also allocate all or part of your investment to a Fixed Account fixed interest rate option (where we have the investment risk and guarantee a certain return on your investment). Please Read this Prospectus Carefully and Keep It for Future Reference. It provides information you should consider before investing in a Policy. Prospectuses for the portfolios underlying the Subaccount variable investment options are available without charge from your sales representative or from our Service Center. THE SECURITIES AND EXCHANGE COMMISSION ("SEC") DOES NOT PASS UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS, AND HAS NOT APPROVED OR DISAPPROVED THE POLICY. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS MAY ONLY BE USED TO OFFER THE POLICY WHERE THE POLICY MAY LAWFULLY BE SOLD. THE POLICY, AND CERTAIN FEATURES DESCRIBED IN THIS PROSPECTUS, MAY NOT BE AVAILABLE IN ALL STATES. NO ONE IS AUTHORIZED TO GIVE INFORMATION OR MAKE ANY REPRESENTATION ABOUT THE POLICY THAT IS NOT IN THIS PROSPECTUS. IF ANYONE DOES SO, YOU SHOULD NOT RELY UPON IT AS BEING ACCURATE OR ADEQUATE. NOT FDIC INSURED o MAY LOSE VALUE o NO BANK GUARANTEE AMERITAS LIFE INSURANCE CORP. (WE, US, OUR, AMERITAS) SERVICE CENTER, P.O. BOX 82550, LINCOLN, NEBRASKA 68501. 1-800-745-1112. WWW.AMERITAS.COM ------------ EXECUTIVE SELECT - 1 - TABLE OF CONTENTS BEGIN ON PAGE -------------------------------------------------------------------------------- POLICY SUMMARY........................................................3 Policy Operation and Features CHARGES...............................................................4 CHARGES EXPLAINED.....................................................8 Transaction Fees Monthly Deductions from Policy Value Daily Deduction from Separate Account Assets INVESTMENT OPTIONS...................................................10 Separate Account Variable Investment Options Fixed Account Fixed Interest Rate Option Transfers Third-Party Services Disruptive Trading Procedures Systematic Transfer Programs (DOLLAR COST AVERAGING, PORTFOLIO REBALANCING, EARNINGS SWEEP) OTHER IMPORTANT POLICY INFORMATION...................................16 Policy Application and Issuance Policy Value Misstatement of Age or Sex Suicide Incontestability Telephone Transactions Lapse and Grace Period Reinstatement Delay of Payments or Transfers Beneficiary Policy Changes "Free Look" Rights Optional Features Legal Proceedings How to get Financial Statements Distribution of the Policy POLICY DISTRIBUTIONS.................................................21 Death Benefit No Maturity Date Policy Loans Full Surrender Partial Withdrawal Payment of Policy Proceeds TAX MATTERS..........................................................26 Life Insurance Qualification; Tax Treatment of Death Benefit Special Considerations for Corporations Tax Treatment of Loans and Other Distributions Other Policy Owner Tax Matters APPENDIX A: Employee Benefit Plan Information Statement......................29 DEFINED TERMS........................................................30 LAST PAGE..........................................................Last Page Thank You/ If You Have Questions Illustrations Statement of Additional Information; Registration Statement Reports to You CONTACTING US. To answer your questions or to send additional premium, contact your sales representative or write or call us at: Ameritas Life Insurance Corp. Service Center P.O. Box 82550 Lincoln, Nebraska 68501 Or 5900 "O" Street Lincoln, Nebraska 68510 Telephone: 1-800-745-1112 Fax: 1-402-467-7335 www.AMERITAS.COM Express mail packages should be sent to our street address, not our P.O. Box address. SENDING FORMS, WRITTEN NOTICE AND WRITTEN REQUESTS IN "GOOD ORDER." If you are writing to change your beneficiary, request a withdrawal or for any other purpose, contact us or your sales representative to learn what information is required for the request to be in "good order". Often, we can only accept information on a form we provide. We can only act upon requests that are received in good order. FACSIMILE WRITTEN NOTICE. To provide you with timely service you want, we accept some Written Notice by facsimile. However, by not requiring your original signature, there is a greater risk unauthorized persons can manipulate your signature and make changes on your Policy (including withdrawals) without your knowledge. We are entitled to act upon facsimile signatures that reasonably appear to us to be genuine. MAKE CHECKS PAYABLE TO: "Ameritas Life Insurance Corp" EXECUTIVE SELECT - 2 - POLICY SUMMARY -------------------------------------------------------------------------------- Your Policy contains the complete terms of your agreement with Ameritas. You may obtain a copy from us. The EXECUTIVE SELECT Policy is offered and issued by Ameritas. Prior to May 1, 2007, the Policy was offered and issued by Ameritas Variable Life Insurance Company ("AVLIC"). Effective May 1, 2007, AVLIC merged into Ameritas ("Merger"). AVLIC was a wholly-owned subsidiary of Ameritas. On the date of the Merger, Ameritas Life Insurance Corp. acquired from AVLIC all of AVLIC's assets, including the Separate Account, and became directly liable for AVLIC's liabilities and obligations with respect to all policies issued by AVLIC then outstanding. The Merger was approved by the boards of directors of Ameritas and AVLIC. The Merger also received regulatory approval from the State of Nebraska Department of Insurance, the state of domicile of Ameritas and AVLIC. The Merger did not affect the terms of, or the rights and obligations under your Policy, other than to reflect the change to the company that guarantees your Policy benefits from AVLIC to Ameritas. You will receive a Policy endorsement from Ameritas that reflects the change from AVLIC to Ameritas. The Merger also did not result in any adverse tax consequences for any Policy owners. The EXECUTIVE SELECT Policy is flexible premium variable universal life insurance designed for use by employers for long-term funding of key-executive non-qualified deferred compensation plans. THE POLICY WILL USUALLY BE UNSUITABLE FOR SHORT-TERM SAVINGS OR SHORT-TERM LIFE INSURANCE NEEDS. We are obligated to pay all amounts promised under the Policy. The Policy pays death benefit proceeds to the Policy beneficiary upon the insured's death, or pays a Cash Surrender Value to you if you surrender the Policy. The insured must be at least 18 and not over age 85 on the insured's birthday nearest the Policy issue date. We will only issue the Policy for an initial specified amount of insurance coverage of $100,000 or more which may be a combination of base policy coverage and optional term insurance rider. You have flexibility under the Policy. Within certain limits, you can vary the amount and timing of premium payments, change the death benefit, and transfer amounts among the investment options. You may allocate Policy premium and value among several different variable investment options where you can gain or lose money on your investment, or to a fixed rate option where we guarantee you will earn a fixed rate of interest. You can take out a Policy loan, make a partial withdrawal, or surrender your Policy completely, subject to certain restrictions. However, loans, partial withdrawals and surrenders may be subject to income tax and penalty tax. Your Policy value and Death Benefit will go up or down as a result of the investment experience of your Policy. Even if you pay Planned Periodic Premiums, your Policy could lapse if the Policy value is not enough to pay the Policy's charges. Your Policy's Death Benefit will never be less than the then current Specified Amount of insurance coverage less any outstanding loans and loan interest, and less any due but unpaid Policy charges. The Policy remains in force until surrendered for its Cash Surrender Value, or all proceeds have been paid as a death benefit, or until it lapses because the Cash Surrender Value is insufficient to keep the Policy in force. BUYING A POLICY MIGHT NOT BE ADVISABLE IF IT IS JUST REPLACING EXISTING LIFE INSURANCE. YOU MAY WISH TO CONSULT WITH YOUR FINANCIAL OR INSURANCE ADVISER. INFORMATION ABOUT THE RISKS OF EACH VARIABLE INVESTMENT OPTION IS CONTAINED IN THE PORTFOLIO PROSPECTUS FOR EACH OPTION. YOU MAY OBTAIN A COPY FROM US. EXECUTIVE SELECT - 3 - [ ] POLICY OPERATION AND FEATURES PREMIUMS. o Premium is used to create Policy value to cover Policy charges and to generate investment earnings. CHARGES DEDUCTED FROM PREMIUM. o Percentage of Premium Charge: currently 3%. CHARGES DEDUCTED FROM ASSETS. (SEE CHARGES SECTION ON NEXT PAGES.) INVESTMENT OPTIONS. o Variable investment option allocations are invested in Subaccounts of the Separate Account, which in turn invest in corresponding underlying portfolios. Fixed Account allocations are invested in our general account and we guarantee a fixed rate of interest. o You may transfer between investments, subject to limits. Asset Allocation, dollar cost averaging, portfolio rebalancing and earnings sweep systematic investment programs are available. LOANS. o You may borrow a limited amount of Policy value. Each loan must be at least $200. Interest accrues on outstanding loan amounts. After the 10th Policy Year, loans at a lower interest rate may be available. MATURITY DATE. o None. SURRENDERS. o You can surrender the Policy in full at any time for its Cash Surrender Value, or, within limits, withdraw part of the Policy value. Applicable charges are shown in the CHARGES section. DEATH BENEFIT. o Two death benefit options are available: OPTION A: essentially a level death benefit that includes total Policy value within the specified amount; or OPTION B: pays the total Policy value in addition to the specified amount. DEATH BENEFIT PROCEEDS ARE REDUCED BY ANY POLICY LOAN BALANCE, UNPAID LOAN INTEREST, AND ANY MONTHLY DEDUCTIONS DUE BUT UNPAID AT DEATH. See the POLICY DISTRIBUTIONS: DEATH BENEFIT section for details. SETTLEMENT INCOME. o Amounts surrendered or death benefit proceeds can be paid out under several different payment options. CHARGES (SOME CHARGES ARE ROUNDED) --------------------------------------------------------------------------------
The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Policy. The first table describes the fees and expenses that you will pay at the time that you pay a premium, surrender the Policy, or transfer Policy value between investment options. -------------------------------------------------------------------------------------------------- TRANSACTION FEES When Deducted Guaranteed Current Maximum ---------------------------------------------- ------------------- --------------- --------------- > PERCENT OF PREMIUM CHARGE When each premium 5% of each 3% of each is paid. (1) premium premium payment payment ---------------------------------------------- ------------------- --------------- --------------- > SURRENDER CHARGE N/A NONE NONE ---------------------------------------------- ------------------- --------------- --------------- > PARTIAL WITHDRAWAL CHARGE (lesser of % of withdrawal amount or Upon each dollar amount) withdrawal. 2% or $50 2% or $25 ---------------------------------------------- ------------------- --------------- --------------- > TRANSFER FEE (per transfer) First 15 NONE NONE transfers per $10 NONE year: Each additional transfer: ---------------------------------------------- ------------------- --------------- --------------- (1) Refund 100% of first year charge upon surrender in Policy Year 1; 50% in Policy Year 2; 0% thereafter. EXECUTIVE SELECT - 4 - The next table describes the fees and expenses that you will pay periodically during the time that you own the Policy, to equal the annualized charges shown, not including Subaccount portfolio operating fees and expenses. ---------------------------------------------- ------------------- --------------- --------------- PERIODIC CHARGES Guaranteed (other than subaccount portfolio operating Maximum Current expenses) When Deducted (annual) (annual) ---------------------------------------------- ------------------- --------------- --------------- DAILY DEDUCTION FROM SEPARATE ACCOUNT ASSETS (to equal the annual % shown) -------------------------------------------------------------------------------------------------- > RISK CHARGE (for mortality and expense risk) Daily Policy Years 1-15 0.95% 0.75% Policy Years 16+ 0.50% 0.30% > ASSET-BASED ADMINISTRATIVE EXPENSE CHARGE Daily 0.15% Same as guaranteed maximum. ---------------------------------------------- ------------------- --------------- --------------- TOTAL Daily Deduction from Separate Account Assets 1.10% 0.90% Policy Years 1-15 0.65% 0.45% Policy Years 16+ ---------------------------------------------- ------------------- --------------- --------------- MONTHLY DEDUCTIONS FROM POLICY VALUE Several of the charges below vary based on individual characteristics. The cost shown for these charges may not be representative of the charge you will pay. Ask for a Policy illustration or see your Policy for the charge applicable to you. -------------------------------------------------------------------------------------------------- > BASE POLICY COST OF INSURANCE (Rate Monthly Varies(1) is a % of the net amount of insurance Minimum 0.10% Same as coverage at risk) Maximum 100.00% guaranteed Example(6,7) 0.46% maximum. ---------------------------------------------- ------------------- --------------- --------------- > ADMINISTRATIVE CHARGE Policy Year 1 Monthly $180 $180 Policy Year 2+ $144 $84 ---------------------------------------------- ------------------- --------------- --------------- > ADMINISTRATIVE CHARGE PER $1,000 OF Monthly, for Varies(2) INITIAL SPECIFIED AMOUNT first 10 Policy Minimum $1.80 Same as Years only. Maximum $23.64 guaranteed Example(6)$2.16 maximum. ---------------------------------------------- ------------------- --------------- --------------- > ADMINISTRATIVE CHARGE PER $1,000 OF Monthly, for Varies(3) INCREASE IN SPECIFIED AMOUNT first 10 Policy Minimum $1.80 Same as Years only. Maximum $23.64 guaranteed Example(6,8)$2.16 maximum. ---------------------------------------------- ------------------- --------------- --------------- > COST OF OPTIONAL FEATURES PER $1,000 OF BASE POLICY SPECIFIED AMOUNT -------------------------------------------------------------------------------------------------- Waiver of Monthly Deductions on Varies(4) Disability Rider (Rate is a percentage of Monthly Minimum 4.03% Same as the total monthly deduction not including Maximum 53.68% guaranteed this rider.) Example(6,7) 7.94% maximum. ---------------------------------------------- ------------------- --------------- --------------- Disability Benefit Rider (Rate is a % of Monthly Varies(5) the monthly benefit.) Minimum 3.63% Same as Maximum 21.44% guaranteed Example(6) 5.06% maximum. ---------------------------------------------- ------------------- --------------- --------------- Term Coverage Rider (Rate is a % of the Monthly Varies(1) specified amount of rider coverage.) Minimum 0.081% Same as Maximum 100.00% guaranteed Example(6,7)0.32% maximum. -------------------------------------------------------------------------------------------------- Footnotes to Monthly Deductions from Policy Value, above: (1) Rate varies by insured's sex, issue age, risk class, and the length of time the Policy has been in force. (2) Rate varies by insured's sex, issue age, and risk class. (3) Rate varies by insured's sex, and age and risk class at the time of the increase. (4) Rate varies by insured's sex and attained age. (5) Rate varies by insured's sex and issue age at the time the rider is added to the Policy. (6) "Example" charges assume an insured who is male, issue age 45, guaranteed issue non-tobacco risk class. (7) "Example" charges assume Policy is in its first Policy Year. (8) "Example" charges assume increase occurs after five Policy Years. -------------------------------------------------------------------------------------------------- We currently do not assess a separate charge against our Separate Account or Fixed Account for any income taxes. We may, however, make such a charge in the future if income or gains within the Separate Account will incur any income tax liability, or if tax treatment of our Company changes. EXECUTIVE SELECT - 5 - The next table describes interest rates credited to amounts allocated to the Policy's fixed account and loan accounts, and interest rates charged on amounts borrowed from the Policy. ----------------------------------------------------------- ---------- ---------- --------------- Guaranteed Maximum Current INTEREST CREDITED AND CHARGED Credited Charge Charge (annual) (annual) (annual) ----------------------------------------------------------- ---------- ---------- --------------- > FIXED ACCOUNT * Guaranteed minimum annual effective rate. We may At least N/A N/A credit a higher current rate. 3.50%* ----------------------------------------------------------- ---------- ---------- --------------- > LOAN ACCOUNT (effective annual rates) Regular Loans 3.50% 6.00% 5.50% Reduced Rate Loans (available only after the 10th 3.50% 4.00% 3.50% Policy Year) ----------------------------------------------------------- ---------- ---------- --------------- -------------------------------------------------------------- ---------------- ---------------- TOTAL ANNUAL PORTFOLIO COMPANY OPERATING EXPENSES Expenses that are deducted from portfolio company assets, including management fees, distribution and/or service (12b-1) fees, and other expenses Minimum Maximum -------------------------------------------------------------- ---------------- ---------------- Before any Waivers and Reductions 0.27% (1) 1.86% (2) -------------------------------------------------------------- ---------------- ---------------- After any Waivers and Reductions (explained in the footnotes 0.27% (1) 1.86% (2) to the Portfolio Expenses Table at the end of this section) -------------------------------------------------------------- ---------------- ---------------- (1) Dreyfus Stock Index 500 Portfolio. (2) CVS Social International Equity Portfolio. ----------------------------------------------------------------------------------------------- Acquired Total Fund Expenses Subaccount's Fees Total Waivers after underlying Management 12b-1 Other and Fund and Waivers and Portfolio Name Fees Fees* Fees Expenses Fees Reductions Reductions, if any ----------------------------------------------------------------------------------------------- ALGER (Class O) Alger American Growth 0.71% - 0.12% - 0.83% - 0.83% Alger American MidCap 0.76% - 0.15% - 0.91% - 0.91% Growth Alger American Small 0.81% - 0.12% - 0.93% - 0.93% Capitalization AMERITAS PORTFOLIO Ameritas Money Market 0.25% - 0.13% - 0.38% 0.02% 0.36% (1) (2) CALVERT PORTFOLIOS CVS Social Balanced 0.70% - 0.21% - 0.91% - 0.91% (3) CVS Social 1.10% - 0.76% - 1.86% - 1.86% (3) International Equity CVS Social Mid Cap Growth 0.90% - 0.27% - 1.17% - 1.17% (3) CVS Social Small Cap 1.00% - 0.44% - 1.44% - 1.44% (3) Growth DREYFUS Stock Index 0.25% - 0.02% - 0.27% - 0.27% DWS SCUDDER DWS Equity 500 Index 0.29% - - - 0.29% 0.01% 0.28% (5) VIP - Class A(4) DWS Small Cap Index VIP 0.45% - 0.05% - 0.50% - 0.50% (6) - Class A(4) FIDELITY (Service Class 2) VIP Contrafund(R) 0.57% 0.25% 0.09% - 0.91% - 0.91% (7) VIP Equity-Income 0.47% 0.25% 0.10% - 0.82% - 0.82% VIP High Income 0.57% 0.25% 0.15% - 0.97% - 0.97% NEUBERGER BERMAN AMT Growth 0.85% - 0.14% - 0.99% - 0.99% AMT Lehman Brothers Short Duration Bond 0.65% - 0.10% - 0.75% - 0.75% AMT Partners 0.83% - 0.07% - 0.91% - 0.91% OPPENHEIMER FUNDS MidCap /VA 0.67% - 0.02% - 0.69% - 0.69% (8)(9) Capital Appreciation /VA 0.64% - 0.03% - 0.67% - 0.67% (8)(9) High Income /VA 0.72% - 0.02% - 0.74% - 0.74% (8)(9) Main Street /VA 0.72% - 0.05% - 0.77% - 0.77% (8)(9) Strategic Bond /VA 0.62% - 0.02% - 0.64% - 0.64% (8)(10) SUMMIT EAFE International 0.56% - 0.69% - 1.25% - 1.25% Index Portfolio(11)(12) TEMPLETON (Class 2) Foreign Securities 0.63% 0.25% 0.15% 0.03% 1.06% 0.03% 1.03% (13) Global Asset Allocation 0.62% 0.25% 0.23% 0.01% 1.11% 0.01% 1.10% (13) VAN ECK Worldwide Hard Assets 1.00% - 0.13% - 1.13% - 1.13% ------------------------------------------------------------------------------------------------
(1) The portfolio Advisor (Calvert Asset Management Company, Inc.) has contractually agreed to limit annual portfolio operating expenses through April 30, 2008, as reflected above. Under the terms of the contractual expense limitation, operating expenses do not include interest expense, brokerage commissions, taxes and extraordinary expenses. Each Portfolio has an expense offset arrangement with the custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the EXECUTIVE SELECT - 6 - bank. These credits are used to reduce the Portfolio's expenses. Under those circumstances where the Advisor has provided to the Portfolio a contractual expense limitation, and to the extent any expense offset credits are earned, the Advisor may benefit from the expense offset arrangement and the Advisor's obligation under the contractual limitation may be reduced by the credits earned. (2) Management fees for the Ameritas Portfolios include both the investment advisory fee and administrative service fee. The administrative service fee is 0.05% of the portfolio's average daily net assets. (3) "Total Fund Fees" reflect an indirect fee and fees before waivers. Indirect fees result from the portfolio's offset arrangement with the custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the portfolio's cash on deposit with the bank. These credits are used to reduce the portfolio's expenses. Net operating expenses after reductions for fees paid indirectly and fee waivers would be as follows: CVS Social Balanced 0.90% CVS Social International Equity 1.79% CVS Social Mid Cap Growth 1.15% CVS Social Small Cap Growth 1.37% (4) Includes 0.10% administration fee. (5) Pursuant to their respective agreements with DWS VIT Funds, the investment manager, the underwriter and the accounting agent have agreed, through April 30, 2009 to limit their respective fees and to reimburse other expenses to the extent necessary to limit total operating expenses to the following amount, 0.28% for Class A shares. (6) Pursuant to their respective agreements with DWS VIT Funds, the investment manager, the underwriter and the accounting agent have agreed, through September 30, 2007 to limit their respective fees and to reimburse other expenses to the extent necessary to limit total operating expenses to the following amounts, 0.48% for Class A shares. (7) A portion of the brokerage commissions that the fund pays may be reimbursed and used to reduce the fund's expenses. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances are used to reduce the fund's custodian expenses. These offsets may be discontinued at any time. Including these reductions, the total operating expenses would have been 0.90%. (8) The "Other Fees" in the table are based on, among other things, the fees the Fund would have paid if the transfer agent had not waived a portion of its fee under a voluntary undertaking to the Fund to limit these fees to 0.35% of average daily net assets per fiscal year. That undertaking may be amended or withdrawn at any time. For the Fund's fiscal year ended December 31, 2006, the transfer agent fees did not exceed the expense limitation described above. (9) The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in IMMF. During the year ended December 31, 2006, the Manager waived $2,708 for Mid/Cap VA Fund, $5,287 for Capital Appreciation VA Fund, $474 for High Income VA Fund, and $2,785 for Main Street VA Fund, for IMMF management fees. There was no change to "Other Fees" and "Total Fund Fees". (10) The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in IMMF. During the year ended December 31, 2006, the Manager waived $74,462 for IMMF management fees. The fund also had a reduction to custodian expenses of $5,883. After these waivers/reductions the actual "Other Fees" and "Total Fund Fees" as percentages of average daily net assets were 0.01% and 0.63%. (11) The fund does not bear any direct operating expenses above the amount disclosed; any additional direct operating expenses are borne by the adviser according to the terms of the advisory agreement. Expenses of Acquired Funds are not included in this arrangement. (12) The adviser has agreed to waive its fees and/or reimburse expenses of the portfolio to the extent necessary, to limit all expenses to 0.95% of the average daily net assets of the portfolio until December 31, 2007. (13) The manager has agreed in advance to reduce its fee from assets invested by the Fund in a Franklin Templeton Money Market Fund (the acquired fund) to the extent that the Fund's fees and expenses are due to those of the acquired fund. This reduction is required by the Trust's board of trustees and an exemptive order of the Securities and Exchange Commission (SEC). * Portfolios pay 12b-1 fees to us pursuant to Rule 12b-1 under the Investment Company Act of 1940, which allows investment companies to pay fees out of portfolio assets to those who sell and distribute portfolio shares. Some portfolios may also pay 0.05 to 0.25 percent of annual portfolio assets for our providing shareholder support and marketing services. EXECUTIVE SELECT - 7 - CHARGES EXPLAINED -------------------------------------------------------------------------------- The following repeats and adds to information provided in the CHARGES section. Please review both Prospectus sections, and the Policy, for information on charges. For those Policies issued on a unisex basis in certain states or in certain cases, sex-distinct rates do not apply. Except as otherwise stated, charges are deducted pro-rata from your selected Subaccount and Fixed Account investment options; for such charges, you may instead designate the investment options from which all such charges are to be paid. [ ] TRANSACTION FEES o PERCENT OF PREMIUM CHARGE We currently deduct 3% of each Policy premium payment we receive as a Percent of Premium Charge, and we guarantee to never deduct more than 5%. This charge partially offsets premium taxes imposed by some States and local governments and federal taxes on certain capitalized acquisition expenses. We do not expect to profit from this charge. If you surrender your Policy during the first two Policy Years, we will refund the following percentage of this charge that we collect on premiums paid in the first Policy Year: Policy Year 1 - 100%; Year 2 - 50%; Years 3+ - 0%. o SURRENDER CHARGE - NONE o PARTIAL WITHDRAWAL CHARGE Upon a partial withdrawal from your Policy, we will deduct a Partial Withdrawal Charge that is guaranteed to never be greater than the lesser of (1) 2% of the amount withdrawn, or (2) $50; currently this charge is the lesser of (1) 2% of the amount withdrawn, or (2) $25. This fee will be deducted from the investment options and in the same allocation as your partial withdrawal allocation instruction; if that is not possible (due to insufficient value in one of the investment options you elect) or you have not given such instructions, we will deduct this fee on a pro-rata basis from balances in all Subaccounts and the Fixed Account. Taxes and tax penalties may apply. o TRANSFER FEE We may charge a $10 Transfer Fee for any transfer in excess of 15 transfers per Policy Year. This fee may be deducted from only Policy investment options you designate; if that is not possible (due to insufficient value in an investment option you elect) or you have not provided such instructions, we will deduct this fee on a pro-rata basis from balances in all Subaccounts and the Fixed Account. [ ] PERIODIC CHARGES: MONTHLY DEDUCTIONS FROM POLICY VALUE The following charges are deducted from Policy value on each Policy Month date. o BASE POLICY COST OF INSURANCE The cost of insurance rate per $1,000 of net amount at risk cannot exceed the guaranteed cost of insurance rate that is set forth in the Policy. The maximum cost of insurance each month can be determined by using the guaranteed cost of insurance rate in the below formula for cost of insurance. The cost of insurance charge is for providing insurance protection under the Policy. Because the cost of insurance charge depends upon several variables, the cost for each Policy month can vary from month to month. The cost of insurance rate for the initial specified amount of insurance coverage varies by the insured's sex, issue age, risk class, and the length of time the Policy has been in force. The cost of insurance rate for an increase in specified amount varies by the insured's sex, age and risk class at the time of the increase, and the length of time the Policy has been in force since the increase. We may use current cost of insurance rates less than those shown in the Policy, and reserve the right to change them so long as they do not exceed the charges shown in the Policy. Changes will equally apply to similarly situated Policy owners and be based on changes in future expectations of factors such as investment earnings, mortality, persistency, and expenses. We expect a profit from this charge. Ask for a Policy illustration or see your Policy for these charges applicable to you. EXECUTIVE SELECT - 8 - The COST OF INSURANCE each month equals: - The "NET AMOUNT AT RISK" for the month; multiplied by - The cost of insurance rate per $1,000 of net amount at risk; divided by - $1,000. The NET AMOUNT AT RISK in any month equals: - The death benefit on the Policy Month date, discounted at the guaranteed rate of interest for the Fixed Account for one month; minus - The Policy value on the Policy Month date after deducting the charge for any optional features selected and the administrative charges but not the cost of insurance charge. o ADMINISTRATIVE CHARGE, ADMINISTRATIVE CHARGE PER $1,000 OF INITIAL SPECIFIED AMOUNT, and ADMINISTRATIVE CHARGE PER $1,000 OF INCREASE IN SPECIFIED AMOUNT These administrative charges partially compensate us for our costs in issuing and administering the Policy and operating the Separate Account. We do not anticipate making a profit from these charges. The ADMINISTRATIVE CHARGE is currently $15 per month in Policy Year 1 and $7 per month in Policy Year 2 and thereafter, and is guaranteed to never exceed $15 per month in Policy Year 1 and $12 per month in Policy Year 2 and thereafter. The ADMINISTRATIVE CHARGE PER $1,000 OF INITIAL SPECIFIED AMOUNT of insurance coverage varies by the insured's sex, issue age, risk class, and initial specified amount of insurance coverage. Ask for a Policy illustration or see your Policy for these charges applicable to you. The ADMINISTRATIVE CHARGE PER $1,000 OF INCREASE IN SPECIFIED AMOUNT of insurance coverage applies to increases in specified amount of insurance coverage after the Policy is issued. This charge varies depending upon the amount of the increase, the insured's sex, and age and risk class at the time of the increase. Ask for a Policy illustration or see your Policy for these charges applicable to you. o COST OF OPTIONAL FEATURES The cost for any optional features you select (sometimes called Policy "Riders") is also deducted monthly from Policy value. See the CHARGES section for information about the costs of these features, and refer to the Optional Features provision of this prospectus for descriptions of these features. Optional features may not be available in all states. [ ] PERIODIC CHARGES: DAILY DEDUCTION FROM SEPARATE ACCOUNT ASSETS The following charges are applied daily to Separate Account assets in determining the daily Accumulation Unit value of each Subaccount. o RISK CHARGE The Risk Charge is for the mortality risks we assume - that insureds may live for shorter periods of time than we estimate, and also compensates us for the Policy expense risks we assume. In Policy Years 1-15, this charge is currently equal to an annual charge of 0.75% of the assets in the Separate Account, and is guaranteed to never exceed 0.95%. In Policy Years 16+, this charge is currently equal to an annual charge of 0.30% of the assets in the Separate Account, and is guaranteed to never exceed 0.50%. If this charge exceeds our actual costs to cover these risks, the excess goes to our general account. Conversely, if this charge is not enough, we bear the additional expense, not you. We expect a profit from this charge. o ASSET-BASED ADMINISTRATIVE EXPENSE CHARGE This charge partially compensates us for our costs in issuing and administering the Policy and operating the Separate Account. We do not anticipate making a profit from this charge. This charge is equal to an annual charge of 0.15% of the Policy Separate Account assets. o PORTFOLIO CHARGES Each Subaccount's underlying portfolio has investment advisory expenses. These expenses, as of the end of each portfolio's last fiscal year, are stated in this prospectus' CHARGES section and described in more detail in each fund's prospectus. A portfolio's charges and expenses are not deducted from your Policy value. Instead, they are reflected in the daily value of portfolio shares which, in turn, will affect the daily Accumulation Unit value of the Subaccounts. These charges and expenses help to pay the portfolio's investment adviser and operating expenses. EXECUTIVE SELECT - 9 - INVESTMENT OPTIONS -------------------------------------------------------------------------------- We recognize you have very personal goals and investment strategies. The Policy allows you to choose from a wide array of investment options - each chosen for its potential to meet specific investment objectives. You may allocate all or a part of your premiums among the Separate Account variable investment options or the Fixed Account fixed interest rate option. Allocations must be in whole percentages and total 100%. The variable investment options, which invest in underlying portfolios, are listed and described in this section of the prospectus. THE VALUE OF YOUR POLICY WILL GO UP OR DOWN BASED ON THE INVESTMENT PERFORMANCE OF THE VARIABLE INVESTMENT OPTIONS YOU CHOOSE. The investment results of each variable investment option are likely to differ significantly, and vary over time. They do not earn a fixed interest rate. Please consider carefully, and on a continuing basis, which investment options best suit your long-term investment objectives and risk tolerance. [ ] SEPARATE ACCOUNT VARIABLE INVESTMENT OPTIONS The Separate Account provides you with variable investment options in the form of underlying portfolio investments. Each underlying portfolio is an open-end investment management company. When you allocate investments to an underlying portfolio, those investments are placed in a Subaccount of the Separate Account corresponding to that portfolio, and the Subaccount in turn invests in the portfolio. The Policy value of your Policy depends directly on the investment performance of the portfolios that you select. THE UNDERLYING PORTFOLIOS IN THE SEPARATE ACCOUNT ARE NOT PUBLICLY TRADED MUTUAL FUNDS, AND ARE NOT THE SAME AS OTHER PUBLICLY TRADED MUTUAL FUNDS WITH VERY SIMILAR NAMES. The portfolios are only available as separate account investment options in life insurance or variable annuity policies issued by insurance companies, or through participation in certain qualified pension or retirement plans. Even if the investment options and policies of some underlying portfolios available under the Policy may be very similar to the investment objectives and policies of publicly traded mutual funds that may be managed by the same investment adviser, the investment performance and results of the portfolios available under the Policy may vary significantly from the investment results of such other publicly traded mutual funds. You should read the prospectuses for the underlying portfolios together with this prospectus for more information. The SEC does not supervise the management or the investment practices or policies of the Separate Account or us. Under Nebraska law, we own the Separate Account assets, but they are held separately from our other assets and are not charged with any liability or credited with any gain of business unrelated to the Separate Account. Any and all distributions made by the underlying portfolios, with respect to the shares held by the Separate Account, will be reinvested in additional shares at net asset value. We are responsible to you for meeting the obligations of the Policy, but we do not guarantee the investment performance of any of the variable investment options' underlying portfolios. We do not make any representations about their future performance. YOU BEAR THE RISK THAT THE VARIABLE INVESTMENT OPTIONS YOU SELECT MAY FAIL TO MEET THEIR OBJECTIVES, THAT THEY COULD DECREASE IN VALUE, AND THAT YOU COULD LOSE PRINCIPAL. -------------------------------------------------------------------- Each Subaccount underlying portfolio operates as a separate variable investment option, and the income or losses of one generally has no effect on the investment performance of any other. Complete descriptions of each variable investment option's investment objectives and restrictions and other material information related to an investment in the variable investment option are contained in the prospectuses for each of the series funds which accompany this prospectus. The Separate Account Subaccount underlying portfolios listed below are designed primarily as investments for variable annuity and variable life insurance policies issued by insurance companies. They are NOT publicly traded mutual funds available for direct purchase by you. THERE IS NO ASSURANCE THE INVESTMENT OBJECTIVES WILL BE MET. This information is just a summary for each underlying portfolio. You should read the series fund prospectus for an underlying portfolio accompanying this prospectus for more information about that portfolio, including detailed information about the portfolio's fees and expenses, investment strategy and investment objective. To get a copy of any portfolio prospectus, contact your representative or us as shown on page 2 or the last page of this prospectus. EXECUTIVE SELECT - 10 -
------------------------------- ----------------------------------------------------------------- Separate Account Portfolio Summary of Investment Strategy/Fund Type ------------------------------- ----------------------------------------------------------------- --------------------------------------- -------------------------------------------------------- Alger (Class O) Offered through The Alger American Fund Advised by Fred Alger Management, Inc. --------------------------------------- -------------------------------------------------------- Alger American Growth Growth. --------------------------------------- -------------------------------------------------------- Alger American MidCap Growth Growth. --------------------------------------- -------------------------------------------------------- Alger American Small Capitalization Value. --------------------------------------- -------------------------------------------------------- AMERITAS PORTFOLIO Offered through Calvert Variable Series, Inc. Ameritas Portfolios * Advised by Calvert Asset Management Company, Inc. --------------------------------------- -------------------------------------------------------- Ameritas Money Market - no Subadvisor Money Market. --------------------------------------- -------------------------------------------------------- CALVERT PORTFOLIOS - Subadvisor Offered through Calvert Variable Series, Inc. Calvert Portfolios * Advised by Calvert Asset Management Company, Inc. --------------------------------------- -------------------------------------------------------- CVS Social Balanced - Equity Portion: Income and Growth. New Amsterdam Partners LLC ("New Amsterdam") and SSgA Funds Management, Inc.; Fixed Income Portion: no Subadvisor --------------------------------------- -------------------------------------------------------- CVS Social International Equity - Growth. Acadian Asset Management, Inc. --------------------------------------- -------------------------------------------------------- CVS Social Mid Cap Growth - New Growth. Amsterdam --------------------------------------- -------------------------------------------------------- CVS Social Small Cap Growth - Bridgeway Capital Management, Inc. (through March 8, 2007 the subadvisor WAS Renaissance Investment Management) Growth. --------------------------------------- -------------------------------------------------------- DREYFUS Offered through Dreyfus Investment Portfolios Advised by The Dreyfus Corporation --------------------------------------- -------------------------------------------------------- Stock Index Match before expenses, performance of the S&P 500 Index. --------------------------------------- -------------------------------------------------------- DWS SCUDDER Offered through DWS Scudder Investments VIT Funds Advised by Deutsche Asset Management, Inc. --------------------------------------- -------------------------------------------------------- DWS Equity 500 Index VIP - Class A Match, before expenses, performance of the S&P 500 Index. --------------------------------------- -------------------------------------------------------- DWS Small Cap Index VIP - Class A Match, before expenses, performance of the Russell 2000 Index. --------------------------------------- -------------------------------------------------------- FIDELITY Offered through Variable Insurance Products Advised by Fidelity Management and Research Company --------------------------------------- -------------------------------------------------------- VIP Contrafund(R): Service Class 2 Seeks long-term capital appreciation. --------------------------------------- -------------------------------------------------------- VIP Equity-Income: Service Class 2 Income. --------------------------------------- -------------------------------------------------------- VIP High Income: Service Class 2 Income and Growth. --------------------------------------- -------------------------------------------------------- NEUBERGER BERMAN - Subadvisor Offered through Neuberger Berman Advisers Management Trust Advised by Neuberger Berman Management Inc. --------------------------------------- -------------------------------------------------------- AMT Growth Growth. --------------------------------------- -------------------------------------------------------- AMT Lehman Brothers Short Duration Bond - Lehman Brothers Asset Management Bond. Seeks highest available current income (until May 1, 2007 the subadvisor consistent with liquidity and low risk to principal. was Neuberger Berman) Total return is secondary. --------------------------------------- -------------------------------------------------------- AMT Partners Growth of capital. --------------------------------------- -------------------------------------------------------- OPPENHEIMER Offered through Oppenheimer Variable Account Funds Advised by OppenheimerFunds, Inc. --------------------------------------- -------------------------------------------------------- MidCap Fund/VA - Non-Service Shares Long-term growth. --------------------------------------- -------------------------------------------------------- Capital Appreciation Fund/VA - Large cap growth. Non-Service Shares --------------------------------------- -------------------------------------------------------- High Income Fund/VA - Non-Service Large cap core. Shares --------------------------------------- -------------------------------------------------------- Main Street Fund/VA - Non-Service Small cap. Shares Strategic Bond Fund/VA - Non-Service Bond. Shares --------------------------------------- -------------------------------------------------------- SUMMIT Offered through Summit Mutual Funds Inc. Summit Pinnacle Series * Advised by Summit Investment Partners, Inc. --------------------------------------- -------------------------------------------------------- EAFE International Index Growth. --------------------------------------- -------------------------------------------------------- TEMPLETON Offered through Franklin Templeton Variable Insurance Products Trust Advised by Templeton Investment Counsel, LLC --------------------------------------- -------------------------------------------------------- Foreign Securities - Class 2 Seeks long-term capital growth. --------------------------------------- -------------------------------------------------------- Global Asset Allocation - Class 2 Seeks high total return. --------------------------------------- -------------------------------------------------------- EXECUTIVE SELECT - 11 - ------------------------------- ----------------------------------------------------------------- Separate Account Portfolio Summary of Investment Strategy/Fund Type ------------------------------- ----------------------------------------------------------------- Van Eck Offered through Van Eck Worldwide Insurance Trust Advised by Van Eck Associates --------------------------------------- -------------------------------------------------------- Worldwide Hard Assets Investing globally, primarily in securities of companies that derive most of revenue or profit from exploration, development, production or distribution of precious metals, natural resources, real estate or commodities. --------------------------------------- -------------------------------------------------------- * These funds and their investment advisors are part of UNIFI Mutual Holding Company, the ultimate parent of Ameritas.
o ADDING, DELETING, OR SUBSTITUTING VARIABLE INVESTMENT OPTIONS We do not control the Subaccounts' underlying portfolios, so we cannot guarantee that any of the portfolios will always be available. We retain the right to add or change the investments of the Separate Account, and to eliminate the shares of any Subaccount underlying portfolio and substitute shares of another series fund portfolio. If the shares of the underlying portfolio are no longer available for investment or if, in our judgment, investment in the portfolio would be inappropriate in view of the purposes of the Separate Account, we will first notify you and receive any necessary SEC and state approval before making such a change. If a portfolio is eliminated, we will ask you to reallocate any amount in the eliminated portfolio. If you do not reallocate these amounts, upon any necessary regulatory approval and notice to you, we will automatically reinvest them in the Ameritas Money Market Subaccount. Our Separate Account may be (i) operated as an investment management company or any other form permitted by law, (ii) deregistered with the SEC if registration is no longer required, or (iii) combined with one or more other separate accounts. To the extent permitted by law, we also may transfer assets of the Separate Account to other accounts. o VOTING RIGHTS As a Policy Owner, you may have voting rights in the portfolios whose shares underlie the Subaccounts in which you invest. You will receive proxy material, reports, and other materials relating to each underlying portfolio in which you have voting rights. If you send us written voting instructions, we will follow your instructions in voting the Portfolio shares attributable to your Policy. If you do not send us written instructions, we will vote those shares in the same proportions as we vote the shares for which we have received instructions from other Policy Owners. We will vote shares that we hold in the same proportions as we vote the shares for which we receive instructions from other Policy Owners. It is possible that a small number of Policy owners can determine the outcome of a voting proposal. The underlying portfolios may not hold routine annual shareholder meetings. [ ] FIXED ACCOUNT FIXED INTEREST RATE OPTION There is one fixed interest rate option ("Fixed Account"), where we bear the investment risk. We guarantee that you will earn a minimum interest rate that will yield at least 3.5% per year, compounded annually. We may declare a higher current interest rate. However, you bear the risk that we will not credit more interest than will yield the minimum guaranteed rate per year for the life of the Policy. We have sole discretion over how assets allocated to the Fixed Account are invested, and we bear the risk that those assets will perform better or worse than the amount of interest we have declared. The focus of this prospectus is to disclose the Separate Account aspects of the Policy. Refer to the Policy for additional details regarding the Fixed Account. All amounts allocated to the Fixed Account become assets of our general account. Interest in the general account has not been registered with the SEC and is not subject to SEC regulation. Therefore, SEC staff have not reviewed the Fixed Account disclosures in this prospectus. [ ] TRANSFERS The Policy is designed for long-term investment. Excessive transfers such as those triggered by market timing services or other large or frequent transfers could harm other Policy Owners by having a detrimental effect on investment portfolio management. Therefore, upon notice to you, we reserve the right to reject any specific premium allocation or transfer request, if in the judgment of a Subaccount portfolio fund advisor, a Subaccount portfolio would be unable to invest effectively in accordance with its investment objectives and policies, or if Policy owners would otherwise potentially be adversely affected. EXECUTIVE SELECT - 12 - Subject to restrictions during the "right to examine period", you may transfer Policy value from one Subaccount to another, from the Separate Account to the Fixed Account, or from the Fixed Account to any Subaccount, subject to these rules: TRANSFER RULES: o A transfer is considered any single request to move assets between one or more investment options. o We must receive notice of the transfer - either Written Notice, an authorized telephone transaction, or by Internet when available. o The transferred amount must be at least $250, or the entire Subaccount or Fixed Account value if it is less. (If the value remaining after a transfer will be less than $100 in a Subaccount or $100 in the Fixed Account, we will include that amount as part of the transfer.) - If the Dollar Cost Averaging systematic transfer program is used, then the minimum transfer amount out of a Subaccount or the Fixed Account is the lesser of $100 or the balance in the Subaccount or Fixed Account. Under this program, the maximum amount that may be transferred from the Fixed Account each month is 1/36th of the value of the Fixed Account at the time the Dollar Cost Averaging program is established. While a Dollar Cost Averaging program is in effect, elective transfers out of the Fixed Account are prohibited. - The Portfolio Rebalancing and Earnings Sweep systematic transfer programs have no minimum transfer limits. o The first 15 transfers each Policy Year are free. Thereafter, transfers may result in a $10 charge for each transfer. See the CHARGES section of this Prospectus for information about how this charge is applied. This fee is not subtracted from the amount of the transfer. Transfers under any systematic transfer program DO count toward the 15 free transfer limit. o A transfer from the Fixed Account (except made pursuant to a systematic transfer program): - may be made only once each Policy Year; - may be delayed up to six months; - is limited during any Policy Year to the greater of: - 25% of the Fixed Account value on the date of the transfer during that Policy Year; - the greatest amount of any similar transfer out of the Fixed Account during the previous 13 months; or - $1,000. o We reserve the right to limit transfers, or to modify transfer privileges, and we reserve the right to change the transfer rules at any time. We and our portfolio managers consider market timing strategies, programmed transfers or transfers that are large in relation to the total assets of an investment option's underlying portfolio as disruptive. See the DISRUPTIVE TRADING PROCEDURES section for information about how we will address disruptive activity. We may react to disruptive transfers by, among other things, restricting the availability of personal telephone requests, facsimile transmissions, automated telephone services, Internet services or any electronic transfer service. We may also refuse to act on transfer instructions of an agent acting under a power of attorney or otherwise who is acting on behalf of one or more Owners. In making these determinations, we may consider the combined transfer activity of annuity contracts and life insurance policies that we believe are under common ownership, control or direction. o In the event you authorize telephone or Internet transfers, we are not liable for telephone or Internet instructions that we in good faith believe you authorized. We will employ reasonable procedures to confirm that instructions are genuine. o If the Policy value in any Subaccount falls below $100, we may transfer the remaining balance, without charge, to the Ameritas Money Market Subaccount. [ ] THIRD-PARTY SERVICES Where permitted and subject to our rules, we may accept your authorization to have a third party (such as your sales representative or someone else you name) exercise transfers or investment allocations on your behalf. Third-party transfers and allocations are subject to the same rules as all other transfers and allocations. You can make this election on the application or by sending us Written Notice on a form provided by us. Please note that any person or entity you authorize to make transfers or allocations on your behalf, including any investment advisory, asset allocation, money management or timing service, does so independently from any agency relationship they may have with us for the sale of the Policies. They are accountable to you alone for such transfers or allocations. We are not responsible for such transfers or allocations on your behalf, or recommendations to you, by such third-party services. You should be aware that charges charged by such third parties for their service are separate from and in addition to charges paid under the Policy. EXECUTIVE SELECT - 13 - [ ] DISRUPTIVE TRADING PROCEDURES Organizations or individuals that use market timing investment strategies and make frequent or other disruptive transfers should not purchase the Policy, unless such transfers are limited to Subaccounts whose underlying portfolio prospectus specifically permits such transfers. The Policy is not designed to serve as a vehicle for frequent trading in response to short-term fluctuations in the market. Such frequent trading, programmed transfers, or transfers that are large in relation to the total assets of a Subaccount's underlying portfolio can disrupt management of a Subaccount's underlying portfolio and raise expenses. This in turn can hurt performance of an affected Subaccount and therefore hurt your Policy's performance. Policy Owners should be aware that we are contractually obligated to provide Policy Owner transaction data relating to trading activities to the underlying funds on written request and, on receipt of written instructions from a fund, to restrict or prohibit further purchases of transfers by Policy Owners identified by an underlying fund as having engaged in transactions that violate the trading policies of the fund. We reserve the right to reject or restrict, in our sole discretion, transfers initiated by a market timing organization or individual or other party authorized to give transfer instructions. We further reserve the right to impose restrictions on transfers that we determine, in our sole discretion, will disadvantage or potentially hurt the rights or interests of other Policy Owners. Restrictions may include changing, suspending or terminating telephone, on-line and facsimile transfer privileges. We will enforce any Subaccount underlying portfolio manager's restrictions imposed upon transfers considered by the manager to be disruptive. Our disruptive trading procedures may vary from Subaccount to Subaccount, and may also vary due to differences in operational systems and contract provisions. However, any Subaccount restrictions will be uniformly applied. There is no assurance that the measures we take will be effective in preventing market timing or other excessive transfer activity. Our ability to detect and deter disruptive trading and to consistently apply our disruptive trading procedures may be limited by operational systems and technological limitations. Also, because other insurance companies and retirement plans may invest in Subaccount underlying portfolios, we cannot guarantee that Subaccount underlying portfolios will not suffer harm from disruptive trading within contracts issued by them. EXCESSIVE TRANSFERS We reserve the right to restrict transfers if we determine you are engaging in a pattern of transfers that may disadvantage Policy Owners. In making this determination, we will consider, among other things: o the total dollar amount being transferred; o the number of transfers you make over a period of time; o whether your transfers follow a pattern designed to take advantage of short term market fluctuations, particularly within certain Subaccount underlying portfolios; o whether your transfers are part of a group of transfers made by a third party on behalf of individual Policy Owners in the group; and o the investment objectives and/or size of the Subaccount underlying portfolio. THIRD PARTY TRADERS We reserve the right to restrict transfers by any firm or any other third party authorized to initiate transfers on behalf of multiple Policy Owners if we determine such third party trader is engaging in a pattern of transfers that may disadvantage Policy Owners. In making this determination, we may, among other things: o reject the transfer instructions of any agent acting under a power of attorney on behalf of more than one Policy Owner, or o reject the transfer or exchange instructions of individual Policy Owners who have executed transfer forms which are submitted by market timing firms or other third parties on behalf of more than one Policy Owner. We will notify affected Policy Owners before we limit transfers, modify transfer procedures or refuse to complete a transfer. Transfers made pursuant to participation in a dollar cost averaging, portfolio rebalancing, earnings sweep or asset allocation program are not subject to these rules, nor are they subject to a transfer fee. See the sections of the Prospectus describing those programs for the rules of each program. [ ] SYSTEMATIC TRANSFER PROGRAMS Transfers under any systematic transfer program DO count toward the 15 free transfer limit. We reserve the right to alter or terminate any systematic transfer program upon thirty days advance written notice. EXECUTIVE SELECT - 14 - o DOLLAR COST AVERAGING PROGRAM Dollar Cost Averaging allows you to automatically transfer, on a periodic basis, a set dollar amount or percentage from the Ameritas Money Market Subaccount or the Fixed Account to any other Subaccount(s) or the Fixed Account. Requested percentages are converted to a dollar amount. You can begin Dollar Cost Averaging when you purchase the Policy or later. You can increase or decrease the amount or percentage of transfers or discontinue the program at any time. Dollar Cost Averaging is intended to limit loss by resulting in the purchase of more Accumulation Units when a portfolio's value is low, and fewer units when its value is high. However, there is no guarantee that such a program will result in a higher Policy value, protect against a loss, or otherwise achieve your investment goals. DOLLAR COST AVERAGING RULES: o There is no additional charge for the Dollar Cost Averaging program. o We must receive notice of your election and any changed instruction - either Written Notice, by telephone transaction instruction, or by Internet when available. o Automatic transfers can only occur monthly. o The minimum transfer amount out of the Ameritas Money Market Subaccount or the Fixed Account is the lesser of $250 or the balance in the Subaccount or Fixed Account. Under this program, the maximum amount that may be transferred from the Fixed Account each month is 1/36th of the Fixed Account value at the time Dollar Cost Averaging is established. While a Dollar Cost Averaging program is in effect, elective transfers out of the Fixed Account are prohibited. There is no maximum transfer amount limitation applicable to any of the Subaccounts. o Dollar Cost Averaging program transfers cannot begin before the end of a Policy's "right to examine" period. o You may specify that transfers be made on the 1st through the 28th day of the month. Transfers will be made on the date you specify (or if that is not a Business Day, then on the next Business Day). If you do not select a date, the program will begin on the next Policy Month Anniversary following the date the Policy's "right to examine" period ends. o You can limit the number of transfers to be made, in which case the program will end when that number has been made. Otherwise, the program will terminate when the amount remaining in the Ameritas Money Market Subaccount or the Fixed Account is less than $100. o Dollar Cost Averaging is not available when the Portfolio Rebalancing Program is elected. o PORTFOLIO REBALANCING PROGRAM The Portfolio Rebalancing program allows you to rebalance your Policy value among designated Subaccounts only as you instruct. You may change your rebalancing allocation instructions at any time. Any change will be effective when the next rebalancing occurs. PORTFOLIO REBALANCING PROGRAM RULES: o There is no additional charge for the Portfolio Rebalancing program. o The Fixed Account is excluded from this program. o You must request the rebalancing program, give us your rebalancing instructions, or request to end this program either by Written Notice, by telephone transaction instruction, or by Internet when available. o You may have rebalancing occur quarterly, semi-annually or annually. o Portfolio Rebalancing is not available when the Dollar Cost Averaging Program is elected. o EARNINGS SWEEP PROGRAM The Earnings Sweep program allows you to rebalance your Policy value by automatically allocating earnings from your Subaccounts among designated investment options (Subaccounts or the Fixed Account), either based on your original Policy allocation of premiums or pursuant to new allocation instructions. You may change your Earnings Sweep program instructions at any time. Any change will be effective when the next sweep occurs. EARNINGS SWEEP PROGRAM RULES: o There is no additional charge for the Earnings Sweep program. o The Fixed Account is included in this program. o You must request the Earnings Sweep program, give us your allocation instructions, or request to end this program either by Written Notice, by telephone transaction instruction, or by Internet when available. o You may have your earnings sweep quarterly, semi-annually or annually. EXECUTIVE SELECT - 15 - OTHER IMPORTANT POLICY INFORMATION -------------------------------------------------------------------------------- [ ] POLICY APPLICATION AND ISSUANCE Replacing an existing life insurance policy is not always your best choice. Evaluate any replacement carefully. The insured must be at least age 18 and not over age 85 on the insured's birthday nearest to the Policy Date. To purchase a Policy, you must submit an application, at least the Minimum Initial Premium, and provide evidence of the proposed insured's insurability satisfactory to us. Before accepting an application, we conduct underwriting to determine insurability. We reserve the right to reject any application or premium. If we issue a Policy, insurance coverage will be effective as of the Policy Date. The minimum initial specified amount of life insurance is $100,000, which can be a combination of base Policy coverage and term insurance provided by an optional rider. The specified amount of base coverage must be at least $50,000 and at issue must be at least 10% of the total specified amount (base plus term coverage combined). o APPLICATION IN GOOD ORDER All application questions must be answered, but particularly note these requirements: o The Owner's and insured's full name, Social Security number (tax identification number for a business or trust Owner), date of birth, and certain other required information must be included. o Your premium allocations must be complete, be in whole percentages, and total 100%. o Initial premium must meet Minimum Initial Premium requirements. o Your signature and your agent's signature must be on the application. o City, state and date the application was signed must be completed. o You must provide all information required for us to underwrite your application (including health and medical information about the insured, and other information we consider relevant). o If you have one, please give us your e-mail address to facilitate receiving updated Policy information by electronic delivery. o There may be forms in addition to the application required by law or regulation, especially when a replacement of other coverage is involved. o Your agent must be both properly licensed and appointed with us. o PREMIUM REQUIREMENTS Your premium checks should be made payable to "Ameritas Life Insurance Corp." We may postpone crediting any payment made by check until the check has been honored by your bank. Payment by certified check, banker's draft, or cashier's check will be promptly applied. Under our electronic fund transfer program, you may select a monthly payment schedule for us to automatically deduct premiums from your bank account or other sources. MINIMUM INITIAL PREMIUM o At least Minimum Initial Premium sufficient to purchase and cover the Policy charges for the specified amount of insurance coverage and any optional features you apply for. ADDITIONAL PREMIUMS o Payment of additional premiums is flexible, but must be enough to cover Policy charges. o Planned Periodic Premiums may be paid annually, semi-annually, quarterly, or monthly. You may change your Planned Periodic Premium, subject to our approval. Because Policy value can fluctuate depending upon the performance of your selected variable investment options, PAYMENT OF YOUR PLANNED PERIODIC PREMIUMS DOES NOT GUARANTEE THAT YOUR POLICY WILL REMAIN IN FORCE. YOUR POLICY CAN LAPSE EVEN IF YOU PAY ALL PLANNED PERIODIC PREMIUMS ON TIME. o If there is a Policy loan, you should identify any payment intended to reduce a loan as a loan repayment; otherwise it will be treated as a premium and added to Policy value. o Additional premiums are applied pursuant to your current allocation instructions, unless you give us different instructions by Written Notice or authorized telephone transaction when you make the payment. o We reserve the right to limit premiums or refund any values so the Policy qualifies as life insurance under the federal Internal Revenue Code. o CREDITING AND ALLOCATING PREMIUM Once your application is in good order, we will credit initial net premium to the Policy on the date the Policy is issued pursuant to your allocation instructions. When state or other legal requirements require return of at least the premium payments under a free-look privilege, we allocate all premium to the Ameritas Money Market subaccount until 13 days after the date the Policy is issued; then, we will allocate your Policy value to the investment options according to your allocation instructions. Other states may allow us to return your Policy value if a Policy is not issued or a free-look privilege is exercised, which may be more or less than the premiums paid. EXECUTIVE SELECT - 16 - Until your Policy is issued, premium payments received by us are held in our general account and are credited with interest at a rate we determine. [ ] POLICY VALUE On your Policy's date of issue, Policy value equals your initial net premium (premium less the Percent of Premium Charge) less the Policy's first monthly deduction. On any Business Day thereafter, your total Policy value equals the sum of Policy value in the Separate Account variable investment options, the Fixed Account, and the Loan Account. o SEPARATE ACCOUNT VALUE Premiums or transfers allocated to Subaccounts are accounted for in Accumulation Units. The Policy value held in the Separate Account Subaccounts on any Business Day is determined by multiplying each Subaccount's Accumulation Unit value at the end of the prior Business Day by the Subaccount's net investment factor for the current Business Day. The net investment factor for a Subaccount is determined by dividing (a) by (b), and then subtracting (c) from the result, where: (a) is: 1. the net asset value of the underlying portfolio as of the end of the current Business Day plus any dividend or capital gain distribution declared and unpaid by the underlying portfolio during that Business Day; plus or minus 2. any charge or credit during the current Business Day as a provision for taxes attributable to the operation or maintenance of that Subaccount. (b) is: 1. the net asset value of the underlying portfolio as of the end of the previous Business Day; plus or minus 2. any charge or credit during the previous Business Day as a provision for taxes attributable to the operation or maintenance of that Subaccount. (c) is the mortality and expense risk charge and the administration charge. We value the assets in each Subaccount at their fair market value in accordance with accepted accounting practices and applicable laws and regulations. The net investment factor may be greater than, equal to, or less than 1. o FIXED ACCOUNT VALUE The Policy value of the Fixed Account on any Business Day equals: (a) the Policy value of the Fixed Account at the end of the preceding Policy month; plus (b) any net premiums credited to the Fixed Account since the end of the previous Policy month; plus (c) any transfers from the Subaccounts credited to the Fixed Account since the end of the previous Policy month; minus (d) any transfers and transfer fee from the Fixed Account to the Subaccounts since the end of the previous Policy month; minus (e) any partial withdrawal and withdrawal charge taken from the Fixed Account since the end of the previous Policy month; minus (f) the Fixed Account's share of any monthly deductions from Policy value; minus (g) the Fixed Account's share of charges for any optional features; plus (h) interest credited on the Fixed Account balance since the end of the previous Policy month. [ ] MISSTATEMENT OF AGE OR SEX If the age or sex of the insured or any person insured by a Policy rider has been misstated on the application, the Policy death benefit and any additional benefits provided will be those which would be purchased by the most recent deduction for Policy charges and the cost of such additional benefits at the insured person's correct age or sex. EXECUTIVE SELECT - 17 - [ ] SUICIDE We will pay the greater of the premiums received or Policy value, less any partial withdrawals and indebtedness, if the insured, while sane or insane, commits suicide within two years (one year in Colorado and North Dakota) after the date the Policy was issued (and in Missouri, the insured intended suicide at the time coverage was applied for). We will pay the greater of the monthly deductions for an increase in specified amount of insurance coverage or Policy value attributable to such an increase if the insured, while sane or insane, commits suicide within two years (one year in Colorado and North Dakota) after the effective date of any increase (and in Missouri, the insured intended suicide at the time the increase was applied for). Optional feature riders to the Policy may have separate suicide provisions. [ ] INCONTESTABILITY We will not contest the validity of the Policy after it has been in force during the insured's lifetime for two years from the date the Policy was issued or for two years from the date of any reinstatement. We will not contest the validity of an increase in the specified amount of insurance coverage after the Policy has been in force during the insured's lifetime for two years from the effective date of any increase. Any contest of an increase in the specified amount of insurance coverage will be based on the application for that increase. Optional benefit riders to the Policy may have separate incontestability provisions. [ ] TELEPHONE TRANSACTIONS TELEPHONE TRANSACTIONS PERMITTED o Transfers among investment options. o Establish systematic transfer programs. o Change premium allocations. HOW TO AUTHORIZE TELEPHONE TRANSACTIONS o Upon your authorization on the Policy application or in Written Notice to us, you, your registered representative or a third person named by you may do telephone transactions on your behalf. You bear the risk of the accuracy of any designated person's instructions to us. TELEPHONE TRANSACTION RULES o Must be received by close of the New York Stock Exchange ("NYSE") (usually 3 p.m. Central Time); if later, the transaction will be processed the next day the NYSE is open. o Will be recorded for your protection. o For security, you or your authorized designee must provide your Social Security number and/or other identification information. o May be discontinued at any time as to some or all Owners. We are not liable for following telephone transaction instructions we reasonably believe to be genuine. [ ] LAPSE AND GRACE PERIOD o LAPSE BECAUSE POLICY VALUE CAN FLUCTUATE DEPENDING UPON THE PERFORMANCE OF YOUR SELECTED VARIABLE INVESTMENT OPTIONS, YOUR POLICY CAN LAPSE, EVEN IF YOU PAY ALL PLANNED PERIODIC PREMIUMS ON TIME. This Policy will lapse with no value when Policy value is not enough to cover any due but unpaid charges and, where a Policy loan exists, any loan interest due. However, this Policy will not terminate during a grace period as long as sufficient premium is paid by the end of the grace period to prevent lapse. LAPSE OF THE POLICY MAY RESULT IN ADVERSE TAX CONSEQUENCES. o GRACE PERIOD If your Policy lapses, we allow you a 61-day grace period to make a premium payment in order to continue the Policy. The grace period begins on the date we mail a notice of the premium necessary to keep this Policy in force. We will mail this notice to you at your current address on record with us and to any assignee on record. Insurance coverage continues during the grace period, but the Policy has no value for purposes of Policy loans, surrenders or transfers. If sufficient premium is not paid by the end of the grace period, the Policy will terminate without value as of the first day of the grace period. If the insured dies during the grace period, we will deduct Policy charges due but not paid from the death benefit proceeds payable. EXECUTIVE SELECT - 18 - [ ] REINSTATEMENT If the Policy lapses because a grace period ended without a sufficient payment being made, you may reinstate it within three years of the date of lapse. To reinstate, we must receive: o Written application signed by you and the insured; o Evidence of the insured's insurability satisfactory to us, and the insurability of any insured covered under an optional benefit rider; o Premium at least equal to the greater of: (1) An amount sufficient to bring the Cash Surrender Value after the first Monthly Deduction to an amount greater than zero; or (2) Three times the current Policy Month's monthly deductions. o Reinstatement of any outstanding Policy debt. The effective date of reinstatement will be the Policy Month date on or next following the date the reinstatement is approved. The specified amount of the reinstated Policy may not exceed the specified amount at the time of lapse. The Policy value on the effective date of reinstatement will equal the Policy value as of the beginning of the grace period that ended in termination of the Policy. The surrender charge at reinstatement, if any, will be based on the current Policy Year as if the Policy had never terminated. The Policy cannot be reinstated once it has been fully surrendered. [ ] DELAY OF PAYMENTS OR TRANSFERS We will usually pay any amounts from the Separate Account requested as a partial withdrawal or cash surrender within seven days after we receive your Written Notice. We can postpone such payments or any transfers out of a Subaccount if: (i) the NYSE is closed for other than customary weekend and holiday closings; (ii) trading on the NYSE is restricted; (iii) an emergency exists as determined by the SEC, as a result of which it is not reasonably practical to dispose of securities, or not reasonably practical to determine the value of the net assets of the Separate Account; or (iv) the SEC permits delay for the protection of security holders. The applicable rules of the SEC will govern as to whether the conditions in (iii) or (iv) exist. We may defer payments of a full or partial surrender from the Fixed Account for up to six months from the date we receive your Written Notice requesting the surrender. [ ] BENEFICIARY You may change your beneficiary by sending Written Notice to us, unless the named beneficiary is irrevocable. Once we record and acknowledge the change, it is effective as of the date you signed the Written Notice. The change will not apply to any payments made or other action taken by us before recording. If the named beneficiary is irrevocable, you may change the named beneficiary only by Written Notice signed by both you and the beneficiary. If more than one named beneficiary is designated, and you fail to specify their interest, they will share equally. If the named beneficiary dies before you, then your estate is the beneficiary until you name a new beneficiary. The interest of any beneficiary is subject to that of any assignee. [ ] POLICY CHANGES Any change to your Policy is only effective if on a form acceptable to us, and then only once it is received at our Service Center and recorded on our records. Information on how to contact us to determine what information is needed and where you can get various forms for Policy changes is shown on this prospectus' first two pages and last page. EXECUTIVE SELECT - 19 - [ ] "FREE LOOK" RIGHTS Most States give you a limited period of time within which you can cancel your Policy, usually called a "right to examine" or "free look" period. The amount we will refund if you cancel during this period varies, but will always be at least the amount required by the State whose law governs your Policy. The specific terms of your State's "free look" requirements are on the front page of your Policy. [ ] OPTIONAL FEATURES Subject to certain requirements, one or more of the following optional insurance benefits may be added to your Policy by rider. The cost of any optional insurance benefit will be deducted monthly from Policy value as stated in this prospectus' CHARGES section. o WAIVER OF MONTHLY DEDUCTIONS ON DISABILITY RIDER This Rider provides that during periods of the insured's total disability, as defined in the Rider, certain Policy charges and charges for any Policy riders will be waived. o DISABILITY BENEFIT RIDER This Rider provides that during periods of the insured's total disability, as defined in the Rider, we will pay benefits to the Policy Owner by paying some or all of the Policy premiums, and by waiving the Cost of Insurance Charge for this Rider. The Owner chooses the benefit level at the issue of the Rider. o TERM COVERAGE RIDER This Rider provides term insurance upon the insured's life in addition to the death benefit coverage under the Policy. [ ] LEGAL PROCEEDINGS As of the date of this Prospectus, there are no proceedings affecting the Separate Account, or that are material in relation to our total assets. [ ] HOW TO GET FINANCIAL STATEMENTS Our financial statements are included in a Statement of Additional Information ("SAI"). For information on how to obtain copies of these financial statements, at no charge, see the STATEMENT OF ADDITIONAL INFORMATION; REGISTRATION STATEMENT provision on the last page of this prospectus. [ ] DISTRIBUTION OF THE POLICY Our underwriter and affiliate, Ameritas Investment Corp., enters into contracts with its own registered representatives to sell Policies and with various broker-dealers ("Distributors") to distribute Policies through their representatives. Total commission paid for the Policies and other information about distribution compensation can be found in this Policy's Statement of Additional Information ("SAI"). Instructions to obtain an SAI are on the last page of this prospectus. It is also fair for you to ask a representative about the commission they earn for the sale of a Policy. Information about compensation we pay helps you determine whether a representative may have an incentive to recommend our product over another. In addition to regularly scheduled commission, which is indirectly paid for by certain Policy charges, distribution compensation can include periodic cash incentives paid based upon sales goals. We may enter into special compensation or reimbursement arrangements with certain broker-dealers for, among other things, training of sales personnel, marketing or other services they provide to us or our affiliates. We may also pay other distribution expenses, marketing support allowances, conference sponsorship fees and production incentive bonuses. The list of broker-dealers to whom we pay conference sponsorship fees (typically ranging from $10,000 to $25,000) and marketing support allowances may change from time to time, but in calendar year 2006 the list included the following firms: Harbour Investments, Investacorp, Inc., Investors Capital Corp, and Horace Mann Investors, Inc. Any additional compensation is paid out of our own assets and will not result in any additional direct charge to you. EXECUTIVE SELECT - 20 - POLICY DISTRIBUTIONS -------------------------------------------------------------------------------- The principle purpose of the Policy is to provide a death benefit upon the insured's death, but before then you may also borrow against the Policy's Cash Surrender Value, take a partial withdrawal, or fully surrender it for its Cash Surrender Value. Tax penalties and surrender charges may apply to amounts taken out of your Policy. [ ] DEATH BENEFIT Upon the insured's death, we will pay to the Policy beneficiary: (a) the death benefit on the insured's life under the death benefit option in effect; plus (b) any additional life insurance proceeds provided by any optional benefit or rider; minus (c) any outstanding Policy debt; minus (d) any due and unpaid Policy charges, including deductions for the month of death. We will pay the death benefit after we receive Due Proof of Death of the insured's death and as soon thereafter as we have sufficient information about the beneficiary to make the payment. Death benefits may be paid pursuant to a payment option to the extent allowed by applicable law and any settlement agreement in effect at the insured's death. If neither you nor the beneficiary makes a payment option election within 60 days of our receipt of Due Proof of Death, we will issue a lump-sum payment to the beneficiary. A death benefit is payable upon: - Your Policy being in force; - Our receipt of Due Proof of Death of the Insured; - Our receipt of sufficient beneficiary information to make the payment; and - Your election of a payment option. "DUE PROOF OF DEATH" is generally a certified copy of a death certificate, a certified copy of a decree of a court of competent jurisdiction as to the finding of death, or any other proof satisfactory to us. o DEATH BENEFIT OPTIONS You may choose one of two death benefit options. Option A is in effect unless you elect Option B. For the same specified amount and premium payments, Option B provides higher death benefit protection, higher cost of insurance charges, and lower Policy value than Option A. Generally, choose Option A if you want to build Policy value faster but aren't as concerned with continued growth of Policy death benefit, and Option B if you want your Policy death benefit to grow over time but aren't as concerned with growth of Policy value. DEATH BENEFIT OPTION A If you prefer to have favorable investment performance, if any, reflected in higher Policy value rather than increased insurance coverage, you should generally select Option A. Under Option A, the death benefit is the greater of: (a) the specified amount of insurance coverage on the insured's date of death; or (b) the Policy value on the date of death multiplied times the corridor percentage (see below). DEATH BENEFIT OPTION B If you prefer to have favorable investment performance, if any, reflected in increased insurance coverage rather than higher Policy value, you should generally select Option B. Under Option B, the death benefit is the greater of: (a) the specified amount of insurance coverage on the date of death PLUS the Policy value; or (b) the Policy value on the date of death multiplied times the corridor percentage (see below). ----------- --------- --------- -------- --------- --------- --------- --------- Attained Corridor Attained Corridor Attained Corridor Attained Corridor Age % Age % Age % Age % ----------- --------- --------- -------- --------- --------- --------- --------- 0-40 250% 41 243% 51 178% 61 128% 71 113% 42 236% 52 171% 62 126% 72 111% 43 229% 53 164% 63 124% 73 109% 44 222% 54 157% 64 122% 74 107% 45 215% 55 150% 65 120% 75-90 105% 46 209% 56 146% 66 119% 91 104% 47 203% 57 142% 67 118% 92 103% 48 197% 58 138% 68 117% 93 102% 49 191% 59 134% 69 116% 94+ 101% 50 185% 60 130% 70 115% ----------- --------- --------- -------- --------- --------- --------- --------- EXECUTIVE SELECT - 21 - CHANGES IN DEATH BENEFIT OPTION After the first Policy Year, you may change your Policy's death benefit option. CHANGES IN DEATH BENEFIT OPTION RULES o Your request for a change must be by Written Notice. o You can only change your Policy death benefit option once each Policy Year. The change will be effective on the Policy Month date after we receive your request. o There is no fee to change your Policy death benefit option. o CHANGING FROM OPTION A TO OPTION B: The specified amount is decreased by an amount equal to the total Policy value as of the date of the change. o CHANGING FROM OPTION B TO OPTION A: The specified amount of insurance will equal the death benefit on the date of the change. o The change is only allowed if the new specified amount of insurance meets the requirements set forth in the CHANGE IN SPECIFIED AMOUNT OF INSURANCE COVERAGE section, below. o CHANGE IN SPECIFIED AMOUNT OF INSURANCE COVERAGE You may change the current specified amount of insurance coverage by Written Notice on a form provided by us, and subject to our approval. A change could have federal tax consequences (see this Prospectus' TAX MATTERS section). Any change will take effect on the Policy Month date on or after the date we receive your Written Notice. INCREASE IN COVERAGE RULES o No increase is allowed in the first Policy Year. o The insured's age nearest birthday must be 85 or younger (65 or younger for simplified issue and guaranteed issue rate classes). o A new application, evidence of insurability, and additional premium for the amount of the increase may be required. o Minimum amount of an increase in specified amount of insurance coverage is $25,000. o Cost of insurance charges for the increase will be based upon the insured's attained age and underwriting class at the time of the increase. o An additional Administrative Charge Per $1,000 of Increase in Specified Amount will be added. See this Prospectus' PERIODIC CHARGES: MONTHLY DEDUCTIONS FROM POLICY VALUE section. o Additional premium may be required if Policy value at the time of the increase, minus outstanding Policy debt, is less than an amount equal to 12 times what the current monthly deductions from Policy value will be reflecting the increase in specified amount of insurance coverage. DECREASE IN COVERAGE RULES o No decrease is allowed in the first Policy Year nor during the first 12 Policy Months following an increase in specified amount of insurance coverage except for a decrease which is the result of a partial withdrawal. o The specified amount of coverage after the decrease must be at least $100,000 ($50,000 if the Term Coverage Rider is attached to the Policy). After the insured reaches age 100, the specified amount of coverage after a decrease must be at least $1,000. o We may limit any requested decrease to the amount necessary to keep the Policy in compliance with maximum premium limits under federal tax law. o For purposes of determining the new Cost of Insurance charge, the decrease will reduce the specified amount of insurance coverage by first reducing the specified amount provided by the most recent increase, then the next most recent increase successively, and finally the Policy's initial specified amount of insurance coverage. [ ] NO MATURITY DATE This Policy does not have a maturity date. However, some States do not allow us to collect cost of insurance charges after you attain age 100. In those States your Policy's specified amount is reduced to $1,000 upon your attained age 100. EXECUTIVE SELECT - 22 - [ ] POLICY LOANS If you ask, your sales representative or we may be able to provide you with illustrations giving examples of how a loan might affect Policy value, Cash Surrender Value and death benefit. Any loan transaction will permanently affect Policy values. Surrender or lapse of a Policy while a loan is outstanding could result in significant tax consequences.
Amount You Can Borrow Loan Interest Rate ---------------------------------------------------- -------------------------------------------- Standard Policy Loan. At any time after the Standard Policy Loan. Current net annual Policy is issued, you may borrow not less than loan interest rate of 2%: we charge a $200 and up to an amount equal to the Cash current interest rate with a 5.5% Surrender Value, minus guaranteed monthly effective annual yield (guaranteed to not deductions from Policy value for the rest of the exceed 6%), but we also credit an interest Policy Year, minus interest on Policy debt rate with an effective annual yield of including the requested loan to the next Policy 3.5% to any amounts in the Loan Account. anniversary. ---------------------------------------------------- -------------------------------------------- Reduced Rate Policy Loan. Available after the Reduced Rate Policy Loan. Current net 10th Policy Year. Amount eligible is limited to annual loan interest rate of 0%: we Policy earnings (Policy value exceeding the amount charge a current interest rate with a 3.5% of premiums paid minus any previous partial effective annual yield (guaranteed to not withdrawals, minus any outstanding Reduced Rate exceed 4%), but we also credit an interest Policy Loan; but, cannot exceed the maximum rate with an effective annual yield of available loan amount. 3.5% to any amounts in the Loan Account.
LOAN RULES o The Policy must be assigned to us as sole security for the loan. o We will accept a loan request signed by you on our form of Written Notice by mail or facsimile. o We will transfer all loan amounts from the Subaccounts and the Fixed Account to a Loan Account. The amounts will be transferred on a pro rata basis, unless you instruct us otherwise. If the value of an investment option after a transfer pursuant to your instructions is less than $100, the amounts will be transferred on a pro rata basis. o Loan interest is due on each Policy Anniversary. If the interest is not paid when due, we will transfer an amount equal to the unpaid loan interest from only Policy investment options you designate; if that is not possible (due to insufficient value in an investment option you elect) or you have not provided such instructions, we will deduct loan interest on a pro-rata basis from balances in all Subaccounts and the Fixed Account. o If Policy debt exceeds Policy value minus accrued expenses and charges, you must pay the excess or your Policy will lapse. o All or part of a loan may be repaid at any time while the Policy is in force. We will deduct the amount of the loan repayment from the Loan Account and allocate that amount among the Subaccounts and the Fixed Account in the same percentages as net premium is allocated on the date of repayment. We will treat any amounts you pay us as a premium unless you specify that it is a loan repayment. o The death benefit will be reduced by the amount of any loan outstanding and unpaid loan interest on the date of the insured's death. o We may defer making a loan for up to six months unless the loan is to pay premiums to us. [ ] FULL SURRENDER While the insured is alive, you may terminate the Policy for its Cash Surrender Value. Following a full surrender, all your rights in the Policy end, and the Policy may not be reinstated. [ ] FULL SURRENDER RULES o We will accept a full surrender request signed by you on our form of Written Notice by mail or facsimile. However, when accepting a request by a method not requiring an original signature, there is a greater possibility that unauthorized persons can manipulate your signature and make changes on your Policy (including withdrawals) without your knowledge. o Upon a full surrender of your Policy, we will refund the following percentage of the Percentage of Premium Charge collected during the first Policy Year: during Policy Year 1 - 100%; Year 2 - 50%; Years 3+ - 0%. o We may defer surrender payments from the Fixed Account for up to six months from the date we receive your request. EXECUTIVE SELECT - 23 - [ ] PARTIAL WITHDRAWAL While the insured is alive, you may withdraw part of the Policy value. The amount requested and any partial withdrawal charge will usually be deducted from the Policy value on the date we receive your request if received before 3 p.m. Central Time. If DEATH BENEFIT OPTION A (described above) is in effect, then the current specified amount of insurance coverage as well as Policy value will be reduced by the amount of any partial withdrawal. If DEATH BENEFIT OPTION B (described above) is in effect, the Policy value will be reduced by the amount of the partial surrender, but the specified amount of insurance coverage will not change. PARTIAL SURRENDER RULES o We will accept a partial withdrawal request signed by you on our form of Written Notice by mail or facsimile. o The applicable Partial Withdrawal Charge is described in your Policy and the CHARGES section of this Prospectus. o The MINIMUM partial withdrawal amount is $500; the MAXIMUM is an amount such that remaining Cash Surrender Value is at least $1,000 or an amount sufficient to maintain the Policy in force for the next 12 months. o A partial withdrawal is irrevocable. o For tax purposes, partial withdrawals are treated as made first from premiums paid and then from earnings, beginning with the most recent premium payment, unless the Policy is a modified endowment contract. o Partial withdrawals will be deducted from your Policy investment options on a pro rata basis, unless you instruct us otherwise. If the value of an investment option after a withdrawal pursuant to your instructions is less than $100, the amounts will be deducted on a pro rata basis. o Partial withdrawals result in cancellation of Accumulation Units from each applicable Subaccount. o We reserve the right to defer withdrawal payments from the Fixed Account for up to six months from the date we receive your request. o Depending upon the circumstances, a partial withdrawal may have tax consequences. [ ] PAYMENT OF POLICY PROCEEDS A primary function of a life insurance policy is to provide payment options for payment of Policy proceeds in a way that best benefits the payee. Policy proceeds are payable upon the insured's death, a full surrender or partial withdrawal of Policy value, or upon any other benefit where certain proceeds are payable. You may elect to have Policy proceeds paid under one of several payment options or as a lump sum. If another option is not chosen within 60 days of the date we receive satisfactory proof of the insured's death, we will make payment in a lump sum to the beneficiary. RULES FOR PAYMENT OF POLICY PROCEEDS o You, or your beneficiary after your death if you are the insured, may elect a payment option by completing an election form that can be requested from us at any time. o Payees must be individuals who receive payments in their own behalf unless otherwise agreed to by us. o An association, corporation, partnership or fiduciary can only receive a lump sum payment or a payment under a fixed period payment option (Option C). o Any payment option chosen will be effective when we acknowledge it. o We may require proof of your age or survival or the age or survival of the payee. o We reserve the right to pay the proceeds in one lump sum when the amount is less than $5,000, or when the payment option chosen would result in periodic payments of less than $100. If any payment would be or becomes less than $100, we also have the right to change the frequency of payments to an interval that will result in payments of at least $100. In no event will we make payments under a payment option less frequently than annually. o No payee may commute, encumber or alienate any proceeds under this Policy before they are due. No proceeds are subject to attachment for any debt or obligation of any payee. o When the last payee dies, we will pay to the estate of that payee any amount on deposit, or the then present value of any remaining guaranteed payments under a fixed payment option. Payments under the payment options are FIXED PAYMENTS based on a fixed rate of interest at or higher than the minimum effective annual rate which is guaranteed to yield 3% for Options A-C and 3.5% for Options D-E on an annual basis. Proceeds to fund payments are transferred to our general account and are no longer a part of the Separate Account. We have sole discretion whether or not to pay a higher interest rate for payment options A, B, C, D or E (see below). Current single premium immediate annuity rates for options D or E are used if EXECUTIVE SELECT - 24 - higher than the guaranteed amounts (guaranteed amounts are based upon the tables contained in the Policy). Current interest rates, and further information, may be obtained from us. The amount of each fixed annuity payment is set and begins on the date payment of Policy proceeds is to begin, and does not change. o SELECTING A PAYMENT OPTION Once fixed payments under a payment option begin, they cannot be changed. (We may allow the beneficiary to transfer amounts applied under options A to C to options D to F after the date payment of Policy proceeds begins. However, we reserve the right to discontinue this practice.) The longer the guaranteed or projected payment option period, the lower the amount of each payment. NOTE: IF YOU ELECT PAYMENT OPTIONS D OR E AND SELECT A NON-GUARANTEED PERIOD, IT IS POSSIBLE THAT ONLY ONE ANNUITY PAYMENT WOULD BE MADE UNDER THE PAYMENT OPTION IF THE PERSON WHOSE LIFE THE PAYMENT IS BASED UPON (THE "MEASURING LIFE") DIES BEFORE THE DUE DATE OF THE SECOND PAYMENT, ONLY TWO PAYMENTS WOULD BE MADE IF THE "MEASURING LIFE" DIED BEFORE THE DUE DATE OF THE THIRD PAYMENT, ETC. The payment options for receiving Policy proceeds are: A. INTEREST PAYMENT. We will pay interest each month at a rate determined by us on the amount retained. B. PAYMENTS FOR A FIXED AMOUNT. Proceeds are paid in equal monthly installments until proceeds, with interest, have been fully paid. The total annual payment must be at least 5% of the amount retained. C. PAYMENTS FOR A FIXED PERIOD. Proceeds are paid in equal monthly installments for the specified period chosen not to exceed 20 years. Monthly incomes for each $1,000 of proceeds, which include interest, are illustrated by a table in the Policy. D. LIFETIME INCOME. Proceeds are paid as equal monthly installments based on the life of a named person, and continue for the lifetime of that person. Variations provide for guaranteed payments for a period of time or a lump sum refund. E. JOINT AND LAST SURVIVOR LIFETIME INCOME. Proceeds are paid as equal monthly installments during the joint lives of two individuals and until the last of them dies. Variations provide for a reduced amount of payment during the lifetime of the surviving person. F. LUMP SUM. Proceeds are paid in one sum. In most cases, when death benefit proceeds are paid in a lump sum, we will pay the death benefit proceeds by establishing an interest bearing account for the beneficiary, in the amount of the death benefit proceeds payable. The same interest rate schedule and other account terms will apply to all beneficiary accounts in place at any given time. We will send the beneficiary a checkbook within 7 days after we receive all the required documents, and the beneficiary will have immediate access to the account simply by writing a check for all or any part of the amount of the death benefit proceeds payable. The account is part of our general account. It is not a bank account and it is not insured by the FDIC or any other government agency. As part of our general account, it is subject to the claims of our creditors. We receive a benefit from all amounts left in the general account. EXECUTIVE SELECT - 25 - TAX MATTERS -------------------------------------------------------------------------------- THE FOLLOWING IS ONLY GENERAL INFORMATION ABOUT FEDERAL TAX LAW AND IS NOT INTENDED AS TAX ADVICE TO ANY INDIVIDUAL. TAX LAWS AFFECTING THE POLICY ARE COMPLEX, MAY CHANGE AND ARE AFFECTED BY YOUR FACTS AND CIRCUMSTANCES. WE CANNOT GUARANTEE THE TAX TREATMENT OF THE POLICY OR ANY TRANSACTION INVOLVING THE POLICY. YOU SHOULD CONSULT YOUR OWN TAX ADVISER AS TO HOW THESE GENERAL RULES AND ANY APPLICABLE TAXES WILL APPLY TO YOU IF YOU PURCHASE A POLICY. [ ] LIFE INSURANCE QUALIFICATION; TAX TREATMENT OF DEATH BENEFIT The Internal Revenue Code, as amended (the "Code") defines a life insurance contract for federal income tax purposes. This definition can be met if an insurance contract satisfies either one of two tests set forth in that section. The Code and related regulations do not directly address the manner in which these tests should be applied to certain features of the Policy. Thus, there is some uncertainty about how those tests apply to the Policy. Nevertheless, we believe the Policy qualifies as a life insurance contract for federal tax purposes, so that: o the death benefit should be fully excludable from the beneficiary's gross income; and o you should not be considered in constructive receipt of the Cash Surrender Value, including any increases in Cash Surrender Value, unless and until it is distributed from the Policy. However, Congress has recently enacted new statutory provisions relating to employer owned life insurance. The death benefit of life insurance owned by an employer is taxable unless the insured is a certain class of employee and has been given notice and has consented to coverage on his life. Specific statutory requirements must be satisfied for the death benefit of employer owned life insurance to be excluded from taxable income. Any employer contemplating the purchase of life insurance contract should consult a tax advisor. We reserve the right to make such changes in the Policy as we deem necessary to assure it qualifies as a life insurance contract under the Code and continues to provide the tax benefits of such qualification. MODIFIED ENDOWMENT CONTRACTS. The Code establishes a class of life insurance contracts designated as modified endowment contracts. The Code rules governing whether a Policy will be treated as a modified endowment contract are extremely complex. In general, a Policy is a modified endowment contract if the accumulated premium payments made at any time during the first seven Policy Years exceed the sum of the net level premium payments which would have been paid on or before such time if the policy provided for paid-up future benefits after the payment of seven level annual premiums. A Policy may also become a modified endowment contract because of a material change. The determination of whether a Policy is a modified endowment contract after a material change generally depends upon the relationship of the Policy's death benefit and Policy value at the time of such change and the additional premium payments made in the seven years following the material change. A Policy may also become a modified endowment contract if the death benefit is reduced. This Policy's flexibility and how you tailor it to meet your needs could cause it to be a modified endowment contract. We recommend you consult with a tax adviser to determine if desired Policy transactions may cause such treatment. WHEN A PREMIUM PAYMENT IS CREDITED WHICH WE BELIEVE CAUSES THE POLICY TO BECOME A MODIFIED ENDOWMENT CONTRACT, WE WILL NOTIFY YOU and offer you the opportunity to request a refund of that premium in order to avoid such treatment. You have 30 days after receiving such a notice to request the refund. A Policy issued in exchange for a modified endowment contract is subject to tax treatment as a modified endowment contract. However, we believe that a Policy issued in exchange for a life insurance policy that is NOT a modified endowment contract will generally not be treated as a modified endowment contract if the death benefit of the Policy is greater than or equal to the death benefit of the Policy being exchanged. The payment of any premiums at the time of or after the exchange may, however, cause the Policy to become a modified endowment contract. You may, of course, choose to not make additional payments in order to prevent a Policy from being treated as a modified endowment contract. EXECUTIVE SELECT - 26 - [ ] SPECIAL CONSIDERATIONS FOR CORPORATIONS Premium paid by a business for a life insurance Policy is not deductible as a business expense or otherwise if the business is directly or indirectly a beneficiary of the Policy. For purposes of the alternative minimum tax ("AMT") that may be imposed on corporations, the death benefit from the Policy, even though excluded from gross income for normal tax purposes, is included in "adjusted current earnings" for AMT purposes. In addition, although increases to the Policy's cash surrender value are generally excluded from gross income for normal income tax purposes, such increases are included in adjusted current earnings for income tax purposes. In recent years, Congress has adopted new rules relating to corporate owned life insurance. Any business contemplating the purchase of a new life insurance contract or a change in an existing contract should consult a tax advisor. [ ] TAX TREATMENT OF LOANS AND OTHER DISTRIBUTIONS Upon a surrender or lapse of the Policy, if the amount received plus any outstanding Policy debt exceeds the total cost basis in the Policy, the excess will generally be treated as ordinary income subject to tax, regardless of whether a Policy is or is not a modified endowment contract. However, the tax consequences of distributions from, and loans taken from or secured by, a Policy depend on whether the Policy is classified as a modified endowment contract. "COST BASIS IN THE POLICY" means: o the total of any premium payments or other consideration paid for the Policy, MINUS o any withdrawals previously recovered that were not taxable. DISTRIBUTIONS FROM POLICIES CLASSIFIED AS MODIFIED ENDOWMENT CONTRACTS are subject to the following tax rules: 1) All distributions, including surrenders and partial withdrawals, are treated as ordinary income subject to tax up to the amount equal to the excess (if any) of the Policy value immediately before the distribution over the cost basis in the Policy at such time. 2) Loans from or secured by the Policy are treated as distributions and taxed accordingly. If you do not repay loan interest, the loan interest itself is treated as a distribution. 3) A 10% additional income tax is imposed on the portion of any distribution from, or loan taken from or secured by, the Policy that is included in income except where the distribution or loan is made on or after the Owner attains age 59 1/2, is attributable to the Owner's becoming disabled, or is part of a series of substantially equal periodic payments for the life (or life expectancy) of the Owner or the joint lives (or joint life expectancies) of the Owner and the Owner's beneficiary. DISTRIBUTIONS FROM POLICIES NOT CLASSIFIED AS MODIFIED ENDOWMENT CONTRACTS are generally treated as first recovering the cost basis in the Policy and then, only after the return of all such cost basis in the Policy, as distributing taxable income. An exception to this general rule occurs in the case of a decrease in the Policy's death benefit or any other change that reduces benefits under the Policy in the first 15 years after the Policy is issued and that results in a cash distribution to the Owner in order for the Policy to continue complying with the Code's definition of life insurance. Such a cash distribution will be taxed in whole or in part as ordinary income (to the extent of any gain in the Policy). Loans from, or secured by, a Policy that is not a modified endowment contract are not treated as distributions. However, it is possible that reduced rate loans could be treated as distributions rather than loans. Distributions (including upon surrender) and loans from, or secured by, a Policy that is NOT a modified endowment contract are not subject to the 10% additional income tax rule. If a Policy which is not now but later becomes a modified endowment contract, then any distributions made from the Policy within two years prior to the change will become taxable pursuant to modified endowment contract rules. [ ] OTHER POLICY OWNER TAX MATTERS Depending on the circumstances, the exchange of a Policy, a change in the Policy's death benefit option, a Policy loan, a partial or full surrender, a lapse, a change in ownership, or an assignment of the Policy may have federal income tax consequences. In addition, federal, state and local transfer and other tax consequences of ownership or receipt of distributions from a Policy depend on the circumstances of each Owner or beneficiary. EXECUTIVE SELECT - 27 - INTEREST PAID ON POLICY LOANS generally is not tax deductible. AGGREGATION OF MODIFIED ENDOWMENT CONTRACTS. Pre-death distributions (including a loan, partial surrender, collateral assignment or full surrender) from a Policy that is treated as a modified endowment contract may require a special aggregation to determine the amount of income recognized on the Policy. If we or any of our affiliates issue more than one modified endowment contract to the same Policy Owner within any 12-month period, then for purposes of measuring the income on the Policy with respect to a distribution from any of those Policies, the income for all those Policies will be aggregated and attributed to that distribution. FEDERAL AND STATE ESTATE, INHERITANCE AND OTHER TAX CONSEQUENCES of ownership or receipt of proceeds under the Policy depend upon your or the beneficiary's individual circumstance. DIVERSIFICATION REQUIREMENTS. Investments of the Separate Account must be "adequately diversified" for the Policy to qualify as a life insurance contract under the Code. Any failure to comply with diversification requirements could subject you to immediate taxation on the incremental increases in Policy value plus the cost of insurance protection for the year. However, we believe the Policy complies fully with such requirements. OWNER CONTROL. The Treasury Department stated that it anticipates the issuance of regulations or rulings prescribing the circumstances in which your control of the investments of the Separate Account may cause you, rather than us, to be treated as the owner of the assets in the Separate Account. To date, no such regulations or guidance has been issued. If you are considered the Owner of the assets of the Separate Account, income and gains from the Separate Account would be included in your gross income. The ownership rights under the Policy are similar to, but different in certain respects from, those described by the IRS in rulings in which it determined that owners were not owners of separate account assets. For example, you have additional flexibility in allocating Policy premium and Policy values. These differences could result in you being treated as the owner of a pro rata share of the assets of the Separate Account. In addition, we do not know what standards will be set forth in the regulations or rulings which the Treasury may issue. We therefore reserve the right to modify the Policy as necessary to attempt to prevent you from being considered the Owner of the assets of the Separate Account. TAX-ADVANTAGED ARRANGEMENTS. The Policy may be used in various arrangements, including non-qualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, tax exempt and nonexempt welfare benefit plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances of each individual arrangement. If you are contemplating the use of the Policy in any arrangement the value of which depends in part on its tax consequences, you should be sure to consult a qualified tax advisor regarding the tax attributes of the particular arrangement and the suitability of this Policy for the arrangement. EXECUTIVE SELECT - 28 - APPENDIX A: EMPLOYEE BENEFIT PLAN INFORMATION STATEMENT -------------------------------------------------------------------------------- This statement informs you, as an independent Fiduciary of the Employee Benefit Plan, of the Sales Representative's relationship to and compensation from Ameritas Life Insurance Corp. ("Ameritas"), as well as to describe certain fees and charges under the Executive Select Policy being purchased from the Sales Representative. The Sales Representative is appointed with Ameritas as its Sales Representative and is a Securities Registered Representative. In this position, the Sales Representative is employed to procure and submit to Ameritas applications for contracts, including applications for Executive Select. COMMISSIONS, FEES AND CHARGES The following commissions, fees and charges apply to Executive Select (Policy): Sales Commission: Ameritas pays commission to the broker-dealers, which in turn pay commissions to the registered representative who sells this Policy. The commission may equal an amount up to 30% of premium in the first Policy Year and up to 12% of premium in renewal years. Broker-dealers may also receive a service fee up to an annualized rate of .50% of the Accumulation Value beginning in the fifth Policy Year. Compensation arrangements may vary among broker-dealers. In addition, Ameritas may also pay override payments, expense allowances, bonuses, wholesaler fees, and training allowances. Registered representatives who meet certain production standards may receive additional compensation. From time to time, additional sales incentives may be provided to broker-dealers. Cost of Insurance: A monthly charge for the Policy and any riders. The Cost of Insurance Rates are shown on the Policy Schedule. Monthly Per Policy Charge: Ameritas will make a per Policy charge of $15.00 per month (maximum $15.00) during the first Policy Year and $7.00 per month (maximum $12.00) thereafter. This charge is guaranteed not to increase above the maximum. Monthly per $1000 Charge for Administrative Expenses: The first ten Policy Years, there is a monthly charge per $1000 of initial Specified Amount. In addition, there is a monthly charge per $1000 of each increase in Specified Amount for ten years from the date of increase. The per $1000 rates for both the initial Specified Amount and each increase vary by Issue Age, gender, and risk class. (See the Policy Schedule for rates.) Daily Asset-Based Administrative Expense Charge: Ameritas makes a daily charge of the value of the average daily net assets of the Separate Account under the policies equal to an annual rate of 0.15% (maximum 0.15%). This charge is subtracted when determining the daily accumulation unit value. This charge is guaranteed not to increase above the maximum and is designed to reimburse Ameritas for administrative expenses of issuing, servicing and maintaining the policies. Ameritas does not expect to make a profit on this fee. Mortality and Expense Risk Charge: Ameritas imposes a charge to compensate it for bearing certain mortality and expense risks under the policies. Ameritas makes a daily charge of the value of the average daily net assets of the Account under the policies equal to an annual rate of 0.75% (maximum 0.95%) in Policy Years 1-15 and 0.30% (maximum 0.50%) thereafter. This charge is subtracted when determining the daily accumulation unit value. Ameritas guarantees that this charge will never increase above the maximum. If this charge is insufficient to cover assumed risks, the loss will fall on Ameritas. Conversely, if the charge proves more than sufficient, any excess will be added to Ameritas's surplus. No mortality and expense risk charge is imposed on the Fixed Account. Partial and Full Withdrawals: Partial withdrawals may be made, subject to certain restrictions. The Death Benefit will be reduced by the amount of the partial withdrawal. A partial withdrawal is subject to a maximum charge not to exceed the lesser of $50 or 2% of the amount withdrawn (currently, the partial withdrawal charge is the lesser of $25 or 2%). You may Surrender the Policy at any time for its Cash Surrender Value. There is no surrender charge. Percent of Premium Charge: Ameritas will deduct a percent of premium charge upon receipt of a premium payment. Currently, this charge is 3.0% of the premium paid (maximum 5.0%). Fund Investment Advisory Fees and Expenses: At the direction of the Policy Owner, the Separate Account purchases shares of Funds which are available for investment under this Policy. The net assets of Ameritas Variable Separate Account VL will reflect the value of the Fund shares and therefore, investment advisory fees and other expenses of the Funds. A complete description of these fees and expenses is contained in the Funds' prospectuses. EXECUTIVE SELECT -29 - DEFINED TERMS -------------------------------------------------------------------------------- ACCUMULATION UNITS are an accounting unit of measure used to calculate the Policy value allocated to Subaccounts of the Separate Account. It is similar to a share of a mutual fund. The Policy describes how Accumulation Units are calculated. BUSINESS DAY is each day that the New York Stock Exchange is open for trading. CASH SURRENDER VALUE is the total Policy value less outstanding loans and loan interest, less any due but unpaid Policy charges. FIXED ACCOUNT is an account that credits a fixed rate of interest guaranteed by us and is not affected by the experience of the variable investment options of the Separate Account. The Fixed Account is part of our general account. LOAN ACCOUNT is an account we maintain for your Policy if you have a Policy loan outstanding. The Loan Account is credited with interest and is not affected by the experience of the variable investment options of the Separate Account. The Loan Account is part of our general account. OWNER, YOU, YOUR is you - the person(s) or legal entity who may exercise all rights and privileges under the Policy. If there are joint Owners, the signatures of both Owners are needed to exercise rights under the Policy. POLICY DATE is the effective date for Policy coverage. It is usually, but need not be, the same as the date the Policy is issued. POLICY YEAR/MONTH/ANNIVERSARY are measured from respective anniversary dates of the Policy Date of your Policy. PREMIUM MINIMUM INITIAL PREMIUM is the minimum premium necessary to initiate coverage under the Policy. PLANNED PERIODIC PREMIUM is a schedule of equal premiums payable at fixed intervals chosen by you, the Owner. You need not follow this schedule, nor will following it ensure that the Policy will remain in force. SUBACCOUNT is a variable investment option division within the Separate Account for which Accumulation Units are separately maintained. Each Subaccount corresponds to a single, underlying, non-publicly traded portfolio issued through a series fund. VALUATION PERIOD is the period commencing at the close of business of the New York Stock Exchange on each Business Day and ending at the close of business on the next succeeding Business Day. WE, US, OUR, AMERITAS - Ameritas Life Insurance Corp. WRITTEN NOTICE OR REQUEST - Written notice, signed by you, in good order, on a form approved by or acceptable to us, that gives us the information we require and is received at Ameritas, Service Center, P.O. Box 82550, Lincoln, NE 68501 (or 5900 "O" Street, Lincoln, NE 68510), fax 1-402-467-7335. Call us if you have questions about what form or information is required. EXECUTIVE SELECT - 30 - THANK YOU for reviewing this Prospectus. You should also review the series fund prospectuses for those Subaccount variable investment option underlying portfolios you wish to select. IF YOU HAVE QUESTIONS, wish to request a Statement of Additional Information, or want information about a Policy including a personalized illustration, contact your sales representative, or write or call us at: Ameritas Life Insurance Corp. Service Center P.O. Box 82550 Lincoln, Nebraska 68501 or 5900 "O" Street Lincoln, Nebraska 68510 Telephone: 1-800-745-1112 Fax: 1-402-467-7335 www.ameritas.com REMEMBER, THE CORRECT FORM is important for us to accurately process your Policy elections and changes. Many can be found in the "on-line services" section of our Web Site. Or, call us at our toll-free number and we will send you the form you need. [ ] ILLUSTRATIONS Illustrations are tools that can help demonstrate how the Policy operates, given the Policy's charges, investment options and any optional features selected, how you plan to accumulate or access Policy value over time, and assumed rates of return. Illustrations may also be able to assist you in comparing the Policy's death benefits, Cash Surrender Values and Policy values with those of other variable life insurance policies based upon the same or similar assumptions. You may ask your sales representative or us (at our toll-free telephone number) to provide an illustration, without charge, based upon your specific situation. [ ] STATEMENT OF ADDITIONAL INFORMATION; REGISTRATION STATEMENT A Statement of Additional Information ("SAI") with the same date as this prospectus contains other information about us and the Policy. You may obtain a copy without charge upon request to our toll-free telephone number shown to the left. Information about us (including the SAI), is available on the SEC's Internet site at WWW.SEC.GOV, or can be reviewed and copies made at or ordered from (for a fee) the SEC's Public Reference Room, 450 Fifth St., NW, Washington, D.C. 20549-0102. (Direct questions to the SEC at 202-942-8090.) [ ] REPORTS TO YOU We will send you a statement at least annually showing your Policy's death benefit, Policy value and any outstanding Policy loan balance. We will also confirm Policy loans, Subaccount transfers, lapses, surrender, partial withdrawals, and other Policy transactions as they occur. You will receive such additional periodic reports as may be required by the SEC. (c) Ameritas Life Insurance Corp. AMERITAS LIFE INSURANCE CORP. A UNIFI COMPANY EXECUTIVE SELECT LAST PAGE SEC Registration #: 811-21136 -------------------------------------------------------------------------------- Statement of Additional Information: May 1, 2007 to accompany Policy Prospectuses dated: May 1, 2007 AMERITAS VARIABLE LIFE INSURANCE POLICIES LIFE INSURANCE CORP. offered through A UNIFI COMPANY AMERITAS VARIABLE SEPARATE ACCOUNT VL -------------------------------------------------------------------------------- TABLE OF CONTENTS PAGE General Information and History................................1 Underwriter....................................................2 Distribution of the Policy More Information on Charges Waiver of Certain Charges Underwriting Procedure Distribution of Materials......................................3 Advertising Performance Data Financial Statements...........................................4 CONTACTING US. To answer your questions or to send additional premium, contact your sales representative or write or call us at: Ameritas Life Insurance Corp. Service Center P.O. Box 82550 Lincoln, Nebraska 68501 Or 5900 O Street Lincoln, Nebraska 68510 Telephone: 1-800-745-1112 Fax: 1-402-467-7335 www.AMERITAS.COM EXPRESS MAIL PACKAGES SHOULD BE SENT TO OUR STREET ADDRESS, NOT OUR P.O. BOX ADDRESS. This Statement of Additional Information is not a prospectus. It contains information in addition to that set forth in the Policy prospectus and should be read together with the prospectus. The Policy prospectus may be obtained from our Service Center by writing us at P.O. Box 82550, Lincoln, Nebraska 68501, by e-mailing us or accessing it through our Web site at www.ameritas.com, or by calling us at 1-800-745-1112. Defined terms used in the current prospectus for the Policies are incorporated in this Statement. [ ] GENERAL INFORMATION AND HISTORY Ameritas Life Insurance Corp. ("we, us, our, Ameritas") is a stock life insurance company organized under the insurance laws of the State of Nebraska since 1887. We are engaged in the business of issuing life insurance and annuities, group dental and vision insurance, retirement plans and 401(k) plans throughout the United States (except New York). We are an indirect wholly owned subsidiary of UNIFI Mutual Holding Company ("UNIFI") (we are wholly owned by Ameritas Holding Company, which in turn is wholly owned by UNIFI). The UNIFI companies are a diversified family of financial services businesses offering the above-listed products and services as well as mutual funds and other investments, financial planning, banking, and public financing. Prior to May 1, 2007, the Policies described in this Statement of Additional Information and in the prospectus were offered and issued by Ameritas Variable Life Insurance Company ("AVLIC"). Effective May 1, 2007, AVLIC merged into Ameritas, AVLIC's former parent. Ameritas Variable Separate Account VL is now a separate investment account of Ameritas. Policies previously issued by AVLIC now are Policies of Ameritas, which will service and maintain those Policies in accordance with their terms. SAI: 1 AMERITAS VARIABLE SEPARATE ACCOUNT VL STATEMENT OF ADDITIONAL INFORMATION [ ] UNDERWRITER Policies in Ameritas Variable Separate Account VL were distributed by Ameritas Investment Corp. (AIC), 5900 O Street, Lincoln, Nebraska 68510, a majority-owned subsidiary of ours. AIC enters into contracts with various broker-dealers (Distributors) to distribute Policies. YEAR: 2004 2005 2006 ------------------------------------------------- ---------- --------- --------- Variable life insurance commission AVLIC paid $2,164,022 $82,371 $60,249 to AIC that was paid to other broker-dealers and representatives (not kept by AIC). ------------------------------------------------- ---------- --------- --------- Variable life insurance commission earned and 0 0 0 kept by AIC. ------------------------------------------------- ---------- --------- --------- Fees AVLIC paid to AIC for variable life 0 0 0 insurance Principal Underwriter services. ------------------------------------------------- ---------- --------- --------- [ ] DISTRIBUTION OF THE POLICY Our underwriter, AIC, enters into contracts with various broker-dealers (Distributors) to distribute Policies. These Distributors are registered with the SEC and are members of the National Association of Securities Dealers, Inc. (NASD). All persons selling the Policy must be registered representatives of the Distributors, and must also be licensed as insurance agents to sell variable insurance products. EXECUTIVE SELECT POLICY: Commission may equal an amount up to 30% of premium in the first year and up to 12% of premium in renewal years. Broker-dealers may also receive a service fee up to an annualized rate of 0.5% of the Policy value beginning in the fifth Policy Year. REGENT 2000 AND ALLOCATOR 2000 POLICIES: Commission may equal an amount up to 95% of premium in the first year, up to 20% of premium paid in years 2-4, and up to 2% of the Policy value beginning in the fifth Policy Year. Compensation arrangements may vary among broker-dealers. We may also pay other distribution expenses such as production incentive bonuses. These distribution expenses do not result in any additional charges under the Policy other than those described in the prospectus' CHARGES section. [ ] MORE INFORMATION ON CHARGES o WAIVER OF CERTAIN CHARGES When the Policy is sold in a manner that results in savings of sales or administrative expenses, we reserve the right to waive all or part of any fee we charge under the Policy (excluding charges charged by the portfolios). Factors we consider include one or more of the following: size and type of group to whom the Policy is issued; amount of expected premiums; relationship with us (employee of us or an affiliated company, receiving distributions or making transfers from other policies we or one of our affiliates issue, or transferring amounts held under qualified retirement plans we or one of our affiliates sponsor); type and frequency of administrative and sales services provided; or level of annual maintenance fee and withdrawal charges. Any fee waiver will not discriminate unfairly against protected classes of individuals and will be done according to our rules in effect at the time the Policy is issued. We reserve the right to change these rules. The right to waive any charges may be subject to State approval. o UNDERWRITING PROCEDURE The Policy's cost of insurance depends upon the insured's sex, issue age, risk class, and length of time the Policy has been in force. The rates will vary depending upon tobacco use and other risk factors. Guaranteed cost of insurance rates are based on the insured's attained age and are equal to the 1980 Insurance Commissioners Standard Ordinary Male and Female Mortality Tables without smoker distinction. The maximum rates for the table-rated substandard insureds are based on a multiple (shown in the schedule pages of the Policy) of the above rates. We may add flat extra ratings to reflect higher mortality risk. Any change in the cost of insurance rates will apply to all insureds of the same age, gender, risk class and whose Policies have been in effect for the same length of time. SAI: 2 AMERITAS VARIABLE SEPARATE ACCOUNT VL STATEMENT OF ADDITIONAL INFORMATION The cost of insurance rates, Policy charges, and payment options for Policies issued in Montana, and perhaps other states or in connection with certain employee benefit arrangements, are issued on a gender-neutral (unisex) basis. The unisex rates will be higher than those applicable to females and lower than those applicable to males. If the rating class for any increase in the specified amount of insurance coverage is not the same as the rating class at issue, the cost of insurance rate used after such increase will be a composite rate based upon a weighted average of the rates of the different rating classes. Decreases may be reflected in the cost of insurance rate, as discussed earlier. Actual charges made during the Policy year will be shown in the annual report delivered to Policy owners. [ ] DISTRIBUTION OF MATERIALS We will distribute proxy statements, updated prospectuses and other materials to you from time to time. In order to achieve cost savings, we may send consolidated mailings to several owners with the same last name who share a common address or post office box. [ ] ADVERTISING From time to time, we may advertise performance information for the Subaccounts and their underlying portfolios. We may also advertise ratings, rankings or other information related to us, the Subaccounts or the underlying portfolios. We may provide hypothetical illustrations of Policy value, Cash Surrender Value and death benefit based on historical investment returns of the underlying portfolios for a sample Policy based on assumptions as to age, sex and risk class of the insured, and other Policy-specific assumptions. We may also provide individualized hypothetical illustrations calculated in the same manner as stated above but based upon factors particular to your Policy. [ ] PERFORMANCE DATA From time to time, we may advertise performance for the Subaccount variable investment options. Performance data is available on our website and is authorized for use with prospective investors only when accompanied or preceded by current product and fund prospectuses containing detailed information about the Policy, investment, limitations and risks. Performance returns reflect fees and charges assessed by the fund companies and current mortality and expenses and administrative risk charges deducted from separate account assets. Some portfolio advisors have agreed to limit their expenses; without these limits, performance would have been lower. The returns shown on our website do not reflect the Policy's transaction fees and periodic charges. If these fees and charges were deducted, the performance quoted would be lower. Yields shown are typically annualized yields. This means the income generated during the measured seven days is assumed to be generated each week over a 52-week period, and not reinvested, and is shown as a percentage of the investment. SAI: 3 AMERITAS VARIABLE SEPARATE ACCOUNT VL STATEMENT OF ADDITIONAL INFORMATION We encourage you to obtain a personalized illustration which reflects all charges of the Policy and the impact of those charges upon performance; contact your registered representative or us to obtain an illustration, without charge, based upon your specific situation. See the Policy prospectus for detailed information about Policy charges and portfolio prospectuses for each portfolio's expenses. For periods prior to the date the Policy Subaccount began operation, performance data will be calculated based on the performance of the underlying portfolio and the assumption that the Subaccounts were in existence for the same periods as those indicated for the underlying portfolio with the level of Policy charges that were in effect at the inception of the Subaccount. Past performance is no guarantee of future results. The return and principal value of an investment will fluctuate so that investor's shares, when redeemed, may be worth more or less than their original cost. [ ] FINANCIAL STATEMENTS The statutory financial statements of Ameritas Life Insurance Corp. as of December 31, 2006 and 2005, and for the years then ended, and the financial statements of the Subaccounts of Ameritas Variable Separate Account VL as of December 31, 2006, and for each of the periods in the two years then ended, included in this Statement of Additional Information have been audited by Deloitte & Touche LLP, 1248 "O" Street, Suite 716, Lincoln, Nebraska 68508, independent auditors and independent registered public accounting firm, respectively, as stated in their reports appearing herein, and are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. Our financial statements follow this page of this Statement. They only bear on our ability to meet our obligations under the Policy, and should not be considered as bearing on the investment performance of the assets held in the Separate Account. SAI: 4 AMERITAS VARIABLE SEPARATE ACCOUNT VL STATEMENT OF ADDITIONAL INFORMATION AMERITAS VARIABLE SEPARATE ACCOUNT VL FINANCIAL STATEMENTS AS OF DECEMBER 31, 2006 AND FOR EACH OF THE PERIODS IN THE TWO YEARS THEN ENDED AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors Ameritas Variable Life Insurance Company Lincoln, Nebraska We have audited the accompanying statements of net assets of each of the subaccounts listed in Note 1 which comprise Ameritas Variable Separate Account VL as of December 31, 2006, and the related statements of operations for the period then ended and changes in net assets for each of the periods in the two years then ended. These financial statements are the responsibility of management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The subaccounts are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audit 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 each of the subaccounts' 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. Our procedures included confirmation of securities owned at December 31, 2006 by correspondence with the custodian. 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 financial position of each of the subaccounts constituting Ameritas Variable Separate Account VL as of December 31, 2006, and the results of their operations for the period then ended and changes in their net assets for each of the periods in the two years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP Lincoln, Nebraska March 8, 2007 FS-1 AMERITAS VARIABLE SEPARATE ACCOUNT VL STATEMENTS OF NET ASSETS DECEMBER 31, 2006
ASSETS INVESTMENTS AT FAIR VALUE: Calvert Variable Series, Inc. Calvert Portfolios (Calvert): CVS Social Balanced Portfolio (Balanced) - 329,072.236 shares at $2.030 per share (cost $557,667) $ 668,017 CVS Social Small Cap Growth Portfolio (Small Cap) - 25,863.963 shares at $15.38 per share (cost $334,599) 397,788 CVS Social Mid Cap Growth Portfolio (Mid Cap) - 21,579.873 shares at $28.29 per share (cost $464,113) 610,495 CVS Social International Equity Portfolio (International) - 64,039.911 shares at $21.85 per share (cost $848,735) 1,399,272 Calvert Variable Series, Inc. Ameritas Portfolios (Ameritas): Ameritas Money Market Portfolio (Money Market) - 8,926,715.600 shares at $1.00 per share (cost $8,926,716) $ 8,926,716 Dividends Receivable 6,149 ------------------- Total 8,932,865 The Alger American Fund (Alger): Alger American Growth Portfolio - Class O (Growth) - 186,575.524 shares at $41.22 per share (cost $5,131,463) 7,690,643 Alger American MidCap Growth Portfolio - Class O (MidCap) - 240,815.110 shares at $20.75 per share (cost $3,735,074) 4,996,914 Alger American Small Capitalization Portfolio - Class O (Small Cap) - 101,532.322 shares at $28.42 per share (cost $1,469,330) 2,885,549 DWS Scudder Investments VIT Funds (Scudder): DWS Equity 500 Index VIP Portfolio (Equity 500) - 1,065,606.843 shares at $14.97 per share (cost $10,838,102) 15,952,134 DWS Small Cap Index VIP Portfolio (Small Cap) - 186,833.552 shares at $16.12 per share (cost $2,103,672) 3,011,757 Dreyfus Investment Portfolios (Dreyfus): Stock Index Portfolio (Stock) - 26,546.425 shares at $36.15 per share (cost $618,376) 959,653 Variable Insurance Products (Fidelity): VIP Equity-Income Portfolio: Service Class 2 (Equity-Income SC2) - 170,330.633 shares at $25.87 per share (cost $3,519,111) 4,406,453 VIP High Income Portfolio: Service Class 2 (High Income SC2) - 29,130.241 shares at $6.25 per share (cost $183,814) 182,064 VIP Contrafund Portfolio: Service Class 2 (Contrafund SC2) - 124,141.573 shares at $31.11 per share (cost $3,149,885) 3,862,044 Franklin Templeton Variable Insurance Products Trust (Franklin Templeton): Global Asset Allocation Portfolio Class 2 (Global Asset) - 27,862.382 shares at $21.75 per share (cost $522,901) 606,007 Foreign Securities Portfolio Class 2 (Foreign Securities) - 243,013.058 shares at $18.72 per share (cost $2,695,264) 4,549,204 The accompanying notes are an integral part of these financial statements. FS-2 AMERITAS VARIABLE SEPARATE ACCOUNT VL STATEMENTS OF NET ASSETS DECEMBER 31, 2006 ASSETS, continued INVESTMENTS AT FAIR VALUE: Neuberger Berman Advisers Management Trust (Neuberger Berman): AMT Limited Maturity Bond Portfolio (Limited Maturity Bond) - 508,430.205 shares at $12.76 per share (cost $6,710,359) $ 6,487,569 AMT Growth Portfolio (Growth) - 267,139.180 shares at $15.73 per share (cost $2,505,941) 4,202,099 AMT Partners Portfolio (Partners) - 272,776.636 shares at $21.16 per share (cost $4,148,893) 5,771,954 Van Eck Worldwide Insurance Trust (Van Eck): Worldwide Hard Assets Portfolio (Hard Assets) - 117,579.934 shares at $32.71 per share (cost $1,963,393) 3,846,040 Oppenheimer Variable Account Funds (Oppenheimer): Capital Appreciation Portfolio/VA (Capital Appreciation) - 87,180.052 shares at $41.43 per share (cost $2,549,369) 3,611,870 Aggressive Growth Portfolio/VA (Aggressive Growth) - 78,308.620 shares at $50.85 per share (cost $2,556,376) 3,981,993 Main Street Growth & Income Portfolio/VA - 220,678.540 shares at $24.78 per share (cost $3,674,045) 5,468,414 High Income Portfolio/VA (High Income) - 107,628.107 shares at $8.55 per share (cost $844,373) 920,220 Strategic Bond Portfolio/VA (Strategic Bond) - 376,258.826 shares at $5.26 per share (cost $1,799,183) 1,979,121 Summit Mutual Funds, Inc. Summit Pinnacle Series (Summit): EAFE International Index Portfolio (EAFE Intl.) - 27,820.341 shares at $98.66 per share (cost $2,195,685) 2,744,755 ------------------- NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS $ 100,124,894 ===================
The accompanying notes are an integral part of these financial statements. FS-3 AMERITAS VARIABLE SEPARATE ACCOUNT VL FOR THE PERIODS ENDED DECEMBER 31
Calvert -------------------------------------- Balanced ------------------ STATEMENTS OF OPERATIONS 2006 ------------------ Investment income: Dividend distributions received $ 14,989 Mortality and expense risk charge (5,787) ------------------ Net investment income(loss) 9,202 ------------------ Realized gain(loss) on investments: Net realized gain distributions 11,502 Net realized gain(loss) on sale of fund shares 32,504 ------------------ Net realized gain(loss) 44,006 ------------------ Change in unrealized appreciation/depreciation (3,136) ------------------ Net increase(decrease) in net assets resulting from operations $ 50,072 ================== Balanced -------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2006 2005 ------------------ ------------------- Increase(decrease) in net assets from operations: Net investment income(loss) $ 9,202 $ 5,616 Net realized gain(loss) 44,006 42,634 Net change in unrealized appreciation/depreciation (3,136) (9,085) ------------------ ------------------- Net increase(decrease) in net assets resulting from operations 50,072 39,165 ------------------ ------------------- Net increase(decrease) from policyowner transactions: Payments received from policyowners 51,407 66,688 Subaccounts transfers (including fixed account), net (32,079) (47,859) Transfers for policyowner benefits and terminations (112,448) (167,285) Policyowner maintenance charges (47,400) (59,196) ------------------ ------------------- Net increase(decrease) from policyowner transactions (140,520) (207,652) ------------------ ------------------- Total increase(decrease) in net assets (90,448) (168,487) Net assets at beginning of period 758,465 926,952 ------------------ ------------------- Net assets at end of period $ 668,017 $ 758,465 ================== =================== The accompanying notes are an integral part of these financial statements.
FS-4
Calvert -------------------------------------------------------------------------------------------------------------------- Small Cap Mid Cap International ------------------- ------------------- ------------------- 2006 2006 2006 ------------------- ------------------- ------------------- $ ---- $ ---- $ 7,161 (3,766) (5,091) (10,524) ------------------- ------------------- ------------------- (3,766) (5,091) (3,363) ------------------- ------------------- ------------------- ---- ---- 65,850 22,903 10,653 80,374 ------------------- ------------------- ------------------- 22,903 10,653 146,224 ------------------- ------------------- ------------------- (18,246) 28,535 153,757 ------------------- ------------------- ------------------- $ 891 $ 34,097 $ 296,618 =================== =================== ===================
Small Cap Mid Cap International -------------------------------------- -------------------------------------- -------------------------------------- 2006 2005 2006 2005 2006 2005 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ $ (3,766) $ (5,244) $ (5,091) $ (4,669) $ (3,363) $ (5,470) 22,903 49,710 10,653 8,655 146,224 68,090 (18,246) (123,798) 28,535 (6,329) 153,757 33,162 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 891 (79,332) 34,097 (2,343) 296,618 95,782 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 65,059 83,329 49,773 61,318 100,031 125,801 (20,643) (125,031) (2,749) 13,621 (42,276) (106,846) (82,245) (117,949) (7,991) (10,954) (42,427) (45,091) (35,514) (48,466) (35,493) (34,940) (66,580) (69,484) ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ (73,343) (208,117) 3,540 29,045 (51,252) (95,620) ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ (72,452) (287,449) 37,637 26,702 245,366 162 470,240 757,689 572,858 546,156 1,153,906 1,153,744 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ $ 397,788 $ 470,240 $ 610,495 $ 572,858 $ 1,399,272 $ 1,153,906 =================== ================== =================== ================== =================== ==================
FS-5 AMERITAS VARIABLE SEPARATE ACCOUNT VL FOR THE PERIODS ENDED DECEMBER 31
Ameritas -------------------------------------- Money Market ------------------ STATEMENTS OF OPERATIONS 2006 ------------------ Investment income: Dividend distributions received $ 429,183 Mortality and expense risk charge (77,941) ------------------ Net investment income(loss) 351,242 ------------------ Realized gain(loss) on investments: Net realized gain distributions ---- Net realized gain(loss) on sale of fund shares ---- ------------------ Net realized gain(loss) ---- ------------------ Change in unrealized appreciation/depreciation ---- ------------------ Net increase(decrease) in net assets resulting from operations $ 351,242 ================== Money Market -------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2006 2005 ------------------ ------------------- Increase(decrease) in net assets from operations: Net investment income(loss) $ 351,242 $ 117,070 Net realized gain(loss) ---- ---- Net change in unrealized appreciation/depreciation ---- ---- ------------------ ------------------- Net increase(decrease) in net assets resulting from operations 351,242 117,070 ------------------ ------------------- Net increase(decrease) from policyowner transactions: Payments received from policyowners 1,349,318 621,179 Subaccounts transfers (including fixed account), net (949,240) 10,077,861 Transfers for policyowner benefits and terminations (662,456) (785,375) Policyowner maintenance charges (806,245) (380,489) ------------------ ------------------- Net increase(decrease) from policyowner transactions (1,068,623) 9,533,176 ------------------ ------------------- Total increase(decrease) in net assets (717,381) 9,650,246 Net assets at beginning of period 9,650,246 ---- ------------------ ------------------- Net assets at end of period $ 8,932,865 $ 9,650,246 ================== =================== The accompanying notes are an integral part of these financial statements.
FS-6
Alger -------------------------------------------------------------------------------------------------------------------- Growth MidCap Small Cap ------------------- ------------------- ------------------- 2006 2006 2006 ------------------- ------------------- ------------------- $ 9,515 $ ---- $ ---- (65,616) (40,591) (24,189) ------------------- ------------------- ------------------- (56,101) (40,591) (24,189) ------------------- ------------------- ------------------- ---- 661,345 ---- 412,287 164,342 265,897 ------------------- ------------------- ------------------- 412,287 825,687 265,897 ------------------- ------------------- ------------------- (27,741) (349,767) 263,106 ------------------- ------------------- ------------------- $ 328,445 $ 435,329 $ 504,814 =================== =================== ===================
Growth MidCap Small Cap -------------------------------------- -------------------------------------- -------------------------------------- 2006 2005 2006 2005 2006 2005 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ $ (56,101) $ (48,908) $ (40,591) $ (39,207) $ (24,189) $ (22,072) 412,287 334,910 825,687 427,830 265,897 196,456 (27,741) 548,818 (349,767) 2,346 263,106 205,653 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 328,445 834,820 435,329 390,969 504,814 380,037 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 1,002,526 1,206,231 562,937 561,900 290,030 316,398 (422,660) (767,019) (72,814) (268,482) (91,864) (240,111) (737,356) (692,017) (298,590) (386,659) (308,535) (204,787) (606,308) (689,635) (345,974) (368,283) (227,870) (231,609) ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ (763,798) (942,440) (154,441) (461,524) (338,239) (360,109) ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ (435,353) (107,620) 280,888 (70,555) 166,575 19,928 8,125,996 8,233,616 4,716,026 4,786,581 2,718,974 2,699,046 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ $ 7,690,643 $ 8,125,996 $ 4,996,914 $ 4,716,026 $ 2,885,549 $ 2,718,974 =================== ================== =================== ================== =================== ==================
FS-7 AMERITAS VARIABLE SEPARATE ACCOUNT VL FOR THE PERIODS ENDED DECEMBER 31
Scudder -------------------------------------- Equity 500 ------------------ STATEMENTS OF OPERATIONS 2006 ------------------ Investment income: Dividend distributions received $ 179,469 Mortality and expense risk charge (130,650) ------------------ Net investment income(loss) 48,819 ------------------ Realized gain(loss) on investments: Net realized gain distributions ---- Net realized gain(loss) on sale of fund shares 598,395 ------------------ Net realized gain(loss) 598,395 ------------------ Change in unrealized appreciation/depreciation 1,453,624 ------------------ Net increase(decrease) in net assets resulting from operations $ 2,100,838 ================== Equity 500 -------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2006 2005 ------------------ ------------------- Increase(decrease) in net assets from operations: Net investment income(loss) $ 48,819 $ 97,303 Net realized gain(loss) 598,395 329,032 Net change in unrealized appreciation/depreciation 1,453,624 121,667 ------------------ ------------------- Net increase(decrease) in net assets resulting from operations 2,100,838 548,002 ------------------ ------------------- Net increase(decrease) from policyowner transactions: Payments received from policyowners 1,807,208 2,228,728 Subaccounts transfers (including fixed account), net (681,792) (231,416) Transfers for policyowner benefits and terminations (1,280,087) (995,680) Policyowner maintenance charges (1,055,822) (1,113,384) ------------------ ------------------- Net increase(decrease) from policyowner transactions (1,210,493) (111,752) ------------------ ------------------- Total increase(decrease) in net assets 890,345 436,250 Net assets at beginning of period 15,061,789 14,625,539 ------------------ ------------------- Net assets at end of period $ 15,952,134 $ 15,061,789 ================== =================== The accompanying notes are an integral part of these financial statements.
FS-8
Scudder Dreyfus Fidelity -------------------------------------- -------------------------------------- -------------------------------------- Small Cap Stock Equity-Income SC2 ------------------- ------------------- ------------------- 2006 2006 2006 ------------------- ------------------- ------------------- $ 17,989 $ 16,142 $ 123,271 (23,965) (8,380) (35,518) ------------------- ------------------- ------------------ (5,976) 7,762 87,753 ------------------- ------------------- ------------------ 120,346 ---- 507,984 142,170 61,215 152,044 ------------------- ------------------- ------------------ 262,516 61,215 660,028 ------------------- ------------------- ------------------ 169,756 62,093 (14,521) ------------------- ------------------- ------------------ $ 426,296 $ 131,070 $ 733,260 =================== =================== ==================
Small Cap Stock Equity-Income SC2 -------------------------------------- -------------------------------------- -------------------------------------- 2006 2005 2006 2005 2006 2005 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ $ (5,976) $ (5,053) $ 7,762 $ 7,917 $ 87,753 $ 24,768 262,516 113,396 61,215 38,585 660,028 304,377 169,756 (13,331) 62,093 (9,974) (14,521) (142,090) ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 426,296 95,012 131,070 36,528 733,260 187,055 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 299,247 301,294 469 156 500,371 571,736 280,761 299,623 (41,623) (35,558) (89,785) (156,209) (289,645) (116,770) (89,646) (38,199) (447,998) (464,770) (188,734) (173,315) (68,044) (74,654) (290,305) (315,979) ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 101,629 310,832 (198,844) (148,255) (327,717) (365,222) ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 527,925 405,844 (67,774) (111,727) 405,543 (178,167) 2,483,832 2,077,988 1,027,427 1,139,154 4,000,910 4,179,077 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ $ 3,011,757 $ 2,483,832 $ 959,653 $ 1,027,427 $ 4,406,453 $ 4,000,910 =================== ================== =================== ================== =================== ==================
FS-9 AMERITAS VARIABLE SEPARATE ACCOUNT VL FOR THE PERIODS ENDED DECEMBER 31
Fidelity -------------------------------------- High Income SC2 ------------------ STATEMENTS OF OPERATIONS 2006 ------------------ Investment income: Dividend distributions received $ 13,293 Mortality and expense risk charge (1,356) ------------------ Net investment income(loss) 11,937 ------------------ Realized gain(loss) on investments: Net realized gain distributions ---- Net realized gain(loss) on sale of fund shares (280) ------------------ Net realized gain(loss) (280) ------------------ Change in unrealized appreciation/depreciation 4,110 ------------------ Net increase(decrease) in net assets resulting from operations $ 15,767 ================== High Income SC2 -------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2006 2005 ------------------ ------------------- Increase(decrease) in net assets from operations: Net investment income(loss) $ 11,937 $ 20,047 Net realized gain(loss) (280) 909 Net change in unrealized appreciation/depreciation 4,110 (18,303) ------------------ ------------------- Net increase(decrease) in net assets resulting from operations 15,767 2,653 ------------------ ------------------- Net increase(decrease) from policyowner transactions: Payments received from policyowners 28,529 40,525 Subaccounts transfers (including fixed account), net 12,193 8,044 Transfers for policyowner benefits and terminations (15,559) (6,169) Policyowner maintenance charges (16,400) (17,940) ------------------ ------------------- Net increase(decrease) from policyowner transactions 8,763 24,460 ------------------ ------------------- Total increase(decrease) in net assets 24,530 27,113 Net assets at beginning of period 157,534 130,421 ------------------ ------------------- Net assets at end of period $ 182,064 $ 157,534 ================== =================== The accompanying notes are an integral part of these financial statements.
FS-10
Fidelity Franklin Templeton -------------------------------------- ----------------------------------------------------------------------------- Contrafund SC2 Global Asset Foreign Services ------------------- ------------------- ------------------- 2006 2006 2006 ------------------- ------------------- ------------------- $ 35,112 $ 37,433 $ 52,572 (29,656) (4,813) (36,291) ------------------- ------------------- ------------------ 5,456 32,620 16,281 ------------------- ------------------- ------------------ 307,170 33,463 ---- 89,009 27,397 265,193 ------------------- ------------------- ------------------ 396,179 60,860 265,193 ------------------- ------------------- ------------------ (55,125) 13,004 524,637 ------------------- ------------------- ------------------ $ 346,510 $ 106,484 $ 806,111 =================== =================== ==================
Contrafund SC2 Global Asset Foreign Securities -------------------------------------- -------------------------------------- -------------------------------------- 2006 2005 2006 2005 2006 2005 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ $ 5,456 $ (17,469) $ 32,620 $ 12,367 $ 16,281 $ 14,230 396,179 50,820 60,860 12,493 265,193 166,974 (55,125) 332,544 13,004 (8,943) 524,637 191,111 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 346,510 365,895 106,484 15,917 806,111 372,315 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 351,039 267,399 91,525 70,638 432,065 470,519 720,507 744,115 225 110,771 (320,197) 207,864 (289,076) (181,106) (83,008) (28,268) (299,068) (351,823) (195,135) (150,470) (44,694) (37,713) (252,472) (275,510) ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 587,335 679,938 (35,952) 115,428 (439,672) 51,050 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 933,845 1,045,833 70,532 131,345 366,439 423,365 2,928,199 1,882,366 535,475 404,130 4,182,765 3,759,400 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ $ 3,862,044 $ 2,928,199 $ 606,007 $ 535,475 $ 4,549,204 $ 4,182,765 =================== ================== =================== ================== =================== ==================
FS-11 AMERITAS VARIABLE SEPARATE ACCOUNT VL FOR THE PERIODS ENDED DECEMBER 31
Neuberger Berman -------------------------------------- Limited Maturity Bond ------------------ STATEMENTS OF OPERATIONS 2006 ------------------ Investment income: Dividend distributions received $ 206,644 Mortality and expense risk charge (56,843) ------------------ Net investment income(loss) 149,801 ------------------ Realized gain(loss) on investments: Net realized gain distributions ---- Net realized gain(loss) on sale of fund shares (41,505) ------------------ Net realized gain(loss) (41,505) ------------------ Change in unrealized appreciation/depreciation 108,826 ------------------ Net increase(decrease) in net assets resulting from operations $ 217,122 ================== Limited Maturity Bond -------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2006 2005 ------------------ ------------------- Increase(decrease) in net assets from operations: Net investment income(loss) $ 149,801 $ 131,840 Net realized gain(loss) (41,505) (26,591) Net change in unrealized appreciation/depreciation 108,826 (66,151) ------------------ ------------------- Net increase(decrease) in net assets resulting from operations 217,122 39,098 ------------------ ------------------- Net increase(decrease) from policyowner transactions: Payments received from policyowners 846,104 1,017,966 Subaccounts transfers (including fixed account), net (73,670) 309,110 Transfers for policyowner benefits and terminations (713,920) (482,626) Policyowner maintenance charges (496,971) (544,754) ------------------ ------------------- Net increase(decrease) from policyowner transactions (438,457) 299,696 ------------------ ------------------- Total increase(decrease) in net assets (221,335) 338,794 Net assets at beginning of period 6,708,904 6,370,110 ------------------ ------------------- Net assets at end of period $ 6,487,569 $ 6,708,904 ================== =================== The accompanying notes are an integral part of these financial statements.
FS-12
Neuberger Berman Van Eck ----------------------------------------------------------------------------- -------------------------------------- Growth Partners Hard Assets ------------------- ------------------- ------------------- 2006 2006 2006 ------------------- ------------------- ------------------- $ ---- $ 41,704 $ 2,042 (34,581) (47,087) (29,539) ------------------- ------------------- ------------------ (34,581) (5,383) (27,497) ------------------- ------------------- ------------------ ---- 642,327 173,742 259,001 255,261 369,872 ------------------- ------------------- ------------------ 259,001 897,588 543,614 ------------------- ------------------- ------------------ 290,205 (272,981) 171,618 ------------------- ------------------- ------------------ $ 514,625 $ 619,224 $ 687,735 =================== =================== ==================
Growth Partners Hard Assets -------------------------------------- -------------------------------------- -------------------------------------- 2006 2005 2006 2005 2006 2005 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ $ (34,581) $ (31,725) $ (5,383) $ 8,033 $ (27,497) $ (12,867) 259,001 163,412 897,588 215,169 543,614 319,473 290,205 328,613 (272,981) 535,176 171,618 759,441 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 514,625 460,300 619,224 758,378 687,735 1,066,047 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 478,516 527,149 689,513 650,857 317,210 325,393 (118,316) (154,394) (122,894) 546,316 407,592 (364,518) (377,311) (270,742) (451,415) (303,700) (269,684) (179,693) (260,672) (284,950) (353,270) (346,780) (200,769) (184,878) ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ (277,783) (182,937) (238,066) 546,693 254,349 (403,696) ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 236,842 277,363 381,158 1,305,071 942,084 662,351 3,965,257 3,687,894 5,390,796 4,085,725 2,903,956 2,241,605 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ $ 4,202,099 $ 3,965,257 $ 5,771,954 $ 5,390,796 $ 3,846,040 $ 2,903,956 =================== ================== =================== ================== =================== ==================
FS-13 AMERITAS VARIABLE SEPARATE ACCOUNT VL FOR THE PERIODS ENDED DECEMBER 31
Oppenheimer -------------------------------------- Capital Appreciation ------------------ STATEMENTS OF OPERATIONS 2006 ------------------ Investment income: Dividend distributions received $ 13,796 Mortality and expense risk charge (30,695) ------------------ Net investment income(loss) (16,899) ------------------ Realized gain(loss) on investments: Net realized gain distributions ---- Net realized gain(loss) on sale of fund shares 135,434 ------------------ Net realized gain(loss) 135,434 ------------------ Change in unrealized appreciation/depreciation 126,531 ------------------ Net increase(decrease) in net assets resulting from operations $ 245,066 ================== Capital Appreciation -------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2006 2005 ------------------ ------------------- Increase(decrease) in net assets from operations: Net investment income(loss) $ (16,899) $ 3,110 Net realized gain(loss) 135,434 225,462 Net change in unrealized appreciation/depreciation 126,531 (83,735) ------------------ ------------------- Net increase(decrease) in net assets resulting from operations 245,066 144,837 ------------------ ------------------- Net increase(decrease) from policyowner transactions: Payments received from policyowners 382,145 456,807 Subaccounts transfers (including fixed account), net (126,780) (405,823) Transfers for policyowner benefits and terminations (219,818) (474,637) Policyowner maintenance charges (250,725) (275,632) ------------------ ------------------- Net increase(decrease) from policyowner transactions (215,178) (699,285) ------------------ ------------------- Total increase(decrease) in net assets 29,888 (554,448) Net assets at beginning of period 3,581,982 4,136,430 ------------------ ------------------- Net assets at end of period $ 3,611,870 $ 3,581,982 ================== =================== The accompanying notes are an integral part of these financial statements.
FS-14
Oppenheimer -------------------------------------------------------------------------------------------------------------------- Aggressive Growth Growth & Income High Income ------------------- ------------------- ------------------- 2006 2006 2006 ------------------- ------------------- ------------------- $ ---- $ 61,134 $ 70,980 (35,258) (45,618) (7,970) ------------------- ------------------- ------------------ (35,258) 15,516 63,010 ------------------- ------------------- ------------------ ---- ---- ---- 227,298 259,180 6,947 ------------------- ------------------- ------------------ 227,298 259,180 6,947 ------------------- ------------------- ------------------ (102,346) 436,374 5,789 ------------------- ------------------- ------------------ $ 89,694 $ 711,070 $ 75,746 =================== =================== ==================
Aggressive Growth Growth & Income High Income -------------------------------------- -------------------------------------- -------------------------------------- 2006 2005 2006 2005 2006 2005 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ $ (35,258) $ (34,605) $ 15,516 $ 27,090 $ 63,010 $ 54,039 227,298 171,902 259,180 148,921 6,947 12,947 (102,346) 308,071 436,374 87,675 5,789 (52,529) ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 89,694 445,368 711,070 263,686 75,746 14,457 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 490,816 571,028 669,969 787,691 109,469 155,437 (191,068) (298,021) (412,748) (285,651) (61,893) (35,396) (339,167) (230,840) (523,210) (333,566) (51,562) (62,722) (314,493) (343,664) (387,273) (434,075) (91,609) (104,757) ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ (353,912) (301,497) (653,262) (265,601) (95,595) (47,438) ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ (264,218) 143,871 57,808 (1,915) (19,849) (32,981) 4,246,211 4,102,340 5,410,606 5,412,521 940,069 973,050 ------------------- ------------------ ------------------- ------------------ ------------------- ------------------ $ 3,981,993 $ 4,246,211 $ 5,468,414 $ 5,410,606 $ 920,220 $ 940,069 =================== ================== =================== ================== =================== ==================
FS-15 AMERITAS VARIABLE SEPARATE ACCOUNT VL FOR THE PERIODS ENDED DECEMBER 31
Oppenheimer -------------------------------------- Strategic Bond ------------------ STATEMENTS OF OPERATIONS 2006 ------------------ Investment income: Dividend distributions received $ 79,120 Mortality and expense risk charge (16,356) ------------------ Net investment income(loss) 62,764 ------------------ Realized gain(loss) on investments: Net realized gain distributions ---- Net realized gain(loss) on sale of fund shares 10,729 ------------------ Net realized gain(loss) 10,729 ------------------ Change in unrealized appreciation/depreciation 47,067 ------------------ Net increase(decrease) in net assets resulting from operations $ 120,560 ================== Strategic Bond -------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2006 2005 ------------------ ------------------- Increase(decrease) in net assets from operations: Net investment income(loss) $ 62,764 $ 59,334 Net realized gain(loss) 10,729 19,879 Net change in unrealized appreciation/depreciation 47,067 (49,652) ------------------ ------------------- Net increase(decrease) in net assets resulting from operations 120,560 29,561 ------------------ ------------------- Net increase(decrease) from policyowner transactions: Payments received from policyowners 274,819 234,609 Subaccounts transfers (including fixed account), net 95,921 146,754 Transfers for policyowner benefits and terminations (76,799) (148,407) Policyowner maintenance charges (141,577) (135,931) ------------------ ------------------- Net increase(decrease) from policyowner transactions 152,364 97,025 ------------------ ------------------- Total increase(decrease) in net assets 272,924 126,586 Net assets at beginning of period 1,706,197 1,579,611 ------------------ ------------------- Net assets at end of period $ 1,979,121 $ 1,706,197 ================== =================== The accompanying notes are an integral part of these financial statements.
FS-16 Summit -------------------------------------- EAFE Intl. ------------------- 2006 ------------------- $ 31,341 (18,694) ------------------- 12,647 ------------------- 38,000 34,775 ------------------- 72,775 ------------------- 387,021 ------------------- $ 472,443 =================== EAFE Intl. -------------------------------------- 2006 2005 ------------------- ------------------ $ 12,647 $ (5,924) 72,775 3,040 387,021 162,049 ------------------- ------------------ 472,443 159,165 ------------------- ------------------ 217,203 99,983 767,199 1,328,114 (126,295) (9,991) (118,086) (44,980) ------------------- ------------------ 740,021 1,373,126 ------------------- ------------------ 1,212,464 1,532,291 1,532,291 ---- ------------------- ------------------ $ 2,744,755 $ 1,532,291 =================== ================== FS-17 AMERITAS VARIABLE SEPARATE ACCOUNT VL NOTES TO FINANCIAL STATEMENTS FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005 1. ORGANIZATION Ameritas Variable Separate Account VL (the Account) was established on May 17, 2002, under Nebraska law by Ameritas Variable Life Insurance Company (AVLIC), a wholly owned subsidiary of Ameritas Life Insurance Corp. (ALIC) (an indirect wholly owned subsidiary of UNIFI Mutual Holding Company). The assets of the Account are segregated from AVLIC's other assets and are used only to support certain AVLIC variable life products. Management believes these financial statements should be read in conjunction with the policyowner statements and policy and fund prospectuses. The Account is registered under the Investment Company Act of 1940, as amended, as a unit investment trust. The Account is made up of variable investment options called subaccounts for which accumulation units are separately maintained. Each subaccount corresponds to a single underlying non-publicly traded portfolio issued through a series fund. At December 31, 2006, there are twenty-six subaccounts within the Account.
Calvert Asset Management Company, Inc. The Dreyfus Corporation (Advisor) (See Note 3) Dreyfus Calvert (Fund) *Stock *Balanced (Subaccount) (Commenced October 31, 2002) (Commenced October 31, 2002) *Small Cap Fidelity Management & Research Company (Commenced October 31, 2002) Fidelity *Mid Cap *Equity-Income SC2 (Commenced October 31, 2002) (Commenced October 31, 2002) *International *High Income SC2 (Commenced October 31, 2002) (Commenced October 31, 2002) *Contrafund SC2 Ameritas (Commenced October 31, 2002) *Money Market (Commenced May 3, 2005) Templeton Investment Counsel, LLC Franklin Templeton Fred Alger Management, Inc. *Global Asset Alger (Commenced October 31, 2002) *Growth *Foreign Securities (Commenced October 31, 2002) (Commenced October 31, 2002) *MidCap (Commenced October 31, 2002) Neuberger Berman Management Inc. *Small Cap Neuberger Berman (Commenced October 31, 2002) *Limited Maturity Bond (Commenced October 31, 2002) Deutsche Asset Management, Inc. *Growth Scudder (Commenced October 31, 2002) *Equity 500 *Partners (Commenced October 31, 2002) (Commenced October 31, 2002) *Small Cap (Commenced October 31, 2002) FS-18 1. ORGANIZATION, continued Van Eck Associates Oppenheimer Funds, Inc., continued Van Eck Oppenheimer, continued *Hard Assets *High Income (Commenced October 31, 2002) (Commenced October 31, 2002) *Strategic Bond Oppenheimer Funds, Inc. (Commenced October 31, 2002) Oppenheimer *Capital Appreciation Summit Investment Partners, Inc. (Commenced October 31, 2002) (See Note 3) *Aggressive Growth Summit (Commenced October 31, 2002) *EAFE Intl. *Growth & Income (Commenced May 2, 2005) (Commenced October 31, 2002)
2. ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. INVESTMENTS The assets of the subaccounts are carried at the net asset value of the underlying portfolios, adjusted for the accrual of dividends. The value of the policyowners' units corresponds to the investment in the underlying subaccounts. The availability of investment portfolio and subaccount options may vary between products. Share transactions and security transactions are accounted for on a trade date basis. Income from dividends and gains from realized gain distributions are recorded on the ex-distribution date. Realized gains and losses on the sales of investments represent the difference between the proceeds from sales of investments by the subaccounts and the cost of such shares, which is determined on a weighted average cost basis. FEDERAL AND STATE TAXES The operations of the Account are included in the federal income tax return of AVLIC, which is taxed as a life insurance company under the Internal Revenue Code. AVLIC has the right to charge the Account any federal income taxes, or provisions for federal income taxes, attributed to the operations of the Account or to the policies funded in the Account. Charges for state and local taxes, if any, attributable to the Account may also be made. Currently, AVLIC does not make a charge for income taxes or other taxes. 3. RELATED PARTIES Affiliates of AVLIC provided management, administrative and investment advisory services for the Ameritas, Calvert and Summit subaccounts for a fee. These fees are reflected in the daily value of the underlying portfolio share price. The fee is computed separately for each underlying portfolio on daily average net assets, at an annual rate, as of December 31, 2006 and 2005 as follows: FS-19 3. RELATED PARTIES, continued
Investment Advisory Management/ Fee Administrative Fee(1) ---------------------- ----------------------- Ameritas: Money Market 0.00200 0.00050 Calvert: Balanced 0.00425 0.00275 Small Cap 0.00750 0.00250 Mid Cap 0.00650 0.00250 International 0.00750 0.00350 Summit: EAFE Intl. 0.00560 0.00100
(1) The administrative fee for the Ameritas portfolios is .0005 annually, with a $50,000 minimum annual fee. 4. PURCHASES AND SALES OF INVESTMENTS The cost of purchases and proceeds from sales of investments in the subaccounts for the periods ended December 31, 2006 were as follows:
Purchases Sales ----------------------- ----------------------- Calvert: Balanced $ 88,919 $ 208,735 Small Cap 50,102 127,211 Mid Cap 46,670 48,221 International 215,512 204,277 Ameritas: Money Market 1,615,196 2,334,460 Alger: Growth 498,869 1,318,767 MidCap 1,042,359 576,046 Small Cap 207,790 570,217 Scudder: Equity 500 1,047,902 2,209,576 Small Cap 700,320 484,321 Dreyfus: Stock 11,932 203,013 Fidelity: Equity-Income SC2 959,984 691,964 High Income SC2 64,219 43,520 Contrafund SC2 1,272,551 372,590 FS-20 4. PURCHASES AND SALES OF INVESTMENTS, continued Purchases Sales ----------------------- ----------------------- Franklin Templeton: Global Asset $ 198,554 $ 168,422 Foreign Securities 323,665 747,056 Neuberger Berman: Limited Maturity Bond 847,682 1,136,338 Growth 350,242 662,605 Partners 1,186,742 787,864 Van Eck: Hard Assets 1,101,940 701,346 Oppenheimer: Capital Appreciation 273,406 505,484 Aggressive Growth 235,423 624,593 Growth & Income 280,382 918,127 High Income 129,652 162,237 Strategic Bond 408,630 193,502 Summit: EAFE Intl. 1,081,182 290,514
5. UNIT VALUES The unit value, units, net assets, investment income ratio (Inv. Income Ratio), expense ratio and total return (certain of which are defined below) are included in the following table (amounts have been rounded). Inv. Income Ratio - The Inv. Income Ratio represents the dividend distributions received divided by average daily net assets. This ratio excludes the mortality and expense risk charge and is affected by the timing of the declaration of dividends by the underlying fund portfolio. Expense Ratio - The Expense Ratio represents the annualized contract expenses of the Account for the period indicated and includes only those expenses that are charged through a reduction of the unit value. Included in this category are mortality and expense charges. These fees range from .85 percent to .90 percent (annualized) of net assets. Expenses of the underlying fund portfolios and charges made directly to policyowner accounts through the redemption of units are excluded. For this separate account, charges made through the redemption of units ranged up to $27 per policy monthly, depending on the product and options selected. On all life insurance policies, cost of insurance is charged to each policyowner monthly through the redemption of units. The cost of insurance is determined based upon several variables, including policyowners death benefit amount and account value. FS-21 5. UNIT VALUES, continued Total Return - The Total Return represents the change in the unit value reported year-to-date, however, subaccounts which commenced during a year, as shown in Note 1, are based on shorter return periods. These percentages do not include any expenses assessed through the redemption of units. As the total return is presented as a range of minimum to maximum values, based on the product grouping representing the minimum and maximum expense ratio amounts, some individual contract total returns are not within the ranges presented. Total returns and expense ratios in this disclosure may not be applicable to all policies.
At December 31 For the Periods Ended December 31 ---------------------------------------------- ------------------------------------------------- Inv. Unit Net Assets Income Expense Total Value ($) Units ($) Ratio % Ratio % Return % ------------------- ------------ ------------- ----------- ------------------ ------------------ Min Max Min Max Min Max Calvert: Balanced 2006 2.41 19.49 85,190 668,017 2.22 0.85 0.90 7.80 7.86 2005 2.24 18.07 93,185 758,465 1.47 0.85 0.90 4.71 4.76 2004 2.14 17.25 101,673 926,952 1.74 0.85 0.90 7.29 7.34 2003 1.82 16.07 93,244 774,639 2.34 0.85 0.90 18.25 18.31 2002 1.54 13.58 39,758 328,805 2.91 0.85 0.90 0.06 0.07 Small Cap 2006 16.06 16.85 23,617 397,788 ---- 0.85 0.90 (0.11) (0.06) 2005 16.08 16.86 27,906 470,240 ---- 0.85 0.90 (9.98) (9.93) 2004 17.86 18.72 40,492 757,689 ---- 0.85 0.90 9.46 9.52 2003 15.76 17.09 45,986 785,117 1.59 0.85 0.90 38.33 38.40 2002 11.39 12.35 36,412 449,211 1.63 0.85 0.90 (1.59) (1.58) Mid Cap 2006 17.59 30.89 31,964 610,495 ---- 0.85 0.90 5.92 5.98 2005 16.59 29.16 31,720 572,858 ---- 0.85 0.90 (0.48) (0.43) 2004 16.67 29.30 29,934 546,156 ---- 0.85 0.90 8.35 8.41 2003 15.37 23.75 26,707 459,008 ---- 0.85 0.90 30.50 30.57 2002 11.77 20.72 20,681 247,844 ---- 0.85 0.90 0.23 0.24 International 2006 18.70 29.82 71,340 1,399,272 0.58 0.85 0.90 26.39 26.45 2005 14.79 23.60 75,281 1,153,906 0.35 0.85 0.90 8.96 9.01 2004 13.57 21.66 82,549 1,153,744 0.80 0.85 0.90 16.89 16.95 2003 11.60 14.16 91,708 1,093,817 2.59 0.85 0.90 30.51 30.57 2002 8.88 14.20 66,088 606,244 ---- 0.85 0.90 1.33 1.34 Ameritas: Money Market 2006 1.06 1.06 8,440,953 8,932,865 4.67 0.85 0.90 3.87 3.92 2005 1.02 1.02 9,475,868 9,650,246 2.29 0.85 0.90 1.18 1.67 2004 ---- ---- ---- ---- ---- ---- ---- ---- ---- 2003 ---- ---- ---- ---- ---- ---- ---- ---- ---- 2002 ---- ---- ---- ---- ---- ---- ---- ---- ---- FS-22 5. UNIT VALUES, continued At December 31 For the Periods Ended December 31 ---------------------------------------------- ------------------------------------------------- Inv. Unit Net Assets Income Expense Total Value ($) Units ($) Ratio % Ratio % Return % ------------------- ------------ ------------- ----------- ------------------ ------------------ Min Max Min Max Min Max Alger: Growth 2006 22.36 44.30 333,421 7,690,643 0.12 0.85 0.90 4.21 4.26 2005 21.44 42.51 366,937 8,125,996 0.23 0.85 0.90 11.04 11.09 2004 19.30 38.29 414,185 8,233,616 ---- 0.85 0.90 4.55 4.60 2003 18.45 36.62 418,219 7,916,463 ---- 0.85 0.90 33.95 34.02 2002 13.77 31.49 292,548 4,110,777 ---- 0.85 0.90 (3.18) (3.17) MidCap 2006 23.95 30.20 161,821 4,996,914 ---- 0.85 0.90 9.16 9.21 2005 21.94 27.65 167,193 4,716,026 ---- 0.85 0.90 8.85 8.90 2004 25.39 36.97 185,137 4,786,581 ---- 0.85 0.90 12.03 12.09 2003 22.65 33.00 188,320 4,347,310 ---- 0.85 0.90 46.47 46.55 2002 15.46 22.53 117,978 1,842,439 ---- 0.85 0.90 (2.65) (2.64) Small Cap 2006 15.82 26.91 172,805 2,885,549 ---- 0.85 0.90 18.95 19.01 2005 13.29 22.62 196,937 2,718,974 ---- 0.85 0.90 15.84 15.90 2004 11.47 19.53 228,270 2,699,046 ---- 0.85 0.90 15.53 15.58 2003 9.92 16.90 245,955 2,512,355 ---- 0.85 0.90 41.07 41.14 2002 7.03 20.28 138,638 991,207 ---- 0.85 0.90 0.51 0.52 Scudder: Equity 500 2006 15.21 15.22 1,048,123 15,952,134 1.17 0.85 0.90 14.49 14.55 2005 13.29 13.29 1,133,549 15,061,789 1.52 0.85 0.90 3.74 3.79 2004 12.80 12.81 1,142,454 14,625,539 1.10 0.85 0.90 9.60 9.66 2003 11.68 11.68 1,179,669 13,772,501 1.24 0.85 0.90 27.01 27.08 2002 9.18 9.20 799,892 7,349,337 1.11 0.85 0.90 (0.51) (0.50) Small Cap 2006 18.06 18.08 166,794 3,011,757 0.64 0.85 0.90 16.44 16.50 2005 15.50 15.53 160,248 2,483,832 0.62 0.85 0.90 3.33 3.38 2004 14.99 15.03 138,597 2,077,988 0.43 0.85 0.90 16.70 16.76 2003 12.84 12.88 132,033 1,695,484 0.99 0.85 0.90 45.12 45.19 2002 8.83 8.87 86,826 767,963 0.76 0.85 0.90 2.76 2.77 Dreyfus: Stock 2006 24.94 38.54 38,221 959,653 1.63 0.85 0.90 14.47 14.53 2005 21.77 33.67 46,865 1,027,427 1.60 0.85 0.90 3.76 3.81 2004 20.97 32.45 53,985 1,139,154 1.71 0.85 0.90 9.65 9.70 2003 19.12 29.59 72,911 1,400,739 1.47 0.85 0.90 27.22 27.28 2002 15.02 23.26 68,813 1,036,643 0.38 0.85 0.90 (0.55) (0.54) FS-23 5. UNIT VALUES, continued At December 31 For the Periods Ended December 31 ---------------------------------------------- ------------------------------------------------- Inv. Unit Net Assets Income Expense Total Value ($) Units ($) Ratio % Ratio % Return % ------------------- ------------ ------------- ----------- ------------------ ------------------ Min Max Min Max Min Max Fidelity: Equity-Income SC2 2006 34.53 34.54 127,652 4,406,453 2.95 0.85 0.90 18.86 18.92 2005 29.04 29.06 137,820 4,000,910 1.46 0.85 0.90 4.63 4.68 2004 27.74 27.77 150,687 4,179,077 1.37 0.85 0.90 10.24 10.29 2003 25.15 25.20 135,829 3,415,803 1.27 0.85 0.90 28.87 28.93 2002 19.48 19.55 90,138 1,758,236 ---- 0.85 0.90 1.83 1.84 High Income SC2 2006 11.01 11.04 16,527 182,064 8.33 0.85 0.90 10.04 10.09 2005 10.00 10.03 15,743 157,534 12.96 0.85 0.90 1.40 1.45 2004 9.86 9.89 13,221 130,421 6.81 0.85 0.90 8.40 8.46 2003 9.09 9.13 11,028 100,317 3.34 0.85 0.90 25.62 25.68 2002 7.23 7.26 3,362 24,335 ---- 0.85 0.90 5.80 5.81 Contrafund SC2 2006 33.90 33.92 113,863 3,862,044 1.01 0.85 0.90 10.44 10.49 2005 30.70 30.70 95,384 2,928,199 0.11 0.85 0.90 15.61 15.67 2004 25.87 26.54 70,930 1,882,366 0.19 0.85 0.90 14.13 14.18 2003 22.67 23.24 50,987 1,184,623 0.19 0.85 0.90 27.05 27.11 2002 17.84 18.31 24,029 438,854 ---- 0.85 0.90 (1.25) (1.24) Franklin Templeton: Global Asset 2006 26.73 29.81 20,601 606,007 6.62 0.85 0.90 20.03 20.09 2005 22.27 24.83 21,719 535,475 3.46 0.85 0.90 2.63 2.68 2004 21.81 24.18 16,891 404,130 2.50 0.85 0.90 14.68 14.74 2003 19.02 21.07 10,819 225,894 2.86 0.85 0.90 30.78 30.84 2002 14.54 16.10 1,709 27,035 ---- 0.85 0.90 2.61 2.62 Foreign Securities 2006 19.08 25.31 179,918 4,549,204 1.23 0.85 0.90 20.36 20.42 2005 15.85 21.02 199,196 4,182,765 1.20 0.85 0.90 9.19 9.24 2004 14.52 19.24 195,724 3,759,400 1.04 0.85 0.90 17.47 17.53 2003 12.36 16.37 176,614 2,886,165 1.75 0.85 0.90 31.03 31.10 2002 9.43 12.49 132,305 1,649,187 ---- 0.85 0.90 0.28 0.28 Neuberger Berman: Limited Maturity Bond 2006 14.86 15.61 431,216 6,487,569 3.10 0.85 0.90 3.27 3.32 2005 14.38 15.11 460,360 6,708,904 2.84 0.85 0.90 0.54 0.59 2004 14.30 15.03 439,874 6,370,110 3.60 0.85 0.90 (0.12) (0.07) 2003 14.31 15.05 410,031 5,939,926 5.02 0.85 0.90 1.51 1.56 2002 14.09 15.74 297,939 4,236,833 ---- 0.85 0.90 0.90 0.90 FS-24 5. UNIT VALUES, continued At December 31 For the Periods Ended December 31 ---------------------------------------------- ------------------------------------------------- Inv. Unit Net Assets Income Expense Total Value ($) Units ($) Ratio % Ratio % Return % ------------------- ------------ ------------- ----------- ------------------ ------------------ Min Max Min Max Min Max Neuberger Berman, continued: Growth 2006 15.08 18.81 218,729 4,202,099 ---- 0.85 0.90 13.05 13.11 2005 13.34 16.63 232,275 3,965,257 ---- 0.85 0.90 12.49 12.54 2004 11.86 14.78 244,324 3,687,894 ---- 0.85 0.90 15.56 15.62 2003 10.27 12.78 241,953 3,121,059 ---- 0.85 0.90 30.23 30.29 2002 7.88 15.33 178,689 1,772,016 ---- 0.85 0.90 (3.44) (3.43) Partners 2006 23.98 23.99 240,731 5,771,954 0.75 0.85 0.90 11.24 11.30 2005 21.55 21.57 250,219 5,390,796 1.02 0.85 0.90 16.99 17.05 2004 18.41 18.44 221,970 4,085,725 0.01 0.85 0.90 17.91 17.97 2003 15.61 15.63 213,932 3,338,248 ---- 0.85 0.90 33.88 33.95 2002 11.64 11.68 157,646 1,836,533 ---- 0.85 0.90 0.91 0.92 Van Eck: Hard Assets 2006 29.48 33.75 129,486 3,846,040 0.06 0.85 0.90 23.38 23.44 2005 23.88 27.35 120,443 2,903,956 0.34 0.85 0.90 50.32 50.40 2004 15.88 18.20 139,901 2,241,605 0.38 0.85 0.90 22.87 22.93 2003 12.92 14.81 145,409 1,894,852 0.36 0.85 0.90 43.78 43.85 2002 8.98 10.32 117,789 1,066,207 ---- 0.85 0.90 8.95 8.96 Oppenheimer: Capital Appreciation 2006 20.18 47.34 167,411 3,611,870 0.38 0.85 0.90 6.99 7.04 2005 18.86 44.25 181,053 3,581,982 0.93 0.85 0.90 4.16 4.21 2004 18.09 42.48 219,849 4,136,430 0.31 0.85 0.90 5.98 6.03 2003 17.06 37.87 222,660 3,957,271 0.28 0.85 0.90 29.77 29.84 2002 13.14 30.89 143,674 1,927,017 ---- 0.85 0.90 (1.30) (1.29) Aggressive Growth 2006 18.57 59.12 206,234 3,981,993 ---- 0.85 0.90 2.04 2.09 2005 18.19 57.93 223,031 4,246,211 ---- 0.85 0.90 11.33 11.38 2004 16.33 50.89 239,861 4,102,340 ---- 0.85 0.90 18.70 18.76 2003 13.75 42.87 246,187 3,555,128 ---- 0.85 0.90 24.47 24.53 2002 11.04 35.22 160,072 1,825,948 ---- 0.85 0.90 (2.58) (2.57) Growth & Income 2006 17.25 24.79 308,596 5,468,414 1.14 0.85 0.90 14.00 14.06 2005 15.12 21.74 347,708 5,410,606 1.36 0.85 0.90 5.03 5.08 2004 14.39 20.70 365,944 5,412,521 0.84 0.85 0.90 8.48 8.53 2003 13.26 19.08 372,564 5,060,948 0.75 0.85 0.90 25.59 25.65 2002 10.55 15.96 267,854 2,890,299 ---- 0.85 0.90 (1.56) (1.56) FS-25 5. UNIT VALUES, continued At December 31 For the Periods Ended December 31 ---------------------------------------------- ------------------------------------------------- Inv. Unit Net Assets Income Expense Total Value ($) Units ($) Ratio % Ratio % Return % ------------------- ------------ ------------- ----------- ------------------ ------------------ Min Max Min Max Min Max Oppenheimer, continued: High Income 2006 14.58 15.78 58,820 920,220 7.57 0.85 0.90 8.45 8.50 2005 13.44 14.55 65,103 940,069 6.42 0.85 0.90 1.40 1.45 2004 13.26 14.34 68,550 973,050 5.93 0.85 0.90 7.99 8.40 2003 11.11 13.27 71,070 933,364 5.16 0.85 0.90 22.85 22.91 2002 9.04 10.80 43,844 471,458 ---- 0.85 0.90 5.17 5.18 Strategic Bond 2006 6.72 17.48 141,360 1,979,121 4.13 0.85 0.90 6.53 6.58 2005 6.31 16.40 123,518 1,706,197 4.48 0.85 0.90 1.75 1.80 2004 6.20 16.11 116,543 1,579,611 4.74 0.85 0.90 7.70 7.75 2003 5.76 14.95 103,497 1,248,287 4.68 0.85 0.90 17.02 17.08 2002 4.92 12.77 69,088 749,146 ---- 0.85 0.90 4.42 4.43 Summit: EAFE Intl. 2006 101.32 101.40 27,069 2,744,755 1.42 0.85 0.90 24.44 24.50 2005 81.42 81.45 18,814 1,532,291 ---- 0.85 0.90 14.60 15.05 2004 ---- ---- ---- ---- ---- ---- ---- ---- ---- 2003 ---- ---- ---- ---- ---- ---- ---- ---- ---- 2002 ---- ---- ---- ---- ---- ---- ---- ---- ----
6. CHANGES IN UNITS OUTSTANDING The changes in units outstanding for the periods ended December 31 were as follows:
2006 2005 -------------------- -------------------- Calvert: Balanced Units issued 39,330 53,928 Units redeemed (47,325) (62,416) -------------------- -------------------- Net increase(decrease) (7,995) (8,488) ==================== ==================== Small Cap Units issued 26,132 35,506 Units redeemed (30,421) (48,092) -------------------- -------------------- Net increase(decrease) (4,289) (12,586) ==================== ==================== Mid Cap Units issued 28,158 26,431 Units redeemed (27,914) (24,645) -------------------- -------------------- Net increase(decrease) 244 1,786 ==================== ==================== FS-26 6. CHANGES IN UNITS OUTSTANDING, continued 2006 2005 -------------------- -------------------- Calvert, continued: International Units issued 128,996 147,659 Units redeemed (132,937) (154,927) -------------------- -------------------- Net increase(decrease) (3,941) (7,268) ==================== ==================== Ameritas: Money Market Units issued 22,558,726 21,872,690 Units redeemed (23,593,641) (12,396,822) -------------------- -------------------- Net increase(decrease) (1,034,915) 9,475,868 ==================== ==================== Alger: Growth Units issued 846,666 1,034,979 Units redeemed (880,182) (1,082,227) -------------------- -------------------- Net increase(decrease) (33,516) (47,248) ==================== ==================== MidCap Units issued 195,757 196,318 Units redeemed (201,129) (214,262) -------------------- -------------------- Net increase(decrease) (5,372) (17,944) ==================== ==================== Small Cap Units issued 281,522 319,331 Units redeemed (305,654) (350,664) -------------------- -------------------- Net increase(decrease) (24,132) (31,333) ==================== ==================== Scudder: Equity 500 Units issued 2,535,528 3,005,687 Units redeemed (2,620,954) (3,014,592) -------------------- -------------------- Net increase(decrease) (85,426) (8,905) ==================== ==================== Small Cap Units issued 418,868 450,651 Units redeemed (412,322) (429,000) -------------------- -------------------- Net increase(decrease) 6,546 21,651 ==================== ==================== Dreyfus: Stock Units issued 20 149 Units redeemed (8,664) (7,269) -------------------- -------------------- Net increase(decrease) (8,644) (7,120) ==================== ==================== FS-27 6. CHANGES IN UNITS OUTSTANDING, continued 2006 2005 -------------------- -------------------- Fidelity: Equity-Income SC2 Units issued 359,227 425,033 Units redeemed (369,395) (437,900) -------------------- -------------------- Net increase(decrease) (10,168) (12,867) ==================== ==================== High Income SC2 Units issued 12,873 20,307 Units redeemed (12,089) (17,785) -------------------- -------------------- Net increase(decrease) 784 2,522 ==================== ==================== Contrafund SC2 Units issued 150,888 94,488 Units redeemed (132,409) (70,034) -------------------- -------------------- Net increase(decrease) 18,479 24,454 ==================== ==================== Franklin Templeton: Global Asset Units issued 35,335 24,343 Units redeemed (36,453) (19,515) -------------------- -------------------- Net increase(decrease) (1,118) 4,828 ==================== ==================== Foreign Securities Units issued 454,968 584,230 Units redeemed (474,246) (580,758) -------------------- -------------------- Net increase(decrease) (19,278) 3,472 ==================== ==================== Neuberger Berman: Limited Maturity Bond Units issued 1,705,207 2,085,783 Units redeemed (1,734,351) (2,065,297) -------------------- -------------------- Net increase(decrease) (29,144) 20,486 ==================== ==================== Growth Units issued 732,521 988,806 Units redeemed (746,067) (1,000,855) -------------------- -------------------- Net increase(decrease) (13,546) (12,049) ==================== ==================== Partners Units issued 840,008 1,046,542 Units redeemed (849,496) (1,018,293) -------------------- -------------------- Net increase(decrease) (9,488) 28,249 ==================== ==================== FS-28 6. CHANGES IN UNITS OUTSTANDING, continued 2006 2005 -------------------- -------------------- Van Eck: Hard Assets Units issued 358,197 514,493 Units redeemed (349,154) (533,951) -------------------- -------------------- Net increase(decrease) 9,043 (19,458) ==================== ==================== Oppenheimer: Capital Appreciation Units issued 306,192 324,661 Units redeemed (319,834) (363,457) -------------------- -------------------- Net increase(decrease) (13,642) (38,796) ==================== ==================== Aggressive Growth Units issued 358,372 409,828 Units redeemed (375,169) (426,658) -------------------- -------------------- Net increase(decrease) (16,797) (16,830) ==================== ==================== Growth & Income Units issued 966,542 1,255,943 Units redeemed (1,005,654) (1,274,179) -------------------- -------------------- Net increase(decrease) (39,112) (18,236) ==================== ==================== High Income Units issued 112,047 120,390 Units redeemed (118,330) (123,837) -------------------- -------------------- Net increase(decrease) (6,283) (3,447) ==================== ==================== Strategic Bond Units issued 441,695 413,700 Units redeemed (423,853) (406,725) -------------------- -------------------- Net increase(decrease) 17,842 6,975 ==================== ==================== Summit: EAFE Intl. Units issued 74,064 49,688 Units redeemed (65,809) (30,874) -------------------- -------------------- Net increase(decrease) 8,255 18,814 ==================== ====================
7. SUBSEQUENT EVENTS In November 2006, AVLIC's board of directors approved a plan of merger with its parent, ALIC, pending various regulatory approvals, with an effective date of May 1, 2007. AVLIC has received approval of the merger from the Insurance Department of the State of Nebraska. The surviving company will be Ameritas Life Insurance Corp. As a result of this merger, the Account will be transferred, intact, to ALIC, effective May 1, 2007. FS-29 AMERITAS LIFE INSURANCE CORP. STATUTORY FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005, SUPPLEMENTAL SCHEDULES AS OF DECEMBER 31, 2006 AND INDEPENDENT AUDITORS' REPORT INDEPENDENT AUDITORS' REPORT To the Board of Directors Ameritas Life Insurance Corp. Lincoln, Nebraska We have audited the accompanying statutory statements of admitted assets, liabilities and surplus of Ameritas Life Insurance Corp. (the Company), a wholly owned subsidiary of Ameritas Holding Company, as of December 31, 2006 and 2005, and the related statutory statements of operations, changes in surplus, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 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 Company's 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. As described more fully in Note 1 to the financial statements, the Company prepared these financial statements using accounting practices prescribed or permitted by the Insurance Department of the State of Nebraska, which practices differ from accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between the statutory basis of accounting and accounting principles generally accepted in the United States of America are described in Note 19. In our opinion, because of the effects of the matter discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of Ameritas Life Insurance Corp. as of December 31, 2006 and 2005, or the results of its operations or its cash flows for the years then ended. In our opinion, the financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities and surplus of Ameritas Life Insurance Corp. as of December 31, 2006 and 2005, and the results of its operations and its cash flows for the years then ended, on the basis of accounting described in Note 1. /s/ Deloitte & Touche LLP Lincoln, Nebraska March 6, 2007 AMERITAS LIFE INSURANCE CORP. STATUTORY STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND SURPLUS (in thousands)
December 31 -------------------------------------- ADMITTED ASSETS 2006 2005 ------------------ ------------------- Bonds $ 1,222,225 $ 1,167,300 Preferred stocks - unaffiliated 7,948 5,690 - affiliated 20,000 22,500 Common stocks - unaffiliated 203,847 178,043 - affiliated 190,932 168,528 Mortgage loans 329,434 317,531 Real estate - properties occupied by the company 28,500 29,444 - properties held for the production of income 37,910 38,479 - properties held for sale 10,229 - Cash and cash equivalents 10,603 20,579 Short-term investments - unaffiliated 17,601 11,170 - affiliated - 8,600 Loans on insurance contracts 57,737 60,082 Partnerships and limited liability companies - real estate 18,231 28,988 Partnerships - joint ventures 63,367 55,542 Other investments 962 752 Receivable for securities 4,593 - ------------------ ------------------- Total Cash and Invested Assets 2,224,119 2,113,228 ------------------ ------------------- Accrued investment income 19,361 18,246 Deferred and uncollected premiums 22,883 27,507 Current federal income taxes receivable - affiliates - 5,858 Deferred tax asset 11,431 11,171 Accounts receivable - affiliates 9,062 7,292 Data processing and other admitted assets 6,659 5,872 Separate accounts 1,273,171 886,986 ------------------ ------------------- Total Admitted Assets $ 3,566,686 $ 3,076,160 ================== =================== The accompanying notes are an integral part of these statutory financial statements. 2 AMERITAS LIFE INSURANCE CORP. STATUTORY STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND SURPLUS (in thousands, except share data) December 31 -------------------------------------- LIABILITIES AND SURPLUS 2006 2005 ------------------ ------------------- Policy reserves $ 746,988 $ 763,506 Deposit-type funds 516,048 497,207 Reserves for unpaid claims 34,374 32,264 Dividends payable to policyowners 10,260 10,479 Interest maintenance reserve 2,482 2,736 Current federal income taxes payable - affiliates 2,417 - Asset valuation reserve 60,281 68,064 Accounts payable - affiliates 236 49 Borrowed money - affiliates (Note 5) 27,466 - Payable for securities 385 - Other liabilities 78,342 57,238 Separate accounts 1,273,171 886,986 ------------------ ------------------- Total Liabilities 2,752,450 2,318,529 ------------------ ------------------- Common stock, par value $0.10 per share; 25,000,000 shares authorized, issued and outstanding 2,500 2,500 Additional paid-in capital 5,000 5,000 Unassigned surplus 806,736 750,131 ------------------ ------------------- Total Surplus 814,236 757,631 ------------------ ------------------- Total Liabilities and Surplus $ 3,566,686 $ 3,076,160 ================== =================== The accompanying notes are an integral part of these statutory financial statements. 3 AMERITAS LIFE INSURANCE CORP. STATUTORY STATEMENTS OF OPERATIONS (in thousands) Years Ended December 31 -------------------------------------- 2006 2005 ------------------ ------------------- INCOME Premium income $ 733,871 $ 521,276 Net investment income 113,004 116,812 Miscellaneous income 20,382 30,605 ------------------ ------------------- Total income 867,257 668,693 ------------------ ------------------- EXPENSES Benefits to policyowners 445,255 397,303 Change in policy reserves 202,572 31,535 Commissions 47,959 49,318 General insurance expenses 94,252 112,494 Taxes, licenses and fees 12,873 12,187 ------------------ ------------------- Total expenses 802,911 602,837 ------------------ ------------------- Income before dividends, federal income taxes, and realized capital gains 64,346 65,856 Dividends appropriated for policyowners 10,202 10,479 ------------------ ------------------- Income before federal income taxes and realized capital gains 54,144 55,377 Federal income tax expense 18,107 15,505 ------------------ ------------------- Income from operations before realized capital gains 36,037 39,872 Realized capital gains on investments, net of tax expense of $12,626 and $6,077 and transfers to(from) the interest maintenance reserve of ($71) and $1,300 in 2006 and 2005, respectively 18,177 12,818 ------------------ ------------------- Net income $ 54,214 $ 52,690 ================== ===================
The accompanying notes are an integral part of these statutory financial statements. 4 AMERITAS LIFE INSURANCE CORP. STATUTORY STATEMENTS OF CHANGES IN SURPLUS FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands)
Additional Common Stock Paid-in Unassigned Total Shares Amount Capital Surplus Surplus ------------- ----------- ---------- ----------- ------------- BALANCE, January 1, 2005 25,000 $ 2,500 $ 5,000 $ 696,276 $ 703,776 Net income - - - 52,690 52,690 Change in net unrealized gains on investments, - - - 24,696 24,696 net of taxes Change in net deferred income taxes - - - (1,437) (1,437) Change in non-admitted assets - - - (4,491) (4,491) Cumulative effect of change in accounting principle (Note 1) - - - (831) (831) Change in asset valuation reserve - - - (16,772) (16,772) ------------- ----------- ---------- ----------- ------------- BALANCE, December 31, 2005 25,000 $ 2,500 $ 5,000 $ 750,131 $ 757,631 Net income - - - 54,214 54,214 Change in net unrealized gains on investments, net of taxes - - - (7,529) (7,529) Change in net deferred income taxes - - - 2,868 2,868 Change in non-admitted assets - - - 58 58 Cumulative effect of change in accounting principle (Note 1) - - - (676) (676) Change in asset valuation reserve - - - 7,670 7,670 ------------- ----------- ---------- ----------- ------------- BALANCE, December 31, 2006 25,000 $ 2,500 $ 5,000 $ 806,736 $ 814,236 ============= =========== ========== =========== =============
The accompanying notes are an integral part of these statutory financial statements. 5 AMERITAS LIFE INSURANCE CORP. STATUTORY STATEMENTS OF CASH FLOWS (in thousands)
Years Ended December 31 -------------------------------------- OPERATING ACTIVITIES 2006 2005 ------------------ ------------------- Premium collected net of reinsurance $ 734,992 $ 518,067 Net investment income received 114,230 120,507 Miscellaneous income 32,321 40,662 Benefits paid to policyowners (418,690) (370,721) Net transfers to separate accounts (258,199) (81,723) Commissions, expenses and taxes paid (164,039) (186,839) Dividends paid to policyowners (10,393) (10,532) Federal income taxes paid (22,523) (25,892) ------------------ ------------------- Net cash from operating activities 7,699 3,529 ------------------ ------------------- INVESTING ACTIVITIES Proceeds from investments sold, matured or repaid 383,096 363,461 Cost of investments acquired (441,589) (428,794) Net change in loans on insurance contracts 2,695 (2,445) ------------------ ------------------- Net cash from investing activities (55,798) (67,778) ------------------ ------------------- FINANCING AND MISCELLANEOUS ACTIVITIES Payments on borrowed funds (2,485) - Change in deposit-type funds without life contingencies 39,199 55,450 Other miscellaneous, net (760) 2,067 ------------------ ------------------- Net cash from financing and miscellaneous activities 35,954 57,517 ------------------ ------------------- NET DECREASE IN CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS (12,145) (6,732) CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS - BEGINNING OF YEAR 40,349 47,081 ------------------ ------------------- CASH AND CASH EQUIVALENTS AND SHORT- TERM INVESTMENTS - END OF YEAR $ 28,204 $ 40,349 ================== =================== Non-cash transactions: Deferred gain on sale of other invested assets $ - $ 2,067 Proceeds on real estate partnerships dissolved and converted $ - $ 5,793 Acquisition cost on partnerships converted to direct real estate $ - $ 5,796 Note payable to affiliate on subsidiary stock redemption (Note 1) $ 29,825 $ - Mortgage loan foreclosed and transferred to real estate $ 595 $ - Mortgage loan from a real estate partnership basis adjustment due to refinance $ 4,400 $ - Common stock adjustments on dissolution of affiliate $ 45,987 $ -
The accompanying notes are an integral part of these statutory financial statements. 6 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 1. Nature of Operations and Summary of Significant Accounting Policies Nature of Operations Ameritas Life Insurance Corp. (the Company), a stock life insurance company domiciled in the state of Nebraska, is a wholly owned subsidiary of Ameritas Holding Company (AHC), which is a wholly owned subsidiary of UNIFI Mutual Holding Company (UNIFI). Effective January 1, 2006, Ameritas Acacia Mutual Holding Company (AAMHC) and Union Central Mutual Holding Company (UCMHC) merged to form UNIFI in a business combination accounted for as a pooling of interests. In a concurrent event, The Union Central Life Insurance Company (UCL) was converted from an Ohio mutual life insurance company to an Ohio stock life insurance company, wholly owned by the newly formed UCMHC. Also in a concurrent event, the capital stock of Union Central was contributed to UNIFI's wholly-owned holding company, AHC. AHC owns three stock life insurance companies, the Company, Acacia Life Insurance Company (Acacia Life) and UCL. UNIFI is a mutual insurance holding company. Owners of designated policies issued by the Company have a membership interest in UNIFI, while contractual rights remain with the Company. The Company owns 100% of First Ameritas Life Insurance Corp. of New York (FALIC), a New York domiciled life insurance subsidiary, Ameritas Variable Life Insurance Company (AVLIC), a Nebraska domiciled life insurance subsidiary, Ameritas Investment Advisors, Inc., an advisor providing investment management services; and Pathmark Administrators Inc., a third-party administrator. Ameritas owns 80% of Ameritas Investment Corp. (AIC), a broker dealer, and the remaining 20% ownership is with Centralife Annuities Services, Inc., a wholly owned subsidiary of AmerUs Life Insurance Company (AmerUs). Effective September 1, 2006, AMAL Corporation (AMAL) repurchased its outstanding shares of stock from Acacia Life and Acacia Financial Corporation (AFCO) and issued two notes payable. On this date, AMAL became a wholly owned subsidiary of the Company. Effective September 30, 2006 AMAL was dissolved into its parent, the Company. Prior to September 1, 2006, the Company owned 85.77% of AMAL, which wholly owned AVLIC, The Advisors Group, Inc. (TAG), a former broker dealer (dissolved as of December 29, 2006), and a 66.41% interest in Ameritas Investment Corp. (AIC), a broker dealer. Prior to September 26, 2005, the Company owned 52.41% of AMAL. Acacia Life is an insurance company domiciled in the District of Columbia. Acacia Life is a 100% owner of AFCO, which is a holding company comprised of several financial service companies. Principal subsidiaries of AFCO include: Calvert Group Ltd. (Calvert), a provider of investment advisory, management and administrative services to The Calvert Group of mutual funds; Acacia Federal Savings Bank (AFSB), a federally chartered savings bank; and Acacia Realty Corporation, owner of real estate properties. UCL is an insurance company domiciled in the state of Ohio. UCL's wholly owned subsidiaries include Summit Investment Partners, Inc., an investment advisor; Carillon Investments, Inc., (prior to June 30, 2006) a broker-dealer (now merged with AIC); PRBA, Inc., the holding company of a pension administration company; Summit Investment Partners, LLC, an investment advisor and Union Central Mortgage Funding, Inc, a mortgage banking business. The Company's insurance operations consist of life and health insurance, annuity, group pension, and retirement contracts. The Company and its subsidiaries operate in all 50 states and the District of Columbia. 7 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 1. Nature of Operations and Summary of Significant Accounting Policies (continued) Basis of Presentation The Company's statutory financial statements are presented on the basis of accounting practices prescribed or permitted by the Insurance Department of the State of Nebraska. Accounting practices and procedures of the National Association of Insurance Commissioners ("NAIC") as prescribed or permitted by the Insurance Department of the State of Nebraska comprise a comprehensive basis of accounting ("NAIC SAP") other than accounting principles generally accepted in the United States of America ("GAAP"). The more significant differences are as follows: (a) Investments in bonds are generally carried at amortized cost, while under GAAP, they are carried at either amortized cost or fair value based on their classification according to the Company's ability and intent to hold or trade the securities; (b) Investments in common stocks are valued as prescribed by the Securities Valuation Office ("SVO") of the NAIC, while under GAAP, common stocks are reported at fair value; (c) Investments in preferred stocks are carried at cost if the NAIC designation is RP3 and P3 or above. Preferred stocks with NAIC designations of RP4 and P4 or below are carried at the lower of cost or fair value. Under GAAP, preferred stocks are carried at amortized cost or fair value depending upon the characteristics of the security. (d) Subsidiaries are included as common stock carried under the equity method, with the equity in net income of subsidiaries credited directly to the Company's unassigned surplus for NAIC SAP, while GAAP requires either consolidation or the equity interest in net income of subsidiaries to be credited to the income statement; (e) Investments in limited partnerships, limited liability companies and joint venture investments are accounted for on the GAAP equity method, while under GAAP, such investments are accounted for at cost or the equity method depending upon ownership percentage and control; (f) Acquisition costs, such as commissions and other costs related to acquiring new business, are expensed as incurred, while under GAAP, they are deferred and amortized to income as premiums are earned or in relation to estimated gross profits; (g) NAIC SAP requires an amount be recorded for deferred taxes, however, there are limitations as to the amount of deferred tax assets that may be reported as "admitted assets"; and a federal income tax provision is required on a current basis for the statutory statements of operations; (h) Statutory policy reserves are based on mortality and interest assumptions prescribed or permitted by state statutes, without consideration of withdrawals. Statutory policy reserves generally differ from policy reserves under GAAP, which are based on the Company's estimates of mortality, interest and withdrawals; (i) Asset valuation reserves ("AVR") and interest maintenance reserves ("IMR") are established only in the statutory financial statements; 8 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 1. Nature of Operations and Summary of Significant Accounting Policies, (continued) Basis of Presentation, (continued) (j) Assets are reported under NAIC SAP at "admitted-asset" value and "non-admitted" assets are excluded through a charge against unassigned surplus, while under GAAP, "non-admitted assets" are reinstated to the balance sheet, net of any valuation allowance; (k) Premium receipts and benefits on universal life-type contracts are recorded as income and expense for statutory purposes. Under GAAP, revenues on universal life-type contracts are comprised of contract charges and fees which are recognized when assessed against the policyowner account balance. Additionally, premium receipts on universal life-type contracts are considered deposits and are recorded as interest-bearing liabilities while benefits are recognized as expenses in excess of the policyowner account balance; (l) Reinsurance recoverables on unpaid losses are reported as a reduction of policy reserves, while under GAAP, they are reported as an asset; and (m) Comprehensive income and its components are not presented in the statutory financial statements. Use of Estimates The preparation of financial statements in accordance with statutory accounting practices requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates susceptible to significant change include reserves and income taxes. Cash Equivalents The Company considers all highly liquid securities purchased with an original maturity of three months or less to be cash equivalents. Investments Investments are reported according to valuation procedures prescribed by the NAIC. Bonds not backed by other loans are generally stated at amortized cost using the interest method, except for those with an NAIC designation of 6, which are stated at the lower of amortized cost or fair value. Mortgage and asset backed securities are stated at either amortized cost or the lower of amortized cost or fair value. Premiums and discounts on mortgage and asset backed bonds and structured securities are amortized using the retrospective method based on anticipated prepayments at the date of purchase. Prepayment assumptions are obtained from broker dealer survey values or internal estimates. Changes in estimated cash flows from the original purchase assumptions are accounted for using the retrospective method. Preferred stocks are stated at cost as the NAIC designation is RP3 and P3 or above. Common stocks are generally carried at NAIC fair value. The change in the stated value is generally recorded as a change in net unrealized losses on investments, a component of unassigned surplus. 9 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 1. Nature of Operations and Summary of Significant Accounting Policies, (continued) Investments, (continued) The Company carries subsidiaries as follows: FALIC and AVLIC at audited statutory equity, Pathmark and AIC at audited GAAP equity, AMAL at audited GAAP equity with statutory adjustments (2005 only), and AIA as non-admitted unaudited GAAP equity. Mortgage loans are stated at aggregate carrying value less accrued interest. The Company records a reserve for losses on mortgage loans as part of the asset valuation reserve. Investments in real estate are stated at the lower of depreciated cost or fair value less encumbrances. The intent to sell a property exists when management has committed to a plan to dispose of the property by sale to an outside party. Short-term investments include all investments whose maturities, at the time of acquisition, are one year or less and are stated at amortized cost, which approximates fair value. Loans on insurance contracts are carried at the unpaid principal balances. If the unpaid balance of the loan exceeds the policy reserves, the excess is considered a non-admitted asset. Investments in real estate partnerships, limited liability companies and joint ventures are carried based on the underlying GAAP equity of the investee with unrealized gains and losses reflected in unassigned surplus. Other than temporary impairments of $670 and $276 were recorded as realized losses during 2006 and 2005, respectively. Other investments are primarily low-income housing tax credits carried under the amortized cost method in 2006. In 2005, prior to the change in accounting principle, these other investments were carried under the equity method. Derivative instruments are stated at fair value. The Company has issued covered call options outstanding with a fair value of $24 at December 31, 2006 and 2005. The purpose of these options is for income generation and not as a hedging activity. Investment income consists primarily of interest and dividends. Interest is recognized on an accrual basis and dividends are recorded as earned at the ex-dividend date. Interest income on mortgage-backed and asset-backed securities is determined on the effective yield method based on estimated principal repayments. Accrual of income is suspended for bonds and mortgage loans that are in default or when the receipt of interest payments is in doubt. Realized capital gains and losses are determined on a specific identification basis and recorded in operations. Accrued interest more than 180 days past due deemed collectible on mortgage loans in default is non-admitted. All other investment income due and accrued with amounts over 90 days past due is non-admitted. No amount was excluded from unassigned surplus at December 31, 2006 and 2005. Property Property and equipment are carried at cost less accumulated depreciation. The Company provides for depreciation of property and equipment using straight-line and accelerated methods over the estimated useful lives of the assets. Buildings are generally depreciated over forty years. Furniture and fixtures are generally depreciated over three to ten years. Depreciation expense was $3,758 and $3,648 for the years ended December 31, 2006 and 2005 respectively. Maintenance and repairs are charged to expense as incurred. 10 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 1. Nature of Operations and Summary of Significant Accounting Policies, (continued) EDP Equipment and Software Electronic data processing ("EDP") equipment and operating and nonoperating software are carried at cost less accumulated depreciation. Depreciation expense is computed using the straight-line method over the lesser of the estimated useful life of the related asset or three years for EDP equipment and operating system software. Depreciation expense for nonoperating system software is computed using the straight-line method over the lesser of its estimated useful life or five years. Costs incurred for the development of internal use software are capitalized and amortized using the straight-line method over the lesser of the useful lives of the assets or three years. Non-Admitted Assets Certain assets, primarily a portion of deferred tax assets, receivable related to prepaid pension assets, furniture and equipment, and nonoperating system software are designated as non-admitted under statutory reporting requirements. These assets are excluded from the statutory statements of admitted assets, liabilities and surplus by adjustments to unassigned surplus. Total non-admitted assets were $35,483 and $35,541 as of December 31, 2006 and 2005, respectively. Premiums and Related Commissions Life premiums are recognized as income over the premium paying period of the related policies. Annuity considerations are recognized as income when received. Health premiums are earned ratably over the terms of the related insurance and reinsurance contracts or policies. Consideration received on deposit-type funds, which do not contain any life contingencies, is recorded directly to the related liability. Expenses incurred in connection with acquiring new insurance business, including acquisition costs such as sales commissions, are charged to operations as incurred. Policy Reserves and Deposit-type Funds Life policy reserves provide amounts adequate to discharge estimated future obligations in excess of estimated future premiums on policies in force. Reserves for traditional and flexible premium insurance are computed principally by using the Commissioners' Reserve Valuation Method ("CRVM") or the Net Level Premium Method with assumed interest rates and mortality as prescribed by regulatory authorities. Reserves for annuities and deposit administration contracts are calculated using the Commissioners' Annuity Reserve Valuation Method ("CARVM") with appropriate statutory interest and mortality assumptions. Policy reserves include the estimated future obligations for the fixed account options selected by variable life and annuity policyowners; obligations related to variable account options are in the separate accounts. Tabular interest, tabular less actual reserves released and tabular cost for all life contracts are determined based upon statutory regulations. Other policy reserves are established and maintained on the basis of published mortality tables using assumed interest rates and valuation methods as prescribed by the Insurance Department of the State of Nebraska. Reserves for deposit-type funds are equal to deposits received and interest credited to the benefit of policyowners, less withdrawals that represent a return to the policyowner. For the determination of tabular interest to deposit-type funds, the valuation interest rate, which varies by issue year, is multiplied by the average funds in force during the year subject to such valuation interest rate. 11 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 1. Nature of Operations and Summary of Significant Accounting Policies, (continued) Reserves for Unpaid Claims The reserves for unpaid group dental and vision claims are estimated using historic claim lags, and then adjusted upward or downward based on the current level of pended/unprocessed claims relative to the historic level of pended/unprocessed claims during the time period used in generating the claim lag factors. The reserves for unpaid claims for group dental and vision insurance includes claims in course of settlement and incurred but not reported claims. Claim adjustment expenses corresponding to the unpaid claims are accounted for by adding an additional load to the reserve for unpaid claims. To the extent the ultimate liability differs from the amounts recorded, such differences are reflected in operations when additional information becomes known. Reserves for unpaid life claims include claims reported and unpaid and claims not yet reported, which is estimated based upon historical experience. As such amounts are necessarily estimates, the ultimate liability will differ from the amount recorded and will be reflected in operations when additional information becomes known. Dividends to Policyowners A portion of the Company's business has been issued on a participating basis. The amount of insurance in force on individual life participating policies was $4,603,861 or 37.0% and $5,240,193 or 41.6% of the total individual life policies in force as of December 31, 2006 and 2005, respectively. The Company distributed dividends in the amount of $10,421 and $10,533 to policyowners and did not allocate any additional income to such policyowners for the years ended December 31, 2006 and 2005, respectively. Asset Valuation and Interest Maintenance Reserves The AVR is a required appropriation of unassigned surplus to provide for possible losses that may occur on certain investments of the Company. The reserve is computed based on holdings of all investments and realized and unrealized gains and losses, other than those resulting from interest rate changes. Changes in the reserve are charged or credited to unassigned surplus. The IMR is calculated based on the prescribed methods developed by the NAIC. Realized gains and losses, net of tax, resulting from interest rate changes on fixed income investments are deferred and credited to this reserve. These gains and losses are then amortized into investment income over what would have been the remaining years to maturity of the underlying investment. Amortization included in net investment income was $182 and $72 for 2006 and 2005, respectively. Income Taxes The Company files a life/non-life consolidated tax return with UNIFI and UNIFI includible affiliates and is party to a federal income tax allocation agreement. The Company's income tax allocation is based upon a written agreement which generally specifies separate income tax return calculations with current credit for net operating losses and/or credits which are used to reduce the portion of the consolidated income tax liability. 12 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 1. Nature of Operations and Summary of Significant Accounting Policies, (continued) Income Taxes, (continued) The Company is subject to tax-related audits in the normal course of operations. The Company records a contingency for these tax-related matters when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company reviews its loss contingencies on an ongoing basis to ensure that the Company has appropriate reserves recorded on the statutory statements of admitted assets, liabilities and surplus. These reserves are based on judgment made by management with respect to the likely outcome of these matters. The Company's judgment could change based on new information, Internal Revenue Service examinations and changes in laws or regulations. The statute of limitations, generally, is closed for the Company through December 31, 2002. In 2006, the Internal Revenue Service started an examination for the federal income tax returns of the Company and Acacia Life and their affiliates for the tax years of 2004 and 2003. Separate Accounts The Company issues variable annuities, variable life contracts, and experience-rated group annuities, the assets and liabilities of which are legally segregated and recorded in the accompanying statutory statements of admitted assets, liabilities and surplus as assets and liabilities of the separate accounts. Absent any contract provision wherein the Company guarantees either a minimum return or account value upon death or annuitization, the net investment experience of the separate account is credited directly to the policyowner and can be positive or negative. Mortality, policy administration and surrender charges to all separate accounts are included in miscellaneous income in the statutory statements of operations. The assets of separate accounts relating to variable annuity and variable life contracts are carried at fair value and consist primarily of mutual funds held for the benefit of policyowners. Deposits received from, and benefits paid, to separate account policyowners which were invested in the fixed account are recorded as an increase in, or a direct charge to, policy reserves. Investment income and realized and unrealized capital gains and losses related to the assets which support the variable annuity and variable life contracts are not reflected in the Company's statutory statements of operations. Certain other separate accounts relate to experience-rated group annuity contracts that fund defined contribution pension plans. These contracts provide guaranteed interest returns for one-year only, where the guaranteed interest rate is re-established each year based on the investment experience of the separate account. In no event can the interest rate be less than zero. There are guarantees of principal and interest for the purposes of plan participant transactions (e.g., participant-directed withdrawals and fund transfers done at account value). The assets and liabilities of these separate accounts are carried at account value. 13 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 1. Nature of Operations and Summary of Significant Accounting Policies, (continued) Fair Values of Financial Instruments The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: Bonds and Preferred Stocks - The fair values for bonds and preferred stocks are based on quoted market prices, where available. For bonds and preferred stocks not actively traded, fair values are estimated using values obtained from independent pricing services and based on expected future cash flows using a current market rate applicable to the yield, credit quality and maturity of the investments. The fair values of mortgage and asset backed securities are estimated using values obtained from independent pricing services and based on expected future cash flows using a current market rate applicable to the yield, credit quality and maturity of the investments. Common Stocks - For publicly traded securities, fair value is determined using prices published by the NAIC Securities Valuation Office. Stocks in affiliates are carried on the equity method and, therefore, are not included as part of the fair value disclosure. Mortgage Loans - The fair values for mortgage loans are estimated using discounted cash flow calculations which are based on interest rates currently being offered for similar loans to borrowers with similar credit ratings, credit quality, and maturity of the investments. Loans that exceed 100% loan-to-value are valued at the estimated fair value of the underlying collateral. Cash and Cash Equivalents, Short-term Investments, Other Investments, and Accrued Investment Income - The carrying amounts for these instruments approximate their fair values due to the short maturity of these investments, except when an instrument becomes other than temporarily impaired and a new cost basis has been recognized. The fair value for these instruments becomes their new cost basis. Loans on Insurance Contracts - The carrying amounts approximate fair value. Deposit-Type Funds - Deposit-type funds with a fixed maturity are valued at discounted present value using market interest rates. Deposit-type funds which do not have fixed maturities are carried at the amount payable on demand at the reporting date. Borrowed money - The fair value is estimated using discounted cash flow analyses based on current incremental borrowing rates for similar types of borrowing arrangements. Separate Account Assets and Liabilities - The fair values of separate account assets are based upon quoted market prices. Separate account liabilities are carried at the fair value of the underlying assets. 14 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 1. Nature of Operations and Summary of Significant Accounting Policies, (continued) Vulnerability due to Certain Concentrations The Company operates in a business environment which is subject to various risks and uncertainties. Such risks and uncertainties include, but are not limited to, interest rate risk, market risk, credit risk and legal and regulatory changes. Federal legislation has allowed banks and other financial organizations to have greater participation in securities and insurance businesses. This legislation may present an increased level of competition for sales of the Company's products. Furthermore, the market for deferred annuities and interest-sensitive life insurance is enhanced by the tax incentives available under current law. Any legislative changes that lessen these incentives are likely to negatively impact the demand for these products. The demand for life insurance products that are used to address a customer's estate planning needs may be impacted to the extent any legislative changes occur to the current estate tax laws. Reclassifications Certain items on the prior year financial statements have been reclassified to conform to current year presentation. Such reclassifications were not material, either individually or in the aggregate. Accounting Pronouncements ACCOUNTING FOR LOW INCOME HOUSING TAX CREDIT PROPERTY INVESTMENTS, STATEMENT OF STATUTORY ACCOUNTING PRINCIPLE NO. 93 Effective January 1, 2006, the Company adopted SSAP No. 93, "Accounting for Low Income Housing Tax Credit Property Investments". This statement establishes the valuation method for recording investments in low income housing tax credit properties. As a result, the cumulative effect of the change in accounting principle from implementing SSAP No. 93 was a reduction in unassigned surplus of $676 which was comprised of a reduction to other investments of $788 and a reduction to the AVR beginning balance of $112. The Company has up to 9 remaining years of unexpired tax credits and is required to hold these investments for up to 13 years. The prior period has not been restated as it was not permitted by SSAP No. 93. INVESTMENTS IN SUBSIDIARY, CONTROLLED, AND AFFILIATED ENTITIES, STATEMENT OF STATUTORY ACCOUNTING PRINCIPLE NO. 88 Effective January 1, 2005, the Company adopted SSAP No. 88, "Investments in Subsidiary, Controlled, and Affiliated Entities, A Replacement of SSAP No. 46". SSAP No. 88 addresses the valuation of subsidiary, controlled, and affiliated entities. As a result, the cumulative effect of the change in accounting principle from implementing SSAP No. 88 was a reduction in unassigned surplus of $831. 15 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 2. Investments Bonds The table below provides additional information relating to bonds held at December 31, 2006:
Gross Gross Book/Adjusted Unrealized Unrealized Carrying Value Gains Losses Fair Value -------------------------------------------------------------------------------------------------------------------- Bonds: U.S. Governments $ 164,825 $ 3,634 $ 2,326 $ 166,133 All Other Governments 2,239 40 - 2,279 Special Revenue & Special Assessment Obligations and all Non-Guaranteed Obligations of Agencies and Authorities of Governments and Their Political Subdivisions 168,988 237 3,668 165,557 Public Utilities (Unaffiliated) 79,405 1,680 1,269 79,816 Industrial & Miscellaneous (Unaffiliated) 806,768 19,288 8,881 817,175 -------------------------------------------------------------------------------------------------------------------- Total Bonds $ 1,222,225 $ 24,879 $ 16,144 $ 1,230,960 ==================================================================================================================== The table below provides additional information relating to bonds held at December 31, 2005: Gross Gross Book/Adjusted Unrealized Unrealized Carrying Value Gains Losses Fair Value -------------------------------------------------------------------------------------------------------------------- Bonds: U.S. Governments $ 177,184 $ 5,067 $ 1,609 $ 180,642 All Other Governments 3,027 100 - 3,127 Special Revenue & Special Assessment Obligations and all Non-Guaranteed Obligations of Agencies and Authorities of Governments and Their Political Subdivisions 180,159 735 2,646 178,248 Public Utilities (Unaffiliated) 86,212 2,822 545 88,489 Industrial & Miscellaneous (Unaffiliated) 720,718 25,880 6,619 739,979 -------------------------------------------------------------------------------------------------------------------- Total Bonds $ 1,167,300 $ 34,604 $ 11,419 $ 1,190,485 ====================================================================================================================
16 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 2. Investments Bonds and Stocks An aging of unrealized losses on the Company's investments in bonds, preferred stocks - unaffiliated and common stocks - unaffiliated were as follows:
December 31, 2006 ----------------------------------------------------------------------------- Less than 12 months 12 months or more Total ------------------------- ------------------------- ------------------------- Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses -------------------------------------------------------------------------------------------------------------------- Bonds: U.S. Governments $ 33,065 $ 265 $ 69,070 $ 2,061 $ 102,135 $ 2,326 Special Revenue & Special Assessment Obligations and all Non-Guaranteed Obligations of Agencies and Authorities of Governments and Their Political Subdivisions 31,737 253 119,017 3,415 150,754 3,668 Public Utilities (Unaffiliated) 20,234 284 25,210 985 45,444 1,269 Industrial & Miscellaneous (Unaffiliated) 108,421 1,065 237,182 7,816 345,603 8,881 -------------------------------------------------------------------------------------------------------------------- Total Bonds 193,457 1,867 450,479 14,277 643,936 16,144 -------------------------------------------------------------------------------------------------------------------- Preferred Stocks (Unaffiliated) - - 1,566 58 1,566 58 Common Stocks (Unaffiliated) 16,611 768 - - 16,611 768 -------------------------------------------------------------------------------------------------------------------- Total $ 210,068 $ 2,635 $ 452,045 $ 14,335 $ 662,113 $ 16,970 -------------------------------------------------------------------------------------------------------------------- December 31, 2005 ----------------------------------------------------------------------------- Less than 12 months 12 months or more Total ------------------------- ------------------------- ------------------------- Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses -------------------------------------------------------------------------------------------------------------------- Bonds: U.S. Governments $ 75,594 $ 915 $ 18,190 $ 694 $ 93,784 $ 1,609 Special Revenue & Special Assessment Obligations and all Non-Guaranteed Obligations of Agencies and Authorities of Governments and Their Political Subdivisions 109,600 1,751 21,969 895 131,569 2,646 Public Utilities (Unaffiliated) 22,653 545 - - 22,653 545 Industrial & Miscellaneous (Unaffiliated) 196,893 4,122 54,847 2,497 251,740 6,619 -------------------------------------------------------------------------------------------------------------------- Total Bonds 404,740 7,333 95,006 4,086 499,746 11,419 Preferred Stocks (Unaffiliated) 1,470 202 2,163 188 3,633 390 Common Stocks (Unaffiliated) 35,732 1,485 - - 35,732 1,485 -------------------------------------------------------------------------------------------------------------------- Total $ 441,942 $ 9,020 $ 97,169 $ 4,274 $ 539,111 $ 13,294 --------------------------------------------------------------------------------------------------------------------
17 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 2. Investments, (continued) Bonds and Stocks, (continued) The Company regularly reviews its investment portfolio for factors that may indicate that a decline in fair value of an investment is other than temporary. Based on an evaluation of the prospects of the issuers, including, but not limited to, the Company's intentions to sell or ability to hold the investments; the length of time and magnitude of the unrealized loss; and the credit ratings of the issuers of the investments in the above bonds, the Company has concluded that the declines in the fair values of the Company's investments in bonds at December 31, 2006 or 2005 are temporary. For substantially all preferred stocks - unaffiliated and common stocks - unaffiliated securities with an unrealized loss greater than 12 months, such unrealized loss was less than 25% of the Company's carrying value of each preferred stock or common stock security. The Company considers various factors when considering if a decline in the fair value of a preferred stock and common stock security is other than temporary, including but not limited to, the length of time and magnitude of the unrealized loss; the volatility of the investment; analyst recommendations and price targets; opinions of the Company's investment managers; market liquidity; and the Company's intentions to sell or ability to hold the investments. Based on an evaluation of these factors, the Company has concluded that the declines in the fair values of the Company's investments in both unaffiliated preferred stocks and common stocks at December 31, 2006 or 2005 are temporary. The Company's bond and short-term investment portfolios are predominantly comprised of investment grade securities. At December 31, 2006 and 2005, bonds totaling $44,053 and $50,488, respectively, (3.6% and 4.3%, respectively, of the total bond and short-term portfolios) are considered "below investment grade". Securities are classified as "below investment grade" by utilizing rating criteria established by the NAIC. During 2006 and 2005, the Company recorded realized losses for other than temporary impairments on bonds of $1,535 and $405, respectively. The carrying value and fair value of bonds at December 31, 2006 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Book/Adjusted Fair Carrying Value Value -------------------------------------------------------------------------------------------------------------------- Due in one year or less $ 29,124 $ 29,391 Due after one year through five years 245,619 252,517 Due after five years through ten years 502,037 499,674 Due after ten years 298,225 299,241 Bonds with multiple repayment dates 147,220 150,137 -------------------------------------------------------------------------------------------------------------------- Total Bonds $ 1,222,225 $ 1,230,960 ====================================================================================================================
Bonds not due at a single maturity date have been included in the table above in the year of final maturity. Sales of bond investments in 2006 and 2005 resulted in proceeds of $21,137 and $47,488, respectively, on which the Company realized gross gains of $587 and $1,539, respectively, and gross losses of $425 and $986, respectively. 18 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 2. Investments, (continued) Mortgage Loans The Company invests in mortgage loans collateralized principally by commercial real estate. The maximum and minimum lending rates for mortgage loans issued during 2006 are 6.98% and 5.85%, respectively. The maximum percentage of any one loan to the value of security at the time the loan was originated, exclusive of insured, guaranteed or purchase money mortgages, was 75% with the exception of two loans for which the portion exceeding 75% is admitted under investment "basket" provisions. The Company has not included taxes, assessments or other amounts advanced in mortgage loans at December 31, 2006 and 2005. The Company's mortgage loans finance various types of commercial and multi-family residential properties throughout the United States. The geographic distributions of the mortgage loans at December 31, 2006 and 2005 are as follows:
2006 2005 -------------------------------------------------------------------------------------------------------------------- California $ 38,431 $ 32,606 Texas 24,894 30,860 Arizona 23,275 20,289 Minnesota 19,757 19,560 Oklahoma 18,805 14,193 Washington 18,723 20,804 Oregon 18,126 17,920 Utah 17,414 10,797 Ohio 17,393 16,960 All other states 132,616 133,542 -------------------------------------------------------------------------------------------------------------------- $ 329,434 $ 317,531 ====================================================================================================================
At December 31, 2006 and 2005, the Company does not have any impaired mortgage loans or interest income on impaired mortgage loans. Interest income on impaired mortgage loans is generally recognized on a cash basis. 19 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 2. Investments, (continued) Fair Value of Financial Instruments The book/adjusted carrying value and fair value of financial instruments at December 31 are as follows:
2006 2005 ------------------------------------------------------------------- Book/Adjusted Book/Adjusted Carrying Value Fair Value Carrying Value Fair Value -------------------------------------------------------------------------------------------------------------------- Financial Assets: Bonds $ 1,222,225 $ 1,230,960 $ 1,167,300 $ 1,190,485 Preferred stocks - unaffiliated 7,948 8,332 5,690 5,371 Preferred stocks - affiliated 20,000 20,000 22,500 22,500 Common stocks - unaffiliated 203,847 203,847 178,043 178,043 Mortgage loans 329,434 327,800 317,531 328,590 Cash and cash equivalents 10,603 10,603 20,579 20,579 Short-term investments - unaffiliated 17,601 17,601 11,170 11,170 Short-term investments - affiliated - - 8,600 8,600 Loans on insurance contracts 57,737 57,737 60,082 60,082 Other investments 962 962 752 752 Accrued investment income 19,361 19,361 18,246 18,246 Assets related to separate accounts 1,273,171 1,273,171 886,986 886,986 Financial Liabilities: Deposit-type funds $ 516,048 $ 517,885 $ 497,207 $ 500,002 Borrowed money - affiliates 27,466 27,359 - - Liabilities related to separate accounts 1,273,171 1,273,171 886,986 886,986 --------------------------------------------------------------------------------------------------------------------
3. Income Taxes The following are federal income taxes paid in the current and prior years that will be available for recoupment in the event of future losses: 2006 $ 32,488 2005 21,263 2004 22,276
Federal income taxes incurred at December 31 consist of the following major components: 2006 2005 -------------------------------------------------------------------------------------------------------------------- Current federal income taxes Operations $ 18,107 $ 15,505 Capital gains 12,626 6,077 -------------------------------------------------------------------------------------------------------------------- 30,733 21,582 Change in net deferred income taxes (2,868) 1,437 -------------------------------------------------------------------------------------------------------------------- Total federal income taxes incurred $ 27,865 $ 23,019 ==================================================================================================================== 20 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 3. Income Taxes, (continued) The difference between the U.S. federal income tax rate and the federal income taxes incurred at December 31 is summarized as follows: 2006 2005 -------------------------------------------------------------------------------------------------------------------- Income before federal income taxes and realized capital gains $ 54,144 $ 55,377 Net realized capital gains before federal income taxes and transfers to IMR 30,732 20,195 -------------------------------------------------------------------------------------------------------------------- Total pretax income 84,876 75,572 Change in non-admitted assets (497) (2,371) Tax exempt income (7,683) (5,907) Nondeductible expenses 5,337 614 Change in accounting principle (788) - Other (1,419) (738) -------------------------------------------------------------------------------------------------------------------- 79,826 67,170 Statutory tax rate 0.35 0.35 -------------------------------------------------------------------------------------------------------------------- 27,939 23,510 Addition of federal income tax reserve 205 - Tax credits (279) (491) -------------------------------------------------------------------------------------------------------------------- Total federal income taxes incurred $ 27,865 $ 23,019 ==================================================================================================================== The items that give rise to deferred tax assets and liabilities at December 31 relate to the following: 2006 2005 -------------------------------------------------------------------------------------------------------------------- Deferred tax assets: Unrealized investment losses $ 2,335 $ 2,070 Deferred policy acquisition costs 7,811 6,794 Future policy and contract benefits 4,809 4,055 Policyowner dividends 3,591 3,668 Pension and postretirement benefits 9,364 9,056 Non-admitted assets 11,059 10,885 Other 1,548 1,417 -------------------------------------------------------------------------------------------------------------------- Gross deferred tax assets 40,517 37,945 -------------------------------------------------------------------------------------------------------------------- Deferred tax liabilities: Unrealized investment gains 18,079 13,992 Other 7,999 8,341 -------------------------------------------------------------------------------------------------------------------- Gross deferred tax liabilities 26,078 22,333 -------------------------------------------------------------------------------------------------------------------- Net deferred tax asset 14,439 15,612 Less: non-admitted deferred tax assets 3,008 4,441 -------------------------------------------------------------------------------------------------------------------- Net admitted deferred tax asset $ 11,431 $ 11,171 ==================================================================================================================== Increase (decrease) in deferred tax assets non-admitted $ (1,433) $ 4,441 ====================================================================================================================
21 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 3. Income Taxes, (continued)
The change in net deferred income taxes is comprised of the following: December 31 2006 2005 Change -------------------------------------------------------------------------------------------------------------------- Gross deferred tax assets $ 40,517 $ 37,945 $ 2,572 Gross deferred tax liabilities 26,078 22,333 3,745 -------------------------------------------------------------------------------------------------------------------- Net deferred tax asset $ 14,439 $ 15,612 (1,173) ================================================================================================== Tax effect of unrealized gains 4,041 ------------------- Change in net deferred income tax $ 2,868 =================== December 31 2005 2004 Change -------------------------------------------------------------------------------------------------------------------- Gross deferred tax assets $ 37,945 $ 38,479 $ (534) Gross deferred tax liabilities 22,333 32,463 (10,130) -------------------------------------------------------------------------------------------------------------------- Net deferred tax asset $ 15,612 $ 6,016 9,596 ================================================================================================== Tax effect of unrealized gains (11,033) ------------------- Change in net deferred income tax $ (1,437) ===================
The Company files income tax returns with the Internal Revenue Service and various state tax jurisdictions. From time to time, the Company is subject to routine audits by those agencies and those audits may result in proposed adjustments. The Company has considered the alternative interpretations that may be assumed by the various taxing agencies and believes its positions taken regarding its filings are valid. Based upon review of the Company's tax contingencies, the reserve held for tax related contingencies was increased by $205 in 2006. 4. Information Concerning Parent, Subsidiaries and Affiliates With the AMAL dissolution into the Company as of September 30, 2006, included in the book/adjusted carry value of AMAL was $21,711 of goodwill, which was released at that time. The Company received assets totaling $2,766 and liabilities of $40,856 (including $29,825 as disclosed in Note 5 - Borrowed Money and $10,000 related to a note with the Company, which was subsequently retired upon the dissolution). On December 29, 2006, TAG was dissolved into the Company. Upon dissolution the Company received consideration in the amount of $807 resulting in no realized capital gain or loss. During 2002, AMAL entered into an unsecured loan agreement to borrow up to $15,000 from its parents. The note came due August 13, 2004 and at that time, the maturity date of the promissory note was amended to be August 11, 2005. During 2005, a new promissory note was issued with a maturity date of August 10, 2006. The note was paid off during 2006. The note carried an interest rate of LIBOR plus 0.625% (4.965% at December 31, 2005). Included in short-term investments - affiliated was $8,600 that represents the amount due to the Company from AMAL at December 31, 2005. On January 30, 2003, the Company purchased 520,562 shares of common stock from AFSB valued on that date for $10,000. During 2005, the Company made additional contributions of $1,479 as paid in capital to AFSB. 22 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 4. Information Concerning Parent, Subsidiaries and Affiliates, (continued) On December 20, 1999, the Company purchased $25,000 of redeemable preferred stock from Acacia Life. The stock, which pays dividends in an amount per annum equal to 6.66% in 2006 and 2005, and is non-voting, provides for redemption beginning in 2005 with final redemption on or by January 1, 2015. On June 1, 2006 and 2005, the Company redeemed 100,000 shares at $2,500. In 2003, the Company received $2,452 in bonds and related accrued interest as of November 30, 2003 in payment of a $2,500 dividend declared by Pathmark Administrators, Inc. The remaining $48 was paid in cash. The bonds were transferred at fair value with the Company recording a deferred gain of $120 to be amortized over the life of the bonds. On December 30, 2005, Veritas Corp. was dissolved into the Company. Upon dissolution, the Company received consideration in the amount of $159 resulting in a realized capital gain of $23. AVLIC, an affiliate, has a variable insurance trust (VIT). The Company offers, in conjunction with FALIC and AVLIC, the VIT as an investment option to policyowners through their separate accounts. The Company had separate account investments of $1,892 and $1,899 in the VIT as of December 31, 2006 and 2005, respectively. Affiliates of the Company provide investment advisory and administrative services to the VIT on a fee basis. The Company offers mutual funds of Calvert Variable Series, Inc. (CVS) and Summit Investment Partners, Inc. (SIP), affiliates, to policyowners through the separate accounts. Separate account investments in the mutual funds offered through CVS and SIP were $100,986 and 73,329 as of December 31, 2006 and 2005, respectively. The Company had short-term investments of $409 and $1,892 in mutual funds of an affiliate at December 31, 2006 and 2005, respectively, included in short-term investments - unaffiliated. The Company reported the following amounts due from (to) the below listed affiliates. The terms of the intercompany agreements require that these amounts be settled within 30 days. Receivable (Payable) ------------------------------------------------------------------------------ Ameritas Holding Company $ (62) Union Central Life Insurance Company 628 Ameritas Variable Life Insurance Company 3,850 First Ameritas Life Insurance Corp. of New York 182 Pathmark Administrators Inc. (174) Ameritas Investment Corp. 1,192 Ameritas Investment Advisors, Inc. 104 Acacia Life Insurance Company 3,039 Acacia Federal Savings Bank 35 Calvert Group, LTD 18 Summit Investment Partners, Inc. 14 ------------------------------------------------------------------------------ The Company has entered into a guarantee agreement with AVLIC, whereby the Company guarantees the full, complete and absolute performance of all duties and obligations of this company. 23 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 4. Information Concerning Parent, Subsidiaries and Affiliates, (continued) The Company provides technical, financial, legal and marketing support to its affiliates under various administrative service and cost-sharing agreements. Included in miscellaneous income is $2,754 and $17,422 received under administrative service agreements for the years ended December 31, 2006 and 2005, respectively. Reimbursements of $24,378 and $1,486 for the years ended December 31, 2006 and 2005 related to cost-sharing agreements with affiliates have been recorded as a reduction in general insurance expenses. In addition, the Company receives investment advisory services from an affiliate. Costs related to this agreement, included as an investment expense and reducing net investment income, totaled $1,657 and $1,609 for the years ended December 31, 2006 and 2005, respectively. 5. Borrowed Money Effective September 1, 2006 the Company has an outstanding liability for borrowed money in the amount of $29,825 payable to two affiliates, Acacia Life and AFCO. These notes were issued by a 100% owned subsidiary, AMAL, during the repurchase of its outstanding common stock from Acacia Life and AFCO. These notes are payable in twelve equal quarterly installments beginning on December 1, 2006 with the final installment due on September 1, 2009. The notes carry a fixed interest rate of 5.56% based on the Bloomberg Fair Value 3-year Single "A" U.S. Insurer Index plus 0.020%. The Company may not prepay the notes in whole or in part at any time prior to the maturity date. There are no collateral requirements associated with these notes. 6. Benefit Plans Defined Benefit Plan The Company participates in a non-contributory defined benefit plan (the Plan or the Pension Plan) sponsored by AHC. The Plan was formerly sponsored by the Company as a non-contributory defined benefit pension plan (Ameritas Plan) covering substantially all employees of the Company. During 2000, the Ameritas Plan was merged with the Acacia Retirement Plan (Acacia Plan), sponsored by Acacia. Upon the merger of the Ameritas and Acacia Plans, accumulated benefits of the Plan were frozen, and AHC became the Plan sponsor. Accordingly, the Company's prepaid benefit cost was transferred to AHC, and the Company holds a pre-funded pension expense receivable, due from AHC. During 2006 and 2005, the Company paid $5,000 and $15,650, respectively to AHC which in turn contributed the money to the Plan. The balance of the prefunded pension expense receivable was $12,085 and $10,620 at December 31, 2006 and 2005, respectively, and is a non-admitted asset. While their pension plans were merged, the separate benefit formulas of the Ameritas Plan and Acacia Plan still exist within the Plan and are used to determine the amount of Plan expense to allocate from AHC to the participating companies. The Company incurred pension expense of $3,447 and $14,041 in 2006 and 2005, respectively, for its participation in the Plan. The Plan's assets include investments in a deposit administration contract with the Company and investments in two pension separate accounts of the Company, Ameritas Retirement Equity Account and Ameritas Separate Account D. The carrying value of the assets of the Plan invested in the Company and its separate accounts were approximately $98,000 and $90,000 at December 31, 2006 and 2005, respectively. A portion of the separate accounts' assets are invested in mutual funds which are advised by an affiliate of Acacia Life. 24 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 6. Benefit Plans, (continued) Defined Contribution Plans The Company's employees and agents participate in defined contribution plans sponsored by AHC that cover substantially all full-time employees and agents. Company matching contributions under the defined contribution plan range from 0.5% to 3% of the participant's compensation. In addition, for eligible employees who are not Pension Plan participants, the Company makes a contribution of 6% of the participant's compensation for those employees hired prior to January 1, 2006 and 5% of the participant's compensation for those hired after January 1, 2006. Contributions by the Company to the employee and agents defined contribution plans were $3,410 and $3,383 in 2006 and 2005, respectively. The defined contribution plans' assets also include investments in a deposit administration contract with the Company and investments in two pension separate accounts of the Company, the Ameritas Retirement Equity Account and Ameritas Separate Account D. The carrying value of the assets of the Plan invested in the Company and its separate accounts were approximately $207,500 and $184,000 at December 31, 2006 and 2005, respectively. A portion of the separate accounts' assets are invested in mutual funds which are advised by an affiliate of Acacia Life. Postretirement Benefit Plans The Company provides certain health care benefits to retired employees who were hired prior to January 1, 2005. For associates eligible to retire at January 1, 2000, these benefits are a specified percentage of premium until age 65 and a flat dollar amount thereafter. For associates eligible for retirement after January 1, 2000, benefits will be provided until the associate becomes eligible for Medicare. Employees become eligible for these benefits upon the attainment of age 55, 15 years of service and participation in the Company's medical plan for the immediately preceding five years. In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) became law. The Act introduces a prescription drug benefit under Medicare (Medicare Part D) as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. The postretirement benefit obligation and net periodic postretirement benefit cost in the financial statements and accompanying notes do reflect the effects of the Act on the Plan. In May 2004, additional guidance became available to specific companies who elected deferral and were able to determine if their plans are actuarially equivalent to recognize the impact of the Act no later than the first annual reporting period beginning after June 15, 2004. In January 2005, the Center for Medicare and Medicaid Services issued the final regulations for the Act including the determination of actuarial equivalence. The Company has determined that its plans are actuarially equivalent. The Company qualified for and elected to receive the 28% federal subsidy on allowable gross prescription drug costs of qualified retirees. The Company received subsidy payments of $47 in 2006. The Company did not receive any subsidy payments in 2005. The Company has determined that the effects of the subsidy are immaterial on the results of statutory operations or statutory statements of admitted assets, liabilities and surplus of the Company. The measures of benefit obligations and net periodic pension cost reflect effects of the Act. 25 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 6. Benefit Plans, (continued) Postretirement Benefit Plans, (continued) The following tables provide a reconciliation of the changes in the postretirement benefit obligations and fair value of assets for the years ended December 31, 2006 and 2005, and a statement of the funded status as of the December 31 measurement date of both years:
2006 2005 -------------------------------------------------------------------------------------------------------------------- Reconciliation in benefit obligation Benefit obligation at beginning of year $ 5,558 $ 6,693 Transfer of obligation from dissolution of AMAL 106 - Service cost 69 57 Interest cost 331 315 Actuarial (gain) or loss 1,164 (1,279) Special termination benefits - 81 Federal subsidy receipts 47 - Benefits paid (772) (309) -------------------------------------------------------------------------------------------------------------------- Benefit obligation at end of year $ 6,503 $ 5,558 -------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- Reconciliation of fair value of plan assets Fair value of plan assets at beginning of year $ 2,754 $ 2,557 Transfer of plan assets from dissolution of AMAL 156 - Actual return on plan assets 147 131 Employer contributions 401 303 Benefits paid (663) (237) -------------------------------------------------------------------------------------------------------------------- Fair value of plan assets at end of year $ 2,795 $ 2,754 -------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- Funded status Funded status at end of year $ (3,708) $ (2,804) Unrecognized net actuarial loss 3,009 1,995 Unrecognized prior service cost (1) (1) -------------------------------------------------------------------------------------------------------------------- Accrued benefit cost $ (700) $ (810) --------------------------------------------------------------------------------------------------------------------
26 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 6. Benefit Plans, (continued) Postretirement Benefit Plans, (continued) The amount of the postretirement obligation for nonvested employees was $849 and $512 at December 31, 2006 and 2005, respectively.
Periodic postretirement medical expense included the following components: Years Ended December 31 -------------------------------------------------------------------------------------------------------------------- 2006 2005 -------------------------------------------------------------------------------------------------------------------- Service cost $ 69 $ 57 Interest cost 331 315 Expected return on plan assets (156) (139) Early retirement one-time cost - 81 Amortization of net loss 175 176 -------------------------------------------------------------------------------------------------------------------- Net periodic benefit cost $ 419 $ 490 --------------------------------------------------------------------------------------------------------------------
Plan assets are invested in 100% fixed income investments. The expected rate of return on these investments is 6%. The Company expects to contribute $520 to its postretirement benefits plans and 401(h) account in 2007. Estimated Future Benefit Payments The following net benefit payments, which reflect expected future service, as appropriate, are expected to be paid: Expected Net Fiscal Year Benefit Payments -------------------------------------------------------------------------------- 2007 $ 763 2008 774 2009 778 2010 773 2011 756 2012 - 2016 3,430 -------------------------------------------------------------------------------- The assumptions used in the measurement of the postretirement benefit obligations are:
2006 2005 -------------------------------------------------------------------------------------------------------------------- Weighted-average assumptions as of December 31 Discount rate 6.00% 5.75% Expected long term rate of return on plan assets 6.00% 6.00% -------------------------------------------------------------------------------------------------------------------- 27 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 6. Benefit Plans, (continued) Estimated Future Benefit Payments, (continued) The assumptions used to determine net periodic post retirement benefit costs are: 2006 2005 -------------------------------------------------------------------------------------------------------------------- Weighted-average assumptions as of December 31 Discount rate 5.75% 6.00% Expected long term rate of return on plan assets 6.00% 6.00% -------------------------------------------------------------------------------------------------------------------- The assumed health care cost trend rates as of December 31 were: 2006 2005 -------------------------------------------------------------------------------------------------------------------- Healthcare Cost Trend Rate Assumed for Next Year 9.0% 7.0% Rate to which the Cost Trend Rate is Assumed to Decline (Ultimate Trend Rate) 5.0% 5.0% Year the Rate Reaches the Ultimate Trend Rate 2011 2008 --------------------------------------------------------------------------------------------------------------------
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A 1% change in health care trend rates would have the following effects:
-------------------------------------------------------------------------------------------------------------------- 1% increase 1% decrease -------------------------------------------------------------------------------------------------------------------- Effect on total of service and interest cost components of net $ 45 $ (40) periodic postretirement health care benefit cost Effect on the health care component of the accumulated postretirement benefit obligation $ 625 $ (569) --------------------------------------------------------------------------------------------------------------------
Other Plans Separate supplemental retirement agreements totaled $11,696 and $10,596 included in other liabilities at December 31, 2006 and 2005, respectively, cover certain active and retired employees. These plans are unfunded. 7. Dividend Restrictions and Surplus The Company is subject to regulation by the Insurance Department of the State of Nebraska, which restricts the advancement of funds to parent and affiliated companies as well as the amount of dividends that may be paid without prior approval. No dividends to parent or affiliated companies were paid in the current or prior year. Unassigned surplus represents the undistributed and unappropriated amount of surplus at the statement date. The cumulative effect related to the portion of unassigned surplus represented or reduced by each of the following items as of December 31:
2006 2005 ------------------------------------------------------------------------------------------------------------------- Unrealized gains on investments, net of taxes $ 63,558 $ 69,648 of $18,002 and $13,961 Nonadmitted asset values (35,483) (34,102) Asset valuation reserves (60,281) (68,064) -------------------------------------------------------------------------------------------------------------------
28 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 8. Commitments and Contingencies As a condition of doing business, all states and jurisdictions have adopted laws requiring membership in life and health insurance guaranty funds. Member companies are subject to assessments each year based on life, health or annuity premiums collected in the state. In some states these assessments may be applied against premium taxes. The Company estimated its cost related to past insolvencies and has provided a reserve included in other liabilities of $456 and $492 as of December 31, 2006 and 2005, respectively, and estimated recoveries from premium taxes included in data processing and other admitted assets of $382 and $402 as of December 31, 2006 and 2005, respectively. From time to time the Company is involved in pending and threatened litigation in the normal course of business in which claims for monetary damages are asserted. In the opinion of management, the ultimate liability, if any, arising from such pending or threatened litigation is not expected to have a material effect on the results of operations, liquidity or financial position of the Company. Securities commitments of $20,990 and $33,136 and mortgage loan and real estate commitments of $26,375 and $7,963 were outstanding for investments to be purchased in subsequent years as of December 31, 2006 and 2005, respectively. Low income housing tax credit property investment commitments were $139 as of December 31, 2006. These commitments have been made in the normal course of business and are not reflected in the accompanying financial statements. The Company's exposure to credit loss is represented by the contractual notional amount of these commitments. The Company uses the same credit policies and collateral requirements in making commitments and conditional obligations as it does for on-balance sheet instruments. Companies operating in the insurance and financial services markets have come under the scrutiny of regulators with respect to market conduct and compliance issues. Under certain circumstances, companies have been held responsible for providing incomplete or misleading sales materials and for replacing existing policies with policies that were less advantageous to the policyowner. The Company monitors its sales materials and enforces compliance procedures to mitigate any exposure to potential litigation. The Company and its life insurance subsidiaries are members of the Insurance Marketplace Standards Association, an organization which advocates ethical market conduct. The Company has a $15,000 unsecured line of credit available at December 31, 2006. No balance was outstanding at any time during 2006 or 2005. The line of credit expires May 31, 2007. The Company engages in securities lending transactions to generate additional income. The program is administered by an authorized financial institution and requires the borrower to provide collateral, primarily consisting of cash and government securities, on a daily basis, in amounts equal or exceeding 102% of the fair value of the loaned securities. The Company maintains effective control over all loaned securities and, therefore, continues to report such securities as bonds and common stocks in the statutory statements of admitted assets, liabilities, and surplus. Bonds and common stocks loaned as of December 31, 2006 were $23,626 and $5,414, respectively. The fair value of cash collateral held was $29,428 as of December 31, 2006. There was no non-cash collateral on deposit at December 31, 2006. 29 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 9. Gain or Loss to the Reporting Entity from Uninsured Accident and Health Plans ASO Plans The gain from operations from administrative services only (ASO) uninsured plans is as follows for the year ended December 31:
2006 2005 -------------------------------------------------------------------------------------------------------------------- Net reimbursement for administrative expenses (including $ 3,793 $ 3,602 administrative fees) in excess of actual expenses Total net other income (expense) (including interest paid to or received from ASO uninsured plans) - - -------------------------------------------------------------------------------------------------------------------- Net gain from operations $ 3,793 $ 3,602 -------------------------------------------------------------------------------------------------------------------- Total claim payment volume $ 65,044 $ 55,611 -------------------------------------------------------------------------------------------------------------------- ASC Plans The gain from operations from administrative services contract (ASC) uninsured plans is as follows for the year ended December 31: 2006 2005 -------------------------------------------------------------------------------------------------------------------- Gross reimbursement for medical cost incurred $ 430 $ 380 Other income or expenses (including interest paid to or received from plans) 27 24 Gross expenses incurred (claims and administrative) 452 399 -------------------------------------------------------------------------------------------------------------------- Net gain from operations $ 5 $ 5 ====================================================================================================================
10. Direct Premiums Written The Company has one third party administrator, HealthPlan Services, Inc., for which direct premiums written exceed 5% of total surplus. This administrator writes group accident and health business, does not have an exclusive contract, and has been granted the authority for underwriting, premium collection, and binding authority. The total amount of direct premiums written is $36,965 and $36,020 for the years ended December 31, 2006 and 2005, respectively. The Company did not have any other third party administrators or any managing general agents that exceeded 5% of total surplus for direct written premiums during these periods. 11. Other Items Troubled Debt Restructuring The Company has several long-term bond holdings with restructured terms. The carrying value as of December 31, 2006 and 2005, has been written down to $0 and $104, respectively, whereby the Company recorded no realized capital losses. The Company incurred no amount of commitments to lend additional funds to debtors owing receivables whose terms have been modified in troubled debt restructuring. The Company's income recognition policy for interest income on an impaired loan is the cash basis/cost recovery method. Securities on Deposit Securities with a book/adjusted carrying value of $6,700 and $6,692 at December 31, 2006 and 2005, respectively, were on deposit with government agencies as required by law in various jurisdictions in which the Company conducts business. 30 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 11. Other Items, (continued) Uncollectibility of Assets The Company had admitted assets of $995 and $1,017 at December 31, 2006 and 2005, respectively, in accounts receivable for uninsured plans and included with data processing and other admitted assets on the statutory statements of admitted assets, liabilities and surplus. The Company routinely assesses the collectibility of these receivables. Based upon Company experience, less than 1% of the balance may become uncollectible and the potential loss is not material to the Company's financial condition. Participating Contracts Effective October 1, 1998 (the Effective Date) the Company formed a closed block (the Closed Block) of policies, under an arrangement approved by the Insurance Department of the State of Nebraska, to provide for dividends on policies that were in force on the Effective Date and which were within the classes of individual policies for which the Company had a dividend scale in effect on the Effective Date. The Closed Block was designed to give reasonable assurance to owners of affected policies that the assets will be available to support such policies including maintaining dividend scales in effect at the Effective Date, if the experience underlying such scales continues. The assets, including revenue thereon, will accrue solely to the benefit of the owners of policies included in the block until the block is no longer in effect. 12. Reinsurance Amounts recoverable from reinsurers are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Management believes the recoverables are appropriately established. The Company conducts reinsurance business with FALIC, AVLIC, and other non-affiliated companies. Following is a summary of the transactions through reinsurance operations:
Years Ended December 31 ------------------------------------ 2006 2005 -------------------------------------------------------------------------------------------------------------------- Premiums Income: Assumed (related party $6,572 and $6,807 in 2006 and 2005) $ 77,855 $ 84,658 Ceded 18,406 18,151 Benefits To Policyowners: Assumed (related party $5,119 and $2,825 in 2006 and 2005) 60,029 57,222 Ceded 11,436 6,027 Policy Reserves: Assumed (related party $2,247 and $2,051 in 2006 and 2005) 3,728 3,419 Ceded 54,689 47,422 --------------------------------------------------------------------------------------------------------------------
The Company is not relieved of its primary liability in the event that a reinsurer is unable to meet the obligations ceded under a reinsurance agreement. 31 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 13. Changes in Unpaid Claims and Claim Adjustment Expenses The change in the liability for unpaid accident and health claims and claim adjustment expenses which is reported within reserves for unpaid claims is summarized as follows:
2006 2005 -------------------------------------------------------------------------------------------------------------------- Balance at January 1 $ 30,599 $ 28,215 Less reinsurance recoveries (9,929) (9,835) -------------------------------------------------------------------------------------------------------------------- Net balance at January 1 20,670 18,380 -------------------------------------------------------------------------------------------------------------------- Incurred related to: Current year 280,572 252,232 Prior year (3,739) (4,634) -------------------------------------------------------------------------------------------------------------------- Total incurred 276,833 247,598 -------------------------------------------------------------------------------------------------------------------- Paid related to: Current year 257,528 231,562 Prior year 16,931 13,746 -------------------------------------------------------------------------------------------------------------------- Total paid 274,459 245,308 -------------------------------------------------------------------------------------------------------------------- Net balance at December 31 23,044 20,670 Plus reinsurance recoveries 8,776 9,929 -------------------------------------------------------------------------------------------------------------------- Total reserve for unpaid claims $ 31,820 $ 30,599 ====================================================================================================================
As a result of favorable settlement of prior years' estimated claims, the provision for claims and claim adjustment expenses decreased by $3,739 and $4,634 for the years ended December 31, 2006 and 2005, respectively. The Company paid assumed reinsurance claims of $55,422 and $54,530, and incurred assumed reinsurance claims of $54,919 and $54,405 for the years ended December 31, 2006 and 2005, respectively. The Company paid ceded reinsurance claims of $598 and $661, and incurred ceded reinsurance claims of $601 and $652 for the years ended December 31, 2006 and 2005, respectively. 14. Policy Reserves The Company waives deduction of deferred fractional premiums due upon death of the insured except on those policies issued prior to April 1, 1962, which are paid by preauthorized check. The Company returns any portion of the final premium beyond the date of death when policy provisions call for such a refund. The Company has policy series which do call for a refund of premium and which do not call for a refund. Surrender values are not provided in excess of legally computed reserves. Additional premiums are charged for policies issued on substandard lives according to underwriting classification. For policies issued prior to March 1986, the mean reserves are based on appropriate multiples of standard rates of mortality. For policies issued March 1986 and later, the substandard mean reserve for this class of business is one-half the gross extra premium. 32 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 14. Policy Reserves, (continued) As of December 31, 2006 and 2005, respectively, the Company had $1,594,245 and $1,667,120 of insurance in force for which the gross premiums are less than the net premiums according to the standard valuation set by the Insurance Department of the State of Nebraska. Reserves to cover the above insurance totaled $8,685 and $8,693 at December 31, 2006 and 2005, respectively. 15. Analysis of Annuity Reserves and Deposit-type Funds by Withdrawal Characteristics Withdrawal characteristics of annuity reserves and deposit-type funds at December 31 are as follows:
2006 ------------------------------------ Amount % of Total -------------------------------------------------------------------------------------------------------------------- Subject to discretionary withdrawal: With fair value adjustment $ 437,643 24.7% At book value less current surrender charge of 5% or more 997 0.1% At fair value 792,670 44.8% -------------------------------------------------------------------------------------------------------------------- Total with adjustment or at fair value 1,231,310 69.6% At book value without adjustment (minimal or no charge) 471,234 26.6% Not subject to discretionary withdrawal 66,586 3.8% -------------------------------------------------------------------------------------------------------------------- Total gross and net $ 1,769,130 100.0% ==================================================================================================================== 2005 ------------------------------------ Amount % of Total -------------------------------------------------------------------------------------------------------------------- Subject to discretionary withdrawal: With fair value adjustment $ 420,996 29.9% At book value less current surrender charge of 5% or more 1,283 0.1% At fair value 665,600 47.3% -------------------------------------------------------------------------------------------------------------------- Total with adjustment or at fair value 1,087,879 77.3% At book value without adjustment (minimal or no charge) 249,487 17.7% Not subject to discretionary withdrawal 69,768 5.0% -------------------------------------------------------------------------------------------------------------------- Total gross and net $ 1,407,134 100.0% ====================================================================================================================
33 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 15. Analysis of Annuity Reserves and Deposit-type Funds by Withdrawal Characteristics, (continued) The following information is obtained from the applicable Exhibit in the Company's December 31 Annual Statement and related Separate Accounts Annual Statement, both of which are filed with the Insurance Department of the State of Nebraska, and is provided to reconcile annuity reserves and deposit-type funds to amounts reported in the statutory statements of admitted assets, liabilities and surplus as of December 31:
2006 2005 -------------------------------------------------------------------------------------------------------------------- Life and Accident and Health Annual Statement: Exhibit 5, Annuities Section, Total (net) $ 103,630 $ 119,071 Exhibit 5, Supplementary Contracts with Life Contingencies Section, Total (net) 10,218 9,337 Exhibit 7, Deposit-Type Contracts, Line 14, Column 1 516,048 497,207 -------------------------------------------------------------------------------------------------------------------- 629,896 625,615 Separate Accounts Annual Statement: Exhibit 3, Line 0299999, Column 2 346,564 115,919 Page 3, Line 2, Column 3 792,670 665,600 -------------------------------------------------------------------------------------------------------------------- Total $ 1,769,130 $ 1,407,134 ====================================================================================================================
16. Premium and Annuity Considerations Deferred and Uncollected Deferred and uncollected life insurance premiums and annuity considerations as of December 31 are as follows:
2006 2005 ------------------------------------------------------------------------ Type Gross Net of Loading Gross Net of Loading -------------------------------------------------------------------------------------------------------------------- Ordinary new business $ 71 $ 60 $ 345 $ 195 Ordinary renewal 5,221 4,785 5,011 8,213 -------------------------------------------------------------------------------------------------------------------- Totals $ 5,292 $ 4,845 $ 5,356 $ 8,408 ====================================================================================================================
34 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 17. Separate Accounts Information regarding the nonguaranteed separate accounts of the Company is as follows:
2006 2005 -------------------------------------------------------------------------------------------------------------------- For the years ended December 31: Premiums, considerations or deposits $ 394,921 $ 405,188 -------------------------------------------------------------------------------------------------------------------- At December 31: Reserves by valuation basis Fair value $ 1,273,171 $ 886,986 ==================================================================================================================== Reserves by withdrawal characteristic: Subject to discretionary withdrawal At fair value $ 792,670 $ 665,600 At book value without adjustment (minimal or no charge) 480,501 221,386 -------------------------------------------------------------------------------------------------------------------- Total $ 1,273,171 $ 886,986 ==================================================================================================================== -------------------------------------------------------------------------------------------------------------------- Reconciliation of net transfers to (from) separate accounts at December 31: Transfers as reported in the statutory statement of operations of the separate accounts annual statement: Transfers to separate accounts $ 248,379 $ 56,416 Transfers from separate accounts (33,985) (21,906) -------------------------------------------------------------------------------------------------------------------- Net transfers to separate accounts 214,394 34,510 -------------------------------------------------------------------------------------------------------------------- Net transfers as reported in the statutory statements of operations $ 214,394 $ 34,510 of the Company (included in change in policy reserves) ==================================================================================================================== 18. EDP Equipment and Software Electronic data processing ("EDP") equipment and operating and nonoperating software consisted of the following at December 31: 2006 2005 -------------------------------------------------------------------------------------------------------------------- Electronic data processing equipment $ 12,156 $ 14,430 Operating system software 3,198 2,432 Nonoperating system software 13,673 13,077 -------------------------------------------------------------------------------------------------------------------- Subtotal 29,027 29,939 Accumulated depreciation (25,605) (26,046) -------------------------------------------------------------------------------------------------------------------- Balance, net $ 3,422 $ 3,893 ====================================================================================================================
EDP equipment and operating software included in data processing and other admitted assets are $2,419 and $2,108 at December 31, 2006 and 2005, respectively. Depreciation expense related to EDP equipment and operating and nonoperating software totaled $2,956 and $3,413 for the year ended December 31, 2006 and 2005, respectively. 35 AMERITAS LIFE INSURANCE CORP. NOTES TO THE STATUTORY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 (in thousands) 19. Reconciliation of Statutory Net Income and Surplus to GAAP Net Income and Equity As described in Note 1, the Company has prepared these financial statements in conformity with statutory accounting practices prescribed or permitted by the Insurance Department of the State of Nebraska. These practices differ from accounting principles generally accepted in the United States of America (GAAP). The following tables reconcile statutory net income to GAAP net income and statutory surplus to GAAP equity.
2006 2005 --------------------------------------------------------------------------------------------------- Statutory net income as reported $ 54,214 $ 52,690 Insurance reserves 3,134 1,653 Deferred policy acquisition costs 6,369 (842) Deferred income taxes and other tax reclassifications (1,246) 19,691 Statutory investment reserves (253) 1,228 Earnings of subsidiaries 24,830 14,485 Other 403 (837) --------------------------------------------------------------------------------------------------- GAAP net income $ 87,451 $ 88,068 =================================================================================================== 2006 2005 --------------------------------------------------------------------------------------------------- Statutory surplus as reported $ 814,236 $ 757,631 Insurance reserves (8,134) (6,218) Deferred policy acquisition costs 57,301 49,890 Deferred income taxes (27,876) (26,847) Valuation of investments (6,837) 1,639 Statutory investment reserves 62,763 70,800 Subsidiary equity 70,290 33,141 Statutory non-admitted assets 35,483 35,541 Other 5,718 (539) --------------------------------------------------------------------------------------------------- GAAP equity $ 1,002,944 $ 915,038 ===================================================================================================
20. Subsequent Event In November 2006, the Company's Board of Directors approved a plan of merger with its 100% owned subsidiary, AVLIC, a Nebraska domiciled life and accident and health insurance company, pending various approvals. The Company received approval of the merger from the Insurance Department of the State of Nebraska. The Company will account for this transaction as a statutory merger under Statement of Statutory Principles No. 68 - Business Combinations and Goodwill. The surviving company will be named Ameritas Life Insurance Corp. with no shares of stock to be issued. The merger has an effective date of May 1, 2007. The Company does not expect this transaction to have a material effect on its financial condition or unassigned surplus funds. 36 PART C OTHER INFORMATION ITEM 26. EXHIBITS EXHIBIT NUMBER DESCRIPTION OF EXHIBIT (a) (1) Board of Directors Resolution of Ameritas Variable Life Insurance Company establishing Ameritas Variable Separate Account VL. (1) (a) (2) Resolution of Board of Directors of Ameritas Life Insurance Corp. authorizing the transfer of Ameritas Variable Separate Account VL to Ameritas Life Insurance Corp. (2) (b) Custodian Agreements. Not Applicable. (c) Principal Underwriting Agreement and Amendment. (1,) (2) (d) Form of Assumption Certificate. (3) (e) Form of Application. . Not Applicable. (f) Articles of Incorporation of Ameritas Life Insurance Corp. (4) Bylaws of Ameritas Life Insurance Corp. (5) (g) Form of Reinsurance Agreement. (1) (h) Forms of Participation Agreements: (1) The Alger American Fund. (6) (2) Calvert Variable Series, Inc. (7) (3) Variable Insurance Products Funds. (6) (4) Neuberger Berman Advisers Management Trust. (1) (5) Oppenheimer Variable Account Funds. (1) (6) Deutsche Asset Management VIT Funds. (1) (7) Franklin Templeton Variable Insurance Products Trust. (1) (8) Summit Mutual Funds, Inc. (2) (9) Van Eck Worldwide Insurance Trust. (1) (10) Form of Participation Agreement Novations. (2) (i) Administrative Contracts. Not Applicable. (j) Other Material Contracts: Powers of Attorney. (2) (k) Legal Opinion. (l) Actuarial Opinion. Not applicable. (m) Calculation. Not applicable. (n) Other Opinions: Consent of Independent Auditors Consent of Independent Registered Public Accounting Firm (o) No financial statements are omitted from Item 24. (p) Initial Capital Agreements. Not applicable. (q) Transfer and Redemption Procedures Pursuant to Rule 6e-3(T)(b) (12)(iii). (8) Footnotes: 1. Incorporated by reference to the Registration Statement for Ameritas Variable Separate Account VA Allocator 2000 Annuity, filed on July 1, 2002. 2. Incorporated by reference to the Form N-4 Registration Statement of Ameritas Variable Separate Account VA-2 (File No. 811-05192) for Overture Medley!, filed May 1, 2007. 3. Incorporated by reference to the Registration Statement for Ameritas Variable Separate Account VA Allocator 2000 Annuity, filed on July 1, 2002. Also See Form of Policy incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement on for Acacia National Variable Life Insurance Separate Account I File No. 333-95593, filed on April 28, 2000. 4. Incorporated by reference to the initial registration statement for Ameritas Life Insurance Corp. Separate Account LLVA (File No. 333-05529), filed on June 7, 1996. 5. Incorporated by reference to Post-Effective Amendment No. 4 for Ameritas Life Insurance Corp. Separate Account LLVA (File No. 333-05529), filed on February 26, 1999. 6. Incorporated by reference to Pre-Effective Amendment to the Registration Statement for Ameritas Variable Life Insurance Company, Separate Account V File No. 333-15585, filed on January 20, 1997. 7. Incorporated by reference to Post-Effective Amendment No. 7 to the Registration Statement for Ameritas Variable Life Insurance Company Separate Account V, File No. 333-14845, filed November 22, 2000. 8. Incorporated by reference to Pre-Effective amendment No. 1 for Ameritas Variable Separate Account VL Registration No. 333-91748, filed on September 20, 2002. ITEM 27. DIRECTORS AND OFFICERS OF THE DEPOSITOR Name and Principal Position and Offices BUSINESS ADDRESS* WITH DEPOSITOR Lawrence J. Arth Director, Chairman JoAnn M. Martin Director, President & Chief Executive Officer James P. Abel Director William W. Cook, Jr. Director Bert A. Getz Director James R. Knapp Director Tonn M. Ostergard Director Paul C. Schorr, III Director Winston J. Wade Director Robert C. Barth Senior Vice President, Controller & Chief Accounting Officer Jan M. Connolly Senior Vice President & Corporate Secretary Raymond M. Gilbertson Vice President, Corporate Compliance Arnold D. Henkel Senior Vice President, Individual Distribution Paul J. Huebner Senior Vice President & Chief Information Officer Dale D. Johnson Senior Vice President and Corporate Actuary William W. Lester Senior Vice President, Investments & Treasurer Robert G. Lange Vice President, General Counsel & Assistant Secretary * Principal business address: Ameritas Life Insurance Corp., 5900 "O" Street, Lincoln, Nebraska 68510. ITEM 28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR THE REGISTRANT
NAME OF CORPORATION (STATE WHERE ORGANIZED) PRINCIPAL BUSINESS ------------------------------------------- ------------------ UNIFI MUTUAL HOLDING COMPANY (NE)............................mutual insurance holding company AMERITAS HOLDING COMPANY (NE)...............................stock insurance holding company ACACIA LIFE INSURANCE COMPANY (DC)......................life insurance company ACACIA FINANCIAL CORPORATION (MD)....................holding company Acacia Federal Savings Bank (DE).................federally chartered bank ACACIA SERVICE CORP. (VA).....................deposit solicitation Calvert Group, Ltd. (DE).........................holding company CALVERT ASSET MANAGEMENT COMPANY (DE).........asset management services CALVERT SHAREHOLDER SERVICES, INC. (DE).......administrative services CALVERT ADMINISTRATIVE SERVICES COMPANY (DE)..administrative services CALVERT DISTRIBUTORS, INC. (DE)...............broker-dealer AMERITAS LIFE INSURANCE CORP. (NE)......................life/health insurance company AMERITAS INVESTMENT CORP. (NE).......................a securities broker dealer and investment advisor owned by Ameritas Life Insurance Corp. (80%) and Centralife Annuities Service, Inc. (20%) AMERITAS INVESTMENT ADVISORS, INC. (NE)..............investment advisor FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK (NY).life insurance company PATHMARK ADMINISTRATORS, INC. (NE)...................third-party administrator of dental and eye care insurance plans THE UNION CENTRAL LIFE INSURANCE COMPANY (OH)...........life insurance company UNION CENTRAL MORTGAGE FUNDING, INC. (OH)............mortgage loan and servicing SUMMIT INVESTMENT PARTNERS, LLC (OH).................investment adviser PBRA, INC. (CA)......................................holding company Price, Raffel & Browne Administrators, Inc.(DE). pension administration services SUMMIT INVESTMENT PARTNERS, INC. (OH)................investment adviser
Subsidiaries are indicated by indentations. Ownership is 100% by the parent company except as noted. ITEM 29. INDEMNIFICATION Ameritas Life Insurance Corp.'s By-laws provide as follows: "The Corporation shall indemnify any person who was, or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that he or she is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses including attorney's fees, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding to the full extent authorized by the laws of Nebraska." Section 21-2004 of the Nebraska Business Corporation Act, in general, allows a corporation to indemnify any director, officer, employee or agent of the corporation for amount paid in settlement actually and reasonably incurred by him or her in connection with an action, suit or proceeding, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interest of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. In a case of a derivative action, no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to the corporation, unless a court in which the action was brought shall determine that such person is fairly and reasonably entitled to indemnify for such expenses which the Court shall deem proper. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ITEM 30. PRINCIPAL UNDERWRITER a) Ameritas Investment Corp. ("AIC") serves as the principal underwriter for the variable life insurance contracts issued through Ameritas Variable Separate Account VL, as well as Ameritas Variable Separate Account V, Ameritas Life Insurance Corp. Separate Account LLVL, First Ameritas Variable Life Separate Account, and Carillon Life Account. AIC also serves as the principal underwriter for variable annuity contracts issued through Ameritas Variable Separate Account VA-2, Ameritas Variable Separate Account VA, Ameritas Life Insurance Corp. Separate Account LLVA, First Ameritas Variable Annuity Separate Account, and Carillon Account. b) The following table sets forth certain information regarding the officers and directors of the principal underwriter, Ameritas Investment Corp. Name and Principal Positions and Offices Business Address With Underwriter ---------------- ---------------- JoAnn M. Martin * Director, Chair & Senior Vice President Salene Hitchcock-Gear* Director, President & Chief Executive Officer Gary R. McPhail** Director, Senior Vice President William W. Lester* Director, Vice President & Treasurer Gary T. Huffman*** Director Billie B. Beavers**** Senior Vice President Cheryl L. Heilman* Vice President, Chief Operating Officer Bruce D. Lefler**** Senior Vice President - Public Finance Gregory C. Sernett* Vice President, Chief Compliance Officer, and Assistant Secretary Robert G. Lange* Vice President, Secretary, & General Counsel Michael M. VanHorne**** Senior Vice President * Principal business address: Ameritas Investment Corp., 5900 "O" Street, Lincoln, Nebraska 68510. ** Principal business address: AmerUs Life Insurance Company, 611 Fifth Avenue, Des Moines, Iowa 50309. *** Principal business address: The Union Central Life Insurance Company, 1876 Waycross Road, Cincinnati, Ohio 45240 **** Principal business address: Ameritas Investment Corp., 440 Regency Parkway Drive, Suite 222, Omaha, Nebraska 68114. (c) Compensation From the Registrant. (1) (2) (3) (4) (5) Compensation on Net Underwriting Events Occasioning Name of Principal Discounts and the Deduction of a Brokerage Other Underwriter Commissions Deferred Sales Load Commissions Compensation Ameritas Investment ----------- ------------------- ----------- ------------ Corp. ("AIC") $60,249 $0 $0 $0 (2)+(4)+(5) = Gross variable life compensation received by AIC. (2) = Sales compensation received and paid out by AIC as underwriter; AIC retains 0. (4) = Sales compensation received by AIC for retail sales. (5) = Sales compensation received by AIC and retained as underwriting fee. ITEM 31. LOCATION OF ACCOUNTS AND RECORDS The Books, records and other documents required to be maintained by Section 31(a) of the 1940 Act and Rules 31a-1 to 31a-3 thereunder are maintained at Ameritas Life Insurance Corp., 5900 "O" Street, Lincoln, Nebraska 68510. ITEM 32. MANAGEMENT SERVICES Not Applicable. ITEM 33. FEE REPRESENTATION Ameritas Life Insurance Corp. represents that the fees and charges deducted under the contract, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company. SIGNATURES As required by the Securities Act of 1933, the Registrant, Ameritas Variable Separate Account VL certifies that it has caused this Registration Statement on Form N-6 to be signed on its behalf by the undersigned thereunto duly authorized in the City of Lincoln, County of Lancaster, State of Nebraska effective this May 1, 2007, on this 30th day of April, 2007. AMERITAS VARIABLE SEPARATE ACCOUNT VL, Registrant AMERITAS LIFE INSURANCE CORP., Depositor By: LAWRENCE J. ARTH * ---------------------------------- Chairman of the Board As required by the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated effective May 1, 2007, on April 30, 2007. SIGNATURE TITLE --------- ----- Lawrence J. Arth * Director, Chairman of the Board JoAnn M. Martin * Director, President & Chief Executive Officer James P. Abel * Director William W. Cook, Jr. * Director Bert A. Getz * Director James R. Knapp * Director Tonn M. Ostergard * Director Paul C. Schorr, III * Director Winston J. Wade * Director Robert C. Barth * Senior Vice President, Controller & Chief Accounting Officer William W. Lester * Senior Vice President - Investments & Treasurer /S/ ROBERT G. LANGE Vice President, General Counsel & Assistant --------------------- Secretary Robert G. Lange * Signed by Robert G. Lange under Powers of Attorney executed on February 23, 2007, effective as of May 1, 2007. EXHIBIT INDEX EXHIBIT (k) Legal Opinion of Robert G. Lange (n) Other Opinions: Consent of Independent Auditors Consent of Independent Registered Public Accounting Firm