N-30B-2

N-30B-2 1 d490923dn30b2.htm N-30B-2 N-30B-2

[Federal Life Insurance Company (Mutual) Letterhead]

March 4, 2013

VIA EDGAR

Securities and Exchange Commission

100 F. Street N.E.

Washington, D.C. 20549-0506

Re:

Federal Life Variable Annuity Account-A

File Nos.: 333-147464; 811-02570

CIK: 0000034867

Rule 30b2-1 Filing

Dear Sir or Madam:

We have included with this filing the annual report of Federal Life Variable Annuity Account-A, which was mailed to its contract owners on February 25, 2013.

Very truly yours,

/s/ William S. Austin

William S. Austin

President and Chief Operating Officer
Federal Life Insurance Company
(Mutual)

Federal Life Insurance Company (Mutual)

3750 West Deerfield Road • Riverwoods, Illinois 60015 •

(847) 520-1900

February 25, 2013

To Contract Owners and Participants:

We are pleased to forward our 2012 annual report reflecting the financial condition of the Federal Life Variable Annuity Account A. Values of accumulation units for the account divisions that make up the separate account are shown under the section “Net Assets” in the Statement of Assets and Liabilities of the account. Total net assets attributable to contract owners at the end of 2012 are $21,483,104.

Federal Life Variable Annuity Account A, a segregated investment established by Federal Life Insurance Company (Mutual), invests its funds at net asset value in shares of the Vanguard group of mutual funds.

The operating results of the mutual funds representing investments of the account divisions that apply to your policy may be found in the latest financial report of such mutual funds. The mutual funds reporting period may not always coincide with the reporting period for Federal Life Variable Annuity Account A.

If you have any questions or would like any additional information, please call Leslie Shear at (800) 233-3750 extension 335. Your participation in Federal Life Variable Annuity Account A is greatly appreciated.

William S. Austin

President and Chief Operating Officer

Federal Life Variable Annuity Account A

Annual Report

December 31, 2012

Annual Report of

Federal Life Variable Annuity Account A

Prepared and Provided by:

Federal Life Insurance Company (Mutual)

3750 West Deerfield Road

Riverwoods, Illinois 60015

This report is submitted for the general information of owners of Federal Life Variable Annuity Account A contracts. The report is not authorized for distribution to prospective purchasers of variable annuity contracts unless it is accompanied by an effective prospectus.

Federal Life Variable Annuity Account A

Annual Report

December 31, 2012

Contents


Statement of Assets and Liabilities		1-2
Statements of Operations and Changes in Net Assets		3-6
Notes to Financial Statements		7-16
Report of Independent Registered Public Accounting Firm		17
Report of Independent Registered Public Accounting Firm on Internal Controls Required by the SEC under Form N-SAR		18-19

Federal Life Variable Annuity Account A

Statement of Assets and Liabilities

December 31, 2012



	Number of Shares		Share Value		Total Value
Assets:
Investments at Fair Value (Note B)
Vanguard Wellesley Income Fund
Admiral Class Non-Qualified Shares (Cost $872,860)		24,452.370	$	58.40	$	1,428,018

Vanguard Long-Term Corporate Fund
Investor Class Qualified Shares (Cost $3)		3.244	$	10.85		35
Admiral Class Non-Qualified Shares (Cost $779,888)		81,827.148	$	10.85		887,825

Vanguard Windsor Fund
Admiral Class Qualified Shares (Cost $1,029,909)		28,810.558	$	50.94		1,467,610
Admiral Class Non-Qualified Shares (Cost $9,154,268)		224,064.515	$	50.94		11,413,846

Vanguard Wellington Fund
Investor Class Qualified Shares (Cost $41,611)		1,888.078	$	33.84		63,893
Admiral Class Non-Qualified Shares (Cost $2,418,349)		57,799.920	$	58.45		3,378,405

Vanguard Morgan Growth Fund
Admiral Class Qualified Shares (Cost $58,577)		1,812.966	$	61.68		111,824
Admiral Class Non-Qualified Shares (Cost $747,888)		18,715.113	$	61.68		1,154,348

Vanguard Prime Money Market Fund
Investor Class Qualified Shares (Cost $46,487)		46,486.800	$	1.00		46,487
Investor Class Non-Qualified Shares (Cost $1,584,150)		1,584,150.390	$	1.00		1,584,150

Total Assets					$	21,536,441

Liabilities
Funds Held for Federal Life Insurance Company (Mutual)					$	52,279
Accrued Expenses (Note C)						1,058

Total Liabilities						53,337

Total Net Assets Attributable to Variable Annuity Contract Owners					$	21,483,104

See notes to financial statements.

Federal Life Variable Annuity Account A

Statement of Assets and Liabilities (Continued)

December 31, 2012


	Number of Units		Unit Value		Total Value
Net Assets Attributable to Variable Annuity Contract Owners
Vanguard Wellesley Income Fund
Admiral Class Non-Qualified Accumulation Units		54,879.815		25.849738	$	1,418,629

Vanguard Long-Term Corporate Fund
Investor Class Qualified Accumulation Units		0.000		17.621714		0
Admiral Class Non-Qualified Accumulation Units		49,534.310		17.967113		889,989

Vanguard Windsor Fund
Admiral Class Qualified Accumulation Units		21,028.547		48.879195		1,027,858
Reserve for Payout Annuity						438,600
Admiral Class Non-Qualified Accumulation Units		333,597.872		34.124935		11,384,006
Reserve for Payout Annuity						6,329

Vanguard Wellington Fund
Investor Class Qualified Accumulation Units		1,895.109		33.649551		63,770
Admiral Class Non-Qualified Accumulation Units		119,290.069		28.220000		3,366,366

Vanguard Morgan Growth Fund
Admiral Class Qualified Accumulation Units		3,355.965		33.013024		110,791
Admiral Class Non-Qualified Accumulation Units		47,710.633		24.181645		1,153,722

Vanguard Prime Money Market Fund
Investor Class Qualified Accumulation Units		9,879.827		4.570282		45,154
Investor Class Non-Qualified Accumulation Units		345,250.528		4.570282		1,577,892

Total Net Assets Attributable to Variable Annuity Contract Owners					$	21,483,104

See notes to financial statements.

Federal Life Variable Annuity Account A

Statements of Operations and Changes in Net Assets

For the Years Ended December 31, 2012 and 2011


	Vanguard Wellesley Income Fund

	Admiral Class Non-Qualified 2012			Admiral Class Non-Qualified 2011
Income—Reinvested dividends	$	45,606		$	50,289
Expense—Mortality and expense		12,008			11,529

Net investment income		33,598			38,760
Net realized and unrealized gain on investments		88,916			77,720

Increase in net assets from operations		122,514			116,480
Net redemption payments disbursed		(95,393	)		(233,809	)

Increase (decrease) in net assets		27,122			(117,329	)
Net assets, beginning of year		1,391,507			1,508,836

Net assets, end of year	$	1,418,629		$	1,391,507


	Vanguard Long-Term Corporate Fund

	Investor Class Qualified 2012			Investor Class Qualified 2011		Admiral Class Non-Qualified 2012		Admiral Class Non-Qualified 2011
Income—Reinvested dividends	$	3		$	11	$	39,112	$	43,573
Expense—Mortality and expense		0			0		6,858		5,857

Net investment income		3			11		32,254		37,716
Net realized and unrealized gain on investments		0			11		48,788		67,821

Increase in net assets from operations		3			22		81,042		105,537
Net redemption payments (disbursed) received		(165	)		0		56,000		0

(Decrease) increase in net assets		(162	)		22		137,042		105,537
Net assets, beginning of year		162			140		752,947		647,410

Net assets, end of year	$	0		$	162	$	889,989	$	752,947

See notes to financial statements.

Federal Life Variable Annuity Account A

Statements of Operations and Changes in Net Assets (Continued)

For the Years Ended December 31, 2012 and 2011


	Vanguard Windsor Fund

	Admiral Class Qualified 2012			Admiral Class Qualified 2011			Admiral Class Non-Qualified 2012			Admiral Class Non-Qualified 2011
Income—Reinvested dividends	$	30,985		$	25,781		$	239,978		$	166,598
Expense—Mortality and expense		8,168			10,498			90,986			87,492

Net investment income		22,817			15,283			148,992			79,106
Net realized and unrealized gain (loss) on investments		238,957			(98,841	)		1,761,537			(552,051	)

Increase (decrease) in net assets from operations		261,774			(83,558	)		1,910,528			(472,945	)
Net redemption payments disbursed		(75,052	)		(513,302	)		(159,076	)		(572,780	)

Increase (decrease) in net assets		186,722			(596,860	)		1,751,453			(1,045,725	)
Net assets, beginning of year		1,279,736			1,876,596			9,638,882			10,684,607

Net assets, end of year	$	1,466,458		$	1,279,736		$	11,390,335		$	9,638,882


	Vanguard Wellington Fund

	Investor Class Qualified 2012		Investor Class Qualified 2011		Admiral Class Non-Qualified 2012			Admiral Class Non-Qualified 2011
Income—Reinvested dividends	$	1,919	$	1,698	$	104,359		$	92,941
Expense—Mortality and expense		522		481		27,667			25,795

Net investment income		1,397		1,217		76,692			67,146
Net realized and unrealized gain on investments		5,239		434		278,556			29,129

Increase in net assets from operations		6,636		1,651		355,248			96,275
Net redemption payments disbursed		0		0		(30,588	)		(96,756	)

Increase (decrease) in net assets		6,636		1,651		324,660			(481	)
Net assets, beginning of year		57,134		55,483		3,041,706			3,042,187

Net assets, end of year	$	63,770	$	57,134	$	3,366,366		$	3,041,706

See notes to financial statements.

Federal Life Variable Annuity Account A

Statements of Operations and Changes in Net Assets (Continued)

For the Years Ended December 31, 2012 and 2011


	Vanguard Morgan Growth Fund

	Admiral Class Qualified 2012			Admiral Class Qualified 2011			Admiral Class Non-Qualified 2012			Admiral Class Non-Qualified 2011
Income—Reinvested dividends	$	1,318		$	702		$	13,602		$	8,446
Expense—Mortality and expense		923			859			10,057			10,347

Net investment income (loss)		395			(157	)		3,544			(1,901	)
Net realized and unrealized gain (loss) on investments		13,442			(3,075	)		158,837			(42,387	)

Increase (decrease) in net assets from operations		13,837			(3,232	)		162,381			(44,288	)
Net purchase payments (disbursed) received		0			0			(160,520	)		170,169

Increase (decrease) in net assets		13,837			(3,232	)		1,861			125,881
Net assets, beginning of year		96,954			100,186			1,151,861			1,025,980

Net assets, end of year	$	110,791		$	96,954		$	1,153,722		$	1,151,861


	Vanguard Prime Money Market Fund

	Investor Class Qualified 2012			Investor Class Qualified 2011			Investor Class Non-Qualified 2012			Investor Class Non-Qualified 2011
Income—Reinvested dividends	$	18		$	31		$	626		$	747
Expense—Mortality and expense		395			522			13,719			13,986

Net investment loss		(377	)		(491	)		(13,092	)		(13,239	)
Net realized and unrealized (loss) gain on investments		(1	)		37			(39	)		32

Decrease in net assets from operations		(378	)		(454	)		(13,131	)		(13,207	)
Net redemption payments disbursed		(3,676	)		(27,276	)		(41,403	)		(13,582	)

Decrease in net assets		(4,053	)		(27,730	)		(54,534	)		(26,789	)
Net assets, beginning of year		49,207			76,937			1,632,426			1,659,215

Net assets, end of year	$	45,154		$	49,207		$	1,577,892		$	1,632,426

See notes to financial statements.

Federal Annuity Variable Annuity Account A

Statements of Operations and Changes in Net Assets (Continued)

For the Years Ended December 31, 2012 and 2011


	Federal Life Equity Portfolio

	2012		2011
Income—Reinvested dividends	$	0	$	0
Expense—Mortality and expense		0		0

Net investment income		0		0
Net realized and unrealized gain on investments		0		211

Increase in net assets from operations		0		211
Net redemption payments disbursed		0		(9,504	)

Decrease in net assets		0		(9,293	)
Net assets, beginning of year		0		9,293

Net assets, end of year	$	0	$	0


	Federal Life Fixed Income Portfolio

	2012		2011
Income—Reinvested dividends	$	0	$	0
Expense—Mortality and expense		0		0

Net investment income		0		0
Net realized gain on investments		0		77

Increase in net assets from operations		0		77
Net redemption payments disbursed		0		(2,723	)

Decrease in net assets		0		(2,646	)
Net assets, beginning of year		0		2,646

Net assets, end of year	$	0	$	0

See notes to financial statements.

Federal Life Variable Annuity Account A

Notes to Financial Statements

December 31, 2012

Note A—The Account

Federal Life Variable Annuity Account A (the Account) is a separate account of Federal Life Insurance Company (Mutual) (Federal Life). The Account is registered as a unit investment trust under the Investment Company Act of 1940.

Under applicable insurance law, the assets and liabilities of the Account are clearly identified and distinguished from Federal Life’s other assets and liabilities. The portion of the Account’s assets applicable to the variable annuity contracts is not chargeable with liabilities arising out of any other business Federal Life may conduct.

Net assets allocated to contracts in the payout period are computed according to the Annuity 2000 Mortality table. The assumed investment return is 3.5% unless the annuitant elects otherwise, in which case the rate may vary from 3.5% to 7.0%, as regulated by the laws of the respective states. The mortality risk is fully borne by Federal Life and may result in additional amounts being transferred into the Account by Federal Life to cover greater longevity of annuitants than expected. Conversely, if amounts allocated exceed amounts required, transfers may be made to Federal Life.

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (GAAPUSA) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

The Account has evaluated the recognition and disclosure of subsequent events for its 2012 financial statements through February 21, 2013.

Note B—Investments

The Net Asset Value (NAV) of the investments in each mutual fund represents the fair value of the shares. Investment transactions are accounted for on the trade date. Dividends and short-term capital gain distributions are recorded as income on the ex-dividend trade date, with the distributions being reinvested. Long-term capital gain distributions are recorded on the ex-dividend date as the net realized and unrealized gain (loss) by investments, with the distribution being reinvested. Cost represents the average cost of shares purchased, less redemptions.

The cost of purchases and proceeds from sales of investments for the years ended December 31 were as follows:


	2012				2011
	Purchases		Sales		Purchases		Sales
Vanguard Wellesley Income Fund	$	0	$	95,393	$	0	$	233,809
Vanguard Long-Term Corporate Fund		56,000		165		0		0
Vanguard Windsor Fund		0		234,128		0		1,086,082
Vanguard Wellington Fund		0		30,588		84,372		181,128
Vanguard Morgan Growth Fund		0		160,520		261,708		91,539
Vanguard Prime Money Market Fund		0		45,079		0		40,858
Federal Life Equity Portfolio		0		0		0		9,504
Federal Life Fixed Income Portfolio		0		0		0		2,723

Total	$	56,000	$	565,872	$	346,080	$	1,645,643

Federal Life Variable Annuity Account A

Notes to Financial Statements (Continued)

December 31, 2012

Note C—Mortality and Expense Assurances

Deductions of 0.00233% and 0.00137% per daily valuation period (annual basis of 0.85% and 0.50%) of the current value of the Account are made to Federal Life for mortality and expense assurances for the Vanguard and the Federal Life Portfolios, respectively. Expenses were not charged for the Federal Life Portfolios.

Note D—Federal Income Taxes

The operations of the Account form a part of, and are taxed with, the operations of Federal Life, which under the Internal Revenue Code (the Code) is taxed as a life insurance company. The Account will not be taxed as a regulated investment company under Subchapter M of the Code. Under existing federal income tax law, no taxes are payable on the investment income, nor on the realized gain on the Account.

Note E—Changes in Units Outstanding


	Vanguard Wellesley Income Fund

	Admiral Class Non-Qualified 2012			Admiral Class Non-Qualified 2011
Unit value, beginning of year	$	23.68		$	21.76
Unit value, end of year	$	25.85		$	23.68
Number of units outstanding, beginning of year		58,762.962			69,335.493
Net contract purchase payments		0			0
Withdrawals		(3,883.147	)		(2,472.998	)
Transfers between Account divisions, net		0			(8,099.533	)

Number of units outstanding, end of year		54,879.815			58,762.962


	Vanguard Long-Term Corporate Fund

	Investor Class Qualified 2012			Investor Class Qualified 2011		Admiral Class Non-Qualified 2012		Admiral Class Non-Qualified 2011
Unit value, beginning of year	$	15.92		$	13.70	$	16.21	$	13.94
Unit value, end of year	$	17.62		$	15.92	$	17.97	$	16.21
Number of units outstanding, beginning of year		10.197			10.197		46,446.483		46,446.483
Net contract purchase payments		0			0		3,087.827		0
Withdrawals		(10.197	)		0		0		0
Transfers between Account divisions, net		0			0		0		0

Number of units outstanding, end of year		0.000			10.197		49,534.310		46,446.483

Federal Life Variable Annuity Account A

Notes to Financial Statements (Continued)

December 31, 2012

Note E—Changes in Units Outstanding (Continued)


	Vanguard Windsor Fund

	Admiral Class Qualified 2012			Admiral Class Qualified 2011			Admiral Class Non-Qualified 2012			Admiral Class Non-Qualified 2011
Unit value, beginning of year	$	40.76		$	42.80		$	28.46		$	29.88
Unit value, end of year	$	48.88		$	40.76		$	34.12		$	28.46
Number of units outstanding, beginning of year		21,683.034			33,362.071			338,484.401			357,334.639
Net contract purchase payments		0			0			0			0
Withdrawals		(654.487	)		(11,415.775	)		(1,664.707	)		(18,850.238	)
Transfers between Account divisions, net		0			(263.262	)		(3,221.822	)		0

Number of units outstanding, end of year		21,028.547			21,683.034			333,597.872			338,484.401


	Vanguard Wellington Fund

	Investor Class Qualified 2012			Investor Class Qualified 2011			Admiral Class Non-Qualified 2012			Admiral Class Non-Qualified 2011
Unit value, beginning of year	$	30.15		$	29.28		$	25.26		$	24.51
Unit value, end of year	$	33.65		$	30.15		$	28.22		$	25.26
Number of units outstanding, beginning of year		1,895.109			1,895.109			120,407.286			124,122.540
Net contract purchase payments		0			0			0			0
Withdrawals		0			0			(1,117.217	)		(1,824.025	)
Transfers between Account divisions, net		0			0			0			(1,891.229	)

Number of units outstanding, end of year		1,895.109			1,895.109			119,290.069			120,407.286


	Vanguard Morgan Growth Fund

	Admiral Class Qualified 2012			Admiral Class Qualified 2011			Admiral Class Non-Qualified 2012			Admiral Class Non-Qualified 2011
Unit value, beginning of year	$	28.89		$	29.85		$	21.16		$	21.87
Unit value, end of year	$	33.01		$	28.89		$	24.18		$	21.16
Number of units outstanding, beginning of year		3,355.965			3,355.965			54,431.535			46,918.577
Net contract purchase payments		0			0			0			0
Withdrawals		0			0			(2,730.590	)		(1,207.835	)
Transfers between Account divisions, net		0			0			(3,990.311	)		8,720.793

Number of units outstanding, end of year		3,355.965			3,355.965			47,710.633			54,431.535

Federal Life Variable Annuity Account A

Notes to Financial Statements (Continued)

December 31, 2012

Note E—Changes in Units Outstanding (Continued)


	Vanguard Prime Money Market Fund

	Investor Class Qualified 2012			Investor Class Qualified 2011			Investor Class Non-Qualified 2012			Investor Class Non-Qualified 2011
Unit value, beginning of year	$	4.61		$	4.64		$	4.61		$	4.64
Unit value, end of year	$	4.57		$	4.61		$	4.57		$	4.61
Number of units outstanding, beginning of year		10,679.138			16,563.685			354,277.822			357,210.825
Net contract purchase payments		0			0			0			0
Withdrawals		(799.311	)		(5,884.547	)		(9,027.294	)		0
Transfers between Account divisions, net		0			0			0			(2,933.003	)

Number of units outstanding, end of year		9,879.827			10,679.138			345,250.528			354,277.822


	Federal Life Equity Portfolio

	2012		2011
Unit value, beginning of year	$	0	$	12.53
Unit value, end of year	$	0	$	0
Number of units outstanding, beginning of year		0		741.469
Net contract purchase payments		0		—
Withdrawals		0		(741.469	)
Transfers between Account divisions, net		0		0

Number of units outstanding, end of year		0		0


	Federal Life Fixed Income Portfolio

	2012		2011
Unit value, beginning of year	$	0	$	10.57
Unit value, end of year	$	0	$	0
Number of units outstanding, beginning of year		0		250.271
Net contract purchase payments		0		0
Withdrawals		0		(250.271	)
Transfers between Account divisions, net		0		0

Number of units outstanding, end of year		0		0

Federal Life Variable Annuity Account A

Notes to Financial Statements (Continued)

December 31, 2012

Note F—Summary of Units Outstanding, Unit Values, Expenses and Total Return for Each of the Five Years in the Period Ended December 31

Vanguard Wellesley Income Fund

Admiral Class Non-Qualified


Year	Units		Unit Value		Net Assets		Investment Income Ratio			Expenses as a % of Average Assets			Total Return
2012		54,879.815	$	25.85	$	1,418,629		3.25	%		0.85	%		8.80	%
2011		58,762.962		23.68		1,391,507		3.56	%		0.85	%		7.72	%
2010		69,335.493		21.76		1,508,836		3.76	%		0.85	%		9.04	%
2009		85,220.220		19.82		1,689,372		4.67	%		0.85	%		13.46	%
2008		95,064.947		17.22		1,636,556		5.06	%		0.85	%		-11.46	%

Vanguard Long-Term Corporate

Fund Investor Class Qualified


Year	Units		Unit Value		Net Assets		Investment Income Ratio			Expenses as a % of Average Assets			Total Return
2012		0.000	$	17.62	$	0		0.00	%		0.85	%		2.06	%
2011		10.197		15.92		162		7.40	%		0.85	%		15.71	%
2010		10.197		13.70		140		6.67	%		0.85	%		9.63	%
2009		10.197		12.48		127		7.46	%		0.85	%		7.46	%
2008		10.197		11.57		118		3.65	%		0.85	%		-3.73	%

Vanguard Long-Term Corporate Fund

Admiral Class Non-Qualified


Year	Units		Unit Value		Net Assets		Investment Income Ratio			Expenses as a % of Average Assets			Total Return
2012		49,534.310	$	17.97	$	889,989		5.59	%		0.85	%		10.76	%
2011		46,446.483		16.21		752,947		6.33	%		0.85	%		16.30	%
2010		46,446.483		13.94		647,410		6.23	%		0.85	%		10.10	%
2009		80,559.354		12.68		1,021,591		6.14	%		0.85	%		7.72	%
2008		81,656.895		11.74		959,048		5.93	%		0.85	%		1.45	%

Federal Life Variable Annuity Account A

Notes to Financial Statements (Continued)

December 31, 2012

Note F—Summary of Units Outstanding, Unit Values, Expenses and Total Return for Each of the Five Years in the Period Ended December 31 (Continued)

Vanguard Windsor Fund

Admiral Class Qualified


Year	Units		Unit Value		Net Assets (1)		Investment Income Ratio			Expenses as a % of Average Assets			Total Return
2012		21,028.547	$	48.88	$	1,027,858		0.59	%		0.85	%		20.46	%
2011		21,683.034		40.76		883,891		1.53	%		0.85	%		-4.45	%
2010		33,362.071		42.80		1,427,961		1.34	%		0.85	%		14.07	%
2009		34,474.679		37.57		1,295,102		1.92	%		0.85	%		25.13	%
2008		60,136.919		28.09		1,689,067		2.23	%		0.85	%		-51.53	%

Vanguard Windsor Fund

Admiral Class Non-Qualified


Year	Units		Unit Value		Net Assets (1)		Investment Income Ratio			Expenses as a % of Average Assets			Total Return
2012		333,597.872	$	34.12	$	11,384,006		2.28	%		0.85	%		19.82	%
2011		338,484.401		28.46		9,633,074		1.61	%		0.85	%		-4.43	%
2010		357,334.639		29.88		10,677,908		1.33	%		0.85	%		13.53	%
2009		366,937.110		26.23		9,623,720		2.17	%		0.85	%		29.60	%
2008		397,803.753		19.61		7,800,499		2.18	%		0.85	%		-49.18	%

Vanguard Wellington Fund

Investor Class Qualified


Year	Units		Unit Value		Net Assets		Investment Income Ratio			Expenses as a % of Average Assets			Total Return
2012		1,895.109	$	33.65	$	63,770		3.18	%		0.85	%		11.61	%
2011		1,895.109		30.15		57,134		2.98	%		0.85	%		2.98	%
2010		1,895.109		29.28		55,483		2.91	%		0.85	%		9.79	%
2009		1,895.109		26.62		50,440		3.42	%		0.85	%		19.48	%
2008		1,895.109		21.97		41,631		3.55	%		0.85	%		-25.40	%

(1)	Does not include payout reserve

Federal Life Variable Annuity Account A

Notes to Financial Statements (Continued)

December 31, 2012

Note F—Summary of Units Outstanding, Unit Values, Expenses and Total Return for Each of the Five Years in the Period Ended December 31 (Continued)

Vanguard Wellington Fund

Admiral Class Non-Qualified


Year	Units		Unit Value		Net Assets		Investment Income Ratio			Expenses as a % of Average Assets			Total Return
2012		119,290.069	$	28.22	$	3,366,366		3.26	%		0.85	%		11.68	%
2011		120,407.286		25.26		3,041,706		3.04	%		0.85	%		3.16	%
2010		124,122.540		24.51		3,042,187		2.95	%		0.85	%		9.36	%
2009		139,892.838		22.26		3,114,288		3.47	%		0.85	%		18.70	%
2008		146,439.049		18.35		2,687,383		3.72	%		0.85	%		-25.63	%

Vanguard Morgan Growth Fund

Admiral Class Qualified


Year	Units		Unit Value		Net Assets		Investment Income Ratio			Expenses as a % of Average Assets			Total Return
2012		3,355.965	$	33.01	$	110,791		1.27	%		0.85	%		14.27	%
2011		3,355.965		28.89		96,954		0.69	%		0.85	%		-3.23	%
2010		3,355.965		29.85		100,186		0.74	%		0.85	%		17.91	%
2009		3,355.965		25.33		84,997		0.89	%		0.85	%		26.02	%
2008		4,948.697		18.74		92,735		1.03	%		0.85	%		-50.35	%

Vanguard Morgan Growth Fund

Admiral Class Non-Qualified


Year	Units		Unit Value		Net Assets		Investment Income Ratio			Expenses as a % of Average Assets			Total Return
2012		47,710.633	$	24.18	$	1,153,722		1.18	%		0.85	%		14.10	%
2011		54,431.535		21.16		1,151,861		0.73	%		0.85	%		-4.32	%
2010		46,918.577		21.87		1,025,980		0.73	%		0.85	%		17.24	%
2009		46,918.577		18.55		870,431		0.98	%		0.85	%		28.42	%
2008		51,282.999		13.73		703,927		1.01	%		0.85	%		-49.74	%

Federal Life Variable Annuity Account A

Notes to Financial Statements (Continued)

December 31, 2012

Note F—Summary of Units Outstanding, Unit Values, Expenses and Total Return for Each of the Five Years in the Period Ended December 31 (Continued)

Vanguard Prime Money Market Fund

Investor Class Qualified


Year	Units		Unit Value		Net Assets		Investment Income Ratio			Expenses as a % of Average Assets			Total Return
2012		9,879.827	$	4.57	$	45,154		0.04	%		0.85	%		-0.77	%
2011		10,679.138		4.61		49,207		0.05	%		0.85	%		-0.59	%
2010		16,563.685		4.64		76,937		0.06	%		0.85	%		-0.79	%
2009		16,634.135		4.68		77,876		0.54	%		0.85	%		-0.31	%
2008		17,067.455		4.70		80,156		2.75	%		0.85	%		2.01	%

Vanguard Prime Money Market Fund

Investor Class Non-Qualified


Year	Units		Unit Value		Net Assets		Investment Income Ratio			Expenses as a % of Average Assets			Total Return
2012		345,250.528	$	4.57	$	1,577,892		0.04	%		0.85	%		-0.80	%
2011		354,277.822		4.61		1,632,426		0.05	%		0.85	%		-0.80	%
2010		357,210.825		4.64		1,659,215		0.06	%		0.85	%		-0.79	%
2009		397,853.524		4.68		1,862,636		0.54	%		0.85	%		-0.30	%
2008		424,251.084		4.70		1,992,468		2.72	%		0.85	%		1.88	%

Federal Life Equity Portfolio*


Year	Units		Unit Value		Net Assets		Investment Income Ratio			Expenses as a % of Average Assets			Total Return
2011		0	$	0	$	0		0.47	%		0.50	%		1.70	%
2010		741.469		12.53		9,293		1.74	%		0.50	%		17.10	%
2009		741.469		10.76		7,976		5.33	%		0.50	%		7.65	%

Federal Life Fixed Income Portfolio*


Year	Units		Unit Value		Net Assets		Investment Income Ratio			Expenses as a % of Average Assets			Total Return
2011		—	$	0.01	$	0.01		2.78	%		0.50	%		2.98	%
2010		250.271		10.57		2,646		3.28	%		0.50	%		6.37	%
2009		250.271		9.99		2,500		3.36	%		0.50	%		0.00	%

*	The portfolios commenced operations on October 31, 2009 and abandoned registration on June 30, 2011.

Federal Life Variable Annuity Account A

Notes to Financial Statements (Continued)

December 31, 2012

Note G—Fair Value Measurements

GAAPUSA defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market or, in the absence of a principal market, the most advantageous market accessible to the reporting entity at the measurement date. Under GAAPUSA, the principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity. The most advantageous market, which may be a hypothetical market, is the market in which the reporting entity would sell the asset or transfer the liability with the price that maximizes the amount that would be received for the asset or minimizes the amount that would be paid to transfer the liability, considering transaction costs in the respective market.

GAAPUSA describes three approaches to measuring fair value: the market approach, the income approach and the cost approach. Each approach includes multiple valuation techniques. The standard does not prescribe which valuation technique should be used when measuring fair value, but does establish a fair value hierarchy that prioritizes the inputs used in applying the various techniques based on the degree to which such inputs are observable to market participants. Inputs broadly refer to the assumptions that market participants use to make pricing decisions, including assumptions about risk.

The Account’s investments are classified in one of the following three categories based upon the inputs used to determine their respective fair values:

Level 1—Quoted prices (unadjusted) for identical assets or liabilities in active markets as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2—Observable market-based inputs or unobservable inputs that are corroborated by market data. These inputs may include quoted prices in a market that is not active.

Level 3—Unobservable inputs that cannot be corroborated by market data. These inputs reflect management’s best estimate of fair value using its own assumptions about the assumptions a market participant would use in pricing the asset or liability.

When the inputs used to value an investment fall into more than one level, the investment is classified in its entirety based on the lowest level input that is significant to that investment’s fair value measurement. Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and is dependent on factors specific to the investment.

The Account invests in shares of open-end mutual funds which calculate a daily NAV based on the value of the underlying securities in their portfolios. As a result, and as required by law, shares of open-ended mutual funds are purchased and redeemed at their quoted daily NAV as reported by Vanguard at the close of each business day.

Federal Life Variable Annuity Account A

Notes to Financial Statements (Continued)

December 31, 2012

Note G—Fair Value Measurements (Continued)

The following table presents information about the Account’s assets measured at fair value on a recurring basis as of December 31, 2012 and indicates the fair value hierarchy of the valuation techniques utilized by the Account to determine such fair value.


			Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Vanguard Wellesley Income Fund Admiral Class Non-Qualified	$	1,428,018	$	0	$	0	$	1,428,018
Vanguard Long-Term Corporate Fund Investor Class Qualified		35		0		0		35
Vanguard Long-Term Corporate Fund Admiral Class Non-Qualified		887,825		0		0		887,825
Vanguard Windsor Fund Admiral Class Qualified		1,467,610		0		0		1,467,610
Vanguard Windsor Fund Admiral Class Non-Qualified		11,413,846		0		0		11,413,846
Vanguard Wellington Fund Investor Class Qualified		63,893		0		0		63,893
Vanguard Wellington Fund Admiral Class Non-Qualified		3,378,405		0		0		3,378,405
Vanguard Morgan Growth Fund Admiral Class Qualified		111,824		0		0		111,824
Vanguard Morgan Growth Fund Admiral Class Non-Qualified		1,154,348		0		0		1,154,348
Vanguard Prime Money Market Fund Investor Class Qualified		46,487		0		0		46,487
Vanguard Prime Money Market Fund Investor Class Non-Qualified		1,584,150		0		0		1,584,150

Total Assets	$	21,536,441	$	0	$	0	$	21,536,441

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy.

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Report of Independent Registered Public Accounting Firm

To the Contract Owners and Board of Directors

of Federal Life Variable Annuity Account A

We have audited the accompanying statement of assets and liabilities of Federal Life Variable Annuity Account A (the Account) (comprising, respectively, Vanguard Wellesley Income Fund, Vanguard Long-Term Corporate Fund, Vanguard Windsor Fund, Vanguard Wellington Fund, Vanguard Morgan Growth Fund and the Vanguard Prime Money Market Fund) as of December 31, 2012, and the related statements of operations and changes in net assets and the financial highlights for the two years then ended. These financial statements and financial highlights are the responsibility of the Account’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The financial highlights of the Account for the three years ended December 31, 2010 were audited by other auditors whose report dated February 25, 2011 expressed an unqualified opinion on those financial highlights.

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 audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Account’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. Our procedures included confirmation of securities owned as of December 31, 2012, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective funds of the Federal Life Variable Annuity Account A as of December 31, 2012, and the results of their operations and changes in their net assets and the financial highlights for the two years then ended, in conformity with accounting principles generally accepted in the United States of America.

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Arlington Heights, Illinois

February 21, 2013

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Report of Independent Registered Public Accounting Firm

on Internal Control Required by SEC under Form N-SAR

Board of Directors

Federal Life Variable Annuity Account A

(A Wholly Owned Subsidiary of Federal Life Insurance Company (Mutual))

In planning and performing our audit of the financial statements of Federal Life Variable Annuity Account A (the Account), a wholly owned subsidiary of Federal Life Insurance Company (Mutual), as of and for the year ended December 31, 2012, in accordance with the standards of the Public Company Accounting Oversight Board (United States), we considered the Account’s internal control over financial reporting, including controls over safeguarding securities, as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-SAR, but not for the purpose of expressing an opinion on the effectiveness of the Account’s internal control over financial reporting. Accordingly, we express no such opinion.

The management of the Account is responsible for establishing and maintaining effective internal control over financial reporting. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related cost of controls. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAPUSA). A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAPUSA, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Account’s annual or interim financial statements will not be prevented or detected on a timely basis.

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Our consideration of the Account’s internal control over financial reporting was for the limited purpose described in the first paragraph and would not necessarily disclose all deficiencies in internal control that might be material weaknesses under standards established by the Public Company Accounting Oversight Board (United States). However, we noted no deficiencies in the Account’s internal control over financial reporting and its operations, including controls over safeguarding securities, that we consider to be a material weakness as defined above as of December 31, 2012.

The report is intended solely for the information and use of management and the Board of Directors of Federal Life Variable Annuity Account A and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties.

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Arlington Heights, Illinois

February 21, 2013