-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TCxk6NKiu6H+R9TrCE1DLHW0DJyGeItawJ6rPTXSG8V+qytmUDyzE1gbnZSIwFNK cdlUML3lAej+6Inok5itGw== 0000837276-00-000044.txt : 20000217 0000837276-00-000044.hdr.sgml : 20000217 ACCESSION NUMBER: 0000837276-00-000044 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20000216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEPARATE ACCOUNT B OF GOLDEN AMERICAN LIFE INSURANCE CO CENTRAL INDEX KEY: 0000836687 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: SEC FILE NUMBER: 333-66757 FILM NUMBER: 547530 BUSINESS ADDRESS: STREET 1: 1475 DUNWOODY DRIVE STREET 2: SUITE 400 CITY: WEST CHESTER STATE: PA ZIP: 19380-1478 BUSINESS PHONE: 610-425-3516 MAIL ADDRESS: STREET 1: 1475 DUNWOODY DRIVE STREET 2: P. O. BOX 2700 CITY: WEST CHESTER STATE: PA ZIP: 19380-2700 FORMER COMPANY: FORMER CONFORMED NAME: SPECIALTY MANAGERS SEPARATE ACCOUNT B DATE OF NAME CHANGE: 19910529 FORMER COMPANY: FORMER CONFORMED NAME: WESTERN CAPITAL SPECIALTY MANAGERS SEPARATE ACCOUNT B DATE OF NAME CHANGE: 19890914 497 1 PROFILE AND PROSPECTUS FOR VALUE - ---------------------------------------------------------------------------- SUPPLEMENT FOR LINKING FID BROCHURE TO PROSPECTUS OF GOLDENSELECT ES II Registration Nos. 333-66757, 811-5626 Filed pursuant to Rule 497 ING VARIABLE ANNUITIES GOLDEN AMERICAN LIFE INSURANCE COMPANY PROFILE AND PROSPECTUS SUPPLEMENT DATED FEBRUARY 1, 2000 Supplement to the Profile and Prospectus dated February 1, 2000 for DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY CONTRACTS issued by Golden American Life Insurance Company (the "GoldenSelect VALUE Prospectuses") __________ You should keep this supplement with your Prospectus. A Fixed Interest Division option is available through the group and individual deferred variable annuity contracts offered by Golden American Life Insurance Company. The Fixed Interest Division is part of the Golden American General Account. Interests in the Fixed Interest Division have not been registered under the Securities Act of 1933, and neither the Fixed Interest Division nor the General Account are registered under the Investment Company Act of 1940. Interests in the Fixed Interest Division are offered through an Offering Brochure, dated May 1, 1999. The Fixed Interest Division is different from the Fixed Account which is described in the prospectus but which is not available in your state. When reading through the GoldenSelect VALUE Prospectus, the Fixed Interest Division should be counted among the various divisions available for the allocation of your premiums, in lieu of the Fixed Account. The Fixed Interest Division may not be available in some states. Some restrictions may apply. More complete information relating to the Fixed Interest Division is found in the Offering Brochure. Please read the Offering Brochure carefully before you invest in the Fixed Interest Division. Golden American Life Insurance Company Golden American Life Insurance Company is a stock company domiciled in Delaware 106548 VALUE 02/01/00 PROFILE AND PROSPECTUS FOR VALUE Registration Nos. 333-66757, 811-5626 Filed pursuant to Rule 497 | | [VALUE PROFILE AND PROSPECTUS appears down the left margin] | | | | | PROFILE AND PROSPECTUS FOR GOLDENSELECT VALUE | | Fixed and Variable Annuity Contract, February 1, 2000 | | | | | | | | | | | | | | | | | | | | | | | | | [ING VARIABLE ANNUITIES appears down left margin] | | | | | | | | | | | Golden American Life Insurance Company | Separate Account B of Golden American Life Insurance Company | ING VARIABLE ANNUITIES | | ING VARIABLE ANNUITIES GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B OF GOLDEN AMERICAN LIFE INSURANCE COMPANY PROFILE OF GOLDENSELECT VALUE FIXED AND VARIABLE ANNUITY CONTRACT FEBRUARY 1, 2000 This Profile is a summary of some of the more important points that you should know and consider before purchasing the Contract. The Contract is more fully described in the full prospectus which accompanies this Profile. Please read the prospectus carefully. 1. THE ANNUITY CONTRACT The Contract offered in this prospectus is a deferred combination variable and fixed annuity contract between you and Golden American Life Insurance Company. The Contract provides a means for you to invest on a tax-deferred basis in (i) one or more of the 25 mutual fund investment portfolios through our Separate Account B and/or (ii) in a fixed account of Golden American with guaranteed interest periods. The 25 mutual fund portfolios are listed on page 3 below. We currently offer guaranteed interest periods of 6 months, 1, 3, 5, 7 and 10 years in the fixed account. We set the interest rates in the fixed account (which will never be less than 3%) periodically. We may credit a different interest rate for each interest period. The interest you earn in the fixed account as well as your principal is guaranteed by Golden American as long as you do not take your money out before the maturity date for the applicable interest period. If you withdraw your money from the fixed account more than 30 days before the applicable maturity date, we will apply a market value adjustment. A market value adjustment could increase or decrease your contract value and/or the amount you take out. Generally, the investment portfolios are designed to offer a better return than the fixed account. However, this is NOT guaranteed. You may not make any money, and you can even lose the money you invest. The Contract, like all deferred variable annuity contracts, has two phases: the accumulation phase and the income phase. The accumulation phase is the period between the contract date and the date on which you start receiving the annuity payments under your Contract. The amounts you accumulate during the accumulation phase will determine the amount of annuity payments you will receive. The income phase begins on the annuity start date, which is the date you start receiving regular annuity payments from your Contract. You determine (1) the amount and frequency of premium payments, (2) the investments, (3) transfers between investments, (4) the type of annuity to be paid after the accumulation phase, (5) the beneficiary who will receive the death benefits, and (6) the amount and frequency of withdrawals. Value Profile Prospectus begins after Page 6 of this Profile 2. YOUR ANNUITY PAYMENTS (THE INCOME PHASE) Annuity payments are the periodic payments you will begin receiving on the annuity start date. You may choose one of the following annuity payment options: [Table with Shaded Header] |----------------------------------------------------------------------------| | ANNUITY OPTIONS | |----------------------------------------------------------------------------| | Option 1 Income for a Payments are made for a specified number of | | fixed period years to you or your beneficiary. | |----------------------------------------------------------------------------| | Option 2 Income for Payments are made for the rest of your life | | life with a or longer for a specified period such as 10 | | period or 20 years or until the total amount used to | | certain buy this option has been repaid. This option | | comes with an added guarantee that payments | | will continue to your beneficiary for the | | remainder of such period if you should die | | during the period. | |----------------------------------------------------------------------------| | Option 3 Joint life Payments are made for your life and the life | | income of another person (usually your spouse). | |----------------------------------------------------------------------------| | Option 4 Annuity plan Any other annuitization plan that we choose | | to offer on the annuity start date. | |----------------------------------------------------------------------------| Annuity payments under Options 1, 2 and 3 are fixed. Annuity payments under Option 4 may be fixed or variable. If variable and subject to the Investment Company Act of 1940, it will comply with requirements of such Act. Once you elect an annuity option and begin to receive payments, it cannot be changed. 3. PURCHASE (BEGINNING OF THE ACCUMULATION PHASE) You may purchase the Contract with an initial payment of $25,000 or more up to and including age 85. You may make additional payments of $1,000 or more ($250 for a qualified Contract) at any time before you turn age 85 during the accumulation phase. Under certain circumstances, we may waive the minimum initial and additional premium payment requirement. Any initial or additional premium payment that would cause the contract value of all annuities that you maintain with us to exceed $1,000,000 requires our prior approval. Who may purchase this Contract? The Contract may be purchased by individuals as part of a personal retirement plan (a "non-qualified Contract"), or as a Contract that qualifies for special tax treatment when purchased as either an Individual Retirement Annuity (IRA) or in connection with a qualified retirement plan (each a "qualified Contract"). The Contract is designed for people seeking long-term tax-deferred accumulation of assets, generally for retirement or other long-term purposes. The tax-deferred feature is more attractive to people in high federal and state tax brackets. You should not buy this Contract if you are looking for a short-term investment or if you cannot risk getting back less money than you put in. 4. THE INVESTMENT PORTFOLIOS You can direct your money into (1) the fixed account with guaranteed interest periods of 6 months, and 1, 3, 5, 7 and 10 years, and/or (2) into any one or more of the following 25 mutual fund investment portfolios through our Separate Account B. The investment portfolios are described in the prospectuses for the GCG Trust, the PIMCO Variable Insurance Trust and the Warburg Pincus Trust. Keep in mind that while an investment in the fixed account earns a fixed interest rate, an investment in any investment portfolio, depending on market conditions, may cause you to make or lose money. The investment portfolios available under your Contract are: Value Profile 2 THE GCG TRUST Liquid Asset Series Rising Dividends Series Capital Appreciation Series Limited Maturity Bond Series Capital Growth Series Mid-Cap Growth Series Global Fixed Income Series Growth Series Strategic Equity Series Total Return Series Value Equity Series Small Cap Series Fully Managed Series Research Series Real Estate Series Equity Income Series Managed Global Series Hard Assets Series Investors Series All Cap Series Developing World Series Large Cap Value Series THE PIMCO TRUST PIMCO High Yield Bond Portfolio PIMCO StocksPLUS Growth and Income Portfolio THE WARBURG PINCUS TRUST International Equity Portfolio
5. EXPENSES The Contract has insurance features and investment features, and there are charges related to each. The Company currently does not deduct an annual contract administrative charge but may in the future charge an annual contract administrative fee of $30 or 2% of the contract value, whichever is less. We also collect a mortality and expense risk charge and an asset-based administrative charge. These 2 charges are deducted daily directly from the amounts in the investment portfolios. The asset-based administrative charge is 0.15% annually. The annual rate of the mortality and expense risk charge is: Mortality & Expense Risk Charge 0.75% Asset-Based Administrative Charge 0.15% ---- Total 0.90% Each investment portfolio has charges for investment management fees and other expenses. These charges, which vary by investment portfolio, currently range from 0.59% to 1.83% annually (see following table) of the portfolio's average daily net asset balance. If you withdraw money from your Contract, or if you begin receiving annuity payments, the Company may deduct a premium tax of 0%-3.5% to pay to your state. We deduct a surrender charge if you surrender your Contract or withdraw an amount exceeding the free withdrawal amount. The free withdrawal amount in any contract year is the greater of (i) any earnings less previous withdrawals; or (ii) 10% of premium payments paid within the last 7 years and not previously withdrawn, less any previous withdrawals taken in the same contract year. The following table shows the schedule of the surrender charge that will apply. The surrender charge is a percent of each premium payment withdrawn. COMPLETE YEARS ELAPSED 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7+ SINCE PREMIUM PAYMENT | | | | | | | SURRENDER CHARGE 6% | 6% | 6% | 5% | 4% | 3% | 1% | 0% The following table is designed to help you understand the Contract charges. The "Total Annual Insurance Charges" column includes the mortality and expense risk charge, the asset-based administrative charge, and reflects the annual contract administrative charge as 0.04% (based on an average contract value of $75,000). The "Total Annual Investment Portfolio Charges" column reflects the portfolio charges for each portfolio and are based on actual expenses as of December 31, 1998, except for (i) portfolios that commenced operations during 1998 where the charges have been estimated, and (ii) the newly formed portfolios where the charges have been estimated. The column "Total Annual Charges" reflects the sum of the previous two columns. The columns under the heading "Examples" show you how much you would pay under the Contract for a 1-year period and for a 10-year period. Value Profile 3 As required by the Securities and Exchange Commission, the examples assume that you invested $1,000 in a Contract that earns 5% annually and that you withdraw your money at the end of Year 1 or at the end of Year 10. For Years 1 and 10, the examples show the total annual charges assessed during that time. For these examples, the premium tax is assumed to be 0%.
EXAMPLES: TOTAL ANNUAL -------------------- TOTAL CHARGES AT THE TOTAL ANNUAL INVESTMENT TOTAL END OF: INSURANCE PORTFOLIO ANNUAL INVESTMENT PORTFOLIO CHARGES CHARGES CHARGES 1 YEAR 10 YEARS - ------------------------ -------------- -------------- --------- -------- --------- THE GCG TRUST Liquid Asset 0.94% 0.59% 1.53% $ 76 $ 182 Limited Maturity Bond 0.94% 0.60% 1.54% $ 76 $ 183 Global Fixed Income 0.94% 1.60% 2.54% $ 86 $ 288 Total Return 0.94% 0.97% 1.91% $ 79 $ 223 Fully Managed 0.94% 0.98% 1.92% $ 79 $ 224 Equity Income 0.94% 0.98% 1.92% $ 79 $ 224 Investors 0.94% 1.01% 1.95% $ 80 $ 227 Large Cap Value 0.94% 1.01% 1.95% $ 80 $ 227 Rising Dividends 0.94% 0.98% 1.92% $ 79 $ 224 Capital Growth 0.94% 1.08% 2.02% $ 81 $ 235 Growth 0.94% 1.09% 2.03% $ 81 $ 236 Value Equity 0.94% 0.98% 1.92% $ 79 $ 224 Research 0.94% 0.94% 1.88% $ 79 $ 220 Managed Global 0.94% 1.26% 2.20% $ 82 $ 253 All Cap 0.94% 1.01% 1.95% $ 80 $ 227 Capital Appreciation 0.94% 0.98% 1.92% $ 79 $ 224 Mid-Cap Growth 0.94% 0.95% 1.89% $ 79 $ 221 Strategic Equity 0.94% 0.99% 1.93% $ 80 $ 225 Small Cap 0.94% 0.99% 1.93% $ 80 $ 225 Real Estate 0.94% 0.99% 1.93% $ 80 $ 225 Hard Assets 0.94% 1.00% 1.94% $ 80 $ 226 Developing World 0.94% 1.83% 2.77% $ 88 $ 310 THE PIMCO TRUST PIMCO High Yield Bond 0.94% 0.75% 1.69% $ 77 $ 200 PIMCO StocksPLUS Growth and Income 0.94% 0.65% 1.59% $ 76 $ 189 THE WARBURG PINCUS TRUST International Equity 0.94% 1.33% 2.27% $ 83 $ 261
For the newly formed portfolios, the charges have been estimated. The "Total Annual Investment Portfolio Charges" column above reflects current expense reimbursements for applicable investment portfolios. The 1 Year examples above include a 6% surrender charge. For more detailed information, see "Fees and Expenses" in the prospectus for the Contract. 6. TAXES Under a qualified Contract, your premiums are generally pre-tax contributions and accumulate on a tax-deferred basis. Premiums and earnings are generally taxed as income when you make a withdrawal or begin receiving annuity payments, presumably when you are in a lower tax bracket. Under a non-qualified Contract, premiums are paid with after-tax dollars, and any earnings will accumulate tax-deferred. You will be taxed on these earnings, but not on premiums, when you withdraw them from the Contract. For owners of most qualified Contracts, when you reach age 701/2 (or, in some cases, retire), you will be required by federal tax laws to begin receiving payments from your annuity or risk paying a penalty tax. In those cases, we can calculate and pay you the minimum required distribution amounts at your request. If you are younger than 591/2 when you take money out, in most cases, you will be charged a 10% federal penalty tax on the taxable earnings withdrawn. Value Profile 4 7. WITHDRAWALS You can withdraw your money at any time during the accumulation phase. You may elect in advance to take systematic withdrawals which are described on page 6. Withdrawals above the free withdrawal amount may be subject to a surrender charge. We will apply a market value adjustment if you withdraw your money from the fixed account more than 30 days before the applicable maturity date. Income taxes and a penalty tax may apply to amounts withdrawn. 8. PERFORMANCE The value of your Contract will fluctuate depending on the investment performance of the portfolio(s) you choose. Since this is a new Contract, there is no actual performance history to illustrate. Actual performance information will be shown in an updated prospectus. Please keep in mind that past or hypothetical performance is not a guarantee of future results. 9. DEATH BENEFIT The death benefit is payable when the first of the following persons dies: the contract owner, joint owner, or annuitant (if a contract owner is not an individual). Assuming you are the contract owner, if you die during the accumulation phase, your beneficiary will receive a death benefit unless the beneficiary is your surviving spouse and elects to continue the Contract. The death benefit paid depends on the death benefit you have chosen. The death benefit value is calculated at the close of the business day on which we receive due proof of death at our Customer Service Center. If your beneficiary elects to delay receipt of the death benefit until a date after the time of your death, the amount of the benefit payable in the future may be affected. If you die after the annuity start date and you are the annuitant, your beneficiary will receive the death benefit under the annuity option then in effect. The death benefit may be subject to certain mandatory distribution rules required by federal tax law. Under the death benefit, if you die before the annuity start date, your beneficiary will receive the greatest of: 1) the contract value; 2) the total premium payments made under the Contract after subtracting any withdrawals; or 3) the cash surrender value. Note: The amount of the death benefit could be reduced by premium taxes owed and withdrawals not previously deducted. 10. OTHER INFORMATION FREE LOOK. If you cancel the Contract within 10 days after you receive it, you will receive a refund of the adjusted contract value. We determine your contract value at the close of business on the day we receive your written refund request. For purposes of the refund during the free look period, (i) we adjust your contract value for any market value adjustment (if you have invested in the fixed account), and (ii) then we include a refund of any charges deducted from your contract value. Because of the market risks associated with investing in the portfolios and the potential positive or negative effect of the market value adjustment, the contract value returned may be greater or less than the premium payment you paid. Some states require us to return to you the amount of the paid premium (rather than the contract value in which case you will not be subject to investment risk during the free look period. Also, in some states, you may be entitled to a longer free look period. TRANSFERS AMONG INVESTMENT PORTFOLIOS AND THE FIXED ACCOUNT. You can make transfers among your investment portfolios and your investment in the fixed account as frequently as you wish without any current tax implications. The minimum amount for a transfer is $100. There is currently no charge for transfers, and we do not limit the number of transfers. The Company may, in the future, charge a $25 fee for any transfer after the twelfth transfer in a contract year or limit the number of transfers allowed. Keep Value Profile 5 in mind that if you transfer or otherwise withdraw your money from the fixed account more than 30 days before the applicable maturity date, we will apply a market value adjustment. A market value adjustment could increase or decrease your contract value and/or the amount you transfer or withdraw. NO PROBATE. In most cases, when you die, the person you choose as your beneficiary will receive the death benefit without going through probate. See "Federal Tax Considerations-Taxation of Death Benefit Proceeds" in the prospectus for the Contract. ADDITIONAL FEATURES. This Contract has other features you may be interested in. These include: Dollar Cost Averaging. This is a program that allows you to invest a fixed amount of money in the investment portfolios each month. It may give you a lower average cost per unit over time than a single one-time purchase. Dollar cost averaging requires regular investments regardless of fluctuating price levels, and does not guarantee profits or prevent losses in a declining market. This option is currently available only if you have $1,200 or more in the Limited Maturity Bond or the Liquid Asset investment portfolios or in the fixed account with either a 6-month or 1-year guaranteed interest period. Transfers from the fixed account under this program will not be subject to a market value adjustment. Systematic Withdrawals. During the accumulation phase, you can arrange to have money sent to you at regular intervals throughout the year. Within limits these withdrawals will not result in any surrender charge. Withdrawals from your money in the fixed account under this program are not subject to a market value adjustment. Of course, any applicable income and penalty taxes will apply on amounts withdrawn. Automatic Rebalancing. If your contract value is $10,000 or more, you may elect to have the Company automatically readjust the money between your investment portfolios periodically to keep the blend you select. Investments in the fixed account are not eligible for automatic rebalancing. 11. INQUIRIES If you need more information after reading this prospectus, please contact us at: CUSTOMER SERVICE CENTER P.O. BOX 2700 WEST CHESTER, PA 19380 (800) 366-0066 or your registered representative. Value Profile 6 GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B OF GOLDEN AMERICAN LIFE INSURANCE COMPANY FEBRUARY 1, 2000 DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY PROSPECTUS GOLDENSELECT VALUE - -------------------------------------------------------------------------------- This prospectus describes GoldenSelect Value, a group and individual deferred variable annuity contract (the "Contract") offered by Golden American Life Insurance Company (the "Company," "we" or "our"). The Contract is available in connection with certain retirement plans that qualify for special federal income tax treatment ("qualified Contracts") as well as those that do not qualify for such treatment ("non-qualified Contracts"). The Contract provides a means for you to invest your premium payments in one or more of 25 mutual fund investment portfolios. You may also allocate premium payments to our Fixed Account with guaranteed interest periods. Your contract value will vary daily to reflect the investment performance of the investment portfolio(s) you select and any interest credited to your allocations in the Fixed Account. The investment portfolios available under your Contract and the portfolio managers are: A I M CAPITAL MANAGEMENT, INC. Strategic Equity Series Capital Appreciation Series ALLIANCE CAPITAL MANAGEMENT L. P. Capital Growth Series BARING INTERNATIONAL INVESTMENT LIMITED (AN AFFILIATE) Developing World Series Global Fixed Income Series Hard Assets Series CAPITAL GUARDIAN TRUST COMPANY Large Cap Value Series Managed Global Series Small Cap Series EAGLE ASSET MANAGEMENT, INC. Value Equity Series EII REALTY SECURITIES, INC. Real Estate Series ING INVESTMENT MANAGEMENT, LLC (AN AFFILIATE) Limited Maturity Bond Series Liquid Asset Series JANUS CAPITAL CORPORATION Growth Series KAYNE ANDERSON INVESTMENT MANAGEMENT, LLC Rising Dividends Series MASSACHUSETTS FINANCIAL SERVICES COMPANY Mid-Cap Growth Series Research Series Total Return Series SALOMON BROTHERS ASSET MANAGEMENT, INC. All Cap Series Investors Series T. ROWE PRICE ASSOCIATES, INC. Equity Income Series Fully Managed Series PACIFIC INVESTMENT MANAGEMENT COMPANY PIMCO High Yield Bond Portfolio PIMCO StocksPLUS Growth and Income Portfolio CREDIT SUISSE ASSET MANAGEMENT, LLC International Equity Portfolio The above mutual fund investment portfolios are purchased and held by corresponding divisions of our Separate Account B. We refer to the divisions as "subaccounts" and the money you place in the Fixed Account's guaranteed interest periods as "Fixed Interest Allocations" in this prospectus. We will credit your Fixed Interest Allocation(s) with a fixed rate of interest. We set the interest rates periodically. We will not set the interest rate to be less than a minimum annual rate of 3%. You may choose guaranteed interest periods of 6 months, and 1, 3, 5, 7 and 10 years. The interest earned on your money as well as your principal is guaranteed as long as you hold them until the maturity date. If you take your money out from a Fixed Interest Allocation more than 30 days before the applicable maturity date, we will apply a market value adjustment ("Market Value Adjustment"). A Market Value Adjustment could increase or decrease your contract value and/or the amount you take out. You bear the risk that you may receive less than your principal if we take a Market Value Adjustment. For Contracts sold in some states, not all Fixed Interest Allocations or subaccounts are available. You have a right to return a Contract within 10 days after you receive it for a refund of the adjusted contract value (which may be more or less than the premium payments you paid), or if required by your state, the original amount of your premium payment. Longer free look periods apply in some states and in certain situations. This prospectus provides information that you should know before investing and should be kept for future reference. A Statement of Additional Information, dated February 1, 2000, has been filed with the Securities and Exchange Commission. It is available without charge upon request. To obtain a copy of this document, write to our Customer Service Center at P.O. Box 2700, West Chester, Pennsylvania 19380 or call (800) 366-0066, or access the SEC's website (http://www.sec.gov). The table of contents of the Statement of Additional Information ("SAI") is on the last page of this prospectus and the SAI is made part of this prospectus by reference. - -------------------------------------------------------------------------------- THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THE SUBACCOUNTS THROUGH THE GCG TRUST OR THE PIMCO TRUST OR THE WARBURG PINCUS TRUST IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED BY ANY BANK OR BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE GCG TRUST, THE PIMCO TRUST AND THE WARBURG PINCUS TRUST. [THIS PAGE INTENTIONALLY LEFT BLANK] [Shaded Section Header] - -------------------------------------------------------------------------- TABLE OF CONTENTS - --------------------------------------------------------------------------
Page Index of Special Terms ................................................. 1 Fees and Expenses ...................................................... 2 Performance Information ................................................ 6 Accumulation Unit ................................................... 6 Net Investment Factor ............................................... 6 Financial Statements ................................................ 7 Performance Information ............................................. 7 Golden American Life Insurance Company ................................. 8 The Trusts ............................................................. 8 Golden American Separate Account B ..................................... 9 The Investment Portfolios .............................................. 9 Investment Objectives ............................................... 9 Investment Management Fees .......................................... 11 The Fixed Interest Allocation .......................................... 12 Selecting a Guaranteed Interest Period .............................. 12 Guaranteed Interest Rates ........................................... 12 Transfers from a Fixed Interest Allocation .......................... 13 Withdrawals from a Fixed Interest Allocation ........................ 13 Market Value Adjustment ............................................. 14 The Annuity Contract ................................................... 14 Contract Date and Contract Year ..................................... 15 Annuity Start Date .................................................. 15 Contract Owner ...................................................... 15 Annuitant ........................................................... 15 Beneficiary ......................................................... 16 Purchase and Availability of the Contract ........................... 16 Crediting of Premium Payments ....................................... 16 Contract Value ...................................................... 17 Cash Surrender Value ................................................ 18 Surrendering to Receive the Cash Surrender Value .................... 18 Addition, Deletion or Substitution of Subaccounts and Other Changes . 18 The Fixed Account ................................................... 18 Other Contracts ..................................................... 18 Other Important Provisions .......................................... 19 Withdrawals ............................................................ 19 Regular Withdrawals ................................................. 19 Systematic Withdrawals .............................................. 19 IRA Withdrawals ..................................................... 20 Transfers Among Your Investments ....................................... 21 Dollar Cost Averaging ............................................... 21 Automatic Rebalancing ............................................... 22 Death Benefit .......................................................... 23 Death Benefit During the Accumulation Phase ......................... 23 Death Benefit During the Income Phase ............................... 23 Charges and Fees ....................................................... 23 Charge Deduction Subaccount ......................................... 23 Charges Deducted from the Contract Value ............................ 23 Surrender Charge ................................................... 23 Waiver of Surrender Charge for Extended Medical Care ............... 24 Free Withdrawal Amount ............................................. 24 Surrender Charge for Excess Withdrawals ............................ 24
i [Shaded Section Header] - -------------------------------------------------------------------------- TABLE OF CONTENTS (CONTINUED) - --------------------------------------------------------------------------
Page Premium Taxes ............................................................ 24 Administrative Charge .................................................... 24 Transfer Charge .......................................................... 24 Charges Deducted from the Subaccounts ..................................... 25 Mortality and Expense Risk Charge ........................................ 25 Asset-Based Administrative Charge ........................................ 25 Trust Expenses ............................................................ 25 The Annuity Options .......................................................... 25 Annuitization of Your Contract ............................................ 25 Selecting the Annuity Start Date .......................................... 26 Frequency of Annuity Payments ............................................. 26 The Annuity Options ....................................................... 26 Income for a Fixed Period ................................................ 26 Income for Life with a Period Certain .................................... 26 Joint Life Income ........................................................ 26 Annuity Plan ............................................................. 27 Payment When Named Person Dies ............................................ 27 Other Contract Provisions .................................................... 27 Reports to Contract Owners ................................................ 27 Suspension of Payments .................................................... 27 In Case of Errors in Your Application ..................................... 27 Assigning the Contract as Collateral ...................................... 27 Contract Changes-Applicable Tax Law ....................................... 28 Free Look ................................................................. 28 Group or Sponsored Arrangements ........................................... 28 Selling the Contract ...................................................... 28 Other Information ............................................................ 29 Voting Rights ............................................................. 29 State Regulation .......................................................... 29 Legal Proceedings ......................................................... 29 Legal Matters ............................................................. 29 Experts ................................................................... 30 Federal Tax Considerations ................................................... 30 More Information About Golden American ....................................... 35 Unaudited Financial Statements of Golden American Life Insurance Company ..... 58 Financial Statements of Golden American Life Insurance Company ............... 66 Statement of Additional Information Table of Contents ......................................................... 94 Appendix A Market Value Adjustment Examples .......................................... A1 Appendix B Surrender Charge for Excess Withdrawals Example ........................... B1
ii [Shaded Section Header] - -------------------------------------------------------------------------- INDEX OF SPECIAL TERMS - -------------------------------------------------------------------------- The following special terms are used throughout this prospectus. Refer to the page(s) listed for an explanation of each term: Special Term Page Accumulation Unit 6 Annuitant 15 Annuity Start Date 15 Cash Surrender Value 18 Contract Date 15 Contract Owner 15 Contract Value 17 Contract Year 15 Fixed Interest Allocation 12 Free Withdrawal Amount 24 Market Value Adjustment 14 Net Investment Factor 6 Death Benefit 23 The following terms as used in this prospectus have the same or substituted meanings as the corresponding terms currently used in the Contract: Term Used in This Prospectus Corresponding Term Used in the Contract Accumulation Unit Value Index of Investment Experience Annuity Start Date Annuity Commencement Date Contract Owner Owner or Certificate Owner Contract Value Accumulation Value Transfer Charge Excess Allocation Charge Fixed Interest Allocation Fixed Allocation Free Look Period Right to Examine Period Guaranteed Interest Period Guarantee Period Subaccount(s) Division(s) Net Investment Factor Experience Factor Regular Withdrawals Conventional Partial Withdrawals Withdrawals Partial Withdrawals 1 [Shaded Section Header] - -------------------------------------------------------------------------- FEES AND EXPENSES - -------------------------------------------------------------------------- CONTRACT OWNER TRANSACTION EXPENSES* Surrender Charge: COMPLETE YEARS ELAPSED 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7+ SINCE PREMIUM PAYMENT | | | | | | | SURRENDER CHARGE 6% | 6% | 6% | 5% | 4% | 3% | 1% | 0% Transfer Charge...................................................None** * If you invested in a Fixed Interest Allocation, a Market Value Adjustment may apply to certain transactions. This may increase or decrease your contract value and/or your transfer or surrender amount. ** We may in the future charge $25 per transfer if you make more than 12 transfers in a contract year. ANNUAL CONTRACT ADMINISTRATIVE CHARGE Administrative Charge................................................$ 0 (We may in the future charge an annual contract administrative charge of $30 or 2% of your contract value, whichever is less.) SEPARATE ACCOUNT ANNUAL CHARGES*** Mortality and Expense Risk Charge ......... 0.75% Asset-Based Administrative Charge ......... 0.15% ---- Total Separate Account Expenses ........... 0.90% ***As a percentage of average daily assets in each subaccount. The Separate Account Annual Charges are deducted daily. 2 THE GCG TRUST ANNUAL EXPENSES (as a percentage of the average daily net assets of a portfolio): OTHER TOTAL EXPENSES(2) EXPENSES MANAGEMENT AFTER EXPENSE AFTER EXPENSE PORTFOLIO FEES(1) REIMBURSEMENT REIMBURSEMENT(3) - ---------------------- ---------- ------------- ---------------- Liquid Asset 0.59% 0.00% 0.59% Limited Maturity Bond 0.60% 0.00% 0.60% Global Fixed Income 1.60% 0.00% 1.60%(3) Total Return 0.94% 0.03% 0.97%(3) Fully Managed 0.98% 0.00% 0.98% Equity Income 0.98% 0.00% 0.98% Investors 1.00% 0.01% 1.01% Large Cap Value 1.00% 0.01% 1.01% Rising Dividends 0.98% 0.00% 0.98% Capital Growth 1.08% 0.00% 1.08% Growth 1.08% 0.01% 1.09% Value Equity 0.98% 0.00% 0.98% Research 0.94% 0.00% 0.94% Managed Global 1.25% 0.01% 1.26% All Cap 1.00% 0.01% 1.01% Capital Appreciation 0.98% 0.00% 0.98% Mid-Cap Growth 0.94% 0.01% 0.95% Strategic Equity 0.98% 0.01% 0.99% Small Cap 0.98% 0.01% 0.99% Real Estate 0.98% 0.01% 0.99% Hard Assets 0.98% 0.02% 1.00% Developing World 1.75% 0.08% 1.83% (1) Fees decline as the total assets of one or more portfolios increase. See the prospectus for the GCG Trust for more information. (2) Other expenses generally consist of independent trustees fees and certain expenses associated with investing in international markets. Other expenses are based on actual expenses for the year ended December 31, 1998, except for portfolios that commenced operations in 1998 where the charges have been estimated. (3) Total expenses are based on actual expenses for the fiscal year ended December 31, 1998. Directed Services, Inc. is currently reimbursing expenses to maintain total expenses at 0.97% for the Total Return portfolio and 1.60% for the Global Fixed Income portfolio as shown. Without this reimbursement, and based on current estimates, total expenses would be 0.98% for the Total Return portfolio and 1.74% for the Global Fixed Income portfolio. This reimbursement agreement will remain in place through August 14, 2000 after which it may be terminated at any time. 3 THE PIMCO TRUST ANNUAL EXPENSES (as a percentage of the average daily net assets of a portfolio): OTHER TOTAL EXPENSES EXPENSES MANAGEMENT AFTER EXPENSE AFTER EXPENSE PORTFOLIO FEES REIMBURSEMENT REIMBURSEMENT(1) - -------------------------- ------------ --------------- ----------------- PIMCO High Yield Bond 0.50% 0.25%(2) 0.75% PIMCO StocksPLUS Growth 0.40% 0.25% 0.65% and Income (1) PIMCO has agreed to waive some or all of its other expenses, subject to potential future reimbursement, to the extent that total expenses for the PIMCO High Yield Bond Portfolio and PIMCO StocksPLUS Growth and Income portfolio would exceed 0.75% and 0.65%, respectively, due to payment by the portfolios of their pro rata portion of Trustees' fees. Without this agreement and, based on current estimates, total expenses would be 0.81% for the PIMCO High Yield Bond portfolio and 0.72% for the PIMCO StocksPLUS Growth and Income portfolio. (2) Since the PIMCO High Yield Bond portfolio commenced operations on April 30, 1998, other expenses as shown have been annualized for the year ended December 31, 1998. THE WARBURG PINCUS TRUST ANNUAL EXPENSES (as a percentage of the average daily net assets of the portfolio): ADVISORY OTHER TOTAL PORTFOLIO FEES EXPENSES EXPENSES(1) - ----------------------- ---------- ---------- ------------ International Equity 1.00% 0.33% 1.33% (1) Total expenses are based on actual expenses for the fiscal year ended December 31, 1998. The purpose of the foregoing tables is to help you understand the various costs and expenses that you will bear directly and indirectly. See the prospectuses of the GCG Trust, the PIMCO Trust and the Warburg Pincus Trust for additional information on portfolio expenses. Premium taxes (which currently range from 0% to 3.5% of premium payments) may apply, but are not reflected in the tables above or in the examples below. 4 Examples: The following two examples are designed to show you the expenses you would pay on a $1,000 investment that earns 5% annually. The examples reflect the deduction of a mortality and expense risk charge, an asset-based administrative charge, and in columns one and two of the examples, the annual contract administrative charge of 0.04% of assets (based on an average contract value of $75,000). Columns three and four of the examples show the expenses without the annual contract administrative charge of 0.04%. We currently waive the 0.04% annual contract administrative charge. Note that surrender charges may apply if you choose to annuitize your Contract within the first 5 contract years, and under certain circumstances, within the first 7 contract years. Thus, in the event you annuitize your Contract under circumstances which require a surrender charge, you should refer to Example 1 below which assumes applicable surrender charges. Example 1: If you surrender your Contract at the end of the applicable time period, you would pay the following expenses for each $1,000 invested: --------------------------------------------------------------------------
WITHOUT ADMIN. WITH ADMIN. CHARGE CHARGE THE GCG TRUST 1 YEAR 3 YEARS 1 YEAR 3 YEARS Liquid Asset .................. $ 76 $ 108 $ 75 $ 107 Limited Maturity Bond ......... $ 76 $ 109 $ 75 $ 107 Global Fixed Income ........... $ 86 $ 139 $ 85 $ 138 Total Return .................. $ 79 $ 120 $ 79 $ 119 Fully Managed ................. $ 79 $ 120 $ 79 $ 119 Equity Income ................. $ 79 $ 120 $ 79 $ 119 Investors ..................... $ 80 $ 121 $ 79 $ 120 Large Cap Value ............... $ 80 $ 121 $ 79 $ 120 Rising Dividends .............. $ 79 $ 120 $ 79 $ 119 Capital Growth ................ $ 81 $ 123 $ 80 $ 122 Growth ........................ $ 81 $ 124 $ 80 $ 122 Value Equity .................. $ 79 $ 120 $ 79 $ 119 Research ...................... $ 79 $ 119 $ 79 $ 118 Managed Global ................ $ 82 $ 129 $ 82 $ 128 All Cap ....................... $ 80 $ 121 $ 79 $ 120 Capital Appreciation .......... $ 79 $ 120 $ 79 $ 119 Mid-Cap Growth ................ $ 79 $ 119 $ 79 $ 118 Strategic Equity .............. $ 80 $ 121 $ 79 $ 119 Small Cap ..................... $ 80 $ 121 $ 79 $ 119 Real Estate ................... $ 80 $ 121 $ 79 $ 119 Hard Assets ................... $ 80 $ 121 $ 79 $ 120 Developing World .............. $ 88 $ 146 $ 88 $ 145 THE PIMCO TRUST PIMCO High Yield Bond ......... $ 77 $ 113 $ 77 $ 112 PIMCO StocksPLUS Growth and Income ....................... $ 76 $ 110 $ 76 $ 109 THE WARBURG PINCUS TRUST International Equity .......... $ 83 $ 131 $ 83 $ 130
5 Example 2: If you do not surrender your Contract or if you annuitize on the annuity start date, you would pay the following expenses for each $1,000 invested: --------------------------------------------------------------------------
WITHOUT ADMIN. WITH ADMIN. CHARGE CHARGE 1 YEAR 3 YEARS 1 YEAR 3 YEARS THE GCG TRUST -------- --------- -------- -------- Liquid Asset .................. $ 16 $ 48 $ 15 $ 47 Limited Maturity Bond ......... $ 16 $ 49 $ 15 $ 47 Global Fixed Income ........... $ 26 $ 79 $ 25 $ 78 Total Return .................. $ 19 $ 60 $ 19 $ 59 Fully Managed ................. $ 19 $ 60 $ 19 $ 59 Equity Income ................. $ 19 $ 60 $ 19 $ 59 Investors ..................... $ 20 $ 61 $ 19 $ 60 Large Cap Value ............... $ 20 $ 61 $ 19 $ 60 Rising Dividends .............. $ 19 $ 60 $ 19 $ 59 Capital Growth ................ $ 21 $ 63 $ 20 $ 62 Growth ........................ $ 21 $ 64 $ 20 $ 62 Value Equity .................. $ 19 $ 60 $ 19 $ 59 Research ...................... $ 19 $ 59 $ 19 $ 58 Managed Global ................ $ 22 $ 69 $ 22 $ 68 All Cap ....................... $ 20 $ 61 $ 19 $ 60 Capital Appreciation .......... $ 19 $ 60 $ 19 $ 59 Mid-Cap Growth ................ $ 19 $ 59 $ 19 $ 58 Strategic Equity .............. $ 20 $ 61 $ 19 $ 59 Small Cap ..................... $ 20 $ 61 $ 19 $ 59 Real Estate ................... $ 20 $ 61 $ 19 $ 59 Hard Assets ................... $ 20 $ 61 $ 19 $ 60 Developing World .............. $ 28 $ 86 $ 28 $ 85 THE PIMCO TRUST PIMCO High Yield Bond ......... $ 17 $ 53 $ 17 $ 52 PIMCO StocksPLUS Growth and Income ....................... $ 16 $ 50 $ 16 $ 49 THE WARBURG PINCUS TRUST International Equity .......... $ 23 $ 71 $ 23 $ 70
These examples should not be considered a representation of past or future expenses. Actual expenses may be more or less than those shown subject to the terms of your Contract. [Shaded Section Header] - -------------------------------------------------------------------------- PERFORMANCE INFORMATION - -------------------------------------------------------------------------- ACCUMULATION UNIT We use accumulation units to calculate the value of a Contract. Each subaccount of Separate Account B has its own accumulation unit value. The accumulation units are valued each business day that the New York Stock Exchange is open for trading. Their values may increase or decrease from day to day according to a Net Investment Factor, which is primarily based on the investment performance of the applicable investment portfolio. Shares in the investment portfolios are valued at their net asset value. THE NET INVESTMENT FACTOR The Net Investment Factor is an index number which reflects certain charges under the Contract and the investment performance of the subaccount. The Net Investment Factor is calculated for each subaccount as follows: 1) We take the net asset value of the subaccount at the end of each business day. 6 2) We add to (1) the amount of any dividend or capital gains distribution declared for the subaccount and reinvested in such subaccount. We subtract from that amount a charge for our taxes, if any. 3) We divide (2) by the net asset value of the subaccount at the end of the preceding business day. 4) We then subtract the applicable daily mortality and expense risk charge and the daily asset-based administrative charge from the subaccount. Calculations for the subaccounts are made on a per share basis. CONDENSED FINANCIAL INFORMATION Tables containing (i) the accumulation unit value history of each subaccount of Golden American Separate Account B offered in this prospectus and (ii) the total investment value history of each such subaccount are presented in Appendix A -- Condensed Financial Information. FINANCIAL STATEMENTS The unaudited financial statements of Separate Account B for the nine months ended September 30, 1999 and the audited financial statements of Separate Account B for the years ended December 31, 1998 and 1997 are included in the Statement of Additional Information. The unaudited condensed consolidated financial statements of Golden American for the nine months ended September 30, 1999 and the audited consolidated financial statements of Golden American for the years ended December 31, 1998, 1997 and 1996 are included in this prospectus. PERFORMANCE INFORMATION From time to time, we may advertise or include in reports to contract owners performance information for the subaccounts of Separate Account B, including the average annual total return performance, yields and other nonstandard measures of performance. Such performance data will be computed, or accompanied by performance data computed, in accordance with standards defined by the SEC. Except for the Liquid Asset subaccount, quotations of yield for the subaccounts will be based on all investment income per unit (contract value divided by the accumulation unit) earned during a given 30-day period, less expenses accrued during such period. Information on standard total average annual return performance will include average annual rates of total return for 1, 5 and 10 year periods, or lesser periods depending on how long Separate Account B has been investing in the portfolio. We may show other total returns for periods less than one year. Total return figures will be based on the actual historic performance of the subaccounts of Separate Account B, assuming an investment at the beginning of the period when the separate account first invested in the portfolio. Withdrawal of the investment at the end of the period, adjusted to reflect the deduction of all applicable portfolio and current contract charges. We may also show rates of total return on amounts invested at the beginning of the period with no withdrawal at the end of the period. Total return figures which assume no withdrawals at the end of the period will reflect all recurring charges, but will not reflect the surrender charge. Quotations of average annual return for the Managed Global subaccount take into account the period before September 3, 1996, during which it was maintained as a subaccount of Golden American Separate Account D. In addition, we may present historic performance data for the investment portfolios since their inception reduced by some or all of the fees and charges under the Contract. Such adjusted historic performance includes data that precedes the inception dates of the subaccounts of Separate Account B. This data is designed to show the performance that would have resulted if the Contract had been in existence before the separate account began investing in the portfolios Current yield for the Liquid Asset subaccount is based on income received by a hypothetical investment over a given 7-day period, less expenses accrued, and then "annualized" (i.e., assuming that the 7-day yield would be received for 52 weeks). We calculate "effective yield" for the Liquid Asset subaccount in a manner similar to that used to calculate yield, but when annualized, the income earned by the investment is assumed to be reinvested. The "effective yield" will thus be slightly higher than the "yield" because of the compounding effect of earnings. We calculate quotations of yield for the remaining subaccounts on all investment income per accumulation unit earned during a given 30-day period, after subtracting fees and expenses accrued during the period, assuming no surrender. 7 We may compare performance information for a subaccount to: (i) the Standard & Poor's 500 Stock Index, Dow Jones Industrial Average, Donoghue Money Market Institutional Averages, or any other applicable market indices, (ii) other variable annuity separate accounts or other investment products tracked by Lipper Analytical Services (a widely used independent research firm which ranks mutual funds and other investment companies), or any other rating service, and (iii) the Consumer Price Index (measure for inflation) to determine the real rate of return of an investment in the Contract. Our reports and promotional literature may also contain other information including the ranking of any subaccount based on rankings of variable annuity separate accounts or other investment products tracked by Lipper Analytical Services or by similar rating services. Performance information reflects only the performance of a hypothetical contract and should be considered in light of other factors, including the investment objective of the investment portfolio and market conditions. Please keep in mind that past performance is not a guarantee of future results. [Shaded Section Header] - -------------------------------------------------------------------------- GOLDEN AMERICAN LIFE INSURANCE COMPANY - -------------------------------------------------------------------------- Golden American Life Insurance Company is a Delaware stock life insurance company, which was originally incorporated in Minnesota on January 2, 1973. Golden American is a wholly owned subsidiary of Equitable of Iowa Companies, Inc. ("Equitable of Iowa"). Equitable of Iowa is a wholly owned subsidiary of ING Groep N.V. ("ING"), a global financial services holding company. Golden American is authorized to sell insurance and annuities in all states, except New York, and the District of Columbia. In May 1996, Golden American established a subsidiary, First Golden American Life Insurance Company of New York, which is authorized to sell annuities in New York and Delaware. Golden American's consolidated financial statements appear in this prospectus. Equitable of Iowa is the holding company for Golden American, Directed Services, Inc., the investment manager of the GCG Trust and the distributor of the Contracts, and other interests. Equitable of Iowa and another ING affiliate own ING Investment Management, LLC, a portfolio manager of the GCG Trust. ING also owns Baring International Investment Limited, another portfolio manager of the GCG Trust. Our principal office is located at 1475 Dunwoody Drive, West Chester, Pennsylvania 19380. [Shaded Section Header] - -------------------------------------------------------------------------- THE TRUSTS - -------------------------------------------------------------------------- The GCG Trust is a mutual fund whose shares are offered to separate accounts funding variable annuity and variable life insurance policies offered by Golden American and other affiliated insurance companies. The GCG Trust may also sell its shares to separate accounts of insurance companies not affiliated with Golden American. Pending SEC approval, shares of the GCG Trust may also be sold to certain qualified pension and retirement plans. The address of the GCG Trust is 1475 Dunwoody Drive, West Chester, PA 19380. The PIMCO Trust is also a mutual fund whose shares are available to separate accounts of insurance companies, including Golden American, for both variable annuity contracts and variable life insurance policies and to qualified pension and retirement plans. The address of the PIMCO Trust is 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660. The Warburg Pincus Trust is also a mutual fund whose shares are available to separate accounts of life insurance companies, including Golden American and Equitable Life Insurance Company of Iowa, and to certain qualified and retirement plans. The address of the Warburg Pincus Trust is 153 East 53rd Street, New York, NY 10022. In the event that, due to differences in tax treatment or other considerations, the interests of contract owners of various contracts participating in the Trusts conflict, we, the Boards of Trustees of the GCG Trust, the PIMCO Trust and the Warburg Pincus Trust, Directed Services, Inc., Pacific Investment Management Company, Credit Suisse Asset Management, LLC and any other insurance companies participating in the Trusts will monitor events to identify and resolve any material conflicts that may arise. You will find complete information about the GCG Trust, the PIMCO Trust and the Warburg Pincus Trust in the accompanying prospectus for each trust. You should read them carefully before investing. 8 [Shaded Section Header] - -------------------------------------------------------------------------- GOLDEN AMERICAN SEPARATE ACCOUNT B - -------------------------------------------------------------------------- Golden American Separate Account B ("Account B") was established as a separate account of the Company on July 14, 1988. It is registered with the Securities and Exchange Commission as a unit investment trust under the Investment Company Act of 1940. Account B is a separate investment account used for our variable annuity contracts. We own all the assets in Account B but such assets are kept separate from our other accounts. Account B is divided into subaccounts. Each subaccount invests exclusively in shares of one investment portfolio of the GCG Trust, the PIMCO Trust or the Warburg Pincus Trust. Each investment portfolio has its own distinct investment objectives and policies. Income, gains and losses, realized or unrealized, of a portfolio are credited to or charged against the corresponding subaccount of Account B without regard to any other income, gains or losses of the Company. Assets equal to the reserves and other contract liabilities with respect to each are not chargeable with liabilities arising out of any other business of the Company. They may, however, be subject to liabilities arising from subaccounts whose assets we attribute to other variable annuity contracts supported by Account B. If the assets in Account B exceed the required reserves and other liabilities, we may transfer the excess to our general account. We are obligated to pay all benefits and make all payments provided under the Contracts. We currently offer other variable annuity contracts that invest in Account B but are not discussed in this prospectus. Account B may also invest in other investment portfolios which are not available under your Contract. [Shaded Section Header] - -------------------------------------------------------------------------- THE INVESTMENT PORTFOLIOS - -------------------------------------------------------------------------- During the accumulation phase, you may allocate your premium payments and contract value to any of the investment portfolios listed in the section below. You bear the entire investment risk for amounts you allocate to any investment portfolio, and you may lose your principal. INVESTMENT OBJECTIVES The investment objective of each investment portfolio is set forth below. You should understand that there is no guarantee that any portfolio will meet its investment objectives. Meeting objectives depends on various factors, including, in certain cases, how well the portfolio managers anticipate changing economic and market conditions. You can find more detailed information about the investment portfolios in the prospectuses for the GCG Trust, the PIMCO Trust and the Warburg Pincus Trust. You should read these prospectuses before investing.
INVESTMENT PORTFOLIO INVESTMENT OBJECTIVE - ----------------------- ----------------------------------------------------------------------------- THE GCG TRUST Liquid Asset Seeks high level of current income consistent with the preservation of capital and liquidity. Invests primarily in obligations of the U.S. Government and its agencies and instrumentalities, bank obligations, commercial paper and short-term corporate debt securities. All securities will mature in less than one year. ----------------------------------------------------------------------------- Limited Maturity Bond Seeks highest current income consistent with low risk to principal and liquidity. Also seeks to enhance its total return through capital appreciation when market factors, such as falling interest rates and rising bond prices, indicate that capital appreciation may be available without significant risk to principal. Invests primarily in diversified limited maturity debt securities with average maturity dates of five years or shorter and in no cases more than seven years. ----------------------------------------------------------------------------- Global Fixed Income Seeks high total return. Invests primarily in high-grade fixed income securities, both foreign and domestic. -----------------------------------------------------------------------------
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Total Return Seeks above-average income (compared to a portfolio entirely invested in equity securities) consistent with the prudent employment of capital. Invests primarily in a combination of equity and fixed income securities. ------------------------------------------------------------------------------- Fully Managed Seeks, over the long term, a high total investment return consistent with the preservation of capital and with prudent investment risk. Invests primarily in the common stocks of established companies believed by the portfolio manager to have above-average potential for capital growth. ------------------------------------------------------------------------------- Equity Income Seeks substantial dividend income as well as long-term growth of capital. Invests primarily in common stocks of well-established companies paying above-average dividends. ------------------------------------------------------------------------------- Investors Seeks long-term growth of capital. Current income is a secondary objective. Invests primarily in equity securities of U.S. Companies and to a lesser degree, debt securities. ------------------------------------------------------------------------------- Large Cap Value Seeks long-term growth of capital and income. Invests primarily in equity and equity-related securities of companies with market capitalization greater than $1 billion. ------------------------------------------------------------------------------- Rising Dividends Seeks capital appreciation. A secondary objective is dividend income. Invests in equity securities that meet the following quality criteria: regular dividend increases; 35% of earnings reinvested annually; and a credit rating of "A" to "AAA". ------------------------------------------------------------------------------- Capital Growth Seeks long-term total return. Invests primarily in common stocks of companies where the potential for change (earnings acceleration) is significant. ------------------------------------------------------------------------------- Growth Seeks capital appreciation. Invests primarily in common stocks of growth companies that have favorable relationships between price/earnings ratios and growth rates in sectors offering the potential for above-average returns. ------------------------------------------------------------------------------- Value Equity Seeks capital appreciation. Dividend income is a secondary objective. Invests primarily in common stocks of domestic and foreign issuers which meet quantitative standards relating to financial soundness and high intrinsic value relative to price. ------------------------------------------------------------------------------- Research Seeks long-term growth of capital and future income. Invests primarily in common stocks or securities convertible into common stocks of companies believed to have better than average prospects for long-term growth. ------------------------------------------------------------------------------- Managed Global Seeks capital appreciation. Current income is only an incidental consideration. Invests primarily in common stocks traded in securities markets throughout the world. ------------------------------------------------------------------------------- All Cap Seeks capital appreciation through investment in secuities which the portfolio manager believes have above-average capital appreciation potential. Invests primarily in equity securities of U.S. companies of any size. ------------------------------------------------------------------------------- Capital Appreciation Seeks long-term capital growth. Invests primarily in equity securities believed by the portfolio manager to be undervalued. ------------------------------------------------------------------------------- Mid-Cap Growth Seeks long-term growth of capital. Invests primarily in equity securities of companies with medium market capitalization which the portfolio manager believes have above-average growth potential. ------------------------------------------------------------------------------- Strategic Equity Seeks capital appreciation. Invests primarily in common stocks of medium- and small-sized companies. -------------------------------------------------------------------------------
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Small Cap Seeks long-term capital appreciation. Invests primarily in equity securities of companies that have a total market capitalization within the range of companies in the Russell 2000 Growth Index or the Standard & Poor's Small-Cap 600 Index. ------------------------------------------------------------------------------- Real Estate Seeks capital appreciation. Current income is a secondary objective. Invests primarily in publicly-traded real estate equity securities. ------------------------------------------------------------------------------- Hard Assets Seeks long-term capital appreciation. Invests primarily in hard asset securities. Hard asset companies produce a commodity which the portfolio manager is able to price on a daily or weekly basis. ------------------------------------------------------------------------------- Developing World Seeks capital appreciation. Invests primarily in equity securities of companies in developing or emerging countries. ------------------------------------------------------------------------------- THE PIMCO TRUST PIMCO High Yield Bond Seeks to maximize total return, consistent with preservation of capital and prudent investment management. Invests in at least 65% of its assets in a diversified portfolio of junk bonds rated at least B by Moody's Investor Services, Inc. or Standard & Poor's or, if unrated, determined by the portfolio manager to be of comparable quality. ------------------------------------------------------------------------------- PIMCO StocksPLUS Seeks to achieve a total return which exceeds the total return performance Growth and Income of the S&P 500. Invests primarily in common stocks, options, futures, options on futures and swaps. ------------------------------------------------------------------------------- THE WARBURG PINCUS TRUST International Equity Seeks long-term appreciation. Invests primarily in a broadly diversified portfolio of equity securities of companies that have their principal business activities outside of the United States. -------------------------------------------------------------------------------
INVESTMENT MANAGEMENT FEES Directed Services, Inc. serves as the overall manager of the GCG Trust. The GCG Trust pays Directed Services a monthly fee for its investment advisory and management services. The monthly fee is based on the average daily net assets of an investment portfolio, and in some cases, the combined total assets of certain grouped portfolios. Directed Services provides or procures, at its own expense, the services necessary for the operation of the portfolios. Directed Services (and not the GCG Trust) pays each portfolio manager a monthly fee for managing the assets of a portfolio. For a list of the portfolio managers, see the front cover of this prospectus. Directed Services does not bear the expense of brokerage fees and other transactional expenses for securities, taxes (if any) paid by a portfolio, interest on borrowing, fees and expenses of the independent trustees, and extraordinary expenses, such as litigation or indemnification expenses. Pacific Investment Management Company ("PIMCO") serves as investment advisor to the PIMCO Trust. The PIMCO Trust pays PIMCO a monthly advisory fee and a monthly administrative fee of 0.25% based on the average daily net assets of each of the investment portfolios for managing the assets of the portfolios and for administering the PIMCO Trust. Credit Suisse Asset Management, LLC serves as the investment advisor of the Warburg Pincus Trust. The Warburg Trust pays Credit Suisse Asset Management a monthly advisory fee based on the average daily net assets of the investment portfolio and also procures the services necessary for the operation of its portfolios. The Warburg Trust pays monthly administrative fees to two co-administrators for administrative services, one of which is an affiliate of Credit Suisse Asset Management. The monthly administrative fee is based on the portfolio's average daily net assets. Credit Suisse Asset Management does not bear any portfolio expenses. You can find more detailed information about each portfolio including its management fees in the prospectus for each trust. You should read these prospectuses before investing. 11 [Shaded Section Header] - -------------------------------------------------------------------------- THE FIXED INTEREST ALLOCATION - -------------------------------------------------------------------------- You may allocate premium payments and transfer your contract value to the guaranteed interest periods of our Fixed Account at any time during the accumulation period. Every time you allocate money to the Fixed Account, we set up a Fixed Interest Allocation for the guaranteed interest period you select. We currently offer guaranteed interest periods of 6 months, 1, 3, 5, 7, and 10 years, although we may not offer all these periods in the future. You may select one or more guaranteed interest periods at any one time. We will credit your Fixed Interest Allocation with a guaranteed interest rate for the interest period you select, so long as you do not withdraw money from that Fixed Interest Allocation before the end of the guaranteed interest period. Each guaranteed interest period ends on its maturity date which is the last day of the month in which the interest period is scheduled to expire. If you surrender, withdraw, transfer or annuitize your investment in a Fixed Interest Allocation more than 30 days before the end of the guaranteed interest period, we will apply a Market Value Adjustment to the transaction. A market value adjustment could increase or decrease the amount you surrender, withdraw, transfer or annuitize, depending on current interest rates at the time of the transaction. You bear the risk that you may receive less than your principal if we apply a Market Value Adjustment. Assets supporting amounts allocated to the Fixed Account are available to fund the claims of all classes of our customers, contract owners and other creditors. Interests under your Contract relating to the Fixed Account are registered under the Securities Act of 1933 but the Fixed Account is not registered under the 1940 Act. SELECTING A GUARANTEED INTEREST PERIOD You may select one or more Fixed Interest Allocations with specified guaranteed interest periods. A guaranteed interest period is the period that a rate of interest is guaranteed to be credited to your Fixed Interest Allocation. We may at any time decrease or increase the number of guaranteed interest periods offered. In addition, we may offer DCA Fixed Interest Allocations, which are 6-month and 1-year Fixed Interest Allocations available exclusively in connection with our dollar cost averaging program. For more information on DCA Fixed Interest Allocations, see "Transfers Among Your Investments -- Dollar Cost Averaging." Your contract value in the Fixed Account is the sum of your Fixed Interest Allocations and the interest credited, as adjusted for any withdrawals (including any Market Value Adjustment applied to such withdrawal), transfers or other charges we may impose. Your Fixed Interest Allocation will be credited with the guaranteed interest rate in effect for the guaranteed interest period you selected when we receive and accept your premium or reallocation of contract value. We will credit interest daily at a rate which yields the quoted guaranteed interest rate. GUARANTEED INTEREST RATES Each Fixed Interest Allocation will have an interest rate that is guaranteed as long as you do not take your money out until its maturity date. We do not have a specific formula for establishing the guaranteed interest rates for the different guaranteed interest periods. We determine guaranteed interest rates at our sole discretion. To find out the current guaranteed interest rate for a guaranteed interest period you are interested in, please contact our Customer Service Center or your registered representative. The determination may be influenced by the interest rates on fixed income investments in which we may invest with the amounts we receive under the Contracts. We will invest these amounts primarily in investment-grade fixed income securities (i.e., rated by Standard & Poor's rating system to be suitable for prudent investors) although we are not obligated to invest according to any particular strategy, except as may be required by applicable law. You will have no direct or indirect interest in these investments. We will also consider other factors in determining the guaranteed interest rates, including regulatory and tax requirements, sales commissions and administrative expenses borne by us, general economic trends and competitive factors. We cannot predict the level of future interest rates but no Fixed Interest Allocation will ever have a guaranteed interest rate of less than 3% per year. 12 We may from time to time at our discretion offer interest rate specials for new premiums that are higher than the current base interest rate then offered. Renewal rates for such rate specials will be based on the base interest rate and not on the special rates initially declared. TRANSFERS FROM A FIXED INTEREST ALLOCATION You may transfer your contract value in a Fixed Interest Allocation to one or more new Fixed Interest Allocations with new guaranteed interest periods, or to any of the subaccounts of Account B. We will transfer amounts from your Fixed Interest Allocations starting with the guaranteed interest period nearest its maturity date, until we have honored your transfer request. The minimum amount that you can transfer to or from any Fixed Interest Allocation is $100. If a transfer request would reduce the contract value remaining in a Fixed Interest Allocation to less than $100, we will treat such transfer request as a request to transfer the entire contract value in such Fixed Interest Allocation. Transfers from a Fixed Interest Allocation may be subject to a Market Value Adjustment. If you have a special Fixed Interest Allocation that was offered exclusively with our dollar cost averaging program, cancelling dollar cost averaging will cause a transfer of the entire contract value in such Fixed Interest Allocation to the Liquid Asset subaccount, and such a transfer will be subject to a Market Value Adjustment. On the maturity date of a guaranteed interest period, you may transfer amounts from the applicable Fixed Interest Allocation to the subaccounts and/or to new Fixed Interest Allocations with guaranteed interest periods of any length we are offering at that time. You may not, however, transfer amounts to any Fixed Interest Allocation with a guaranteed interest period that extends beyond the annuity start date. At least 30 calendar days before a maturity date of any of your Fixed Interest Allocations, or earlier if required by state law, we will send you a notice of the guaranteed interest periods that are available. You must notify us which subaccounts or new guaranteed interest periods you have selected before the maturity date of your Fixed Interest Allocations. If we do not receive timely instructions from you, we will transfer the contract value in the maturing Fixed Interest Allocation to a new Fixed Interest Allocation with a guaranteed interest period that is the same as the expiring guaranteed interest period. If such guaranteed interest period is not available or would go beyond the annuity start date, we will transfer your contract value in the maturing Fixed Interest Allocation to the next shortest guaranteed interest period which does not go beyond the annuity start date. If no such guaranteed interest period is available, we will transfer the contract value to a subaccount specially designated by the Company for such purpose. Currently we use the Liquid Asset subaccount for such purpose. WITHDRAWALS FROM A FIXED INTEREST ALLOCATION During the accumulation phase, you may withdraw a portion of your contract value in any Fixed Interest Allocation. You may make systematic withdrawals of only the interest earned during the prior month, quarter or year, depending on the frequency chosen, from a Fixed Interest Allocation under our systematic withdrawal option. Systematic withdrawals from a Fixed Interest Allocation are not permitted if such Fixed Interest Allocation is currently participating in the dollar cost averaging program. A withdrawal from a Fixed Interest Allocation may be subject to a Market Value Adjustment and, in some cases, a surrender charge. Be aware that withdrawals may have federal income tax consequences, including a 10% penalty tax, as well as state income tax consequences. If you tell us the Fixed Interest Allocation from which your withdrawal will be made, we will assess the withdrawal against that Fixed Interest Allocation. If you do not, we will assess your withdrawal against the subaccounts in which you are invested, unless the withdrawal exceeds the contract value in the subaccounts. If there is no contract value in those subaccounts, we will deduct your withdrawal from your Fixed Interest Allocations starting with the guaranteed interest periods nearest their maturity dates until we have honored your request. 13 MARKET VALUE ADJUSTMENT A Market Value Adjustment may decrease, increase or have no effect on your contract value. We will apply a Market Value Adjustment (i) whenever you withdraw or transfer money from a Fixed Interest Allocation (unless made within 30 days before the maturity date of the applicable guaranteed interest period, or under the systematic withdrawal or dollar cost averaging programs) and (ii) if on the annuity start date a guaranteed interest period for any Fixed Interest Allocation does not end on or within 30 days of the annuity start date. We determine the Market Value Adjustment by multiplying the amount you withdraw, transfer or apply to an income plan by the following factor: ( 1+I )N/365 (---------) -1 (1+J+.0050) Where, o "I" is the Index Rate for the affected Fixed Interest Allocation as of the first day of its guaranteed interest period; o "J" is equal to the following: (1) If calculated for a Fixed Interest Allocation of 1 year or more, then "J" is the Index Rate for a new Fixed Interest Allocation with a guaranteed interest period equal to the time remaining (rounded up to the next full year except in Pennsylvania) in the guaranteed interest period; (2) If calculated for a Fixed Interest Allocation of 6 months, then "J" is the lesser of the Index Rate for a new Fixed Interest Allocation with (i) a 6 month guaranteed interest period, or (ii) a 1 year guaranteed interest period at the time of calculation; and o "N" is the remaining number of days in the guaranteed interest period at the time of calculation. The Index Rate is the average of the Ask Yields for U.S. Treasury Strips as quoted by a national quoting service for a period equal to the applicable guaranteed interest period. The average currently is based on the period starting from the 22nd day of the calendar month two months prior to the month of the Index Rate determination and ending the 21st day of the calendar month immediately before the month of determination. We currently calculate the Index Rate once each calendar month but have the right to calculate it more frequently. The Index Rate will always be based on a period of at least 28 days. If the Ask Yields are no longer available, we will determine the Index Rate by using a suitable and approved, if required, replacement method. A Market Value Adjustment may be positive, negative or result in no change. In general, if interest rates are rising, you bear the risk that any Market Value Adjustment will likely be negative and reduce your contract value. On the other hand, if interest rates are falling, it is more likely that you will receive a positive Market Value Adjustment that increases your contract value. In the event of a full surrender, transfer or annuitization from a Fixed Interest Allocation, we will add or subtract any Market Value Adjustment from the amount surrendered, transferred or annuitized. In the event of a partial withdrawal, transfer or annuitization, we will add or subtract any Market Value Adjustment from the total amount withdrawn, transferred or annuitized in order to provide the amount requested. If a negative Market Value Adjustment exceeds your contract value in the Fixed Interest Allocation, we will consider your request to be a full surrender, transfer or annuitization of the Fixed Interest Allocation. Several examples which illustrate how the Market Value Adjustment works are included in Appendix A. [Shaded Section Header] - -------------------------------------------------------------------------- THE ANNUITY CONTRACT - -------------------------------------------------------------------------- The Contract described in this prospectus is a deferred combination variable and fixed annuity contract. The Contract provides a means for you to invest in one or more of the available mutual fund portfolios of the GCG Trust, the PIMCO Trust and the Warburg Pincus Trust through Account B. It also provides a means for you to invest in a Fixed Interest Allocation through the Fixed Account. 14 CONTRACT DATE AND CONTRACT YEAR The date the Contract became effective is the contract date. Each 12-month period following the contract date is a contract year. ANNUITY START DATE The annuity start date is the date you start receiving annuity payments under your Contract. The Contract, like all deferred variable annuity contracts, has two phases: the accumulation phase and the income phase. The accumulation phase is the period between the contract date and the annuity start date. The income phase begins when you start receiving regular annuity payments from your Contract on the annuity start date. CONTRACT OWNER You are the contract owner. You are also the annuitant unless another annuitant is named in the application. You have the rights and options described in the Contract. One or more persons may own the Contract. If there are multiple owners named, the age of the oldest owner will determine the applicable death benefit if such death benefit is available for multiple owners. The death benefit becomes payable when you die. In the case of a sole contract owner who dies before the income phase begins, we will pay the beneficiary the death benefit then due. The sole contract owner's estate will be the beneficiary if no beneficiary has been designated or the beneficiary has predeceased the contract owner. In the case of a joint owner of the Contract dying before the income phase begins, we will designate the surviving contract owner as the beneficiary. This will override any previous beneficiary designation. If the contract owner is a trust and a beneficial owner of the trust has been designated, the beneficial owner will be treated as the contract owner for determining the death benefit. If a beneficial owner is changed or added after the contract date, this will be treated as a change of contract owner for determining the death benefit. JOINT OWNER. For non-qualified Contracts only, joint owners may be named in a written request before the Contract is in effect. Joint owners may independently exercise transfers and other transactions allowed under the Contract. All other rights of ownership must be exercised by both owners. Joint owners own equal shares of any benefits accruing or payments made to them. All rights of a joint owner end at death of that owner if the other joint owner survives. The entire interest of the deceased joint owner in the Contract will pass to the surviving joint owner. The age of the older owner will determine the applicable death benefit if Enhanced Death Benefits are available for multiple owners. ANNUITANT The annuitant is the person designated by you to be the measuring life in determining annuity payments. The annuitant's age determines when the income phase must begin and the amount of the annuity payments to be paid. You are the annuitant unless you choose to name another person. The annuitant may not be changed after the Contract is in effect. The contract owner will receive the annuity benefits of the Contract if the annuitant is living on the annuity start date. If the annuitant dies before the annuity start date, and a contingent annuitant has been named, the contingent annuitant becomes the annuitant (unless the contract owner is not an individual, in which case the death benefit becomes payable). If there is no contingent annuitant when the annuitant dies before the annuity start date, the contract owner will become the annuitant. The contract owner may designate a new annuitant within 60 days of the death of the annuitant. If there is no contingent annuitant when the annuitant dies before the annuity start date and the contract owner is not an individual, we will pay the designated beneficiary the death benefit then due. If a beneficiary has not been designated, or if there is no designated beneficiary living, the contract owner will be the beneficiary. If the annuitant was the sole contract owner and there is no beneficiary designation, the annuitant's estate will be the beneficiary. 15 Regardless of whether a death benefit is payable, if the annuitant dies and any contract owner is not an individual, distribution rules under federal tax law will apply. You should consult your tax advisor for more information if you are not an individual. BENEFICIARY The beneficiary is named by you in a written request. The beneficiary is the person who receives any death benefit proceeds and who becomes the successor contract owner if the contract owner (or the annuitant if the contract owner is other than an individual) dies before the annuity start date. We pay death benefits to the primary beneficiary (unless there are joint owners, in which case death proceeds are payable to the surviving owner(s)). If the beneficiary dies before the annuitant or the contract owner, the death benefit proceeds are paid to the contingent beneficiary, if any. If there is no surviving beneficiary, we pay the death benefit proceeds to the contract owner's estate. One or more persons may be a beneficiary or contingent beneficiary. In the case of more than one beneficiary, we will assume any death benefit proceeds are to be paid in equal shares to the surviving beneficiaries. You have the right to change beneficiaries during the annuitant's lifetime unless you have designated an irrevocable beneficiary. When an irrevocable beneficiary has been designated, you and the irrevocable beneficiary may have to act together to exercise some of the rights and options under the Contract. CHANGE OF CONTRACT OWNER OR BENEFICIARY. During the annuitant's lifetime, you may transfer ownership of a non-qualified Contract. A change in ownership may affect the amount of the death benefit and the guaranteed death benefit. You may also change the beneficiary. All requests for changes must be in writing and submitted to our Customer Service Center in good order. The change will be effective as of the day you sign the request. The change will not affect any payment made or action taken by us before recording the change. PURCHASE AND AVAILABILITY OF THE CONTRACT We will issue a Contract only if both the annuitant and the contract owner are not older than age 85. The initial premium payment must be $25,000 or more. You may make additional payments of at least $1,000 or more at any time after the free look period before you turn age 85. Under certain circumstances, we may waive the minimum premium payment requirement. We may also change the minimum initial or additional premium requirements for certain group or sponsored arrangements. Any initial or additional premium payment that would cause the contract value of all annuities that you maintain with us to exceed $1,000,000 requires our prior approval. CREDITING OF PREMIUM PAYMENTS We will process your initial premium within 2 business days after receipt, if the application and all information necessary for processing the Contract are complete. Subsequent premium payments will be processed within 1 business day if all information necessary is received. In certain states we also accept initial and additional premium payments by wire order. Wire transmittals must be accompanied by sufficient electronically transmitted data. We may retain your initial premium payment for up to 5 business days while attempting to complete an incomplete application. If the application cannot be completed within this period, we will inform you of the reasons for the delay. We will also return the premium payment immediately unless you direct us to hold the premium payment until the application is completed. For initial premium payments, the payment will be credited at the accumulation unit value next determined after receipt of your premium payment and the completed application. Once the completed application is received, we will allocate the payment to the subaccount and/or Fixed Interest Allocation specified by you within 2 business days. We will make inquiry to discover any missing information related to subsequent payments. For any subsequent premium payments, the payment will be credited at the accumulation unit value next determined after receipt of your premium payment and instructions. Once we allocate your premium payment to the subaccounts selected by you, we convert the premium payment into accumulation units. We divide the amount of the premium payment allocated to a particular 16 subaccount by the value of an accumulation unit for the subaccount to determine the number of accumulation units of the subaccount to be held in Account B with respect to your Contract. The net investment results of each subaccount vary with its investment performance. If your premium payment was transmitted by wire order from your broker- dealer, we will follow one of the following two procedures after we receive and accept the wire order and investment instructions. The procedure we follow depends on state availability and the procedures of your broker-dealer. (1) If either your state or broker-dealer do not permit us to issue a Contract without an application, we reserve the right to rescind the Contract if we do not receive and accept a properly completed application or enrollment form within 5 days of the premium payment. If we do not receive the application or form within 5 days of the premium payment, we will refund the contract value plus any charges we deducted, and the Contract will be voided. Some states require that we return the premium paid, in which case we will comply. (2) If your state and broker-dealer allow us to issue a Contract without an application, we will issue and mail the Contract to you, together with an Application Acknowledgement Statement for your execution. Until our Customer Service Center receives the executed Application Acknowledgement Statement, neither you nor the broker-dealer may execute any financial transactions on your Contract unless they are requested in writing by you. We may require additional information before complying with your request (e.g., signature guarantee). In some states, we may require that an initial premium designated for a subaccount of Account B or the Fixed Account be allocated to a subaccount specially designated by the Company (currently, the Liquid Asset subaccount) during the free look period. After the free look period, we will convert your contract value (your initial premium plus any earnings less any expenses) into accumulation units of the subaccounts you previously selected. The accumulation units will be allocated based on the accumulation unit value next computed for each subaccount. Initial premiums designated for Fixed Interest Allocations will be allocated to a Fixed Interest Allocation with the guaranteed interest period you have chosen; however, in the future we may allocate the premiums to the specially designated subaccount during the free look period. CONTRACT VALUE We determine your contract value on a daily basis beginning on the contract date. Your contract value is the sum of (a) the contract value in the Fixed Interest Allocations, and (b) the contract value in each subaccount in which you are invested. CONTRACT VALUE IN FIXED INTEREST ALLOCATIONS. The contract value in your Fixed Interest Allocation is the sum of premium payments allocated to the Fixed Interest Allocation under the Contract, plus contract value transferred to the Fixed Interest Allocation, plus credited interest, minus any transfers and withdrawals from the Fixed Interest Allocation (including any Market Value Adjustment applied to such withdrawal), contract fees (including, in some cases, fees for optional benefit riders), and premium taxes. CONTRACT VALUE IN THE SUBACCOUNTS. On the contract date, the contract value in the subaccount in which you are invested is equal to the initial premium paid and designated to be allocated to the subaccount. On the contract date, we allocate your contract value to each subaccount and/or a Fixed Interest Allocation specified by you, unless the Contract is issued in a state that requires the return of premium payments during the free look period, in which case, the portion of your initial premium not allocated to a Fixed Interest Allocation may be allocated to a subaccount specially designated by the Company during the free look period for this purpose (currently, the Liquid Asset subaccount). On each business day after the contract date, we calculate the amount of contract value in each subaccount as follows: (1) We take the contract value in the subaccount at the end of the preceding business day. (2) We multiply (1) by the subaccount's Net Investment Factor since the preceding business day. (3) We add (1) and (2). 17 (4) We add to (3) any additional premium payments, and then add or subtract any transfers to or from that subaccount. (5) We subtract from (4) any withdrawals and any related charges, and then subtract any contract fees (including any rider charges) and premium taxes. CASH SURRENDER VALUE The cash surrender value is the amount you receive when you surrender the Contract. The cash surrender value will fluctuate daily based on the investment results of the subaccounts in which you are invested, and interest credited to Fixed Interest Allocations and any Market Value Adjustment. We do not guarantee any minimum cash surrender value. On any date during the accumulation phase, we calculate the cash surrender value as follows: we start with your contract value, then we adjust for any Market Value Adjustment, then we deduct any surrender charge, any charge for premium taxes, and any other charges incurred but not yet deducted. SURRENDERING TO RECEIVE THE CASH SURRENDER VALUE You may surrender the Contract at any time while the annuitant is living and before the annuity start date. A surrender will be effective on the date your written request and the Contract are received at our Customer Service Center. We will determine and pay the cash surrender value at the price next determined after receipt of all paperwork required in order for us to process your surrender. Once paid, all benefits under the Contract will be terminated. For administrative purposes, we will transfer your money to a specially designated subaccount (currently the Liquid Asset subaccount) prior to processing the surrender. This transfer will have no effect on your cash surrender value. You may receive the cash surrender value in a single sum payment or apply it under one or more annuity options. We will usually pay the cash surrender value within 7 days. Consult your tax advisor regarding the tax consequences associated with surrendering your Contract. A surrender made before you reach age 591/2 may result in a 10% tax penalty. See "Federal Tax Considerations" for more details. ADDITION, DELETION OR SUBSTITUTION OF SUBACCOUNTS AND OTHER CHANGES We may make additional subaccounts available to you under the Contract. These subaccounts will invest in investment portfolios we find suitable for your Contract. We may amend the Contract to conform to applicable laws or governmental regulations. If we feel that investment in any of the investment portfolios has become inappropriate to the purposes of the Contract, we may, with approval of the SEC (and any other regulatory agency, if required) substitute another portfolio for existing and future investments. If you have elected the dollar cost averaging, systematic withdrawals, or automatic rebalancing programs or if you have other outstanding instructions, and we substitute a portfolio subject to those instructions, we will execute your instructions using the substituted portfolio, unless you request otherwise. We also reserve the right to: (i) deregister Account B under the 1940 Act; (ii) operate Account B as a management company under the 1940 Act if it is operating as a unit investment trust; (iii) operate Account B as a unit investment trust under the 1940 Act if it is operating as a managed separate account; (iv) restrict or eliminate any voting rights as to Account B; and (v) combine Account B with other accounts. We will, of course, provide you with written notice before any of these changes are effected. THE FIXED ACCOUNT The Fixed Account is a segregated asset account which contains the assets that support a contract owner's Fixed Interest Allocations. See "The Fixed Interest Allocations" for more information. OTHER CONTRACTS We offer other variable annuity contracts that also invest in the same investment portfolios of the Trusts. These contracts have different charges that could effect their performance, and may offer different benefits more suitable to your needs. To obtain more information about these other contracts, contact our Customer Service Center or your registered representative. 18 OTHER IMPORTANT PROVISIONS See "Withdrawals," "Transfers Among Your Investments," "Death Benefit Choices," "Charges and Fees," "The Annuity Options" and "Other Contract Provisions" in this prospectus for information on other important provisions in your Contract. [Shaded Section Header] - -------------------------------------------------------------------------- WITHDRAWALS - -------------------------------------------------------------------------- Any time during the accumulation phase and before the death of the annuitant, you may withdraw all or part of your money. Keep in mind that if you request a withdrawal for more than 90% of the cash surrender value, we will treat it as a request to surrender the Contract. If any single withdrawal or the sum of withdrawals exceeds the Free Withdrawal Amount, you will incur a surrender charge. The Free Withdrawal Amount in any contract year is the greater of (i) any earnings less previous free withdrawals, or (ii) 10% of premium payments paid within the past 7 years not previously withdrawn, less any previous free withdrawals taken in the same contract year. You need to submit to us a written request specifying the Fixed Interest Allocations or subaccounts from which amounts are to be withdrawn, otherwise the withdrawal will be made on a pro rata basis from all of the subaccounts in which you are invested. If there is not enough contract value in the subaccounts, we will deduct the balance of the withdrawal from your Fixed Interest Allocations starting with the guaranteed interest periods nearest their maturity dates until we have honored your request. We will apply a Market Value Adjustment to any withdrawal from your Fixed Interest Allocation taken more than 30 days before its maturity date. Definitive guidance on the proper federal tax treatment of the Market Value Adjustment has not been issued. You may want to discuss the potential tax consequences of a Market Value Adjustment with your tax adviser. We will determine the contract value as of the close of business on the day we receive your withdrawal request at our Customer Service Center. The contract value may be more or less than the premium payments made. For administrative purposes, we will transfer your money to a specially designated subaccount (currently, the Liquid Asset subaccount) prior to processing the withdrawal. This transfer will not effect the withdrawal amount you receive. We offer the following three withdrawal options: REGULAR WITHDRAWALS After the free look period, you may make regular withdrawals. Each withdrawal must be a minimum of $100. We will apply a Market Value Adjustment to any regular withdrawals from a Fixed Interest Allocation taken more than 30 days before its maturity date. SYSTEMATIC WITHDRAWALS You may choose to receive automatic systematic withdrawal payments (1) from the contract value in the subaccounts in which you are invested, or (2) from the interest earned in your Fixed Interest Allocations. Systematic withdrawals may be taken monthly, quarterly or annually. You decide when you would like systematic payments to start as long as it starts at least 28 days after your contract date. You also select the date on which the systematic withdrawals will be made, but this date cannot be later than the 28th day of the month. If you have elected to receive systematic withdrawals but have not chosen a date, we will make the withdrawals on the same calendar day of each month as your contract date. If your contract date is after the 28th, your systematic withdrawal will be made on the 28th day of each month. Each systematic withdrawal amount must be a minimum of $100. The amount of your systematic withdrawal can either be (1) a fixed dollar amount, or (2) an amount based on a percentage of the premiums not previously withdrawn from the subaccounts in which you are invested. Both forms of systematic withdrawals are subject to the following maximum, which is calculated on each withdrawal date: MAXIMUM PERCENTAGE FREQUENCY OF CONTRACT VALUE Monthly 0.833% Quarterly 2.50% Annually 10.00% 19 If your systematic withdrawal is a fixed dollar amount and the amount to be withdrawn would exceed the applicable maximum percentage of your contract value on any withdrawal date, we will automatically reduce the amount withdrawn so that it equals such percentage. Thus, your fixed dollar systematic withdrawals will never exceed the maximum percentage. If you want fixed dollar systematic withdrawals to exceed the maximum percentage and are willing to incur associated surrender charges, consider the Fixed Dollar Systematic Withdrawal Feature which you may add to your regular systematic withdrawal program. If your systematic withdrawal is based on a percentage of the premiums not previously withdrawn from the subaccounts in which you are invested and the amount to be withdrawn based on that percentage would be less than $100, we will automatically increase the amount to $100 as long as it does not exceed the maximum percentage. If the systematic withdrawal would exceed the maximum percentage, we will send the amount, and then automatically cancel your systematic withdrawal option. Systematic withdrawals from Fixed Interest Allocations are limited to interest earnings during the prior month, quarter, or year, depending on the frequency you chose. Systematic withdrawals are not subject to a Market Value Adjustment, unless you have added the Fixed Dollar Systematic Withdrawal Feature discussed below and the payments exceed interest earnings. Systematic withdrawals from Fixed Interest Allocations under the Fixed Dollar Systematic Withdrawal Feature are available only in connection with Section 72(q) or 72(t) distributions. A Fixed Interest Allocation may not participate in both the systematic withdrawal option and the dollar cost averaging program at the same time. You may change the amount or percentage of your systematic withdrawal once each contract year or cancel this option at any time by sending satisfactory notice to our Customer Service Center at least 7 days before the next scheduled withdrawal date. The systematic withdrawal option may commence in a contract year where a regular withdrawal has been taken but you may not change the amount or percentage of your withdrawals in any contract year during which you have previously taken a regular withdrawal. You may not elect the systematic withdrawal option if you are taking IRA withdrawals. FIXED DOLLAR SYSTEMATIC WITHDRAWAL FEATURE. You may add the Fixed Dollar Systematic Withdrawal Feature to your regular fixed dollar systematic withdrawal program. This feature allows you to receive a systematic withdrawal in a fixed dollar amount regardless of any surrender charges or Market Value Adjustments. Systematic withdrawals from Fixed Interest Allocations under the Fixed Dollar Systematic Withdrawal Feature are available only in connection with Section 72(q) or 72(t) distributions. You choose the amount of the fixed systematic withdrawals, which may total up to an annual maximum of 10% of your premium payments not previously withdrawn as determined on the day we receive your election of this feature. The maximum limit will not be recalculated when you make additional premium payments, unless you instruct us to do us. We will assess a surrender charge on the withdrawal date if the withdrawal exceeds the maximum limit as calculated on the withdrawal date. We will assess a Market Value Adjustment on the withdrawal date if the withdrawal from a Fixed Interest Allocation exceeds your interest earnings on the withdrawal date. We will apply the surrender charge and any Market Value Adjustment directly to your contract value (rather than to the systematic withdrawal) so that the amount of each systematic withdrawal remains fixed. Flat dollar systematic withdrawals which are intended to satisfy the requirements of Section 72(q) or 72(t) of the Tax Code may exceed the maximum. Such withdrawals are subject to surrender charges and Market Value Adjustment when they exceed the applicable free withdrawal amount. IRA WITHDRAWALS If you have a non-Roth IRA Contract and will be at least age 701/2 during the current calendar year, you may elect to have distributions made to you to satisfy requirements imposed by Federal tax law. IRA withdrawals provide payout of amounts required to be distributed by the Internal Revenue Service rules governing mandatory distributions under qualified plans. We will send you a notice before your distributions commence. You may elect to take IRA withdrawals at that time, or at a later date. You may not elect IRA withdrawals and participate in systematic withdrawals at the same time. If you do not elect to take IRA withdrawals, and distributions are required by Federal tax law, distributions adequate to satisfy the requirements imposed by Federal tax law may be made. Thus, if you are participating in systematic withdrawals, distributions under that option must be adequate to satisfy the mandatory distribution rules imposed by federal tax law. 20 You may choose to receive IRA withdrawals on a monthly, quarterly or annual basis. Under this option, you may elect payments to start as early as 28 days after the contract date. You select the day of the month when the withdrawals will be made, but it cannot be later than the 28th day of the month. If no date is selected, we will make the withdrawals on the same calendar day of the month as the contract date. You may request that we calculate for you the amount that is required to be withdrawn from your Contract each year based on the information you give us and various choices you make. For information regarding the calculation and choices you have to make, see the Statement of Additional Information. The minimum dollar amount you can withdraw is $100. When we determine the required IRA withdrawal amount for a taxable year based on the frequency you select, if that amount is less than $100, we will pay $100. At any time where the IRA withdrawal amount is greater than the contract value, we will cancel the Contract and send you the amount of the cash surrender value. You may change the payment frequency of your IRA withdrawals once each contract year or cancel this option at any time by sending us satisfactory notice to our Customer Service Center at least 7 days before the next scheduled withdrawal date. An IRA withdrawal in excess of the amount allowed under systematic withdrawals will be subject to a Market Value Adjustment. CONSULT YOUR TAX ADVISOR REGARDING THE TAX CONSEQUENCES ASSOCIATED WITH TAKING WITHDRAWALS. You are responsible for determining that withdrawals comply with applicable law. A withdrawal made before the taxpayer reaches age 591/2 may result in a 10% penalty tax. See "Federal Tax Considerations" for more details. [Shaded Section Header] - -------------------------------------------------------------------------- TRANSFERS AMONG YOUR INVESTMENTS - -------------------------------------------------------------------------- You may transfer your contract value among the subaccounts in which you are invested and your Fixed Interest Allocations at the end of the free look period until the annuity start date. We currently do not charge you for transfers made during a contract year, but reserve the right to charge $25 for each transfer after the twelfth transfer in a contract year. We also reserve the right to limit the number of transfers you may make and may otherwise modify or terminate transfer privileges if required by our business judgement or in accordance with applicable law. We will apply a Market Value Adjustment to transfers from a Fixed Interest Allocation taken more than 30 days before its maturity date, unless the transfer is made under the dollar cost averaging program. Transfers will be based on values at the end of the business day in which the transfer request is received at our Customer Service Center. The minimum amount that you may transfer is $100 or, if less, your entire contract value held in a subaccount or a Fixed Interest Allocation. To make a transfer, you must notify our Customer Service Center and all other administrative requirements must be met. Any transfer request received after 4:00 p.m. eastern time or the close of the New York Stock Exchange will be effected on the next business day. Account B and the Company will not be liable for following instructions communicated by telephone that we reasonably believe to be genuine. We require personal identifying information to process a request for transfer made over the telephone. DOLLAR COST AVERAGING You may elect to participate in our dollar cost averaging program if you have at least $1,200 of contract value in the (i) Limited Maturity Bond subaccount or the Liquid Asset subaccount, or (ii) a Fixed Interest Allocation with either a 6-month or a 1-year guaranteed interest period. These subaccounts or Fixed Interest Allocations serve as the source accounts from which we will, on a monthly basis, automatically transfer a set dollar amount of money to other subaccounts selected by you. We also may offer DCA Fixed Interest Allocations, which are 6-month and 1-year Fixed Interest Allocations available exclusively for use with the dollar cost averaging program. The DCA Fixed Interest Allocations require a minimum premium payment of $1,200 directed into a DCA Fixed Interest Allocation. 21 The dollar cost averaging program is designed to lessen the impact of market fluctuation on your investment. Since we transfer the same dollar amount to other subaccounts each month, more units of a subaccount are purchased if the value of its unit is low and less units are purchased if the value of its unit is high. Therefore, a lower than average value per unit may be achieved over the long term. However, we cannot guarantee this. When you elect the dollar cost averaging program, you are continuously investing in securities regardless of fluctuating price levels. You should consider your tolerance for investing through periods of fluctuating price levels. Unless you have a DCA Fixed Interest Allocation, you elect the dollar amount you want transferred under this program. Each monthly transfer must be at least $100. If your source account is the Limited Maturity Bond subaccount, the Liquid Asset subaccount or a 1-year Fixed Interest Allocation, the maximum amount that can be transferred each month is your contract value in such source account divided by 12. If your source account is a 6-month Fixed Interest Allocation, the maximum amount that can be transferred each month is your contract value in such source account divided by 6. You may change the transfer amount once each contract year. If you have a DCA Fixed Interest Allocation, there is no minimum or maximum transfer amount; we will transfer all your money allocated to that source account into the subaccount(s) in equal payments over the selected 6-month or 1-year period. The last payment will include earnings accrued over the course of the selected period. Transfers from a Fixed Interest Allocation or a DCA Fixed Interest Allocation under the dollar cost averaging program are not subject to a Market Value Adjustment. However, if you terminate the dollar cost averaging program for a DCA Fixed Interest Allocation and there is money remaining in the DCA Fixed Interest Allocation, we will transfer the remaining money to the Liquid Asset subaccount. Such transfer will trigger a Market Value Adjustment if the transfer is made more than 30 days before the maturity date of the DCA Fixed Interest Allocation. If you do not specify the subaccounts to which the dollar amount of the source account is to be transferred, we will transfer the money to the subaccounts in which you are invested on a proportional basis. The transfer date is the same day each month as your contract date. If, on any transfer date, your contract value in a source account is equal or less than the amount you have elected to have transferred, the entire amount will be transferred and the program will end. You may terminate the dollar cost averaging program at any time by sending satisfactory notice to our Customer Service Center at least 7 days before the next transfer date. A Fixed Interest Allocation or DCA Fixed Interest Allocation may not participate in the dollar cost averaging program and in systematic withdrawals at the same time. We may in the future offer additional subaccounts or withdraw any subaccount or Fixed Interest Allocation to or from the dollar cost averaging program, stop offering DCA Fixed Interest Allocations or otherwise modify, suspend or terminate this program. Of course, such change will not affect any dollar cost averaging programs in operation at the time. AUTOMATIC REBALANCING If you have at least $10,000 of contract value invested in the subaccounts of Account B, you may elect to have your investments in the subaccounts automatically rebalanced. We will transfer funds under your Contract on a quarterly, semi-annual, or annual calendar basis among the subaccounts to maintain the investment blend of your selected subaccounts. The minimum size of any allocation must be in full percentage points. Rebalancing does not affect any amounts that you have allocated to the Fixed Account. The program may be used in conjunction with the systematic withdrawal option only if withdrawals are taken pro rata. Automatic rebalancing is not available if you participate in dollar cost averaging. Automatic rebalancing will not take place during the free look period. To participate in automatic rebalancing send satisfactory notice to our Customer Service Center. We will begin the program on the last business day of the period in which we receive the notice. You may cancel the program at any time. The program will automatically terminate if you choose to reallocate your contract value among the subaccounts or if you make an additional premium payment or partial withdrawal on other than a pro rata basis. Additional premium payments and partial withdrawals effected on a pro rata basis will not cause the automatic rebalancing program to terminate. 22 [Shaded Section Header] - -------------------------------------------------------------------------- DEATH BENEFIT - -------------------------------------------------------------------------- DEATH BENEFIT DURING THE ACCUMULATION PHASE During the accumulation phase, a death benefit is payable when either the annuitant (when a contract owner is not an individual), the contract owner or the first of joint owners dies. Assuming you are the contract owner, your beneficiary will receive a death benefit unless the beneficiary is your surviving spouse and elects to continue the Contract. The death benefit value is calculated at the close of the business day on which we receive written notice and due proof of death, as well as any required paperwork, at our Customer Service Center. If your beneficiary elects to delay receipt of the death benefit until a date after the time of death, the amount of the benefit payable in the future may be affected. The proceeds may be received in a single sum or applied to any of the annuity options. If we do not receive a request to apply the death benefit proceeds to an annuity option, we will make a single sum distribution. We will generally pay death benefit proceeds within 7 days after our Customer Service Center has received sufficient information to make the payment. The Death Benefit under the Contract is the greatest of (i) your contract value; (ii) total premium payments less any withdrawals; and (iii) the cash surrender value. DEATH BENEFIT DURING THE INCOME PHASE If any contract owner or the annuitant dies after the annuity start date, we will pay the beneficiary any certain benefit remaining under the annuity in effect at the time. [Shaded Section Header] - -------------------------------------------------------------------------- CHARGES AND FEES - -------------------------------------------------------------------------- We deduct the charges described below to cover our cost and expenses, services provided and risks assumed under the Contracts. We incur certain costs and expenses for distributing and administrating the Contracts, for paying the benefits payable under the Contracts and for bearing various risks associated with the Contracts. The amount of a charge will not always correspond to the actual costs associated. For example, the surrender charge collected may not fully cover all of the distribution expenses incurred by us with the service or benefits provided. In the event there are any profits from fees and charges deducted under the Contract, we may use such profits to finance the distribution of contracts. CHARGE DEDUCTION SUBACCOUNT You may elect to have all charges against your contract value deducted directly from a single subaccount designated by the Company. Currently we use the Liquid Asset subaccount for this purpose. If you do not elect this option, or if the amount of the charges is greater than the amount in the designated subaccount, the charges will be deducted as discussed below. You may cancel this option at any time by sending satisfactory notice to our Customer Service Center. Charges Deducted from the Contract Value We deduct the following charges from your contract value: SURRENDER CHARGE. We will deduct a contingent deferred sales charge (a "surrender charge") if you surrender your Contract or if you take a withdrawal in excess of the Free Withdrawal Amount during the 7-year period from the date we receive and accept a premium payment. The surrender charge is based on a percentage of each premium payment withdrawn. This charge is intended to cover sales expenses that we have incurred. We may in the future reduce or waive the surrender charge in certain situations and will never charge more than the maximum surrender charges. The percentage of premium payments deducted at the time of surrender or excess withdrawal depends on the number of complete years that have elapsed since that premium payment was made. We determine the surrender charge as a percentage of each premium payment withdrawn as follows: 23 COMPLETE YEARS ELAPSED 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7+ SINCE PREMIUM PAYMENT | | | | | | | SURRENDER CHARGE 6% | 6% | 6% | 5% | 4% | 3% | 1% | 0% WAIVER OF SURRENDER CHARGE FOR EXTENDED MEDICAL CARE. We will waive the surrender charge in most states in the following events: (i) you begin receiving qualified extended medical care on or after the first contract anniversary for at least 45 days during a 60-day period and your request for the surrender or withdrawal, together with all required documentation is received at our Customer Service Center during the term of your care or within 90 days after the last day of your care; or (ii) you are first diagnosed by a qualifying medical professional, on or after the first contract anniversary, as having a qualifying terminal illness. We have the right to require an examination by a physician of our choice. If we require such an examination, we will pay for it. You are required to send us satisfactory written proof of illness. See your Contract for more information. The waiver of surrender charge may not be available in all states. FREE WITHDRAWAL AMOUNT. The Free Withdrawal Amount in any contract year is the greater of (i) any earnings less previous free withdrawals or (ii) 10% of premium payments paid within the past 7 years and not previously withdrawn, less any previous free withdrawals taken in the same contract year. SURRENDER CHARGE FOR EXCESS WITHDRAWALS. We will deduct a surrender charge for excess withdrawals. We consider a withdrawal to be an "excess withdrawal" when the amount you withdraw in any contract year exceeds the Free Withdrawal Amount. Where you are receiving systematic withdrawals, any combination of regular withdrawals taken and any systematic withdrawals expected to be received in a contract year will be included in determining the amount of the excess withdrawal. Such a withdrawal will be considered a partial surrender of the Contract and we will impose a surrender charge and any associated premium tax. We will deduct such charges from the contract value in proportion to the contract value in each subaccount or Fixed Interest Allocation from which the excess withdrawal was taken. In instances where the excess withdrawal equals the entire contract value in such subaccounts or Fixed Interest Allocations, we will deduct charges proportionately from all other subaccounts and Fixed Interest Allocations in which you are invested. Any withdrawal from a Fixed Interest Allocation more than 30 days before its maturity date will trigger a Market Value Adjustment. For the purpose of calculating the surrender charge for an excess withdrawal: a) we treat premiums as being withdrawn on a first-in, first-out basis; and b) amounts withdrawn which are not considered an excess withdrawal are not considered a withdrawal of any premium payments. We have included an example of how this works in Appendix B. Although we treat premium payments as being withdrawn before earnings for purpose of calculating the surrender charge for excess withdrawals, the federal tax law treats earnings as withdrawn first. PREMIUM TAXES. We may make a charge for state and local premium taxes depending on your state of residence. The tax can range from 0% to 3.5% of the premium payment. We have the right to change this amount to conform with changes in the law or if you change your state of residence. We deduct the premium tax from your contract value on the annuity start date. However, some jurisdictions impose a premium tax at the time that initial and additional premiums are paid, regardless of when the annuity payments begin. In those states we may defer collection of the premium taxes from your contract value and deduct it when you surrender the Contract, when you take an excess withdrawal, or on the annuity start date. ADMINISTRATIVE CHARGE. We currently do not charge an annual administrative charge but may in the future deduct an annual administrative charge of $30 or 2% of the contract value, whichever is smaller. Such charge, if any, will be made on each Contract anniversary, or if you surrender your Contract prior to a Contract anniversary, at the time we determine the cash surrender value payable to you. We deduct the charge proportionately from all subaccounts in which you are invested. If there is no contract value in those subaccounts, we will deduct the charge from your Fixed Interest Allocations starting with the guarantee interest periods nearest their maturity dates until the charge has been paid. TRANSFER CHARGE. We currently do not deduct any charges for transfers made during a contract year. We have the right, however, to assess up to $25 for each transfer after the twelfth transfer in a contract year. If such a charge is assessed, we would deduct the charge from the subaccounts and the 24 Fixed Interest Allocations from which each such transfer is made in proportion to the amount being transferred from each subaccount and Fixed Interest Allocation, unless you have chosen to have all charges deducted from a single subaccount. The charge will not apply to any transfers due to the election of dollar cost averaging, automatic rebalancing and transfers we make to and from any subaccount specially designated by the Company for such purpose. CHARGES DEDUCTED FROM THE SUBACCOUNTS MORTALITY AND EXPENSE RISK CHARGE. The mortality and expense risk charge is deducted each business day. The amount of the mortality and expense risk charge, on an annual basis, is equal to 0.75% of the assets you have in each subaccount. The charge is deducted on each business day at the rate of .002063% for each day since the previous business day. ASSET-BASED ADMINISTRATIVE CHARGE. The amount of the asset-based administrative charge, on an annual basis, is equal to 0.15% of the assets you have in each subaccount. The charge is deducted on each business day at the rate of .000411% for each day since the previous business day. This charge is deducted daily from your assets in each subaccount. TRUST EXPENSES There are fees and charges deducted from each investment portfolio of the Trusts. Please read the respective Trust prospectus for details. [Shaded Section Header] - -------------------------------------------------------------------------- THE ANNUITY OPTIONS - -------------------------------------------------------------------------- ANNUITIZATION OF YOUR CONTRACT If the annuitant and contract owner are living on the annuity start date, we will begin making payments to the contract owner under an income plan. We will make these payments under the annuity option chosen. You may change annuity option by making a written request to us at least 30 days before the annuity start date. The amount of the payments will be determined by applying your contract value adjusted for any applicable Market Value Adjustment on the annuity start date in accordance with the annuity option you chose. You may also elect an annuity option on surrender of the Contract for its cash surrender value or you may choose one or more annuity options for the payment of death benefit proceeds while it is in effect and before the annuity start date. If, at the time of the contract owner's death or the annuitant's death (if the contract owner is not an individual), no option has been chosen for paying death benefit proceeds, the beneficiary may choose an annuity option within 60 days. In all events, payments of death benefit proceeds must comply with the distribution requirements of applicable federal tax law. The minimum monthly annuity income payment that we will make is $20. We may require that a single sum payment be made if the contract value is less than $2,000 or if the calculated monthly annuity income payment is less than $20. For each annuity option we will issue a separate written agreement putting the annuity option into effect. Before we pay any annuity benefits, we require the return of your Contract. If your Contract has been lost, we will require that you complete and return the applicable lost Contract form. Various factors will affect the level of annuity benefits, such as the annuity option chosen, the applicable payment rate used and the investment performance of the portfolios and interest credited to the Fixed Interest Allocations. Our current annuity options provide only for fixed payments. Fixed annuity payments are regular payments, the amount of which is fixed and guaranteed by us. Some fixed annuity options provide fixed payments either for a specified period of time or for the life of the annuitant. The amount of life income payments will depend on the form and duration of payments you chose, the age of the annuitant or beneficiary (and gender, where appropriate) under applicable law, the total contract value applied to purchase a Fixed Interest Allocation, and the applicable payment rate. 25 Our approval is needed for any option where: (1) The person named to receive payment is other than the contract owner or beneficiary; (2) The person named is not a natural person, such as a corporation; or (3) Any income payment would be less than the minimum annuity income payment allowed. SELECTING THE ANNUITY START DATE You select the annuity start date, which is the date on which the annuity payments commence. The annuity start date must be at least 5 years from the contract date but before the month immediately following the annuitant's 90th birthday, or 10 years from the contract date, if later. If, on the annuity start date, a surrender charge remains, the elected annuity option must include a period certain of at least 5 years. If you do not select an annuity start date, it will automatically begin in the month following the annuitant's 90th birthday, or 10 years from the contract date, if later. If the annuity start date occurs when the annuitant is at an advanced age, such as over age 85, it is possible that the Contract will not be considered an annuity for federal tax purposes. See "Federal Tax Considerations" and the Statement of Additional Information. For a Contract purchased in connection with a qualified plan, other than a Roth IRA, distributions must commence not later than April 1st of the calendar year following the calendar year in which you attain age 701/2 or, in some cases, retire. Distributions may be made through annuitization or withdrawals. You should consult your tax adviser for tax advice. FREQUENCY OF ANNUITY PAYMENTS You choose the frequency of the annuity payments. They may be monthly, quarterly, semi-annually or annually. If we do not receive written notice from you, we will make the payments monthly. There may be certain restrictions on minimum payments that we will allow. THE ANNUITY OPTIONS We offer the 4 annuity options shown below. Payments under Options 1, 2 and 3 are fixed. Payments under Option 4 may be fixed or variable. For a fixed annuity option, the contract value in the subaccounts is transferred to the Company's general account. OPTION 1. INCOME FOR A FIXED PERIOD. Under this option, we make monthly payments in equal installments for a fixed number of years based on the contract value on the annuity start date. We guarantee that each monthly payment will be at least the amount stated in your Contract. If you prefer, you may request that payments be made in annual, semi-annual or quarterly installments. We will provide you with illustrations if you ask for them. If the cash surrender value or contract value is applied under this option, a 10% penalty tax may apply to the taxable portion of each income payment until the contract owner reaches age 591/2. OPTION 2. INCOME FOR LIFE WITH A PERIOD CERTAIN. Payment is made for the life of the annuitant in equal monthly installments and guaranteed for at least a period certain such as 10 or 20 years. Other periods certain may be available to you on request. You may choose a refund period instead. Under this arrangement, income is guaranteed until payments equal the amount applied. If the person named lives beyond the guaranteed period, payments continue until his or her death. We guarantee that each payment will be at least the amount specified in the Contract corresponding to the person's age on his or her last birthday before the annuity start date. Amounts for ages not shown in the Contract are available if you ask for them. OPTION 3. JOINT LIFE INCOME. This option is available when there are 2 persons named to determine annuity payments. At least one of the persons named must be either the contract owner or beneficiary of the Contract. We guarantee monthly payments will be made as long as at least one of the named persons is living. There is no minimum number of payments. Monthly payment amounts are available if you ask for them. 26 OPTION 4. ANNUITY PLAN. The contract value can be applied to any other annuitization plan that we choose to offer on the annuity start date. Annuity payments under Option 4 may be fixed and variable. If variable and subject to the Investment Company Act of 1940, it will comply with the requirements of such Act. PAYMENT WHEN NAMED PERSON DIES When the person named to receive payment dies, we will pay any amounts still due as provided in the annuity agreement between you and Golden American. The amounts we will pay are determined as follows: (1) For Option 1, or any remaining guaranteed payments under Option 2, we will continue payments. Under Options 1 and 2, the discounted values of the remaining guaranteed payments may be paid in a single sum. This means we deduct the amount of the interest each remaining guaranteed payment would have earned had it not been paid out early. The discount interest rate is never less than 3% for Option 1 and Option 2 per year. We will, however, base the discount interest rate on the interest rate used to calculate the payments for Options 1 and 2 if such payments were not based on the tables in the Contract. (2) For Option 3, no amounts are payable after both named persons have died. (3) For Option 4, the annuity option agreement will state the amount we will pay, if any. [Shaded Section Header] - -------------------------------------------------------------------------- OTHER CONTRACT PROVISIONS - -------------------------------------------------------------------------- REPORTS TO CONTRACT OWNERS We will send you a quarterly report within 31 days after the end of each calendar quarter. The report will show the contract value, cash surrender value, and the death benefit as of the end of the calendar quarter. The report will also show the allocation of your contract value and reflects the amounts deducted from or added to the contract value since the last report. You have 30 days to notify our Customer Service Center of any errors or discrepancies contained in the report or in any confirmation notices. We will also send you copies of any shareholder reports of the investment portfolios in which Account B invests, as well as any other reports, notices or documents we are required by law to furnish to you. SUSPENSION OF PAYMENTS The Company reserves the right to suspend or postpone the date of any payment or determination of values on any business day (1) when the New York Stock Exchange is closed; (2) when trading on the New York Stock Exchange is restricted; (3) when an emergency exists as determined by the Securities and Exchange Commission so that the sale of securities held in Account B may not reasonably occur or so that the Company may not reasonably determine the value of Account B's net assets; or (4) during any other period when the SEC so permits for the protection of security holders. We have the right to delay payment of amounts from a Fixed Interest Allocation for up to 6 months. IN CASE OF ERRORS IN YOUR APPLICATION If an age or sex given in the application or enrollment form is misstated, the amounts payable or benefits provided by the Contract shall be those that the premium payment would have bought at the correct age or sex. ASSIGNING THE CONTRACT AS COLLATERAL You may assign a non-qualified Contract as collateral security for a loan but you should understand that your rights and any beneficiary's rights may be subject to the terms of the assignment. An assignment may have federal tax consequences. You must give us satisfactory written notice at our Customer Service Center in order to make or release an assignment. We are not responsible for the validity of any assignment. 27 CONTRACT CHANGES--APPLICABLE TAX LAW We have the right to make changes in the Contract to continue to qualify the Contract as an annuity under applicable federal tax law. You will be given advance notice of such changes. FREE LOOK You may cancel your Contract within your 10-day free look period. We deem the free look period to expire 15 days after we mail the Contract to you. Some states may require a longer free look period. To cancel, you need to send your Contract to our Customer Service Center or to the agent from whom you purchased it. We will refund the contract value. For purposes of the refund during the free look period, (i) we adjust your contract value for any market value adjustment (if you have invested in the fixed account), and (ii) then we include a refund of any charges deducted from your contract value. Because of the market risks associated with investing in the portfolios, the contract value returned may be greater or less than the premium payment you paid. Some states require us to return to you the amount of the paid premium (rather than the contract value) in which case you will not be subject to investment risk during the free look period. In these states, your premiums designated for investment in the subaccounts will be allocated during the free look period to a subaccount specially designated by the Company for this purpose (currently, the Liquid Asset subaccount). We may, in our discretion, require that premiums designated for investment in the subaccounts from all other states as well as premiums designated for a Fixed Interest Allocation be allocated to the specially designated subaccount during the free look period. Your Contract is void as of the day we receive your Contract and cancellation request. We determine your contract value at the close of business on the day we receive your written request. If you keep your Contract after the free look period, we will put your money in the subaccount(s) chosen by you, based on the accumulation unit value next computed for each subaccount, and/or in the Fixed Interest Allocation chosen by you. GROUP OR SPONSORED ARRANGEMENTS For certain group or sponsored arrangements, we may reduce any surrender, administration, and mortality and expense risk charges. We may also change the minimum initial and additional premium requirements, or offer an alternative or reduced death benefit. SELLING THE CONTRACT Directed Services, Inc. is the principal underwriter and distributor of the Contract as well as for other contracts issued through Account B and other separate accounts of Golden American. We pay Directed Services for acting as principal underwriter under a distribution agreement which in turn pays the writing agent. The principal address of Directed Services is 1475 Dunwoody Drive, West Chester, Pennsylvania 19380-1478. Directed Services enters into sales agreements with broker-dealers to sell the Contracts through registered representatives who are licensed to sell securities and variable insurance products. These broker-dealers are registered with the SEC and are members of the National Association of Securities Dealers, Inc. Directed Services receives a maximum of 6.5% commission, and passes through 100% of the commission to the broker-dealer whose registered representative sold the contract: 28 [Shaded Table Header] ----------------------------------------------------------- | UNDERWRITER COMPENSATION | ----------------------------------------------------------- | NAME OF | AMOUNT OF | OTHER | | PRINCIPAL | COMMISSION TO BE | COMPENSATION | | UNDERWRITER | PAID | Reimbursement of | | | Maximum of 6.5% | any | | Directed | of any initial | covered expenses | | Services, Inc. | or additional | incurred | | | premium payments | by registered | | | except when | representatives | | | combined | in | | | with some annual | connection with | | | trail | the distribution | | | commissions. | of the | | | | Contracts. | ----------------------------------------------------------- Certain sales agreements may provide for a combination of a certain percentage of commission at the time of sale and an annual trail commission (which when combined could exceed 6.5% of total premium payments). [Shaded Section Header] - -------------------------------------------------------------------------- OTHER INFORMATION - -------------------------------------------------------------------------- VOTING RIGHTS We will vote the shares of a Trust owned by Account B according to your instructions. However, if the Investment Company Act of 1940 or any related regulations should change, or if interpretations of it or related regulations should change, and we decide that we are permitted to vote the shares of a Trust in our own right, we may decide to do so. We determine the number of shares that you have in a subaccount by dividing the Contract's contract value in that subaccount by the net asset value of one share of the portfolio in which a subaccount invests. We count fractional votes. We will determine the number of shares you can instruct us to vote 180 days or less before a Trust's meeting. We will ask you for voting instructions by mail at least 10 days before the meeting. If we do not receive your instructions in time, we will vote the shares in the same proportion as the instructions received from all contracts in that subaccount. We will also vote shares we hold in Account B which are not attributable to contract owners in the same proportion. STATE REGULATION We are regulated by the Insurance Department of the State of Delaware. We are also subject to the insurance laws and regulations of all jurisdictions where we do business. The variable Contract offered by this prospectus has been approved where required by those jurisdictions. We are required to submit annual statements of our operations, including financial statements, to the Insurance Departments of the various jurisdictions in which we do business to determine solvency and compliance with state insurance laws and regulations. LEGAL PROCEEDINGS The Company, like other insurance companies, may be involved in lawsuits, including class action lawsuits. In some class action and other lawsuits involving insurers, substantial damages have been sought and/or material settlement payments have been made. We believe that currently there are no pending or threatened lawsuits that are reasonably likely to have a materially adverse impact on the Company or Account B. LEGAL MATTERS The legal validity of the Contracts was passed on by Myles R. Tashman, Esquire, Executive Vice President, General Counsel and Secretary of Golden American. Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on certain matters relating to federal securities laws. 29 EXPERTS The audited financial statements of Golden American Life Insurance Company and Account B appearing or incorporated by reference in the Statement of Additional Information and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their reports thereon appearing or incorporated by reference in the Statement of Additional Information and in the Registration Statement and are included or incorporated by reference in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. [Shaded Section Header] - -------------------------------------------------------------------------- FEDERAL TAX CONSIDERATIONS - -------------------------------------------------------------------------- The following summary provides a general description of the federal income tax considerations associated with this Contract and does not purport to be complete or to cover all tax situations. This discussion is not intended as tax advice. You should consult your counsel or other competent tax advisers for more complete information. This discussion is based upon our understanding of the present federal income tax laws. We do not make any representations as to the likelihood of continuation of the present federal income tax laws or as to how they may be interpreted by the IRS. TYPES OF CONTRACTS: NON-QUALIFIED OR QUALIFIED The Contract may be purchased on a non-tax-qualified basis or purchased on a tax-qualified basis. Qualified Contracts are designed for use by individuals whose premium payments are comprised solely of proceeds from and/or contributions under retirement plans that are intended to qualify as plans entitled to special income tax treatment under Sections 401(a), 403(b), 408, or 408A of the Code. The ultimate effect of federal income taxes on the amounts held under a Contract, or annuity payments, depends on the type of retirement plan, on the tax and employment status of the individual concerned, and on our tax status. In addition, certain requirements must be satisfied in purchasing a qualified Contract with proceeds from a tax-qualified plan and receiving distributions from a qualified Contract in order to continue receiving favorable tax treatment. Some retirement plans are subject to distribution and other requirements that are not incorporated into our Contract administration procedures. Contract owners, participants and beneficiaries are responsible for determining that contributions, distributions and other transactions with respect to the Contract comply with applicable law. Therefore, you should seek competent legal and tax advice regarding the suitability of a Contract for your particular situation. The following discussion assumes that qualified Contracts are purchased with proceeds from and/or contributions under retirement plans that qualify for the intended special federal income tax treatment. Tax Status of the Contracts DIVERSIFICATION REQUIREMENTS. The Code requires that the investments of a variable account be "adequately diversified" in order for nonqualified Contracts to be treated as annuity contracts for federal income tax purposes. It is intended that Account B, through the subaccounts, will satisfy these diversification requirements. In certain circumstances, owners of variable annuity contracts have been considered for federal income tax purposes to be the owners of the assets of the separate account supporting their contracts due to their ability to exercise investment control over those assets. When this is the case, the contract owners have been currently taxed on income and gains attributable to the separate account assets. There is little guidance in this area, and some features of the Contracts, such as the flexibility of a contract owner to allocate premium payments and transfer contract values, have not been explicitly addressed in published rulings. While we believe that the Contracts do not give contract owners investment control over Account B assets, we reserve the right to modify the Contracts as necessary to prevent a contract owner from being treated as the owner of the Account B assets supporting the Contract. REQUIRED DISTRIBUTIONS. In order to be treated as an annuity contract for federal income tax purposes, the Code requires any non-qualified Contract to contain certain provisions specifying how your interest in the Contract will be distributed in the event of your death. The non-qualified Contracts contain provisions that are intended to comply with these Code requirements, although no regulations interpreting these requirements have yet been issued. We intend to review such provisions and modify them if necessary to assure that they comply with the applicable requirements when such requirements are clarified by regulation or otherwise. 30 Other rules may apply to Qualified Contracts. The following discussion assumes that the Contracts will qualify as annuity contracts for federal income tax purposes. TAX TREATMENT OF ANNUITIES IN GENERAL. We believe that if you are a natural person you will generally not be taxed on increases in the value of a Contract until a distribution occurs or until annuity payments begin. (For these purposes, the agreement to assign or pledge any portion of the contract value, and, in the case of a qualified Contract, any portion of an interest in the qualified plan, generally will be treated as a distribution.) Taxation of Non-Qualified Contracts NON-NATURAL PERSON. The owner of any annuity contract who is not a natural person generally must include in income any increase in the excess of the contract value over the "investment in the contract" (generally, the premiums or other consideration you paid for the contract less any nontaxable withdrawals) during the taxable year. There are some exceptions to this rule and a prospective contract owner that is not a natural person may wish to discuss these with a tax adviser. The following discussion generally applies to Contracts owned by natural persons. WITHDRAWALS. When a withdrawal from a non-qualified Contract occurs, the amount received will be treated as ordinary income subject to tax up to an amount equal to the excess (if any) of the contract value (unreduced by the amount of any surrender charge) immediately before the distribution over the contract owner's investment in the Contract at that time. The tax treatment of market value adjustments is uncertain. You should consult a tax adviser if you are considering taking a withdrawal from your Contract in circumstances where a market value adjustment would apply. In the case of a surrender under a non-qualified Contract, the amount received generally will be taxable only to the extent it exceeds the contract owner's investment in the Contract. PENALTY TAX ON CERTAIN WITHDRAWALS. In the case of a distribution from a non-qualified Contract, there may be imposed a federal tax penalty equal to 10% of the amount treated as income. In general, however, there is no penalty on distributions: o made on or after the taxpayer reaches age 591/2; o made on or after the death of a contract owner; o attributable to the taxpayer's becoming disabled; or o made as part of a series of substantially equal periodic payments for the life (or life expectancy) of the taxpayer. Other exceptions may be applicable under certain circumstances and special rules may be applicable in connection with the exceptions enumerated above. A tax adviser should be consulted with regard to exceptions from the penalty tax. ANNUITY PAYMENTS. Although tax consequences may vary depending on the payment option elected under an annuity contract, a portion of each annuity payment is generally not taxed and the remainder is taxed as ordinary income. The non-taxable portion of an annuity payment is generally determined in a manner that is designed to allow you to recover your investment in the Contract ratably on a tax-free basis over the expected stream of annuity payments, as determined when annuity payments start. Once your investment in the Contract has been fully recovered, however, the full amount of each annuity payment is subject to tax as ordinary income. TAXATION OF DEATH BENEFIT PROCEEDS. Amounts may be distributed from a Contract because of your death or the death of the annuitant. Generally, such amounts are includible in the income of recipient as follows: (i) if distributed in a lump sum, they are taxed in the same manner as a surrender of the Contract, or (ii) if distributed under a payment option, they are taxed in the same way as annuity payments. 31 TRANSFERS, ASSIGNMENTS, EXCHANGES AND ANNUITY DATES OF A CONTRACT. A transfer or assignment of ownership of a Contract, the designation of an annuitant, the selection of certain dates for commencement of the annuity phase, or the exchange of a Contract may result in certain tax consequences to you that are not discussed herein. A contract owner contemplating any such transfer, assignment or exchange, should consult a tax advisor as to the tax consequences. WITHHOLDING. Annuity distributions are generally subject to withholding for the recipient's federal income tax liability. Recipients can generally elect, however, not to have tax withheld from distributions. MULTIPLE CONTRACTS. All non-qualified deferred annuity contracts that are issued by us (or our affiliates) to the same contract owner during any calendar year are treated as one annuity contract for purposes of determining the amount includible in such contract owner's income when a taxable distribution occurs. TAXATION OF QUALIFIED CONTRACTS The Contracts are designed for use with several types of qualified plans. The tax rules applicable to participants in these qualified plans vary according to the type of plan and the terms and contributions of the plan itself. Special favorable tax treatment may be available for certain types of contributions and distributions. Adverse tax consequences may result from: contributions in excess of specified limits; distributions before age 59 1/2 (subject to certain exceptions); distributions that do not conform to specified commencement and minimum distribution rules; and in other specified circumstances. Therefore, no attempt is made to provide more than general information about the use of the Contracts with the various types of qualified retirement plans. Contract owners, annuitants, and beneficiaries are cautioned that the rights of any person to any benefits under these qualified retirement plans may be subject to the terms and conditions of the plans themselves, regardless of the terms and conditions of the Contract, but we shall not be bound by the terms and conditions of such plans to the extent such terms contradict the Contract, unless the Company consents. DISTRIBUTIONS. Annuity payments are generally taxed in the same manner as under a non-qualified Contract. When a withdrawal from a qualified Contract occurs, a pro rata portion of the amount received is taxable, generally based on the ratio of the contract owner's investment in the Contract (generally, the premiums or other consideration paid for the Contract) to the participant's total accrued benefit balance under the retirement plan. For qualified Contracts, the investment in the Contract can be zero. For Roth IRAs, distributions are generally not taxed, except as described below. For qualified plans under Section 401(a) and 403(b), the Code requires that distributions generally must commence no later than the later of April 1 of the calendar year following the calendar year in which the contract owner (or plan participant) (i) reaches age 701/2 or (ii) retires, and must be made in a specified form or manner. If the plan participant is a "5 percent owner" (as defined in the Code), distributions generally must begin no later than April 1 of the calendar year following the calendar year in which the contract owner (or plan participant) reaches age 701/2. For IRAs described in Section 408, distributions generally must commence no later than April 1 of the calendar year following the calendar year in which the contract owner (or plan participant) reaches age 701/2. Roth IRAs under Section 408A do not require distributions at any time before the contract owner's death. WITHHOLDING. Distributions from certain qualified plans generally are subject to withholding for the contract owner's federal income tax liability. The withholding rates vary according to the type of distribution and the contract owner's tax status. The contract owner may be provided the opportunity to elect not to have tax withheld from distributions. "Eligible rollover distributions" from section 401(a) plans and section 403(b) tax-sheltered annuities are subject to a mandatory federal income tax withholding of 20%. An eligible rollover distribution is the taxable portion of any distribution from such a plan, except certain distributions that are required by the Code or distributions in a specified annuity form. The 20% withholding does not apply, however, if the contract owner chooses a "direct rollover" from the plan to another tax-qualified plan or IRA. Brief descriptions of the various types of qualified retirement plans in connection with a Contract follow. We will endorse the Contract as necessary to conform it to the requirements of such plan. 32 REQUIRED DISTRIBUTIONS UPON CONTRACT OWNER'S DEATH We will not allow any payment of benefits provided under a non-qualified Contract which do not satisfy the requirements of Section 72(s) of the Code. If any owner of a non-qualified Contract dies before the annuity start date, the death benefit payable to the beneficiary will be distributed as follows: (a) the death benefit must be completely distributed within 5 years of the contract owner's date of death; or (b) the beneficiary may elect, within the 1-year period after the contract owner's date of death, to receive the death benefit in the form of an annuity from us, provided that (i) such annuity is distributed in substantially equal installments over the life of such beneficiary or over a period not extending beyond the life expectancy of such beneficiary; and (ii) such distributions begin not later than 1 year after the contract owner's date of death. Notwithstanding (a) and (b) above, if the sole contract owner's beneficiary is the deceased owner's surviving spouse, then such spouse may elect to continue the Contract under the same terms as before the contract owner's death. Upon receipt of such election from the spouse at our Customer Service Center: (1) all rights of the spouse as contract owner's beneficiary under the Contract in effect prior to such election will cease; (2) the spouse will become the owner of the Contract and will also be treated as the contingent annuitant, if none has been named and only if the deceased owner was the annuitant; and (3) all rights and privileges granted by the Contract or allowed by Golden American will belong to the spouse as contract owner of the Contract. This election will be deemed to have been made by the spouse if such spouse makes a premium payment to the Contract or fails to make a timely election as described in this paragraph. If the owner's beneficiary is a nonspouse, the distribution provisions described in subparagraphs (a) and (b) above, will apply even if the annuitant and/or contingent annuitant are alive at the time of the contract owner's death. If we do not receive an election from a nonspouse owner's beneficiary within the 1-year period after the contract owner's date of death, then we will pay the death benefit to the owner's beneficiary in a cash payment within five years from date of death. We will determine the death benefit as of the date we receive proof of death. We will make payment of the proceeds on or before the end of the 5-year period starting on the owner's date of death. Such cash payment will be in full settlement of all our liability under the Contract. If the contract owner dies after the annuity start date, we will continue to distribute any benefit payable at least as rapidly as under the annuity option then in effect. All of the contract owner's rights granted under the Contract or allowed by us will pass to the contract owner's beneficiary. If the Contract has joint owners we will consider the date of death of the first joint owner as the death of the contract owner and the surviving joint owner will become the contract owner of the Contract. CORPORATE AND SELF-EMPLOYED PENSION AND PROFIT SHARING PLANS Section 401(a) of the Code permits corporate employers to establish various types of retirement plans for employees, and permits self-employed individuals to establish these plans for themselves and their employees. These retirement plans may permit the purchase of the Contracts to accumulate retirement savings under the plans. Adverse tax or other legal consequences to the plan, to the participant, or to both may result if this Contract is assigned or transferred to any individual as a means to provide benefit payments, unless the plan complies with all legal requirements applicable to such benefits before transfer of the Contract. Employers intending to use the Contract with such plans should seek competent advice. INDIVIDUAL RETIREMENT ANNUITIES Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an "Individual Retirement Annuity" or "IRA." These IRAs are subject to limits on the amount that can be contributed, the deductible amount of the contribution, the persons who may be eligible, and the time when distributions commence. Also, distributions from certain other types of qualified retirement plans may be "rolled over" or transferred on a tax-deferred basis into an IRA. There are significant restrictions on rollover or transfer contributions from Savings Incentive Match Plans (SIMPLE), under 33 which certain employers may provide contributions to IRAs on behalf of their employees, subject to special restrictions. Employers may establish Simplified Employee Pension (SEP) Plans to provide IRA contributions on behalf of their employees. Sales of the Contract for use with IRAs may be subject to special requirements of the IRS. ROTH IRAS Section 408A of the Code permits certain eligible individuals to contribute to a Roth IRA. Contributions to a Roth IRA, which are subject to certain limitations, are not deductible, and must be made in cash or as a rollover or transfer from another Roth IRA or other IRA. A rollover from or conversion of an IRA to a Roth IRA may be subject to tax, and other special rules may apply. Distributions from a Roth IRA generally are not taxed, except that, once aggregate distributions exceed contributions to the Roth IRA, income tax and a 10% penalty tax may apply to distributions made (1) before age 591/2 (subject to certain exceptions) or (2) during the five taxable years starting with the year in which the first contribution is made to any Roth IRA. TAX SHELTERED ANNUITIES Section 403(b) of the Code allows employees of certain Section 501(c)(3) organizations and public schools to exclude from their gross income the premium payments made, within certain limits, on a Contract that will provide an annuity for the employee's retirement. These premium payments may be subject to FICA (social security) tax. Distributions of (1) salary reduction contributions made in years beginning after December 31, 1988; (2) earnings on those contributions; and (3) earnings on amounts held as of the last year beginning before January 1, 1989, are not allowed prior to age 591/2, separation from service, death or disability. Salary reduction contributions may also be distributed upon hardship, but would generally be subject to penalties. OTHER TAX CONSEQUENCES As noted above, the foregoing comments about the federal tax consequences under the Contracts are not exhaustive, and special rules are provided with respect to other tax situations not discussed in this prospectus. Further, the federal income tax consequences discussed herein reflect our understanding of current law, and the law may change. Federal estate and state and local estate, inheritance and other tax consequences of ownership or receipt of distributions under a Contract depend on the individual circumstances of each contract owner or recipient of the distribution. A competent tax adviser should be consulted for further information. POSSIBLE CHANGES IN TAXATION Although the likelihood of legislative change is uncertain, there is always the possibility that the tax treatment of the Contracts could change by legislation or other means. It is also possible that any change could be retroactive (that is, effective before the date of the change). A tax adviser should be consulted with respect to legislative developments and their effect on the Contract. 34 [Shaded Section Header] - -------------------------------------------------------------------------- MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY - -------------------------------------------------------------------------- SELECTED FINANCIAL DATA The following selected financial data prepared in accordance with generally accepted accounting principles ("GAAP") for Golden American should be read in conjunction with the financial statements and notes thereto included in this prospectus. On October 24, 1997, PFHI Holdings, Inc. ("PFHI"), a Delaware corporation, acquired all of the outstanding capital stock of Equitable of Iowa Companies ("Equitable of Iowa"), according to a merger agreement among Equitable of Iowa, PFHI, and ING Groep N.V. (the "ING acquisition"). On August 13, 1996, Equitable of Iowa acquired all of the outstanding capital stock of BT Variable, Inc., then the parent of Golden American (the "Equitable acquisition"). For financial statement purposes, the ING acquisition was accounted for as a purchase effective October 25, 1997 and the Equitable acquisition was accounted for as a purchase effective August 14, 1996. As a result, the financial data presented below for periods after October 24, 1997, are presented on the Post-Merger new basis of accounting, for the period August 14, 1996 through October 24, 1997, are presented on the Post- Acquisition basis of accounting, and for August 13, 1996 and prior periods are presented on the Pre-Acquisition basis of accounting. SELECTED GAAP BASIS FINANCIAL DATA (IN THOUSANDS) Post-Merger | Post-Acquisition --------------------------------------------|--------------------------------- For the Period For For the Period | For the Period For the Period January 1, 1999 the Year October 25, | January 1, August 14, 1996 through Ended 1997 through | 1997 through 1996 through September 30, December 31, December 31, | October 24, December 31, 1999 1998 1997 | 1997 1996 ------------ ------------ -------------- | -------------- --------------- | Annuity and Interest | Sensitive Life | Product Charges....... $ 55,195 $ 39,119 $ 3,834 | $18,288 $ 8,768 Net Income before | Federal Income Tax.... $ 7,269 $ 10,353 $ (279) | $ (608) $ 570 Net Income (Loss)....... $ 3,551 $ 5,074 $ (425) | $ 729 $ 350 Total Assets............ $7,312,027 $4,752,533 $2,446,395 | N/A $1,677,899 Total Liabilities....... $6,858,151 $4,398,639 $2,219,082 | N/A $1,537,415 Total Stockholder's | Equity................ $ 453,876 $ 353,894 $ 227,313 | N/A $ 140,484
(IN THOUSANDS) Pre-Acquisition --------------------------------------- For the Period January 1, For the Years 1996 through Ended December 31, August 13, ---------------------- 1996 1995 1994 -------------- ---------- ---------- Annuity and Interest Sensitive Life Product Charges....... $12,259 $ 18,388 $ 17,519 Net Income before Federal Income Tax.... $ 1,736 $ 3,364 $ 2,222 Net Income (Loss)....... $ 3,199 $ 3,364 $ 2,222 Total Assets............ N/A $1,203,057 $1,044,760 Total Liabilities....... N/A $1,104,932 $ 955,254 Total Stockholder's Equity................ N/A $ 98,125 $ 89,506
35 BUSINESS ENVIRONMENT The current business and regulatory environment remains challenging for the insurance industry. The variable annuity competitive environment is intense and is dominated by a number of large variable product companies with strong distribution, name recognition and wholesaling capabilities. Increasing competition from traditional insurance carriers as well as banks and mutual fund companies offer consumers many choices. However, overall demand for variable products remains strong for several reasons including: strong stock market performance over the last five years; relatively low interest rates; an aging U. S. population that is increasingly concerned about retirement and estate planning, as well as maintaining their standard of living in retirement; and potential reductions in government and employer- provided benefits at retirement as well as lower public confidence in the adequacy of those benefits. In October of 1997, Golden American introduced three new variable annuity products (GoldenSelect Access, GoldenSelect ES II and GoldenSelect Premium Plus) which have contributed significantly to sales. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS The purpose of this section is to discuss and analyze Golden American Life Insurance Company's ("Golden American") consolidated results of operations. In addition, some analysis and information regarding financial condition and liquidity and capital resources has also been provided. This analysis should be read jointly with the consolidated financial statements, related notes and the Cautionary Statement Regarding Forward-Looking Statements, which appear elsewhere in the financial report. Golden American reports financial results on a consolidated basis. The consolidated financial statements include the accounts of Golden American and its wholly owned subsidiary, First Golden American Life Insurance Company of New York ("First Golden," and collectively with Golden American, the "Companies"). RESULTS OF OPERATIONS MERGER. On October 23, 1997, Equitable of Iowa Companies' ("Equitable") shareholders approved an Agreement and Plan of Merger ("Merger Agreement") dated July 7, 1997 among Equitable, PFHI Holdings, Inc. ("PFHI") and ING Groep N.V. ("ING"). On October 24, 1997, PFHI, a Delaware corporation, acquired all of the outstanding capital stock of Equitable according to the Merger Agreement. PFHI is a wholly owned subsidiary of ING, a global financial services holding company based in The Netherlands. Equitable, an Iowa corporation, in turn owned all the outstanding capital stock of Equitable Life Insurance Company of Iowa ("Equitable Life") and Golden American and their wholly owned subsidiaries. In addition, Equitable owned all the outstanding capital stock of Locust Street Securities, Inc., Equitable Investment Services, Inc. (subsequently dissolved), Directed Services, Inc. ("DSI"), Equitable of Iowa Companies Capital Trust, Equitable of Iowa Companies Capital Trust II and Equitable of Iowa Securities Network, Inc. (subsequently renamed ING Funds Distributor, Inc.). In exchange for the outstanding capital stock of Equitable, ING paid total consideration of approximately $2.1 billion in cash and stock and assumed approximately $400 million in debt. As a result of this transaction, Equitable of Iowa Companies was merged into PFHI, which was simultaneously renamed Equitable of Iowa Companies, Inc. ("EIC" or "Parent"), a Delaware corporation. For financial statement purposes, the change in control of the Companies through the ING merger was accounted for as a purchase effective October 25, 1997. This merger resulted in a new basis of accounting reflecting estimated fair values of assets and liabilities at the merger date. As a result, the Companies' financial statements for periods after October 24, 1997 are presented on the Post-Merger new basis of accounting. The purchase price was allocated to EIC and its subsidiaries with $227.6 million allocated to the Companies. Goodwill of $1.4 billion was established for the excess of the merger cost over the fair value of the assets and liabilities of EIC with $151.1 million attributed to the Companies. Goodwill resulting from the merger is being amortized over 40 years on a straight-line basis. The carrying value will be reviewed periodically for any indication of impairment in value. 36 CHANGE IN CONTROL--ACQUISITION. On August 13, 1996, Equitable acquired all of the outstanding capital stock of BT Variable, Inc. ("BT Variable") and its wholly owned subsidiaries, Golden American and DSI. After the acquisition, the BT Variable, Inc. name was changed to EIC Variable, Inc. On April 30, 1997, EIC Variable, Inc. was liquidated and its investments in Golden American and DSI were transferred to Equitable, while the remainder of its net assets were contributed to Golden American. On December 30, 1997, EIC Variable, Inc. was dissolved. For financial statement purposes, the change in control of Golden American through the acquisition of BT Variable was accounted for as a purchase effective August 14, 1996. This acquisition resulted in a new basis of accounting reflecting estimated fair values of assets and liabilities at the acquisition date. As a result, the Companies' financial statements for the period August 14, 1996 through October 24, 1997 are presented on the Post-Acquisition basis of accounting and for August 13, 1996 and prior periods are presented on the Pre-Acquisition basis of accounting. The purchase price was allocated to the three companies purchased - - BT Variable, DSI, and Golden American. The allocation of the purchase price to Golden American was approximately $139.9 million. Goodwill of $41.1 million was established for the excess of the acquisition cost over the fair value of the assets and liabilities and attributed to Golden American. At June 30, 1997, goodwill was increased by $1.8 million due to the adjustment of the value of a receivable existing at the acquisition date. Before the ING merger, goodwill resulting from the acquisition was being amortized over 25 years on a straight-line basis. THE FIRST NINE MONTHS OF 1999 COMPARED TO THE SAME PERIOD OF 1998 PREMIUMS. PERCENTAGE DOLLAR NINE MONTHS ENDED SEPTEMBER 30 1999 CHANGE CHANGE 1998 ---- ---------- ------ ---- (Dollars in millions) Variable annuity premiums: Separate account................ $1,783.5 64.9% $702.1 $1,081.4 Fixed account................... 539.4 55.6 192.8 346.6 -------- ---- ------ -------- Total variable annuity premiums... 2,322.9 62.7 894.9 1,428.0 Variable life premiums............ 7.0 (38.9) (4.4) 11.4 -------- ---- ------ -------- Total premiums.................... $2,329.9 61.9% $890.5 $1,439.4 ======== ==== ====== ========
For the Companies' variable contracts, premiums collected are not reported as revenues, but as deposits to insurance liabilities. Revenues for these products are recognized over time in the form of investment income and product charges. Variable annuity separate account premiums increased 64.9% during the first nine months of 1999. The fixed account portion of the Companies' variable annuity premiums increased 55.6% during the first nine months of 1999. These increases resulted from increased sales of the Premium Plus variable annuity product. Premiums, net of reinsurance, for variable products from two significant broker/dealers each having at least ten percent of total sales for the nine months ended September 30, 1999 totaled $664.2 million, or 29% of total premiums ($142.6 million, or 10%, from the one significant broker/dealer for the nine months ended September 30, 1998). 37 REVENUES. PERCENTAGE DOLLAR NINE MONTHS ENDED JUNE 30 1999 CHANGE CHANGE 1998 ---- ---------- ------ ---- (Dollars in millions) Annuity and interest sensitive life product charges............ $ 55.2 104.5% $ 28.2 $ 27.0 Management fee revenue............ 6.8 107.4 3.5 3.3 Net investment income............. 42.7 45.7 13.4 29.3 Realized gains(losses) on investments..................... (2.2) (607.5) (2.6) 0.4 Other income...................... 7.4 55.0 2.6 4.8 ------- ------ ------ ------ Total premiums.................... $ 109.9 69.6% $ 45.1 $ 64.8 ======= ====== ====== ======
Total revenues increased 69.6% in the first nine months of 1999 from the same period in 1998. Annuity and interest sensitive life product charges increased 104.5% in the first nine months of 1999 due to additional fees earned from the increasing block of business in the separate accounts. Golden American provides certain managerial and supervisory services to Directed Services, Inc. ("DSI"). The fee paid to Golden American for these services, which is calculated as a percentage of average assets in the variable separate accounts, was $6.8 million and $3.3 million for the first nine months of 1999 and 1998, respectively. Net investment income increased 45.7% in the first nine months of 1999 due to growth in invested assets from September 30, 1998. The Companies had $2.2 million of realized losses resulting from the writedown of two fixed maturities in the second quarter of 1999 and from the sale of investments in the first nine months of 1999, compared to gains of $0.4 million in the same period of 1998. Other income increased $2.6 million to $7.4 million in the first nine months of 1999 due primarily to income received due to a modified coinsurance agreement with an unaffiliated reinsurer, which was offset by a reduction in the Companies' deferred policy acquisition costs. EXPENSES. Total insurance benefits and expenses increased $44.5 million, or 84.6%, to $97.0 million in the first nine months of 1999. Interest credited to account balances increased $61.3 million, or 95.6%, to $125.4 million in the first nine months of 1999. The extra credit bonus on the Premium Plus variable annuity product increased $49.9 million to $85.7 million at September 30, 1999 resulting in an increase in interest credited during the first nine months of 1999 compared to the same period in 1998. The bonus interest on the fixed account increased $2.6 million to $7.6 million at September 30, 1999 resulting in an increase in interest credited during the first nine months of 1999 compared to the same period in 1998. The remaining increase in interest credited relates to higher account balances associated with the Companies' fixed account option within the variable products. Commissions increased $49.6 million, or 58.4%, to $134.6 million in the first nine months of 1999. Insurance taxes, state licenses, and fees increased $0.9 million, or 32.3%, to $3.5 million in the first nine months of 1999. Changes in commissions and insurance taxes, state licenses, and fees are generally related to changes in the level and composition of variable product sales. Insurance taxes, state licenses, and fees are impacted by several other factors, which include an increase in FICA taxes primarily due to bonuses and expenses for the triennial insurance department examination of Golden American. Most costs incurred as the result of sales have been deferred, thus having very little impact on current earnings. General expenses increased $24.1 million, or 102.5%, to $47.6 million in the first nine months of 1999. Management expects general expenses to continue to increase in 1999 as a result of the emphasis on expanding the salaried wholesaler distribution network and the growth in sales. The Companies use a network of wholesalers to distribute products and the salaries and sales bonuses of these wholesalers are included in general expenses. The portion of these salaries and related expenses that varies directly with production levels is deferred thus having little impact on current earnings. The increase in general expenses was partially offset by reimbursements received from DSI and Equitable Life, an affiliate, for certain advisory, computer, and other resources and services provided by Golden American. 38 The Companies' previous balances of deferred policy acquisition costs ("DPAC"), value of purchased insurance in force ("VPIF"), and unearned revenue reserve were eliminated and an asset of $44.3 million representing VPIF was established for all policies in force at the merger date. During the first nine months of 1999, VPIF was adjusted to increase amortization by $0.7 million to reflect changes in the assumptions related to the timing of estimated gross profits. During the first nine months of 1998, VPIF decreased $2.7 million to adjust the value of other receivables and increased $0.2 million as a result of an adjustment to the merger costs. Amortization of DPAC increased $15.7 million, or 390.7%, in the first nine months of 1999. This increase resulted from growth in policy acquisition costs deferred from $133.6 million at September 30, 1998 to $244.8 million at September 30, 1999, which was generated by expenses associated with the large sales volume experienced since September 30, 1998. Based on current conditions and assumptions as to the impact of future events on acquired policies in force, the expected approximate net amortization relating to VPIF as of September 30, 1999 is $1.1 million for the remainder of 1999, $4.3 million in 2000, $4.0 million in 2001, $3.6 million in 2002, $3.2 million in 2003, and $2.4 million in 2004. Actual amortization may vary based upon changes in assumptions and experience. Amortization of goodwill during the first nine months of 1999 totaled $2.8 million, unchanged from the first nine months of 1998. Goodwill resulting from the merger is being amortized on a straight-line basis over 40 years. Interest expense on the $25 million surplus note issued in December 1996 and expiring December 2026 was $1.5 million in the first nine months of 1999, unchanged from the same period of 1998. Interest expense on the $60 million surplus note issued in December 1998 and expiring December 2028 was $3.3 million in the first nine months of 1999. Golden American also paid $0.7 million in the first nine months of 1999 compared to $1.3 million in the same period of 1998 to ING America Insurance Holdings, Inc. ("ING AIH") for interest on the reciprocal loan agreement. Interest expense on the revolving note payable with SunTrust Bank, Atlanta was $0.1 million for the first nine months of 1999. In addition, Golden American paid interest of $0.2 million during the first quarter of 1998 on the line of credit with Equitable, which was repaid with a capital contribution from the Parent and with funds borrowed from ING AIH. INCOME. Net income for the first nine months of 1999 was $3.6 million, a decrease of $1.3 million from net income of $4.9 million in the same period of 1998. Comprehensive loss for the first nine months of 1999 was $18,000, a decrease of $5.5 million from comprehensive income of $5.5 million in the same period of 1998. 1998 COMPARED TO 1997 The following analysis combines Post-Merger and Post-Acquisition activity for 1997. PREMIUMS. POST-MERGER COMBINED POST-MERGER | POST-ACQUISITION For the Period | For the Period For the Year For the Year October 25, 1997 | January 1, 1997 ended ended through | through December 31, 1998 December 31, 1997 December 31, 1997 | October 24, 1997 ----------------- ----------------- ----------------- | ---------------- (Dollars in millions) | | Variable annuity | premiums: | Separate account.... $1,513.3 $291.2 $111.0 | $180.2 Fixed account....... 588.7 318.0 60.9 | 257.1 -------- ------ ------ | ------ 2,102.0 609.2 171.9 | 437.3 Variable life | premiums............ 13.8 15.6 1.2 | 14.4 -------- ------ ------ | ------ Total premiums........ $2,115.8 $624.8 $173.1 | $451.7 ======== ====== ====== | ======
For the Companies' variable contracts, premiums collected are not reported as revenues, but are reported as deposits to insurance liabilities. Revenues for these products are recognized over time in the form of investment income and product charges. 39 Variable annuity separate account premiums increased 419.7% in 1998 primarily due to increased sales of the Premium Plus product introduced in October of 1997 and the increased sales levels of the Companies' other products. The fixed account portion of the Companies' variable annuity premiums increased 85.1% in 1998. Variable life premiums decreased 11.4% in 1998. Total premiums increased 238.7% in 1998. During 1998, the Companies' sales were further diversified among broker/dealers. Premiums, net of reinsurance, for variable products from two significant broker/dealers having at least ten percent of total sales for the year ended December 31, 1998 totaled $580.7 million, or 27% of premiums ($328.2 million, or 53% from two significant broker/dealers for the year ended December 31, 1997). REVENUES. POST-MERGER COMBINED POST-MERGER | POST-ACQUISITION For the Period | For the Period For the Year For the Year October 25, 1997 | January 1, 1997 ended ended through | through December 31, 1998 December 31, 1997 December 31, 1997 | October 24, 1997 ----------------- ----------------- ----------------- | ---------------- (Dollars in millions) | | Annuity and interest | sensitive life | product charges...... $39.1 $22.1 $3.8 | $18.3 Management fee | revenue.............. 4.8 2.8 0.5 | 2.3 Net investment | income............... 42.5 26.8 5.1 | 21.7 Realized gains (losses) | on investments....... (1.5) 0.1 -- | 0.1 Other income........... 5.6 0.7 0.3 | 0.4 ----- ----- ---- | ----- $90.5 $52.5 $9.7 | $42.8 ===== ===== ==== | =====
Total revenues increased 72.3%, or $38.0 million, to $90.5 million in 1998. Annuity and interest sensitive life product charges increased 76.8%, or $17.0 million, to $39.1 million in 1998 due to additional fees earned from the increasing block of business under management in the separate accounts and an increase in surrender charge revenues. This increase was partially offset by the elimination of the unearned revenue reserve related to in force acquired business at the merger date, which resulted in lower annuity and interest sensitive life product charges compared to Post-Acquisition levels. Golden American provides certain managerial and supervisory services to DSI. The fee paid to Golden American for these services, which is calculated as a percentage of average assets in the variable separate accounts, was $4.8 million for 1998 and $2.8 million for 1997. Net investment income increased 58.6%, or $15.7 million, to $42.5 million in 1998 from $26.8 million in 1997 due to growth in invested assets. During 1998, the Company had net realized losses on investments of $1.5 million, which included a $1.0 million write down of two impaired bonds, compared to gains of $0.1 million in 1997. Other income increased $4.9 million to $5.6 million in 1998 due primarily to income received under a modified coinsurance agreement with an unaffiliated reinsurer as a result of increased sales. 40 EXPENSES. POST-MERGER COMBINED POST-MERGER | POST-ACQUISITION For the Period | For the Period For the Year For the Year October 25, 1997 | January 1, 1997 ended ended through | through December 31, 1998 December 31, 1997 December 31, 1997 | October 24, 1997 ----------------- ----------------- ----------------- | ---------------- (Dollars in millions) | | Insurance benefits | and expenses: | Annuity and interest | sensitive life | benefits: | Interest credited to | account balances.. $94.9 $26.7 $7.4 | $19.3 Benefit claims | incurred in excess | of account | balances.......... 2.1 0.1 -- | 0.1 Underwriting, | acquisition, and | insurance expense: | Commission.......... 121.2 36.3 9.4 | 26.9 General Expenses.... 37.6 17.3 3.4 | 13.9 Insurance taxes..... 4.1 2.3 0.5 | 1.8 Policy acquisition | costs deferred (197.8) (42.7) (13.7) | (29.0) Amortization: | Deferred policy | acquisition | costs........... 5.1 2.6 0.9 | 1.7 Value of purchased | insurance in | force........... 4.7 6.1 0.9 | 5.2 Goodwill............ 3.8 2.0 0.6 | 1.4 ------ ----- ----- | ----- $ 75.7 $50.7 $ 9.4 | $41.3 ====== ===== ===== | =====
Total insurance benefits and expenses increased 49.2%, or $25.0 million, in 1998 from $50.7 million in 1997. Interest credited to account balances increased 255.4%, or $68.2 million, in 1998 from $26.7 in 1997. The extra credit bonus on the Premium Plus product introduced in October of 1997 generated a $51.6 million increase in interest credited during 1998 compared to 1997. The remaining increase in interest credited related to higher account balances associated with the Companies' fixed account option within its variable products. Commissions increased 234.2%, or $84.9 million, in 1998 from $36.3 million in 1997. Insurance taxes increased 77.0%, or $1.8 million, in 1998 from $2.3 million in 1997. Changes in commissions and insurance taxes are generally related to changes in the level of variable product sales. Insurance taxes are impacted by several other factors, which include an increase in FICA taxes primarily due to bonuses. Most costs incurred as the result of new sales including the extra credit bonus were deferred, thus having very little impact on current earnings. General expenses increased 117.7%, or $20.3 million, in 1998 from $17.3 million in 1997. Management expects general expenses to continue to increase in 1999 as a result of the emphasis on expanding the salaried wholesaler distribution network. The Companies use a network of wholesalers to distribute products and the salaries of these wholesalers are included in general expenses. The portion of these salaries and related expenses that varies with production levels is deferred thus having little impact on current earnings. The increase in general expenses was partially offset by reimbursements received from Equitable Life, an affiliate, for certain advisory, computer and other resources and services provided by Golden American. At the merger date, the Companies' deferred policy acquisition costs ("DPAC"), previous balance of value of purchased insurance in force ("VPIF") and unearned revenue reserve were eliminated and a new asset of $44.3 million representing VPIF was established for all policies in force at the merger date. During 1998, VPIF was adjusted to reduce amortization by $0.2 million to reflect changes in the assumptions related to the timing of future gross profits. VPIF decreased $2.6 million in the second quarter of 1998 to adjust the value of other receivables recorded at the time of merger and increased $0.2 million in the first quarter of 41 1998 as the result of an adjustment to the merger costs. The amortization of VPIF and DPAC increased $1.1 million, or 13.0%, in 1998. During the second quarter of 1997, VPIF was adjusted by $2.3 million to reflect narrower spreads than the gross profit model assumed. Amortization of goodwill for the year ended December 31, 1998 totaled $3.8 million compared to $2.0 million for the year ended December 31, 1997. Interest expense on the $25 million surplus note issued December 1996 and expiring December 2026 was $2.1 million for the year ended December 31, 1998, unchanged from the same period of 1997. In addition, Golden American incurred interest expense of $0.2 million in 1998 compared to $0.5 million in 1997 on the line of credit with Equitable which was repaid with a capital contribution. Golden American also paid $1.8 million in 1998 to ING America Insurance Holdings, Inc. ("ING AIH") for interest on the reciprocal loan agreement. Interest expense on the revolving note payable with SunTrust Bank, Atlanta was $0.3 million for the year ended December 31, 1998. INCOME. Net income for 1998 was $5.1 million, an increase of $4.8 million from $0.3 million in 1997. Comprehensive income for 1998 was $3.9 million, an increase of $1.8 million from $2.1 million in 1997. 1997 COMPARED TO 1996 The following analysis combines Post-Merger and Post-Acquisition activity for 1997 and Post-Acquisition and Pre-Acquisition activity for 1996 for comparison purposes. Such a comparison does not recognize the impact of the purchase accounting and goodwill amortization except for the periods after August 13, 1996. PREMIUMS. POST-MERGER | COMBINED | POST-ACQUISITION -------------------|-------------------|----------------- For the Period | | For the Period October 25, 1997 | For the Year | January 1, 1997 through | ended | through December 31, 1997 | December 31, 1997 | October 24, 1997 -------------------|-------------------|----------------- (Dollars in millions) | | Variable annuity | | premiums: | | Separate account............. $111.0 | $291.2 | $180.2 Fixed account................ 60.9 | 318.0 | 257.1 ------ | ------ | ------ 171.9 | 609.2 | 437.3 Variable life premiums......... 1.2 | 15.6 | 14.4 ------ | ------ | ------ Total premiums................. $173.1 | $624.8 | $451.7 ====== | ====== | ======
POST-ACQUISITION | COMBINED | PRE-ACQUISITION -------------------|-------------------|----------------- For the Period | | For the Period August 14, 1996 | For the Year | January 1, 1996 through | ended | through December 31, 1996 | December 31, 1996 | August 13, 1996 -------------------|-------------------|----------------- (Dollars in millions) | | Variable annuity | | premiums: | | Separate account............. $ 51.0 | $182.4 | $131.4 Fixed account................ 118.3 | 245.3 | 127.0 ------ | ------ | ------ 169.3 | 427.7 | 258.4 Variable life premiums......... 3.6 | 14.1 | 10.5 ------ | ------ | ------ Total premiums................. $172.9 | $441.8 | $268.9 ====== | ====== | ======
42 Variable annuity separate account and variable life premiums increased 59.6% and 10.1%, respectively in 1997. During 1997, stock market returns, a relatively low interest rate environment and flat yield curve have made returns provided by variable annuities and mutual funds more attractive than fixed rate products such as certificates of deposits and fixed annuities. The fixed account portion of the Companies' variable annuity premiums increased 29.7% in 1997 due to the Companies' marketing emphasis on fixed rates during the second and third quarters. Premiums, net of reinsurance, for variable products from two significant broker/dealers having at least ten percent of total sales for the year ended December 31, 1997, totaled $328.2 million, or 53% of premiums ($298.0 million or 67% from two significant broker/dealers for the year ended December 31, 1996). REVENUES. POST-MERGER | COMBINED | POST-ACQUISITION -------------------|-------------------|----------------- For the Period | | For the Period October 25, 1997 | For the Year | January 1, 1997 through | ended | through December 31, 1997 | December 31, 1997 | October 24, 1997 -------------------|-------------------|----------------- (Dollars in millions) | | Annuity and interest sensitive | | life product charges......... $3.8 | $22.1 | $18.3 Management fee revenue......... 0.5 | 2.8 | 2.3 Net investment income.......... 5.1 | 26.8 | 21.7 Realized gains (losses) on | | investments.................. -- | 0.1 | 0.1 Other Income................... 0.3 | 0.7 | 0.4 ---- | ----- | ----- $9.7 | $52.5 | $42.8 ==== | ===== | =====
POST-ACQUISITION | COMBINED | PRE-ACQUISITION -------------------|-------------------|----------------- For the Period | | For the Period August 14, 1996 | For the Year | January 1, 1996 through | ended | through December 31, 1996 | December 31, 1996 | August 13, 1996 -------------------|-------------------|----------------- (Dollars in millions) | | Annuity and interest sensitive | | life product charges......... $ 8.8 | $21.0 | $12.2 Management fee revenue......... 0.9 | 2.3 | 1.4 Net investment income.......... 5.8 | 10.8 | 5.0 Realized gains (losses) on | | investments.................. -- | (0.4) | (0.4) Other income 0.5 | 0.6 | 0.1 ----- | ----- | ----- $16.0 | $34.3 | $18.3 ===== | ===== | =====
Total revenues increased 53.3%, or $18.2 million, to $52.5 million in 1997. Annuity and interest sensitive life product charges increased 5.2%, or $1.1 million in 1997 due to additional fees earned from the increasing block of business under management in the Separate Accounts and an increase in the collection of surrender charges. Golden American provides certain managerial and supervisory services to DSI. This fee, calculated as a percentage of average assets in the variable separate accounts, was $2.8 million for 1997 and $2.3 million for 1996. Net investment income increased 148.3%, or $16.0 million, to $26.8 million in 1997 from $10.8 million in 1996 due to growth in invested assets. During 1997, the Company had net realized gains on the disposal of investments, which were the result of voluntary sales, of $0.1 million compared to net realized losses of $0.4 million in 1996. 43 EXPENSES. POST-MERGER | COMBINED | POST-ACQUISITION -------------------|-------------------|----------------- For the Period | | For the Period October 25, 1997 | For the Year | January 1, 1997 through | ended | through December 31, 1997 | December 31, 1997 | October 24, 1997 -------------------|-------------------|----------------- (Dollars in millions) | | Insurance benefits and | | expenses: | | Annuity and interest | | sensitive life benefits: | | Interest credited to account | | balances................... $ 7.4 | $ 26.7 | $ 19.3 Benefit claims incurred in | | excess of account balances. -- | 0.1 | 0.1 Underwriting, acquisition and | | insurance expenses: | | Commissions.................. 9.4 | 36.3 | 26.9 General expenses............. 3.4 | 17.3 | 13.9 Insurance taxes.............. 0.5 | 2.3 | 1.8 Policy acquisition costs | | deferred................... (13.7) | (42.7) | (29.0) Amortization: | | Deferred policy acquisition | | costs...................... 0.9 | 2.6 | 1.7 Present value of in force | | acquired................... 0.9 | 6.1 | 5.2 Goodwill..................... 0.6 | 2.0 | 1.4 ------ | ------ | ------ $ 9.4 | $ 50.7 | $ 41.3 ====== | ====== | ======
POST-ACQUISITION | COMBINED | PRE-ACQUISITION -------------------|-------------------|----------------- For the Period | | For the Period August 14, 1996 | For the Year | January 1, 1996 through | ended | through December 31, 1996 | December 31, 1996 | August 13, 1996 -------------------|-------------------|----------------- (Dollars in millions) | | Insurance benefits and | | expenses: | | Annuity and interest sensitive | | life benefits: | | Interest credited to account | | balances.................. $ 5.7 | $ 10.1 | $ 4.4 Benefit claims incurred in | | excess of account | | balances.................. 1.3 | 2.2 | 0.9 Underwriting, acquisition and | | insurance expenses: | | Commissions................. 9.9 | 26.5 | 16.6 General expenses............ 5.9 | 15.3 | 9.4 Insurance taxes............. 0.7 | 1.9 | 1.2 Policy acquisition costs.... | | deferred (11.7) | (31.0) | (19.3) Amortization: | | Deferred policy acquisition | | costs..................... 0.2 | 2.6 | 2.4 Present value of in force | | acquired.................. 2.7 | 3.7 | 1.0 Goodwill.................... 0.6 | 0.6 | -- ------ | ------ | ------ $ 15.3 | $ 31.9 | $ 16.6 ====== | ====== | ======
Total insurance benefits and expenses increased 59.3%, or $18.8 million, in 1997 from $31.9 million in 1996. Interest credited to account balances increased 164.4%, or $16.6 million, in 1997 as a result of higher account balances associated with the Company's fixed account option within its variable products. Commissions increased 37.3%, or $9.8 million, in 1997 from $26.5 million in 1996. Insurance taxes increased 23.3%, or $0.4 million, in 1997 from $1.9 million in 1996. Increases and decreases in commissions and insurance taxes are generally related to changes in the level of variable product sales. Insurance taxes are also impacted by several other factors which include an increase in FICA taxes primarily due to bonuses and an increase in state licenses and fees. Most costs incurred as the result of new sales were deferred, thus having very little impact on earnings. 44 General expenses increased 12.6%, or $2.0 million, in 1997 from $15.3 million in 1996 due in part to certain expenses associated with the merger occurring on October 24, 1997. In addition, the Company uses a network of wholesalers to distribute its products and the salaries of these wholesalers are included in general expenses. The portion of these salaries and related expenses which vary with sales production levels are deferred, thus having little impact on earnings. This increase in general expenses was partially offset by reimbursements received from Equitable Life, an affiliate, for certain advisory, computer and other resources and services provided by Golden American. During the second quarter of 1997, present value of in force acquired ("PVIF") was unlocked by $2.3 million to reflect narrower current spreads than the gross profit model assumed. The Company's deferred policy acquisition costs ("DPAC"), previous balance of PVIF and unearned revenue reserve, as of the merger date, were eliminated and an asset of $44.3 million representing PVIF was established for all policies in force at the merger date. The amortization of PVIF and DPAC increased $2.4 million, or 37.1%, in 1997. Based on current conditions and assumptions as to the impact of future events on acquired policies in force, the expected approximate net amortization for the next five years, relating to the PVIF as of December 31, 1997, is $6.2 million in 1998, $6.0 million in 1999, $5.6 million in 2000, $5.0 million in 2001 and $4.2 million in 2002. Amortization of goodwill for the year ended December 31, 1997 totaled $2.0 million compared to $0.6 million for the year ended December 31, 1996. Interest expense on the $25 million surplus note issued December 1996 was $2.0 million for the year ended December 31, 1997. Interest on any line of credit borrowings was charged at the rate of Equitable's monthly average aggregate cost of short-term funds plus 1.00%. During 1997, the Company paid $0.6 million to Equitable for interest on the line of credit. INCOME. Net income on a combined basis for 1997 was $0.3 million, a decrease of $3.2 million, or 91.4%, from 1996. FINANCIAL CONDITION RATINGS. During 1998, the Companies' ratings were upgraded by Standard & Poor's Rating Services ("Standard & Poor's") from AA to AA+. During the first quarter of 1999, the Companies' ratings were upgraded by Duff & Phelps Credit Rating Company from AA+ to AAA. INVESTMENTS. The financial statement carrying value and amortized cost basis of the Companies' total investment portfolio grew 8.7% and 10.5%, respectively, during the first nine months of 1999. All of the Companies' investments, other than mortgage loans on real estate, are carried at fair value in the Companies' financial statements. As such, growth in the carrying value of the Companies' investment portfolio included changes in unrealized appreciation and depreciation of fixed maturities as well as growth in the cost basis of these securities. Growth in the cost basis of the Companies' investment portfolio resulted from the investment of premiums from the sale of the Companies' fixed account options. The Companies manage the growth of insurance operations in order to maintain adequate capital ratios. To support the fixed account options of the Companies' variable insurance products, cash flow was invested primarily in fixed maturities and short-term investments. At September 30, 1999 and December 31, 1998, the Companies had no investments in default. At September 30, 1999 and December 31, 1998, the Companies' investment portfolio had a yield of 6.6% and 6.4%, respectively. The Companies estimate the total investment portfolio, excluding policy loans, had a fair value approximately equal to 98.0% of amortized cost value at September 30, 1999 (100.2% at December 31, 1998). Fixed Maturities: At September 30, 1999, the Companies had fixed maturities with an amortized cost of $815.0 million and an estimated fair value of $798.7 million. At December 31, 1998, the Companies had fixed maturities with an amortized cost of $739.8 million and an estimated fair value of $742.0 million. The Companies classify 100% of securities as available for sale. At September 30, 1999, net unrealized depreciation on fixed maturities of $16.3 million was comprised of gross appreciation of $0.8 million and gross depreciation of $17.1 million. Net unrealized holding losses on these securities, net of adjustments to VPIF, DPAC, and deferred income taxes of $4.0 million, was included in stockholder's equity at September 45 30, 1999. At December 31, 1998 net unrealized appreciation of fixed maturities of $2.2 million was comprised of gross appreciation of $6.7 million and gross depreciation of $4.5 million. Net unrealized holding gains on these securities, net of adjustments to VPIF, DPAC, and deferred income taxes of $1.0 million was included in stockholder's equity at December 31, 1998. The individual securities in the Companies' fixed maturities portfolio (at amortized cost) include investment grade securities, which include securities issued by the U.S. government, its agencies, and corporations, that are rated at least A- by Standard & Poor's ($528.0 million or 64.8% at September 30, 1999 and $477.4 million or 64.5% at December 31, 1998), that are rated BBB+ to BBB- by Standard & Poor's ($138.0 million or 16.9% at September 30, 1999 and $124.0 million or 16.8% at December 31, 1998) and below investment grade securities which are securities issued by corporations that are rated BB+ to CCC- by Standard & Poor's ($72.3 million or 8.9% at September 30, 1999 and $51.6 million or 7.0% at December 31, 1998). Securities not rated by Standard & Poor's had a National Association of Insurance Commissioners ("NAIC") rating of 1, 2, 3 or 4 ($76.7 million or 9.4% at September 30, 1999 and $86.8 million or 11.7% at December 31, 1998). The Companies' fixed maturity investment portfolio had a combined yield at amortized cost of 6.6% at September 30, 1999 and 6.5% at December 31, 1998. Fixed maturities rated BBB+ to BBB- may have speculative characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity of the issuer to make principal and interest payments than is the case with higher rated fixed maturities. At September 30, 1999, the amortized cost value of the Companies' total investment in below investment grade securities, excluding mortgage-backed securities, was $73.7 million, or 7.4%, of the Companies' investment portfolio ($52.7 million, or 5.9%, at December 31, 1998). The Companies intend to purchase additional below investment grade securities but do not expect the percentage of the portfolio invested in such securities to exceed 10% of the investment portfolio. At September 30, 1999, the yield at amortized cost on the Companies' below investment grade portfolio was 7.8% compared to 6.6% for the Companies' investment grade corporate bond portfolio. AAt December 31, 1998, the yield at amortized cost on the Companies' below investment grade portfolio was 7.9% compared to 6.4% for the Companies' investment grade corporate bond portfolio. The Companies estimate the fair value of the below investment grade portfolio was $70.5 million, or 95.6% of amortized cost value, at September 30, 1999 ($51.7 million, or 98.1% of amortized cost value, at December 31, 1998). Below investment grade securities have different characteristics than investment grade corporate debt securities. Risk of loss upon default by the borrower is significantly greater with respect to below investment grade securities than with other corporate debt securities. Below investment grade securities are generally unsecured and are often subordinated to other creditors of the issuer. Also, issuers of below investment grade securities usually have higher levels of debt and are more sensitive to adverse economic conditions, such as a recession or increasing interest rates, than are investment grade issuers. The Companies attempt to reduce the overall risk in the below investment grade portfolio, as in all investments, through careful credit analysis, strict investment policy guidelines, and diversification by company and by industry. The Companies analyze the investment portfolio, including below investment grade securities, at least quarterly in order to determine if the Companies' ability to realize the carrying value on any investment has been impaired. For debt and equity securities, if impairment in value is determined to be other than temporary (i.e. if it is probable the Companies will be unable to collect all amounts due according to the contractual terms of the security), the cost basis of the impaired security is written down to fair value, which becomes the new cost basis. The amount of the write-down is included in earnings as a realized loss. Future events may occur, or additional or updated information may be received, which may necessitate future write-downs of securities in the Companies' portfolio. Significant write-downs in the carrying value of investments could materially adversely affect the Companies' net income in future periods. During the nine months ended September 30, 1999 and Ifor the year ended December 31, 1998, fixed maturities designated as available for sale with a combined amortized cost of $170.6 million and $145.3 million, respectively, were called or repaid by their issuers. In total, net pre-tax losses from sales, calls, and repayments of fixed maturities amounted to $2.2 million and $0.5 million, for the first nine months of 1999 and for the year ended December 31, 1998, respectively. 46 During the fourth quarter of 1998, Golden American determined that the carrying value of two bonds exceeded their estimated net realizable value. As a result, at December 31, 1998, Golden American recognized a total pre-tax loss of approximately $1.0 million to reduce the carrying value of the bonds to their combined net realizable value of $2.9 million. During the second quarter of 1999, further information was received regarding these bonds and Golden American determined that the carrying value of the two bonds exceeded their estimated net realizeable value. As a result, at June 30, 1999 Golden American recognized a total pre-tax loss of approximately $1.6 million to further reduce the carrying value of the bonds to their combined net realizeable value of $1.1 million. Equity Securities: At September 30, 1999 and December 31, 1998, Eequity securities represented 1.5% and 1.6%, respectively, of the Companies' investment portfolio. At September 30, 1999 and December 31, 1998, the Companies owned equity securities with a cost of $14.4 million and an estimated fair value of $13.7 million and $11.5 million, respectively. At September 30, 1999, net unrealized depreciation of equity securities of $0.7 million was comprised of gross appreciation of $0.3 million and gross depreciation of $1.0 million at December 31, 1998 net unrealized depreciation of equity securities was comprised entirely of gross depreciation of $2.9 million . Equity securities are primarily comprised of investments in shares of the mutual funds underlying the Companies' registered separate accounts. Mortgage Loans on Real Estate: Mortgage loans on real estate represented 9.5% and 10.9% of the Companies' investment portfolio at September 30, 1999 and at December 31, 1998, respectively. Mortgages outstanding at amortized cost were $93.9 million September 30, 1999 with an estimated fair value of $91.2 million. Mortgages outstanding were $97.3 million at December 31, 1998 with an estimated fair value of $99.8 million. At September 30, 1999, the Companies' mortgage loan portfolio included 57 loans with an average size of $1.6 million and average seasoning of 0.8 years if weighted by the number of loans. At December 31, 1998, Tthe Companies' mortgage loan portfolio includeds 57 loans with an average size of $1.7 million and average seasoning of 0.9 years if weighted by the number of loans. The Companies' mortgage loans on real estate are typically secured by occupied buildings in major metropolitan locations and not speculative developments and are diversified by type of property and geographic location. Mortgage loans on real estate have been analyzed by geographical location with concentrations by state identified as California (12% in 1998 and 1997), Utah (11% in 1998, 13% in 1997) and Georgia (10% in 1998, 11% in 1997). There are no other concentrations of mortgage loans in any state exceeding ten percent at December 31, 1998 and 1997. Mortgage loans on real estate have also been analyzed by collateral type with significant concentrations identified in office buildings (36% in 1998, 43% in 1997), industrial buildings (32% in 1998, 33% in 1997) and retail facilities (20% in 1998, 15% in 1997). As of September 30, 1999, there have been no significant changes to the concentrations of mortgage loans on real estate compared to December 31, 1998. At September 30, 1999 and December 31, 1998, the yield on the Companies' mortgage loan portfolio was 7.3%. At September 30, 1999 and December 31, 1998, no mortgage loan on real estate was delinquent by 90 days or more. The Companies' loan investment strategy is consistent with other life insurance subsidiaries of ING in the U.S. The insurance subsidiaries of EIC have experienced a historically low default rate in their mortgage loan portfolios. OTHER ASSETS. Accrued investment income increased $2.3 million during the first nine months of 1999 due to an increase in the overall size of the portfolio resulting from the investment of premiums allocated to the fixed account options of the Companies' variable products. DPAC represents certain deferred costs of acquiring insurance business, principally first year commissions and interest bonuses, extra credit bonuses and other expenses related to the production of new business after the merger. The Companies' previous balances of DPAC and VPIF were eliminated as of the merger date, and an asset representing VPIF was established for all policies in force at the merger date. VPIF is amortized into income in proportion to the expected gross profits of in force acquired business in a manner similar to DPAC amortization. Any expenses which vary directly with the sales of the Companies' products are deferred and amortized. At September 30, 1999, the Companies had DPAC and VPIF balances of $439.2 million and $33.0 million ($205.0 million and $36.0 million, respectively at December 31, 1998). During the first nine months of 1998, VPIF decreased $2.7 million to adjust the value of other receivables and increased $0.2 million as a result of an adjustment to the merger costs. 47 Property and equipment increased $5.7 million, or 77.1%, during the first nine months of 1999, due to the purchase of furniture and other equipment for Golden American's new offices in West Chester, Pennsylvania. Property and equipment increased $5.8 million during 1998, due to installation of a new policy administration system, introduction of an imaging system as well as the growth in the business. Goodwill totaling $151.1 million, representing the excess of the acquisition cost over the fair value of net assets acquired, was established at the merger date. Accumulated amortization of goodwill as of September 30, 1999 and December 31, 1998 was $7.2 million and $4.4 million, respectively. Other assets increased $35.8 million during the first nine months of 1999 due mainly to an increase in a receivable from the separate account. Other assets increased $5.5 million during 1998 due mainly to an increase in amounts due from an unaffiliated reinsurer under a modified coinsurance agreement. At September 30, 1999, the Companies had $5.6 billion of separate account assets compared to $3.4 billion at December 31, 1998. The increase in separate account assets resulted from market appreciation, increased transfer activity, and sales of the Companies' variable annuity products, net of redemptions. At December 31, 1998, the Companies had $3.4 billion of separate account assets compared to $1.6 billion at December 31, 1997. The increase in separate account assets resulted from market appreciation and growth in sales of the Companies' variable annuity products, net of redemptions. At September 30, 1999, the Companies had total assets of $7.3 billion, a 53.9% increase from December 31, 1998. At December 31, 1998, the Companies had total assets of $4.8 billion, an increase of 94.3% from December 31, 1997. LIABILITIES. In conjunction with the volume of variable annuity sales, the Companies' total liabilities increased $2.5 billion, or 55.9%, during the first nine months of 1999 and totaled $6.9 billion at September 30, 1999. At September 30, 1999, future policy benefits for annuity and interest sensitive life products increased $128.3 million, or 14.6%, to $1.0 billion reflecting premium growth in the Companies' fixed account options of its variable products, net of transfers to the separate accounts. Market appreciation, increased transfer activity, and premiums, net of redemptions, accounted for the $2.2 billion, or 64.9%, increase in separate account liabilities to $5.6 billion at September 30, 1999. In conjunction with the volume of variable annuity sales, the Companies' total liabilities increased $2.2 billion, or 98.2%, during 1998 and totaled $4.4 billion at December 31, 1998. Future policy benefits for annuity and interest sensitive life products increased $375.8 million, or 74.4%, to $881.1 million reflecting premium growth in the Companies' fixed account option of its variable products. Market appreciation and premium growth, net of redemptions, accounted for the $1.7 billion, or 106.3%, increase in separate account liabilities to $3.4 billion at December 31, 1998. On September 30, 1999, Golden American issued a $75 million, 7.75% surplus note to ING AIH, which matures on September 29, 2029. On December 30, 1998, Golden American issued a $60 million, 7.25% surplus note to Equitable Life, which matures on December 29, 2028. On December 17, 1996, Golden American issued a $25 million, 8.25% surplus note to Equitable which matures on December 17, 2026. As a result of the merger, the surplus note is now payable to EIC. At September 30, 1999, other liabilities increased $47.5 million from $32.6 million at December 31, 1998, due primarily to increases in securities payables and remittances to be applied. At December 31, 1998, other liabilities increased $15.3 million from $17.3 million at December 31, 1997, due primarily to increases in accounts payable, outstanding checks, guaranty fund assessment liability, and pension liability. The effects of inflation and changing prices on the Companies' financial position are not material since insurance assets and liabilities are both primarily monetary and remain in balance. An effect of inflation, which has been low in recent years, is a decline in stockholder's equity when monetary assets exceed monetary liabilities. 48 STOCKHOLDER'S EQUITY. Additional paid-in capital increased $100.0 million, or 28.8%, from December 31, 1998 to $447.6 million at September 30, 1999 due to capital contributions from the Parent. Additional paid-in capital increased $122.6 million, or 54.5%, from December 31, 1997 to $347.6 million at December 31, 1998 primarily due to capital contributions from the Parent. LIQUIDITY AND CAPITAL RESOURCES Liquidity is the ability of the Companies to generate sufficient cash flows to meet the cash requirements of operating, investing, and financing activities. The Companies' principal sources of cash are variable annuity premiums and product charges, investment income, maturing investments, proceeds from debt issuance, and capital contributions made by the Parent. Primary uses of these funds are payments of commissions and operating expenses, interest and extra premium credits, investment purchases, repayment of debt, as well as withdrawals and surrenders. Net cash used in operating activities was $60.0 million in the first nine months of 1999 compared to $22.7 million in the same period of 1998. Net cash used in operating activities was $63.9 million in 1998 compared to $4.8 million in 1997. The Companies have predominantly had negative cash flows from operating activities since Golden American started issuing variable insurance products in 1989. These negative operating cash flows result primarily from the funding of commissions and other deferrable expenses related to the continued growth in the variable annuity products. The 1998 increase in net cash used in operating activities resulted principally from the introduction of Golden American's extra premium credit product in October 1997. In 1998, $54.4 million in extra premium credits was added to contract holders' account values versus $2.8 million in 1997. Net cash used in investing activities was $111.3 million during the first nine months of 1999 as compared to $224.5 million in the same period of 1998. This decrease is primarily due to greater net purchases of fixed maturities, equity securities, and mortgage loans on real estate during the first nine months of 1998 than in the same period of 1999. Net purchases of fixed maturities reached $79.7 million during the first nine months of 1999 versus $199.0 million in the same period of 1998. Net sales of mortgage loans on real estate were $3.2 million during the first nine months of 1999 compared to net purchases of $13.2 million during the first nine months of 1998. Net cash used in investing activities was $390.0 million during 1998 as compared to $198.5 million in 1997. This increase is primarily due to greater net purchases of fixed maturities resulting from an increase in funds available from net fixed account deposits. Net purchases of fixed maturities reached $331.3 million in 1998 versus $135.3 million in 1997. Net purchases of mortgage loans on real estate, on the other hand, declined to $12.6 million from $51.2 at December 31, 1997in the prior year. In 1998, net purchases of short-term investments were unusually high due to the investment of the remaining proceeds of Golden American's $60.0 million surplus note issued on December 30, 1998. Net cash provided by financing activities was $177.5 million during the first nine months of 1999 compared to $245.1 million during the same period of 1998. In the first nine months of 1999, net cash provided by financing activities was positively impacted by net fixed account deposits of $441.7 million compared to $300.0 million in the same period of 1998. This increase was offset by net reallocations to the Companies' separate accounts, which increased to $439.2 million from $163.5 million during the prior year, and by a decrease in net borrowings of $54.8 million in the first nine months of 1999 compared to the first nine months of 1998. In the first nine months of 1999, another important source of cash provided by financing activities was $100.0 million in capital contributions from the Parent compared to $53.8 million in the first nine months of 1998. In addition, another source of cash provided by financing activities during the third quarter of 1999 was $75.0 million in proceeds from a surplus note with ING AIH. Net cash provided by financing activities was $439.5 million during 1998 as compared to $218.6 million during the prior year. In 1998, net cash provided by financing activities was positively impacted by net fixed account deposits of $520.8 million compared to $303.6 million in 1997. This increase was partially offset by net reallocations to the Companies' separate accounts, which increased to $239.7 million from $110.1 million during the prior year. In 1998, other important sources of cash provided by financing activities were $98.4 million of capital contributions from the Parent and $60.0 million of proceeds from the issuance of a surplus note on December 30, 1998. The Companies have used part of the proceeds of the surplus note to repay outstanding short-term debt. 49 The Companies' liquidity position is managed by maintaining adequate levels of liquid assets, such as cash or cash equivalents and short- term investments. Additional sources of liquidity include borrowing facilities to meet short-term cash requirements. Golden American maintains a $65.0 million reciprocal loan agreement with ING AIH, which expires on December 31, 2007. In addition, the Companies have an $85.0 million revolving note facility with SunTrust Bank, Atlanta, which expires on July 31, 2000. Management believes that these sources of liquidity are adequate to meet the Companies' short-term cash obligations. Based on current trends, the Companies expect to continue to use net cash in operating activities, given the continued growth of the variable annuity products. It is anticipated that a continuation of capital contributions from the Parent and the issuance of additional surplus notes will cover these net cash outflows. ING is committed to the sustained growth of Golden American. During 1999, ING will maintain Golden American's statutory capital and surplus at the end of each quarter at a level such that: 1) the ratio of Total Adjusted Capital divided by Company Action Level Risk Based Capital exceeds 300%; 2) the ratio of Total Adjusted Capital (excluding surplus notes) divided by Company Action Level Risk Based Capital exceeds 200%; and 3) Golden American's statutory capital and surplus exceeds the "Amounts Accrued for Expense Allowances Recognized in Reserves" as disclosed on page 3, Line 13A of Golden American's Statutory Statement. During the first quarter of 1999, Golden American's operations were moved to a new site in West Chester, Pennsylvania. During the third quarter of 1999, Golden American occupied an additional 20,000 square feet and currently occupies 85,000 square feet of leased space, its affiliate occupies 20,000 square feet, and it has made commitments for an additional 20,000 square feet to be occupied by itself or its affiliates during the fourth quarter of 1999. Previously, Golden American's home office operations were housed in leased locations in Wilmington, Delaware and various locations in Pennsylvania, which were leased on a short-term basis for use in the transition to the new office building. Golden American's New York subsidiary is housed in leased space in New York, New York. The Companies intend to spend approximately $1.0 million on capital needs during the remainder of 1999. The ability of Golden American to pay dividends to its Parent is restricted. Prior approval of insurance regulatory authorities is required for payment of dividends to the stockholder which exceed an annual limit. During 1999, Golden American cannot pay dividends to its Parent without prior approval of statutory authorities. Under the provisions of the insurance laws of the State of New York, First Golden cannot distribute any dividends to its stockholder, Golden American, unless a notice of its intent to declare a dividend and the amount of the dividend has been filed with the New York Insurance Department at least thirty days in advance of the proposed declaration. If the Superintendent of the New York Insurance Department finds the financial condition of First Golden does not warrant the distribution, the Superintendent may disapprove the distribution by giving written notice to First Golden within thirty days after the filing. The management of First Golden does not anticipate paying any dividends to Golden American during 1999. The NAIC's risk-based capital requirements require insurance companies to calculate and report information under a risk-based capital formula. These requirements are intended to allow insurance regulators to monitor the capitalization of insurance companies based upon the type and mixture of risks inherent in a company's operations. The formula includes components for asset risk, liability risk, interest rate exposure and other factors. The Companies have complied with the NAIC's risk-based capital reporting requirements. Amounts reported indicate the Companies have total adjusted capital well above all required capital levels. Reinsurance: At September 30, 1999 and at December 31, 1998, Golden American had reinsurance treaties with four unaffiliated reinsurers and one affiliated reinsurer covering a significant portion of the mortality risks under its variable contracts. Golden American remains liable to the extent its reinsurers do not meet their obligations under the reinsurance agreements. 50 MARKET RISK AND RISK MANAGEMENT Asset/liability management is integrated into many aspects of the Companies' operations, including investment decisions, product development and crediting rates determination. As part of the risk management process, different economic scenarios are modeled, including cash flow testing required for insurance regulatory purposes, to determine that existing assets are adequate to meet projected liability cash flows. Key variables include contractholder behavior and the variable separate accounts' performance. Contractholders bear the majority of the investment risks related to the variable products. Therefore, the risks associated with the investments supporting the variable separate accounts are assumed by contractholders, not by the Companies (subject to, among other things, certain minimum guarantees). The Companies' products also provide certain minimum death benefits that depend on the performance of the variable separate accounts. Currently the majority of death benefit risks are reinsured, which protects the Companies from adverse mortality experience and prolonged capital market decline. A surrender, partial withdrawal, transfer or annuitization made prior to the end of a guarantee period from the fixed account may be subject to a market value adjustment. As the majority of the liabilities in the fixed account are subject to market value adjustment, the Companies do not face a material amount of market risk volatility. The fixed account liabilities are supported by a portfolio principally composed of fixed rate investments that can generate predictable, steady rates of return. The portfolio management strategy for the fixed account considers the assets available for sale. This enables the Companies to respond to changes in market interest rates, changes in prepayment risk, changes in relative values of asset sectors and individual securities and loans, changes in credit quality outlook and other relevant factors. The objective of portfolio management is to maximize returns, taking into account interest rate and credit risks as well as other risks. The Companies' asset/liability management discipline includes strategies to minimize exposure to loss as interest rates and economic and market conditions change. On the basis of these analyses, management believes there is no material solvency risk to the Companies. With respect to a 10% drop in equity values from year-end 1998 levels, variable separate account funds, which represent 85% of the in force as of September 30, 1999, pass the risk in underlying fund performance to the contract holder (except for certain minimum guarantees that are mostly reinsured). With respect to interest rate movements up or down 100 basis points from year-end 1998 levels, the remaining 15% of the in force as of September 30, 1999 are fixed account funds and almost all of these have market value adjustments which provide significant protection against changes in interest rates. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Any forward-looking statement contained herein or in any other oral or written statement by the Companies or any of their officers, directors or employees is qualified by the fact that actual results of the Companies may differ materially from such statement, among other risks and uncertainties inherent in the Companies' business, due to the following important factors: 1. Prevailing interest rate levels and stock market performance, which may affect the ability of the Companies to sell their products, the market value and liquidity of the Companies' investments and the lapse rate of the Companies' policies, notwithstanding product design features intended to enhance persistency of the Companies' products. 2. Changes in the federal income tax laws and regulations which may affect the tax status of the Companies'products. 3. Changes in the regulation of financial services, including bank sales and underwriting of insurance products, which may affect the competitive environment for the Companies' products. 4. Increasing competition in the sale of the Companies' products. 5. Other factors that could affect the performance of the Companies, including, but not limited to, market conduct claims, litigation, insurance industry insolvencies, availability of competitive reinsurance on new business, investment performance of the underlying portfolios of the variable products, variable product design and sales volume by significant sellers of the Companies' variable products. 51 6. To the extent third parties are unable to transact business in the Year 2000 and thereafter, the Companies' operations could be adversely affected. OTHER INFORMATION SEGMENT INFORMATION. During the period since the acquisition by Bankers Trust, September 30, 1992 to date of this Prospectus, Golden American's operations consisted of one business segment, the sale of annuity and life insurance products. Golden American and its affiliate DSI are party to in excess of 140 sales agreements with broker-dealers, three of whom, Locust Street Securities, Inc., Vestax Securities Corporation, and Multi-Financial Securities Corporation, are affiliates of Golden American. As of September 30, 1999, two broker-dealers produce 10% or more of Golden American's product sales. REINSURANCE. Golden American reinsures its mortality risk associated with the Contract's guaranteed death benefit with one or more appropriately licensed insurance companies. Golden American also, effective June 1, 1994, entered into a reinsurance agreement on a modified coinsurance basis with an affiliate of a broker-dealer which distributes Golden American's products with respect to 25% of the business produced by that broker-dealer. RESERVES. In accordance with the life insurance laws and regulations under which Golden American operates, it is obligated to carry on its books, as liabilities, actuarially determined reserves to meet its obligations on outstanding Contracts. Reserves, based on valuation mortality tables in general use in the United States, where applicable, are computed to equal amounts which, together with interest on such reserves computed annually at certain assumed rates, make adequate provision according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of Golden American. COMPETITION. Golden American is engaged in a business that is highly competitive because of the large number of stock and mutual life insurance companies and other entities marketing insurance products comparable to those of Golden American. There are approximately 2,350 stock, mutual and other types of insurers in the life insurance business in the United States, a substantial number of which are significantly larger than Golden American. SERVICE AGREEMENTS. Beginning in 1994 and continuing until August 13, 1996, Bankers Trust (Delaware), a subsidiary of Bankers Trust New York Corporation, and Golden American became parties to a service agreement pursuant to which Bankers Trust (Delaware) agreed to provide certain accounting, actuarial, tax, underwriting, sales, management and other services to Golden American. Expenses incurred by Bankers Trust (Delaware)in relation to this service agreement were reimbursed by Golden American on an allocated cost basis. Charges billed to Golden American by Bankers Trust (Delaware) pursuant to the service agreement for 1996 through its termination as of August 13, 1996 were $0.5 million. Pursuant to a service agreement between Golden American and Equitable Life, Equitable Life provides certain administrative, financial and other services to Golden American. Equitable Life billed Golden American and its subsidiary First Golden American Life Insurance Company of New York ("First Golden"), $0.9 million, $1.1 million, and $29,000 for the first nine months of 1999 and the years ended December 31, 1998 and 1997, respectively, under this service agreement. Golden American provides to DSI certain of its personnel to perform management, administrative and clerical services and the use of certain facilities. Golden American charges DSI for such expenses and all other general and administrative costs, first on the basis of direct charges when identifiable, and the remainder allocated based on the estimated amount of time spent by Golden American's employees on behalf of DSI. In the opinion of management, this method of cost allocation is reasonable. In 1995, the service agreement between DSI and Golden American was amended to provide for a management fee from DSI to Golden American for managerial and supervisory services provided by Golden American. This fee, calculated as a percentage of average assets in the variable separate accounts, was $6.8 million, $4.8 million, $2.8 million and $2.3 million for the first nine months of 1999, and the years of 1998, 1997 and 1996, respectively. Since January 1, 1998, Golden American and First Golden have had an asset management agreement with ING Investment Management LLC ("ING IM"), an affiliate, in which ING IM provides asset management and accounting services for a fee, payable quarterly. For the first nine months of 1999 and for the year 52 ended December 31, 1998, Golden American and First Golden incurred fees of $1.6 million and $1.5 million, respectively, under this agreement. Prior to 1998, Golden American and First Golden had a service agreement with Equitable Investment Services, Inc. ("EISI"), an affiliate, in which EISI provided investment management services. Golden American and First Golden paid fees of $1.0 million for 1997 and $72,000 for the period from August 14, 1996 through December 31, 1996, respectively. Since 1997, Golden American has provided certain advisory, computer and other resources and services to Equitable Life. Revenues for these services totaled $0.9 million for the first nine months of 1999, $5.8 million for 1998 and $4.3 million for 1997. The Companies provide resources and services to DSI. Revenues for these services totaled $0.8 million for the first nine months of 1999. Golden American provides resources and services to ING Mutual Funds Management Co., LLC, an affiliate. Revenues for these services totaled $0.4 million for the first nine months of 1999 and $2.1 million for 1998. DISTRIBUTION AGREEMENT. Under a distribution agreement, DSI acts as the principal underwriter (as defined in the Securities Act of 1933 and the Investment Company Act of 1940, as amended) of the variable insurance products issued by Golden American which as of September 30, 1999 and December 31, 1998, are sold primarily through two broker/dealer institutions. For the nine months ended September 30, 1999 and the years 1998, 1997 and 1996, commissions paid by Golden American to DSI (including commissions paid by First Golden) aggregated $130.4 million, $117.5 million, $36.4 million and $27.1 million, respectively. EMPLOYEES. Golden American, as a result of its Service Agreement with Bankers Trust (Delaware) and EIC Variable, had very few direct employees. Instead, various management services were provided by Bankers Trust (Delaware), EIC Variable and Bankers Trust New York Corporation, as described above under "Service Agreement." The cost of these services were allocated to Golden American. Since August 14, 1996, Golden American has hired individuals to perform various management services and has looked to Equitable of Iowa and its affiliates for certain other management services. Certain officers of Golden American are also officers of DSI, and their salaries are allocated among both companies. Certain officers of Golden American are also officers of other Equitable of Iowa subsidiaries. See "Directors and Executive Officers." PROPERTIES. Golden American's principal office is located at 1475 Dunwoody Drive, West Chester, Pennsylvania 19380, where all of Golden American's records are maintained. This office space is leased. STATE REGULATION. Golden American is subject to the laws of the State of Delaware governing insurance companies and to the regulations of the Delaware Insurance Department (the "Insurance Department"). A detailed financial statement in the prescribed form (the "Annual Statement") is filed with the Insurance Department each year covering Golden American's operations for the preceding year and its financial condition as of the end of that year. Regulation by the Insurance Department includes periodic examination to determine contract liabilities and reserves so that the Insurance Department may certify that these items are correct. Golden American's books and accounts are subject to review by the Insurance Department at all times. A full examination of Golden American's operations is conducted periodically by the Insurance Department and under the auspices of the NAIC. In addition, Golden American is subject to regulation under the insurance laws of all jurisdictions in which it operates. The laws of the various jurisdictions establish supervisory agencies with broad administrative powers with respect to various matters, including licensing to transact business, overseeing trade practices, licensing agents, approving contract forms, establishing reserve requirements, fixing maximum interest rates on life insurance contract loans and minimum rates for accumulation of surrender values, prescribing the form and content of required financial statements and regulating the type and amounts of investments permitted. Golden American is required to file the Annual Statement with supervisory agencies in each of the jurisdictions in which it does business, and its operations and accounts are subject to examination by these agencies at regular intervals. The NAIC has adopted several regulatory initiatives designed to improve the surveillance and financial analysis regarding the solvency of insurance companies in general. These initiatives include the development and implementation of a risk-based capital formula for determining adequate levels of capital 53 and surplus. Insurance companies are required to calculate their risk-based capital in accordance with this formula and to include the results in their Annual Statement. It is anticipated that these standards will have no significant effect upon Golden American. For additional information about the Risk-Based Capital adequacy monitoring system and Golden American, see "Management's Discussion and Analysis Results of Operations" In addition, many states regulate affiliated groups of insurers, such as Golden American, and its affiliates, under insurance holding company legislation. Under such laws, inter-company transfers of assets and dividend payments from insurance subsidiaries may be subject to prior notice or approval, depending on the size of the transfers and payments in relation to the financial positions of the companies involved. Under insurance guaranty fund laws in most states, insurers doing business therein can be assessed (up to prescribed limits) for contract owner losses incurred by other insurance companies which have become insolvent. Most of these laws provide that an assessment may be excused or deferred if it would threaten an insurer's own financial strength. For information regarding Golden American's estimated liability for future guaranty fund assessments, see Note 11 of Notes to Financial Statements. Although the federal government generally does not directly regulate the business of insurance, federal initiatives often have an impact on the business in a variety of ways. Certain insurance products of Golden American are subject to various federal securities laws and regulations. In addition, current and proposed federal measures which may significantly affect the insurance business include regulation of insurance company solvency, employee benefit regulation, removal of barriers preventing banks from engaging in the insurance business, tax law changes affecting the taxation of insurance companies and the tax treatment of insurance products and its impact on the relative desirability of various personal investment vehicles. DIRECTORS AND OFFICERS NAME (AGE) POSITION(S) WITH THE COMPANY - ---------- ---------------------------- Barnett Chernow (50) President and Director Myles R. Tashman (57) Director, Executive Vice President, General Counsel and Secretary Michael W. Cunningham (50) Director Mark A. Tullis (44) Director Phillip R. Lowery (46) Director James R. McInnis (51) Executive Vice President and Chief Marketing Officer Stephen J. Preston (42) Executive Vice President and Chief Actuary E. Robert Koster (41) Senior Vice President and Chief Financial Officer Patricia M. Corbett (34) Treasurer and Assistant V.P. David L. Jacobson (50) Senior Vice President and Assistant Secretary William L. Lowe (35) Senior Vice President, Sales and Marketing Ronald R. Blasdell (46) Senior Vice President, Project Implementation Steven G. Mandel (40) Senior Vice President and Chief Information Officer Gary F. Haynes (54) Senior Vice President, Operations Each director is elected to serve for one year or until the next annual meeting of shareholders or until his or her successor is elected. Some directors are directors of insurance company subsidiaries of Golden American's parent, Equitable of Iowa. The principal positions of Golden American's directors and senior executive officers for the past five years are listed below: Mr. Barnett Chernow became President and Director of Golden American and President of First Golden in April 1998. From 1993 to 1998, Mr. Chernow served as Executive Vice President of Golden American. He was elected to serve as Executive Vice President and Director of First Golden in September 1996. Mr. Myles R. Tashman joined Golden American in August 1994 as Senior Vice President and was named Executive Vice President, General Counsel and Secretary effective January 1, 1996. He was elected to serve as a Director of Golden American in January 1998. He also serves as a Director, Executive Vice President, General Counsel and Secretary of First Golden. 54 Mr. Michael W. Cunningham became a Director of Golden American and First Golden in April 1999. Also, he has served as a Director of Life of Georgia and Security Life of Denver since 1995. Currently, he serves as Executive Vice President and Chief Financial Officer of ING North America Insurance Corporation, and has worked for them since 1991. Mr. Mark A. Tullis became a Director of Golden American in January 2000. He has served as Executive Vice President, Strategy and Operations for ING Americas Region since September 1999. Mr. Phillip R. Lowery became a Director of Golden American in April 1999. He has served as Executive Vice President and Chief Actuary for ING Americas Region since 1990. Mr. James R. McInnis joined Golden American in December, 1997 as Executive Vice President. From 1982 through November 1997, he held several positions with the Endeavor Group and was President upon his departure. Mr. E. Robert Koster was elected Senior Vice President and Chief Financial Officer of Golden American in September 1998. From August, 1984 to September, 1998 he has held various positions with ING companies in The Netherlands. Ms. Patricia M. Corbett was elected Treasurer of Golden American in December 1998. She joined Equitable Life Insurance Company of Iowa in 1987 and is currently Treasurer and Assistant Vice President of Equitable Life and USG Annuity & Life Company. Mr. David L. Jacobson joined Golden American in November 1993 as Senior Vice President and Assistant Secretary. Mr. Stephen J. Preston joined Golden American in December, 1993 as Senior Vice President, Chief Actuary and Controller. He became an Executive Vice President and Chief Actuary in June 1998. Mr. William L. Lowe joined Equitable Life as Vice President, Sales & Marketing in January 1994. He became a Senior Vice President, Sales & Marketing, of Golden American in August 1997. He was also President of Equitable of Iowa Securities Network, Inc. until October 1998. Mr. Steven G. Mandel joined Golden American in October 1988 and became Senior Vice President and Chief Information Officer in June 1998. Mr. Ronald R. Blasdell joined Golden American in February 1994 and became Senior Vice President, Project Implementation in June 1998. Mr. Gary Haynes joined Golden American in April 1999 and became Senior Vice President, Operations in April 1999. COMPENSATION TABLES AND OTHER INFORMATION The following sets forth information with respect to the Chief Executive Officer of Golden American as well as the annual salary and bonus for the next five highly compensated executive officers for the fiscal year ended December 31, 1998. Certain executive officers of Golden American are also officers of DSI. The salaries of such individuals are allocated between Golden American and DSI. Executive officers of Golden American are also officers of DSI. The salaries of such individuals are allocated between Golden American and DSI pursuant to an arrangement among these companies. Throughout 1995 and until August 13, 1996, Terry L. Kendall served as a Managing Director at Bankers Trust New York Corporation. Compensation amounts for Terry L. Kendall which are reflected throughout these tables prior to August 14, 1996 were not charged to Golden American, but were instead absorbed by Bankers Trust New York Corporation. 55 EXECUTIVE COMPENSATION TABLE The following table sets forth information with respect to the annual salary and bonus for Golden American's Chief Executive Officers and the five other most highly compensated executive officers for the fiscal year ended December 31, 1998. As of the date of this prospectus 1999 data was not yet available. LONG-TERM ALL OTHER ANNUAL COMPENSATION COMPENSATION COMPENSATION ------------------- ------------------------ ------------ RESTRICTED SECURITIES NAME AND STOCK AWARDS UNDERLYING PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(2) OPTIONS(3) - ------------------ ---- ------ -------- ------------ ---------- Barnett Chernow, 1998 $284,171 $105,375 8,000 President 1997 $234,167 $ 31,859 $277,576 4,000 1996 $207,526 $150,000 $ 7,755(4) James R. McInnis, 1998 $250,004 $626,245 2,000 Executive Vice President Keith Glover, 1998 $250,000 $145,120 3,900 Executive Vice President Myles R. Tashman, 1998 $189,337 $ 54,425 3,500 Executive Vice 1997 $181,417 $ 25,000 $165,512 5,000 President, 1996 $176,138 $ 90,000 $ 5,127(4) General Counsel and Secretary Stephen J. Preston, 1998 $173,870 $ 32,152 3,500 Executive Vice 1997 $160,758 $ 16,470 President 1996 $156,937 $ 58,326 and Chief Actuary Paul R. Schlaack, 1998 $406,730 $210,600 Former Chairman 1997 $351,000 $249,185 $1,274,518 19,000 $15,000 and Vice President 1996 $327,875 $249,185 $ 245,875 19,000 $15,000 Terry L. Kendall, 1998 $145,237 $181,417 Former President 1997 $362,833 $ 80,365 $ 644,844 16,000 and CEO 1996 $288,298 $400,000 $11,535(4)
(1) The amount shown relates to bonuses paid in 1998, 1997 and 1996. (2) Restricted stock awards granted to executive officers vested on October 24, 1997 with the change in control of Equitable of Iowa. (3) Awards comprised of qualified and non-qualified stock options. All options were granted with an exercise price equal to the then fair market value of the underlying stock. All options vested with the change in control of Equitable of Iowa and were cashed out for the difference between $68.00 and the exercise price. (4) In 1996, Contributions were made by the Company on behalf of the employee to PartnerShare, the deferred compensation plan sponsored by Bankers Trust New York Corporation and its affiliates for the benefit of all Bankers Trust employees, in February of 1996 to employees on record as of December 31, 1996, after an employee completed one year of service with the company. This contribution could be in the form of deferred compensation and/or a cash payment. In 1996, Mr. Kendall received $9,000 of deferred compensation and $2,535 of cash payment from the plan; Mr. Chernow received $6,000 of deferred compensation and $1,755 of cash payment from the plan; Mr. Tashman received $4,000 of deferred compensation and $1,127 of cash payment from the plan. 56 OPTION GRANTS IN LAST FISCAL YEAR (1998) POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL % OF TOTAL RATES OF STOCK NUMBER OF OPTIONS PRICE APPRECIATION SECURITIES GRANTED TO FOR OPTION UNDERLYING EMPLOYEES EXERCISE TERM (3) OPTIONS IN FISCAL OR BASE EXPIRATION ------------------ NAME GRANTED(1) YEAR PRICE (2) DATE 5% 10% - ---- ---------- ----- --------- ---- -- --- Barnett Chernow 8,000 11.99 $60.518 5/26/2003 $164,016 $362,433 James R. McInnis 2,000 3.00 $60.518 5/26/2003 $ 41,004 $ 90,608 Keith Glover 3,900 5.85 $60.518 5/26/2003 $ 79,958 $176,686 Myles R. Tashman 3,500 5.25 $60.518 5/26/2003 $ 71,758 $158,564 Stephen J. Preston 3,500 5.25 $60.518 5/26/2003 $ 71,758 $158,564
(1) Stock appreciation rights granted on May 26, 1998 to the officers of Golden American have a three-year vesting period and an expiration date as shown. (2) The base price was equal to the fair market value of ING's stock on on the date of grant. (3) Total dollar gains based on indicated rates of appreciation of share price over a the five year term of the rights. Directors of Golden American receive no additional compensation for serving as a director. 57 [Shaded Section Header] - -------------------------------------------------------------------------- UNAUDITED FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY - -------------------------------------------------------------------------- For the Nine Months Ended September 30, 1999 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands, except per share data)
September 30, 1999 December 31, 1998 ------------------ ----------------- ASSETS Investments: Fixed maturities, available for sale, at fair value (cost: 1999 -- $815,027; 1998 -- $739,772) $ 798,708 $ 741,985 Equity securities, at fair value (cost: 13,679 11,514 1999 -- $14,437; 1998 -- $14,437) Mortgage loans on real estate 93,884 97,322 Policy loans 13,454 11,772 Short-term investments 66,519 41,152 ---------- ---------- Total investments 986,244 903,745 Cash and cash equivalents 12,908 6,679 Due from affiliates 1,460 2,983 Accrued investment income 11,896 9,645 Deferred policy acquisition costs 439,176 204,979 Value of purchased insurance in force 32,984 35,977 Current income taxes recoverable 204 628 Deferred income tax asset 29,690 31,477 Property and equipment, less allowances for depreciation of $2,807 in 1999 and $801 in 1998 13,017 7,348 Goodwill, less accumulated amortization of $7,242 in 1999 and $4,408 in 1998 143,886 146,719 Other assets 42,072 6,239 Separate account assets 5,598,490 3,396,114 ---------- ---------- Total assets $7,312,027 $4,752,533 ========== ========== LIABILITIES AND STOCKHOLDER'S EQUITY Policy liabilities and accruals: Future policy benefits: Annuity and interest sensitive life products $1,009,382 $881,112 Unearned revenue reserve 5,855 3,840 Other policy claims and benefits 15 -- ---------- ---------- 1,015,252 884,952 Surplus notes 160,000 85,000 Due to affiliates 4,328 -- Other liabilities 80,081 32,573 Separate account liabilities 5,598,490 3,396,114 ---------- ---------- 6,858,151 4,398,639 Commitments and contingencies Stockholder's equity: Common stock, par value $10 per share, authorized, issued, 2,500 2,500 and outstanding 250,000 shares Additional paid-in capital 447,640 347,640 Accumulated other comprehensive loss (4,464) (895) Retained earnings 8,200 4,649 ---------- ---------- Total stockholder's equity 453,876 353,894 ---------- ---------- Total liabilities and stockholder's equity $7,312,027 $4,752,533 ========== ========== See accompanying notes.
58 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands)
For the Nine For the Nine Months ended Months ended September 30, 1999 September 30, 1998 ------------------ ------------------ Revenues: Annuity and interest sensitive life product charges $ 55,195 $ 26,984 Management fee revenue 6,755 3,257 Net investment income 42,671 29,296 Realized gains (losses) on investments (2,215) 436 Other income 7,448 4,805 --------- -------- 109,854 64,778 Insurance benefits and expenses: Annuity and interest sensitive life benefits: Interest credited to account 125,404 64,110 balances Benefit claims incurred in 3,452 862 excess of account balances Underwriting, acquisition, and insurance expenses: Commissions 134,585 84,958 General expenses 47,551 23,480 Insurance taxes, state 3,545 2,680 licenses, and fees Policy acquisition costs (244,840) (133,616) deferred Amortization: Deferred policy acquisition 19,699 4,014 costs Value of purchased insurance 4,803 3,252 in force Goodwill 2,834 2,834 --------- -------- 97,033 52,574 Interest expense 5,552 3,033 --------- -------- 102,585 55,607 --------- -------- Income before income taxes 7,269 9,171 Income taxes 3,718 4,294 --------- -------- Net income $ 3,551 $ 4,877 ========= ======== See accompanying notes.
59 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands)
For the Nine For the Nine Months ended Months ended September 30, 1999 September 30, 1998 ------------------ ------------------ NET CASH USED IN OPERATING ACTIVITIES $ (60,026) $ (22,666) INVESTING ACTIVITIES Sale, maturity, or repayment of investments: Fixed maturities -- available for sale 170,548 92,707 Mortgage loans on real estate 4,241 3,145 Short-term investments -- net -- 2,575 ---------- ---------- 174,789 98,427 Acquisition of investments: Fixed maturities -- available for sale (250,277) (291,687) Equity securities -- (10,000) Mortgage loans on real estate (1,034) (16,390) Policy loans -- net (1,682) (1,385) Short term investments -- net (25,367) -- ---------- ---------- (278,360) (319,462) Net purchase of property and equipment (7,700) (3,470) ---------- ---------- Net cash used in investing activities (111,271) (224,505) FINANCING ACTIVITIES Proceeds from reciprocal loan agreement 488,950 242,847 borrowings Repayment of reciprocal loan agreement (488,950) (202,847) borrowings Proceeds from revolving note payable 131,595 20,082 Repayment of revolving note payable (131,595) -- Proceeds from surplus note 75,000 -- Repayment of line of credit borrowings -- (5,309) Receipts from annuity and interest sensitive life policies credited to account balances 540,464 350,385 Return of account balances on annuity and interest sensitive life policies (98,715) (50,370) Net reallocations to Separate Accounts (439,223) (163,455) Contributions from parent 100,000 53,750 ---------- ---------- Net cash provided by financing 177,526 245,083 activities ---------- ---------- Increase (decrease) in cash and cash equivalents 6,229 (2,088) Cash and cash equivalents at beginning of period 6,679 21,039 ---------- ---------- Cash and cash equivalents at end of period $ 12,908 $ 18,951 ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 5,078 $ 3,493 Taxes 10 80 Non-cash financing activities: Non-cash adjustment to additional paid in capital for adjusted merger costs -- 143 Non-cash contribution of capital from parent to repay line of credit borrowings -- 18,750 See accompanying notes.
60 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) September 30, 1999 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments were of a normal recurring nature, unless otherwise noted in Management's Discussion and Analysis and the Notes to Financial Statements. Operating results for the nine months ended September 30, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. These financial statements should be read in conjunction with the financial statements and related notes included in the Golden American Life Insurance Company's annual report on Form 10-K for the year ended December 31, 1998. CONSOLIDATION The condensed consolidated financial statements include Golden American Life Insurance Company ("Golden American") and its wholly owned subsidiary, First Golden American Life Insurance Company of New York ("First Golden," and with Golden American, collectively, the "Companies"). All significant intercompany accounts and transactions have been eliminated. ORGANIZATION Golden American is a wholly owned subsidiary of Equitable of Iowa Companies, Inc. ("EIC" or the "Parent"). On October 24, 1997, PFHI Holdings, Inc. ("PFHI"), a Delaware corporation, acquired all of the outstanding capital stock of Equitable of Iowa Companies ("Equitable") according to the terms of an Agreement and Plan of Merger dated July 7, 1997 among Equitable, PFHI, and ING Groep N.V. ("ING"). PFHI is a wholly owned subsidiary of ING, a global financial services holding company based in The Netherlands. As a result of this transaction, Equitable was merged into PFHI, which was simultaneously renamed Equitable of Iowa Companies, Inc., a Delaware corporation. FAIR VALUES Estimated fair values of publicly traded fixed maturities for 1999 are as reported by an independent pricing service. STATUTORY Net loss for Golden American as determined in accordance with statutory accounting practices was $75,508,000 and $32,198,000 for the nine months ended September 30, 1999 and 1998, respectively. Total statutory capital and surplus was $285,674,000 at September 30, 1999 and $183,045,000 at December 31, 1998. RECLASSIFICATIONS Certain amounts in the September 30, 1998 and December 31, 1998 financial statements have been reclassified to conform to the September 30, 1999 financial statement presentation. 2. COMPREHENSIVE INCOME As of January 1, 1998, the Companies adopted the Statement of Financial Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this statement had no 61 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) September 30, 1999 2. COMPREHENSIVE INCOME (continued) impact on the Companies' net income or stockholder's equity. SFAS No. 130 requires unrealized gains or losses on the Companies' available for sale securities (net of adjustments for value of purchased insurance in force ("VPIF"), deferred policy acquisition costs ("DPAC"), and deferred income taxes) to be included in other comprehensive income. During the third quarter and first nine months of 1999, other comprehensive income (loss) for the Companies amounted to $2,059,000 and $(18,000), respectively ($2,426,000 and $5,478,000, respectively, for the same periods of 1998). Included in these amounts are other comprehensive income (loss) for First Golden of $(14,000) and $(258,000) for the third quarter and first nine months of 1999, respectively ($601,000 and $1,174,000, respectively, for the same periods of 1998). Other comprehensive income (loss) excludes net investment gains (losses) included in net income which merely represent transfers from unrealized to realized gains and losses. These amounts totaled $(460,000) and $(2,512,000) during the third quarter and first nine months of 1999, respectively ($263,000 and $388,000, respectively, for the same periods of 1998). Such amounts, which have been measured through the date of sale, are net of income taxes and adjustments for VPIF and DPAC totaling $(38,000) and $297,000 for the third quarter and first nine months of 1999, respectively ($40,000 and $48,000, respectively, for the same periods of 1998). 3. INVESTMENTS INVESTMENT VALUATION ANALYSIS: The Companies analyze the investment portfolio at least quarterly in order to determine if the carrying value of any investment has been impaired. The carrying value of debt and equity securities is written down to fair value by a charge to realized losses when an impairment in value appears to be other than temporary. During the fourth quarter of 1998, Golden American determined that the carrying value of two bonds exceeded their estimated net realizable value. As a result, at December 31, 1998, Golden American recognized a total pre-tax loss of $973,000 to reduce the carrying value of the bonds to their combined net realizable value of $2,919,000. During the second quarter of 1999, further information was received regarding these bonds and Golden American determined that the carrying value of the two bonds exceeded their estimated net realizable value. As a result, at June 30, 1999, Golden American recognized a total pre-tax loss of $1,639,000 to further reduce the carrying value of the bonds to their combined net realizable value of $1,137,000. 4. RELATED PARTY TRANSACTIONS OPERATING AGREEMENTS: Directed Services, Inc. ("DSI"), an affiliate, acts as the principal underwriter (as defined in the Securities Act of 1933 and the Investment Company Act of 1940, as amended) and distributor of the variable insurance products issued by the Companies. DSI is authorized to enter into agreements with broker/dealers to distribute the Companies' variable insurance products and appoint representatives of the broker/dealers as agents. The Companies paid commissions and expenses to DSI totaling $50,131,000 in the third quarter and $130,419,000 for the first nine months of 1999 ($32,104,000 and $82,548,000, respectively, for the same periods of 1998). Golden American provides certain managerial and supervisory services to DSI. The fee paid by DSI for these services is calculated as a percentage of average assets in the variable separate accounts. For the third quarter and first nine months of 1999, the fee was $2,659,000 and $6,755,000, respectively ($1,234,000 and $3,257,000, respectively, for the same periods of 1998). The Companies have an asset management agreement with ING Investment Management LLC ("ING IM"), an affiliate, in which ING IM provides asset management and accounting services. Under the agreement, the Companies record a fee based on the value of the assets under management. The fee is payable quarterly. For the third quarter and first nine months of 1999, the Companies incurred fees of $523,000 and $1,637,000, respectively, under this agreement ($341,000 and $1,013,000, respectively, for the same periods of 1998). 62 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) September 30, 1999 4. RELATED PARTY TRANSACTIONS (continued) Golden American has a guaranty agreement with Equitable Life Insurance Company of Iowa ("Equitable Life"), an affiliate. In consideration of an annual fee, payable June 30, Equitable Life guarantees to Golden American that it will make funds available, if needed, to Golden American to pay the contractual claims made under the provisions of Golden American's life insurance and annuity contracts. The agreement is not, and nothing contained therein or done pursuant thereto by Equitable Life shall be deemed to constitute, a direct or indirect guaranty by Equitable Life of the payment of any debt or other obligation, indebtedness or liability, of any kind or character whatsoever, of Golden American. The agreement does not guarantee the value of the underlying assets held in separate accounts in which funds of variable life insurance and variable annuity policies have been invested. The calculation of the annual fee is based on risk based capital. As Golden American's risk based capital level was above required amounts, no annual fee was payable at June 30, 1999 or 1998. Golden American provides certain advisory, computer and other resources and services to Equitable Life. Revenues for these services, which reduce general expenses incurred by Golden American, totaled $237,000 in the third quarter of 1999 and $898,000 for the first nine months of 1999 ($1,524,000 and $5,091,000, respectively, for the same periods of 1998). The Companies have a service agreement with Equitable Life in which Equitable Life provides administrative and financial related services. Under this agreement, the Companies incurred expenses of $50,000 in the third quarter of 1999 and $855,000 for the first nine months of 1999 ($261,000 and $575,000, respectively, for the same periods of 1998). The Companies provide resources and services to DSI. Revenues for these services, which reduce general expenses incurred by the Companies, totaled $276,000 in the third quarter of 1999 and $759,000 for the first nine months of 1999 ($19,000 and $57,000, respectively, for the same periods of 1998). Golden American provides resources and services to ING Mutual Funds Management Co., LLC, an affiliate. Revenues for these services, which reduce general expenses incurred by Golden American, totaled $159,000 in the third quarter of 1999 and $376,000 for the first nine months of 1999. For the third quarter of 1999, the Companies received 7.8% of total premiums (9.7% in the same period of 1998), net of reinsurance, for variable products sold through four affiliates, Locust Street Securities, Inc. ("LSSI"), Vestax Securities Corporation ("Vestax"), DSI, and Multi- Financial Securities Corporation ("Multi-Financial") of $46,600,000, $12,900,000, $0, and $11,000,000, respectively ($34,600,000, $14,200,000, $1,800,000, and $4,100,000, respectively, for the same period of 1998). For the first nine months of 1999, the Companies received 9.5% of total premiums (10.0% in the same period of 1998), net of reinsurance, from LSSI, Vestax, DSI, and Multi-Financial of $121,900,000, $72,000,000, $2,300,000, and $24,400,000, respectively ($92,700,000, $30,000,000, $10,700,000, and $10,000,000, respectively, for the same period of 1998). RECIPROCAL LOAN AGREEMENT: Golden American maintains a reciprocal loan agreement with ING America Insurance Holdings, Inc. ("ING AIH"), a Delaware corporation and affiliate, to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Under this agreement, which became effective January 1, 1998 and expires December 31, 2007, Golden American and ING AIH can borrow up to $65,000,000 from one another. Prior to lending funds to ING AIH, Golden American must obtain approval from the Department of Insurance of the State of Delaware. Interest on any Golden American borrowings is charged at the rate of ING AIH's cost of funds for the interest period plus 0.15%. Interest on any ING AIH borrowings is charged at a rate based on the prevailing interest rate of U.S. commercial paper available for purchase with a similar duration. Under this agreement, Golden American incurred interest expense of $397,000 in the third quarter of 1999 and $633,000 for the first nine months of 1999 ($505,000 and $1,269,000, respectively, for the same periods of 1998). At September 30, 1999, Golden American did not have any borrowings or receivables from ING AIH under this agreement. LINE OF CREDIT: Golden American maintained a line of credit agreement with Equitable to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Under this agreement, which 63 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) September 30, 1999 4. RELATED PARTY TRANSACTIONS (continued) became effective December 1, 1996 and expired December 31, 1997, Golden American could borrow up to $25,000,000. Interest on any borrowings was charged at the rate of Equitable's monthly average aggregate cost of short-term funds plus 1.00%. Under this agreement, Golden American incurred interest expense of $211,000 for the first quarter of 1998. The outstanding balance was paid by a capital contribution from the Parent and with funds borrowed from ING AIH. SURPLUS NOTES: On September 30, 1999, Golden American issued a 7.75% surplus note in the amount of $75,000,000 to ING AIH. The note matures on September 29, 2029. Payment of the note and related accrued interest is subordinate to payments due to policyholders, claimant and beneficiary claims, as well as debts owed to all other classes of debtors, other than surplus note holders, of Golden American. Any payment of principal and/or interest made is subject to the prior approval of the Delaware Insurance Commissioner. Under this agreement, Golden American incurred no interest expense in the third quarter of 1999. On December 30, 1998, Golden American issued a 7.25% surplus note in the amount of $60,000,000 to Equitable Life. The note matures on December 29, 2028. Payment of the note and related accrued interest is subordinate to payments due to policyholders, claimant and beneficiary claims, as well as debts owed to all other classes of debtors, other than surplus note holders, of Golden American. Any payment of principal and/or interest made is subject to the prior approval of the Delaware Insurance Commissioner. Under this agreement, Golden American incurred interest expense of $1,088,000 in the third quarter of 1999 and $3,263,000 for the first nine months of 1999. On December 17, 1996, Golden American issued an 8.25% surplus note in the amount of $25,000,000 to Equitable. The note matures on December 17, 2026. Payment of the note and related accrued interest is subordinate to payments due to policyholders, claimant and beneficiary claims, as well as debts owed to all other classes of debtors of Golden American. Any payment of principal made is subject to the prior approval of the Delaware Insurance Commissioner. Golden American incurred interest totaling $516,000 in the third quarter of 1999 and $1,547,000 for the first nine months of 1999, unchanged from the same periods of 1998. As a result of the merger, the surplus note is now payable to EIC. STOCKHOLDER'S EQUITY: During the third quarter of 1999 and the first nine months of 1999, Golden American received capital contributions from its Parent of $20,000,000 and $100,000,000, respectively ($0 and $72,500,000, respectively, for the same periods of 1998). 5. COMMITMENTS AND CONTINGENCIES REINSURANCE: At September 30, 1999, Golden American had reinsurance treaties with four unaffiliated reinsurers and one affiliated reinsurer covering a significant portion of the mortality risks under its variable contracts. Golden American remains liable to the extent its reinsurers do not meet their obligations under the reinsurance agreements. At September 30, 1999 and 1998, the Companies had a net receivable of $14,041,000 and $6,539,000, respectively, for reserve credits, reinsurance claims, or other receivables from these reinsurers comprised of $2,268,000 and $257,000, respectively, for claims recoverable from reinsurers, $918,000 and $451,000, respectively, for a payable for reinsurance premiums and $12,691,000 and $6,733,000, respectively, for a receivable from an unaffiliated reinsurer. Included in the accompanying financial statements are net considerations to reinsurers of $2,638,000 in the third quarter of 1999 and $6,656,000 for the first nine months of 1999 compared to $1,293,000 and $3,259,000, respectively, for the same periods in 1998. Also included in the accompanying financial statements are net policy benefits of $2,569,000 in the third quarter of 1999 and $4,008,000 for the first nine months of 1999 compared to $1,272,000 and $2,096,000, respectively, for the same periods in 1998. Effective June 1, 1994, Golden American entered into a modified coinsurance agreement with an unaffiliated reinsurer. The accompanying financial statements are presented net of the effects of the treaty. GUARANTY FUND ASSESSMENTS: Assessments are levied on the Companies by life and health guaranty associations in most states in which the Companies are licensed to cover losses of policyholders of insolvent 64 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) September 30, 1999 5. COMMITMENTS AND CONTINGENCIES (continued) or rehabilitated insurers. In some states, these assessments can be partially recovered through a reduction in future premium taxes. The Companies cannot predict whether and to what extent legislative initiatives may affect the right to offset. The associated cost for a particular insurance company can vary significantly based upon its fixed account premium volume by line of business and state premiums as well as its potential for premium tax offset. The Companies have established an undiscounted reserve to cover such assessments, review information regarding known failures, and revise estimates of future guaranty fund assessments. Accordingly, the Companies accrued and charged to expense an additional $208,000 and $598,000 in the third quarter and first nine months of 1998, respectively. At September 30, 1999, the Companies have an undiscounted reserve of $2,444,000 to cover estimated future assessments (net of related anticipated premium tax credits) and have established an asset totaling $586,000 for assessments paid which may be recoverable through future premium tax offsets. The Companies believe this reserve is sufficient to cover expected future guaranty fund assessments based upon previous premiums and known insolvencies at this time. LITIGATION: The Companies, like other insurance companies, may be named or otherwise involved in lawsuits, including class action lawsuits and arbitrations. In some class action and other actions involving insurers, substantial damages have been sought and/or material settlement or award payments have been made. The Companies currently believe no pending or threatened lawsuits or actions exist that are reasonably likely to have a material adverse impact on the Companies. VULNERABILITY FROM CONCENTRATIONS: The Companies have various concentrations in the investment portfolio. The Companies' asset growth, net investment income, and cash flow are primarily generated from the sale of variable products and associated future policy benefits and separate account liabilities. Substantial changes in tax laws that would make these products less attractive to consumers and extreme fluctuations in interest rates or stock market returns, which may result in higher lapse experience than assumed, could cause a severe impact on the Companies' financial condition. Two broker/dealers, each having at least ten percent of total sales, generated 29% of the Companies' sales during the first nine months of 1999 (10% by one broker/dealer in the same period of 1998). The Premium Plus variable annuity product generated 78% of the Companies' sales during the first nine months of 1999 (59% in the same period of 1998). REVOLVING NOTE PAYABLE: To enhance short-term liquidity, the Companies established a revolving note payable effective July 27, 1998 and expiring July 31, 1999 with SunTrust Bank, Atlanta (the "Bank"). The note was approved by the Boards of Directors of Golden American and First Golden on August 5, 1998 and September 29, 1998, respectively. As of July 31, 1999, the SunTrust Bank, Atlanta revolving note facility was extended to July 31, 2000. The total amount the Companies may have outstanding is $85,000,000, of which Golden American and First Golden have individual credit sublimits of $75,000,000 and $10,000,000, respectively. The note accrues interest at an annual rate equal to: (1) the cost of funds for the Bank for the period applicable for the advance plus 0.25% or (2) a rate quoted by the Bank to the Companies for the advance. The terms of the agreement require the Companies to maintain the minimum level of Company Action Level Risk Based Capital as established by applicable state law or regulation. During the quarter and nine months ended September 30, 1999, the Companies paid interest expense of $55,000 and $109,000, respectively ($6,000 for the same periods of 1998). At September 30, 1999, the Companies did not have any borrowings under this agreement. 65 [Shaded Section Header] - -------------------------------------------------------------------------- FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY - -------------------------------------------------------------------------- REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholder Golden American Life Insurance Company We have audited the accompanying consolidated balance sheets of Golden American Life Insurance Company as of December 31, 1998 and 1997, and the related consolidated statements of operations, changes in stockholder's equity, and cash flows for the year ended December 31, 1998 and for the periods from October 25, 1997 through December 31, 1997, January 1, 1997 through October 24, 1997, August 14, 1996 through December 31, 1996 and January 1, 1996 through August 13, 1996. These financials are the responsibility of the Companies' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Golden American Life Insurance Company at December 31, 1998 and 1997, and the consolidated results of its operations and its cash flows for the year ended December 31, 1998 and for the periods from October 25, 1997 through December 31, 1997, January 1, 1997 through October 24, 1997, August 14, 1996 through December 31, 1996 and January 1, 1996 through August 13, 1996 in conformity with generally accepted accounting principles. /s/Ernst & Young LLP Des Moines, Iowa February 12, 1999 66 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data) POST-MERGER ------------------------------------ December 31, 1998 December 31, 1997 ----------------- ----------------- ASSETS Investments: Fixed maturities, available for sale, at fair value (cost: 1998 - $739,772; 1997 - $413,288)...................... $ 741,985 $ 414,401 Equity securities, at fair value (cost: 1998 - $14,437; 1997 - $4,437)........................ 11,514 3,904 Mortgage loans on real estate.... 97,322 85,093 Policy loans..................... 11,772 8,832 Short-term investments........... 41,152 14,460 ---------- ---------- Total investments.................. 903,745 526,690 Cash and cash equivalents.......... 6,679 21,039 Due from affiliates................ 2,983 827 Accrued investment income.......... 9,645 6,423 Deferred policy acquisition costs.. 204,979 12,752 Value of purchased insurance in force............................ 35,977 43,174 Current income taxes recoverable... 628 272 Deferred income tax asset.......... 31,477 36,230 Property and equipment, less allowances for depreciation of $801 in 1998 and $97 in 1997.. 7,348 1,567 Goodwill, less accumulated amortization of $4,408 in 1998 and $630 in 1997................. 146,719 150,497 Other assets....................... 6,239 755 Separate account assets............ 3,396,114 1,646,169 ---------- ---------- Total assets....................... $4,752,533 $2,446,395 ========== ==========
See accompanying notes. 67 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED BALANCE SHEETS (CONTINUED) (Dollars in thousands, except per share data) POST-MERGER ------------------------------------ December 31, 1998 December 31, 1997 ----------------- ----------------- LIABILITIES AND STOCKHOLDER'S EQUITY Policy liabilities and accruals: Future policy benefits: Annuity and interest sensitive life products......................... $ 881,112 $ 505,304 Unearned revenue reserve........... 3,840 1,189 Other policy claims and benefits... -- 10 ---------- ---------- 884,952 506,503 Line of credit with affiliate....... -- 24,059 Surplus notes....................... 85,000 25,000 Due to affiliates................... -- 80 Other liabilities................... 32,573 17,271 Separate account liabilities........ 3,396,114 1,646,169 ---------- ---------- 4,398,639 2,219,082 Commitments and contingencies Stockholder's equity: Common stock, par value $10 per share, authorized,issued and outstanding 250,000 shares................... 2,500 2,500 Additional paid-in capital......... 347,640 224,997 Accumulated other comprehensive income (loss).................... (895) 241 Retained earnings (deficit)........ 4,649 (425) ---------- ---------- Total stockholder's equity.......... 353,894 227,313 ---------- ---------- Total liabilities and stockholder's equity............................ $4,752,533 $2,446,395 ========== ==========
See accompanying notes. 68 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands) POST-MERGER | POST-ACQUISITION | PRE-ACQUISITION ------------------------------------ | ----------------------------------- | --------------- For the period | For the period For the period | For the period For the year October 25,1997 | January 1,1997 August 14, 1996 | January 1, 1996 ended through | through through | through December 31, 1998 December 31, 1997 | October 24, 1997 December 31, 1996 | August 13, 1996 ----------------- ----------------- | ---------------- ----------------- | --------------- | | REVENUES: | | Annuity and interest sensitive | | life product charges........ $ 39,119 $ 3,834 | $ 18,288 $ 8,768 | $12,259 Management fee revenue....... 4,771 508 | 2,262 877 | 1,390 Net investment income........ 42,485 5,127 | 21,656 5,795 | 4,990 Realized gains (losses) on | | investments................. (1,491) 15 | 151 42 | (420) Other income................. 5,569 236 | 426 486 | 70 --------- -------- | -------- ------- | ------- 90,453 9,720 | 42,783 15,968 | 18,289 | | | | INSURANCE BENEFITS AND EXPENSES: | | Annuity and interest sensitive | | life benefits: | | Interest credited to account | | balances..................... 94,845 7,413 | 19,276 5,741 | 4,355 Benefit claims incurred in | | excess of account balances... 2,123 -- | 125 1,262 | 915 Underwriting, acquisition | | and insurance expenses: | | Commissions.................. 121,171 9,437 | 26,818 9,866 | 16,549 General expenses............. 37,577 3,350 | 13,907 5,906 | 9,422 Insurance taxes.............. 4,140 450 | 1,889 672 | 1,225 Policy acquisition costs | | deferred................... (197,796) (13,678) | (29,003) (11,712) | (19,300) Amortization: | | Deferred policy acquisition | | costs..................... 5,148 892 | 1,674 244 | 2,436 Value of purchased insurance | | in force.................. 4,724 948 | 5,225 2,745 | 951 Goodwill.................... 3,778 630 | 1,398 589 | -- --------- --------- | -------- ------ | ------- 75,710 9,442 | 41,309 15,313 | 16,553 | | Interest expense............... 4,390 557 | 2,082 85 | -- --------- --------- | -------- ------ | ------- 80,100 9,999 | 43,391 15,398 | 16,553 --------- --------- | -------- ------ | ------- Income (loss) before income | | taxes........................ 10,353 (279) | (608) 570 | 1,736 | | Income taxes................... 5,279 146 | (1,337) 220 | (1,463) --------- --------- | -------- ------ | ------- Net income (loss).............. $ 5,074 $ (425) | $ 729 $ 350 | $ 3,199 ========= ========= | ======== ======= | ========
See accompanying notes. 69 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (Dollars in thousands) Accumulated Redeemable Additional Other Retained Total Common Preferred Paid-in Comprehensive Earnings Stockholder's Stock Stock Capital Income (Loss) (Deficit) Equity ------------------------------------------------------------------------------ PRE-ACQUISITION ------------------------------------------------------------------------------ Balance at January 1, 1996........ $2,500 $50,000 $ 45,030 $ 658 $ (63) $ 98,125 Comprehensive income: Net income...................... -- -- -- -- 3,199 3,199 Change in net unrealized investment gains (losses)..... -- -- -- (1,175) -- (1,175) --------- Comprehensive income............. 2,024 Preferred stock dividends........ -- -- -- -- (719) (719) ------ ------- -------- ------- ------ --------- Balance at August 13, 1996........ $2,500 $50,000 $ 45,030 $ (517) $2,417 $ 99,430 ====== ======= ======== ======== ====== =========
------------------------------------------------------------------------------ POST-ACQUISITION ------------------------------------------------------------------------------ Balance at August 14, 1996........ $2,500 $50,000 $ 87,372 -- -- $139,872 Comprehensive income: Net income...................... -- -- -- -- $ 350 350 Change in net unrealized investment gains (losses)...... -- -- -- $ 262 -- 262 -------- Comprehensive income............. 612 Contribution of preferred stock to additional paid-in capital... -- (50,000) 50,000 -- -- -- ------ ------- -------- ------- ------ -------- Balance at December 31, 1996...... 2,500 -- 137,372 262 350 140,484 Comprehensive income: Net income...................... -- -- -- -- 729 729 Change in net unrealized investment gains (losses)...... -- -- -- 1,543 -- 1,543 -------- Comprehensive income............. 2,272 Contribution of capital.......... -- -- 1,121 -- -- 1,121 ------ ------- -------- ------- ------ -------- Balance at October 24, 1997 $2,500 -- $138,493 $1,805 $1,079 $143,877 ====== ======= ======== ====== ====== ========
------------------------------------------------------------------------------ POST-MERGER ------------------------------------------------------------------------------ Balance at October 25, 1997....... $2,500 -- $224,997 -- -- $227,497 Comprehensive loss: Net loss....................... -- -- -- -- $ (425) (425) Change in net unrealized investment gains (losses)...... -- -- -- $ 241 -- 241 -------- Comprehensive loss............... (184) ------ ------- -------- ------- ------ -------- Balance at December 31, 1997...... 2,500 -- 224,997 241 (425) 227,313 Comprehensive income: Net income...................... -- -- -- -- 5,074 5,074 Change in net unrealized investment gains (losses)...... -- -- -- (1,136) -- (1,136) -------- Comprehensive income............. 3,938 Contribution of capital.......... -- -- 122,500 -- -- 122,500 Other............................ -- -- 143 -- -- 143 ------ ------- -------- ------- ------ -------- Balance at December 31, 1998...... $2,500 -- $347,640 $ (895) $4,649 $353,894 ====== ======= ======== ======= ====== ========
See accompanying notes. 70 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) POST-MERGER | POST-ACQUISITION | PRE-ACQUISITION ------------------------------------ | ----------------------------------- | --------------- For the period | For the period For the period | For the period For the year October 25,1997 | January 1,1997 August 14, 1996 | January 1, 1996 ended through | through through | through December 31, 1998 December 31, 1997 | October 24, 1997 December 31, 1996 | August 13, 1996 ----------------- ----------------- | ---------------- ----------------- | --------------- | | OPERATING ACTIVITIES | | Net income (loss)............ $ 5,074 $ (425) | $ 729 $ 350 | $ 3,199 Adjustments to reconcile net | | income (loss) to net cash | | provided by (used in) | | operations: | | Adjustments related to annuity | | and interest sensitive life | | products: | | Interest credited and other | | charges on interest | | sensitive products........ 94,690 7,361 | 19,177 5,106 | 4,472 Change in unearned | | revenues.................. 2,651 1,189 | 3,292 2,063 | 2,084 Decrease (increase) in | | accrued investment income.. (3,222) 1,205 | (3,489) (877) | (2,494) Policy acquisition costs | | deferred................... (197,796) (13,678) | (29,003) (11,712) | (19,300) Amortization of deferred | | policy acquisition costs... 5,148 892 | 1,674 244 | 2,436 Amortization of value of | | purchased insurance in | | force...................... 4,724 948 | 5,225 2,745 | 951 Change in other assets, | | other liabilities and | | accrued income taxes....... 9,891 4,205 | (8,944) (96) | 4,672 Provision for depreciation | | and amortization........... 8,147 1,299 | 3,203 1,242 | 703 Provision for deferred | | income taxes............... 5,279 146 | 316 220 | (1,463) Realized (gains) losses on | | investments................ 1,491 (15) | (151) (42) | 420 --------- -------- | -------- -------- | --------- Net cash provided by (used | | in)operating activities..... (63,923) 3,127 | (7,971) (757) | (4,320) | | INVESTING ACTIVITIES | | Sale, maturity or repayment | | of investments: | | Fixed maturities - available | | for sale 145,253 9,871 | 39,622 47,453 | 55,091 Mortgage loans on real | | estate..................... 3,791 1,644 | 5,828 40 | -- Short-term investments-net.. -- -- | 11,415 2,629 | 354 --------- -------- | -------- -------- | --------- 149,044 11,515 | 56,865 50,122 | 55,445 Acquisition of investments: | | Fixed maturities - available | | for sale................... (476,523) (29,596) | (155,173) (147,170) | (184,589) Equity securities........... (10,000) (1) | (4,865) (5) | -- Mortgage loans on real | | estate..................... (16,390) (14,209) | (44,481) (31,499) | -- Policy loans - net.......... (2,940) (328) | (3,870) (637) | (1,977) Short-term investments-net.. (26,692) (13,244) | -- -- | -- --------- -------- | -------- -------- | --------- (532,545) (57,378) | (208,389) (179,311) | (186,566) Purchase of property and | | equipment................... (6,485) (252) | (875) (137) | -- --------- -------- | -------- -------- | --------- Net cash used in investing | | activities.................. (389,986) (46,115) | (152,399) (129,326) | (131,121)
See accompanying notes. 71 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (Dollars in thousands) POST-MERGER | POST-ACQUISITION | PRE-ACQUISITION ------------------------------------ | ----------------------------------- | --------------- For the period | For the period For the period | For the period For the year October 25,1997 | January 1,1997 August 14, 1996 | January 1, 1996 ended through | through through | through December 31, 1998 December 31, 1997 | October 24, 1997 December 31, 1996 | August 13, 1996 ----------------- ----------------- | ---------------- ----------------- | --------------- | | FINANCING ACTIVITIES | | Proceeds from issuance of | | surplus note................ $ 60,000 -- | -- $ 25,000 | -- Proceeds from reciprocal loan | | agreement borrowings........ 500,722 -- | -- -- | -- Repayment of reciprocal loan | | agreement borrowings........ (500,722) -- | -- -- | -- Proceeds from revolving | | note payable................ 108,495 -- | -- -- | -- Repayment of revolving note | | payable..................... (108,495) -- | -- -- | -- Proceeds from line of credit | | borrowings.................. -- $10,119 | $ 97,124 -- | -- Repayment of line of credit | | borrowings................... -- (2,207) | (80,977) -- | -- Receipts from annuity and | | interest sensitive life | | policies credited to | | account balances............ 593,428 62,306 | 261,549 116,819 | $149,750 Return of account balances | | on annuity and interest | | sensitive life policies..... (72,649) (6,350) | (13,931) (3,315) | (2,695) Net reallocations to Separate | | Accounts (239,671) (17,017) | (93,069) (10,237) | (8,286) Contributions of capital by | | parent...................... 98,441 -- | 1,011 -- | -- Dividends paid on preferred | | stock....................... -- -- | -- -- | (719) Net cash provided by | | financing activities........ 439,549 46,851 | 171,707 128,267 | 138,050 | | Increase (decrease) in cash | | and cash equivalents........ (14,360) 3,863 | 11,337 (1,816) | 2,609 Cash and cash equivalents at | | beginning of period......... 21,039 17,176 | 5,839 7,655 | 5,046 Cash and cash equivalents at | | end of period............... $ 6,679 $21,039 | $ 17,176 $ 5,839 | $ 7,655 | | SUPPLEMENTAL DISCLOSURE | | OF CASH FLOW INFORMATION | | Cash paid during the period | | for: | | Interest.................... $ 4,305 $ 295 | $ 1,912 -- | -- Income taxes................ 99 -- | 283 -- | -- Non-cash financing activities: | | Non-cash adjustment to | | additional paid-in capital | | for adjusted merger costs.. 143 -- | -- -- | -- Contribution of property and | | equipment from EIC Variable, | | Inc. net of $353 of | | accumulated depreciation... -- -- | 110 -- | -- Contribution of capital from | | parent to repay line of | | credit borrowings.......... 24,059 -- | -- -- | --
See accompanying notes. 72 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1998 1. SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION The consolidated financial statements include Golden American Life Insurance Company ("Golden American") and its wholly owned subsidiary, First Golden American Life Insurance Company of New York ("First Golden," and with Golden American, collectively, the "Companies"). All significant intercompany accounts and transactions have been eliminated. ORGANIZATION Golden American, a wholly owned subsidiary of Equitable of Iowa Companies, Inc., offers variable insurance products and is licensed as a life insurance company in the District of Columbia and all states except New York. On January 2, 1997 and December 23, 1997, First Golden became licensed to sell insurance products in New York and Delaware, respectively. The Companies' products are marketed by broker/dealers, financial institutions and insurance agents. The Companies' primary customers are consumers and corporations. On October 24, 1997, PFHI Holding, Inc. ("PFHI"), a Delaware corporation, acquired all of the outstanding capital stock of Equitable of Iowa Companies ("Equitable") according to the terms of an Agreement and Plan of Merger ("Merger Agreement") dated July 7, 1997 among Equitable, PFHI and ING Groep N.V. ("ING"). PFHI is a wholly owned subsidiary of ING, a global financial services holding company based in The Netherlands. As a result of this transaction, Equitable was merged into PFHI, which was simultaneously renamed Equitable of Iowa Companies, Inc. ("EIC" or the "Parent"), a Delaware corporation. See Note 6 for additional information regarding the merger. On August 13, 1996, Equitable acquired all of the outstanding capital stock of BT Variable, Inc. (subsequently known as EIC Variable, Inc.) and its wholly owned subsidiaries, Golden American and Directed Services, Inc. ("DSI") from Whitewood Properties Corporation ("Whitewood"). See Note 7 for additional information regarding the acquisition. For financial statement purposes, the ING merger was accounted for as a purchase effective October 25, 1997 and the change in control of Golden American through the acquisition of BT Variable, Inc. was accounted for as a purchase effective August 14, 1996. The merger and acquisition resulted in new bases of accounting reflecting estimated fair values of assets and liabilities at their respective dates. As a result, the Companies' financial statements for the periods after October 24, 1997 are presented on the Post-Merger new basis of accounting, for the period August 14, 1996 through October 24, 1997 are presented on the Post- Acquisition basis of accounting, and for August 13, 1996 and prior periods are presented on the Pre-Acquisition basis of accounting. INVESTMENTS Fixed Maturities: The Companies account for their investments under the Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which requires fixed maturities to be designated as either "available for sale," "held for investment" or "trading." Sales of fixed maturities designated as "available for sale" are not restricted by SFAS No. 115. Available for sale securities are reported at fair value and unrealized gains and losses on these securities are included directly in stockholder's equity, after adjustment for related changes in value of purchased insurance in force ("VPIF"), deferred policy acquisition costs ("DPAC") and deferred income taxes. At December 31, 1998 and 1997, all of the Companies' fixed maturities are designated as available for sale, although the Companies are not precluded from designating fixed maturities as held for investment or trading at some future date. Securities determined to have a decline in value that is other than temporary are written down to estimated fair value, which becomes the new cost basis by a charge to realized losses in the Companies' 73 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 1. SIGNIFICANT ACCOUNTING POLICIES (continued) Statements of Operations. Premiums and discounts are amortized/accrued utilizing a method which results in a constant yield over the securities' expected lives. Amortization/accrual of premiums and discounts on mortgage and other asset-backed securities incorporates a prepayment assumption to estimate the securities' expected lives. Equity Securities: Equity securities are reported at estimated fair value if readily marketable. The change in unrealized appreciation and depreciation of marketable equity securities (net of related deferred income taxes, if any) is included directly in stockholder's equity. Equity securities determined to have a decline in value that is other than temporary are written down to estimated fair value, which then becomes the new cost basis by a charge to realized losses in the Companies' Statements of Operations. Mortgage Loans: Mortgage loans on real estate are reported at cost adjusted for amortization of premiums and accrual of discounts. If the value of any mortgage loan is determined to be impaired (i.e., when it is probable the Companies will be unable to collect all amounts due according to the contractual terms of the loan agreement), the carrying value of the mortgage loan is reduced to the present value of expected future cash flows from the loan discounted at the loan's effective interest rate, or to the loan's observable market price, or the fair value of the underlying collateral. The carrying value of impaired loans is reduced by the establishment of a valuation allowance which is adjusted at each reporting date for significant changes in the calculated value of the loan. Changes in this valuation allowance are charged or credited to income. Other Investments: Policy loans are reported at unpaid principal. Short-term investments are reported at cost, adjusted for amortization of premiums and accrual of discounts. Realized Gains and Losses: Realized gains and losses are determined on the basis of specific identification and average cost methods for manager initiated and issuer initiated disposals, respectively. Fair Values: Estimated fair values, as reported herein, of conventional mortgage-backed securities not actively traded in a liquid market and publicly traded fixed maturities are estimated using a third party pricing system. This pricing system uses a matrix calculation assuming a spread over U.S. Treasury bonds based upon the expected average lives of the securities. Fair values of private placement bonds are estimated using a matrix that assumes a spread (based on interest rates and a risk assessment of the bonds) over U.S. Treasury bonds. Estimated fair values of equity securities which consist of the Companies' investment in its registered separate accounts are based upon the quoted fair value of the securities comprising the individual portfolios underlying the separate accounts. CASH AND CASH EQUIVALENTS For purposes of the accompanying Statements of Cash Flows, the Companies consider all demand deposits and interest-bearing accounts not related to the investment function to be cash equivalents. All interest-bearing accounts classified as cash equivalents have original maturities of three months or less. DEFERRED POLICY ACQUISITION COSTS Certain costs of acquiring new insurance business, principally first year commissions and interest bonuses, extra credit bonuses and other expenses related to the production of new business, have been deferred. Acquisition costs for variable annuity and variable life products are being amortized generally in proportion to the present value (using the assumed crediting rate) of expected future gross profits. This amortization is adjusted retrospectively when the Companies revise their estimate of current or future gross profits to be realized from a group of products. DPAC is adjusted to reflect the pro forma impact of unrealized gains and losses on fixed maturities the Companies have designated as "available for sale" under SFAS No. 115. VALUE OF PURCHASED INSURANCE IN FORCE As a result of the merger and the acquisition, a portion of the purchase price related to each transaction was allocated to the right to receive future cash flows from existing insurance contracts. This allocated cost 74 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 1. SIGNIFICANT ACCOUNTING POLICIES (continued) represents VPIF which reflects the value of those purchased policies calculated by discounting actuarially determined expected future cash flows at the discount rate determined by the purchaser. Amortization of VPIF is charged to expense in proportion to expected gross profits of the underlying business. This amortization is adjusted retrospectively when the Companies revise the estimate of current or future gross profits to be realized from the insurance contracts acquired. VPIF is adjusted to reflect the pro forma impact of unrealized gains and losses on available for sale fixed maturities. See Notes 6 and 7 for additional information on VPIF resulting from the merger and acquisition. PROPERTY AND EQUIPMENT Property and equipment primarily represent leasehold improvements, office furniture, certain other equipment and capitalized computer software and are not considered to be significant to the Companies' overall operations. Property and equipment are reported at cost less allowances for depreciation. Depreciation expense is computed primarily on the basis of the straight-line method over the estimated useful lives of the assets. GOODWILL Goodwill was established as a result of the merger and is being amortized over 40 years on a straight-line basis. Goodwill established as a result of the acquisition was being amortized over 25 years on a straight-line basis. See Notes 6 and 7 for additional information on the merger and acquisition. FUTURE POLICY BENEFITS Future policy benefits for divisions with fixed interest guarantees of the variable products are established utilizing the retrospective deposit accounting method. Policy reserves represent the premiums received plus accumulated interest, less mortality and administration charges. Interest credited to these policies ranged from 3.00% to 10.00% during 1998, 3.30% to 8.25% during 1997 and 4.00% to 7.25% during 1996. The unearned revenue reserve represents unearned distribution fees. These distribution fees have been deferred and are amortized over the life of the contracts in proportion to expected gross profits. SEPARATE ACCOUNTS Assets and liabilities of the separate accounts reported in the accompanying Balance Sheets represent funds separately administered principally for variable annuity and variable life contracts. Contractholders, rather than the Companies, bear the investment risk for the variable products. At the direction of the contractholders, the separate accounts invest the premiums from the sale of variable products in shares of specified mutual funds. The assets and liabilities of the separate accounts are clearly identified and segregated from other assets and liabilities of the Companies. The portion of the separate account assets equal to the reserves and other liabilities of variable annuity and variable life contracts cannot be charged with liabilities arising out of any other business the Companies may conduct. Variable separate account assets are carried at fair value of the underlying investments and generally represent contractholder investment values maintained in the accounts. Variable separate account liabilities represent account balances for the variable annuity and variable life contracts invested in the separate accounts; the fair value of these liabilities is equal to their carrying amount. Net investment income and realized and unrealized capital gains and losses related to separate account assets are not reflected in the accompanying Statements of Operations. Product charges recorded by the Companies from variable products consist of charges applicable to each contract for mortality and expense risk, cost of insurance, contract administration and surrender charges. In addition, some variable annuity and all variable life contracts provide for a distribution fee collected for 75 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 1. SIGNIFICANT ACCOUNTING POLICIES (continued) a limited number of years after each premium deposit. Revenue recognition of collected distribution fees is amortized over the life of the contract in proportion to its expected gross profits. The balance of unrecognized revenue related to the distribution fees is reported as an unearned revenue reserve. DEFERRED INCOME TAXES Deferred tax assets or liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. Deferred tax assets or liabilities are adjusted to reflect the pro forma impact of unrealized gains and losses on equity securities and fixed maturities the Companies have designated as available for sale under SFAS No. 115. Changes in deferred tax assets or liabilities resulting from this SFAS No. 115 adjustment are charged or credited directly to stockholder's equity. Deferred income tax expenses or credits reflected in the Companies' Statements of Operations are based on the changes in the deferred tax asset or liability from period to period (excluding the SFAS No. 115 adjustment). DIVIDEND RESTRICTIONS Golden American's ability to pay dividends to its Parent is restricted. Prior approval of insurance regulatory authorities is required for payment of dividends to the stockholder which exceed an annual limit. During 1999, Golden American cannot pay dividends to its Parent without prior approval of statutory authorities. Under the provisions of the insurance laws of the State of New York, First Golden cannot distribute any dividends to its stockholder unless a notice of its intent to declare a dividend and the amount of the dividend has been filed at least thirty days in advance of the proposed declaration. If the Superintendent finds the financial condition of First Golden does not warrant the distribution, the Superintendent may disapprove the distribution by giving written notice to First Golden within thirty days after the filing. SEGMENT REPORTING As of December 31, 1998, the Companies adopted the SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 131 superseded SFAS No. 14, "Financial Reporting for Segments of a Business Enterprise." SFAS No. 131 establishes standards for the way public business enterprises report information about operating segments in annual financial statements and requires enterprises to report selected information about operating segments in interim financial reports. SFAS No. 131 also establishes standards for related disclosures about products and services, geographic areas and major customers. The Companies manage their business as one segment, the sale of variable products designed to meet customer needs for tax- advantaged methods of saving for retirement and protection from unexpected death. Variable products are sold to consumers and corporations throughout the United States. The adoption of SFAS No. 131 did not affect the results of operations or financial position of the Companies. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions affecting the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Management is required to utilize historical experience and assumptions about future events and circumstances in order to develop estimates of material reported amounts and disclosures. Included among the material (or potentially material) reported amounts and disclosures that require extensive use of estimates and assumptions are (1) estimates of fair values of investments in securities and other financial instruments, as well as fair values of policyholder liabilities, (2) policyholder liabilities, (3) deferred policy 76 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 1. SIGNIFICANT ACCOUNTING POLICIES (continued) acquisition costs and value of purchased insurance in force, (4) fair values of assets and liabilities recorded as a result of merger and acquisition transactions, (5) asset valuation allowances, (6) guaranty fund assessment accruals, (7) deferred tax benefits (liabilities) and (8) estimates for commitments and contingencies including legal matters, if a liability is anticipated and can be reasonably estimated. Estimates and assumptions regarding all of the proceeding are inherently subject to change and are reassessed periodically. Changes in estimates and assumptions could materially impact the financial statements. RECLASSIFICATIONS Certain amounts in the financial statements for the periods ended within the years ended December 31, 1997 and 1996 have been reclassified to conform to the December 31, 1998 financial statement presentation. 2. BASIS OF FINANCIAL REPORTING The financial statements of the Companies differ from related statutory-basis financial statements principally as follows: (1) acquisition costs of acquiring new business are deferred and amortized over the life of the policies rather than charged to operations as incurred; (2) an asset representing the present value of future cash flows from insurance contracts acquired was established as a result of the merger/acquisition and is amortized and charged to expense; (3) future policy benefit reserves for divisions with fixed interest guarantees of the variable products are based on full account values, rather than the greater of cash surrender value or amounts derived from discounting methodologies utilizing statutory interest rates; (4) reserves are reported before reduction for reserve credits related to reinsurance ceded and a receivable is established, net of an allowance for uncollectible amounts, for these credits rather than presented net of these credits; (5) fixed maturity investments are designated as "available for sale" and valued at fair value with unrealized appreciation/depreciation, net of adjustments to value of purchased insurance in force, deferred policy acquisition costs and deferred income taxes (if applicable), credited/charged directly to stockholder's equity rather than valued at amortized cost; (6) the carrying value of fixed maturities is reduced to fair value by a charge to realized losses in the Statements of Operations when declines in carrying value are judged to be other than temporary, rather than through the establishment of a formula- determined statutory investment reserve (carried as a liability), changes in which are charged directly to surplus; (7) deferred income taxes are provided for the difference between the financial statement and income tax bases of assets and liabilities; (8) net realized gains or losses attributed to changes in the level of interest rates in the market are recognized when the sale is completed rather than deferred and amortized over the remaining life of the fixed maturity security; (9) a liability is established for anticipated guaranty fund assessments, net of related anticipated premium tax credits, rather than capitalized when assessed and amortized in accordance with procedures permitted by insurance regulatory authorities; (10) revenues for variable products consist of policy charges applicable to each contract for the cost of insurance, policy administration charges, amortization of policy initiation fees and surrender charges assessed rather than premiums received; (11) the financial statements of Golden American's wholly owned subsidiary are consolidated rather than recorded at the equity in net assets; (12) surplus notes are reported as liabilities rather than as surplus; and (13) assets and liabilities are restated to fair values when a change in ownership occurs, with provisions for goodwill and other intangible assets, rather than continuing to be presented at historical cost. The net loss for Golden American as determined in accordance with statutory accounting practices was $68,002,000 in 1998, $428,000 in 1997 and $9,188,000 in 1996. Total statutory capital and surplus was $183,045,000 at December 31, 1998 and $76,914,000 at December 31, 1997. 77 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 3. INVESTMENT OPERATIONS INVESTMENT RESULTS Major categories of net investment income are summarized below: POST-MERGER | POST-ACQUISITION | PRE-ACQUISITION ------------------------------------ | ----------------------------------- | --------------- For the period | For the period For the period | For the period For the year October 25,1997 | January 1,1997 August 14, 1996 | January 1, 1996 ended through | through through | through December 31, 1998 December 31, 1997 | October 24, 1997 December 31, 1996 | August 13, 1996 ----------------- ----------------- | ---------------- ----------------- | --------------- | (Dollars in thousands) | | | Fixed maturities............. $35,224 $4,443 | $18,488 $5,083 | $4,507 Equity securities............ -- 3 | -- 103 | -- Mortgage loans on | | real estate................. 6,616 879 | 3,070 203 | -- Policy loans................. 619 59 | 482 78 | 73 Short-term | | investments................. 1,311 129 | 443 441 | 341 Other, net................... 246 (154) | 24 2 | 22 Funds held in | | escrow...................... -- -- | -- -- | 145 ------- ------ | ------- ------ | ------ Gross investment | | income...................... 44,016 5,359 | 22,507 5,910 | 5,088 Less investment | | expenses.................... (1,531) (232) | (851) (115) | (98) ------- ------ | ------- ------ | ------ Net investment | | income...................... $42,485 $5,127 | $21,656 $5,795 | $4,990 ======= ====== | ======= ====== | ======
Realized gains (losses) on investments are as follows: POST-MERGER | POST-ACQUISITION | PRE-ACQUISITION ------------------------------------ | ----------------------------------- | --------------- For the period | For the period For the period | For the period For the year October 25,1997 | January 1,1997 August 14, 1996 | January 1, 1996 ended through | through through | through December 31, 1998 December 31, 1997 | October 24, 1997 December 31, 1996 | August 13, 1996 ----------------- ----------------- | ---------------- ----------------- | --------------- | (Dollars in thousands) | | | Fixed maturities: | | available for sale.......... $(1,428) $25 | $151 $42 | $(420) Mortgage loans............... (63) (10) | -- -- | -- ------- --- | ---- --- | ----- Realized gains (losses) | | on investments.............. $(1,491) $15 | $151 $42 | $(420) ======= === | ==== === | =====
78 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 3. INVESTMENT OPERATIONS (continued) The change in unrealized appreciation (depreciation) of securities at fair value is as follows: POST-MERGER | POST-ACQUISITION | PRE-ACQUISITION ------------------------------------ | ----------------------------------- | --------------- For the period | For the period For the period | For the period For the year October 25,1997 | January 1,1997 August 14, 1996 | January 1, 1996 ended through | through through | through December 31, 1998 December 31, 1997 | October 24, 1997 December 31, 1996 | August 13, 1996 ----------------- ----------------- | ---------------- ----------------- | --------------- | (Dollars in thousands) | | | Fixed maturities: | | Available for sale.......... $1,100 $(3,494) | $4,197 $2,497 | $(3,045) Held for investment......... -- -- | -- -- | (90) Equity securities............ (2,390) (68) | (462) (4) | (2) ------ ------- | ------ ------ | ------- Unrealized appreciation | | (depreciation) of | | securities.................. $(1,290) $(3,562) | $3,735 $2,493 | $(3,137) ======= ======= | ====== ====== | =======
At December 31, 1998 and December 31, 1997, amortized cost, gross unrealized gains and losses and estimated fair values of fixed maturities, all of which are designated as available for sale, are as follows: POST-MERGER --------------------------------------------------------- Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value --------- ---------- ---------- --------- (Dollars in thousands) DECEMBER 31, 1998 U.S. government and governmental agencies and authorities............. $ 13,568 $ 182 $ (8) $ 13,742 Foreign governments................... 2,028 8 -- 2,036 Public utilities...................... 67,710 546 (447) 67,809 Corporate securities.................. 365,569 4,578 (2,658) 367,489 Other asset-backed securities......... 99,877 281 (1,046) 99,112 Mortgage-backed securities............ 191,020 1,147 (370) 191,797 -------- ------ ------- -------- Total................................. $739,772 $6,742 $(4,529) $741,985 ======== ====== ======= ======== DECEMBER 31, 1997 U.S. government and governmental agencies and authorities............ $ 5,705 $ 5 $ (1) $ 5,709 Foreign governments................... 2,062 -- (9) 2,053 Public utilities...................... 26,983 55 (4) 27,034 Corporate securities.................. 259,798 1,105 (242) 260,661 Other asset-backed securities......... 3,155 32 -- 3,187 Mortgage-backed securities............ 115,585 202 (30) 115,757 -------- ------ ------- -------- Total................................. $413,288 $1,399 $ (286) $414,401 ======== ====== ======= ========
At December 31, 1998, net unrealized investment gains on fixed maturities designated as available for sale totaled $2,213,000. Appreciation of $1,005,000 was included in stockholder's equity at December 31, 1998 (net of an adjustment of $203,000 to VPIF, an adjustment of $455,000 to DPAC and deferred income taxes of $550,000). Short-term investments with maturities of 30 days or less have been excluded from the above schedules. Amortized cost approximates fair value for these securities. 79 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 3. INVESTMENT OPERATIONS (continued) Amortized cost and estimated fair value of fixed maturities designated as available for sale, by contractual maturity, at December 31, 1998 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. POST-MERGER --------------------------- Amortized Estimated December 31, 1998 Cost Fair Value - ---------------------------------------------------------------------- (Dollars in thousands) Due within one year...................... $ 50,208 $ 50,361 Due after one year through five years.... 310,291 311,943 Due after five years through ten years... 78,264 78,541 Due after ten years...................... 10,112 10,231 448,875 451,076 Other asset-backed securities............ 99,877 99,112 Mortgage-backed securities............... 191,020 191,797 -------- -------- Total.................................... $739,772 $741,985 ======== ======== An analysis of sales, maturities and principal repayments of the Companies' fixed maturities portfolio is as follows: Gross Gross Proceeds Amortized Realized Realized from Cost Gains Losses Sale --------- -------- -------- -------- (Dollars in thousands) POST-MERGER For the year ended December 31, 1998: Scheduled principal repayments, calls and tenders...................... $102,504 $ 60 $ (3) $102,561 Sales................................... 43,204 518 (1,030) 42,692 -------- ---- ------- -------- Total................................... $145,708 $578 $(1,033) $145,253 ======== ==== ======= ======== For the period October 25, 1997 through December 31, 1997: Scheduled principal repayments, calls and tenders..................... $ 6,708 $ 2 -- $ 6,710 Sales.................................. 3,138 23 -- 3,161 -------- ---- ------- -------- Total.................................. $ 9,846 $ 25 -- $ 9,871 ======== ==== ======= ========
80 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 3. INVESTMENT OPERATIONS (continued) Gross Gross Proceeds Amortized Realized Realized from Cost Gains Losses Sale --------- -------- -------- -------- (Dollars in thousands) POST- ACQUISITION For the period January 1, 1997 through October 24, 1997: Scheduled principal repayments, calls and tenders..................... $25,419 -- -- $25,419 Sales.................................. 14,052 $153 $ (2) 14,203 ------- ---- ---- ------- Total.................................. $39,471 $153 $ (2) $39,622 ======= ==== ==== ======= For the period August 14, 1996 through December 31, 1996: Scheduled principal repayments, calls and tenders.................... $ 1,612 -- -- $ 1,612 Sales................................. 45,799 $115 $(73) 45,841 ------- ---- ---- ------- Total................................. $47,411 $115 $(73) $47,453 ======= ==== ==== ======= PRE-ACQUISITION For the period January 1, 1996 through August 13, 1996: Scheduled principal repayments, calls and tenders.................... $ 1,801 -- -- $ 1,801 Sales................................. 53,710 $152 $(572) 53,290 ------- ---- ----- ------- Total................................. $55,511 $152 $(572) $55,091 ======= ==== ===== =======
Investment Valuation Analysis: The Companies analyze the investment portfolio at least quarterly in order to determine if the carrying value of any investment has been impaired. The carrying value of debt and equity securities is written down to fair value by a charge to realized losses when an impairment in value appears to be other than temporary. During the year ended December 31, 1998, Golden American recognized a loss on two fixed maturity investments of $973,000. During 1997 and 1996, no investments were identified as having an other than temporary impairment. Investments on Deposit: At December 31, 1998 and 1997, affidavits of deposits covering bonds with a par value of $6,470,000 and $6,605,000, respectively, were on deposit with regulatory authorities pursuant to certain statutory requirements. Investment Diversifications: The Companies' investment policies related to the investment portfolio require diversification by asset type, company and industry and set limits on the amount which can be invested in an individual issuer. Such policies are at least as restrictive as those set forth by regulatory authorities. The following percentages relate to holdings at December 31, 1998 and December 31, 1997. Fixed maturities included investments in basic industrials (26% in 1998, 30% in 1997), conventional mortgage-backed securities (25% in 1998, 13% in 1997), financial companies (19% in 1998, 24% in 1997), other asset- backed securities (11% in 1998) and various government bonds and government or agency mortgage-backed securities (5% in 1998, 17% in 1997). Mortgage loans on real estate have been analyzed by geographical location with concentrations by state identified as California (12% in 1998 and 1997), Utah (11% in 1998, 13% in 1997) and Georgia (10% in 1998, 11% in 1997). There are no other concentrations of mortgage loans in any state exceeding ten percent at December 31, 1998 and 1997. Mortgage loans on real 81 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 3. INVESTMENT OPERATIONS (continued) estate have also been analyzed by collateral type with significant concentrations identified in office buildings (36% in 1998, 43% in 1997), industrial buildings (32% in 1998, 33% in 1997) and retail facilities (20% in 1998, 15% in 1997). Equity securities are not significant to the Companies' overall investment portfolio. No investment in any person or its affiliates (other than bonds issued by agencies of the United States government) exceeded ten percent of stockholder's equity at December 31, 1998. 4. COMPREHENSIVE INCOME As of January 1, 1998, the Companies adopted the SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this statement had no impact on the Companies' net income or stockholder's equity. SFAS No. 130 requires unrealized gains or losses on the Companies' available for sale securities (net of VPIF, DPAC and deferred income taxes) to be included in other comprehensive income. Prior to the adoption of SFAS No. 130, unrealized gains (losses) were reported separately in stockholder's equity. Prior year financial statements have been reclassified to conform to the requirements of SFAS No. 130. Total comprehensive income (loss) for the Companies includes $1,015,000 for the year ended December 31, 1998 for First Golden ($159,000, $536,000 and $(57,000), respectively, for the periods October 25, 1997 through December 31, 1997, January 1, 1997 through October 24, 1997 and December 17, 1996 through December 31, 1996). Other comprehensive income excludes net investment gains (losses) included in net income which merely represent transfers from unrealized to realized gains and losses. These amounts total $(2,133,000) in 1998. Such amounts, which have been measured through the date of sale, are net of income taxes and adjustments to VPIF and DPAC totaling $705,000 in 1998. 5. FAIR VALUES OF FINANCIAL INSTRUMENTS SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires disclosure of estimated fair value of all financial instruments, including both assets and liabilities recognized and not recognized in a company's balance sheet, unless specifically exempted. SFAS No. 119, "Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments," requires additional disclosures about derivative financial instruments. Most of the Companies' investments, investment contracts and debt fall within the standards' definition of a financial instrument. Fair values for the Companies' insurance contracts other than investment contracts are not required to be disclosed. In cases where quoted market prices are not available, estimated fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accounting, actuarial and regulatory bodies are continuing to study the methodologies to be used in developing fair value information, particularly as it relates to such things as liabilities for insurance contracts. Accordingly, care should be exercised in deriving conclusions about the Companies' business or financial condition based on the information presented herein. The Companies closely monitor the composition and yield of invested assets, the duration and interest credited on insurance liabilities and resulting interest spreads and timing of cash flows. These amounts are taken into consideration in the Companies' overall management of interest rate risk, which attempts to minimize exposure to changing interest rates through the matching of investment cash flows with amounts expected to be due under insurance contracts. These assumptions may not result in values consistent with those obtained through an actuarial appraisal of the Companies' business or values that might arise in a negotiated transaction. 82 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 5. FAIR VALUES OF FINANCIAL INSTRUMENTS (continued) The following compares carrying values as shown for financial reporting purposes with estimated fair values: POST-MERGER ----------------------------------------------- December 31, 1998 December 31, 1997 ---------------------- ----------------------- Estimated Estimated Carrying Fair Carrying Fair Value Value Value Value ----------- --------- ---------- ----------- (Dollars in thousands) ASSETS Fixed maturities, available for sale...................... $ 741,985 $ 741,985 $ 414,401 $ 414,401 Equity securities.............. 11,514 11,514 3,904 3,904 Mortgage loans on real estate.. 97,322 99,762 85,093 86,348 Policy loans................... 11,772 11,772 8,832 8,832 Short-term investments......... 41,152 41,152 14,460 14,460 Cash and cash equivalents...... 6,679 6,679 21,039 21,039 Separate account assets........ $3,396,114 $3,396,114 $1,646,169 $1,646,169 LIABILITIES Annuity products............... 869,009 827,597 493,181 469,714 Surplus notes.................. 85,000 90,654 25,000 28,837 Line of credit with affiliate.. -- -- 24,059 24,059 Separate account liabilities... 3,396,114 3,396,114 1,646,169 1,646,169
The following methods and assumptions were used by the Companies in estimating fair values. Fixed Maturities: Estimated fair values of conventional mortgage- backed securities not actively traded in a liquid market and publicly traded securities are estimated using a third party pricing system. This pricing system uses a matrix calculation assuming a spread over U.S. Treasury bonds based upon the expected average lives of the securities. Equity Securities: Estimated fair values of equity securities, which consist of the Companies' investment in the portfolios underlying its separate accounts, are based upon the quoted fair value of individual securities comprising the individual portfolios. For equity securities not actively traded, estimated fair values are based upon values of issues of comparable returns and quality. Mortgage Loans on Real Estate: Fair values are estimated by discounting expected cash flows, using interest rates currently offered for similar loans. Policy Loans: Carrying values approximate the estimated fair value for policy loans. Short-Term Investments and Cash and Cash Equivalents: Carrying values reported in the Companies' historical cost basis balance sheet approximate estimated fair value for these instruments due to their short-term nature. Separate Account Assets: Separate account assets are reported at the quoted fair values of the individual securities in the separate accounts. Annuity Products: Estimated fair values of the Companies' liabilities for future policy benefits for the divisions of the variable annuity products with fixed interest guarantees and for supplemental contracts without life contingencies are stated at cash surrender value, the cost the Companies would incur to extinguish the liability. Surplus Notes: Estimated fair value of the Companies' surplus notes were based upon discounted future cash flows using a discount rate approximating the Companies' return on invested assets. 83 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 5. FAIR VALUES OF FINANCIAL INSTRUMENTS (continued) Line Of Credit With Affiliate: Carrying value reported in the Companies' historical cost basis balance sheet approximates estimated fair value for this instrument. Separate Account Liabilities: Separate account liabilities are reported at full account value in the Companies' historical cost balance sheet. Estimated fair values of separate account liabilities are equal to their carrying amount. 6. MERGER Transaction: On October 23, 1997, Equitable's shareholders approved the Merger Agreement dated July 7, 1997 among Equitable, PFHI and ING. On October 24, 1997, PFHI, a Delaware corporation, acquired all of the outstanding capital stock of Equitable according to the Merger Agreement. PFHI is a wholly owned subsidiary of ING, a global financial services holding company based in The Netherlands. Equitable, an Iowa corporation, in turn, owned all the outstanding capital stock of Equitable Life Insurance Company of Iowa ("Equitable Life") and Golden American and their wholly owned subsidiaries. In addition, Equitable owned all the outstanding capital stock of Locust Street Securities, Inc. ("LSSI"), Equitable Investment Services, Inc. (subsequently dissolved), DSI, Equitable of Iowa Companies Capital Trust, Equitable of Iowa Companies Capital Trust II and Equitable of Iowa Securities Network, Inc. (subsequently renamed ING Funds Distributor, Inc.). In exchange for the outstanding capital stock of Equitable, ING paid total consideration of approximately $2.1 billion in cash and stock and assumed approximately $400 million in debt. As a result of this transaction, Equitable was merged into PFHI, which was simultaneously renamed Equitable of Iowa Companies, Inc. ("EIC" or the "Parent"), a Delaware corporation. All costs of the merger, including expenses to terminate certain benefit plans, were paid by the Parent. Accounting Treatment: The merger was accounted for as a purchase resulting in a new basis of accounting, reflecting estimated fair values for assets and liabilities at October 24, 1997. The purchase price was allocated to EIC and its subsidiaries with $227,497,000 allocated to the Companies. Goodwill was established for the excess of the merger cost over the fair value of the net assets and attributed to EIC and its subsidiaries including Golden American and First Golden. The amount of goodwill allocated to the Companies relating to the merger was $151,127,000 at the merger date and is being amortized over 40 years on a straight-line basis. The carrying value of goodwill will be reviewed periodically for any indication of impairment in value. The Companies' DPAC, previous balance of VPIF and unearned revenue reserve, as of the merger date, were eliminated and a new asset of $44,297,000 representing VPIF was established for all policies in force at the merger date. Value of Purchased Insurance In Force: As part of the merger, a portion of the acquisition cost was allocated to the right to receive future cash flows from insurance contracts existing with the Companies at the merger date. This allocated cost represents VPIF reflecting the value of those purchased policies calculated by discounting the actuarially determined expected future cash flow at the discount rate determined by ING. 84 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 6. Merger (continued) An analysis of the VPIF asset is as follows: POST-MERGER ------------------------------------- For the period For the year October 25, 1997 ended through December 31, 1998 December 31, 1997 ----------------- ----------------- (Dollars in thousands) Beginning balance................. $43,174 $44,297 -------- -------- Imputed interest.................. 2,802 1,004 Amortization...................... (7,753) (1,952) Changes in assumptions of timing of gross profits.......... 227 -- -------- -------- Net amortization.................. (4,724) (948) Adjustment for unrealized gains on available for sale securities....................... (28) (175) Adjustment for other receivables and merger costs................. (2,445) -- -------- -------- Ending balance.................... $35,977 $43,174 ======= ======= Interest is imputed on the unamortized balance of VPIF at a rate of 7.38% for the year ended December 31, 1998 and 7.03% for the period October 25, 1997 through December 31, 1997. The amortization of VPIF, net of imputed interest, is charged to expense. VPIF decreased $2,664,000 in the second quarter of 1998 to adjust the value of other receivables at merger date and increased $219,000 in the first quarter of 1998 as a result of an adjustment to the merger costs. VPIF is adjusted for the unrealized gains (losses) on available for sale securities; such changes are included directly in stockholder's equity. Based on current conditions and assumptions as to the impact of future events on acquired policies in force, the expected approximate net amortization relating to VPIF as of December 31, 1998 is $4,300,000 in 1999, $4,000,000 in 2000, $3,900,000 in 2001, $3,700,000 in 2002 and $3,300,000 in 2003. Actual amortization may vary based upon changes in assumptions and experience. 7. ACQUISITION Transaction: On August 13, 1996, Equitable acquired all of the outstanding capital stock of BT Variable from Whitewood, a wholly owned subsidiary of Bankers Trust Company ("Bankers Trust"), according to the terms of the Purchase Agreement dated May 3, 1996 between Equitable and Whitewood. In exchange for the outstanding capital stock of BT Variable, Equitable paid the sum of $93,000,000 in cash to Whitewood in accordance with the terms of the Purchase Agreement. Equitable also paid the sum of $51,000,000 in cash to Bankers Trust to retire certain debt owed by BT Variable to Bankers Trust pursuant to a revolving credit arrangement. After the acquisition, the BT Variable, Inc. name was changed to EIC Variable, Inc. On April 30, 1997, EIC Variable, Inc. was liquidated and its investments in Golden American and DSI were transferred to Equitable, while the remainder of its net assets were contributed to Golden American. On December 30, 1997, EIC Variable, Inc. was dissolved. Accounting Treatment: The acquisition was accounted for as a purchase resulting in a new basis of accounting, which reflected estimated fair values for assets and liabilities at August 13, 1996. The purchase price was allocated to the three companies purchased - BT Variable, DSI and Golden American. The allocation of the purchase price to Golden American was approximately $139,872,000. Goodwill was established for the excess of the purchase price over the fair value of the net assets acquired and attributed to Golden American. The amount of goodwill relating to the acquisition was $41,113,000 and was amortized over 25 years on a straight-line basis until the October 24, 1997 merger with ING. Golden American's DPAC, previous balance of VPIF and unearned revenue reserve, as of the acquisition date, were eliminated and an asset of $85,796,000 representing VPIF was established for all policies in force at the acquisition date. 85 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 7. Acquisition (continued) Value of Purchased Insurance In Force: As part of the acquisition, a portion of the acquisition cost was allocated to the right to receive future cash flows from the insurance contracts existing with Golden American at the date of acquisition. This allocated cost represents VPIF reflecting the value of those purchased policies calculated by discounting the actuarially determined expected future cash flows at the discount rate determined by Equitable. An analysis of the VPIF asset is as follows: POST-ACQUISITION | PRE-ACQUISITION ------------------------------------|---------------- For the period For the period | For the period January 1, 1997 August 14,1996 | January 1, 1996 through through | through October 24, 1997 December 31, 1996 | August 13, 1996 ---------------- ----------------- | --------------- (Dollars in thousands) | Beginning balance................ $83,051 $85,796 | $6,057 ------- ------- | ------ Imputed interest................. 5,138 2,465 | 273 Amortization..................... (12,656) (5,210) | (1,224) Changes in assumption of | ------ timing of gross profits......... 2,293 -- | -- ------- ------- | Net amortization................. (5,225) (2,745) | (951) Adjustment for unrealized gains | (losses) on available for sale | securities...................... (373) -- | 11 ------- ------- | ------ Ending balance $77,453 $83,051 | $5,117 ======= ======= | ======
Pre-Acquisition VPIF represents the remaining value assigned to in force contracts when Bankers Trust purchased Golden American from Mutual Benefit Life Insurance Company in Rehabilitation ("Mutual Benefit") on September 30, 1992. Interest was imputed on the unamortized balance of VPIF at rates of 7.70% to 7.80% for the period August 14, 1996 through October 24, 1997. The amortization of VPIF net of imputed interest was charged to expense. VPIF was also adjusted for the unrealized gains (losses) on available for sale securities; such changes were included directly in stockholder's equity. 8. INCOME TAXES Golden American files a consolidated federal income tax return. Under the Internal Revenue Code, a newly acquired insurance company cannot file as part of its parent's consolidated tax return for 5 years. At December 31, 1998, the Companies have net operating loss ("NOL") carryforwards for federal income tax purposes of approximately $50,917,000. Approximately $5,094,000, $3,354,000 and $42,469,000 of these NOL carryforwards are available to offset future taxable income of the Companies through the years 2011, 2012 and 2013, respectively. 86 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 8. INCOME TAXES(continued) INCOME TAX EXPENSE Income tax expense (benefit) included in the consolidated financial statements is as follows: POST-MERGER | POST-ACQUISITION | PRE-ACQUISITION ------------------------------------ | ----------------------------------- | --------------- For the period | For the period For the period | For the period For the year October 25,1997 | January 1,1997 August 14, 1996 | January 1, 1996 ended through | through through | through December 31, 1998 December 31, 1997 | October 24, 1997 December 31, 1996 | August 13, 1996 ----------------- ----------------- | ---------------- ----------------- | --------------- | (Dollars in thousands) | | | Current..................... -- -- | $ 12 -- | -- Deferred.................... $5,279 $146 | (1,349) $220 | $(1,463) ------ ---- | | $5,279 $146 | $(1,337) $220 | $(1,463) ====== ==== | ======= ==== | =======
The effective tax rate on income (loss) before income taxes is different from the prevailing federal income tax rate. A reconciliation of this difference is as follows: POST-MERGER | POST-ACQUISITION | PRE-ACQUISITION ------------------------------------ | ----------------------------------- | --------------- For the period | For the period For the period | For the period For the year October 25,1997 | January 1,1997 August 14, 1996 | January 1, 1996 ended through | through through | through December 31, 1998 December 31, 1997 | October 24, 1997 December 31, 1996 | August 13, 1996 ----------------- ----------------- | ---------------- ----------------- | --------------- | (Dollars in thousands) | | | | | Income (loss) before | | income taxes.............. $10,353 $(279) | $ ( 608) $570 | $1,736 ======= ===== | ======= ==== | ====== Income tax (benefit) at | | federal statutory rate.... $ 3,624 $ (98) | $ (213) $200 | $ 607 Tax effect (decrease) of: | | Realization of NOL | | carryforwards........... -- -- | -- -- | (1,214) Goodwill amortization..... 1,322 220 | -- -- | -- Compensatory stock | | option and restricted | | stock expense............ -- -- | (1,011) -- | -- Meals and | | entertainment............ 157 23 | 53 20 | -- Other items............... 176 1 | (166) -- | -- Change in valuation | | allowance................. -- -- | -- -- | (856) ------- ----- | ------- ---- | ------- Income tax expense | | (benefit)................. $ 5,279 $ 146 | $(1,337) $220 | $(1,463) ======= ===== | ======= ==== | =======
87 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 8. INCOME TAXES (continued) DEFERRED INCOME TAXES The tax effect of temporary differences giving rise to the Companies' deferred income tax assets and liabilities at December 31, 1998 and 1997 is as follows: POST-MERGER ------------------------------------ December 31, 1998 December 31, 1997 ----------------- ----------------- (Dollars in thousands) Deferred tax assets: Net unrealized depreciation of securities at fair value.......... $ 691 -- Future policy benefits............. 66,273 $27,399 Deferred policy acquisition costs.. -- 4,558 Goodwill........................... 16,323 17,620 Net operating loss carryforwards... 17,821 3,044 Other.............................. 1,272 1,548 -------- ------- 102,380 54,169 Deferred tax liabilities: Net unrealized appreciation of securities at fair value.......... -- (130) Fixed maturity securities.......... (1,034) (1,665) Deferred policy acquisition costs.. (55,520) -- Mortgage loans on real estate...... (845) (845) Value of purchased insurance in force............................. (12,592) (15,172) Other.............................. (912) (127) -------- -------- (70,903) (17,939) -------- -------- Deferred income tax asset........... $ 31,477 $ 36,230 ======== ======== The Companies are required to establish a "valuation allowance" for any portion of the deferred tax assets management believes will not be realized. In the opinion of management, it is more likely than not the Companies will realize the benefit of the deferred tax assets; therefore, no such valuation allowance has been established. 9. RETIREMENT PLANS Defined Benefit Plans: In 1998 and 1997, the Companies were allocated their share of the pension liability associated with their employees. The Companies' employees are covered by the employee retirement plan of an affiliate, Equitable Life. Further, Equitable Life sponsors a defined contribution plan that is qualified under Internal Revenue Code Section 401(k). The following tables summarize the benefit obligations and the funded status for pension benefits over the two-year period ended December 31, 1998: 1998 1997 -------- ------ (Dollars in thousands) CHANGE IN BENEFIT OBLIGATION Benefit obligation at January 1............ $ 956 $192 Service cost............................... 1,138 682 Interest cost.............................. 97 25 Actuarial loss............................. 2,266 57 Benefit payments........................... (3) -- ------ ---- Benefit obligation at December 31.......... $4,454 $956 ====== ==== 88 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 9. RETIREMENT PLANS (continued) 1998 1997 -------- ------ (Dollars in thousands) FUNDED STATUS Funded status at December 31............... $(4,454) $(956) Unrecognized net loss...................... 2,266 -- ------- ----- Net amount recognized...................... $(2,188) $(956) ======= ===== During 1998 and 1997, the Companies' plan assets were held by Equitable Life, an affiliate. The weighted-average assumptions used in the measurement of the Companies' benefit obligation are as follows: 1998 1997 ------ ------ DECEMBER 31 Discount rate................................ 6.75% 7.25% Expected return on plan assets............... 9.50 9.00 Rate of compensation increase................ 4.00 5.00 The following table provides the net periodic benefit cost for the fiscal years 1998 and 1997: POST-MERGER | POST-ACQUISITION ------------------------------------ | ---------------- For the period | For the period For the year October 25,1997 | January 1,1997 ended through | through December 31, 1998 December 31, 1997 | October 24, 1997 ----------------- ----------------- | ---------------- (Dollars in thousands) | Service cost................ $1,138 $114 | $568 Interest cost............... 97 10 | 15 Amortization of net loss.... -- -- | 1 ------ ---- | ---- Net periodic benefit cost... $1,235 $124 | $584 ====== ==== | ====
There were no gains or losses resulting from curtailments or settlements during 1998 or 1997. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $4,454,000, $3,142,000 and $0, respectively, as of December 31, 1998 and $956,000, $579,000 and $0, respectively, as of December 31, 1997. 10. RELATED PARTY TRANSACTIONS Operating Agreements: DSI acts as the principal underwriter (as defined in the Securities Act of 1933 and the Investment Company Act of 1940, as amended) and distributor of the variable insurance products issued by the Companies. DSI is authorized to enter into agreements with broker/dealers to distribute the Companies' variable insurance products and appoint representatives of the broker/dealers as agents. For the year ended December 31, 1998 and for the periods October 25, 1997 through December 31, 1997 and January 1, 1997 through October 24, 1997, the Companies paid commissions to DSI totaling $117,470,000, $9,931,000 and $26,419,000, respectively ($9,995,000 for the period August 14, 1996 through December 31, 1996 and $17,070,000 for the period January 1, 1996 through August 13, 1996). Golden American provides certain managerial and supervisory services to DSI. The fee paid by DSI for these services is calculated as a percentage of average assets in the variable separate accounts. For the 89 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 10. RELATED PARTY TRANSACTIONS (continued) year ended December 31, 1998 and for the periods October 25, 1997 through December 31, 1997 and January 1, 1997 through October 24, 1997, the fee was $4,771,000, $508,000 and $2,262,000, respectively. For the periods August 14, 1996 through December 31, 1996 and January 1, 1996 through August 13, 1996 the fee was $877,000 and $1,390,000, respectively. Effective January 1, 1998, the Companies have an asset management agreement with ING Investment Management LLC ("ING IM"), an affiliate, in which ING IM provides asset management services. Under the agreement, the Companies record a fee based on the value of the assets under management. The fee is payable quarterly. For the year ended December 31, 1998, the Companies incurred fees of $1,504,000 under this agreement. Prior to 1998, the Companies had a service agreement with Equitable Investment Services, Inc. ("EISI"), an affiliate, in which EISI provided investment management services. Payments for these services totaled $200,000, $768,000 and $72,000 for the periods October 25, 1997 through December 31, 1997, January 1, 1997 through October 24, 1997 and August 14, 1996 through December 31, 1996, respectively. Golden American has a guaranty agreement with Equitable Life, an affiliate. In consideration of an annual fee, payable June 30, Equitable Life guarantees to Golden American that it will make funds available, if needed, to Golden American to pay the contractual claims made under the provisions of Golden American's life insurance and annuity contracts. The agreement is not, and nothing contained therein or done pursuant thereto by Equitable Life shall be deemed to constitute, a direct or indirect guaranty by Equitable Life of the payment of any debt or other obligation, indebtedness or liability, of any kind or character whatsoever, of Golden American. The agreement does not guarantee the value of the underlying assets held in separate accounts in which funds of variable life insurance and variable annuity policies have been invested. The calculation of the annual fee is based on risk based capital. As Golden American's risk based capital level was above required amounts, no annual fee was payable in 1998 or in 1997. Golden American provides certain advisory, computer and other resources and services to Equitable Life. Revenues for these services, which reduced general expenses incurred by Golden American, totaled $5,833,000 for the year ended December 31, 1998 ($1,338,000 and $2,992,000 for the periods October 25, 1997 through December 31, 1997 and January 1, 1997 through October 24, 1997, respectively). No services were provided by Golden American in 1996. The Companies have a service agreement with Equitable Life in which Equitable Life provides administrative and financial related services. Under this agreement, the Companies incurred expenses of $1,058,000 for the year ended December 31, 1998 ($13,000 and $16,000 for the periods October 25, 1997 through December 31, 1997 and January 1, 1997 through October 24, 1997, respectively). First Golden provides resources and services to DSI. Revenues for these services, which reduce general expenses incurred by the Companies, totaled $75,000 in 1998. For the year ended December 31, 1998, the Companies had premiums, net of reinsurance, for variable products from four affiliates, Locust Street Securities, Inc., Vestax Securities Corporation, DSI and Multi-Financial Securities Corporation of $122,900,000, $44,900,000, $13,600,000 and $13,400,000, respectively. The Companies had premiums, net reinsurance, for variable products from three affiliates, Locust Street Securities, Inc., Vestax Securities Corporation and DSI of $9,300,000, $1,900,000 and $2,100,000 respectively, for the period October 25, 1997 through December 31, 1997 ($16,900,000, $1,200,000 and $400,000 for the period January 1, 1997 through October 24, 1997, respectively). Reciprocal Loan Agreement: Golden American maintains a reciprocal loan agreement with ING America Insurance Holdings, Inc. ("ING AIH"), a Delaware corporation and affiliate, to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Under this agreement which became effective January 1, 1998 and expires December 31, 2007, Golden American and ING AIH can borrow up to $65,000,000 from one another. Prior to lending funds to ING AIH, Golden American must obtain the approval of the State of Delaware Department of Insurance. Interest on any Golden American borrowings 90 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 10. RELATED PARTY TRANSACTIONS (continued) is charged at the rate of ING AIH's cost of funds for the interest period plus 0.15%. Interest on any ING AIH borrowings is charged at a rate based on the prevailing interest rate of U.S. commercial paper available for purchase with a similar duration. Under this agreement, Golden American incurred interest expense of $1,765,000 in 1998. At December 31, 1998, Golden American did not have any borrowings or receivables from ING AIH under this agreement. Line of Credit: Golden American maintained a line of credit agreement with Equitable to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Under this agreement which became effective December 1, 1996 and expired December 31, 1997, Golden American could borrow up to $25,000,000. Interest on any borrowings was charged at the rate of Equitable's monthly average aggregate cost of short-term funds plus 1.00%. Under this agreement, Golden American incurred interest expense of $211,000 for the year ended December 31, 1998 ($213,000 for the period October 25, 1997 through December 31, 1997, $362,000 for the period January 1, 1997 through October 24, 1997 and $85,000 for the period August 14, 1996 through December 31, 1996). The outstanding balance was paid by a capital contribution. Surplus Notes: On December 30, 1998, Golden American issued a 7.25% surplus note in the amount of $60,000,000 to Equitable Life. The note matures on December 29, 2028. The note and related accrued interest is subordinate to payments due to policyholders, claimant and beneficiary claims, as well as debts owed to all other classes of debtors, other than surplus note holders, of Golden American. Any payment of principal and/or interest made is subject to the prior approval of the Delaware Insurance Commissioner. Golden American incurred no interest in 1998. On December 17, 1996, Golden American issued an 8.25% surplus note in the amount of $25,000,000 to Equitable. The note matures on December 17, 2026. The note and related accrued interest is subordinate to payments due to policyholders, claimant and beneficiary claims, as well as debts owed to all other classes of debtors of Golden American. Any payment of principal made is subject to the prior approval of the Delaware Insurance Commissioner. Golden American incurred interest totaling $2,063,000 in 1998 ($344,000 and $1,720,000 for the periods October 25, 1997 through December 31, 1997 and January 1, 1997 through October 24, 1997, respectively). On December 17, 1996, Golden American contributed the $25,000,000 to First Golden acquiring 200,000 shares of common stock (100% of outstanding stock) of First Golden. Stockholder's Equity: On September 23, 1996, EIC Variable, Inc. contributed $50,000,000 of Preferred Stock to the Companies' additional paid-in capital. During 1998, Golden American received $122,500,000 of capital contributions from its Parent. 11. COMMITMENTS AND CONTINGENCIES Contingent Liability: In a transaction that closed on September 30, 1992, Bankers Trust acquired from Mutual Benefit, in accordance with the terms of an Exchange Agreement, all of the issued and outstanding capital stock of Golden American and DSI and certain related assets for consideration with an aggregate value of $13,200,000 and contributed them to BT Variable. The transaction involved settlement of pre-existing claims of Bankers Trust against Mutual Benefit. The ultimate value of these claims has not yet been determined by the Superior Court of New Jersey and, prior to August 13, 1996, was contingently supported by a $5,000,000 note payable from Golden American and a $6,000,000 letter of credit from Bankers Trust. Bankers Trust estimated the contingent liability due from Golden American amounted to $439,000 at August 13, 1996. At August 13, 1996, the balance of the escrow account established to fund the contingent liability was $4,293,000. On August 13, 1996, Bankers Trust made a cash payment to Golden American in an amount equal to the balance of the escrow account less the $439,000 contingent liability discussed above. In exchange, Golden American irrevocably assigned to Bankers Trust all of Golden American's rights to receive any amounts to 91 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 11. COMMITMENTS AND CONTINGENCIES (continued) be disbursed from the escrow account in accordance with the terms of the Exchange Agreement. Bankers Trust also irrevocably agreed to make all payments becoming due under the Golden American note and to indemnify Golden American for any liability arising from the note. Reinsurance: At December 31, 1998, the Companies had reinsurance treaties with four unaffiliated reinsurers and one affiliated reinsurer covering a significant portion of the mortality risks under variable contracts. The Companies remain liable to the extent reinsurers do not meet their obligations under the reinsurance agreements. Reinsurance ceded in force for life mortality risks were $111,552,000 and $96,686,000 at December 31, 1998 and 1997, respectively. At December 31, 1998, the Companies have a net receivable of $7,470,000 for reserve credits, reinsurance claims or other receivables from these reinsurers comprised of $439,000 for claims recoverable from reinsurers, $543,000 for a payable for reinsurance premiums and $7,574,000 for a receivable from an unaffiliated reinsurer. Included in the accompanying financial statements are net considerations to reinsurers of $4,797,000, $326,000, $1,871,000, $875,000 and $600,000 and net policy benefits recoveries of $2,170,000, $461,000, $1,021,000, $654,000 and $1,267,000 for the year ended December 31, 1998 and for the periods October 25, 1997 through December 31, 1997, January 1, 1997 through October 24, 1997, August 14, 1996 through December 31, 1996 and January 1, 1996 through August 13, 1996, respectively. Effective June 1, 1994, Golden American entered into a modified coinsurance agreement with an unaffiliated reinsurer. The accompanying financial statements are presented net of the effects of the treaty which increased income by $1,022,000, $265,000, $335,000, $10,000 and $56,000 for the year ended December 31, 1998 and for the periods October 25, 1997 through December 31, 1997, January 1, 1997 through October 24, 1997, August 14, 1996 through December 31, 1996 and January 1, 1996 through August 13, 1996, respectively. Guaranty Fund Assessments: Assessments are levied against the Companies by life and health guaranty associations in most states in which the Companies are licensed to cover losses of policyholders of insolvent or rehabilitated insurers. In some states, these assessments can be partially recovered through a reduction in future premium taxes. The Companies cannot predict whether and to what extent legislative initiatives may affect the right to offset. The associated cost for a particular insurance company can vary significantly based upon its fixed account premium volume by line of business and state premiums as well as its potential for premium tax offset. The Companies have established an undiscounted reserve to cover such assessments and regularly reviews information regarding known failures and revises its estimates of future guaranty fund assessments. Accordingly, the Companies accrued and charged to expense an additional $1,123,000 for the year ended December 31, 1998, $141,000 for the period October 25, 1997 through December 31, 1997, $446,000 for the period January 1, 1997 through October 24, 1997, $291,000 for the period August 14, 1996 through December 31, 1996 and $480,000 for the period January 1, 1996 through August 13, 1996. At December 31, 1998, the Companies have an undiscounted reserve of $2,446,000 to cover estimated future assessments (net of related anticipated premium tax credits) and has established an asset totaling $586,000 for assessments paid which may be recoverable through future premium tax offsets. The Companies believe this reserve is sufficient to cover expected future guaranty fund assessments, based upon previous premiums, and known insolvencies at this time. Litigation: The Companies, like other insurance companies, may be named or otherwise involved in lawsuits, including class action lawsuits. In some class action and other lawsuits involving insurers, substantial damages have been sought and/or material settlement payments have been made. The Companies currently believe no pending or threatened lawsuits exist that are reasonably likely to have a material adverse impact on the Companies. Vulnerability from Concentrations: The Companies have various concentrations in its investment portfolio (see Note 3 for further information). The Companies' asset growth, net investment income and cash flow are primarily generated from the sale of variable products and associated future policy benefits and separate account liabilities. Substantial changes in tax laws that would make these products less 92 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 11. COMMITMENTS AND CONTINGENCIES (continued) attractive to consumers and extreme fluctuations in interest rates or stock market returns which may result in higher lapse experience than assumed could cause a severe impact to the Companies' financial condition. Two broker/dealers generated 27% of the Companies' sales (53% by two broker/dealers during 1997). Leases: The Companies lease their home office space, certain other equipment and capitalized computer software under operating leases which expire through 2018. During the year ended December 31, 1998 and for the periods October 25, 1997 through December 31, 1997, January 1, 1997 through October 24, 1997, August 14, 1996 through December 31, 1996 and January 1, 1996 through August 13, 1996, rent expense totaled $1,241,000, $39,000, $331,000, $147,000 and $247,000, respectively. At December 31, 1998, minimum rental payments due under all non-cancelable operating leases with initial terms of one year or more are: 1999 - $1,528,000; 2000 - $1,429,000; 2001 - $1,240,000; 2002 - $1,007,000; 2003 - $991,000 and 2004 and thereafter - $5,363,000. Revolving Note Payable: To enhance short-term liquidity, the Companies have established a revolving note payable effective July 27, 1998 and expiring July 31, 1999 with SunTrust Bank, Atlanta (the "Bank"). The note was approved by the Boards of Directors of Golden American and First Golden on August 5, 1998 and September 29, 1998, respectively. The total amount the Companies may have outstanding is $85,000,000, of which Golden American and First Golden have individual credit sublimits of $75,000,000 and $10,000,000, respectively. The note accrues interest at an annual rate equal to: (1) the cost of funds for the Bank for the period applicable for the advance plus 0.25% or (2) a rate quoted by the Bank to the Companies for the advance. The terms of the agreement require the Companies to maintain the minimum level of Company Action Level Risk Based Capital as established by applicable state law or regulation. During the year ended December 31, 1998, the Companies incurred interest expense of $352,000. At December 31, 1998, the Companies did not have any borrowings under this agreement. 93 [Shaded Section Header] - -------------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION - -------------------------------------------------------------------------- TABLE OF CONTENTS ITEM PAGE Introduction...................................................... 1 Description of Golden American Life Insurance Company............. 1 Safekeeping of Assets............................................. 1 The Administrator................................................. 1 Independent Auditors.............................................. 1 Distribution of Contracts......................................... 2 Performance Information........................................... 2 IRA Withdrawal Option............................................. 6 Other Information................................................. 6 Financial Statements of Separate Account B........................ 6 Appendix -- Description of Bond Ratings........................... A-1 94 - ------------------------------------------------------------------------------ PLEASE TEAR OFF, COMPLETE AND RETURN THE FORM BELOW TO ORDER A FREE STATEMENT OF ADDITIONAL INFORMATION FOR THE CONTRACTS OFFERED UNDER THE PROSPECTUS. SEND THE FORM TO OUR CUSTOMER SERVICE CENTER AT THE ADDRESS SHOWN ON THE PROSPECTUS COVER. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - PLEASE SEND ME A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION FOR SEPARATE ACCOUNT B. Please Print or Type: ------------------------------------------------- NAME ------------------------------------------------- SOCIAL SECURITY NUMBER ------------------------------------------------- STREET ADDRESS ------------------------------------------------- CITY, STATE, ZIP 106302 Value 02/01/00 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 95 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX A MARKET VALUE ADJUSTMENT EXAMPLES EXAMPLE #1: FULL SURRENDER -- EXAMPLE OF A NEGATIVE MARKET VALUE ADJUSTMENT Assume $100,000 was allocated to a Fixed Interest Allocation with a guarantee interest period of 10 years, a guaranteed interest rate of 7.5%, an initial Index Rate ("I") of 7%; that a full surrender is requested 3 years into the guaranteed interest period; that the then Index Rate for a 7 year guaranteed interest period ("J") is 8%; and that no prior transfers or partial withdrawals affecting this Fixed Interest Allocation have been made. CALCULATE THE MARKET VALUE ADJUSTMENT 1. The contract value of the Fixed Interest Allocation on the date of surrender is $124,230 ( $100,000 X 1.075 ^ 3 ) 2. N = 2,555 ( 365 X 7 ) 3. Market Value Adjustment = $124,230 X (( 1.07 / 1.0850 ) ^ ( 2,555 / 365 ) - 1 ) = $11,535 Therefore, the amount paid to you on full surrender ignoring any surrender charge is $112,695 ( $124,230 - $11,535 ). EXAMPLE #2: FULL SURRENDER -- EXAMPLE OF A POSITIVE MARKET VALUE ADJUSTMENT Assume $100,000 was allocated to a Fixed Interest Allocation with a guaranteed interest period of 10 years, a guaranteed interest rate of 7.5%, an initial Index Rate ("I") of 7%; that a full surrender is requested 3 years into the guaranteed interest period; that the then Index Rate for a 7 year guaranteed interest period ("J") is 6%; and that no prior transfers or partial withdrawals affecting this Fixed Interest Allocation have been made. CALCULATE THE MARKET VALUE ADJUSTMENT 1. The contract value of the Fixed Interest Allocation on the date of surrender is $124,230 ( $100,000 X 1.075 ^ 3 ) 2. N = 2,555 ( 365 X 7 ) 3. Market Value Adjustment = $124,230 X (( 1.07 / 1.0650 ) ^ ( 2,555 / 365 ) - 1 ) = $4,141 Therefore, the amount paid to you on full surrender ignoring any surrender charge is $128,371 ( $124,230 + $4,141 ). EXAMPLE #3: WITHDRAWAL -- EXAMPLE OF A NEGATIVE MARKET VALUE ADJUSTMENT Assume $200,000 was allocated to a Fixed Interest Allocation with a guaranteed interest period of 10 years, a guaranteed interest rate of 7.5%, an initial Index Rate ("I") of 7%; that a partial withdrawal of $112,695 is requested 3 years into the guaranteed interest period; that the then Index Rate ("J") for a 7 year guaranteed interest period is 8%; and that no prior transfers or partial withdrawals affecting this Fixed Interest Allocation have been made. First calculate the amount that must be withdrawn from the Fixed Interest Allocation to provide the amount requested. 1. The contract value of the Fixed Interest Allocation on the date of withdrawal is $248,459 ( $200,000 X 1.075 ^ 3 ) 2. N = 2,555 ( 365 X 7 ) A1 3. Amount that must be withdrawn = (( $112,695 / ( 1.07 / 1.0850 ) ^ ( 2,555 / 365 )) = $124,230 Then calculate the Market Value Adjustment on that amount 4. Market Value Adjustment = $124,230 X (( 1.07 / 1.0850 ) ^ ( 2,555 / 365 ) - 1 ) = $11,535 Therefore, the amount of the withdrawal paid to you is $112,695, as requested. The Fixed Interest Allocation will be reduced by the amount of the withdrawal, $112,695, and also reduced by the Market Value Adjustment of $11,535, for a total reduction in the Fixed Interest Allocation of $124,230. EXAMPLE #4: WITHDRAWAL -- EXAMPLE OF A POSITIVE MARKET VALUE ADJUSTMENT Assume $200,000 was allocated to a Fixed Interest Allocation with a guaranteed interest period of 10 years, a guaranteed interest rate of 7.5%, an initial Index Rate of 7%; that a partial withdrawal of $128,371 requested 3 years into the guaranteed interest period; that the then Index Rate ("J") for a 7 year guaranteed interest period is 6%; and that no prior transfers or withdrawals affecting this Fixed Interest Allocation have been made. First calculate the amount that must be withdrawn from the Fixed Interest Allocation to provide the amount requested. 1. The contract value of Fixed Interest Allocation on the date of surrender is $248,459 ( $200,000 X 1.075 ^ 3 ) 2. N = 2,555 ( 365 X 7 ) 3. Amount that must be withdrawn = (( $128,371 / ( 1.07 / 1.0650 ) ^ ( 2,555 / 365 )) = $124,230 Then calculate the Market Value Adjustment on that amount 4. Market Value Adjustment = $124,230 X (( 1.07 / 1.0650 ) ^ ( 2,555 / 365 ) - 1 ) = $4,141 Therefore, the amount of the partial withdrawal paid to you is $128,371, as requested. The Fixed Interest Allocation will be reduced by the amount of the partial withdrawal, $128,371, but increased by the Market Value Adjustment of $4,141, for a total reduction in the Fixed Interest Allocation of $124,230. A2 APPENDIX B SURRENDER CHARGE FOR EXCESS WITHDRAWALS EXAMPLE The following assumes you made an initial premium payment of $25,000 and additional premium payments of $25,000 in each of the second and third contract years, for total premium payments under the Contract of $75,000. It also assumes a withdrawal at the beginning of the fifth contract year of 30% of the contract value of $90,000. In this example, $15,000 (maximum of $15,000 in earnings or $75,000 x .10) is the maximum free withdrawal amount that you may withdraw during the contract year without a surrender charge. The total withdrawal would be $27,000 ($90,000 x .30). Therefore, $12,000 ($27,000 - $15,000) is considered an excess withdrawal of a part of the initial premium payment of $25,000 and would be subject to a 4% surrender charge of $480 ($12,000 x .04). This example does not take into account any Market Value Adjustment or deduction of any premium taxes. B-1 [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] ING VARIABLE ANNUITIES Golden American Life Insurance Company Golden American Life Insurance Company is a stock company domiciled in Delaware 106302 Value 02/01/00 | | | | | | | | | | | | | | | | | | ING VARIABLE ANNUITIES | GOLDEN AMERICAN LIFE INSURANCE COMPANY | Golden American Life Insurance Company is a stock company domiciled | in Delaware | | 106302 Value 02/01/2000 | PART B Registration Nos. 333-66757, 811-5626 Filed pursuant to Rule 497 Statement of Additional Information GOLDENSELECT VALUE DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY CONTRACT ISSUED BY SEPARATE ACCOUNT B ("Account B") OF GOLDEN AMERICAN LIFE INSURANCE COMPANY This Statement of Additional Information is not a prospectus. The information contained herein should be read in conjunction with the Prospectus for the Golden American Life Insurance Company Deferred Variable Annuity Contract, which is referred to herein. The Prospectus sets forth information that a prospective investor ought to know before investing. For a copy of the Prospectus, send a written request to Golden American Life Insurance Company, Customer Service Center, P.O. Box 2700, West Chester, Pennsylvania 19380-1478 or telephone 1-800-366-0066. DATE OF PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION: [FEBRUARY 1, 2000] TABLE OF CONTENTS ITEM PAGE Introduction............................................. 1 Description of Golden American Life Insurance Company.... 1 Safekeeping of Assets.................................... 1 The Administrator........................................ 1 Independent Auditors..................................... 1 Distribution of Contracts................................ 1 Performance Information.................................. 2 IRA Partial Withdrawal Option............................ 5 Other Information........................................ 6 Financial Statements of Account B........................ 6 i INTRODUCTION This Statement of Additional Information provides background information regarding Account B. DESCRIPTION OF GOLDEN AMERICAN LIFE INSURANCE COMPANY Golden American Life Insurance Company ("Golden American") is a stock life insurance company organized under the laws of the State of Delaware. On August 13, 1996, Equitable of Iowa Companies, Inc. (formerly Equitable of Iowa Companies) ("Equitable of Iowa") acquired all of the interest in Golden American and Directed Services, Inc. On October 24, 1997, Equitable of Iowa and ING Groep N.V. ("ING") completed a merger agreement, and Equitable of Iowa became a wholly owned subsidiary of ING. ING, headquartered in The Netherlands, is a global financial services holding company with over $461.8 billion in assets as of December 31, 1998. As of December 31, 1998, Golden American had approximately $353.9 million in stockholder's equity and approximately $4.8 billion in total assets, including approximately $3.4 billion of separate account assets. Golden American is authorized to do business in all jurisdictions except New York. Golden American offers variable annuities and variable life insurance. Golden American formed a subsidiary, First Golden American Life Insurance Company of New York ("First Golden"), who is licensed to do variable annuity business in the states of New York and Delaware. SAFEKEEPING OF ASSETS Golden American acts as its own custodian for Account B. THE ADMINISTRATOR Effective January 1, 1997, Equitable Life Insurance Company of Iowa ("Equitable Life") and Golden American became parties to a service agreement pursuant to which Equitable Life agreed to provide certain accounting, actuarial, tax, underwriting, sales, management and other services to Golden American. Expenses incurred by Equitable Life in relation to this service agreement were reimbursed by Golden American on an allocated cost basis. No charges were billed to Golden American by Equitable Life pursuant to the service agreement in 1997. Equitable Life billed Golden American $892,903 pursuant to the service agreement in 1998. INDEPENDENT AUDITORS Ernst & Young LLP, independent auditors, performs annual audits of Golden American and Account B. DISTRIBUTION OF CONTRACTS The offering of contracts under the prospectus associated with this Statement of Additional Information is continuous. Directed Services, Inc., an affiliate of Golden American, acts as the principal underwriter (as defined in the Securities Act of 1933 and the Investment Company Act of 1940, as amended) of the variable insurance products (the "variable insurance products") issued by Golden American. The variable insurance products were sold primarily through two broker/dealer institutions, during the year ended December 31, 1996, through two broker/dealer institutions, during the year ended December 31, 1997 and through two broker/dealer institutions during the year ended December 1998. For the years ended 1998, 1997 and 1996 commissions paid by Golden American, including amounts paid by its subsidiary, First Golden American Life Insurance Company of New York, to Directed Services, Inc. aggregated $117,470,000, $36,350,000 and $27,065,000, respectively. All commissions received by the distributor were passed through to the broker-dealers who sold the contracts. Directed Services, Inc. is located at 1475 Dunwoody Drive, West Chester, Pennsylvania 19380-1478. Golden American provides to Directed Services, Inc. certain of its personnel to perform management, administrative and clerical services and the use of certain facilities. Golden American charges Directed Services, Inc. for such expenses and all other general and administrative costs, first on the basis of direct charges when identifiable, and the remainder allocated based on the estimated amount of time spent by Golden American's employees on behalf of Directed Services, Inc. In the opinion of management, this method of cost allocation is reasonable. In 1995, the service agreement between Directed Services, Inc. and Golden American was amended to provide for a management 1 fee from Directed Services, Inc. to Golden American for managerial and supervisory services provided by Golden American. This fee, calculated as a percentage of average assets in the variable separate accounts, was $4,771,000, $2,770,000 and $2,267,000 for the years ended 1998, 1997 and 1996, respectively. PERFORMANCE INFORMATION Performance information for the subaccounts of Account B, including yields, standard annual returns and other non-standard measures of performance of all subaccounts, may appear in reports or promotional literature to current or prospective owners. Such non-standard measures of performance will be computed, or accompanied by performance data computed, in accordance with standards defined by the SEC. Negative values are denoted by minus signs ("-"). Performance information for measures other than total return do not reflect any applicable premium tax that can range from 0% to 3.5%. As described in the prospectus, three death benefit options are available. The following performance values reflect the election at issue of the 7% Solution Enhanced Death Benefit Option providing values reflecting the highest aggregate contract charges. If one of the other death benefit options had been elected, the historical performance values would be higher than those represented in the examples. SEC STANDARD MONEY MARKET SUBACCOUNT YIELDS Current yield for the Liquid Asset Subaccount will be based on the change in the value of a hypothetical investment (exclusive of capital changes or income other than investment income) over a particular 7-day period, less a pro-rata share of subaccount expenses accrued over that period (the "base period"), and stated as a percentage of the investment at the start of the base period (the "base period return"). The base period return is then annualized by multiplying by 365/7, with the resulting yield figure carried to at least the nearest hundredth of one percent. Calculation of "effective yield" begins with the same "base period return" used in the calculation of yield, which is then annualized to reflect weekly compounding pursuant to the following formula: EFFECTIVE YIELD = [(BASE PERIOD RETURN) +1)365/7] - 1 The current yield and effective yield of the Liquid Asset Subaccount for the 7-day period December 25, 1998 to December 31, 1998 were 3.30% and 3.35%, respectively. SEC STANDARD 30-DAY YIELD FOR NON-MONEY MARKET SUBACCOUNTS Quotations of yield for the remaining subaccounts will be based on all investment income per subaccount earned during a particular 30- day period, less expenses accrued during the period ("net investment income"), and will be computed by dividing net investment income by the value of an accumulation unit on the last day of the period, according to the following formula: YIELD = 2 [ ( a - b +1)(6) - 1] cd Where: [a] equals the net investment income earned during the period by the investment portfolio attributable to shares owned by a subaccount [b] equals the expenses accrued for the period (net of reimbursements) [c] equals the average daily number of units outstanding during the period based on the accumulation unit value [d] equals the value (maximum offering price) per accumulation unit value on the last day of the period Yield on subaccounts of Account B is earned from the increase in net asset value of shares of the investment portfolio in which the Subaccount invests and from dividends declared and paid by the Investment portfolio, which are automatically reinvested in shares of the investment portfolio. SEC STANDARD AVERAGE ANNUAL TOTAL RETURN FOR ALL SUBACCOUNTS Quotations of average annual total return for any subaccount will be expressed in terms of the average annual compounded rate of return of a hypothetical investment in a contract over a period of one, five and 10 years (or, if less, up to the life of the subaccount), calculated pursuant to the formula: 2 P(1+T)(n)=ERV Where: (1) [P] equals a hypothetical initial premium payment of $1,000 (2) [T] equals an average annual total return (3) [n] equals the number of years (4) [ERV] equals the ending redeemable value of a hypothetical $1,000 initial premium payment made at the beginning of the period (or fractional portion thereof) All total return figures reflect the deduction of the maximum sales load, the administrative charges, and the mortality and expense risk charges. The Securities and Exchange Commission (the "SEC") requires that an assumption be made that the contract owner surrenders the entire contract at the end of the one, five and 10 year periods (or, if less, up to the life of the security) for which performance is required to be calculated. This assumption may not be consistent with the typical contract owner's intentions in purchasing a contract and may adversely affect returns. Quotations of total return may simultaneously be shown for other periods, as well as quotations of total return that do not take into account certain contractual charges such as sales load. Except for the All Cap, Investors, Large Cap Value, and Managed Global subaccounts which had not commenced as of December 31, 1998, Average Annual Total Return for the subaccounts is presented on a standardized basis, which includes deductions for the maximum mortality and expense risk charge of 1.20%, administrative charges of 0.15%, contract administration charge at 0.05%, and applicable surrender charges of 6% for the one year period and 3% for the five year period ending, for the nine-month period ending September 30, 1999 and for the year ending December 31, 1998 were as follows, respectively: Average Annual Total Return for Periods Ending 09/30/99 -Standardized - --------------------------------------------------------------------- One Year Five Year Inception Period Period to Ending Ending Ending Inception Subaccount 09/30/99 09/30/99 09/30/99 Date - ---------- -------- -------- -------- ------- THE GCG TRUST Liquid Asset -23.10% 3.41% 4.16%* 1/25/89 Limited Maturity -5.63% 4.33% 5.45%* 1/25/89 Bond Global Fixed -12.66%* n/a 3.76%* 10/7/94 Income Total Return 0.55%* n/a 12.11%* 10/7/94 Fully Managed 4.41% 10.84% 8.15%* 1/25/89 Equity Income -2.84% 8.45% 7.91%* 1/25/89 Rising Dividends 16.42% 17.19% 15.69% 10/4/93 Capital Growth 12.61% n/a 15.83% 4/1/96 Growth 48.25% n/a 22.30%* 4/1/96 Value Equity 7.14% n/a 12.69% 1/1/95 Research 16.84% n/a 18.50%* 10/7/94 Capital 15.91% 16.60% 14.13%* 5/4/92 Appreciation Mid-Cap Growth 50.01% n/a 23.37%* 10/7/94 Strategic Equity 6.34% n/a 8.21%* 10/2/95 Small Cap 37.06% n/a 15.10% 1/2/96 Real Estate -11.70% 8.64% 7.53%* 1/25/89 Hard Assets 14.81% 2.81% 5.79%* 1/25/89 Developing World 27.67% n/a -10.71% 2/18/98 THE PIMCO TRUST High Yield Bond -2.51% n/a -3.13%* 5/1/98 StocksPLUS 20.92% n/a 7.16%* 5/1/98 Growth and Income THE WARBURG PINCUS TRUST International 22.94% n/a 4.40% 4/1/96 Equity _________________________ * Total return calculation reflects partial waiver of fees and expenses. # Non-annualized. Average Annual Total Return for Periods Ending 12/31/98 -Standardized - --------------------------------------------------------------------- One Year Five Year Inception Period Period to Ending Ending Ending Inception Subaccount 12/31/98 12/31/98 12/31/98 Date - ---------- -------- -------- -------- ------- THE GCG TRUST Liquid Asset -2.37% 2.78% 3.72%* 1/25/89 Limited Maturity -0.58% 3.47% 5.37%* 1/25/89 Bond Global Fixed 4.34%* n/a 5.83%* 10/7/94 Income Total Return 4.09%* n/a 13.89%* 10/7/94 Fully Managed -1.54% 7.42% 7.55%* 1/25/89 Equity Income 0.80% 7.86% 8.26%* 1/25/89 Rising Dividends 6.60% 16.77% 16.56% 10/4/93 Capital Growth 4.46% n/a 20.11% 4/1/96 Growth 19.11% n/a 18.19%* 4/1/96 Value Equity -5.82% n/a 15.72% 1/1/95 Research 15.39% n/a 21.14%* 10/7/94 Capital 5.16% 14.76% 14.34%* 5/4/92 Appreciation Mid-Cap Growth 15.15% n/a 20.59%* 10/7/94 Strategic Equity -6.52% n/a 10.26%* 10/2/95 Small Cap 13.35% n/a 14.21% 1/2/96 Real Estate -20.62% 9.81% 8.17%* 1/25/89 Hard Assets -36.53% -0.49% 3.69%* 1/25/89 Developing World n/a n/a -37.27%# 2/18/98 THE PIMCO TRUST High Yield Bond n/a n/a -7.61%*# 5/1/98 StocksPLUS n/a n/a 7.80%*# 5/1/98 Growth and Income THE WARBURG PINCUS TRUST International -2.09% n/a -0.09% 4/1/96 Equity _________________________ * Total return calculation reflects partial waiver of fees and expenses. # Non-annualized. NON-STANDARD AVERAGE ANNUAL TOTAL RETURN FOR ALL SUBACCOUNTS Quotations of non-standard average annual total return for any subaccount will be expressed in terms of the average annual compounded rate of return of a hypothetical investment in a contract over a period of one, five and 10 years (or, if less, up to the life of the subaccount), calculated pursuant to the formula: 3 P(1+T)(n)]=ERV Where: (1) [P] equals a hypothetical initial premium payment of $1,000 (2) [T] equals an average annual total return (3) [n] equals the number of years (4) [ERV] equals the ending redeemable value of a hypothetical $1,000 initial premium payment made at the beginning of the period (or fractional portion thereof) assuming certain loading and charges are zero. All total return figures reflect the deduction of the mortality and expense risk charge and the administrative charges, but not the deduction of the maximum sales load and the annual contract fee. Except for the All Cap, Investors, Large Cap Value, and Managed Global subaccounts which had not commenced as of December 31, 1998, Average Annual Total Return for the subaccounts is presented on a standardized basis, which includes deductions for the maximum mortality and expense risk charge of 1.20%, administrative charges of 0.15%, and contract administration charge at 0.05%,, for the nine-month period ending September 30, 1999 and for the year ending December 31, 1998 were as follows, respectively: Average Annual Total Return for Periods Ending 09/30/99 - Non-Standardized - -------------------------------------------------------------------------- One Year Five Year Inception Period Period to Ending Ending Ending Inception Subaccount 09/30/99 09/30/99 09/30/99 Date - ---------- -------- -------- -------- ------- THE GCG TRUST Liquid Asset 3.69% 4.10% 3.64%* 1/25/89 Limited Maturity 0.37% 5.06% 4.94%* 1/25/89 Bond Global Fixed -6.66% n/a 3.93%* 10/7/94 Income Total Return 6.55%* n/a 12.05%* 10/7/94 Fully Managed 10.40% 11.80% 7.61%* 1/25/89 Equity Income 3.16% 9.32% 7.38%* 1/25/89 Rising Dividends 22.42% 18.44% 15.38% 10/4/93 Capital Growth 18.61% n/a 16.18%* 4/1/96 Growth 54.26% n/a 22.47%* 4/1/96 Value Equity 13.14% n/a 12.69% 1/1/95 Research 22.85% n/a 18.31%* 10/7/94 Capital 21.91% 17.82% 13.58%* 5/4/92 Appreciation Mid-Cap Growth 56.00% n/a 23.06%* 10/7/94 Strategic Equity 28.27% n/a 12.13%* 10/2/95 Small Cap 43.06% n/a 15.42% 1/2/96 Real Estate -5.70% 9.52% 7.00%* 1/25/89 Hard Assets 20.81% 3.49% 5.27%* 1/25/89 Developing World 33.67% n/a -7.23% 2/18/98 THE PIMCO TRUST High Yield Bond 3.49% n/a 0.60%* 5/1/98 StocksPLUS 26.92% n/a 10.68%* 5/1/98 Growth and Income THE WARBURG PINCUS TRUST International 28.94% n/a 4.92%* 4/1/96 Equity _________________________ * Total return calculation reflects partial waiver of fees and expenses. # Non-annualized. Average Annual Total Return for Periods Ending 12/31/98 - Non-Standardized - -------------------------------------------------------------------------- One Year Five Year Inception Period Period to Ending Ending Ending Inception Subaccount 12/31/98 12/31/98 12/31/98 Date - ---------- -------- -------- -------- ------- THE GCG TRUST Liquid Asset 3.63% 3.45% 3.72%* 1/25/89 Limited Maturity 5.42% 4.16% 5.37%* 1/25/89 Bond Global Fixed 10.34% n/a 6.61%* 10/7/94 Income Total Return 10.08%* n/a 14.51%* 10/7/94 Fully Managed 4.46% 8.25% 7.55%* 1/25/89 Equity Income 6.80% 8.71% 8.26%* 1/25/89 Rising Dividends 12.59% 17.09% 16.86% 10/4/93 Capital Growth 10.46% n/a 21.36%* 4/1/96 Growth 25.11% n/a 19.48%* 4/1/96 Value Equity 0.18% n/a 16.36% 1/1/95 Research 21.39% n/a 21.64%* 10/7/94 Capital 11.16% 15.89% 14.41%* 5/4/92 Appreciation Mid-Cap Growth 21.15% n/a 21.11%* 10/7/94 Strategic Equity -0.52% n/a 11.48%* 10/2/95 Small Cap 19.35% n/a 15.49% 1/2/96 Real Estate -14.62% 10.73% 8.17%* 1/25/89 Hard Assets -30.53% 1.10% 3.69%* 1/25/89 Developing World n/a n/a -30.62%# 2/18/98 THE PIMCO TRUST High Yield Bond n/a n/a 1.27%*# 5/1/98 StocksPLUS n/a n/a 17.13%*# 5/1/98 Growth and Income THE WARBURG PINCUS TRUST International 3.93% n/a 1.35%* 4/1/96 Equity _________________________ * Total return calculation reflects partial waiver of fees and expenses. # Non-annualized. Performance information for a subaccount may be compared, in reports and promotional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P 500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market Institutional Averages, or other indices that measure performance of a pertinent group of securities so that investors may compare a subaccount's results with those of a group of securities widely regarded by investors as representative of the securities markets in general; (ii) other groups of variable annuity separate accounts or other investment products tracked by Lipper Analytical Services, a widely used independent research firm which ranks mutual funds and other investment companies by overall performance, investment objectives, and assets, or tracked by other services, companies, publications, or persons who rank such investment companies on overall performance 4 or other criteria; and (iii) the Consumer Price Index (measure for inflation) to assess the real rate of return from an investment in the contract. Unmanaged indices may assume the reinvestment of dividends but generally do not reflect deductions for administrative and management costs and expenses. Performance information for any subaccount reflects only the performance of a hypothetical contract under which contract value is allocated to a subaccount during a particular time period on which the calculations are based. Performance information should be considered in light of the investment objectives and policies, characteristics and quality of the investment portfolio of the Trust in which the Account B subaccounts invest, and the market conditions during the given time period, and should not be considered as a representation of what may be achieved in the future. Reports and promotional literature may also contain other information including the ranking of any subaccount derived from rankings of variable annuity separate accounts or other investment products tracked by Lipper Analytical Services or by other rating services, companies, publications, or other persons who rank separate accounts or other investment products on overall performance or other criteria. PUBLISHED RATINGS From time to time, the rating of Golden American as an insurance company by A.M. Best may be referred to in advertisements or in reports to contract owners. Each year the A.M. Best Company reviews the financial status of thousands of insurers, culminating in the assignment of Best's Ratings. These ratings reflect their current opinion of the relative financial strength and operating performance of an insurance company in comparison to the norms of the life/health insurance industry. Best's ratings range from A+ + to F. An A++ and A+ ratings mean, in the opinion of A.M. Best, that the insurer has demonstrated the strongest ability to meet its respective policyholder and other contractual obligations. ACCUMULATION UNIT VALUE The calculation of the Accumulation Unit Value ("AUV") is discussed in the prospectus for the Contracts under Performance Information. Note that in your Contract, accumulation unit value is referred to as the Index of Investment Experience. The following illustrations show a calculation of a new AUV and the purchase of Units (using hypothetical examples 1. AUV, beginning of period........................$10.00 2. Value of securities, beginning of period........$10.00 3. Change in value of securities...................$ 0.10 4. Gross investment return [(3) divided by (2)].... 0.01 5. Less daily mortality and expense charge......... 0.00003308 6. Less asset based administrative charge.......... 0.00000411 7. Net investment return [(4) minus (5) minus (6)]. 0.00995309 8. Net investment factor [(1.000000) plus (7)]..... 1.00995309 9. AUV, end of period [(1) multiplied by (8)]......$10.0995309 ILLUSTRATION OF PURCHASE OF UNITS (ASSUMING NO STATE PREMIUM TAX) EXAMPLE 2. 1. Initial premium payment...........................$1,000 2. AUV on effective date of purchase (see Example 1).$10.00 3. Number of units purchased [(1) divided by (2)].... 100 4. AUV for valuation date following purchase (see Example 1)...................................$10.0995309 5. Contract Value in account for valuation date following purchase [(3) multiplied by (4)].......$ 1,009.95 IRA PARTIAL WITHDRAWAL OPTION If the contract owner has an IRA contract and will attain age 70 1/2 in the current calendar year, distributions will be made in accordance with the requirements of Federal tax law. This option is available to assure that the required minimum distributions from qualified plans under the Internal Revenue Code (the "Code") are made. Under the 5 Code, distributions must begin no later than April 1st of the calendar year following the calendar year in which the contract owner attains age 70 1/2. If the required minimum distribution is not withdrawn, there may be a penalty tax in an amount equal to 50% of the difference between the amount required to be withdrawn and the amount actually withdrawn. Even if the IRA Partial Withdrawal Option is not elected, distributions must nonetheless be made in accordance with the requirements of Federal tax law. Golden American notifies the contract owner of these regulations with a letter mailed on January 1st of the calendar year in which the contract owner reaches age 70 1/2 which explains the IRA Partial Withdrawal Option and supplies an election form. If electing this option, the owner specifies whether the withdrawal amount will be based on a life expectancy calculated on a single life basis (contract owner's life only) or, if the contract owner is married, on a joint life basis (contract owner's and spouse's lives combined). The contract owner selects the payment mode on a monthly, quarterly or annual basis. If the payment mode selected on the election form is more frequent than annually, the payments in the first calendar year in which the option is in effect will be based on the amount of payment modes remaining when Golden American receives the completed election form. Golden American calculates the IRA Partial Withdrawal amount each year based on the minimum distribution rules. We do this by dividing the contract value by the life expectancy. In the first year withdrawals begin, we use the contract value as of the date of the first payment. Thereafter, we use the contract value on December 31st of each year. The life expectancy is recalculated each year. Certain minimum distribution rules govern payouts if the designated beneficiary is other than the contract owner's spouse and the beneficiary is more than ten years younger than the contract owner. OTHER INFORMATION Registration statements have been filed with the SEC under the Securities Act of 1933, as amended, with respect to the Contracts discussed in this Statement of Additional Information. Not all of the information set forth in the registration statements, amendments and exhibits thereto has been included in this Statement of Additional Information. Statements contained in this Statement of Additional Information concerning the content of the Contracts and other legal instruments are intended to be summaries. For a complete statement of the terms of these documents, reference should be made to the instruments filed with the SEC. FINANCIAL STATEMENTS OF SEPARATE ACCOUNT B The unaudited financial statements of Separate Account B are listed below and are included in this Statement of Additional Information: Unaudited Financial Statements Statement of Assets and Liability as of September 30, 1999 Statement of Operations for the period ended September 30, 1999 Statements of Changes in Net Assets for the periods ended September 30, 1999 and December 31, 1998 Notes to Financial Statements The audited financial statements of Account B are listed below and are included in this Statement of Additional Information: Report of Independent Auditors Audited Financial Statements Statement of Assets and Liability as of December 31, 1998 Statement of Operations for the year ended December 31, 1998 Statements of Changes in Net Assets for the years ended December 31, 1998 and 1997 Notes to Financial Statements 6 FINANCIAL STATEMENTS GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B (UNAUDITED) PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B FINANCIAL STATEMENTS PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 TABLE OF CONTENTS Financial Statements Statement of Assets and Liability Statement of Operations Statements of Changes in Net Assets Notes to Financial Statements GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF ASSETS AND LIABILITY (UNAUDITED) SEPTEMBER 30, 1999 (DOLLARS IN THOUSANDS)
COMBINED ____________ ASSETS Investments at net asset value: The GCG Trust: Liquid Asset Series, 434,250,156 shares (cost - $434,250) $434,250 Limited Maturity Bond Series, 13,546,860 shares (cost - $145,162) 145,900 Hard Assets Series, 3,491,625 shares (cost - $38,384) 41,061 All-Growth Series, 4,995,445 shares (cost - $71,636) 100,009 Real Estate Series, 4,482,928 shares (cost - $71,082) 58,323 Fully Managed Series, 15,919,709 shares (cost - $236,970) 261,402 Equity Income Series, 21,636,504 shares (cost - $270,041) 270,240 Capital Appreciation Series, 15,991,068 shares (cost - $267,597) 306,868 Rising Dividends Series, 29,752,243 shares (cost - $598,998) 689,657 Emerging Markets Series, 2,961,088 shares (cost - $27,835) 25,939 Market Manager Series, 358,354 shares (cost - $3,711) 7,099 Value Equity Series, 8,286,304 shares (cost - $134,218) 128,023 Strategic Equity Series, 7,866,644 shares (cost - $105,758) 113,201 Small Cap Series, 11,379,126 shares (cost - $187,468) 205,166 Managed Global Series, 8,262,783 shares (cost - $117,917) 129,643 Mid-Cap Growth Series, 12,725,459 shares (cost - $250,096) 291,922 Capital Growth Series, 19,634,861 shares (cost - $308,027) 307,875 Research Series, 23,040,830 shares (cost - $460,222) 477,637 Total Return Series, 26,123,116 shares (cost - $415,811) 415,096 Growth Series, 32,064,511 shares (cost - $578,416) 631,350 Global Fixed Income Series, 2,062,733 shares (cost - $21,889) 21,556
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF ASSETS AND LIABILITY (UNAUDITED) SEPTEMBER 30, 1999 (CONTINUED) (DOLLARS IN THOUSANDS)
COMBINED ____________ ASSETS - CONTINUED Investments at net asset value: The GCG Trust: Developing World Series, 2,476,871 shares (cost - $23,140) $22,440 Growth Opportunities Series, 604,270 shares (cost - $6,235) 6,357 PIMCO Variable Insurance Trust: PIMCO High Yield Bond Portfolio, 13,936,073 shares (cost - $133,272) 128,351 PIMCO StocksPLUS Growth and Income Portfolio, 12,458,844 shares (cost - $161,862) 160,096 Greenwich Street Series Fund Inc.: Appreciation Portfolio, 44,430 shares (cost - $909) 955 Travelers Series Fund Inc.: Smith Barney High Income Portfolio, 53,221 shares (cost - $711) 624 Smith Barney Large Cap Value Portfolio, 40,029 shares (cost - $811) 763 Smith Barney International Equity Portfolio, 25,696 shares (cost - $361) 401 Smith Barney Money Market Portfolio, 134,305 shares (cost - $134) 134 Warburg Pincus Trust: International Equity Portfolio, 9,414,330 shares (cost - $116,363) 120,221 ____________ TOTAL ASSETS (cost - $5,189,286) 5,502,559 LIABILITY Payable to Golden American Life Insurance Company for charges and fees 230 ____________ TOTAL NET ASSETS $5,502,329 ============ NET ASSETS For variable annuity insurance contracts $5,507,112 Retained in Separate Account B by Golden American Life Insurance Company 4,783 ____________ TOTAL NET ASSETS $5,502,329 ============
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS (UNAUDITED) FOR THE PERIOD ENDED SEPTEMBER 30, 1999, EXCEPT AS NOTED (DOLLARS IN THOUSANDS)
Limited Liquid Maturity Hard Asset Bond Assets Division Division Division _________________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $9,548 -- -- Capital gains distributions -- -- -- _________________________________ TOTAL INVESTMENT INCOME 9,548 -- -- Expenses: Mortality and expense risk and other charges 3,044 $1,171 $351 Annual administrative charges 62 27 12 Minimum death benefit guarantee charges 6 1 1 Contingent deferred sales charges 1,599 116 111 Other contract charges 5 2 2 Amortization of deferred charges related to: Deferred sales load 408 231 71 Premium taxes 15 1 -- _________________________________ TOTAL EXPENSES 5,139 1,549 548 _________________________________ NET INVESTMENT INCOME (LOSS) 4,409 (1,549) (548) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments -- (333) (10,585) Net unrealized appreciation (depreciation) of investments -- 1,454 17,031 _________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $4,409 ($428) $5,898 =================================
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS (UNAUDITED) FOR THE PERIOD ENDED SEPTEMBER 30, 1999, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Capital Equity Apprecia- Rising Income tion Dividends Division Division Division _________________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends -- -- -- Capital gains distributions -- -- -- _________________________________ TOTAL INVESTMENT INCOME -- -- -- Expenses: Mortality and expense risk and other charges $2,375 $2,697 $6,565 Annual administrative charges 112 86 154 Minimum death benefit guarantee charges 5 1 1 Contingent deferred sales charges 120 200 597 Other contract charges 8 7 10 Amortization of deferred charges related to: Deferred sales load 974 611 619 Premium taxes 2 2 1 _________________________________ TOTAL EXPENSES 3,596 3,604 7,947 _________________________________ NET INVESTMENT INCOME (LOSS) (3,596) (3,604) (7,947) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 818 10,813 10,795 Net unrealized appreciation (depreciation) of investments (4,918) 4,291 11,828 _________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($7,696) $11,500 $14,676 =================================
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS (UNAUDITED) FOR THE PERIOD ENDED SEPTEMBER 30, 1999, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
All- Real Fully Growth Estate Managed Division Division Division _________________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends -- -- -- Capital gains distributions -- -- -- _________________________________ TOTAL INVESTMENT INCOME -- -- -- Expenses: Mortality and expense risk and other charges $904 $628 $2,351 Annual administrative charges 34 22 77 Minimum death benefit guarantee charges 1 -- 1 Contingent deferred sales charges 67 102 134 Other contract charges 1 1 5 Amortization of deferred charges related to: Deferred sales load 256 137 474 Premium taxes 1 1 2 _________________________________ TOTAL EXPENSES 1,264 891 3,044 _________________________________ NET INVESTMENT INCOME (LOSS) (1,264) (891) (3,044) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 8,308 1,744 3,482 Net unrealized appreciation (depreciation) of investments 19,140 (4,476) 14,210 _________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $26,184 ($3,623) $14,648 =================================
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS (UNAUDITED) FOR THE PERIOD ENDED SEPTEMBER 30, 1999, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Emerging Market Value Markets Manager Equity Division Division Division _________________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends -- -- -- Capital gains distributions -- -- -- _________________________________ TOTAL INVESTMENT INCOME -- -- -- Expenses: Mortality and expense risk and other charges $228 -- $1,370 Annual administrative charges 10 $1 42 Minimum death benefit guarantee charges 1 -- -- Contingent deferred sales charges 17 -- 111 Other contract charges 1 -- 1 Amortization of deferred charges related to: Deferred sales load 73 32 125 Premium taxes -- -- -- _________________________________ TOTAL EXPENSES 330 33 1,649 _________________________________ NET INVESTMENT INCOME (LOSS) (330) (33) (1,649) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (1,054) 861 4,323 Net unrealized appreciation (depreciation) of investments 7,613 (17) (9,587) _________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $6,229 $811 ($6,913) =================================
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS (UNAUDITED) FOR THE PERIOD ENDED SEPTEMBER 30, 1999, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Strategic Small Managed Equity Cap Global Division Division Division _________________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends -- -- -- Capital gains distributions -- -- -- _________________________________ TOTAL INVESTMENT INCOME -- -- -- Expenses: Mortality and expense risk and other charges $871 $1,718 $1,174 Annual administrative charges 21 42 40 Minimum death benefit guarantee charges -- -- 1 Contingent deferred sales charges 173 106 158 Other contract charges 1 2 3 Amortization of deferred charges related to: Deferred sales load 65 70 319 Premium taxes -- 1 1 _________________________________ TOTAL EXPENSES 1,131 1,939 1,696 _________________________________ NET INVESTMENT INCOME (LOSS) (1,131) (1,939) (1,696) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 3,305 19,972 21,629 Net unrealized appreciation (depreciation) of investments 5,999 (3,471) (8,421) _________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $8,173 $14,562 $11,512 =================================
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS (UNAUDITED) FOR THE PERIOD ENDED SEPTEMBER 30, 1999, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Mid-Cap Capital Growth Growth Research Division Division Division _________________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends -- -- -- Capital gains distributions -- -- -- _________________________________ TOTAL INVESTMENT INCOME -- -- -- Expenses: Mortality and expense risk and other charges $2,034 $2,762 $4,440 Annual administrative charges 40 69 85 Minimum death benefit guarantee charges -- -- -- Contingent deferred sales charges 131 265 298 Other contract charges 1 1 2 Amortization of deferred charges related to: Deferred sales load 53 58 92 Premium taxes 1 -- 1 _________________________________ TOTAL EXPENSES 2,260 3,155 4,918 _________________________________ NET INVESTMENT INCOME (LOSS) (2,260) (3,155) (4,918) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 12,779 3,544 2,224 Net unrealized appreciation (depreciation) of investments 34,465 (9,080) 149 _________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $44,984 ($8,691) ($2,545) =================================
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS (UNAUDITED) FOR THE PERIOD ENDED SEPTEMBER 30, 1999, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Global Total Fixed Return Growth Income Division Division Division _________________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends -- -- -- Capital gains distributions -- -- -- _________________________________ TOTAL INVESTMENT INCOME -- -- -- Expenses: Mortality and expense risk and other charges $3,706 $3,831 $157 Annual administrative charges 76 67 2 Minimum death benefit guarantee charges -- 1 -- Contingent deferred sales charges 238 229 14 Other contract charges 1 2 -- Amortization of deferred charges related to: Deferred sales load 73 66 2 Premium taxes 1 1 -- _________________________________ TOTAL EXPENSES 4,095 4,197 175 _________________________________ NET INVESTMENT INCOME (LOSS) (4,095) (4,197) (175) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 125 24,458 (416) Net unrealized appreciation (depreciation) of investments (2,155) 38,947 (323) _________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($6,125) $59,208 ($914) =================================
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS (UNAUDITED) FOR THE PERIOD ENDED SEPTEMBER 30, 1999, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
PIMCO Growth High Developing Oppor- Yield World tunities Bond Division Division Division _________________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends -- -- $5,343 Capital gains distributions -- -- -- _________________________________ TOTAL INVESTMENT INCOME -- -- 5,343 Expenses: Mortality and expense risk and other charges $139 $71 1,007 Annual administrative charges 2 1 12 Minimum death benefit guarantee charges -- -- -- Contingent deferred sales charges 6 2 56 Other contract charges -- -- -- Amortization of deferred charges related to: Deferred sales load -- 1 11 Premium taxes -- -- -- _________________________________ TOTAL EXPENSES 147 75 1,086 _________________________________ NET INVESTMENT INCOME (LOSS) (147) (75) 4,257 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 2,092 689 (399) Net unrealized appreciation (depreciation) of investments (849) (227) (4,903) _________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $1,096 $387 ($1,045) =================================
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS (UNAUDITED) FOR THE PERIOD ENDED SEPTEMBER 30, 1999, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
PIMCO StocksPLUS Smith Growth Barney and Appre- High Income ciation Income Division Division Division _________________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $3,524 $7 $53 Capital gains distributions -- 17 -- _________________________________ TOTAL INVESTMENT INCOME 3,524 24 53 Expenses: Mortality and expense risk and other charges 1,302 10 7 Annual administrative charges 13 1 -- Minimum death benefit guarantee charges -- -- -- Contingent deferred sales charges 80 -- -- Other contract charges -- -- -- Amortization of deferred charges related to: Deferred sales load 14 -- -- Premium taxes -- -- -- _________________________________ TOTAL EXPENSES 1,409 11 7 _________________________________ NET INVESTMENT INCOME (LOSS) 2,115 13 46 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 3,448 14 (32) Net unrealized appreciation (depreciation) of investments (6,021) 3 (24) _________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($458) $30 ($10) =================================
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS (UNAUDITED) FOR THE PERIOD ENDED SEPTEMBER 30, 1999, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Smith Barney Barney Smith Large Inter- Barney Cap national Money Value Equity Market Division Division Division _________________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $10 $1 $6 Capital gains distributions 21 -- -- _________________________________ TOTAL INVESTMENT INCOME 31 1 6 Expenses: Mortality and expense risk and other charges 8 4 2 Annual administrative charges 1 -- -- Minimum death benefit guarantee charges -- -- -- Contingent deferred sales charges -- -- -- Other contract charges -- -- -- Amortization of deferred charges related to: Deferred sales load -- -- -- Premium taxes -- -- -- _________________________________ TOTAL EXPENSES 9 4 2 _________________________________ NET INVESTMENT INCOME (LOSS) 22 (3) 4 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 4 -- -- Net unrealized appreciation (depreciation) of investments (58) 47 -- _________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($32) $44 $4 =================================
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS (UNAUDITED) FOR THE PERIOD ENDED SEPTEMBER 30, 1999, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Inter- national Equity Division Combined ______________________ NET INVESTMENT INCOME (LOSS) Income: Dividends -- $18,492 Capital gains distributions -- 38 ______________________ TOTAL INVESTMENT INCOME -- 18,530 Expenses: Mortality and expense risk and other charges $845 45,772 Annual administrative charges 14 1,125 Minimum death benefit guarantee charges -- 20 Contingent deferred sales charges 70 5,000 Other contract charges -- 56 Amortization of deferred charges related to: Deferred sales load -- 4,835 Premium taxes -- 31 ______________________ TOTAL EXPENSES 929 56,839 ______________________ NET INVESTMENT INCOME (LOSS) (929) (38,309) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 14,543 137,151 Net unrealized appreciation (depreciation) of investments 2,304 102,951 ______________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $15,918 $201,793 ======================
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (DOLLARS IN THOUSANDS)
Liquid Asset Division __________ NET ASSETS AT JANUARY 1, 1998 $57,254 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 3,131 Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- __________ Net increase (decrease) in net assets resulting from operations 3,131 Changes from principal transactions: Purchase payments 227,924 Contract distributions and terminations (38,803) Transfer payments from (to) Fixed Accounts and other Divisions (73,759) Addition to assets retained in the Account by Golden American Life Insurance Company 12 __________ Increase (decrease) in net assets derived from principal transactions 115,374 __________ Total increase (decrease) 118,505 __________ NET ASSETS AT DECEMBER 31, 1998 175,759
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Liquid Asset Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $4,409 Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- __________ Net increase (decrease) in net assets resulting from operations 4,409 Changes from principal transactions: Purchase payments 320,550 Contract distributions and terminations (71,046) Transfer payments from (to) Fixed Accounts and other Divisions 4,343 Addition to assets retained in the Account by Golden American Life Insurance Company 4 __________ Increase (decrease) in net assets derived from principal transactions 253,851 __________ Total increase (decrease) 258,260 __________ NET ASSETS AT SEPTEMBER 30, 1999 $434,019 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Limited Maturity Bond Division __________ NET ASSETS AT JANUARY 1, 1998 $52,467 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 1,782 Net realized gain (loss) on investments 872 Net unrealized appreciation (depreciation) of investments 739 __________ Net increase (decrease) in net assets resulting from operations 3,393 Changes from principal transactions: Purchase payments 42,180 Contract distributions and terminations (9,265) Transfer payments from (to) Fixed Accounts and other Divisions 14,051 Addition to assets retained in the Account by Golden American Life Insurance Company 6 __________ Increase (decrease) in net assets derived from principal transactions 46,972 __________ Total increase (decrease) 50,365 __________ NET ASSETS AT DECEMBER 31, 1998 102,832
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Limited Maturity Bond Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($1,549) Net realized gain (loss) on investments (333) Net unrealized appreciation (depreciation) of investments 1,454 __________ Net increase (decrease) in net assets resulting from operations (428) Changes from principal transactions: Purchase payments 52,316 Contract distributions and terminations (11,770) Transfer payments from (to) Fixed Accounts and other Divisions 2,949 Addition to assets retained in the Account by Golden American Life Insurance Company 1 __________ Increase (decrease) in net assets derived from principal transactions 43,496 __________ Total increase (decrease) 43,068 __________ NET ASSETS AT SEPTEMBER 30, 1999 $145,900 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Hard Assets Division __________ NET ASSETS AT JANUARY 1, 1998 $45,503 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 2,033 Net realized gain (loss) on investments (6,941) Net unrealized appreciation (depreciation) of investments (8,620) __________ Net increase (decrease) in net assets resulting from operations (13,528) Changes from principal transactions: Purchase payments 7,508 Contract distributions and terminations (4,524) Transfer payments from (to) Fixed Accounts and other Divisions (5,266) Addition to assets retained in the Account by Golden American Life Insurance Company 10 __________ Increase (decrease) in net assets derived from principal transactions (2,272) __________ Total increase (decrease) (15,800) __________ NET ASSETS AT DECEMBER 31, 1998 29,703
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Hard Assets Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($548) Net realized gain (loss) on investments (10,585) Net unrealized appreciation (depreciation) of investments 17,031 __________ Net increase (decrease) in net assets resulting from operations 5,898 Changes from principal transactions: Purchase payments 5,318 Contract distributions and terminations (4,096) Transfer payments from (to) Fixed Accounts and other Divisions 4,254 Addition to assets retained in the Account by Golden American Life Insurance Company 1 __________ Increase (decrease) in net assets derived from principal transactions 5,477 __________ Total increase (decrease) 11,375 __________ NET ASSETS AT SEPTEMBER 30, 1999 $41,078 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
All-Growth Division __________ NET ASSETS AT JANUARY 1, 1998 $71,738 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (905) Net realized gain (loss) on investments 330 Net unrealized appreciation (depreciation) of investments 6,240 __________ Net increase (decrease) in net assets resulting from operations 5,665 Changes from principal transactions: Purchase payments 15,762 Contract distributions and terminations (9,206) Transfer payments from (to) Fixed Accounts and other Divisions (2,159) Addition to assets retained in the Account by Golden American Life Insurance Company 7 __________ Increase (decrease) in net assets derived from principal transactions 4,404 __________ Total increase (decrease) 10,069 __________ NET ASSETS AT DECEMBER 31, 1998 81,807
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
All-Growth Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($1,264) Net realized gain (loss) on investments 8,308 Net unrealized appreciation (depreciation) of investments 19,140 __________ Net increase (decrease) in net assets resulting from operations 26,184 Changes from principal transactions: Purchase payments 9,484 Contract distributions and terminations (10,612) Transfer payments from (to) Fixed Accounts and other Divisions (6,834) Addition to assets retained in the Account by Golden American Life Insurance Company 3 __________ Increase (decrease) in net assets derived from principal transactions (7,959) __________ Total increase (decrease) 18,225 __________ NET ASSETS AT SEPTEMBER 30, 1999 $100,032 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Real Estate Division __________ NET ASSETS AT JANUARY 1, 1998 $74,700 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 8,244 Net realized gain (loss) on investments 3,708 Net unrealized appreciation (depreciation) of investments (24,689) __________ Net increase (decrease) in net assets resulting from operations (12,737) Changes from principal transactions: Purchase payments 24,639 Contract distributions and terminations (6,988) Transfer payments from (to) Fixed Accounts and other Divisions (10,631) Addition to assets retained in the Account by Golden American Life Insurance Company 12 __________ Increase (decrease) in net assets derived from principal transactions 7,032 __________ Total increase (decrease) (5,705) __________ NET ASSETS AT DECEMBER 31, 1998 68,995
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Real Estate Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($891) Net realized gain (loss) on investments 1,744 Net unrealized appreciation (depreciation) of investments (4,476) __________ Net increase (decrease) in net assets resulting from operations (3,623) Changes from principal transactions: Purchase payments 7,553 Contract distributions and terminations (7,329) Transfer payments from (to) Fixed Accounts and other Divisions (7,248) Addition to assets retained in the Account by Golden American Life Insurance Company 1 __________ Increase (decrease) in net assets derived from principal transactions (7,023) __________ Total increase (decrease) (10,646) __________ NET ASSETS AT SEPTEMBER 30, 1999 $58,349 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Fully Managed Division __________ NET ASSETS AT JANUARY 1, 1998 $158,650 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 15,626 Net realized gain (loss) on investments 1,704 Net unrealized appreciation (depreciation) of investments (10,501) __________ Net increase (decrease) in net assets resulting from operations 6,829 Changes from principal transactions: Purchase payments 74,467 Contract distributions and terminations (19,367) Transfer payments from (to) Fixed Accounts and other Divisions 5,756 Addition to assets retained in the Account by Golden American Life Insurance Company 31 __________ Increase (decrease) in net assets derived from principal transactions 60,887 __________ Total increase (decrease) 67,716 __________ NET ASSETS AT DECEMBER 31, 1998 226,366
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Fully Managed Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($3,044) Net realized gain (loss) on investments 3,482 Net unrealized appreciation (depreciation) of investments 14,210 __________ Net increase (decrease) in net assets resulting from operations 14,648 Changes from principal transactions: Purchase payments 46,925 Contract distributions and terminations (23,061) Transfer payments from (to) Fixed Accounts and other Divisions (3,474) Addition to assets retained in the Account by Golden American Life Insurance Company 5 __________ Increase (decrease) in net assets derived from principal transactions 20,395 __________ Total increase (decrease) 35,043 __________ NET ASSETS AT SEPTEMBER 30, 1999 $261,409 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Equity Income Division __________ NET ASSETS AT JANUARY 1, 1998 $261,869 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 23,815 Net realized gain (loss) on investments 2,288 Net unrealized appreciation (depreciation) of investments (10,125) __________ Net increase (decrease) in net assets resulting from operations 15,978 Changes from principal transactions: Purchase payments 34,793 Contract distributions and terminations (39,339) Transfer payments from (to) Fixed Accounts and other Divisions 581 Addition to assets retained in the Account by Golden American Life Insurance Company 28 __________ Increase (decrease) in net assets derived from principal transactions (3,937) __________ Total increase (decrease) 12,041 __________ NET ASSETS AT DECEMBER 31, 1998 273,910
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Equity Income Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($3,596) Net realized gain (loss) on investments 818 Net unrealized appreciation (depreciation) of investments (4,918) __________ Net increase (decrease) in net assets resulting from operations (7,696) Changes from principal transactions: Purchase payments 45,531 Contract distributions and terminations (43,023) Transfer payments from (to) Fixed Accounts and other Divisions 1,502 Addition to assets retained in the Account by Golden American Life Insurance Company 11 __________ Increase (decrease) in net assets derived from principal transactions 4,021 __________ Total increase (decrease) (3,675) __________ NET ASSETS AT SEPTEMBER 30, 1999 $270,235 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Capital Appre- ciation Division __________ NET ASSETS AT JANUARY 1, 1998 $187,817 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 18,956 Net realized gain (loss) on investments 6,551 Net unrealized appreciation (depreciation) of investments (3,987) __________ Net increase (decrease) in net assets resulting from operations 21,520 Changes from principal transactions: Purchase payments 63,892 Contract distributions and terminations (26,711) Transfer payments from (to) Fixed Accounts and other Divisions 10,035 Addition to assets retained in the Account by Golden American Life Insurance Company 25 __________ Increase (decrease) in net assets derived from principal transactions 47,241 __________ Total increase (decrease) 68,761 __________ NET ASSETS AT DECEMBER 31, 1998 256,578
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Capital Appre- ciation Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($3,604) Net realized gain (loss) on investments 10,813 Net unrealized appreciation (depreciation) of investments 4,291 __________ Net increase (decrease) in net assets resulting from operations 11,500 Changes from principal transactions: Purchase payments 66,219 Contract distributions and terminations (32,566) Transfer payments from (to) Fixed Accounts and other Divisions 5,139 Addition to assets retained in the Account by Golden American Life Insurance Company 9 __________ Increase (decrease) in net assets derived from principal transactions 38,801 __________ Total increase (decrease) 50,301 __________ NET ASSETS AT SEPTEMBER 30, 1999 $306,879 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Rising Dividends Division __________ NET ASSETS AT JANUARY 1, 1998 $215,943 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 12,920 Net realized gain (loss) on investments 3,842 Net unrealized appreciation (depreciation) of investments 17,344 __________ Net increase (decrease) in net assets resulting from operations 34,106 Changes from principal transactions: Purchase payments 216,682 Contract distributions and terminations (26,449) Transfer payments from (to) Fixed Accounts and other Divisions 60,274 Addition to assets retained in the Account by Golden American Life Insurance Company 60 __________ Increase (decrease) in net assets derived from principal transactions 250,567 __________ Total increase (decrease) 284,673 __________ NET ASSETS AT DECEMBER 31, 1998 500,616
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Rising Dividends Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($7,947) Net realized gain (loss) on investments 10,795 Net unrealized appreciation (depreciation) of investments 11,828 __________ Net increase (decrease) in net assets resulting from operations 14,676 Changes from principal transactions: Purchase payments 185,783 Contract distributions and terminations (44,097) Transfer payments from (to) Fixed Accounts and other Divisions 32,703 Addition to assets retained in the Account by Golden American Life Insurance Company 13 __________ Increase (decrease) in net assets derived from principal transactions 174,402 __________ Total increase (decrease) 189,078 __________ NET ASSETS AT SEPTEMBER 30, 1999 $689,694 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Emerging Markets Division __________ NET ASSETS AT JANUARY 1, 1998 $34,501 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (524) Net realized gain (loss) on investments (3,524) Net unrealized appreciation (depreciation) of investments (4,266) __________ Net increase (decrease) in net assets resulting from operations (8,314) Changes from principal transactions: Purchase payments 2,520 Contract distributions and terminations (2,973) Transfer payments from (to) Fixed Accounts and other Divisions (3,483) Addition to assets retained in the Account by Golden American Life Insurance Company 3 __________ Increase (decrease) in net assets derived from principal transactions (3,933) __________ Total increase (decrease) (12,247) __________ NET ASSETS AT DECEMBER 31, 1998 22,254
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Emerging Markets Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($330) Net realized gain (loss) on investments (1,054) Net unrealized appreciation (depreciation) of investments 7,613 __________ Net increase (decrease) in net assets resulting from operations 6,229 Changes from principal transactions: Purchase payments 914 Contract distributions and terminations (2,462) Transfer payments from (to) Fixed Accounts and other Divisions (971) Addition to assets retained in the Account by Golden American Life Insurance Company 1 __________ Increase (decrease) in net assets derived from principal transactions (2,518) __________ Total increase (decrease) 3,711 __________ NET ASSETS AT SEPTEMBER 30, 1999 $25,965 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Market Manager Division __________ NET ASSETS AT JANUARY 1, 1998 $6,716 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 299 Net realized gain (loss) on investments 135 Net unrealized appreciation (depreciation) of investments 1,090 __________ Net increase (decrease) in net assets resulting from operations 1,524 Changes from principal transactions: Purchase payments (36) Contract distributions and terminations (188) Transfer payments from (to) Fixed Accounts and other Divisions (309) Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions (533) __________ Total increase (decrease) 991 __________ NET ASSETS AT DECEMBER 31, 1998 7,707
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Market Manager Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($33) Net realized gain (loss) on investments 861 Net unrealized appreciation (depreciation) of investments (17) __________ Net increase (decrease) in net assets resulting from operations 811 Changes from principal transactions: Purchase payments 66 Contract distributions and terminations (1,346) Transfer payments from (to) Fixed Accounts and other Divisions (324) Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions (1,604) __________ Total increase (decrease) (793) __________ NET ASSETS AT SEPTEMBER 30, 1999 $6,914 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Value Equity Division __________ NET ASSETS AT JANUARY 1, 1998 $77,025 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 1,994 Net realized gain (loss) on investments 1,237 Net unrealized appreciation (depreciation) of investments (4,208) __________ Net increase (decrease) in net assets resulting from operations (977) Changes from principal transactions: Purchase payments 51,484 Contract distributions and terminations (7,869) Transfer payments from (to) Fixed Accounts and other Divisions 6,521 Addition to assets retained in the Account by Golden American Life Insurance Company 10 __________ Increase (decrease) in net assets derived from principal transactions 50,146 __________ Total increase (decrease) 49,169 __________ NET ASSETS AT DECEMBER 31, 1998 126,194
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Value Equity Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($1,649) Net realized gain (loss) on investments 4,323 Net unrealized appreciation (depreciation) of investments (9,587) __________ Net increase (decrease) in net assets resulting from operations (6,913) Changes from principal transactions: Purchase payments 25,285 Contract distributions and terminations (10,550) Transfer payments from (to) Fixed Accounts and other Divisions (5,998) Addition to assets retained in the Account by Golden American Life Insurance Company 1 __________ Increase (decrease) in net assets derived from principal transactions 8,738 __________ Total increase (decrease) 1,825 __________ NET ASSETS AT SEPTEMBER 30, 1999 $128,019 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Strategic Equity Division __________ NET ASSETS AT JANUARY 1, 1998 $50,437 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 3,586 Net realized gain (loss) on investments 1,365 Net unrealized appreciation (depreciation) of investments (6,078) __________ Net increase (decrease) in net assets resulting from operations (1,127) Changes from principal transactions: Purchase payments 25,972 Contract distributions and terminations (5,201) Transfer payments from (to) Fixed Accounts and other Divisions 1,265 Addition to assets retained in the Account by Golden American Life Insurance Company 2 __________ Increase (decrease) in net assets derived from principal transactions 22,038 __________ Total increase (decrease) 20,911 __________ NET ASSETS AT DECEMBER 31, 1998 71,348
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Strategic Equity Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($1,131) Net realized gain (loss) on investments 3,305 Net unrealized appreciation (depreciation) of investments 5,999 __________ Net increase (decrease) in net assets resulting from operations 8,173 Changes from principal transactions: Purchase payments 35,618 Contract distributions and terminations (7,743) Transfer payments from (to) Fixed Accounts and other Divisions 5,803 Addition to assets retained in the Account by Golden American Life Insurance Company 2 __________ Increase (decrease) in net assets derived from principal transactions 33,680 __________ Total increase (decrease) 41,853 __________ NET ASSETS AT SEPTEMBER 30, 1999 $113,201 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Small Cap Division __________ NET ASSETS AT JANUARY 1, 1998 $52,725 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (1,343) Net realized gain (loss) on investments 2,148 Net unrealized appreciation (depreciation) of investments 15,952 __________ Net increase (decrease) in net assets resulting from operations 16,757 Changes from principal transactions: Purchase payments 44,851 Contract distributions and terminations (6,104) Transfer payments from (to) Fixed Accounts and other Divisions 16,010 Addition to assets retained in the Account by Golden American Life Insurance Company 6 __________ Increase (decrease) in net assets derived from principal transactions 54,763 __________ Total increase (decrease) 71,520 __________ NET ASSETS AT DECEMBER 31, 1998 124,245
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Small Cap Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($1,939) Net realized gain (loss) on investments 19,972 Net unrealized appreciation (depreciation) of investments (3,471) __________ Net increase (decrease) in net assets resulting from operations 14,562 Changes from principal transactions: Purchase payments 61,536 Contract distributions and terminations (8,069) Transfer payments from (to) Fixed Accounts and other Divisions 12,882 Addition to assets retained in the Account by Golden American Life Insurance Company 2 __________ Increase (decrease) in net assets derived from principal transactions 66,351 __________ Total increase (decrease) 80,913 __________ NET ASSETS AT SEPTEMBER 30, 1999 $205,158 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Managed Global Division __________ NET ASSETS AT JANUARY 1, 1998 $104,681 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 3,296 Net realized gain (loss) on investments 7,634 Net unrealized appreciation (depreciation) of investments 16,611 __________ Net increase (decrease) in net assets resulting from operations 27,541 Changes from principal transactions: Purchase payments 11,958 Contract distributions and terminations (13,329) Transfer payments from (to) Fixed Accounts and other Divisions (176) Addition to assets retained in the Account by Golden American Life Insurance Company 9 __________ Increase (decrease) in net assets derived from principal transactions (1,538) __________ Total increase (decrease) 26,003 __________ NET ASSETS AT DECEMBER 31, 1998 130,684
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Managed Global Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($1,696) Net realized gain (loss) on investments 21,629 Net unrealized appreciation (depreciation) of investments (8,421) __________ Net increase (decrease) in net assets resulting from operations 11,512 Changes from principal transactions: Purchase payments 5,337 Contract distributions and terminations (16,521) Transfer payments from (to) Fixed Accounts and other Divisions (1,348) Addition to assets retained in the Account by Golden American Life Insurance Company 2 __________ Increase (decrease) in net assets derived from principal transactions (12,530) __________ Total increase (decrease) (1,018) __________ NET ASSETS AT SEPTEMBER 30, 1999 $129,666 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Mid-Cap Growth Division __________ NET ASSETS AT JANUARY 1, 1998 $20,361 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 3,991 Net realized gain (loss) on investments 899 Net unrealized appreciation (depreciation) of investments 6,574 __________ Net increase (decrease) in net assets resulting from operations 11,464 Changes from principal transactions: Purchase payments 66,121 Contract distributions and terminations (3,065) Transfer payments from (to) Fixed Accounts and other Divisions 21,962 Addition to assets retained in the Account by Golden American Life Insurance Company 1 __________ Increase (decrease) in net assets derived from principal transactions 85,019 __________ Total increase (decrease) 96,483 __________ NET ASSETS AT DECEMBER 31, 1998 116,844
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Mid-Cap Growth Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($2,260) Net realized gain (loss) on investments 12,779 Net unrealized appreciation (depreciation) of investments 34,465 __________ Net increase (decrease) in net assets resulting from operations 44,984 Changes from principal transactions: Purchase payments 105,122 Contract distributions and terminations (8,408) Transfer payments from (to) Fixed Accounts and other Divisions 33,395 Addition to assets retained in the Account by Golden American Life Insurance Company 4 __________ Increase (decrease) in net assets derived from principal transactions 130,113 __________ Total increase (decrease) 175,097 __________ NET ASSETS AT SEPTEMBER 30, 1999 $291,941 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Capital Growth Division __________ NET ASSETS AT JANUARY 1, 1998 $44,922 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 2,904 Net realized gain (loss) on investments 911 Net unrealized appreciation (depreciation) of investments 7,679 __________ Net increase (decrease) in net assets resulting from operations 11,494 Changes from principal transactions: Purchase payments 105,760 Contract distributions and terminations (7,503) Transfer payments from (to) Fixed Accounts and other Divisions 24,270 Addition to assets retained in the Account by Golden American Life Insurance Company 7 __________ Increase (decrease) in net assets derived from principal transactions 122,534 __________ Total increase (decrease) 134,028 __________ NET ASSETS AT DECEMBER 31, 1998 178,950
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Capital Growth Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($3,155) Net realized gain (loss) on investments 3,544 Net unrealized appreciation (depreciation) of investments (9,080) __________ Net increase (decrease) in net assets resulting from operations (8,691) Changes from principal transactions: Purchase payments 118,536 Contract distributions and terminations (12,868) Transfer payments from (to) Fixed Accounts and other Divisions 31,944 Addition to assets retained in the Account by Golden American Life Insurance Company 2 __________ Increase (decrease) in net assets derived from principal transactions 137,614 __________ Total increase (decrease) 128,923 __________ NET ASSETS AT SEPTEMBER 30, 1999 $307,873 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Research Division __________ NET ASSETS AT JANUARY 1, 1998 $34,402 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 10,068 Net realized gain (loss) on investments 972 Net unrealized appreciation (depreciation) of investments 16,878 __________ Net increase (decrease) in net assets resulting from operations 27,918 Changes from principal transactions: Purchase payments 167,295 Contract distributions and terminations (6,740) Transfer payments from (to) Fixed Accounts and other Divisions 60,643 Addition to assets retained in the Account by Golden American Life Insurance Company 11 __________ Increase (decrease) in net assets derived from principal transactions 221,209 __________ Total increase (decrease) 249,127 __________ NET ASSETS AT DECEMBER 31, 1998 283,529
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Research Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($4,918) Net realized gain (loss) on investments 2,224 Net unrealized appreciation (depreciation) of investments 149 __________ Net increase (decrease) in net assets resulting from operations (2,545) Changes from principal transactions: Purchase payments 185,397 Contract distributions and terminations (18,467) Transfer payments from (to) Fixed Accounts and other Divisions 29,742 Addition to assets retained in the Account by Golden American Life Insurance Company 6 __________ Increase (decrease) in net assets derived from principal transactions 196,678 __________ Total increase (decrease) 194,133 __________ NET ASSETS AT SEPTEMBER 30, 1999 $477,662 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Total Return Division __________ NET ASSETS AT JANUARY 1, 1998 $26,231 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 9,099 Net realized gain (loss) on investments 185 Net unrealized appreciation (depreciation) of investments 1,028 __________ Net increase (decrease) in net assets resulting from operations 10,312 Changes from principal transactions: Purchase payments 156,492 Contract distributions and terminations (7,889) Transfer payments from (to) Fixed Accounts and other Divisions 42,666 Addition to assets retained in the Account by Golden American Life Insurance Company 23 __________ Increase (decrease) in net assets derived from principal transactions 191,292 __________ Total increase (decrease) 201,604 __________ NET ASSETS AT DECEMBER 31, 1998 227,835
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Total Return Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($4,095) Net realized gain (loss) on investments 125 Net unrealized appreciation (depreciation) of investments (2,155) __________ Net increase (decrease) in net assets resulting from operations (6,125) Changes from principal transactions: Purchase payments 158,461 Contract distributions and terminations (15,803) Transfer payments from (to) Fixed Accounts and other Divisions 50,725 Addition to assets retained in the Account by Golden American Life Insurance Company 8 __________ Increase (decrease) in net assets derived from principal transactions 193,391 __________ Total increase (decrease) 187,266 __________ NET ASSETS AT SEPTEMBER 30, 1999 $415,101 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Growth Division __________ NET ASSETS AT JANUARY 1, 1998 $23,178 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 4,697 Net realized gain (loss) on investments (807) Net unrealized appreciation (depreciation) of investments 15,417 __________ Net increase (decrease) in net assets resulting from operations 19,307 Changes from principal transactions: Purchase payments 77,977 Contract distributions and terminations (3,834) Transfer payments from (to) Fixed Accounts and other Divisions 26,430 Addition to assets retained in the Account by Golden American Life Insurance Company 10 __________ Increase (decrease) in net assets derived from principal transactions 100,583 __________ Total increase (decrease) 119,890 __________ NET ASSETS AT DECEMBER 31, 1998 143,068
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Growth Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($4,197) Net realized gain (loss) on investments 24,458 Net unrealized appreciation (depreciation) of investments 38,947 __________ Net increase (decrease) in net assets resulting from operations 59,208 Changes from principal transactions: Purchase payments 277,629 Contract distributions and terminations (13,651) Transfer payments from (to) Fixed Accounts and other Divisions 165,092 Addition to assets retained in the Account by Golden American Life Insurance Company 3 __________ Increase (decrease) in net assets derived from principal transactions 429,073 __________ Total increase (decrease) 488,281 __________ NET ASSETS AT SEPTEMBER 30, 1999 $631,349 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Global Fixed Income Division __________ NET ASSETS AT JANUARY 1, 1998 $206 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 174 Net realized gain (loss) on investments 216 Net unrealized appreciation (depreciation) of investments -- __________ Net increase (decrease) in net assets resulting from operations 390 Changes from principal transactions: Purchase payments 5,820 Contract distributions and terminations (219) Transfer payments from (to) Fixed Accounts and other Divisions 3,331 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 8,932 __________ Total increase (decrease) 9,322 __________ NET ASSETS AT DECEMBER 31, 1998 9,528
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Global Fixed Income Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($175) Net realized gain (loss) on investments (416) Net unrealized appreciation (depreciation) of investments (323) __________ Net increase (decrease) in net assets resulting from operations (914) Changes from principal transactions: Purchase payments 8,574 Contract distributions and terminations (786) Transfer payments from (to) Fixed Accounts and other Divisions 5,154 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 12,942 __________ Total increase (decrease) 12,028 __________ NET ASSETS AT SEPTEMBER 30, 1999 $21,556 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Develop- ing World Division (a) __________ NET ASSETS AT JANUARY 1, 1998 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($22) Net realized gain (loss) on investments (266) Net unrealized appreciation (depreciation) of investments 149 __________ Net increase (decrease) in net assets resulting from operations (139) Changes from principal transactions: Purchase payments 2,757 Contract distributions and terminations (34) Transfer payments from (to) Fixed Accounts and other Divisions 1,928 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 4,651 __________ Total increase (decrease) 4,512 __________ NET ASSETS AT DECEMBER 31, 1998 4,512
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Develop- ing World Division (a) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($147) Net realized gain (loss) on investments 2,092 Net unrealized appreciation (depreciation) of investments (849) __________ Net increase (decrease) in net assets resulting from operations 1,096 Changes from principal transactions: Purchase payments 7,579 Contract distributions and terminations (358) Transfer payments from (to) Fixed Accounts and other Divisions 9,611 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 16,832 __________ Total increase (decrease) 17,928 __________ NET ASSETS AT SEPTEMBER 30, 1999 $22,440 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Growth Oppor- tunities Division (a) __________ NET ASSETS AT JANUARY 1, 1998 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($8) Net realized gain (loss) on investments (235) Net unrealized appreciation (depreciation) of investments 349 __________ Net increase (decrease) in net assets resulting from operations 106 Changes from principal transactions: Purchase payments 4,097 Contract distributions and terminations (45) Transfer payments from (to) Fixed Accounts and other Divisions (27) Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 4,025 __________ Total increase (decrease) 4,131 __________ NET ASSETS AT DECEMBER 31, 1998 4,131
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Growth Oppor- tunities Division (a) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($75) Net realized gain (loss) on investments 689 Net unrealized appreciation (depreciation) of investments (227) __________ Net increase (decrease) in net assets resulting from operations 387 Changes from principal transactions: Purchase payments 1,830 Contract distributions and terminations (142) Transfer payments from (to) Fixed Accounts and other Divisions 151 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 1,839 __________ Total increase (decrease) 2,226 __________ NET ASSETS AT SEPTEMBER 30, 1999 $6,357 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
PIMCO High Yield Bond Division (c) __________ NET ASSETS AT JANUARY 1, 1998 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $817 Net realized gain (loss) on investments (318) Net unrealized appreciation (depreciation) of investments (18) __________ Net increase (decrease) in net assets resulting from operations 481 Changes from principal transactions: Purchase payments 32,399 Contract distributions and terminations (912) Transfer payments from (to) Fixed Accounts and other Divisions 14,150 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 45,637 __________ Total increase (decrease) 46,118 __________ NET ASSETS AT DECEMBER 31, 1998 46,118
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
PIMCO High Yield Bond Division (c) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $4,257 Net realized gain (loss) on investments (399) Net unrealized appreciation (depreciation) of investments (4,903) __________ Net increase (decrease) in net assets resulting from operations (1,045) Changes from principal transactions: Purchase payments 61,793 Contract distributions and terminations (3,502) Transfer payments from (to) Fixed Accounts and other Divisions 24,988 Addition to assets retained in the Account by Golden American Life Insurance Company 1 __________ Increase (decrease) in net assets derived from principal transactions 83,280 __________ Total increase (decrease) 82,235 __________ NET ASSETS AT SEPTEMBER 30, 1999 $128,353 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
PIMCO StocksPLUS Growth and Income Division (b) __________ NET ASSETS AT JANUARY 1, 1998 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $814 Net realized gain (loss) on investments (97) Net unrealized appreciation (depreciation) of investments 4,255 __________ Net increase (decrease) in net assets resulting from operations 4,972 Changes from principal transactions: Purchase payments 29,368 Contract distributions and terminations (361) Transfer payments from (to) Fixed Accounts and other Divisions 17,822 Addition to assets retained in the Account by Golden American Life Insurance Company 1 __________ Increase (decrease) in net assets derived from principal transactions 46,830 __________ Total increase (decrease) 51,802 __________ NET ASSETS AT DECEMBER 31, 1998 51,802
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
PIMCO StocksPLUS Growth and Income Division (b) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $2,115 Net realized gain (loss) on investments 3,448 Net unrealized appreciation (depreciation) of investments (6,021) __________ Net increase (decrease) in net assets resulting from operations (458) Changes from principal transactions: Purchase payments 92,078 Contract distributions and terminations (3,384) Transfer payments from (to) Fixed Accounts and other Divisions 20,050 Addition to assets retained in the Account by Golden American Life Insurance Company 2 __________ Increase (decrease) in net assets derived from principal transactions 108,746 __________ Total increase (decrease) 108,288 __________ NET ASSETS AT SEPTEMBER 30, 1999 $160,090 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Appre- ciation Division __________ NET ASSETS AT JANUARY 1, 1998 $263 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 30 Net realized gain (loss) on investments 3 Net unrealized appreciation (depreciation) of investments 52 __________ Net increase (decrease) in net assets resulting from operations 85 Changes from principal transactions: Purchase payments 595 Contract distributions and terminations (21) Transfer payments from (to) Fixed Accounts and other Divisions 52 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 626 __________ Total increase (decrease) 711 __________ NET ASSETS AT DECEMBER 31, 1998 974
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Appre- ciation Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $13 Net realized gain (loss) on investments 14 Net unrealized appreciation (depreciation) of investments 3 __________ Net increase (decrease) in net assets resulting from operations 30 Changes from principal transactions: Purchase payments 28 Contract distributions and terminations (126) Transfer payments from (to) Fixed Accounts and other Divisions 49 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions (49) __________ Total increase (decrease) (19) __________ NET ASSETS AT SEPTEMBER 30, 1999 $955 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney High Income Division __________ NET ASSETS AT JANUARY 1, 1998 $209 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 36 Net realized gain (loss) on investments 8 Net unrealized appreciation (depreciation) of investments (66) __________ Net increase (decrease) in net assets resulting from operations (22) Changes from principal transactions: Purchase payments 530 Contract distributions and terminations (15) Transfer payments from (to) Fixed Accounts and other Divisions 104 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 619 __________ Total increase (decrease) 597 __________ NET ASSETS AT DECEMBER 31, 1998 806
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney High Income Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $46 Net realized gain (loss) on investments (32) Net unrealized appreciation (depreciation) of investments (24) __________ Net increase (decrease) in net assets resulting from operations (10) Changes from principal transactions: Purchase payments 2 Contract distributions and terminations (75) Transfer payments from (to) Fixed Accounts and other Divisions (99) Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions (172) __________ Total increase (decrease) (182) __________ NET ASSETS AT SEPTEMBER 30, 1999 $624 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney Large Cap Value Division __________ NET ASSETS AT JANUARY 1, 1998 $215 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 14 Net realized gain (loss) on investments 2 Net unrealized appreciation (depreciation) of investments 3 __________ Net increase (decrease) in net assets resulting from operations 19 Changes from principal transactions: Purchase payments 429 Contract distributions and terminations (5) Transfer payments from (to) Fixed Accounts and other Divisions 43 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 467 __________ Total increase (decrease) 486 __________ NET ASSETS AT DECEMBER 31, 1998 701
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney Large Cap Value Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $22 Net realized gain (loss) on investments 4 Net unrealized appreciation (depreciation) of investments (58) __________ Net increase (decrease) in net assets resulting from operations (32) Changes from principal transactions: Purchase payments 41 Contract distributions and terminations (39) Transfer payments from (to) Fixed Accounts and other Divisions 92 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 94 __________ Total increase (decrease) 62 __________ NET ASSETS AT SEPTEMBER 30, 1999 $763 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney Inter- national Equity Division __________ NET ASSETS AT JANUARY 1, 1998 $96 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (3) Net realized gain (loss) on investments (1) Net unrealized appreciation (depreciation) of investments (2) __________ Net increase (decrease) in net assets resulting from operations (6) Changes from principal transactions: Purchase payments 178 Contract distributions and terminations (4) Transfer payments from (to) Fixed Accounts and other Divisions 62 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 236 __________ Total increase (decrease) 230 __________ NET ASSETS AT DECEMBER 31, 1998 326
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney Inter- national Equity Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($3) Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments 47 __________ Net increase (decrease) in net assets resulting from operations 44 Changes from principal transactions: Purchase payments 11 Contract distributions and terminations (3) Transfer payments from (to) Fixed Accounts and other Divisions 23 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 31 __________ Total increase (decrease) 75 __________ NET ASSETS AT SEPTEMBER 30, 1999 $401 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney Money Market Division __________ NET ASSETS AT JANUARY 1, 1998 $181 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 14 Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- __________ Net increase (decrease) in net assets resulting from operations 14 Changes from principal transactions: Purchase payments 565 Contract distributions and terminations (25) Transfer payments from (to) Fixed Accounts and other Divisions (417) Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 123 __________ Total increase (decrease) 137 __________ NET ASSETS AT DECEMBER 31, 1998 318
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney Money Market Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $4 Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- __________ Net increase (decrease) in net assets resulting from operations 4 Changes from principal transactions: Purchase payments 25 Contract distributions and terminations (9) Transfer payments from (to) Fixed Accounts and other Divisions (204) Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions (188) __________ Total increase (decrease) (184) __________ NET ASSETS AT SEPTEMBER 30, 1999 $134 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Inter- national Equity Division __________ NET ASSETS AT JANUARY 1, 1998 $1,981 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (179) Net realized gain (loss) on investments (556) Net unrealized appreciation (depreciation) of investments 1,647 __________ Net increase (decrease) in net assets resulting from operations 912 Changes from principal transactions: Purchase payments 41,775 Contract distributions and terminations (940) Transfer payments from (to) Fixed Accounts and other Divisions 6,037 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 46,872 __________ Total increase (decrease) 47,784 __________ NET ASSETS AT DECEMBER 31, 1998 49,765
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Inter- national Equity Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($929) Net realized gain (loss) on investments 14,543 Net unrealized appreciation (depreciation) of investments 2,304 __________ Net increase (decrease) in net assets resulting from operations 15,918 Changes from principal transactions: Purchase payments 35,909 Contract distributions and terminations (2,396) Transfer payments from (to) Fixed Accounts and other Divisions 21,016 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 54,529 __________ Total increase (decrease) 70,447 __________ NET ASSETS AT SEPTEMBER 30, 1999 $120,212 ========== (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Combined _____________ NET ASSETS AT JANUARY 1, 1998 $1,604,271 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 125,356 Net realized gain (loss) on investments 22,265 Net unrealized appreciation (depreciation) of investments 39,447 _____________ Net increase (decrease) in net assets resulting from operation 187,068 Changes from principal transactions: Purchase payments 1,536,754 Contract distributions and terminations (247,928) Transfer payments from (to) Fixed Accounts and other Divisions 237,766 Addition to assets retained in the Account by Golden American Life Insurance Company 274 _____________ Increase (decrease) in net assets derived from principal transactions 1,526,866 _____________ Total increase (decrease) 1,713,934 _____________ NET ASSETS AT DECEMBER 31, 1998 3,318,205
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Combined _____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($38,309) Net realized gain (loss) on investments 137,151 Net unrealized appreciation (depreciation) of investments 102,951 _____________ Net increase (decrease) in net assets resulting from operation 201,793 Changes from principal transactions: Purchase payments 1,921,450 Contract distributions and terminations (374,308) Transfer payments from (to) Fixed Accounts and other Divisions 435,107 Addition to assets retained in the Account by Golden American Life Insurance Company 82 _____________ Increase (decrease) in net assets derived from principal transactions 1,982,331 _____________ Total increase (decrease) 2,184,124 _____________ NET ASSETS AT SEPTEMBER 30, 1999 $5,502,329 ============= (a) Commencement of operations, March 2, 1998. (b) Commencement of operations, May 8, 1998. (c) Commencement of operations, May 11, 1998.
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 NOTE 1 - ORGANIZATION Golden American Life Insurance Company Separate Account B (the "Account") was established by Golden American Life Insurance Company ("Golden American") to support the operations of variable annuity contracts ("Contracts"). Golden American is primarily engaged in the issuance of variable insurance products and is licensed as a life insurance company in the District of Columbia and all states except New York. The Account is registered as a unit investment trust with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended. Golden American provides for variable accumulation and benefits under the Contracts by crediting annuity considerations to one or more divisions within the Account or the Golden American Guaranteed Interest Division, the Golden American Fixed Interest Division, and the Fixed Separate Account, which are not part of the Account, as directed by the Contractowners. The portion of the Account's assets applicable to Contracts will not be chargeable with liabilities arising out of any other business Golden American may conduct, but obligations of the Account, including the promise to make benefit payments, are obligations of Golden American. The assets and liabilities of the Account are clearly identified and distinguished from the other assets and liabilities of Golden American. During 1999, the Account had GoldenSelect Contracts and Granite PrimElite Contracts. GoldenSelect Contracts sold by Golden American during 1999 include DVA 100, DVA Series 100, DVA Plus, Access, Premium Plus, ESII, and Value. During 1999, the Account had GoldenSelect Contracts (DVA 80) which were no longer being sold. During 1999, the Account began selling GoldenSelect Value Contracts. The Value Contracts have daily mortality and expense risk charges deducted at an annual rate of 0.75%. A daily charge for an asset based administrative charge is deducted from assets attributable to the contract at an annual rate of 0.15%. Currently, there is no administrative charge for Value Contracts. Premium taxes, where applicable, are deducted from the accumulation value of the Value Contracts. The amount and timing of the deduction depend on the annuitant's state of residence and currently ranges up to 3.5%. The contingent deferred sales charges for the Value Contract is imposed as a percentage of each premium payment if the Contract is surrendered or a partial withdrawal in excess of stated allowable partial withdrawals is taken. The surrender charge is imposed at a rate of 6% during the first three complete years after purchase declining to 5%, 4%, 3%, and 1% after the third, fourth, fifth, and sixth years, respectively. At September 30, 1999, the Account had, under GoldenSelect Contracts, twenty- six investment divisions: Liquid Asset, Limited Maturity Bond, Hard Assets, All-Growth, Real Estate, Fully Managed, Equity Income (formerly Multiple Allocation), Capital Appreciation, Rising Dividends, Emerging Markets, Market Manager, Value Equity, Strategic Equity, Small Cap, Managed Global, Mid-Cap Growth, Capital Growth (formerly Growth & Income), Research, Total Return, Growth (formerly Value + Growth), Global Fixed Income, Developing World, Growth Opportunities, PIMCO High Yield Bond, PIMCO StocksPLUS Growth and Income, and International Equity Divisions ("Divisions"). The Account also had, under Granite PrimElite Contracts, eight investments divisions: Mid-Cap Growth, Research, Total Return, Appreciation, Smith Barney High Income, Smith Barney Large Cap Value, Smith Barney International Equity, and Smith Barney Money Market Divisions (collectively with the divisions noted above, "Divisions"). The assets in each Division are invested in shares of a designated series ("Series," which may also be referred to as "Portfolio") of mutual funds, The GCG Trust, the Travelers Series Fund Inc., the Greenwich Street Series Fund Inc., the Warburg Pincus Trust or the PIMCO Variable Insurance Trust (the "Trusts"). The Account also includes The Fund For Life Division, which is not included in the accompanying financial statements, and ceased to accept new Contracts effective December 31, 1994. Golden American has requested permission from the Securities and Exchange Commission ("SEC") to substitute shares of the All-Growth Series and the Growth Opportunities Series with shares of the Mid-Cap Growth Series. These requests are still pending. As of May 1, 1999, new allocations to the All- Growth Series and the Growth Opportunities Series are no longer being accepted. Prior to August 14, 1998, the Account also had certain investment divisions available from the Equi-Select Series Trust. In an effort to consolidate operations, Golden American requested permission from the SEC to substitute shares of each Portfolio of the Equi-Select Series Trust with shares of a similar Series of The GCG Trust. On August 14, 1998, after approval from the SEC, shares of each Portfolio of the Equi-Select Series Trust were substituted with shares of a similar Series of The GCG Trust. The consolidation resulted in the following Series being substituted from The GCG Trust:
Equi-Select Series Trust The GCG Trust Investment Division Investment Division ___________________________ _________________________________________ International Fixed Income Global Fixed Income OTC Mid-Cap Growth Research Research Total Return Total Return Value + Growth Growth (formerly Value + Growth) Growth & Income Capital Growth (formerly Growth & Income)
The Market Manager Division was open for investment for only a brief period during 1994 and 1995. This Division is now closed and Contractowners are not permitted to direct their investments into this Division. NOTE 2 - BASIS OF PRESENTATION The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 1999 are not necessarily indicative of the results that may be expected for the year ended December 31, 1999. For further information, refer to the financial statements and footnotes thereto for the year ended December 31, 1998 included in this amendment to the separate account registration statement. NOTE 3 - NET ASSETS Investments at net asset value less the payable to Golden American Life Insurance Company for charges and fees at September 30, 1999 consisted of the following:
Limited Liquid Maturity Hard All- Asset Bond Assets Growth Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $420,471 $129,159 $32,533 $56,210 Accumulated net investment income (loss) and net realized gain (loss) on investments 13,548 16,003 5,868 15,449 Net unrealized appreciation (depreciation) of investments -- 738 2,677 28,373 _____________________________________________________ $434,019 $145,900 $41,078 $100,032 =====================================================
Real Fully Equity Capital Estate Managed Income Appreciation Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $44,239 $187,984 $138,612 $185,675 Accumulated net investment income (loss) and net realized gain (loss) on investments 26,869 48,993 131,424 81,933 Net unrealized appreciation (depreciation) of investments (12,759) 24,432 199 39,271 _____________________________________________________ $58,349 $261,409 $270,235 $306,879 =====================================================
Rising Emerging Market Value Dividends Markets Manager Equity Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $569,355 $44,157 $638 $117,980 Accumulated net investment income (loss) and net realized gain (loss) on investments 29,680 (16,296) 2,888 16,234 Net unrealized appreciation (depreciation) of investments 90,659 (1,896) 3,388 (6,195) _____________________________________________________ $689,694 $25,965 $6,914 $128,019 =====================================================
Strategic Small Managed Mid-Cap Equity Cap Global Growth Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $95,258 $169,894 $77,830 $233,832 Accumulated net investment income (loss) and net realized gain (loss) on investments 10,500 17,566 40,110 16,283 Net unrealized appreciation (depreciation) of investments 7,443 17,698 11,726 41,826 _____________________________________________________ $113,201 $205,158 $129,666 $291,941 =====================================================
Capital Total Growth Research Return Growth Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $300,586 $451,081 $409,797 $553,886 Accumulated net investment income (loss) and net realized gain (loss) on investments 7,439 9,166 6,019 24,529 Net unrealized appreciation (depreciation) of investments (152) 17,415 (715) 52,934 _____________________________________________________ $307,873 $477,662 $415,101 $631,349 =====================================================
Global Growth PIMCO Fixed Developing Oppor- High Yield Income World tunities Bond Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $22,082 $21,483 $5,864 $128,917 Accumulated net investment income (loss) and net realized gain (loss) on investments (193) 1,657 371 4,357 Net unrealized appreciation (depreciation) of investments (333) (700) 122 (4,921) _____________________________________________________ $21,556 $22,440 $6,357 $128,353 =====================================================
PIMCO Smith Smith StocksPLUS Barney Barney Growth and Appre- High Large Cap Income ciation Income Value Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $155,576 $833 $653 $770 Accumulated net investment income (loss) and net realized gain (loss) on investments 6,280 76 58 41 Net unrealized appreciation (depreciation) of investments (1,766) 46 (87) (48) _____________________________________________________ $160,090 $955 $624 $763 =====================================================
Smith Barney Smith Inter- Barney Inter- national Money national Equity Market Equity Division Division Division Combined _____________________________________________________ (Dollars in thousands) Unit transactions $368 $116 $103,406 $4,659,245 Accumulated net investment income (loss) and net realized gain (loss) on investments (7) 18 12,948 529,811 Net unrealized appreciation (depreciation) of investments 40 -- 3,858 313,273 _____________________________________________________ $401 $134 $120,212 $5,502,329 =====================================================
NOTE 4 - UNIT VALUES Accumulation unit value information (which is based on total assets) for units outstanding by Contract type as of September 30, 1999 were as follows:
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE _______________________________________________________________________________ (IN THOUSANDS) LIQUID ASSET Currently payable annuity products: DVA 80 2,484 $15.61 $39 DVA 100 3,808 15.28 58 Contracts in accumulation period: DVA 80 480,573 15.61 7,504 DVA 100 1,975,262 15.28 30,187 DVA DIVISION/CONTRACT 100 59,274 14.71 872 DVA Plus - Standard 782,343 14.90 11,653 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 10,366,938 14.66 151,957 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 6,969,910 14.42 100,531 Access - 7% Solution, Premium Plus - 7% Solution 9,275,343 14.17 131,429 Value 1,296 15.45 20 ____________ 434,250 LIMITED MATURITY BOND Currently payable annuity products: DVA 80 6,084 17.81 109 DVA 100 14,244 17.43 248 Contracts in accumulation period: DVA 80 55,500 17.81 988 DVA 100 1,655,177 17.43 28,851 DVA DIVISION/CONTRACT 100 18,808 16.78 316 DVA Plus - Standard 310,272 17.00 5,276 DVA Plus - Annual Ratchet & 5.5% Solution, Access- Standard, Premium Plus - Standard, ES II 3,194,141 16.73 53,447 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 1,552,715 16.47 25,566 Access - 7% Solution, Premium Plus - 7% Solution 1,921,743 16.18 31,086 Value 720 17.64 13 ____________ 145,900
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE _______________________________________________________________________________ (IN THOUSANDS) HARD ASSETS Currently payable annuity products: DVA 80 71 $18.44 $1 DVA 100 7,147 18.05 129 Contracts in accumulation period: DVA 80 51,074 18.44 942 DVA 100 525,251 18.05 9,481 DVA DIVISION/CONTRACT 100 22,713 17.38 395 DVA Plus - Standard 108,635 17.59 1,911 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 499,870 17.31 8,654 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 643,959 17.04 10,970 Access - 7% Solution, Premium Plus - 7% Solution 512,114 16.74 8,571 Value 368 18.25 7 ____________ 41,061 ALL-GROWTH Currently payable annuity products: DVA 100 10,400 21.25 221 Contracts in accumulation period: DVA 80 32,946 21.72 716 DVA 100 1,817,288 21.25 38,626 DVA DIVISION/CONTRACT 100 20,550 20.46 421 DVA Plus - Standard 185,822 20.72 3,850 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 713,050 20.39 14,536 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 1,460,549 20.06 29,298 Access - 7% Solution, Premium Plus - 7% Solution 626,209 19.71 12,341 ____________ 100,009
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE _______________________________________________________________________________ (IN THOUSANDS) REAL ESTATE Currently payable annuity products: DVA 80 353 $21.96 $8 DVA 100 7,069 21.49 152 Contracts in accumulation period: DVA 80 22,665 21.96 497 DVA 100 800,668 21.49 17,206 DVA DIVISION/CONTRACT 100 8,108 20.69 168 DVA Plus - Standard 148,548 20.95 3,111 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 510,629 20.61 10,525 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 795,034 20.28 16,125 Access - 7% Solution, Premium Plus - 7% Solution 528,500 19.93 10,531 ____________ 58,323 FULLY MANAGED Currently payable annuity products: DVA 80 1,073 23.34 25 DVA 100 46,446 22.84 1,061 Contracts in accumulation period: DVA 80 58,820 23.34 1,373 DVA 100 3,075,079 22.84 70,232 DVA DIVISION/CONTRACT 100 33,047 21.99 727 DVA Plus - Standard 532,576 22.26 11,855 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 2,243,995 21.91 49,156 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 3,157,986 21.56 68,071 Access - 7% Solution, Premium Plus - 7% Solution 2,781,025 21.18 58,893 Value 398 23.09 9 ____________ 261,402
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE _______________________________________________________________________________ (IN THOUSANDS) EQUITY INCOME Currently payable annuity products: DVA 80 11,017 $22.80 $250 DVA 100 67,950 22.31 1,515 Contracts in accumulation period: DVA 80 241,877 22.80 5,514 DVA 100 5,734,857 22.31 127,950 DVA DIVISION/CONTRACT 100 57,610 21.48 1,237 DVA Plus - Standard 383,234 21.75 8,333 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 1,647,882 21.40 35,263 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 2,427,728 21.06 51,120 Access - 7% Solution, Premium Plus - 7% Solution 1,885,767 20.69 39,011 Value 2,083 22.55 47 ____________ 270,240 CAPITAL APPRECIATION Currently payable annuity products: DVA 100 32,576 26.46 862 Contracts in accumulation period: DVA 80 54,927 26.86 1,475 DVA 100 3,447,230 26.46 91,223 DVA DIVISION/CONTRACT 100 36,489 25.78 941 DVA Plus - Standard 433,138 26.00 11,264 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 1,990,268 25.72 51,185 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 3,312,127 25.43 84,235 Access - 7% Solution, Premium Plus - 7% Solution 2,611,894 25.11 65,585 Value 3,669 26.66 98 ____________ 306,868
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE _______________________________________________________________________________ (IN THOUSANDS) RISING DIVIDENDS Currently payable annuity products: DVA 80 2,864 $24.40 $70 DVA 100 11,272 24.11 271 Contracts in accumulation period: DVA 80 65,206 24.40 1,591 DVA 100 3,559,543 24.11 85,806 DVA DIVISION/CONTRACT 100 78,539 23.60 1,853 DVA Plus - Standard 1,247,307 23.77 29,653 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 6,834,082 23.56 161,024 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 9,513,935 23.35 222,164 Access - 7% Solution, Premium Plus - 7% Solution 8,098,168 23.11 187,116 Value 4,492 24.25 109 ____________ 689,657 EMERGING MARKETS Currently payable annuity products: DVA 100 22,610 8.64 195 Contracts in accumulation period: DVA 80 66,076 8.75 578 DVA 100 1,252,234 8.64 10,825 DVA DIVISION/CONTRACT 100 19,649 8.46 167 DVA Plus - Standard 273,503 8.53 2,332 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 299,951 8.45 2,535 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 1,070,965 8.37 8,968 Access - 7% Solution, Premium Plus - 7% Solution 40,937 8.29 339 ____________ 25,939
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE _______________________________________________________________________________ (IN THOUSANDS) MARKET MANAGER Contracts in accumulation period: DVA 100 296,162 $23.97 $7,099 ____________ 7,099 VALUE EQUITY Currently payable annuity products: DVA 80 367 18.11 7 DVA 100 8,847 17.94 159 Contracts in accumulation period: DVA 80 18,778 18.11 340 DVA 100 742,247 17.94 13,315 DVA DIVISION/CONTRACT 100 14,270 17.64 252 DVA Plus - Standard 435,601 17.75 7,731 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 1,694,917 17.62 29,871 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 2,677,427 17.50 46,855 Access - 7% Solution, Premium Plus - 7% Solution 1,698,775 17.34 29,464 Value 1,634 18.02 29 ____________ 128,023 STRATEGIC EQUITY Currently payable annuity products: DVA 100 26,685 16.04 428 Contracts in accumulation period: DVA 80 18,291 16.17 296 DVA 100 387,147 16.04 6,211 DVA DIVISION/CONTRACT 100 7,160 15.82 113 DVA Plus - Standard 433,546 15.90 6,893 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 1,786,161 15.80 28,229 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 2,282,316 15.71 35,857 Access - 7% Solution, Premium Plus - 7% Solution 2,254,744 15.59 35,162 Value 767 16.11 12 ____________ 113,201
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE _______________________________________________________________________________ (IN THOUSANDS) SMALL CAP Currently payable annuity products: DVA 100 4,783 $17.36 $83 Contracts in accumulation period: DVA 80 19,937 17.50 349 DVA 100 524,063 17.36 9,100 DVA DIVISION/CONTRACT 100 15,193 17.14 260 DVA Plus - Standard 448,759 17.20 7,719 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 4,287,381 17.10 73,332 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 3,944,346 17.01 67,081 Access - 7% Solution, Premium Plus - 7% Solution 2,784,712 16.91 47,093 Value 8,547 17.43 149 ____________ 205,166 MANAGED GLOBAL Currently payable annuity products: DVA 100 14,368 16.76 241 Contracts in accumulation period: DVA 80 29,959 16.99 509 DVA 100 2,980,836 16.76 49,947 DVA DIVISION/CONTRACT 100 39,282 16.36 643 DVA Plus - Standard 614,599 16.46 10,113 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 783,946 16.29 12,767 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 3,315,995 16.12 53,441 Access - 7% Solution, Premium Plus - 7% Solution 124,499 15.92 1,982 ____________ 129,643
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE _______________________________________________________________________________ (IN THOUSANDS) MID-CAP GROWTH Contracts in accumulation period: DVA 80 24,541 $29.03 $712 DVA 100 283,261 28.74 8,140 DVA DIVISION/CONTRACT 100 10,366 28.23 293 DVA Plus - Standard 255,815 28.38 7,260 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 3,508,143 28.13 98,669 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 2,932,667 27.95 81,975 Granite PrimElite - Standard 3,805 28.38 108 Granite PrimElite - Annual Ratchet 24,221 28.13 681 Access - 7% Solution, Premium Plus - 7% Solution 3,384,554 27.74 93,891 Value 6,687 28.88 193 ____________ 291,922 CAPITAL GROWTH Contracts in accumulation period: DVA 80 4,318 17.26 75 DVA 100 435,503 17.14 7,462 DVA DIVISION/CONTRACT 100 14,456 16.92 245 DVA Plus - Standard 620,752 16.99 10,544 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 5,246,868 16.90 88,656 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 5,579,453 16.81 93,767 Access - 7% Solution, Premium Plus - 7% Solution 6,406,836 16.72 107,101 Value 1,461 17.20 25 ____________ 307,875
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE _______________________________________________________________________________ (IN THOUSANDS) RESEARCH Contracts in accumulation period: DVA 80 6,657 $23.82 $159 DVA 100 454,552 23.58 10,717 DVA DIVISION/CONTRACT 100 17,333 23.16 402 DVA Plus - Standard 563,325 23.28 13,117 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 5,920,313 23.12 136,871 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 6,655,121 22.93 152,631 Granite PrimElite - Standard 2,481 23.28 58 Granite PrimElite - Annual Ratchet 39,213 23.12 906 Access - 7% Solution, Premium Plus - 7% Solution 7,144,676 22.76 162,621 Value 6,536 23.70 155 ____________ 477,637 TOTAL RETURN Contracts in accumulation period: DVA 80 9,144 18.17 166 DVA 100 419,948 17.98 7,552 DVA DIVISION/CONTRACT 100 4,918 17.67 87 DVA Plus - Standard 805,233 17.76 14,302 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 7,686,511 17.63 135,529 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 6,534,820 17.49 114,321 Granite PrimElite - Standard 5,973 17.76 106 Granite PrimElite - Annual Ratchet 34,842 17.63 614 Access - 7% Solution, Premium Plus - 7% Solution 8,200,030 17.36 142,368 Value 2,841 18.08 51 ____________ 415,096
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE _______________________________________________________________________________ (IN THOUSANDS) GROWTH Contracts in accumulation period: DVA 80 53,970 $20.76 $1,120 DVA 100 702,103 20.61 14,472 DVA DIVISION/CONTRACT 100 27,280 20.36 555 DVA Plus - Standard 602,631 20.43 12,313 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 10,757,752 20.33 218,657 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 8,121,303 20.22 164,177 Access - 7% Solution, Premium Plus - 7% Solution 10,929,111 20.11 219,765 Value 14,091 20.69 291 ____________ 631,350 GLOBAL FIXED INCOME Contracts in accumulation period: DVA 100 19,437 12.36 240 DVA DIVISION/CONTRACT 100 330 12.14 4 DVA Plus - Standard 21,496 12.21 262 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 910,594 12.12 11,033 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 344,748 12.02 4,145 Access - 7% Solution, Premium Plus - 7% Solution 492,124 11.93 5,872 ____________ 21,556
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE _______________________________________________________________________________ (IN THOUSANDS) DEVELOPING WORLD Contracts in accumulation period: DVA 80 513 $8.95 $5 DVA 100 18,896 8.92 168 DVA DIVISION/CONTRACT 100 683 8.87 6 DVA Plus - Standard 10,154 8.88 90 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 1,402,520 8.86 12,426 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 438,213 8.84 3,873 Access - 7% Solution, Premium Plus - 7% Solution 664,597 8.82 5,860 Value 1,342 8.93 12 ____________ 22,440 GROWTH OPPORTUNITIES Contracts in accumulation period: DVA 80 423 10.45 4 DVA 100 12,750 10.42 133 DVA Plus - Standard 9,752 10.37 101 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 228,188 10.35 2,362 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 156,870 10.32 1,620 Access - 7% Solution, Premium Plus - 7% Solution 207,530 10.30 2,137 ____________ 6,357
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE _______________________________________________________________________________ (IN THOUSANDS) PIMCO HIGH YIELD BOND Contracts in accumulation period: DVA 80 1,150 $10.17 $12 DVA 100 181,673 10.14 1,843 DVA DIVISION/CONTRACT 100 951 10.10 10 DVA Plus - Standard 339,021 10.11 3,426 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 4,412,449 10.09 44,502 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 2,715,099 10.06 27,324 Access - 7% Solution, Premium Plus - 7% Solution 5,101,916 10.04 51,234 ____________ 128,351 PIMCO STOCKSPLUS GROWTH AND INCOME Contracts in accumulation period: DVA 80 1,606 11.65 19 DVA 100 110,890 11.61 1,288 DVA Plus - Standard 255,112 11.57 2,952 DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 4,269,129 11.55 49,293 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 3,550,063 11.52 40,902 Access - 7% Solution, Premium Plus - 7% Solution 5,708,728 11.50 65,632 Value 879 11.63 10 ____________ 160,096
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE _______________________________________________________________________________ (IN THOUSANDS) APPRECIATION Contracts in accumulation period: Granite PrimElite - Standard 1,258 $17.03 $21 Granite PrimElite - Annual Ratchet 55,133 16.94 934 ____________ 955 SMITH BARNEY HIGH INCOME Contracts in accumulation period: Granite PrimElite - Standard 7,534 13.48 101 Granite PrimElite - Annual Ratchet 39,047 13.39 523 ____________ 624 SMITH BARNEY LARGE CAP VALUE Contracts in accumulation period: Granite PrimElite - Standard 5,217 18.72 98 Granite PrimElite - Annual Ratchet 35,761 18.59 665 ____________ 763 SMITH BARNEY INTERNATIONAL EQUITY Contracts in accumulation period: Granite PrimElite - Standard 2,648 16.18 43 Granite PrimElite - Annual Ratchet 22,244 16.07 358 ____________ 401 SMITH BARNEY MONEY MARKET Contracts in accumulation period: Granite PrimElite - Standard 1,919 11.71 23 Granite PrimElite - Annual Ratchet 9,581 11.63 111 ____________ 134 INTERNATIONAL EQUITY Contracts in accumulation period: DVA Plus - Annual Ratchet & 5.5% Solution, Access - Standard, Premium Plus - Standard, ES II 5,182,818 11.83 61,312 DVA Plus - 7% Solution, Access - Annual Ratchet & 5.5% Solution, Premium Plus - Annual Ratchet & 5.5% Solution 1,488,334 11.85 17,636 Access - 7% Solution, Premium Plus - 7% Solution 3,500,208 11.79 41,256 Value 1,484 12.13 17 ____________ 120,221 _____________ ____________ COMBINED 298,616,800 $5,502,559 ============= ============
FINANCIAL STATEMENTS GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B YEARS ENDED DECEMBER 31, 1998 AND 1997 WITH REPORT OF INDEPENDENT AUDITORS GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1998 AND 1997 TABLE OF CONTENTS Report of Independent Auditors Audited Financial Statements Statement of Assets and Liability Statement of Operations Statements of Changes in Net Assets Notes to Financial Statements Report of Independent Auditors The Board of Directors Golden American Life Insurance Company We have audited the accompanying statement of assets and liability of Golden American Life Insurance Company Separate Account B as of December 31, 1998, and the related statements of operations for the year then ended and the changes in net assets for each of the two years in the period then ended. These financial statements are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1998, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Golden American Life Insurance Company Separate Account B at December 31, 1998, and the results of its operations for the year then ended and the changes in its net assets for each of the two years in the period then ended in conformity with generally accepted accounting principles. /S/ Ernst & Young LLP Des Moines, Iowa February 25, 1999 GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF ASSETS AND LIABILITY DECEMBER 31, 1998 (DOLLARS IN THOUSANDS)
COMBINED ____________ ASSETS Investments at net asset value: The GCG Trust: Liquid Asset Series, 175,698,298 shares (cost - $175,698) $175,698 Limited Maturity Bond Series, 9,632,216 shares (cost - $103,588) 102,872 Hard Assets Series, 3,095,761 shares (cost - $44,073) 29,719 All-Growth Series, 5,460,140 shares (cost - $72,614) 81,847 Real Estate Series, 5,082,757 shares (cost - $77,307) 69,024 Fully Managed Series, 14,869,764 shares (cost - $216,245) 226,467 Multiple Allocation Series, 21,629,600 shares (cost - $268,930) 274,047 Capital Appreciation Series, 14,189,481 shares (cost - $221,707) 256,687 Rising Dividends Series, 22,754,116 shares (cost - $421,987) 500,818 Emerging Markets Series, 3,333,290 shares (cost - $31,776) 22,267 Market Manager Series, 414,851 shares (cost - $4,663) 8,068 Value Equity Series, 7,950,210 shares (cost - $122,857) 126,249 Strategic Equity Series, 5,567,699 shares (cost - $69,933) 71,377 Small Cap Series, 7,754,062 shares (cost - $103,129) 124,298 Managed Global Series, 9,213,401 shares (cost - $110,591) 130,738 Mid-Cap Growth Series, 6,458,180 shares (cost - $109,532) 116,893 Growth & Income Series, 11,461,829 shares (cost - $170,105) 179,033 Research Series, 13,965,668 shares (cost - $266,377) 283,643 Total Return Series, 14,425,794 shares (cost - $226,488) 227,928 Value + Growth Series, 9,163,078 shares (cost - $129,140) 143,127 Global Fixed Income Series, 853,224 shares (cost - $9,541) 9,531
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF ASSETS AND LIABILITY DECEMBER 31, 1998 (CONTINUED) (DOLLARS IN THOUSANDS)
COMBINED ____________ ASSETS - CONTINUED Investments at net asset value: The GCG Trust: Developing World Series, 612,452 shares (cost - $4,365) $4,514 Growth Opportunities Series, 425,552 shares (cost - $3,783) 4,132 PIMCO Variable Insurance Trust: PIMCO High Yield Bond Portfolio, 4,770,792 shares (cost - $46,152) 46,134 PIMCO StocksPLUS Growth and Income Portfolio, 4,119,171 shares (cost - $47,564) 51,819 Greenwich Street Series Fund Inc.: Appreciation Portfolio, 46,082 shares (cost - $932) 975 Travelers Series Fund Inc.: Smith Barney High Income Portfolio, 63,707 shares (cost - $870) 807 Smith Barney Large Cap Value Portfolio, 34,717 shares (cost - $692) 702 Smith Barney International Equity Portfolio, 23,707 shares (cost - $333) 326 Smith Barney Money Market Portfolio, 317,907 shares (cost - $318) 318 Warburg Pincus Trust: International Equity Portfolio, 4,529,941 shares (cost - $48,231) 49,785 ____________ TOTAL ASSETS (cost - $3,109,521) 3,319,843 LIABILITY Payable to Golden American Life Insurance Company for charges and fees 1,638 ____________ TOTAL NET ASSETS $3,318,205 ============ NET ASSETS For variable annuity insurance contracts $3,309,202 Retained in Separate Account B by Golden American Life Insurance Company 9,003 ____________ TOTAL NET ASSETS $3,318,205 ============
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998, EXCEPT AS NOTED (DOLLARS IN THOUSANDS)
Limited Liquid Maturity Hard Asset Bond Assets Division Division Division ______________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $5,783 $3,217 $1,662 Capital gains distributions -- -- 1,065 ______________________________ TOTAL INVESTMENT INCOME 5,783 3,217 2,727 Expenses: Mortality and expense risk and other charges 1,619 939 461 Annual administrative charges 62 41 13 Minimum death benefit guarantee charges 7 1 2 Contingent deferred sales charges 342 65 53 Other contract charges 9 3 2 Amortization of deferred charges related to: Deferred sales load 615 389 164 Premium taxes 3 6 3 ______________________________ TOTAL EXPENSES BEFORE WAIVER 2,657 1,444 698 Fees waived by Golden American Life Insurance Company 5 9 4 ______________________________ NET EXPENSES 2,652 1,435 694 ______________________________ NET INVESTMENT INCOME (LOSS) 3,131 1,782 2,033 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments -- 872 (6,941) Net unrealized appreciation (depreciation) of investments -- 739 (8,620) ______________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $3,131 $3,393 ($13,528) ============================== (a) Commencement of operations, March 2, 1998 (b) Commencement of operations, May 8, 1998 (c) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
All- Real Fully Growth Estate Managed Division Division Division ______________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends -- $3,321 $6,674 Capital gains distributions $470 6,244 12,408 ______________________________ TOTAL INVESTMENT INCOME 470 9,565 19,082 Expenses: Mortality and expense risk and other charges 879 964 2,417 Annual administrative charges 41 28 105 Minimum death benefit guarantee charges 1 1 2 Contingent deferred sales charges 46 38 64 Other contract charges 2 1 5 Amortization of deferred charges related to: Deferred sales load 409 290 866 Premium taxes 7 5 16 ______________________________ TOTAL EXPENSES BEFORE WAIVER 1,385 1,327 3,475 Fees waived by Golden American Life Insurance Company 10 6 19 ______________________________ NET EXPENSES 1,375 1,321 3,456 ______________________________ NET INVESTMENT INCOME (LOSS) (905) 8,244 15,626 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 330 3,708 1,704 Net unrealized appreciation (depreciation) of investments 6,240 (24,689) (10,501) ______________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $5,665 ($12,737) $6,829 ============================== (a) Commencement of operations, March 2, 1998 (b) Commencement of operations, May 8, 1998 (c) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Multiple Capital Alloca- Apprecia- Rising tion tion Dividends Division Division Division ______________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $13,875 $3,355 $2,240 Capital gains distributions 14,968 19,519 16,632 ______________________________ TOTAL INVESTMENT INCOME 28,843 22,874 18,872 Expenses: Mortality and expense risk and other charges 2,985 2,656 4,670 Annual administrative charges 144 110 212 Minimum death benefit guarantee charges 10 2 4 Contingent deferred sales charges 89 59 128 Other contract charges 9 9 13 Amortization of deferred charges related to: Deferred sales load 1,784 1,083 934 Premium taxes 33 25 11 ______________________________ TOTAL EXPENSES BEFORE WAIVER 5,054 3,944 5,972 Fees waived by Golden American Life Insurance Company 26 26 20 ______________________________ NET EXPENSES 5,028 3,918 5,952 ______________________________ NET INVESTMENT INCOME (LOSS) 23,815 18,956 12,920 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 2,288 6,551 3,842 Net unrealized appreciation (depreciation) of investments (10,125) (3,987) 17,344 ______________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $15,978 $21,520 $34,106 ============================== (a) Commencement of operations, March 2, 1998 (b) Commencement of operations, May 8, 1998 (c) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Emerging Market Value Markets Manager Equity Division Division Division ______________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends -- $129 $2,766 Capital gains distributions -- 214 1,018 ______________________________ TOTAL INVESTMENT INCOME -- 343 3,784 Expenses: Mortality and expense risk and other charges $336 -- 1,442 Annual administrative charges 10 1 57 Minimum death benefit guarantee charges 1 -- 1 Contingent deferred sales charges 16 -- 57 Other contract charges 1 -- 2 Amortization of deferred charges related to: Deferred sales load 160 43 231 Premium taxes 2 -- 3 ______________________________ TOTAL EXPENSES BEFORE WAIVER 526 44 1,793 Fees waived by Golden American Life Insurance Company 2 -- 3 ______________________________ NET EXPENSES 524 44 1,790 ______________________________ NET INVESTMENT INCOME (LOSS) (524) 299 1,994 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (3,524) 135 1,237 Net unrealized appreciation (depreciation) of investments (4,266) 1,090 (4,208) ______________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($8,314) $1,524 ($977) ============================== (a) Commencement of operations, March 2, 1998 (b) Commencement of operations, May 8, 1998 (c) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Strategic Small Managed Equity Cap Global Division Division Division ______________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $1,941 -- $1,806 Capital gains distributions 2,711 -- 3,627 ______________________________ TOTAL INVESTMENT INCOME 4,652 -- 5,433 Expenses: Mortality and expense risk and other charges 851 $1,114 1,445 Annual administrative charges 29 55 59 Minimum death benefit guarantee charges 1 1 1 Contingent deferred sales charges 52 59 50 Other contract charges 1 3 4 Amortization of deferred charges related to: Deferred sales load 135 112 579 Premium taxes 1 1 8 ______________________________ TOTAL EXPENSES BEFORE WAIVER 1,070 1,345 2,146 Fees waived by Golden American Life Insurance Company 4 2 9 ______________________________ NET EXPENSES 1,066 1,343 2,137 ______________________________ NET INVESTMENT INCOME (LOSS) 3,586 (1,343) 3,296 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 1,365 2,148 7,634 Net unrealized appreciation (depreciation) of investments (6,078) 15,952 16,611 ______________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($1,127) $16,757 $27,541 ============================== (a) Commencement of operations, March 2, 1998 (b) Commencement of operations, May 8, 1998 (c) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Mid-Cap Growth & Growth Income Research Division Division Division ______________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $4,999 $4,745 $12,283 Capital gains distributions -- -- -- ______________________________ TOTAL INVESTMENT INCOME 4,999 4,745 12,283 Expenses: Mortality and expense risk and other charges 880 1,599 1,941 Annual administrative charges 51 88 120 Minimum death benefit guarantee charges 1 -- -- Contingent deferred sales charges 20 62 71 Other contract charges 2 1 4 Amortization of deferred charges related to: Deferred sales load 55 92 79 Premium taxes -- 2 1 ______________________________ TOTAL EXPENSES BEFORE WAIVER 1,009 1,844 2,216 Fees waived by Golden American Life Insurance Company 1 3 1 ______________________________ NET EXPENSES 1,008 1,841 2,215 ______________________________ NET INVESTMENT INCOME (LOSS) 3,991 2,904 10,068 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 899 911 972 Net unrealized appreciation (depreciation) of investments 6,574 7,679 16,878 ______________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $11,464 $11,494 $27,918 ============================== (a) Commencement of operations, March 2, 1998 (b) Commencement of operations, May 8, 1998 (c) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Global Total Value + Fixed Return Growth Income Division Division Division ______________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $11,048 $5,950 $237 Capital gains distributions -- -- -- ______________________________ TOTAL INVESTMENT INCOME 11,048 5,950 237 Expenses: Mortality and expense risk and other charges 1,714 1,099 57 Annual administrative charges 98 62 4 Minimum death benefit guarantee charges -- 1 -- Contingent deferred sales charges 62 42 2 Other contract charges 1 1 -- Amortization of deferred charges related to: Deferred sales load 75 49 -- Premium taxes 1 1 -- ______________________________ TOTAL EXPENSES BEFORE WAIVER 1,951 1,255 63 Fees waived by Golden American Life Insurance Company 2 2 -- ______________________________ NET EXPENSES 1,949 1,253 63 ______________________________ NET INVESTMENT INCOME (LOSS) 9,099 4,697 174 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 185 (807) 216 Net unrealized appreciation (depreciation) of investments 1,028 15,417 -- ______________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $10,312 $19,307 $390 ============================== (a) Commencement of operations, March 2, 1998 (b) Commencement of operations, May 8, 1998 (c) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
PIMCO Growth High Developing Oppor- Yield World tunities Bond Division Division Division (a) (a) (c) ______________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $2 $25 $1,050 Capital gains distributions -- -- -- ______________________________ TOTAL INVESTMENT INCOME 2 25 1,050 Expenses: Mortality and expense risk and other charges 22 31 197 Annual administrative charges 2 1 17 Minimum death benefit guarantee charges -- -- -- Contingent deferred sales charges -- 1 15 Other contract charges -- -- -- Amortization of deferred charges related to: Deferred sales load -- -- 4 Premium taxes -- -- -- ______________________________ TOTAL EXPENSES BEFORE WAIVER 24 33 233 Fees waived by Golden American Life Insurance Company -- -- -- ______________________________ NET EXPENSES 24 33 233 ______________________________ NET INVESTMENT INCOME (LOSS) (22) (8) 817 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (266) (235) (318) Net unrealized appreciation (depreciation) of investments 149 349 (18) ______________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($139) $106 $481 ============================== (a) Commencement of operations, March 2, 1998 (b) Commencement of operations, May 8, 1998 (c) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
PIMCO StocksPLUS Smith Growth Barney and Appre- High Income ciation Income Division Division Division (b) ______________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $1,005 $8 $37 Capital gains distributions -- 33 8 ______________________________ TOTAL INVESTMENT INCOME 1,005 41 45 Expenses: Mortality and expense risk and other charges 162 10 8 Annual administrative charges 18 1 1 Minimum death benefit guarantee charges -- -- -- Contingent deferred sales charges 9 -- -- Other contract charges -- -- -- Amortization of deferred charges related to: Deferred sales load 2 -- -- Premium taxes -- -- -- ______________________________ TOTAL EXPENSES BEFORE WAIVER 191 11 9 Fees waived by Golden American Life Insurance Company -- -- -- ______________________________ NET EXPENSES 191 11 9 ______________________________ NET INVESTMENT INCOME (LOSS) 814 30 36 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (97) 3 8 Net unrealized appreciation (depreciation) of investments 4,255 52 (66) ______________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $4,972 $85 ($22) ============================== (a) Commencement of operations, March 2, 1998 (b) Commencement of operations, May 8, 1998 (c) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Smith Barney Smith Barney Inter- Barney Large Cap national Money Value Equity Market Division Division Division ______________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $6 -- $20 Capital gains distributions 16 -- -- ______________________________ TOTAL INVESTMENT INCOME 22 -- 20 Expenses: Mortality and expense risk and other charges 7 $3 6 Annual administrative charges 1 -- -- Minimum death benefit guarantee charges -- -- -- Contingent deferred sales charges -- -- -- Other contract charges -- -- -- Amortization of deferred charges related to: Deferred sales load -- -- -- Premium taxes -- -- -- ______________________________ TOTAL EXPENSES BEFORE WAIVER 8 3 6 Fees waived by Golden American Life Insurance Company -- -- -- ______________________________ NET EXPENSES 8 3 6 ______________________________ NET INVESTMENT INCOME (LOSS) 14 (3) 14 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 2 (1) -- Net unrealized appreciation (depreciation) of investments 3 (2) -- ______________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $19 ($6) $14 ============================== (a) Commencement of operations, March 2, 1998 (b) Commencement of operations, May 8, 1998 (c) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Inter- national Equity Division Combined ____________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $251 $88,435 Capital gains distributions -- 78,933 ____________________ TOTAL INVESTMENT INCOME 251 167,368 Expenses: Mortality and expense risk and other charges 398 30,912 Annual administrative charges 20 1,451 Minimum death benefit guarantee charges -- 37 Contingent deferred sales charges 12 1,414 Other contract charges -- 73 Amortization of deferred charges related to: Deferred sales load -- 8,150 Premium taxes -- 129 ____________________ TOTAL EXPENSES BEFORE WAIVER 430 42,166 Fees waived by Golden American Life Insurance Company -- 154 ____________________ NET EXPENSES 430 42,012 ____________________ NET INVESTMENT INCOME (LOSS) (179) 125,356 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (556) 22,265 Net unrealized appreciation (depreciation) of investments 1,647 39,447 ____________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $912 $187,068 ==================== (a) Commencement of operations, March 2, 1998 (b) Commencement of operations, May 8, 1998 (c) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (DOLLARS IN THOUSANDS)
Liquid Asset Division ____________ NET ASSETS AT JANUARY 1, 1997 $37,476 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 970 Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- ____________ Net increase (decrease) in net assets resulting from operations 970 Changes from principal transactions: Purchase payments 29,455 Contract distributions and terminations (18,096) Transfer payments from (to) Fixed Accounts and other Divisions 7,253 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 196 ____________ Increase (decrease) in net assets derived from principal transactions 18,808 ____________ Total increase (decrease) 19,778 ____________ NET ASSETS AT DECEMBER 31, 1997 57,254
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Liquid Asset Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $3,131 Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- ____________ Net increase (decrease) in net assets resulting from operations 3,131 Changes from principal transactions: Purchase payments 227,924 Contract distributions and terminations (38,803) Transfer payments from (to) Fixed Accounts and other Divisions (73,759) Addition to assets retained in the Account by Golden American Life Insurance Company 12 ____________ Increase (decrease) in net assets derived from principal transactions 115,374 ____________ Total increase (decrease) 118,505 ____________ NET ASSETS AT DECEMBER 31, 1998 $175,759 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Limited Maturity Bond Division ____________ NET ASSETS AT JANUARY 1, 1997 $54,334 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 2,703 Net realized gain (loss) on investments 139 Net unrealized appreciation (depreciation) of investments (690) ____________ Net increase (decrease) in net assets resulting from operations 2,152 Changes from principal transactions: Purchase payments 5,847 Contract distributions and terminations (8,648) Transfer payments from (to) Fixed Accounts and other Divisions (1,150) Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (68) ____________ Increase (decrease) in net assets derived from principal transactions (4,019) ____________ Total increase (decrease) (1,867) ____________ NET ASSETS AT DECEMBER 31, 1997 52,467
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Limited Maturity Bond Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $1,782 Net realized gain (loss) on investments 872 Net unrealized appreciation (depreciation) of investments 739 ____________ Net increase (decrease) in net assets resulting from operations 3,393 Changes from principal transactions: Purchase payments 42,180 Contract distributions and terminations (9,265) Transfer payments from (to) Fixed Accounts and other Divisions 14,051 Addition to assets retained in the Account by Golden American Life Insurance Company 6 ____________ Increase (decrease) in net assets derived from principal transactions 46,972 ____________ Total increase (decrease) 50,365 ____________ NET ASSETS AT DECEMBER 31, 1998 $102,832 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Hard Assets Division ____________ NET ASSETS AT JANUARY 1, 1997 $43,301 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 8,570 Net realized gain (loss) on investments 3,106 Net unrealized appreciation (depreciation) of investments (9,738) ____________ Net increase (decrease) in net assets resulting from operations 1,938 Changes from principal transactions: Purchase payments 6,936 Contract distributions and terminations (5,699) Transfer payments from (to) Fixed Accounts and other Divisions (886) Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (87) ____________ Increase (decrease) in net assets derived from principal transactions 264 ____________ Total increase (decrease) 2,202 ____________ NET ASSETS AT DECEMBER 31, 1997 45,503
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Hard Assets Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $2,033 Net realized gain (loss) on investments (6,941) Net unrealized appreciation (depreciation) of investments (8,620) ____________ Net increase (decrease) in net assets resulting from operations (13,528) Changes from principal transactions: Purchase payments 7,508 Contract distributions and terminations (4,524) Transfer payments from (to) Fixed Accounts and other Divisions (5,266) Addition to assets retained in the Account by Golden American Life Insurance Company 10 ____________ Increase (decrease) in net assets derived from principal transactions (2,272) ____________ Total increase (decrease) (15,800) ____________ NET ASSETS AT DECEMBER 31, 1998 $29,703 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
All-Growth Division ____________ NET ASSETS AT JANUARY 1, 1997 $76,842 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 490 Net realized gain (loss) on investments 556 Net unrealized appreciation (depreciation) of investments 1,550 ____________ Net increase (decrease) in net assets resulting from operations 2,596 Changes from principal transactions: Purchase payments 7,441 Contract distributions and terminations (10,832) Transfer payments from (to) Fixed Accounts and other Divisions (4,053) Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (256) ____________ Increase (decrease) in net assets derived from principal transactions (7,700) ____________ Total increase (decrease) (5,104) ____________ NET ASSETS AT DECEMBER 31, 1997 71,738
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
All-Growth Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($905) Net realized gain (loss) on investments 330 Net unrealized appreciation (depreciation) of investments 6,240 ____________ Net increase (decrease) in net assets resulting from operations 5,665 Changes from principal transactions: Purchase payments 15,762 Contract distributions and terminations (9,206) Transfer payments from (to) Fixed Accounts and other Divisions (2,159) Addition to assets retained in the Account by Golden American Life Insurance Company 7 ____________ Increase (decrease) in net assets derived from principal transactions 4,404 ____________ Total increase (decrease) 10,069 ____________ NET ASSETS AT DECEMBER 31, 1998 $81,807 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Real Estate Division ____________ NET ASSETS AT JANUARY 1, 1997 $50,681 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 3,901 Net realized gain (loss) on investments 2,621 Net unrealized appreciation (depreciation) of investments 5,391 ____________ Net increase (decrease) in net assets resulting from operations 11,913 Changes from principal transactions: Purchase payments 14,095 Contract distributions and terminations (5,798) Transfer payments from (to) Fixed Accounts and other Divisions 3,766 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 43 ____________ Increase (decrease) in net assets derived from principal transactions 12,106 ____________ Total increase (decrease) 24,019 ____________ NET ASSETS AT DECEMBER 31, 1997 74,700
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Real Estate Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $8,244 Net realized gain (loss) on investments 3,708 Net unrealized appreciation (depreciation) of investments (24,689) ____________ Net increase (decrease) in net assets resulting from operations (12,737) Changes from principal transactions: Purchase payments 24,639 Contract distributions and terminations (6,988) Transfer payments from (to) Fixed Accounts and other Divisions (10,631) Addition to assets retained in the Account by Golden American Life Insurance Company 12 ____________ Increase (decrease) in net assets derived from principal transactions 7,032 ____________ Total increase (decrease) (5,705) ____________ NET ASSETS AT DECEMBER 31, 1998 $68,995 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Fully Managed Division ____________ NET ASSETS AT JANUARY 1, 1997 $134,431 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 9,632 Net realized gain (loss) on investments 2,407 Net unrealized appreciation (depreciation) of investments 5,898 ____________ Net increase (decrease) in net assets resulting from operations 17,937 Changes from principal transactions: Purchase payments 19,633 Contract distributions and terminations (17,687) Transfer payments from (to) Fixed Accounts and other Divisions 4,389 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (53) ____________ Increase (decrease) in net assets derived from principal transactions 6,282 ____________ Total increase (decrease) 24,219 ____________ NET ASSETS AT DECEMBER 31, 1997 158,650
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Fully Managed Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $15,626 Net realized gain (loss) on investments 1,704 Net unrealized appreciation (depreciation) of investments (10,501) ____________ Net increase (decrease) in net assets resulting from operations 6,829 Changes from principal transactions: Purchase payments 74,467 Contract distributions and terminations (19,367) Transfer payments from (to) Fixed Accounts and other Divisions 5,756 Addition to assets retained in the Account by Golden American Life Insurance Company 31 ____________ Increase (decrease) in net assets derived from principal transactions 60,887 ____________ Total increase (decrease) 67,716 ____________ NET ASSETS AT DECEMBER 31, 1998 $226,366 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Multiple Allocation Division ____________ NET ASSETS AT JANUARY 1, 1997 $270,427 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 21,419 Net realized gain (loss) on investments 5,773 Net unrealized appreciation (depreciation) of investments 9,866 ____________ Net increase (decrease) in net assets resulting from operations 37,058 Changes from principal transactions: Purchase payments 9,404 Contract distributions and terminations (45,162) Transfer payments from (to) Fixed Accounts and other Divisions (9,649) Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (209) ____________ Increase (decrease) in net assets derived from principal transactions (45,616) ____________ Total increase (decrease) (8,558) ____________ NET ASSETS AT DECEMBER 31, 1997 261,869
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Multiple Allocation Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $23,815 Net realized gain (loss) on investments 2,288 Net unrealized appreciation (depreciation) of investments (10,125) ____________ Net increase (decrease) in net assets resulting from operations 15,978 Changes from principal transactions: Purchase payments 34,793 Contract distributions and terminations (39,339) Transfer payments from (to) Fixed Accounts and other Divisions 581 Addition to assets retained in the Account by Golden American Life Insurance Company 28 ____________ Increase (decrease) in net assets derived from principal transactions (3,937) ____________ Total increase (decrease) 12,041 ____________ NET ASSETS AT DECEMBER 31, 1998 $273,910 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Capital Appreciation Division ____________ NET ASSETS AT JANUARY 1, 1997 $145,989 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 13,819 Net realized gain (loss) on investments 8,242 Net unrealized appreciation (depreciation) of investments 16,323 ____________ Net increase (decrease) in net assets resulting from operations 38,384 Changes from principal transactions: Purchase payments 17,440 Contract distributions and terminations (20,143) Transfer payments from (to) Fixed Accounts and other Divisions 5,915 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 232 ____________ Increase (decrease) in net assets derived from principal transactions 3,444 ____________ Total increase (decrease) 41,828 ____________ NET ASSETS AT DECEMBER 31, 1997 187,817
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Capital Appreciation Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $18,956 Net realized gain (loss) on investments 6,551 Net unrealized appreciation (depreciation) of investments (3,987) ____________ Net increase (decrease) in net assets resulting from operations 21,520 Changes from principal transactions: Purchase payments 63,892 Contract distributions and terminations (26,711) Transfer payments from (to) Fixed Accounts and other Divisions 10,035 Addition to assets retained in the Account by Golden American Life Insurance Company 25 ____________ Increase (decrease) in net assets derived from principal transactions 47,241 ____________ Total increase (decrease) 68,761 ____________ NET ASSETS AT DECEMBER 31, 1998 $256,578 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Rising Dividends Division ____________ NET ASSETS AT JANUARY 1, 1997 $123,573 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 1,726 Net realized gain (loss) on investments 3,602 Net unrealized appreciation (depreciation) of investments 33,738 ____________ Net increase (decrease) in net assets resulting from operations 39,066 Changes from principal transactions: Purchase payments 45,995 Contract distributions and terminations (18,620) Transfer payments from (to) Fixed Accounts and other Divisions 25,458 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 471 ____________ Increase (decrease) in net assets derived from principal transactions 53,304 ____________ Total increase (decrease) 92,370 ____________ NET ASSETS AT DECEMBER 31, 1997 215,943
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Rising Dividends Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $12,920 Net realized gain (loss) on investments 3,842 Net unrealized appreciation (depreciation) of investments 17,344 ____________ Net increase (decrease) in net assets resulting from operations 34,106 Changes from principal transactions: Purchase payments 216,682 Contract distributions and terminations (26,449) Transfer payments from (to) Fixed Accounts and other Divisions 60,274 Addition to assets retained in the Account by Golden American Life Insurance Company 60 ____________ Increase (decrease) in net assets derived from principal transactions 250,567 ____________ Total increase (decrease) 284,673 ____________ NET ASSETS AT DECEMBER 31, 1998 $500,616 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Emerging Markets Division ____________ NET ASSETS AT JANUARY 1, 1997 $37,153 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (826) Net realized gain (loss) on investments (1,134) Net unrealized appreciation (depreciation) of investments (2,698) ____________ Net increase (decrease) in net assets resulting from operations (4,658) Changes from principal transactions: Purchase payments 5,427 Contract distributions and terminations (5,304) Transfer payments from (to) Fixed Accounts and other Divisions 2,002 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (119) ____________ Increase (decrease) in net assets derived from principal transactions 2,006 ____________ Total increase (decrease) (2,652) ____________ NET ASSETS AT DECEMBER 31, 1997 34,501
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Emerging Markets Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($524) Net realized gain (loss) on investments (3,524) Net unrealized appreciation (depreciation) of investments (4,266) ____________ Net increase (decrease) in net assets resulting from operations (8,314) Changes from principal transactions: Purchase payments 2,520 Contract distributions and terminations (2,973) Transfer payments from (to) Fixed Accounts and other Divisions (3,483) Addition to assets retained in the Account by Golden American Life Insurance Company 3 ____________ Increase (decrease) in net assets derived from principal transactions (3,933) ____________ Total increase (decrease) (12,247) ____________ NET ASSETS AT DECEMBER 31, 1998 $22,254 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Market Manager Division ____________ NET ASSETS AT JANUARY 1, 1997 $5,479 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 424 Net realized gain (loss) on investments 238 Net unrealized appreciation (depreciation) of investments 1,127 ____________ Net increase (decrease) in net assets resulting from operations 1,789 Changes from principal transactions: Purchase payments (59) Contract distributions and terminations (189) Transfer payments from (to) Fixed Accounts and other Divisions (303) Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (1) ____________ Increase (decrease) in net assets derived from principal transactions (552) ____________ Total increase (decrease) 1,237 ____________ NET ASSETS AT DECEMBER 31, 1997 6,716
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Market Manager Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $299 Net realized gain (loss) on investments 135 Net unrealized appreciation (depreciation) of investments 1,090 ____________ Net increase (decrease) in net assets resulting from operations 1,524 Changes from principal transactions: Purchase payments (36) Contract distributions and terminations (188) Transfer payments from (to) Fixed Accounts and other Divisions (309) Addition to assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions (533) ____________ Total increase (decrease) 991 ____________ NET ASSETS AT DECEMBER 31, 1998 $7,707 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Value Equity Division ____________ NET ASSETS AT JANUARY 1, 1997 $42,861 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 5,696 Net realized gain (loss) on investments 898 Net unrealized appreciation (depreciation) of investments 5,129 ____________ Net increase (decrease) in net assets resulting from operations 11,723 Changes from principal transactions: Purchase payments 16,881 Contract distributions and terminations (5,181) Transfer payments from (to) Fixed Accounts and other Divisions 10,573 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 168 ____________ Increase (decrease) in net assets derived from principal transactions 22,441 ____________ Total increase (decrease) 34,164 ____________ NET ASSETS AT DECEMBER 31, 1997 77,025
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Value Equity Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $1,994 Net realized gain (loss) on investments 1,237 Net unrealized appreciation (depreciation) of investments (4,208) ____________ Net increase (decrease) in net assets resulting from operations (977) Changes from principal transactions: Purchase payments 51,484 Contract distributions and terminations (7,869) Transfer payments from (to) Fixed Accounts and other Divisions 6,521 Addition to assets retained in the Account by Golden American Life Insurance Company 10 ____________ Increase (decrease) in net assets derived from principal transactions 50,146 ____________ Total increase (decrease) 49,169 ____________ NET ASSETS AT DECEMBER 31, 1998 $126,194 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Strategic Equity Division ____________ NET ASSETS AT JANUARY 1, 1997 $29,858 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 1,752 Net realized gain (loss) on investments 1,180 Net unrealized appreciation (depreciation) of investments 4,847 ____________ Net increase (decrease) in net assets resulting from operations 7,779 Changes from principal transactions: Purchase payments 9,853 Contract distributions and terminations (4,107) Transfer payments from (to) Fixed Accounts and other Divisions 6,920 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 134 ____________ Increase (decrease) in net assets derived from principal transactions 12,800 ____________ Total increase (decrease) 20,579 ____________ NET ASSETS AT DECEMBER 31, 1997 50,437
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Strategic Equity Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $3,586 Net realized gain (loss) on investments 1,365 Net unrealized appreciation (depreciation) of investments (6,078) ____________ Net increase (decrease) in net assets resulting from operations (1,127) Changes from principal transactions: Purchase payments 25,972 Contract distributions and terminations (5,201) Transfer payments from (to) Fixed Accounts and other Divisions 1,265 Addition to assets retained in the Account by Golden American Life Insurance Company 2 ____________ Increase (decrease) in net assets derived from principal transactions 22,038 ____________ Total increase (decrease) 20,911 ____________ NET ASSETS AT DECEMBER 31, 1998 $71,348 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Small Cap Division ____________ NET ASSETS AT JANUARY 1, 1997 $33,056 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (754) Net realized gain (loss) on investments (174) Net unrealized appreciation (depreciation) of investments 4,543 ____________ Net increase (decrease) in net assets resulting from operations 3,615 Changes from principal transactions: Purchase payments 13,691 Contract distributions and terminations (3,143) Transfer payments from (to) Fixed Accounts and other Divisions 5,487 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 19 ____________ Increase (decrease) in net assets derived from principal transactions 16,054 ____________ Total increase (decrease) 19,669 ____________ NET ASSETS AT DECEMBER 31, 1997 52,725
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Small Cap Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($1,343) Net realized gain (loss) on investments 2,148 Net unrealized appreciation (depreciation) of investments 15,952 ____________ Net increase (decrease) in net assets resulting from operations 16,757 Changes from principal transactions: Purchase payments 44,851 Contract distributions and terminations (6,104) Transfer payments from (to) Fixed Accounts and other Divisions 16,010 Addition to assets retained in the Account by Golden American Life Insurance Company 6 ____________ Increase (decrease) in net assets derived from principal transactions 54,763 ____________ Total increase (decrease) 71,520 ____________ NET ASSETS AT DECEMBER 31, 1998 $124,245 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Managed Global Division ____________ NET ASSETS AT JANUARY 1, 1997 $86,266 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 6,640 Net realized gain (loss) on investments 2,841 Net unrealized appreciation (depreciation) of investments (883) ____________ Net increase (decrease) in net assets resulting from operations 8,598 Changes from principal transactions: Purchase payments 17,472 Contract distributions and terminations (12,081) Transfer payments from (to) Fixed Accounts and other Divisions 4,438 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (12) ____________ Increase (decrease) in net assets derived from principal transactions 9,817 ____________ Total increase (decrease) 18,415 ____________ NET ASSETS AT DECEMBER 31, 1997 104,681
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Managed Global Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $3,296 Net realized gain (loss) on investments 7,634 Net unrealized appreciation (depreciation) of investments 16,611 ____________ Net increase (decrease) in net assets resulting from operations 27,541 Changes from principal transactions: Purchase payments 11,958 Contract distributions and terminations (13,329) Transfer payments from (to) Fixed Accounts and other Divisions (176) Addition to assets retained in the Account by Golden American Life Insurance Company 9 ____________ Increase (decrease) in net assets derived from principal transactions (1,538) ____________ Total increase (decrease) 26,003 ____________ NET ASSETS AT DECEMBER 31, 1998 $130,684 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Mid-Cap Growth Division ____________ NET ASSETS AT JANUARY 1, 1997 $4,571 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 612 Net realized gain (loss) on investments 57 Net unrealized appreciation (depreciation) of investments 912 ____________ Net increase (decrease) in net assets resulting from operations 1,581 Changes from principal transactions: Purchase payments 8,980 Contract distributions and terminations (580) Transfer payments from (to) Fixed Accounts and other Divisions 5,763 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 46 ____________ Increase (decrease) in net assets derived from principal transactions 14,209 ____________ Total increase (decrease) 15,790 ____________ NET ASSETS AT DECEMBER 31, 1997 20,361
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Mid-Cap Growth Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $3,991 Net realized gain (loss) on investments 899 Net unrealized appreciation (depreciation) of investments 6,574 ____________ Net increase (decrease) in net assets resulting from operations 11,464 Changes from principal transactions: Purchase payments 66,121 Contract distributions and terminations (3,065) Transfer payments from (to) Fixed Accounts and other Divisions 21,962 Addition to assets retained in the Account by Golden American Life Insurance Company 1 ____________ Increase (decrease) in net assets derived from principal transactions 85,019 ____________ Total increase (decrease) 96,483 ____________ NET ASSETS AT DECEMBER 31, 1998 $116,844 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Growth & Income Division ____________ NET ASSETS AT JANUARY 1, 1997 $8,275 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 3,057 Net realized gain (loss) on investments 177 Net unrealized appreciation (depreciation) of investments 980 ____________ Net increase (decrease) in net assets resulting from operations 4,214 Changes from principal transactions: Purchase payments 22,706 Contract distributions and terminations (1,861) Transfer payments from (to) Fixed Accounts and other Divisions 11,481 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 107 ____________ Increase (decrease) in net assets derived from principal transactions 32,433 ____________ Total increase (decrease) 36,647 ____________ NET ASSETS AT DECEMBER 31, 1997 44,922
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Growth & Income Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $2,904 Net realized gain (loss) on investments 911 Net unrealized appreciation (depreciation) of investments 7,679 ____________ Net increase (decrease) in net assets resulting from operations 11,494 Changes from principal transactions: Purchase payments 105,760 Contract distributions and terminations (7,503) Transfer payments from (to) Fixed Accounts and other Divisions 24,270 Addition to assets retained in the Account by Golden American Life Insurance Company 7 ____________ Increase (decrease) in net assets derived from principal transactions 122,534 ____________ Total increase (decrease) 134,028 ____________ NET ASSETS AT DECEMBER 31, 1998 $178,950 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Research Division (b) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $801 Net realized gain (loss) on investments 19 Net unrealized appreciation (depreciation) of investments 388 ____________ Net increase (decrease) in net assets resulting from operations 1,208 Changes from principal transactions: Purchase payments 19,514 Contract distributions and terminations (534) Transfer payments from (to) Fixed Accounts and other Divisions 14,044 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 170 ____________ Increase (decrease) in net assets derived from principal transactions 33,194 ____________ Total increase (decrease) 34,402 ____________ NET ASSETS AT DECEMBER 31, 1997 34,402
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Research Division (b) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $10,068 Net realized gain (loss) on investments 972 Net unrealized appreciation (depreciation) of investments 16,878 ____________ Net increase (decrease) in net assets resulting from operations 27,918 Changes from principal transactions: Purchase payments 167,295 Contract distributions and terminations (6,740) Transfer payments from (to) Fixed Accounts and other Divisions 60,643 Addition to assets retained in the Account by Golden American Life Insurance Company 11 ____________ Increase (decrease) in net assets derived from principal transactions 221,209 ____________ Total increase (decrease) 249,127 ____________ NET ASSETS AT DECEMBER 31, 1998 $283,529 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Total Return Division (a) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $687 Net realized gain (loss) on investments 18 Net unrealized appreciation (depreciation) of investments 412 ____________ Net increase (decrease) in net assets resulting from operations 1,117 Changes from principal transactions: Purchase payments 15,427 Contract distributions and terminations (602) Transfer payments from (to) Fixed Accounts and other Divisions 10,193 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 96 ____________ Increase (decrease) in net assets derived from principal transactions 25,114 ____________ Total increase (decrease) 26,231 ____________ NET ASSETS AT DECEMBER 31, 1997 26,231
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Total Return Division (a) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $9,099 Net realized gain (loss) on investments 185 Net unrealized appreciation (depreciation) of investments 1,028 ____________ Net increase (decrease) in net assets resulting from operations 10,312 Changes from principal transactions: Purchase payments 156,492 Contract distributions and terminations (7,889) Transfer payments from (to) Fixed Accounts and other Divisions 42,666 Addition to assets retained in the Account by Golden American Life Insurance Company 23 ____________ Increase (decrease) in net assets derived from principal transactions 191,292 ____________ Total increase (decrease) 201,604 ____________ NET ASSETS AT DECEMBER 31, 1998 $227,835 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Value + Growth Division (b) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($137) Net realized gain (loss) on investments 515 Net unrealized appreciation (depreciation) of investments (1,430) ____________ Net increase (decrease) in net assets resulting from operations (1,052) Changes from principal transactions: Purchase payments 15,158 Contract distributions and terminations (431) Transfer payments from (to) Fixed Accounts and other Divisions 9,404 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 99 ____________ Increase (decrease) in net assets derived from principal transactions 24,230 ____________ Total increase (decrease) 23,178 ____________ NET ASSETS AT DECEMBER 31, 1997 23,178
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Value + Growth Division (b) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $4,697 Net realized gain (loss) on investments (807) Net unrealized appreciation (depreciation) of investments 15,417 ____________ Net increase (decrease) in net assets resulting from operations 19,307 Changes from principal transactions: Purchase payments 77,977 Contract distributions and terminations (3,834) Transfer payments from (to) Fixed Accounts and other Divisions 26,430 Addition to assets retained in the Account by Golden American Life Insurance Company 10 ____________ Increase (decrease) in net assets derived from principal transactions 100,583 ____________ Total increase (decrease) 119,890 ____________ NET ASSETS AT DECEMBER 31, 1998 $143,068 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Global Fixed Income Division (g) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $9 Net realized gain (loss) on investments (1) Net unrealized appreciation (depreciation) of investments (10) ____________ Net increase (decrease) in net assets resulting from operations (2) Changes from principal transactions: Purchase payments 190 Contract distributions and terminations -- Transfer payments from (to) Fixed Accounts and other Divisions 18 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 208 ____________ Total increase (decrease) 206 ____________ NET ASSETS AT DECEMBER 31, 1997 206
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Global Fixed Income Division (g) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $174 Net realized gain (loss) on investments 216 Net unrealized appreciation (depreciation) of investments -- ____________ Net increase (decrease) in net assets resulting from operations 390 Changes from principal transactions: Purchase payments 5,820 Contract distributions and terminations (219) Transfer payments from (to) Fixed Accounts and other Divisions 3,331 Addition to assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 8,932 ____________ Total increase (decrease) 9,322 ____________ NET ASSETS AT DECEMBER 31, 1998 $9,528 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Develop- ing World Division (h) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- ____________ Net increase (decrease) in net assets resulting from operations -- Changes from principal transactions: Purchase payments -- Contract distributions and terminations -- Transfer payments from (to) Fixed Accounts and other Divisions -- Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions -- ____________ Total increase (decrease) -- ____________ NET ASSETS AT DECEMBER 31, 1997 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Develop- ing World Division (h) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($22) Net realized gain (loss) on investments (266) Net unrealized appreciation (depreciation) of investments 149 ____________ Net increase (decrease) in net assets resulting from operations (139) Changes from principal transactions: Purchase payments 2,757 Contract distributions and terminations (34) Transfer payments from (to) Fixed Accounts and other Divisions 1,928 Addition to assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 4,651 ____________ Total increase (decrease) 4,512 ____________ NET ASSETS AT DECEMBER 31, 1998 $4,512 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Growth Oppor- tunities Division (h) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- ____________ Net increase (decrease) in net assets resulting from operations -- Changes from principal transactions: Purchase payments -- Contract distributions and terminations -- Transfer payments from (to) Fixed Accounts and other Divisions -- Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions -- ____________ Total increase (decrease) -- ____________ NET ASSETS AT DECEMBER 31, 1997 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Growth Oppor- tunities Division (h) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($8) Net realized gain (loss) on investments (235) Net unrealized appreciation (depreciation) of investments 349 ____________ Net increase (decrease) in net assets resulting from operations 106 Changes from principal transactions: Purchase payments 4,097 Contract distributions and terminations (45) Transfer payments from (to) Fixed Accounts and other Divisions (27) Addition to assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 4,025 ____________ Total increase (decrease) 4,131 ____________ NET ASSETS AT DECEMBER 31, 1998 $4,131 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
PIMCO High Yield Bond Division (j) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- ____________ Net increase (decrease) in net assets resulting from operations -- Changes from principal transactions: Purchase payments -- Contract distributions and terminations -- Transfer payments from (to) Fixed Accounts and other Divisions -- Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions -- ____________ Total increase (decrease) -- ____________ NET ASSETS AT DECEMBER 31, 1997 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
PIMCO High Yield Bond Division (j) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $817 Net realized gain (loss) on investments (318) Net unrealized appreciation (depreciation) of investments (18) ____________ Net increase (decrease) in net assets resulting from operations 481 Changes from principal transactions: Purchase payments 32,399 Contract distributions and terminations (912) Transfer payments from (to) Fixed Accounts and other Divisions 14,150 Addition to assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 45,637 ____________ Total increase (decrease) 46,118 ____________ NET ASSETS AT DECEMBER 31, 1998 $46,118 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
PIMCO StocksPLUS Growth and Income Division (i) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- ____________ Net increase (decrease) in net assets resulting from operations -- Changes from principal transactions: Purchase payments -- Contract distributions and terminations -- Transfer payments from (to) Fixed Accounts and other Divisions -- Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions -- ____________ Total increase (decrease) -- ____________ NET ASSETS AT DECEMBER 31, 1997 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
PIMCO StocksPLUS Growth and Income Division (i) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $814 Net realized gain (loss) on investments (97) Net unrealized appreciation (depreciation) of investments 4,255 ____________ Net increase (decrease) in net assets resulting from operations 4,972 Changes from principal transactions: Purchase payments 29,368 Contract distributions and terminations (361) Transfer payments from (to) Fixed Accounts and other Divisions 17,822 Addition to assets retained in the Account by Golden American Life Insurance Company 1 ____________ Increase (decrease) in net assets derived from principal transactions 46,830 ____________ Total increase (decrease) 51,802 ____________ NET ASSETS AT DECEMBER 31, 1998 $51,802 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Appre- ciation Division (c) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $15 Net realized gain (loss) on investments 1 Net unrealized appreciation (depreciation) of investments (9) ____________ Net increase (decrease) in net assets resulting from operations 7 Changes from principal transactions: Purchase payments 256 Contract distributions and terminations -- Transfer payments from (to) Fixed Accounts and other Divisions -- Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 256 ____________ Total increase (decrease) 263 ____________ NET ASSETS AT DECEMBER 31, 1997 263
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Appre- ciation Division (c) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $30 Net realized gain (loss) on investments 3 Net unrealized appreciation (depreciation) of investments 52 ____________ Net increase (decrease) in net assets resulting from operations 85 Changes from principal transactions: Purchase payments 595 Contract distributions and terminations (21) Transfer payments from (to) Fixed Accounts and other Divisions 52 Addition to assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 626 ____________ Total increase (decrease) 711 ____________ NET ASSETS AT DECEMBER 31, 1998 $974 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney High Income Division (c) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($1) Net realized gain (loss) on investments 1 Net unrealized appreciation (depreciation) of investments 3 ____________ Net increase (decrease) in net assets resulting from operations 3 Changes from principal transactions: Purchase payments 206 Contract distributions and terminations -- Transfer payments from (to) Fixed Accounts and other Divisions -- Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 206 ____________ Total increase (decrease) 209 ____________ NET ASSETS AT DECEMBER 31, 1997 209
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney High Income Division (c) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $36 Net realized gain (loss) on investments 8 Net unrealized appreciation (depreciation) of investments (66) ____________ Net increase (decrease) in net assets resulting from operations (22) Changes from principal transactions: Purchase payments 530 Contract distributions and terminations (15) Transfer payments from (to) Fixed Accounts and other Divisions 104 Addition to assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 619 ____________ Total increase (decrease) 597 ____________ NET ASSETS AT DECEMBER 31, 1998 $806 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney Large Cap Value Division (c) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($1) Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments 7 ____________ Net increase (decrease) in net assets resulting from operations 6 Changes from principal transactions: Purchase payments 204 Contract distributions and terminations -- Transfer payments from (to) Fixed Accounts and other Divisions 5 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 209 ____________ Total increase (decrease) 215 ____________ NET ASSETS AT DECEMBER 31, 1997 215
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney Large Cap Value Division (c) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $14 Net realized gain (loss) on investments 2 Net unrealized appreciation (depreciation) of investments 3 ____________ Net increase (decrease) in net assets resulting from operations 19 Changes from principal transactions: Purchase payments 429 Contract distributions and terminations (5) Transfer payments from (to) Fixed Accounts and other Divisions 43 Addition to assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 467 ____________ Total increase (decrease) 486 ____________ NET ASSETS AT DECEMBER 31, 1998 $701 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney Inter- national Equity Division (d) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments ($5) ____________ Net increase (decrease) in net assets resulting from operations (5) Changes from principal transactions: Purchase payments 99 Contract distributions and terminations -- Transfer payments from (to) Fixed Accounts and other Divisions 2 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 101 ____________ Total increase (decrease) 96 ____________ NET ASSETS AT DECEMBER 31, 1997 96
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney Inter- national Equity Division (d) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($3) Net realized gain (loss) on investments (1) Net unrealized appreciation (depreciation) of investments (2) ____________ Net increase (decrease) in net assets resulting from operations (6) Changes from principal transactions: Purchase payments 178 Contract distributions and terminations (4) Transfer payments from (to) Fixed Accounts and other Divisions 62 Addition to assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 236 ____________ Total increase (decrease) 230 ____________ NET ASSETS AT DECEMBER 31, 1998 $326 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney Money Market Division (e) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- ____________ Net increase (decrease) in net assets resulting from operations -- Changes from principal transactions: Purchase payments $183 Contract distributions and terminations (1) Transfer payments from (to) Fixed Accounts and other Divisions (1) Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 181 ____________ Total increase (decrease) 181 ____________ NET ASSETS AT DECEMBER 31, 1997 181
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Smith Barney Money Market Division (e) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $14 Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- ____________ Net increase (decrease) in net assets resulting from operations 14 Changes from principal transactions: Purchase payments 565 Contract distributions and terminations (25) Transfer payments from (to) Fixed Accounts and other Divisions (417) Addition to assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 123 ____________ Total increase (decrease) 137 ____________ NET ASSETS AT DECEMBER 31, 1998 $318 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Inter- national Equity Division (f) ____________ NET ASSETS AT JANUARY 1, 1997 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $81 Net realized gain (loss) on investments (12) Net unrealized appreciation (depreciation) of investments (93) ____________ Net increase (decrease) in net assets resulting from operations (24) Changes from principal transactions: Purchase payments 1,825 Contract distributions and terminations (2) Transfer payments from (to) Fixed Accounts and other Divisions 182 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 2,005 ____________ Total increase (decrease) 1,981 ____________ NET ASSETS AT DECEMBER 31, 1997 1,981
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Inter- national Equity Division (f) ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($179) Net realized gain (loss) on investments (556) Net unrealized appreciation (depreciation) of investments 1,647 ____________ Net increase (decrease) in net assets resulting from operations 912 Changes from principal transactions: Purchase payments 41,775 Contract distributions and terminations (940) Transfer payments from (to) Fixed Accounts and other Divisions 6,037 Addition to assets retained in the Account by Golden American Life Insurance Company -- ____________ Increase (decrease) in net assets derived from principal transactions 46,872 ____________ Total increase (decrease) 47,784 ____________ NET ASSETS AT DECEMBER 31, 1998 $49,765 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Combined ____________ NET ASSETS AT JANUARY 1, 1997 $1,184,573 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 81,285 Net realized gain (loss) on investments 31,070 Net unrealized appreciation (depreciation) of investments 75,558 ____________ Net increase (decrease) in net assets resulting from operations 187,913 Changes from principal transactions: Purchase payments 304,259 Contract distributions and terminations (184,701) Transfer payments from (to) Fixed Accounts and other Divisions 111,251 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 976 ____________ Increase (decrease) in net assets derived from principal transactions 231,785 ____________ Total increase (decrease) 419,698 ____________ NET ASSETS AT DECEMBER 31, 1997 1,604,271
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, EXCEPT AS NOTED (CONTINUED) (DOLLARS IN THOUSANDS)
Combined ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $125,356 Net realized gain (loss) on investments 22,265 Net unrealized appreciation (depreciation) of investments 39,447 ____________ Net increase (decrease) in net assets resulting from operations 187,068 Changes from principal transactions: Purchase payments 1,536,754 Contract distributions and terminations (247,928) Transfer payments from (to) Fixed Accounts and other Divisions 237,766 Addition to assets retained in the Account by Golden American Life Insurance Company 274 ____________ Increase (decrease) in net assets derived from principal transactions 1,526,866 ____________ Total increase (decrease) 1,713,934 ____________ NET ASSETS AT DECEMBER 31, 1998 $3,318,205 ============ (a) Commencement of operations, February 3, 1997 (b) Commencement of operations, February 4, 1997 (c) Commencement of operations, August 26, 1997 (d) Commencement of operations, September 18, 1997 (e) Commencement of operations, September 24, 1997 (f) Commencement of operations, October 9, 1997 (g) Commencement of operations, October 24, 1997 (h) Commencement of operations, March 2, 1998 (i) Commencement of operations, May 8, 1998 (j) Commencement of operations, May 11, 1998
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 NOTE 1 - ORGANIZATION Golden American Life Insurance Company Separate Account B (the "Account") was established by Golden American Life Insurance Company ("Golden American") to support the operations of variable annuity contracts ("Contracts"). Golden American is primarily engaged in the issuance of variable insurance products and is licensed as a life insurance company in the District of Columbia and all states except New York. The Account is registered as a unit investment trust with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended. Golden American provides for variable accumulation and benefits under the Contracts by crediting annuity considerations to one or more divisions within the Account or the Golden American Guaranteed Interest Division, the Golden American Fixed Interest Division and the Fixed Separate Account, which are not part of the Account, as directed by the Contractowners. The portion of the Account's assets applicable to Contracts will not be chargeable with liabilities arising out of any other business Golden American may conduct, but obligations of the Account, including the promise to make benefit payments, are obligations of Golden American. The assets and liabilities of the Account are clearly identified and distinguished from the other assets and liabilities of Golden American. During 1998, the Account had GoldenSelect Contracts and Granite PrimElite Contracts. GoldenSelect Contracts sold by Golden American during 1998 include DVA 100, DVA Series 100, DVA PLUS, ACCESS, PREMIUM PLUS and ESII. During 1998, the Account had GoldenSelect Contracts (DVA 80) which were no longer being sold. At December 31, 1998, the Account had, under GoldenSelect Contracts, twenty- six investment divisions: Liquid Asset, Limited Maturity Bond, Hard Assets, All-Growth, Real Estate, Fully Managed, Multiple Allocation, Capital Appreciation, Rising Dividends, Emerging Markets, Market Manager, Value Equity, Strategic Equity, Small Cap, Managed Global, Mid-Cap Growth (formerly OTC), Growth & Income, Research, Total Return, Value + Growth, Global Fixed Income, Developing World, Growth Opportunities, PIMCO High Yield Bond, PIMCO StocksPLUS Growth and Income and International Equity Divisions ("Divisions"). The Account also had, under Granite PrimElite Contracts, eight investment divisions: Mid-Cap Growth (formerly OTC), Research, Total Return, Appreciation, Smith Barney High Income, Smith Barney Large Cap Value (formerly Smith Barney Income and Growth), Smith Barney International Equity and Smith Barney Money Market Divisions (collectively with the divisions noted above, "Divisions"). The assets in each Division are invested in shares of a designated series ("Series," which may also be referred to as "Portfolio") of mutual funds, The GCG Trust, the Travelers Series Fund Inc., the Greenwich Street Series Fund Inc. (formerly the Smith Barney Series Fund Inc.), the Warburg Pincus Trust or the PIMCO Variable Insurance Trust (the "Trusts"). The Account also includes The Fund For Life Division, which is not included in the accompanying financial statements, and which ceased to accept new Contracts effective December 31, 1994. Prior to August 14, 1998, the Account also had certain investment divisions available from the Equi-Select Series Trust. In an effort to consolidate operations, Golden American requested permission from the Securities and Exchange Commission ("SEC") to substitute shares of each Portfolio of the Equi-Select Series Trust with shares of a similar Series of The GCG Trust. On August 14, 1998, after approval from the SEC, shares of each Portfolio of the Equi-Select Series Trust were substituted with shares of a similar Series of The GCG Trust. The consolidation resulted in the following Series being substituted from The GCG Trust:
Equi-Select Series Trust The GCG Trust Investment Division Investment Division ___________________________ ___________________________ International Fixed Income Global Fixed Income OTC Mid-Cap Growth Research Research Total Return Total Return Value + Growth Value + Growth Growth & Income Growth & Income
The Market Manager Division was open for investment for only a brief period during 1994 and 1995. This Division is now closed and Contractowners are not permitted to direct their investments into this Division. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the significant accounting policies of the Account: USE OF ESTIMATES: The preparation of the financial statements in conformity with generally accepted accounting principles 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. INVESTMENTS: Investments are made in shares of a Series or Portfolio of the Trusts and are valued at the net asset value per share of the respective Series or Portfolio of the Trusts. Investment transactions in each Series or Portfolio of the Trusts are recorded on the trade date. Distributions of net investment income and capital gains from each Series or Portfolio of the Trusts are recognized on the ex-distribution date. Realized gains and losses on redemptions of the shares of the Series or Portfolio of the Trusts are determined on the specific identification basis. FEDERAL INCOME TAXES: Operations of the Account form a part of, and are taxed with, the total operations of Golden American which is taxed as a life insurance company under the Internal Revenue Code. Earnings and realized capital gains of the Account attributable to the Contractowners are excluded in the determination of the federal income tax liability of Golden American. NOTE 3 - CHARGES AND FEES The DVA PLUS, ACCESS and the PREMIUM PLUS each have three different death benefit options referred to as Standard, Annual Ratchet and 7% Solution; however, in the state of Washington, the 5.5% Solution is offered instead of the 7% Solution. Granite PrimElite has two death benefit options referred to as Standard and Annual Ratchet. Golden American discontinued external sales of DVA 80 in May 1991. In December 1995, Golden American also discontinued external sales of DVA 100, however, the DVA 100 contracts continue to be available to Golden American employees and agents. Under the terms of the Contracts, certain charges are allocated to the Contracts to cover Golden American's expenses in connection with the issuance and administration of the Contracts. Following is a summary of these charges: MORTALITY AND EXPENSE RISK CHARGES: Golden American assumes mortality and expense risks related to the operations of the Account and, in accordance with the terms of the Contracts, deducts a daily charge from the assets of the Account. Daily charges deducted at annual rates to cover these risks are as follows:
Series Annual Rates __________________________________ __________________ DVA 80 0.80% DVA 100 0.90 DVA Series 100 1.25 DVA PLUS - Standard 1.10 DVA PLUS - Annual Ratchet 1.25 DVA PLUS - 5.5% Solution 1.25 DVA PLUS - 7% Solution 1.40 ACCESS - Standard 1.25 ACCESS - Annual Ratchet 1.40 ACCESS - 5.5% Solution 1.40 ACCESS - 7% Solution 1.55 PREMIUM PLUS - Standard 1.25 PREMIUM PLUS - Annual Ratchet 1.40 PREMIUM PLUS - 5.5% Solution 1.40 PREMIUM PLUS - 7% Solution 1.55 ES II 1.25 Granite PrimElite - Standard 1.10 Granite PrimElite - Annual Ratchet 1.25
ASSET BASED ADMINISTRATIVE CHARGES: A daily charge at an annual rate of .10% is deducted from assets attributable to DVA 100 and DVA Series 100 Contracts. A daily charge at an annual rate of .15% is deducted from the assets attributable to the DVA PLUS, ACCESS, PREMIUM PLUS, ESII and Granite PrimElite Contracts. ADMINISTRATIVE CHARGES: An administrative charge is deducted from the accumulation value of Deferred Annuity Contracts to cover ongoing administrative expenses. The charge is $30 per Contract year for ES II contracts. For all other Contracts the charge is $40. The charge is incurred at the beginning of the Contract processing period and deducted at the end of the Contract processing period. This charge has been waived for certain offerings of the Contracts. MINIMUM DEATH BENEFIT GUARANTEE CHARGES: For certain Contracts, a minimum death benefit guarantee charge of up to $1.20 per $1,000 of guaranteed death benefit per Contract year is deducted from the accumulation value of Deferred Annuity Contracts on each Contract anniversary date. CONTINGENT DEFERRED SALES CHARGES: Under DVA PLUS, PREMIUM PLUS, ES II and Granite PrimElite Contracts, a contingent deferred sales charge ("Surrender Charge") is imposed as a percentage of each premium payment if the Contract is surrendered or an excess partial withdrawal is taken. The following table reflects the surrender charge that is assessed, based upon the date a premium payment is received.
Complete Years Elapsed Since Premium Payment Surrender Charge _____________________ _______________________________________________________ PREMIUM Granite DVA PLUS PLUS ES II PrimElite _____________ _____________ _____________ _____________ 0 7% 8% 8% 7% 1 7 8 7 7 2 6 8 6 6 3 5 8 5 5 4 4 7 4 4 5 3 6 3 3 6 1 5 2 1 7 -- 3 1 -- 8 -- 1 -- -- 9+ -- -- -- --
OTHER CONTRACT CHARGES: Under DVA 80, DVA 100 and DVA Series 100 Contracts, a charge is deducted from the accumulation value for Contracts taking more than one conventional partial withdrawal during a Contract year. For DVA 80 and DVA 100 Contracts, annual distribution fees are deducted from the Contract accumulation values. DEFERRED SALES LOAD: Under Contracts offered prior to October 1995, a sales load of up to 7.5% was assessed against each premium payment for sales- related expenses as specified in the Contracts. For DVA Series 100, the sales load is deducted in equal annual installments over the period the Contract is in force, not to exceed 10 years. For DVA 80 and DVA 100 Contracts, although the sales load is chargeable to each premium when it is received by Golden American, the amount of such charge is initially advanced by Golden American to Contractowners and included in the accumulation value and then deducted in equal installments on each Contract anniversary date over a period of six years. Upon surrender of the Contract, the unamortized deferred sales load is deducted from the accumulation value by Golden American. In addition, when partial withdrawal limits are exceeded, a portion of the unamortized deferred sales load is deducted. PREMIUM TAXES: For certain Contracts, premium taxes are deducted, where applicable, from the accumulation value of each Contract. The amount and timing of the deduction depend on the annuitant's state of residence and currently ranges up to 3.5% of premiums. FEES WAIVED BY GOLDEN AMERICAN: Certain charges and fees for various types of Contracts are currently waived by Golden American. Golden American reserves the right to discontinue these waivers at its discretion or to conform with changes in the law. A summary of the net assets retained in the Account, representing the unamortized deferred sales load and premium taxes advanced by Golden American previously noted, follows:
YEAR ENDED DECEMBER 31 ___________________________________ 1998 1997 _______________ _________________ (DOLLARS IN THOUSANDS) Balance at beginning of year $17,009 $26,612 Sales load advanced 274 616 Premium tax advanced -- 7 Net transfer from Fixed Account and other Divisions -- 353 Amortization of deferred sales load and premium tax (8,280) (10,579) _______________ _________________ Balance at end of year $9,003 $17,009 =============== =================
NOTE 4 - PURCHASES AND SALES OF INVESTMENT SECURITIES The aggregate cost of purchases and proceeds from sales of investments were as follows:
YEAR ENDED DECEMBER 31 _________________________ 1998 _________________________ PURCHASES SALES _________________________ (DOLLARS IN THOUSANDS) The GCG Trust: Liquid Asset Series $570,537 $452,115 Limited Maturity Bond Series 71,742 22,970 Hard Assets Series 17,730 17,975 All-Growth Series 16,647 13,146 Real Estate Series 29,007 13,733 Fully Managed Series 83,688 7,148 Multiple Allocation Series 52,037 32,159 Capital Appreciation Series 83,259 17,034 Rising Dividends Series 270,955 7,361 Emerging Markets Series 2,644 7,107 Market Manager Series 342 292 Value Equity Series 58,297 6,136 Strategic Equity Series 31,008 5,375 Small Cap Series 63,182 9,735 Managed Global Series 41,119 39,355 Mid-Cap Growth Series 97,494 8,444 Growth & Income Series 132,350 6,850 Research Series 237,915 6,540 Total Return Series 202,032 1,560 Value + Growth Series 119,241 13,912 Global Fixed Income Series 14,270 5,161 Developing World Series 7,293 2,662 Growth Opportunities Series 7,214 3,196 PIMCO Variable Insurance Trust: PIMCO High Yield Bond Portfolio 52,726 6,256 PIMCO StocksPLUS Growth and Income Portfolio 49,898 2,237 Greenwich Street Series Fund Inc.: Appreciation Portfolio 739 82 Travelers Series Fund Inc.: Smith Barney High Income Portfolio 878 222 Smith Barney Large Cap Value Porfolio 513 32 Smith Barney International Equity Portfolio 245 12 Smith Barney Money Market Portfolio 630 494 Warburg Pincus Trust: International Equity Portfolio 370,938 324,226 _________________________ COMBINED $2,686,570 $1,033,527 =========================
YEAR ENDED DECEMBER 31 _________________________ 1997 _________________________ PURCHASES SALES _________________________ (DOLLARS IN THOUSANDS) The GCG Trust: Liquid Asset Series $94,848 $75,062 Limited Maturity Bond Series 12,572 13,891 Hard Assets Series 21,526 12,693 All-Growth Series 7,468 14,683 Real Estate Series 24,254 8,239 Fully Managed Series 27,691 11,768 Multiple Allocation Series 30,819 55,031 Capital Appreciation Series 41,409 24,135 Rising Dividends Series 63,949 8,887 Emerging Markets Series 8,023 6,846 Market Manager Series 467 623 Value Equity Series 32,557 4,409 Strategic Equity Series 19,475 4,918 Small Cap Series 25,870 10,563 Managed Global Series 37,985 21,524 Mid-Cap Growth Series 18,373 3,328 Growth & Income Series 37,291 1,763 Research Series 34,430 419 Total Return Series 26,167 354 Value + Growth Series 30,053 5,950 Global Fixed Income Series 224 7 Developing World Series -- -- Growth Opportunities Series -- -- PIMCO Variable Insurance Trust: PIMCO High Yield Bond Portfolio -- -- PIMCO StocksPLUS Growth and Income Portfolio -- -- Greenwich Street Series Fund Inc.: Appreciation Portfolio 283 12 Travelers Series Fund Inc.: Smith Barney High Income Portfolio 216 11 Smith Barney Large Cap Value Porfolio 210 1 Smith Barney International Equity Portfolio 103 2 Smith Barney Money Market Portfolio 194 12 Warburg Pincus Trust: International Equity Portfolio 2,146 59 _________________________ COMBINED $598,603 $285,190 =========================
NOTE 5 - SUMMARY OF CHANGES FROM UNIT TRANSACTIONS Contractowners' transactions shown in the following table reflect gross inflows ("Purchases") and outflows ("Sales") in units for each Division. The activity includes Contractowners electing to update a DVA 100 or DVA Series 100 Contract to a DVA PLUS Contract. Updates to DVA PLUS Contracts resulted in both a sale (surrender of the old Contract) and a purchase (acquisition of the new Contract). All of the purchase transactions for the Market Manager Division resulted from such updates.
YEAR ENDED DECEMBER 31 _________________________ 1998 _________________________ PURCHASES SALES _________________________ Liquid Asset Division 46,713,872 38,496,936 Limited Maturity Bond Division 5,263,273 2,390,944 Hard Assets Division 1,390,271 1,503,254 All-Growth Division 1,876,296 1,557,867 Real Estate Division 1,269,259 1,003,769 Fully Managed Division 4,432,536 1,393,191 Multiple Allocation Division 2,439,316 2,628,892 Capital Appreciation Division 3,704,327 1,712,022 Rising Dividends Division 13,285,423 1,798,264 Emerging Markets Division 737,697 1,279,884 Market Manager Division 16,579 26,443 Value Equity Division 3,639,566 936,377 Strategic Equity Division 2,329,825 828,876 Small Cap Division 5,737,867 1,727,666 Managed Global Division 3,637,963 3,808,355 Mid-Cap Growth Division 5,201,859 1,073,702 Growth & Income Division 8,700,243 1,061,928 Research Division 11,776,149 1,145,700 Total Return Division 11,841,572 542,519 Value + Growth Division 8,862,606 1,834,396 Global Fixed Income Division 1,199,981 486,199 Developing World Division 1,034,819 414,729 Growth Opportunities Division 801,993 373,469 PIMCO High Yield Bond Division 5,575,890 995,489 PIMCO StocksPLUS Growth and Income Division 5,235,676 567,893 Appreciation Division 45,518 5,062 Smith Barney High Income Division 59,777 15,706 Smith Barney Large Cap Value Division 25,818 1,496 Smith Barney International Equity Division 13,627 659 Smith Barney Money Market Division 55,074 43,687 International Equity Division 34,755,360 31,779,305 _________________________ COMBINED 191,660,032 101,434,679 =========================
YEAR ENDED DECEMBER 31 _________________________ 1997 _________________________ PURCHASES SALES _________________________ Liquid Asset Division 8,859,035 7,508,736 Limited Maturity Bond Division 814,102 1,099,923 Hard Assets Division 955,532 934,748 All-Growth Division 902,597 1,467,510 Real Estate Division 1,165,038 633,059 Fully Managed Division 1,588,523 1,271,492 Multiple Allocation Division 858,882 3,296,283 Capital Appreciation Division 1,899,517 1,801,059 Rising Dividends Division 4,263,972 1,391,248 Emerging Markets Division 1,231,916 1,082,071 Market Manager Division -- 31,196 Value Equity Division 1,792,574 522,420 Strategic Equity Division 1,539,555 551,638 Small Cap Division 3,022,647 1,720,403 Managed Global Division 3,674,935 2,873,007 Mid-Cap Growth Division 1,166,129 357,910 Growth & Income Division 2,623,649 368,883 Research Division 1,962,393 137,427 Total Return Division 1,683,989 52,603 Value + Growth Division 2,598,824 818,375 Global Fixed Income Division 18,902 1,482 Developing World Division -- -- Growth Opportunities Division -- -- PIMCO High Yield Bond Division -- -- PIMCO StocksPLUS Growth and Income Division -- -- Appreciation Division 19,581 822 Smith Barney High Income Division 15,972 739 Smith Barney Large Cap Value Division 12,176 39 Smith Barney International Equity Division 7,216 138 Smith Barney Money Market Division 17,685 1,114 International Equity Division 208,851 9,015 _________________________ COMBINED 42,904,192 27,933,340 =========================
NOTE 6 - NET ASSETS Investments at net asset value less the payable to Golden American Life Insurance Company for charges and fees at December 31, 1998 consisted of the following:
Limited Liquid Maturity Hard All- Asset Bond Assets Growth Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $166,620 $85,663 $27,056 $64,169 Accumulated net investment income (loss) and net realized gain (loss) on investments 9,139 17,885 17,001 8,405 Net unrealized appreciation (depreciation) of investments -- (716) (14,354) 9,233 _____________________________________________________ $175,759 $102,832 $29,703 $81,807 =====================================================
Real Fully Multiple Capital Estate Managed Allocation Appreciation Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $51,262 $167,589 $134,591 $146,874 Accumulated net investment income (loss) and net realized gain (loss) on investments 26,016 48,555 134,202 74,724 Net unrealized appreciation (depreciation) of investments (8,283) 10,222 5,117 34,980 _____________________________________________________ $68,995 $226,366 $273,910 $256,578 =====================================================
Rising Emerging Market Value Dividends Markets Manager Equity Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $394,953 $46,675 $2,242 $109,242 Accumulated net investment income (loss) and net realized gain (loss) on investments 26,832 (14,912) 2,060 13,560 Net unrealized appreciation (depreciation) of investments 78,831 (9,509) 3,405 3,392 _____________________________________________________ $500,616 $22,254 $7,707 $126,194 =====================================================
Strategic Small Managed Mid-Cap Equity Cap Global Growth Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $61,578 $103,543 $90,360 $103,719 Accumulated net investment income (loss) and net realized gain (loss) on investments 8,326 (467) 20,177 5,764 Net unrealized appreciation (depreciation) of investments 1,444 21,169 20,147 7,361 _____________________________________________________ $71,348 $124,245 $130,684 $116,844 =====================================================
Growth & Total Value + Income Research Return Growth Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $162,972 $254,403 $216,406 $124,813 Accumulated net investment income (loss) and net realized gain (loss) on investments 7,050 11,860 9,989 4,268 Net unrealized appreciation (depreciation) of investments 8,928 17,266 1,440 13,987 _____________________________________________________ $178,950 $283,529 $227,835 $143,068 =====================================================
PIMCO Global Growth High Fixed Developing Oppor- Yield Income World tunities Bond Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $9,140 $4,651 $4,025 $45,637 Accumulated net investment income (loss) and net realized gain (loss) on investments 398 (288) (243) 499 Net unrealized appreciation (depreciation) of investments (10) 149 349 (18) _____________________________________________________ $9,528 $4,512 $4,131 $46,118 =====================================================
PIMCO Smith Smith StocksPLUS Barney Barney Growth and Appre- High Large Cap Income ciation Income Value Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $46,830 $882 $825 $676 Accumulated net investment income (loss) and net realized gain (loss) on investments 717 49 44 15 Net unrealized appreciation (depreciation) of investments 4,255 43 (63) 10 _____________________________________________________ $51,802 $974 $806 $701 =====================================================
Smith Barney Smith Inter- Barney Inter- national Money national Equity Market Equity Division Division Division Combined _____________________________________________________ (Dollars in thousands) Unit transactions $337 $304 $48,877 $2,676,914 Accumulated net investment income (loss) and net realized gain (loss) on investments (4) 14 (666) 430,969 Net unrealized appreciation (depreciation) of investments (7) -- 1,554 210,322 _____________________________________________________ $326 $318 $49,765 $3,318,205 =====================================================
NOTE 7 - UNIT VALUES Accumulation unit value information (which is based on total assets) for units outstanding by Contract type as of December 31, 1998 were as follows:
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE ______________________________________________________________________________ (IN THOUSANDS) LIQUID ASSET Currently payable annuity products: DVA 80 2,728 $15.19 $41 DVA 100 2,657 14.89 40 Contracts in accumulation period: DVA 80 371,896 15.19 5,650 DVA 100 1,765,308 14.89 26,288 DVA Series 100 50,601 14.38 727 DVA PLUS - Standard 489,531 14.54 7,118 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 3,587,645 14.33 51,394 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 2,964,038 14.11 41,830 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 3,069,965 13.88 42,610 ____________ 175,698 LIMITED MATURITY BOND Currently payable annuity products: DVA 80 8,126 17.77 144 DVA 100 17,655 17.42 307 Contracts in accumulation period: DVA 80 91,829 17.77 1,632 DVA 100 2,069,663 17.42 36,045 DVA Series 100 22,995 16.81 387 DVA PLUS - Standard 263,074 17.02 4,478 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,557,946 16.77 26,124 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,121,400 16.52 18,525 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 937,378 16.25 15,230 ____________ 102,872
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE ______________________________________________________________________________ (IN THOUSANDS) HARD ASSETS Currently payable annuity products: DVA 80 365 $15.15 $6 DVA 100 8,649 14.85 128 Contracts in accumulation period: DVA 80 58,984 15.15 893 DVA 100 744,236 14.85 11,050 DVA Series 100 23,997 14.33 344 DVA PLUS - Standard 146,678 14.50 2,126 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 258,034 14.28 3,685 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 609,087 14.07 8,570 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 210,821 13.84 2,917 ____________ 29,719 ALL-GROWTH Currently payable annuity products: DVA 80 474 16.36 8 DVA 100 11,790 16.03 189 Contracts in accumulation period: DVA 80 72,780 16.36 1,191 DVA 100 2,382,762 16.03 38,207 DVA Series 100 23,147 15.48 358 DVA PLUS - Standard 208,260 15.66 3,261 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 645,591 15.43 9,958 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,471,156 15.20 22,355 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 422,889 14.95 6,320 ____________ 81,847
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE ______________________________________________________________________________ (IN THOUSANDS) REAL ESTATE Currently payable annuity products: DVA 80 1,101 $23.06 $25 DVA 100 21,684 22.60 490 Contracts in accumulation period: DVA 80 33,563 23.06 774 DVA 100 1,136,778 22.60 25,692 DVA Series 100 9,562 21.82 209 DVA PLUS - Standard 170,494 22.07 3,763 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 436,867 21.74 9,498 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 914,501 21.42 19,588 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 426,516 21.07 8,985 ____________ 69,024 FULLY MANAGED Currently payable annuity products: DVA 80 2,737 21.78 60 DVA 100 60,779 21.34 1,297 Contracts in accumulation period: DVA 80 96,116 21.78 2,093 DVA 100 4,072,871 21.34 86,930 DVA Series 100 33,313 20.61 686 DVA PLUS - Standard 544,623 20.84 11,351 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,628,157 20.53 33,431 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 2,780,652 20.23 56,246 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 1,727,706 19.90 34,373 ____________ 226,467
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE ______________________________________________________________________________ (IN THOUSANDS) MULTIPLE ALLOCATION Currently payable annuity products: DVA 80 14,541 $23.26 $338 DVA 100 90,029 22.80 2,053 Contracts in accumulation period: DVA 80 405,816 23.26 9,440 DVA 100 7,709,073 22.80 175,791 DVA Series 100 64,749 22.01 1,425 DVA PLUS - Standard 395,764 22.27 8,812 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 800,489 21.94 17,560 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,980,779 21.61 42,806 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 744,366 21.26 15,822 ____________ 274,047 CAPITAL APPRECIATION Currently payable annuity products: DVA 80 7,669 25.47 195 DVA 100 44,548 25.13 1,119 Contracts in accumulation period: DVA 80 83,297 25.47 2,122 DVA 100 4,645,391 25.13 116,756 DVA Series 100 49,076 24.55 1,205 DVA PLUS - Standard 413,115 24.75 10,223 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,342,757 24.50 32,897 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 2,787,732 24.26 67,619 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 1,023,964 23.98 24,551 ____________ 256,687
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE ______________________________________________________________________________ (IN THOUSANDS) RISING DIVIDENDS Currently payable annuity products: DVA 80 12,379 $23.31 $289 DVA 100 15,367 23.06 355 Contracts in accumulation period: DVA 80 127,116 23.31 2,962 DVA 100 4,450,237 23.06 102,628 DVA Series 100 92,161 22.64 2,086 DVA PLUS - Standard 1,199,087 22.79 27,323 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 4,591,470 22.61 103,810 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 7,386,288 22.43 165,696 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 4,305,084 22.22 95,669 ____________ 500,818 EMERGING MARKETS Currently payable annuity products: DVA 80 304 6.71 2 DVA 100 9,591 6.64 64 Contracts in accumulation period: DVA 80 68,213 6.71 458 DVA 100 1,539,408 6.64 10,224 DVA Series 100 23,813 6.52 155 DVA PLUS - Standard 266,800 6.56 1,751 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 271,025 6.51 1,765 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,177,915 6.46 7,610 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 37,134 6.40 238 ____________ 22,267
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE ______________________________________________________________________________ (IN THOUSANDS) MARKET MANAGER Contracts in accumulation period: DVA 100 332,519 $23.71 $7,884 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 7,958 23.14 184 ____________ 8,068 VALUE EQUITY Currently payable annuity products: DVA 80 409 18.73 8 DVA 100 2,145 18.58 40 Contracts in accumulation period: DVA 80 29,033 18.73 544 DVA 100 1,049,863 18.58 19,502 DVA Series 100 20,539 18.32 376 DVA PLUS - Standard 454,942 18.41 8,377 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,415,540 18.31 25,913 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 2,736,310 18.20 49,797 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 1,201,314 18.06 21,692 ____________ 126,249 STRATEGIC EQUITY Currently payable annuity products: DVA 100 34,850 14.40 502 Contracts in accumulation period: DVA 80 53,353 14.49 773 DVA 100 737,255 14.40 10,615 DVA Series 100 22,096 14.23 315 DVA PLUS - Standard 508,588 14.30 7,272 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,105,850 14.23 15,735 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,731,615 14.16 24,521 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 827,477 14.07 11,644 ____________ 71,377
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE ______________________________________________________________________________ (IN THOUSANDS) SMALL CAP Currently payable annuity products: DVA 100 6,856 $15.55 $107 Contracts in accumulation period: DVA 80 46,417 15.65 726 DVA 100 694,347 15.55 10,801 DVA Series 100 18,405 15.39 283 DVA PLUS - Standard 446,934 15.44 6,900 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 2,476,498 15.37 38,058 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 3,086,639 15.30 47,219 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 1,326,706 15.23 20,204 ____________ 124,298 MANAGED GLOBAL Currently payable annuity products: DVA 80 295 15.46 5 DVA 100 16,286 15.27 249 Contracts in accumulation period: DVA 80 31,668 15.46 489 DVA 100 3,928,543 15.27 59,981 DVA Series 100 47,894 14.95 716 DVA PLUS - Standard 649,216 15.02 9,753 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 610,300 14.88 9,084 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 3,354,682 14.75 49,469 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 67,979 14.59 992 ____________ 130,738
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE ______________________________________________________________________________ (IN THOUSANDS) MID-CAP GROWTH Contracts in accumulation period: DVA 80 31,935 $23.04 $736 DVA 100 315,603 22.84 7,210 DVA Series 100 12,309 22.50 277 DVA PLUS - Standard 173,070 22.60 3,912 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,905,008 22.43 42,722 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,527,664 22.31 34,087 Granite PrimElite - Standard 981 22.60 22 Granite PrimElite - Annual Ratchet 23,659 22.43 531 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 1,235,724 22.17 27,396 ____________ 116,893 GROWTH & INCOME Contracts in accumulation period: DVA 80 9,045 17.29 156 DVA 100 486,360 17.20 8,365 DVA Series 100 9,399 17.03 160 DVA PLUS - Standard 537,480 17.08 9,180 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 3,297,314 17.01 56,089 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 3,474,459 16.94 58,850 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 2,741,015 16.87 46,233 ____________ 179,033
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE ______________________________________________________________________________ (IN THOUSANDS) RESEARCH Contracts in accumulation period: DVA 80 14,054 $23.47 $330 DVA 100 488,822 23.27 11,377 DVA Series 100 20,718 22.93 475 DVA PLUS - Standard 437,189 23.03 10,068 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 3,902,974 22.89 89,339 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 3,875,695 22.73 88,107 Granite PrimElite - Standard 3,070 23.03 71 Granite PrimElite - Annual Ratchet 38,692 22.89 886 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 3,674,201 22.59 82,990 ____________ 283,643 TOTAL RETURN Contracts in accumulation period: DVA 80 2,035 18.17 37 DVA 100 431,678 18.02 7,778 DVA Series 100 6,695 17.75 119 DVA PLUS - Standard 616,433 17.83 10,989 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 3,982,960 17.72 70,569 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 3,973,034 17.60 69,922 Granite PrimElite - Standard 10,098 17.83 180 Granite PrimElite - Annual Ratchet 32,769 17.72 581 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 3,874,737 17.49 67,753 ____________ 227,928
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE ______________________________________________________________________________ (IN THOUSANDS) VALUE + GROWTH Contracts in accumulation period: DVA 80 35,295 $16.57 $585 DVA 100 299,829 16.47 4,940 DVA Series 100 11,112 16.31 181 DVA PLUS - Standard 362,210 16.36 5,926 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 3,293,704 16.29 53,670 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 2,452,149 16.22 39,786 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 2,354,360 16.16 38,039 ____________ 143,127 GLOBAL FIXED INCOME Contracts in accumulation period: DVA 80 1,419 13.42 19 DVA 100 13,446 13.31 179 DVA PLUS - Standard 6,337 13.17 83 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 396,068 13.09 5,184 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 119,924 13.00 1,560 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 194,008 12.92 2,506 ____________ 9,531
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE ______________________________________________________________________________ (IN THOUSANDS) DEVELOPING WORLD Contracts in accumulation period: DVA 80 3,368 $7.32 $25 DVA 100 4,598 7.31 34 DVA PLUS - Standard 617 7.29 5 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 417,221 7.28 3,039 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 82,414 7.27 599 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 111,872 7.26 812 ____________ 4,514 GROWTH OPPORTUNITIES Contracts in accumulation period: DVA 100 13,050 9.69 126 DVA PLUS - Standard 5,235 9.67 51 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 141,597 9.65 1,367 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 126,683 9.64 1,221 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 141,959 9.63 1,367 ____________ 4,132
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE ______________________________________________________________________________ (IN THOUSANDS) PIMCO HIGH YIELD BOND Contracts in accumulation period: DVA 80 2,973 $10.12 $30 DVA 100 107,998 10.11 1,092 DVA PLUS - Standard 213,774 10.09 2,157 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,630,971 10.08 16,440 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,066,219 10.07 10,737 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 1,558,466 10.06 15,678 ____________ 46,134 PIMCO STOCKSPLUS GROWTH AND INCOME Contracts in accumulation period: DVA 80 13,664 11.16 152 DVA 100 160,283 11.14 1,786 DVA PLUS - Standard 112,706 11.12 1,253 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,527,697 11.11 16,975 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 942,738 11.10 10,465 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 1,910,695 11.09 21,188 ____________ 51,819
UNIT TOTAL UNIT DIVISION/CONTRACT UNITS VALUE VALUE ______________________________________________________________________________ (IN THOUSANDS) APPRECIATION Contracts in accumulation period: Granite PrimElite - Standard 1,108 $16.53 $18 Granite PrimElite - Annual Ratchet 58,107 16.47 957 ____________ 975 SMITH BARNEY HIGH INCOME Contracts in accumulation period: Granite PrimElite - Standard 12,711 13.66 174 Granite PrimElite - Annual Ratchet 46,593 13.58 633 ____________ 807 SMITH BARNEY LARGE CAP VALUE Contracts in accumulation period: Granite PrimElite - Standard 1,600 19.35 31 Granite PrimElite - Annual Ratchet 34,859 19.24 671 ____________ 702 SMITH BARNEY INTERNATIONAL EQUITY Contracts in accumulation period: Granite PrimElite - Standard 2,885 14.35 41 Granite PrimElite - Annual Ratchet 19,916 14.28 285 ____________ 326 SMITH BARNEY MONEY MARKET Contracts in accumulation period: Granite PrimElite - Standard 2,017 11.43 23 Granite PrimElite - Annual Ratchet 25,941 11.37 295 ____________ 318 INTERNATIONAL EQUITY Contracts in accumulation period: DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 2,422,075 10.29 24,919 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 680,861 10.32 7,025 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 1,736,713 10.27 17,841 ____________ 49,785 _____________ ____________ COMBINED 183,098,947 $3,319,843 ============= ============
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