-----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, K0685qukbGHgu0ytmPIv+3yvjvMugpqOfjKJZDFXs8UlJJHQDTPLNDd33SeiQ7jj djWYc0NxHMJPLJ2g0/7clA== 0000837276-99-000014.txt : 19990120 0000837276-99-000014.hdr.sgml : 19990120 ACCESSION NUMBER: 0000837276-99-000014 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19990119 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: 485APOS SEC ACT: SEC FILE NUMBER: 033-59261 FILM NUMBER: 99507938 FILING VALUES: FORM TYPE: 485APOS SEC ACT: SEC FILE NUMBER: 811-05626 FILM NUMBER: 99507939 BUSINESS ADDRESS: STREET 1: 1001 JEFFERSON STREET STREET 2: SUITE 400 CITY: WILMINGTON STATE: DE ZIP: 19801 BUSINESS PHONE: 3025763400 MAIL ADDRESS: STREET 1: 1001 JEFFERSON STREET STREET 2: SUITE 400 CITY: WILMINGTON STATE: DE ZIP: 19801 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 485APOS 1 POSTEFF DVA PLUS As Filed with the Securities and Exchange Commission on January 19, 1999 Registration Nos. 33-59261, 811-5626 - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. ___ Post-Effective Amendment No. 10 and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 61 SEPARATE ACCOUNT B (EXACT NAME OF REGISTRANT) GOLDEN AMERICAN LIFE INSURANCE COMPANY (NAME OF DEPOSITOR) 1001 Jefferson Street Wilmington, DE 19801 302-576-3400 (ADDRESS AND TELEPHONE NUMBER OF DEPOSITOR'S PRINCIPAL OFFICES) Marilyn Talman, Esq. COPY TO: Golden American Life Insurance Company Stephen E. Roth, Esq. 1001 Jefferson Street, Suite 400 Sutherland Asbill & Brennan LLP Wilmington, DE 19801 1275 Pennsylvania Avenue, N.W. (NAME AND ADDRESS OF AGENT FOR SERVICE Washington, D.C. 20004-2404 OF PROCESS) APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practical after the effective date of the Registration Statement IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE: [ ] immediately upon filing pursuant to paragraph (b) of Rule 485 [ ] on ____________ pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485 [x] on April 5, 1999 pursuant to paragraph (a)(1) of Rule 485 IF APPROPRIATE, CHECK THE FOLLOWING BOX: [ ] this Post-Effective Amendment designates a new effective date for a previously filed Post-Effective Amendment. TITLE OF SECURITIES BEING REGISTERED: Deferred Combination Variable and Fixed Annuity Contracts PART A EXPLANATORY NOTE The Contracts covered by this Registration Statement are being offered through two different distribution systems. Therefore, there are two Prospectuses and corresponding Statements of Additional Information ("Version 1" and "Version 2") for the Contracts covered by this registration statement, one pertaining to each distribution system. Version 2 differs from Version 1 in the following respects: (a) Version 2 offers different variable funding options (specifically, Version 2 offers the Travelers Series Fund Inc. and Greenwich Street Series Fund in lieu of The GCG Trust, the Equi-Select Series Trust and the PIMCO Variable Insurance Trust); (b) Version 2 is intended to be used in New Hampshire only by a different retail distribution system, receiving different compensation, than is the case for Version 1; and (c) because Version 2 is to be used only in New Hampshire, whereas Version 1 is used in all states (except New York), Version 2 deletes Contract features, options or procedures described in Version 1 that are available in other states but not in New Hampshire. In particular, Version 2 does not include the market value adjusted fixed account option included in Version 1 and covered by an effective registration statement on Form S-1 (File No. 33-23458). This Post-Effective Amendment No. 10 includes the text of only Version 1 of the Prospectus. PROFILE OF GOLDENSELECT DVA PLUS FIXED AND VARIABLE ANNUITY CONTRACT __________________ ___, 1999 --------------------------------------------------------------- | 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 to 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 24 mutual fund investment portfolios (listed on the next page) through our Separate Account B and/or (ii) in a fixed account of Golden American with guaranteed interest periods. We set the interest rates in the fixed account (which will never be less than 3%) periodically. We currently offer guaranteed interest periods of 6 months, 1, 3, 5, 7 and 10 years. 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 interest period. The investment portfolios are designed to offer a better return than the fixed account. However, this is NOT guaranteed. You can lose your money. 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 generally determine the amount of annuity payments you will receive. The income phase begins when you start receiving regular annuity payments from your Contract on the annuity start date. 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, (6) the type of death benefit, and (7) the amount and frequency of withdrawals. 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: ANNUITY OPTIONS ---------------------------------------------------------------------------- | | | Option 1 Income for a Payments are made for a specified | | fixed period number of years to you or your | | beneficiary. | |--------------------------------------------------------------------------| | Option 2 Income for Payments are made for the rest of | | life with a your life or longer for a specified | | period certain period such as 10 or 20 years or until | | the total amount used to 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 income Payments are made for your life and the | | life 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. 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 $10,000 or more ($1,500 for a qualified Contract). You may make additional payments of $500 or more ($250 for a qualified Contract) at any time during the accumulation phase. With our prior consent, you may make premium payments over $1,000,000. 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 with funding from another qualified account (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 either: (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 24 mutual fund investment portfolios through our Separate Account B. The investment portfolios are described in the prospectuses for the GCG Trust and the PIMCO Variable Insurance Trust. Keep in mind that any amount you direct into the fixed account earns a fixed interest rate. But if you invest in any of the following investment portfolios, depending on market conditions, you may make or lose money: THE GCG TRUST Multiple Allocation Series Strategic Equity Series Mid-Cap Growth Series Fully Managed Series Small Cap Series Total Return Series Capital Appreciation Series Emerging Markets Series Research Series Rising Dividends Series Managed Global Series Global Fixed Income Series All-Growth Series Growth Opportunities Series Limited Maturity Bond Series Real Estate Series Developing World Series Liquid Asset Series Hard Assets Series Growth & Income Series Value Equity Series Value + Growth Series THE PIMCO TRUST PIMCO High Yield Bond Portfolio PIMCO StocksPLUS Growth and Income Portfolio
2 5. EXPENSES The Contract has insurance features and investment features, and there are costs related to each. The Company deducts an annual contract administrative charge of $40. 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 depends on the death benefit you choose: Standard Enhanced Death Benefit Death Benefit Annual Ratchet 7% Solution ------------- -------------- ----------- Mortality & Expense Risk Charge 1.10% 1.25% 1.40% Asset-Based Administrative Charge 0.15% 0.15% 0.15% --------------------------------- ----- ----- ----- Total 1.25% 1.40% 1.55%
Each investment portfolio has charges for investment management fees and other expenses. These charges, which vary by investment portfolio, currently range from 0.61% to 1.80% annually (see table below) of the portfolio's average daily net asset balance. If you withdraw money from your Contract, or if you begin receiving annuity payments, we 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 year is 15% of your contract value on the date of the withdrawal less any prior withdrawals during that 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.
COMPLETE YEARS ELAPSED 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 SINCE PREMIUM PAYMENT | | | | | | | SURRENDER CHARGE 7% | 7% | 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 maximum mortality and expense risk charge, the asset-based administrative charge, and reflects the annual contract administrative charge as 0.06% (based on an average contract value of $65,000). The "Total Annual Investment Portfolio Charges" column reflects the portfolio charges for each portfolio and are based on actual expenses as of December 31, 1997, except for newly formed portfolios and portfolios that had not commenced operations as of December 31, 1997 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. 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 and assume that you have elected the 7% Solution Enhanced Death Benefit. For these examples, the premium tax is assumed to be 0%. 3
---------------------------------------------------------------------------------------------- | Examples: | | Total Annual -------- | | Total Annual Investment Total Total Charges at the End of: | | Insurance Portfolio Annual | |Investment Portfolio Charges Charges Charges 1 Year 10 Years | | | |--------------------------------------------------------------------------------------------| | | |THE GCG TRUST | |Multiple Allocation 1.61% 0.99% 2.60% $ 96.33 $292.93 | |Fully Managed 1.61% 0.99% 2.60% $ 96.33 $292.93 | |Capital Appreciation 1.61% 0.99% 2.60% $ 96.33 $292.93 | |Rising Dividends 1.61% 0.99% 2.60% $ 96.33 $292.93 | |All-Growth 1.61% 0.99% 2.60% $ 96.33 $292.93 | |Real Estate 1.61% 0.99% 2.60% $ 96.33 $292.93 | |Hard Assets 1.61% 0.99% 2.60% $ 96.33 $292.93 | |Value Equity 1.61% 0.99% 2.60% $ 96.33 $292.93 | |Strategic Equity 1.61% 0.99% 2.60% $ 96.33 $292.93 | |Small Cap 1.61% 0.99% 2.60% $ 96.33 $292.93 | |Emerging Markets 1.61% 1.80% 3.41% $104.39 $369.15 | |Managed Global 1.61% 1.36% 2.97% $100.02 $328.59 | |Growth Opportunities 1.61% 1.11% 2.72% $ 97.53 $304.65 | |Developing World 1.61% 1.80% 3.41% $104.39 $369.15 | |Growth & Income 1.61% 1.10% 2.71% $ 97.43 $303.68 | |Value + Growth 1.61% 1.10% 2.71% $ 97.43 $303.68 | |Mid-Cap Growth 1.61% 0.97% 2.58% $ 96.13 $290.96 | |Total Return 1.61% 0.97% 2.58% $ 96.13 $290.96 | |Research 1.61% 0.96% 2.57% $ 96.03 $289.98 | |Global Fixed Income 1.61% 1.60% 3.21% $102.41 $350.96 | |Limited Maturity Bond 1.61% 0.61% 2.22% $ 92.52 $254.79 | |Liquid Asset 1.61% 0.61% 2.22% $ 92.52 $254.79 | | | |THE PIMCO TRUST | |PIMCO High Yield Bond 1.61% 0.75% 2.36% $ 93.93 $269.03 | |PIMCO StocksPLUS | | Growth and Income 1.61% 0.65% 2.26% $ 92.92 $258.88 | | | ----------------------------------------------------------------------------------------------
For the newly formed portfolios, the charges have been estimated. The "Total Annual Investment Portfolio Charges" reflect current expense reimbursements for the Research and Global Fixed Income portfolios. The Year 1 examples above include a 7% surrender charge. For more detailed information, see the fee table in the prospectus for the Contract. 6. TAXES Under a qualified Contract, your premiums are pre-tax contributions and accumulate on a tax-deferred basis. Premiums and earnings are 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, 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. If you are younger than 59 1/2 when you take money out, in most cases, you will be charged a 10% federal penalty tax on the amount withdrawn. 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 7. 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. 4 8. PERFORMANCE The value of your Contract will fluctuate depending on the investment performance of the portfolio(s) you choose. The following chart shows average annual total return for each portfolio for the time periods shown. These numbers reflect the deduction of the mortality and expense risk charge (based on the 7% Solution Enhanced Death Benefit), the asset-based administrative charge and the annual contract fee but do not reflect deductions for any withdrawal charges. Please keep in mind that past performance is not a guarantee of future results.
CALENDAR YEAR INVESTMENT PORTFOLIO 1997 1996 1995 1994 1993 1992 1991 1990 Managed by Zweig Advisors, Inc. Multiple Allocation 15.56% 7.01% 17.21% (2.76)% 9.35% .23% 18.11% 3.05% Strategic Equity 21.19% 17.47% -- -- -- -- -- -- Managed by INVESCO (NY), Inc. Capital Appreciation 26.90% 18.32% 28.28% (3.17)% 6.57% -- -- -- Managed by T. Rowe Price Associates, Inc. Fully Managed 13.50% 14.49% 18.96% (8.76)% 5.86% 4.52% 26.87% (4.75)% Managed by Kayne Anderson Investment Management, LLC Rising Dividends 27.75% 18.70% 29.17% (1.02)% -- -- -- -- Managed by Pilgrim, Baxter & Associates, Ltd. All-Growth 4.16% (2.18)% 20.64% (12.22)% 4.84% (4.17)% 34.31% (8.85)% Managed by EII Realty Securities, Inc. Real Estate 20.82% 33.13% 14.89% 4.64% 15.39% 12.04% 31.93% (22.07)% Managed by Van Eck Associates Corporation Hard Assets 4.46% 31.10% 9.08% 0.88% 47.55% (11.27)% 3.02% (15.24)% Managed by Eagle Asset Management, Inc. Value Equity 25.25% 8.83% 33.32% -- -- -- -- -- Managed by Fred Alger Management, Inc. Small Cap 8.55% 18.18% -- -- -- -- -- -- Managed by Putnam Investment Management, Inc. Emerging Markets (10.84)% 5.55% (11.43)% (16.55)% -- -- -- -- Managed Global 10.37% 10.50% 5.75% (14.11)% 4.44% -- -- -- Managed by ING Investment Management, LLC Limited Maturity Bond 4.96% 2.63% 10.10% (2.78)% 4.50% 3.16% 9.52% 6.16% Liquid Asset 3.40% 3.28% 3.98% 2.03% .99% 1.46% 3.96% 6.01% Managed by Pacific Investment Management Company PIMCO High Yield Bond -- -- -- -- -- -- -- -- PIMCO StocksPLUS Growth and Income -- -- -- -- -- -- -- -- Managed by Montgomery Asset Management, LLC Growth Opportunities -- -- -- -- -- -- -- -- Developing World -- -- -- -- -- -- -- -- Managed by Robertson, Stephens & Company Investment Management, L.P. Growth & Income 23.15% -- -- -- -- -- -- -- Value + Growth 13.91% -- -- -- -- -- -- -- Managed by Massachusetts Financial Services Company Mid-Cap Growth 17.75% 18.73% 27.39% -- -- -- -- -- Total Return 18.93% 11.85% 22.54% -- -- -- -- -- Research 18.20% 21.35% 34.40% -- -- -- -- -- Managed by Baring International Investment Limited Global Fixed Income (0.96)% 3.30% 14.52% -- -- -- -- --
9. DEATH BENEFIT You may choose (i) the Standard Death Benefit, (ii) the 7% Solution Enhanced Death Benefit or (iii) the Annual Ratchet Enhanced Death Benefit. The 7% Solution Enhanced Death Benefit is available only if the contract owner or the annuitant (if the contract owner is not an individual) is not more than 80 years old at 5 the time of purchase. The Annual Ratchet Enhanced Death Benefit is available only if the contract owner or the annuitant (if the contract owner is not an individual) is not more than 79 years old. The death benefit applies on the first person to die of 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 the 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 not to take the death benefit at the time of your death, the death benefit 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 you chose under the annuity option then in effect. Under the Standard 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. Under the 7% Solution Enhanced 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; 3) the cash surrender value; or 4) the enhanced death benefit, which we determine as follows: we credit interest each business day at the 7% annual effective rate to the enhanced death benefit from the preceding day (which would be the initial premium if the preceding day is the contract date), then we add additional premiums paid since the preceding day, then we subtract any withdrawals made since the preceding day, then we adjust for any market value adjustment, and then we subtract any associated surrender charges. The maximum enhanced death benefit is 2 times all premium payments, less an amount to reflect withdrawals. Note: The actual interest rate used for calculating the death benefit for the Liquid Asset and Limited Maturity Bond investment portfolios will be the lesser of the 7% annual effective rate or the net rate of return for such portfolios during the applicable period. The interest rate used for calculating the death benefit for your investment in the fixed account will be the lesser of the 7% annual effective rate or the interest credited to such investment during the applicable period. The investments you select will affect your maximum death benefit as explained above. Under the Annual Ratchet Enhanced 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; 3) the cash surrender value; or 4) the enhanced death benefit, which is determined as follows: On each contract anniversary that occurs on or before the contract owner turns age 80, we compare the prior enhanced death benefit to the contract value and select the larger amount as the new enhanced death benefit. On all other days, the enhanced death benefit is the following amount: On a daily basis we first take the enhanced death benefit from the preceding day (which would be the initial premium if the preceding day is the contract 6 date), then we add additional premiums paid since the preceding day, and then we subtract any withdrawals made since the preceding day, then we adjust for any market value adjustment, and then we subtract for any associated surrender charges. That amount becomes the new enhanced death benefit. Note: In all cases described above, amounts could be reduced by premium taxes owed and withdrawals not previously deducted. The enhanced death benefits may not be available in all states. Please refer to the Contract for more details. 10. OTHER INFORMATION Free Look. If you cancel the Contract within 10 days after you ---------- receive it, you will receive a full refund of the contract value (including charges). If applicable state law requires a longer free look period, or the return of the premium paid, the Company will comply. Unless your state requires us to return your premium payment, you bear the investment risk during the free look period; therefore, the contract value returned may be greater or less than your premium payment. Your contract value will be determined at the close of business on the day we receive a written request for a refund. 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. Currently there is no charge for transfers, and we do not limit the number of transfers allowed. 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 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. 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, which 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 withdrawal 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 8794 Wilmington, DE 19899-8794 (800) 366-0066 or your registered representative. 7 GOLDEN AMERICAN LIFE INSURANCE COMPANY GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B ________ ____, 1999 DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY PROSPECTUS GOLDENSELECT DVA PLUS - ------------------------------------------------------------------------------ This prospectus describes GoldenSelect DVA PLUS, a 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 24 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 are: THE GCG TRUST: MANAGER: Multiple Allocation Series Zweig Advisors, Inc. Fully Managed Series T. Rowe Price Associates, Inc. Capital Appreciation Series INVESCO (NY), Inc. Rising Dividends Series Kayne Anderson Investment Management, LLC All-Growth Series Pilgrim, Baxter & Associates, Ltd. Real Estate Series EII Realty Securities, Inc. Hard Assets Series Van Eck Associates Corporation Value Equity Series Eagle Asset Management, Inc. Strategic Equity Series Zweig Advisors Inc. Small Cap Series Fred Alger Management, Inc. Emerging Markets Series Putnam Investment Management, Inc. Managed Global Series Putnam Investment Management, Inc. Growth Opportunities Series Montgomery Asset Management, LLC Developing World Series Montgomery Asset Management, LLC Growth & Income Series Robertson, Stephens & Company Investment Management, L.P. Value + Growth Series Robertson, Stephens & Company Investment Management, L.P. Mid-Cap Growth Series Massachusetts Financial Services Company Total Return Series Massachusetts Financial Services Company Research Series Massachusetts Financial Services Company Global Fixed Income Series Baring International Investment Limited (an affiliate) Limited Maturity Bond Series ING Investment Management, LLC (an affiliate) Liquid Asset Series ING Investment Management, LLC (an affiliate) PIMCO VARIABLE INSURANCE TRUST: PIMCO High Yield Bond Portfolio Pacific Investment Management Company PIMCO StocksPLUS Growth Pacific Investment Management Company and Income 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 full refund of the 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. This prospectus provides information that you should know before investing and should be kept for future reference. A Statement of Additional Information, dated ______________ ___, 1999 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 8794, Wilmington, DE 19899-8794 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 GCG TRUST OR THE PIMCO TRUST IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE GCG TRUST AND THE PIMCO TRUST. - ------------------------------------------------------------------------------ TABLE OF CONTENTS - ------------------------------------------------------------------------------
PAGE Index of Special Terms................................................. 1 Fees and Expenses...................................................... 2 Performance Information................................................ 5 Accumulation Unit................................................. 5 Net Investment Factor............................................. 5 Condensed Financial Information................................... 6 Financial Statements.............................................. 6 Performance Information........................................... 6 Golden American Life Insurance Company................................. 7 The GCG Trust and the PIMCO Trust...................................... 7 Golden American Separate Account B..................................... 8 The Investment Portfolios.............................................. 8 Investment Objectives............................................. 8 Investment Portfolio Management Fees.............................. 10 The Fixed Interest Allocation......................................... 10 Selecting a Guaranteed Interest Period........................... 11 Guaranteed Interest Rates........................................ 11 Transfers from a Fixed Interest Allocation....................... 11 Withdrawals from a Fixed Interest Allocation..................... 12 Market Value Adjustment.......................................... 12 The Annuity Contract.................................................. 13 Contract Date and Contract Year.................................. 13 Annuity Start Date............................................... 13 Contract Owner................................................... 13 Annuitant........................................................ 14 Beneficiary...................................................... 14 Purchase and Availability of the Contract........................ 15 Crediting of Premium Payments.................................... 15 Contract Value................................................... 15 Cash Surrender Value............................................. 16 Surrendering to Receive the Cash Surrender Value................. 16 Addition, Deletion or Substitution of Subaccounts and Other Changes............................................... 17 The Fixed Account................................................ 17 Other Important Provisions....................................... 17 Withdrawals........................................................... 17 Regular Withdrawals.............................................. 17 Systematic Withdrawals........................................... 18 IRA Withdrawals.................................................. 18 Transfers Among Your Investments...................................... 19 Dollar Cost Averaging............................................ 19 Automatic Rebalancing............................................ 20 Death Benefit Choices................................................. 20 Death Benefit During the Accumulation Phase...................... 20 Standard Death Benefit...................................... 21 Enhanced Death Benefits..................................... 21 Death Benefit During the Income Phase............................ 22 Charges and Fees...................................................... 22 Charge Deduction Subaccount...................................... 22 Charges Deducted from the Contract Value......................... 22 Surrender Charge............................................ 22 Free Withdrawal Amount...................................... 23 Surrender Charge for Excess Withdrawals..................... 23 Premium Taxes............................................... 23 Administrative Charge....................................... 23 Excess Transfer Charge...................................... 23 Charges Deducted from the Subaccounts............................ 24 Mortality and Expense Risk Charge........................... 24 Asset-Based Administrative Charge........................... 24 Trust Expenses................................................... 24 The Annuity Options................................................... 24 Annuitization of Your Contract................................... 24
i
PAGE Selecting the Annuity Start Date................................. 25 Frequency of Annuity Payments.................................... 25 The Annuity Options.............................................. 25 Income for a Fixed Period................................... 25 Income for Life with a Period Certain....................... 25 Joint Life Income........................................... 25 Annuity Plan................................................ 26 Payment When Named Person Dies................................... 26 Other Contract Provisions............................................. 26 Reports to Contract Owners....................................... 26 Suspension of Payments........................................... 26 In Case of Errors in Your Application............................ 26 Assigning the Contract as Collateral............................. 26 Contract Changes-Applicable Tax Law.............................. 27 Free Look........................................................ 27 Group or Sponsored Arrangements.................................. 27 Selling the Contract............................................. 27 Other Information..................................................... 27 Voting Rights.................................................... 27 Year 2000 Problem................................................ 28 State Regulation................................................. 28 Legal Proceedings................................................ 28 Legal Matters.................................................... 28 Experts.......................................................... 28 Federal Tax Considerations............................................ 28 More Information About Golden American................................ 34 Financial Statements of Golden American Life Insurance Company........ 56 Statement of Additional Information Table of Contents................................................ 91 Appendix A Condensed Financial Information.................................. A1 Appendix B Market Value Adjustment Examples................................. B1 Appendix C Surrender Charge for Excess Withdrawals Example.................. C1
ii - ------------------------------------------------------------------------------ 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 Value 5 Annual Ratchet Enhanced Death Benefit 21 Annuitant 14 Annuity Start Date 13 Cash Surrender Value 16 Contract Date 13 Contract Owner 13 Contract Valu 15 Contract Year 13 Fixed Interest Allocation 10 Free Withdrawal Amount 23 Market Value Adjustment 12 Net Investment Factor 5 7% Solution Enhanced Death Benefit 21 Standard Death Benefit 21 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 Index of Investment Experience Annuity Start Date Annuity Commencement Date Contract Owner Owner or Certificate Owner Contract Value Accumulation Value Excess Transfer Charge Excess Allocation Charge Fixed Interest Allocation Fixed Allocation Free Look Period Right to Examine Period Guaranteed Interest Period Guarantee Period Subaccounts Division(s) Net Investment Factor Experience Factor Regular Withdrawals Conventional Partial Withdrawals Withdrawals Partial Withdrawals
1 - ------------------------------------------------------------------------------ FEES AND EXPENSES - ------------------------------------------------------------------------------ CONTRACT OWNER TRANSACTION EXPENSES*
Complete Years Elapsed 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 since premium payment | | | | | | | Surrender Charge 7% | 7% | 6% | 5% | 4% | 3% | 1% | 0%
Transfer Charge............................................. None** * A Market Value Adjustment may apply to certain transactions, which 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....................................... $40 (We waive this charge if your premium payments or current contract value is $100,000 or more.) SEPARATE ACCOUNT ANNUAL CHARGES***
Standard Enhanced Death Benefit ---------------------- Death Benefit Annual Ratchet 7% Solution ------------- -------------- ----------- Mortality and Expense Risk Charge..... 1.10% 1.25% 1.40% Asset-Based Administrative Charge..... 0.15% 0.15% 0.15% ----- ----- ----- Total Separate Account Charges........ 1.25% 1.40% 1.55% ***As a percentage of assets in each investment portfolio.
THE GCG TRUST ANNUAL EXPENSES (as a percentage of the average daily net assets of an investment portfolio or on the combined average daily net assets of the indicated groups of portfolios):
----------------------------------------------------------------------------------------------------------- | | | | | | | | OTHER | TOTAL | | | | EXPENSES(2) | EXPENSES | | | MANAGEMENT | AFTER EXPENSE | AFTER EXPENSE | | PORTFOLIO | FEES(1) | REIMBURSEMENT(3) | REIMBURSEMENT(3) | | | | | | |---------------------------------------------------------------------------------------------------------| | | | | | | Multiple Allocation, Fully Managed, Capital | | | | | Appreciation, Rising Dividends, All-Growth, | | | | | Real Estate, Hard Assets, Value Equity, | | | | | Strategic Equity, Small Cap | 0.98% | 0.01% | 0.99% | | | | | | |------------------------------------------------|--------------------------------------------------------| | | | | | | Growth Opportunities, Growth & Income, | | | | | Value + Growth | 1.10% | 0.01% | 1.11% | | | | | | |------------------------------------------------|--------------------------------------------------------| | | | | | | Managed Global | 1.25% | 0.11% | 1.36% | | | | | | |------------------------------------------------|--------------------------------------------------------| | | | | | | Emerging Markets, Developing World | 1.75% | 0.05% | 1.80% | | | | | | |------------------------------------------------|--------------------------------------------------------| | | | | | | Mid-Cap Growth, Total Return | 0.96% | 0.01% | 0.97% | | | | | | |------------------------------------------------|--------------------------------------------------------| | | | | | | Research | 0.96% | 0.00%(3) | 0.96%(3) | | | | | | |------------------------------------------------|--------------------------------------------------------| | | | | | | Global Fixed Income | 1.60% | 0.00%(3) | 1.60%(3) | | | | | | |------------------------------------------------|--------------------------------------------------------| | | | | | | Limited Maturity Bond, Liquid Asset | 0.60% | 0.01% | 0.61% | | | | | | -----------------------------------------------------------------------------------------------------------
Other Expenses are based on actual expenses for fiscal year ended December 31, 1997, except for newly formed portfolios and portfolios that had not commenced operations as of December 31, 1997 where the charges have been estimated. (1) Fees decline as combined assets 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. (3) Directed Services, Inc. is currently reimbursing expenses and waiving management fees to maintain Total Expenses at 0.96% for the Research portfolio and 1.60% for the Global Fixed Income portfolio as shown. This agreement will remain in place through December 31, 1999. Without this Agreement, 2 and based on current estimates, Total Expenses for the Research and Fixed Income portfolios would be 0.97% and 1.65% respectively. THE PIMCO TRUST ANNUAL EXPENSES (as a percentage of the average daily net assets of a portfolio):
----------------------------------------------------------------------------------------------------------- | | | | | | | ADVISORY | OTHER | TOTAL | | PORTFOLIO | FEES | EXPENSES | EXPENSES | | | | | | |------------------------------------------------|--------------------------------------------------------| | | PIMCO High Yield Bond | 0.50% | 0.25% | 0.75% | | | | | | |------------------------------------------------|--------------------------------------------------------| | | | | | | PIMCO StocksPLUS Growth and Income | 0.40% | 0.25% | 0.65% | | | | | | -----------------------------------------------------------------------------------------------------------
Other Expenses are estimated since, as of December 31, 1997, these portfolios had not yet commenced operations. The purpose of the foregoing tables is to assist you in understanding the various costs and expenses that you will bear directly and indirectly. See the prospectuses of the GCG Trust and the PIMCO 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. See "Charges and Fees--Charges Deducted from the Contract Value." 3 Examples: - --------- In the following examples, surrender charges may apply if you choose to annuitize within the first 7 contract years. The examples also assume election of the 7% Solution Enhanced Death Benefit and are based on an assumed 5% annual return. If you surrender your Contract at the end of the applicable time period, you would pay the following expenses for each $1,000 invested:
THE GCG TRUST 1 YEAR 3 YEARS 5 YEARS 10 YEARS Multiple Allocation......... $ 96.33 $140.85 $177.96 $292.93 Fully Managed............... $ 96.33 $140.85 $177.96 $292.93 Capital Appreciation........ $ 96.33 $140.85 $177.96 $292.93 Rising Dividends............ $ 96.33 $140.85 $177.96 $292.93 All-Growth.................. $ 96.33 $140.85 $177.96 $292.93 Real Estate................. $ 96.33 $140.85 $177.96 $292.93 Hard Assets................. $ 96.33 $140.85 $177.96 $292.93 Value Equity................ $ 96.33 $140.85 $177.96 $292.93 Strategic Equity............ $ 96.33 $140.85 $177.96 $292.93 Small Cap................... $ 96.33 $140.85 $177.96 $292.93 Emerging Markets............ $104.39 $164.79 $217.41 $369.15 Managed Global.............. $100.02 $151.86 $196.19 $328.59 Growth Opportunities........ $ 97.53 $144.43 $183.91 $304.65 Developing World............ $104.39 $164.79 $217.41 $369.15 Growth & Income............. $ 97.43 $144.14 $183.42 $303.68 Value + Growth.............. $ 97.43 $144.14 $183.42 $303.68 Mid-Cap Growth.............. $ 96.13 $140.25 $176.96 $290.96 Total Return................ $ 96.13 $140.25 $176.96 $290.96 Research.................... $ 96.03 $139.95 $176.47 $289.98 Global Fixed Income......... $102.41 $158.94 $207.83 $350.96 Limited Maturity Bond....... $ 92.52 $129.41 $158.87 $254.79 Liquid Asset................ $ 92.52 $129.41 $158.87 $254.79 THE PIMCO TRUST PIMCO High Yield Bond....... $ 93.93 $133.64 $165.95 $269.03 PIMCO StocksPLUS Growth and Income............. $ 92.92 $130.62 $160.90 $258.88
4 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:
THE GCG TRUST 1 YEAR 3 YEARS 5 YEARS 10 YEARS Multiple Allocation......... $26.33 $ 80.85 $137.96 $292.93 Fully Managed............... $26.33 $ 80.85 $137.96 $292.93 Capital Appreciation........ $26.33 $ 80.85 $137.96 $292.93 Rising Dividends............ $26.33 $ 80.85 $137.96 $292.93 All-Growth.................. $26.33 $ 80.85 $137.96 $292.93 Real Estate................. $26.33 $ 80.85 $137.96 $292.93 Hard Assets................. $26.33 $ 80.85 $137.96 $292.93 Value Equity................ $26.33 $ 80.85 $137.96 $292.93 Strategic Equity............ $26.33 $ 80.85 $137.96 $292.93 Small Cap................... $26.33 $ 80.85 $137.96 $292.93 Emerging Markets............ $34.39 $104.79 $177.41 $369.15 Managed Global.............. $30.02 $ 91.86 $156.19 $328.59 Growth Opportunities........ $27.53 $ 84.43 $143.91 $304.65 Developing World............ $34.39 $104.79 $177.41 $369.15 Growth & Income............. $27.43 $ 84.14 $143.42 $303.68 Value + Growth.............. $27.43 $ 84.14 $143.42 $303.68 Mid-Cap Growth.............. $26.13 $ 80.25 $136.96 $290.96 Total Return................ $26.13 $ 80.25 $136.96 $290.96 Research.................... $26.03 $ 79.95 $136.47 $289.98 Global Fixed Income......... $32.41 $ 98.94 $167.83 $350.96 Limited Maturity Bond....... $22.52 $ 69.41 $118.87 $254.79 Liquid Asset................ $22.52 $ 69.41 $118.87 $254.79 THE PIMCO TRUST PIMCO High Yield Bond....... $23.93 $ 73.64 $125.95 $269.03 PIMCO StocksPLUS Growth and Income............. $22.92 $ 70.62 $120.90 $258.88
The examples above reflect the annual administrative charge as an annual charge of 0.06% of assets (based on an average contract value of $65,000). If the Standard Death Benefit or the Annual Ratchet Enhanced Death Benefit is elected instead of the 7% Solution Enhanced Death Benefit used in the examples, the actual expenses will be less than those represented in the examples. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN SUBJECT TO THE TERMS OF YOUR CONTRACT. - ------------------------------------------------------------------------------ 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 charges under the Contract and the investment performance of the investment portfolio. The Net Investment Factor is calculated as follows: (1) We take the net asset value of the investment portfolio at the end of each business day. 5 (2) We add to (1) the amount of any dividend or capital gains distribution declared for the investment portfolio and reinvested in such portfolio. We subtract from that amount a charge for our taxes, if any. (3) We divide (2) by the net asset value of the investment portfolio 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 each 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 and (ii) the total investment value history of each subaccount are presented in Appendix A - - Condensed Financial Information. FINANCIAL STATEMENTS The unaudited financial statements of Separate Account B for the period ended September 30, 1998 and the audited financial statements of Separate Account B for the years ended December 31, 1997 and 1996 are included in the Statement of Additional Information. The unaudited financial statements of Golden American for the period ended September 30, 1998 and the audited financial statements for the years ended December 31, 1997, 1996 and 1995 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, 3, 5 and 10 year periods, or lesser periods depending on how long the subaccount has been in existence. 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, withdrawal of the investment at the end of the period, and the deduction of all applicable portfolio and 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 mutual fund 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. This data is designed to show the performance that would have resulted if the Contract had been in existence during that time. Current yield for the Liquid Asset subaccount is based on income generated 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. 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 6 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 assess the real rate of return from 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. - ------------------------------------------------------------------------------ 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") which is a wholly owned subsidiary of ING Groep N.V. ("ING"), a global financial services holding company with over $307.6 billion in assets as of December 31, 1997. 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 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 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 1001 Jefferson Street, Wilmington, Delaware 19801. For more information, see "More Information About Golden American." - ------------------------------------------------------------------------------ THE GCG TRUST AND THE PIMCO TRUST - ------------------------------------------------------------------------------ The GCG Trust is a mutual fund whose shares are available to separate accounts funding variable annuity and variable life insurance policies offered by Golden American. The GCG Trust also sells its shares to separate accounts of other insurance companies, both affiliated and not affiliated with Golden American. Pending Securities and Exchange Commission approval, shares of the GCG Trust may also be sold to certain qualified pension and retirement plans. The PIMCO Trust is also a mutual fund. The portfolios of the PIMCO Trust sell their shares to separate accounts of insurance companies, including Golden American, for both variable annuity contracts and variable life insurance policies and by qualified pension and retirement plans. The principal address of the Primco Trust is 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660. 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 and the PIMCO Trust, Directed Services, Inc., Pacific Investment Management Company 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 and the PIMCO Trust in the accompanying Trusts' prospectuses. You should read them carefully before investing. 7 - ------------------------------------------------------------------------------ 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 purchases shares of the mutual fund investment portfolios of the GCG Trust and the PIMCO 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. - ------------------------------------------------------------------------------ THE INVESTMENT PORTFOLIOS - ------------------------------------------------------------------------------ During the accumulation phase, you may allocate your premium payments and contract value to any of the 24 investment portfolios listed below. YOU BEAR THE ENTIRE INVESTMENT RISK FOR AMOUNTS YOU ALLOCATE TO THE INVESTMENT PORTFOLIOS AND 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. MORE DETAILED INFORMATION ABOUT THE INVESTMENT PORTFOLIOS CAN BE FOUND IN THE PROSPECTUSES FOR THE GCG TRUST AND THE PIMCO TRUST. YOU SHOULD READ THESE PROSPECTUSES BEFORE INVESTING.
INVESTMENT PORTFOLIO INVESTMENT OBJECTIVE -------------------- ------------------------------------------------------------------- Multiple Allocation Seeks the highest total return, consisting of capital appreciation and current income, consistent with the preservation of capital and elimination of unnecessary risk. Invests primarily in equity and debt securities. ------------------------------------------------------------------- Fully Managed Seeks high total investment return over the long term, consistent with the preservation of capital and with prudent investment risk. Pursues an active asset allocation strategy whereby investments are allocated among debt securities, equity securities and money market instruments. ------------------------------------------------------------------- Capital Appreciation Seeks long-term capital growth. Invests in common stocks and preferred stock that are allocated by the portfolio manager among growth and value categories. Securi- ties eligible for the value category may include real estate stocks. ------------------------------------------------------------------- 8 Rising Dividends Seeks capital appreciation, with dividend income as a secondary objective. Invests in equity securities that meet the following four criteria: consistent dividend increases; substantial dividend increases; reinvested profits; and an under-leveraged balance sheet. ------------------------------------------------------------------- All-Growth Seeks capital appreciation. Invests in securities selected by the portfolio manager for their long-term growth prospects. ------------------------------------------------------------------- Real Estate Seeks capital appreciation, with current income as a secondary objective. Invests in publicly traded real estate equity securities. ------------------------------------------------------------------- Hard Assets Seeks long-term capital appreciation. Invests in equity and debt securities of companies engaged in the exploration, development, production, management, and distribution of hard assets. This is a non-diversified portfolio. ------------------------------------------------------------------- Value Equity Seeks capital appreciation with a secondary objective of dividend income. Invests primarily in equity securities of U.S. and foreign issuers indicate above financial soundness and high intrinsic value. ------------------------------------------------------------------- Strategic Equity Seeks long-term capital appreciation. Invests primarily in equity securities based on various equity market timing techniques. ------------------------------------------------------------------- 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. ------------------------------------------------------------------- Emerging Markets Seeks long-term capital appreciation. Invests primarily in equity securities of companies that are in emerging market countries in the Pacific Basin, Latin America and elsewhere. Income is not an objective, any production of current income is incidental to the objective of capital growth. ------------------------------------------------------------------- Managed Global Seeks capital appreciation. Invests primarily in common stocks of both domestic and foreign issuers. This is a non-diversified portfolio. ------------------------------------------------------------------- Growth Opportunities Seeks capital appreciation. Invests primarily in equity securities of domestic companies emphasizing companies with market capitalizations of $1 billion or more. ------------------------------------------------------------------- Developing World Seeks capital appreciation. Invests primarily in equity securities of companies in developing or emerging countries. ------------------------------------------------------------------- Mid-Cap Growth Seeks long-term growth of capital. Invests primarily in equity securities with medium market capitalization. ------------------------------------------------------------------- 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. ------------------------------------------------------------------- Total Return Seeks above-average income consistent with prudent employment of capital. Invests primarily in equity securities. ------------------------------------------------------------------- Growth & Income Seeks long-term total return. Invests primarily in equity and debt securities, focusing on small- and mid-cap companies that offer potential appreciation, current income, or both. ------------------------------------------------------------------- 9 Value + Growth Seeks capital appreciation. Invests primarily in mid-cap growth companies with favorable relationships between price/earnings ratios and growth rates. Mid-cap companies are those with market capitalizations ranging from $750 million to approximately $2.0 billion. ------------------------------------------------------------------- Global Fixed Income Seeks high total return. Invests in both domestic and foreign debt securities and related foreign currency transactions. The total return will be sought through a combination of current income, capital gains and gains in currency positions. ------------------------------------------------------------------- Limited Maturity Seeks highest current income consistent with low risk to principal Bond and liquidity. Also seeks to enhance its total return through capital appreciation when market factors 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. ------------------------------------------------------------------- Liquid Asset Seeks high level of current income consistent with the preservation of capital and liquidity. Invests in obligations of the U.S. Government and its agencies and instrumentali-ties, bank obligations, commercial paper and short-term corporate debt securities. All securities will mature in less than one year. ------------------------------------------------------------------- PIMCO High Yield Seeks to maximize total return. Bond 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 Rating Services or, if unrated, determined to be of comparable quality. ------------------------------------------------------------------- PIMCO StocksPLUS Seeks total return that exceeds the total return of the S&P 500. Growth and Income Invests in common stocks, options, futures, options on futures and swaps consistent with strategy to exceed the performance of the Standard & Poor's 500 Composite Stock Price Index.
INVESTMENT PORTFOLIO MANAGEMENT FEES Directed Services, Inc. serves as the overall manager of the GCG Trust and PIMCO serves as the overall adviser to the PIMCO Trust. Directed Services, Inc. and PIMCO provide or procure, at their own expense, the services necessary for the operation of the portfolios. See the cover page of this prospectus for the names of the corresponding portfolio managers. Directed Services, Inc. and PIMCO do 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. The GCG Trust pays Directed Services, Inc. for its services a monthly fee based on the annual rates of the average daily net assets of the investment portfolios. Directed Services, Inc. (and not the GCG Trust) in turn pays each portfolio manager a monthly fee for managing the assets of the portfolios. 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. - ------------------------------------------------------------------------------ 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 10 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 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 TAKE A MARKET VALUE ADJUSTMENT. Assets supporting amounts allocated to the Fixed Account are available to fund the claims of all classes of our customer, 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, see "Transfers Among Your Investments - Dollar Cost Averaging." 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 hold it until its maturity date. We do not have a specific formula for establishing the guaranteed interest rates for the different guaranteed interest periods. 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. We may from time to time in our discretion offer interest rate specials for new premiums that are higher than the then current base interest rate. 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. Unless you tell us the Fixed Interest Allocations from which such transfers will be made, 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 11 have a special Fixed Interest Allocation offered only with dollar cost averaging, cancelling dollar cost averaging will cause a transfer which is 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 subaccount(s) 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 subaccount(s) or new guaranteed interest period(s) 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 your 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. See "Charges and Fees." Withdrawals may have federal income tax consequences, including a 10% penalty tax. 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 not assess your withdrawal against any Fixed Interest Allocations unless the withdrawal exceeds the contract value in the subaccounts in which you are invested. 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. MARKET VALUE ADJUSTMENT 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 program) 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. A Market Value Adjustment may decrease, increase or have no effect on your contract value. 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+.0025) 12 Where, o "I" is the Index Rate for a Fixed Interest Allocation on the first day of the guaranteed interest period; o "J" is the lesser of the Index Rate for a new Fixed Interest Allocation with (i) a 6month 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 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. Several examples which illustrate how the Market Value Adjustment works are included in Appendix B. - ------------------------------------------------------------------------------ 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 and the PIMCO Trust funded by Account B. It also provides a means for you to invest in a Fixed Interest Allocation through the Fixed Account. 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. 13 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 when 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. If no beneficial owner of the Trust has been designated, the availability of enhanced death benefits will be based on the age of the annuitant at the time you purchase the Contract. 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. 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. 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. 14 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 The initial premium payment must be $10,000 or more ($1,500 for qualified Contracts). You may make additional payments of at least $500 or more ($250 for qualified Contracts) at any time after the free look period. Under certain circumstances, we may waive the minimum premium payment requirement. You may make premium payments over $1,000,000 with our prior consent. We will issue a Contract only if both the annuitant and the contract owner are not older than age 85. CREDITING OF PREMIUM PAYMENTS We will allocate 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 received in good order will be credited to a Contract within 1 business day. We may retain premium payments 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. Once the completed application is received, we will allocate the payment 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. Once we allocate your premium payment to the subaccount(s) selected by you, we convert the premium payment into accumulation units. We divide the amount of the premium payment allocated to a particular subaccount by the value of an accumulation unit for the subaccount to determine the number of accumulation units of the subaccount to be held with respect to the Contract. The net investment results of each subaccount vary primarily with its investment performance. 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(s) is the sum of premium payments allocated to the Fixed Interest Allocation(s) under the 15 Contract, plus credited interest, minus any transfers and withdrawals, contract fees, premium taxes and any Market Value Adjustment. 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 will 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). (4) We add to (3) any additional premium payments, and then add or subtract allocations to or from that subaccount. (5) We subtract from (4) any withdrawals and any related charges, and then subtract any contract fees 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 deduct any surrender charge, any charge for premium taxes, and any other charges incurred but not yet deducted. Finally, we adjust for any Market Value Adjustment. 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. 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 59 1/2 may result in a 10% tax penalty. See "Federal Tax Considerations" for more details. 16 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 Securities and Exchange Commission (and any other regulatory agency, if required) substitute another portfolio for existing and future investments. 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 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. - ------------------------------------------------------------------------------ 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. See "Charges and Fees--Surrender Charge for Excess Withdrawals." 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. 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 have no effect on the amount you withdraw. 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 $1,000. A regular withdrawal from a Fixed Interest Allocation may be subject to a Market Value Adjustment. 17 SYSTEMATIC WITHDRAWALS You may choose to receive automatically systematic withdrawals on a monthly, quarterly, or annual basis from your contract value in the subaccounts or the Fixed Interest Allocations. You may elect payments to start as early as 28 days after the contract date. You select the date on which the withdrawals will be made but this date 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 each month as the contract date. Each withdrawal payment must be at least $100. The amount of your withdrawal can either be a fixed dollar amount or an amount based on a percentage of the premiums not previously withdrawn from the subaccounts in which you are invested. Both options are subject to the following maximums: FREQUENCY MAXIMUM PERCENTAGE --------- ------------------ Monthly 1.25% Quarterly 3.75% Annual 15.00% If you select a fixed dollar amount and the amount to be systematically withdrawn would exceed the applicable maximum percentage of your premiums not previously withdrawn on the withdrawal date, we will reduce the amount withdrawn so that it equals such percentage. If you select a percentage and the amount to be systematically withdrawn based on that percentage would be less than the minimum of $100, we will increase the amount to $100 provided it does not exceed the maximum percentage. If it is below the maximum percentage we will send the $100. If it is above the maximum percentage we will send the amount and then cancel the option. Systematic withdrawals from Fixed Interest Allocations are limited to interest earnings during the prior month, quarter, or year, depending on the frequency you choose. Systematic withdrawals are not subject to a Market Value Adjustment. A Fixed Interest Allocation may not participate in both the dollar cost averaging program (see "Transfers Among Your Investments") and the systematic withdrawal option 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. You may elect to have this option 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 this if you are taking IRA withdrawals. 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. 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 determine 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 18 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. A withdrawal made before the taxpayer reaches age 59 1/2 may result in a 10% penalty tax. See "Federal Tax Considerations" for more details. - ------------------------------------------------------------------------------ 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. 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. 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 subaccount(s) 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. 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. 19 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 subaccount, 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. - ------------------------------------------------------------------------------ DEATH BENEFIT CHOICES - ------------------------------------------------------------------------------ DEATH BENEFIT DURING THE ACCUMULATION PHASE During the accumulation phase, a death benefit is payable when either the annuitant (when contract owner is not an individual), the contract owner or the first of joint owners dies. Assuming you are the contract 20 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 proof of death at our Customer Service Center. If the beneficiary elects not to take the death benefit at the time of death, the death benefit 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. You may choose from the following 3 death benefit choices: (1) the Standard Death Option; (2) the 7% Solution Enhanced Death Benefit Option; and (3) the Annual Ratchet Enhanced Death Benefit. Once you choose a death benefit, it cannot be changed. We may in the future stop or suspend offering any of the enhanced death benefit options to new Contracts. STANDARD DEATH BENEFIT. You will automatically receive the Standard Death Benefit unless you elect one of the enhanced death benefits. The standard 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. ENHANCED DEATH BENEFITS. If the 7% Solution Enhanced Death Benefit or the Annual Ratchet Enhanced Death Benefit is elected, the death benefit under the Contract is the greatest of (i) the contract value; (ii) total premium payments less any withdrawals; (iii) the cash surrender value; and (iv) the enhanced death benefit as calculated below.
- -------------------------------------------------------------------- | HOW THE ENHANCED DEATH BENEFIT IS CALCULATED | | -------------------------------------------- | | 7% SOLUTION ANNUAL RATCHET | |------------------------------------------------------------------| | | We credit interest each | On each contract anniversary | | business day at the 7% annual | that occurs on or before the | | effective rate* to the enhanced | contract owner turns age 80, | | death benefit from the | we compare the prior enhanced | | preceding day (which would be | death benefit to the contract | | the initial premium if the | value and select the larger | | preceding day is the contract | amount as the new enhanced | | date), then we add additional | death benefit. | | premiums paid since the | | | preceding day, then we subtract | On all other days, the | | any withdrawals made since the | enhanced death benefit is the | | preceding day, then adjust for | following amount we first | | any Market Value Adjustment, | take the enhanced death | | and then we subtract any | benefit from the preceding day | | associated surrender charges.** | (which would be the initial | | | premium if the valuation date | | The maximum enhanced death | is the contract date) and then | | benefit is 2 times all premium | we add additional premiums | | payments, as reduced by | paid since the preceding day, | | withdrawals.*** | then we subtract any | | | withdrawals made since the | | | preceding day, then we adjust | | | for any Market Value | | | Adjustment, and then we | | | subtract any associated | | | surrender charges. That | | | amount becomes the new | | | enhanced death benefit. | - --------------------------------------------------------------------
* The interest rate used for calculating the death benefit for the Liquid Asset and Limited Maturity Bond subaccounts will be the lesser of the 7% annual effective rate or the net rate of return for such subaccounts during the applicable period. The interest rate used for calculating the death benefit for your Fixed Interest Allocation will be the lesser of the 7% annual effective rate or the interest credited to such investment during the applicable period. Thus, selecting these investments may limit the enhanced death benefit. If we offer additional subaccounts in the future, we may restrict those new subaccounts from participating in the 7% Solution Enhanced Death Benefit. ** Each premium payment reduced by any withdrawals and any associated surrender charges incurred will continue to grow at the enhanced death benefit interest rate, compounded daily. *** Each withdrawal reduces the maximum enhanced death benefit as follows: first, the maximum enhanced death benefit is reduced by the amount of any withdrawal of earnings; then, it is reduced in pro- portion to the reduction in the contract value for any withdrawal of premium (in each case, including any associated surrender charges) and as adjusted for any Market Value Adjustment. If those withdrawals in a contract year do not exceed 7% of cumulative pre- miums and did not exceed 7% of 21 cumulative premiums in any prior contract year, such withdrawals will be treated as withdrawals of earnings for the purpose of calculating the maximum enhanced death benefit. The 7% Solution Enhanced Death Benefit is available only at the time you purchase your Contract and only if the contract owner or annuitant (when the contract owner is other than an individual) is not more than 80 years old at the time of purchase. The 7% Solution Enhanced Death Benefit may not be available where a Contract is held by joint owners. The Annual Ratchet Enhanced Death Benefit is available only at the time you purchase your Contract and only if the contract owner or annuitant (when the contract owner is other than an individual) is not more than 79 years old at the time of purchase. DEATH BENEFIT DURING THE INCOME PHASE If any contract owner or the annuitant dies after the annuity start date, the Company will pay the beneficiary any certain benefit remaining under the annuity in effect at the time. - ------------------------------------------------------------------------------ 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 proportionately from all subaccounts in which you are invested. If there is no contract value in those subaccounts, we will deduct charges from your Fixed Interest Allocations starting with the guarantee interest periods nearest their maturity dates until such charges have been paid. The charges we deduct are: 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. 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 as follows: 22
Complete Years Elapsed 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7+ since premium payment | | | | | | | Surrender Charge 7% | 7% | 6% | 5% | 4% | 3% | 1% | 0%
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 15% of your contract value on the date of withdrawal less any withdrawals during that 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 C. 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 the contract owner's state of residence. The tax can range from 0% to 3.5% of the premium. We have the right to change this amount to conform with changes in the law or if the contract owner changes 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 on surrender of the Contract, on excess withdrawals or on the annuity start date. ADMINISTRATIVE CHARGE. We deduct an annual administrative charge 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. The amount deducted is $40 per Contract. This charge is waived if you have a contract value exceeding $100,000 at the end of a contract year or the sum of the premiums paid equals or exceeds $100,000. EXCESS 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 Fixed 23 Interest Allocations from which each such transfer is made in proportion to the amount being transferred from each such 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, auto 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 amount of the mortality and expense risk charge depends on the death benefit you have elected. If you have elected the Standard Death Benefit, the charge, on an annual basis, is equal to 1.10% of the assets in each subaccount. The charge is deducted on each business day at the rate of .003030% for each day since the previous business day. If you have elected an enhanced death benefit, the charge, on an annual basis, is equal to 1.25% for the Annual Ratchet Death Benefit, or 1.40% for the 7% Solution Death Benefit, of the assets in each subaccount. The charge is deducted each business day at the rate of .003446% or .003863%, respectively, for each day since the previous business day. ASSET-BASED ADMINISTRATIVE CHARGE. We will deduct a daily charge from the assets in each subaccount, to compensate us for a portion of the administrative expenses under the Contract. The daily charge is at a rate of .000411% (equivalent to an annual rate of 0.15%) on the assets in each subaccount. TRUST EXPENSES There are fees and charges deducted from each investment portfolio of the GCG Trust and the PIMCO Trust. Please read the respective Trust prospectus for details. - ------------------------------------------------------------------------------ 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 24 beneficiary (and gender, where appropriate), the total contract value applied to purchase a Fixed Interest Allocation, and the applicable payment rate. 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 date on which the annuity payments commence. The annuity start date must be at least 3 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. Distributions may be made through annuitization or withdrawals. Consult your tax advisor. 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 59 1/2. 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 25 living. There is no minimum number of payments. Monthly payment amounts are available if you ask for them. 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. 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 3.50% for 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. - ------------------------------------------------------------------------------ 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 the amounts deducted from or added to the contract value since the last report. 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 Securities and Exchange Commission 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 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. 26 CONTRACT CHANGES--APPLICABLE TAX LAW We have the right to make changes in the Contract to continue to qualify the Contract as an annuity. 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 plus any charges we deducted. The Contract will be void as of the day we receive your Contract and your request. Some states require that we return the premium paid rather than the contract value. 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. 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 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 who in turn pays the writing agent. 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. Through Directed Services, we pay the writing agent commissions of up to 6.5% of any initial or additional premium payments made. 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). The principal address of Directed Services is 1001 Jefferson Street, Wilmington, Delaware 19801. Additionally, we intend to reimburse registered representatives for any covered actual expenses they incur with regard to the distribution of the Contract as provided for under the non-cash compensation regulation recently adopted by the NASD and approved by the SEC. - ------------------------------------------------------------------------------ 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 27 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. YEAR 2000 PROBLEM Like other business organizations and individuals around the world, Golden American and Account B could be adversely affected if the computer systems doing the accounts processing or on which Golden American and/or Account B relies do not properly process and calculate date-related information related to the end of the year 1999. This is commonly known as the Year 2000 (or Y2K) Problem. Golden American is taking steps that it believes are reasonably designed to address the Year 2000 Problem with respect to the computer systems that it uses and to obtain satisfactory assurances that comparable steps are being taken by its and Account B's major service providers. At this time, however, we cannot guarantee that these steps will be sufficient to avoid any adverse impact on Golden American and Account B. 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 material 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. EXPERTS The audited financial statements of Golden American Life Insurance Company and Separate 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. - ------------------------------------------------------------------------------ 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. 28 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 whom 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 the 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. 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 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 paid for the contract) during the taxable year. There are 29 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 59 1/2; 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. TRANSFERS, ASSIGNMENTS OR EXCHANGES 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 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. 30 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 the later of 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. REQUIRED DISTRIBUTIONS UPON CONTRACT OWNER'S DEATH We will not allow any payment of benefits provided under the Contract which do not satisfy the requirements of Section 72(s) of the Code. If the contract owner 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. 31 Notwithstanding (a) and (b) above, if the sole contract owner's beneficiary is the deceased owner's surviving spouse, then such spouse may elect, within the 1-year period after the contract owner's date of death, 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. 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 annuitant 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. 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 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 Effective January 1, 1998, 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 59 1/2 (subject 32 to certain exceptions) or (2) during the five taxable years starting with the year in which the first contribution is made to the 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. 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. 33 - ------------------------------------------------------------------------------ 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 Holding, Inc. ("PFHI"), a Delaware corporation, acquired all of the outstanding capital stock of Equitable of Iowa Companies ("Equitable of Iowa"), pursuant to a merger agreement among Equitable of Iowa, PFHI and ING Groep N.V. On August 13, 1996, Equitable of Iowa acquired all of the outstanding capital stock of BT Variable, Inc., the parent of Golden American. For GAAP financial statement purposes, the 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 GAAP financial data presented below for the period subsequent to October 24, 1997, are presented as the Post-Merger new basis of accounting, for the period August 14, 1996 through October 24, 1997, are presented as the Post-Acquisition basis of accounting, and for August 13, 1997 and prior periods are presented as the Pre-Acquisition basis of accounting.
SELECTED GAAP BASIS FINANCIAL DATA (IN THOUSANDS) POST-MERGER POST-ACQUISITION ------------------------------- | ----------------------------- | (UNAUDITED) FOR THE PERIOD| FOR THE PERIOD FOR THE PERIOD FOR THE NINE OCTOBER 25, | JANUARY 1, AUGUST 14, MONTHS ENDED 1997 THROUGH | 1997 THROUGH 1996 THROUGH SEPTEMBER 30, DECEMBER 31, | OCTOBER 24, DECEMBER 31, 1998 1997 | 1997 1996 -------------- -------------- |------------ --------------- | Annuity and Interest | Sensitive Life | Product Charges ............. $ 26,984 $ 3,834 | $18,288 $ 8,768 Net Income before | Federal Income Tax .......... $ 9,171 $ (279) | $ (608) $ 570 Net Income (Loss) ............ $ 4,877 $ (425) | $ 729 $ 350 Total Assets ................. $3,776,542 $ 2,445,835 | N/A $1,677,899 Total Liabilities ............ $3,471,107 $ 2,218,522 | N/A $1,537,415 Total Stockholder's Equity ... $ 305,435 $ 227,313 | N/A $ 140,484
PRE-ACQUISITION ------------------------------------------------------- FOR THE PERIOD JANUARY 1, 1996 THROUGH FOR THE FISCAL YEARS ENDED DECEMBER 31, ------------------------------------------ AUGUST 13, 1996 1995 1994 1993 1992(a) --------------- ------ ------ ------ -------- Annuity and Interest Sensitive Life Product Charges ...... $12,259 $ 18,388 $ 17,519 $ 10,192 $ 694 Net Income before Federal Income Tax ... $ 1,736 $ 3,364 $ 2,222 $ (1,793) $ (508) Net Income (Loss) ...... $ 3,199 $ 3,364 $ 2,222 $ (1,793) $ (508) Total Assets ........... N/A $1,203,057 $1,044,760 $886,155 $320,539 Total Liabilities ...... N/A $1,104,932 $ 955,254 $857,558 $306,197 Total Stockholder's Equity ............... N/A $ 98,125 $ 89,506 $ 28,597 $ 14,342 (a) Results for 1992 are for the period September 30, 1992 (date of acquisition) to December 31, 1992. 34 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The purpose of this section is to discuss and analyze the Company's condensed consolidated results of operations. In addition, some analysis and information regarding financial condition as well as liquidity and capital resources has also been provided. This analysis should be read in conjunction with the condensed consolidated financial statements, the related notes and the Cautionary Statement Regarding Forward-Looking Statements which appear elsewhere in this report. The Company reports financial results on a consolidated basis. The condensed consolidated financial statements include the accounts of Golden American Life Insurance Company ("Golden American") and its wholly owned subsidiary, First Golden American Life Insurance Company of New York ("First Golden," and collectively with Golden American, the "Company"). BUSINESS ENVIRONMENT. The current business and regulatory environment remains challenging for the insurance industry. The variable annuity industry 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 four 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 1995, Golden American experienced a significant decline in sales, due to a number of factors. First, some portfolio managers performed poorly in 1993 and 1994. Second, as more products came to market the cost structure of the "DVA" deferred variable annuity product became less competitive. Third, market share was lost because no fixed interest rate options were available in 1994 during the time of rising interest rates and flat or declining equity markets. Consequently, the Company took steps to respond to these business challenges. Several portfolio managers were replaced and new funds were added to give contractholders more investment options. In October of 1995, the Company introduced the Combination Deferred Variable and Fixed Annuity (GoldenSelect DVA Plus) and the GoldenSelect Genesis I and Genesis Flex life insurance products, and sales increased substantially. 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. RESULTS OF OPERATIONS MERGER. On October 23, 1997, Equitable of Iowa shareholders approved the Agreement and Plan of Merger ("Merger Agreement") dated as of July 7, 1997, among Equitable of Iowa, 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 of Iowa pursuant to the Merger Agreement. PFHI is a wholly owned subsidiary of ING, a global financial services holding company based in The Netherlands. Equitable of Iowa, 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. Equitable of Iowa also owned all the outstanding capital stock of Locust Street Securities, Inc., Equitable Investment Services, Inc., Directed Services, Inc. ("DSI"), Equitable of Iowa Companies Capital Trust, Equitable of Iowa Companies Capital Trust II and Equitable of Iowa Securities Network, Inc. In exchange for the outstanding capital stock of Equitable of Iowa, ING paid total consideration of approximately $2.1 billion in cash and stock plus the assumption of approximately $400 million in debt according to the Merger Agreement. As a result of the merger, Equitable of Iowa was merged into PFHI which was simultaneously renamed Equitable of Iowa Companies, Inc. ("EIC" or the "Parent"). For financial statement purposes, the change in control of the Company through the ING acquisition of EIC, 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 that date. As a result, the Company's financial statements for the period subsequent to October 24, 1997, are presented on the Post-Merger new basis of accounting. The purchase price was allocated to the companies mentioned previously. 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 35 pushed down to the Company. The allocation of the purchase price to the Company was $227.6 million. The cost of the acquisition is preliminary as it relates to estimated expenses, and as a result, the allocation of the purchase price to the Company may change. 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. CHANGE IN CONTROL - ACQUISITION. On August 13, 1996, Equitable of Iowa acquired all of the outstanding capital stock of BT Variable, Inc. ("BT Variable") and its wholly owned subsidiaries Golden American and DSI. Subsequent to 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 of Iowa 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 value of assets and liabilities at that date. As a result, the Company's 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. Goodwill of $41.1 million was established for the excess of the acquisition cost over the fair value of the assets and liabilities and pushed down to Golden American. At June 30, 1997, goodwill was increased by $1.8 million to adjust the value of a receivable existing at that date. The allocation of the purchase price to Golden American was approximately $139.9 million. Goodwill resulting from the acquisition was being amortized over 25 years on a straight-line basis. THE FIRST NINE MONTHS OF 1998 COMPARED TO THE SAME PERIOD OF 1997 PREMIUMS (DOLLARS IN MILLIONS) |POST- POST-MERGER |ACQUISITION _____________ |_____________ NINE MONTHS ENDED PERCENTAGE DOLLAR | SEPTEMBER 30 1998 CHANGE CHANGE | 1997 __________________________________________________________________|_____________ | | | Variable annuity | | | premiums: | | | Separate account $1,125.3 | 651.6%| $975.5 | $149.8 Fixed account 346.6 | 51.7 | 118.1 | 228.5 ________ | _____ | ______ | ______ Total variable | | | annuity premiums 1,471.9 | 289.1 | 1,093.6 | 378.3 Variable life | | | premiums 11.4 | (16.2)| (2.2)| 13.6 ________ | _____ | ________ | ______ Total premiums $1,483.3 | 278.5%| $1,091.4 | $391.9 ======== ===== ======== ====== Variable annuity separate account premiums increased 651.6% during the first nine months of 1998 and increased 2.5% in the third quarter compared to second quarter 1998 premiums. These increases resulted from increased sales of the new Premium Plus product introduced in October of 1997 and the increased sales levels of the Company's other products. The fixed account portion of the Company's variable annuity premiums increased 51.7% during the first nine months of 1998 and increased 39.1% in the third quarter of 1998 compared to the second quarter of 1998. Although variable life premiums decreased 16.2% during the first nine months of 1998, third quarter 1998 variable life premiums increased 11.1% over second quarter 1998 premiums. Premiums, net of reinsurance, for variable products from four significant broker/dealers totaled $546.9 million, or 37% of total premiums, for the first nine months of 1998. 36 REVENUES (DOLLARS IN MILLIONS) POST- POST-MERGER |ACQUISITION _____________ |_____________ NINE MONTHS ENDED PERCENTAGE DOLLAR | SEPTEMBER 30 1998 CHANGE CHANGE | 1997 __________________________________________________________________|_____________ Annuity and interest | | | sensitive life | | | product charges $27.0 | 69.3%| $11.1 | $15.9 Management fee revenue 3.3 | 61.7 | 1.3 | 2.0 Net investment income 29.3 | 54.6 | 10.3 | 19.0 Realized gains | | | on investments 0.4 | 658.7 | 0.3 | 0.1 Other income 4.8 | 1,026.6 | 4.4 | 0.4 _____ | _______ | _____ | _____ $64.8 | 73.2%| $27.4 | $37.4 ===== ======= ===== ===== Total revenues increased 73.2% in the first nine months of 1998 compared to the same period in 1997. Annuity and interest sensitive life product charges increased 69.3% in the first nine months of 1998 due to additional fees earned from the increasing block of business under management in the separate accounts and an increase in surrender charges. This increase was partially offset by the elimination of the unearned revenue reserve related to in force acquired 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 $3.3 million and $2.0 million for the first nine months of 1998 and 1997, respectively. Net investment income increased 54.6% in the first nine months of 1998 due to the increase in invested assets. The Company had $436,000 of realized gains on the sale of investments in the first nine months of 1998, compared to gains of $58,000 in the same period of 1997. Other income increased $4.4 million to $4.8 million in the first nine months of 1998 due primarily to income received from a modified coinsurance agreement with an unaffiliated reinsurer as a result of increased sales. EXPENSES Total insurance benefits and expenses increased $17.4 million, or 49.3%, to $52.6 million in the first nine months of 1998. Interest credited to account balances increased $47.3 million, or 280.7%, to $64.1 million in the first nine months of 1998. The extra credit bonus on the new Premium Plus product introduced in October of 1997 generated a $35.8 million increase in interest credited during the first nine months of 1998. The remaining increase in interest credited relates to higher account balances associated with the Company's fixed account option within its variable products. Commissions increased $61.8 million, or 267.6%, to $85.0 million in the first nine months of 1998. Insurance taxes increased $1.0 million, or 58.3%, to $2.7 million in the first nine months of 1998. Increases and decreases 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 have been deferred, thus having very little impact on current earnings. General expenses increased $11.7 million, or 99.6%, to $23.5 million in the first nine months of 1998. Management expects general expenses to continue to increase in 1998 as a result of the emphasis on expanding the salaried wholesaler distribution network. 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 varies with sales 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. 37 At the merger date, the Company's deferred policy acquisition costs ("DPAC"), previous balance of present value of in force acquired ("PVIF") and unearned revenue reserve were eliminated and an asset of $44.3 million representing PVIF was established for all policies in force at the merger date. During the third quarter of 1998, PVIF was unlocked by $0.8 million to reflect changes in the assumptions related to the timing of future gross profits. PVIF decreased $2.7 million in the second quarter of 1998 to adjust the value of other receivables and increased $0.2 million in the first quarter of 1998 as a result of an adjustment to the merger costs. The amortization of PVIF and DPAC increased $1.4 million, or 23.2%, in the first nine months of 1998. During the second quarter of 1997, PVIF was unlocked by $2.3 million to reflect narrower current spreads than the gross profit model assumed. Based on current conditions and assumptions as to the impact of future events on acquired policies in force, the expected approximate net amortization is $1.0 million for the remainder of 1998, $4.1 million in 1999, $4.1 million in 2000, $4.0 million in 2001, $3.8 million in 2002 and $3.5 million in 2003. Certain expense estimates inherent in the cost of the merger may change resulting in changes of the allocation of the purchase price. If changes occur, the impact could result in changes to PVIF and the related amortization and deferred taxes. Actual amortization may vary based upon changes in assumptions and experience. Amortization of goodwill during the first nine months of 1998 totaled $2.8 million. Goodwill resulting from the merger is being amortized on a straight- line basis over 40 years and is expected to approximate $3.8 million annually. Interest expense on the $25 million surplus note issued in December 1996 was $1.5 million in the first nine months of 1998 and the same period of 1997. In addition, Golden American paid interest of $0.2 million on the line of credit during the first nine months of 1998. Golden American also paid $1.3 million in the first nine months of 1998 to ING America Insurance Holdings, Inc. ("ING AIH")for interest on the reciprocal loan agreement. NET INCOME. Net income for the first nine months of 1998 was $4.9 million, an increase of $4.6 million over net income of $0.3 million in the same period of 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 (DOLLARS IN MILLIONS)
POST-MERGER COMBINED POST-ACQUISITION __________________________________________________________ FOR THE PERIOD | FOR THE YEAR | FOR THE PERIOD OCTOBER 25, 1997 | ENDED | JANUARY 1, 1997 THROUGH | DECEMBER 31, 1997 | THROUGH DECEMBER 31, 1997 | COMBINED | OCTOBER 24, 1997 _________________________________________| __________________| _________________ | | 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 ====== ====== ======
38
POST-ACQUISITION COMBINED PRE-ACQUISITION __________________________________________________________ FOR THE PERIOD | FOR THE YEAR | FOR THE PERIOD AUGUST 14, 1996 | ENDED | JANUARY 1, 1996 THROUGH | DECEMBER 31, 1996 | THROUGH DECEMBER 31, 1996 | COMBINED | AUGUST 13, 1996 _________________________________________| __________________| _________________ | | 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 ====== ====== =======
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 Company's variable annuity premiums increased 29.7% in 1997 due to the Company's marketing emphasis on fixed rates during the second and third quarters. Premiums, net of reinsurance, for variable products from six significant broker/dealers for the year ended December 31, 1997, totaled $445.3 million, or 71% of premiums ($298.0 million or 67% from two significant broker/dealers for the year ended December 31, 1996). REVENUES (DOLLARS IN MILLIONS)
POST-MERGER COMBINED POST-ACQUISITION __________________________________________________________ FOR THE PERIOD | FOR THE YEAR| FOR THE PERIOD OCTOBER 25, 1997 | ENDED| JANUARY 1, 1997 THROUGH | DECEMBER 31, 1997| THROUGH DECEMBER 31, 1997 | COMBINED| OCTOBER 24, 1997 _________________________________________| _________________| __________________ | | 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 YEAR| FOR THE PERIOD AUGUST 14, 1996 | ENDED| JANUARY 1, 1996 THROUGH | DECEMBER 31, 1996| THROUGH DECEMBER 31, 1996 | COMBINED| AUGUST 13, 1996 _________________________________________| _________________| __________________ | | 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 ===== ===== =====
39 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 surrender charge revenues. 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 $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, resulting from voluntary sales, of $0.1 million compared to net realized losses of $0.4 million in 1996. EXPENSES (DOLLARS IN MILLIONS)
POST-MERGER COMBINED POST-ACQUISITION _______________________________________________________ FOR THE PERIOD| FOR THE YEAR| FOR THE PERIOD OCTOBER 25, 1997| ENDED| JANUARY 1, 1997 THROUGH| DECEMBER 31, 1997| THROUGH DECEMBER 31, 1997| COMBINED| OCTOBER 24, 1997 _________________________________________| _________________| _________________ | | 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 YEAR| FOR THE PERIOD AUGUST 14, 1996| ENDED| JANUARY 1, 1996 THROUGH| DECEMBER 31, 1996| THROUGH DECEMBER 31, 1996| COMBINED| AUGUST 13, 1996 _________________________________________| _________________| _________________ | | 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 ===== ===== =====
40 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. 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. Management expects general expenses to continue to increase in 1998 as a result of the emphasis on expanding the salaried wholesaler distribution network. 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. 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 of Iowa's monthly average aggregate cost of short-term funds plus 1.00%. During 1997, the Company paid $0.6 million to Equitable of Iowa for interest on the line of credit. NET INCOME. Net income on a combined basis for 1997 was $0.3 million, a decrease of $3.2 million, or 91.4%, from 1996. 1996 COMPARED TO 1995 The following analysis combines the Post-Acquisition and Pre-Acquisition activity for 1996 in order to compare the results to 1995. Such a comparison does not recognize the impact of the purchase accounting and goodwill amortization except for the period after August 13, 1996. PREMIUMS (DOLLARS IN MILLIONS)
POST- ACQUISITION | COMBINED | PRE-ACQUISITION --------------- | ------------ | ---------------------------- FOR THE PERIOD | FOR THE YEAR | AUGUST 14, 1996 | ENDED | FOR THE PERIOD FOR THE YEAR THROUGH | DECEMBER 31, | JANUARY 1,1996 ENDED DECEMBER 31, | 1996 | THROUGH DECEMBER 31, 1996 | COMBINED | AUGUST 13, 1996 1995 --------------- | ------------ | --------------- ------------ | | Variable annuity premiums.. $169.3 | $427.7 | $258.4 $110.6 Variable life premiums..... 3.6 | 14.1 | 10.5 5.1 ------ | ------ | ------ ------ Total premiums............. $172.9 | $441.8 | $268.9 $115.7 ====== | ====== | ====== ======
41 Variable annuity premiums increased 286.4%, or $317.1 million, in 1996, and variable life premiums increased 176.2%, or $9.0 million, in 1996. During 1995, the fund offerings underlying Golden American's variable products were improved and a fixed account option was added. These changes and the current environment have contributed to the significant growth in the Company's variable annuity premiums from 1995. Premiums, net of reinsurance, for variable products from two significant sellers for the year ended December 31, 1996, totaled $298.0 million, or 67% of premiums. REVENUES (DOLLARS IN MILLIONS)
POST- ACQUISITION | COMBINED | PRE-ACQUISITION --------------- | ------------ | ---------------------------- FOR THE PERIOD | FOR THE YEAR | AUGUST 14, 1996 | ENDED | FOR THE PERIOD FOR THE YEAR THROUGH | DECEMBER 31, | JANUARY 1, 1996 ENDED DECEMBER 31, | 1996 | THROUGH DECEMBER 31, 1996 | COMBINED | AUGUST 13, 1996 1995 --------------- | ------------ | --------------- ------------ Annuity and interest | | sensitive life product | | charges................ $ 8.8 | $21.0 | $12.2 $18.4 Management fee revenue.. 0.9 | 2.3 | 1.4 1.0 Net investment income... 5.8 | 10.8 | 5.0 2.8 Realized gains (losses) | | on investments......... -- | (0.4) | (0.4) 0.3 Other income............ 0.5 | 0.6 | 0.1 0.1 ----- | ----- | ---- ---- $16.0 | $34.3 | $18.3 $22.6 ===== | ===== | ==== =====
Total revenues increased 51.9%, or $11.7 million, to $34.3 million in 1996. Annuity and interest sensitive life product charges increased 14.4%, or $2.6 million in 1996. The increase is due to additional fees earned from the increasing block of business under management in the Separate Accounts and an increase in surrender charge revenues partially offset by a decrease in the revenue recognition of net distribution fees. Golden American provides certain managerial and supervisory services to DSI. The fee for these services, which is calculated as a percentage of average assets in the variable separate accounts, was $2.3 million for 1996 and $1.0 million for 1995. Net investment income increased 282.7%, or $8.0 million, to $10.8 million in 1996 from $2.8 million in 1995. This increase resulted from growth in invested assets. During 1996, the Company had realized losses on the disposal of investments, resulting from voluntary sales, of $0.4 million compared to realized gains of $0.3 million in 1995. 42 EXPENSES (DOLLARS IN MILLIONS)
POST- ACQUISITION | COMBINED | PRE-ACQUISITION --------------- | ------------ | ----------------------------- FOR THE PERIOD | FOR THE YEAR | FOR THE PERIOD AUGUST 14, 1996 | ENDED | JANUARY 1, 1996 FOR THE YEAR THROUGH | DECEMBER 31, | THROUGH ENDED DECEMBER 31, | 1996 | AUGUST 13, DECEMBER 31, 1996 | COMBINED | 1996 1995 --------------- | ------------ | --------------- ------------- Insurance benefits and expenses: | | Annuity and interest sensitive | | life benefits: | | Interest credited to account balances.... $ 5.7 | $10.1 | $ 4.4 $ 1.3 Benefit claims incurred in excess of | | account balances....................... 1.3 | 2.2 | 0.9 1.8 Underwriting, acquisition, and insurance | | expenses: | | Commissions.............................. 9.9 | 26.5 | 16.6 8.0 General expenses......................... 5.9 | 15.3 | 9.4 12.7 Insurance taxes.......................... 0.7 | 1.9 | 1.2 0.9 Policy acquisition costs deferred........ (11.7) | (31.0) | (19.3) (9.8) Amortization: | | Deferred policy acquisition costs....... 0.2 | 2.6 | 2.4 2.7 Present value of in force acquired...... 2.7 | 3.7 | 1.0 1.6 Goodwill................................ 0.6 | 0.6 | -- -- ------ | ------ | ------ ----- $15.3 | $31.9 | $16.6 $19.2 ====== ====== ====== =====
Total insurance benefits and expenses increased 66.1%, or $12.7 million, in 1996 from $19.2 million in 1995. Interest credited to account balances increased 663.6%, or $8.8 million, in 1996 as a result of higher account balances associated with the Company's fixed account option within its variable products. Benefit claims incurred in excess of account balances increased 19.4%, or $0.4 million, in 1996 from $1.8 million in 1995. Commissions increased 230.9%, or $18.5 million, in 1996 from $8.0 million in 1995. Insurance taxes increased 99.3%, or $1.0 million, in 1996 from $1.0 million in 1995. General expenses increased 21.2%, or $2.6 million, in 1996 from $12.7 million in 1995. The Company's deferred policy acquisition costs ("DPAC"), previous balance of present value of in force acquired ("PVIF") and unearned revenue reserve, as of the purchase date, were eliminated and an asset of $85.8 million representing the PVIF was established for all policies in force at the acquisition date. Amortization of goodwill during the period from the acquisition date to December 31, 1996 totaled $0.6 million. Goodwill resulting from the acquisition was being amortized on a straight-line basis over 25 years. Net income on a combined basis for 1996 was $3.5 million, an increase of $0.2 million, or 5.5%, from 1995. FINANCIAL CONDITION RATINGS. During 1997, the Company's ratings were upgraded by A.M. Best from A to A+ and by Duff & Phelps from AA to AA+. 43 INVESTMENTS. The financial statement carrying value of the Company's total investment portfolio grew 39.6% in the first nine months of 1998. The amortized cost basis of the Company's total investment portfolio grew 39.0% during the same period. The financial statement carrying value and amortized cost basis of the Company's total investments each increased 65.1% in 1997. All of the Company's investments, other than mortgage loans, are carried at fair value in the Company's financial statements. As such, growth in the carrying value of the Company's investment portfolio included changes in unrealized appreciation and depreciation of fixed maturity and equity securities as well as growth in the cost basis of these securities. Growth in the cost basis of the Company's investment portfolio resulted from the investment of premiums from the sale of the Company's fixed account option. The Company manages the growth of its insurance operations in order to maintain adequate capital ratios. To support the fixed account option of the Company's variable insurance products, cash flow was invested primarily in fixed maturity and equity securities and mortgage loans. At September 30, 1998, the Company's investment portfolio at amortized cost was $722.4 million with a yield of 7.1% and carrying value of $726.4 million. At December 31, 1997, the Company's investment portfolio at amortized cost was $519.6 million with a yield of 6.7% and carrying value of $520.2 million. Fixed Maturity Securities: At September 30, 1998 the Company had fixed maturities with an amortized cost of $610.3 million and an estimated fair value of $618.7 million. At December 31, 1997, the Company had fixed maturities with an amortized cost of $413.3 million and an estimated fair value of $414.4 million. The individual securities in the Company's fixed maturities portfolio (at amortized cost) include investment grade securities ($471.5 million or 77.3% at September 30, 1998, and $368.0 million or 89.1% at December 31, 1997), which include securities issued by the U.S. Government, its agencies and corporations that are rated at least BBB- by Standard & Poor's Rating Services, ("Standard & Poor's"), and below investment grade securities ($47.2 million or 7.7% at September 30, 1998, and $41.4 million or 10.0% at December 31, 1997), which are securities issued by corporations that are rated BB+ to B- by Standard & Poor's. Securities not rated by Standard & Poor's had a National Association of Insurance Commissioners ("NAIC") rating of 1, 2 or 3 ($90.5 million or 14.8%) or a rating of 4 ($1.1 million or 0.2%) at September 30, 1998, and 1, 3 or 4 ($3.9 million or 0.9%) at December 31, 1997. The Company classifies 100% of its securities as available for sale. On September 30, 1998, fixed income securities with an amortized cost of $610.3 million and an estimated fair value of $618.7 million were designated as available for sale, and on December 31, 1997, fixed income securities with an amortized cost of $413.3 million and an estimated fair value of $414.4 million were designated as available for sale. At September 30, 1998, and December 31, 1997, net unrealized appreciation of fixed maturity securities of $8.4 million and $1.1 million, respectively, was comprised of gross appreciation of $11.3 million and $1.4 million, respectively, and gross depreciation of $2.9 million and $0.3 million, respectively. Net unrealized holding gains on these securities, net of adjustments to DPAC, PVIF and deferred income taxes, increased stockholder's equity by $3.7 million at September 30, 1998, and $0.6 million at December 31, 1997. The Company began investing in below investment grade securities during 1996. At September 30, 1998, and December 31, 1997 the amortized cost value of the Company's total investment in below investment grade securities was $55.1 million and $41.4 million, or 7.6% and 8.0%, respectively, of the Company's investment portfolio. The Company intends to purchase additional below investment grade securities, but it does not expect the percentage of its portfolio invested in such securities to exceed 10% of its investment portfolio. At September 30, 1998, and December 31, 1997, the yield at amortized cost on the Company's below investment grade portfolio was 8.0% compared to 6.4%, respectively, and 7.9% compared to 6.3%, respectively, for the Company's investment grade corporate bond portfolio. The Company estimates the fair value of its below investment grade portfolio was $53.8 million, or 97.5% of amortized cost value, at September 30, 1998, and $41.3 million, or 99.9% of amortized cost value, at December 31, 1997. 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 44 have higher levels of debt and are more sensitive to adverse economic conditions, such as recession or increasing interest rates, than are issuers of investment grade securities. The Company attempts to reduce the overall risk in its below investment grade portfolio, as in all of its investments, through careful credit analysis, strict investment policy guidelines, and diversification by company and by industry. The Company analyzes its investment portfolio, including below investment grade securities, at least quarterly in order to determine if its ability to realize its 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 that the Company 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 security's 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 Company's portfolio. Significant write-downs in the carrying value of investments could materially adversely affect the Company's net income in future periods. During the first nine months of 1998, and during 1997, fixed maturity securities designated as available for sale with a combined amortized cost of $91.2 and $49.3 million, respectively, were called or repaid by their issuers. In total, net pre-tax gains from sales, calls and repayments of fixed maturity investments amounted to $0.5 million for the first nine months of 1998, and $0.2 million for the year ended December 31, 1997. At September 30, 1998, and December 31, 1997 no fixed maturity securities were deemed to have impairments in value that are other than temporary. The Company's fixed maturity investment portfolio had a combined yield at amortized cost of 6.7% at September 30, 1998, and 6.7% at December 31, 1997. Equity Securities: At September 30, 1998, and December 31, 1997, the Company owned equity securities with a cost of $14.4 million and $4.4 million, respectively, and an estimated fair value of $10.1 million and $3.9 million, respectively. At September 30, 1998, net unrealized depreciation of equity securities of $4.3 million was comprised entirely of gross depreciation. At December 31, 1997 gross unrealized depreciation of equity securities totaled $0.5 million. Equity securities are comprised primarily of the Company's investment in shares of the mutual funds underlying the Company's registered separate accounts. Mortgage Loans: Mortgage loans represented 13.5% at September 30, 1998, and 16.4% at December 31, 1997, of the Company's investment portfolio at amoritized cost. Mortgages outstanding were $98.0 million and $85.1 million at September 30, 1998, and December 31, 1997, respectively, with an estimated fair value of $101.9 million and $86.3 million, respectively. At September 30, 1998, the Company's mortgage loan portfolio included 57 loans with an average size of $1.7 million and average seasoning of 0.9 years if weighted by the number of loans. At December 31, 1997, the Company's mortgage loan portfolio included 50 loans with an average size of $1.7 million and average seasoning of 1.1 years if weighted by the number of loans, and 1.2 years if weighted by mortgage loan carrying value. The Company's mortgage loans are typically secured by occupied buildings in major metropolitan locations and not speculative developments, and are diversified by type of property and geographic location. At September 30, 1998, and December 31, 1997, the yield on the Company's mortgage loan portfolio was 7.3% and 7.4%, respectively. At September 30, 1998, and December 31, 1997 no mortgage loans were delinquent by 90 days or more. The Company's loan investment strategy is consistent with other life insurance subsidiaries of EIC. EIC's insurance subsidiaries have experienced an historically low default rate in their mortgage loan portfolio and have been able to recover 95.9% of the principal amount of problem mortgages resolved in the last three years ended December 31, 1997. At September 30, 1998, and December 31, 1997, the Company had no investments in default. The Company estimates its total investment portfolio, excluding policy loans, had a fair value approximately equal to 101.1% and 100.4% of its amortized cost value for accounting purposes at September 30, 1998, and December 31, 1997, respectively. 45 OTHER ASSETS. Accrued investment income increased $3.0 million during the first nine months of 1998, and $2.3 million during 1997, due to an increase in the overall size of the portfolio resulting from the investment of premiums allocated to the fixed account option of the Company's variable products. DPAC represents certain deferred costs of acquiring new insurance business, principally commissions and other expenses related to the production of new business subsequent to the merger. The Company's DPAC and previous balance of PVIF were eliminated as of the merger and acquisition dates, and an asset representing PVIF was established for all policies in force at the merger and acquisition dates. PVIF is amortized into income in proportion to the expected gross profits of the in force acquired in a manner similar to DPAC amortization. Any expenses which vary with the sales of the Company's products are deferred and amortized. At September 30, 1998, the Company had DPAC and PVIF balances of $140.8 million and $36.5 million, respectively. At December 31, 1997, the Company had DPAC and PVIF balances of $12.8 million and $43.2 million, respectively. During the third quarter of 1998, PVIF was unlocked by $0.8 million to reflect changes in the assumptions related to the timing of future gross profits. PVIF decreased $2.7 million in the second quarter of 1998 for an adjustment to the value of other receivables and increased $0.2 million in the first quarter of 1998 for an adjustment made to the merger costs. During the second quarter of 1997, PVIF was unlocked by $2.3 million to reflect narrower current spreads than the gross profit model assumed. Goodwill totaling $151.1 million and $41.1 million as adjusted, representing the excess of the acquisition cost over the fair value of net assets acquired, was established at the merger and acquisition dates, respectively. At June 30, 1997, goodwill was increased by $1.8 million to adjust the value of a receivable existing at the acquisition date. Amortization of goodwill through September 30, 1998 was $2.8 million. At September 30, 1998 the Company had $2.6 billion of separate account assets compared to $1.6 billion at December 31, 1997, and 1.2 billion at December 31, 1996. The increase in separate account assets during the first nine months of 1998 is due to growth in sales of the Company's variable annuity products, net of redemptions and market depreciation. At September 30, 1998 the Company had total assets of $3.8 billion, a 54.4% increase from the December 31, 1997 total asset amount of $2.4 billion. The 1997 total assets increased 45.8% over total assets at December 31, 1996. LIABILITIES. In conjunction with the volume of variable insurance sales, the Company's total liabilities increased $1.3 billion, or 56.4%, during the first nine months of 1998 and totaled $3.5 billion at September 30, 1998. For the year ended December 31, 1997, liabilities increased $681.1 million, or 44.3%, and totaled $2.2 billion at December 31, 1997. Future policy benefits for annuity and interest sensitive life products increased $200.4 million, or 39.7%, to $705.7 million during the first nine months of 1998 and $220.0 million, or 77.1%, to $505.3 million at December 31, 1997, reflecting premium growth in the Company's fixed account option of its variable products. Premium growth net of redemptions, and market depreciation accounted for the $983.2 million, or 59.7%, increase in separate account liabilities to $2.6 billion at September 30, 1998. At December 31, 1997, separate account liabilities increased $438.9 million, or 36.4%, to $1.6 billion from December 31, 1996. As of the merger and acquisition dates, the Company's existing unearned revenue reserves were eliminated. This treatment corresponds with the treatment of PVIF. Golden American maintains a reciprocal loan agreement with ING AIH, a Delaware corporation and an affiliate of EIC, to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Under this agreement, which became effective January 1, 1998, and expires on December 31, 2007, Golden American and ING AIH can borrow up to $65 million from one another. Prior to lending funds to ING AIH, Golden American must obtain approval from the State of Delaware Department of Insurance. At September 30, 1998, $40.0 million was payable to ING AIH under this agreement. Golden American maintained a line of credit agreement with Equitable of Iowa to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Under the agreement, which became effective December 1, 1996 and expired on December 31, 1997, Golden American could borrow up to $25 million. At December 31, 1997, $24.1 million was outstanding under this agreement. The outstanding balance was repaid by a capital contribution. 46 On December 17, 1996, Golden American issued a $25 million, 8.25% surplus note to Equitable of Iowa which matures on December 17, 2026. As a result of the merger, the surplus note is now payable to EIC. To enhance short-term liquidity, the Company has 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 Golden American's and First Golden's boards of directors on August 5, 1998 and September 29, 1998, respectively. The total amount the Company may have outstanding is $85 million, of which Golden American and First Golden have individual credit sublimits of $75 million and $10 million, respectively. The terms of the agreement require the Company to maintain the minimum level of Company Action Level Risk Based Capital as established by applicable law or regulation. At September 30, 1998, $20.1 million was payable to the Bank under this note by Golden American. Other liabilities increased $29.1 million from $17.3 million at December 31, 1997, due primarily to a payable on investments at September 30, 1998. Equity. Additional paid-in capital increased $87.6 million, or 63.8%, from December 31, 1996 to $225.0 million at December 31, 1997 primarily due to the revaluation of net assets as a result of the merger. The effects of inflation and changing prices on the Company 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 purchasing power when monetary assets exceed monetary liabilities. LIQUIDITY AND CAPITAL RESOURCES The liquidity requirements of the Company are met by cash flow from variable insurance premiums, investment income and maturities of fixed maturity investments, mortgage loans and short term investments. The Company primarily uses funds for the payment of insurance benefits, commissions, operating expenses and the purchase of new investments. The Company's home office operations are currently housed in leased locations in Wilmington, Delaware, various locations in Pennsylvania, and New York, New York. The office space in Pennsylvania is being leased on a short term basis for use in the transition to a new office building. The Company has entered into agreements with a developer to develop and lease a 65,000 square foot office building to house the Company's operations, except for New York. The Company expects to spend approximately $2.9 million on capital needs during the remainder of 1998. The Company intends to continue expanding its operations. Future growth in the Company's operations will require additional capital. The Company believes it will be able to fund the capital required for projected new business primarily with future capital contributions from its Parent. It is ING's policy to ensure adequate capital and surplus is provided for the Company and, if necessary, additional funds will be contributed in 1998. During the first nine months of 1998, Golden American received capital contributions from EIC of $72.5 million. On November 12, 1998, Golden American received an additional $50 million capital contribution from EIC. The ability of Golden American to pay dividends to its Parent is restricted because prior approval of insurance regulatory authorities is required for payment of dividends to the stockholder which exceed an annual limitation. During the remainder of 1998, Golden American cannot pay dividends to its Parent without prior approval of statutory authorities. The Company has maintained adequate statutory capital and surplus and has not used surplus relief or financial reinsurance. 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 intention to declare a dividend and amount of the dividend has been filed not less than thirty days in advance of the proposed declaration. The superintendent may disapprove the distribution by giving written notice to First Golden within thirty days after the filing should the superintendent find that the financial condition of First Golden does not warrant the distribution. 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 identify inadequately capitalized insurance companies based upon the type and mixture of risks inherent in the Company's 47 operations. The formula includes components for asset risk, liability risk, interest rate exposure and other factors. At December 31, 1997, the Company had complied with the NAIC's risk-based capital reporting requirements. Amounts reported indicate that the Company has total adjusted capital well above all required capital levels. REINSURANCE. At September 30, 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. YEAR 2000 PROJECT. Based on a 1997 study of its computer software and hardware, the Company has determined its exposure to the Year 2000 change of the century date issue. Some of the Company's computer programs were originally written using two digits rather than four to define a particular year. As a result, these computer programs contain "time sensitive" software that may recognize "00" as the year 1900 rather than the year 2000, which could cause system failure or miscalculations resulting in disruptions to operations. These disruptions could include, but are not limited to, a temporary inability to record transactions. The Company has identified one system and some desktop software that will have date problems. All systems will be upgraded in the fourth quarter of 1998. To a lesser extent, the Company depends on various non-information technology systems, such as telephone switches, which could also fail or misfunction as a result of the Year 2000. The Company has developed a plan to address the Year 2000 issue in a timely manner. The following schedule details the plan's phases, progress towards completion and actual or estimated completion dates: % COMPLETE AS OF ACTUAL/ESTIMATED PHASES SEPTEMBER 30, 1998 COMPLETION DATES _______________________________________ __________________ ________________ ASSESSMENT AND DEVELOPMENT of the steps to be taken to address Year 2000 systems issues 100% 12/31/97 IMPLEMENTATION of steps to address Year 2000 systems issues 76-99% 12/31/98 IMPLEMENTATION of steps to address Year 2000 desktop software issues 76-99% 12/31/98 TESTING of systems 26-50% 12/31/98 POINT-TO-POINT TESTING of external interfaces with third party computer systems that communicate with Company systems 1-25% 12/31/98 IMPLEMENTATION of tested software addressing Year 2000 systems issues 51-75% 12/31/98 CONTINGENCY PLAN 1-25% 03/31/99 In addition, the Company's operations could be adversely affected if significant customers, suppliers and other third parties would be unable to transact business in the Year 2000 and thereafter. To mitigate the effect of outside influences and other dependencies relative to the Year 2000, the Company has identified and contacted these third parties who have assured the Company that necessary steps are being taken to prepare for the Year 2000. Management believes the Company's systems are or will be substantially compliant by Year 2000. Golden American has charged to expense approximately $140,000 in the first nine months of 1998 related to the Year 2000 project. The Company anticipates charging to expense an additional $180,000 to $195,000 in 1998 which 48 includes upgrade and internal resources costs. Management expects some internal resources will be utilized in early 1999 to finalize the contingency plan. Despite the Company's efforts to modify or replace "time sensitive" computer and information systems, the Company could experience a disruption to its operations as a result of the Year 2000. The Company is currently developing a contingency plan to address any systems that may malfunction despite the testing being performed. The contingency plan, which is expected to be completed by March 31, 1999, will provide for the availability of staff, prioritize tasks and outline procedures to fix any malfunctioning systems. The costs and completion date of the Year 2000 project are based on management's best estimates. These estimates were derived using numerous assumptions of future events, including the continued availability of resources, third party Year 2000 compliance and other factors. There is no guarantee these estimates will be achieved and actual results could materially differ from those anticipated. Specific factors that might cause such material differences include, but are not limited to, the availability and cost of trained personnel, the ability to locate and correct all relevant computer codes and other uncertainties. SURPLUS NOTE. On December 17, 1996, Golden American issued a surplus note in the amount of $25 million to Equitable of Iowa. The note matures on December 17, 2026, and accrues interest of 8.25% per annum until paid. The note and accrued interest thereon shall be 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 shall be subject to the prior approval of the Delaware Insurance Commissioner. On December 17, 1996, Golden American contributed the $25 million to First Golden acquiring 200,000 shares of common stock (100% of shares outstanding) of First Golden. As a result of the merger, the surplus note is now payable to EIC. RECIPROCAL LOAN AGREEMENT. Golden American maintains a reciprocal loan agreement with ING AIH to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Under this agreement, which became effective January 1, 1998, and expires on December 31, 2007, Golden American and ING AIH can borrow up to $65 million from one another. Prior to lending funds to ING AIH, Golden American must obtain approval from the State of Delaware Department of Insurance. At September 30, 1998, $40.0 million was payable to ING AIH under this agreement. REVOLVING NOTE PAYABLE. To enhance short-term liquidity, the Company has 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 Golden American's and First Golden's boards of directors on August 5, 1998 and September 29, 1998, respectively. The total amount the Company may have outstanding is $85 million, of which Golden American and First Golden have individual credit sublimits of $75 million and $10 million, 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 Company for the advance. The terms of the agreement require the Company to maintain the minimum level of Company Action Level Based Capital as established by applicable state law or regulation. At September 30, 1998, $20.1 million was payable to the Bank under this note by Golden American. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Any forward-looking statement contained herein or in any other oral or written statement by the Company or any of its officers, directors or employees is qualified by the fact that actual results of the Company may differ materially from such statement, among other risks and uncertainties inherent in the Company's business due to the following important factors: (1) Prevailing interest rate levels and stock market performance which may affect the ability of the Company to sell its products, the market value and liquidity of the Company's investments and the lapse rate of the Company's policies, notwithstanding product design features intended to enhance persistency of the Company's products. (2) Changes in the federal income tax laws and regulations which may affect the relative tax advantages of the Company's products. 49 (3) Changes in the regulation of financial services, including bank sales and underwriting of insurance products, which may affect the competitive environment for the Company's products. (4) Increasing competition in the sale of the Company's products. (5) Other factors affecting the performance of the Company, including, but not limited to, market conduct claims, litigation, insurance industry insolvencies, investment performance of the underlying portfolios of the variable products, variable product design and sales volume by significant sellers of the Company's variable products. (6) To the extent third parties are unable to transact business in the Year 2000 and thereafter, the Company's 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. Four broker-dealers, including Locust Street Securities, Inc., are currently responsible for more than two-thirds of Golden American's product sales revenues. REINSURANCE. Golden American reinsures a significant portion of its mortality risk associated with the Contract's guaranteed death benefit with one or more appropriately licensed insurance companies. Golden American also, effective September 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 Golden American 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 ("BT 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 and 1995 were $0.5 million and $0.8 million, respectively. Pursuant to a service agreement between Golden American and Equitable Life, Equitable Life provides certain administrative, financial and other services to Golden American. 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 50 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 $2.8 million, $2.3 million and $1.0 million for the years of 1997, 1996 and 1995, respectively. 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. For the years 1997, 1996 and 1995, commissions paid by Golden American to DSI aggregated $36.4 million, $27.1 million and $8.4 million, respectively. EMPLOYEES. Golden American, as a result of its Service Agreement with Bankers Trust (Delaware) and EIC Variable, Inc., had very few direct employees. Instead, various management services were provided by Bankers Trust (Delaware), EIC Variable, Inc., 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 looked to Equitable of Iowa and its affiliates for 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 1001 Jefferson Street, Suite 400, Wilmington, Delaware 19801, 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 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 of Financial Condition and Results of Operations - Liquidity and Capital Resources." 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 51 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 10 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 EXECUTIVE OFFICERS Name (Age) Position(s) with the Company - ------------------------- ------------------------------------------- Barnett Chernow (48) President and Director Myles R. Tashman (56) Director, Executive Vice President, General Counsel and Secretary Frederick S. Hubbell (47) Director and Chairman Paul E. Larson (45) Director R. Brock Armstrong ( ) [ ] James R. McInnis (50) Executive Vice President Stephen J. Preston (41) Executive Vice President and Chief Actuary E. Robert Koster (40) Senior Vice President and Chief Financial Officer Patricia M. Corbett (33) Treasurer David L. Jacobson (49) Senior Vice President and Assistant Secretary William B. Lowe (34) Senior Vice President Edward M. Syring, Jr. (60) Senior Vice President Ronald R. Blasdell (45) Senior Vice President Steven G. Mandel (39) Senior Vice President Beth B. Neppl (41) Director 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 Life Insurance Company ("Golden American") and President of First Golden American Life Insurance Company of New York ("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. From 1977 through 1993, he held various positions with Reliance Insurance Companies and was Senior Vice President and Chief Financial Officer of United Pacific Life Insurance Company from 1984 through 1993. 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. From 1986 through 1993, he was Senior Vice President and General Counsel of United Pacific Life Insurance Company. Mr. Frederick S. Hubbell is a Director of Golden American since August, 1996 and Chairman since September, 1996. He also serves as a Director and Chairman of First Golden, having been first appointed as a Director in 52 December, 1997 and as Chairman in April, 1998. He was appointed General Manager of ING Financial ServicesInternational, North America, in October, 1997 and General Manager, President and Chief Executive Officer of ING US life and annuities companies in April 1998. Mr. Hubbell served as Chairman, President and Chief Executive Officer of Equitable of Iowa from 1991 until October, 1997. He also has served as Chairman and President of Equitable Life Insurance Company of Iowa from 1987 until October, 1997. Mr. Paul E. Larson joined Equitable of Iowa in 1977 and is currently President of Equitable Life. He was elected to serve as a director of Golden American in August, 1996. He also served as Executive Vice President, CFO, and Assistant Secretary of Golden American from December, 1996 through December, 1997. Mr. R. Brock Armstrong joined Golden American [ , 1998] and was elected [ ] in [ ,1998] prior to joining Golden American he was [ ]. Mr. James R. McInnis joined Golden American in December, 1997 as Executive Vice President. From 1982 through November, 1997, he was with the Endeavor Group and was President upon leaving. 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 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. From April, 1974 through November, 1993, he held various positions with United Pacific Life Insurance Company and was Vice President upon leaving. Mr. Stephen J. Preston joined Golden American in December, 1993 as Senior Vice President, Chief Actuary and Controller. He currently serves as Executive Vice President and Chief Actuary. From September, 1993 through November, 1993, he was Senior Vice President and Actuary for Mutual of America Insurance Company. From July, 1987 through August, 1993, he held various positions with United Pacific Life Insurance Company and was Vice President and Actuary upon leaving. Mr. William B. 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. Prior to joining Equitable Life, he was an Associate Vice President of Lincoln Benefit Life from July, 1990 through December, 1993. Mr. Edward Syring, Jr. joined Golden American in February, 1998 as a Senior Vice President, Sales & Marketing. Prior to joining Golden American, he was with Putnam Mutual Funds from April, 1991 through February, 1995. Mr. Steven G. Mandel joined Golden American in October, 1988 and was elected Senior Vice President in June, 1998. Prior to joining Golden American, he was with Monarch Resources Inc. from June, 1982 to October, 1988. Mr. Ronald R. Blasdell joined Golden American in February, 1994 and was elected Senior Vice President in June, 1998. Prior to joining Golden American, he was with United Pacific Life Insurance Company, from November, 1988 to November, 1993. From July, 1975 through November, 1988, he was with Colonial Penn Group, Inc. Ms. Beth B. Neppl joined Equitable Life as Vice President, Human Resources in December, 1987. Ms. Neppl was elected to serve as a director of Golden American on [ ]. Prior to joining Equitable Life she was a Human Resources Officer with Norwest Bank Iowa from May, 1985 to December, 1987. 53 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 five other most highly compensated executive officers for the fiscal year ended December 31, 1997. Certain 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. EXECUTIVE COMPENSATION TABLE The following table sets forth information with respect to the annual salary and bonus for Golden American's Chief Executive Officer and the five other most highly compensated executive officers for the fiscal year ended December 31, 1997.
LONG-TERM ANNUAL COMPENSATION COMPENSATION -------------------- ------------------------ RESTRICTED SECURITIES NAME AND STOCK AWARDS UNDERLYING ALL OTHER PRINCIPAL POSITION YEAR SALARY BONUS (/1/) OPTIONS (/2/) OPTIONS COMPENSATION - ------------------ ---- -------- ----------- ------------- ---------- ------------ Terry L. Kendall,...... 1997 $362,833 $ 80,365 $ 644,844 16,000 $ 10,000(/4/) President and Chief 1996 $288,298 $400,000 $ 11,535(/5/) Executive Officer(/3/) 1995 $250,000 $400,000 8,000 $ 6,706(/5/) Paul R. Schlaack,..... 1997 $351,000 $249,185 $1,274,518 19,000 $ 15,000 Chairman, Director 1996 $327,875 $249,185 $ 245,875 19,000 $ 15,000 and Vice President 1995 $311,750 $165,890 $ 19,594 23,000 $ 9,000(/4/) Paul E. Larson,....... 1997 $327,667 $128,540 $ 971,036 16,000 $ 15,000 Executive Vice 1996 $267,791 $128,540 $ 319,935 26,000 $ 15,000 President, Chief 1995 $242,833 $ 70,760 $ 73,396 20,000 $ 12,000(/4/) Financial Officer and Assistant Secretary Barnett Chernow,....... 1997 $234,167 $ 31,859 $ 277,576 4,000 $ 5,000(/4/) Executive Vice 1996 $207,526 $150,000 $ 7,755(/5/) President 1995 $190,000 $165,000 $ 15,444(/5/)(/6/) Edward C. Wilson,...... 1997 $ 80,383 $137,700 5,000 Executive Vice 1996 $190,582 $327,473 President Myles R. Tashman,...... 1997 $181,417 $ 25,000 $ 165,512 5,000 $ 5,000(/4/) Executive Vice 1996 $176,138 $ 90,000 $ 5,127(/5/) President, General 1995 $160,000 $ 25,000 Counsel and Secretary
________________ (1) The amount shown relates to bonuses paid in 1997, 1996 and 1995. $50,000 of Mr. Wilson's bonus paid in 1996 represents a signing bonus. (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) For 1997, this compensation includes payment to each named executive as perquisite payments which are classified as taxable income and are required to be applied to specific business expenses of the named executive. 54 (5) 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 the current year to employees on record as of December 31 of the previous year, after the employee completes 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; Mr. Wilson was not eligible for contributions to the Partnershare Plan in 1996. In 1995, Mr. Kendall received $2,956 of deferred compensation and $3,750 of cash payment from the plan; Mr. Chernow received $1,013 of deferred compensation and $1,267 of cash payment from the plan; Mr. Wilson and Mr. Tashman were not eligible for contributions to the PartnerShare Plan in 1995. (6) Amount shown for 1995 represents relocation expenses paid on behalf of the employee. Option Grants in Last Fiscal Year (1997) On October 24, 1997, in conjunction with the acquisition of Equitable of Iowa, all outstanding options vested and were cashed out for the difference between $68.00 and the exercise price. The table below represents the options granted in 1997.
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL % OF TOTAL RATES OF STOCK NUMBER OF OPTIONS PRICE APPRECIATION SECURITIES GRANTED TO FOR OPTION UNDERLYING EMPLOYEES TERM (/4/) OPTIONS IN FISCAL EXERCISE EXPIRATION ------------------- NAME GRANTED (/1/) YEAR PRICE (/2/) DATE (/3/) 5% 10% - ---- ------------- ---------- ----------- ---------- -------- ---------- Terry L. Kendall........ 16,000 5.26 $47.875 2/12/2007 $481,733 $1,220,807 Pual R. Schlaack........ 8,000 6.25 $47.875 2/12/2007 $572,058 $1,449,708 Paul E. Larsen.......... 8,000 6.25 $47.875 2/12/2007 $782,817 $1,983,811 Barnett Chernow......... 4,000 1.32 $47.875 2/12/2007 $120,433 $ 305,202 Edward C. Wilson........ 5,000 1.64 $47.875 2/12/2007 $150,542 $ 381,502 Myles R. Tashman........ 5,000 1.64 $47.875 2/12/2007 $150,542 $ 381,502
________________ (1) Stock options granted on February 12, 1997 by Equitable of Iowa to the officers of Golden American had a five-year vesting period with 20% exercisable after 3rd year, an additional 30% after 4th year, and the final 50% after 5th year. The options vested with the change of control of Equitable of Iowa. (2) The exercise price was equal to the fair market value of the Common Stock on the date of grant. (3) Incentive Stock Options had a term of ten years. They were subject to earlier termination in certain events related to termination of employment. (4) Total dollar gains based on indicated rates of appreciation of share price over a ten-year term. Directors of Golden American receive no additional compensation for serving as a director. 55 UNAUDITED FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY For the Nine Months Ended September 30, 1998 56 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED): (DOLLARS IN THOUSANDS) POST-MERGER POST-ACQUISITION _____________________________________ For the Nine | For the Nine Months ended | Months ended September 30, 1998|September 30, 1997 __________________|__________________ (Dollars in thousands) | Revenues: | Annuity and interest sensitive life | product charges $26,984 | $15,937 Management fee revenue 3,257 | 2,014 Net investment income 29,296 | 18,955 Realized gains on investments 436 | 58 Other income 4,805 | 427 __________________|__________________ 64,778 | 37,391 | Insurance benefits and expenses: | Annuity and interest sensitive life | benefits: | Interest credited to account balances 64,110 | 16,840 Benefit claims incurred in excess of | account balances 862 | 118 Underwriting, acquisition and | insurance expenses: | Commissions 84,958 | 23,113 General expenses 23,480 | 11,762 Insurance taxes 2,680 | 1,693 Policy acquisition costs deferred (133,616)| (25,464) Amortization: | Deferred policy acquisition costs 4,014 | 1,433 Present value of in force acquired 3,252 | 4,465 Goodwill 2,834 | 1,261 __________________|__________________ 52,574 | 35,221 Interest expense 3,033 | 1,827 __________________|__________________ 55,607 | 37,048 __________________|__________________ 9,171 | 343 | Income taxes 4,294 | 1 __________________|__________________ Net income $4,877 | $342 ===================================== See accompanying notes. 57 Condensed Consolidated Balance Sheets (Unaudited): POST-MERGER _____________________________________ September 30, 1998|December 31, 1997 __________________|__________________ (Dollars in thousands, except per share data) | ASSETS | Investments: | Fixed maturities, available for sale, | at fair value (cost: 1998 - $610,316; | 1997 - $413,288) $618,650 | $414,401 Equity securities, at fair value | (cost: 1998 - $14,437; 1997 - $4,437) 10,092 | 3,904 Mortgage loans 98,045 | 85,093 Policy loans 10,217 | 8,832 Short-term investments 11,886 | 14,460 __________________|__________________ Total investments 748,890 | 526,690 | Cash and cash equivalents 18,951 | 21,039 Due from affiliates 1,114 | 827 Accrued investment income 9,395 | 6,423 Deferred policy acquisition costs 140,845 | 12,752 Present value of in force acquired 36,502 | 43,174 Current income taxes recoverable 502 | 272 Deferred income tax asset 31,633 | 36,230 Property and equipment, less allowances for | depreciation of $583 in 1998 and $97 | in 1997 4,550 | 1,567 Goodwill, less accumulated amortization of | $3,463 in 1998 and $630 in 1997 147,664 | 150,497 Other assets 7,153 | 755 Separate account assets 2,629,343 | 1,646,169 __________________|__________________ Total assets $3,776,542 | $2,446,395 ==================|================== | LIABILITIES AND STOCKHOLDER'S EQUITY | Policy liabilities and accruals: | Future policy benefits: | Annuity and interest sensitive life | products $705,673 | $505,304 Unearned revenue reserve 2,968 | 1,189 Other policy claims and benefits 89 | 10 __________________|__________________ 708,730 | 506,503 Reciprocal loan with affiliate 40,000 | -- Line of credit with affiliate -- | 24,059 Surplus note 25,000 | 25,000 Revolving note payable 20,082 | -- Due to affiliates 1,552 | 80 Other liabilities 46,400 | 17,271 Separate account liabilities 2,629,343 | 1,646,169 __________________|__________________ 3,471,107 | 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 297,640 | 224,997 Accumulated comprehensive income 842 | 241 Retained earnings (deficit) 4,453 | (425) __________________|__________________ Total stockholder's equity 305,435 | 227,313 __________________|__________________ Total liabilities and stockholder's | equity $3,776,542 | $2,446,395 ===================================== See accompanying notes. 58 Condensed Consolidated Statements of Cash Flows (Unaudited): POST-MERGER POST-ACQUISITION _____________________________________ For the Nine | For the Nine Months ended | Months ended September 30, 1998|September 30, 1997 __________________|__________________ (Dollars in thousands) | NET CASH USED IN OPERATING ACTIVITIES ($22,666)| ($1,659) | INVESTING ACTIVITIES | Sale, maturity or repayment of | investments: | Fixed maturities - available for sale 92,707 | 35,590 Mortgage loans on real estate 3,145 | 5,017 Short-term investments - net 2,575 | 11,153 __________________|__________________ 98,427 | 51,760 | Acquisition of investments: | Fixed maturities - available for sale (291,687)| (146,376) Equity securities (10,000)| (4,864) Mortgage loans on real estate (16,390)| (38,058) Policy loans - net (1,385)| (3,682) __________________|__________________ (319,462)| (192,980) Purchase of property and equipment (3,470)| (659) __________________|__________________ Net cash used in investing activities (224,505)| (141,879) | FINANCING ACTIVITIES | Proceeds from reciprocal loan agreement | borrowings 242,847 | -- Repayment of reciprocal loan agreement | borrowings (202,847)| -- Proceeds from revolving note payable 20,082 | -- Proceeds from line of credit borrowings -- | 86,522 Repayment of line of credit borrowings (24,059)| (69,562) Receipts from annuity and interest | sensitive life policies credited to | policyholder account balances 350,385 | 232,635 Return of policyholder account balances | on annuity and interest sensitive life | policies (50,370)| (12,674) Net reallocations to Separate Accounts (163,455)| (81,561) Contribution from parent 72,500 | 1,011 __________________|__________________ Net cash provided by financing activities 245,083 | 156,371 __________________|__________________ | Increase (decrease) in cash and cash | equivalents ($2,088)| $12,833 | Cash and cash equivalents at beginning | of period 21,039 | 5,839 __________________|__________________ Cash and cash equivalents at end of period $18,951 | $18,672 ==================|================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW | INFORMATION | | Cash paid during the period for: | Interest $3,493 | -- Income taxes 80 | $283 | Non-cash financing activities: | Non-cash adjustment to paid in capital | for adjusted merger costs 143 | -- Contribution of property, plant and | equipment from EIC Variable, Inc. net | of $353 of accumulated depreciation -- | 110 | See accompanying notes. 59 NOTE 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. This form is being filed with the reduced disclosure format specified in General Instruction H (1)(a) and (b) of Form 10-Q. 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, 1998, are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. For further information, refer to the financial statements and footnotes thereto included in the Golden American Life Insurance Company Annual Report on Form 10-K for the year ended December 31, 1997. 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 collectively with Golden American, the "Company"). All significant intercompany accounts and transactions have been eliminated. ORGANIZATION On October 24, 1997, PFHI Holdings, Inc. ("PFHI"), a Delaware corporation, acquired all of the outstanding capital stock of Equitable of Iowa Companies ("Equitable") pursuant to the terms of an Agreement and Plan of Merger dated as of 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 the merger, Equitable was merged into PFHI which was simultaneously renamed Equitable of Iowa Companies, Inc. ("EIC" or the "Parent"), a Delaware corporation. On August 13, 1996, Equitable acquired all of the outstanding capital stock of EIC Variable, Inc. (formerly known as BT Variable, Inc.) and its wholly owned subsidiaries, Golden American and Directed Services, Inc. ("DSI"), from Whitewood Properties Corporation. 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 Company's financial statements for the period subsequent to 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. FAIR VALUES Estimated fair values of investment grade public bonds 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. STATUTORY Net income (loss) for Golden American as determined in accordance with statutory accounting practices was $(32,198,000) and $510,000 for the nine months ended September 30, 1998 and 1997, respectively. Total statutory capital and surplus was $112,356,000 at September 30, 1998 and $76,914,000 at December 31, 1997. 60 RECLASSIFICATION Certain amounts in the September 30, 1997 and December 31, 1997 financial statements have been reclassified to conform to the September 30, 1998 financial statement presentation. NOTE 2 -- COMPREHENSIVE INCOME As of January 1, 1998, the Company 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 impact on the Company's net income or stockholder's equity. SFAS No. 130 requires unrealized gains or losses on the Company's available for sale securities (net of deferred income taxes, deferred policy acquisition costs and present value of in force acquired), which prior to adoption were reported separately in stockholder's equity, to be included in other comprehensive income. Prior year financial statements have been reclassified to conform to the requirements of SFAS No. 130. During the third quarter and first nine months of 1998, total comprehensive income for the Company amounted to $2,426,000 and $5,478,000, respectively ($2,385,000 and $2,016,000, respectively, for the same periods of 1997). Included in these amounts are total comprehensive income for First Golden of $601,000 and $1,174,000 for the third quarter and first nine months of 1998, respectively ($551,000 and $879,000, respectively, for the same periods of 1997). NOTE 3 -- RELATED PARTY TRANSACTIONS 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 the Company. DSI is authorized to enter into agreements with broker/dealers to distribute the Company's variable insurance products and appoint the broker/dealers as agents. As of September 30, 1998, the Company's variable insurance products are sold primarily through four broker/dealer institutions. The Company paid commissions and expenses to DSI totaling $32,104,000 in the third quarter and $82,548,000 for the first nine months of 1998 ($8,849,000 and $23,113,000, respectively, for the same periods of 1997). Golden American provides certain managerial and supervisory services to DSI. The fee paid by DSI for these services was calculated as a percentage of average assets in the variable separate accounts. For the quarter and nine months ended September 30, 1998, the fee was $1,234,000 and $3,257,000 ($736,000 and $2,014,000, respectively, for the same periods of 1997). Golden American provides certain advisory, computer and other resources and services to Equitable Life Insurance Company of Iowa ("Equitable Life"). Revenues for these services, which reduce general expenses incurred by Golden American, totaled $1,524,000 in the third quarter and $5,091,000 for the first nine months of 1998 ($954,000 and $2,694,000, respectively, for the same periods of 1997). The Company has a service agreement with Equitable Life in which Equitable Life provides administrative and financial related services. The Company incurred expenses of $261,000 in the third quarter and $575,000 for the first nine months of 1998 under this agreement. First Golden provides resources and services to DSI. Revenues for these services, which reduce general expenses incurred by the Company, totaled $19,000 in the third quarter and $57,000 for the first nine months of 1998. 61 Golden American maintains a reciprocal loan agreement with ING America Insurance Holdings, Inc. ("ING AIH"), a Delaware corporation and affiliate of EIC, 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 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 $505,000 in the third quarter and $1,269,000 for the first nine months of 1998. At September 30, 1998, $40,000,000 was payable to ING AIH under this agreement. Effective January 1, 1998, the Company has an asset management agreement with ING Investment Management LLC ("ING-IM"), an affiliated company, in which ING- IM provides asset management services. Under the agreement, the Company records 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 1998, the Company incurred fees of $341,000 and $1,013,000, respectively, under this agreement. 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 first nine months of 1998 ($165,000 and $279,000 in the third quarter and first nine months of 1997, respectively). The outstanding balance was paid by a capital contribution. For the nine months ended September 30, 1998, the Company 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 $92,900,000, $30,100,000, $10,700,000 and $10,100,000, respectively. NOTE 4 -- COMMITMENTS AND CONTINGENCIES REINSURANCE: At September 30, 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. At September 30, 1998, the Company has a net receivable of $6,539,000 for reserve credits, reinsurance claims or other receivables from these reinsurers comprised of $257,000 for claims recoverable from reinsurers, $451,000 for a payable for reinsurance premiums, and $6,733,000 for a receivable from an unaffiliated reinsurer. Included in the accompanying financial statements are net considerations to reinsurers of $1,293,000 in the third quarter and $3,259,000 for the first nine months of 1998 compared to $467,000 and $1,318,000, respectively, for the same periods in 1997. Also included in the accompanying financial statements are net policy benefits of $1,272,000 and $2,096,000 in the third quarter and first nine months of 1998, respectively ($142,000 and $571,000, respectively, for the same periods of 1997). 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. INVESTMENT COMMITMENTS: At September 30, 1998, outstanding commitments to fund mortgage loans on real estate totaled $25,290,000. 62 GUARANTY FUND ASSESSMENTS: Assessments are levied on the Company by life and health guaranty associations in most states in which the Company is 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 Company 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 Company has 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 Company accrued and charged to expense an additional $208,000 in the third quarter and $598,000 for the first nine months of 1998. At September 30, 1998, the Company has an undiscounted reserve of $1,910,000 to cover estimated future assessments (net of related anticipated premium tax credits) and has established an asset totaling $261,000 for assessments paid which may be recoverable through future premium tax offsets. The Company believes this reserve is sufficient to cover expected future guaranty fund assessments based upon previous premium levels and known insolvencies at this time. LITIGATION: The Company, 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 Company currently believes no pending or threatened lawsuits exist that are reasonably likely to have a material adverse impact on the Company. VULNERABILITY FROM CONCENTRATIONS: The Company's 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 have a severe impact on the Company's financial condition. A significant portion of the Company's sales is generated by four broker/dealers. The Company has various concentrations in its investment portfolio. The composition of the Company's fixed maturity securities has changed significantly from December 31, 1997. The following percentages relate to holdings at September 30, 1998, and December 31, 1997. Fixed maturity investments included investments in basic industrials (25% in 1998, 30% in 1997), conventional mortgage-backed securities (24% in 1998, 13% in 1997), financial companies (20% in 1998, 24% in 1997), asset-backed securities (11% in 1998, 0% in 1997), various government bonds or agency mortgage-backed securities (7% in 1998, 17% in 1997) and public utilities (6% in 1998, 7% in 1997). REVOLVING NOTE PAYABLE: To enhance short-term liquidity, the Company has 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 Golden American's and First Golden's boards of directors on August 5, 1998 and September 29, 1998, respectively. The total amount the Company 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 Company for the advance. The terms of the agreement require the Company 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, 1998, the Company paid interest expense of $6,000. At September 30, 1998, $20,082,000 was payable to the Bank under this note by Golden American. 63 YEAR 2000 PROJECT: Based on a 1997 study of its computer software and hardware, the Company has determined its exposure to the Year 2000 change of the century date issue. Some of the Company's computer programs were originally written using two digits rather than four to define a particular year. As a result, these computer programs contain "time sensitive" software that may recognize "00" as the year 1900 rather than the year 2000, which could cause system failure or miscalculations resulting in disruptions to operations. These disruptions could include, but are not limited to, a temporary inability to record transactions. The Company has identified one system and some desktop software that will have date problems. All systems will be upgraded in the fourth quarter of 1998. To a lesser extent, the Company depends on various non-information technology systems, such as telephone switches, which could also fail or misfunction as a result of the Year 2000. The Company has developed a plan to address the Year 2000 issue in a timely manner. The following schedule details the plan's phases, progress towards completion and actual or estimated completion dates: % Complete as of Actual/Estimated Phases September 30, 1998 Completion Dates ______________________________________________________________________________ ASSESSMENT AND DEVELOPMENT of the steps to be taken to address Year 2000 systems issues 100% 12/31/97 IMPLEMENTATION of steps to address Year 2000 systems issues 76-99% 12/31/98 IMPLEMENTATION of steps to address Year 2000 desktop software issues 76-99% 12/31/98 TESTING of systems 26-50% 12/31/98 POINT-TO-POINT TESTING of external interfaces with third party computer systems that communicate with Company systems 1-25% 12/31/98 IMPLEMENTATION of tested software addressing Year 2000 systems issues 51-75% 12/31/98 CONTINGENCY PLAN 1-25% 03/31/99 In addition, the Company's operations could be adversely affected if significant customers, suppliers and other third parties would be unable to transact business in the Year 2000 and thereafter. To mitigate the effect of outside influences and other dependencies relative to the Year 2000, the Company has identified and contacted these third parties who have assured the Company that necessary steps are being taken to prepare for the Year 2000. Management believes the Company's systems are or will be substantially compliant by Year 2000. Golden American has charged to expense approximately $140,000 in the first nine months of 1998 related to the Year 2000 project. The Company anticipates charging to expense an additional $180,000 to $195,000 in 1998 which includes upgrade and internal resources costs. Management expects some internal resources will be utilized in early 1999 to finalize the contingency plan. Despite the Company's efforts to modify or replace "time sensitive" computer and information systems, the Company could experience a disruption to its operations as a result of the Year 2000. The Company is currently developing a contingency plan to address any systems that may malfunction despite the testing being performed. The contingency plan, which is expected to be completed by March 31, 1999, will provide for the availability of staff, prioritize tasks and outline procedures to fix any malfunctioning systems. 64 The costs and completion date of the Year 2000 project are based on management's best estimates. These estimates were derived using numerous assumptions of future events, including the continued availability of resources, third party Year 2000 compliance and other factors. There is no guarantee these estimates will be achieved and actual results could materially differ from those anticipated. Specific factors that might cause such material differences include, but are not limited to, the availability and cost of trained personnel, the ability to locate and correct all relevant computer codes and other uncertainties. 65 ______________________________________________________________________________ FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY For the years ended December 31, 1997, 1996 and 1995 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, 1997 and 1996, and the related consolidated statements of income, changes in stockholder's equity, and cash flows 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, and the year ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Golden American Life Insurance Company at December 31, 1997 and 1996, and the consolidated results of their operations and their cash flows 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, and the year ended December 31, 1995, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Des Moines, Iowa February 12, 1998 66 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data)
POST-MERGER POST-ACQUISITION ______________________________________ December 31, 1997 | December 31, 1996 ___________________| _________________ | ASSETS | | Investments: | Fixed maturities, available for sale, | at fair value (cost: 1997 - $413,288; | 1996 - $275,153) $414,401 | $275,563 Equity securities, at fair value | (cost: 1997 - $4,437; 1996 - $36) 3,904 | 33 Mortgage loans on real estate 85,093 | 31,459 Policy loans 8,832 | 4,634 Short-term investments 14,460 | 12,631 ___________________| _________________ Total investments 526,690 | 324,320 | Cash and cash equivalents 21,039 | 5,839 | Due from affiliates 827 | -- | Accrued investment income 6,423 | 4,139 | Deferred policy acquisition costs 12,752 | 11,468 | Present value of in force acquired 43,174 | 83,051 | Current income taxes recoverable 272 | -- | Deferred income tax asset 36,230 | -- | Property and equipment, less allowances | for depreciation of $97 in 1997 and | $63 in 1996 1,567 | 699 | Goodwill, less accumulated amortization | of $630 in 1997 and $589 in 1996 150,497 | 38,665 | Other assets 195 | 2,471 | Separate account assets 1,646,169 | 1,207,247 ___________________| _________________ Total assets $2,445,835 | $1,677,899 ===================| =================
POST-MERGER POST-ACQUISITION ______________________________________ December 31, 1997 | December 31, 1996 ___________________| _________________ | LIABILITIES AND STOCKHOLDER'S EQUITY | | Policy liabilities and accruals: | Future policy benefits: | Annuity and interest sensitive life | products $505,304 | $285,287 Unearned revenue reserve 1,189 | 2,063 Other policy claims and benefits 10 | -- ___________________| _________________ 506,503 | 287,350 | Deferred income tax liability -- | 365 Line of credit with affiliate 24,059 | -- Surplus note 25,000 | 25,000 Due to affiliates 80 | 1,504 Other liabilities 16,711 | 15,949 Separate account liabilities 1,646,169 | 1,207,247 ___________________| _________________ 2,218,522 | 1,537,415 | 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 224,997 | 137,372 Unrealized appreciation (depreciation) | of securities at fair value 241 | 262 Retained earnings (deficit) (425)| 350 ___________________| _________________ Total stockholder's equity 227,313 | 140,484 ___________________| _________________ Total liabilities and stockholder's | equity $2,445,835 | $1,677,899 ===================| =================
See accompanying notes. 67 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands)
POST-MERGER POST-ACQUISITION ___________________________________ For the period | For the period October 25, 1997 | January 1, 1997 through | through December 31, 1997 |October 24, 1997 __________________|________________ | | Revenues: | Annuity and interest sensitive life | product charges $3,834 | $18,288 Management fee revenue 508 | 2,262 Net investment income 5,127 | 21,656 Realized gains (losses) on investments 15 | 151 Other income 236 | 426 __________________|________________ 9,720 | 42,783 | | Insurance benefits and expenses: | Annuity and interest sensitive life benefits: | Interest credited to account balances 7,413 | 19,276 Benefit claims incurred in excess of | account balances -- | 125 Underwriting, acquisition and insurance | expenses: | Commissions 9,437 | 26,818 General expenses 3,350 | 13,907 Insurance taxes 450 | 1,889 Policy acquisition costs deferred (13,678)| (29,003) Amortization: | Deferred policy acquisition costs 892 | 1,674 Present value of in force acquired 948 | 5,225 Goodwill 630 | 1,398 __________________|________________ 9,442 | 41,309 | Interest expense 557 | 2,082 __________________|________________ 9,999 | 43,391 __________________|________________ Income (loss) before income taxes (279)| (608) | Income taxes 146 | (1,337) __________________|________________ | Net income (loss) ($425)| $729 ==================|================
POST-ACQUISITION PRE-ACQUISITION ____________________________________ For the period | For the period August 14, 1996 | January 1, 1996 through | through December 31, 1996 | August 13, 1996 __________________| ________________ | | Revenues: | Annuity and interest sensitive life | product charges $8,768 | $12,259 Management fee revenue 877 | 1,390 Net investment income 5,795 | 4,990 Realized gains (losses) on investments 42 | (420) Other income 486 | 70 __________________| ________________ 15,968 | 18,289 | | Insurance benefits and expenses: | Annuity and interest sensitive life benefits: | Interest credited to account balances 5,741 | 4,355 Benefit claims incurred in excess of | account balances 1,262 | 915 Underwriting, acquisition and insurance | expenses: | Commissions 9,866 | 16,549 General expenses 5,906 | 9,422 Insurance taxes 672 | 1,225 Policy acquisition costs deferred (11,712)| (19,300) Amortization: | Deferred policy acquisition costs 244 | 2,436 Present value of in force acquired 2,745 | 951 Goodwill 589 | -- __________________| ________________ 15,313 | 16,553 | Interest expense 85 | -- __________________| ________________ 15,398 | 16,553 __________________| ________________ Income (loss) before income taxes 570 | 1,736 | Income taxes 220 | (1,463) __________________| ________________ | Net income (loss) $350 | $3,199 ==================| ================
PRE-ACQUISITION __________________ For the year ended December 31, 1995 __________________ Revenues: Annuity and interest sensitive life product charges $18,388 Management fee revenue 987 Net investment income 2,818 Realized gains (losses) on investments 297 Other income 63 __________________ 22,553 Insurance benefits and expenses: Annuity and interest sensitive life benefits: Interest credited to account balances 1,322 Benefit claims incurred in excess of account balances 1,824 Underwriting, acquisition and insurance expenses: Commissions 7,983 General expenses 12,650 Insurance taxes 952 Policy acquisition costs deferred (9,804) Amortization: Deferred policy acquisition costs 2,710 Present value of in force acquired 1,552 Goodwill -- __________________ 19,189 Interest expense -- __________________ 19,189 __________________ Income (loss) before income taxes 3,364 Income taxes -- __________________ Net income (loss) $3,364 ==================
See accompanying notes. 68 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (Dollars in thousands)
PRE-ACQUISITION __________________________________________________________ Unreal- ized Appre- ciation (Depre- ciation) Addi- of Total Redeemable tional Securities Retained Stock- Common Preferred Paid-In at Earnings holder's Stock Stock Capital Fair Value (Deficit) Equity __________________________________________________________ Balance at January 1, 1995 $2,500 $50,000 $37,086 ($1) ($79) $89,506 Contribution of capital -- -- 7,944 -- -- 7,944 Net income -- -- -- -- 3,364 3,364 Preferred stock dividends -- -- -- -- (3,348) (3,348) Unrealized apprecia- tion of securities at fair value -- -- -- 659 -- 659 __________________________________________________________ Balance at December 31, 1995 2,500 50,000 45,030 658 (63) 98,125 Net income -- -- -- -- 3,199 3,199 Preferred stock dividends -- -- -- -- (719) (719) Unrealized deprecia- tion of securities at fair value -- -- -- (1,175) -- (1,175) __________________________________________________________ Balance at August 13, 1996 $2,500 $50,000 $45,030 ($517) $2,417 $99,430 ==========================================================
POST-ACQUISITION __________________________________________________________ Unreal- ized Appre- ciation (Depre- ciation) Addi- of Total Redeemable tional Securities Retained Stock- Common Preferred Paid-In at Earnings holder's Stock Stock Capital Fair Value (Deficit) Equity __________________________________________________________ Balance at August 14, 1996 $2,500 $50,000 $87,372 -- -- $139,872 Contribution of preferred stock to additional paid-in capital -- (50,000) 50,000 -- -- -- Net income -- -- -- -- $350 350 Unrealized apprecia- tion of securities at fair value -- -- -- $262 -- 262 __________________________________________________________ Balance at December 31, 1996 2,500 -- 137,372 262 350 140,484 Contribution of capital -- -- 1,121 -- -- 1,121 Net income -- -- -- -- 729 729 Unrealized apprecia- tion of securities at fair value -- -- -- 1,543 -- 1,543 __________________________________________________________ Balance at October 24, 1997 $2,500 -- $138,493 $1,805 $1,079 $143,877 ========================================================== POST-MERGER __________________________________________________________ Unreal- ized Appre- ciation (Depre- ciation) Addi- of Total Redeemable tional Securities Retained Stock- Common Preferred Paid-In at Earnings holder's Stock Stock Capital Fair Value (Deficit) Equity __________________________________________________________ Balance at October 25, 1997 $2,500 -- $224,997 -- -- $227,497 Net loss -- -- -- -- ($425) (425) Unrealized apprecia- tion of securities at fair value -- -- -- $241 -- 241 __________________________________________________________ Balance at December 31, 1997 $2,500 -- $224,997 $241 ($425) $227,313 ==========================================================
See accompanying notes. 69 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
POST-MERGER POST-ACQUISITION ________________________________________ For the period | For the period October 25, 1997 | January 1, 1997 through | through December 31, 1997 | October 24, 1997 ___________________| ___________________ | OPERATING ACTIVITIES | Net income (loss) ($425)| $729 Adjustments to reconcile net income (loss) | to net cash provided by (used in) | operations: | Adjustments related to annuity and | interest sensitive life products: | Change in annuity and interest | sensitive life product reserves 7,361 | 19,177 Change in unearned revenues 1,189 | 3,292 Decrease (increase) in accrued | investment income 1,205 | (3,489) Policy acquisition costs deferred (13,678)| (29,003) Amortization of deferred policy | acquisition costs 892 | 1,674 Amortization of present value of in | force acquired 948 | 5,225 Change in other assets, other | liabilities and accrued income taxes 4,205 | (8,944) Provision for depreciation and | amortization 1,299 | 3,203 Provision for deferred income taxes 146 | 316 Realized (gains) losses on investments (15)| (151) ___________________| ___________________ Net cash provided by (used in) | operating activities 3,127 | (7,971) | INVESTING ACTIVITIES | Sale, maturity or repayment of | investments: | Fixed maturities - available for sale 9,871 | 39,622 Mortgage loans on real estate 1,644 | 5,828 Short-term investments - net -- | 11,415 ___________________| ___________________ 11,515 | 56,865 Acquisition of investments: | Fixed maturities - available for sale (29,596)| (155,173) Equity securities (1)| (4,865) Mortgage loans on real estate (14,209)| (44,481) Policy loans - net (328)| (3,870) Short-term investments - net (13,244)| -- ___________________| ___________________ (57,378)| (208,389)
See accompanying notes.
POST-ACQUISITION PRE-ACQUISITION ________________________________________ For the period | For the period August 14, 1996 | January 1, 1996 through | through December 31, 1996 | August 13, 1996 ___________________| ___________________ | OPERATING ACTIVITIES | Net income (loss) $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: | Change in annuity and interest | sensitive life product reserves 5,106 | 4,472 Change in unearned revenues 2,063 | 2,084 Decrease (increase) in accrued | investment income (877)| (2,494) Policy acquisition costs deferred (11,712)| (19,300) Amortization of deferred policy | acquisition costs 244 | 2,436 Amortization of present value of in | force acquired 2,745 | 951 Change in other assets, other | liabilities and accrued income taxes (96)| 4,672 Provision for depreciation and | amortization 1,242 | 703 Provision for deferred income taxes 220 | (1,463) Realized (gains) losses on investments (42)| 420 ___________________| ___________________ Net cash provided by (used in) | operating activities (757)| (4,320) | | INVESTING ACTIVITIES | Sale, maturity or repayment of | investments: | Fixed maturities - available for sale 47,453 | 55,091 Mortgage loans on real estate 40 | -- Short-term investments - net 2,629 | 354 ___________________| ___________________ 50,122 | 55,445 Acquisition of investments: | Fixed maturities - available for sale (147,170)| (184,589) Equity securities (5)| -- Mortgage loans on real estate (31,499)| -- Policy loans - net (637)| (1,977) Short-term investments - net -- | -- ___________________| ___________________ (179,311)| (186,566)
See accompanying notes.
PRE-ACQUISITION _________________ For the year ended December 31, 1995 _________________ OPERATING ACTIVITIES Net income (loss) $3,364 Adjustments to reconcile net income (loss) to net cash provided by (used in) operations: Adjustments related to annuity and interest sensitive life products: Change in annuity and interest sensitive life product reserves 4,664 Change in unearned revenues 4,949 Decrease (increase) in accrued investment income (676) Policy acquisition costs deferred (9,804) Amortization of deferred policy acquisition costs 2,710 Amortization of present value of in force acquired 1,552 Change in other assets, other liabilities and accrued income taxes 4,686 Provision for depreciation and amortization (142) Provision for deferred income taxes -- Realized (gains) losses on investments (297) _________________ Net cash provided by (used in) operating activities 11,006 INVESTING ACTIVITIES Sale, maturity or repayment of investments: Fixed maturities - available for sale 24,026 Mortgage loans on real estate -- Short-term investments - net -- _________________ 24,026 Acquisition of investments: Fixed maturities - available for sale (61,723) Equity securities (10) Mortgage loans on real estate -- Policy loans - net (1,508) Short-term investments - net (1,681) _________________ (64,922)
See accompanying notes. 70 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS -(CONTINUED) (Dollars in thousands)
POST-MERGER POST-ACQUISITION ________________________________________ For the period | For the period October 25, 1997 | January 1, 1997 through | through December 31, 1997 | October 24, 1997 ___________________| ___________________ | INVESTING ACTIVITIES-CONTINUED Funds held in escrow pursuant to | an Exchange Agreement -- | -- Purchase of property and equipment ($252)| ($875) ___________________| ___________________ Net cash used in investing activities (46,115)| (152,399) | FINANCING ACTIVITIES | Proceeds from issuance of surplus note -- | -- 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 policyholder account balances 62,306 | 261,549 Return of policyholder account balances | on annuity and interest sensitive | life policies (6,350)| (13,931) Net reallocations to Separate | Accounts (17,017)| (93,069) Contributions of capital by Parent -- | 1,011 Dividends paid on preferred stock -- | -- ___________________| ___________________ Net cash provided by financing | activities 46,851 | 171,707 ___________________| ___________________ Increase (decrease) in cash and | cash equivalents 3,863 | 11,337 | Cash and cash equivalents at | beginning of period 17,176 | 5,839 ___________________| ___________________ Cash and cash equivalents at end | of period $21,039 | $17,176 ===================| =================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $295 $1,912 Income taxes -- 283 Non-cash financing activities: Contribution of property, plant and equipment from EIC Variable, Inc. net of $353 of accumulated depreciation -- 110
See accompanying notes.
POST-ACQUISITION PRE-ACQUISITION _____________________________________ For the period | For the period August 14, 1996 | January 1, 1996 through | through December 31, 1996 | August 13, 1996 __________________| _________________ | INVESTING ACTIVITIES - CONTINUED | Funds held in escrow pursuant to | an Exchange Agreement -- | -- Purchase of property and equipment ($137)| -- __________________| _________________ Net cash used in investing activities (129,326)| ($131,121) | FINANCING ACTIVITIES | Proceeds from issuance of surplus note 25,000 | -- Proceeds from line of credit borrowings -- | -- Repayment of line of credit borrowings -- | -- Receipts from annuity and interest | sensitive life policies credited | to policyholder account balances 116,819 | 149,750 Return of policyholder account balances | on annuity and interest sensitive | life policies (3,315)| (2,695) Net reallocations to Separate | Accounts (10,237)| (8,286) Contributions of capital by Parent -- | -- Dividends paid on preferred stock -- | (719) __________________| _________________ Net cash provided by financing | activities 128,267 | 138,050 __________________| _________________ Increase (decrease) in cash and | cash equivalents (1,816)| 2,609 | Cash and cash equivalents at | beginning of period 7,655 | 5,046 __________________| _________________ Cash and cash equivalents at end | of period $5,839 | $7,655 ==================| ================= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest -- -- Income taxes -- -- Non-cash financing activities: Contribution of property, plant and equipment from EIC Variable, Inc. net of $353 of accumulated depreciation -- --
See accompanying notes.
PRE-ACQUISITION _________________ For the year ended December 31, 1995 _________________ INVESTING ACTIVITIES - CONTINUED Funds held in escrow pursuant to an Exchange Agreement ($1,242) Purchase of property and equipment -- _________________ Net cash used in investing activities (42,138) FINANCING ACTIVITIES Proceeds from issuance of surplus note -- Proceeds from line of credit borrowings -- Repayment of line of credit borrowings -- Receipts from annuity and interest sensitive life policies credited to policyholder account balances 29,501 Return of policyholder account balances on annuity and interest sensitive life policies (1,543) Net reallocations to Separate Accounts -- Contributions of capital by Parent 7,944 Dividends paid on preferred stock (3,348) _________________ Net cash provided by financing activities 32,554 _________________ Increase (decrease) in cash and cash equivalents 1,422 Cash and cash equivalents at beginning of period 3,624 _________________ Cash and cash equivalents at end of period $5,046 ================= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest -- Income taxes -- Non-cash financing activities: Contribution of property, plant and equipment from EIC Variable, Inc. net of $353 of accumulated depreciation --
See accompanying notes. 71 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1997 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 "Company"). 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 Company's products are marketed by broker/dealers, financial institutions and insurance agents. The Company's primary customers are individuals and families. On October 24, 1997, PFHI Holding, Inc. ("PFHI"), a Delaware corporation, acquired all of the outstanding capital stock of Equitable of Iowa Companies ("Equitable"), pursuant to the terms of the Agreement and Plan of Merger ("Merger Agreement") 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 the merger, Equitable was merged into PFHI which was simultaneously renamed Equitable of Iowa Companies, Inc. ("EIC" or the "Parent"), a Delaware corporation. See Note 5 for additional information regarding the merger. On August 13, 1996, Equitable acquired all of the outstanding capital stock of EIC Variable, Inc. (formerly known as BT Variable, Inc.) and its wholly owned subsidiaries, Golden American and Directed Services, Inc. ("DSI") from Whitewood Properties Corporation ("Whitewood") pursuant to the terms of a Stock Purchase Agreement between Equitable and Whitewood (the "Purchase Agreement"). 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. See Note 6 for additional information regarding the acquisition. For financial statement purposes, the 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 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 Company's financial statements for the period subsequent to 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: Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities," requires fixed maturity securities 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 deferred policy acquisition costs ("DPAC"), present value of in force acquired ("PVIF"), policy reserves and deferred income 72 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 taxes. At December 31, 1997 and 1996, all of the Company's fixed maturity securities are designated as available for sale although the Company is not precluded from designating fixed maturity securities 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 security's new cost basis by a charge to realized losses in the Company's Statement of Income. Premiums and discounts are amortized/accrued utilizing the scientific interest method which results in a constant yield over the security's expected life. Amortization/accrual of premiums and discounts on mortgage-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 becomes the security's new cost basis by a charge to realized losses in the Company's Statement of Income. 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 Company 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. FAIR VALUES: Estimated fair values, as reported herein, of publicly traded fixed maturity securities are as reported by an independent pricing service. Fair values of conventional mortgage-backed securities not actively traded in a liquid market 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 consists of the Company's investment in its registered separate accounts are based upon the quoted fair value of the securities comprising the individual portfolios underlying the separate accounts. Realized gains and losses are determined on the basis of specific identification and average cost methods for manager initiated and issuer initiated disposals, respectively. CASH AND CASH EQUIVALENTS For purposes of the consolidated statement of cash flows, the Company considers 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. 73 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 DEFERRED POLICY ACQUISITION COSTS Certain costs of acquiring new insurance business, principally commissions 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 "unlocked" when the Company revises its 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 maturity securities the Company has designated as "available for sale" under SFAS No. 115. PRESENT VALUE OF IN FORCE ACQUIRED As a result of the merger and the acquisition, a portion of the acquisition cost related to each transaction was allocated to the right to receive future cash flows from existing insurance contracts. This allocated cost represents the PVIF 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 PVIF is charged to expense in proportion to expected gross profits. This amortization is "unlocked" when the Company revises its estimate of current or future gross profits to be realized from the insurance contracts acquired. PVIF is adjusted to reflect the pro forma impact of unrealized gains (losses) on available for sale fixed maturities. See Notes 5 and 6 for additional information on PVIF resulting from the merger and acquisition. PROPERTY AND EQUIPMENT Property and equipment primarily represent leasehold improvements, office furniture and equipment and capitalized computer software and are not considered to be significant to the Company's 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 discussed previously and is being amortized over 40 years on a straight-line basis. Goodwill established as a result of the acquisition discussed above was being amortized over 25 years on a straight-line basis. See Notes 5 and 6 for additional information on the merger and acquisition. FUTURE POLICY BENEFITS Future policy benefits for fixed interest subaccounts 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 3.30% to 8.25% during 1997. The unearned revenue reserve represents unearned distribution fees discussed below. These distribution fees have been deferred and are amortized over the life of the contract in proportion to its expected gross profits. SEPARATE ACCOUNTS Assets and liabilities of the separate accounts reported in the accompanying balance sheets represent funds that are separately administered principally for variable annuity and variable life contracts. Contractholders, rather than the Company, bear the investment risk for variable products. At the direction of the Contractholders, the separate accounts invest the premiums from the sale of variable annuity and variable life 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 Company. The portion of the separate account assets applicable to variable annuity and variable life contracts cannot be charged with liabilities arising out of any other business the Company may conduct. 74 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 Variable separate account assets carried at fair value of the underlying investments 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. Net investment income and realized and unrealized capital gains and losses related to separate account assets are not reflected in the accompanying Statements of Income. Product charges recorded by the Company from variable annuity and variable life 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 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 maturity securities the Company has 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 Company's Statement of Income are based on the changes in the deferred tax asset or liability from period to period (excluding the SFAS No. 115 adjustment). DIVIDEND RESTRICTIONS The Company's ability to pay dividends to its parent is restricted because prior approval of insurance regulatory authorities is required for payment of dividends to the stockholder which exceed an annual limitation. During 1998, Golden American cannot pay dividends to its parent without prior approval of statutory authorities. The Company has maintained adequate statutory capital and surplus and has not used surplus relief or financial reinsurance, which have come under scrutiny by many state insurance departments. Under the provisions of the insurance laws of the State of New York, First Golden cannot distribute any dividends to its stockholders unless a notice of its intention to declare a dividend and amount of the dividend has been filed not less than thirty days in advance of the proposed declaration. The superintendent may disapprove the distribution by giving written notice to First Golden within thirty days after the filing should the superintendent find that the financial condition of First Golden does not warrant the distribution. 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 acquisition costs and present value of in force acquired, (4) fair values of assets and liabilities recorded as a result of merger and acquisition transactions, (5) asset valuation 75 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 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 preceding are inherently subject to change and are reassessed periodically. Changes in estimates and assumptions could materially impact the financial statements. 2. BASIS OF FINANCIAL REPORTING The financial statements of the Company 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 the fixed interest divisions 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 deferred income taxes (if applicable), present value of in force acquired and deferred policy acquisition costs, credited/charged directly to stockholder's equity rather than valued at amortized cost; (6) the carrying value of fixed maturity securities is reduced to fair value by a charge to realized losses in the Statement of Income 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 annuity and variable life products consist of policy charges 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. Net loss for Golden American as determined in accordance with statutory accounting practices was $428,000 in 1997, $9,188,000 in 1996 and $4,117,000 in 1995. Total statutory capital and surplus was $76,914,000 at December 31, 1997 and $80,430,000 at December 31, 1996. 76 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 3. INVESTMENT OPERATIONS INVESTMENT RESULTS Major categories of net investment income are summarized below:
POST-MERGER POST-ACQUISITION ________________________________________________________ For the period| For the period For the period October 25, 1997| January 1, 1997 August 14, 1996 through| through through December 31, 1997| October 24, 1997 December 31, 1996 __________________| ____________________________________ (Dollars in thousands) | Fixed maturities $4,443 | $18,488 $5,083 Equity securities 3 | -- 103 Mortgage loans on real | estate 879 | 3,070 203 Policy loans 59 | 482 78 Short-term investments 129 | 443 441 Other, net (154)| 24 2 Funds held in escrow -- | -- -- __________________| ____________________________________ Gross investment income 5,359 | 22,507 5,910 Less investment expenses (232)| (851) (115) __________________| ____________________________________ Net investment income $5,127 | $21,656 $5,795 ==================| ====================================
PRE-ACQUISITION _____________________________________ For the period | January 1, 1996 | For the year through | ended August 13, 1996 | December 31, 1995 __________________| _________________ (Dollars in thousands) | Fixed maturities $4,507 | $1,610 Equity securities -- | -- Mortgage loans on real | estate -- | -- Policy loans 73 | 56 Short-term investments 341 | 899 Other, net 22 | 148 Funds held in escrow 145 | 166 __________________| _________________ Gross investment income 5,088 | 2,879 Less investment expenses (98)| (61) __________________| _________________ Net investment income $4,990 | $2,818 ==================| =================
Realized gains (losses) on investments are as follows:
POST-MERGER POST-ACQUISITION ________________________________________________________ For the period| For the period For the period October 25, 1997| January 1, 1997 August 14, 1996 through| through through December 31, 1997| October 24, 1997 December 31, 1996 __________________| ____________________________________ (Dollars in thousands) | Fixed maturities, | available for sale $25 | $151 $42 Mortgage loans (10)| -- -- __________________| ____________________________________ Realized gains (losses) | on investments $15 | $151 $42 ========================================================
PRE-ACQUISITION _____________________________________ For the period | January 1, 1996 | For the year through | ended August 13, 1996 | December 31, 1995 __________________| _________________ (Dollars in thousands) | Fixed maturities, | available for sale ($420)| $297 Mortgage loans -- | -- __________________| _________________ Realized gains (losses) | on investments ($420)| $297 =====================================
77 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 The change in unrealized appreciation (depreciation) on securities at fair value is as follows:
POST-MERGER POST-ACQUISITION ________________________________________________________ For the period | For the period For the period October 25, 1997 | January 1, 1997 August 14, 1996 through | through through December 31, | October 24, December 31, 1997 | 1997 1996 __________________| ____________________________________ (Dollars in thousands) | Fixed maturities: | Available for sale $1,113 | $4,607 $410 Held for investment -- | -- -- Equity securities (533)| (465) (3) __________________| ____________________________________ Unrealized appreciation | (depreciation) of | securities $580 | $4,142 $407 ========================================================
PRE-ACQUISITION _____________________________________ For the period | January 1, 1996 | For the year through | ended August 13, 1996 | December 31, 1995 __________________| _________________ (Dollars in thousands) | Fixed maturities: | Available for sale ($2,087)| $958 Held for investment -- | 90 Equity securities 1 | 3 __________________| _________________ Unrealized appreciation | (depreciation) of | securities ($2,086)| $1,051 =====================================
At December 31, 1997 and December 31, 1996, amortized cost, gross unrealized gains and losses and estimated fair values of fixed maturity securities, all of which are designated as available for sale, are as follows:
Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value _______________________________________________ (Dollars in thousands) December 31, 1997 POST-MERGER ______________________________________________________________________________ U.S. government and governmental agencies and authorities: Mortgage-backed securities $62,988 $155 ($10) $63,133 Other 5,705 5 (1) 5,709 Foreign governments 2,062 -- (9) 2,053 Public utilities 25,899 49 (4) 25,944 Investment grade corporate 219,526 926 (32) 220,420 Below investment grade corporate 41,355 186 (210) 41,331 Mortgage-backed securities 55,753 78 (20) 55,811 _______________________________________________ Total $413,288 $1,399 ($286) $414,401 =============================================== December 31, 1996 POST-ACQUISITION ______________________________________________________________________________ U.S. government and governmental agencies and authorities: Mortgage-backed securities $70,902 $122 ($247) $70,777 Other 3,082 2 (4) 3,080 Public utilities 35,893 193 (38) 36,048 Investment grade corporate 134,487 586 (466) 134,607 Below investment grade corporate 25,921 249 (56) 26,114 Mortgage-backed securities 4,868 69 -- 4,937 _______________________________________________ Total $275,153 $1,221 ($811) $275,563 ===============================================
78 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 At December 31, 1997, net unrealized investment gains on fixed maturities designated as available for sale totaled $1,113,000. This appreciation caused an increase to stockholder's equity of $587,000 at December 31, 1997 (net of deferred income taxes of $316,000, an adjustment of $35,000 to DPAC and PVIF of $175,000). 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. Amortized cost and estimated fair value of fixed maturities designated as available for sale, by contractual maturity, at December 31, 1997, 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 _____________________________ Estimated Amortized Fair December 31, 1997 Cost Value _____________________________________________________________________________ (Dollars in thousands) Due within one year $26,261 $26,239 Due after one year through five years 198,249 198,781 Due after five years through ten years 70,037 70,437 _____________ _____________ 294,547 295,457 Mortgage-backed securities 118,741 118,944 _____________ _____________ Total $413,288 $414,401 ============= =============
An analysis of sales, maturities and principal repayments of the Company's fixed maturities portfolio is as follows:
Gross Gross Proceeds Amortized Realized Realized from Cost Gains Losses Sale ______________________________________________________________________________ (Dollars in thousands) 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 ====================================================== 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 ====================================================== 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 ====================================================== Year ended December 31, 1995: Scheduled principal repayments, calls and tenders $20,279 $305 ($16) $20,568 Sales 3,450 8 -- 3,458 ______________________________________________________ Total $23,729 $313 ($16) $24,026 ======================================================
79 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 INVESTMENT VALUATION ANALYSIS: The Company analyzes its investment portfolio at least quarterly in order to determine if the carrying value of any of its investments 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 1997 and 1996, no investments were identified as having an impairment other than temporary. INVESTMENTS ON DEPOSIT: At December 31, 1997 and 1996, affidavits of deposits covering bonds with a par value of $6,605,000 were on deposit with regulatory authorities pursuant to certain statutory requirements. INVESTMENT DIVERSIFICATIONS: The Company's investment policies related to its 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, 1997 and December 31, 1996. Fixed maturity investments included investments in basic industrials (30% in 1997 and 1996), financial companies (24% in 1997, 18% in 1996), various government bonds and government or agency mortgage-backed securities (17% in 1997 and 27% in 1996) and public utilities (7% in 1997, 13% in 1996). Mortgage loans on real estate have been analyzed by geographical location with concentrations by state identified as Utah (13% in 1997, 4% in 1996), California (12% in 1997, 7% in 1996), and Georgia (11% in 1997, 17% in 1996). There are no other concentrations of mortgage loans in any state exceeding ten percent at December 31, 1997 and 1996. Mortgage loans on real estate have also been analyzed by collateral type with significant concentrations identified in office buildings (43% in 1997, 36% in 1996), industrial buildings (33% in 1997, 31% in 1996), retail facilities (15% in 1997, 6% in 1996) and multi-family residential buildings (9% in 1997, 27% in 1996). Equity securities and investments accounted for by the equity method are not significant to the Company's 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, 1997. 4. 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 Company's investments, investment contracts and debt fall within the standards' definition of a financial instrument. Fair values for the Company's 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 Company's business or financial condition based on the information presented herein. The Company closely monitors the composition and yield of its 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 Company's 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. As discussed be- 80 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 low, the Company has used discount rates in its determination of fair values for its liabilities which are consistent with market yields for related assets. The use of the asset market yield is consistent with management's opinion that the risks inherent in its asset and liability portfolios are similar. This assumption, however, might not result in values consistent with those obtained through an actuarial appraisal of the Company's business or values that might arise in a negotiated transaction. The following compares carrying values as shown for financial reporting purposes with estimated fair values:
December 31 1997 1996 _______________________________________________________________________________ (Dollars in thousands) | Estimated | Estimated Carrying Fair | Carrying Fair Value Value | Value Value ___________ ___________| ___________ ___________ | ASSETS | Fixed maturities, available | for sale $414,401 $414,401 | $275,563 $275,563 Equity securities 3,904 3,904 | 33 33 Mortgage loans on real estate 85,093 86,348 | 31,459 30,979 Policy loans 8,832 8,832 | 4,634 4,634 Short-term investments 14,460 14,460 | 12,631 12,631 Cash and cash equivalents 21,039 21,039 | 5,839 5,839 Separate account assets 1,646,169 1,646,169 | 1,207,247 1,207,247 | LIABILITIES | Annuity products 493,181 431,859 | 280,076 253,012 Surplus note 25,000 28,837 | 25,000 28,878 Separate account liabilities 1,646,169 1,443,458 | 1,207,247 1,119,158 |
The following methods and assumptions were used by the Company in estimating fair values. FIXED MATURITIES: Estimated fair values of publicly traded securities are as reported by an independent pricing service. Estimated fair values of conventional mortgage-backed securities not actively traded in a liquid market 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 Company's investment in the portfolios underlying its separate accounts, are based upon the quoted fair value of the individual securities comprising the individual portfolios underlying the separate accounts. For equity securities not actively traded, estimated fair values are based upon values of issues of comparable yield 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 Company's 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 based upon the quoted fair values of the individual securities in the separate accounts. 81 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 ANNUITY PRODUCTS: Estimated fair values of the Company's liabilities for future policy benefits for the fixed interest division of the variable annuity products and for supplemental contracts without life contingencies are based upon discounted cash flow calculations. Cash flows of future policy benefits are discounted using the market yield rate of the assets supporting these liabilities. SURPLUS NOTE: Estimated fair value of the Company's surplus note was based upon discounted future cash flows using a discount rate approximating the Company's return on invested assets. SEPARATE ACCOUNT LIABILITIES: Separate account liabilities are reported at full account value in the Company's historical cost balance sheet. Estimated fair values of separate account liabilities are based upon assumptions using an estimated long-term average market rate of return to discount future cash flows. The reduction in fair values for separate account liabilities reflect the present value of future revenue from product charges, distribution fees or surrender charges. 5. MERGER TRANSACTION: On October 23, 1997, Equitable shareholders approved the Merger Agreement dated as of 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 pursuant 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. Equitable also owned all the outstanding capital stock of Locust Street Securities, Inc. ("LSSI"), Equitable Investment Services, Inc., DSI, Equitable of Iowa Companies Capital Trust, Equitable of Iowa Companies Capital Trust II and Equitable of Iowa Securities Network, Inc. In exchange for the outstanding capital stock of Equitable, ING paid total consideration of approximately $2.1 billion in cash and stock plus the assumption of approximately $400 million in debt according to the Merger Agreement. As a result of the merger, 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. Goodwill was established for the excess of the merger cost over the fair value of the net assets and pushed down to EIC and its subsidiaries including Golden American and First Golden. The merger cost is preliminary with respect to estimated expenses and, as a result, the PVIF and related amortization and deferred taxes may change. The allocation of the purchase price to the Company was approximately $227,497,000. The amount of goodwill allocated to the Company 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 Company's DPAC, previous balance of PVIF and unearned revenue reserve, as of the merger date, were eliminated and an asset of $44,297,000 representing PVIF was established for all policies in force at the merger date. PRESENT VALUE OF IN FORCE ACQUIRED: 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 Company at the date of merger. This allocated cost represents the present value of in force acquired reflecting the value of those purchased policies calculated by discounting the actuarially determined expected future cash flow at the discount rate determined by ING. 82 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 An analysis of the PVIF asset is as follows:
POST-MERGER ________________________ For the period October 25, 1997 through December 31, 1997 ________________________ (Dollars in thousands) Beginning balance $44,297 Imputed interest 1,004 Amortization (1,952) Adjustment for unrealized gains on available for sale securities (175) ________________________ Ending balance $43,174 ========================
Interest is imputed on the unamortized balance of PVIF at a rate of 7.03% for the period October 25, 1997 through December 31, 1997. The amortization of PVIF net of imputed interest is charged to expense. PVIF is also 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 amoritization for the next five years, relating to the PVIF as of December 31, 1997, is $6,200,000 in 1998, $6,000,000 in 1999, $5,600,000 in 2000, $5,000,000 in 2001 and $4,200,000 in 2002. Actual amortization may vary based upon final purchase price allocation and changes in assumptions and experience. 6. 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"), pursuant to the terms of the Purchase Agreement dated as of 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. Subsequent to the acquisition, the BT Variable, Inc. name was changed to EIC Variable, Inc. At 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. Goodwill was established for the excess of the acquisition cost over the fair value of the net assets acquired and pushed down to Golden American. The allocation of the purchase price to the Company was approximately $139,872,000. 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. The Company's DPAC, previous balance of PVIF and unearned revenue reserve, as of the merger date, were eliminated and an asset of $85,796,000 representing PVIF was established for all policies in force at the acquisition date. 83 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 PRESENT VALUE OF IN FORCE ACQUIRED: 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 the Company at the date of acquisition. This allocated cost represents the present value of in force acquired 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 PVIF asset is as follows:
POST-ACQUISITION PRE-ACQUISITION _________________________________________________ For the For the | For the period period | period January August | January For the 1, 1997 14, 1996 | 1, 1996 year through through | through ended October December | August December 24, 1997 31, 1996 | 13, 1996 31, 1995 _______________________| ________________________ (Dollars in thousands) | Beginning balance $83,051 $85,796 | $6,057 $7,620 Imputed interest 5,138 2,465 | 273 548 Amortization (10,363) (5,210)| (1,224) (2,100) Adjustment for unrealized | gains (losses) on available | for sale securities (373) -- | 11 (11) _______________________| ________________________ Ending balance $77,453 $83,051 | $5,117 $6,057 =================================================
Pre-Acquisition PVIF 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 PVIF at rates of 7.70% to 7.80% for the period August 14, 1996 through October 24, 1997. The amortization of PVIF net of imputed interest was charged to expense. PVIF was also adjusted for the unrealized gains (losses) on available for sale securities; such changes were included directly in stockholder's equity. 7. INCOME TAXES The Company will file a consolidated federal income tax return with its wholly owned life insurance subsidiary. 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, 1997, Golden American has net operating loss ("NOL") carryforwards for federal income tax purposes of approximately $8,697,000. Approximately $5,094,000 and $3,603,000 of these NOL carryforwards are available to offset future taxable income of the Company through the years 2011 and 2012, respectively. 84 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 INCOME TAX EXPENSE Income tax expense (benefit) included in the consolidated financial statements is as follows:
POST-MERGER POST-ACQUISITION PRE-ACQUISITION _____________________________________________________________________ For the | For the For the | For the period | period period | period October 25, | January 1, August 14, | January 1, 1997 | 1997 1996 | 1996 For the through | through through | through year ended December 31, | October 24, December 31, | August 13, December 31, 1997 | 1997 1996 | 1996 1995 _____________| __________________________| __________________________ (Dollars in thousands) | | Current -- | $12 -- | -- -- Deferred $146 | (1,349) $220 | ($1,463) -- _____________| __________________________| __________________________ $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 | For the For the | For the period | period period | period October | January August | January 25, 1997 | 1, 1997 14, 1996 | 1, 1996 For the through | through through | through year ended December | October December | August December 31, 1997 | 24, 1997 31, 1996 | 13, 1996 31, 1995 ___________| ____________________| ____________________ (Dollars in thousands) | | Income (loss) | | before income taxes ($279)| ($608) $570 | $1,736 $3,364 ===========| ====================| ==================== Income tax | | (benefit) at federal | | statutory rate ($98)| ($213) $200 | $607 $1,177 Tax effect (decrease) of: | | Realization of NOL | | carryforwards -- | -- -- | (1,214) -- Dividends received | | deduction -- | -- -- | -- (350) Goodwill amortization 220 | -- -- | -- -- Compensatory stock | | option and restricted | | stock expense -- | (1,011) -- | -- -- Other items 24 | (113) 20 | -- 17 Valuation allowance -- | -- -- | (856) (844) ___________| ____________________| ____________________ Income tax expense | | (benefit) $146 | ($1,337) $220 | ($1,463) $-- =======================================================
85 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 DEFERRED INCOME TAXES The tax effect of temporary differences giving rise to the Company's deferred income tax assets and liabilities at December 31, 1997 and 1996 is as follows:
POST-MERGER POST-ACQUISITION ___________________________________ December 31 1997 | 1996 ____________________________________________________________ | ________________ (Dollars in thousands) | Deferred tax assets: | Future policy benefits $27,399 | $19,102 Deferred policy acquisition costs 4,558 | 1,985 Goodwill 17,620 | 5,918 Net operating loss carryforwards 3,044 | 1,653 Other 1,548 | 235 ________________ | ________________ 54,169 | 28,893 Deferred tax liabilities: | Unrealized appreciation (depreciation) | of securities at fair value (130) | (145) Fixed maturity securities (1,665) | -- Present value of in force acquired (15,172) | (29,068) Other (972) | (45) ________________ | ________________ (17,939) | (29,258) ________________ | ________________ Deferred income tax asset (liability) $36,230 | ($365) ===================================
The Company is required to establish a "valuation allowance" for any portion of the deferred tax assets that management believes will not be realized. In the opinion of management, it is more likely than not that the Company will realize the benefit of the deferred tax assets, and, therefore, no such valuation allowance has been established. 8. RETIREMENT PLANS DEFINED BENEFIT PLANS In 1997, the Company was allocated their share of the pension liability associated with their employees. The Company's employees are covered by the employee retirement plan of an affiliate, Equitable Life. The benefits are based on years of service and the employee's average annual compensation during the last five years of employment. Further, Equitable Life sponsors a defined contribution plan that is qualified under Internal Revenue Code Section 401(k). The Company's funding and accounting policies are consistent with the funding requirements of Federal law and regulations. The following table sets forth the plan's funded status and amounts recognized in the Company's consolidated balance sheet:
POST-MERGER _______________________ December 31, 1997 _______________________ (Dollars in thousands) Accumulated benefit obligation $579 ======================= Plan assets at fair value, primarily bonds, common stocks, mortgage loans and short-term investments -- Projected benefit obligation for service rendered to date $956 _______________________ Pension liability $956 =======================
86 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 Net periodic pension cost included the following components:
POST-MERGER POST-ACQUISITION ______________________________________ For the period | For the period October 25, 1997 | January 1, 1997 through | through December 31, 1997 | October 24, 1997 __________________| __________________ (Dollars in thousands) | Service cost-benefits earned | during the period $114 | $568 Interest cost on projected | benefit obligation 10 | 15 Net amortization and deferral -- | 1 __________________| __________________ Net periodic pension cost $124 | $584 ======================================
The discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation were 7.25% and 5.00%, respectively, at December 31, 1997. The average expected long term rate of return on plan assets was 9.00% in 1997. 9. RELATED PARTY TRANSACTIONS 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 the Company which as of December 31, 1997 are sold primarily through six broker/dealer institutions. For the periods October 25, 1997, through December 31, 1997 and January 1, 1997 through October 24, 1997, the Company paid commissions to DSI totaling $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). For the year ended December 31, 1995 commissions paid by Golden American to DSI aggregated $8,440,000. Golden American provides certain managerial and supervisory services to DSI. Beginning in 1995, this fee was calculated as a percentage of average assets in the variable separate accounts. For the periods October 25, 1997 through December 31, 1997 and January 1, 1997 through October 24, 1997, the fee was $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. This fee was $987,000 for 1995. The Company has a service agreement with Equitable Investment Services, Inc. ("EISI"), an affiliate, in which EISI provides 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. 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. 87 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 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 $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 Company has a service agreement with Equitable Life in which Equitable Life provides administrative and financial related services. For the period October 25, 1997 through December 31, 1997 and January 1, 1997 through October 24, 1997, the Company incurred expenses of $13,000 and $16,000, respectively, under this agreement. The Company had premiums, net of reinsurance, for variable products from six significant broker/dealers for the year ended December 31, 1997, that totaled $445,300,000, or 71% of premiums ($298,000,000 or 67% from two significant broker/dealers for the year ended December 31, 1996). Included in these amounts are premiums for 1997 of $26.2 million from LSSI, an affiliate. SURPLUS NOTE: 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 accrued interest thereon shall be 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 shall be subject to the prior approval of the Delaware Insurance Commissioner. Golden American incurred interest totaling $344,000 and $1,720,000 for the period 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. RECIPROCAL LOAN AGREEMENT: Golden American maintains a reciprocal loan agreement with ING America Insurance Holdings, Inc. ("ING America"), a Delaware corporation, and affiliate of EIC, 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 America can borrow up to $65,000,000 from one another. Interest on any Golden American borrowings is charged at the rate of ING America's cost of funds for the interest period plus 0.15%. Interest on any ING America borrowings is charged at a rate based on the prevailing interest rate of U.S. commercial paper available for purchase with a similar arrangement. 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, the Company incurred interest expense of $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. At December 31, 1997, $24,059,000 was outstanding under this agreement. The outstanding balance was repaid by a capital contribution. STOCKHOLDER'S EQUITY: On September 23, 1996, EIC Variable, Inc. contributed $50,000,000 of Preferred Stock to the Company's additional paid-in capital. 88 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 10. 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 had estimated that 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 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, 1997, the Company had reinsurance treaties with five unaffiliated reinsurers covering a significant portion of the mortality risks under its variable contracts. The Company remains liable to the extent its reinsurers do not meet their obligations under the reinsurance agreements. Reinsurance in force for life mortality risks were $96,686,000 and $58,368,000 at December 31, 1997 and 1996. At December 31, 1997, the Company has a net payable of $11,000 for reserve credits, reinsurance claims or other receivables from these reinsurers comprised of $240,000 for claims recoverable from reinsurers and a payable of $251,000 for reinsurance premiums. Included in the accompanying financial statements are net considerations to reinsurers of $326,000, $1,871,000, $875,000, $600,000 and $2,800,000 and net policy benefits recoveries of $461,000, $1,021,000, $654,000, $1,267,000 and $3,500,000 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 and the year ended 1995, 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 $265,000, $335,000, $10,000 and $56,000 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. In 1995, net income was reduced by $109,000. GUARANTY FUND ASSESSMENTS: Assessments are levied on the Company by life and health guaranty associations in most states in which the Company is 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 Company cannot predict whether and to what extent legislative initiatives may affect the right to offset. Based upon information currently available from the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA), the Company believes that it is probable these insolvencies will result in future assessments which could be material to the Company's financial statements if the Company's reserve is not sufficient. The Company regularly reviews its reserve for these insolvencies and updates its reserve based upon the Company's interpretation of information from the NOLHGA annual report. The associated cost for a particular insurance company can vary significantly based upon its fixed account premium volume by line of business and 89 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, 1997 state premium levels as well as its potential for premium tax offset. Accordingly, the Company accrued and charged to expense an additional $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, 1997, the Company has an undiscounted reserve of $1,358,000 to cover estimated future assessments (net of related anticipated premium tax credits) and has established an asset totaling $238,000 for assessments paid which may be recoverable through future premium tax offsets. The Company believes this reserve is sufficient to cover expected future insurance guaranty fund assessments, based upon previous premiums, and known insolvencies at this time. LITIGATION: In the ordinary course of business, the Company is engaged in litigation, none of which management believes is material. VULNERABILITY FROM CONCENTRATIONS: The Company has various concentrations in its investment portfolio (see Note 3 for further information). The Company's 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. A significant portion of the Company's sales is generated by six broker/dealers. Substantial changes in tax laws that would make these products less attractive to consumers, 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 Company's financial condition. OTHER COMMITMENTS: At December 31, 1997, outstanding commitments to fund mortgage loans on real estate totaled $1,825,000. YEAR 2000 (UNAUDITED): Based on a study of its computer software and hardware, the Company has determined its exposure to the Year 2000 change of the century date issue. Management believes the Company's systems are or will be substantially compliant by Year 2000 and has engaged external consultants to validate this assumption. Golden American has spent approximately $2,000 in 1997 related to the external consultants' analysis. The projected cost to the Company for the external consultants' analysis is approximately $130,000 to $170,000. The only system known to be affected by this issue is a system maintained by an affiliate who will incur the related costs to make the system compliant. To mitigate the effect of outside influences and other dependencies relative to the Year 2000, the Company will be contacting significant customers, suppliers and other third parties. To the extent these third parties would be unable to transact business in the Year 2000 and thereafter, the Company's operations could be adversely affected. 90 - ------------------------------------------------------------------------------ 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...................................... 2 Distribution of Contracts................................. 2 Performance Information................................... 3 IRA Withdrawal Option..................................... 9 Other Information......................................... 9 Financial Statements of Separate Account.................. 10 Appendix--Description of Bond Ratings..................... A1 - ------------------------------------------------------------------------------ PLEASE TEAR OFF, COMPLETE AND RETURN THE FORM BELOW TO ORDER A FREE STATEMENT OF ADDITIONAL INFORMATION FOR THE CONTRACTS OFFERED UNDER THE PROSPECTUS. ADDRESS THE FORM TO OUR CUSTOMER SERVICE CENTER; THE ADDRESS IS SHOWN ON THE 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 3306 DVA PLUS (__/99) 91 THIS PAGE IS INTENTIONALLY LEFT BLANK. 92 Appendix A Condensed Financial Information The following tables give (1) the accumulation unit value ("AUV"), (2) the total number of accumulation units, and (3) the total accumulation unit value for each subaccount of Golden American Separate Account B available under the Contract for the indicated periods. Information for the Growth Opportunities, Developing World, Global Fixed Income, PIMCO High Yield Bond and PIMCO StocksPLUS Growth and Income subaccounts is not available because they had not commenced operations as of December 31, 1997. Except where noted, each subaccount commenced operations on October 2, 1995 (the Managed Global subaccount commenced operations initially as a subaccount of another separate account, the Managed Global Account of Separate Account D of Golden American; however, at the time of conversion the value of an accumulation unit did not change).
MULTIPLE ALLOCATION - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 20.83 6,849 | 20.55 4,585 | 20.28 29,860 | | 1996 17.96 5,207 | 17.75 2,675 | 17.54 19,593 | | 1995 16.72 1,747 | 16.55 349 | 16.38 6,068 | | 10/2/95 16.10 -- | 15.94 -- | 15.78 -- | - ---------------------------------------------------------------------------------------------------------------------------------
FULLY MANAGED - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 19.93 8,345 | 19.66 6,706 | 19.40 33,720 | | 1996 17.50 3,568 | 17.29 2,999 | 17.08 16,273 | | 1995 15.23 748 | 15.07 211 | 14.91 2,750 | | 10/2/95 14.77 -- | 14.62 -- | 14.47 -- | - ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL APPRECIATION - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 22.24 7,868 | 22.05 6,326 | 21.87 38,297 | | 1996 17.46 2,839 | 17.34 3,028 | 17.22 19,054 | | 1995 14.71 355 | 14.63 239 | 14.55 4,752 | | 10/2/95 14.31 -- | 14.23 -- | 14.16 -- | - ---------------------------------------------------------------------------------------------------------------------------------
A1
RISING DIVIDENDS - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 20.22 16,079 | 20.09 14,848 | 19.96 73,266 | | 1996 15.77 4,699 | 15.69 5,575 | 15.62 25,976 | | 1995 13.24 303 | 13.19 476 | 13.15 3,956 | | 10/2/95 12.16 -- | 12.12 -- | 12.09 -- | - ---------------------------------------------------------------------------------------------------------------------------------
ALL-GROWTH - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 14.48 3,097 | 14.28 3,227 | 14.09 15,367 | | 1996 13.85 1,795 | 13.68 2,000 | 13.52 10,173 | | 1995 14.10 309 | 13.96 231 | 13.81 3,479 | | 10/2/95 13.88 -- | 13.74 -- | 13.60 -- | - ---------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 25.82 4,473 | 25.46 2,883 | 25.14 22,333 | | 1996 21.30 1,155 | 21.04 899 | 20.79 8,004 | | 1995 15.94 43 | 15.78 46 | 15.61 955 | | 10/2/95 15.06 -- | 14.91 -- | 14.76 -- | - ---------------------------------------------------------------------------------------------------------------------------------
HARD ASSETS - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 20.85 3,219 | 20.57 1,680 | 20.29 12,834 | | 1996 19.89 1,873 | 19.65 850 | 19.42 6,635 | | 1995 15.11 375 | 14.96 43 | 14.80 394 | | 10/2/95 14.86 -- | 14.71 -- | 14.57 -- | - ---------------------------------------------------------------------------------------------------------------------------------
A2
VALUE EQUITY - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 18.36 6,843 | 18.28 7,510 | 18.20 31,652 | | 1996 14.61 2,649 | 14.57 3,642 | 14.53 15,282 | | 1995 13.37 458 | 13.36 312 | 13.34 2,394 | | 10/2/95 12.43 -- | 12.41 -- | 12.40 -- | - ---------------------------------------------------------------------------------------------------------------------------------
STRATEGIC EQUITY - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 14.36 5,840 | 14.31 7,644 | 14.26 19,185 | | 1996 11.81 4,374 | 11.78 2,729 | 11.76 11,396 | | 1995 10.01 762(1) | 10.01 475(1) | 10.01 1,528(1) | | 10/2/95 10.00(1) -- | 10.00(1) -- | 10.00(1) -- | - ---------------------------------------------------------------------------------------------------------------------------------
SMALL CAP - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 12.92 5,183 | 12.88 5,735 | 12.84 26,069 | | 1996 11.86 2,352 | 11.84 2,692 | 11.82 15,569 | | 1995 --(2) --(2) | --(2) --(2) | --(2) -- (2) | | 10/2/95 --(2) -- | --(2) --(2) | -- -- | - ---------------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 8.75 2,182 | 8.70 1,875 | 8.64 9,779 | | 1996 9.78 957 | 9.74 995 | 9.69 6,581 | | 1995 9.23 145 | 9.20 115 | 9.17 1,475 | | 10/2/95 9.50 -- | 9.47 -- | 9.44 -- | - ---------------------------------------------------------------------------------------------------------------------------------
(1) The Strategic Equity subaccount became available for investment on October 2, 1995, starting with an accumulation unit value of $10.00. (2) The Small Cap subaccount became available for investment on January 2, 1996, starting with an accumulation unit value of $10.00. A3
MANAGED GLOBAL - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 11.76 6,180 | 11.67 5,120 | 11.58 31,494 | | 1996 10.62 2,402 | 10.55 2,446 | 10.49 14,422 | | 1995 9.58 256 | 9.53 262 | 9.49 1,983 | | 10/2/95 9.32 -- | 9.28 -- | 9.24 -- | - ---------------------------------------------------------------------------------------------------------------------------------
MID-CAP GROWTH - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 18.64 1,600 | 18.52 2,081 | 18.45 9,284 | | 1996 15.77 471 | 15.70 443 | 15.66 880 | | 1995 --(3) --(3) | --(3) --(3) | --(3) --(3) | | 10/2/95 --(3) -- | --(3) -- | --(3) -- | - ---------------------------------------------------------------------------------------------------------------------------------
RESEARCH - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 18.95 2 | 18.87 2,691 | 18.77 14,752 | | 1996 --(4) --(4) | --(4) --(4) | --(4) --(4) | | 1995 --(4) --(4) | --(4) --(4) | --(4) --(4) | | 10/2/95 --(4) -- | --(4) -- | --(4) -- | - ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 16.18 3,636 | 16.10 2,285 | 16.02 11,548 | | 1996 --(4) --(4) | --(4) --(4) | --(4) --(4) | | 1995 --(4) --(4) | --(4) --(4) | --(4) --(4) | | 10/2/95 --(4) -- | --(4) -- | --(4) -- | - ---------------------------------------------------------------------------------------------------------------------------------
(3) The Mid-Cap Growth subaccount and Growth & Income subaccount became available for investment on September 3, 1996, starting with accumulation unit values of $14.64 and $10.94, respectively. (4) The Research, Total Return and Value + Growth subaccounts became available for investment on January 20, 1997, starting with accumulation unit values of $16.43, $13.76, and $11.99, respectively. A4
GROWTH & INCOME - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 15.45 5,037 | 15.41 3,492 | 15.36 17,317 | | 1996 12.50 627 | 12.49 475 | 12.47 2,167 | | 1995 --(3) --(3) | --(3) --(3) | --(3) --(3) | | 10/2/95 --(3) -- | --(3) -- | --(3) -- | - ---------------------------------------------------------------------------------------------------------------------------------
VALUE + GROWTH - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 13.06 2,106 | 13.03 1,729 | 12.99 9,339 | | 1996 --(4) --(4) | --(4) --(4) | --(4) --(4) | | 1995 --(4) --(4) | --(4) --(4) | --(4) --(4) | | 10/2/95 --(4) -- | --(4) -- | --(4) -- | - ---------------------------------------------------------------------------------------------------------------------------------
LIMITED MATURITY BOND - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 16.13 2,247 | 15.91 1,250 | 15.70 7,104 | | 1996 15.31 1,285 | 15.13 701 | 14.95 5,224 | | 1995 14.86 401 | 14.71 174 | 14.56 1,988 | | 10/2/95 14.49 -- | 14.35 -- | 14.20 -- | - ---------------------------------------------------------------------------------------------------------------------------------
LIQUID ASSET - --------------------------------------------------------------------------------------------------------------------------------- | STANDARD DEATH BENEFIT | ANNUAL RATCHET DEATH BENEFIT | 7% SOLUTION ENHANCED DEATH BENEFIT | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | TOTAL # OF | TOTAL # OF | TOTAL # OF | | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | AUV ACCUMULATION TOTAL | | AT UNITS AT AUV | AT UNITS AT AUV | AT UNITS AT AUV | | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | YEAR END YEAR END (IN THOUSANDS) | |-------------------------------------------------------------------------------------------------------------------------------| | | | | | 1998 $ $ | $ $ | $ $ | | 1997 14.02 3,188 | 13.83 1,611 | 13.65 14,501 | | 1996 13.51 1,033 | 13.35 1,134 | 13.19 5,054 | | 1995 13.03 494 | 12.89 801 | 12.76 1,190 | | 10/2/95 12.89 -- | 12.76 -- | 12.63 -- | - ---------------------------------------------------------------------------------------------------------------------------------
(3) The Mid-Cap Growth subaccount and Growth & Income subaccount became available for investment on September 3, 1996, starting with accumulation unit values of $14.64 and $10.94, respectively. (4) The Research, Total Return and Value + Growth subaccounts became available for investment on January 20, 1997, starting with accumulation unit values of $16.43, $13.76, and $11.99, respectively. A5 APPENDIX B 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 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 8%; and that no prior transfers or 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 / 1.0825 ) ^ 2,555 / 365 - 1 ) = $9,700 Therefore, the amount paid to you on full surrender ignoring any surrender charge is $114,530 ( $124,230 - $9,700 ). 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 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 / 1.0625 ) ^ 2,555 / 365 - 1 ) = $6,270 Therefore, the amount paid to you on full surrender ignoring any surrender charge is $130,500 ( $124,230 + $6,270 ). 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 withdrawal of $114,530 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 withdrawals affecting this Fixed Interest Allocation have been made. B1 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 ) 3. Amount that must be withdrawn = ( $114,530 / ( 1.07 / 1.0825 ) ^ 2,555 / 365 - 1 ) = $124,230 Then calculate the Market Value Adjustment on that amount 4. Market Value Adjustment = $124,230 X (( 1.07 / 1.0825 ) ^ 2,555 / 365 - 1 ) = $9,700 Therefore, the amount of the withdrawal paid to you ignoring any surrender charge is $114,530 as requested. The Fixed Interest Allocation will be reduced by the amount of the withdrawal, $114,530, and also reduced by the Market Value Adjustment of $9,700, 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 withdrawal of $130,530 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 = ( $130,500 / ( 1.07 / 1.0625 ) ^ 2,555 / 365 ) = $124,230 Then calculate the Market Value Adjustment on that amount 4. Market Value Adjustment = $124,230 X (( 1.07 / 1.0625 ) ^ 2,555 / 365 - 1 ) = $6,270 Therefore, the amount of the withdrawal paid to you ignoring any surrender charge is $130,500, as requested. The Fixed Interest Allocation will be reduced by the amount of the withdrawal, $130,500, but increased by the Market Value Adjustment of $6,270, for a total reduction in the Fixed Interest Allocation of $124,230. B2 APPENDIX C 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 or $75,000 x .10) is the maximum free withdrawal amount that you may withdraw during the contract year without the imposition of 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. C1 GOLDEN AMERICAN LIFE INSURANCE COMPANY Golden American Life Insurance Company is a stock company domiciled in Wilmington, Delaware 3306 DVA PLUS __/99 PART B STATEMENT OF ADDITIONAL INFORMATION GOLDENSELECT DVA PLUS DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY CONTRACT ISSUED BY SEPARATE ACCOUNT B ("Account B") (or the "Account") 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 8794, WILMINGTON, DE 19899-8794 OR TELEPHONE 1-800-366-0066. DATE OF PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION: [ ] 1999 TABLE OF CONTENTS ITEM PAGE Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Description of Golden American Life Insurance Company. . . . . . . 1 Safekeeping of Assets. . . . . . . . . . . . . . . . . . . . . . . 1 The Administrator. . . . . . . . . . . . . . . . . . . . . . . . . 1 Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . 2 Distribution of Contracts. . . . . . . . . . . . . . . . . . . . . 2 Performance Information. . . . . . . . . . . . . . . . . . . . . . 3 IRA Partial Withdrawal Option. . . . . . . . . . . . . . . . . . . 9 Other Information. . . . . . . . . . . . . . . . . . . . . . . . . 9 Financial Statements of Separate Account B . . . . . . . . . . . . 10 Appendix - Description of Bond Ratings . . . . . . . . . . . . . . A-1 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)("EIC") acquired all of the interest in Golden American and Directed Services, Inc. On October 24, 1997, Equitable of Iowa Companies and ING Groep N.V. ("ING") completed a merger agreement with Equitable of Iowa becoming a wholly owned subsidiary of ING. ING, headquartered in The Netherlands, is a global financial services holding company with over $307.6 billion in assets as of December 31, 1997. As of December 31, 1997, Golden American had approximately $227.3 million in stockholder's equity and approximately $2.4 billion in total assets, including approximately $1.6 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 has formed a subsidiary, First Golden American Life Insurance Company of New York ("First Golden"), who currently writes variable annuity business in the state of New York. The initial capitalization of First Golden was $25 million. 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. 1 INDEPENDENT AUDITORS Ernst & Young LLP, independent auditors, performs annual audits of Golden American and the Account. 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 the Depositor, 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, from December 31, 1994 through December 31, 1996, were sold primarily through two broker/dealer institutions, and during the year ended December 1997 were sold primarily through six broker/dealer institutions. For the years ended 1997, 1996 and 1995 commissions paid by Golden American to Directed Services, Inc. aggregated $36,350,000, $27,065,000 and $8,440,000, respectively. Directed Services, Inc. is located at 1001 Jefferson Street, suite 400, Wilmington, Delaware 19801. 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, 2 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 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 $2,770,000, $2,267,000 and $987,000 for the years ended 1997, 1996 and 1995, 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 sales load which can be a maximum level of 6.5% of premium, and 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) 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, 1997 to December 31, 1997 were 3.43% and 3.49%, respectively. 3 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: 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) 4 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. The Average Annualized Total Return for the Subaccounts presented on a standardized basis for the year ending December 31, 1997 were as follows:
Average Annualized Total Return for Periods Ending 12/31/97 -- Standardized - ---------------------------------------------------------------------------- One Year Period Five Year Period Inception to Subaccount Ending 12/31/97 Ending 12/31/97 12/31/97 Inception Date - -------- --------------- ---------------- ------------ -------------- Multiple Allocation 8.56% 8.62%* 8.20%* 1/25/89 Fully Managed 6.50% 7.92%* 7.66%* 1/25/89 Capital Appreciation 19.90% 14.40% 14.48%* 5/4/92 Rising Dividends 20.75% N/A 17.09% 10/4/93 All-Growth -2.84% 1.96%* 3.87%* 1/25/89 Real Estate 13.82% 17.11%* 10.84%* 1/25/89 Hard Assets -2.54% 17.03%* 8.21%* 1/25/89 Value Equity 18.25% N/A 20.74% 1/1/95 Strategic Equity 14.19% N/A 14.82% 10/2/95 Small Cap 1.56% N/A 10.16% 1/2/96 Emerging Markets -17.84% N/A -4.53% 10/4/93 Managed Global ** 3.37% 2.43 2.28%* 10/21/92 Limited Maturity Bond -2.04% 3.28%* 5.14%* 1/25/89 Liquid Assets -3.60% 2.19%* 3.49%* 1/25/89 OTC 10.75%* N/A 20.19%* 10/7/94 Total Return 11.93% N/A 14.49%* 10/7/94 Research 11.20% N/A 20.41%* 10/7/94 Growth & Income 16.15% N/A 24.46%* 4/1/96 Value + Growth 6.91% N/A 12.49%* 4/1/96
- ---------------------- * Total return calculation reflects partial waiver of fees and expenses. ** From its inception date until September 3, 1996, the Managed Global Account of Separate Account D was a registered management investment company. On that date it was reorganized into two entities: the Managed Global Subaccount of Separate Account B and the Managed Global Series of The GCG Trust. The historical performance of the Managed Global Subaccount remains unchanged by the reorganization. 5 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: [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. The Average Annualized Total Return for the Subaccounts presented on a non- standardized basis for the year ending December 31, 1997 were as follows:
Average Annualized Total Return for Periods Ending 12/31/97 -- Non-Standardized - ------------------------------------------------------------------------------- One Year Period Five Year Period Inception to Subaccount Ending 12/31/97 Ending 12/31/97 12/31/97 Inception Date - -------- --------------- ---------------- ------------ -------------- Multiple Allocation 15.62% 9.09%* 8.23%* 1/25/89 Fully Managed 13.56% 8.40%* 7.70%* 1/25/89 Capital Appreciation 26.96% 14.78% 14.79%* 5/4/92 Rising Dividends 27.82% N/A 17.69% 10/4/93 All-Growth 4.23% 2.56%* 3.91%* 1/25/89 Real Estate 20.89% 17.46%* 10.86%* 1/25/89 Hard Assets 4.52% 17.38%* 8.24%* 1/25/89 Value Equity 25.31% N/A 22.14% 1/1/95 Strategic Equity 21.25% N/A 17.10% 10/2/95 Small Cap 8.62% N/A 13.35% 1/2/96 Emerging Markets -10.78% N/A -3.37% 10/4/93 Managed Global ** 10.43%* 3.02% 2.87%* 10/21/92 Limited Maturity Bond 5.02% 3.86%* 5.18%* 1/25/89 Liquid Assets 3.47% 2.79%* 3.54%* 1/25/89 OTC 17.81%* N/A 20.85%* 10/7/94 Total Return 18.99% N/A 15.68%* 10/7/94 Research 18.26% N/A 21.47%* 10/7/94 Growth & Income 23.21% N/A 27.89%* 4/1/96 Value + Growth 13.98% N/A 16.19%* 4/1/96 - ----------------------------------------------------------------------
* Total return calculation reflects partial waiver of fees and expenses. ** From its inception date until September 3, 1996, the Managed Global Account of Separate Account D was a registered management investment company. On that date it was reorganized into two entities: the Managed Global Subaccount of Separate Account B and the Managed Global portfolio of The GCG Trust. The historical performance of the Managed Global Subaccount remains unchanged by the reorganization. 6 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 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, 7 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 Measurement of Investment Experience. 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). Note that the examples below are calculated for a Contract issued with the 7% Solution Enhanced Death Benefit Option, the death benefit option with the highest mortality and expense risk charge. The mortality and expense risk charge associated with the Annual Ratchet Enhanced Death Benefit Option and the Standard Death Benefit are lower than that used in the examples and would result in higher AUV's or contract values.
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 . . . . . . . . . . . . . . . . . . 0.00003863 6. Less asset based administrative charge. . . . . . . . . . . . . . . . . . . 0.00000411 7. Net investment return [(4) minus (5) minus (6)] . . . . . . . . . . . . . . 0.00995726 8. Net investment factor [(1.000000) plus (7)] . . . . . . . . . . . . . . . . 1.00995726 9. AUV, end of period [(1) multiplied by (8)]. . . . . . . . . . . . . . . . . $ 10.09957261 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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.09957261 5. Contract value for valuation date following purchase [(3) multiplied by (4)]. . . . . . . . . . . . . . . . . . . . . . $ 1,009.96
8 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 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 accumulation value by the life expectancy. In the first year withdrawals begin, we use the accumulation value as of the date of the first payment. Thereafter, we use the accumulation 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. 9 FINANCIAL STATEMENTS OF SEPARATE ACCOUNT B The unaudited financial statements of Separate Account B for the nine months ended September 30, 1998 are included in this Statement of Additional Information. The audited financial statements of Separate 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, 1997 Statements of Operations for the Year ended December 31, 1997 Statements of Changes in Net Assets for the Years Ended December 31, 1996 and 1997 Notes to Financial Statements 10 Financial Statements Golden American Life Insurance Company Separate Account B (Unaudited) Periods ended September 30, 1998 and December 31, 1997 Golden American Life Insurance Company Separate Account B Financial Statements Periods ended September 30, 1998 and December 31, 1997 Table of Contents Unaudited 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, 1998 (Dollars in thousands)
COMBINED ____________ ASSETS Investments at net asset value: The GCG Trust: Liquid Asset Series, 174,541,999 shares (cost - $174,542) $174,542 Limited Maturity Bond Series, 8,801,293 shares (cost - $93,632) 96,550 Hard Assets Series, 2,870,226 shares (cost - $45,123) 30,568 All-Growth Series, 5,351,541 shares (cost - $70,945) 64,114 Real Estate Series, 4,566,204 shares (cost - $69,959) 72,694 Fully Managed Series, 12,669,852 shares (cost - $181,587) 204,238 Multiple Allocation Series, 19,446,965 shares (cost - $241,112) 260,977 Capital Appreciation Series, 12,178,359 shares (cost - $184,348) 208,859 Rising Dividends Series, 18,571,848 shares (cost - $328,563) 362,152 Emerging Markets Series, 3,447,037 shares (cost - $33,096) 19,717 Market Manager Series, 396,812 shares (cost - $4,321) 6,519 Value Equity Series, 7,211,315 shares (cost - $110,661) 100,669 Strategic Equity Series, 4,984,661 shares (cost - $62,293) 59,417 Small Cap Series, 6,462,777 shares (cost - $84,744) 80,719 Managed Global Series, 8,953,942 shares (cost - $103,922) 108,522 Mid-Cap Growth Series, 5,088,114 shares (cost - $86,095) 74,592 Growth & Income Series, 9,692,554 shares (cost - $144,367) 127,554 Research Series, 10,246,290 shares (cost - $197,708) 171,522 Total Return Series, 10,575,594 shares (cost - $167,194) 157,366 Value + Growth Series, 7,485,760 shares (cost - $107,037) 94,696 Global Fixed Income Series, 513,233 shares (cost - $5,493) 5,763
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF ASSETS AND LIABILITY (Unaudited) SEPTEMBER 30, 1998 (continued) (Dollars in thousands)
COMBINED ____________ ASSETS - CONTINUED Investments at net asset value: The GCG Trust: Developing World Series, 301,487 shares (cost - $2,231) $2,027 Growth Opportunities Series, 443,753 shares (cost - $4,301) 3,714 PIMCO Variable Insurance Trust: PIMCO High Yield Bond Portfolio, 2,819,458 shares (cost - $27,570) 26,953 PIMCO StocksPLUS Growth and Income Portfolio, 1,630,950 shares (cost - $18,186) 17,140 Greenwich Street Series Fund: Appreciation Portfolio, 44,711 shares (cost - $904) 809 Travelers Series Fund Inc.: Smith Barney High Income Portfolio, 61,479 shares (cost - $843) 759 Smith Barney Large Cap Value Portfolio, 33,157 shares (cost - $661) 588 Smith Barney International Equity Portfolio, 22,550 shares (cost - $319) 272 Smith Barney Money Market Portfolio, 441,831 shares (cost - $442) 442 Warburg Pincus Trust: International Equity Portfolio, 3,432,293 shares (cost - $33,813) 33,866 ____________ TOTAL ASSETS (cost - $2,586,012) 2,568,320 LIABILITY Payable to Golden American Life Insurance Company for charges and fees 1,543 ____________ TOTAL NET ASSETS $2,566,777 ============ NET ASSETS For variable annuity insurance contracts $2,555,928 Retained in Separate Account B by Golden American Life Insurance Company 10,849 ____________ TOTAL NET ASSETS $2,566,777 ============
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS (Unaudited) For the period ended September 30, 1998, Except as Noted (Dollars in thousands)
Limited Liquid Maturity Hard Asset Bond Assets Division Division Division ________________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $3,679 -- -- Capital gains distributions -- -- -- ________________________________ TOTAL INVESTMENT INCOME 3,679 -- -- Expenses: Mortality and expense risk and other charges 989 $595 $363 Annual administrative charges 53 35 11 Minimum death benefit guarantee charges 5 1 1 Contingent deferred sales charges 213 48 31 Other contract charges 7 2 2 Amortization of deferred charges related to: Deferred sales load 499 301 136 Premium taxes 3 6 3 ________________________________ TOTAL EXPENSES BEFORE WAIVER 1,769 988 547 Fees waived by Golden American 5 9 4 ________________________________ NET EXPENSES 1,764 979 543 ________________________________ NET INVESTMENT INCOME (LOSS) 1,915 (979) (543) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments -- 45 (3,826) Net unrealized appreciation (depreciation) of investments -- 4,373 (8,821) ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $1,915 $3,439 ($13,190) ================================ (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 (Unaudited) For the period ended September 30, 1998, 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 $663 $734 $1,710 Annual administrative charges 29 25 83 Minimum death benefit guarantee charges 1 1 2 Contingent deferred sales charges 30 29 39 Other contract charges 1 1 4 Amortization of deferred charges related to: Deferred sales load 326 229 676 Premium taxes 7 5 16 ________________________________ TOTAL EXPENSES BEFORE WAIVER 1,057 1,024 2,530 Fees waived by Golden American 10 6 19 ________________________________ NET EXPENSES 1,047 1,018 2,511 ________________________________ NET INVESTMENT INCOME (LOSS) (1,047) (1,018) (2,511) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 431 2,809 1,442 Net unrealized appreciation (depreciation) of investments (9,824) (13,671) 1,928 ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($10,440) ($11,880) $859 ================================ (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 (Unaudited) For the period ended September 30, 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 -- -- -- Capital gains distributions -- -- -- ________________________________ TOTAL INVESTMENT INCOME -- -- -- Expenses: Mortality and expense risk and other charges $2,215 $1,934 $3,117 Annual administrative charges 113 83 151 Minimum death benefit guarantee charges 7 2 3 Contingent deferred sales charges 67 35 77 Other contract charges 9 7 11 Amortization of deferred charges related to: Deferred sales load 1,399 839 690 Premium taxes 31 25 10 ________________________________ TOTAL EXPENSES BEFORE WAIVER 3,841 2,925 4,059 Fees waived by Golden American 26 27 19 ________________________________ NET EXPENSES 3,815 2,898 4,040 ________________________________ NET INVESTMENT INCOME (LOSS) (3,815) (2,898) (4,040) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 1,890 5,899 3,105 Net unrealized appreciation (depreciation) of investments 4,623 (14,456) (27,898) ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $2,698 ($11,455) ($28,833) ================================ (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 (Unaudited) For the period ended September 30, 1998, 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 $269 -- $1,028 Annual administrative charges 7 $1 43 Minimum death benefit guarantee charges 1 -- 1 Contingent deferred sales charges 14 -- 26 Other contract charges -- -- 2 Amortization of deferred charges related to: Deferred sales load 124 33 174 Premium taxes 2 -- 2 ________________________________ TOTAL EXPENSES BEFORE WAIVER 417 34 1,276 Fees waived by Golden American 3 -- 3 ________________________________ NET EXPENSES 414 34 1,273 ________________________________ NET INVESTMENT INCOME (LOSS) (414) (34) (1,273) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (2,906) 136 667 Net unrealized appreciation (depreciation) of investments (8,136) (117) (17,592) ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($11,456) ($15) ($18,198) ================================ (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 (Unaudited) For the period ended September 30, 1998, 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 $621 $769 $1,081 Annual administrative charges 22 37 43 Minimum death benefit guarantee charges 1 -- 1 Contingent deferred sales charges 40 28 43 Other contract charges -- 3 3 Amortization of deferred charges related to: Deferred sales load 108 93 401 Premium taxes 1 1 8 _________________________________ TOTAL EXPENSES BEFORE WAIVER 793 931 1,580 Fees waived by Golden American 4 2 9 _________________________________ NET EXPENSES 789 929 1,571 _________________________________ NET INVESTMENT INCOME (LOSS) (789) (929) (1,571) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 1,085 1,557 4,817 Net unrealized appreciation (depreciation) of investments (10,398) (9,242) 1,064 _________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($10,102) ($8,614) $4,310 ================================= (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 (Unaudited) For the period ended September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Mid-Cap Growth & Growth Income Research Division Division Division ________________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $4,346 $3,956 $12,011 Capital gains distributions -- -- -- ________________________________ TOTAL INVESTMENT INCOME 4,346 3,956 12,011 Expenses: Mortality and expense risk and other charges 541 1,037 1,115 Annual administrative charges 35 65 82 Minimum death benefit guarantee charges 1 1 -- Contingent deferred sales charges 13 24 34 Other contract charges 1 1 4 Amortization of deferred charges related to: Deferred sales load 40 73 58 Premium taxes -- 1 1 ________________________________ TOTAL EXPENSES BEFORE WAIVER 631 1,202 1,294 Fees waived by Golden American 1 3 2 ________________________________ NET EXPENSES 630 1,199 1,292 ________________________________ NET INVESTMENT INCOME (LOSS) 3,716 2,757 10,719 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 529 276 813 Net unrealized appreciation (depreciation) of investments (12,290) (18,062) (26,574) ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($8,045) ($15,029) ($15,042) ================================ (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 (Unaudited) For the period ended September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Global Total Value + Fixed Return Growth Income Division Division Division ________________________________ NET INVESTMENT INCOME (LOSS) Income: Dividends $9,551 $5,951 $128 Capital gains distributions -- -- -- ________________________________ TOTAL INVESTMENT INCOME 9,551 5,951 128 Expenses: Mortality and expense risk and other charges 990 670 26 Annual administrative charges 73 43 2 Minimum death benefit guarantee charges -- 1 -- Contingent deferred sales charges 36 17 2 Other contract charges 1 1 -- Amortization of deferred charges related to: Deferred sales load 38 31 -- Premium taxes 1 1 -- ________________________________ TOTAL EXPENSES BEFORE WAIVER 1,139 764 30 Fees waived by Golden American 2 2 -- ________________________________ NET EXPENSES 1,137 762 30 ________________________________ NET INVESTMENT INCOME (LOSS) 8,414 5,189 98 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 138 122 11 Net unrealized appreciation (depreciation) of investments (10,240) (10,911) 280 ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($1,688) ($5,600) $389 ================================ (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 (Unaudited) For the period ended September 30, 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 -- -- $336 Capital gains distributions -- -- -- ________________________________ TOTAL INVESTMENT INCOME -- -- 336 Expenses: Mortality and expense risk and other charges $7 $13 67 Annual administrative charges 1 2 10 Minimum death benefit guarantee charges -- -- -- Contingent deferred sales charges -- -- 9 Other contract charges -- -- -- Amortization of deferred charges related to: Deferred sales load -- -- 3 Premium taxes -- -- -- ________________________________ TOTAL EXPENSES BEFORE WAIVER 8 15 89 Fees waived by Golden American -- -- -- ________________________________ NET EXPENSES 8 15 89 ________________________________ NET INVESTMENT INCOME (LOSS) (8) (15) 247 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (211) (4) (156) Net unrealized appreciation (depreciation) of investments (204) (587) (617) ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($423) ($606) ($526) ================================ (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 (Unaudited) For the period ended September 30, 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 $121 $8 $37 Capital gains distributions -- 33 8 ________________________________ TOTAL INVESTMENT INCOME 121 41 45 Expenses: Mortality and expense risk and other charges 39 6 5 Annual administrative charges 8 1 -- Minimum death benefit guarantee charges -- -- -- Contingent deferred sales charges -- -- -- Other contract charges -- -- -- Amortization of deferred charges related to: Deferred sales load 2 -- -- Premium taxes -- -- -- ________________________________ TOTAL EXPENSES BEFORE WAIVER 49 7 5 Fees waived by Golden American -- -- -- ________________________________ NET EXPENSES 49 7 5 ________________________________ NET INVESTMENT INCOME (LOSS) 72 34 40 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (73) 2 9 Net unrealized appreciation (depreciation) of investments (1,046) (86) (87) ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($1,047) ($50) ($38) ================================ (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 (Unaudited) For the period ended September 30, 1998, 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 $6 -- $16 Capital gains distributions 16 -- -- ________________________________ TOTAL INVESTMENT INCOME 22 -- 16 Expenses: Mortality and expense risk and other charges 5 $3 4 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 6 3 4 Fees waived by Golden American -- -- -- ________________________________ NET EXPENSES 6 3 4 ________________________________ NET INVESTMENT INCOME (LOSS) 16 (3) 12 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 2 -- -- Net unrealized appreciation (depreciation) of investments (80) (42) -- ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($62) ($45) $12 ================================ (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 (Unaudited) For the period ended September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Inter- national Equity Division Combined _______________________ NET INVESTMENT INCOME (LOSS) Income: Dividends -- $40,146 Capital gains distributions -- 57 _______________________ TOTAL INVESTMENT INCOME -- 40,203 Expenses: Mortality and expense risk and other charges $218 20,834 Annual administrative charges 14 1,073 Minimum death benefit guarantee charges -- 30 Contingent deferred sales charges 4 859 Other contract charges -- 60 Amortization of deferred charges related to: Deferred sales load -- 6,273 Premium taxes -- 124 _______________________ TOTAL EXPENSES BEFORE WAIVER 236 29,253 Fees waived by Golden American -- 156 _______________________ NET EXPENSES 236 29,097 _______________________ NET INVESTMENT INCOME (LOSS) (236) 11,106 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (4,798) 13,811 Net unrealized appreciation (depreciation) of investments 146 (188,567) _______________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($4,888) ($163,650) ======================= (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 December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Liquid Asset Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $1,915 Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- __________ Net increase (decrease) in net assets resulting from operations 1,915 Changes from principal transactions: Purchase payments 162,108 Contract distributions and terminations (28,364) Transfer payments from (to) Fixed Accounts and other Divisions (18,443) Addition to assets retained in the Account by Golden American Life Insurance Company 12 __________ Increase (decrease) in net assets derived from principal transactions 115,313 __________ Total increase (decrease) 117,228 __________ NET ASSETS AT SEPTEMBER 30, 1998 $174,482 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Limited Maturity Bond Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($979) Net realized gain (loss) on investments 45 Net unrealized appreciation (depreciation) of investments 4,373 __________ Net increase (decrease) in net assets resulting from operations 3,439 Changes from principal transactions: Purchase payments 26,844 Contract distributions and terminations (6,428) Transfer payments from (to) Fixed Accounts and other Divisions 20,180 Addition to assets retained in the Account by Golden American Life Insurance Company 7 __________ Increase (decrease) in net assets derived from principal transactions 40,603 __________ Total increase (decrease) 44,042 __________ NET ASSETS AT SEPTEMBER 30, 1998 $96,509 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Hard Assets Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($543) Net realized gain (loss) on investments (3,826) Net unrealized appreciation (depreciation) of investments (8,821) __________ Net increase (decrease) in net assets resulting from operations (13,190) Changes from principal transactions: Purchase payments 6,015 Contract distributions and terminations (3,635) Transfer payments from (to) Fixed Accounts and other Divisions (4,152) Addition to assets retained in the Account by Golden American Life Insurance Company 9 __________ Increase (decrease) in net assets derived from principal transactions (1,763) __________ Total increase (decrease) (14,953) __________ NET ASSETS AT SEPTEMBER 30, 1998 $30,550 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
All-Growth Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($1,047) Net realized gain (loss) on investments 431 Net unrealized appreciation (depreciation) of investments (9,824) __________ Net increase (decrease) in net assets resulting from operations (10,440) Changes from principal transactions: Purchase payments 11,958 Contract distributions and terminations (7,079) Transfer payments from (to) Fixed Accounts and other Divisions (2,106) Addition to assets retained in the Account by Golden American Life Insurance Company 5 __________ Increase (decrease) in net assets derived from principal transactions 2,778 __________ Total increase (decrease) (7,662) __________ NET ASSETS AT SEPTEMBER 30, 1998 $64,076 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Real Estate Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($1,018) Net realized gain (loss) on investments 2,809 Net unrealized appreciation (depreciation) of investments (13,671) __________ Net increase (decrease) in net assets resulting from operations (11,880) Changes from principal transactions: Purchase payments 22,591 Contract distributions and terminations (5,013) Transfer payments from (to) Fixed Accounts and other Divisions (7,750) Addition to assets retained in the Account by Golden American Life Insurance Company 12 __________ Increase (decrease) in net assets derived from principal transactions 9,840 __________ Total increase (decrease) (2,040) __________ NET ASSETS AT SEPTEMBER 30, 1998 $72,660 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Fully Managed Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($2,511) Net realized gain (loss) on investments 1,442 Net unrealized appreciation (depreciation) of investments 1,928 __________ Net increase (decrease) in net assets resulting from operations 859 Changes from principal transactions: Purchase payments 56,252 Contract distributions and terminations (13,540) Transfer payments from (to) Fixed Accounts and other Divisions 1,887 Addition to assets retained in the Account by Golden American Life Insurance Company 28 __________ Increase (decrease) in net assets derived from principal transactions 44,627 __________ Total increase (decrease) 45,486 __________ NET ASSETS AT SEPTEMBER 30, 1998 $204,136 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Multiple Allocation Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($3,815) Net realized gain (loss) on investments 1,890 Net unrealized appreciation (depreciation) of investments 4,623 __________ Net increase (decrease) in net assets resulting from operations 2,698 Changes from principal transactions: Purchase payments 25,195 Contract distributions and terminations (30,256) Transfer payments from (to) Fixed Accounts and other Divisions 1,305 Addition to assets retained in the Account by Golden American Life Insurance Company 20 __________ Increase (decrease) in net assets derived from principal transactions (3,736) __________ Total increase (decrease) (1,038) __________ NET ASSETS AT SEPTEMBER 30, 1998 $260,831 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Capital Appreciation Division ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($2,898) Net realized gain (loss) on investments 5,899 Net unrealized appreciation (depreciation) of investments (14,456) ____________ Net increase (decrease) in net assets resulting from operations (11,455) Changes from principal transactions: Purchase payments 49,577 Contract distributions and terminations (21,207) Transfer payments from (to) Fixed Accounts and other Divisions 3,998 Addition to assets retained in the Account by Golden American Life Insurance Company 23 ____________ Increase (decrease) in net assets derived from principal transactions 32,391 ____________ Total increase (decrease) 20,936 ____________ NET ASSETS AT SEPTEMBER 30, 1998 $208,753 ============ (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Rising Dividends Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($4,040) Net realized gain (loss) on investments 3,105 Net unrealized appreciation (depreciation) of investments (27,898) __________ Net increase (decrease) in net assets resulting from operations (28,833) Changes from principal transactions: Purchase payments 160,698 Contract distributions and terminations (17,879) Transfer payments from (to) Fixed Accounts and other Divisions 32,000 Addition to assets retained in the Account by Golden American Life Insurance Company 47 __________ Increase (decrease) in net assets derived from principal transactions 174,866 __________ Total increase (decrease) 146,033 __________ NET ASSETS AT SEPTEMBER 30, 1998 $361,976 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Emerging Markets Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($414) Net realized gain (loss) on investments (2,906) Net unrealized appreciation (depreciation) of investments (8,136) __________ Net increase (decrease) in net assets resulting from operations (11,456) Changes from principal transactions: Purchase payments 2,233 Contract distributions and terminations (2,489) Transfer payments from (to) Fixed Accounts and other Divisions (3,087) Addition to assets retained in the Account by Golden American Life Insurance Company 2 __________ Increase (decrease) in net assets derived from principal transactions (3,341) __________ Total increase (decrease) (14,797) __________ NET ASSETS AT SEPTEMBER 30, 1998 $19,704 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Market Manager Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($34) Net realized gain (loss) on investments 136 Net unrealized appreciation (depreciation) of investments (117) __________ Net increase (decrease) in net assets resulting from operations (15) Changes from principal transactions: Purchase payments 17 Contract distributions and terminations (165) 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 (457) __________ Total increase (decrease) (472) __________ NET ASSETS AT SEPTEMBER 30, 1998 $6,244 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Value Equity Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($1,273) Net realized gain (loss) on investments 667 Net unrealized appreciation (depreciation) of investments (17,592) __________ Net increase (decrease) in net assets resulting from operations (18,198) Changes from principal transactions: Purchase payments 43,990 Contract distributions and terminations (5,352) Transfer payments from (to) Fixed Accounts and other Divisions 3,142 Addition to assets retained in the Account by Golden American Life Insurance Company 10 __________ Increase (decrease) in net assets derived from principal transactions 41,790 __________ Total increase (decrease) 23,592 __________ NET ASSETS AT SEPTEMBER 30, 1998 $100,617 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Strategic Equity Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($789) Net realized gain (loss) on investments 1,085 Net unrealized appreciation (depreciation) of investments (10,398) __________ Net increase (decrease) in net assets resulting from operations (10,102) Changes from principal transactions: Purchase payments 22,564 Contract distributions and terminations (3,982) Transfer payments from (to) Fixed Accounts and other Divisions 471 Addition to assets retained in the Account by Golden American Life Insurance Company 2 __________ Increase (decrease) in net assets derived from principal transactions 19,055 __________ Total increase (decrease) 8,953 __________ NET ASSETS AT SEPTEMBER 30, 1998 $59,390 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Small Cap Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($929) Net realized gain (loss) on investments 1,557 Net unrealized appreciation (depreciation) of investments (9,242) __________ Net increase (decrease) in net assets resulting from operations (8,614) Changes from principal transactions: Purchase payments 35,056 Contract distributions and terminations (4,548) Transfer payments from (to) Fixed Accounts and other Divisions 6,052 Addition to assets retained in the Account by Golden American Life Insurance Company 6 __________ Increase (decrease) in net assets derived from principal transactions 36,566 __________ Total increase (decrease) 27,952 __________ NET ASSETS AT SEPTEMBER 30, 1998 $80,677 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Managed Global Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($1,571) Net realized gain (loss) on investments 4,817 Net unrealized appreciation (depreciation) of investments 1,064 __________ Net increase (decrease) in net assets resulting from operations 4,310 Changes from principal transactions: Purchase payments 9,579 Contract distributions and terminations (9,711) Transfer payments from (to) Fixed Accounts and other Divisions (398) Addition to assets retained in the Account by Golden American Life Insurance Company 8 __________ Increase (decrease) in net assets derived from principal transactions (522) __________ Total increase (decrease) 3,788 __________ NET ASSETS AT SEPTEMBER 30, 1998 $108,469 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Mid-Cap Growth Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $3,716 Net realized gain (loss) on investments 529 Net unrealized appreciation (depreciation) of investments (12,290) __________ Net increase (decrease) in net assets resulting from operations (8,045) Changes from principal transactions: Purchase payments 50,982 Contract distributions and terminations (2,031) Transfer payments from (to) Fixed Accounts and other Divisions 13,285 Addition to assets retained in the Account by Golden American Life Insurance Company 1 __________ Increase (decrease) in net assets derived from principal transactions 62,237 __________ Total increase (decrease) 54,192 __________ NET ASSETS AT SEPTEMBER 30, 1998 $74,553 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Growth & Income Division __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $2,757 Net realized gain (loss) on investments 276 Net unrealized appreciation (depreciation) of investments (18,062) __________ Net increase (decrease) in net assets resulting from operations (15,029) Changes from principal transactions: Purchase payments 87,143 Contract distributions and terminations (4,789) Transfer payments from (to) Fixed Accounts and other Divisions 15,231 Addition to assets retained in the Account by Golden American Life Insurance Company 5 __________ Increase (decrease) in net assets derived from principal transactions 97,590 __________ Total increase (decrease) 82,561 __________ NET ASSETS AT SEPTEMBER 30, 1998 $127,483 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Research Division (b) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $10,719 Net realized gain (loss) on investments 813 Net unrealized appreciation (depreciation) of investments (26,574) __________ Net increase (decrease) in net assets resulting from operations (15,042) Changes from principal transactions: Purchase payments 120,437 Contract distributions and terminations (3,687) Transfer payments from (to) Fixed Accounts and other Divisions 35,316 Addition to assets retained in the Account by Golden American Life Insurance Company 10 __________ Increase (decrease) in net assets derived from principal transactions 152,076 __________ Total increase (decrease) 137,034 __________ NET ASSETS AT SEPTEMBER 30, 1998 $171,436 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Total Return Division (a) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $8,414 Net realized gain (loss) on investments 138 Net unrealized appreciation (depreciation) of investments (10,240) __________ Net increase (decrease) in net assets resulting from operations (1,688) Changes from principal transactions: Purchase payments 110,212 Contract distributions and terminations (3,732) Transfer payments from (to) Fixed Accounts and other Divisions 26,246 Addition to assets retained in the Account by Golden American Life Insurance Company 21 __________ Increase (decrease) in net assets derived from principal transactions 132,747 __________ Total increase (decrease) 131,059 __________ NET ASSETS AT SEPTEMBER 30, 1998 $157,290 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Value + Growth Division (b) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $5,189 Net realized gain (loss) on investments 122 Net unrealized appreciation (depreciation) of investments (10,911) __________ Net increase (decrease) in net assets resulting from operations (5,600) Changes from principal transactions: Purchase payments 63,587 Contract distributions and terminations (2,007) Transfer payments from (to) Fixed Accounts and other Divisions 15,481 Addition to assets retained in the Account by Golden American Life Insurance Company 9 __________ Increase (decrease) in net assets derived from principal transactions 77,070 __________ Total increase (decrease) 71,470 __________ NET ASSETS AT SEPTEMBER 30, 1998 $94,648 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Global Fixed Income Division (g) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $98 Net realized gain (loss) on investments 11 Net unrealized appreciation (depreciation) of investments 280 __________ Net increase (decrease) in net assets resulting from operations 389 Changes from principal transactions: Purchase payments 3,528 Contract distributions and terminations (137) Transfer payments from (to) Fixed Accounts and other Divisions 1,775 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 5,166 __________ Total increase (decrease) 5,555 __________ NET ASSETS AT SEPTEMBER 30, 1998 $5,761 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Develop- ing World Division (h) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($8) Net realized gain (loss) on investments (211) Net unrealized appreciation (depreciation) of investments (204) __________ Net increase (decrease) in net assets resulting from operations (423) Changes from principal transactions: Purchase payments 2,011 Contract distributions and terminations (5) Transfer payments from (to) Fixed Accounts and other Divisions 443 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 2,449 __________ Total increase (decrease) 2,026 __________ NET ASSETS AT SEPTEMBER 30, 1998 $2,026 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Growth Oppor- tunities Division (h) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($15) Net realized gain (loss) on investments (4) Net unrealized appreciation (depreciation) of investments (587) __________ Net increase (decrease) in net assets resulting from operations (606) Changes from principal transactions: Purchase payments 2,828 Contract distributions and terminations (11) Transfer payments from (to) Fixed Accounts and other Divisions 1,502 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 4,319 __________ Total increase (decrease) 3,713 __________ NET ASSETS AT SEPTEMBER 30, 1998 $3,713 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
PIMCO High Yield Bond Division (j) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $247 Net realized gain (loss) on investments (156) Net unrealized appreciation (depreciation) of investments (617) __________ Net increase (decrease) in net assets resulting from operations (526) Changes from principal transactions: Purchase payments 18,226 Contract distributions and terminations (506) Transfer payments from (to) Fixed Accounts and other Divisions 9,749 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 27,469 __________ Total increase (decrease) 26,943 __________ NET ASSETS AT SEPTEMBER 30, 1998 $26,943 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands) PIMCO StocksPLUS Growth and
Income Division (i) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $72 Net realized gain (loss) on investments (73) Net unrealized appreciation (depreciation) of investments (1,046) __________ Net increase (decrease) in net assets resulting from operations (1,047) Changes from principal transactions: Purchase payments 12,629 Contract distributions and terminations (102) Transfer payments from (to) Fixed Accounts and other Divisions 5,651 Addition to assets retained in the Account by Golden American Life Insurance Company 1 __________ Increase (decrease) in net assets derived from principal transactions 18,179 __________ Total increase (decrease) 17,132 __________ NET ASSETS AT SEPTEMBER 30, 1998 $17,132 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Appre- ciation Division (c) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $34 Net realized gain (loss) on investments 2 Net unrealized appreciation (depreciation) of investments (86) __________ Net increase (decrease) in net assets resulting from operations (50) Changes from principal transactions: Purchase payments 569 Contract distributions and terminations (9) Transfer payments from (to) Fixed Accounts and other Divisions 35 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 595 __________ Total increase (decrease) 545 __________ NET ASSETS AT SEPTEMBER 30, 1998 $808 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Smith Barney High Income Division (c) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $40 Net realized gain (loss) on investments 9 Net unrealized appreciation (depreciation) of investments (87) __________ Net increase (decrease) in net assets resulting from operations (38) Changes from principal transactions: Purchase payments 524 Contract distributions and terminations (9) Transfer payments from (to) Fixed Accounts and other Divisions 72 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 587 __________ Total increase (decrease) 549 __________ NET ASSETS AT SEPTEMBER 30, 1998 $758 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Smith Barney Large Cap Value Division (c) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $16 Net realized gain (loss) on investments 2 Net unrealized appreciation (depreciation) of investments (80) __________ Net increase (decrease) in net assets resulting from operations (62) Changes from principal transactions: Purchase payments 403 Contract distributions and terminations (4) Transfer payments from (to) Fixed Accounts and other Divisions 35 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 434 __________ Total increase (decrease) 372 __________ NET ASSETS AT SEPTEMBER 30, 1998 $587 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 -- Net unrealized appreciation (depreciation) of investments (42) __________ Net increase (decrease) in net assets resulting from operations (45) Changes from principal transactions: Purchase payments 180 Contract distributions and terminations (1) Transfer payments from (to) Fixed Accounts and other Divisions 42 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 221 __________ Total increase (decrease) 176 __________ NET ASSETS AT SEPTEMBER 30, 1998 $272 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Smith Barney Money Market Division (e) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $12 Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- __________ Net increase (decrease) in net assets resulting from operations 12 Changes from principal transactions: Purchase payments 548 Contract distributions and terminations (17) Transfer payments from (to) Fixed Accounts and other Divisions (282) Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 249 __________ Total increase (decrease) 261 __________ NET ASSETS AT SEPTEMBER 30, 1998 $442 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Inter- national Equity Division (f) __________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($236) Net realized gain (loss) on investments (4,798) Net unrealized appreciation (depreciation) of investments 146 __________ Net increase (decrease) in net assets resulting from operations (4,888) Changes from principal transactions: Purchase payments 32,775 Contract distributions and terminations (459) Transfer payments from (to) Fixed Accounts and other Divisions 4,442 Addition to assets retained in the Account by Golden American Life Insurance Company -- __________ Increase (decrease) in net assets derived from principal transactions 36,758 __________ Total increase (decrease) 31,870 __________ NET ASSETS AT SEPTEMBER 30, 1998 $33,851 ========== (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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, 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 (Unaudited) For the periods ended December 31, 1997 and September 30, 1998, Except as Noted (continued) (Dollars in thousands)
Combined ____________ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $11,106 Net realized gain (loss) on investments 13,811 Net unrealized appreciation (depreciation) of investments (188,567) ____________ Net increase (decrease) in net assets resulting from operations (163,650) Changes from principal transactions: Purchase payments 1,141,259 Contract distributions and terminations (177,154) Transfer payments from (to) Fixed Accounts and other Divisions 161,813 Addition to assets retained in the Account by Golden American Life Insurance Company 238 ____________ Increase (decrease) in net assets derived from principal transactions 1,126,156 ____________ Total increase (decrease) 962,506 ____________ NET ASSETS AT SEPTEMBER 30, 1998 $2,566,777 ============ (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 (Unaudited) September 30, 1998 NOTE 1 - ORGANIZATION 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. At September 30, 1998, the Account had, under GoldenSelect Contracts, twenty-six investment divisions: Liquid Asset, Limited Maturity Bond, Hard Assets (formerly Natural Resources), 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 Managed Global Division was formerly the Managed Global Account of Golden American's Separate Account D from October 12, 1992 until September 3, 1996. 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 of The GCG Trust, the Travelers Series Fund Inc., the Greenwich Street Series Fund (formerly the Smith Barney Series Fund), 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. On August 14, 1998, after approval from the Securities and Exchange Commission, The GCG Trust and the Equi-Select Series Trust were consolidated. This consolidation resulted in the substitution of shares of each Series of the Equi-Select Series with shares of similar Series of The GCG Trust. The consolidation is expected to reduce operating expenses. The consolidation resulted in the following Series being substituted from The GCG Trust: Global Fixed Income (for the International Fixed Income), Mid-Cap Growth (for the OTC), Research, Total Return, Value + Growth and 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. Contractowners with investments in the Market Manager Division were permitted to elect to update their Contracts to DVA PLUS Contracts. 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 of 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, 1998 are not necessarily indicative of the results that may be expected for the year ended December 31, 1998. For further information, refer to the financial statements and footnotes thereto for the year ended December 31, 1997 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, 1998 consisted of the following:
Limited Liquid Maturity Hard All- Asset Bond Assets Growth Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $166,559 $79,294 $27,565 $62,543 Accumulated net investment income (loss) and net realized gain (loss) on investments 7,923 14,297 17,540 8,364 Net unrealized appreciation (depreciation) of investments -- 2,918 (14,555) (6,831) _____________________________________________________ $174,482 $96,509 $30,550 $64,076 =====================================================
Real Fully Multiple Capital Estate Managed Allocation Appreciation Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $54,070 $151,329 $134,792 $132,024 Accumulated net investment income (loss) and net realized gain (loss) on investments 15,855 30,156 106,174 52,218 Net unrealized appreciation (depreciation) of investments 2,735 22,651 19,865 24,511 _____________________________________________________ $72,660 $204,136 $260,831 $208,753 =====================================================
Rising Emerging Market Value Dividends Markets Manager Equity Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $319,252 $47,267 $2,318 $100,886 Accumulated net investment income (loss) and net realized gain (loss) on investments 9,135 (14,184) 1,728 9,723 Net unrealized appreciation (depreciation) of investments 33,589 (13,379) 2,198 (9,992) _____________________________________________________ $361,976 $19,704 $6,244 $100,617 =====================================================
Strategic Small Managed Mid-Cap Equity Cap Global Growth Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $58,595 $85,346 $91,376 $80,937 Accumulated net investment income (loss) and net realized gain (loss) on investments 3,671 (644) 12,493 5,119 Net unrealized appreciation (depreciation) of investments (2,876) (4,025) 4,600 (11,503) _____________________________________________________ $59,390 $80,677 $108,469 $74,553 =====================================================
Growth & Total Value + Income Research Return Growth Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $138,028 $185,270 $157,861 $101,300 Accumulated net investment income (loss) and net realized gain (loss) on investments 6,268 12,352 9,257 5,689 Net unrealized appreciation (depreciation) of investments (16,813) (26,186) (9,828) (12,341) _____________________________________________________ $127,483 $171,436 $157,290 $94,648 =====================================================
Global Growth PIMCO Fixed Developing Oppor- High Yield Income World tunities Bond Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $5,374 $2,449 $4,319 $27,469 Accumulated net investment income (loss) and net realized gain (loss) on investments 117 (219) (19) 91 Net unrealized appreciation (depreciation) of investments 270 (204) (587) (617) _____________________________________________________ $5,761 $2,026 $3,713 $26,943 =====================================================
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 $18,179 $851 $793 $643 Accumulated net investment income (loss) and net realized gain (loss) on investments (1) 52 49 17 Net unrealized appreciation (depreciation) of investments (1,046) (95) (84) (73) _____________________________________________________ $17,132 $808 $758 $587 =====================================================
Smith Barney Smith Inter- Barney Inter- national Money national Equity Market Equity Division Division Division Combined _____________________________________________________ (Dollars in thousands) Unit transactions $322 $430 $38,763 $2,276,204 Accumulated net investment income (loss) and net realized gain (loss) on investments (3) 12 (4,965) 308,265 Net unrealized appreciation (depreciation) of investments (47) -- 53 (17,692) _____________________________________________________ $272 $442 $33,851 $2,566,777 =====================================================
NOTE 4 - UNIT VALUES Accumulation unit value information (which is based on total assets) for units outstanding by contract type as of September 30, 1998 were as follows:
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (In thousands) LIQUID ASSET Currently payable annuity products: DVA 80 10,731 $15.04 $161 DVA 100 4,021 14.75 59 Contracts in accumulation period: DVA 80 425,900 15.04 6,407 DVA 100 2,093,824 14.75 30,890 DVA Series 100 84,033 14.26 1,198 DVA PLUS - Standard 565,424 14.42 8,151 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 3,837,984 14.21 54,527 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 3,006,684 14.00 42,098 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 2,254,008 13.78 31,051 ____________ 174,542 LIMITED MATURITY BOND Currently payable annuity products: DVA 80 8,488 17.73 150 DVA 100 17,752 17.38 309 Contracts in accumulation period: DVA 80 61,241 17.73 1,086 DVA 100 2,167,774 17.38 37,686 DVA Series 100 26,962 16.80 453 DVA PLUS - Standard 235,278 17.00 4,000 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,475,353 16.76 24,720 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,092,949 16.51 18,048 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 621,523 16.25 10,098 ____________ 96,550
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (In thousands) HARD ASSETS Currently payable annuity products: DVA 80 677 $15.25 $10 DVA 100 9,174 14.96 137 Contracts in accumulation period: DVA 80 86,213 15.25 1,315 DVA 100 805,025 14.96 12,041 DVA Series 100 24,010 14.45 347 DVA PLUS - Standard 156,425 14.61 2,286 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 218,899 14.40 3,153 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 614,939 14.19 8,729 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 182,582 13.97 2,550 ___________ 30,568 ALL-GROWTH Currently payable annuity products: DVA 80 1,058 13.02 14 DVA 100 16,175 12.77 207 Contracts in accumulation period: DVA 80 69,627 13.02 907 DVA 100 2,534,505 12.77 32,364 DVA Series 100 23,473 12.34 290 DVA PLUS - Standard 233,511 12.48 2,914 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 648,538 12.30 7,975 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,362,813 12.12 16,515 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 245,518 11.92 2,928 ___________ 64,114
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (In thousands) REAL ESTATE Currently payable annuity products: DVA 80 1,982 $23.26 $46 DVA 100 23,650 22.81 539 Contracts in accumulation period: DVA 80 39,399 23.26 916 DVA 100 1,239,959 22.81 28,286 DVA Series 100 10,264 22.04 226 DVA PLUS - Standard 187,848 22.29 4,187 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 408,649 21.97 8,977 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 965,854 21.65 20,910 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 404,032 21.30 8,607 ____________ 72,694 FULLY MANAGED Currently payable annuity products: DVA 80 3,360 21.12 71 DVA 100 62,406 20.71 1,292 Contracts in accumulation period: DVA 80 103,861 21.12 2,193 DVA 100 4,315,940 20.71 89,374 DVA Series 100 35,276 20.01 706 DVA PLUS - Standard 503,070 20.23 10,179 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,382,221 19.94 27,563 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 2,526,357 19.65 49,649 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 1,200,333 19.34 23,211 ____________ 204,238
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (In thousands) MULTIPLE ALLOCATION Currently payable annuity products: DVA 80 17,137 $22.08 $378 DVA 100 92,764 21.65 2,008 Contracts in accumulation period: DVA 80 426,679 22.08 9,419 DVA 100 8,136,686 21.65 176,151 DVA Series 100 71,913 20.92 1,504 DVA PLUS - Standard 385,784 21.15 8,161 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 649,628 20.85 13,543 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,917,638 20.55 39,399 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 515,248 20.22 10,414 ____________ 260,977 CAPITAL APPRECIATION Currently payable annuity products: DVA 80 8,627 22.01 190 DVA 100 48,677 21.73 1,058 Contracts in accumulation period: DVA 80 83,421 22.01 1,836 DVA 100 4,823,873 21.73 104,819 DVA Series 100 51,217 21.24 1,088 DVA PLUS - Standard 389,295 21.41 8,334 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,078,031 21.20 22,857 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 2,587,764 21.00 54,341 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 690,393 20.77 14,336 ____________ 208,859
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (In thousands) RISING DIVIDENDS Currently payable annuity products: DVA 80 7,464 $19.91 $149 DVA 100 17,944 19.71 354 Contracts in accumulation period: DVA 80 131,654 19.91 2,621 DVA 100 4,519,507 19.71 89,084 DVA Series 100 97,284 19.37 1,884 DVA PLUS - Standard 1,135,860 19.49 22,136 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 3,551,554 19.34 68,701 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 6,512,144 19.20 125,036 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 2,742,770 19.03 52,187 ____________ 362,152 EMERGING MARKETS Currently payable annuity products: DVA 80 679 5.76 4 DVA 100 11,652 5.70 66 Contracts in accumulation period: DVA 80 67,452 5.76 388 DVA 100 1,638,256 5.70 9,340 DVA Series 100 24,499 5.60 137 DVA PLUS - Standard 272,943 5.64 1,539 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 247,274 5.60 1,384 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,203,831 5.55 6,685 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 31,469 5.50 174 ____________ 19,717
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (In thousands) MARKET MANAGER Contracts in accumulation period: DVA 100 331,770 $19.20 $6,370 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 7,958 18.77 149 ____________ 6,519 VALUE EQUITY Currently payable annuity products: DVA 80 424 15.99 7 DVA 100 4,871 15.87 77 Contracts in accumulation period: DVA 80 28,034 15.99 448 DVA 100 1,119,694 15.87 17,772 DVA Series 100 23,187 15.66 363 DVA PLUS - Standard 474,513 15.74 7,470 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,234,128 15.66 19,322 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 2,606,693 15.57 40,587 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 946,185 15.45 14,623 ____________ 100,669 STRATEGIC EQUITY Currently payable annuity products: DVA 100 37,736 12.52 472 Contracts in accumulation period: DVA 80 60,034 12.60 756 DVA 100 789,356 12.52 9,882 DVA Series 100 22,173 12.39 275 DVA PLUS - Standard 501,705 12.44 6,241 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,039,321 12.38 12,871 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,664,610 12.33 20,523 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 685,074 12.26 8,397 ____________ 59,417
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (In thousands) SMALL CAP Currently payable annuity products: DVA 100 8,866 $12.15 $108 Contracts in accumulation period: DVA 80 23,058 12.22 282 DVA 100 690,789 12.15 8,393 DVA Series 100 20,057 12.03 241 DVA PLUS - Standard 444,156 12.07 5,359 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,800,125 12.02 21,631 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 2,764,221 11.97 33,077 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 975,771 11.92 11,628 ____________ 80,719 MANAGED GLOBAL Currently payable annuity products: DVA 80 669 12.67 8 DVA 100 20,503 12.52 257 Contracts in accumulation period: DVA 80 36,491 12.67 462 DVA 100 4,189,513 12.52 52,448 DVA Series 100 51,817 12.27 636 DVA PLUS - Standard 636,971 12.32 7,851 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 527,143 12.22 6,440 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 3,283,974 12.11 39,761 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 55,009 11.98 659 ____________ 108,522
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (In thousands) MID-CAP GROWTH Contracts in accumulation period: DVA 80 25,799 $18.59 $480 DVA 100 283,583 18.44 5,229 DVA Series 100 12,371 18.18 225 DVA PLUS - Standard 177,152 18.26 3,234 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,485,192 18.12 26,911 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,265,085 18.04 22,816 Granite PrimElite - Standard 982 18.26 18 Granite PrimElite - Annual Ratchet 22,512 18.12 408 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 851,830 17.93 15,271 ____________ 74,592 GROWTH & INCOME Contracts in accumulation period: DVA 80 37,720 14.53 548 DVA 100 535,001 14.46 7,737 DVA Series 100 11,407 14.33 164 DVA PLUS - Standard 519,575 14.37 7,467 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 2,756,404 14.32 39,465 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 3,065,552 14.26 43,722 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 2,002,475 14.21 28,451 ____________ 127,554
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (In thousands) RESEARCH Contracts in accumulation period: DVA 80 13,840 $19.37 $268 DVA 100 448,508 19.21 8,617 DVA Series 100 20,997 18.94 398 DVA PLUS - Standard 376,271 19.02 7,157 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 2,787,506 18.91 52,725 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 3,096,089 18.79 58,183 Granite PrimElite - Standard 2,966 19.02 56 Granite PrimElite - Annual Ratchet 38,429 18.91 727 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 2,323,082 18.68 43,391 ____________ 171,522 TOTAL RETURN Contracts in accumulation period: DVA 80 2,070 17.03 35 DVA 100 411,526 16.90 6,953 DVA Series 100 8,149 16.66 136 DVA PLUS - Standard 511,738 16.73 8,561 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 3,062,959 16.63 50,944 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 3,025,023 16.53 49,996 Granite PrimElite - Standard 9,715 16.73 163 Granite PrimElite - Annual Ratchet 30,188 16.63 502 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 2,439,499 16.43 40,076 ____________ 157,366
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (In thousands) VALUE + GROWTH Contracts in accumulation period: DVA 80 33,768 $13.44 $454 DVA 100 308,882 13.38 4,132 DVA Series 100 11,288 13.26 150 DVA PLUS - Standard 334,435 13.29 4,445 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 2,543,984 13.24 33,690 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 2,037,789 13.19 26,882 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 1,898,000 13.14 24,943 ____________ 94,696 GLOBAL FIXED INCOME Contracts in accumulation period: DVA 100 4,994 13.25 66 DVA PLUS - Standard 480 13.12 6 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 262,884 13.05 3,430 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 70,276 12.96 911 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 104,791 12.89 1,350 ____________ 5,763
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (In thousands) DEVELOPING WORLD Contracts in accumulation period: DVA 80 547 $6.69 $4 DVA 100 3,250 6.68 22 DVA PLUS - Standard 616 6.67 4 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 165,813 6.66 1,105 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 69,253 6.66 461 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 64,808 6.65 431 ____________ 2,027 GROWTH OPPORTUNITIES Contracts in accumulation period: DVA 80 483 8.33 4 DVA 100 14,076 8.32 117 DVA PLUS - Standard 5,585 8.31 46 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 248,605 8.30 2,063 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 101,365 8.29 840 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 77,692 8.28 644 ____________ 3,714
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (In thousands) PIMCO HIGH YIELD BOND Contracts in accumulation period: DVA 80 1,919 $9.82 $19 DVA 100 94,708 9.81 929 DVA PLUS - Standard 142,440 9.80 1,396 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,141,592 9.80 11,184 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 567,233 9.79 5,553 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 804,632 9.78 7,872 ____________ 26,953 PIMCO STOCKSPLUS GROWTH AND INCOME Contracts in accumulation period: DVA 100 42,112 9.16 386 DVA PLUS - Standard 12,631 9.15 116 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 766,971 9.14 7,013 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 465,554 9.14 4,254 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 588,348 9.13 5,371 ____________ 17,140
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (In thousands) APPRECIATION Contracts in accumulation period: Granite PrimElite - Standard 809 $14.19 $11 Granite PrimElite - Annual Ratchet 56,442 14.13 798 ____________ 809 SMITH BARNEY HIGH INCOME Contracts in accumulation period: Granite PrimElite - Standard 12,253 13.38 164 Granite PrimElite - Annual Ratchet 44,779 13.31 595 ____________ 759 SMITH BARNEY LARGE CAP VALUE Contracts in accumulation period: Granite PrimElite - Standard 1,049 17.04 18 Granite PrimElite - Annual Ratchet 33,651 16.95 570 ____________ 588 SMITH BARNEY INTERNATIONAL EQUITY Contracts in accumulation period: Granite PrimElite - Standard 2,945 12.63 37 Granite PrimElite - Annual Ratchet 18,666 12.56 235 ____________ 272 SMITH BARNEY MONEY MARKET Contracts in accumulation period: Granite PrimElite - Standard 2,137 11.33 24 Granite PrimElite - Annual Ratchet 37,044 11.27 418 ____________ 442 INTERNATIONAL EQUITY Contracts in accumulation period: DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 1,797,899 9.22 16,579 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 506,331 9.25 4,684 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 1,367,829 9.22 12,603 ____________ 33,866
Financial Statements Golden American Life Insurance Company Separate Account B Years ended December 31, 1997 and 1996 with Report of Independent Auditors Golden American Life Insurance Company Separate Account B Financial Statements Years ended December 31, 1997 and 1996 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 Separate Account B as of December 31, 1997, 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, 1997, 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 Separate Account B at December 31, 1997, 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 12, 1998 GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF ASSETS AND LIABILITY DECEMBER 31, 1997 (Dollars in thousands)
Combined ____________ NET ASSETS Investments at net asset value: The GCG Trust: Liquid Asset Series, 57,275,780 shares (cost - $57,276) $57,276 Limited Maturity Bond Series, 5,091,118 shares (cost - $53,944) 52,489 Hard Assets Series, 3,024,920 shares (cost - $51,259) 45,525 All-Growth Series, 5,212,408 shares (cost - $68,783) 71,776 Real Estate Series, 4,090,371 shares (cost - $58,325) 74,731 Fully Managed Series, 10,090,542 shares (cost - $138,001) 158,724 Multiple Allocation Series, 20,015,834 shares (cost - $246,764) 262,006 Capital Appreciation Series, 10,645,781 shares (cost - $148,931) 187,898 Rising Dividends Series, 10,780,319 shares (cost - $154,551) 216,038 Emerging Markets Series, 3,922,730 shares (cost - $39,763) 34,520 Market Manager Series, 412,444 shares (cost - $4,478) 6,793 Value Equity Series, 4,777,402 shares (cost - $69,459) 77,059 Strategic Equity Series, 3,701,897 shares (cost - $42,935) 50,457 Small Cap Series, 3,981,210 shares (cost - $47,534) 52,751 Managed Global Series, 9,138,658 shares (cost - $101,193) 104,729 Equi-Select Series Trust: OTC Portfolio, 1,287,578 shares (cost - $19,583) 20,370 Growth & Income Portfolio, 3,106,847 shares (cost - $43,694) 44,943 Research Portfolio, 1,918,246 shares (cost - $34,030) 34,418 Total Return Portfolio, 1,708,746 shares (cost - $25,831) 26,243 Value + Growth Portfolio, 1,754,513 shares (cost - $24,618) 23,188 International Fixed Income Portfolio, 19,798 shares (cost - $216) 206
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF ASSETS AND LIABILITY DECEMBER 31, 1997 (Continued) (Dollars in thousands)
Combined ____________ NET ASSETS Investments at net asset value: Greenwich Street Series Fund: Appreciation Portfolio, 14,037 shares (cost - $272) $263 Travelers Series Fund, Inc.: Smith Barney High Income Portfolio, 15,500 shares (cost - $206) 209 Smith Barney Income and Growth Portfolio, 11,307 shares (cost - $209) 216 Smith Barney International Equity Portfolio, 7,460 shares (cost - $101) 96 Smith Barney Money Market Portfolio, 181,453 shares (cost - $182) 182 Warburg Pincus Trust: International Equity Portfolio, 188,938 shares (cost - $2,075) 1,982 ____________ TOTAL ASSETS (cost - $1,434,213) 1,605,088 LIABILITY Payable to Golden American Life Insurance Company for charges and fees 817 ____________ TOTAL NET ASSETS $1,604,271 ============ NET ASSETS For Variable Annuity Insurance Contracts $1,587,262 Retained in Separate Account B by Golden American Life Insurance Company 17,009 ____________ TOTAL NET ASSETS $1,604,271 ============
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS For the year ended December 31, 1997, Except as Noted (Dollars in thousands)
Limited Liquid Maturity Hard Asset Bond Assets Division Division Division ________________________________ INVESTMENT INCOME (LOSS) Income: Dividends $2,290 $3,854 $4,545 Capital gains distributions -- -- 4,923 ________________________________ TOTAL INVESTMENT INCOME 2,290 3,854 9,468 Expenses: Mortality and expense risk and other charges (528) (559) (527) Annual administrative charges (24) (20) (21) Minimum death benefit guarantee charges (7) (1) (3) Contingent deferred sales charges (256) (34) (45) Other contract charges (5) (1) (4) Amortization of deferred charges related to: Deferred sales load (503) (540) (302) Premium taxes (3) (9) (6) ________________________________ TOTAL EXPENSES BEFORE WAIVER (1,326) (1,164) (908) Fees waived by Golden American 6 13 10 ________________________________ NET EXPENSES (1,320) (1,151) (898) ________________________________ NET INVESTMENT INCOME (LOSS) 970 2,703 8,570 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments -- 139 3,106 Net unrealized appreciation (depreciation) of investments -- (690) (9,738) ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $970 $2,152 $1,938 ================================ (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
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS For the year ended December 31, 1997, Except as Noted (Continued) (Dollars in thousands)
All- Real Fully Growth Estate Managed Division Division Division ________________________________ INVESTMENT INCOME (LOSS) Income: Dividends $163 $2,740 $5,106 Capital gains distributions 1,877 2,326 7,461 ________________________________ TOTAL INVESTMENT INCOME 2,040 5,066 12,567 Expenses: Mortality and expense risk and other charges (809) (710) (1,632) Annual administrative charges (37) (31) (75) Minimum death benefit guarantee charges (2) (3) (3) Contingent deferred sales charges (40) (41) (80) Other contract charges (3) (3) (5) Amortization of deferred charges related to: Deferred sales load (662) (380) (1,145) Premium taxes (19) (7) (30) ________________________________ TOTAL EXPENSES BEFORE WAIVER (1,572) (1,175) (2,970) Fees waived by Golden American 22 10 35 ________________________________ NET EXPENSES (1,550) (1,165) (2,935) ________________________________ NET INVESTMENT INCOME (LOSS) 490 3,901 9,632 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 556 2,621 2,407 Net unrealized appreciation (depreciation) of investments 1,550 5,391 5,898 ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $2,596 $11,913 $17,937 ================================ (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
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS For the year ended December 31, 1997, Except as Noted (Continued) (Dollars in thousands)
Multiple Capital Alloca- Apprecia- Rising tion tion Dividends Division Division Division ________________________________ INVESTMENT INCOME (LOSS) Income: Dividends $18,237 $5,745 $1,396 Capital gains distributions 8,909 11,398 3,628 ________________________________ TOTAL INVESTMENT INCOME 27,146 17,143 5,024 Expenses: Mortality and expense risk and other charges (2,812) (1,850) (2,007) Annual administrative charges (140) (85) (97) Minimum death benefit guarantee charges (13) (2) (3) Contingent deferred sales charges (137) (82) (145) Other contract charges (11) (8) (10) Amortization of deferred charges related to: Deferred sales load (2,613) (1,298) (1,052) Premium taxes (58) (43) (17) ________________________________ TOTAL EXPENSES BEFORE WAIVER (5,784) (3,368) (3,331) Fees waived by Golden American 57 44 33 ________________________________ NET EXPENSES (5,727) (3,324) (3,298) ________________________________ NET INVESTMENT INCOME (LOSS) 21,419 13,819 1,726 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 5,773 8,242 3,602 Net unrealized appreciation (depreciation) of investments 9,866 16,323 33,738 ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $37,058 $38,384 $39,066 ================================ (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
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS For the year ended December 31, 1997, Except as Noted (Continued) (Dollars in thousands)
Emerging Market Value Markets Manager Equity Division Division Division ________________________________ INVESTMENT INCOME (LOSS) Income: Dividends $42 $138 $5,449 Capital gains distributions -- 329 1,347 ________________________________ TOTAL INVESTMENT INCOME 42 467 6,796 Expenses: Mortality and expense risk and other charges (470) -- (746) Annual administrative charges (19) (2) (36) Minimum death benefit guarantee charges (2) -- (1) Contingent deferred sales charges (31) -- (54) Other contract charges (2) -- (2) Amortization of deferred charges related to: Deferred sales load (346) (42) (266) Premium taxes (4) -- (3) ________________________________ TOTAL EXPENSES BEFORE WAIVER (874) (44) (1,108) Fees waived by Golden American 6 1 8 ________________________________ NET EXPENSES (868) (43) (1,100) ________________________________ NET INVESTMENT INCOME (LOSS) (826) 424 5,696 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (1,134) 238 898 Net unrealized appreciation (depreciation) of investments (2,698) 1,127 5,129 ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($4,658) $1,789 $11,723 ================================ (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
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS For the year ended December 31, 1997, Except as Noted (Continued) (Dollars in thousands)
Strategic Small Managed Equity Cap Global Division Division Division _________________________________ INVESTMENT INCOME (LOSS) Income: Dividends $2,496 -- $8,296 Capital gains distributions 58 -- 394 _________________________________ TOTAL INVESTMENT INCOME 2,554 -- 8,690 Expenses: Mortality and expense risk and other charges (512) ($556) (1,151) Annual administrative charges (20) (26) (47) Minimum death benefit guarantee charges (1) (1) (1) Contingent deferred sales charges (150) (42) (69) Other contract charges (2) (3) (5) Amortization of deferred charges related to: Deferred sales load (123) (130) (779) Premium taxes (2) (1) (15) _________________________________ TOTAL EXPENSES BEFORE WAIVER (810) (759) (2,067) Fees waived by Golden American 8 5 17 _________________________________ NET EXPENSES (802) (754) (2,050) _________________________________ NET INVESTMENT INCOME (LOSS) 1,752 (754) 6,640 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 1,180 (174) 2,841 Net unrealized appreciation (depreciation) of investments 4,847 4,543 (883) _________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $7,779 $3,615 $8,598 ================================= (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
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS For the year ended December 31, 1997, Except as Noted (Continued) (Dollars in thousands)
Growth & Research OTC Income Division Division Division (b) ________________________________ INVESTMENT INCOME (LOSS) Income: Dividends $809 $3,477 $681 Capital gains distributions 9 6 327 ________________________________ TOTAL INVESTMENT INCOME 818 3,483 1,008 Expenses: Mortality and expense risk and other charges (146) (298) (156) Annual administrative charges (10) (23) (17) Minimum death benefit guarantee charges -- -- -- Contingent deferred sales charges (14) (29) (12) Other contract charges (2) (1) (2) Amortization of deferred charges related to: Deferred sales load (35) (76) (21) Premium taxes -- (2) -- ________________________________ TOTAL EXPENSES BEFORE WAIVER (207) (429) (208) Fees waived by Golden American 1 3 1 ________________________________ NET EXPENSES (206) (426) (207) ________________________________ NET INVESTMENT INCOME (LOSS) 612 3,057 801 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 57 177 19 Net unrealized appreciation (depreciation) of investments 912 980 388 ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $1,581 $4,214 $1,208 ================================ (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
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS For the year ended December 31, 1997, Except as Noted (Continued) (Dollars in thousands)
Inter- national Total Value + Fixed Return Growth Income Division Division Division (a) (b) (g) ________________________________ INVESTMENT INCOME (LOSS) Income: Dividends $589 $3 $8 Capital gains distributions 240 -- 1 ________________________________ TOTAL INVESTMENT INCOME 829 3 9 Expenses: Mortality and expense risk and other charges (104) (98) -- Annual administrative charges (12) (11) -- Minimum death benefit guarantee charges -- (1) -- Contingent deferred sales charges (3) (5) -- Other contract charges (1) -- -- Amortization of deferred charges related to: Deferred sales load (22) (25) -- Premium taxes -- -- -- ________________________________ TOTAL EXPENSES BEFORE WAIVER (142) (140) -- Fees waived by Golden American -- -- -- ________________________________ NET EXPENSES (142) (140) -- ________________________________ NET INVESTMENT INCOME (LOSS) 687 (137) 9 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 18 515 (1) Net unrealized appreciation (depreciation) of investments 412 (1,430) (10) ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $1,117 ($1,052) ($2) ================================ (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
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS For the year ended December 31, 1997, Except as Noted (Continued) (Dollars in thousands)
Smith Smith Barney Barney Appre- High Income and ciation Income Growth Division Division Division (c) (c) (c) ________________________________ INVESTMENT INCOME (LOSS) Income: Dividends $3 -- -- Capital gains distributions 13 -- -- ________________________________ TOTAL INVESTMENT INCOME 16 -- -- Expenses: Mortality and expense risk and other charges (1) ($1) ($1) Annual administrative charges -- -- -- 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 (1) (1) (1) Fees waived by Golden American -- -- -- ________________________________ NET EXPENSES (1) (1) (1) ________________________________ NET INVESTMENT INCOME (LOSS) 15 (1) (1) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 1 1 -- Net unrealized appreciation (depreciation) of investments (9) 3 7 ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $7 $3 $6 ================================ (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
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS For the year ended December 31, 1997, Except as Noted (Continued) (Dollars in thousands)
Smith Barney Smith Inter- Barney Inter- national Money national Equity Market Equity Division Division Division (d) (e) (f) ________________________________ INVESTMENT INCOME (LOSS) Income: Dividends -- $1 $43 Capital gains distributions -- -- 41 ________________________________ TOTAL INVESTMENT INCOME -- 1 84 Expenses: Mortality and expense risk and other charges -- (1) (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 BEFORE WAIVER -- (1) (3) Fees waived by Golden American -- -- -- ________________________________ NET EXPENSES -- (1) (3) ________________________________ NET INVESTMENT INCOME (LOSS) -- -- 81 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments -- -- (12) Net unrealized appreciation (depreciation) of investments ($5) -- (93) ________________________________ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($5) $-- ($24) ================================ (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
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENT OF OPERATIONS For the year ended December 31, 1997, Except as Noted (Continued) (Dollars in thousands)
Combined __________ INVESTMENT INCOME (LOSS) Income: Dividends $66,111 Capital gains distributions 43,287 __________ TOTAL INVESTMENT INCOME 109,398 Expenses: Mortality and expense risk and other charges (15,677) Annual administrative charges (754) Minimum death benefit guarantee charges (44) Contingent deferred sales charges (1,269) Other contract charges (70) Amortization of deferred charges related to: Deferred sales load (10,360) Premium taxes (219) __________ TOTAL EXPENSES BEFORE WAIVER (28,393) Fees waived by Golden American 280 __________ NET EXPENSES (28,113) __________ NET INVESTMENT INCOME (LOSS) 81,285 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 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 ========== (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
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Dollars in thousands)
Liquid Asset Division __________ NET ASSETS AT JANUARY 1, 1996 $36,491 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 730 Net realized gain (loss) on investments -- Net unrealized appreciation (depreciation) of investments -- __________ Net increase (decrease) in net assets resulting from operations 730 Changes from principal transactions: Purchase payments 14,178 Contract distributions and terminations (15,313) Transfer payments from (to) Fixed Accounts and other Divisions 1,242 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 148 __________ Increase (decrease) in net assets derived from principal transactions 255 __________ Total increase (decrease) 985 __________ NET ASSETS AT DECEMBER 31, 1996 37,476
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Liquid Asset Division __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Limited Maturity Bond Division __________ NET ASSETS AT JANUARY 1, 1996 $67,837 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 4,507 Net realized gain (loss) on investments 314 Net unrealized appreciation (depreciation) of investments (3,831) __________ Net increase (decrease) in net assets resulting from operations 990 Changes from principal transactions: Purchase payments 5,869 Contract distributions and terminations (9,672) Transfer payments from (to) Fixed Accounts and other Divisions (10,189) Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (501) __________ Increase (decrease) in net assets derived from principal transactions (14,493) __________ Total increase (decrease) (13,503) __________ NET ASSETS AT DECEMBER 31, 1996 54,334
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Limited Maturity Bond Division __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Hard Assets Division __________ NET ASSETS AT JANUARY 1, 1996 $26,990 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 3,916 Net realized gain (loss) on investments 2,353 Net unrealized appreciation (depreciation) of investments 2,704 __________ Net increase (decrease) in net assets resulting from operations 8,973 Changes from principal transactions: Purchase payments 6,154 Contract distributions and terminations (4,962) Transfer payments from (to) Fixed Accounts and other Divisions 5,904 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 242 __________ Increase (decrease) in net assets derived from principal transactions 7,338 __________ Total increase (decrease) 16,311 __________ NET ASSETS AT DECEMBER 31, 1996 43,301
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Hard Assets Division __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
All-Growth Division __________ NET ASSETS AT JANUARY 1, 1996 $91,956 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (150) Net realized gain (loss) on investments 2,112 Net unrealized appreciation (depreciation) of investments (4,894) __________ Net increase (decrease) in net assets resulting from operations (2,932) Changes from principal transactions: Purchase payments 10,539 Contract distributions and terminations (12,597) Transfer payments from (to) Fixed Accounts and other Divisions (9,493) Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (631) __________ Increase (decrease) in net assets derived from principal transactions (12,182) __________ Total increase (decrease) (15,114) __________ NET ASSETS AT DECEMBER 31, 1996 76,842
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
All-Growth Division __________ 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 (rellocation 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Real Estate Division __________ NET ASSETS AT JANUARY 1, 1996 $34,813 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 2,214 Net realized gain (loss) on investments 652 Net unrealized appreciation (depreciation) of investments 8,605 __________ Net increase (decrease) in net assets resulting from operations 11,471 Changes from principal transactions: Purchase payments 5,981 Contract distributions and terminations (4,775) Transfer payments from (to) Fixed Accounts and other Divisions 3,076 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 115 __________ Increase (decrease) in net assets derived from principal transactions 4,397 __________ Total increase (decrease) 15,868 __________ NET ASSETS AT DECEMBER 31, 1996 50,681
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Real Estate Division __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Fully Managed Division __________ NET ASSETS AT JANUARY 1, 1996 $117,327 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 7,463 Net realized gain (loss) on investments 2,245 Net unrealized appreciation (depreciation) of investments 6,614 __________ Net increase (decrease) in net assets resulting from operations 16,322 Changes from principal transactions: Purchase payments 16,217 Contract distributions and terminations (17,846) Transfer payments from (to) Fixed Accounts and other Divisions 2,478 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (67) __________ Increase (decrease) in net assets derived from principal transactions 782 __________ Total increase (decrease) 17,104 __________ NET ASSETS AT DECEMBER 31, 1996 134,431
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Fully Managed Division __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Multiple Allocation Division __________ NET ASSETS AT JANUARY 1, 1996 $305,502 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 18,091 Net realized gain (loss) on investments 6,043 Net unrealized appreciation (depreciation) of investments (7,108) __________ Net increase (decrease) in net assets resulting from operations 17,026 Changes from principal transactions: Purchase payments 16,631 Contract distributions and terminations (44,014) Transfer payments from (to) Fixed Accounts and other Divisions (23,461) Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (1,257) __________ Increase (decrease) in net assets derived from principal transactions (52,101) __________ Total increase (decrease) (35,075) __________ NET ASSETS AT DECEMBER 31, 1996 270,427
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Multiple Allocation Division __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Capital Appreciation Division ____________ NET ASSETS AT JANUARY 1, 1996 $121,049 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 7,757 Net realized gain (loss) on investments 4,853 Net unrealized appreciation (depreciation) of investments 8,839 ____________ Net increase (decrease) in net assets resulting from operations 21,449 Changes from principal transactions: Purchase payments 16,081 Contract distributions and terminations (16,095) Transfer payments from (to) Fixed Accounts and other Divisions 3,299 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 206 ____________ Increase (decrease) in net assets derived from principal transactions 3,491 ____________ Total increase (decrease) 24,940 ____________ NET ASSETS AT DECEMBER 31, 1996 145,989
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Capital Appreciation Division ____________ 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 ============ (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Rising Dividends Division __________ NET ASSETS AT JANUARY 1, 1996 $80,342 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (455) Net realized gain (loss) on investments 4,125 Net unrealized appreciation (depreciation) of investments 12,317 __________ Net increase (decrease) in net assets resulting from operations 15,987 Changes from principal transactions: Purchase payments 25,572 Contract distributions and terminations (12,639) Transfer payments from (to) Fixed Accounts and other Divisions 13,857 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 454 __________ Increase (decrease) in net assets derived from principal transactions 27,244 __________ Total increase (decrease) 43,231 __________ NET ASSETS AT DECEMBER 31, 1996 123,573
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Rising Dividends Division __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Emerging Markets Division __________ NET ASSETS AT JANUARY 1, 1996 $36,887 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (998) Net realized gain (loss) on investments (2,959) Net unrealized appreciation (depreciation) of investments 5,674 __________ Net increase (decrease) in net assets resulting from operations 1,717 Changes from principal transactions: Purchase payments 6,432 Contract distributions and terminations (6,450) Transfer payments from (to) Fixed Accounts and other Divisions (1,273) Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (160) __________ Increase (decrease) in net assets derived from principal transactions (1,451) __________ Total increase (decrease) 266 __________ NET ASSETS AT DECEMBER 31, 1996 37,153
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Emerging Markets Division __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Market Manager Division __________ NET ASSETS AT JANUARY 1, 1996 $5,206 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 396 Net realized gain (loss) on investments 327 Net unrealized appreciation (depreciation) of investments 245 __________ Net increase (decrease) in net assets resulting from operations 968 Changes from principal transactions: Purchase payments (111) Contract distributions and terminations (383) Transfer payments from (to) Fixed Accounts and other Divisions (187) Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (14) __________ Increase (decrease) in net assets derived from principal transactions (695) __________ Total increase (decrease) 273 __________ NET ASSETS AT DECEMBER 31, 1996 5,479
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Market Manager Division __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Value Equity Division __________ NET ASSETS AT JANUARY 1, 1996 $28,447 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 1,157 Net realized gain (loss) on investments 1,290 Net unrealized appreciation (depreciation) of investments 601 __________ Net increase (decrease) in net assets resulting from operations 3,048 Changes from principal transactions: Purchase payments 15,780 Contract distributions and terminations (3,990) Transfer payments from (to) Fixed Accounts and other Divisions (376) Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company (48) __________ Increase (decrease) in net assets derived from principal transactions 11,366 __________ Total increase (decrease) 14,414 __________ NET ASSETS AT DECEMBER 31, 1996 42,861
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Value Equity Division __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Strategic Equity Division __________ NET ASSETS AT JANUARY 1, 1996 $8,031 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 275 Net realized gain (loss) on investments 161 Net unrealized appreciation (depreciation) of investments 2,648 __________ Net increase (decrease) in net assets resulting from operations 3,084 Changes from principal transactions: Purchase payments 12,046 Contract distributions and terminations (1,671) Transfer payments from (to) Fixed Accounts and other Divisions 8,149 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 219 __________ Increase (decrease) in net assets derived from principal transactions 18,743 __________ Total increase (decrease) 21,827 __________ NET ASSETS AT DECEMBER 31, 1996 29,858
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Strategic Equity Division __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Small Cap Division (a) __________ NET ASSETS AT JANUARY 1, 1996 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($369) Net realized gain (loss) on investments 25 Net unrealized appreciation (depreciation) of investments 674 __________ Net increase (decrease) in net assets resulting from operations 330 Changes from principal transactions: Purchase payments 17,552 Contract distributions and terminations (1,530) Transfer payments from (to) Fixed Accounts and other Divisions 16,293 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 411 __________ Increase (decrease) in net assets derived from principal transactions 32,726 __________ Total increase (decrease) 33,056 __________ NET ASSETS AT DECEMBER 31, 1996 33,056
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Small Cap Division (a) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Managed Global Division (b) __________ NET ASSETS AT JANUARY 1, 1996 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) ($350) Net realized gain (loss) on investments 116 Net unrealized appreciation (depreciation) of investments 4,419 __________ Net increase (decrease) in net assets resulting from operations 4,185 Changes from principal transactions: Purchase payments 3,524 Contract distributions and terminations (3,844) Transfer payments from (to) Fixed Accounts and other Divisions 80,286 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 2,115 __________ Increase (decrease) in net assets derived from principal transactions 82,081 __________ Total increase (decrease) 86,266 __________ NET ASSETS AT DECEMBER 31, 1996 86,266
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Managed Global Division (b) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
OTC Division (c) __________ NET ASSETS AT JANUARY 1, 1996 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $204 Net realized gain (loss) on investments 1 Net unrealized appreciation (depreciation) of investments (125) __________ Net increase (decrease) in net assets resulting from operations 80 Changes from principal transactions: Purchase payments 1,207 Contract distributions and terminations (36) Transfer payments from (to) Fixed Accounts and other Divisions 3,248 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 72 __________ Increase (decrease) in net assets derived from principal transactions 4,491 __________ Total increase (decrease) 4,571 __________ NET ASSETS AT DECEMBER 31, 1996 4,571
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
OTC Division (c) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Growth & Income Division (c) __________ NET ASSETS AT JANUARY 1, 1996 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- Net realized gain (loss) on investments $1 Net unrealized appreciation (depreciation) of investments 269 __________ Net increase (decrease) in net assets resulting from operations 270 Changes from principal transactions: Purchase payments 2,760 Contract distributions and terminations (43) Transfer payments from (to) Fixed Accounts and other Divisions 5,164 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 124 __________ Increase (decrease) in net assets derived from principal transactions 8,005 __________ Total increase (decrease) 8,275 __________ NET ASSETS AT DECEMBER 31, 1996 8,275
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Growth & Income Division (c) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Research Division (e) __________ NET ASSETS AT JANUARY 1, 1996 -- 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, 1996 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Research Division (e) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Total Return Division (d) __________ NET ASSETS AT JANUARY 1, 1996 -- 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, 1996 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Total Return Division (d) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Value + Growth Division (e) __________ NET ASSETS AT JANUARY 1, 1996 -- 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, 1996 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Value + Growth Division (e) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Inter- national Fixed Income Division (j) __________ NET ASSETS AT JANUARY 1, 1996 -- 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, 1996 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Inter- national Fixed Income Division (j) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Appre- ciation Division (f) __________ NET ASSETS AT JANUARY 1, 1996 -- 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, 1996 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Appre- ciation Division (f) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Smith Barney High Income Division (f) __________ NET ASSETS AT JANUARY 1, 1996 -- 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, 1996 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Smith Barney High Income Division (f) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Smith Barney Income and Growth Division (f) __________ NET ASSETS AT JANUARY 1, 1996 -- 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, 1996 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Smith Barney Income and Growth Division (f) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Smith Barney Inter- national Equity Division (g) __________ NET ASSETS AT JANUARY 1, 1996 -- 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, 1996 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Smith Barney Inter- national Equity Division (g) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Smith Barney Money Market Division (h) __________ NET ASSETS AT JANUARY 1, 1996 -- 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, 1996 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Smith Barney Money Market Division (h) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Inter- national Equity Division (i) __________ NET ASSETS AT JANUARY 1, 1996 -- 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, 1996 --
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Inter- national Equity Income Division (i) __________ 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 ========== (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Combined ____________ NET ASSETS AT JANUARY 1, 1996 $960,878 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 44,388 Net realized gain (loss) on investments 21,659 Net unrealized appreciation (depreciation) of investments 37,651 ____________ Net increase (decrease) in net assets resulting from operations 103,698 Changes from principal transactions: Purchase payments 176,412 Contract distributions and terminations (155,860) Transfer payments from (to) Fixed Accounts and other Divisions 98,017 Addition to (reallocation from) assets retained in the Account by Golden American Life Insurance Company 1,428 ____________ Increase (decrease) in net assets derived from principal transactions 119,997 ____________ Total increase (decrease) 223,695 ____________ NET ASSETS AT DECEMBER 31, 1996 1,184,573
GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1996 and 1997, Except as Noted (Continued) (Dollars in thousands)
Combined ____________ 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 ============ (a) Commencement of operations, January 3, 1996 (b) Commencement of operations, September 3, 1996 (c) Commencement of operations, September 23, 1996 (d) Commencement of operations, February 3, 1997 (e) Commencement of operations, February 4, 1997 (f) Commencement of operations, August 26, 1997 (g) Commencement of operations, September 18, 1997 (h) Commencement of operations, September 24, 1997 (i) Commencement of operations, October 9, 1997 (j) Commencement of operations, October 24, 1997
See accompanying notes. GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B NOTES TO FINANCIAL STATEMENTS December 31, 1997 NOTE 1 - ORGANIZATION 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 to 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. At December 31, 1997, the Account had, under GoldenSelect Contracts, twenty- two investment divisions: the Liquid Asset, the Limited Maturity Bond, the Hard Assets (formerly the Natural Resources), the All-Growth, the Real Estate, the Fully Managed, the Multiple Allocation, the Capital Appreciation, the Rising Dividends, the Emerging Markets, the Market Manager, the Value Equity, the Strategic Equity, the Small Cap, the Managed Global, the OTC, the Growth & Income, the Research, the Total Return, the Value + Growth, the International Equity and the International Fixed Income Divisions ("Divisions"). The Account also had, under Granite PrimElite Contracts, eight investment divisions: the OTC, the Research, the Total Return, the Appreciation, the Smith Barney High Income, the Smith Barney Income and Growth, the Smith Barney International Equity and the Smith Barney Money Market Divisions (collectively with the divisions noted above, "Divisions"). The Managed Global Division was formerly the Managed Global Account of Golden American's Separate Account D from October 12, 1992 until September 3, 1996. 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 of The GCG Trust, the Equi-Select Series Trust, Travelers Series Fund, Inc., the Greenwich Street Series Fund (formerly the Smith Barney Series Fund) or the Warburg Pincus 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. 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. Contractowners with investments in the Market Manager Division were permitted to elect to update their Contracts to DVA PLUS Contracts. 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 of 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 Contracts currently being sold include the DVA 100, DVA Series 100, DVA PLUS, Granite PrimElite, ACCESS, ES II and the PREMIUM PLUS. 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, both the DVA 80 and 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 AND OTHER 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. NOTE 3 - CHARGES AND FEES - CONTINUED Daily charges deducted at annual rates to cover these risks are as follows:
Series Annual Rates __________________________________ __________________ DVA 80 .80% DVA 100 .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, Granite PrimElite, ACCESS, ES II and the PREMIUM PLUS Contracts. ANNUAL ADMINISTRATIVE CHARGES: An administrative charge of $40 per Contract year for every Contract except ES II Contracts and DVA PLUS, PREMIUM PLUS and ACCESS Contracts in the state of Washington which charge $30. This charge is deducted from the accumulation value of Deferred Annuity Contracts to cover ongoing administrative expenses. The charge is incurred on the Contract anniversary date and deducted at the end of the Contract anniversary 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. NOTE 3 - CHARGES AND FEES - CONTINUED CONTINGENT DEFERRED SALES CHARGES: Under DVA PLUS, ES II and PREMIUM PLUS 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 during the period reflected in the following table, from the date a premium payment is received.
Complete Years Elapsed Since Premium Payment Surrender Charge ____________________________ _____________________________________________ DVA PLUS ES II PREMIUM PLUS ___________ _________________ _____________ 0 7% 8% 8% 1 7 7 8 2 6 6 8 3 5 5 8 4 4 4 7 5 3 3 6 6 1 2 5 7 -- 1 3 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 Contract accumulation values. DEFERRED SALES LOAD: Under Contracts offered prior to October 1995, a sales load of up to 7.5% was applicable to 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. NOTE 3 - CHARGES AND FEES - CONTINUED 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. The net assets retained in the Account by Golden American in the accompanying financial statements represent the unamortized deferred sales load and premium taxes advanced by Golden American, noted above. Net assets retained in the Account by Golden American are as follows:
Combined ___________________________________ 1997 1996 _______________ _________________ (Dollars in thousands) Balance at beginning of period $26,612 $35,980 Sales load advanced 616 380 Premium tax advanced 7 11 Net transfer from Separate Account D, Fixed Account and other Divisions 353 2,672 Amortization of deferred sales load and premium tax (10,579) (12,431) _______________ _________________ Balance at end of period $17,009 $26,612 =============== =================
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, _________________________ 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 Equi-Select Series Trust: OTC Portfolio 18,373 3,328 Growth & Income Portfolio 37,291 1,763 Research Portfolio 34,430 419 Total Return Portfolio 26,167 354 Value + Growth Portfolio 30,053 5,950 International Fixed Income Portfolio 224 7 Greenwich Street Series Fund: Appreciation Portfolio 283 12 Travelers Series Fund, Inc.: Smith Barney High Income Portfolio 216 11 Smith Barney Income and Growth Porfolio 210 1 Smith Barney International Equity Portfolio 103 2 Smith Barney Money Market Portfolio 194 12 Warburg Pincust Trust: International Equity Portfolio 2,146 59 _________________________ $598,603 $285,190 =========================
NOTE 4 - PURCHASES AND SALES OF INVESTMENT SECURITIES - CONTINUED
Year Ended December 31, _________________________ 1996 _________________________ Purchases Sales _________________________ (Dollars in thousands) The GCG Trust: Liquid Asset Series $64,148 $63,169 Limited Maturity Bond Series 13,202 23,196 Hard Assets Series 22,965 11,706 All-Growth Series 10,482 22,833 Real Estate Series 12,388 5,777 Fully Managed Series 22,506 14,263 Multiple Allocation Series 28,625 62,678 Capital Appreciation Series 32,609 21,360 Rising Dividends Series 41,303 14,500 Emerging Markets Series 11,043 13,496 Market Manager Series 449 1,388 Value Equity Series 20,546 8,015 Strategic Equity Series 20,731 1,702 Small Cap Series 47,577 15,201 Managed Global Series 85,923 4,148 Equi-Select Series Trust: OTC Portfolio 4,644 164 Growth & Income Portfolio 8,037 49 Research Portfolio -- -- Total Return Portfolio -- -- Value + Growth Portfolio -- -- International Fixed Income Portfolio -- -- Greenwich Street Series Fund: Appreciation Portfolio -- -- Travelers Series Fund, Inc.: Smith Barney High Income Portfolio -- -- Smith Barney Income and Growth Porfolio -- -- Smith Barney International Equity Portfolio -- -- Smith Barney Money Market Portfolio -- -- Warburg Pincust Trust: International Equity Portfolio -- -- _________________________ $447,178 $283,645 =========================
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. Contractowner transactions in units were as follows:
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 OTC 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 International Fixed Income Division 18,902 1,482 Appreciation Division 19,581 822 Smith Barney High Income Division 15,972 739 Smith Barney Income and Growth 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
NOTE 5 - SUMMARY OF CHANGES FROM UNIT TRANSACTIONS - CONTINUED
Year Ended December 31, _________________________ 1996 _________________________ Purchases Sales _________________________ Liquid Asset Division 5,982,248 6,003,930 Limited Maturity Bond Division 829,366 1,824,946 Hard Assets Division 1,374,569 978,096 All-Growth Division 1,228,512 2,169,543 Real Estate Division 754,585 552,462 Fully Managed Division 1,450,300 1,450,120 Multiple Allocation Division 1,330,139 4,486,173 Capital Appreciation Division 2,032,074 1,900,755 Rising Dividends Division 3,448,184 1,678,751 Emerging Markets Division 1,573,766 1,768,185 Market Manager Division 7,958 106,893 Value Equity Division 1,834,937 1,024,120 Strategic Equity Division 2,083,197 353,766 Small Cap Division 4,912,458 2,122,101 Managed Global Division 8,792,080 716,753 OTC Division 316,184 26,607 Growth & Income Division 697,746 35,755 Research Division -- -- Total Return Division -- -- Value + Growth Division -- -- International Fixed Income Division -- -- Appreciation Division -- -- Smith Barney High Income Division -- -- Smith Barney Income and Growth Division -- -- Smith Barney International Equity Division -- -- Smith Barney Money Market Division -- -- International Equity Division -- --
NOTE 6 - NET ASSETS Net assets at December 31, 1997 consisted of the following:
Limited Liquid Maturity Hard All- Asset Bond Assets Growth Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $51,246 $38,691 $29,328 $59,765 Accumulated net investment income (loss) 6,008 15,231 21,909 8,980 Net unrealized appreciation (depreciation) of investments -- (1,455) (5,734) 2,993 _____________________________________________________ $57,254 $52,467 $45,503 $71,738 =====================================================
Real Fully Multiple Capital Estate Managed Allocation Appreciation Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $44,230 $106,702 $138,528 $99,633 Accumulated net investment income (loss) 14,064 31,225 108,099 49,217 Net unrealized appreciation (depreciation) of investments 16,406 20,723 15,242 38,967 _____________________________________________________ $74,700 $158,650 $261,869 $187,817 =====================================================
Rising Emerging Market Value Dividends Markets Manager Equity Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $144,386 $50,608 $2,775 $59,096 Accumulated net investment income (loss) 10,070 (10,864) 1,626 10,329 Net unrealized appreciation (depreciation) of investments 61,487 (5,243) 2,315 7,600 _____________________________________________________ $215,943 $34,501 $6,716 $77,025 =====================================================
NOTE 6 - NET ASSETS - CONTINUED
Strategic Small Managed Equity Cap Global OTC Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $39,540 $48,780 $91,898 $18,700 Accumulated net investment income (loss) 3,375 (1,272) 9,247 874 Net unrealized appreciation (depreciation) of investments 7,522 5,217 3,536 787 _____________________________________________________ $50,437 $52,725 $104,681 $20,361 =====================================================
Growth & Total Value + Income Research Return Growth Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $40,438 $33,194 $25,114 $24,230 Accumulated net investment income (loss) 3,235 820 705 378 Net unrealized appreciation (depreciation) of investments 1,249 388 412 (1,430) _____________________________________________________ $44,922 $34,402 $26,231 $23,178 =====================================================
Inter- Smith Smith national Barney Barney Fixed Appre- High Income and Income ciation Income Growth Division Division Division Division _____________________________________________________ (Dollars in thousands) Unit transactions $208 $256 $206 $209 Accumulated net investment income (loss) 8 16 -- (1) Net unrealized appreciation (depreciation) of investments (10) (9) 3 7 _____________________________________________________ $206 $263 $209 $215 =====================================================
NOTE 6 - NET ASSETS - CONTINUED
Smith Barney Smith Inter- Barney Inter- national Money national Equity Market Equity Division Division Division Combined __________________________ __________________________ (Dollars in thousands) Unit transactions $101 $181 $2,005 $1,150,048 Accumulated net investment income (loss) -- -- 69 283,348 Net unrealized appreciation (depreciation) of investments (5) -- (93) 170,875 __________________________ __________________________ $96 $181 $1,981 $1,604,271 ========================== ==========================
NOTE 7 - UNIT VALUES Accumulation unit value information (which is based on total assets) for units outstanding by Contract type as of December 31, 1997 was as follows:
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (in thousands) LIQUID ASSET Currently payable annuity products: DVA 80 4,190 $14.58 $61 DVA 100 3,369 14.32 48 Contracts in accumulation period: DVA 80 363,377 14.58 5,298 DVA 100 1,595,580 14.32 22,846 DVA Series 100 37,946 13.87 526 DVA PLUS - Standard 227,427 14.02 3,188 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 353,076 13.83 4,883 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,132,057 13.65 15,447 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 370,411 13.44 4,979 ____________ 57,276 LIMITED MATURITY BOND Currently payable annuity products: DVA 80 12,043 16.76 202 DVA 100 20,397 16.46 336 Contracts in accumulation period: DVA 80 58,275 16.76 977 DVA 100 2,349,902 16.46 38,684 DVA Series 100 22,582 15.95 360 DVA PLUS - Standard 139,323 16.13 2,247 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 133,461 15.91 2,124 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 462,583 15.70 7,263 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 19,171 15.47 296 ____________ 52,489
NOTE 7 - UNIT VALUES - CONTINUED
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (in thousands) HARD ASSETS Currently payable annuity products: DVA 80 2,001 $21.68 $44 DVA 100 13,390 21.30 285 Contracts in accumulation period: DVA 80 107,103 21.68 2,322 DVA 100 1,123,746 21.30 23,932 DVA Series 100 32,428 20.63 669 DVA PLUS - Standard 154,417 20.85 3,219 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 90,379 20.57 1,859 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 637,191 20.29 12,932 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 13,179 19.99 263 ___________ 45,525 ALL-GROWTH Currently payable annuity products: DVA 80 3,037 15.06 46 DVA 100 22,962 14.79 340 Contracts in accumulation period: DVA 80 107,041 15.06 1,612 DVA 100 3,135,493 14.79 46,368 DVA Series 100 26,286 14.33 377 DVA PLUS - Standard 213,900 14.48 3,097 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 263,462 14.28 3,763 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,107,672 14.09 15,610 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 40,567 13.88 563 ___________ 71,776
NOTE 7 - UNIT VALUES - CONTINUED
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (in thousands) REAL ESTATE Currently payable annuity products: DVA 80 5,216 $26.86 $140 DVA 100 28,837 26.38 761 Contracts in accumulation period: DVA 80 83,412 26.86 2,240 DVA 100 1,493,690 26.38 39,399 DVA Series 100 22,395 25.55 572 DVA PLUS - Standard 173,241 25.82 4,473 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 135,993 25.48 3,465 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 897,320 25.14 22,556 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 45,472 24.76 1,125 ____________ 74,731 FULLY MANAGED Currently payable annuity products: DVA 80 8,128 20.73 168 DVA 100 71,911 20.36 1,464 Contracts in accumulation period: DVA 80 122,182 20.73 2,533 DVA 100 4,960,237 20.36 100,987 DVA Series 100 36,340 19.72 717 DVA PLUS - Standard 418,686 19.93 8,345 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 414,805 19.66 8,157 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,766,390 19.40 34,271 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 108,930 19.11 2,082 ____________ 158,724
NOTE 7 - UNIT VALUES - CONTINUED
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (in thousands) MULTIPLE ALLOCATION Currently payable annuity products: DVA 80 26,732 $21.66 $579 DVA 100 107,200 21.28 2,280 Contracts in accumulation period: DVA 80 524,945 21.66 11,371 DVA 100 9,544,200 21.28 203,061 DVA Series 100 86,050 20.61 1,773 DVA PLUS - Standard 328,740 20.83 6,847 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 255,396 20.55 5,248 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,485,966 20.28 30,129 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 35,953 19.97 718 ____________ 262,006 CAPITAL APPRECIATION Currently payable annuity products: DVA 80 12,559 22.79 286 DVA 100 56,444 22.53 1,272 Contracts in accumulation period: DVA 80 112,987 22.79 2,575 DVA 100 5,668,379 22.53 127,717 DVA Series 100 46,932 22.08 1,036 DVA PLUS - Standard 353,774 22.24 7,868 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 312,229 22.05 6,885 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,772,316 21.87 38,752 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 69,624 21.65 1,507 ____________ 187,898
NOTE 7 - UNIT VALUES - CONTINUED
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (in thousands) RISING DIVIDENDS Currently payable annuity products: DVA 80 8,045 $20.58 $166 DVA 100 21,073 20.41 430 Contracts in accumulation period: DVA 80 177,812 20.58 3,660 DVA 100 4,864,305 20.41 99,278 DVA Series 100 85,890 20.11 1,727 DVA PLUS - Standard 795,321 20.22 16,079 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 853,473 20.09 17,146 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 3,706,709 19.96 73,999 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 179,402 19.81 3,553 ____________ 216,038 EMERGING MARKETS Currently payable annuity products: DVA 80 1,431 8.91 13 DVA 100 19,625 8.84 173 Contracts in accumulation period: DVA 80 83,108 8.91 741 DVA 100 2,194,303 8.84 19,393 DVA Series 100 34,350 8.71 299 DVA PLUS - Standard 249,197 8.75 2,182 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 222,368 8.70 1,934 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,131,392 8.64 9,780 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 616 8.58 5 ____________ 34,520
NOTE 7 - UNIT VALUES - CONTINUED
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (in thousands) MARKET MANAGER Contracts in accumulation period: DVA 100 342,383 $19.40 $6,641 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 7,958 19.04 152 ____________ 6,793 VALUE EQUITY Currently payable annuity products: DVA 80 469 18.59 9 DVA 100 6,299 18.48 116 Contracts in accumulation period: DVA 80 57,796 18.59 1,074 DVA 100 1,362,952 18.48 25,185 DVA Series 100 24,986 18.28 457 DVA PLUS - Standard 372,681 18.36 6,843 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 469,649 18.28 8,586 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,793,172 18.20 32,639 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 118,902 18.09 2,150 ____________ 77,059 STRATEGIC EQUITY Currently payable annuity products: DVA 100 33,665 14.42 485 Contracts in accumulation period: DVA 80 102,523 14.49 1,485 DVA 100 977,705 14.42 14,102 DVA Series 100 34,778 14.31 498 DVA PLUS - Standard 406,747 14.36 5,840 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 554,068 14.31 7,929 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,361,070 14.26 19,414 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 49,579 14.20 704 ____________ 50,457
NOTE 7 - UNIT VALUES - CONTINUED
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (in thousands) SMALL CAP Currently payable annuity products: DVA 100 11,327 $12.99 $147 Contracts in accumulation period: DVA 80 42,479 13.04 554 DVA 100 884,375 12.99 11,485 DVA Series 100 38,537 12.90 497 DVA PLUS - Standard 401,090 12.92 5,183 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 559,014 12.88 7,202 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 2,049,765 12.84 26,326 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 106,014 12.81 1,357 ____________ 52,751 MANAGED GLOBAL Currently payable annuity products: DVA 80 3,304 12.05 40 DVA 100 25,036 11.93 299 Contracts in accumulation period: DVA 80 48,012 12.05 578 DVA 100 5,030,071 11.93 59,991 DVA Series 100 76,803 11.72 900 DVA PLUS - Standard 525,356 11.76 6,180 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 443,665 11.67 5,179 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 2,721,529 11.58 31,522 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 3,479 11.47 40 ____________ 104,729
NOTE 7 - UNIT VALUES - CONTINUED
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (in thousands) OTC Contracts in accumulation period: DVA 80 14,078 $18.91 $266 DVA 100 239,052 18.79 4,492 DVA Series 100 10,361 18.57 193 DVA PLUS - Standard 85,870 18.64 1,600 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 177,125 18.52 3,280 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 518,640 18.45 9,571 Granite PrimElite - Standard 202 18.64 4 Granite PrimElite - Annual Ratchet 4,122 18.52 76 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 48,346 18.36 888 ____________ 20,370 GROWTH & INCOME Contracts in accumulation period: DVA 80 41,266 15.57 643 DVA 100 559,791 15.51 8,685 DVA Series 100 9,355 15.42 144 DVA PLUS - Standard 325,440 15.45 5,027 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 438,636 15.41 6,758 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 1,288,333 15.36 19,795 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 253,936 15.32 3,891 ____________ 44,943
NOTE 7 - UNIT VALUES - CONTINUED
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (in thousands) RESEARCH Contracts in accumulation period: DVA 80 22,953 $19.23 $441 DVA 100 310,066 19.11 5,924 DVA Series 100 10,225 18.89 193 DVA PLUS - Standard 223,067 18.95 4,227 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 268,126 18.87 5,058 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 816,216 18.77 15,317 Granite PrimElite - Standard 102 18.95 2 Granite PrimElite - Annual Ratchet 11,534 18.87 218 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 162,677 18.67 3,038 ____________ 34,418 TOTAL RETURN Contracts in accumulation period: DVA 80 4,765 16.42 78 DVA 100 206,943 16.31 3,375 DVA Series 100 4,909 16.12 79 DVA PLUS - Standard 224,763 16.18 3,636 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 286,032 16.10 4,606 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 746,754 16.02 11,962 Granite PrimElite - Standard 63 16.18 1 Granite PrimElite - Annual Ratchet 4,893 16.10 79 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 152,264 15.94 2,427 ____________ 26,243
NOTE 7 - UNIT VALUES - CONTINUED
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (in thousands) VALUE + GROWTH Contracts in accumulation period: DVA 80 41,904 $13.17 $552 DVA 100 230,798 13.12 3,028 DVA Series 100 2,137 13.04 28 DVA PLUS - Standard 161,235 13.06 2,106 DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 343,006 13.03 4,470 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 763,169 12.99 9,917 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 238,200 12.96 3,087 ____________ 23,188 INTERNATIONAL FIXED INCOME Contracts in accumulation period: DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 10,655 11.87 126 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 310 11.81 4 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 6,455 11.75 76 ____________ 206 APPRECIATION Contracts in accumulation period: Granite PrimElite - Annual Ratchet 18,759 14.01 263 ____________ 263 SMITH BARNEY HIGH INCOME Contracts in accumulation period: Granite PrimElite - Standard 73 13.77 1 Granite PrimElite - Annual Ratchet 15,160 13.72 208 ____________ 209 SMITH BARNEY INCOME AND GROWTH Contracts in accumulation period: Granite PrimElite - Annual Ratchet 12,137 17.77 216 ____________ 216
NOTE 7 - UNIT VALUES - CONTINUED
Unit Total Unit Series Units Value Value _______________________________________________________________________________ (in thousands) SMITH BARNEY INTERNATIONAL EQUITY Contracts in accumulation period: Granite PrimElite - Standard 130 $13.65 $2 Granite PrimElite - Annual Ratchet 6,948 13.59 94 ____________ 96 SMITH BARNEY MONEY MARKET Contracts in accumulation period: Granite PrimElite - Annual Ratchet 16,571 10.97 182 ____________ 182 INTERNATIONAL EQUITY Contracts in accumulation period: DVA PLUS - Annual Ratchet & 5.5% Solution, ACCESS - Standard, PREMIUM PLUS - Standard, ES II 90,783 9.90 899 DVA PLUS - 7% Solution, ACCESS - Annual Ratchet & 5.5% Solution, PREMIUM PLUS - Annual Ratchet & 5.5% Solution 36,098 9.95 359 ACCESS - 7% Solution, PREMIUM PLUS - 7% Solution 72,955 9.92 724 ____________ 1,982
NOTE 8 - YEAR 2000 (Unaudited) Based on a study of its computer software and hardware,Golden American has determined its exposure to the Year 2000 change of the century date issue. Management believes systems are substantially compliant and has engaged external consultants to validate this assumption. The only system known to be affected by this issue is a system maintained by an affiliate who will incur the related costs. To mitigate the effect of the outside influences and other dependencies relative to Year 2000, Golden American will be contacting significant customers, suppliers and other third parties. To the extent these third parties would be unable to transact business in the year 2000 and thereafter, Golden American's operations could be adversely affected. APPENDIX: DESCRIPTION OF BOND RATINGS Excerpts from Moody's Investors Service, Inc. ("Moody's) description of its bond ratings: Aaa: Judged to be the best quality; they carry the smallest degree of investment risk. Aa: Judged to be of high quality by all standards; together with the Aaa group, they comprise what are generally known as high grade bonds. A: Possess many favorable investment attributes and are to be considered as "upper medium grade obligations." Baa: Considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured; interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Ba: Judged to have speculative elements; their future cannot be considered as well assured. B: Generally lack characteristics of the desirable investment. Caa: Are of poor standing; such issues may be in default or there may be present elements of danger with respect to principal or interest. Ca: Speculative in a high degree; often in default. C: Lowest rate class of bonds; regarded as having extremely poor prospects. Moody's also applies numerical indicators 1, 2 and 3 to rating categories. The modifier 1 indicates that the security is in the higher end of its rating category; 2 indicates a mid-range ranking; and 3 indicates a ranking toward the lower end of the category. Excerpts from Standard & Poor's Rating Group ("Standard & Poor's") description of its bond ratings: AAA: Highest grade obligations; capacity to pay interest and repay principal is extremely strong. A - 1 AA: Also qualify as high grade obligations; a very strong capacity to pay interest and repay principal and differs from AAA issues only in small degree. A: Regarded as upper medium grade; they have a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. BBB: Regarded as having an adequate capacity to pay interest and repay principal; whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity than in higher rated categories -- this group is the lowest which qualifies for commercial bank investment. BB, B, CCC, CC: Predominantly speculative with respect to capacity to pay interest and repay principal in accordance with terms of the obligation: BB indicates the lowest degree of speculation and CC the highest. Standard & Poor's applies indicators "+," no character, and "-" to its rating categories. The indicators show relative standing within the major rating categories. PART C -- OTHER INFORMATION ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS FINANCIAL STATEMENTS (a) (1) All financial statements are included in either the Prospectuses or the Statements of Additional Information, as indicated therein. (2) Schedules I, III, IV follow: SCHEDULE I SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES (Dollars in thousands)
Balance Sheet December 31, 1997 Cost 1 Value Amount _______________________________________________________________________________ TYPE OF INVESTMENT Fixed maturities, available for sale: Bonds: United States government and govern- mental agencies and authorities $68,693 $68,842 $68,842 Foreign governments 2,062 2,053 2,053 Public utilities 25,899 25,944 25,944 Investment grade corporate 219,526 220,420 220,420 Below investment grade corporate 41,355 41,331 41,331 Mortgage-backed securities 55,753 55,811 55,811 ___________ ___________ ___________ Total fixed maturities, available for sale 413,288 414,401 414,401 Equity securities: Common stocks: industrial, mis- cellaneous and all other 4,437 3,904 3,904 Mortgage loans on real estate 85,093 85,093 Policy loans 8,832 8,832 Short-term investments 14,460 14,460 ___________ ___________ Total investments $526,110 $526,690 =========== =========== Note 1: Cost is defined as original cost for stocks and other invested assets, amortized cost for bonds and unpaid principal for policy loans and mortgage loans on real estate, adjusted for amortization of premiums and accrual of discounts.
SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION (Dollars in thousands)
Column Column Column Column Column Column A B C D E F ________________________________________________________________________________ Future Policy Other De- Benefits, Policy ferred Losses, Claims Insur- Policy Claims Un- and ance Acqui- and earned Bene- Premiums sition Loss Revenue fits and Segment Costs Expenses Reserve Payable Charges ________________________________________________________________________________ POST-MERGER ________________________________________________________________________________ Period October 25, 1997 through December 31, 1997: Life insurance $12,752 $505,304 $1,189 $10 $3,834 POST-ACQUISITION ________________________________________________________________________________ Period January 1, 1997 through October 24, 1997: Life insurance N/A N/A N/A N/A 18,288 Period August 14, 1996 through December 31, 1996: Life insurance 11,468 285,287 2,063 -- 8,768 PRE-ACQUISITION ________________________________________________________________________________ Period January 1, 1996 through August 13, 1996: Life insurance N/A N/A N/A N/A 12,259 Year ended December 31, 1995: Life insurance 67,314 33,673 6,556 -- 18,388
SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION - CONTINUED (Dollars in thousands)
Column Column Column Column Column Column A G H I J K ________________________________________________________________________________ Amorti- Benefits zation Claims, of Losses Deferred Net and Policy Other Invest- Settle- Acqui- Operat- ment ment sition ing Premiums Segment Income Expenses Costs Expenses Written ________________________________________________________________________________ POST-MERGER ________________________________________________________________________________ Period October 25, 1997 through December 31, 1997: Life insurance $5,127 $7,413 $892 $1,137 -- POST-ACQUISITION ________________________________________________________________________________ Period January 1, 1997 through October 24, 1997: Life insurance 21,656 19,401 1,674 20,234 -- Period August 14, 1996 through December 31, 1996: Life insurance 5,795 7,003 244 8,066 -- PRE-ACQUISITION ________________________________________________________________________________ Period January 1, 1996 through August 13, 1996: Life insurance 4,990 5,270 2,436 8,847 -- Year ended December 31, 1995: Life insurance 2,818 3,146 2,710 13,333 --
SCHEDULE IV REINSURANCE
Column A Column B Column C Column D Column E Column F _______________________________________________________________________________ Assumed Percentage Ceded to from of Amount Gross Other Other Net Assumed Amount Companies Companies Amount to Net _______________________________________________________________________________ At December 31, 1997: Life insurance in force $149,842,000 $96,686,000 -- $53,156,000 -- ============= ============ ========= ============ ========== At December 31, 1996: Life insurance in force $86,192,000 $58,368,000 -- $27,824,000 -- ============= ============ ========= ============ ========== At December 31, 1995: Life insurance in force $38,383,000 $24,709,000 -- $13,674,000 -- ============= ============ ========= ============ ==========
EXHIBITS (b) (1) Resolution of the board of directors of Depositor authorizing the establishment of the Registrant (1) (2) Not Applicable (3) (a) Distribution Agreement between the Depositor and Directed Services, Inc. (2) (b) Form of Dealers Agreement (2) (c) Organizational Agreement (5) (d) (i) Addendum to Organizational Agreement (3) (ii) Expense Reimbursement Agreement (5) (e) Form of Assignment Agreement for Organizational Agreement (5) (4) (a) Individual Deferred Combination Variable and Fixed Annuity Contract (10) (b) Group Deferred Combination Variable and Fixed Annuity Contract (10) (c) Individual Deferred Variable Annuity Contract (10) (d) External Exchange Program Endorsement (9) (e) DVA Update Program Schedule Page (9) (f) Individual Retirement Annuity Rider Page (9) (g) ROTH Individual Retirement Annuity Rider (9) (5) (a) Individual Deferred Combination Variable and Fixed Annuity Application (12) (b) Group Deferred Combination Variable and Fixed Annuity Enrollment Form (12) (c) Individual Deferred Variable Annuity Application (12) (6) (a) (i) Articles of Incorporation of Golden American Life Insurance Company (1) (ii) Certificate of Amendment of the Restated Articles of Incorporation of Golden American Life Insurance Company(4) (iii) Certificate of Amendment of the Restated Articles of Incorporation of MB Variable Life Insurance Company (6) (iv) Certificate of Amendment of the Restated Articles of Incorporation of Golden American Life Insurance Company (12/28/93) (7) (b) (i) By-Laws of Golden American Life Insurance Company (1) (ii) By-Laws of Golden American Life Insurance Company, as amended (4) (iii) Certificate of Amendment of the By-Laws of MB Variable Life Insurance Company, as amended (6) (iv) By-Laws of Golden American, as amended (12/21/93) (7) (c) Resolution of Board of Directors for Powers of Attorney (8) (7) Not applicable (8) (a) Participation Agreement between Golden American and PIMCO Variable Insurance Trust (12) (8) (b) Administrative Services Agreement between Golden American and Equitable Life Insurance Company of Iowa (12) (8) (c) Service Agreement between Golden American and Directed Services, Inc. (12) (9) Opinion and Consent of Myles R. Tashman (10) (a) Consent of Sutherland Asbill & Brennan LLP (b) Consent of Independent Auditors (c) Consent of Myles R. Tashman (11) Not applicable (12) Not applicable (13) Schedule of Performance Data (11) (14) Not applicable (15) Powers of Attorney (16) Subsidiaries of ING (1) Incorporated herein by reference to an initial registration statement for Separate Account B filed with the Securities and Exchange Commission on July 27, 1988 (File No. 33-23351). (2) Incorporated herein by reference to pre-effective amendment No. 1 to a registration statement for Separate Account B filed with the Securities and Exchange Commission on October 6, 1988 (File No. 33-23351). (3) Incorporated herein by reference to post-effective amendment No. 2 to a registration statement for The Specialty Managers Separate Account A filed on Form S-6 with the Securities and Exchange Commission on September 13, 1989 (file No. 33-23458). (4) Incorporated herein by reference to post-effective amendment No. 5 to a registration statement for Separate Account B filed with the Securities and Exchange Commission on May 2, 1991. (File No. 33-23351). (5) Incorporated herein by reference to post-effective amendment No. 8 to a registration statement for Separate Account B filed with the Securities and Exchange Commission on May 1, 1992. (File No. 33-23351). (6) Incorporated herein by reference to an initial registration statement on Form N-3 for Golden American Life Insurance Company Separate Account D filed with the Securities and Exchange Commission on August 19, 1992 (File No. 33-51028). (7) Incorporated herein by reference to post-effective amendment No. 17 to a registration statement for Separate Account B filed with the Securities and Exchange Commission on May 2, 1994 (File No. 33-23351). (8) Incorporated herein by reference to post-effective amendment No. 2 to the registration statement for The Specialty Managers Separate Account A on Form S-6 filed with the Securities and Exchange Commission on September 13, 1989 (File No. 33-23458). (9) Incorporated herein by reference to pre-effective amendment No. 1 to the registration statement for Separate Account B filed with the Securities and Exchange Commission on September 7, 1995 (File No. 33-59261). (10)Incorporated herein by reference to post-effective amendment No. 2 to the registration statement for Separate Account B filed with the Securities and Exchange Commission on May 1, 1996 (File No. 33-59261). (11)Incorporated herein by reference to post-effective amendment No. 8 to the registration statement for Separate Account B filed with the Securities and Exchange Commission on May 1, 1997 (File No. 33-59261). (12)Incorporated herein by reference to post-effective amendment No. 9 to the registration statement for Separate Account B filed with the Securities and Exchange Commission on April 30, 1998 (File No. 33-59261). ITEM 25: DIRECTORS AND OFFICERS OF THE DEPOSITOR Principal Position(s) Name Business Address with Depositor Barnett Chernow Golden American Life Ins. Co. President and 1001 Jefferson Street Director Wilmington, DE 19801 Paul E. Larson Equitable of Iowa Companies Director 909 Locust Street Des Moines, IA 50309 Frederick S. Hubbell Equitable of Iowa Companies Director 909 Locust Street Des Moines, IA 50309 Beth B. Neppl Equitable of Iowa Companies Director and Vice 909 Locust Street President Des Moines, IA 50309 Myles R. Tashman Golden American Life Ins. Co. Director, Executive 1001 Jefferson Street Vice President, General Wilmington, DE 19801 Counsel and Secretary R. Brock Armstrong Golden American Life Ins. Co. [ ] 1001 Jefferson Street Wilmington, DE 19801 James R. McInnis Golden American Life Ins. Co. Executive Vice 1001 Jefferson Street President Wilmington, DE 19801 Stephen J. Preston Golden American Life Ins. Co. Executive Vice President 1001 Jefferson Street, and Chief Actuary Wilmington, DE 19801 Steven G. Mandel Golden American Life Ins. Co. Senior Vice President 1001 Jefferson Street Wilmington, DE 19801 Ronald R. Blasdell Golden American Life Ins. Co. Senior Vice President 1001 Jefferson Street Wilmington, DE 19801 E. Robert Koster Golden American Life Ins. Co. Senior Vice President 1001 Jefferson Street and Chief Financial Wilmington, DE 19801 Officer David L. Jacobson Golden American Life Ins. Co. Senior Vice President 1001 Jefferson Street and Assistant Secretary Wilmington, DE 19801 William L. Lowe Equitable of Iowa Companies Senior Vice President, 909 Locust Street Sales & Marketing Des Moines, IA 50309 Edward Syring, Jr. Equitable of Iowa Companies Senior Vice President, 909 Locust Street Sales & Marketing Des Moines, IA 50309 Patricia M. Corbett Equitable of Iowa Companies Treasurer & Assistant 909 Locust Street Vice President Des Moines, IA 50309 Lawrence W. Porter, M.D. Equitable of Iowa Companies Medical Director 909 Locust Street Des Moines, IA 50309 ITEM 26: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT The Depositor owns 100% of the stock of a newly formed New York company, First Golden American Life Insurance Company of New York ("First Golden"). The primary purpose for the formation of First Golden is to offer variable products in the state of New York. The following persons control or are under common control with the Depositor: DIRECTED SERVICES, INC. ("DSI") - This corporation is a general business corporation organized under the laws of the State of New York, and is wholly owned by ING Groep N.V. The primary purpose of Directed Services, Inc. is to act as a broker-dealer in securities. It acts as the principal underwriter and distributor of variable insurance products including variable annuities as required by the SEC. The contracts are issued by the Depositor. DSI also has the power to carry on a general financial, securities, distribution, advisory or investment advisory business; to act as a general agent or broker for insurance companies and to render advisory, managerial, research and consulting services for maintaining and improving managerial efficiency and operation. DSI is also registered with the SEC as an investment adviser. The registrant is a segregated asset account of the Company and is therefore owned and controlled by the Company. All of the Company's outstanding stock is owned and controlled by ING. Various companies and other entities controlled by ING may therefore be considered to be under common control with the registrant or the Company. Such other companies and entities, together with the identity of their controlling persons (where applicable), are set forth on the following organizational chart. The subsidiaries of ING are included as Exhibit 16. Item 27: Number of Contract Owners 50,901 contract owners as of October 31, 1998 ITEM 28: INDEMNIFICATION Golden American shall indemnify (including therein the prepayment of expenses) any person who is or was a director, officer or employee, or who is or was serving at the request of Golden American as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise for expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him with respect to any threatened, pending or completed action, suit or proceedings against him by reason of the fact that he is or was such a director, officer or employee to the extent and in the manner permitted by law. Golden American may also, to the extent permitted by law, indemnify any other person who is or was serving Golden American in any capacity. The Board of Directors shall have the power and authority to determine who may be indemnified under this paragraph and to what extent (not to exceed the extent provided in the above paragraph) any such person may be indemnified. Golden American or its parents may purchase and maintain insurance on behalf of any such person or persons to be indemnified under the provision in the above paragraphs, against any such liability to the extent permitted by law. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the Registrant, as provided above or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification by the Depositor is against public policy, as expressed in the Securities Act of 1933, and therefore may be unenforceable. In the event that a claim of such indemnification (except insofar as it provides for the payment by the Depositor of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted against the Depositor by such director, officer or controlling person and the SEC is still of the same opinion, the Depositor or Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by the Depositor is against public policy as expressed by the Securities Act of 1933 and will be governed by the final adjudication of such issue. ITEM 29: PRINCIPAL UNDERWRITER (a) At present, DSI, the Registrant's Distributor, also serves as principal underwriter for all contracts issued by Golden American. DSI is the principal underwriter for Separate Account A, Separate Account B and Alger Separate Account A of Golden American. (b) The following information is furnished with respect to the principal officers and directors of DSI, the Registrant's Distributor: Name and Principal Positions and Offices Positions and Offices Business Address with Underwriter with Depositor - ------------------ --------------------- --------------------- Beth B. Neppl Director Director and Vice Equitable of Iowa Companies President 909 Locust Street Des Moines, IA 50309 R. Lawrence Roth Director None VESTAX Capital Corporation 1931 Georgetown Road Hudson, OH 44236 Myles R. Tashman Director, Executive Director, Executive Vice Directed Services, Inc. Vice President, General President, General 1001 Jefferson Street Counsel and Secretary Counsel and Secretary Wilmington, DE 19801 James R. McInnis President Executive Vice President Directed Services, Inc. 1001 Jefferson Street Wilmington, DE 19801 Barnett Chernow Executive Vice President Director and President Directed Services, Inc. 1001 Jefferson Street Wilmington, DE 19801 Stephen J. Preston Executive Vice President Executive Vice President Directed Services, Inc. and Chief Actuary 1001 Jefferson Street Wilmington, DE 19801 David L. Jacobson Senior Vice President Senior Vice President Directed Services, Inc. and Assistant Secretary 1001 Jefferson Street Wilmington, DE 19801 Jodie R. Schult Treasurer None Equitable of Iowa Companies 909 Locust Street Des Moines, IA 50309 (c) 1997 Net Name of Underwriting Compensation Principal Discounts and on Brokerage Underwriter Commissions Redemption Commissions Compensation ----------- ----------- ---------- ----------- ------------ DSI $35,944,000 $0 $0 $0 ITEM 30: LOCATION OF ACCOUNTS AND RECORDS Accounts and records are maintained by Golden American Life Insurance Company at 1001 Jefferson Street, Suite 400, Wilmington, DE 19801 and by Equitable Life Insurance Company, an affiliate, 909 Locust Street, Des Moines, IA 50309. ITEM 31: MANAGEMENT SERVICES None. ITEM 32: UNDERTAKINGS (a) Registrant hereby undertakes to file a post-effective amendment to this registration statement as frequently as it is necessary to ensure that the audited financial statements in the registration statement are never more that 16 months old so long as payments under the variable annuity contracts may be accepted. (b) Registrant hereby undertakes to include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information; and, (c) Registrant hereby undertakes to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request. REPRESENTATIONS 1. The account meets definition of a "separate account" under federal securities laws. 2. Golden American Life Insurance Company hereby represents that the fees and charges deducted under the Contract described in the Prospectus, in the aggregate, are reasonable in relation to the services rendered, the expenses to be incurred and the risks assumed by the Company. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Registration Statement and has caused this Registration Statement to be signed on its behalf in the City of Wilmington, and State of Delaware, on the 19th day of January, 1999. SEPARATE ACCOUNT B (Registrant) By: GOLDEN AMERICAN LIFE INSURANCE COMPANY (Depositor) By: -------------------- Barnett Chernow* President Attest: /s/ Marilyn Talman ------------------------ Marilyn Talman Vice President, Associate General Counsel and Assistant Secretary of Depositor As required by the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on January 19, 1999. Signature Title President and Director - -------------------- of Depositor Barnett Chernow* - -------------------- Senior Vice President E. Robert Koster* and Chief Financial Officer DIRECTORS OF DEPOSITOR - ---------------------- Frederick S. Hubbell* - ---------------------- Paul E. Larson* - ---------------------- Myles R. Tashman* - ---------------------- Beth B. Neppl* By: /s/ Marilyn Talman Attorney-in-Fact ----------------------- Marilyn Talman _______________________ *Executed by Marilyn Talman on behalf of those indicated pursuant to Power of Attorney. EXHIBIT INDEX ITEM EXHIBIT PAGE # 10(a) Consent of Sutherland Asbill & Brennan LLP EX-99.B10A 10(b) Consent of Independent Auditors EX-99.B10B 10(c) Consent of Myles R. Tashman, Esq. EX-99.B10C 15 Powers of Attorney EX-99.B15 16 Subsidiaries of ING Groep N.V. EX-99.B16 EX-99.B10A 2 CONSENT OF SUTHERLAND ASBILL & BRENNAN LLP Exhibit 10(a) - Consent of Sutherland Asbill & Brennan LLP SUTHERLAND ASBILL & BRENNAN LLP 1275 PENNSYLVANIA AVENUE, N.W. WASHINGTON, D.C. 20004-2404 January 19, 1998 VIA EDGAR - --------- Board of Directors Golden American Life Insurance Company 1001 Jefferson Street, Suite 400 Wilmington, DE 19801 Ladies and Gentlemen: We hereby consent to the reference to our name under the caption "Legal Matters" in the Statement of Additional Information filed as part of Post-Effective Amendment No. 10 to the registration statement on Form N-4 for the Separate Account B (File No. 33-59261). In giving this consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933. Very truly yours, SUTHERLAND ASBILL & BRENNAN LLP By: /s/ Stephen E. Roth ---------------------------- Stephen E. Roth EX-99.B10B 3 CONSENT OF INDEPENDENT AUDITORS Exhibit 10(b) - Consent of Ernst & Young LLP, Independent Auditors We consent to the reference to our firm under the captions "Independent Auditors" and "Experts", and to the use of our reports dated February 12, 1998, with respect to the financial statements of Golden American Life Insurance Company, and February 12, 1998, with respect to the financial statements of Separate Account B, included in Post-Effective Amendment No. 10 to the Registration Statement (Form N-4 No. 33-59261) and related Prospectus of Separate Account B. Our audit also included the financial statement schedules of Golden American Life Insurance Company included in Item 24(a)(2). These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audit. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. /s/ Ernst & Young LLP Des Moines, Iowa January 11, 1999 EX-99.B10C 4 CONSENT OF MYLES R. TASHMAN Exhibit 10(c) - Consent of Myles R. Tashman GOLDEN AMERICAN LIFE INSURANCE COMPANY 1001 Jefferson Street, Wilmington, DE 19801 Tel: (302) 576-3400 Fax: (302) 576-3540 January 19, 1999 Members of the Board of Directors Golden American Life Insurance Company 1001 Jefferson Street, Suite 400 Wilmington, DE 19801 Ladies and Gentlemen: I consent to the reference to my name under the heading "Legal Matters" in the prospectus. In giving this consent I do not thereby admit that I come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933 or the Rules and Regulations of the Securities and Exchange Commission thereunder. Sincerely, /s/ Myles R. Tashman - ---------------------- Myles R. Tashman Executive Vice President and Secretary EX-99.B15 5 POWERS OF ATTORNEY Exhibit 15 - Powers of Attorney GOLDEN AMERICAN LIFE INSURANCE COMPANY 1001 Jefferson Street, Suite 400, Wilmington, DE 19801 Phone: (302) 576-3400 Fax: (302) 576-3520 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, being duly elected Directors and officers of Golden American Life Insurance Company ("Golden American"), constitute and appoint Myles R. Tashman, and Marilyn Talman, and each of them, his or her true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution for him or her in his or her name, place and stead, in any and all capacities, to sign Golden American's registration statements and applications for exemptive relief, and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as s/he might or could do in person, hereby ratifying and affirming all that said attorneys-in-fact and agents, or any of them, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. SIGNATURE TITLE DATE - --------- ----- ---- /s/ Frederick S. Hubbell Director and Chairman April 27, 1998 - ----------------------- -------------------- Frederick S. Hubbell /s/ Barnett Chernow Director and President April 27, 1998 - ----------------------- -------------------- Barnett Chernow /s/ Myles R. Tashman Director, Executive Vice April 27, 1998 - ----------------------- President, General -------------------- Myles R. Tashman Counsel and Secretary /s/ Paul E. Larson Director April 27, 1998 - ----------------------- -------------------- Paul E. Larson /s/ Beth B. Neppl Director and Vice President November 6, 1998 - ----------------------- -------------------- Beth B. Neppl /s/ E. Robert Koster Senior Vice President November 20, 1998 - ----------------------- and Chief Financial Officer -------------------- E. Robert Koster EX-99.B16 6 SUBSIDIARIES OF ING GROEP N.V. Exhibit 16 - Subsidiaries of ING Groep N.V. ING Bank N.V. Alegron Belegging B.V. ING Bank Ukraine ING Baring Securities (Romania) S.A. Amsterdam Exchanges N.V. Argencontrol Artolis B.V. Assurantiebedrijf ING Bank N.V. Assurantiekantdoor Honig & Hageman BV Noordster V.O.F. Volmachtbedrijf ING Bank B.V. Atlas Investeringsgroep N.V. Atlas Investors Partnership III C.V. B.V. Gemeenschappelijk Bezit Aandelen Necigef Bank Brussels Lambert S.A. ING Bank (Belgium) N.V./S.A. Bancard Company S.A. Cooperation Liquidation Terme Bourse S.C. Europay Belgium S.C. Institut De Reescompte S.C. Societe Belge D' Investissement International S.C. Society for Worldwide Interbank Financial Telecommunication S.C. Visa Belgium SC Bank Mendes Gans NV B.V. Deelnemings En Financieringsmaatschappij "Nova Zembla" B.V. Trust En Administratiekantoor Van Bank Mendes Gans N.V. Bank Mendes Gans Effectenbewaarbedrijf N.V. Brenko B.V. Cabel B.V. Handamar N.V. Handamar Corporation Intervest B.V. Intervest PPM B.V. Bank Slaski S.A. W Katowicach *Rodkowoeropejskie Centrum Ratingu I Analiz S.A. Bankowe Przedsi*Biorstwo Telekom. Telebank S.A. BSK Konsulting SP Z.O.O. BSK Leasing S.A. Centralna Tabela Ofert S.A. Dom Maklerski BSK S.A. Gie*Da Papierow Warto*Clowych S.A. ING BSK Asset Management S.A. Krajowa Izba Rozliczeniowa S.A. Biuro Informacji Kredytowe S.A. Mi*Dzvnarodowa Szko*A Bankowo*Ci I Finansow SP Z.O.O. Society for Worldwide Interbank Financial Telecommunication S.C. Banque Baring Brothers (Suisse) S.A. Benelux Investment Fund B.V. Berliner Handels - Und Frankfurter Bank A.G. Buenos Aires Equity Investments N.V. Emprendimiento Recoleta S.A. (ERSA) BPEP Holdings Limited Baring Asia (GP) Limited Baring European Fund Managers Limited Baring Latin America GP Limited Baring Latin America Partners Limited Baring Private Equity Partners (Asia) PTE. Limited Baring Private Equity Partners (China) Limited ING Barings Private Equity (China) Limited ING BPE (China) Advisers Limited Baring Private Equity Partners (India) Limited Baring Private Equity Partners GMBH Baring Private Equity Partners Limited Baring Venture Partners GMBH Baring Venture Partners S.A BHB Management Limited BPEP General Partner I Limited BPEP General Partner II Limited BPEP Management (UK) Limited BPEP Nominees Limited Quartz Capital Partners Limited Transtech Limited BCEE Advisers Limited BCEF Advisers Limited BHR Management Limited BI Advisers Limited Blac Holdings Inc. Blac Corp. Incorperated BPEP Management Limited Baring Mexico (GP) Limited Baring Private Equity Partners Espana S.A. Baring Private Equity Partners Mexico S.C. BVP Mexico S.A. Cavendish Nominees Limited BPEP Participations Limited Baring Vostok Capital Partners Limited Baring Vostok Fund Managers Limited ESD Managers Limited Easdaq S.A. International Private Equity Services Limited Polytechnos Venture Partners GMBH BVP Holdings Limited Baring Capricorn Ventures Limited Baring Communications Equity Limited BCEA Advisers Limited BCEA Management PTE. Limited Capricorn Venture Fund N.V. Procuritas Partners KB PAB Partner AB BVP Management Limited Capricorn Venture Partners N.V. Czech Venture Partners S.R.O. CI European Limited SCGF Advisers Limited BV Maatschappij Van Onroerende Goederen 'Het Middenstandshuis B' BV Maatschappij Van Onroerende Goederen 'Het Middenstandshuis' Amsterdamse Poort III B.V. Bijlmerplein Leasing BV Foppingadreef Leasing B.V. BV Maatschappij Van Onroerende Goederen 'Het Middenstandshuis A' BV Maatschappij Van Onroerende Goederen 'Het Middenstandshuis C' Grondpoort III B.V. C.V. Exploitatiemaatschappij Tunnel Onder De Noord Cardona B.V. Cedel International S.A. Centrum Cocarde B.V. Cene Bankiers N.V. Administratie & Trustkantoor Beleggingsfonds Protestants Nederland BV Amsterdam Exchanges N.V. Arma Beheer B.V. Beheer Administratie en Beleggingsmaatschappij Kant B.V. Bewaarbedrijf Cene Bankiers B.V. BV Algemene Beleggingsmaatschappij Cene Bankiers N.V. Beheermaatschappij Jansen Groenekan B.V. Copar B.V. Fidele Management B.V. Flexibel Beheer Utrecht B.V. Hercules Beheer B.V. Langosta B.V. Mercurius Beheer B.V. Nivo Investments B.V. Remazon B.V. Cene Bankiers Holdings N.V. Cene Asset Management N.V. Cene Management N.V. Tawny Owl Investment Company N.V. Cene Verzekeringen B.V. N.V. Instituut Voor Ziekenhuisfinanciering Utrechtse Participatiemaatschappij B.V. Cofiton B.V. Sterling Developments B.V. Brooks Equities Inc. Location 3 Ltd. SDC Properties Inc. Tripolis Vastgoed B.V. Tripolis A C.V. Tripolis B C.V. Tripolis C C.V. Combdring B.V. Compensadora Electronica S.A. Computer Centrum Twente B.V. Corporacion Financiera ING (Colombia) S.A. Credit Commercial De France S.A. Depositary Company ING Bank B.V. Destara B.V. ING Bank Ukraine ING Baring Securities (Romania) S.A. Effectenbeursvennootschap Van Brussel C.V. Effectenbewaarbedrijf ING Bank N.V. Euroclear Clearance System Public Limited Company European Investment Fund (Center 757) European Investment Fund (Center 920) Extra Clearing B.V. Amsterdam Exchanges N.V. Extra Clearing GMBH YVOF Floorbrokers B.V. Easdaq S.A. Financial Advisory & Consultancy Services B.V. Owen Stanley Financial S.A. Financial Facilities Management B.V. Finemij B.V. Gabela Belegging B.V. Hamgia Beheer B.V. ING Bank Urkraine ING Baring Securities (Romania)S.A. Ingvest III B.V. Institucion Financiera Externa Middenbank Curacao N.V. (Uruguay) Interbank On-Line System Limited International Bankers S.A. Interpay Nederland B.V. Interunion Bank (Antilles) N.V. Interadvies N.V. Administratiekantoor De Leuve BV Crediet Service Bank B.V. Incassobureau Fiditon BV NV Nationale Volksbank Arenda B.V. Spaarfondsen Beheer B.V. Spaarfondsen Bewaar B.V. Welvaert Financieringen NV Welstand B.V. ING (U.S.) Financial Holdings Corporation ING (U.S.) Capital Financial Holdings Corporation ING (U.S.) Capital Corporation ING (U.S.) Capital Investors Holdings, Inc. ING (U.S.) Capital Advisors, Inc. ING (U.S.) Emerging Markets Investors Inc. ING Equity Partners L.P. ING (U.S.) Capital Securities, Inc. ING (U.S.) Financial Services Corporation ING Baring Grupo Financiero (Mexico) S.A. De C.V. ING Baring (U.S.) Financial Holdings Corp. ING (U.S.) Securities, Futures & Options, Inc. ING Baring (U.S.) Capital Corp. Brecco, Inc. ING (U.S.) Real Estate Investors, Inc. ING Baring (U.S.) Capital Markets, Inc. ING Baring (U.S.) Securities, Inc. ING Merger Inc. Furman Selz (Ireland) LLC Furman Selz Financial Services Unlimited Furman Selz Advisors LLC Furman Selz Capital LLC Furman Selz Capital Management LLC Furman Selz Investments LLC Furman Selz SBIC Invest LLC Furman Selz LLC Furman Selz Financial Services LLC Furman Selz Merchant Capital LLC Furman Selz Resources LLC FSIC LLC Total Resources LLC Furman Selz Proprietary, Inc. Furman Selz (Ireland) LLC Furman Selz Financial Services Unlimited Furman Selz Advisors LLC Furman Selz Capital LLC Furman Selz Capital Management LLC Furman Selz Financial Services LLC Furman Selz Financial Services Unlimited Furman Selz Investments LLC Furman Selz SBIC Invest LLC Furman Selz LLC Furman Selz Financial Services LLC Furman Selz Merchant Capital LLC Furman Selz Resources LLC FSIC LLC Total Resources LLC Furman Selz Merchant Capital LLC Furman Selz Residential Funding LLC Furman Selz Resources LLC Furman Selz SBIC Invest LLC FSIC LLC Mutual Fund Funding 1994-1 Pacifica Funds Distributor, Inc. Total Resources LLC Furman Selz Residential Funding LLC FS Trust Company ING (U.S.) Funding Corporation ING Bank (Chile) S.A. Edibank S.A. Sociedad Interbancaria De Depositos De Valores S.A. ING Bank (Eurasia) ING Bank (Hungary) Rt. Giro Elszamolasforgalmi Rt. ING Duna Ingatlanhasznositc KFT ING Bank (Luxembourg) S.A. CMF Advisory S.A.H. Euromix Advisory S.A.H. ING Bank Luxfund Management S.A. ING International Advisory S.A.H. ING International II Advisory S.A.H. ING Bank (Schweiz) A.G. Kredietbank S.A. Luxembourgeoise ING Bank (Uruguay) S.A. Bolsa Electronica De Valores Del Uruguay S.A. Compania Uruguaya De Medios De Procesamiento S.A. Red. De Intercomunicacion De Alta Seguridad S.R.L. ING Bank of Canada ING Bank Corporate Investments B.V. Entero B.V. Eruca Belegging B.V. ING Bank Mezzaninefonds B.V. ING Bank Participatie PPM B.V. MKB Beleggingen B.V. MKB Vliehors II B.V. Wijkertunnel Beheer II B.V. Wijkertunnel Beheer II Management B.V. MKB Vliehors III B.V. Small Business Publishing B.V. N&M Holding N.V. ING Bank Dutch Fund N.V. ING Bank Fondsen Beheer B.V. ING Bank Geldmarkt Fonds N.V. ING Bank Global Custody UK Nominees Limited ING Bank Global Fund N.V. ING Bank Guldem Fonds N.V. ING Bank I.T. Fund N.V. ING Bank Luxfund Management S.A. ING Bank Middutch Fund N.V. ING Bank Obligatie Fonds N.V. ING Bank Rentegroei Fonds N.V. ING Bank Spaardividend Fonds N.V. ING Bank Vastgoed Fonds B.V. ING Bank Verre Oosten Fonds N.V. ING Baring Capital Markets (C.R.), A.S. ING Baring Financial Products ING Baring Holding Nederland B.V. Atlas Capital (Thailand) Limited ("Atlas") ING Baring Securities (Thailand) Limited ING Baring Holdings Limited Baring Asset Management Holdings Ltd. Baring Asset Management Ltd. Baring International Investment Limited Baring International Investment Management Holdings Ltd. Baring Asset Management Inc. Baring International Investment (Canada) Limited Baring International Investment Management Limited Baring Asset Management Holdings Inc. Baring Asset Management UK Holdings Limited Baring Asset Management (Asia) Holdings Limited Austin Assets Limited Baring Asset Management (Asia) Limited Baring Asset Management (Australia) Limited Baring Asset Management (Japan) Limited Baring International Fund Managers (Bermuda) Limited Baring International Fund Managers Limited Baring International Investment (Far East) Limited Baring Pacific Investments Limited Baring Asset Management (C.I.) Limited Baring International Fund Managers (Ireland) Ltd. Baring Investment Services Inc. Baring Mutual Fund Management S.A. European and Asian Fund Management S.A. Baring Investment Management Ltd. Baring Quantative Management Ltd. Baring Global Fund Managers Limited Baring Private Asset Management Ltd. Baring Fund Managers Limited Baring Managed Funds Services Ltd. Baring Private Investment Management Ltd. Baring Trust Company Ltd. Baring Trustees (Guernsey) Limited Arnold Limited International Metal Trading Limited Barings (Isle of Man) Limited Control Management Limited Doyle Administration Limited International Metal Trading Limited ING Trust (Jersey) Ltd Saline Nominees Limited Truchot Limited Vivian Limited Barings (Guernsey) Limited Barfield Nominees Limited Barings Ireland Limited Guernsey International Fund Managers Limited Arnold Limited International Metal Trading Limited Control Management Limited Doyle Administration Limited International Metal Trading Limited International Fund Managers (Ireland) Ltd. International Securitisation Managers (Ireland) Ltd Saline Nominees Limited Truchot Limited Vivian Limited International Fund Managers UK Ltd. Ravensbourne Registration Services Ltd. Barings Investment Services Limited Baring Brothers Holdings Limited Baring (U.S.) Holdings Limited Abbotstone Investment Company Limited Baring Brothers Limited Baring Brothers (Finance) Limited Baring Brothers Argentina S.A. Baring Brothers International Limited Barings C.F. Holdings Limited B.B.A.H. Pty Limited Baring Brothers Burrows & Co. Limited Baring Brothers Burrows Securities Limited SAIPH Pty Limited BBHP Pty Limited Baring Brothers (Deutschland) GMBH Baring Brothers International GMBH Baring Brothers (Espana) S.A. Barings Brothers (Italia) SRL Baring Properties (London Wall) Limited Baring Properties Limited Outwich Finance Limited Outwich Limited Baring Warrants PLC Barings France S.A. Barings Nominees Limited Bishopscourt Holdings Limited Bishipscourt Leasing (Holdings) Limited Bishopscourt Asset Leasing Limited Bishopscourt Equipment Leasing Limited Bishopscourt Industrial Finance Limited Bishopscourt Limited Bishopscourt Securities Limited BVC Nominees Limited Cotton Nominees Limited ING Baring International Advisers Limited ING Baring Services (Eastern Europe) Limited ING Baring Services Limited The Mortgage Acceptance Corporation (Holdings) Limited The Mortgage Acceptance Corporation Limited Yealme Securities Limited ING Baring Financial Products ING Baring Securities Holdings Limited ING Baring Securities Limited ING Baring Securities (Andean Pact) Ltda ING Barings Peru S.A. ING Baring Securities Services Limited Baring Securities (Property Services) Ltd BS Property Services (Japan) Limited ING Baring Data Limited INGB Dormant Holding Company Limited Baring Securities (London) Limited Baring Securities (OTC Options) Limited ING Baring Management Services PTE Ltd ING Baring Research Limited ING Baring Securities (Overseas) Ltd. ING Baring Securities Management Services (Hong Kong) Ltd Maketravel Limited INGB Securities (International) Holdings Limited Baring Securities (Financial Services) Limited Barsec (International) Limited Baring Nominees (Australia) Pty Ltd Baring Research S.A. De C.V. Baring Securities (Australia) Limited Baring Securities (France) S.A. Baring Securities Pakistan (Private) Limited Barings Mauritius Limited ING Barings India Private Limited ING Baring Securities (India) Pvt. Ltd. Celtec Holdings S.A. ING Baring Corretora De Valores Mobiliarios S.A. Corinvest Limited Epcorp Limited Galax Limited Dropny B.V. ING Baring Chile Limitada ING Baring International PTE Ltd ING Baring Operational Services (Taiwan) Limited ING Baring Securities (Andean Pact) Ltda ING Baring Securities (Hong Kong) Ltd ING Baring Far East Nominees Limited ING Baring Securities (Philippines) Inc. ING Baring Securities (Singapore) PTE Ltd ING Baring Nominees (Singapore) PTE Ltd ING Baring Research (Malaysia) SDN. Bhd. ING Baring Securities (Taiwan) Limited (SICE) ING Baring Securities, Argentina S.A. ING Baring South Africa Limited ING Barings Southern Africa (Proprietary) Ltd Anodyne Nominees (Proprietary) Limited ING Barings Peru S.A. ING Futures & Options (Hong Kong) Limited ING UK Capital Limited Lokmaipattana Co. Limited PT ING Baring Securities Indonesia INGB Securities Client Services Limited Aliwall Limited Barings Securities Nominees Limited Brunera Limited Cereus Limited Dianthus Limited Eranthis Limited Francoa Limited Grassmere Limited Leacroft Limited Mountbatten Limited ING Baring Securities (Japan) Limited ING Baring Securities (Thailand) Limited ING Baring Investment (Eurasia) Zao ING Baring Securities (Hungary) Rt. ING Baring Securities (Poland) Holding B.V. ING Baring Securities (Romania) S.A. ING Baring Securities (Slovakia), S.R.O. Proctor & Gamble S.R.O. ING Barings Ecuador Casa De Valores S.A. ING BSK Asset Management S.A. ING Capital Markets (Hong Kong) Limited ING Compania De Inversiones Y Servicios Limitada Bolsa Electronica De Chile, Bolsa De Valores S.A. CISL Aruba A.E.C. ING Consultants Co., Ltd. ING Derivatives (London) Limited Belgian Futures & Options Exchange London Clearing House Limited Liffe (Holdings) PLC The International Petroleum Exchange of London Limited ING Empreendimentos E Participacaos Ltda. Guilder Corretora De Valores Mobiliarios S/A ING Guilder Distribuidora De Titulos E Valores Mobiliarios S/A ING Investment Management Ltda. ING Servicos Ltda. ING Finance (Ireland) Ltd ING Forex Corporation ING Futures & Options (Singapore) PTE Ltd ING Inversiones, Ltda. Corporacion Financiera ING (Colombia) S.A. ING Investment Management Holdings (Antilles) N.V. ING Lease Holding N.V. CW Lease Belgium NV CW Finance N.V. CW Lease Luxembourg S.A. Dealer Lease Service Belgium N.V. CW Lease Nederland BV Autolease OSS B.V. CW Finance N.V. CW Lease Belgium NV CW Finance N.V. CW Lease Luxembourg S.A. Dealer Lease Service Belgium N.V. CW Lease France S.N.C. CW Lease Luxembourg S.A. Dealer Lease Service Belgium N.V. Gothia Estate II B.V. Westment II B.V. International Driver Service B.V. Schade Herstel Bedrijf B.V. ING Aircraft Lease B.V. Fokker Brasil B.V. ING Lease (Belgium) N.V. Real Estate Lease SPC 1 N.V. Savin Lease N.V. ING Lease (Espana) EFC, SA ING Lease (France) S.A. ING Lease (France) S.N.C. ING Lease (Italia) SPA ING Lease (Nederland) B.V. Blauwe IRM B.V. Graphic Lease B.V. Groen Lease B.V. GIL 1997 (Windkracht) B.V. ING Lease Vastgoed B.V. Newco-One Corp. Ship Lease International B.V. ZIL '96 B.V. ING Lease (Polska) ING Lease Holding (Deutschland) GMBH CW Lease Deutschland GMBH CW Lease Berlin GMBH ING Lease Deutschland GMBH IFSC Beteiligungsgesellschaft GMBH ING Lease (Berlin) GMBH ING Lease Kran und Schwertransport GMBH ING Leasing Besitzgesellschaft MBH ING Leasing Geschaeftsfuhrungsgesellschaft MBH ING Leasing Gesellschaft Fur Beteiligungen MBH ING Leasing GMBH & Co. Golf KG ING Leasing GMBH & Co. Juliett KG ING Leasing Treuhandsgeselschaft GMBH ING Leasing Verwaltungsgesellschaft GMBH Uta Finanz und Leasing GMBH ING Lease Holdings (UK) Limited CW Lease UK Ltd CW Finance Ltd. Leasing Principals Limited ING Lease (UK) Limited ING Farm Finance Limited ING Farm Finance (June) Limited ING Farm Finance (March) Limited ING Farm Finance (September) Limited ING Lease (UK) Nine Limited ING Lease (UK) Six Limited ING Lease (UK) Three Limited MKL Rentals Limited ING Lease Interfinance B.V. CW Lease France S.N.C. ING Lease (Italia) SPA Real Estate Lease SPC 1 N.V. Runoto Belgium N.V. Diamond Lease ING Lease International Equipment Finance B.V. ING Aviation Lease B.V. Air Finance Holland B.V. Aviation Service Holland B.V. ING Lease (Far East 2) B.V. ING Lease (Far East) N.V. ING Lease (Ireland) B.V. ING Lease (France) S.N.C. ING Lease Structured Finance B.V. Esbelto B.V. Green Assets B.V. Hirando B.V. Hokabe Lease B.V. ING Bank Geldmarkt Fonds Beheer B.V. ING Lease Milieu B.V. Quadralock 2 B.V. SFING Europe B.V. Tropelia B.V. Virgula B.V. ING Lease International Equipment Management B.V. Air Finance Amsterdam B.V. Air Holland Leasing II B.V. ING (Holland Aircraft Lease) B.V. ING Lease Aircraft B.V. ING Lease Delaware, Inc. Noord Lease B.V. Postbank-Lease B.V. Renting De Equipos E Inmuebles SA Runoto Leasing BV Runoto Belgium N.V. Diamond Lease ING Mercantile Mutual Bank Limited ING Merchant Bank (Singapore) Limited Export Credit Insurance Corporation of Singapore Ltd ING Asset Management (Singapore) Ltd ING Nominees (Singapore) PTE Ltd ING Participation Dalrybbank B.V. ING Private Banking Beheer B.V. ING Bank Vastgoed Management B.V. ING Securities (Eurasia) Zao ING Servicios, C.A. ING Sociedad De Bolsa (Argentina), S.A. Mercado De Valores De Buenos Aires S.A. ING Sviluppo Sim S.P.A. ING Trust B.V. Ingress N.V. ING Management (Hong Kong) Ltd ING Nominees (Hong Kong) Ltd ING Trust (Antilles) NV Formid Management N.V. ING (Antilles) Portfolio Management N.V. Monna NV Jet NV Simbad N.V. ING Trust (Aruba) N.V. ING Trust (BVI) Ltd. ING Trust (Luxembourg) S.A. ING Trust (Nederland) B.V. ING Bank (Eurasia) ING Bank (Luxembourg) S.A. CMF Advisory S.A.H. Euromix Advisory S.A.H. ING Bank Luxfund Management S.A. ING International Advisory S.A.H. ING International II Advisory S.A.H. ING Baring Securities (Romania) S.A. ING Holdings Empreendimentos Participacao Ltda. Guilder Corretora De Valores Mobiliarios S/A Management Services ING Bank B.V. ING Bank (Eurasia) ING Baring Investment (Eurasia) Zao ING Securities (Eurasia) Zao Muteka BV ING Trust (Suisse) AG Trust Maatschappij ING Bank B.V. Anorga B.V. Corpovea B.V. N.V. Balmore Vastgoed U.S.A. Den Hamer Beheer B.V. Diagonac B.V. Henry F. Holding B.V. ING Aconto N.V. N.V. Balmore Vastgoed U.S.A. Mijcene B.V. Vitigudino B.V. N.V. Balmore Vastgoed U.S.A. N.V. Balmore Vastgoed U.S.A. Paramito B.V. Rescit I BV Storeria B.V. Tuvor B.V. Vitigudino B.V. N.V. Balmore Vastgoed U.S.A. Vitigudino B.V. N.V. Balmore Vastgoed U.S.A. Westward Capital II B.V. ING Valores (Venezuela) C.A. ING Vastgoed B B.V. ING Real Estate (BHS) B.V. ING Real Estate International Development B.V. Holland Park Sp. Zoo ING Real Estate Iberica SL ING Real Estate International Development (Liege) B.V. ING Real Estate Sp. Zoo ING Real Estate Vasco Da Gama B.V. London & Amsterdam Properties Ltd London and Amsterdam Development Ltd. London & Amsterdam Properties Ltd MBO Camargo SA Inmolor SA MBO La Farga SA Hospitalet Center, SL MBO Morisson Ltd Warsaw I B.V. 1300 Connecticut Avenue Joint Venture Ltd ING Real Estate International Investment II B.V. ING Real Estate International Investment III B.V. ING Vastgoed Financiering N.V. Bedrijfsgebouw MBO - Riho C.V. Groeneveld MBO C.V. M.B.O. Vastgoed Lease B.V. Lindenburgh C.V. Maria Hove C.V. MBO Brova C.V. MBO North America Finance B.V. Residential Financial Development LLC ING Vastgoed Fondsen B.V. Winkelfonds Nederland Management B.V. ING Vastgoed Ontwikkeling B.V. Amsterdamse Poort Holding IV B.V. Amsterdamse Poort IV B.V. Grondpoort IV B.V. Amsterdamse Poort II B.V. BV Bedrijvenpark G.P. CV Bedrijvenpark G.P. Grondpoort II B.V. Gulogulo B.V. Antibes Holding B.V. ING Vastgoed Arena B.V. Muller Bouwparticipatie B.V. V.O.F. Winkelcentrum Markt Noorderpromenade Drachten MBO - Ruijters B.V. Holding 'T Loon B.V. Vastgoed 'T Loon B.V. Wolfstreet Holding B.V. Wolfstreet B.V. Wolfstreet Grond B.V. MBO Brinkstraat Holding B.V. MBO Brinkstraat B.V. MBO Brinkstraat Grond B.V. MBO Catharijnesingel Holding B.V. MBO Catharijnesingel B.V. MBO Catharijnesingel Grond B.V. MBO De Centrale Holding B.V. MBO De Centrale B.V. MBO De Centrale Grond B.V. MBO Dommelstaete Holding B.V. MBO Dommestaete B.V. MBO Emmasingel Holding B.V. MBO Emmasingel B.V. MBO Emmasingel Grond B.V. MBO Guyotplein Holding B.V. MBO Guyotplein B.V. MBO Guyotplein Grond B.V. MBO Kousteensedijk Holding B.V. MBO Kousteensedijk B.V. MBO Kousteensedijk Grond B.V. MBO Kruseman Van Eltenweg Holding B.V. MBO Kruseman Van Eltenweg B.V. MBO Kruseman Van Eltenweg Grond B.V. MBO Marienburg B.V. Marienburg V.O.F. MBO Martinetsingel Holding B.V. MBO Martinetsingel B.V. MBO Martinetsingel Grond B.V. MBO Oranjerie Holding B.V. MBO Oranjerie B.V. MBO Oranjerie Grond B.V. MBO Pleintoren Holding b.V. MBO Pleintoren BV MBO Pleintoren Grond BV MBO Via Catarina B.V. Via Catarina "Empredimentos Imobiliarios" SA MBO Walburg Holding B.V. MBO Walburg B.V. MBO Walburg Grond B.V. MBO Willem II Singel Holding B.V. MBO Willem II Singel B.V. MBO Willem II Singel Grond B.V. Q-Park Bovenmaas I B.V. Q-Park N.V. Q-Park Nederland B.V. Q-Park Exploitatie B.V. Q-Park De Bijenkorf B.V. Q-Park Beheer B.V. Q-Park Brabant B.V. Q-Park Reserve I B.V. Q-Park Byzantium B.V. Q-Park City Holding B.V. Q-Park City B.V. Q-Park Schouwburg B.V. Q-Park De Klomp B.V. Q-Park Raadhuis B.V. Q-Park Reserve II B.V. Stadsherstel Historisch Rotterdam N.V. Supermarkt Krouwel B.V. V.O.F. Winkelcentrum Markt Noorderpromenade Drachten Vastgoed De Brink Holding B.V. Vastgoed De Brink B.V. Wilhelminahof MBO B.V. Zuidplein Beheer BV ING Verwaltung (Deutschland) GMBH A.G. Allgemeine Deutsche Direktbank AG BNL Beteiligungsgeselschaft Neue Laender GMBH & Co. KG Liquiditats-Konsortialbank GMBH ING-North East Asia Bank INIB N.V. Locura Belegging B.V. Luteola B.V. Melifluo B.V. Middenbank Curacao N.V. Advisory Company Luxembourg Altasec N.V. Corporacion Financiera ING (Colombia) S.A. Aralco N.V. Atlas Venture Fund I, L.P. Banco Latino-Americano De Exportaciones S.A. Cayman Islands Funds N.V. Corporacion Financiera ING (Colombia) S.A. Datasegur S.R.L. Fiseco N.V. Granity Shipping N.V. Institucion Financiera Externa Middenbank Curacao N.V. (Uruguay) ING Bank (Chile) S.A. Edibank S.A. Sociedad Interbancaria De Depositor De Valores S.A. ING Barings Ecuador Casa De Valores S.A. ING Compania De Inversiones Y Servicios Limitada Bolsa Electronica De Chile, Bolsa De Valores S.A. CISL Aruba A.E.C. ING Inversiones, Ltda. Corporacion Financiera ING (Colombia) S.A. ING Sociedad De Bolsa (Argentina), S.A. Mercado De Valores De Buenos Aires S.A. Kamadora Investments N.V. Corporacion Financiera ING (Colombia) S.A. Lerac Investment S.A. Red Rose Investments N.V. Unilarse Zermatt N.V. Miopia B.V. Multiaccess B.V. MKB Adviseurs B.V. MKB Card B.V. MKB Investments BV De Springelberg B.V. Het Dijkhuis B.V. Palino B.V. Tiberia B.V. MKB Punt B.V. Business Compass Holding B.V. N.V. Instituut Voor Ziekenhuisfinanciering Nationale-Nederlanden Financiele Diensten B.V. B.V. Financieringsmaatschappij Vola B.V. Kredietmaatschappij Vola Dealer Cash Plan B.V. Cash Plan B.V. Finantel B.V. Sentax Assurantie B.V. G. J. Van Geet Beheer B.V. Alegro Krediet B.V. Gelderse Discount Maatschappij B.V. Sentax Beheer B.V. Finam Krediet B.V. Sentax Lease B.V. Vola Geldleningen B.V. Nederlandse Bouwbank N.V. Nederlandse Financieringsmaatschappij Voor Ontwikkelingslanden N.V. Nedermex Limited N.V. Netherlands Caribbean Bank N.V. Nethworks Integrated Project Consultancy B.V. Nofegol Beheer B.V. NCM Holding N.V. NMB Equity Participaitons N.V. NMB-Heller Holding N.V. Handlowy-Heller SA Heller GMBH Heller Bank A.G. International Credit Service S.A.S. Heller Finanz GMBH Info-Und Beratungsunternehmen GMBH NMB-Heller Ltd. NMB-Heller N.V. Agpo Participatiemaatschappij B.V. Felix Tigris B.V. Inter Credit B.V. International Credit Service S.A.S. International Credit Service S.A.S. NMB-Heller Zweigniederlassung Neuss Zamenbrink B.V. Zamenterp B.V. OB Heller AS Okalia N.V. Olivacea B.V. Ontwikkelingsmaatschappij Noordrand B.V. Orcinus B.V. Oscar Smit's Bank N.V. Bouwmaatschappij Mecklenburgplein B.V. Kenau B.V. P.T. ING Indonesia Bank Parmola B.V. Paronyme B.V. Pendola B.V. Perotis B.V. Policy Extra Holdings Limited Postbank N.V. Amsterdam Exchanges N.V. Interpartes Incasso B.V. Postbank Aandelenfonds N.V. Postbank Beleggingsfonds N.V. Postbank Beleggingsfondsen Beheer B.V.. Postbank Beleggingsfondsen Bewaar B.V. Postbank Chipper Beheer B.V. Postbank Euro Aandelen Fonds N.V. Postbank Groen N.V. Postbank I.T. Fonds N.V. Postbank Interfinance B.V. Postbank Nederlandfonds N.V. Postbank Obligatie Fonds N.V. Postbank Obligatiefonds Beheer B.V. Postbank Vastgoedfonds N.V. Postbank Vermogensgroeifonds N.V. Postbank Wereldmerkenfonds N.V. Postkantoren B.V. Prena Belegging B.V. T Oye Deventer B.V. A. Van Der Molen Herenmode B.V. A. Van Der Pol Beleggingsmaatschappij Amsterdam B.V. A. Van Venrooy Beleggingen B.V. A. Van Weringh Beleggingen B.V. A.C.M. Nienhuis Houdstermaatschappij B.V. B.V. Raadgevend Bureau Nienhuis Consultans A.H. Blok Holding B.V. A.H.M. Habets Beheer B.V. A.J. Vos Makelaardij Onroerende Goederen B.V. Abades B.V. Abrocoma B.V. Ad Barnhard Holding B.V. Albranis B.V. Almenzor B.V. Altimira B.V. Ambito N.V. Aralar B.V. Atitlan B.V. B.V. Beheersmaatschappij Nuyt En Heikens B.V. Odripi B.V. Varen ABC B.V. Vulca Beleggingsmaatschappij Barbatus B.V. Barbuda B.V. Bebida B.V. Beheermaatschappij Van Der Reijnst B.V. Beheermaatschappij Van Het Beleggingsfonds Van De 7 B.V. Beheermaatschappij Darius B.V. Beheermaatschappij Stouwe B.V. Beheermaatschappij Van Putten B.V. Beheersmaatschappij Elma Schrijen B.V. Beheersmaatschappij K.G. Tjia B.V. Beheersmaatschappij Luco Zuidlaren B.V. Beheersmij A.J. Konst B.V. Belagua B.V. Bergara B.V. Bermillio B.V. Betulina B.V. Bidasoa B.V. Biporus B.V. Blarina B.V. Brasas B.V. Bravura B.V. Bremer-Van Mierlo Belegginsgmaatschappij B.V. Bustia B.V. C. J. Buyzen Beheer B.V. C. J. H. - En J. J. Heimeriks Holding B.V. Calando Belegging B.V. Camilo B.V. Castroverde B.V. Catoneria B.V. Cermanita B.V. Cicania B.V. Clacri B.V. Colocar B.V. OCB Beheer B.V. Concolor B.V. Cortada B.V. Cotranco B.V. Crescentes Prins B.V. Cumbras B.V. Cupula B.V. D'Eijk B.V. De Groninger Lederwaren Industrie B.V. Delta Nederland Beheer B.V. Dorsalis B.V. Dr. De Grood Beheer B.V. DKP Beheer B.V. Dick Kooiman Publication/Productions B.V. DSBV-Enserink B.V. DSBV-Ploeger B.V. E. Romar Beheer B.V. Omnium B.V. Empluma B.V. Entorno B.V. Epic Investments B.V. Ernsatus B.V. Esvice B.V. Exel Beheer B.V. Exploitatie En Beleggingsmaatschappij Alja Eindhoven B.V. F. R. Hoffschlag Beleggingen B.V. Familiale Investerings Maatschappij F.I.M. Farlita B.V. Flantua Beheer B.V. Fregenda B.V. Funjob Investments B.V. G. Laterveer Beheer B.V. Garlito B.V. Gebrema Beheer B.V. Gekrabeheer B.V. Germs Beleggingen B.V. Glabana B.V. Golpejas B.V. H. Van Duinen Beheer B.V. H. Mekenkamp Holding B.V. Mekenkamp Beheer B.V. H. Weterings Holding B.V. H. D. En L.B. Meijer Beheer B.V. H. G. Van Der Most Beheer B.V. Handelsonderneming E. Spee B.V. Hepec Beheer B.V. Hilschip BV Hispidus B.V. Hof En Frieling Beheer B.V. Hof & Frieling Onroerend Goed B.V. Holding Hoveling Beheer B.v. Holding J.W.G. Huijbregts B.V. Holding Schildersbedrijf West-Friesland B.V. Holding Schuiling B.V. Holding Th. A. Wellink B.V. Hotel-Restaurant Boerhave B.V. Huaco B.V. Humada B.V. Ignaro B.V. Imbricata B.V. Incoloro B.V. Indonea B.V. Allshoes Schoengroothandel B.V. ING Bank Spaardividend Fonds Beheer B.V. J & A Holding B.V. J. B. Van Den Brink Beleggingsmaatschappij B.V. J. G. Mekenkamp Holding B.V. Mekenkamp Beheer B.V. J. H. Moes Holding B.V. J. P. Korenwinder Beheer B.V. J. W. Th. M. Kohlen Beheer B.V. Jemaas Beheer B.V. Jongert Beheer B.V. K & M Beheer B.V. Kalliope B.V. Bacolac B.V. Kapellenberg B.V. Kijkgroep B.V. Koehorst Promotion Beheer B.V. KBM Maarssen B.V. L. Martens Beheer B.V. La Douce Vie Network B.V. Lagotis B.V. Larino B.V. Latourette B.V. Leaver B.V. Ledanca B.V. Lektura Tiel Beheer B.V. Licorera B.V. Liecene B.V. Lin Beheer B.V. Lomajoma Holdings B.V. Lorkendreef Beheer N.V. Lustroso B.V. M. B. Van Der Vlerk B.V. Madrigal B.V. Marres B.V. Masegoso B.V. Matthew Holding B.V. Mazairac Belegging B.V. Minnaar Holding B.V. Mirabilis B.V. Molenwiede B.V. Muguet B.V. Multicover B.V. Pulido B.V. Mustang B.V. Olseria B.V. Arend Broekhuis B.V. P. Nienhuis Houdstermaatschappij P. J. Heinrici Beheer B.V. Pastrana B.V. Pedralva B.V. Pemac B.V. Penuria B.V. Perola Belegging B.V. Pertusa B.V. Peter Trompalphen Aan Den Rijn Beheer B.V. Phobos Beleggingen Pinicola B.V. Pluijmen Holding B.V. Portelas B.V. Postigo B.V. Prestamo B.V. Pruis Elburg Beheer B.V. Puebla B.V. Pulido B.V. Rayhold Management En Deelneming B.V. Rescoldo B.V. Ressel B.v. Retrasos B.V. Rodeba Deurne B.v. Roelcene B.V. Rowanda B.V. Rudlolf & Peter Herenmode En Confectie B.V. Sabra Holding B.V. Valpacos B.V. Sacobel Beheer B.V. Schnieders Beheer B.V. Simonis Beheer B.V. Simonis Beleggingsmaatschappij B.V. Sipororo B.V. Spaleta B.V. Spatgens Beheer B.V. Stampida B.V. Stamveld B.V. Steendam Beleggingsmaatschappij Drachten B.V. Storm Beheer B.V. Beheermaatschappij Baarlo B.V. Strokkur B.V. Sunrise Investments B.V. Sustento B.V. Svalbard Beheer B.V. T. A. Lie Beheer B.V. T. M. D. Beheer B.V. Beheermaatschappij Baarlo B.V. Tadavia B.V. Beleggings - En Beheer Maatschappij Solina B.V. Refina B.V. Talboom Beheer B.V. Tapirus B.V. Tarsius B.V. Technisch Advies Bureau Jaba B.V. Ter Linden En Heijer Holding B.V. Tessara Zaanlandia B.V. Thecoar B.V. Theo Kentie Holding B.V. Theo Kentie Design B.V. Traslado B.V. Trasgo B.V. Treetop B.V. Trituris B.V. Truckstar Holding B.V. Tucupido B.V. Tricor B.V. U. Ringsma Beheer B.V. Unitres Holding B.V. Vaanhold & Van Zon Holding B.V. Van Den Heuvel Beheer B.V. Van Loon Beheer B.V. Van Roij Holding B.V. Van Zwamen Holding B.V. Vebe Olst B.V. Vegem Beheer B.V. Venidero B.V. Vette Consultants B.V. Vicar B.V. Vidriales B.V. W. Van Den Berg B.V. W. N. Van Twist Holding B.V. Wabemij B.V. Wiancini B.V. Rentista B.V. Reoco Limited Rutilus B.V. RL & T (International) N.V. Securo De Depositos S.A. Siam City Asset Management Co., Ltd Slivast B.V. Societe Financiere Du Libans. A.L. Society for Worldwide Interbank Financial Telecommunication S.C. Stichting Administratiekantoor ING Bank Global Custody Tablero B.V. Tolinea B.V. Tripudio B.V. Tunnel Onder De Noord B.V. C. V. Exploitatiemaatschappij Tunnel Onder De Noord Unidanmark A/S Verenigde Bankbedrijven N. V. Westland Utrecht Hypotheekbank N.V. Amstgeld Management AG Amstgeld N.V. Amstgeld Trust AG Bouw En Exploitatiemaatschappij Deska XXIII B.V. Charterhouse Vermogensbeheer B.V. Hypothecair Belang Gaasperdam I N.V. Assorti Beheer Amsterdam B.V. Muidergracht Onroerend Goed B.V. Amstel Gaasperdam B. V. Bouw-, Exploitatie En Administratie Maatschappij Amer IV B.V. N.V. Zeker Vast Gaasperdam Rijn Gaasperdam B.V. Juza Onroerend Goed B.V. Hazo Immobilia B.V. Kort Ambacht Maatschappij Tot Exploitatie Van Onroerende Goederen B.V. Utrechtse Financierings Bank N.V. Utrechtse Hypotheekbank N.V. Algemeene Waarborgmaatschappij N.V. Hypotheekbank Voor Nederland II N.V. Hypotheekbank Voor Nederland N.V. Standard Hypotheekbank N.V. ING Bank Hypotheken N.V. Nationale Hypotheekbank N.V. Hollandsche Hypotheekbank N.V. Zuid Nederlandsche Hypotheekbank N.V. Vermogensplanning N.B.I. B.V. W.U.H. Finanz A.G. Westland/Utrecht Leasing B.V. Berchem Onroerend Goed B.V. Berkelse Poort B.V. Beuke Poort B.V. Brasemer Poort B.V. Bruine Poort B.V. Denne Poort B.V. Doetichem Immobilia B.V. Dommelse Poort B.V. Drechtse Poort B.V. Eike Poort B.V. Esse Poort B.V. Frabu Immobilia B.V. Friese Poort B.V. Gelderse Poort B.V. Gele Poort B.V. Grijze Poort B.V. Groninger Poort B.V. Helo Immobilia B.V. Holendrecht Gemeenschappelijk Beheer B.V. Holendrecht Parking B.V. Hollandse Poort B.V. Iepe Poort B.V. Kager Poort B.V. Kilse Poort B.V. Lekse Poort B.V. Limburgse Waterpoort B.V. Lingese Poort B.V. Markse Poort B.V. Oranje Poort B.V. Paarse Poort B.V. Reggese Poort B.V. Roerse Poort B.V. Schepa Immobilia B.V. Sparre Poort B.V. Spoolde B.V. Spuise Poort B.V. Thames Poort B.V. Utrechtse Poort B.V. Vechtse Poort B.V. Vliestse Poort B.V. Westland/Utrecht Bouwonderneming Wubo VI B.V. Westland/Utrecht Bouwonderonderneming Wubo IV B.V. Wilge Poort B.V. Zeeuwse Poort B.V. Westland/Utrecht Verzekeringen B.V. Westlandsche Hypotheekbank N.V. Algemeene Hypotheekbank N.V. Hypotheekbank Maatschappij Voor Hypothecaire Crediet N.V. Groningsche Hypotheekbank N.V. Vaderlandsche Hypotheekbank N.V. Zeeuwsche Hypotheekbank N.V. Zuid-Hollandsche Hypotheekbank N.V. Zugut B.V. ING Verzekeringen N.V. ING Insurance International B.V. Nationale-Nederlanden Intervest II B.V. ING North America Real Estate Holdings Inc. ING Financial Services International (Asia) Ltd. Nationale-Nederlanden Intervest XIII B.V. Nationale-Nederlanden Intertrust B.V. N.N. US Realty Corp B.V. Nederlandsche Flatbouwmaatschappij NN Korea ING Continental Europe Holdings B.V. De Vaderlandsche N.V. Nationale Omnium N.V. De Vaderlandsche Spaarbank N.V. RVS Financial Services N.V. Fiducre N.V. Sodefina S.A. SA De Vaderlandsche Luxemburg Immo "De Hertoghe" NV Westland/Utrecht Hypotheekmaatschappij N.V. Intermediair Services N.V. RVS Verzekeringen N.V. Gefinac N.V. Proodos General Insurances S.A. NN Mutual Fund Management Co. The Seven Provinces International B.V. Nationale-Nederlanden Magyarorszagi Biztosito Rt NN Mutual Fund Services and Consulting Ltd. ING Management Services s.r.o. Prumy Penzijni fond a.s. Nationale-Nederlanden Polska S.A. Nationale-Nederlanden Poist'ovna S.A. ING Management Services Slovensko spol s.r.o. Nationale-Nederlanden Agencia de Valores S.A. NN Romania Asigurari de Viata S.A. Sviluppo Finanziaria ING Investment Management Italy NN Vida Compania de Seguros y Raeseguros S.A. NN Generales Compania e Seguros y Raeseguros Nationale-Nederlanden Pojistovna ING Latin American Holdings ING Insurance Chile Holdings Limitada ING Seguros de Vida S.A. NNOFIC Nationale-Nederlanden (UK) Ltd. NN (UK General) Ltd. The Orion Insurance ING Australia Limited Mercantile Mutual Holdings Ltd. Mercantile Mutual Funds Management Mercantile Mutual Global Ltd. Athelas Mercantile Mutual Insurance (Australia) Ltd. M.A.F.G. Ltd. Mercantile Equities Ltd. Greater Pacific (Leasing) Ltd. Amfas Australia Pty Ltd. Australian General Insurance Co. Ltd. "The Seven Provinces" Insurance Underwriters MM Investment Management Ltd. The Mercantile Mutual Life Insurance Co. Ltd. MML Properties Pty Ltd. Mercantile Mutual Deposits Ltd. Union Investment Co. Ltd. Mercantile Mutual Securities Ltd. Tazak Pty Ltd. Mercantile Mutual Custodians Pty. Ltd. Mercantile Mutual Casualty Insurance Ltd. Australian Brokers Holdings Ltd. Australian Brokers Ltd. Australian Community Insurance Ltd. Mercantile Mutual Insurance (Workers Compensation) Ltd. Mercantile Mutual Insurance (N.S.W. Workers Compensation) Ltd. Prosafe Investments Ltd. Dinafore Pty Ltd. Tongkang Pty Ltd. MM Investment Management ING Canada Holdings Inc. AFP Financial Services ING Canada Inc. The Halifax Insurance Company Western Union Insurance Company Wellington Insurance Company La Compagnie d'Assurances Belair The Commerce Group Insurance La Compagnie d'Assurances NN Life Insurance Company of Canada NN Funds Limited NN Capital Management NN Maple Leaf ING America Insurance Holdings Inc. Equitable of Iowa Companies Directed Services, Inc. Equitable Investment Services, Inc. Equitable Life Insurance Company of Iowa Equitable American Insurance Company Equitable Creative Services, Ltd. Equitable Companies CLC, Ltd. Equitable American Marketing Services, Inc. Equitable Marketing Services, Inc. Younkers Insurance & Investments, Ltd. USG Annuity & Life Company USGL Service Corporation Equitable of Iowa Companies Capital Trust Equitable of Iowa Companies Capital Trust II Equitable of Iowa Securities Network, Inc. Golden American Life Insurance Company First Golden American Life Insurance Company of New York Locust Street Securities, Inc. Shiloh Farming Company Tower Locust, Ltd. ING America Life Corporation Georgia US Capital Inc. Life Insurance Company of Georgia Springstreet Associates, Inc. Southland Life Insurance Co. Security Life of Denver Insurance Company First ING Life of New York First Secured Mortgage Deposit Corp. ING American Equities, Inc. Midwestern United Life Insurance Company Wilderness Associates Afore Bital ING, S.A. de C.V. Columbine Life Insurance Co. ING Fund Services Co., Inc. ING Investment Management, Inc. ING Investment Management LLC ING Mutual Funds Management ING North America Insurance Corporation ING Seguros Sociedad Anonima de Capital Variable Lion Custom Investments Inc. Lion Custom Investments II Inc. MIA Office Americas, Inc. Multi-Financial Group, Inc. Multi-Financial Securities Corporation Multi-Financial Securities Corporation Massachusetts Multi-Financial Securities Corporation of Ohio Multi-Financial Securities Corporation of Texas Orange Investment Enterprises Inc. Security Life Assignment Corp. ING Seguros S.A. de C.V. United Protective Company Security Life of Denver International Ltd. SLR Management (Bermuda) Ltd. VESTAX Capital Corporation, Inc. VESTAX Securities Corp. VTX Agency Inc. PMG Agency, Inc. VTX Agency of Michigan, Inc. ING US P&C Corporation Diversified Settlements, Inc. Peerless Insurance Company The Netherlands Insurance Company America First Insurance Company Alabama First Insurance Company Excelsior Insurance Company Indiana Insurance Consolidated Insurance Company Cooling-Grumme-Mumford Company, Inc. Blue Cross Medical Consultancy (Singapore) Pte. Ltd. ING Indonesia Insurance P.T. ING Life Insurance Japan Nederlandse Reassurantie Groep Holding N.V. Nederlandse Reassurantie Groep N.V. NRG London Levensherverzekering Algemene Levensherverzekering Maatschappij N.V. Vereenigde Assurantie Bedrijven "Nederland" N.V. Reassurantie Holding Nederland N.V. Internationale Reassurantie Maatschappij Nederland N.V. Reassurantie Maatschappij Nederland N.V. Ruckversicherungs-Clearing A.G. Reinsurers Marketing B.V. N.V. Beleggingsmaatschappij NRG Reassurantie Beleggingen N.V. NRG Woningbouw B.V. BMA Beleggingsmaatschappij "Alliance" B.V. "Traviata" Onroerend Goed B.V. The Victory Reinsurance Corporation of the Netherlands N.V. NRG Victory Holdings Ltd. NRG London Reinsurance Company Ltd. NRG Fenchurch Insurance Company Ltd. NRG Victory Australia Holdings Ltd. NRG Victory Australia Ltd. NRG Victory Reinsurance Corporation Ltd. The Victory Health Reinsurance Corporation Ltd. NRG Victory Management Ltd. European Life Marketing & Actuarial Consultancy Ltd. European Life Marketing & Actuarial Consultancy 92 Ltd. Medical Expenses Development and Insurance Consultancy Services Ltd. NRG Victory Management Services Ltd. General Reinsurance Syndicate Ltd. General Reinsurance Syndicate Ltd. (Trustee) London Reinsurance Comp. Ltd. NRG Victory Life and Health Services Ltd. NRG Victory Canada Management Ltd. NRG Victory Management (Hong Kong) Ltd. NRG America Holding Company Philadelphia Reinsurance Corporation NRG America Life Reassurance Corporation NRG American Management Corporation Market Run Off Services Ltd. NRG Antillean Holding N.V. NRG Antillean Reinsurance Company N.V. NRG Victory International Ltd. NRG Victory Management (Bermuda) Ltd. SRO Run-Off Ltd. Bermuda ING Life Insurance Co. (Phillippines) ING Penta Life Insurance Indonesia P.T. ING Insurance Consultants (HK) Ltd. ING Reinsurance International Holding Co. Ltd. ING Reinsurance International Nationale-Nederlanden Nederland B.V. Nationale-Nederlanden Schadeverzekering Maatschappij N.V. H. van Veeren B.V. Nationale-Nederlanden Greek General Insurance Company S.A. Nationale-Nederlanden Levensverzekering Maatschappij N.V. B.V. Beleggingsmaatschappij Berendaal Consortium Scheveninggen B.V. RVS Beroeps-en Bedrijfsfinanciering B.V. De Bossche Poort B.V. ING Vastgoed V B.V. ING Vastgoed Belegging B.V. B.V. Beleggingsmaatschappij Vinkendaal Muggenburg Beheer B.V. Muggenburg C.V. ING REI Investment U.K. B.V. Nationale-Nederlanden Real Estate Ltd. ING Vastgoed Beheer Maatschappij I B.V. ING Vastgoed Bewaar Maatschappij I B.V. Nationale-Nederlanden Intervest 52 B.V. Bouwfonds Nationale-Nederlanden B.V. Nationale-Nederlanden Bouwfonds 1975 B.V. Bouwfonds AVG B.V. Bouwfonds Nemavo B.V. Bouwfonds Anklaar-Apeldoorn 1967 B.V. Bouwfonds Bilthoven 1969 B.V. Bouwfonds Roveso B.V. RVS Bouwfonds B.V. Bouwfonds Utrecht 1967 B.V. Amersfoort Premiewoningen B.V. Bouwfonds Valken Staete B.V. Nationale-Nederlanden Bouwfonds 1976 B.V. ING Real Estate International Investment I B.V. ING REI Investment U.K. B.V. ING Vastgoed Fondsbelegging BV Jetta Vastgoed B.V. B.V. Algemene Beleggingsmaatschappij "Lapeg" ING Insurance Argentina Nationale-Nederlanden Greek Life Insurance Company S.A. RVS Levensverzekering N.V. RVS Schadeverzekering N.V. Tiel Utrecht Levensverzekering N.V. Tiel Utrecht Schadeverzekering N.V. Utrechtsche Algemeene Brandverzekering Maatschappij N.V. Assurantiekantoor A Brugmans B.V. Algemene Zeeuwse Verzekering Maatschappij N.V. Apollonia Levensverzekering N.V. N.V. Nationale Borg-Maatschappij N.V. Belegging- en Beheer Maatschappij Keizersgracht Antilliaanse Borg-Maatschappij N.V. Amfas Exploitatie Maatschappij B.V. AVG Exploitatie en Beheer B.V. Amfas Hypotheken N.V. Noordwester Hypotheken N.V. Amfinex II B.V. Westermij B.V. Amfico B.V. AVG Exploitatie I B.V. ING Bewaar Maatschappij IV B.V. S.C.P. AVG Investissement Assurantiemaatschappij "De Zeven Provincien" N.V. "Transatlantica" Herverzekering Maatschappij N.V. "The Seven Provinces" Insurance Underwriters Ltd. Ramus Insurance Ltd. Tiel Utrecht Verzekerd Sparen N.V. B.V. Algemene Beleggings Maatschappij Reigerdaal Oostermij B.V. Nationale-Nederlanden Pensioendiensten B.V. Nationale-Nederlanden Zorgvezekering N.V. B.V. Algemene Beleggingsmaatschappij "Kievietsdaal" NeSBIC-Postbank B.V. Nitido B.V. Podocarpus Beheer B.V. Parcom Ventures B.V. Parcom Beheer BV Parcom CV Parcom Services BV Postbank Schadeverzekering N.V. Maatschappij tot Exploitatie van Onroerende Goederen"Gevers Deynootplein" BV Maatschappij tot Exploitatie van Onroerende Goederen "Kurhaus" B.V. Postbank Levensverzekering N.V. RVS Beleggingen N.V. Netherlands Life Insurance Company Ltd. AO Artsen-Verzekeringen N.V. Grabenstrasse Staete B.V. ING Life Insurance International N.V. Nationale-Nederlanden Internationale Schadeverzekering N.V. Fatum Vermogensbeheer N.V. Surinaamse Verzekeringsagenturen Maatschappij Seguros Norman Moron N.V. N.V. Arubaanse Verzekeringsagenturen Maatschappij Nationale-Nederlanden Herverzekering Maatschappij N.V. AVG Exploitatie IX B.V. Jahnstrasze Gebaude B.V. Maatschappij tot Exploitatie van Onroerende Goederen "Palace" B.V. Nationale-Nederlanden Interfinance B.V. Maatschappij tot Exploitatie van Onroerende Goederen "Grand Hotel" B.V. N.V. Haagsche Herverzekering Maatschappij van 1836 Baring Central European Investments B.V. Baring Asian Flagship Investments B.V. ING Fund Management B.V. Wijkertunnel Beheer I B.V. Nationale-Nederlanden Beleggingsrekening N.V. Nationale-Nederlanden CSFR Real Estate v.o.s. ING Bewaar Maattschappij I B.V ING Vastgoed B.V. ING Real Estate (Asia) PTE Ltd. ING Real Estate North America Corporation Nationale-Nederlanden Intervest XII B.V. B.V. Algemene Beleggingsmaatschappij Van Markenlaan Kantoorgebouw Johan de Wittlaan B.V. Nationale-Nederlanden Holdinvest B.V. Nationale-Nederlanden International Investment Advisors B.V. B.V. Algemene Beleggingsmaatschappij Fazantendaal Maatschappij Stadhouderslaan B.V. DESKA LII B.V. J.H. Alta en Co. B.V. Westland/Utrecht Projektontwikkeling B.V. Bouwonderneming Amer LII B.V. ING Real Estate Colombo B.V. Loeffpleingarage B.V. B.V. Maatschappij tot Exploitatie van Onroerende Goederen Smeetsland B.V. Vastgoedmaatschappij "Combuta" B.V. Vastgoed Maatschappij "Promes" Beheer- en Exploitatiemaatschappij "De Vestingwachter" B.V. Nationale-Nederlanden Hypotheekbank N.V. N.V. Arnhemsche Hypotheekbank voor Nederland Nationale-Nederlanden Financiering Maatschappij B.V. B.V. Betaalzegelbedrijf "De Voorzorg" J. van Ouwel Nationale-Nederlanden Finance Corporation (Curacao) I.L. Nationale-Nederlanden Vermogensbeheer B.V. NeSBIC Nationale-Nederlanden B.V. BOZ B.V. ABV Staete B.V. B.V. "De Administratie" Maatschappij tot Exploitatie van Onroerende Goederen Amersfoort-Staete B.V. Arnhem Staete B.V. Belart Staete B.V. Belart S.A. N.V. Square Montgomery Steenstaete S.A. Berkel-Staete I B.V. Berkel-Staete II B.V. Blijenhoek Staete B.V. S.N.C. Blijenhoek Staete et Cie SNC Peau Bearn Brussel Staete B.V. Grote Markt Staete B.V. Hoogoorddreef I B.V. SNC Haven Trompenburg Parking B.V. Lena Vastgoed B.V. S.A. du 59 Avenue d'lena SNC le Murier Kleber Vastgoed B.V. S.A. du 42 Avenue Kleber B.V. De Oude Aa-Stroom Portefeuille Staete B.V. S.C.I. 1e Portefeuille S.C.I. le Michelet S.C.I. Roissy Bureaux International S.C.I. Square d'Asnieres SNC Le Dome B.V. Amiloh ING Vastgoed N.V. Immo Management Service S.A. S.A. Regent-Bruxelles Nationale-Nederlanden/Immobilier S.A.R.L. Immogerance S.A.R.L. Nationale-Nederlanden Intervest IV B.V. SAS Espace Daumesnil Nationale-Nederlanden V B.V. Nationale-Nederlanden VII B.V. ING Real Estate Espace Daumesnil B.V. ING Real Estate Parking Daumesnil Viaduc B.V. SAS Parking Daumesnil Viaduc Cadran Invest S.A. ING Bewaar Maatschappij II B.V. ING Bewaar Maatschappij III B.V. ING REI Investment Spain B.V. ING Inmeubles S.A. ING Bewaar Maatschappij V B.V. ING Asset Management B.V. Postbank Verzekeringen Beheer Maatschappij B.V. Postbank Verzekeringen Bewaar Maatschappij B.V. ING Vastergoed B.V. Nationale-Nederlanden Intervest IX B.V. Nationale-Nederlanden CSFR Intervest S.R.O. ING Real Estate Praha Housing a.s. Nationale-Nederlanden Praha Real Estate V.O.S. Nationale-Nederlanden Intervest XI B.V. Nationale-Nederlanden Hungary Real Estate KFT ING Investment Management (Hungary) Rt. ING Investment Management (Asia Pacific) Limited ING Investment Management (Czech Republic) S.A. IIM India (India) Private Ltd. -----END PRIVACY-ENHANCED MESSAGE-----